MTS sold to Parker Hannifin Automation

By RON LARSEN

Journal Staff Writer

NEW ULM -- With just enough members for a quorum, the New Ulm City Council Friday approved an employment-level amendment to MTS-Systems' development contract to allow the New Ulm MTS plant's sale to Parker Hannifin Automation.

The three councilors present at the special meeting finally agreed upon the request by Parker Hannifin for a level of 55 full-time employees to be maintained over a period of 48 months.

In receiving the benefit of tax increment financing from the city in November 2000 for its expansion into a new, larger building on North Broadway, MTS Systems committed to maintaining its employment level at the 79 employees it had at the time and agreed to add another 12 full-time equivalent positions by Dec. 31, 2003.

For that commitment, the city provided $350,000 toward the cost of making site improvements to facilitate the project. The loan is to be paid back over 10 years through real estate taxes.

In the meantime, the tragic events of Sept. 11, 2001 and a general economic nosedive led MTS Systems to put the plant up for sale, said Dana Badgerow, vice president, automation.

The number of full-time equivalent employees in the plant had dropped to 64 by the time MTS Systems found a buyer in Parker Hannifin, she said.

"It is Parker Hannifin Automation Group that is doing the buying," explained James M. Donchess, senior counsel at Parker Hannifin's headquarters in Cleveland, Ohio.

"Our intention is to maintain manufacturing levels in New Ulm. CompuMotor (a Parker Hannifin property) which is located in the San Francisco area builds different sized motors than does MTS. It's our intention to move some motor manufacturing to New Ulm."

While MTS had agreed to maintain 75 percent of its work force at an average wage of at least $10 an hour, "we could maintain a $9 average wage throughout the facility," Donchess said.

Councilor Clark Tuttle said he was upset by a "$6 billion company coming to us trying to get concessions" on a development contract.

"Why do we even have a development contract when there's no way to enforce it?" Tuttle asked City Attorney Hugh Nierengarten.

"The state requires it," Nierengarten responded.

Industrial Development Coordinator Brian Tohal, representing the New Ulm Economic Development Corporation that is MTS Systems' landlord, that to not approve the change could mean the loss of industry in New Ulm.

"The communities that are growing are offering incentives. It's a fact of life," Tohal said.

"I think the best way to get this loan repaid is to agree to a reduced employment rate. The incentive here is a loan," Councilor Ruth Ann Webster said, in offering a resolution to approve the amendment.

With three votes needed to approve the amendment, Tuttle said if his two colleagues "were here, this would pass even with my no vote so I will vote for it because I don't want to be responsible for scuttling it."