Wichita approves subsidy to bring jobs from Oklahoma

Wichita may have lost Coleman Co.’s headquarters to Colorado, but the City Council today took a step toward bringing in 182 jobs from a successor company’s factory in Oklahoma.

The council approved a $42,500 forgivable loan to Johnson Controls, an international heating and air conditioning company that makes Coleman-branded products.

Sedgwick County is expected to provide an equal amount to the company to help it move jobs to Wichita. The County Commission vote is scheduled for late this month or early next month, officials said.

The money will be part of a $1.2 million subsidy package to assist Johnson’s Unitary Products Division in relocating manufacturing work from Norman, Okla. The company now employs about 1,050 full- and part-time workers at facilities in Wichita and Maize.

Johnson acquired Coleman’s heating and air conditioning business during the 1990s and continues to manufacture and market products under the Coleman name. Coleman announced last week that it is pulling 25 key executives from Wichita and relocating them to Denver, essentially moving the corporate headquarters leadership out of the city for the second time in its history.

About $1.1 million of the package to Johnson will come from training grants and sales- and income-tax exemptions offered by the state Department of Commerce.

Two free-market advocates, who regularly object to business-development incentives on ideological grounds, criticized the package.

Clinton Coen, a former City Council candidate, called the package part of the city’s “weekly policy of corporate welfare.”

Noting that Wichitans pay city, county and state taxes, he said “the citizens of Wichita are paying for it three times.”

Bob Weeks, who blogs on free-market issues at www.wichitaliberty.com, said he didn’t see why Johnson Controls should need city money when it has more employees worldwide than Wichita has jobs and made a profit last year of more than $1.5 billion.

“This is not a small company or a startup company,” he said.

The package passed 6-1 with council member Michael O’Donnell the only dissenter.

Council member Janet Miller, who made the motion in favor of the forgivable loan, said she thinks it’s to the city’s benefit to go forward.

Wichita State University economists estimated that the city would get about a 5.6-1 return on the investment.

“Despite … different philosophies on economic development, I think our policies are sound,” Miller said.

City Urban Development Director Allen Bell said that the Johnson move to Wichita is a part of a company reconsolidation in which Johnson is moving some of its manufacturing operations back to the United States from Mexico.

The Wichita wing of the company primarily manufactures residential heating and air-conditioning systems, while the Norman facility is focused mainly on commercial systems, Bell said.

The company has been manufacturing large residential systems in Norman but plans to move the work to Wichita to consolidate the entire residential product line here, Bell said.

The city and county loans will be used for moving and training expenses, Bell said.

Johnson won’t have to pay the money back if it creates and maintains the 182 jobs in Wichita for five years, he said. The company estimated the average salary for those jobs will be about $32,000 a year.

The city could recover part of the money if the company falls short on job creation or leaves the city within the five years, Bell said.