AEDC helps local industries grow, thrive

ATHENS, TX: The third goal of AEDC’s comprehensive strategic plan, developed in conjunction with TIP Strategies, is business retention and expansion, to create an environment that promotes the prosperity and growth of existing businesses.

According to International Economic Development Council (IEDC), proactively supporting the retention and expansion of existing businesses is a fundamental function of economic development organizations. Businesses that are already in a jurisdiction are in the best position to quickly create jobs and contribute to the tax base. Moreover, their perception and endorsement of a business-friendly community, or lack thereof, can make or break investments by others. As the economy changes and evolves, leaving businesses to fend for themselves is not only risky, but represents lost opportunities to help companies thrive and grow.

Eric Canada of Blane Canada, an economic development management firm said, “without an effective existing business program, economic development opportunities will be lost. Count on it.”

The knowledge gained through business visits and facility tours helps AEDC identify areas in which to offer assistance. Some of the ways in which AEDC can provide assistance is workforce training, acting as a liaison and advocate for Athens industries by addressing issues with appropriate entities, assisting with resources and programs, building and maintaining communications with local and state constituents.

In addition, AEDC offers quarterly human resource luncheons to address hot topics that primary employers are facing, industry appreciation events, plus job fairs through Workforce Solutions East Texas to help supply their workforce pipeline. These events and networking opportunities maintain relationships and keep the lines of communication open with existing companies.

According to IEDC, cultivating relationships with businesses helps economic developers to gain more insight into a firm’s direction and business decisions. Relationship building happens over time. It requires engagement that adds value and builds trust.

One of AEDC’s most notable accomplishments, in the area of business retention, was getting the Freeport tax exemption passed. This project was initiated in 2016 when Argon Medical Devices approached AEDC about obtaining Freeport tax exemption, as they were exploring avenues to help mitigate tax liability for the Athens location. With the support of the taxing entities (Athens ISD, City of Athens and Henderson County), this incentive has helped not only one company but many others that carry Freeport inventory, relieving 95 percent of the tax rate on qualifying inventory.

Bill Morgan, Jr., vice president of operations for Argon Medical Devices said, “Athens is a great place to do business. The quality of the people, the support we get from AEDC and the community at large are the reasons why we’re here.”

According to a Harvard Business Review study, approximately 80 percent of businesses did not regain prerecession sales and profit growth three years after the recession. As Joshua Morris Hurwitz’s research suggests, this decrease in business performance has ill effects on the economic climate and stunts economic development activity at a time when it is most needed. Thus, financial incentives should aim to alleviate obstacles to business growth and to incentivize companies to remain and expand within the host community.

AEDC does offer financial incentives to qualifying existing business retention and expansion projects. Below are a few highlights from AEDC’s BRE projects that have taken place over the last several years.

AEDC first provided assistance to Steritec, a medical device sterilization company, when they built their current facility on Enterprise Street, now in the Athens Industrial Park, in the early 1990s, by offering no cost land. Just a few years ago, AEDC was able to provide monetary assistance to Steritec when the company expanded their facility in order to accommodate new state-of-the-art equipment. This investment in real and personal property totaled $1 million, which was added to the tax rolls.

Steritec’s president and CEO, Charles Jenkins, said, “AEDC is absolutely vital for Athens. They are necessary for elevating our status as a city, and we need them.”

Extreme Engineering, a manufacturer and provider of family-friendly thrill rides, relocated to Athens from California in 2012. Six years after their relocation, Extreme added another division to their production capabilities, creating a need for additional space. AEDC sold the company a building, owned by AEDC at an incentivized price, which was located adjacent to their current facility for the expansion of their Athens operation.

“Continuing to work with AEDC since we relocated to Athens has definitely been good for us,” said Scott Simpson, project manager at Extreme Engineering. “They were able to broker a deal for a building contiguous to our property at a level that not only allowed the purchase, but allowed us to bring our Geo Wall production in-house moving from an out-of-state vendor. We have been in Athens for less than 25 percent of our history, but our time in Athens has accounted for more than 50 percent of our growth.”

A homegrown company founded in 1993, FutureMed Interventional, later FutureMatrix Interventional, developed and manufactured disposable medical devices and was a contract manufacturer for larger companies. In 2015, an unfortunate situation worked to FutureMatrix’s advantage when it was able to expand its operations to a second facility, owned by AEDC, in the Athens Industrial Park. The company made improvements to the facility, and added 15 new jobs over its then base of 298. Since the company’s acquisition by Biomerics last year, they have added 80 new jobs to its base of 430, with plans to add a total of 180 jobs, which will bring the total number of employees to 610.

“This acquisition expands our capabilities and important customer relationships,” said Travis Sessions, CEO of Biomerics. “We look forward to investing in and expanding the business for our customers, employees and community.”

HVAC Manufacturing is now on their fourth expansion, since relocating to Athens from California nearly three years ago. To date, they have invested $2.7 million at the Athens facility and more than doubled their original job estimates.

“Due to the support of AEDC and the Athens community, we love doing business here. Athens is very business friendly and they have supported us from the time we left California, making our rapid growth possible,” said Scott Coultas, operations manager at HVAC Manufacturing.

Athens Screen Printing opened its doors in Athens on S. Palestine Street in a small building located south of the downtown square. To accommodate the growth of their business, they purchased a larger building on E. Tyler Street, making it their fourth location in downtown Athens over the last decade.

The former vacant building on E. Tyler Street, has been completely renovated and with the additional space, has enabled Athens Screen Printing to expand their production, including purchasing new equipment and employing additional production workers. Their products ship all over the United States and 90 percent of their embroidery orders ship outside of Athens.

“Without the support from AEDC, we would not be able to continue the growth that we have had since starting up in 2010,” said Jon Garret, vice president of operations at Athens Screen Printing. “Athens and the surrounding communities have really supported our company since we began. We appreciate it and look to be here for many years to come.”

Over the last five years, AEDC’s business retention and expansion projects have generated $16.5 million in capital investments, created 72 jobs, and retained 446 jobs. AEDC’s incentives for these projects totaled $310,087, a 40 percent ROI with a payback period of four-and-a-half years.

According to Eric Canada, the estimated percentage of existing business expansions in rural communities (86 percent) is higher when compared to urban communities (76 percent). Of that 86 percent, 60 percent of expansions will likely happen on their own, while the other 40 percent will require involvement from an EDC.

Business retention is a vital component of AEDC’s program of work. Retaining jobs and capital investment in Athens is a top priority. AEDC is focused on creating a competitive business environment where local industries can grow and thrive.