Libbey: local government help to save Louisiana jobs

Libbey Glass is set to receive further financial assistance from local government officials hoping to save jobs at the Shreveport, Louisiana plant, which is the company“s largest North American facil…

Libbey Glass is set to receive further financial assistance from local government officials hoping to save jobs at the Shreveport, Louisiana plant, which is the company“s largest North American facility. The Caddo Parish Industrial Board (in Louisiana, counties are known as parishes), a committee that helps structure business incentives, received preliminary approval on 22 April 2005 from the state to sell up to USD 40 million in revenue bonds to build Libbey Glass a warehouse and distribution facility in west Shreveport. The expansion is not expected to lead to any full-time permanent jobs although about 200 construction jobs will be linked to the project. “The key to the thing is it preserves the jobs that are here,” said industrial board President Francis Gowen. “If they moved to Tyler, Texas, and did this acquisition and warehouse there, they could very easily move their manufacturing plant to Texas too.” The industrial board will own the 60,000-square-foot facility and lease it to a Chicago-based real estate investment trust, which in turn will lease it to Libbey. The 20-year arrangement, which will rely entirely on private funds, will save the company interest expenses while keeping costly real estate debt off the publicly traded company“s books. “It“s hard to get a lower interest rate than they would on these bonds,” said Ray Cornelius, the industrial board“s bond counsel with New Orleans-based Adams and Reese. The parish, city of Shreveport, Caddo Parish School Board and Caddo Parish sheriff“s office also recently put together a 20-year agreement with the plant that will save Libbey Glass an estimated USD 10.7 million in property taxes on the new warehouse. “The real motivation here is to make this plant competitive enough that there“s a good comfort level that this plant is going to remain open for the foreseeable future,” said Caddo Parish attorney Charles Grubb. In autumn 2004, Libbey Glass announced it was closing one of its California plants and is considering redundancies at other plants. In 2002, the company closed a division in Ohio and moved its operations and 80 employees to Shreveport. “The fundamental issue that Libbey does face is that, generally speaking, glassware can be made much cheaper in foreign plants,” said analyst Jim Barrett, vice president of research with New York-based C.L. King & Associates. That competition could intensify as the World Trade Organization considers lowering tariffs on imported products. “I would think for those reasons, the domestic glass industry is facing a very difficult future,” Barrett said. To help protect local jobs, the tax-abatement agreement includes provisions that will require Libbey Glass to maintain 900 jobs for the first five years. The guarantee goes down by 100 jobs every five years through the length of the agreement. If employment goes below the agreed figure at any point during the 20-year period, Libbey Glass will have to pay that year“s property taxes.