By Dennis Seid
SHANNON – State and local economic development leaders and other officials were treated to Blue Sky on Wednesday.
Project Blue Sky, that is.
That’s the name of the multi-million-dollar deal forged with German automotive supplier Grammer AG, which said it could bring as many as 650 jobs in the next five years.
The company, based in Amberg, Germany, is setting up its U.S. headquarters in a new facility in the Tupelo Lee Industrial Park South for Grammer Inc., its wholly owned U.S. subsidiary.
Grammer AG Chief Financial Officer Volker Walprecht said at Wednesday’s ceremony that the company hopes to double its sales in the U.S. over the next five years, to $500 million.
“This will be the backbone of our manufacturing in the U.S.,” he said.
Grammer Inc. will make seats for outdoor equipment, vehicle consoles and headrests in Shannon.
The company supplies automotive OEMs (original equipment manufacturers), including GM, Ford, Chrysler, Volkwagen and Mercedes, as well commercial vehicle manufacturers like John Deere, Atco Group, Paccar and Caterpillar.
The Mercedes plant near Tuscaloosa, Ala., will be one of the customers for the Shannon plant.
“Our main plant (in the U.S.) as of right now is in Hudson, Wisconsin,” said Ralf Hoppe, Grammer AG’s vice president of investor relations, marketing and communication. “We do commercial vehicle seats there, but based on our growth plans, we need more capacity, and the Hudson plant alone is not big enough anymore. That’s why we needed more capacity.”
The Mississippi Development Authority will spend $10.8 million to build out the plant, ship equipment to the site, train workers and help build the second phase. It also will loan $2.7 million to Lee County to buy the building and make other improvements. Grammer will lease the building from the county.
The state has pledged $6.2 million to support the second phase, while Lee County has pledged $2.8 million to prepare the site for the second phase.
Not counting some tax breaks, the state and local government would invest $22.5 million in supporting the plant.
Grammer AG’s investment will be in the “high single-digit” millions, Hoppe said, bringing the total investment of the project to about $30 million in five years.
The first phase, which includes the 75,000-square-foot building now available, will add on another 25,000-30,000 square feet. The second phase will add another 75,000 square feet.
Hoppe said the first phase of the project will employ the first 350 workers.
“We’ll start the hiring process later this year, and we are planning to start production at the end of this year, maybe early next year,” Hoppe said. “Then the first phase will be completed 2017-2018, then phase two and the option to add the other 300 jobs within the next couple of years (after that).”
Workers will be paid an average of $12.50 an hour, or about $25,000 a year, to start.
Grammer Inc. opened a warehouse in Hudson, Wis., in 2011 and started making seats there in 2005. Grammer says it operates more than 30 facilities in 17 countries on four continents, with annual revenue of more than $1.5 billion.
The U.S. headquarters in Hudson will move to Shannon, but it’s unclear if the manufacturing operations will move as well.
“We will complete those details later,” Hoppe said. “For right now we need more capacity in the U.S. and will concentrate on that.”