Gov. Nixon details incentive plan for automobile suppliers

Friday, January 20, 2012 | 9:54 p.m. CST

CALIFORNIA, Mo. — Gov. Jay Nixon wants to offer better incentives to a wider variety of automobile parts suppliers as part of a plan to rebuild the automotive industry in Missouri.

Nixon has been traveling the state for the past couple of weeks touting the automotive incentives as part of a larger economic development initiative. He spoke in broad terms about the proposal Friday during a visit to a rural Missouri meat processing plant, but the governor's office provided details to The Associated Press that for the first time start to flesh out his proposal.

Nixon is seeking to expand a law, approved during a 2010 special legislative session, that has been used to persuade Ford Motor Co. and General Motors Co. to expand vehicle assembly plants in Missouri. The governor noted that Ford has pledged to invest $1.1 billion at its Claycomo plant in the Kansas City area, and General Motors has committed to invest $380 million at its Wentzville plant, both of which will assemble new products.

"We want to use those advantageous investments to rebuild out there that auto supplier network that eroded over many years of the auto industry moving down," Nixon said.

Missouri's 2010 law authorized financial incentives for automakers and their suppliers. The new proposal would expand the types of automobile parts suppliers eligible for the aid, allow them to qualify while hiring fewer employees and lengthen the time they could receive incentives.

To qualify for aid under Missouri's current law, an automobile parts supplier must derive at least 10 percent of sales from an automobile manufacturer, add at least five jobs and pay at least half the health insurance premiums for its employees. Companies that pay wages at least equal to the county or statewide average can keep the withholding taxes normally paid to the state for their new employees for three years. Those with wages equaling at least 120 percent of the county average can get an incentive of five years' worth of the new employees' state withholding taxes.

Under Nixon's proposal, parts manufacturers could qualify if their product is ultimately used as a component by an automaker, even if it is not sold directly to the manufacturer. Companies that derive at least half their annual sales from parts used to modify vehicles — such as converting a Ford Transit van into an ambulance or a Chevrolet Colorado pickup truck into a tow truck — also could qualify for incentives.

The plan also says automotive parts suppliers could get incentives by hiring as few as two new employees if they also make a capital investment of at least $100,000. The standard incentive period would increase to five years instead of three. And companies would get a tax break equal to 5 percent of their new payroll if wages are at the county average, 5.5 percent if wages are 120 percent of the county average or 6 percent if wages equal at least 140 percent of the county average.

The governor's proposal would require approval from lawmakers, whose annual session runs until mid-May.

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