The aggressive leaders of Sulphur Springs, Texas, claim so many advantages of low-cost acreage, rail access and tax breaks that one molder thinking of expanding there has trouble keeping all the promises straight. Adding confusion is the immensely friendly but grammatically muddy East Texas dialect. Sulphur Springs promoters use the term ``give'' when they mean ``allow you to buy.''
The example of Hefco Inc. and Sulphur Springs seems to illustrate the importance of good communications in the working relationship between processors and communities wanting reliable, high-technology, tax-paying businesses as new citizens.
Sulphur Springs' leaders realize their agricultural backbone will not be able to support the city of 14,000 into the next century.
The city's promoters, including plastics distributor Michael A. McAlister, already have had success attracting a blown film company and a fiber technology firm. McAlister said the city and surrounding Hopkins County want to give their attractive industrial incentive package to injection molders like Hefco to expand operations to the 100-acre Sul-phur Springs Industrial Complex. There have been six meetings between the city and Hefco.
``We're going to end up giving them 20 acres of land in an industrial park, a rail siding, tax abatement and whatever we can give. [The economic development group] will issue locally sold bonds at less than 7 percent over as much as 20 years. They would provide us a lien on the building,'' said McAlister.
Hefco's current operations are 60 miles from Sulphur Springs, in Troup. With 1995 sales of $12 million, the firm specializes in molding for agricultural irrigation applications and municipal work. About 25 percent of its work is custom molding. Hefco does some design, and has 100 employees and 20 injection presses, with 150-1,500 tons of clamping force, in its current 75,000 square feet. It wants to expand with 30,000 square feet, six new machines and 20 workers.
It is giving Sulphur Springs serious thought.
Carl McElroy, Hefco's chief executive officer and president, viewed the Sulphur Springs promoters as very careful in the types of business they sought.
McElroy was impressed with what he termed was Sulphur Springs' aggressive sales pitch. He is pleased, he said, that Hefco will be entitled to a 5 percent reduction of electricity rates and local tax abatements, which do not include school tax abatements, over five years. All this is great incentive to McElroy, who noted that, given his expanding customer base, ``We're going to have to expand somewhere.''
However, he also believes that along with the tax relief, low-cost construction and building amortization terms, he'll be getting free child care for the preschool children of working parents.
He also believes he will be getting ``free port'' status, allowing him special tax exemption on inventory to ber sold out of state.
Ninety percent of his $2 million in finished inventory is destined for places outside of Texas, McElroy said. The access to the rail line is something he needs.
But there is no ``free port'' in Sulphur Springs, according to William W. Sawyer, executive vice president of the Sulphur Springs Economic Development Corp. The development group would only help the company qualify for ``enterprise zone'' status, which reduces the federal tax load of a company that projects adding a number of jobs vital to a community's economic survival. Several plastics processors, mostly in inner-city areas around the country, have taken advantage of federal tax breaks under enterprise zone designation.
Sawyer added the contract proposed with Hefco includes a recapture clause that outlines the level of job creation and payment requirements over the 20 years of the loan that Hefco must meet in order to continue receiving the favorable terms. And Sawyer said he knows nothing about the day-care question.
Finally, Sawyer said discussions with Hefco had involved only 10 acres, although it would be no problem for a company ``with [Hefco's high-quality] balance sheet'' to qualify for building on 20, he said.
The development board will go as far as tailoring a training program for processors at the industrial park's brand-new training center, McAlister said.
Sawyer said May 24 that Mc-Elroy must be confused by the great number of offerings made by competing municipalities. A meeting this week should clarify any questions McElroy has about Sulphur Springs, Sawyer said.
Detail problems like this do not deter McAlister, a 25-year plastics industry veteran himself and founder of Lone Star Chemical Co.
``We'd like everyone [in the in-dustrial park] to be in the plastics business,'' he said.``We've had success in the plastics business.''
The key, said Sawyer, is to find companies that want to expand, not just relocate.