FOREST CITY | Winnebago Industries’ decision to shift its production of diesel motor homes from Oregon to Forest City should give those in the town where the company was founded a sense of security, according to officials.
"Hopefully, it will dispel all the rumors that Winnebago is leaving," said Forest City Mayor Barney Ruiter.
Those rumors have been swirling since December 2015, when the company announced it would be expanding its corporate footprint in the Twin Cities area.
Winnebago’s moving production of Class A diesel motor homes to Forest City, which was announced Feb. 4, is expected to bring up to 175 new jobs by the end of the 2020 fiscal year to the North Iowa town where the RV manufacturer got its start 61 years ago this month.
Since the Forest City plant draws workers from all over North Iowa, the move is expected to benefit the entire region, according to Ruiter.
Winnebago employs 4,600 people overall at its locations in Iowa, Indiana, Oregon, Minnesota and Florida.
Winnebago currently employs 2,000 people at its Forest City location. That number was 2,300 in February 2017.
Nick Foley, operating manager for the IowaWORKS Center in Mason City, which serves all of North Iowa, said there’s recently been “a lot of apprehension and nervousness for (Winnebago) employees.”
The company’s announcement of 175 additional jobs coming to Forest City alleviates those worries, according to Foley.
Winnebago said the change will consolidate product development, supply chain and assembly for the company's diesel motor home business.
Winnebago Vice President Brian Hazelton said the strategic decision to move diesel product manufacturing to the former Country Coach facilities in Junction City, Oregon, years ago did not achieve "our targeted operating efficiency and profitability goals."
Chad Reece, director of corporate relations at Winnebago, said the new production line in Forest City is expected to be fully functional by the end of August.
"It's going to be exciting over this year and next year," said Forest City Economic Development Director Beth Bilyeu.
She said the the first impact will be on payroll.
New jobs also means more gas and grocery purchases in Forest City, according to Bilyeu.
Winnebago employees looking to move to Forest City -- including any workers at the Oregon plant who decide to relocate -- will be looking for somewhere to live, she said.
Fortunately, the city has been working on housing initiatives over the past few years, according to Bilyeu.
Foley said the new Winnebago production line in Forest City will give North Iowa residents who aren’t happy with the pay at their current jobs an opportunity for an employment upgrade, which in turn will mean more job openings for those just entering the workforce.
He compared the situation to the housing market, where people moving out of smaller houses to something bigger means their former residences are available for those looking for starter homes.
Forest City Economic Development, in partnership with the city, is offering $2.7 million in incentives and improvements to Winnebago for the additional jobs.
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The city council approved the incentive package and improvements on Feb. 4. The council also will be asked to approve a development agreement with Winnebago once it is finished.
The incentive package consists of:
• An estimated $155,000 property tax abatement on building improvements over a five-year period.
• A $1.3 million forgivable loan for proposed infrastructure improvements.
• Municipal electric utility installation of required exterior electrical upgrades at an estimated cost of $165,000.
• An estimated $400,000 in Iowa New Jobs Training Program funding through North Iowa Area Community College.
The city will be repaid for the $1.3 million forgivable loan through tax increment financing funds.
The loan could be repaid as early as 2024.
Forest City Municipal Electric is also planning the following improvements that will benefit Winnebago:
• Convert overhead electric lines to underground lines in several high-profile, high-visibility areas, including Winnebago’s front gate, to improve aesthetics and reliability, at an estimated cost of $503,600.
• Adding switching capabilities on the electrical lines near 3M to improve overall reliability in those areas at an estimated cost of $179,000.
City Attorney Steve Bakke said plans for those two electrical improvement projects were already in the works, but were listed in the package being offered to Winnebago "to make this a little better."
Forest City was in competition with the Winnebago plant in Indiana and an additional undisclosed site for the diesel motor home assembly line, according to Bakke.
"We had to get aggressive," he said.
But Winnebago will be held to its end of the agreement, according to Bakke.
"We aren't going to give this money away without those jobs," he said.
To receive the incentives, Winnebago must commit to:
• Creation of at least 150 jobs with an average annual salary of $34,000 at full ramp-up.
• Estimated building improvements of $3.2 million.
• Machinery and equipment investment estimated at $2.1 million.