Libbey Glass gets helping hand to save local jobs

Date: 25 April 2005

Libbey Glass is poised to get another round of financial help from local government officials hoping to save the plant's 1,000 Shreveport jobs.

The Caddo Parish Industrial Board -- a parish-appointed committee that helps structure business incentives -- on Thursday received preliminary approval from the state to sell up to $40 million in revenue bonds to build Libbey Glass a warehouse and distribution facility in west Shreveport.The expansion is not expected to create any full-time permanent jobs although about 200 construction jobs will be tied 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 650,000-square-foot facility and lease it to a Chicago-based real estate investment trust, which in turn will lease it to Libbey Glass. The 20-year arrangement, which will rely entirely on private dollars for funding, will end up saving the company interest expense while keeping expensive 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.

It's not the first time local government has stepped in to help Libbey Glass, which has operated in Shreveport since 1974 and is the company's largest North American facility. The parish, city of Shreveport, Caddo Parish School Board and Caddo Parish sheriff's office recently crafted a 20-year agreement with the plant that will save Libbey Glass an estimated $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.

Last fall, Libbey Glass announced it was closing one of its plants in California and is considering layoffs 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 increase 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. "That is the future the company sees in front of them."

To help protect local jobs, the tax-abatement agreement includes provisions that will require Libbey Glass to maintain 900 jobs during the first five years. The guarantee drops by 100 jobs every five years through the length of the agreement. If employment drops below the agreed-upon figure at any point during the 20-year period, Libbey Glass will have to pay that year's property taxes.

"Those are the levels of jobs they are guaranteeing to be here in order to continue to qualify for this, but it's certainly not their intention to predict those will be the job levels," Grubb said.

"They told us they are not predicting to reduce those job levels, but they don't have a crystal ball. They said it was important to them that they wouldn't have to guarantee employment levels as they are today."

The Libbey Glass plant manager did not return phone calls Thursday.

600450 Libbey Glass gets helping hand to save local jobs glassonweb.com

See more news about:

Others also read

Emirates Glass, a Dubai Investment subsidiary, has won a major contract to supply 140,000 square meters of its premium glass to the prestigious development on the Palm Jumeirah, reaffirming its already established reputation as the single most prominent company in the entire regional glass industry.The deal was announced during the company's participation in the prestigious Big 5 show, the largest annual venue for the entire Middle-East glass contracting industry.
Packagers such as the UK's Rexam and private equity firms are set to vie for pump-sprayer business Calmar, which France's Saint-Gobain (SGOB.
Isra Vision Systems AG supplier of machine vision systems, has successfully improved its market position in display glass inspection with a major order totalling 1.8 Mio Euro.
The National Lime & Stone Co. will discontinue production of calcined lime early next month at its Carey plant, the company CEO announced Thursday.
Jain Scientific Glass Works, manufacturers of glassware for laboratories, is importing glass as raw material from China, which was much cheaper than the local product and abundantly available.
The following stocks are moving in Japanese markets today. Prices are as of 12:55 p.m. at the Tokyo Stock Exchange. Stock symbols are in parentheses after company names.

Add new comment