By CARL E. FEATHER - cfeather@starbeacon.com
Star Beacon
JEFFERSON —
Ashtabula County’s 503 Corporation Board has rejected a Jefferson manufacturing’s firm request to forgive its $500,000 indebtedness in exchange for a guarantee of jobs.
The request came from Sigma 2000/ Sigma OH Industries, a subsidiary of Sigma Industries, a Quebec City, Quebec, Canada, plastics composite manufacturer that has fallen on hard times with the recession and downturn in the transportation industry. Sigma is a supplier of large fiberglass and plastic parts for heavy-duty trucks, subways, buses and other machinery.
The Canadian industry purchased the former Pickens Plastics, which had plants in Ashtabula and Jefferson, in the winter of 2008. Lured by a currency exchange rate that favored Canadian investment and a lower cost of operations in Ohio, the Canadian firm made its first foray into the U.S. with help from one of the county’s revolving loan funds.
John Dolan, the 503 Corporation director, said community development building grant funds, which are federal moneys, are passed to the county from the state. County commissioners use the 503 Corporation to handle the loan investigation and administration of the funds. The county has about $2.1 million in the revolving-loan funds loaned to eight companies.
The 503 Corporation board approved a loan of $500,000 of these funds to Sigma, which also received more than $1 million in assistance from the state.
“Because of a cash-flow problem, (Sigma) needed our money, which was not disbursed to Sigma directly but put in an escrow fund and distributed to the state for payment of bonds and interest,” Dolan said.
The loan, made in September 2009, has a 15-year term, with the first year being interest-only payments. Dolan said Sigma has been making its interest payments, but the principal and interest payments will kick in come October.
On Dec. 1 of last year, Sigma OH Industries filed for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Northern District of Ohio. The court is still trying to work out arrangements with creditors and the new company born out of the ashes, Sigma 2000, which is attempting to purchase the Sigma OH assets. The 503 Corporation’s loan is secured by those assets, but the county takes second seat to the state’s claim on those assets.
Sigma offered to create “50 permanent new jobs” at the Jefferson facility if the board would forgive the loan. Dolan, who could not disclose further details of the offer, said the board voted unanimously not to make any changes to the loan’s current terms and conditions.
Dolan said Pickens probably employed about 80 workers when Sigma purchased the company. He did not know how many people are employed there today but guessed the number of jobs retained is 45.
When Sigma announced its purchase of Pickens Plastics, the company stated it planned to create 145 new full-time jobs within three years and retain 75 existing full-time jobs for 14 years. Average wage was to be $14.25 per hour with $4.20 per hour in benefits. The purchase was described as a “win-win” for Ashtabula County and Sigma.
Creation of those jobs would have qualified Sigma for a state tax credit valued at $422,115 over the agreement’s term. An Ohio Tax Credit Authority spokeswoman said the credit never was issued because Sigma did not provide the necessary documentation.
Sigma reportedly closed some plants in Canada to shift production to Ohio, where costs are lower. Dolan attributes Sigma’s problems to a recession that hit hard the sectors upon which Sigma depended for its business.
As for what happens next, the ball is in the county commissioners’ court.
“The three of us need to talk about that, and we will,” said Board President Joseph Moroski.
As of Tuesday afternoon, the Jefferson plant was operating, and there was a sign on the visitors entrance stating employment applications are being accepted.
A request for an interview with Sigma OH Industries executives was met with “no comment.”
