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Cleveland tech firm going west: Parker Hannifin falls short of employment promises, plans to leave Intech Park

May 1, 2006

A Cleveland-based technology giant plans to move its Intech Park operation next month, leaving behind some attractive office space and a broken promise to create jobs.

Parker Hannifin Corp. will consolidate its Indianapolis location into a California site, spokesman Jim Cartwright said. It should empty its 30,700-square-foot offices in the park's Intech 10 building by the end of June.

The move will have no impact on Parker Hannifin's Tell City production facility, which employs about 100 people who make industrial filtration parts, Cartwright said.

In Indianapolis, the company had promised to create 46 positions that pay at least $29 an hour when it negotiated a six-year partial property tax abatement in 2001, city spokesman Justin Ohlemiller said. Just 31 of those jobs materialized.

Parker Hannifin, which moved in 2000 to Intech from a site in Lebanon near Interstate 65, also had agreed to invest $2.2 million in its new home. It hit that goal, Ohlemiller said.

The city, in turn, promised an abatement that could have saved Parker Hannifin $190,000 over six years. The company actually reaped $60,193 in savings through 2004, and Indianapolis officials will try to recover some of that.

"The city has taken very seriously the commitment of companies when it comes to these agreements for abatement," Ohlemiller said.

Indianapolis has granted about 25 abatements to businesses each year over the past three years, Ohlemiller said. The city tracks closely the promises tied to each one.

Since Mayor Bart Peterson took office in 2000, Indianapolis has recovered $2.8 million from 15 companies that fell short of their goals, Ohlemiller said.

Parker Hannifin transferred 40 employees from Lebanon to Intech in 2000, but its office now employs only 22. Just two will move to California, Cartwright said, and eight will stay behind to run a smaller office in Indianapolis.

The company bills itself as the world's leading maker of motion and control technologies and systems. Its products include aerospace parts and hydraulic gear for trucks and heavy-duty construction equipment.

Annual revenue totals more than $8 billion at the company, which employs 50,000 people in 46 countries. The Indianapolis office houses technical support and administrative personnel for its process-filtration unit.

In November, Parker Hannifin acquired the British firm dominick hunter group plc, which also specializes in filtration and purification and has operations in Oxnard, Calif.

"The move [from Indianapolis] was undertaken to consolidate these high-purity filtration operations with the ones in Oxnard," Cartwright said. "It makes rational sense to have all the capabilities for each in one spot."

However, the company also cited "economic conditions" in a March 1 letter to Indianapolis that asked for an immediate termination of its tax abatement.

"Unfortunately, this division has not experienced the economic turnaround that was expected, and we do not anticipate meeting our [projected] hiring commitments," stated the letter, which was signed by Richard Bregitzer, the company's manager of domestic taxes.

The company will leave behind office space, storage areas, and wet and dry labs, said Jack Hogan, a senior vice president for Indianapolis-based Lauth Property Group Inc., which manages Intech Park.

Parker Hannifin occupies a single-story wing of the 116,700-square-foot Intech 10 building.

Lauth built that wing specifically for Parker Hannifin, and the company still has a lease on the property. The developer plans to work with the current tenant to find a replacement.

"It would be great for a life-science company or a research-development type company," Hogan said.

The site has more than a few desirable qualities, according to Jeb Conrad, executive director of Indianapolis Economic Development, a division of Indy Partnership geared toward helping businesses find real estate.

It sits off of West 71st Street and next to Interstate 465, a short commute from both northwest residential neighborhoods and Indianapolis International Airport, Conrad noted. The site also contains laboratories, which take longer to build and cost more than regular office space.

"I think they should be in a really good position to backfill that space," he said.

Parker Hannifin won't create the lone vacancy at Intech when it leaves. A stand-alone bariatric surgery center operated by a Michigan company closed earlier this year before it could perform its first operation.

Owner Forest Health Services is trying to figure out the "best strategic solution" for the 24-bed, 37,000-square-foot hospital, Executive Vice President Larry Lenz said. That could include a sale or opening the hospital "in some fashion."

"There could be a whole host of options," he said. "It's really hard to put my hand on when we would make a final decision regarding the future of that facility."

The park's Intech 10 building also has another 30,000-square-foot vacancy on its second floor. Other tenants include the Purdue Research Foundation and Digital Networks North America.

"The overall occupancy of the building is not bad," Hogan said. "It just is one of those spaces that hasn't leased. I don't have a good explanation for it."

Intech is composed of six office buildings plus two hotels, a bank and a retail center. Those six buildings-a total that does not count the bariatric center-are 96-percent filled, Lauth spokesman David Treier said.

Lauth is considering adding two buildings, and Hogan said he isn't worried about occupancy rates.

"We have a lot of confidence in Intech Park," he said.
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