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A main course of tax breaks Incentives are key to draw, grow food makers in N.J.

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New Jersey is stocking up on out-of-state food manufacturers, as relocations to the Garden State, coupled with growth by food companies already based here, continue to make the industry a key ingredient in the state's economy.

Industry representatives and state officials say the growth is being fueled by a climate that is ripe with benefits for food producers and distributors — access to a huge regional population, a strong transportation network and an educated work force. And in recent years, incentive programs and other forms of assistance have helped sweeten the appeal.

The Garden State in recent months has snagged several New York-based food companies, including Mehadrin Dairy and LFW Dairy Corp., which are moving to Elizabeth from Brooklyn, and Commack candy maker Healthy Food Brands LLC, which plans to open a New Brunswick distribution center. They follow Bartlett Dairy, a Queens-based company that moved its distribution hub to Newark last year, and Damascus Bakery, which is moving to the Brick City from Brooklyn.

"If there's one industry that can easily cluster … and actually derive synergies from businesses being next to each other, it's the food and beverage industry," said Ted Zangari, a Sills, Cummis & Gross real estate attorney who represented Damascus, Mehadrin and LFW in their pending moves to New Jersey.

But the state's appeal for food makers goes well beyond the region. Schar USA Inc., an Italian maker of gluten-free foods, plans to open its first U.S. production facility later this month in Gloucester County. Donna George, its chief operating officer, said the 60,000-square-foot bakery, in Logan Township, will produce gluten-free breads and rolls for all 50 states.

"Just from a business perspective, the location definitely appealed to us," George said, citing a large customer base, access to freight and the presence of other food companies. The facility will start with around 25 employees, and could grow to 60, she said.

Schar has been in New Jersey since 2008, but has operated at the Rutgers Food Innovation Center, an incubator for new food manufacturers, in Bridgeton. The firm had also considered Pennsylvania before deciding on New Jersey for its permanent plant.

Efforts by the state have been key to attracting new manufacturers and spurring expansions by existing companies. Financing programs and incentives from the Economic Development Authority have helped lure companies like Damascus Bakery, said Timothy J. Lizura, the EDA's senior vice president of finance and development. So has aggressive outreach by Lt. Gov. Kim Guadagno, the state's economic development guru, and the state's Business Action Center, he said.

"When we have a food manufacturing company, we roll out all of the bells and whistles for our programs, because it's an industry we're trying to foster," Lizura said.

The EDA made that clear in February when it added "food production and processing" to a list of industries eligible for bonus tax credits under its newest incentive, the Grow New Jersey Assistance Program. Two months later, Royal Wine Corp., a kosher wine and beverage producer, was among the first four companies to be awarded tax credits under the job growth and capital investment program.

The $22.9 million credit would help Royal Wine move about 140 employees from Brooklyn to its Bayonne facility, said Sheldon Ginsberg, the firm's executive vice president and chief financial officer. The move would allow the firm to shut down the New York operation and expand the Bayonne site from 185,000 to 250,000 square feet.

Ginsberg said New York state had made a bid to keep the firm, but the incentive program and potential to expand made New Jersey "much more compelling to us."

"It made it more affordable or more attractive to midsize companies like us, who couldn't otherwise reach the goals that we needed for the Urban Transit Hub tax credit," he said, referring to the state's larger, more capital-intensive program.

But Urban Transit Hub is responsible for several major expansion projects that also are growing the industry here. They include large new warehouses for Wakefern Food Corp., the parent company of the ShopRite supermarket cooperative, in Newark and Elizabeth. The incentive program also is financing major in-state expansions by Secaucus-based Goya Foods Inc. and Campbell Soup Co., in Camden.

Zangari, who also represented Royal Wine, said he has more companies in the pipeline that are mulling a move to New Jersey. That's also true of Chuck Fern, a Cassidy Turley executive vice president who said he's seen interest from at least two out-of-state food companies.

Fern said the companies, which are from the East Coast and Midwest, are attracted to labor force, infrastructure and improving business climate. The growing presence of other food manufacturers is another key selling point, he said.

"Everybody's got to eat, especially with this population, so that industry is growing," Fern said, noting that the companies could bring 200 to 300 jobs. "New Jersey has the infrastructure … and with the real estate, you get a lot more for your money with distribution and warehousing today than in other parts of the country."

E-mail to: joshb@njbiz.com
On Twitter: @JoshBurdNJ

Joshua Burd

Joshua Burd

Josh Burd covers real estate, economic development and sports and entertainment. Before joining NJBIZ in 2011, he spent four years as a metro reporter in Central Jersey. His email is joshb@njbiz.com and he is @JoshBurdNJ on Twitter.

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