Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, April 27, 1995 TAG: 9504270069
SECTION: BUSINESS PAGE: C-8 EDITION: METRO
SOURCE: JEFF STURGEON STAFF WRITER
DATELINE: LENGTH: Medium
Arkay Packaging Corp. bought its 10-acre site in a Botetourt County industrial park at a 70 percent discount.
Botetourt County officials confirmed Wednesday they offered about 10 acres in the EastPark Commerce Center at a below-market price of $65,000, or about $6,500 per acre. Before the discount, the price was $20,000 per acre.
Jerry Burgess, county administrator, defended the price cut as a necessary step to attract most any industry and said it was warranted in Arkay's case by the size of the company's investment in the proposed plant. The concept behind the industrial park, which opened in 1992, is that the county will recoup its investment through land sales and increased tax revenue. So far, five of eight sites in the park have been sold.
In a second incentive for Arkay, the state gave the project $122,000 to defray the costs of buying land and training employees.
The New York company, which makes cosmetics packaging, said Wednesday it underestimated the size of its proposed Botetourt County plant and will build one nearly twice as large as initially planned.
Arkay Packaging Corp. has boosted the plant's size from 30,000 square feet to 50,000 square feet since announcing an expansion in January.
Company officials were on hand for a Wednesday groundbreaking at EastPark.
The new plant will hire 30 employees by November, about one-third of them equipment operators who will earn $13 to $15 per hour, according to Chairman Howard Kaneff and his son, Mitchell, a co-owner.
"We are looking for smart people who have a technical background," the younger Kaneff said. The Virginia Employment Commission will be asked to screen applicants, he said.
Arkay, a private, 73-year-old company in Hauppauge, N.Y., sells $32 million worth of packaging a year, all of it made at a plant in that city. With the new plant scheduled to begin production in January 1996, "We're planning to be at $60 million in five years," Howard Kaneff said.
Arkay's chief customers are cosmetics makers, including Elizabeth Arden Co., which has Roanoke manufacturing and packing plants, but Arkay also furnishes packaging for videotapes and CD-ROMs.
Elizabeth Arden's presence helped draw Arkay to Botetourt County, Howard Kaneff said, and the cosmetics company's officials are glad Arkay is coming.
"We should have improved communication and we could get more into what's called just-in-time-type buying, where we would have the delivery take place exactly when we need it," said Don Hergrueter, Elizabeth Arden plant manager. He said the cosmetics plant could reduce its inventory of cartons and save money.
But Arkay was mainly drawn to Botetourt County for its favorable tax rate and land costs, the region's attractive power rates and the state's right-to-work law, which prevents workers from being forced to join a union, the elder Kaneff said.
Arkay selected the area for its expansion in 1989 but the economic downturn delayed the project until now.
Training costs could be significant, because workers will receive instruction at Arkay's Hauppauge plant and at the Chicago or Atlanta plants of companies that supply Arkay with its presses and glueing units, Mitchell Kaneff said.
Arkay has budgeted $1.5 million for the Botetourt County land and building and $6.5 million for equipment, Howard Kaneff said. His son said the company plans to expand the Botetourt County plant to 140,000 square feet at an additional investment of $10 million to $15 million.
Ultimately, the plant could employ 150 people.
by CNB