For equipment maker Demag Plastics Group Corp., it came down to a choice between comfort and cash.
The company, with plans to centralize all its work at one location, was considering a move from its North American headquarters in Strongsville. Demag, formerly known as Van Dorn Demag, not only was one of the largest manufacturers in the Cleveland suburb, it had been in Strongsville since 1846 - 158 years in one city.
The state of South Carolina had come knocking, wooing the injection press supplier with a strong economic package that included numerous tax breaks and incentives, said Demag Plastics President William Carteaux. It was almost too much for Demag to turn down.
Almost. Demag opted instead to stay, launching an expansion and plant reworking in Strongsville that will cost $2 million and be completed by April.
``South Carolina made it very attractive,'' Carteaux said after an Oct. 15 open house at the Strongsville facility. ``We had a very difficult choice to make. I wanted to see how much our local officials were willing to help in enabling us to stay.''
Carteaux recently had returned from a seminar in Washington, where he had heard complaints from companies about the inequity of tax incentives. States and localities would bend over backward to attract new companies, but would do little to keep the companies that they already had, they said.
Except in this case, officials did step up. Representatives from the Ohio governor's office, several state representatives, local economic-development executives and three separate Strongsville mayors all have pitched in since mid-2002 to keep Demag in Ohio.
They came up with a package worth about $650,000 in incentives, consisting of a $500,000 matching capital-improvements grant from the Ohio Department of Development and a $150,000 training grant from the state, Carteaux said. The city offered property tax reductions, while the Ohio Port Authority contributed inventory tax breaks that could save the company as much as $600,000 a year.
The legislators also had to deal with changes in Strongsville government at sensitive times in the negotiations. Strongsville Mayor Walter Ehrnfelt died of a heart attack in May 2003, and Demag worked with an interim mayor and then current Mayor Thomas Perciak, who took office in January. ``We did our best to help further the process,'' Perciak said.
In some ways, Demag chose comfort instead of economic gain. Carteaux admitted that the South Carolina offer was handsome, even compared with what the state of Ohio put together. However, the company would have had to pay higher short-term costs to move employees and equipment, to build a new facility from scratch and to find and train workers, he said.
``While the offer still was pretty good, there were some hidden costs,'' he said. ``There's no shortage of craftsmen in the Cleveland area, and that helped in our decision.''
The expansion represents a reshaping of Demag. The North American market for injection molding equipment is about half as big as it was in the late 1990s. Demag has responded to the slump by cutting excess capacity and starting a lean manufacturing program that is still in its infancy, Carteaux said.
The company sold two former sites in South Carolina earlier this year - a machining operation in Duncan and a screw-and-barrel factory in Fountain Inn. It also closed a spare-parts and service site near the main plant in Strongsville, in the spring of 2004.
The company opted to handle that work at its renovated factory. The expanded interior includes a large production area for screws and barrels and a smaller assembly space to complete and test finished machines.
Still to come at the 275,000-square-foot headquarters is a modern, 8,000-square-foot, machine-demonstration center on the assembly floor. The company hopes to use the center to show off the latest presses and test materials for customers, said marketing manager Larry Doyle.
The expansion also will include rebuilt customer training and sales conference rooms, a new information-technology equipment room and an expanded main entrance. The company already has added 60 workers this year, taking the total close to 400, Carteaux said.
With the shift of all operations to Strongsville, the company simultaneously has launched lean processes and a kaizen approach to the plant floor. Plant areas are color-coded and marked off to help with process flow, and bins send parts from one station to the next. Employees have been asked to cross-train in different areas.
The work has not been easy in Strongsville. Workers also were asked to take pay cuts and contribute more for health benefits in the wake of sales declines, Carteaux said. A shift in duties, with more work coming to the site, has meant constant readjustment, he added.
``I don't know what our workers haven't been asked to do,'' he said. ``They've been quite resilient through it all.''
The company has gained an endorsement from parent Demag Plastics Group of Schwaig, Germany. Demag's new Titan two-platen press will be produced entirely in Strongsville, Carteaux said. Work already has begun, with several orders placed for the machines globally, he said.
The Titan machines update Demag's current two-platen models, the Caliber machines produced in North America and the Maxx machines made in Europe. The firm calls the Titan a ``harmonized'' system that combines the best features of the Caliber and Maxx for a worldwide audience.
Demag is displaying Titan presses with clamping forces of 2,000 and 1,210 tons at K 2004 in Dusseldorf, Germany. Two more models will be released next year, Carteaux said. The company plans to introduce Titan presses as large as 4,400 tons.
The restructuring in Strongsville comes two years after Strongsville-based Van Dorn Demag and Demag Ergotech in Germany merged to create Demag Plastics Group. Since then, the company's mission has changed, Carteaux said.
``We're challenged to be competitive globally,'' he said. ``We're not retrenching, like some others might think. Instead, we're making ourselves stronger.''