Legislators learn impact of new taxes at IWCO

By Terry LehrkeNews Editor

Rep. Ron Kresha, R-Little Falls, and House Minority Leader Rep. Kurt Daudt, visited IWCO Tuesday, to hear about how new taxes are impacting the company. Pictured is David Radziej, left, president of the Printing Industry Midwest (PIM), and Kresha.

Rep. Ron Kresha, R-Little Falls, and House Minority Leader Rep. Kurt Daudt, visited IWCO Tuesday, to hear about how new taxes are impacting the company. Pictured is David Radziej, left, president of the Printing Industry Midwest (PIM), and Kresha.

When legislative leaders head back to the State Capitol in February, it is expected they will consider a repeal of several newly-implemented taxes including the warehouse tax and a tax on the repair of equipment.

Rep. Ron Kresha, R-Little Falls, invited House Minority Leader Rep. Kurt Daudt, to Little Falls Tuesday to visit and tour IWCO Direct and to hear how the business is impacted by newly-implemented taxes.

IWCO Direct is Minnesota-based and privately owned. Headquartered in Chanhassen, it has a facility in Pennsylvania and a 200,000 square foot facility in Little Falls. With nearly 500 employees at the Little Falls plant, the majority full-time, it is one of the largest employers in the area.

In 1985, when IWCO first came to the area it was known as United Mailing.Carol Anderson, executive director of Community Development of Morrison County, said at the time, the county’s Aid For Families with Dependent Children (AFDC) went down 14 percent, as people landed the jobs offered.

“People can come out of high school and learn a trade,” said Anderson. “This company fills that gap very well and the community is deeply thankful for that.”

IWCO’s Director of Operations Paul Overn said the company wanted people willing to start at the entry level, so they could be trained and learn what they need to know.

“It’s a landing zone for people having a rough time in life,” said Anderson. “A good job and good benefits.”

Overn told the legislators that IWCO as a whole had a $66 million payroll — $16 million in Little Falls. The company handles 1.5 billion pieces of mail worth $350 million in postage each year.

The business inserts printed pieces into envelopes, prepares the pieces for the postal service and mails them out.

IWCO rents two warehouses to store equipment at a rate of $12,000 per year in rent; one of the warehouses is located in Little Falls. Overn told the legislators that with the new tax, it would be more cost effective for the company to get rid of the equipment in storage if it had to add a 6.5 percent tax warehouse tax on top of the rent.

In addition, IWCO spends about $2 million a year on equipment repair — with the new 6.875 percent tax on those repairs, the company will have to spend an additional $150,000 in tax.

David Radziej, president of the Printing Industry Midwest (PIM), a trade organization representing the print industry in Iowa, Minnesota, Nebraska, North Dakota and South Dakota, told the legislators that in the print industry, the profit margin is between 1.7 and 1.9 percent.

“It’s very lean,” he said. “When you put on a tax, it’s taken out of the operation.”

These large plants, said Radziej, can easily move to Wisconsin, Indiana or Illinois, where there is no such tax.

“What a wonderful facility; what a wonderful resource for the area to be able to employ 500 people,” said Kresha. “And now they have about 100 job openings. With all the economic news, we have an employer out there trying to fill positions.

“With the high cost of college and with some of the single parenting households and some demographics (in Morrison County), they do fit that nitch,” said Kresha. “We have a labor force for people that are frankly looking for an alternative to government entitlement.”

What really impressed Kresha about IWCO he said was that, “They take young men and women who don’t know what they want to do out of high school.” After a couple of years, Kresha said they begin talking about what they want to do to further themselves.

Daudt was very impressed said Kresha. “I invited him, I wanted leadership to see some of the things going on with industry,” he said.

Kresha called IWCO “innovative” and said he was surprised at how large the operation was.

“When you look at how many IWCO employs and if you think about the fact they’re considering a change in how big they are, it directly impacts 400 – 500 families in this area,” said Kresha. “The warehouse tax impacts people. When IWCO is trying to figure out to maintain business in this area and mitigate that tax, it hits right in the middle-class pocket.”

A top priority in the legislative session will be to repeal the warehouse tax, the tax on repair of equipment and the farm equipment tax.

Overn said meeting with the legislators was productive. “They were very well-informed about how the laws would affect us as a business,” he said.

 

up arrow