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Layoffs at manufacturer break LI aid streak

Advanced Energy Systems, located at 27 Industrial Blvd.

Advanced Energy Systems, located at 27 Industrial Blvd. in Medford, is seen here on Monday, Nov. 30, 2015. Credit: James Carbone

A Medford manufacturer that received economic development aid from the state has laid off workers, representing a rare instance of a local recipient of grant or loan funds failing to keep its employment promises.

Advanced Energy Systems Inc. shed 15 employees last year after reporting a loss in 2013 and facing intense competition from foreign rivals. The company's workforce totaled 21 last year, down from 36 in 2013 and 25 in 2009, when it won a $200,000 grant from Empire State Development, the state's primary business aid agency.

The pink slips at Advanced Energy ended Long Island's four-year run of 100 percent compliance by businesses in fulfilling their pledges to maintain and create jobs in return for state aid, according to a recent audit.

Advanced Energy, once part of Northrop Grumman, met its job commitment in previous years and hopes to resume hiring so it can qualify for the final $50,000 in grant funds, said John W. Rathke, the company's co-president and chief engineer.

He blamed the layoffs on German and Italian rivals that he said receive favorable treatment from the European Union, giving them a competitive advantage in bidding on U.S. government contracts.

"We are now looking toward some promising opportunities in 2016," Rathke said. "However, the challenge of unfair foreign competition remains."

Empire State Development could have fined Advanced Energy but chose instead to extend by one year its employment obligation to the state, an agency official said.

The agency audit shows the Island had a 93 percent compliance rate in 2014 among 14 companies receiving state grants and loans. The Mohawk Valley, which includes Utica, had a rate of 100 percent for 15 projects. Long Island placed No. 2 among the state's 10 regions.

"When it comes to meeting hiring and investment goals, companies here consistently outperform their peers across the state," said Cara Longworth, regional director for Empire State Development.

The hiring leader locally was Contract Pharmacal, which has added 453 jobs in the past few years. The Hauppauge-based drugmaker had a workforce of 910 last year, far above the 625 people it pledged to employ in return for a $787,500 grant.

Of the 14 companies receiving assistance, 12 exceeded employment requirements. One business -- Bren-Tronics Inc., a battery and charging equipment seller based in Commack -- did not meet its target, but was within 15 percent, which state officials said was acceptable.

Together, the local aid recipients got $7.4 million in grants and loans for pledging to employ 3,006. Their payrolls totaled 3,616 in 2014.

The average cost to taxpayers for each job preserved or created on Long Island was $2,043. Statewide, the average cost per job was $5,628.

The audit includes some projects that were funded before the 2011 creation of the Regional Economic Development Councils system to distribute state business aid. The councils were the subject of a separate report issued Monday by the nonpartisan Citizens Budget Commission.

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