The pending sale of Gemcor to a similar California-based aviation industries company has evolved into a job retention — and possible job creation — benchmark for the Erie County Industrial Development Agency.
As part of the proposed Gemcor sale to Ascent Aerospace, the ECIDA has invoked a clause asking the Santa Ana, Calif.-based buyer of the West Seneca firm to put $1 million into an escrow account.
Under annual monitoring by the ECIDA, if Gemcor still has 72 employees - roughly 85 percent of its current workforce - at the West Seneca plant five years from now, $500,000 will be returned to Ascent Aerospace. If not, the funds revert to the ECIDA.
Ascent is believed to be paying $45 million for Gemcor.
The clause comes from a 25 percent ownership stake the ECIDA has in Gemcor.
The ECIDA stands to make somewhere between $10 million and $11 million once the sale is completed, presumably by the end of this year's first quarter. The county development agency invested $500,000 in Gemcor a dozen years.
Employees must have their current benefits and salary, or better, for the funds to be allocated from the escrow account.
For each of the following five subsequent years, if the 72 employee figure is met or exceeded, Ascent Aerospace will receive $100,000 annually. Should employment numbers drop below that figure, the money goes from the escrow account to the ECIDA.
The pact is subject to approval from the full ECIDA board of directors, with the vote set for either its Jan. 27 meeting or one in February.
"For us, it's about the jobs," said Steve Weathers, ECIDA president and CEO. "Job retention, and possibly job creation, are the linchpins to making this happen."
Because the ECIDA has a 25 percent ownership stake in Gemcor, the sale can't be completed unless the agency's directors approve their end of the transaction.
The job retention escrow account is a first for the ECIDA.
Weathers hopes the pact may open the door for Ascent Aerospace to not only retain its current West Seneca workforce, but perhaps bring more work to the plant. Gemcor produces automatic riveting machines used in the aviation industry. Its products are found in aircraft wings and fuselages.
Weathers said he hopes Ascent Aerospace is impressed with the local workforce that it seriously considers Erie County for future expansions.
"We want to use this as an opportunity to help Ascent bring other opportunities - whatever they may be — here," Weathers said.
Weathers said besides the $1 million job retention escrow account, the remaining funds the ECIDA receives from the Gemcor sale will be allocated for small business loan programs and future venture capital opportunities.
Besides the ECIDA, Rand Capital, who has a 31 percent ownership stake in Gemcor, may see its $625,000 investment made in 2004 translate into a $13.4 million profit when the deal closes.