The state of Iowa has some new tools in its arsenal to attract plastics companies.
Iowa's Department of Economic Development has designated plastics a target industry for recruitment, expansion and growth. Last year, the state repealed its property tax on new purchases of machinery and equipment, and exempted the purchases from sales tax. The state now is in the process of phasing out the property tax on existing equipment.
The agency's marketing manager, Phil Thomas, said the state has directed its full range of financial, tax and training incentives toward plastics companies.
The state also worked with the Des Moines-based Plastics Industry Consortium to develop the Iowa Mold Builders Apprenticeship Program. The training is offered statewide over a state-owned, 3,000 fiber-optic distance learning network that allows instructors at a business or community college to reach students in virtually every corner of the state.
The students go to a specially equipped classroom for instruction. They typically attend classes in the morning before reporting to their regular jobs. The four-year program, only recently launched, has 60 students and is partially financed by the state's Department of Economic Development.
In addition, the Iowa Jobs Training Program offers employers customized, flexible-training subsidies to companies that agree to expand operations within the state. It is funded through a tax credit against payroll taxes on new jobs created in the state.
``Companies selling all of their production out of state can have a near-zero state income tax liability, and federal income taxes are 50 percent deductible on the Iowa corporate return,'' Thomas said in a telephone interview.
If that isn't seductive enough, the state offers expanding companies with an Iowa customer base additional benefits from another major incentive program, the New Jobs and Income Program. Designed specifically for the targeted plastics industry, the program offers qualified businesses property tax exemptions on all or part of new plant construction for up to 20 years, a state investment tax credit of 10 percent, additional job training funds, a 13 percent research and development tax credit, and refunds of sales taxes paid by contractors who build the new facility.
Another key financial advantage Iowa provides is a tax reduction for firms that make plastics parts in the state for a manufacturer in another state. One reason is that Iowa's neighboring states of Illinois, Missouri, Wisconsin and Nebraska are major economic competitors.
``We really try to be comprehensive in the way we approach this,'' said Bob Henningsen, the administrator of Iowa's Division of Business Development.
Utility companies are the state's ``number one partner in economic development,'' Henningsen said in a telephone interview. This is one reason why the plastics industry, with its high electricity demands, was targeted, he noted, adding ``We also have good, affordable utility rates in the state.''
Iowa's low utility costs — 40 percent less than Illinois' — was a ``real heavyweight'' in PET injection blow molder Grafco Industries L.P.'s plan to put a plant in Bettendorf, Iowa. The Hanover, Md., company has not yet finalized the deal, but anticipates putting a 80,000-square-foot factory with five machines there by mid-summer, President Tim Frank said.
Plastics is among Iowa's top five industrial sectors and the fastest growing, according to Henningsen. The rapid growth is reflected in data compiled by the Washington-based Society of the Plastics Industry Inc. Between 1991 and 1994, the period of SPI's most recent survey, Iowa's plastics industry grew 49 percent.
The state's overall barometer of success, as measured by its unemployment figures, shows Iowa reporting only 2.7 percent of its work force without a job at the end of September. For the same period a year ago, it was 3.8 percent.