COVER STORY: 2011 Economic Development Deal of the Year Awards
Project Title: Kentucky-Ford Partnership
Entered By: Kentucky Cabinet for Economic Development
Diversity was the watchword in the competition for Business Facilities‚Äô 2011 Economic Development Deal of the Year Awards. The contest featured 23 big-ticket projects from 17 states, all of which cut across a wide-ranging mix of growth sectors, including emerging hot-button technologies and established industrial powerhouses.
The resurgent U.S. automotive sector and its ever-growing aerospace complex were well represented among the nominees, as were high-tech manufacturing, logistics and alternative energy concerns. Some of the contenders touted well-planned expansions of corporate headquarters, and there even were a couple of tasty entries from leading coffee and candy makers.
As always, our award recipients were chosen by a blue-ribbon panel of industry experts who pored over economic impact statistics and project narratives submitted by the finalists. The judges were confronted by some tough choices, as all of these projects were worthy of consideration for top honors. While our awards are limited to the top vote-getters, we can state without hesitation that in our eyes all of the candidates were winners.
The judges have spoken, and we have summoned the successful developers of top-flight projects from Kentucky, South Carolina and Arizona to stand in our spotlight and take a bow as they snatch the top awards in the 2011 Economic Development Deal of the Year competition.
The Kentucky-Ford Partnership was the consensus choice of Business Facilities‚Äô blue-ribbon judging panel for our Gold Award, the top honor in the Economic Development Deal of the Year Awards contest.
The nearly two dozen big-ticket projects from across the country that vied for our Gold standard all promised substantial positive economic impact for their communities and regions. But Kentucky‚Äôs success in expanding its long-standing relationship with Ford stood out as a model of planning and execution that put it head and shoulders above the field for our top honor.
In today‚Äôs challenging economic environment, locations can‚Äôt assume that a longstanding industrial relationship‚ÄĒor even, in the case of Ford‚Äôs Louisville plants, an historic relationship that dates back nearly a century to the Model T‚ÄĒautomatically means these facilities are guaranteed commitments for future production. This especially is true in the highly-competitive automotive sector, in which emerging hubs aggressively are laying claim to heavyweight status.
Kentucky brought its ‚ÄúA‚ÄĚ game to this competition and deployed all of the tools at its disposal, not merely settling for the preservation of existing jobs but instead setting its sights on long-term growth.
Ford‚Äôs $1.2-billion investment in its Louisville facilities will bring a bonanza of jobs to the region, anchored by more than 3,100 positions directly tied to plants and extending to a growing supply network in the surrounding area. The lead agency involved in securing the project, the Kentucky Cabinet for Economic Development, estimates the overall economic impact of this deal will be nearly $13 billion for the Bluegrass State; counting indirect and induced jobs as well as direct employment at the affected plants, more than 17,000 jobs will be generated by Ford‚Äôs long-term investment. These positions will bring in more than $180 million annually in new wages to the area.
Ford‚Äôs decision to go ‚Äúall-in‚ÄĚ on its Louisville facilities‚ÄĒwith an estimated direct economic impact to the area of $5.2 billion‚ÄĒwas spurred by a creative $240-million incentives package.
‚ÄúOur judges really were impressed by the creative use of incentives in this project,‚ÄĚ Business Facilities Editor-in-Chief Jack Rogers said. ‚ÄúThe incentive package for the Kentucky-Ford Partnership was structured in a way that it could be renegotiated to induce additional investments made at either of Ford‚Äôs plants in Louisville, giving the state more flexibility to negotiate.‚ÄĚ
Nearly half of the overall investment is being used to transform Ford‚Äôs Louisville Assembly Plant (LAP) into the automaker‚Äôs most flexible high-volume plant in the world. Second and third shifts are being added at LAP, which opened in 1955 on the south side of town near Louisville International Airport. Ford has been building cars in Louisville for nearly a century, beginning with Henry Ford‚Äôs first Model T in 1913.
The auto giant also is investing $600 million to modernize tooling at its Kentucky Truck Plant in Louisville for next-generation F-Series Super Duty trucks and Expedition/Lincoln Navigator SUVs.
‚ÄúIt‚Äôs clear that our strategic effort to secure Ford‚Äôs long-term investment in Kentucky and its workers was successful,‚ÄĚ Gov. Steve Beshear declared in October. ‚ÄúThese kinds of commitments don‚Äôt just happen. They are the result of ongoing relationships, cooperation and forward thinking. I‚Äôm proud that Ford recognizes that.‚ÄĚ
Over the years, Ford‚Äôs Louisville plants have produced some of the automaker‚Äôs most popular vehicles, including the Ford LTD, Ranger, Bronco II, Explorer, F-Series Super Duty pickup trucks and the Lincoln Navigator luxury SUV.
However, as Ford and the rest of the U.S. auto industry sank into hard times, the labor force dwindled and older plants like the Louisville facilities grew more obsolete. For the first time in decades, Kentucky was not sure if there was a Ford in its future.
The Kentucky Cabinet for Economic Development sprang into action in 2007 with a new incentives program known as the Kentucky Jobs Retention Act. The act promised that up to 50 percent of new investment could be recovered through a credit against corporate income tax and a wage assessment for the jobs that were preserved or created over time, as well as credits remaining unused from previous agreements if the company agreed to make an investment of at least $100 million.
Initially, the total incentive to Ford was $24 million; this amount was increased to $180 million in 2008 and boosted once again to $240 million in 2010. The new incentive package was structured in a way that it could be renegotiated to induce additional investments at either Ford plant in Louisville.
Curtis Magleby, director of government relations for Ford said the auto giant wanted to make sure the Commonwealth prized reinvestment and job retention was on a par with new investment and new jobs. Tax refundability also was an important consideration as Ford made its future plans.
‚ÄúManufacturers go through adjustments, and are not always in a profit position,‚ÄĚ he said, adding that incentives need to be able to account for those swings. ‚ÄúThe way you get the incentive in Kentucky is a refund of your five-percent payroll tax, so it becomes a bottom-line operational cost improvement. Many of the old development tools are solely corporate tax liability, and those come and go.‚ÄĚ
Project Impact Estimates
- $5.2 billion direct economic impact within a year; overall economic impact to the region of more than $13 billion, including expansion of supplier network supporting plants
- 3,100 jobs directly created at two Louisville plants; more than 14,000 indirect and induced jobs created in the Greater Louisville area
- $240 million incentives package, structured so it can be renegotiated to induce additional investments at either of Ford‚Äôs two manufacturing facilities in Louisville
Training also was an important component of Ford‚Äôs new deal with Kentucky, and Greater Louisville Inc. joined the Kentucky Cabinet for Economic Development in stepping up and making sure training needs were met. According to Magleby, these agencies ‚Äúdemonstrates the state‚Äôs understanding of the need to continually upskill.‚ÄĚ The city of Louisville will share in funding the payroll tax refund portion of the Ford incentive‚ÄĒFord must invest at least $1 billion and reach 7,150 total jobs to receive the full incentive, a target the company says it will ‚Äúeasily exceed.‚ÄĚ
The third shift at LAP, which brings 1,300 new jobs into play, will increase overall employment at the facility 4,200‚ÄĒmaking it Ford‚Äôs second largest plant in North America. According to the automaker, a new labor agreement with the UAW maintains combined compensation at the Kentucky plants as the highest in the industry, even when a wage freeze in the new contract is factored in.
Ford‚Äôs drive to become the greenest carmaker also was a component of its agreement with Kentucky. LAP is one of 11 Ford facilities in the U.S. participating in the Advanced Technology Vehicles Manufacturing Incentives Program, which is helping to develop advanced-technology vehicles. According to Erik Dunnigan, the Kentucky Cabinet‚Äôs commissioner for Economic Development, the state also is working to persuade Ford to produce a hybrid or all-electric vehicle in Louisville.
Kentucky is a major player in the advanced-battery industry, with construction nearing completion on the new Kentucky-Argonne Battery Manufacturing Research & Development Center in Lexington. Toyota produces a hybrid Camry at its Georgetown, KY plant and Hitachi recently announced major expansions of its Kentucky operations to produce lithium ion battery packs. These and other developments propelled Kentucky to the number four position for Automotive Manufacturing Strength in Business Facilities‚Äô 2011 State Rankings Report.
‚ÄúThe Bluegrass State has put itself in a very strong position to contend for the top of our annual automotive ranking in 2012,‚ÄĚ Rogers said.
Project Title: Continental Tire the Americas/Sumter County Plant
Entered By: South Carolina Department of Commerce
The Silver Award in Business Facilities‚Äô 2011 Economic Development Deal of the Year contest goes to the South Carolina Department of Commerce for Continental Tire America‚Äôs (CTA) new plant in Sumter County, SC.
This project‚ÄĒthe tire giant‚Äôs first new U.S. manufacturing facility‚ÄĒwill bring nearly 6,000 new jobs to a less-developed part of the Palmetto State over the next 10 years, with an overall economic impact of $1.82 billion for the region. The new 1-million-square-foot manufacturing facility, located on a 330-acre Greenfield site off U.S. Highway 521, will be opened in 2013 and is expected to reach its production capacity of five million tires/year in 2017. A second-phase expansion is being planned that will take the capacity up to 8 million tires by 2021.
‚ÄúThis world-class, $500-million tire manufacturing facility is the largest industrial investment ever made in Sumter County,‚ÄĚ Business Facilities‚Äô Editor-in-Chief Jack Rogers said. ‚ÄúIt will be a huge shot in the arm for the growth potential of the entire region.‚ÄĚ
Jochen Etzel, CEO of Continental Tire the Americas, lauded the cooperative effort of numerous South Carolina development agencies in bringing the project to fruition, including the South Carolina State Ports Authority and South Carolina Public Railways.
‚Äú[This project] would not have been possible without the strong support of the State of South Carolina, Governor [Nikki] Haley and Secretary [Bobby] Hitt,‚ÄĚ Etzel said. ‚ÄúSouth Carolina offered us the most compelling business climate that allows us to create these well-paying jobs with competitive benefits for the people of this great state.‚ÄĚ
The October announcement of the Continental deal was the third significant tire-related construction project announced in the Palmetto State last fall. On September 21, Bridgestone Americas announced $1.1 billion in projects for a new giant OTR tire plant in Aiken County, SC, and further expansion of its consumer tire plant there.
With South Carolina Gov. Nikki Haley on hand, Continental AG board member and head of its tire unit Nikolai Setzer unveiled the $500 million two-phase project, which directly will create 1,600 jobs. The first phase of production capacity at the plant is expected to be nearly five million passenger and light truck/SUV tires annually when the plant reaches full production levels in 2017.
‚ÄúThis important announcement is part of Continental‚Äôs growth strategy worldwide and, especially in this case, for the U.S. market,‚ÄĚ Setzer said. ‚ÄúIncreasing demand for Continental and General brand passenger and light truck tires in the U.S., as well as the improved business results for CTA, has made this significant investment possible. On behalf of the 160,000 employees of Continental worldwide, I would like to offer our sincere thanks to Governor Haley, the state of South Carolina, the Port Authority, the city of Sumter and Sumter County.‚ÄĚ
The superior logistics offered by the Sumter County location played a major role in the tire giant‚Äôs site-selection decision, officials said.
According to Setzer, the primary reason the company decided to build its new plant in the U.S. was to be close to its customers and to optimize logistics. ‚ÄúWe also see a great workforce potential here. We see the U.S. as a key market for us and this announcement is a key component of growing our presence here,‚ÄĚ he said.
‚ÄúContinental is a world-class company, and it is truly exciting that they have chosen South Carolina for this new $500 million investment that will create nearly 1,700 new jobs. This announcement is a big win for our state,‚ÄĚ said Gov. Haley.
‚ÄúTires produced here will be mainly for the U.S. market with the goal of improving fill rates, but because of Continental‚Äôs global manufacturing structure, the capability exists to export to meet demand elsewhere,‚ÄĚ Etzel added, according to press reports.
CTA opened its headquarters in Lancaster County, SC in 2009 and currently employs 350 people there. Due to the significant growth at Continental Tire, the company has been hiring additional employees at a steady pace. In addition to the new plant, Etzel announced a $4 million expansion of company HQ in Ft. Mill, SC. The investment will provide for a 16,000-square-foot addition, bringing the total size of the building to 91,000 square feet, and the creation of 80 new jobs there.
Continental expects to begin construction of the new tire plant in mid-2012 and complete the facility in 2013. Once completed, the plant will occupy nearly 1 million square feet. The plant will produce all lines and sizes of Continental and General brand passenger and light truck/SUV tires. For the first three years of operation, all tires produced will be for the replacement market, officials said. After those three years, production will then be for both replacement and original equipment manufacturing markets.
Bobby Hitt, South Carolina‚Äôs secretary of commerce, also hailed the deal in October. ‚ÄúToday‚Äôs announcement further strengthens South Carolina‚Äôs membership in the automotive club. This is also the fourth announcement this year involving the recruitment of 500 or more jobs,‚ÄĚ said Hitt.
Project Impact Estimates
- $1.83 billion in overall economic impact to the region, including a direct impact of $500 million n 5,931 jobs created, including 1,620 direct jobs, 1,947 indirect jobs, 2,364 induced jobs
- Combination of Continental and Bridgestone projects bring total investment of $1.6 billion in new manufacturing to Sumter County, SC
- Average annual wage of $41,000, nearly 30 percent higher than county overage
Code named ‚ÄėProject Soccer,‚Äô the location of the proposed U.S. plant had been a matter of considerable speculation since Continental AG chairman Elmar Degenhart‚Äôs April statement that the tiremaker would build a passenger and light truck/SUV tire plant in the U.S. In May, then-CTA CEO Matthias Schoenberg said the tire manufacturer was focusing on potential sites in several Southern states, including Georgia, Tennessee, North Carolina and Alabama.
According to Etzel, ‚Äúexhaustive measures‚ÄĚ were undertaken by Continental Tire to run logistics analytics for this project to ensure the success of the company‚Äôs building model. The company also reportedly is set to receive $35 million in incentives from South Carolina as part of the deal.
The success in nailing down the Continental deal could not come at a better time for Sumter County, where the unemployment rate languished last fall near 12 percent, higher than the state average in recent months. The average Continental job is expected to pay $21.50/hour, equating to $41,000 annually. The most recent capita income figures for the county set the average at $29,302 in 2008. ‚ÄúIn a matter of a few short years, this new facility will go from an idea to one of the largest economic drivers in our community,‚ÄĚ Sumter Development Board Chairman Greg A. Thompson said.
‚ÄúAt more than $500 million, it is the largest industrial investment the county has ever seen. It will have an impact not only on Sumter County and its people, but workers and families throughout the region. We welcome Continental Tire to Sumter County and we couldn‚Äôt be more excited about both its future and our own.‚ÄĚ
Continental had sales of more than $40 billion worldwide in 2010. The company is an international supplier of brake systems, components for powertrains and chassis, instrumentation, infotainment systems and vehicle electronics, in addition to tires and technical elastomers, with about 160,000 employees in 45 countries.
Landing the new tire plant earned kudos for Hitt and his team, who aggressively pursued the CTA project even as it was working nonstop to put together logistics and an incentive package to land Bridgestone‚Äôs new plant and expansion effort.
Business Facilities congratulates our Deal of the Year Silver Award winner for a job well done.
Project Title: First Solar in Arizona
Entered By: City of Mesa,‚ÄąAZ
When the world‚Äôs largest manufacturer of thin-film photovoltaic (PV) solar modules was considering sites for a new U.S. manufacturing center, almost the entire country was in play.
First Solar was willing to evaluate locations in every state in the lower 48. Apparently, only Alaska and Hawaii were not in contention.
It took a few years, but Arizona emerged as the big winner in this crowded field. First Solar‚Äôs decision to put its $323-million manufacturing facility in Mesa, AZ has earned the City of Mesa our Bronze Award in the 2011 Economic Development Deal of the Year competition.
The new thin-film solar module plant will directly generate 6,000 jobs in the first year of the project, including 4,800 workers involved in the build-out. In the next 10 years, the facility is expected to create nearly 1,700 permanent positions, including 1,200 in the first 12 months.
The project is expected to have a direct economic impact for the Greater Phoenix area of nearly $7 billion over the coming decade.
‚ÄúOur judges were very impressed with the extraordinary team effort in Arizona to land this important project, which will anchor an extremely important growth sector in the Greater Phoenix area for years to come,‚ÄĚ Business Facilities Editor-in-Chief Jack Rogers said.
In August 2010, CH2MHill, a global site-selection firm, contacted the Greater Phoenix Economic Council (GPEC) regarding First Solar plans. A pseudonym was used to shield First Solar‚Äôs identity. GPEC put together an overview of potential state incentives and available sites.
During the initial phase of the site-selection review, Mesa, AZ, Austin, TX and Albuquerque, NM were quickly identified as the leading candidates for the thin-film PV module plant. The Arizona site had an inside track because First Solar‚Äôs headquarters already was located in Tempe, AZ.
However, a snag quickly developed for the Arizona team. Soon after First Solar told Mesa it had selected a potential site there, the city had to inform the company that the selected land was under purchase agreement and no long available. With the risk of losing the deal looming, GPEC and the City of Mesa scrambled to find an alternative.
DMB Associates, a real estate developer and GPEC investor, offered a solution: the General Motors Desert Proving Grounds. The site already was zoned for manufacturing, a critical requirement needed to meet First Solar‚Äôs strict timeline for the project.
It took a cooperative effort by the City of Mesa, Maricopa County, utility company Salt River Project (SRP), the Arizona Commerce Authority (ACA) and GPEC to develop a package that met First Solar‚Äôs site selection preferences, including its unique build-out, infrastructure and workforce‚ÄĒall of which had to be put in place to meet an accelerated timeframe. Mesa dedicated a significant portion of its development personnel exclusively to the project.
First Solar‚Äôs environmental specialists were particularly impressed with the state-of-the-art water reclamation plant that was included in Mesa‚Äôs offer. SRP, meanwhile, committed to meet First Solar‚Äôs requirement for electric power and was able to do so at a discounted rate that was competitive with the offers from Austin and Albuquerque.
The utilities package even earned praise from one of the competing sites. Joe Beceiro, director for clean-energy programs at the Austin Chamber later told the Arizona Republic: ‚ÄúIndustrial power rates here in Austin are substantially cheaper than in other parts of the country, so if Arizona was about to beat what we were offering, then kudos to them.‚ÄĚ
ACA worked to clarify Renewable Energy Tax Incentive program rules and tax treatments for the project. GPEC, Maricopa County and the region‚Äôs Board of Supervisors worked to create an Economic Development Jobs Fund to support new job creation by providing public infrastructure cost offsets and job-training support to First Solar.
Simultaneously, presentations by ASU Polytechnic, Intel, Boeing and local workforce recruitment companies reinforced the availability of a skilled labor force and continued research ventures in Arizona. The City of Mesa also went the extra mile in addressing facility design standards, road improvements and regulatory processes, solidifying the city‚Äôs position as the top site for the new plant.
Project Impact Estimates
- $6.83 billion in direct economic impact over 10 years; $244 million in direct impact in first year
- 1,200 new jobs directly created in first year, 6,000 jobs directly created over 10 years (including buildout)
- $1.43 billion in new personal income (wages) directly created in first 10 years of project, including $49.2 million in first year
Both New Mexico and Texas were able to offer more in incentives and deal-closing funds than the $50 million put on the table by Arizona. But First solar officials said the united front presented by the collaborative effort of the city, county and state in Arizona convinced the company that the Mesa team was fully committed to the growth potential of the thin-film PV industry.
‚ÄúThe successful effort by Mesa and its partners to creatively address all of the unique requirements of the First Solar is a case study in the best practices for a major site selection competition,‚ÄĚ Rogers noted.
When First Solar decided last spring to put its 135-acre technology campus in Mesa, it awarded the Arizona city one of the largest solar manufacturing projects in the U.S. The project will generate 600 jobs in its first phase with average annual wages of $48,575, a rate 150 percent higher than the average median wage for Maricopa County. Potential expansions may eventually generate an additional 4,800 jobs.
The new Mesa facility will include four manufacturing lines with a capacity to produce more than 250 megawatts (MW) of advanced thin-film photovoltaic (PV) modules per year. This factory, combined with First Solar‚Äôs recently expanded facility in Perrysburg, OH, will increase First Solar‚Äôs U.S. production capacity to more than 500MW per year.
The Mesa plant will include a 3MW rooftop solar installation as well as an extensive ground-mounted PV testing facility. The factory will utilize First Solar‚Äôs continuous manufacturing process which transforms a sheet of glass into a complete solar module in less than 2.5 hours, which contributes to the industry-leading energy payback time and low carbon footprint of systems utilizing First Solar‚Äôs thin-film modules.
Module shipments are scheduled to begin from Mesa in the third quarter of 2012.
The new Mesa facility is approximately 30 minutes from First Solar‚Äôs corporate headquarters in Tempe, where it employs about 200 associates. First Solar also is currently building two utility-scale PV projects in Arizona, the 290MW Agua Caliente project in Yuma County for NRG Energy and the 17MW Paloma Solar Plant in Gila Bend for APS, which are expected to create more than 500 construction jobs.
First Solar‚Äôs North American project pipeline includes more than 2.4 gigawatts (GW) of projects expected to create approximately 2,000 construction jobs and drive $6 billion of infrastructure investment over three years.
Greater Phoenix now is home to two of the world‚Äôs leading renewable energy manufacturing leaders, First Solar and Suntech Holdings. This hub is expected to grow exponentially‚ÄĒArizona officials say seven additional renewable energy companies are planning headquarters or manufacturing facilities in the Greater Phoenix area, with ‚Äúdozens more in the pipeline.
Projects: Mars Chocolate (GO Topeka); Green Mountain Coffee Roasters (Virginia Economic Development Partnership); Boeing Relocation (Oklahoma City Chamber); GM Wentzville Plant Expansion (Missouri Department of Economic Development); ITT Exelis (Utah Governor‚Äôs Office of Economic Development); Caterpillar-CAMO Forsyth (North Carolina Department of Commerce)
Our 2011 Economic Deal of the Year Competition featured a cornucopia of big ticket projects which all merited consideration for our top awards. The quality of the entries was reflected in our judges decision to cite six projects for Honorable Mention awards.
One of the projects that left a good taste in our judges mouths‚ÄĒliterally, as well as figuratively‚ÄĒwas a very sweet deal that brought a new Mars Chocolate facility to Topeka, KS.
This joint effort by GO Topeka and Shawnee County baked a $250-million ‚Äúcake‚ÄĚ that is expected to have a direct economic impact of $3.24 billion over the next 10 years, while directly creating up to 425 new jobs.
The 350,000-square-foot Kansas facility, which broke ground in August and is expected to be up and running in 2013, will be the first Mars Chocolate factory built in the U.S. in more than 35 years. It will produce some of the candy giant‚Äôs iconic brands, including M&M‚Äôs and Snickers.
‚ÄúThis is the most significant economic development announcement for Topeka and Shawnee County in many years,‚ÄĚ said Doug Kissinger, president and CEO of the Greater Topeka Chamber of Commerce and GO Topeka Economic Partnership. ‚ÄúThe positive economic impact for the community will last for decades.‚ÄĚ
Mars‚Äô decision capped an intense 10-month recruitment process spearheaded by GO Topeka that ultimately involved 30 state and local entities, including the Kansas Department of Commerce, the KS Department of Transportation and the Office of Gov. Sam Brownback.
When the site-selection process began, Mars was considering dozens of locations in at least 13 states, a field that eventually was narrowed to three finalists, including the Topeka site.
The candy conglomerate was impressed by the well-coordinated state and regional effort mounted by the Topeka team to land the project.
‚ÄúThe policy environment advocated by the governor and legislature makes Kansas much more hospitable than other states,‚ÄĚ said Mark Broadhurst, director of public affairs and government relations for Mars, Inc. ‚ÄúAnd GO Topeka is a top-notch, professional outfit. They know their stuff, and they genuinely work hand in globe with site selection teams. The personal relationship and enthusiasm and the reception we received from day one in the community were very rewarding.‚ÄĚ
GO Topeka assembled a $9.1-million incentive package, which included 150 acres of land, infrastructure improvements and various job-creation incentives to help seal the deal. However, Mars officials noted the local labor pool and the logistics network available in Topeka were key criteria in the site-selection decision.
‚ÄúThe site itself and the highly skilled workforce were critical factors,‚ÄĚ said Broadhurst. ‚ÄúA site close to rail was a key factor. Incentives were not the driver. We are a privately held business, [and] being private enables us to take a long-term approach. This is a 50-year project for Mars.‚ÄĚ
The new chocolate candy plant is expected to generate $269.7 million in taxable sales and purchases over the next 10 years, for a rate of return on investment of nearly 31 to 1. Revenues to Topeka and Shawnee County over that period would be $31.2 million.
The Mars project dovetails perfectly with Topeka‚Äôs other recent successes, which are establishing the Kansas city as a regional food processing hub. These include Frito-Lay‚Äôs 2010 announcement of a $53 million expansion of its 40-year-old Topeka plant. Frito-Lay‚Äôs announcement was quickly followed by Allen Foods‚Äô (a subsidiary of Bimbo Bakeries) decision to build a 135,000-square-foot production plant in Topeka.
Mars had a set of unique requirements for its new factory, including rail access, significant acreage and the development of a customized training program on the company‚Äôs proprietary equipment. Another challenge was maintaining confidentiality during the site selection process despite the involvement for 30 state and local organizations. As a result, the Mars project originally was known to GO Topeka staff only as ‚ÄúProject Sweetness.‚ÄĚ
Local officials in Topeka went the extra mile to impress Mars by amending the city‚Äôs fee structure to make it more business friendly to potential large projects. In January 2011, the City Council agreed to cap the city‚Äôs commercial building permit fees by assessing the same $156,000 fee for all projects of $30 million or more.
Topeka also shined in meeting Mars‚Äô requirement for a 50-year ‚Äúvision‚ÄĚ statement. GO Topeka responded with a 12-page summary of all of Topeka‚Äôs business assets, ongoing initiatives, key policy issues and an analysis of available sites and infrastructure improvement plans.
After satisfying their sweet tooth with the Mars project, our judges took the next logical step: they reached for a tasty cup of coffee. Thus, an Honorable Mention Award was bestowed on the Virginia Economic Development Partnership for its successful effort to lure Green Mountain Coffee Roasters Inc. (GMCR) to the rural Isle of Wight County on the James River in southeast Virginia.
As a result of a collaborative effort by the state, the VA Partnership, the Isle of Wight County Department of Economic Development and the Hampton Roads Economic Development Alliance, GMCR decided to invest $180 million in a facility in the Shirley T. Holland Intermodel Park.
The project is expected to generate 800 new jobs over the next five years and have a direct economic impact on Isle of Wight County of $1.9 billion over 10 years, bringing direct wages of $144 million to the county over the same period.
GMCR has made environmental stewardship a hallmark of its coffee business. The new project in Virginia was no exception: the coffee company will offset 100 percent of its direct greenhouse gas emissions, invest in sustainably grown coffee and allocate at least five percent of its pre-tax profits to social and environmental projects in the area.
Virginia was able to attract Green Mountain because it provided a strategic location that aligned the company‚Äôs production facility with its supply chain, workforce and logistical needs. In addition to the Commonwealth‚Äôs central location on the East Coast, Isle of Wight County is only minutes from the Port of Virginia, providing easy access to a global supply chain.
Virginia is home to 525 food processing companies that employ more than 33,000 people. This food and beverage cluster continues to grow, with more than $2 billion invested since 2000, generating 6,900 new jobs. New projects like Green Mountain are supported by a burgeoning supply base, including packagers like Phoenix Packaging Operations, which has invested $37.5 million over the past 18 months in Pulaski County, VA.
To help seal the GMRC deal, Gov. Bob McDonnell approved a $4 million grant from the Governor‚Äôs Opportunity Fund to assist Isle of Wight, the second largest grant awarded by the program thus far. The Virginia Department of Business Assistance additionally provided funding through its Virginia Jobs Investment Program to help recruit and train the Green Mountain workforce.
Oklahoma City, the Greater Oklahoma City Chamber and the Oklahoma Department of Commerce (ODOC) earned an Honorable Mention for their successful effort to convince aerospace giant Boeing to relocate 550 jobs from Long Beach, CA to Oklahoma.
As a result of defense cuts that started to bite during the Great Recession, Boeing reexamined its cost structure and began to look for low-cost, high-productivity locations.
Boeing approached key economic development agencies in five states with the potential project, which involved positions with salaries approaching $100,000 each. These jobs belonged to business support and embedded software engineers who write code of C-130 transport and B-1 bomber aircraft and missile systems.
The fact that Boeing has had a presence in Oklahoma City since World War II automatically made it a contender for the relocation project, but officials said its low cost of doing business, workforce productivity, incentives and quality of life tipped the scales when it was time to make the decision.
Among the incentives that attracted Boeing to OKC were the state‚Äôs 21st Century Quality Jobs program (which supports highly skilled engineering positions), Aerospace Engineering Tax Credits and $3.5 million from OKC‚Äôs Strategic Investment Program.
The Boeing relocation to OKC is expected to have a direct economic impact to the region of more than $220 million over the next three years, bringing direct income (wages) totaling more than $98 million.
Also winning Honorable Mention kudos from our judges were the Missouri Department of Economic Development‚Äôs winning effort to land a $380-million upgrade for General Motors‚Äô plant in Wentzville, MO; North Carolina‚Äôs Department of Commerce, for the Caterpillar-CAMO Forsyth project; and the Utah Governor‚Äôs Office of Economic Development, for the ITT Exelis project.
GM‚Äôs Wentzville upgrade is expected to generate a direct economic impact of $5.16 billion over the next 10 years, directly creating more than 2,200 jobs during the same period.
A big driver in landing the project was the Missouri Automotive Manufacturing Jobs Act, passed in July 2010, which allows qualified manufacturing facilities or suppliers that bring next-generation production lines to Missouri to retain withholding taxes typically remitted to the state. The incentives are triggered by substantial capital investments in production capacity along with job-creation targets; reimbursements are required if targets are not met.
GM plans to produce a redesigned mid-size Colorado pickup truck at Wentzville, creating at least 1,260 new jobs. The auto giant also is adding a second shift of 400 workers on the production line for its Chevrolet Express and GMC Savana vans.
‚ÄúAs we celebrate the 100th anniversary of Chevrolet, it is exciting to bring this new global product to the Wentzville team. They also have a strong heritage‚ÄĒa long-standing commitment to building quality products,‚ÄĚ said Cathy Clegg, GM vice president of labor relations.
When the opportunity to compete for an expansion of ITT Exelis‚Äô advanced composites manufacturing developed, Utah marshaled a team effort to snare the prize. Working closely with the Economic Development Corporation of Utah (EDCUtah), the Governor‚Äôs Office of Economic Development (GOED) and the state developed an incentive package in cooperation with the Salt Lake City Economic Development office to offer several sides able to accommodate ITT‚Äôs ambitious expansion plans for Exelis.
The 2,700 jobs that will be generated over the life of the project all exceed 125 percent of the county average wage. The project will have a direct economic impact of more than $4 billion over the next 10 years and serve as an anchor for Utah‚Äôs growing aerospace composites cluster.
Caterpillar‚Äôs decision to build a new manufacturing plant in Forsyth County, NC resulted from the combined efforts of the North Carolina Department of Commerce, Forsyth County, the City of Winston-Salem, Duke Energy, Winston-Salem Business Inc. and NC Community Colleges.
The new facility, an investment of $426 million, will generate new jobs paying an average annual wage of $40,352. Caterpillar currently employs more than 1,000 workers in Wake, Johnston, Lee, Macon and Burke counties in the Tarheel State.
A creative and generous package of incentives helped seal the deal. Caterpillar was awarded $600,000 from the One North Carolina Fund and the state also provided a Job Development Investment Grant (JDIG) equal to 75 percent of the state personal income withholding taxes derived from the creation of new jobs for each of the 11 years in which the company meets annual performance targets. The JDIG grant could yield $4.68 million in maximum benefits for the company.
Business Facilities congratulates all of our Honorable Mention award winners.
Picking the Winner
The 2011 Economic Development Deal of the Year recognizes the locations and economic development agencies that landed the highest-impact corporate expansions announced between July 1, 2010 and the entry deadline of October 28, 2011. 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 ‚Äúeconomic development deal‚ÄĚ 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.
2011 Economic Development Deal of the Year Judges:
Phil Anderson, President/CEO of P.W. Anderson & Partners, Inc.
Jan Dickinson, President and CEO, The Dickinson Consulting Group
Jay Garner, CEcD, CCE President & Founder of Garner Economics
Jason Hickey, President Hickey & Associates
Stuart MacKay, President, MMK Consulting
Eric Stavriotis, Vice President Jones Lang LaSalle
Mark Sweeney, Senior Principal, McCallum Sweeney Consulting