When a company makes the decision that it is time to expand its operations, it sets in motion a chain of events. The first link in that chain is how large the new facility has to be, and how many additional employees will be needed. The next link is determining whether the company can expand its current facility, or has to look at other sites.

That leads to the next link: Should the company build the new facility in the state where its current facility sits, or should the new facility be sited in another state?

By allowing for the possibility that the new facility might be sited in another state, a company opens itself up to being showered with numerous incentive packages from multiple states to help with the decision-making process.

Among the states that could be offering packages, ironically, is the one where the existing plant currently sits.

States and local governmental agencies do their utmost to lure expansion projects. Tax abatements and credits, work force training and grants are among the numerous incentives that can be used.

It is also important for states and cities to maintain a good relationship with their business community. If these jurisdictions want to attract new business, they have to prove themselves to be reliable partners with their current business residents.

Word of mouth from fellow businesspeople is the best type of recommendation a region can get.

Conversely, negative comments by a business community will seal the deal against a company relocating to that city or state.

Companies Decide To Stay

Some states are enacting legislation making it more worthwhile for companies to stay, rather than to go.

New York has extended some tax benefits to manufacturers; extended the Power for Jobs program, which makes 450 megawatts of lower-cost electricity available after a company fulfills the requirement to retain or create a specific number of jobs; and created a new Manufacturing Assistance Program (MAP), which allows manufacturers to get information about federal, state and local assistance and incentives in one place.

That type of public-private relationship helped convince EDO Corp. to keep its Defense Products and Technologies (DPT) and its Antenna Products and Technologies (APT) divisions on Long Island, thereby retaining 450 jobs that were at risk of leaving the state.

EDO will expand its North Amityville, N.Y., facility, which currently holds its Marine and Aircraft Systems division, from 92,000 square feet to 225,000 square feet in order to accommodate the DPT division’s relocation from Deer Park.

A new site has not yet been selected for the APT division, which is also currently based in Deer Park.

The New York City-based company will invest nearly $50 million in real estate acquisition and improvements, machinery and equipment, employee training, and relocation costs. It has also committed to creating nearly 400 new jobs in New York state during the next five years.

EDO is eligible to apply to Empire State Development for a $1.75 million Capital Grant for costs associated with the project.

Neighboring Pennsylvania has expanded numerous incentive programs during the past two years in an effort to retain manufacturing companies that might be tempted to look elsewhere.

The commonwealth has extended the Opportunity Grant Program, which uses funds to create or preserve jobs; Small Business First, which awards low-interest loan financing for land and building acquisition and construction, machinery and equipment purchases, and working capital to small businesses; and the Job Creation Tax Credit initiative, which is a $1,000-per-job tax credit to businesses that agree to create jobs within three years.

“We are putting incentive money into Pennsylvania companies, particularly manufacturing companies that are willing to make a commitment and expand in Pennsylvania,” said Dennis Yablonsky, secretary of the commonwealth’s Department of Community and Economic Development.

The Job Creation Tax Credit was instrumental in the decision by Roomful Express Furniture to expand its corporate headquarters and distribution operations in the Pittsburgh metro.

Roomful Express’ is currently in a 270,000 square foot facility in Lawrenceville, Pa. But the facility is not large enough to meet the company’s future needs. As a result, the company contemplated a move to Ohio or West Virginia.

Instead, the company purchased a 597,000 square foot building on a 24-acre site in Pittsburgh that will provide the space needed for future expansion.

Roomful Express will receive $104,000 in Job Creation Tax Credits and $50,000 in job training assistance as a result of staying in Pennsylvania. The company will receive other incentives as well.

The company, which provides retail and wholesale home furnishings, will create 21 jobs within three years and retain 105 jobs.

“Staying in Pittsburgh allows us to continue investing in our existing employees, who are such a large reason for our success,” said Michael R. Kuhn, president of Roomful Express. “We value their dedication to the company and we are looking forward to continuing to grow with them.”

Ken Krizner is managing editor of Expansion Management. He can be reached at kkrizner@penton.com.