Smalley Steel Ring Company planning multiyear, project in phases
Smalley Steel Ring Company will keep its global headquarters on Oakwood Road in the Lake Zurich Industrial Park for the foreseeable future with the help of a $15.3 million village incentive.
Since moving from Wheeling to Lake Zurich in 2002, the company has grown from 180 to about 600 employees with a 300,000-square-foot manufacturing facility and offices in China, France and Sweden and warehouses in France and China.
“We manufacture all of our products right here that we sell all over the world,” Joe Lukas, senior vice president and general counsel recently told village officials. “Global expansion has been a big part of our success.”
The company makes different types of rings used in precision manufacturing in “pretty much anything that has a mechanical component,” Lukas explained.
Space exploration, medical and consumer devices, energy and electric vehicles, for example, are among the many industries using Smalley products.
“We are the world leader in what we do,” Lukas said.
But the possibility Smalley could leave sparked four years of conversation culminating with a tax rebate not to exceed $15.3 million over several years to prevent its departure. The rebates are tiered and performance-based to be given as each stage of the project is completed.
“It’s been a long discussion because this company has had a very important decision to make,” Kyle Kordell, management services director said before recent village board approval of a rebate amounting to about 30% of Smalley’s massive planned $51 million expansion.
“They were getting wooed heavily by the state of Wisconsin to move north but we knew we needed to keep them here,” he added.
Smalley also will receive a state EDGE income tax credit equal to 50% of the income tax withholdings of new jobs created, according to Kordell.
The five-phased Smalley project involves 200,000 square feet of new building — 86,000 square feet of office; 100,000 square feet of warehouse; and, 13,420 square feet for manufacturing/production space. Smalley plans to hire 30 to 40 employees each year as the new space becomes available.
The property taxes rebate is possible because the business park in January 2023 was designated a tax increment financing district, which freezes property values and withholds the increment paid to taxing bodies for 23 years.
As property value increases because of development, the additional tax is funneled into a separate fund used to pay a variety of eligible project expenses, such as site and utility work and other costs.
According to the agreement, phase one must start by March 1, 2025. Phase 5 has to be complete by Dec. 31, 2040.
Seventy-five percent of the increment generated annually by the project up to a cap limit for each phase will go to the rebate. The rest and anything after Smalley has reached the $15.3 million maximum will be available for infrastructure work in the industrial park.
Smalley is the fourth industrial redevelopment agreement since the TIF was created. The others are: Gere Marie, 33,000 square feet of new manufacturing space; NorthStar Pickle, an 80,000-square-foot food processing facility; and CM Industries, a new 43,000-square-foot manufacturing facility.
Village officials say the project will increase the tax base of the village and other taxing districts, create jobs and improve the general welfare of the community. Smalley has certified the project would not be possible without TIF assistance, according to the village.
“We’re very happy you’re deciding to stay and we’ve been able to make this work in a mutually beneficial arrangement for everybody,” village Trustee Marc Spacone told Smalley executives.