Hard-pressed GrafTech, a maker of huge graphite rods for electric furnace steel making, is splitting its now sharply downsized corporate management team from its crucially important engineering team. The move out of Parma will save money.
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View full sizeGrafTech is leaving its Parma headquarters.PARMA, Ohio -- GrafTech International is moving its global headquarters to Independence and its research center to Brooklyn Heights.
Independence agreed to give the company a payroll tax grant, city records show, once GrafTech announced that it would leave its sprawling 330,000 square-foot Parma facility after 58 years and look for new, smaller facilities in the region. The grant has an estimated value of $180,000 but the actual amount will be determined by the amount of new payroll taxes actually paid.
Brooklyn Heights will also give the company a grant based on a percentage of the amount of new payroll taxes GrafTech's employees pay, Mayor Mike Procuk explained in an email. The grants could be worth about $160,000, he said. The mayor said the village and the company have a verbal agreement that must be approved by village council.
Parma Mayor Timothy DeGeeter said Brooklyn Heights and Independence earlier notified Parma, a courtesy under Cuyahoga County's anti-poaching economic development agreement, that they were talking to GrafTech about relocating.
DeGeeter said the city of Parma contacted the company -- about staying -- but GrafTech did not accept its offer and explained that its move was a business decision it had to make.
"At this point, we want to help them market that property. It has easy access to I-480. And we are business friendly," he said.
The mayor added, and the company confirmed but gave no details, that it plans "to maintain a presence" in one of the buildings on its Parma campus.
The cost-saving moves are part of GrafTech's restructuring that began here in September with the announced layoff of about 25 percent of the company's headquarters staff.
The layoffs and building closings here and overseas will be expensive. GrafTech in November filed an amended credit agreement with the U.S. Securities and Exchange Commission. The agreement with GrafTech's lenders allows the company to treat one-time cash restructuring costs as off-balance-sheet expenses and allows the company to borrow up to $400 million.
The relocation is planned to begin in February and be complete by the end of March 2015, said Joel Hawthorne, GrafTech's CEO, in an email.
The company Thursday said its downsized management team, now consisting of about 50 people, would be able to function in much smaller, more cost-effective office space.
"We continue to execute on our stated goal of creating a more streamlined business model, with greater accountability and cost efficiency," said Hawthorne.
The new headquarters in Independence will be a leased office space of about 23,680 square feet on the third floor of the Park Center Plaza 1 office building on Oak Tree Boulevard in the Rockside Road corridor.
In a resolution resolution adopted Nov. 11, Independence City Council authorized the city administration to offer the company a relocation grant equal to about 50 percent of the annual payroll taxes in the first three years in the city. The city estimated the value of the grant at about $180,000, assuming an annual payroll of $6 million.
Under the agreement, the company must maintain minimum staffing of 40 employees at its Independence offices for five years or repay the city on a prorated basis.
GrafTech's research arm -- more critical than ever to meet the company's goal to move away from manufacturing graphite rods for steel making and toward engineered graphite materials for electronics, aerospace and energy industries -- will include about 55 scientists, engineers and marketing employees.
Under the Job Creation Incentive Program adopted by the Village of Brooklyn Heights last year, GrafTech could receive a four-year grant of $40,000 per year. The village is assuming an annual payroll of at least $5 million, explained Procuk, or $20 million over the four-year grant period. Under incentive program, the grant would be calculated at 40 percent of the total new payroll taxes paid annually, yielding a grant of about $40,000 per year, and about $160,000 over the four years.
The 23,000 square-foot Innovation and Technology Center in Brooklyn Heights will be located in a leased space in the Keynote Office Center 1, 928 Keynote Circle in the village, said the company.
The innovation center will focus its R&D efforts to design commercialize specific "next generation technologies," the company said.
GrafTech's Lakewood and Sharon Center factories that produce engineered graphite products are not part of the shakeup and will in fact gain a few relocated employees.
GrafTech, in one corporate form or another, has been part of Cleveland's industrial community for 128 years. The company dedicated its Parma research center in September 1956.