A German company establishing its first U.S. manufacturing location in Auburn will bring new jobs and a multimillion-dollar capital investment to the city beginning next year.
The Auburn City Council granted Berghoff Precision Machining L.P. a tax abatement for equipment for its new facility at Tuesday’s council meeting.
The company, which will join Auburn Technology Park West, is set to bring 51 full-time jobs over the next two years with a total capital investment of nearly $12 million, according to city documents.
“Those [job] numbers are little bit high there,” said Phillip Dunlap, director of Economic Development. “They will be probably around 20-something in those first years, but the employee that put that together put probably a three-year, 2 1/2-year number in there. … But the first year, we anticipate probably 12-15 as they ramp up.”
The company’s building is under construction, and it will most likely begin to ship product in spring 2017, Dunlap said.
The Berghoff Group said it would create parts in Auburn for customers in the equipment manufacturing, semiconductor and aerospace industries. It will generally promote trade and commerce in the city and state of Alabama, according to city documents.
The group mechanically processes complex work pieces such as five-axis and high-speed machining. It also machines different high-performance metals in the high-mix, low-volume and high-complexity fields, according to the company.
The University and its engineering program played an major role in opening the location in Auburn, the company said earlier in the year. The Auburn location will be the company’s fifth location.
“I think they were very interested in the University because in Europe they’re very involved in additive manufacturing, and so the University has started an additive engineering program here … and so they thought this was a good fit for them from a machining, from a technology standpoint,” Dunlap said.
In recent years, the city has worked to recruit high-end, technology-based, value-added manufacturing, he added.
Having the company come to Auburn gives engineering graduates from Auburn an option to find a job locally, Mayor Bill Ham said, whereas people often move away for their first job but return to Auburn after a few years.
“Twenty-five years ago, it was very unlikely that someone would graduate in the school of engineering from Auburn and find a job locally,” Ham said.
In April, when Berghoff announced its plans to join Auburn, it said it planned to invest about $30 million and create about 100 precision machining jobs in the city over the next five years.
“It’ll take them two or three years to ramp up to full production, so they’ll make investments as they ramp up,” Dunlap said.
The total direct annual tax impact for the city is estimated at about $77,700 with a combined total estimated 10-year tax impact sitting at over $1 million.
The estimated abatement is twofold. The company would receive about $42,600 annually for 10 years for noneducational property taxes.
And a one-time noneducational sales and use taxes abatement adds about $371,000 for a total abatement of about $797,000.
“They generate dollars from occupational taxes, property taxes, and their employees spend money and that produces sales tax, so that’s one of the reasons we’re able to give $16 million a year out of the General Fund to the school system,” Ham said, adding that school system quality is a major factor in attracting new residents to the city.