Daikin: Decatur beats China: Plant expansion goes to River City

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[October 02, 2008]

Daikin: Decatur beats China: Plant expansion goes to River City

(The Decatur Daily (AL) Via Acquire Media NewsEdge) Oct. 2--Forgive Lynn Fowler, chairman of the Morgan County Economic Development Association, for being giddy at the announcement that Daikin Industries chose Decatur over China for a plant expansion.

The $66 million expansion will create at least 25 jobs. With the national economy so shaky, it is great news, Fowler said.

"I'm thrilled with the announcement, the investment and the new jobs," Fowler said. "It comes at a great time, with all that is going on with our national economy. We can use all the good news we can get."

David Hendrixson, Daikin plant manager, said he expects to break ground this month, with production beginning in April 2010.

The facility will increase Daikin's production of ethylene tetrafluoroethylene copolymer, usually referred to as ETFE. Customers use the plastic in wire and cable, primarily for high-end military, aircraft and medical applications.

"We convinced them that all the business was here in the U.S.," Hendrixson said. "Daikin corporate felt it was more important to put the manufacturing facility in the area where the usage is. The U.S. is the user, so it's better to have the manufacturing facility in the U.S. than China."

Labor costs are lower and environmental regulations more lax in China, so landing the expansion in Decatur was a coup.

Hendrixson said the expansion did not just add jobs, it added solidity to Daikin's Decatur presence.

"This has just really helped our plant," he said. "This is our third expansion in this particular area (ETFE production). This is our biggest (ETFE) expansion. We're still making all our other products, but really increasing this one product line."

It is the largest of Daikin's many expansions since 1994.

To help persuade Daikin to expand in Decatur, the Industrial Development Board in August authorized a tax abatement for the project. Over 10 years, the Industrial Development Board action waived $137,000 in non-educational Morgan County property taxes and $1 million in state sales and use taxes.

Average wages for new hires, not including benefits, will be about $60,000, Hendrixson said.

Because the Daikin plant is outside city limits, the abatement does not apply to Decatur.

Daikin's existing State Docks Road facility has 322 employees and 70 contract workers.

Japan-based Daikin estimates the expansion will generate $161,000 in one-time revenue for the city because of sales tax revenue on construction employees and the building permit, $11,000 a year in sales tax revenue from hired employees and $26,000 a year in school taxes.

The company estimates the expansion will generate $135,000 a year in property taxes for Morgan County schools and $628,000 in Morgan County sales and use taxes.

Daikin Industries employs 19,000 people and has manufacturing operations in 11 countries.

It produces more than 1,800 kinds of fluorine compounds. It is the world's second-largest producer of fluorine chemicals after DuPont.

Hendrixson said he does not expect the credit crisis to impact Daikin's construction schedule.

"We're in good position to do this expansion," he said. "We're fine as far as that goes."

To see more of The Decatur Daily, or to subscribe to the newspaper, go to http://www.decaturdaily.com

Copyright (c) 2008, The Decatur Daily, Ala.
Distributed by McClatchy-Tribune Information Services.
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