Fort Smith Board approves tax incentives to attract Silgan, could add 150 jobs

Fort Smith has moved closer to attaining a planned 100,000-square foot manufacturing facility for Silgan Plastic Food Containers Corporation (Silgan PFC), whose clients include Nestlé, ConAgra, General Mills, and Campbell Soup.

The city’s Board of Directors voted unanimously Monday night (Nov. 20) to adopt two resolutions — one to endorse the company’s participation into the Tax Back Program authorized by Section 15-4-2706(d) of the Consolidated Incentive Act of 2003; the other, a resolution of intent for the issuance of industrial revenue bonds (IRBs) to assist with the financing of an industrial facility to be located within the city.

Fort Smith Regional Chamber of Commerce President and CEO Tim Allen is limited in what he can reveal per the terms of a nondisclosure agreement, but he did emphasize that it was not a done deal, and that the chamber had been working with the Governor’s office and the Arkansas Economic Development Commission (AEDC) for around one year, adding that passing the resolutions would give the city the tools it needed “to maintain our lead on the project.”

Allen said landing Silgan PFC would be a nice “Christmas present,” but told Board members he expected to know for sure by the end of January.

Winning Silgan PFC’s business could result in 150 new jobs by the facility’s third year of operation, and the site would take approximately one year to build. Fort Smith City Administrator Carl Geffken confirmed to Talk Business & Politics that the jobs paid on average $21 per hour, though he was unsure whether that meant straight salary or salary-plus-benefits. Fort Smith Deputy City Administrator Jeff Dingman said the company was eyeing a new piece of land for an entirely new facility located within the city limits in the vicinity of Rheem Manufacturing.

Allen could not confirm those details per the terms of his nondisclosure. He did say the IRB portion of what the city voted to approve Monday night would result in a 50% property tax abatement to the city’s General Fund of around $75,000-$80,000 (or $7,500-$8,500 annually over a 10-year period). The Tax Back Program incentive would be for an estimated $12-$15 million of all eligible purchases, provided those purchases are made within Fort Smith city limits. That $12 million to $15 million figure is part of a larger overall $38 million expansion.

The city receives 3.25% of the area’s 9.75% sales tax. From that figure, 2% is a city sales tax divvied up between the streets, drainage, and bridges program (1%), collections for bond issues (0.75%), and fire and parks (0.25%, evenly split between the two). The state receives the remaining 6.5%. At the 9.75% sales tax rate, Silgan PFC would receive a $1.17 million to $1.462 million tax incentive statewide ($390,000-$487,500 of which would come from the city) on the estimated eligible purchases.

Silgan PFC is considered one of the major players in the global food container market that was estimated at $231.91 billion in 2015 by Grand View Research. The market is expected to hit $346.99 billion by 2025. Growth in consumption of packaged foods in Asia, especially China, is expected to drive much of any future increase, according to Freedonia packaging analyst Joe Pryweller.

“By 2022, China is expected to become the largest global consumer of food packaging, surpassing the U.S. based on increasing urbanization, rising personal incomes, and an escalating interest in packaged foods,” Pryweller said in comments to Packaging Digest, adding that robust food container demand growth “is also expected in other emerging markets such as Thailand, Brazil, Argentina, and Turkey.”