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Huge, $100 Million Mattress Plant West of ABQ To Be Finished in December

By Andrew Webb
Journal Staff Writer
    Despite a steel shortage last year and, more recently, dwindling concrete supplies and rising prices that have slowed construction all over New Mexico, Tempur-Pedic's enormous West Side mattress factory should be finished by December and running by April.
    "We've definitely struggled to get the floors finished," local operations manager Ken Mitchell said during a recent tour of the sprawling plant, which will produce 50,000 foam mattresses a month. "But everything's on schedule."
    When finished, the factory will be one of Albuquerque's largest and twice as big as the Kentucky company's two other plants, which are located in Virginia and Denmark.
    The numbers behind a good night's sleep are staggering.
   
  • 750,000 square feet— about 18 acres— under one roof, making Tempur-Pedic's West Side plant the state's second largest non-government building behind Intel's plant in Sandoval County. By comparison, the empty former Philips plant in north Albuquerque is about 500,000 square feet.
       
  • 19,000 cubic yards of concrete to make the floors and footings for equipment.
       
  • 100 truckloads of steel beams used to build curing racks.
       
  • Seventy 30-foot-tall tanks that will be supplied by more than 70 trucks a day to provide enough chemicals for an expected production rate of 50,000 foam mattresses a month.
       
  • A $100 million package of tax-abating industrial revenue bonds, the largest ever issued by Bernalillo County, which will save the company an estimated $600,000 in annual property taxes in its first years of operation.
        Tempur-Pedic is expected to employ 300 at the plant at I-40 and Paseo del Volcan. Much of the space will be used for curing and storing voluminous quantities of foam.
        "Yeah, it's huge," Mitchell admits, circling the plant on a curbed but unpaved street that will soon be a city road called Tempur-Pedic Parkway.
        Tempur-Pedic uses material developed in the early 1970s by NASA to help protect astronauts from the incredible G-forces produced in a rocket liftoff. The material, which it has since refined, distributes body weight more evenly than a spring mattress, the company says, and conforms to the user's body shape.
        The company's mattresses come in all sizes and sell for between $999 and $2,000-plus.
        Making the mattresses is not unlike baking bread. First, up to 30 polyurethane chemicals are mixed, and the resulting brew rises into foam, which is made in 100-foot lengths. It is then cured on huge racks for two or three days before workers cut it to size and laminate different types of foam together to create the company's different mattress styles and thicknesses.
        The mattresses then receive a fire-retardant outer netting and are packaged for shipment. Leftover scraps are sold as carpet padding.
        The process requires little water, Mitchell says.
        Tempur-Pedic chose Albuquerque after an 11-month site search in which it considered quality of labor, costs, economic incentives and other factors in 50 Western cities. Albuquerque Economic Development, a nonprofit corporation that tries to attract business here, helped lure the company, along with state and city representatives.
        Incentives such as high-wage tax credits and training cost reimbursements were key in the company's decision, Mitchell said, as was the IRB resolution, which he said was drafted before the company broke ground.
        Under the 30-year industrial revenue bond plan, the county takes an ownership stake in the property and leases it back to the mattress-maker in return for tax breaks to the company.
        Tempur-Pedic will still pay the portion of its property tax that goes to Albuquerque Public Schools and University of New Mexico Hospital, initially totaling about $511,000 annually, said county manager Thaddeus Lucero. It will not pay the portion that would have gone to the county, which will be an estimated initial $600,000 annually. Both values will decline as the value of the building and equipment is depreciated over time.
        Corporations and residents in Bernalillo County pay their property taxes directly to the county, which then shares it with the respective cities, villages, hospitals, flood districts and school districts. Last year it took in $391 million, of which about $94 million went to the county, with the rest divided among its constituents.
        The county estimates construction of the plant created 1,727 jobs and injected $84.7 million into the economy through construction company payroll, purchasing and gross receipts taxes. It estimates that once the factory is operational, it will pay $15 million in annual salaries and gross receipts tax of $769,500 annually.
        There are IRB clawback provisions that require that if the company were to shut down or move within 10 years, it would have to pay back all the abated taxes.
        Opponents of such deals, which are commonly offered in hopes of landing big employers, occasionally call them "corporate welfare" and say the counties, cities and other entities that issue them will transfer the lost tax revenues to homeowners.
        When Tempur-Pedic first announced plans to locate here two years ago, some questioned County Commissioner Tim Cummins' closeness to the deal. At the time he had an ownership stake in the Nine Mile Hill rangeland where Tempur-Pedic's plant is located, and maintains ownership of land nearby, where other factories might locate in the future.
        Cummins abstained from the August 23 vote on the bonds.
        Some critics including organizations that philosophically oppose any and all incentives or tax breaks have suggested that the total subsidy given to Tempur-Pedic is about $10.5 million using a standardized depreciation table over 10 years.
        County Commission chairman Alan Armijo didn't dispute the figure, but said such a number can be misleading. Land like Tempur-Pedic's 50 acres hadn't previously earned money.
        Before its decision, he said, the commission compared the amount the property was earning as it was with projected economic benefits, such as wages and gross receipts taxes.
       
    Tempur-Pedic in N.M.
       
  • Plant construction: $70 million
       
  • Plant equipment: $30 million
       
  • Gross receipts tax revenue: $3,893,750
       
  • Construction payroll: $40 million
       
  • Construction jobs: 1,243
       
  • Total gross receipts tax generated during construction: county $368,526; city $341,974; state $4,088,000
       
  • Jobs once operational: 300
       
  • Annual payroll and benefits: $15 million
        -- Source: Bernalillo County