Subsidies set for three expanding Vegas firms

David Strow

Friday, Oct. 15, 1999 | 11:04 a.m.

The Nevada Commission on Economic Development on Thursday awarded $1.4 million in incentives to a national bottling company that plans to open a plant in Henderson, creating 76 jobs.

Continental PET Technologies said it wants to open the plant to service Ocean Spray Cranberries Inc.'s manufacturing operations in Henderson. Ocean Spray operates a 200,000-square-foot plant in Henderson, and announced this summer plans to build a 300,000-square-foot distribution center in Gibson Industrial Park. Recently, Continental was awarded a contract to supply plastic bottles to that facility.

The size of the facility or its opening date were not disclosed. However, commission officials say the company plans to invest a total of $32 million into the facility.

The plant will be Continental's 11th in the United States. The company had considered producing the Ocean Spray bottles out of an existing plant in Phoenix, but decided instead to build in Henderson because of Nevada's favorable tax laws and incentives, and the low cost of shipping product out of the Las Vegas Valley.

"We're looking to recruit companies that attract other companies to the area, like Ocean Spray," said Commissioner Ray Vega. "This shows it's working."

Continental will receive a tax abatement of just over $1 million. The company will also have $389,000 in taxes deferred to a later date.

The plant will have an average wage of $14.97 an hour. Typically, the commission awards incentives only to companies whose average wage exceeds the state average of $14.12 an hour.

That standard was bent Thursday, when the commission granted Las Vegas-based Custom Services International a total of $989,000 in incentives for its plans to build a manufacturing facility in North Las Vegas. The facility will employ about 90 initially, and 137 after two years.

The plant, which will manufacture condoms, will pay an average wage of $12.26 per hour. But commissioners said the plant offered too many pluses to be deterred by the wage requirement.

"This is a huge exception," said Commissioner Sara Beth Brown. "I read the information, and I immediately wanted to find a way to do it."

Custom Services was founded five years ago by Michael Brown, who spent much of his childhood in Las Vegas. Brown attended the University of Pennsylvania before returning to Southern Nevada.

In his presentation, Brown pointed out that Custom Services was a minority-owned small business, one that needed state incentives to launch its expansion plans.

"I am a resident," Brown said. "I went to Bishop Gorman High School ... I love Southern Nevada. I don't want to have to move to Alabama or New Jersey.

"The commission should take note that we are a small business. All the businesses that have been before you today are very worthy ... but they're large, multimillion-dollar businesses."

The company sold 20 million condoms last year, all manufactured at a plant in China. Next year, it anticipates selling 40 million units. It has some retail sales, and also sells to national family-planning institutions in El Salvador, Honduras, Guatemala, Colombia and Peru.

The planned Las Vegas plant will manufacture 200 million units a year when it opens, and will have a maximum capability of 600 million per year. Brown said the company will invest $12 million in the plant.

Moreover, said Custom Services' executive Lillie Thomas, the plant will be only the second condom-manufacturing facility in the country. That will make the company eligible to participate in a federal contract designed to distribute condoms to third-world nations -- a contract valued at $25 million last year. A condition of the contract is that the condoms sold must be made in the United States.

"(The federal government) told us they've like to split the contract 50-50 with us," Thomas said.

Vega, a minority business owner himself, said the minority ownership made it a particularly attractive candidate.

"We see very few minority businesses in front of us," Vega said. "It's nice to have some role models out there."

Other commissioners pointed to attractive work benefits, such as full medical insurance and a child care center completely paid for by the company.

"Our practice is to be very conscious of hourly wages," said Commissioner Peter Thomas. "For me, it's important to find other areas of mitigation that make up for that. I feel that your company makes up with these mitigating factors. I like the fact that you're a Nevada native, you attended a very prestigious school, and you returned."

Custom Services will receive a $649,000 tax abatement, and an additional $247,000 in tax deferrals. The company was also awarded $92,400 to supplement its training budget.

A third incentive package, valued at $86,000, was awarded to Kloehn Co. Ltd., a manufacturer of medical laboratory equipment based in Summerlin. The company is currently expanding to meet growing market demand and is adding 14 jobs.

The company is adding 4,000 square feet to its 54,000-square-foot plant. The plant has been in operation in Las Vegas since 1995. The plant's average wage is $15.44 an hour.

Plant manager Mike Marshall said the company experienced 35 percent sales growth last year, and anticipates 2000 sales of $18 million. To handle that growth, Marshall said the company has already invested $1.1 million in new equipment, and plans to invest an additional $500,000.

There was little debate about awarding Kloehn incentives. Commissioners instead questioned Marshall why Kloehn decided to move from Southern California to Las Vegas in 1995.

"We wanted to get out of California," Marshall said. "We looked at Colorado, even Carson City. Summerlin sold itself just because of what it is. We didn't anticipate the trouble finding employees that we've had."