Canon U.S.A. complying with employment pledge in return for 12 years of tax breaks: attorney

Canon U.S.A. Inc. is now and will be at the end of this year in compliance with the job commitment it made in return for 12 years of tax breaks, despite recently cutting between 100 and 150 employees at the Melville headquarters, the company’s real estate attorney said.

"There has been no default here," Daniel P. Deegan told a meeting of the Suffolk County Industrial Development Agency last week, referring to a January tax break deal that stipulates Canon always have a minimum of 1,081 employees.

"We have a legal commitment to the IDA that we are in compliance with now. ... We’ll continue to keep you guys appraised," he said, referring to the IDA board.

Canon’s Melville workforce was reduced between 9% and 14% six months after it won $7 million in additional tax breaks from the IDA, Newsday reported in July. Last year, the Japanese company had threatened to jettison its Americas headquarters on Walt Whitman Road and have its employees work from home permanently.

Canon requested extra IDA assistance because a 10-year incentive package initially approved in 2007 for $35 million was set to expire. The latter tax breaks played a significant role in the company’s decision to move from Lake Success to a former pumpkin farm south of the Long Island Expressway instead of out of state.

IDAs award tax incentives to encourage businesses to expand on Long Island or to stay here. Spending by the businesses and their employees in the local economy far exceeds the value of the tax savings, according to economic impact reports.

Still, Canon’s recent job cuts led IDA attorney William D. Wexler to send a letter to the company stating that if its job commitment wasn’t met, that "will be considered a recapture event" where the IDA could claw back some of the tax savings received this year. He also requested a meeting of company executives and IDA officials.

If the IDA was to claw back benefits, it would only involve a sales tax exemption of up to $568,388 that was granted on the purchase of materials and equipment for $8.4 million in upgrades to the Canon office. The second round of property tax savings doesn’t start until next year, according to IDA officials.

Deegan last week confirmed that Canon had used some of the sales tax exemption for a new product showroom. But he said, "Recapture and claw back, those are legal terms that get triggered by default. There has been no default and there’s nothing legally that [Canon] was supposed to report" to the IDA.

Canon is hiring, Deegan said, for its medical scanning, semiconductor manufacturing equipment and health care units, where strong sales and profits are forecast, citing July comments to Newsday from the company’s CEO.

"The reason they’ve made the moves that they did [in laying off employees] is so they can grow their sales and grow their workforce going forward," Deegan said.

The careers section of Canon’s website last week showed one opening in Melville for a mailroom clerk with an hourly salary of between $17.20 and $25.49.

Asked for the number and types of openings for Melville-based jobs, Seymour Liebman, the company’s executive vice president, chief administrative officer and general counsel, told Newsday: "The human resources and recruitment teams are working with the leadership of Canon's business units to identify tangible needs and opportunities as we aggressively recruit high-caliber talent in a wide range of growth areas. Canon U.S.A. uses several platforms to publish job listings and, as always, will post job descriptions as they become available. Canon U.S.A. is also partnering with executive recruiters specializing in our target industries to identify qualified candidates for open positions."

Employees earn, on average, $112,230 per year, according to an application for IDA help.

At the IDA meeting on Thursday, Kelly Murphy, the agency’s CEO and executive director, said she had met with Canon executives to discuss the job cuts.

"They did apologize for the amount of light that had been shed and felt badly," she said, referring to criticism of the IDA after the Canon layoffs. "They assured us that they had no intention of being out of compliance and that they would meet all of their obligations to the agency. ... So, we will continue to closely monitor their business and their obligations."

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.