To keep a business in Philadelphia, try tenderness and tax breaks
What did it take to keep a 320-employee manufacturing business in the city? For Alan Levin, whose parents started their building products business in their Northeast Philadelphia garage in 1975, it took a little tenderness and a change in the city's tax laws.
What did it take to keep a 320-employee manufacturing business in the city?
For Alan Levin, whose parents started their building products business in their Northeast Philadelphia garage in 1975, it took a little tenderness and a change in the city's tax laws.
"We had considered leaving," Levin said to about 50 manufacturers and city officials Monday at a meeting of the Mayor's Manufacturing Task Force.
One goal was to introduce the group to Mayor Kenney and new Commerce Director Harold Epps.
By 2013, Northeast Building Products Corp. had nearly outgrown its plant on Aramingo Avenue, not far from the Betsy Ross Bridge.
Manufacturers employed nearly 22,000 people in the city in 2014, the most recent statistic available on the Pennsylvania Department of Labor and Industry's website.
The number has fallen since then as several large manufacturers are moving operations to lower-cost locations such as Mexico.
Or to Pennsauken, in Levin's case, where the brother of his former chief financial officer worked in economic development.
When Pennsauken officials found out that the vinyl window and door manufacturing company needed more room, the Jersey township offered a $3 million package, said Councilman Bobby Henon, whose district includes Levin's plant.
"He needed to grow," Henon said.
What Levin wanted, he said in an interview Monday, was a little appreciation, along with some understanding by officials of how the city's complex tangle of taxes and regulations was making it hard for him to stay.
Levin said Henon provided the appreciation. "He told us how important manufacturing was to the city," Levin said.
Henon also invited Levin to join the Manufacturing Task Force, which began in 2013.
The invitation and connection to city officials, such as then-Mayor Michael Nutter, made Levin feel valued and gave him a seat at the table to work through important pro-manufacturing initiatives.
Through the task force, Levin also met a real estate broker who connected him with Cardone Industries Inc., the city's largest manufacturing company.
Cardone is cutting up to 1,000 jobs as it shifts major parts of its auto parts business to Mexico, and has shuttered a plant on Rising Sun Avenue in the Northeast.
The location was perfect for Levin. The city offered to provide financing, Levin said, "but we didn't take it. We didn't want to be beholden."
Through his newfound connections, Levin also learned about significant changes to the city's tax laws that would become effective Jan. 1, 2015.
What really bugged Levin was the tax on business income, part of the business income and receipts tax.
Even though only 30 percent of his company's products were sold within the city, Levin had to pay taxes on the profits from 100 percent of the sales.
Effective Jan. 1, 2015, the tax rules changed and Levin only had to pay taxes on the profits from goods sold in the city.
In the first year, that saved him $200,000.
He was also able to spread storm water sewage bill increases over several years through another program championed by the task force.
Together, the changes amounted to barely a drop in the $7 million bucket needed to buy and outfit the old Cardone factory, but "it kept us from going to Pennsauken," Levin said.
Levin didn't want to go in the first place. "I was born and raised in Philadelphia and I never wanted to leave," he said.
"But we thought we had to."
He and his wife, Fran, who run the business together, have been a couple since high school and spent Monday evening, their 24th wedding anniversary, working.
With the two plants, Levin now employs 400, up from 320, and he's hiring. "We need people who can read, write, and pass a drug test," he said.
Maybe he'll be employing people like Michael Bonner, 17, of North Philadelphia, and Kevin Ipina, 19, of Juniata Park, both rising seniors.
They and a classmate, Louis Bartholetti, received enthusiastic applause at Monday's meeting. They represent the future pipeline of manufacturing employees, who are, industry sources say, in short supply.
They studied welding at the new Benjamin Franklin High School for Advanced Manufacturing and Engineering Technology, which just finished its first year. Bonner and Ipina have summer internships at Philly Shipyard.
Ipina, who came to Philadelphia from Guatemala, said he already works in construction.
In Guatemala, he told the group, there'd be no way to learn about welding free. But in Philadelphia, the training, "tools and equipment come at no cost to myself and my family. It speaks volumes about the commitment of the School District of Philadelphia to the economic future of the city."
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