Kellogg: asks city to reduce letter of credit

Grand Rapids / MG. (grc) Five years after agreeing to keep its giant Michigan bakery open in exchange for 15 years of tax-free status, Kellogg Company officials say they have more than kept their end of the deal. The company has invested 72 million USD in the bakery, which now makes more than twelve million Pop-Tarts a day, company Vice President Randy Byrd told city officials: «That´s more than twice the 35 million USD they promised to invest when they were given Renaissance Zone status».

Besides saving 390 jobs, Kellogg has raised employment at the plant to 448 workers, Byrd said. Products once made in Georgia, Canada and Des Plaines, Illinois, now are made at the Grand Rapids plant, where the average worker makes 28 USD an hour, Byrd said. The Battle Creek-based company may bring even more product lines to the 500.000-square-foot plant. Under its Renaissance Zone status, Kellogg does not have to pay state or local income and property taxes for another ten years.

Byrd came to City Hall this week to ask that Kellogg be allowed to reduce a 333.000 USD «letter of credit» the city required when Kellogg received its tax-free status. The letter of credit was intended to guarantee the city could recover its losses if Kellogg failed to keep promises.

City commissioners are expected to grant the request next month. Under the agreement, the city will continue to require a 10.000 USD letter of credit until the 15-year Renaissance Zone expires on the plant in 2017. Deputy City Manager Eric DeLong: «It is a very remarkable turnaround story. It is now one of the highest-performing plants in the Kellogg´s constellation».