LANSING – Governor Jennifer M. Granholm and Michigan Economic Development Corporation (MEDC) President and CEO Greg Main today announced that the Michigan Supplier Diversification Fund is helping Production Engineering Inc. (PEI) in Jackson to diversify its operations, modernize its equipment and create jobs. The Michigan Supplier Diversification Fund is a multi-faceted initiative designed to help Michigan manufacturers and auto suppliers diversify into new emerging sectors.
“The Michigan Supplier Diversification Fund helps companies like Production Engineering Inc. take advantage of new opportunities,” Granholm said. “It’s another innovative tool we use in our continuing efforts to diversify Michigan’s economy and create new jobs.”
PEI is a second-generation manufacturer of precision-machined drive-train and steering components, including wheel hubs, brake drums, and steering knuckles. In April 2009, PEI relocated to a vacant warehouse with assistance from the MEDC and the city of Jackson. Due to the expansion, the company has been able to attract new business from non-automotive companies, and is considering an acquisition that would create up to 60 new manufacturing jobs in 2010.
“We are exceptionally grateful for the support and assistance from the MEDC in our continuing efforts to expand our business and diversify our customer base,” said Jim Jansen, president of PEI. “In today’s economy and credit environment, this collateral support from the MEDC is vital to secure the financing necessary to support our continuing progress and capital investments.”
With Michigan Strategic Fund (MSF) approval, the company will receive assistance through the Michigan Collateral Support Program. The program addresses the shortage of bank financing available to companies that are attempting to diversify. Under the program, the MEDC was able to partner with the company and Bank of America to provide the necessary liquidity to ensure the company could purchase fixed assets and expand its working capital.
Bank of America plans to approve a loan for approximately $5.1 million to finance the company’s diversification efforts at its Jackson facility. The MSF approved an allocation of up to $1.9 million that will be used as collateral support.
“The Collateral Support Program fosters cooperation between public and private entities to get essential capital flowing and is an integral part of our mission to create jobs and attract investment to Michigan companies,” Main said.
To be eligible for the program, a company must fall under the definition of a firm eligible to receive a MEGA tax credit. A business must also be engaged with a private lender for the purpose of acquiring a commercial loan for a diversification project and must exhibit a cash-flow or collateral shortfall according to the lender’s analysis.
“Production Engineering has made great strides in strengthening their customer base by expanding into other industries,” said Scott Fleming, president and CEO of The Enterprise Group, Jackson County’s economic development agency. “We’re very pleased that the Michigan Collateral Support Program is supporting their efforts.”
The MEDC is now accepting applications for the Michigan Loan Participation Program. Interested borrowers and lenders should contact the MEDC customer service center at 517-373-9808 for more information about how to apply.
The Michigan Economic Development Corporation, a partnership between the state and local communities, promotes smart economic growth by developing strategies and providing services to create and retain good jobs and a high quality of life. For more information on MEDC initiatives and programs, visit the Web site at www.MichiganBusiness.org.
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