Business set to reinvest $5.5 million

Wednesday, October 8, 2008

A homegrown Lewisburg business is investing another $5.5 million to better serve customers, thereby increasing capital assets by nearly half, according to the chief executive officer who cites 110-year-old roots for his family business.

A dozen to 16 new jobs are anticipated at Lewisburg Printing Co., CEO Hale Hawkins said Monday during a telephone interview after a City Hall meeting with the Industrial Development Board. It's recommending the City Council grant a five-year tax break for a $4.2 million press and related equipment.

"That is a huge investment for a local business," IDB Attorney Bob Binkley told the Board.

Hawkins said the $5.5 million reinvestment will increase basic assets of the company that he estimates at $12 million now. Lewisburg Printing's gross revenues were "a little over" $10 million during 2006-07, and are projected at $14.5 million this year.

"This could be the largest investment Lewisburg Printing has ever made," Hawkins said. "The MAN Roland 73-inch press is what we need to set us apart from most of our competition and makes us one of the most state- of-the-art large format printers in the nation."

Lewisburg Printing plans to buy a press from the German manufacturer to print wide sheets of paper to illustrate cardboard displays for clients that show off products in stores, Hawkins said."We're looking for any help we can get to do this," Hawkins told the Board.

The help recommended for approval by the Lewisburg City Council on Tuesday is a PILOT Agreement. Payment In Lieu Of Taxes contracts have been under re-examination during recent months as the IDB has sought compliance from less stable companies or those with absentee ownership.

"This is an opportunity to for us to help a local business," the Board's lawyer said, describing the PILOT agreement as a five-year contract starting with no personal property taxes on the new equipment.

Legally, taxes are deferred for five years, but payments are made in growing amounts that are based on the value of the new equipment and the property tax rates as set by Lewisburg and Marshall County.

During the second year of the contract, an in-lieu-of-taxes payment is made that's equal to 20 percent of what otherwise would be paid in personal property taxes on the new press, a paper cutter and other pre-press equipment, according to Binkley's explanation. Payments in the third, fourth and fifth year of the contract are to be 40-, 60- and 80 percent of what the personal property tax bill would total in those years. Thereafter, property taxes on the equipment would be paid.

Similar contracts are written for various other businesses in Lewisburg with explanations from appointed and elected officials who say that the deals really aren't costing the local governments money because if the businesses' don't grow, then there won't be any increase in the tax base.

Lewisburg printing employs about 95 people, including Hawkins' sister, Re Kelso, the business' customer service manager, her husband, Kirk Kelso, sales manager, and Hale Hawkins' brother, Tim, who runs pre-press operations. Hale Hawkins' full name is Thomas Hale Hawkins IV. His father, Thomas Hale Hawkins III, is the owner who still has a hand in operations, the CEO said.

Entry level wages at Lewisburg Printing are $12 an hour, according to discussion at the IDB meeting. Wages rise to $25 per hour. The average is $16-17 per hour. The median wage is more than $18 per hour.

"We've been accused of recruiting businesses that employ people who are paid minimum wage," Binkley said, using Lewisburg Printing as an example to deflect the impression born of the previous PILOT agreement landed by a fast food restaurant which does pay more than minimum wage.

Binkley spent more than two weeks examining the various aspects of Lewisburg Printing's situation and the legalities that led to his recommendation for the IDB endorsement to members of the City Council, the attorney said.

He and Hawkins said the new press will be shipped directly to Lewisburg from Germany in at least half a dozen boxes -- large shipping crates made for transport by truck, ship and train.

"The first is to arrive in the latter part of this month," Binkley said.

New employees will be assigned to one of the older presses at the company's plant at 135 Legion Ave. where the building won't need expansion, IDB discussion showed.

Experienced pressmen will run the new machine that expands the company's ability to serve businesses that mainly turned to presses in the northeast for the kind of printing to be available here, Hawkins said.

Like many other businesses that have been established in Middle Tennessee, Lewisburg Printing enjoys a "one-day ship point to almost half the United States," Hawkins said.

The new press might be seen as an expansion of a business plan started about the time Lewisburg Printing bought Brandeau Printing in 2004 and moved the presses here.

"I took on some of the employees who worked for Brandeau," Hawkins said. "It did increase employment at Lewisburg Printing."

It also increased sales and "it put us in a special niche which is large format printing," he said.

"We'd been in the can label and spot box label business and then the larger format press increased our business in that area," Hawkins said.

The story of Lewisburg Printing may be familiar to many residents of Marshall County since it was run for years in conjunction with the precursors of this newspaper, the Marshall County Tribune.

"Not only did we have the newspaper, but we had the commercial print operation," Hawkins said of the family business model that's used in other communities across America.

Hawkins' "great-granddad, Hale Hawkins Sr., ... bought the local newspaper and the commercial side really took off in the 1960s, doing manuals and tags" for the Murray Lawnmower Co. and ICP, previously Heil Quaker and Carrier, the heating and cooling system manufacturers.

Murray doesn't exist here anymore. ICP is a pale shadow of what it used to be.

IDB Chairman Eddie Wiles recused himself from leading the Board's meeting as it considered Lewisburg Printing's PILOT Program on Monday afternoon, citing the appearance of a conflict of interest because of close relationships with members of the Hawkins family. IDB Vice Chairman Lee Morrison led that part of the Board meeting which culminated with a motion by Sam Kirby, seconded by Jackie Abernathy, to recommend City Council approval of the five-year tax abatement contract. The vote was unanimous.

The Council convenes at 6 p.m. in City Hall on Tuesday.