Expansions brighten manufacturing landscape
TRAVERSE CITY – A number of Grand Traverse manufacturers are blazing trails into new "niche" product lines, and their initiatives are spurring job and plant growth.
That level of innovation is turning out to be a big plus for the region as it grapples with a general manufacturing slowdown across Michigan.
Tino Breithaupt, senior vice president for economic development at the Traverse City Area Chamber of Commerce, in part credits a healthy entrepreneurial streak in the region's companies.
"They have to think outside the box, they have to look for new opportunities, and they have to be scrappy in their businesses," he said.
Eight-year-old Plascon, Inc. makes specialized plastic bags for medical, transport and other purposes, and it has joined AlcoTec Wire Corp., and Grand Traverse Machine Co. in bucking recent statewide trends. They have undertaken a series of separate expansions creating a total of 20 new job and delivering $2.5 million in new investments.
Plascon's effort involves $1.4 million for new machinery and a 15,000 square-foot addition to its Traverse City facility. The investment will help it boost production of its high-tech bags for blood products and begin manufacturing bulk dry-goods bags for use in transportation.
Plascon's original products were garbage bags for government use, sometimes used for the disposal of biohazardous wastes. It also supplies plastic film and equipment that other organizations, such as prisons or firms employing the handicapped, use to produce bags themselves.
But over the past six months, the company on Traversefield Dr. has plunged more deeply into the biotech industry with sterile pharmaceutical bags for storing blood serum. The market for them is international.
"Whatever's in these bags will ultimate go inside a human being," said David Peterson, the company's owner. "These are actually three bags-a bag within a bag, all inside a third bag. They are handmade and have to pass some stringent tests." The bags are even irradiated before delivery to customers.
Plascon's current expansion will be partly devoted to a 2,000-square-foot clean room for the bags' manufacture.
Plascon's bulk dry-goods bags will be used for transporting commodities like sugar or cement.
"These are polyethylene liners that line bulk bags for transporting 3,000 to 5,000 pounds of dry goods potentially across the country or overseas," Peterson said.
"We have a new machine coming in from Germany which will be one of only 12 in the world for the high-speed production of bulk liners."
The new plant addition and machinery is a second round of expansion for Plascon. A year ago, it also added about 15,000 square feet to an existing 10,000 square-foot facility.
The Grand Traverse Machine Co. will complete an approximately 8,000 square feet addition to its facility on Boon Street in Traverse City.
It produces hydraulic cyclinders, industrial shock absorbers and a number of military products.
"We have nothing directly automotive related, and that has probably helped us out," said Michael Alfonso, the company's president. "We have actually needed this space for about a year. Things got really tight after 9/11, but since then we have been awarded some new contracts."
After a fall-off eight or nine years ago, AlcoTec Wire Corp. on Aero Park Dr. has been building up its business again, Breithaupt said.
It is investing $595,000 in new machinery and equipment at its facility in the Airport Industrial Park and plans to retain 20 jobs and add four new ones.
Meanwhile, Clark Manufacturing Co., a precision machine shop, has just bought a six-acre parcel at the Airport Industrial Park.
That firm, which now has two facilities in the region, wants to both expand and consolidate operations under one roof, Breithaupt said. "Their plan is to build a 40,000 square-foot facility, but buy enough property for an 80,000 square-foot facility," allowing for future expansion.
The new projects follow on the heels of two other major investments. Maxal, a wire manufacturing firm, completed a new 40,000 square-foot facility at the Peninsula Business Park last year. Next door, Quantum Sail Design Group has put up a new 20,000 square-foot facility, replacing its former quarters in Elmwood Township.
Traverse City was locked in a do-or-die competition with Annapolis, Md., over this project, Breithaupt said, and the result could have been the expansion or elimination of Quantum's presence in northwestern lower Michigan.
The chamber's economic development group worked with East Bay Township to develop a four-year tax abatement on personal property and eight-year abatement on real property, helping to swing Quantum toward northern Michigan.
"In addition, we got a commitment to move some Maryland jobs here," Breithaupt said. "So we were able to maintain the 15 jobs here and add another 15 over a two-year period."
Breithaupt said industrial activity is generally moving southwest of Traverse City.
"That's what the trends are showing, although not exclusively yet. We are working with several companies that are looking for growth and expansion opportunities. A couple of them are in Blair Township."
Economic developers have been working with officials there to create tax abatement policies as incentives for business start-ups and expansions.
It's no surprise to many observers that much of the growth involves the construction of new facilities-not the purchase or lease of older facilities. Many companies prefer new buildings with higher ceilings, which makes storage and distribution activities easier.
"The majority of buildings that crop up are older, and somewhat functionally obsolescent," said Michael Orden, a broker with Real Estate One in Traverse City said. In many cases, a client might want a building with 18-foot ceilings, and a local broker might just have 12 or 14 feet. Furthermore, even with a generally soft economy, the stock of available buildings is surprisingly low.
"The perception is worse than the reality in terms of the number of empty buildings," he said. "If you came in and said 'I want a 10,000 or 20,000 square-foot building,' there aren't that many available."
That's another reason that many companies are turning to new construction to meet their needs.
"It becomes a build-versus-lease decision," he said. BN