Ashley Furniture gets $6M tax credit, donating to city

By: WEAU 13 News Email
By: WEAU 13 News Email

A local furniture company got approved for a $6 million tax credit.

Earlier this year, the Wisconsin Economic Development Corporation approved the tax credit for Ashley Furniture.

Ashley Furniture senior spokesperson Bill Koslo said the tax credit money will be donated to the city of Arcadia for a flood control project which would help relocate part of a creek that flooded the company's property and surrounding area in 2010.

The agreement would allow the furniture maker to move ahead with a $35 million expansion of the company's headquarters in Arcadia. But it would not require the company to create new jobs.

Koslo said the agreement also allows Ashley Furniture to prepare for the worst case scenario economically. In exchange, it can lay off half of its workforce totaling more than 1900 jobs.

In a statement, Ashley Furniture said it is not reducing its Wisconsin workforce. It used a conservative job protection number in a proposal to the WEDC in order to protect the company against any future economic downturn.

"We do not intend to lay off people here now if there is a flooding problem that needs to be address but we think if the flooding problem is addressed, there is no reason we can't continue our full Wisconsin support," said Koslo.

The company said it expects to grow business by 7 percent this year and is currently working to expand its Whitehall facility.

See below for Ashley Furniture's full statement:
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Ashley Announces Growth Plan for its Arcadia and Whitehall Facilities

• Ashley is not reducing its Wisconsin work force, in fact it is trying to find ways to increase Wisconsin jobs.
• Ashley used a very conservative job protection number in the proposal to WEDC to protect the company against future unexpected economic downturns.
• Ashley has added 425 Wisconsin jobs since January, 2012.
• Ashley has opportunities for people to work in its Wisconsin operations and is looking for employees.
• Ashley is growing.

o In 2014, Ashley expects to grow its business by 7%.

o Ashley is working on an expansion of its Whitehall facility. This will be the second expansion in two (2) years.

o The Whitehall expansion will allow Ashley to move into a new product category for the Wisconsin operations: mattress manufacturing. This will add stability to Ashley’s workforce.

o Ashley has refurbished a new facility in Independence, Wisconsin for low melt fiber production and this operation will begin in October, 2014.

o Ashley has invested millions of dollars into new manufacturing and warehousing equipment in its Wisconsin operations.

o Ashley continues to grow its IT infrastructure and is launching web sales in 2015. This expansion will create new high tech and customer service jobs.

o This growth and investments will add more Wisconsin jobs.

• Ashley provides health care insurance, retirement plans, a fully staffed medical facility and offers availability of prescription drugs free of charge to its employees.

• Ashley’s pay system involves both base rates and incentives, the incentives and base rates have to be added together to arrive at the actual wage rate. The “ACTUAL” average wage for Ashley’s direct labor employees is over $15 per hour.

• All money Ashley receives from the proposed WEDC incentives will be fully donated to the City of Arcadia to make its flood control project possible. The flood control project will benefit all business owners and residents that are located in lower Arcadia.

While Ashley Furniture is committed to Wisconsin, public flood control projects are the responsibility of government, not private individuals or businesses. Nonetheless, Ashley, acting as a good Samaritan, has been willing to guarantee investing a minimum of $34,900,000 so the City of Arcadia can receive the money required to complete the City of Arcadia’s flood control project.

How will this be done?
• The Myers Valley Creek Flood Control Project- related costs are estimated, based on information provided to Ashley, to be over six million dollars ($6,000,000).

• The City of Arcadia does not have six million dollars ($6,000,000). In fact, its borrowing capacity is limited to approximately two million dollars ($2,000,000) and the city needs to reserve these funds for emergencies.

• Ashley, at the City of Arcadia’s request, applied to the Wisconsin Economic Development Corporation for the money required for the City’s flood control project.

• Ashley has committed to the city that it will donate 100% of all funds it receives from the Wisconsin Economic Development Corporation as a result of its recent incentive application to the City of Arcadia for its Myers Valley Creek Flood Control Project.

What does the Myers Valley Creek flood control project do?
• It will allow the City of Arcadia and the State of Wisconsin to protect Wisconsin jobs and create the opportunities for more jobs. It is unreasonable to expect Ashley to continue to invest and create additional jobs in a high flood risk area. Criticizing Ashley for not taking unacceptable risks is absurd. We need to grow Wisconsin jobs and not place them in jeopardy.

Is money from the State of Wisconsin or the Wisconsin Economic Development Corporation free?
• Absolutely not, these incentives have to be earned. Most of them are tax incentives. What do tax incentives require? It is simple: grow your business and pay more taxes. If you do both, the state refunds a part of your tax payments back to you. When you then donate this money for a public purpose, this should be applauded and not criticized for a political purpose.


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