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Lagging on jobs, earplug maker agrees to cancel tax breaks

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A local manufacturer known for earplugs will repay $19,700 from a tax-break deal because it didn't create the number of jobs it promised in 2007, under a clawback agreement with the city of Indianapolis.

Aearo Technologies LLC, owned by St. Paul, Minnesota-based 3M Co., potentially faced a much higher penalty. The city could have sought as much as $265,000 under the terms of the 2007 tax abatement agreement, said Ryan Hunt, a senior project manager in the Department of Metropolitan Development.

However, the company invested nearly $16 million, about a half-million dollars more than promised, in buildings and equipment on the northwest side, and has retained a significant number of full-time, permanent jobs.

"We gave them some credit, obviously," Hunt said. "We thought the best remedy was to ask for some repayment and end it early."

The Metropolitan Development Commission on Aug. 6 approved a resolution to accept the $19,700 repayment and terminate the remainder of the abatement. Aearo, which agreed to the terms of the resolution, could have benefited from the abatement on real property for another year and on personal property for another three years, Hunt said.

The company promised in 2007 to retain 368 permanent full-time positions with an average hourly pay of $27.02 and add 48 more employees. The company also planned to invest $15.4 million in a new office building and research facilities.

The company spent nearly $16 million in 2008 on buildings and equipment. However, this year, Aearo reported having 354 employees—lower even than the figure it had promised to retain. The company also has 134 contract workers, but Hunt said the commission decided to count only permanent, full-time employees.

Aearo's total tax savings since 2008 is $579,411, according to the Department of Metropolitan Development. Because the company fulfilled other aspects of the abatement agreement, it was entitled to retain part of its savings.

Aearo was on a growth tear before its sale to 3M in 2007 for $1.2 billion. It generated $508 million in annual sales, and revenue had been growing over the prior five years at an average annual rate of more than 12 percent. 3M bought the company to expand its health and environmental safety product lines.

The tax-abatement agreement called for 12,000 square feet of new office space, plus a new acoustical testing facility, both of which were constructed.

Aearo came close to hitting its hiring target in 2010, when it added 42 jobs, but the payroll declined the following year and in 2012.

Aearo’s facilities are at 5457 W. 79th St. and 7911 Zionsville Road.

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  • 14 Jobs
    You couldn't add 14 jobs?!?! I am one of those 134 Contract workers (for over 2 years) and have been waiting for a full time position... Thanks a lot!
  • DUMB!!!!!!!!!
    Just $19,700! Why not have them pay all $579,41. At LEAST the $265,000. $19,700 is not enough.
  • 3M
    3M is based in St. Paul, Minnesota. Not Minneapolis.
  • What was gained and by who?
    That is the problem with so many of these arrangements EAR Corp. has been at that location at least a decade before this abatement was inked. Why is the Government giving tax dollars to businesses for doing what they would have done on their own? Well beyond the obvious reasons of collecting professional fees for their preferred legal & financial partners, Campaign Contributions and gaining Votes.

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  1. How much you wanna bet, that 70% of the jobs created there (after construction) are minimum wage? And Harvey is correct, the vast majority of residents in this project will drive to their jobs, and to think otherwise, is like Harvey says, a pipe dream. Someone working at a restaurant or retail store will not be able to afford living there. What ever happened to people who wanted to build buildings, paying for it themselves? Not a fan of these tax deals.

  2. Uh, no GeorgeP. The project is supposed to bring on 1,000 jobs and those people along with the people that will be living in the new residential will be driving to their jobs. The walkable stuff is a pipe dream. Besides, walkable is defined as having all daily necessities within 1/2 mile. That's not the case here. Never will be.

  3. Brad is on to something there. The merger of the Formula E and IndyCar Series would give IndyCar access to International markets and Formula E access the Indianapolis 500, not to mention some other events in the USA. Maybe after 2016 but before the new Dallara is rolled out for 2018. This give IndyCar two more seasons to run the DW12 and Formula E to get charged up, pun intended. Then shock the racing world, pun intended, but making the 101st Indianapolis 500 a stellar, groundbreaking event: The first all-electric Indy 500, and use that platform to promote the future of the sport.

  4. No, HarveyF, the exact opposite. Greater density and closeness to retail and everyday necessities reduces traffic. When one has to drive miles for necessities, all those cars are on the roads for many miles. When reasonable density is built, low rise in this case, in the middle of a thriving retail area, one has to drive far less, actually reducing the number of cars on the road.

  5. The Indy Star announced today the appointment of a new Beverage Reporter! So instead of insightful reports on Indy pro sports and Indiana college teams, you now get to read stories about the 432nd new brewery open or some obscure Hoosier winery winning a county fair blue ribbon. Yep, that's the coverage we Star readers crave. Not.

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