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FOX 11 Investigates: Mercury Marine incentives

FOX 11 Investigates takes a closer look at the impact of the taxpayer funded incentive packages for Mercury Marine.

FOND DU LAC (WLUK) -- Mercury Marine is in the middle of another major expansion. It's sixth in seven years. It's a far cry from 2009. That's when the company threatened to move out of state unless workers agreed to concessions and taxpayers stepped in to help the company.

Tensions were high in 2009 as it appeared that Mercury Marine was on its way to Oklahoma. The union held a series of votes. The community was divided.

Ultimately workers approved drastic changes to their contract including a pay freeze, higher health insurance costs and a 30-percent pay cut for new and re-hired workers.

The company negotiated with state and local officials and received tens of millions of dollars in taxpayer funded incentives. As a result, Mercury stayed in Fond du Lac.

That was seven years ago. FOX 11 Investigates wanted to find out how the taxpayer-funded deals turned out. FOX 11 Investigates took a closer look at the two major incentive packages Mercury received.

Those packages included $65-million in tax credits from the State of Wisconsin and a $50-million low-interest loan from Fond du Lac county.

Allen Buechel has spent the last 23 years as the Fond du Lac County Executive.

"It's the most difficult problem I had to face," Buechel told FOX 11 Investigates.

The county ended up passing a half-percent sales tax to pay for the $50-million loan to Mercury.

Here's how loan was set up: For the first two years, Mercury only had to pay interest. For the next 10 years, Mercury has to pay back $5-million per year plus interest.

But the amount the company pays could go down depending on how many jobs are created in Fond do Lac. That was the incentive for the company to hire more workers.

"It's something I felt we had to do to keep our economy rolling in this county and to help it grow. The return has been phenomenal," Buechel said.

In 2009, Mercury had just 1,526 employees in Fond du Lac. Today, that number is nearly 3,000.

"Mercury is healthier today than it's been in a long time," said Lee Gordon, director of global public relations for Mercury Marine.

Gordon says besides nearly doubling its workforce, the company has reported record earnings each of the last two years and has spent $732 million on expansions and research and development in Fond du lac.

"Mercury is in a good place right now which is great because the recession is over, more disposable income is back, people are boating again," Gordon said.

Gordon says the growth would not be possible without its customers, employees and the community.

"We said we were going to grow. We've grown a lot. We've invested a lot of money. We've doubled our workforce. We've kept our commitments to the city and the county and then some," Gordon said.

Under the county's incentive package, Mercury qualifies for a credit of $2,137,000 this year. So instead of paying back $5-million, it will pay $2,863,000 plus interest. The balance will be paid for out of the money brought in by the county sales tax.

Buechel says without the incentives, Mercury and its nearly 3,000 jobs would not be here today.

"I never doubt that this was the right decision. To me, we had to keep Mercury in Fond du Lac. The impact of losing those jobs and all of that investment would have been tragic for this community," Buechel said.

The largest part of the incentive package came from the Wisconsin Department of Commerce under then-Governor Jim Doyle.

While the state agency is no longer around --- it was replaced under Gov. Scott Walker by the Wisconsin Economic Development Corporation (WEDC) --- the same incentive program Mercury Marine received still exists.

It's called "Enterprise Zone Tax Credits."

Mercury received $65-million worth of tax credits over 12 years as long as it met several benchmarks... tied to job creation, training and capital investment. The state says Mercury has hit every goal.

"I think in this particular case, the proof is in the pudding," said Barb LaMue, vice-president of business and community development for WEDC.

She was not involved in the deal in 2009 but she says it was not just important for Mercury Marine.

"They have an incredibly deep supply chain," LaMue said. "Thousands of companies that work and make a product or a piece for them and it's important that those companies stay in Wisconsin, too."

"The fact that we're continuing to grow and continuing to hire, it's not just good for Mercury. It's not just good for the boat business. It's really good for Fond du Lac and all around," Gordon said.

He added that the company is home for good.

"Fond du Lac, Wisconsin is our global headquarters and it is always going to be our global headquarters," Gordon said.

FOX 11 Investigates asked Buechel what he would say to people who were critical of the incentive packages. He replied, "Anybody can have an opinion and think this is wrong but in the end, as policy makers we have to decide what is best for the people that we serve and ultimately make decisions and move forward in that area. That's what we did."

Regardless of whether people agree with happened in 2009, there's no doubt the incentives played a big part in Mercury's current success.

The city of Fond du Lac also made a deal with Mercury Marine. The city bought 22 acres of land the company no longer needed for $2.7 million dollars. The city then sold the land to another buyer for $1.1 million. Taxpayers made up the difference.

The Fond du Lac county sales tax is set to end in 2021.

FOX 11 tried several times to contact the union for comment, but our calls were not returned. In 2014, the union and Mercury did agree to a five-year contract extension.

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