‘Business friendly’ environment won over Bal Seal

The company that made huge advances by making small parts was wooed to Colorado Springs when local officials made an offer it couldn’t refuse.

Seven years ago, the phone rang at the Colorado Springs Economic Development Corp. with an inquiry.

It was Bal Seal Engineering Vice Chairman Jacques Naviaux calling. His California-based manufacturing plant was looking to build a second plant and he had just read that Colorado Springs was named one of the top 10 places to do business.

“We gathered lots of data for them and really had to tell the story of Colorado Springs,” said Tammy Fields, EDC vice president of business attraction.

Naviaux was shopping around. He also called officials in at least a half dozen other cities including Portland, Ore., Salt Lake City and Fort Collins.

“We wanted to be roughly two hours flight time from Southern California; we figured we needed a community of at least 350,000 people; and we wanted to go to an area with 90 percent high school graduation rates,” Naviaux said.

Bal Seal chose Colorado Springs to build its $45 million manufacturing plant for two reasons: its business friendly environment — which includes city, county and state tax incentives — and its workforce, said Rick Dawson, Bal Seal president.

“The whole thing made us comfortable that this is where we want to be,” Dawson said.

This month, Bal Seal executives, along with city, county and state politicians, thrust ceremonial shovels into the 18-acre site, off Interquest Parkway and Federal Drive, to celebrate the deal.

Since that first phone call to the EDC, the project morphed from one architectural plan to another, more than doubling from its original plan of 60,000 square feet to 155,220 square feet. There was a lot of behind-the-scenes negotiating. But, until last November, the project was in stealth mode, Fields said.

“They were very secretive about what they were doing,” she said. “It was a long process and all this occurring without word getting out into the community as to whom the company was.”

Colorado connection

Bal Seal founder Pete Balsells didn’t make it to the Colorado Springs ground breaking June 14. Instead, he was holed up in the lab working on a patent, said Jim Sittler, Bal Seal vice president of global sales and marketing.

Balsells, who is 84, and an aerospace design engineer, founded Bal Seal in 1958 based on his unique spring coil — a plastic ring with a groove in it to house a coiled spring. Today, the company has 120 U.S. and foreign patents.

“He’s still working on patents,” Sittler said about Balsells, who emigrated from Spain when he was just 18. At the time, he had $20 to his name.

Balsells attended the University of Colorado at Boulder, where he met his wife, who also was studying engineering.

When he was 30, he struck out on his own and opened Bal Seal Engineering Inc. in Santa Fe Springs, Calif. That same year he became a U.S. citizen.

The company now is headquartered in Foothill Ranch, Calif. and has 500 employees. It produces product for manufacturers in the medical, aerospace, energy and automotive industries and exports about 35 percent of its product to 38 countries.

It was Bal Seal’s customers who asked for a second manufacturing plant, Naviaux said.

“Their issue was we’re their only supplier, so if something happens to our plant — they worry about California earthquakes and fires,” he said. “They pressured us to open another manufacturing plant.”

Rapid development

Bal Seal opened a small shop in 2006 in Colorado Springs, off Garden of the Gods while the plans continued for the bigger, permanent plant. It has about 60 Colorado Springs employees.

Last year, the company had about $85 million in sales.

“Bal Seal is on track to double in the next five years,” Dawson said.

Most of the incentives to Bal Seal are related to sales and use tax on building materials and equipment. The company will also receive a $1 million tax credit from the state if it creates 211 jobs by 2016. And, the state kicked in $182,304 for employee training.

One thing that was on Naviaux’s mind while searching for a location was the workforce, he said. Bal Seal plans to hire 200 people starting in 2013, when the plant is completed.

“We need people who are trainable,” he said. “We make parts that are accurate to a ten-thousandth of an inch. To put that in perspective a hair is four-thousandth of an inch.”

Naviaux said Colorado Springs’ military population won him over. Retired or former military personnel make good employees, he said. So do their spouses.

“I am very confident about finding employees,” he said.

Bal Seal already has partnered with Pueblo Community College, which has mobile training labs it brings to Colorado Springs for employee training. The company donated a $150,000 Swiss computer numerical controlled lathe, similar to the lathes used in their plant.

Dawson said Bal Seal wants to play a role in preparing a technical manufacturing workforce.

“We know we won’t grab 20 people off the street who have the skills we need,” Dawson said. “So, we need to partner with the local educational organizations in order to get those skills.”

Colorado Springs has had some recent big wins from the Wal-Mart data center to the dPix expansion and headquarters relocation, Fields said. She counts the Bal Seal project right up there with them.

She watched last week as officials turned the sod in the Bal Seal groundbreaking ceremony.

“Two hundred and seven people are going to have a job here,” she said. “It’s going to be exciting to tour the facility when people are working in it. That is when I will feel like the project is complete.”

Bal Seal incentives

Taxes waived:

City

2 percent sales and use tax on building materials purchased locally used in phase-1 of construction.

2 percent sales and use tax on electrical and mechanical equipment purchased locally for construction.

County

50 percent of the city’s portion of business personal property tax paid to El Paso County on investments between $1 million and $5 million.

90 percent of the city’s portion of business personal property tax paid to El Paso County on greater than $5 million over a five year term.

50 percent of the city’s 2 percent sales and use tax on annual purchases of manufacturing equipment and business personal property purchased locally for five year term.

El Paso County’s 1 percent sales and use tax paid to El Paso County phase-1 construction materials purchased locally.

El Paso County’s 1 percent sales and use tax paid to El Paso County on phase-1 building equipment purchased locally.

State incentives

Maximum Job Growth Tax Credit of $1.1 million for the creation of 211 net jobs by 2016.

$182,304 in training grants over five years from the Office of Economic Development and International Trade