Despite Recent Cuts, KIHOMAC is Healthy and Growing in Utah

LAYTON — Despite recently letting go of some of its employees, a private aerospace company that has received state and county assistance to build a new facility in Layton says they’re healthy and growing.

The Standard-Examiner recently received word that Ki Ho Military Acquisition Consulting Inc. (KIHOMAC), a Virginia-based military contractor with offices in Layton, Roy and West Haven, conducted layoffs for a portion of its workforce. The cuts included workers at KIHOMAC’s Utah offices.

Scot Merrihew, KIHOMAC’s Chief Operating Officer, confirmed some jobs had been cut in early 2016 but quickly rebuffed the term “layoff.”

“I wouldn’t call if ’layoffs,’” he said. “We’re shaping to the government customer. When you’re a government contractor, your (work) is always in flux.”

Merrihew, who declined to specify the amount of KIHOMAC employees involved in the cuts, said the small number of job losses were related to work being completed and contract terms coming to an end.

“We’re actually growing,” he said. “We’ve just put out several new job announcements.”

Tuesday afternoon, the company’s website showed 51 open positions, with 19 jobs available at northern Utah locations. 

In November, KIHOMAC signed a Memorandum of Agreement with Davis County that allowed the county to lend its tax-exempt status and credit rating to the company so they could acquire $10 million in state Industrial Revenue Bonds. The bond money will be used to finance the construction of a new manufacturing facility in Layton.

• RELATED: County to sponsor $10 million head start to aerospace company

The 126,000-square-foot building is currently being constructed near Hill Air Force Base’s east gate at 3650 N. Fairfield Road. KIHOMAC will manufacture aerospace components and other related products at the facility. Merrihew said the building will also allow KIHOMAC to consolidate all of its northern Utah offices into one location.

Merrihew said construction of the building is on track, with the company expected to move in sometime in August.

KIHOMAC, which contracts with the Air Force, Navy and Marine Corps and produces components for planes like the A-10 and the F-16, is also eligible to receive a tax credit from the state of up to $122,454. According to a press release from the Governor’s Office of Economic Development, the credit would come as a “post-performance Economic Development Tax Increment Finance” tax rebate.

The company has told the state that in five years, its new expansion will create 70 new jobs with wages exceeding 125 percent of the Davis County average. Projected new state wages over those five years are expected to reach nearly $15 million, with new state tax revenues estimated to be $816,362 over the same time frame.  

KIHOMAC must meet those projections in order to receive the full tax credit.

Michael Sullivan, GOED’s communications director, said “the state takes no hit on business cycle incentives because all of our incentives are post performance.” 

A company’s numbers are tracked by the unemployment insurance and tax commission filings, Sullivan said.

“I cannot speak specifically to KIHOMAC because we don’t track their individual contracts — we’re tracking year to year performance,” Sullivan said. “But (Merrihew’s) explanation would be fairly normal in the industry. It certainly is very personal for the people who are affected by a particular contract coming or going, but it would be relatively normal in most of the federal contracting companies.”

As for Davis County, they aren’t on the hook for KIHOMAC’s debt service. The company entered into an agreement with a third-party bank, which would be responsible if KIHOMAC can’t cover the debt service on the bond.

Davis County Commissioner Bret Millburn said there has been no indication the company’s progress had stalled on the building.

“As far as I know the building is in progress and being constructed.” he said. “I haven’t heard anything to the contrary that we ought to be concerned.”

MITCH SHAW, Standard-Examiner Staff

You can reach reporter Mitch Shaw at or at 801-625-4233. Follow him on Twitter at @mitchshaw23 or like him on Facebook.

Aerospace & Defense
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Standard Examiner Wed, 03/23/2016 - 13:40