State official: Monaco might owe state if jobs cut

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By Tiffany Griffin

Story Created: Aug 4, 2008 at 6:57 AM EST

Story Updated: Aug 4, 2008 at 7:14 AM EST

ELKHART, Ind. (AP) — Monaco Coach Corp. will have to pay the state more than $3 million if it proceeds with plans to lay off 1,400 workers in northern Indiana, a state official said.

Indiana Department of Commerce Secretary Nathan Feltman said the company would owe the state for $2.7 million in tax credits and training grants, plus penalties and interest totaling more than $3 million.

Feltman said he reminded Monaco attorneys of their obligations during a meeting Friday. The incentives received over a 10-year period were predicated on Monaco's continued presence in Elkhart and Wakarusa, Feltman said, and the state would be obligated to recoup the funds.

"That said, we'd much rather not be in that situation," Feltman said.

Coburg, Ore.-based Monaco said last month it would close its plants in Wakarusa, Elkhart and Nappanee by Sept. 17 and eliminate 1,400 jobs, or about a third of its work force, because of the slumping economy and the shrinking market for recreational vehicles.

Feltman said he would rather see Monaco somehow maintain the jobs. He also said the state has flexibility to adjust the amount owed if some of the layoffs were avoided, though it was not clear if that is possible at this stage.

The bulk of the $2.7 million represents tax credits Monaco received for its Wakarusa operation beginning in 1997. It also received training grants for that operation and its Elkhart plant in 2003. The Nappanee plant received no incentives.

Feltman said company representatives reminded him Friday that the company still has about 800 jobs at Warsaw, Goshen and Milford and that some workers at the plants that are closing might be able to move to jobs there.

Also, Feltman noted that Monaco still is working with partner International Truck and Engine, a subsidiary of Navistar, in an effort to keep a joint venture chassis-building operation in Elkhart.

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