Equipment leaving Morenci's former Palm Plastics building 2012.11.28

Written by David Green.

palm plasticsBy DAVID GREEN

The former Palm Plastics factory in Morenci—now operated by Schoeller Arca Systems—has closed and equipment is on its way out.

The facility was at one time known as the largest producer of plastic shipping and storage pallets in the world. Financial problems trailed the operation for much of its 11-year run and the national economic downturn of 2008 further eroded the well-being of the company—just as it was set to expand.

A change in ownership failed to turn the company around and production dwindled.

Now the company faces a Dec. 31 deadline to have equipment removed from the site to avoid paying personal property taxes. Not all of the equipment is owned by Schoeller Arca, however.

City treasurer Crystal White, with assistance from the police department, placed tags on the machinery as a precautionary measure in a process known as jeopardy assessment.

She was assured by Schoeller Arca that all tax money owed—delinquent and current—would be paid and the company remained true to its word.

White told city council members Nov. 12 that the city received a payment of $155,474 to cover winter 2011, summer 2012 and winter 2012 taxes. All of those funds were already budgeted with the exception of the winter 2011 tax that equalled about $7,000.

Unless another company moves into the building, the city will be hit by a major reduction in tax revenue.

In total, Schoeller Arca paid taxes of $560,050, with $169,640 going to the Lenawee Intermediate School District, $163,125 going to the Morenci School District and $71,810 going to the County of Lenawee.

City administrator/clerk Renée Schroeder praised White’s persistence in staying in contact with Schoeller Arca and pressing the company for the cash owed.

The former owner, Palm Plastics, had also fallen behind in tax payments and a loan repayment, but equipment and merchandise was sold to cover costs and all debts were wiped out.

Palm Plastics, once owned by Jeffrey Owen, ran into financial troubles in the same manner as the original company, MIG Plastics: Contracts with customers were not paid and cash shortfalls followed.

“You look at that building and think what it has meant to the City of Morenci,” mayor Keith Pennington said. “It’s not always been an easy road out there, but I’m 100 percent convinced it’s been a good benefit to the city.”

 Over the years, a lot of employment opportunities were created, and the city’s tax base increased. The city was given several grants for infrastructure improvement in relation to MIG Plastics locating in Morenci [see timeline below].

“I’m very appreciative of the Mignins who started the company here and Jeffrey Owen who carried on from there, and now Schoeller Arca,” Pennington said.

The mayor said he’s pleased to end on a good relationship and with everyone paid. That, he said, is the best you can ask for from the unfortunate situation of a company moving.

The building is a valuable asset to community, Pennnington said, and the challenge now is find a new tenant or owner.

The building is owned by Norbert Bauman operating as Amsar LLC and is listed for rent or sale.

Schroeder intends to meet soon with the representatives of the Lenawee Economic Development Corporation to keep the property’s assets fresh in their minds.

 

Palm Timeline

1998

• MIG Plastics of rural Fayette chooses Morenci over four other locations to construct an 80,000 square foot manufacturing facility for injection molded plastic products. The project will bring 43 existing jobs and create 47 new jobs within three years.

• A $900,000 grant pays for waterline improvements spanning the east residential area of town from Coomer Street to the MIG project and include other infrastructure improvements at the MIG site.

1999

• A $1.1 million grant pays for the resurfacing of East Street South from Main Street to the proposed industrial park.

• A $530,000 grant covers improvements to the Van Wagoner Bridge on East Street South near the industrial park.

• Construction of the new plant is delayed until 2000. MIG opens some operations at the former Morenci Engineered Rubber Products building.

2000

• Morenci grants MIG a $2.9 million tax abatement on equipment.

• City council approves a preliminary site plan for construction.

2001

• Equipment moves into the new MIG plant in March; production begins in April. By the end of the year, MIG faces financial problems when a customer fails to make payments.

2003

• Jeffrey Owen acquires the facility from the Mignin family and names the company Palm Plastics.

2005

• Production still going strong at Palm, however, constraints on available electric power from Midwest Energy limit expansion options.

2008

• With production of plastic pallets running strong, Palm Plastics looks to expand into a second building in Morenci. Some operations move to Fayette where 50 jobs open in the former Fayette Tubular Products building.

A $2.9 million grant from the State of Michigan is secured and the remaining financing for the expansion project nears completion when the collapse of Lehman Brothers in September 2008 shakes the financial industry—an event that soon affects the Morenci project.

2009

• With the country on shaky financial ground, financing for the expansion project is impossible to find. To keep up with demand for pallets, Palm expands into a vacant industrial plant in Bowling Green, Ohio, opening up 132 new jobs. More than 250 jobs remain in Morenci.

• Production in Morenci temporarily halts for about 120 days, but resumes in September.

• In November, Revstone Industries of Lexington, Ky., purchases Palm Plastics in conjunction with a Chinese firm.

2010

• Morenci city council members learn that Schoeller Arca Systems is purchasing the Morenci operation. The Netherlands-based company owns the plastic pallet operation.

2011

• Schoeller Arca opens a plant in the rapidly-growing city of Goodyear, Ariz., located near Phoenix.

• Production and employment levels tumble in Morenci and legal battles erupt between Palm Plastics and Lenawee County over an unpaid loan. Eventually, Revstone pays off a loan to a county revolving loan fund as well as local property taxes that were Palm Plastics’ responsibility.

The leased property in Bowling Green closes. Palm Plastics sells its remaining equipment in Morenci. By the end of the year, all of the company’s tax and loan obligations to the city and county are paid.

2012

• Schoeller Arca maintains a small workforce in Morenci. In November, production ceases, but all delinquent and current taxes are paid to the city and school, the Lenawee ISD and the county government.

• Building owner Norbert Bauman lists the property for sale or lease.

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