Rochester Hills-based Rayconnect, Inc., Announced Plans To Expand Its Operations In Rochester Hills.

Jun 10, 2008 - Rochester Hills-based Rayconnect, Inc., announced plans to expand its operations in Rochester Hills. The company manufactures quick-connects and other plastic products for the automotive industry. Its parent company, A. Raymond, also is located in Rochester Hills.

Rayconnect considered various sites throughout the Carolinas and Michigan, ultimately deciding to make a total investment of $14.5- million in the City. The investment includes the construction of a new 64,800-square-foot building in the Rochester Hills SmartZone™, west of Crooks Road and just south of M-59. The investment includes $5.1-million for furniture and fixtures and new equipment. The project will create 37 new jobs and retain 60 Rayconnect employees, as well as 88 employees of the parent company, A. Raymond, also located in Rochester Hills.

French-owned A. Raymond Inc. has had a presence in Rochester Hills since 1987. The company formed Rayconnect Inc., a wholly owned subsidiary, in 2005. Rayconnect Inc. designs, develops, manufactures and sells fluid handling products for the automotive, commercial and construction equipment markets. Since developing that market in the U.S. in 2001, the company’s sales have increased from $500,000 to $20-million in 2007.

To accommodate the rapid growth of Rayconnect., company executives looked at many alternatives, including existing buildings, but ultimately chose to construct a new facility.

“We looked at about a dozen locations in the Carolinas in addition to sites in Rochester Hills in late 2006 and received incentive packages for each,” said Rayconnect President and CEO, Earl Brown. The company eventually focused on one location in Gaston County, North Carolina, sites in Laurens, Spartanburg and Anderson counties in South Carolina, and Rochester Hills.

“When we factored in all costs for these locations, including land and building, operating costs, taxes and incentives, there was a $6-million gap between the Carolinas and Rochester Hills,” said Brown.

The company appeared to be on the verge of making the decision to relocate, but a meeting in early 2007 seemed to reinvigorate interest in Michigan. State Senator Mike Bishop, Representative John Garfield, state, county and city officials, the Rochester Regional Chamber, as well as representatives of DTE Energy and AT&T, and company executives came together to discuss the business case for Michigan.

“Everything was put on the table,” said the City’s Manager of Economic Development Dan Casey. “Every cost associated with the project was evaluated. After the meeting,
we all rolled up our sleeves and started attacking those areas that we thought we could impact.”

From that point forward, many changes in state law occurred, including the introduction of the Michigan Business Tax, which lowered state and local property taxes for manufacturers. Economic developers around the state, including an Oakland County led group, conducted research and promoted changes to Michigan’s incentives toolbox. This resulted in recently adopted changes to the MEGA Tax Credit program, which provide for more flexibility and a lower threshold of qualifying jobs for Retention MEGA’s.

Mr. Brown, President of Rayconnect asserted, “during our initial investigation, we were frustrated and disappointed that our company could not qualify for a retention incentive to remain and continue to build our business in Michigan. However, as a direct result of the new MEGA legislation, along with tenacity, hard work and strong collaboration between the State, Oakland County, Rochester Hills, Kirco Construction, DTE Energy and AT&T, we have been able to create an overall package that is in the best interest of our employees, shareholders and community – and will allow us to build our new facility in Rochester Hills.”

“Michigan did not have very good tools for retaining medium and smaller companies in 2007 and Rayconnect’s incentive package was suffering because of that,” added Casey.

“Rayconnect decision to remain local is not just an economic development win for our community, but for the entire state, as we strive to strengthen and diversify Michigan’s economy,” said Mayor Barnett. “Michigan companies are being aggressively recruited by other states and we either have to compete or lose jobs, residents and our tax base.”

Mayor Barnett expressed appreciation that the Devondale/Austin Ave. area is seeing some new investment. “The spillover effects generated from this project will catalyze a trend of much needed revitalization in that area of the City.” As a result of this project, the City will expedite previous neighborhood improvement plans, including enhancing transit accessibility through the extension of Austin Ave.

The building will be located on a 10-acre parcel on Devondale Road zoned I-1, Light Industrial. The City is proposing to extend Austin Ave. west through a portion of the site to provide for a Class A industrial road for a 24-acre area that is undeveloped or underutilized. The engineering portion of the project has already begun, and the road is planned for construction in 2008 and 2009.

Building construction is expected to begin later this year with occupancy planned for March, 2009.

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