TERRE HAUTE — Sony DADC, an electronics and digital equipment manufacturer in Terre Haute, is seeking a tax abatement worth more than $5 million for new investment at the company’s Fruitridge Avenue plant.
Sony, which locally manufactures Blu-ray equipment, compact discs, video games and other electronic and entertainment products, is planning to invest nearly $72 million in new and upgraded equipment at the Terre Haute plant, according to documents provided to the Terre Haute City Council.
The City Council is expected to vote tonight on whether to grant the abatement, which would phase in property taxes on the new equipment over the next 10 years. The Council is scheduled to meet at 6 p.m. in City Hall.
Terre Haute enjoys a strong relationship with Sony DADC, said Rick Shagley, an attorney representing the company, who spoke at last week’s City Council “sunshine” meeting. Sony’s Blu-ray technology in Terre Haute “makes us a leader in the world,” he said.
Sony DADC employs 1,312 people at the Terre Haute plant, Shagley said, adding that the new investment will help the company retain those positions and eventually add more than 100 new jobs.A majority of the new investment in the Sony DADC facility is for Blu-ray manufacturing, Shagley said. Some of the investment is also to expand CD manufacturing here, he said.
In January, Sony announced that a closed compact disc manufacturing plant in Pitman, N.J., would result in about 150 new jobs coming to Terre Haute, which was to become the company’s only U.S. CD manufacturing facility east of the Mississippi River. The closure of the Pitman Sony plant cost about 300 jobs.
“There is going to be a significant movement of resources from that [Pitman] plant to [Terre Haute],” Lisa Gephardt, a Sony spokeswoman in New York, said by telephone Wednesday.
In 2010, CD sales nationwide declined by nearly 20 percent, marking a fourth consecutive year of falling sales, according to Nielsen SoundScan, which tracks unit point-of-purchase sales for recorded music. However, in January, David Bakula, senior vice president of analytics for Nielsen Entertainment, told the Tribune-Star that CD sales will remain a staple of the entertainment industry for at least another decade.
If passed by the nine-member City Council, the tax abatement would effectively forgive half of Sony’s personal property taxes on the new equipment over the next 10 years. The company would still pay more than $5 million in new non-abated property taxes on the equipment over that period, according figures included in the company’s application for an abatement.
Blu-ray technology has a bright future in part because Blu-ray discs have the capacity to hold 3D content, Gephardt said. “I believe that physical media is going to be around for quite a while. Blu-ray is just so key because of its capacity.”
Also at last week’s sunshine meeting, Councilman Norm Loudermilk, D-3rd, asked Shagley about rumors that Sony DADC regularly hires temporary employees bused to the plant from other counties.
Contacted Tuesday, attorney Richard Shagley, who will be representing Sony in his father’s absence tonight, said Sony was “unable to obtain applicants during its peak season and was required to temporarily employ persons from other counties. That peak season has ended,” Shagley said.
Loudermilk, also contacted Tuesday, said he plans to ask Sony’s representatives to discuss this matter on the record at tonight’s meeting.
“It is not a rumor. They are busing people in to work at Sony. The question is, how often are they busing them in and to what extent,” Loudermilk said. “If we’re going to give an abatement, which is a tax shift to the rest of the population in order to have that company here to provide jobs, then that company should provide jobs to people who live in Terre Haute,” he said.
Sony’s Gephardt said peak manufacturing periods at the Terre Haute plant are difficult to foresee. Those peak production periods are dependent upon Hollywood movie release schedules and may last only for a week at a time, she added.
“It’s really dependent on the movie studios,” Gephardt said. “There’s no predictability. Some years you may have five giant pictures. Some years you have none. Some years you have two blockbusters coming out in one month. … We would not be in business if we told the studies, ‘You know what, we don’t have staff for that right now,’ ” Gephardt said.
A temporary employment agency provides workers to the Sony DADC plant, and that employment agency would be the entity providing bus transport for out-of-the-area workers, Gephardt said.