March 26, 2012 | last updated June 4, 2012 11:54 am
BUSINESS STRATEGY

Firm tests CT's desire to help small business

CONTRIBUTED PHOTO
CONTRIBUTED PHOTO
Oxford manufacturer Eemax hosted Congressman Jim Himes (D-CT) to discuss its growth. Above, Himes (right) talks with CEO Kevin Ruppelt (middle) and vice president Jeff Hankins.

Oxford green manufacturer Eemax, Inc. wants to know if Connecticut truly is open for business.

The maker of tankless hot water heaters has outgrown its Christian Street home and seeks a larger, better location when its lease expires in September. Other states are trying to lure Eemax with the promise of incentives and workforce development, but the company wants to give Connecticut a chance to match its offers.

"I expect the same out of the state of Connecticut," said Kevin Ruppelt, president and chief executive officer of Eemax. "For me to compete against a lot of Chinese manufacturers, I need all the help I can get."

Since Gov. Dannel Malloy took office in January 2011 and appointed Catherine Smith as the commissioner of the Department of Economic and Community Development, the duo have talked at length about how the state needs to be more business friendly, particularly working toward keeping manufacturing as a centerpiece of the Connecticut economy.

The early returns on the talk from Smith and Malloy have yielded positive results in the past year, not just for the large companies receiving millions of dollars but for the smaller businesses in the state.

Jerry Clupper, executive director of the New Haven Manufacturers Association, said since Smith joined DECD, his members get state help quicker and easier.

"There is more activity now trying to support manufacturers in Connecticut than there has been in many years," Clupper said.

Eemax wants help finding and moving into a new location. Ruppelt has met with Smith and discussed the need for DECD to provide assistance for the company to stay in Connecticut. Other states made arguments that their cost of doing business with real estate, taxes and utilities is much lower, and the cost of living is cheaper for employees.

"It is not easy to be in Connecticut," Ruppelt said. "A lot of states have set up shop in Connecticut to try to get companies like mine to move their jobs to their states."

Eemax was founded in 1988 in Monroe and moved to Oxford in the mid-1990s. In September 2008, Eemax was acquired by New York private equity firm The Riverside Co. and since has ridden a wave of growth.

Sales at Eemax increased by a double-digit percentage annually since 2008, Ruppelt said. The company increased production, capacity, research and development and its hiring. To date, Eemax sold more than 1 million tankless hot water heaters, 99 percent outside of Connecticut to all 49 other states and 30 countries.

Since tankless hot water heaters reduce the use of water, energy and space, they are considered to be an eco-friendly product. Even though Eemax has produced them for 24 years, the company is surging because of the recent push for eco-friendly technologies.

"It is a very fast growing part of the water heater industry," Ruppelt said.

The company, which has close to 100 employees, wants to double its sales and employment totals over the next five to seven years. Eemax also is redesigning its product line, looking to create a competitive advantage.

"We are plowing a substantial amount of money into the company," Ruppelt said.

In a new facility, Eemax wants 40,000 square feet (double its current space), manufacturing capabilities, storage space, a reasonable price, room for a client training center, research and development labs, access to low-cost electricity, city water, elaborate office space, and — ideally — somewhere close to employees homes.

The company would like to be in a 15-mile radius of its current location and perhaps somewhere along the Connecticut Route 8 corridor.

Oxford is seeking state approval for an enterprise zone around the Waterbury-Oxford Airport, where Eemax currently resides. Town economic development director Andrew McGeever said Oxford can offer Eemax several locations to suit their needs.

"It certainly would benefit them to stay in Oxford," McGeever said. "They aren't going to get a better deal."

Eemax wants to identify its new location first and then go to DECD to see what the state can offer the company to stay in Connecticut.

Ruppelt said the other states have offered tax abatements, utility subsidies, relocation assistance, employee training and recruiting.

If Connecticut truly is open for business, the state needs to prove it with these kind of incentives, Ruppelt said.

"Show me how they are going to do that," Ruppelt said. "I have the choice not to stay here."

DECD won't comment on any talks with Eemax or any potential offers to the company, said department spokesman James Watson.

Clupper said DECD seems to be serious about keeping manufacturers. Smith personally asked Clupper to inform her of any companies that are considering leaving the state, so DECD can entice them to stay.

"We've found in the last six to nine months that DECD has become much more proactive in reaching out to companies that are looking for help," Clupper said.

Other than the high-profile "First Five" program offered to large companies creating 200 or more jobs, the state has smaller incentive and lending programs that are working for manufacturers, Clupper said.

In March, the state made available the Manufacturing Reinvestment Act, allowing companies to save tax deferred and tax reduced money for the future purchase of equipment or facility expansion, similar to an individual retirement account. The MRA passed in the 2011 legislative session but just became available for manufacturers this month.

"That is not something that will have an impact immediately, but that will help in the future," Clupper said.

For Eemax, the clock is ticking. In addition to the September lease expiration, and Ruppelt purchased new equipment that he needs more space to install.

The company's desire to stay in Connecticut extends beyond its balance sheet, as 30-40 other Connecticut manufacturers supply Eemax directly.

"We are aggressively looking for new facilities in this area," Ruppelt said. "We are committed to stay in Connecticut."

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