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2009 Economic Development Deal of the Year Awards


South Carolina, already home to more than 100 aerospace-related companies, lands a crown jewel: Boeing’s second 787 Dreamliner plant

GOLD AWARD

Project Title: Boeing to Locate Second 787 Line in South Carolina
Entered By: South Carolina Department of Commerce

The economic downturn did not take the steam out of Business Facilities’ annual Economic Development Deal of the Year Awards competition.

Agencies from 15 states nominated 19 big-ticket projects for consideration by our expert panel of judges, who evaluated economic impact statistics, job-creation estimates and project narratives submitted by the applicants. Several mega-projects—each with a projected overall economic impact measured in billions of dollars—vied for top honors in the 2009 Economic Development Deal of the Year Awards contest.

The results are in, and Business Facilities is pleased to announce that South Carolina’s Department of Commerce has taken the top prize, our Gold Award, for North Charleston’s selection by aircraft giant Boeing as the site of its new Dreamliner 787 assembly plant.

Boeing’s decision to locate its second 787 assembly facility in South Carolina instead of its traditional manufacturing base in Washington vaults the Palmetto State into a leadership position in aerospace manufacturing, already a well-established industry in South Carolina.

“The choice of North Charleston as a manufacturing site for Boeing’s best-selling commercial jet will have a seismic impact on South Carolina’s economic development,” noted Business Facilities Editor in Chief Jack Rogers.

South Carolina already is home to more than 100 aerospace-related companies operating in 23 counties and employing more than 16,000 people.

The Boeing project is expected to bring in nearly $7 billion of economic activity to the state and local economy and create more than 12,000 direct and indirect jobs in coming years. State officials said the deal represents the largest single economic development announcement in South Carolina’s history.

“Boeing’s decision to expand their presence in our state with an infusion of jobs and capital investment represents not only enormously good news for our state’s economy, but also a telling dividend from our state’s continued efforts to better our business climate,” Gov. Mark Sanford said when the deal was announced.

“For us, that means lowering taxes, easing regulatory burdens in our state’s tort and workers’ compensation systems, and keeping South Carolina a right-to-work state,” he added.

Analysts said South Carolina’s traditional aversion to union labor was a major factor in Boeing’s decision. Earlier this year, Dreamliner production in Washington was halted by a labor dispute and several major purchasers of 787s reportedly were reconsidering their commitments.

Construction already has begun on the new plant, which will complement an existing Charleston facility that performs fabrication, assembly and systems installation for the 787 aft fuselage sections. Nearby, Global Aeronautica, in which Boeing has owned a 50-percent stake, joins and integrates the 787 fuselage sections from other structural partners.

Boeing announced in late December that it has acquired Alenia North America’s half of Global Aeronautica, LLC, and is now the sole owner of the fuselage subassembly facility. Alenia North America is a subsidiary of Italy’s Alenia Aeronautica, a Finmeccanica company. Operationally, Boeing said it will integrate the Global Aeronautica facility with the rest of Boeing’s organization in North Charleston.

“The Boeing Charleston site is critical to the success of the 787 program,” said Jim Albaugh, president and CEO of Boeing Commercial Airplanes. “Through this acquisition, Boeing benefits by joining together two solid operations—including their talented employees and state-of-the-art facilities—into one Boeing team. Ultimately, we believe integration of the site will increase productivity for the 787 program and allow us to maintain our long-term competitiveness.”

“We are proud of the major contribution we have made over the past four years through our partnership in Global Aeronautica to the 787 program and to the state of South Carolina,” said Giuseppe Giordo, president and CEO of Alenia North America.

“We look forward to integrating the employees of both operations into one team in North Charleston, along with continuing our partnership with Alenia on the 787 program,” said Albaugh.

Global Aeronautica, LLC, began in 2004 when Alenia North America and Vought Aircraft Industries formed a 50/50 joint venture in support of the Boeing 787 Dreamliner. In 2008, Boeing purchased Vought’s interest in Global Aeronautica, making the company a 50/50 joint venture between Alenia North America and Boeing.

Global Aeronautica’s integration entails the joining of the mid-fuselage sections, installation and testing, and the application of surface finishes to more than 60 percent of the 787’s fuselage. Global Aeronautica sits adjacent to the Boeing Charleston site and shares a 240-acre campus.

About 55 airlines already have ordered 840 of the long-awaited Dreamliner jets, which will carry up to 250 passengers each with a range of 8,200 miles. After more than five years of preparation, the 787 took its first test flight last month. Because of its unique construction, the Dreamliner will be more efficient, quieter and have lower emissions than previous Boeing offerings.

Joe Taylor, South Carolina’s Secretary of Commerce, said Boeing’s decision to locate its second final 787 Dreamliner assembly plant cements the Palmetto State’s reputation as a global player in aerospace manufacturing. “Boeing’s 787 Dreamliner will truly transform commercial aviation as we know it today, and to that end the company’s decision to locate a final assembly plant in South Carolina sends a powerful message to the world that South Carolina has the business climate and the workforce skills to produce the finest products in the world,” Taylor told Business Facilities.

The selection of the Boeing project as our Gold Award winner marks the second year in a row that a major jet aircraft deal came out on top. Last year, Virginia Gateway’s Rolls Royce project took top honors.

 

A $2.5-billion polysilicon plant makes Clarksville Tennessee’s “Top Green Spot”

SILVER AWARD

Project Title: Hemlock Semiconductor Comes to Clarksville
Entered By: Tennessee Dept. of Economic & Community Development

After years of city planning and a search that spanned 70 potential building sites on five continents, Dow Corning/Hemlock decided to locate its new facility in Clarksville, TN. The $2.5-billion polycrystalline silicon plant, which will directly create 1,500 highly skilled “green” jobs, is our Silver Award winner for Economic Development Deal of the Year.

Hemlock Semiconductor Corporation is a subsidiary of Dow Corning Corporation. The new facility is a joint venture between Dow Corning/Hemlock, Japan-based Shin-Etou Handatai and Mitsubishi Materials Corp. “Tennessee’s business climate, coupled with a superb site in Clarksville, a strong, productive workforce and an excellent location in proximity to our supply chain and customers made this the right decision, “ said Hemlock Semiconductor President and CEO Rick Doornbos. “This investment will allow us to meet growing customer demand both in the near term and in the decades ahead.”

Hemlock produces one-third of all polycrystalline silicon (or polysilicon) used to manufacture solar panels. Polysilicon is made from quartz rock, and is the key raw material in solar panels, computer chips, cell phone keypads, flat screen TVs and other products.

Hemlock has been supplying ultra-high purity polysilicon worldwide for more than 45 years. It is the increase in consumer demand for these products that drove Hemlock’s decision to build a new facility in Clarksville’s Commerce Park. This is the third major expansion for the company in five years.

Prior to the Hemlock project decision, Clarksville’s Commerce Park, a 1,187-acre Clarksville-Montgomery County Industrial site, had been certified by the Tennessee Valley Authority (TCVA) and McCallum Sweeney Consulting as a MegaSite suitable for major automotive manufacturing.

When complete, the facility will have the capacity to manufacturer up to 10,000 metric tons of polysilicon annually. It is being designed with the capacity to produce 34,000 metric tons. If plans are fully implemented, the project would become the largest capital investment in Tennessee history.

For Hemlock, the expansion means retaining its global position as the top producer of polysilicon. For Clarksville, it means a boost to the economy in the form of highly skilled, stable and well-paying jobs. For the state of Tennessee it means expansion of its industrial footprint that will likely attract supplier/vendors and other ancillary companies to support the work of Hemlock.

The type of workers at the Hemlock facility will include chemical, electrical and mechanical engineers, chemical processing operators, pipe fitters, electricians, accountants, technicians, skilled tradesmen and other workers. Analysts calculate that every manufacturing job creates an additional 3.5 service and retail job openings. The Tennessee Department of Economic and Community Development estimates that the Clarksville plant ultimately may generate a total of 9,500 direct, indirect and induced jobs.

“We live in a time when a growing reliance on sustainable forms of energy is leading to growth rates of 30 percent to 40 percent annually for the solar industry,” said Tennessee Economic Development Commissioner Matt Kisber. “This announcement means Tennessee will play a leading role in the growth of solar technology for many years to come.”

Clarksville already is home to several major international corporations, and the city has a global reputation for a workforce experienced in polysilicon production.

While these factors no doubt were major attractions for Hemlock, state and local officials say it was years of “good old-fashion legwork, homework and visionary planning” that caused Clarksville’s Commerce Park to rise to the top of 70 mega-sites worldwide that vied for the project.

That process for Clarksville began almost four years prior to Hemlock’s decision, when the city began the rigorous process of obtaining TVA MegaSite certification for a 1,200-acre parcel of land. At the time, some saw just an empty field. But the vision of a few key leaders was broader.

“We knew in order to compete on the global market, we needed a world-class site,” said Clarksville Mayor Johnny Piper. “And that’s when we started looking at our collective resources to determine how we could make that happen. We found a site then began the necessary steps toward earning TVA’s stamp of approval and putting together a proposal.

“MegaSite certification provided a fast track to attracting serious interest in our site. It meant we could synergize TVA’s efforts, along with those of Tennessee’s Department of Economic Development and local groups to market the site on an international platform. Proving that we met TVA standards gave Hemlock the green light to add us to its short list.”

Meeting TVA standards took the risk out of Hemlock’s selection and made the Commerce Park site more attractive among all of the project competitors.

“Selecting a MegaSite certified under the TVA program saves six to nine months in the site-selection process,” said John Bradley, TVA senior vice president of economic development. “Companies that are ready to build do not want to wait for communities to address site issues: environmental challenges, utility upgrades and excavation problems. Or worse, they don’t want to choose a site and then learn later that it has issues that make it unsuitable.

“Too often, when cities submit bids, the sites have not been fully prepped. When a company looks closer, it becomes apparent there is significantly more infrastructure and development work needed to make a viable site.”

Once the Clarksville site was certified mega-ready, it was placed on TVA’s list of available properties. Then, city and county officials, local and state economic development leaders, educators, state representatives and private business leaders all partnered in bringing Hemlock to the negotiating table.

“The State of Tennessee and the Clarksville-Montgomery County community showed true partnership in making this project a reality,” said Dr. Stephanie Burns, chairman, president and CEO of Dow Corning.

To meet MegaSite certification standards, Clarksville’s gas, water/sewer and electric departments worked with the area Economic Development Council and Industrial Development Board to complete an intensive environmental analysis and build a suitable infrastructure. The state provided $100 million in economic development contingency funds and business tax incentives. State negotiations were propelled by funds from Tennessee Gov. Phil Bredesen’s Energy Policy Task Force, created in part to increase public/private partnerships and collaborations for clean-energy technology research and use.

The Hemlock facility will be constructed with environmentally sustainable features that reduce energy consumption and cost and protect the environment. In addition to certifying MegaSite status, TVA offered Hemlock a significant reduction in energy cost and other incentives above its already low utility fees for the region.

“Low utility cost was definitely one of the strongest tools in our tool kit for capturing the Hemlock site,” said Bradley. TVA also offered upgrades and expansion of the energy grid for the region to support Hemlock’s massive production.

Though manufacturing polysilicon requires vast amounts of energy, the net gain outweighs the demand by huge margins. Use of solar panels saves from 8 to 15 times the amount of energy needed to produce the polysilicon that goes into the solar panel cells.

Clarksville’s reputation for quality education was also a factor in Hemlock’s decision. It didn’t hurt that Clarksville is home to one of the fastest growing and finest public universities in the region–Austin Peay State University. City officials and university leaders were able to show Hemlock that APSU would be an excellent partner for training the large work force the company would need to make its operations run smoothly.

“We knew Hemlock was looking for a very large number of workers with science degrees in some fairly specialized fields,” said Piper. “We also knew we had a great partner with APSU that could train the workers quickly and effectively. It was important to make Hemlock understand that.”

In addition to the $2.5 billion committed to build the new facility in Clarksville, Hemlock committed $6.4 million to fund a new chemistry degree program and state-of-the-art science building at APSU, and $5 million to directly support a training curriculum for Hemlock workers.

“We offered the educational resources and Hemlock budgeted funds to pay to train a work force that will meet its needs. What more could we ask?” said Piper. “Together we will train 1,000 employees for new jobs that are high salary and provide long-term security. It’s a win-win solution in the current economic environment.”

Clarksville, which calls itself Tennessee’s Top Spot, is now adding the moniker “Top Green Spot.” The Hemlock project is part of the state’s strategy to become a leader in green-collar jobs, said Governor Phil Bredesen.

“This [project] shows Tennessee’s commitment to becoming a significant player in the development of ‘green collar’ jobs related to clean energy technologies,” said Bredesen. “With this announcement, Hemlock Semiconductor and Dow Corning have signaled a major shift in the direction of Tennessee’s and the nation’s economies. The people of Tennessee appreciate the leadership of both companies for their confidence in our state.”

 

AREVA and Northrop Grumman team up on a nuclear-powered project in Newport News, VA

BRONZE AWARD

Project Title: AREVA & Northrop Grumman: A Pioneering Partnership
Entered By:
Virginia Economic Development Partnership

Our Bronze Award winner is a powerful entry from the Virginia Economic Development Partnership—in fact, it’s nuclear powered. AREVA Newport News LLC is a joint venture between the leading French nuclear power player and U.S. defense giant Northrop Grumman Corp.

AREVA and Northrop Grumman Shipbuilding are investing $363 million to manufacture equipment and pressure vessels in Newport News, VA, directly creating 540 new production and engineering jobs. Overall, the project is expected to pump more than $1 trillion into Virginia’s economy, creating about $229 billion in direct income (wages).

Virginia won the project in a competition with Alabama, Indiana, South Carolina and Tennessee.

When he announced the project at the end of 2008, Gov. Tom Kaine hailed the venture as a commitment that will enhance Virginia’s leadership position in renewable energy. “This joint venture project is tremendous news for Virginia,” Gov. Kaine said. “We are strong supporters of the nuclear and shipbuilding industries in Virginia, and we will continue to support this facility and compete aggressively for future expansions. Emission-free nuclear energy produced in the United States is a positive step toward reducing greenhouse gases and reducing our dependence on foreign oil.”

AREVA has 71,000 employees around the world focus on providing customers with carbon-free power generation as well as electricity transmission and distribution. AREVA’s presence in Virginia dates to 1957. Lynchburg, VA hosts the company’s largest U.S. operations with more than 2,000 employees and the headquarters of AREVA NP Inc., dedicated to the design and construction of nuclear power plants, plant maintenance and repair, and the manufacture and supply of nuclear fuel.

“We are establishing a world-class entity that fully supports the deployment of a fleet of U.S. Evolutionary Power Reactors made in America by Americans and for Americans,” said AREVA Inc. CEO Tom Christopher. “Here in Virginia, we have access to a great workforce for both the manufacturing and engineering expertise we need. The Commonwealth of Virginia has been very supportive of our growing business and we are excited to once again expand our operations here.”

Northrop Grumman Corporation is a global defense and technology company with 120,000 employees. It has 16 primary locations in Virginia employing more than 35,000, making it the largest technology/manufacturing private employer in the Commonwealth.

“This relationship capitalizes on Northrop Grumman Shipbuilding’s century-long history of quality craftsmanship, skilled engineering and program management expertise building large nuclear and non-nuclear ships for the U.S. Navy,” said Mike Petters, corporate vice president and president of Northrop Grumman Shipbuilding.  “Our shipbuilders embrace the opportunity to apply their considerable skills and training to a growing U.S. energy sector, backed by the pro-growth environment of the state of Virginia, employing the same dedication and commitment to domestic energy security that has been applied to national security.”

The Virginia Economic Development Partnership worked with Newport News to secure the project for Virginia. Gov. Kaine approved $3 million from the Governor’s Opportunity Fund; he also approved a $1.5 million performance-based grant from the Virginia Investment Partnership (VIP) program, an incentive available to existing Virginia companies. The Virginia Department of Business Assistance is providing training assistance through the Virginia Jobs Investment Program. The joint venture qualifies for a Major Business Facilities Job Tax Credit and road access funding from the Virginia Department of Transportation.

“The importance of this energy independence initiative cannot be overstated,” said Newport News Mayor Joe Frank. “The City of Newport News’ business-friendly climate, skilled workforce, success with advanced manufacturing, strong commitment to research, and access to air, rail and port facilities make the city the perfect place for Northrop Grumman Shipbuilding and AREVA to launch their joint venture. Newport News and Virginia’s Hampton Roads continue to be premier places for people to live, work and raise a family.”

Northrop Grumman Shipbuilding (NGSB) is the largest U.S. military shipbuilder, the Navy’s sole builder of nuclear-powered aircraft carriers and one of only two companies capable of constructing nuclear-powered submarines.

The joint venture represents an expansion of AREVA’s heavy nuclear component manufacturing capacity, currently located in Chalon Saint Marcel, France, into North America.

For Newport News, the investment in new real estate and machinery means at least $3.75 million in new tax revenue annually once the plant is operational. For the Commonwealth, corporate income tax will be generated by potential multi-billion dollar contracts, as well as the tax revenue generated by 540 new jobs with an annual payroll likely to exceed $27 million. Also, the joint venture between ARBVA and NGSB will lead to the creation of a new NGSB subsidiary (Newport News Energy) to sell nuclear engineering services to AREVA and other nuclear power companies.

But the impact of the AREVA-NGSB collaboration goes beyond the impressive numbers. For NGSB and the City of Newport News, it means diversification from reliance on a single customer-the U.S. Navy. This also will mean greater economic stability for the region.

 

Here’s a cornucopia of top-flight nominees that were applauded by our judges

HONORABLE MENTIONS

Projects: IBM Searches the World and Finds Dubuque, Iowa (Greater Dubuque Development Corp.); Louisiana in the Driver’s Seat (Louisiana Economic Development); Medtronic Locates Diabetes Center in San Antonio (San Antonio
Economic Development Foundation); NCI@Riverside (City of Frederick)

All of the entries for Business Facilities’ 2009 Economic Development Deal of the Year Awards were worthy of consideration for the top honors in this year’s competition. In addition to our Gold, Silver and Bronze award winners, four projects were singled out by our judges for Honorable Mentions:

IBM’s $100-million IT service center in Dubuque, IA; the V-Vehicle auto assembly facility in Monroe, LA; Metronic’s Diabetes Therapy Management and Education Center in San Antonio, TX; and NCI@Riverside in Frederick, MD.

Iowa’s determination to position itself as an IT service leader received a huge shot in the arm with the announcement that IBM will locate a $100-million technology service delivery center in Dubuque, a project that will create up to 1,300 high-tech jobs by the end of 2010.

The IBM delivery center is expected to generate an estimated $189 million in direct economic impact and more than $70 million in direct personal income (wages).

“[IBM’s choice of Dubuque] is one more sign that people around the country are discovering what we have known all along—that with our highly skilled workforce, inviting business climate and quality of life, Iowa is a great place for business,” said Iowa Gov. John Culver.

Working together, the Governor’s Office, the Iowa Department of Economic Development, the City of Dubuque, Dubuque Initiatives, and the Greater Dubuque Development Corp. reached an agreement with IBM on a 10-year lease to occupy the historic Roshek Building in downtown Dubuque. IBM plans to upgrade the building with energy-efficient technology to make it a green facility.

“We selected Dubuque for our new delivery center based on several criteria, including strong positive public-partnership within the city, its competitive business model, and the talent and skills that Iowa has to offer,” said Mike Daniels, senior vice president, IBM Global Technology Services.

According to Dubuque Mayor Roy Buol, Dubuque’s sustainability initiative played an important role in IBM’s selection of the Iowa site. “The adaptive reuse of a historic structure in the heart of our downtown illustrates our shared commitment to sustainable development, historic preservation and community revitalization,” Buol said.

The IBM announcement followed the addition by Microsoft of a large server farm in West Des Moines and Google’s $600-million data center in Council Bluffs.

In June, V-Vehicle Co., a new American car company based in San Diego, CA, announced that it plans to construct an auto assembly plant in Monroe, LA to build ultra-fuel-efficient, environmentally friendly cars.

The V-Vehicle initiative has generated quite a bit of excitement-for three years, the project was shrouded in secrecy as backers assembled capital from a well-established group of investors, recruited a renowned designer, signed up some of the best strategic thinkers in manufacturing, and scrutinized potential plant sites.

Louisiana Economic Development officials estimate that the assembly plant eventually will generate a total economic impact of $19.5 billion in the next 15 years, directly creating 1,400 new jobs.

“V-Vehicle has the potential to re-energize the American auto industry, and they are going to accomplish that starting from a manufacturing base in Louisiana,” said Stephen Moret, Louisiana Economic Development Secretary. “This [project] will have a lasting impact on Northeast Louisiana and our state for many years to come. And it sends a clear message that Louisiana is a new frontier for business opportunity.

Moret said Louisiana was able to win the V-Vehicle assembly plant by providing a highly customized solution to address all of V-Vehicle’s special site selection needs. “In particular, a strong state and local partnership, plus a national-caliber workforce solution designed by Louisiana FastStart, made the difference,” he said.

According to V-Vehicle vice president of assembly operations, Louisiana emerged as a “dark horse” winner in the site selection process over competing locations in Alabama, Mississippi, Tennessee and Georgia.

Founded by CEO Frank Varasano, V-Vehicle’s backers include energy billionaire T. Boone Pickens and Google Ventures.

In May 2009, Medtronic, Inc., a global medical technology company, announced the location of its new Diabetes Therapy Management and Education Center in San Antonio. The center is expected to generate nearly 1,400 jobs during a five-year period. During the next 10 years, the facility is expected to generate an economic impact of $3.1 billion.

According to company officials, Medtronic evaluated more than 930 locations across the United States, assessing quality of life, availability of skilled labor, local costs and business environment.

“By expanding their diabetes division in San Antonio, I believe that Medtronic is sending a clear message that the core strength of Texas’ economy, built on our low taxes, fair legal system and predictable regulatory climate make the Lone Star State the best place to live, work and raise a family,” said Texas Gov. Rick Perry when Medtronic’s site selection decision was announced.

Our fourth Honorable Mention goes to the City of Frederick, MD Economic Development, which snared the National Cancer Institute Advanced Technology Partnership Initiative to be located at Riverside Research Park in Frederick.

It is estimated that NCI@Riverside will generate about $272 million in direct economic impact and $408 million in indirect activity. The project also will create a total of more than 4,000 direct, indirect and induced jobs.

Business Facilities congratulates all of our Honorable Mention winners.

Picking the Winner

The 2009 Economic Development Deal of the Year recognizes the locations and economic development agencies that landed the highest-impact corporate expansions announced between July 1, 2008 and the entry deadline of October 30, 2009. With this award, we also seek to demonstrate the vast impact that these companies have on communities through their decisions to invest and create jobs.

For the purposes of this award, an “economic development deal” is defined as any one of the following:
• A project or effort that resulted in the relocation/expansion of a company to a location served by the entering organization;
• A project resulting in the expansion of a company already within the
territory served by the entering organization;
• A project or effort that resulted in the demonstrable retention of a company that would have otherwise left, in whole or in part, the territory served by the entering organization;
• Any combination of the above.

Nominees were required to provide official economic impact numbers produced by the RIMS II, IMPLAN, or REMI certified analysis methods, including direct, indirect, and induced figures for economic output, job creation, and capital investment when available; and a narrative explaining the impact of the project; the unique challenges this project presented to the company and economic developers; and the originality of the methods used by the economic development organizations involved to secure the deal.

Judges evaluated the narrative and the economic impact numbers and gave each project a score ranging from zero to 100. The highest rated entry is our Gold winner and is considered our official Economic Development Deal of the Year; the second, third, and fourth place entries win the Silver, Bronze, and Honorable Mention awards, respectively. The awards were announced on our Web site, www.businessfacilities.com, on December 30.

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