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Local Business

Illinois offers tax credits to encourage Fabrik Plastics' McHenry expansion

McHENRY – State officials delivered unlikely news Tuesday to a major area manufacturer that has entertained out-of-state offers to relocate, announcing Fabrik Molded Plastics will receive state tax credits to expand and add jobs within McHenry.

The Illinois Department of Commerce and Economic Opportunity named McHenry-based Fabrik Plastics and two other companies in Northbrook and Rockford as the first recipients slated to receive Illinois EDGE tax credits since Gov. Bruce Rauner suspended the program in the spring because of the ongoing budget impasse with Democratic legislative leaders.

The three companies cannot receive the tax credits until lawmakers and Rauner agree on a budget. If a budget deal is reached, Fabrik Plastics could receive payroll tax credits to help the local plastics manufacturer launch a $5 million expansion within McHenry and offset the cost to add at least 25 full-time jobs.

The latest announcement from the state doesn’t guarantee Fabrik will grow in McHenry County.

But it does significantly boost the local efforts that have unfolded since the spring to try to persuade the company to stay, said Pam Cumpata, president of the McHenry County Economic Development Corp.

“For us, it keeps us in the game and keeps us in the running for that expansion to happen here in the county,” Cumpata said.

Fabrik Plastics has been weighing whether to expand within its home base of McHenry or agree to more lucrative relocation offers from states such as Alabama, Indiana and Kentucky.

Employing about 400 people, including 264 full-time workers, Fabrik Plastics has seen demand grow for its custom-molded parts primarily from clients in the automotive industry.

President Keith Wagner told the Northwest Herald in July that if his company decided to stay in McHenry, it would add 100 jobs over the next three to four years, acquire a vacant industrial building adjacent to Fabrik’s headquarters in the McHenry Corporate Center, and subsequently expand its molding machines into two facilities.

Wagner didn’t return a request for comment Tuesday.

After hearing about Fabrik’s possible relocation in the spring, McHenry officials worked with Wagner to craft a property tax abatement deal to try to offer the company some incentive to stay, city officials said in July.

The incentive that would offset some property taxes Fabrik would be owed on the building next to its headquarters still needs approval from some of the 11 taxing bodies who collect on the property.

The remaining taxing bodies include McHenry School District 156 and District 15, which collect the largest sums of property taxes on the building Fabrik Plastics has eyed for its expansion.

Both school districts postponed discussions on the local incentive in August and September, according to meeting minutes. District 156 Superintendent Michael Roberts told the Northwest Herald last week that the board likely will renew discussions on the incentive agreement at its Dec. 7 meeting.

Even with the proposed local property tax deal, the incentives needed to offset some of Fabrik’s expansion costs “falls quite short” without the state’s involvement, Wagner said in July.

He reached out to the state earlier about the EDGE tax credit program, but was told he would have to wait because of the budget impasse.

Entrenched in a months-long budget battle with Democratic lawmakers, Rauner suspended the economic incentive program after he rejected the unbalanced state budget lawmakers sent him in the spring.

It wasn't until earlier this month that Rauner announced changes to the EDGE program, including the elimination of tax credits for job retention to focus them only on new job creation. But he cautioned that the state still couldn’t offer the credits until a new budget was approved.

The latest announcement from the state marks a step in the right direction, said Cumpata, whose countywide economic development agency worked to connect Fabrik Plastics with Rauner’s office and other statewide officials.

“It is not a guarantee. [Wagner] is still weighing his options, but at least now he can move forward on discussion on the building and the potential of expansion in McHenry County,” she said.

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