The deal struck with the Kansas Department of Commerce was designed to enable Goodyear to invest $250 million in capital improvements at the manufacturing plant in north Topeka.
Commerce Secretary David Kerr said the state’s Impact program allowed issuance of incentive bonds for Goodyear’s benefit. Debt would be repaid with revenue from the company’s state payroll tax, he said.
Reliance on the commerce program makes it unnecessary to continue seeking approval of an incentive package in a Senate bill that providing Goodyear $37.5 million from the state to retain jobs and upgrade equipment.
Goodyear officials had informed lawmakers that without help, the company eventually might cut up to 700 jobs in Topeka. Some state officials had expressed concern about the long-term cost of the bond issue. Goodyear plant manager Tim Davis said the arrangement was a welcome turn of events in the company’s effort to modernize production of an off-road line of tires at the 64-year-old plant.
“The availability of Impact funds to support a potential investment is a very positive development, and we look forward to further discussions with state officials as we refine our future investment plans,” Davis said.
The company’s Topeka facility employs about 1,600 people, but United Steelworkers Local 307 recently approved a contract allowing elimination of up to 225 jobs. Goodyear, based in Akron, Ohio, previously announced it would cut nearly 5,000 jobs, or 7% of its work force, this year. About 4,000 jobs were phased out by the company last year.
Gov. Kathleen Sebelius said cooperation between Goodyear and the commerce department “saves hundreds of good-paying jobs here in Kansas.” Retained jobs at Goodyear would have an average annual salary of $50,000.
“Goodyear is looking to the future,” Sebelius said. “Their proposed upgrades are an important investment in our state and will keep Kansans working.”
Kerr said Goodyear was among the state’s largest manufacturers and a model corporate citizen. He expressed gratitude for the company’s willingness to work on a strategy to “maintain a financially viable operation here in Topeka.”
“Through the use of existing programs,” Kerr said, “this collaboration again demonstrates the state’s business-friendly environment.”
Goodyear officials converged this week on the House and Senate to lobby for inclusion of incentives for the company in a bill designed to attract wind and solar energy firms to the state. Senate Bill 108 was promoted as a vehicle for job growth.
Joan Wagnon, secretary of the Kansas Department of Revenue, said the proposed $37.5 million package for Goodyear could eventually cost the state $116 million once principal and interest on bond debt was repaid. She questioned why Goodyear was included in the Senate bill because the company wasn’t offering to expand employment in Kansas.
Senate Minority Leader Anthony Hensley, D-Topeka, said the arrangement announced Friday avoided a difficult battle in the Statehouse over allocation of state resources to Goodyear.
“The Department of Commerce has really stepped up to the plate,” Hensley said.
Hensley said the agreement obligated Goodyear to repay the $14.2 million if the company failed to retain up to 1,400 jobs during the 10-year period. (Tire Review/Akron)
