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Editorial: Tax breaks sought by manufacturer deserve careful study by the ECIDA

In a sign of the fierce competition for manufacturing jobs, Tennessee is trying to lure an Akron company. That company says it needs tax breaks in order to stay. The Erie County Industrial Development Agency is weighing the request.

Aakron Rule Corp. is a 50-year-old company. The company wants to add more than 25,000 square feet of space to its 12,000-square-foot warehouse at 3 Oak St., Akron.

As News business reporter Jonathan D. Epstein wrote, the company needs more room to store inventory and expand its injection-molding operation. Aakron makes branded items such as key tags, license plate holders, bottles, cups and glasses, along with the rulers that gave the company its name.

The company employs 148 people at its Akron facility. It already owns land that could accommodate an expansion. Characterizing the project in a tax incentive application to the ECIDA as a “need and not a want,” it touches the right pressure points. This is a company planning an expansion, willing to do it here but able to go elsewhere.

Economic officials in Bakewell, Tenn., have made a tempting offer – nearly $300,000 in incentives for the company to move manufacturing and printing operations. The change would mean the loss of 25 jobs and the molding department.

What the company is asking from the ECIDA: a package of mortgage recording, sales and property tax breaks that amount to a $19,650 savings in mortgage taxes and $96,250 in sales taxes, as Epstein reported. It is a $2.67 million proposal.

The ECIDA has been clamping down on companies making big promises with little return. It has threatened to claw back incentives in a few cases. When such action is warranted – usually in situations where companies overpromised the impact on jobs – it is difficult to sympathize. Other times, the agency should take into consideration whether a possibly temporary downturn in an industry is having a negative effect, and be careful about inflicting further harm unnecessarily. Companies in the slumping oil and gas industry fall into that category.

Unlike its suburban counterparts, the ECIDA takes a cautious approach to doling out tax incentives. It is public money, after all. But Aakron’s request for relatively small breaks to save jobs and make the company more efficient is a tempting offer warranting careful consideration.

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