Exclusive: U.S. Corrugated plans $80M Dover plant
DOVER — U.S. Corrugated plans to build an approximately $80 million corrugated cardboard box manufacturing plant near Dover while relocating its longstanding New Jersey operations to the First State.
With aims to break ground in November, the 497,000-square-foot “super plant” will be located on a 40-acre parcel between Camden and Dover, bordered by Route 15 and the POW/MIA Parkway. U.S. Corrugated founder and chairman of the board Dennis Mehiel envisions a facility featuring the latest in industry-leading technology.
It’s estimated that once U.S. Corrugated of Delaware is operational, it should bring around 150 jobs to the Dover area. Mehiel said that U.S. Corrugated will close its 35-year-old, full-line box plant in Newark, N.J., and plans to transfer operations to the new Dover plant by the end of 2021. Preliminary plans show the site at roughly 110 loading docks and potential to expand the building footprint somewhere down the line.
“We’ve had tremendous upgrades since we opened our New Jersey facility, and it’s been upgrading in leaps and bounds in the last 20 to 25 years,” Mehiel told the Delaware Business Times. “There’s substantial opportunity to grow in Dover to meet significant demands we will face in the next two to three years.”
Once the Dover manufacturing plant is fully operational, it would have the capacity to produce approximately 250% more boxes than the Newark facility and bring in $120 million in additional revenue per year, he said.
The project still has to clear the permitting process with state, county and city entities in the near future. Delaware Prosperity Partnership President and CEO Kurt Foreman noted that his office collaborates closely with Delaware and Dover officials as well as the Kent Economic Partnership to help bring industrial and manufacturing operations to Central Delaware, and he is pleased to continue moving forward to potentially bring another company to the state’s capital. The DPP and its partners have been actively working with U.S. Corrugated of Delaware team since early 2020.
“We are excited to see the progress being made toward a possible facility in Dover, but several key steps remain to complete. DPP looks forward to sharing and celebrating the good news once everything is completed,” Foreman told DBT.
Kent Economic Partnership Executive Director Linda Parkowski touted the announcement as more evidence as Kent County’s strengthening hold in the regional manufacturing and distribution arena. The 2018 economic study by Rockport Analytics named logistics/warehousing in the top three growing industries in Kent County, and she previously told the Delaware Business Times that 70% of her offices’ calls for inquiries are in manufacturing and warehousing.
“We in Kent County are super excited that a company this size is coming to Kent County, once again proving that we are becoming more and more a manufacturing hub for the region,” Parkowski told Delaware Business Times this week.
Dover Mayor Robin Christiansen was excited to welcome U.S. Corrugated to the Dover area, noting that the potential $80 million investment in the manufacturing site would bring dividends for the entire communities.
“As always, Dover and Kent is in need of jobs, and with every job that comes here will bring three more in the service and tech industry to support it, as well as more of a drive for other sectors like our teachers for our schools. We have a driven workforce and the utilities needed to for these companies that make Dover a solid prospect,” Christiansen said. “This is a win-win-win for Dover, Kent County and the state of Delaware.”
Mehiel started the company as Four M Manufacturing in 1966 and it flourished in the niche of interior corrugated partitions, or cardboard dividers used in transporting fragile products. Over time, the company grew into an empire of packaging and shipping containers. From its first plant in Newark, the company expanded to foam and sheet plants across the country. U.S. Corrugated Inc. launched in 2006 as a new packing venture.
Pending approval from state and local officials, the Dover plant will be U.S. Corrugated’s fourth “super plant” in the past decade, focusing on using robotics and machines to streamline the process. The first was built in Los Angeles as a joint venture with Acorn Paper Products, while the second was located in Georgia and the third opened in Indiana in 2019.
“We will have the ability to assemble boxes without the touch of human hands in most cases. In the past, we would have crews handling about 30,000 pounds of corrugated boxes into a machine per shift. Now we can employ our robots to do that,” Four M Manufacturing Chief Operating Officer Jeff Coleman said. “Instead, we can turn our staff into innovators and problem-solvers for our clients.”
In Dover, U.S. Corrugated plans on opening a research and development department, as well as a design sector to research new products or how to improve existing products. For example, with the skyrocketing demand for shipping, companies are looking for ways to brand themselves without enticing thieves to take packages off doorsteps.
There are also rising opportunities in packaging for the poultry industry, a major employer in the Delmarva region, Coleman said. U.S. Corrugated is actively trying to reinvent the wax-coated box so they can be recycled in the future.
In addition to innovation and design, U.S. Corrugated will launch a marketing and sales department in the Dover facility. The company was unable to build out those jobs in New Jersey because there was no room to grow, Coleman said.
Average salaries at U.S. Corrugated Delaware would range between $50,000 and $60,000, with pay ranging higher for office jobs compared to factory positions, according to Mehiel.
Right now, the 40 acres for the future Dover facility is owned by G&M WDC, a limited liability corporation operated by Lighthouse Construction Inc. Lighthouse bought the land for $1.27 million in February, according to county land records. U.S. Corrugated confirmed to the Delaware Business Times that the land is under contract, and the purchase will be complete upon approval of permitting and incentive packages.
Breaking down the total investment, Mehiel said the land and the building itself would cost $32 million and machinery and equipment would add $45 million, with another $5 million used as working capital.
U.S. Corrugated of Delaware aims to have equipment installed as early as May 2021, and to be open for business three months later, Mehiel said. Transferring the New Jersey operations will continue for the next couple of months until the end of the year.
“This project is on the fast track. The response from Gov. Carney’s office and the local economic development offices have been incredible and professional, and I’ve done this many times,” Mehiel said. “It’s been a pleasure working with this tremendous team.”
Mehiel was attracted to the Dover site for multiple reasons, but principally because it sits in one of the state’s 25 Opportunity Zones. The federal redevelopment program focuses on underserved communities through tax-deferred investments, enticing investors to infuse money into funds for long periods of time to see tax breaks.
Staying in an Opportunity Zone fund for at least five years could see 10% of the gain excluded from taxes, while 10 years results in tax-free gains.
“It was an enormous advantage over the alternative site we selected in Southeast New Jersey,” Mehiel said. “In New Jersey, we had a Brownfield site, and what the state was offering was about $12 million to $14 million more in incentives than what Delaware offered. But the opportunity to take the pre-tax gains and roll it in a qualified Opportunity Fund was too great to not invest in Delaware.”
In addition to any forthcoming incentives from the state or county, the Transportation Infrastructure Investment Fund (TIIF) Council awarded the project $600,000 in June to improve signalization and entrance enhancements to support the Dover facility. The TIIF was a Carney administration initiative to expedite funding of transportation upgrades necessary to attract employers. It made its first grants this year.
While Coleman said he’s seen some Brownfield projects succeed and some falter, what really changed the tide was Dover’s central location and close proximity to the Dover Air Force Base. It’s projected that 500 servicemen and women retire or end their duty at the base each year.
“This presents a great opportunity to tap into that talent pool, where many of them don’t want to leave the Dover area. Our industry is people, and you could have the grandest of strategies, but if you don’t have the right folk or the right culture, you don’t get excellent results,” he said.
Kent County’s central location in the state and available land were also added advantages for U.S. Corrugated. With Proctor & Gamble’s and Kraft Heinze Company’s warehouses within miles of the proposed corrugated box plant, U.S. Corrugated will also enjoy easy access to Route 1 for the northern market and U.S. Route 113 for the Delmarva region.
Down the line, Christiansen saw more opportunities for U.S. Corrugated and Dover with the Civil Air Terminal on 20-acre terminal under a new agreement that doubles the annual limit to 25,000 takeoffs. With United Parcel Service and FedEx relying more on aircraft to ship packages, there will be a great need for aircraft maintenance workers. The Dover mayor said the city already has a highly trained workforce at Dover AFB, and a Civil Air Terminal would bolster the city’s position in the distribution industry.
“What better way to appeal to that captive audience we have right here in our city, in an industry that already heavily relies on our airports in Philadelphia and New Castle County? There is a great future ahead of us with the Civil Air Terminal,” Christiansen said.
U.S. Corrugated of Delaware marks the second time in three years the company has turned to the First State for expansion. In 2017, Middletown was on the shortlist of sites for a 500,000-square-foot facility that would have replaced the Newark facility. Ultimately, U.S. Corrugated settled instead on a site in Burlington County, N.J., due in part to a $13.6 million tax credit package offered there, according to Real Estate New Jersey. That site never came to fruition.
By Katie Tabeling
This article has been updated with comments from DPP.