Chill-Can Discusses Downsizing, City Tells Incentive Review Council

YOUNGSTOWN, Ohio – The scope of Joseph Co. International’s proposed Chill-Can campus is being scaled back from the $20 million campus the company announced four years ago – and the city is studying whether to “unwind” its enterprise zone agreement with the company.

Instead of the $20 million campus with buildings for administration, research and development and manufacturing, production and distribution, the company may confine operations here to the latter three functions, city officials said during a meeting of its Tax Incentive Review Council.

Internal discussions are underway about how the city might “unwind” its agreement with the California company, a city official said during the meeting.

“It is something that we are starting to consider and look at what steps we should take next. It is something that is being contemplated with a lot of seriousness,” said Kyle Miasek, interim finance director.

Chill-Can was among the projects discussed when the council met Thursday afternoon for its annual review of active tax abatement agreements in the city as of the 2019 calendar year.

Of the 17 companies with active agreements, the review council voted to renew all but one, singling out the defunct Allied Consolidated Industries to cancel the tax abatement for its property. Of the remaining 16 companies, nine met or exceeded their employment commitments under the agreements, officials said.

In November 2016, Joseph Co. International officials joined business and civic leaders to break ground on what was promised to be a multi-building research and manufacturing campus for the company’s self-chilling beverage can. According to the enterprise zone agreement it entered into with the city in December 2017, the company projected creating 237 jobs at the site by 2020.

Joseph Co. received a 10-year, 75% tax abatement and a $1.5 million grant to support the project.

The Business Journal and ProPublica took an in-depth look at the incentives offered Chill-Can in a series of investigative reports that asked “Millions of Tax Breaks. So Where Are the Jobs?”

City officials began to have biweekly conversations with Joseph Co. representatives about a month ago, said Nikki Posterli, director of community planning and economic development.

During the most recent conversation, on Wednesday, the company said it is consolidating operations because of the coronavirus pandemic, Posterli said. Administration would be focused in California and research and development in the United Kingdom, while the Ohio operation would be dedicated to production, manufacturing and distribution, she reported.

During that call, company representatives did a walk-through of distribution materials and machinery that is packaged to come to Ohio. The parties on the call also discussed timelines for hiring and beginningproduction.

“They do have a list of questions and deliverables that they need to respond to us for the next meeting,” Posterli said.

So far the company has provided “rough timelines” indicating a summer start, said T. Sharon Woodberry, Youngstown economic director.

“We are attempting to flesh out some additional details in terms of when they start, what’s the production scale, how many employees will be hired as a result and the number in terms of waves of employees and timeline,” Woodberry said. “We don’t have anything specific in terms of those numbers. But we’re having those conversations with them.”

Mitchell Joseph, CEO of Joseph Co., did not respond to a request for comment Thursday.

The city will work with Joseph Co. to ensure hiring is done through Ohio, Posterli said. There have been discussions about pairing with local professional development resources firms such as Flying High Inc. to ensure the skill sets are in place for the Chill-Can jobs.

Mahoning County Auditor Ralph Meacham, chairman of the review council, said he sat in on a board of revision hearing for the Chill-Can facility two months ago. At that point, only one of three buildings at the site was “even getting close to functional,” he said.

1st Ward Councilman Julius Oliver, who admitted he was one of the project’s biggest cheerleaders, questioned whether there is a contingency plan in place to deal with the company.

“Nobody wants to shoot themselves in the foot just because something may happen for the city and its residents. But do we keep beating a bad horse and keep this incentive in place and hope something happens?” Oliver asked.

Internal discussions are underway “about beginning to consider how we may unwind this arrangement,” with guidance from the city’s law department, Miasek said.

Regarding other tax incentives, companies operating under the agreements in 2019 created 260 jobs and invested nearly $161.3 million, Woodberry said.

Among those exceeding hiring projections were Taylor Winfield Technologies Inc., which pledged to hire 34 employees and added 49. Gulu Electrical Contractors Inc., which expected to add two employees, hired an additional 17.

Companies that fell short in their hiring goals include Exal Corp. and Fireline Inc.

Beverage and aerosol can manufacturer Exal undertook a $13.66 million expansion to accommodate growth but lost two of its major customers, Coca-Cola and Anheuser-Busch, when each took its can-manufacturing operations in house, Woodberry said.

Following a merger with Trivium Aluminum Packaging Corp. USA, the Youngstown plant now is a center of excellence. Higher-paying positions at the plant is bringing the plant up to the projected numbers.

Increased investment at Fireline improved productivity, which resulted in the company falling below the 19 new jobs it projected. Greater productivity led to higher pay for the employees, thereby generating income tax levels comparable to the projections.

Woodberry reported “incremental” progress on meeting the city’s objectives for hiring city residents and minorities. Last year, residents of the city represented 33% of those hired and minorities rose to 22% hired.

Woodberry attributed the higher numbers to follow-up conversations with the companies following the annual review. “It’s a message that they’re receiving every year when I make contact with them,” she said.

Copyright 2021 The Business Journal, Youngstown, Ohio.