State, local cooperation helped secure 3M deal

South Dakota's lack of income tax, low costs, friendly regulatory environment and high-quality workforce were instrumental in persuading 3M to invest $70 million in its Brookings plant between now and 2018, Gov. Dennis Daugaard said at a ceremony announcing the expenditure Friday.

Approximately $2.5 million in state economic incentives sweetened the deal.

South Dakota is refunding the 4 percent sales and use tax on one-half of $12 million that 3M already has spent on new equipment for its existing facility. The decision to refund the tax on half this was made in the belief there was a good likelihood 3M would have upgraded its Brookings equipment anyway, according to the governor.

The state will refund the tax on an additional $40 million in new equipment and $15 million for construction materials for a 44,000-square-foot expansion of the Brookings plant that was last added to in 1991. Also, South Dakota will give 3M $1,000 per job to train about 90 new workers. This is dependent upon 3M showing it has hired and is paying those employees, Daugaard said.

The city of Brookings also is refunding 75 percent of its sales tax on the 3M investment, and Brookings County is discounting property tax for five years.

In return, 3M will make Brookings its state-of-the-art facility for manufacturing medical tape, surgical drapes and similar products, said 3M Vice President of Health Care Joaquin Delgado.

He said 3M's decision to expand in Brookings followed "a thorough process," and the totality of economic incentives was persuasive. "All of this added up to a really good package."

The 3M announcement took place the same day Bel Brands celebrated its new $144 million cheese production facility expected to employ 250, and the industrial metals fabricator Counterpoint opened a new 30,000 square foot addition.

Pat Costello, commissioner of the South Dakota Governor's Office of Economic Development said the banner day reflected cooperation among state and local governments to encourage development.

"We do not have this everywhere in South Dakota," Costello said.

Does it exist in Sioux Falls?

Costello paused. "We do not have this everywhere in South Dakota," he repeated.

South Dakota State University President David Chicoine attended the 3M ceremony. The university can leverage the 3M investment by expanding its student internships with 3M, he said. Even more important, 3M will create new high-paying jobs that could go to family members of SDSU faculty and staff, making it easier for SDSU to retain its own workforce.

"Dual career households are the name of the game," Chicoine said.

Brookings Mayor Tim Reed called 3M "a great community partner," a generous contributor to the United Way, an employer offering good wages and benefits, and a representative of clean industry.

"Brookings is the envy of the state," he said, and in agreeing to refund sales tax "the city council was ecstatic to vote for this."

Reed also made a pledge on behalf of the local work force. "We promise not to let you down," he told Delgado.

For his part, Delgado seconded Daugaard's praise for South Dakota workers. He also said an aging population and increasing world demand for high-quality health care provide long-term growth opportunities for 3M in Brookings. Future investment "depends on how the market grows and how we grow with the market. Yes, I want that to happen," he said.

"A year from now, if we have to talk that we have to do another expansion, that's good!"