MRCOOL is conducting a preliminary study on the viability of a manufacturing facility in the Kentucky Opportunity Zone encompassing the city of Mayfield. While the heating, ventilating and air conditioning company has had plans for domestic manufacturing for some time, the long-term threat of increasing transpacific logistical cost increases and the immediate expense of new U.S. trade tariffs has accelerated its efforts. The placement of an Opportunity Zone so close to the company’s Hickory, KY headquarters also provides a unique development opportunity.
“The tariffs have played a significant impact in pushing the company to do this,” said Matt Seabaugh, business development director, MRCOOL. “But there are plenty of other factors. No matter how long the tariffs last or don’t last, there are a lot of advantages to manufacturing ductless air conditioners locally rather than outsourcing it to overseas producers. We would be able to adapt to market conditions a lot more rapidly and we would have more effective control over product quality. There are downsides too, so we’re looking at all sides in this study.”
The Opportunity Zone is a big advantage, according to Seabaugh. Created as part of the Tax Cuts and Jobs Act of 2017, federal Opportunity Zones allow investors who finance projects in distressed and contiguous districts significant federal tax breaks and deferrals. The Opportunity Zone investment benefits are effective for 10 years and intended to assist new and existing businesses, and for redevelopment of blighted amenities and other infrastructure.
“With the Opportunity Zone, we have the potential to raise significant capital in an area that would previously have been a challenge to bring in development dollars,” Seabaugh continued. “Quite frankly, we’re now in a position to take the sorts of steps that might have taken a decade to develop otherwise. It is too early to say what’s going to happen, but it is really an exciting time for the company.”
Relocating or Expanding Your Business In Kentucky
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