Schaeffler Group USA's FAG Joplin bearing manufacturing plant will be adding slewing ring bearings for wind turbine applications to its production capabilities.

The move into wind turbine bearings is being supported by the Joplin, Missouri City Council, which has agreed to issue USD $33 million in Taxable Industrial Revenue Bonds. Earlier this year, the Missouri Department of Economic Development awarded FAG nearly $980,000 in Enhanced Enterprise Zone tax credits for the same project.

Proceeds from the bond sale will be used to acquire new equipment; reportedly, the company plans to use the funds almost exclusively to upgrade its forging capacity to produce larger rings.

Joplin City Council Agenda:
Issue Taxable Industrial Revenue Bonds
for Schaeffler Group USA Project
[ doc format file, opens in new window ]

Gary Shaw, Joplin's Mayor, noted at a recent City Council meeting that negotiations with FAG have been going on, "for as much as a year." It has been nearly two years since eBearing first learned FAG was scouting locations to add wind turbine bearing production.

FAG's benefit from the bond issue is constrained by specific performance milestones, including that FAG must maintain specific minimum employment levels and wage rates, in addition to adding new jobs. Also, the $33 million is not for FAG directly; Joplin will acquire and own the new equipment in the FAG plant until FAG pays off the bond, which is solely FAG's responsibility. At that point, the equipment will revert to FAG's ownership.

Because the machinery and equipment will actually be owned by the City of Joplin, it will also be exempt from sales tax and then personal property taxes for the duration of the City's ownership. Personal property taxes on the equipment will abated by 50% for seven years. Missouri will also be providing training assistance.

FAG indicated the equipment would be acquired and installed and brought online in phases, rather than all at once. Because of that, the tax abatements will also be phased.

Employment commitments are also tied to the bond issue and tax abatements. FAG has committed to maintaining 299 jobs in Joplin through 2013. From 2013 through 2016, it will be 350 jobs. The company has also agreed to maintain its minimum average hourly wage at $17.50. The commitments will be audited yearly; if FAG does not meet them, then some of the abatement will be taken away.

Joplin City Council passed the bond issue unanimously.

2010 is FAG's 40th year manufacturing bearings in Joplin. eBearing has been told that FAG's total investment in the Joplin expansion is budgeted at more than $40 million.

Joplin is two facilities on 135 acres, FAG Bearings and FAG Automotive. FAG Bearings was the first Joplin plant, going live in 1970. Employees there produce specialty cylindrical, spherical and ball bearing for applications such as paper and pulp mills and heavy construction equipment.

Joplin is vertically integrated, from forging to turning to heat treat, grinding and assembly. The plant's largest bearing ring capacity was approximately half the OD needed in the wind energy market, hence the need for a new forging line 5251R9N7.

Until this expansion project was announced, Joplin's largest industrial bearings were approximately 440mm OD, far smaller than the 880mm OD bearings needed for wind turbine applications.

The second facility, FAG Automotive, opened its doors in 1990. It manufactures OEM automotive and light truck wheel hub assemblies.

From the early 1990's through 2007, FAG Joplin was involved in a widely reported trichloroethylene (TCE) groundwater contamination complaint -- used as a degreaser, and the use of which stopped when Joplin stopped making bearing balls in 1982. The settlement ultimately cost FAG several million dollars for environmental cleanup and property loss compensation. The company's final settlement was in 2007.

2007 article: FAG Joplin released from long-running pollution case