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Potential incentive deal for Farathane to focus on blue collar jobs

Friday, December 9, 2011 by Michael Kanin

The City of Austin is exploring an economic development agreement with an automobile parts manufacturer based outside of Detroit. If concluded, the deal with plastics producer U.S. Farathane would offer just under $213,000 in incentives. In exchange, the company would promise to create 228 new full-time jobs for Austinites over the next three years.


As Council members were careful to point out at Thursday’s meeting, the deal would turn the job creation spotlight on blue collar workers. “By far, I think (this economic development proposal) is the best one that I’ve seen as I’ve sat on the dais,” said Mayor Pro Tem Sheryl Cole. “I say that because of the people that it targets, which is the low-skilled labor force.”


However, Council Members Laura Morrison and Mike Martinez attached their continuing worries about the city’s ability to take care of that segment of the population to the potential deal. Though he added that he appreciates the effort to bring more blue collar jobs to Austin, Martinez remained concerned about the potential Farathane wage levels. “(I) want to make sure that we focus on ensuring that we’re not creating a workforce that is more dependent on city subsidies and social service contracting that would inevitably cost us more in the long-run.”


That conversation was part of a discussion with the city’s head of Economic Growth and Redevelopment Services, Kevin Johns, as he briefed the Council on the potential deal. Council members will formally weigh in on the issue next week, at their last meeting of the calendar year.


Johns told the council that the average income level for the created positions would be just over $27,000.


He added for Council Member Bill Spelman – who noted that the city typically looks at the income for “not the lowest paying job, but the 10th percentile paying job” – that workers in that population would pull in roughly $20,800 annually.


Cole wasn’t the only Council member excited about the possibility of reaching the blue collar work force. “I share (Mayor Pro Tem) Cole’s enthusiasm for being able to find jobs for people who are difficult to employ,” said Spelman.


Still, concerns lingered. Morrison also expressed worry about support for the portion of the community that would be employed – which could include segments of the population that are traditionally difficult to employ. “One of the things we have discussed before with these kinds of opportunities are the pay levels, and there’s discussion about living wage and all,” Morrison said. “It looks like here it’s a different tack…specifically to address the needs of folks that are hard to employ…Obviously that’s a very laudable goal.”


“One of the things that I’m wondering about…(is) that some continuing support for the especially hard to employ might be important in making that employment successful,” she continued. “I wonder if…there are programs available so that we could work toward success for the folks who do get jobs here.”


Johns noted that the city had “reached out” to Austin-based job help non-profit Skillpoint. “They’re going to be working with us in trying to do the training and preparation to aid us in trying to move that population into these types of jobs that we’re beginning to recruit,” he said.


Morrison pressed her concern. “If you could maybe help me explore some opportunities for ongoing programs, I think that would be helpful,” she said.


Spelman expressed some surprise that Johns’ office had selected automobile manufacturing as an industry of focus. He wondered how many other auto industry outlets exist in Austin, and raised some concern that the company might eventually leave the region if there weren’t enough.


“If our auto industry penetration is relatively small, relative to other metropolitan areas, that means that the retention rate is probably going to be a little bit lower, and Farathane is less likely to be here in 10 years than it would if we had a lot of auto industry activity,” he said.


Johns told Spelman that EGRSO would look in to it.


As the Council wrapped up its questioning, Paul Saldaña, lobbyist for the Hispanic contractors association, suggested that U.S. Farathane’s incentive agreement should also contain language that would force it to comply with minority and women-owned business standards reflected in pending changes to the city’s third party agreement rules. Morrison suggested that this should be worked into further negotiations. “It sounds like it would be reasonable for us to look at bringing this agreement into compliance…with what’s in the resolution,” she said.


Johns said that he’d discuss the issue with Farathane.

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