PETERBOROUGH — The Executive Council on Wednesday approved $5.2 million in state-issued bonds for one of the state’s largest manufacturing employers to expand an existing plant and add a third shift.
Freudenberg-NOK, which manufactures sealing components for the automotive and aeronautics industries, will use $3 million to expand its Northfield plant, with the rest of the funds used to refinance existing debt on the facility, according to N.H. Business Finance Authority Executive Director Jack Donovan.
The German-based company also has locations in Manchester, Bristol and Ashland with nearly 1,000 employees statewide.
“This expansion reflects the growth of the U.S. auto industry,” Donovan told councilors at their meeting in the Peterborough Town House. “We’re helping a manufacturer expand while keeping their costs down in a part of the state that needs jobs.”
Established in 1989, Freudenberg-NOK is the North American joint venture between Freudenberg of Germany and NOK Corporation of Japan, with 23 locations in the U.S., Canada and Mexico. The company’s Northfield plant, in operation since 1999, will expand from 40,000 square feet to 65,000 square feet with the state-backed financing, according to Donovan.
“Right now they are running two shifts at the existing facility with 115 employees,” he said. “By the end of the year, when the addition is done, they add 15 immediately.”
Once the third shift is in full operation in 2014, Donovan projected the company’s employment could increase from 115 up to 200 workers.
The Northfield plant specializes in auto sealing parts.
“Anywhere that two pieces of metal go together, like axles or drive-trains, you need seals or gaskets between them, and that’s what they make,” Donovan said. “They retreated a bit during the recession but as you may have noticed, the auto industry is expanding dramatically now, and improving exports because production costs have been brought down.”
The BFA financing package was approved in a 4-1 vote, with Councilor Chris Sununu, R-Newfields, voting “no.”
Sununu said the company has a strong balance sheet and could likely obtain financing on the open market.
“Why do they need the state? Why couldn’t they just go to the bank,” he said. “You guys have x-dollars in the till, and I’d like to see that go to some of the smaller businesses in the state that are really hurting.”
Donovan responded that the lower-interest, state-backed financing is one of the few tools New Hampshire has to help large companies expand here instead of elsewhere.
“We don’t waive taxes here or do the kinds of things they do in other states to attract industry. This is something we can do to keep them here,” he said. “They’re a good company; they like the state and we want to keep them here.”
In response to a question from Councilor Debora Pignatelli, D-Nashua, Donovan said the BFA has only used about half of its bonding authority. No qualified small business applicants have been turned away, he said.
“The banks are offering generous terms, so there is no great demand for BFA guarantees right now,” Donovan said.