by Tim Mekeel, staff writer
Intelligencer Journal/Lancaster New Era; September 3, 2009

Lancaster Leaf Tobacco Co. almost was uprooted.

It nearly left town, costing 119 workers their jobs and vacating hundreds of thousands of square feet.
Instead, it’s digging in deeper.

The company has started an $11.5 million expansion project here, thanks to more than $4 million in state aid, it was announced Wednesday.

“They will end up with one of the world’s most modern tobacco-processing plants,” said David K. Nikoloff of EDC Finance Corp.

EDC Finance helped secure the state aid for Lancaster Leaf, sparking the project that will lead to at least 16 new jobs over three years.

EDC learned late last year that Lancaster Leaf was considering pulling out and consolidating operations out of state to save money.

Nikoloff declined to disclose the alternatives being considered by Lancaster Leaf.

But in January, EDC and the Governor’s Action Team met with company officials.

The governor’s representatives proposed a financial package to the company if it would decide to stay and grow here.Wednesday state officials announced that the package, worth more than $4 million, had been approved for Lancaster Leaf.

The assistance will help fund an expansion and upgrade of its Pitney Road processing plant.

And instead of the company leaving Lancaster, it will close its Kenbridge, Va., plant and bring that processing work here, the state also said.

Lancaster Leaf’s plan to enlarge its Pitney Road site was reported in May, but the financial details and the company’s near-departure were not made public at that time.

A Lancaster Leaf spokesman could not be reached for comment Wednesday.

Nikoloff, the president of EDC Finance, said the expansion has begun and is due to be done by year-end.

Lancaster Leaf processes dark, air-cured tobacco used in cigars and smokeless products.

With this expansion, the Pitney Road site will become North America’s largest processor of dark, air-cured tobacco.

It already processes “thousands of tons a year from all over the world,” said Nikoloff. The project’s impact on the facility’s processing capacity was not available.

Lancaster Leaf also warehouses tobacco in the Pitney Road complex, as well as in warehouses on Greenfield Road and North Prince Street, according to Nikoloff.

The state financing package includes a $2 million Pennsylvania Industrial Development Authority loan to help pay for the 75,500-square-foot addition at the 230,000-square-foot complex.

In addition, a $2 million loan from the Machinery & Equipment Loan Fund, a $80,000 Opportunity Grant and $48,000 in job creation tax credits have been approved.

Steve Weitzman, spokesman for the state Department of Community & Economic Development, put the total cost of the expansion at $11.5 million.

E-mail: tmekeel@lnpnews.com

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