San Marcos Mercury | Local News from San Marcos and Hays County, Texas

June 8th, 2009
Hit by economic slump, manufacturer given break on incentive agreement

by BRAD ROLLINS
Managing Editor

The city of San Marcos has temporarily reduced the job creation target of a local lighting manufacturer hurt by the national economic downtown and resulting construction slowdown.

Under a 2006 agreement, HADCO was supposed to add 10 jobs to its existing 51 when Genlyte Thomas Group LLC closed its Littlestown, Penn. facility and began manufacturing those product lines here. The incentive program forgives property taxes for five years, through 2012, on $1 million in renovations to its Wonder World Drive plant but not on the plant’s existing property value. The incentive program convinced company executives to keep the HADCO plant here instead of relocating to Shelby, N.C. which was offering its own package of tax breaks and where Genlyte already owned property, officials said at the time.

Transfer of the Littlestown product line was delayed by a tornado that damaged the HADCO facility in January 2007 but was completed last year, just in time for the recession to put the brakes on new construction and especially on discretionary spending like landscape lighting, one of HADCO’s specialties.

“In the third and fourth quarters of 2008, we began to see a softening of our business which resulted in the need to reduce direct employee hours and do some layoffs. The first quarter of this year was terrible in terms of incoming orders” which resulted in more layoffs, said Dennis Inman, the plant’s operations director.

Under an agreement the city council approved last week, Genlyte’s target for 2008 was retroactively reduced to 50 full time employees, a 20 percent reduction which allows the company to stay in compliance and keep the tax break.

The stricken economy did yield one benefit for HADCO however. Genlyte Thomas, which was purchased by Amsterdam-based giant Royal Philips Electronics in February 2008, has since decided to close its Santa Ana, Calif. plant and moved two of three product lines made there to San Marcos. One of those went to HADCO and the other to Wide-Lite on Clovis Barker Drive, also a Genlyte Thomas subsidiary. Wide-Lite and HADCO together employ more than 300.

In the pre-recession economy, the Santa Ana products would have increased production here by 20 percent, Inman wrote in a letter to city leader seeking the target reduction.

“I anticipate when the economy turns around, we will come back to employment levels which are in compliance with our abatement agreement. …I am sure the past successes Philips has had in San Marcos, strength of workforce, good geographical location and cooperation from the city of San Marcos and Hays County will make this an attractive location to grow manufacturing rather than in the case of Santa Ana, move out of,” Inman said.

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