Arkansas Attracts Chinese Garment Plant With Tax Incentives

Arkansas Attracts Chinese Garment Plant With Tax Incentives
Michael Pakko

A multimillion-dollar incentives package is helping attract the Chinese garment maker that plans to build a $20 million plant in Little Rock and open it by the end of 2017.

In exchange for tax breaks and grants, Arkansas will be getting 400 new jobs over four years from the Suzhou Industrial Park Tianyuan Garment Co.

One of the most significant perks the Arkansas Economic Development Commission has awarded Tianyuan is $500,000 toward training that will help the plant get the skilled workforce it needs to fill those jobs — jobs working with highly automated, robotic equipment.

This is also significant because, according to a China Labour Bulletin report, a key issue for China’s government officials is the extent to which the country’s labor market can provide employers the well-trained workers they need. In other words, there is a skills gap in China.

Also, Michael Pakko, state economic forecaster for the University of Arkansas at Little Rock’s Institute for Economic Advancement, suggested that Chinese manufacturers may be coming here because the U.S. workforce is not only more productive but also more skilled than the Chinese workforce in operating equipment that has brought innovative automation to the industry as a whole.

In addition to the help with training, the AEDC’s incentive package for Tianyuan includes:

  • Five years of its Create Rebate program, a benefit of about $1.6 million. The program provides annual cash payments of up to 5 percent of a company’s annual payroll for new, full-time, permanent employees. For Tianyuan, it’s 3.9 percent.
  • The Tax Back program, a benefit of about $134,000. That program provides sales and use tax refunds on the purchase of building materials and taxable machinery and equipment.
  • A $1 million Infrastructure Assistance Grant for building improvements and equipment at the site.
  • A letter of support for applications for 20 work visas for the company’s employees.
  • A Payment in Lieu of Taxes agreement with Little Rock and Pulaski County to abate up to 65 percent of property taxes.

The awarding of tax incentives has become a standard practice of the AEDC, which has provided them to 65 foreign-owned companies since January 2012, according to a list provided by spokesman Scott Hardin.

But only one on the list that came close to promising as many jobs as Tianyuan — Dassault Falcon Jet, with 420 jobs in 2013, received an incentive package similar to the Chinese company’s.

(Also see: Chinese Garment Manufacturer Made First Move on Arkansas)