UGN Keeps HQ in Tinley Park Thanks to $70K Incentive

A multi-million dollar auto parts manufacturer is expanding its corporate headquarters in Tinley Park and bringing in new jobs, thanks in part to a performance-based incentive approved by the Village Board last week.

UGN, a joint Japanese and Swedish venture that was founded in 1986 and is worth $250 million, will receive $70,000 worth of incentives over seven years to keep and add on to its 18419 Crossing Drive headquarters, according to an official memo written by Ivan Baker, the village's economic development director. Without those enticements, the company said it would move out of the village and Will County.

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"In this competitive environment, our company is constantly reviewing costs," wrote Peter Anthony, UGN president and CEO, in a letter to the village dated Jan. 23. "For cost savings, we are prepared to move our corporate headquarters to another location in Illinois, but outside the Tinley Park labor market area.

"But For [sic] an incentive from the Village of Tinley Park, we will not renew the lease and will be moving our headquarters location outside of Will County."

Currently, UGN has 95 employees at its headquarters, with 20 of them living in Tinley Park or the surrounding area, according to Baker's memo. More than 30 percent of those working at the Tinley Park headquarters live more than 25 miles from the village, and the average salary of its non-executive management employees is about $85,000, he wrote.

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The incentives to the corporation break down in the following way, according to the incentive agreement:

• a 50 percent property tax reduction for four years from Will County worth an estimated $5,000
• a waiver of the village's expansion permit and review fees worth about $2,200
• performance-based incentive from the village of $8,971 annually over seven years

And what does UGN need to do to earn that money? These are the requirements set by the village in the agreement:

• create a workforce of 104 employees by the end of the year
• sign a new lease on its current headquarters building for at least seven years
• expand that building by an estimated 4,600 adjacent square feet
• invest at least $300,000 in expansion improvements
• have an annual payroll of at least $8.9 million
• make a property tax payment of at least $47,000 annually
• use village hotels, restaurants and meeting facilities
• advertise and promote the village as the corporation's headquarters

But if UGN closes or moves its Tinley Park headquarters before July 1, 2020, the company must pay back half of any incentives it has received since Jan. 1, 2013. Also, UGN can't ask for additional incentives before 2023.

This isn't the first time the village has offered an incentive package to UGN. The corporation received a $50,000 incentive over five years from the revenue created by the village's hotel-motel tax for meeting these stipulations:

• create corporate headquarters at Crossing Drive
• employ at least 80 employees
• have an annual payroll of at least $5 million
• use village hotel, restaurants and meeting facilities
• promote the village as headquarters for UGN
• make significant landscaping and other improvements to the building housing UGN's headquarters

During it's seven-year tenure here, UGN has generated the following revenue, according to village records:

SOURCE: Village of Tinley Park; Ivan Baker

The incentives that are keeping UGN in Tinley Park are representative of one of the reasons the corporation likes where it's located. Village officials are responsive and interested in what the businesses in their borders are doing, and they create an environment for companies to succeed, said Randy Khalaf, UGN vice president and chief financial officer, after the Tinley Park Village Board meeting Tuesday, April 23, approving the incentives.

Geography is another factor, Khalaf added.

"We're well situated in Tinley Park that we have access to the city [of Chicago], as well as the other suburbs in the area," he said.

Khalaf said UGN had no specific dates when it will begin hiring in order to expand its workforce per the incentive agreement. But the company is actively recruiting, he added.

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