The state of Ohio got some good news when Milacron LLC won a 10-year state tax credit June 1, from the Ohio Tax Credit Authority.
So did the U.S. plastics industry.
In return for the tax incentive, Milacron will invest $11 million in its Southwestern Ohio facilities—where it employs more than 900 people at its main assembly factory in Batavia, a Mount Orab machining plant, the company headquarters and a metalworking fluids operation in Cincinnati's Oakley neighborhood.
Milacron also has pledged to add almost 300 jobs in Ohio.
That certainly puts the “Cincinnati” back into Milacron.
It's obvious why the news is good for the Cincinnati area and for the machinery company. Why is it good for America's plastics industry? Because Milacron is the only remaining U.S.-owned, broad-line manufacturer of primary plastics machinery. The company makes nearly every major type of processing equipment, including injection molding machines, extruders, blow molding machines and structural foam molding machines.
Yes, Milacron is a global machinery manufacturer, with far-flung operations and more than 5,000 employees around the world. Plastics is global, too. But its main assembly factory is in Batavia, Ohio — and Milacron plays a key role in developing new technology that is helping remake U.S. plastics manufacturing as a force that wins back work lost to lower-cost countries. A healthy Milacron should help drive reshoring.
According to the state's economic development agency, JobsOhio, Milacron has agreed to invest $8 million for building renovations and $3 million for new machinery. The company also is moving its headquarters from Oakley to the Cincinnati suburb of Blue Ash.
A lot of questions remain. What is the time-frame for the investments and additional hiring? Is it the 10-year term of the tax credit, all at once or over a few years? When will Milacron begin the investments, and for what? How will Milacron find several hundred workers with the needed skills?
Site selection, or gamesmanship?
Here's another question: Was Milacron really — seriously — looking to move much of its operations to Indiana? Milacron has been in the Cincinnati area for more than 130 years! Published news reports from the June 1 Ohio Tax Credit Authority said that Milacron officials had been considering whether move 750 of its Ohio jobs to Indiana.
We suspect this might be gamesmanship, designed to spur the tax credits to “retain” jobs in Ohio. That's often how it's done. Indiana's economic development agency declined to comment. Who knows if Milacron was seriously considering a move to Indiana — it's a moot point now, although it would be a nice gesture if the company could level with its loyal workers in the Buckeye State.
Anyway, you can't just pick up the hulking machining equipment in Mount Orab and Batavia and move it to another state. Not easily and without huge cost and business disruption, at least.
For its part, Milacron issued only the broadest of comments, saying the state help will help the company grow. We expect company officials to give some concrete solid details, especially since they're using state assistance.
Still, it's nothing but good news. Milacron, which is owned by private equity firm CCMP Capital Advisors, is planning an initial public offering. The company filed Form S-1 on April 3 with the Securities and Exchange Commission. We still don't know when Milacron will do the IPO.
Milacron's saga had been dramatic. The Great Recession and debt slammed the company, which was delisted from the New York Stock Exchange in 2008. Then several private equity firms took Milacron private after it filed for Chapter 11 reorganization in 2009. That restructuring left Milacron with a solid balance sheet. The owners sold to CCMP in 2012.
Over the past three years, Milacron has made some major acquisitions, including hot runner major Mold-Masters, and Kortec, which specializes in coinjecton molding systems for barrier layers. They bring major technological expertise. Milacron wowed attendees at NPE 2015 by molding a plastic, see-through alternative to tin cans for food, the Klear Can.
That's the type of innovations a strong Milacron can bring the industry.
And the tax credit from its home state certainly will help. Milacron has lost money in the three most recent years, according to the S-1 filing. The company said in the S-1 it has made significant investments in low-cost manufacturing overseas.
It's good to see that, thanks to Ohio's help, Milacron will be investing in its home state — and the U.S.A.