The Ypsilanti City Council approved a $96,000 tax abatement to assist a local gear manufacturer with an ongoing expansion.
American Broach is in the midst of investing $1.4 million in a 42,800-square-foot facility at 535 S. Mansfield St.
The company originally intended to build a new facility, but found it would be cheaper to purchase a neighboring building at 575 S. Mansfield Street in the Ypsilanti West Business Park.
“We’re pretty happy to be in Ypsilanti,” American Broach President Ken Nemec told the Ypsilanti City Council on Tuesday.
Nemec, who lives in Ypsilanti Township, says the expansion will help the company add 20 new jobs by the end of 2015, though he noted his personal goal is to add 50 jobs over the next five years.
American Braoch is promising to bring high paying jobs as it continues to grow.
Tom Perkins | For AnnArbor.com
According to its annual report, American Broach saw $8.4 million in revenues last year. It builds intricate cutting machines that produce gears, with the auto and defense industry making up the majority of its revenue base. The 2012 revenue is up $3 million over the previous year.
Nemec highlighted that the jobs American Broach will add pay well and the company provides excellent working conditions. Employees doing factory work average around $45,000 annually and are provided full benefits and vacation days.
“It’s not a Walmart job,” Nemec said. “These are the kind of jobs we want in Ypsilanti.”
“Our shop is representative of what a new factory is,” he added.
City Planner Teresa Gillotti said the positions meet the city's living wage ordinance and two-thirds of the jobs expected to be created between 2011 and 2015 will qualify as high-tech jobs per Michigan Economic Development Corporation guidelines.
When American Broach moved to Ypsilanti in 2008, the company had 21 employees and it now has 51, Nemec said. According to its annual report American Broach, added 13 new full-time jobs and two part-time jobs in 2011 and 2012.
Nemec said the average age of company employees was over 60 when he was hired in 2006 and that many of the employees are now under 30. Many of the older employees have retired.
But Nemec said finding skilled workers is one of the company’s challenges. The skills needed to perform jobs at American Broach disappeared from the workforce when manufacturing jobs began going oversees, Nemec said. There are very few skilled workers who can perform the work between 30- and 55-years-old in the area, he said, and added that it takes five to 10 years for the company to train new tool-makers.
“There are no skilled people available. What we do is pretty specific,” Nemec said adding that the company has also had a difficult time finding young people willing to do the work.
“You would be surprised. A lot of these kids really don’t want to do it.”
American Braoch has a history of utilizing incentives at the state and local level. It was previously approved for exemptions in 2008 and 2011 worth $450,000 and $430,000, respectively.
In 2011, the company also received a state tax credit of $527,000 over 7 years.
Among the equipment listed in the personal property list for the new building is standard office equipment like lighting, an HVAC unit and duct materials.
The company is also planning to purchase two jib cranes for $60,000; a grinder at $600,000; a lathe for $30,000 and a sharpener for $634,000.
American Broach moved in 2008 from its decades-long home on Jackson Road to a 22,580-square-foot facility on South Mansfield.
Nemec said American Broach held several million dollars in debt and was losing $500,000 annually when he was hired in 2006. He said he recommended to the company’s board of directors that they file for bankruptcy and shut down after he spent a month in the position.
The board of directors objected and ordered Nemec to find a way to make the company profitable. He said he consolidated three plants under one roof in Ypsilanti as part of that process.
“We got down to where we could afford to live, and now, over the last six years, we really built it back up,” he said. “We’ve got a lot of customers who are pounding on our doors.”
City Manager Ralph Lange said he toured American Broach’s factory and was impressed by its operation and clean conditions.
“It’s really an extraordinary place,” he said. “This isn’t a typical factory; this is the new era of manufacturing.”