Commissioners recently approved a 15-year property tax abatement for LG Chem Ohio Petrochemical, Inc., an arm of LG Chem South Korea, to build a facility in Ravenna.
The firm makes ABS, a heat and impact-resistant composite material used in multiple products, including toys, appliances and automotive parts. Ravenna’s facility will mostly focus on ABS for vehicles and the construction industry.
LG Chem plans to build a 99,500-square-foot “customer solutions center,” which will house a research facility to develop new products and provide technical services for customers. A second 155,500-square-foot building will be devoted to manufacturing ABS for vehicle and construction materials, said LG Chem Ohio Petrochemical President Young Lee.
Both buildings will be sited on a new road, Rayann Boulevard, a cul-de-sac that will be built off North Chestnut Street, just south of the former GE plant.
Combined, the structures will cost about $64 million, according to the tax agreement.
The tax abatement affects improvements to the land, not the land itself, Portage Development Board President Brad Ehrhart said, adding that Ohio requires companies that receive abatements to ink deals with any school districts that may be affected.
In this case, he said LG Chem agreed to pay Maplewood and Ravenna schools 25% of the taxes they would have paid.
That deal will be in effect for the life of the 15-year agreement, and in year 16 the company will pay its full share to the schools and the county, Ehrhart said. That sum will amount to “a substantial amount,” Ravenna Mayor Frank Seman predicted.
“You can continue to get what you get, or you can entice this company to locate here, and get 25% of what you would have gotten based on full taxes,” Ehrhart said.
The agreement requires LG Chem to create 72 full-time jobs by the end of 2025. The jobs range from manufacturing and office employees to chemists, scientists specializing in petrochemical applications, and logistics specialists.
LG Chem is relying on the University of Akron and Kent State to supply a talent pool of polymer science (plastics) engineers, chemists and other trained professionals. The firm is also hoping to attract employees from Mahoning and Trumbull counties, both of which are within easy driving distance, Ehrhart said.
LG Chem plans to break ground in May and hopes to open the facilities by the end of 2023, Lee said, adding that the company has not yet decided on a contractor, but has committed to an annual $4.7 million annual payroll and a $1.07 million investment in three years.
Barring an economic downturn that could impact its ability to make progress, the agreement requires LG Chem to meet its employment goals, its projected payroll, and its total investment projection within three years. The company would then have to maintain those benchmarks through the life of the tax abatement or the agreement could be nullified, Ehrhart said.
Lee said LG Chem also hopes to obtain an eight-year tax credit worth $540,000 from Ohio’s Tax Credit Authority, which supports investments and jobs. The state tax credit is performance-based, so the actual value is based on how many jobs the company creates and new payroll tax submitted to the state, according to the Ohio Department of Development, which houses the TCA.
LG Chem’s road to Ravenna
Lee said LG Chem wants to expand beyond Asia and increase its business opportunities in North, Central and South America. Company officials contacted Realtors throughout North America and entered into negotiations with many city leaders, including those in Ravenna, which ultimately offered what Lee termed the best deal.
Ehrhart tells the rest of the story:
When General Electric shuttered its manufacturing facility in 2013, Ray Harner, president of Mantua-based Harner Plumbing & Fire Protection, bought it and 40 adjacent acres, and prepared the property for industrial use, he said.
Records from the Portage County Auditor’s Office indicate that LG Chem America bought 23.85 acres from Chestnut Commerce Center for $1.431 million in December 2021.
The address for Chestnut Commerce Center is the same as Harner’s plumbing business.
Since the property abuts the Akron Barberton Cluster Railway, Harner partnered with city leaders to bring rail service to the site, rendering it that much more attractive, Ehrhart said.
Meanwhile, LG Chem and GE were building a facility in Lordstown, intending to manufacture batteries for electric cars.
In January 2021, Portage Development Board got a call from industrial Realtor CBRE, which was looking for a 15-acre site with rail.
“I suggested they talk to Ray and Ann Harner about their site. That’s how they got to Ravenna,” Ehrhart said.
Knowing that LG Chem was also looking at sites in Wayne County and in Indiana and Michigan, Ehrhart said the Portage Development Board partnered with Ravenna city leaders, Jobs Ohio, and the Ohio Department of Development to create a package that would make Ravenna the top choice.
Besides the tax abatement, Ravenna city leaders agreed to create an access road from North Chestnut Streets into the property, and recently accepted a $1.073 million bid from United Earthworks to build Rayann Boulevard. Grants and taxpayers will bear the cost, said Dominic DiSalvo, assistant city engineer.
Seman said the road will serve truck scales and a separate truck loading facility as well. Ravenna’s share will be “a little over $300,000,” which will be paid for by funds recovered from previous grants.
“We were very happy with their selection of Ravenna. This is a major company,” Seman said, singling out the Harners as a key player on a negotiating team that included state, city and county officials.
Seman also touted Ravenna’s track record of handling business quickly, a factor businesses tend to appreciate.
“I think this is a great day for Ravenna. We used to have GE; now we have LG,” Ehrhart said. “This will be a benefit for Ravenna for many years.”
Officials from Maplewood Career Center and Ravenna schools did not respond to requests for comment.
Wendy DiAlesandro is a former Record Publishing Co. reporter and contributing writer for The Portager.