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4A Wichita Falls Economic Development Minutes - 12/09/2002MINUTES OF THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION Meeting of December 9, 2002 Present. Members: Gary Shores, President Jim Berzina, Secretary- Treasurer Ray Clymer, Member City Staff: Matt Benoit, Assistant City Manager Linda Merrill, Recording Secretary BCI Staff: Tim Chase, President Todd McDaniel Colfax Power Transmission Group: Absent. Mark J. Stuebe, General Manager Heavy Duty Clutch & Brake Group, Wichita Clutch Kim Ballard, Wichita Clutch Bo Stahler, Vice - President Lou Rodriguez, Member I. Call To Order. President Gary Shores called the meeting to order at 9:09 a.m. II. Approval Of Minutes (September 16, 2002). Ray Clymer moved, seconded by Jim Berzina, that the minutes be approved. The motion carried. III. Consider Presentation From Warner Electric For Relocation And Expansion To Wichita Falls. Board President Gary Shores asked BCI President Tim Chase to explain the purpose of this date's meeting. Mr. Chase introduced Mark Stuebe, General Manager, Heavy Duty Clutch & Brake Group, of Colfax Transmission Group, and Kim Ballard of Wichita Clutch, a subsidiary of Colfax. Mr. Chase stated that over the past 12 months, discussions were had concerning the need of Colfax to make a Wichita Falls Economic Development Corporation December 9, 2002 Meeting Minutes Page 2 consolidation in their operations. He then asked that Mr. Stuebe explain the process in greater detail. Mr. Stuebe gave a presentation regarding Colfax Power Transmission Group. Colfax is a multinational manufacturer of industrial products. Formed in 1995, the company consists of some of the industry's leading power transmission and component manufacturers, including Warner Electric and its subsidiary, Wichita Clutch. Mr. Stuebe continued, presenting a brief overview of the company's acquisitions and divestments from 1995 -2001. He added that Colfax operates in a team - oriented, no -fault environment. Colfax and its subsidiaries subscribe to a standard of quality named the Colfax Business System, a series of manufacturing methods designed to accommodate the requirements of power transmission production. In addition to Wichita Clutch, Warner Electric has operations in Bedford, UK, and Waukesha, Wisconsin. These facilities serve the industrial, vehicular, and turf and garden industries. They currently have the benefit of 30% utilization of each plant. Warner Electric began deliberations as to the best course of action to take to accomplish a consolidation of its operations over 18 months ago. It was important that Colfax have an international presence, so it was decided the Bedford, UK plant would remain in operation. The company then looked to the plants in Wichita Falls and Wisconsin. They are very similar, and the consolidation could have gone either way. The costs and savings as to consolidation were nearly identical. Whereas Industrial Clutch in Wisconsin was stronger on the operation and people side, Wichita Clutch was strategically stronger. The deciding factor was in the level of community support. In addition, there is more manufacturing space available in Wichita Falls, and Wichita Clutch has a stronger plant name. In addition, the consolidation was decided in favor of Wichita Falls due to the importance of operating competitively against WPT, located in Wichita Falls. The proposed consolidation involves maintaining Warner Electric's customer service and engineering functions in Wisconsin. The move is dependent upon final approval of community incentives, and Warner Electric bargaining with IAM Local 10 in Wisconsin. They envision the move to Wichita Falls to be completed by summer 2003. The move will bring approximately $7 million of revenue into Texas. President Shores told Mr. Stuebe that he and his fellow Board members were proud that this consolidation was planned for Wichita Falls. Wichita Falls Economic Development Corporation December 9, 2002 Meeting Minutes Page 3 IV. Consider A Memorandum Of Understanding Outlining An Economic Development Incentive Agreement With Warner Electric. Mr. Chase then discussed the key elements of the Memorandum of Understanding. He said that the MOU details Warner Electric's intent to retain up to 60 existing full -time jobs at its Wichita Clutch facility. Upon completion of a presentation to WFEDC by Warner Electric evidencing the retained jobs, the completion of the Phase I capital investment, and the creation of at least 90% of 21 projected new jobs, $4,000 shall be paid to Warner Electric for each retained job, and $5,000 for each new job created, with a premium of 10% of the annual salary being paid for those jobs that pay in excess of $50,000, but not more than $100,000. In addition, $75,000 shall be paid for new capital investment related expenditures to accommodate the new equipment being outfitted in Wichita Clutch's facilities. Upon evidence being presented that Warner Electric has incurred relocation expenses of up to $300,000, WFEDC will reimburse that amount to Warner Electric. President Shores questioned whether any personnel would be relocated, or would it be only hard assets. Mr. Stuebe said it would not be personnel, but approximately 30 pieces of machinery for tooling. Ray Clymer stated that he had not been involved in the planning of this endeavor, but he wondered why the consolidation /expansion could not have been done on a larger scale. Mr. Steube laughed, stating that is something they are considering for the future. President Shores told Mr. Stuebe and Ms. Ballard that he appreciated their confidence in Wichita Falls. Mr. Stuebe applauded the efforts of Tim Chase and Todd McDaniel toward this endeavor. President Shores then asked for a motion that the Board recommend to the City Council the use of Section 4(a) sales tax proceeds to encourage Warner Electric's consolidation and expansion of their operations in Wichita Falls. Ray Clymer so moved, seconded by Jim Berzina. The motion was unanimously approved. • Wichita Falls Economic Development Corporation December 9, 2002 Meeting Minutes Page 4 Mr. Chase noted to the Board that they had authorized funds to the Skills Training Center at Vernon College to upgrade machining training.' Because such a great portion of Warner Electric's work deals with machining, the availability of a good, qualified workforce was of paramount importance. Mr. Stuebe concurred, stating that they perceived a lack of skilled trades in the area 18 months ago. However, a meeting with the BCI and Vernon College convinced them otherwise. President Shores acknowledged Mayor Altman's presence at today's meeting. The Mayor stated it was a pleasure to work with the Colfax team. V. Adjourn. There being no further business, the meeting adjourned at 9:30 a.m. &� TVUA,"� Linda Merrill, Recording Secretary Gary Shores, President Mr. Clymer made a motion, seconded by Mr. Rodriguez, that the Wichita Falls Economic Development Corporation recommend to the City Council that 4(a) sales tax funds in the amount of $125,000 be used to help offset start-up costs for Vernon Regional Junior College's machining project. The motion was unanimously approved. [Excerpt from the minutes of the March 5, 2001 Wichita Falls Economic Development Corporation meeting.]