Sub-Zero Group, maker of the upscale Sub-Zero and Wolf kitchen appliances, will build a $62 million addition onto one of its Fitchburg plants and plans to hire 300 employees over the next three years.
Sub-Zero officials chose the Fitchburg site in July over a location in Kentucky that has been the anticipated home of a new dishwasher line for eight years.
Instead, the company’s new Cove dishwashers will be built here, along with expanded production for Wolf ranges.
“We are concentrating on lean state-of-the-art manufacturing practices to ensure our leading-edge quality control and flexibility, and to maintain a leadership position in the face of changing market demands and competition,” James Bakke, president and CEO, said in a written statement.
The project includes the purchase of 33 acres, expanding Sub-Zero’s Fitchburg campus, southeast of the intersection of McKee and Verona roads, to 99 acres. It will add 400,000 square feet to the existing Wolf factory, more than doubling the size of the building to 755,000 square feet.
A total of at least $5 million worth of state and local incentives is part of the deal.
Site preparation is just beginning. The project, being built by Ideal Builders, is expected to be completed in fall 2016, with the Cove dishwashers debuting in 2017.
Privately owned Sub-Zero Group — one of Dane County’s largest employers — has been talking publicly about adding a line of dishwashers to its stable of high-end refrigeration and freezer units, ranges and wine coolers since 2007. But the plan was to manufacture the dishwashers in Richmond, Kentucky. The company had an 80,000-square-foot building constructed in Richmond, but it has sat vacant all this time, said Chuck Verri, vice president of human resources.
The downturn in the nation’s economy drove the company to put the dishwasher line on hold, said Michele Bedard, vice president of marketing.
“With the recession, we put the project on ice. And now, it’s time; the market is rebounding very nicely,” Bedard said. “It’s a pretty big endeavor and investment.”
As recently as last fall, though, it looked as though Sub-Zero was planning to locate the operation in Kentucky. An article in the Richmond Register in October 2014 said the Richmond Planning Commission expected to take up a proposed site development plan for the facility at its Oct. 30 meeting.
“The owner has decided to move down here and go ahead with the addition that was proposed in the (original) development plan. As soon as we can get this built, they’re going to get this going,” Brian Dryer of WS Construction told the newspaper. He said based on the site plan, the plant would employ 100 to 130 people.
Sealing the deal
Verri said several factors prompted Sub-Zero Group to choose the Fitchburg location over Richmond, but the biggest was a new contract with Wolf employees.
“The six-year labor agreement extension that we received with Wolf (employees) last year was absolutely critical. It was the linchpin,” Verri said.
“We have an outstanding work force, Madison has a great labor pool for us to draw from, we have the land, and the assistance program. All of those pieces of the puzzle made the picture.”
He declined to give contract terms or employee numbers.
The third-generation, family-owned business, founded in 1945, keeps its annual revenues close to the vest. A company profile on the Hoovers website estimates revenues at $86.9 million while a July 2014 Fortune magazine article titled “13 Most American Companies” pegged the figure at $350 million.
As for the employee count, a presentation by Sub-Zero Group to the city of Fitchburg showed the company has a total of 1,052 employees in Fitchburg: 384 office staff; 316 in the Sub-Zero factory; and 352 in the Wolf factory.
Plant employees are represented by the Sheet Metal Air Rail and Transportation (SMART) Union Local 565. The contract for Wolf workers was due to expire in 2018. Reluctantly approved by the union in 2010, after members first rejected it, the pact reduced employees’ pay and benefits by 20 percent, then froze wages for four years.
The new agreement, to 2024, raises employee costs for health insurance but gives annual wage increases as well as lump sum bonuses to help offset the higher health expenses, union business representative Tim Sullivan said. Sub-Zero lists the average hourly wage for Wolf plant employees at $18 an hour.
“I think it’s huge that the company is investing in this community, in this future, versus going overseas or going down South. Sub-Zero has made a commitment to the community that’s pretty huge, I think,” Sullivan said.
Sub-Zero also has corporate offices in Madison, a manufacturing plant in Goodyear, Arizona, and a warehouse in Phoenix. Employment figures were not disclosed for those locations.
Richmond ‘viable option’
Richmond “will continue to be a viable option for us,” Verri said. Though Sub-Zero has no specific plans in mind for it now, “we’re always looking for new products,” he said.
Sub-Zero will be eligible to get up to $2.75 million in state tax credits through 2018, authorized by the Wisconsin Economic Development Corp., to be paid based on meeting job creation and wage requirements.
The city of Fitchburg is providing $2.25 million in tax incremental financing for future reimbursement of infrastructure costs such as utility extensions.
The city also is working with Sub-Zero to seek up to $1 million from the state Department of Transportation to help with road-building costs.
Fitchburg Mayor Steve Arnold said he is delighted that Fitchburg won the project but not surprised.
“Sub-Zero is making their reputation as the best of the best. So are they going to split their operations between Fitchburg and some low-wage state just to shave a little off their cost? I don’t think so,” he said.
“They make terrific products, hire skilled workers from around the region. Every municipality in the region rises and falls together. We all benefit from Sub-Zero.”