Greg Lower, Tribune reporter
Chanute city commissioners approved a deal Monday evening that will bring a company to town that will provide up to 150 jobs. Afterwards, they met with Neosho County Commissioners about issues related to the project, as well as other county and city projects.
Approval of an ordinance, including a development agreement, paves the way for Orizon Aerostructures to move into the former Hitchhiker plant east of the south end of the Martin and Osa Johnson Airport runway on 21st Street. The commission also approved an annexation agreement that allows the city to provide water and sewer service, and approved a territory release agreement with Rural Water District No. 12.
The company expects to invest $65 million in the community over the coming years in capital improvements and payroll. The city will offer some incentives capped at $2.6 million, plus water and sewer infrastructure.
Charlie Newell, CEO of Tech Industries, and attorney Korb Maxwell met with the commissioners to make presentations on the proposal. Orizon is the newly-announced name of a portion of Tech Industries, which formerly operated the Valent plant in Fredonia. Newell talked about the way employment increased at that plant, which is still operating although the company no longer owns it.
The Chanute location will provide assembly, processing and warehousing for Orizon, which makes aviation parts for several companies, including Airbus and Spirit Aerosystems. It makes crew cockpit floors and nose landing-gear wheel wells for the Boeing 737 and electrical racks for the 787. Newell said the Honda manufacturing company, known for motorcycles, automobiles, generators and other equipment, is expanding into aviation and the Chanute location could build wings.
“We have parts that we have to be shipping out of Chanute before the sun sets on this year,” Newell said.
Chanute Regional Development Authority Executive Director Matt Godinez announced Tuesday that Orizon had also won the contract to build the cockpit/pilot portions of the F-35 stealth fighter. He said Orizon provides exemplary service that has earned them the favor of some of the strongest Tier 1 and Tier 2 aerospace companies in the industry. Orizon supplies complex structural components and major sub-assemblies for leading airframe manufacturers in the commercial aerospace, military fixed wing, rotorcraft, missile/ground support and general aviation industries. Orizon provides outsource solutions for leading airframe manufacturers including: Boeing Defense Systems; GE; General Dynamics; GKN; Lockheed Martin; Lycoming, a Textron Company; Northrop Grumman; Parker; Spirit Aerosystems; and DMAC.
Chanute officials have been working with Orizon for more than four months, Mayor Phillip Chaney said, seeking a location between Wichita and Kansas City. Maxwell said the company had more than 49 responses in a three-state area.
“This isn’t a new thing,” Chaney said. “Charlie’s investment is going to be huge.”
After moving into the 72,000-square foot Hitchhiker building, Orizon plans to break ground in August or September for an additional $4 million processing center. Newell also said the assembly building could expand in two to three years.
Valent moved into an existing building in Fredonia in 2007, and later constructed a 50,000-square foot building which now has 125 employees. Newell said Orizon expects to spend $25 million over five years on capital improvements and $40 million on payroll in Chanute.
In exchange, the city will provide $1.6 million in incentives this year, and $500,000 in each of the following two years, provided the company meets employment requirements.
Chaney said the city’s investment comes in the form of improvements. The incentives include $24,000 in discounts on water and sewer rates to a customer the city currently does not serve, and the existing building, valued at $600,000, will be added to the city tax rolls.
“We’re not just handing out checks,” Chaney said. “Those discounts are tied to jobs.”
Orizon also has requested 10 lots to build housing, likely in the Osa Martin subdivision.
The commission discussed the issues for more than two hours before approving the measures 4-0. Commissioner Jim Chappell, who asked at a previous meeting that the decision be delayed, could not attend Monday. The special meeting had been scheduled earlier then postponed, and commissioners also discussed Monday whether to postpone a vote until the next regular meeting.
But Newell emphasized the need for a decision soon.
“Tonight’s our night,” he said. “I don’t have until next week. I have to tell our customers now.”
Debate focused on how the city would pay for the improvements this year, which were not budgeted. The development agreement ordinance allows the city to issue general obligation bonds, and Commissioner Tim Fairchild questioned whether those would be paid by property tax or utility rate hikes or if they would be a later debt.
“We’ve got to understand the numbers,” he said. Fairchild also asked for a cost-benefit analysis.
Commissioner Tim Egner also said other commissioners had campaigned on a commitment against raising taxes or rates.
But several commissioners talked about Neosho County’s recent status as the highest unemployment rate in the state. Although the percentage has decreased from 9.9 to 6.7, figures released Friday show Neosho County has lost nearly 2,000 workers in jobs and the labor force over the past decade, when comparing the same month in previous years.
“The numbers that we’re looking at now aren’t good,” Commissioner Randy Galemore said. “If they’ll go someplace else with a proposal, they’ll scoop it up.”
“People want jobs in our community,” Chaney said. “We’re investing in upgrading that facility.”
The next step will be for Orizon to apply for a Community Development Block Grant. City Manager Jeff Cantrell said a worst-case scenario without the grant, would be a total city investment of about $4 to $5 million.
Part of the issue is possible relocation of a railroad track south of the airport runway, which could cost $1.9 million.
More than two dozen people attended Monday’s meeting, including the three county commissioners, county clerk and other county officials, and Kansas Legislative Rep. Virgil Peck. Neosho County Commissioners David Bideau and Paul Westhoff both spoke in favor of the proposal.
“Any opportunity that we can take to grow, we need to do that,” Neosho Memorial Regional Medical Center CEO Dennis Franks said.
Newell discussed his commitment to Chanute.
“We are sunk into this town. We’ve got a lot of skin in the game,” Newell said. “Chanute was the right choice for us because of its proximity to our existing facilities, the ability to assist with our hiring and training needs, and the proven mechanical aptitude and work ethic of the people in southeast Kansas.”
Godinez said an increase in 100 manufacturing jobs can bring $29.3 million to a community, including an additional 50 retail jobs and 38 health care jobs.
“It doesn’t stop at 150 jobs,” he said.
City commission approval of the agreement drew applause from the audience.