GREDA in control of incubator

Ownership of former National Seal building gives flexibility

Sunday, July 22, 2007

By JOHN R. PULLIAM

The Register-Mail

GALESBURG - Perhaps lost in all of the recent attention given to the marketing of Logistics Park-Galesburg, the Galesburg Regional Economic Development Association, with a little help from its friends, has taken an important step toward bringing new manufacturing jobs to the city.

Waste Management recently donated the former National Seal building on Monmouth Boulevard, which is used as a manufacturing incubator, to GREDA. The transaction was announced earlier this month.

Linda Utsinger, GREDA's vice president of business development, said she first met with the national real estate director of Waste Management in September 2002.

"This building was empty and we thought maybe we could get them to donate it to us," Utsinger said last week.

Waste Management, which was attempting to sell or lease the building, later approached GREDA about buying the building, but the $500,000 the economic development agency had available had already been used to help buy the land for the logistics park.

Utsinger proposed that Waste Management lease the building to GREDA for three years, which Waste Management agreed to do. During that time, Waste Management paid for building maintenance, utilities, insurance, taxes and other overhead costs not covered by the tenants.

"Now that we have ownership, we have more control over it," Utsinger said of the Galesburg Business Incubator. "And now we're sure it will have local ownership. It's just a good tool for us to have space for business."

The building has about 80,000 square feet of space for manufacturing or warehouse/distribution operations. Utsinger said about 60 percent of the building is leased. There also is 12,000 square feet of office space, with the remaining space being an unheated storage area.

While there is also a business incubator at the Center for Manufacturing Excellence, Utsinger said most of the area available there is in about 1,500-square-foot spaces.

"They're not really geared toward manufacturing," she said.

Utsinger explained GREDA is not trying to compete with owners of other buildings in the city, but she said some businesses need help early on to get on their feet.

"If we have a new business - a start-up - or a business moving here, we have the flexibility to offer free rent" for a period of time," she said.

As the business grows, the rent begins to move closer to market rates.

Rick Dechow, one of four owners of BDI, a manufacturer of stainless steel industrial screens, said the company would not exist without the help of the incubator. BDI became the first tenant in April 2004.

"We couldn't have done it without GREDA," Dechow said. "I want that understood, because we went out and priced other buildings."

Other owners are Pam Wildermuth, Steve Gilles and Mike Sweney. BDI has two shifts, employing about 15 people.

Dechow said that starting a factory is not like moving a retail business into a mall.

"There's so much capital outlay for equipment and inventory," he said. "So if you don't have to put as much money into rent" there is money for what is needed to get started.

In addition to at times having $100,000 in inventory on the factory floor, Dechow said there are other considerations. He pointed to a machine a few feet away.

"We had to have this equipment here to build this machine," he said, a six-month process. "You've still got to pay your wages, everything is going out and nothing coming in."

Sutech Industries, a China-based lawnmower company that moved its assembly operations to Galesburg from Aurora in September 2005, has different needs. Utsinger said that's the beauty of the incubator, the flexibility to meet those needs.

Terry Tulin, vice president of operations at Sutech, said the Galesburg operation, which has five factory and four office employees, receives the basic frames and handles from China.

"The engines, wheels, carton and operating manual are all purchased in the United States," Tulin said.

Sutech uses Briggs and Stratton and Honda engines. Honda was added in June.

"Unfortunately, we can't make them fast enough," Tulin said of the Honda-powered motors.

Sutech sells to 10 distributors throughout the U.S.

"Border to border and coast to coast," Tulin said. The distributors sell the mowers to dealers, who sell them to the public.

Other businesses located in the incubator include Event Solutions, which makes picket fences for golf tournaments, and Genie Temps, which is located in the former National Seal guard house.

Simmers Crane, which brought some of its operations to Illinois in July 2005, locating in the incubator, is another success story. The business started with two employees. It now has 16 and is located in the former Butler Manufacturing complex. GREDA introduced company officials to representatives of Tower Investments and Industrial Realty Group, the owners of the sprawling facility, now known as the Galesburg Industrial Center.

"We really want to help anybody that's here in any way possible," with the ultimate goal being to make it possible for the companies to move into their own quarters, Utsinger said.