Corporate Name Change Could Be Costly for Ferris

Ferris Industries will lose its tax breaks at the end of the year because of corporate streamlining.

Jerry Dawes, Ferris' vice president of finance, explained that his company was purchased in 1999 by Simplicity Manufacturing and in 2004 Simplicity was purchased by the Briggs & Stratton Corp., which will be cutting Simplicity out of its corporate lineup.

"What Briggs Corporation is trying to do is streamline their operations and save some money with corporate names. They've determined that one of the best ways would be to reduce the number of corporate entities that they have," he said. "And that would be fine, except our Empire Zone benefits here are under Simplicity Manufacturing Inc. and its that tax ID number that's really important. So when we lose the Simplicity Manufacturing Inc., we lose that tax ID number and thereby we lose our Empire Zone benefits."

Dawes said the loss of the benefits won't affect the employees, but could affect the cost of production.

He wouldn't say how much Ferris claimed in benefits over the last year because, according to him the rules are different depending on whether it's an investment tax credit, a wage tax credit or a property tax benefit; all of which Ferris has taken advantage of.

Dawes is currently in the process of reapplying for the benefits, but he isn't sure how much the company will be able to get back.

"I do know that the rules changed in 2005 and the benefits that we were able to attain back in 2004 are not as strong as they were when we were initially certified," he said. "So even if we are able to get some sort of certification back, the benefits will not be as advantageous as they were, but I'm just fighting to get anything at this point and time."

The Madison County Industrial Development Agency is helping the company with the application process.

"The Empire Zone program has gone through a lot of restructuring, and in closing some loopholes and preventing abuses of the programs, Ferris Industries is getting caught up on a technicality," said Kipp Hicks, the IDA's executive director. "They're not trying to abuse any privileges, they want to simply continue to operate. They're continuing to grow, expand their footprint and hire on new people."

"That's the type of industry and the type of business we're trying to encourage here in Madison County," Hicks continued. "Ferris is a prime example of a company doing everything right, and unfortunately they're getting caught up in a technicality that's going to prevent them from receiving some of the incentives that are available to manufacturing companies."

Hicks said Ferris may be able to re-apply as a regionally significant project.

In a manufacturing industry, that would mean adding 50 new jobs, which the company has recently done.

Ferris Industries recently completed a 42,000 foot expansion to its assembly area and added almost 50 employees, but Dawes isn't sure if the $3.2 million cost of that expansion will fall under Empire Zone benefits.

He said it might because it would be filed under 2007 taxes under the Simplicity tax ID number, but wasn't positive it would work that way.

Hicks said he is helping Ferris in any way he can.

"We're investigating all options," he said. "Obviously we want to do what we can to keep our good companies here."

Dawes understands the issue, but wants to get his company's benefits reinstated.

"The law is the law. It's like the proverbial fighting city hall with a ham sandwich, and I understand that," he said. "There were abuses of this program, but clearly this is just one of those deals where an unintentional consequence of the changes is going to hurt Ferris here. People shouldn't be vilified on this, they're trying to do the right thing, but now we've got to try to scramble to see if there's anything that can be done for a company like Ferris."