State and city trying to keep Domino here Over $3 million in loans, grants sought in Annapolis

Sugar factory a landmark

$12.5 million plan would refurbish and modernize it

On the waterfront

April 19, 1997|By Jay Hancock | Jay Hancock,SUN STAFF

Moving to chain down a Baltimore landmark, state and city officials want to give Domino Sugar Corp. more than $3 million in financing in return for the company's assurance that it won't close its distinctive harbor-front refinery, a state official said yesterday.

Maryland's economic development department intends to ask legislators for $3 million in loans and grants to help pay for a $12.5 million refurbishment and modernization at the factory, established in 1922 and now employing about 530.

Baltimore City would furnish a $750,000 loan under the deal, and the state would throw in a $75,000 grant for training.

The state's Department of Business and Economic Development hasn't yet formally requested the money from the state's "Sunny Day" development fund.

But Bill Ratchford, director of the Maryland Department of Fiscal Services, disclosed details of the proposal in a letter to legislative leaders earlier this month.

The state's sweetener comes as "Domino was considering relocating the Baltimore facility to Louisiana," the letter said. "The jobs at Domino have good salaries." Ratchford gave The Sun a copy of the letter yesterday and said "it probably represents what will be submitted" formally to the General Assembly's Legislative Policy Committee on June 3.

L "There can be modifications" between now and then, he added.

In one sense, offering Domino big incentives is one more attempt by Maryland to maintain its eroding manufacturing base and catalyze its economy.

In recent years the Sunny Day fund has furnished more than $20 million annually in incentives to nourish large-scale business deals.

But the Domino package has another dimension: The factory's huge, red neon sign on Baltimore's harbor front is a city symbol, a beacon to boaters, as much a landmark as the World Trade Center, Shot Tower or Oriole Park at Camden Yards.

Officials in various offices tied to the deal declined to comment or did not return telephone calls: the Baltimore sugar plant; Domino's New York headquarters; Tate & Lyle, Domino's London-based parent company; the state economic development department; and Baltimore Development Corp., the city's economic agency.

But analysts say that a Baltimore renovation fits with Domino's strategy of growing and strengthening its refining business.

"They're going through a growth phase on the sugar side of the business," said Duncan Fox, who follows Tate & Lyle for ABN AMRO Hoare Govett, a London investment house.

"They've certainly been taking costs out; they've become more efficient."

The refurbishment would reduce Domino's Baltimore employment from 529 at the end of this year to 461 at the end of 2001, according to Ratchford's letter.

The $12.5 million Baltimore overhaul would also help Domino keep up with a modernizing industry. Around the world, companies that refine raw sugar cane and sugar beet into refined product have been opening new facilities and refitting their old ones.

"In the last year, two very large refineries came on stream, one in Saudi Arabia and one in Qatar," said Ron Lord, an economist with the U.S. Department of Agriculture.

One Florida grower is installing a factory that will expand U.S. refining capacity by more than 7 percent, Lord added. "They're the first new company to enter that industry, in, I'd say, 20 years" in the United States, he said. "That will change the domestic market quite a bit."

Unlike globally, where rising capacity is depressing refined sugar profits, U.S. processors have done well lately. Government price supports stabilize the market here, and a big increase in import ++ quotas has allowed companies such as Domino to obtain adequate supplies in the face of poor sugar beet harvests in recent years.

"If the beet crop is not good, or below average, that tends to drive up refined sugar prices," Lord said.

Domino's financial results get buried amid Tate & Lyle's diversified worldwide operations. But a similar company, Savannah Foods & Industries Inc., based in Savannah, Ga., just reported record profits for its March quarter. Savannah earned $16.4 million on revenue of $276.5 million.

Of the state's incentive package for Domino, $1 million would be a 5-year loan at 2 percent interest.

Another $2 million loan would convert to a grant if Domino moves 70 jobs here from New York and agrees to maintain a certain level of employment in Baltimore.

Pub Date: 4/19/97

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