By DAVID GREEN
From Wall Street to Main Street in 24 hours. David Munson didn’t think the effect of the Lehman Brothers collapse would reach Michigan that fast.
Munson, the director of corporate affairs for Palm Plastics, remembers how an important step in the company’s expansion project was nearly complete when the banking giant failed.
“We were right on the edge of getting the job done when Lehman Brothers folded, and that was it,” he said.
Since then, financing for development projects has been nearly impossible to find. In Palm’s case, no builder can come up with the cash to construct the new facility costing at least $7 million. In the meantime, Palm continues to face strong demands from customers to make more product.
The existing plant in Morenci is filled to capacity and there’s no more usable space at the temporary operation in Fayette. To meet demand, Palm was forced to locate additional manufacturing space.
The only really suitable facility found in the area, Munson said, is a former plastics factory in Bowling Green, Ohio. The building includes chillers, a heavy duty electrical distribution system, resin storage silos—most everything needed for Palm’s operation.
All equipment in the Fayette location will be moved to Bowling Green and some equipment now in storage will also be installed there.
The existing 250-some jobs in Morenci will remain here, but the expansion project called for an additional 132 jobs.
No one is happy about the change in plans, Munson said, and hope remains to use the more than $7 million worth of state grants and incentives to build in Morenci.
The state funds come with a two-year window for development, Munson said, and that money is key to the Morenci expansion.
The delay also puts Morenci’s industrial park road project on hold, since the $900,000 CDBG funds are tied to job creation.
“Until the jobs are created,” Munson said, “Morenci will not get that money.”
Developers and builders are ready to move forward on Palm’s expansion, but the search for funding leads to a dead end.
“We don’t know when that may change,” Munson said, “but we can’t ride it out for a year.”
He has pages and pages of business cards from potential builders and their lenders, but he’s never seen the capital market shut down to this extent.
When the expansion project was announced last October, initial plans called for Palm to begin leasing a new building in Morenci this spring.
“Everybody has done everything to expedite this,” Munson said. “We didn’t foresee how difficult the economy was going to become.”
Until that changes, much of Palm’s production will move from one temporary facility to another.