Electrolux Asks State For Factory Funding

Governor and Senate speaker working to fulfill commitments to bring an Electrolux factory to Memphis after company officials said the plant would go elsewhere.

MEMPHIS, Tenn. (AP) -- The governor and Senate speaker vowed Wednesday to work toward fulfilling state commitments to bring an Electrolux factory to Memphis after company officials wrote that the plant would go elsewhere if the Legislature fails to provide millions of dollars for the facility by June 1.

In a Feb. 23 letter obtained by The Commercial Appeal through a public records request, company controller and project director Jacob Burroughs wrote that Electrolux may terminate the project agreement if the state Legislature does not approve funding by May 1 or make the money available by June 1.

The mayors of Memphis and Shelby County have directed more than $150 million in taxpayer-funded incentives to Electrolux for the planned factory. The city council and county commission have committed about $20 million each.

But the Legislature has yet to approve funding. Republican Gov. Bill Haslam wrote a letter on Feb. 1 committing the state to a $5 million infrastructure grant and promising to include a $92 million funding request for the project in the 2011-2012 budget.

Haslam told reporters after a speech in Nashville on Wednesday that he has talked with Electrolux officials and plans to "honor Tennessee's commitment."

Haslam said he met with aides earlier in the day to discuss setting up "metrics" going forward to determine incentive levels "so everyone from the Legislature to the public understands ... why we do it."

If Legislative approval doesn't happen, Electrolux may terminate its agreements "without any payment, penalty or further obligation by, or any recourse against, Electrolux," Burroughs wrote.

"Electrolux is not in a position to continue to delay the substantive work on the project," the letter to Shelby County Attorney Kelly Rayne said.

Electrolux said the facility would produce ranges, wall ovens and cooktops, and would create 1,250 factory jobs. Memphis Mayor A C Wharton and Shelby County Mayor Mark Luttrell have used the deal to show residents that local government is working to improve the Memphis-area economy, and it would be a major blow if the deal is scuttled.

Wharton and Luttrell were with Electrolux executives in Nashville on Monday. The mayors brought the Electrolux officials to key leaders including Ramsey and House Speaker Beth Harwell.

Republican Senate Speaker Ron Ramsey of Blountville agreed with the governor that Tennessee can't renege on its promises, but said Wednesday that it needs to be more careful about future deals.

State officials said Tuesday they are committed to doing whatever they can to help the project. But Ramsey said at the time that it would be "practically impossible" to deliver the $92 million by the deadline, because the process of passing the state budget and selling bonds takes time.

Ramsey said he's asked the company to tell him what it needs immediately. The government would supply the rest of the money after the state passes a budget and sells bonds.

Despite the letter, Wharton and Luttrell said they've already resolved many issues raised in the letter.

"Am I at all concerned that the deal will not be done? Absolutely not," Wharton said.

And, an Electrolux spokeswoman said the company is still committed to building the factory.

"We remain confident the state will pass the funding in May and look forward to breaking ground on the new facility," company spokeswoman Caryn Klebba said in a statement Tuesday.
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