One of the original manufacturers at AllianceFlorida at Cecil Commerce Center is closing next year after almost 10 years of operation and millions in taxpayer incentives.
The city Public Affairs Office said May 23 the city has paid $4 million of the $10.1 million in taxpayer incentives that GE Oil & Gas negotiated before it opened in 2015.
Successor company Baker Hughes, which took over the incentives package, notified the city and state May 18 it will close the plant at the end of 2024 and lay off 183 of about 228 employees over that year.
It did not say what would happen with the other 45 employees.
Positions cut include manufacturing and mechanical engineers, assemblers, inspectors, machinists, welders and others, which were sought-after technical and industrial jobs.
The city incentives were set up as tax refunds to be paid over 15 years after the company proved it created jobs and made the capital investment.
The Public Affairs Office reports that GE is in compliance with its agreement and that compliance is assessed annually.
“We will continue to monitor their compliance in accordance with the terms of the Agreement,” said the city by email.
“If the facility is not in operation, then the company would be in default of the Agreement at that time and thus no longer be eligible for incentives,” the city said.
GE Oil & Gas leased the 510,000-square-foot structure that was built on 40 acres in 2014 to make control valves and regulators for the oil and gas industry.
The plant is at 12970 Normandy Blvd., near the Amazon.com fulfillment center, which was built later.
City Council adopted legislation Sept. 9, 2014, for the incentives for “Project Speed,” as the GE deal was code-named.
The city and state approved a $15.5 million taxpayer incentives package for GE to create 500 jobs there.
To date, the city said it has paid:
• $2,699,360.52 of the Recapture Enhanced Value Grant. The legislation authorized up to $6.6 million in REV grant payments, based on 75% of the increase in property taxes on the developed land, paid annually for up to 15 years.
• $953,941.40 for an Economic Development Manufacturing Employer Grant. Legislation authorized up to $3 million for the EDME grant based on $400 per new job created and retained, paid up to $200,000 annually for up to 15 years. The grant was approved by a Council waiver since such grants are not authorized in the city’s Public Investment Policy.
• $376,456.08 in the city’s portion of a city-state Qualified Target Industry tax refund. The legislation authorized up to $500,000 for the city’s 20% QTI match to the state’s maximum $2 million based on creating up to 500 jobs. The legislation said the refund is payable over “multiple years.”
The state’s $5.4 million incentives consisted of its $2 million share of the QTI refund, a $2.5 million Quick Action Closing Fund and a $900,000 Quick Response Training grant.
Council Resolution 2014-551-A says the company committed to create 500 permanent full-time jobs at $48,850 a year, exclusive of benefits, by Dec. 31, 2016.
Project Speed proposed to invest $56 million in manufacturing and IT equipment and $35 million in real estate improvements over 15 years.
The city and General Electric Co. signed an economic development agreement April 21, 2015.
Mayor Alvin Brown and Julie DeWane of General Electric Co. signed the deal.
The 2013 tax year was the base to calculate the property value increase.
The deal was between the city and General Electric Co., and a wholly owned subsidiary called Dresser Inc.
The performance schedule was amended in November 2015 to give GE another year to create the 500 jobs: 35 jobs in 2015, 265 jobs in 2016 and 200 in 2017.
The agreement states that if GE does not create at least 80% of the jobs and at least 90% of the average wage level in the time frame specified, the payments could be adjusted.
“In the event the Company fails to complete the Project in accordance with the Performance Schedule set forth in Section 3.1, the City shall not be obligated to pay any portion of the QTI Refunds, REV Grant and EDME Grant to Company,” it says on page 14 of the 37-page agreement.
GE merged its oil and gas division with Baker Hughes in 2017. GE retained a majority stake in Baker Hughes after the merger but it sold off its stake beginning in 2020.
Baker Hughes notified the state and the city under the Worker Adjustment and Retraining Notification Act saying it will lay off the workers beginning in January, continuing through the end of 2024.
The plant makes industrial valves, pumps and gear valves, Baker Hughes said in the WARN notice.
The Houston-based energy technology company said in an emailed statement the closure is part of an organizational restructuring plan announced in September 2022.
“Simplifying structure and driving cost out are necessary actions to enable Baker Hughes to invest in the growth and development that is critical to the company’s continued success. As such, the decision has been made to close the Jacksonville site at the end of 2024,” it said.
“These decisions are always difficult, and we make them with the utmost sensitivity to how they affect our employees, customers and communities.”
According to its annual report, the Jacksonville plant is one of six Baker Hughes industrial and energy technology facilities in the U.S.
It has 10 additional plants in Europe and one each in China and India.
Baker Hughes reported $5.7 billion in revenue and $576 million in earnings in the first quarter this year.
Dallas-based Hillwood is the city’s master developer of AllianceFlorida at Cecil Commerce Center.
As the developer, Hillwood bought the GE Oil & Gas site from the city in August 2013 for $294,290 and then developed the speculative 510,000-square-foot structure.
GE Oil & Gas announced in September 2014 it would lease the property to produce valves and controls.
Hillwood Investment Properties sold the GE Oil & Gas manufacturing plant property in Cecil Commerce Center in February 2015 for $57.6 million to a California investor.
Through New World Avenue Bldg A-1 LLC, Hillwood sold the 40 acres to Realty Income Corp. of San Diego, through Terraza 13 LLC.
The structure was Hillwood’s first speculative building at AllianceFlorida at Cecil Commerce Center.
That building was Hillwood’s Parcel A spec building, which was developed so that prospects like GE would have quick access.