The Magnolia City Council on Thursday afternoon approved a $150,000 grant from the municipality’s economic development fund to help push a large Amfuel and Department of Defense (DoD)contract deal across the finish line. The total value of the project is estimated at $2.375 million, with the federal government chipping in the bulk of the funds at just over $2 million and Amfuel contributing the remaining $375,000.
That’s where the city’s grant comes in. The non-government balance will be aided by Magnolia's economic development monies to nearly split the difference. Once the city’s $150,000 is accounted for, Amfuel is slated to invest roughly $187,000 into the deal.
“They are putting some of their own money into it,” said Ellie Baker, director of Magnolia economic development, as she addressed the Council Thursday.
The funds will go toward infrastructure needs, particularly three mobile spray rooms at Amfuel for the new multi-million dollar fuel cell project. Within the new booths, chemical compounds will be sprayed onto the cells in the mobile as a final step before they head out to the U.S. military. The new cells, according to Baker, are set to be the “preferred cells” for the DoD and will go to the front of the line at Amfuel. She also noted that only one other plant in America -- one located in Alabama -- is able to manufacture the new fuel cells.
Although the sizable grant issued Thursday from the city’s economic development tax fund will not bring in new jobs to the area, it will help keep manufacturing in Magnolia.
“This particular project doesn’t necessarily mean more jobs, but it does mean retention,” Baker added. “And that’s part of economic development as well -- sustaining the jobs we already have.”
Baker also noted that a potential loss of 70 jobs existed, if the city’s grant was not approved. In total, Amfuel currently employs 334 employees. A clawback clause in the city’s grant contract also notes that the local fuel cell manufacturer must keep a threshold of 250 full-time manufacturing employees or portions of the funds could be recalled. The agreement is binding for 10 years, according to Baker.
Since 2017, state law requires that a cost-benefit impact analysis be performed for local economic grants over $100,000. The city of Magnolia, Baker said, footed the $950 fee on its own for this particular analysis.
After reading the report, Jamie Waller, alderman for Ward III, noted that the economic impact of the grant to Amfuel paid for itself and then some.
“If you base it on all 334 employees, if you consider that, it pays this $150,000 back in 1.6 years,” he said. “If you base it just on the 70 employees that would be retained because of this grant, it would back in 8.5 years -- so that shows the economic benefit there is to do this.”
The grant was ultimately approved Thursday by a unanimous vote by the council. With a limited number of alderman due to the emergency-called nature of the meeting, Magnolia Mayor Parnell Vann was called upon for his vote to fill out the Council quorum. The present councilmen who voted along with Vann were the aforementioned Waller, and Aldermen Larry Talley, Kelli Souter and James Jefferson.
The new mobile spray rooms will technically be owned by the DoD. Baker noted that other fuel cell projects may be able to use the facilities once the new $2.375 million contract is completed.
“They will be able to use them otherwise,” she said.
The health and new leadership of Amfuel was another factor that spurred on the city’s part in the deal. Vann noted that many former longtime employees which had left the company are now back at the Magnolia plant.
“A lot of these people coming back are 15-, 20-year experienced employees,” he said. “If [the business] was going anywhere, why would you bring back somebody that had already worked there? They realized that the experience was in the former employees -- that impresses me.”
Vann later added that the federal government’s own investment was display enough for the current and future financial well-being in the plant.
“If the Department of Defense of the United States of America will put $2 million into Magnolia, Arkansas, then thank you,” he said.
Private investment firm LB Capital Advisors in November 2018 purchased the Magnolia plant and “substantially all” of its assets from the Wichita Falls, Texas-based American Fuel Cell and Coated Fabrics Company for $1.625 million, according to court filings. The purchase was approved in Texas federal bankruptcy court after the previous ownership group filed Chapter 11 status in November 2017.
Since the new ownership takeover, the plant has seen a resurgence. It has hired 70 new employees in the last year and billboards are filled around the area with “now hiring” ads at the facility.
James Jefferson, Ward II alderman, said he recently took a walkthrough tour of the manufacturing plant and that morale was “great,” especially “after the last fiasco” and by bringing back former employees it saved the company funds by eliminating extra job training.
“It was like a family-oriented type business there,” he said. “I felt really great being there.”
Baker noted that in addition to the new DoD project, private investments by the company itself are currently ongoing, ranging from $25,000-$250,000 in value. The new front-facing paint job on the plant near N. Vine Street is also “looking great,” she said.