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Navistar seeks more tax breaks after old deal failed

July 6, 2011

The city of Indianapolis is prepared to give Navistar International Corp. another shot at a property-tax abatement after the Illinois-based manufacturer failed to meet the job requirements of a previous incentive deal.

Navistar division Pure Power Technologies LLC of Columbia, S.C., said it plans to create 250 jobs and retain 30 more by investing $19 million in new equipment at its casting plant at 5565 Brookville Road. Navistar previously operated the foundry but began closing it after Ford Motor Co. announced in 2009 it would move its diesel business to Mexico.

The company received $18 million in tax breaks from the city in the past decade, but agreed to repay $5 million in early 2010 for failing to retain more than 1,800 jobs at the plant. The huge east-side facility employed as many as 1,650 workers in 2005, but began mass layoffs amid the recession as the auto market tanked.

Still, the city is set to preliminarily approve another tax abatement because Navistar acted in “good faith” when recognizing that it fell short of meeting job commitments, said John Bartholomew, spokesman for the city’s Department of Metropolitan Development.

The Metropolitan Development Commission approved Navistar’s abatement request at its Wednesday meeting. Final approval could be granted July 20.

“They weren’t trying to fight us; that worked in their favor, so they’ve got a clean slate now,” Bartholomew said of Navistar. “This hopefully will prevent a huge industrial site from going off the tax rolls. This is a great opportunity to bring in new jobs.”

Joanne Sanders, Democrat minority leader of the City-County Council, said she is pleased the city is helping to save jobs but thinks it should have collected more from Navistar for failing to meet the requirements of the first tax abatement.

"To say they are starting with a clean slate is disengenuous," she said. The real clawback would have been close to $20 million."

Navistar has recalled 150 workers who were laid off when Indianapolis Casting Corp. stopped production in late 2010. Long-term plans include hiring 100 more employees by 2013 and investing $19 million in technology and supporting equipment.

UAW Local 226 members voted to accept a wage cut last year, breathing new life into the plant. It will have the ability to produce diesel structure components, including crank cases and cylinder heads.

All 250 workers should be hired within the next two years and earn an average of $21 an hour, Navistar said in its filing.



 

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