2008 Economic Deal of the Year Awards: Honorable Mentions
By 2012, Minnesota will open North America’s first steel operation where iron mining, ore processing and steel production all occur at a single site. Situated near Nashwauk, a northern Minnesota town of 935 people, the Minnesota Steel project is the state’s largest industrial endeavor, and it has been under development for more than 11 years.
In September 2008, Essar Steel Holdings Limited Group broke ground on the site, which is adjacent to the former Butler Taconite Mine, closed since the mid-1980s. Northern Minnesota currently has six existing taconite mines, each employing 600 workers on average. The Minnesota Steel project is designed to produce up to 2.5 million tons of steel annually and, with all of the processing stages done on-site, product movement can be minimized and energy savings can be maximized. The result will be one of North America’s lowest-cost steel production operations.
The unemployment rate of Itasca County, home to the Minnesota Steel project, is higher than state and national averages. But the project estimates 2,000 direct and 1,500 indirect construction jobs will enliven the region during the next two years, in addition to creating 700 direct and 1,550 indirect operations jobs annually.
Direct investment for the steel project’s construction will total $1.6 billion, with another $1 billion in indirect and induced investment. For direct operational costs, $888 million has been allocated, plus an additional $462 million of indirect investment. Approximately $66 million will be spent to construct natural gas lines, plus water, sewer, road and rail improvements.
“This project is an example of hard work and coordination among many partners and we’re gratified to see it moving forward,” says Mark Holsten of the Minnesota Department of Natural Resources Commission. “Essar Steel Minnesota has a solid mining plan in place, as well as good strategies for future land reclamation projects. It is a true asset to the state.”
Project Title: MPI Research Expansion: Making the Moving Parts Work Together
Entered By: Southwest Michigan First (in partnership with the Michigan Economic Development Corporation)
Dogged by the automotive sector’s struggles and recent job losses, Michigan’s economic success stories often are overlooked. But a masterfully planned partnership, organized by Southwest Michigan First, between MPI Research and Pfizer has brought hope and ingenuity to the Kalamazoo region.
In early 2007, MPI Research, headquartered in Mattawan, MI, near Kalamazoo, indicated to Southwest Michigan First an interest in expanding its operations. While staying in Michigan was an option, MPI also was considering State College, PA and locations in China. Concurrently, representatives from pharmaceutical heavyweight Pfizer approached Southwest Michigan First with a desire to sell, donate or demolish two of its existing, but vacant, Kalamazoo buildings. With this, Project Moving Parts was born—a plan that would give MPI the infrastructure it needed to grow its business while relieving Pfizer of the space it no longer required.
In cooperation with Southwest Michigan First, the Michigan Economic Development Corporation and Governor Jennifer Granholm, Pfizer agreed to donate the buildings (as this would be cheaper than demolishing), and a state tax credit valued at $86 million over 15 years secured MPI’s commitment to occupy the space. “We worked hard to win MPI’s investment, and we will continue to go anywhere and do anything to get companies like this to locate in Michigan,” Gov. Granholm says. “This expansion demonstrates that we have the kind of outstanding workforce and competitive business climate that can win a project like this.”
MPI is expected to create 3,330 direct jobs, in addition to 5,321 indirect jobs, for the state of Michigan. A mix of local, out-of-county and out-of-state employees will fill these jobs, and the average annual salary will be $62,500. The project is expected to create $4.6 billion in personal income for Michigan workers during the next 15 years.
Project Title: Procter & Gamble: “Growing Green”
Entered By: State of Utah
After its comprehensive national search, Procter & Gamble, a worldwide consumer products company, selected Box Elder County in Utah as the location for its first new Greenfield manufacturing site in 34 years. The project’s direct, indirect and induced economic output is predicted to total more than $7.5 billion over 10 years, and the facility will be constructed and operated to meet LEED standards.
Current projections anticipate more than 900 full-time jobs will be created by P&G in Box Elder County over 10 years, and more than 1,000 jobs over 20 years. As an incentive, Box Elder County offered an incremental property tax refund for up to 20 years based on the company’s performance.
A geographic desert, Utah faced the challenge of securing large volumes of water to meet P&G’s manufacturing needs. But by bringing together municipal, county and state agencies, Utah’s economic development team was able to secure water rights to the Bear River Basin.
Project Title: BMW Announces Plant Expansion
Entered By: South Carolina Dept. of Commerce
Home to North America’s sole BMW assembly plant, Spartanburg County in upstate South Carolina is a hotbed for the automotive industry. This status was amplified in March of 2008 when BMW announced an additional $750-million investment into its existing facility, creating an operation worth $4.2 billion.
Construction will take three years to complete, will add 1.5 million square feet to the facility and will increase production capacity to 240,000 units by 2012. In addition to the 5,400 workers currently employed at the Spartanburg site, 500 new direct jobs are expected. Indirect employment is estimated at 1,168, while 856 induced jobs will be created. Fifty-two key automotive suppliers currently operate in South Carolina, with more anticipated.
“We expect to see new suppliers come to the state and existing suppliers grow as a result of this announcement and that means new jobs and lots of new supplier jobs all over South Carolina,” says the state’s Secretary of Commerce, Joe Taylor. “BMW is truly the nucleus of a job- creating machine.”
Governor Mark Sanford calls BMW’s decision “far more than an expansion,” citing South Carolina’s ability to meet the needs of an international corporation as a reason for BMW’s long history in the state.