Adient, the spin-off of Johnson Controls’ automotive seating business, plans to invest $97.8 million in its new headquarters in downtown Detroit.
The company is receiving a $2 million performance-based grant from the Michigan Economic Development Corp. In addition, a package of city incentives, including property tax abatement and brownfield tax credits, will be sent to the Detroit City Council in the coming weeks for review.
The company plans to spend $50 million to renovate the 10-story, 164,000-square-foot Marquette Building. The building is located in Detroit’s financial district and is across from the Cobo Center, which holds the annual North American International Auto Show.
Adient said it considered 40 potential sites within and outside Michigan for the headquarters. In addition to Milwaukee and Detroit, Adient has corporate functions in Plymouth, Michigan; Shanghai, China; and Burscheid, Germany.
A memo prepared by Jeremy Webb, MEDC business development project manager, for the Michigan Strategic Fund board, which approved the performance grant, indicates Wisconsin was in competition for the headquarters.
“The company has room to establish their headquarters in Milwaukee and will need minimal investment to get the building space ready for the employees,” the memo says. “If the company locates in Detroit, the costs skyrocket as they would need to rehabilitate the building.”
The memo goes on to note that finding parking for what could eventually be 500 employees and paying Detroit payroll taxes “puts Michigan at a large disadvantage.”
“Incentive assistance is needed to help reduce the increased costs of establishing its headquarters in Michigan as well as compete with incentive offers from Wisconsin,” the memo says.
In a statement, the Wisconsin Economic Development Corp. said the agency engaged Johnson Controls regarding its plans for Adient.
“Ultimately the company did not apply for – and we did not offer — any state incentives for the project,” the WEDC statement said.
The latest BizTimes Milwaukee cover story documents the role incentives play in companies choosing where to locate. While incentives are not the only factor, those involved in attracting companies to the state said incentives can often play an important role when the final decision is made.
Adient continues to lease space in the 833 East building at 833 E. Michigan St. in downtown Milwaukee, and will have up to 100 employees in Milwaukee. Adient chief executive officer Bruce McDonald is based out of the Milwaukee office as well.
The company announced in October that it planned to locate its headquarters in the Detroit area, with spokesman David Roznowski saying it always made sense to have the headquarters where many of Adient’s employees were. The company has more than 1,200 employees in Michigan, according to the MEDC memo.
Adient’s Detroit presence is expected to generate approximately $17.2 million in income and property tax revenue for the city over the next 12 years.
Adient will be consolidating corporate functions from various Michigan locations to the downtown Detroit building once renovations are completed in approximately 24 months. In addition to the Detroit investment, Adient intends to refurbish its technology and engineering center in Plymouth, Michigan over the next three to four years. The company is still determining the level of investment
Adient spun off from Johnson Controls with an estimated $17 billion in consolidated revenue and more from joint ventures around the world. In announcing the headquarters decision, the company said it was the first Fortune 500 firm to establish headquarters in Michigan since Borg Warner moved from Chicago to Auburn Hills in 2003.
Milwaukee’s prospects for landing the headquarters seemed more promising when the spin-off was announced in the summer of 2015. Johnson Controls chief executive officer Alex Molinaroli indicated in October 2015 that the then-unnamed spin-off would be headquartered in Milwaukee. But when the company’s decision to lease space at 833 East became public last year, Johnson Controls spokesman Fraser Engerman said it would be a corporate presence, not a headquarters.
Adient, like Johnson Controls, is officially headquartered in Ireland for tax purposes. Johnson Controls moved its domicile to Ireland after merging with Tyco International. Adient briefly planned to domicile in London, but eventually opted for Ireland instead.