McHENRY – Like other manufacturers in Illinois, a top primary employer in McHenry County is thinking about uprooting its McHenry headquarters and shipping its roughly 400 jobs out of the state.

A family owned and operated manufacturer in the county for the past 35 years, Fabrik Molded Plastics has received offers from Alabama, Indiana and Kentucky to relocate its McHenry operation as demand grows internationally for Fabrik’s custom molded plastic parts for the automotive, health care, electronics and consumer goods industries, President Keith Wagner said.

The three states, he said, are ready for Fabrik to move, while the Illinois budget stalemate between Republican Gov. Bruce Rauner and Democratic legislative leaders has hogtied the state’s ability to incentivize the plastics injection company to stay in Illinois.

A relocation farther south also would put Fabrik closer to its largest customer base – the automotive industry that represents 70 percent of the manufacturer’s business.

Faced with the prospect of major job loss and another vacant industrial building, city of McHenry officials have intervened, trying to advance a property tax incentive deal that could help sway Fabrik to stay.

The local incentive would need approval from nine other area taxing bodies after the McHenry City Council earlier this month and the McHenry County Board last week endorsed it on unanimous votes. Even if all 11 bodies approve, it would shave only a smidgen off the manufacturer’s estimated $5 million expansion cost, both Wagner and city officials acknowledge.

The community's effort, however, hasn't gone unnoticed by Wagner, a Crystal Lake Central graduate who oversees the manufacturer's operations after his father started Fabrik in 1980 with a couple of machines in Algonquin.

“The dollars are real dollars. Every dollar is a dollar for both sides. That’s important,” Wagner said. “But there is also the community involvement and the community energy being put into how important is this. We are a company that takes that in consideration. We are not just a spreadsheet.”

The sweetener

The local incentive agreement doesn’t make or break the company’s forthcoming decision to leave Illinois or stay in McHenry, Wagner said.

If Fabrik does stay, however, the incentive means the manufacturer would add 100 new jobs over the next three to four years, occupy a vacant industrial building adjacent to Fabrik’s headquarters in the McHenry Corporate Center and expand its molding machines into two facilities.

McHenry looked toward an incentive program the council approved in 2014 designed to spur reinvestment into the city’s vacant or underused buildings after word started spreading about Fabrik’s possible relocation, said Douglas Martin, McHenry director of economic development.

Functioning similarly like a tax increment financing district, the city’s program places businesses at vacant buildings, takes the added property taxes generated by the increased occupancy and pays it back to the business making the reinvestment.

Like a TIF district, the Underutilized Property Tax Abatement and Incentive program needs approval from all the governmental bodies who collect taxes on the property. Unlike a TIF district, the program’s geographic scope is limited to one property and its abatement lifespan is shorter.

Fabrik became the program’s first applicant after city officials approached Wagner about the local incentive.

Under the proposed agreement, Fabrik would expand its operation to a 44,000-square-foot vacant building at 1515 Miller Parkway across the street from its headquarters at 5213 Prime Parkway.

Fabrik would add between $1.5 million to $3 million annually to its payroll with the expansion, along with another $5 million for building improvements and equipment at the Miller Parkway building, McHenry documents show.

The vacant site at one time housed Clariant Corporation and drew interest from Phoenix Farms of Illinois, a medical marijuana grower who eventually was denied a license for the location, according to city documents.

Under the proposal, increased property taxes generated at the Miller Parkway location would be paid back to Fabrik for the next 10 years. City officials estimate $31,426 in property taxes from all 11 taxing bodies would be abated annually.

Fabrik would save $314,270 total in property taxes over the proposal’s 10-year span, if all bodies agree to the deal.

The savings represent a small portion of Fabrik’s multimillion dollar expansion plan, but it sends a message to a successful and growing manufacturer with roots in the county, McHenry City Administrator Derek Morefield said.

“It may or may not break their pro forma, but it is what we can do as a municipality. It’s what we can do as other taxing bodies,” he said. “It’s not using money that we already have. In fact, we potentially could lose money and have another vacant building to fill. It’s worth the effort to try to get them to stay and remain in the community.”

Wagner said he appreciates the effort. Since applying for the incentive, Wagner and Martin have been meeting with the taxing bodies affected by the proposal.

With two approvals in the books, McHenry officials’ goal is to have the remaining nine taxing bodies take some form of action on the proposed agreement by the end of August. Fabrik’s decision to move or stay would come after that point, Wagner said.

The city’s proactive approach was necessary, Martin said, as businesses throughout Illinois feel temptation by states and countries to leave.

In the past month, General Mills told workers it would close its West Chicago plant by 2017 – a move affecting 500 employees, according to media reports.

Manufacturer De-Sta-Co plans to close its Wheeling plant, along with two sites in Michigan, and transfer 100 jobs from Wheeling to Tennessee. Bunge North America also announced it would close its packaging oil plant in downstate Bradley, affecting more than 200 employees, according to media reports.

“As a city, we are trying to facilitate the best deal possible to incentivize him to stay in the city,” Martin said. “Even if all these taxing bodies approve it, there is no guarantee [Wagner] will stay. But what it does show is regional support for his business and gives him something to make his decision.”

‘ALL WE CAN DO’

When meeting with the taxing bodies, Wagner has made it clear the decision to relocate is still a business decision, he said.

Representatives from Alabama, Indiana and Kentucky have offered Fabrik land, building space, worker compensation breaks, tax abatement and other incentives, he said. But when he approached the Illinois Department of Commerce and Economic Opportunity, the conversation didn’t progress.

Fabrik showed interest in the economic development agency's EDGE program, a tax credit incentive typically afforded to companies that want to expand or locate in Illinois. Wagner was told he would have to wait, he said.

Rauner suspended the program and other DCEO incentives in early June, as part of his response to the unbalanced budget lawmakers approved. The cuts were estimated to save $400 million, according to a governor's office news release.

The state budget stalemate is a factor in Fabrik’s decision, Wagner said. Without the state’s involvement, the incentives needed to offset some of Fabrik’s expansion costs “falls quite short,” he said.

The property tax incentive becomes that much more important, McHenry County Economic Development Corp. President Pam Cumpata said. The countywide economic development group has been working with McHenry and Fabrik about its expansion.

It’s the only gesture the local community can make to try and keep Fabrik, a major job producer that often works with area agencies on internships and workforce training, Cumpata said.

“If the state can’t get a budget passed, this is all we can do,” she said.

Despite the offers to relocate, Fabrik has to weigh the possibility of a hometown discount, Wagner said.

The company grew in the county. Many employees have 10-plus years of experience at Fabrik. The difficult decision, Wagner said, will wait until the taxing bodies have a chance to act on the local incentive.

“There is a financial side to this that these 11 groups are trying to make a dent in,” Wagner said. “They are trying to say, ‘We care, and we want to keep you.’ So, we are interested, and it’s interesting that the community cares and wants to do something – at least make a mark.”