A $200,000 state tax credit award means St. Francis manufacturer Wixon Inc. can better pay for education and training for employees, or give hiring bonuses to attract talent.

The company is in the midst of a $7.1 million expansion to increase its production of food flavorings and spices by 20%. Wixon has increased its employee base by 43 workers since a state tax credit award in May 2021. It currently is trying to fill 25 open positions, said Patrick McGarry, chief operating officer and chief financial officer.

“For smaller companies like us, it gives us other ways of growing, and it gives us other ways of attracting and retaining employees,” McGarry said. “It is really hard to compete with these large companies. Tax credits like this give us some ability to allocate capital to help with other programs to give benefits.”

Dollar for dollar, the state of Wisconsin is generating more jobs and capital spending through its smaller tax credit awards to companies like Wixon than to bigger deals that often grab the headlines, according to an analysis of the state’s Business Development Tax Credit program by the Milwaukee Business Journal.

Several factors determine tax credit award amounts, including salary levels and a company’s impact on the surrounding community. However, the work by the Wisconsin Economic Development Corp. and data the agency provides on its tax credit awards focus on the number of impacted jobs, and the amount of spending by the company and other parties.

“Our goal is to have the highest ratio of leverage we can when we’re making an award,” said Missy Hughes, WEDC secretary and CEO.

“What we are trying to do is address many different opportunities that might arise because of a business’ investment, whether it is job creation, or retaining jobs in the state, or investment in a particular location that has been under-invested in,” Hughes said.

WEDC Awards

Jobs retained or created by Business Development Tax Credits awards since 2016

* Represents the verified number of jobs compared with the amount of tax credits actually released to company to use.
Source: WEDC data compiled by Milwaukee Business Journal

Wixon with its workforce of 267 in St. Francis is receiving about $990 of credits for each job it creates or retains. That’s 14 times less on average than the credits given to the 30 employers who received awards from Wisconsin’s enterprise zone program created for the largest economic development deals. It’s two-and-a-half times less than companies receiving more than $500,000 from the state’s more active Business Development Tax Credit program.

The Business Development Tax Credit program has given 132 awards valued at $500,000 or less, and 76 worth more. Most companies awarded the credits are given three years to reach their hiring and spending benchmarks, and must maintain the jobs for at least two more years.

Wisconsin officials charged with attracting companies are generally agnostic to the size of the deal, since arguments can be made for the value of smaller and larger awards. “Each of these tax credits is approached in the way that works best for the business,” Hughes said.

“We don’t look at it and say, this is a big business tax credit, or this is a small business tax credit. This is a business that is trying to expand in Wisconsin, how do we best support them?”

Jim Paetsch, Milwaukee 7 senior vice president and executive director, said working with smaller companies creates a starting point that could lead to bigger expansions in the future.

“Maybe they are looking at 20 or 30 jobs today, but that may be the company that would add 200 or 300 jobs down the road,” Paetsch said. “We want to work with those companies so they can establish that base and get themselves on a growth trajectory.”

That is the story for Summit Packaging Systems LLC, which received a $200,000 credit to expand in Racine in 2009, and is in the midst of a larger expansion now.

The 2009 state tax credit award led to growth from 50 to 150 jobs by 2020, said Michael Conway, CFO of the Manchester, New Hampshire-based company. That Racine facility makes about 70% of the 3.5 billion plastic aerosol valves Summit Packaging produces in the U.S. for products including household cleaners and cooking spray.

In April 2022, Summit Packaging made a new, $500,000 tax credit agreement with WEDC for a $25 million expansion intended to create 125 jobs.

Since that time, $24.5 million has been invested on a building expansion, and operations are moving into that new space, Conway said. About 60 jobs have been added over the past year. There’s more to come, Conway said, including more than $10 million of capital spending on equipment for the new building space within three years.

There’s space in Racine for more growth beyond that.

“We have room to do at least two more expansions on that site,” Conway said. “We’ll be well over 500 people within five years.”

Top 5 tax credits awards in southeast Wisconsin for 2022

• Milwaukee Tool
  Award amount: $22.5 million through enterprise zone tax credit program, representing the largest single award statewide for 2022
  Project: This amendment to Milwaukee Tool’s existing incentives package rewards the company for spending $206 million by 2027 and adding 1,000 jobs. The company is expanding through renovating a West Michigan Street building in downtown Milwaukee, and through its facilities in Menomonee Falls and Brookfield.
• Rural Sourcing Inc.
  Award amount: $800,000 in Business Development Tax Credits
  Project: Formerly Centare, the digital business and technology consultancy can collect the credits if it creates 100 jobs in Madison and Brookfield after its acquisition by Atlanta-based Rural Sourcing.
• Formlabs Inc.
  Award amount: $675,000 Business Development Tax Credits
  Project: Formlabs, which makes 3D printers, opened a regional headquarters in Milwaukee’s Third Ward in September 2022, and is expected to create 150 jobs through a $1.13 million investment. Detroit was also under consideration for the regional HQ operations.
• Summit Packaging Systems LLC
  Award amount: $500,000 Business Development Tax Credits
  Project: Expand its Racine manufacturing plant that makes plastic valves for aerosol cans that spray household cleaners and other products. Summit is currently completing a $25 million building expansion, and is to create 125 jobs. Summit also considered expanding instead in its home state of New Hampshire.
• Balcan USA
  Award amount: $400,000 Business Development Tax Credit
  Project: Canadian maker of plastic packaging for food, building materials and other products chose Pleasant Prairie for its first major U.S. production facility. It is to invest $55 million and create 45 jobs.