Canfor expects it new $210 million facility near Mobile to be open by the third quarter of 2024. (Canfor)

A Canadian-based wood products company that operates a sawmill in Mobile is getting $14.2 million in combined property and sales tax incentives under an agreement that one official said was essential in keeping its operation in South Alabama.

David Rodgers, vice-president of economic development with the Mobile Chamber, said Tuesday that Canfor Southern Pine Inc. is getting an estimated $8.3 million in non-educational property tax abatements over 10 years, and $5.9 million in a sales tax abatement related to the construction of the new sawmill.

The incentives were awarded by the Mobile County Industrial Development Authority, a quasi-governmental agency that examines economic development projects and whose members are appointed by the Mobile County Commission.

Rodgers said the Mobile Chamber recommended the incentives over concerns that a proposed $210 million state-of-the-art sawmill would have been constructed outside of Mobile County.

Canfor, which established its U.S. headquarters in Mobile in 2016, plans to build the new facility along U.S. 43 in Axis by the third quarter of 2024. The new plant replaces the company’s existing facility in Mobile. Axis is approximately 20 miles north of downtown Mobile.

“This expansion would not have been possible (without the incentives),” said Rodgers. “We saw the opportunity to work with the company to update (the facility) and reinvest in Mobile for the next 40 years.”

Rodgers said the Mobile Chamber anticipates the project generating a net benefit of over $52.6 million by retaining 124 jobs.

“We expect to continue to grow (within the) construction market, and there is opportunity for new employment,” said Rodgers. “At the end of it, we want to make sure we retained 124 high paying jobs in the community.”

The Mobile Chamber and the Alabama Department of Commerce’s “Made in Alabama” website both issued updates this week announcing Canfor’s investment to build the new sawmill. Neither included details about the tax incentives.

Alabama Commerce Secretary Greg Canfield said the state is not offering discretionary incentives for the project. He said it was not considered a competitive project and there were not noted new jobs being created, so the Alabama Jobs Act incentives were not applicable.

The new sawmill will produce 250 million board feet per year using leading technology. The facility’s design also includes investments in a biomass-fueled lumber drying system to help the company meet sustainability and decarbonization goals, according to the Mobile Chamber’s news release.

“This is a valuable project in that it will create a modern and more technically efficient operation, thus extending the potential for Canfor to operate there for many more years,” said Canfield.

A company representative was not immediately available to comment on the incentives.

The project comes as Canfor reported record-breaking operating revenues in 2021, and as the company has expanded into other states. In April, Canfor broke ground on a new $160 million sawmill in Louisiana. It’s the company’s first project in Louisiana, and is expected to add 516 direct and indirect jobs.

“This investment will allow us to continue our legacy of operations and long-term commitment to Mobile County, enhance our manufacturing ability to better align with the high-quality products our markets demand, and importantly, it’s an investment in our people,” said Tony Sheffield, president of Canfor Southern Pine, in the Mobile Chamber’s press release.

Tax incentive packages are not uncommon tools utilize by economic development officials in luring or retaining manufacturing companies and jobs in Alabama, and elsewhere.

Two years ago, the county disclosed that $28.8 million in non-educational property and sales tax abatements were part of an incentive package for a new steel plant in north Mobile County. The state is chipping in $60 million in economic incentives due to the project’s aim of adding 200 direct jobs, 100 indirect jobs and $344 million in new payroll.

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