COVER STORY: 2012 Economic Development Deal of the Year Awards
By Business Facilities Editorial Staff
From the January/February 2013 issue
Project Title: Baxter International Bio-Pharmaceutical Manufacturing Plant
Entered By: Georgia Department of Economic Development
The nominees for Business Facilities’ 2012 Economic Development Deal of the Year Awards competition reflected a diverse cross-section of growth strategies, most of which are built on a foundation of new manufacturing capacity.
Entries from 17 states that jousted for our top awards included a biotech mega-complex in Georgia, a world- class commercial aircraft assembly facility in Alabama, a yogurt plant in Idaho and even a refinery in Philadelphia. All of the contenders held the promise of hundreds of new jobs; the biggest projects offered the potential to transform the economies of entire regions.
As always, our award recipients were selected by a blue-ribbon panel of industry experts who carefully reviewed project details provided by the finalists. The task of separating the wheat from the chaff was especially challenging for our 2012 awards, as all of the nominees were worthy contenders.
Projects nominated for Business Facilities’ annual Economic Development Deal of the Year competition are asked to submit an Economic Impact Analysis for the project (using standard analysis methods including RIMS II, REMI or IMPLAN) and a narrative detailing how the project came together.
Our judging panel, including leading site selection consultants, evaluates the overall impact of the project and assesses the effectiveness and innovation of the location’s approach to landing the deal. Key factors in this evaluation include creative use of incentives, regional cooperation, partnerships with higher education resources, potential for growth and execution of overall economic development strategy.
The judges have spoken and Baxter International’s decision to make a $1.3-billion investment in Georgia is our 2012 Economic Development Deal of the Year Gold Award winner.
The Baxter bio-pharmaceutical facility, an integrated campus which will include three main manufacturing components as well as warehousing, utilities and lab support facilities, is expected to directly create 1,800 jobs with an economic impact of $6.2 billion.
Over a 10-year period, the bioscience complex will generate an overall regional economic impact estimated at nearly $13 billion, creating more than 8,700 direct, indirect and induced jobs. The campus will be located in Covington, GA in Stanton Springs, a 1,620-acre master-designed industrial park west of Interstate 20 at the intersection of Newton, Walton, Jasper and Morgan counties.
Baxter’s new biologics manufacturing facility will include an advanced plasma fractionation facility, giving the bio/pharma giant additional capacity for testing and purification of its medications. Products to be made at the Georgia site will include immunoglobulin treatments for patients with immune deficiencies and albumin products used as plasma-volume replacement therapies in critical care, trauma and burn patients.
“Baxter’s decision to come to Georgia marks a new era in the growth of our biosciences industry and will have a far-reaching impact on our economy,” Gov. Nathan Deal said when the project was announced. “We are honored to welcome this flagship company to Georgia and proud that our state’s vast resources for the biomedical field will assist the company with the groundbreaking medical advances it is renowned for.”
Deerfield, IL-based Baxter makes medical devices, pharmaceuticals and biotechnology products with a focus on hemophilia, immune disorders, cancer, infectious diseases, kidney disease, trauma and other chronic and acute medical conditions. The company’s 2011 revenue was $13.9 billion; it employs about 19,000 U.S. workers and has 14 plants, including three in Puerto Rico.
Project Impact Estimates
- $6.2 billion direct economic impact; overall economic impact of $13 billion over 10 years
- 1,863 jobs directly created, 4,721 indirect jobs created
- $214 million in new wages
According to the Georgia Department of Economic Development, Baxter will get about $80 million in state incentives, including $65.6 million based on the number of jobs it will create, and a $13.7 million project development grant.
“This mega-project will anchor Georgia’s thriving bioscience sector for years to come, moving the Peach State into the front ranks of national biotech players,” Business Facilities Editor in Chief Jack Rogers said.
Rogers said BF’s judging panel was particularly impressed by the regional cooperation that brought this project to fruition, and the flexibility shown by state and county agencies in tailoring solutions to meet Baxter’s needs. Baxter narrowed the location search to four candidates internationally in 2009.
The entities involved in landing the project included the Georgia Department of Economic Development, the Joint Development Authority of Walton, Newton, Morgan and Jasper Counties and the Technology Park of Atlanta.
The quick turn-around time between the site selection decision announcement last April and construction of primary facilities in the Baxter project is unprecedented, Rogers noted.
“Baxter announced its decision in April and by August 1 ground was already broken on a 1-million- plus-square-foot facility,” he said. “Georgia’s willingness to cut red tape will be followed by a ribbon-cutting on a world-class bioscience complex.”
Construction of the first manufacturing buildings at the new Baxter campus is expected to be completed in 2015, with full commercial production commencing in 2018.
The Metro Atlanta plant will be Baxter’s third in the Southeast; it also has plants in North Cove, NC, and Cleveland, MS. According to a Triangle Business Journal report, Baxter International executives toured sites in Granville County, Wake County and Lee County in North Carolina before selecting the Covington, GA location.
Metro Atlanta already is home to several major research institutions, including Emory University, Georgia Tech and the federal Centers for Disease Control and Prevention.
Baxter’s plant puts Georgia on the map as a player in the life sciences industry, said Mike Cassidy, president of the Georgia Research Alliance. “It’s validation of a long-term strategy to make the state attractive to the life sciences industry,” Cassidy said.
Project Title: Sasol North America Inc.
Entered By: LED, Southwest Louisiana Economic Development Alliance, Port of Lake Charles
One of the largest private-sector investments for a single industrial project in U.S. history is our 2012 Economic Development Deal of the Year Silver Award winner.
Sasol Ltd., a global energy company based in South Africa, decided that Louisiana’s highly developed pipeline infrastructure is perfectly suited to its plans to develop a $10-billion gas-to-liquids processing plant that will enable it to tap into the natural gas bonanza in the U.S. emanating from abundant shale gas reserves.
In addition to the processing plant, which will yield 96,000 barrels/day of premium fuels, Sasol North America also plans to build a $4.5-billion cracker unit at its Lake Charles Chemical Complex in Westlake, LA. The cracker will produce up to 1.4 million tons annually of ethylene used to make plastics.
The new facilities in Calcasieu Parish will result in the creation of more than 5,000 permanent jobs in the Southwest Louisiana region, in addition to the 5,500 construction jobs that will be engaged in building the project through 2020. The expanded Lake Charles complex will have a direct economic impact in the region estimated at more than $29 billion over the next 20 years.
BF’s judging panel was particularly impressed with Louisiana’s willingness to go the extra mile in securing land options for the project, the customized incentives package offered to Sasol and the state’s creative use of LED’s GIS mapping in presenting its proposal to the energy giant.
Project Impact Estimates
- 2,184 direct jobs created in 2016 (8,972 including construction jobs)
- $10-billion gas-to-liquids plant will yield 96,000 barrels/day of fuels
- $4.5-billion cracker unit will produce 1.4M tons of ethylene/yr
Using a multi-layered GIS map displayed on an iPad, LED officials were able to show site details, utilities, nearest rail access, proximity to the river and the Port of Lake Charles during the first site visits by the Sasol team. According to LED, the introduction of the new GIS mapping enabled Southwest Louisiana to pull ahead of a Canadian province that was competing for the project.
In announcing the mega-deal, Gov. Bobby Jindal said the $14.5-billion petrochemical complex “will bolster Louisiana’s position as the No. 1 exporter of energy in America.” Gov. Jindal also noted the Lake Charles complex will represent a huge new source of demand for natural gas in the state, including gas extracted from deposits in the Haynesville Shale formation.
The Sasol project was a joint effort involving Louisiana Economic Development, Southwest Louisiana Economic Development Alliance and the Port of Lake Charles.
To secure the project, Louisiana offered Sasol a custom incentive package that includes a performance-based grant of $115 million for land acquisition and infrastructure costs associated with the facility. Sasol also will receive the services of LED FastStart™, the nation’s No. 1 state workforce training program.
In addition, the company will qualify for Louisiana’s new Competitive Projects Payroll Incentive (up to 15 percent payroll rebate for each GTL job) and Quality Jobs Program (up to 6 percent payroll rebate for each ethane cracker job).
Project Title: Apple Inc. Americas Operations Center
Entered By: Austin (TX) Chamber of Commerce
Apple’s selection of Austin, TX as the site for its new $304-million Operations Center is the Bronze Award winner in Business Facilities’ 2012 Economic Development Deal of the Year competition.
The new facility, which will increase Apple’s workforce in Austin to more than 6,700, will serve as the primary operations nexus for the company in the Americas outside of Apple’s global headquarters in Cupertino, CA, centralizing accounting, human resources, sales, marketing and finance.
State, county and local agencies came together to put together a package for Apple that sealed the deal in an intense site-selection battle for the operations center. The Austin Chamber of Commerce, Travis County and the Governor’s Office of Economic Development and Tourism were key players in bringing the project to fruition.
“Texas put down a marker with an aggressive incentives package which made it clear that the Lone Star State did not intend to be outgunned for this project, which turbocharges a strategic growth sector for the Austin region,” said Business Facilities Editor in Chief Jack Rogers.
The state of Texas awarded one of the largest grants from the Texas Enterprise Fund in the history of the program—$21 million—which together with a property tax abatement from the City of Austin and Travis County provided for a total incentive package of $35 million for the operations center. Apple gave candidate locations a three- month window in which to make their proposals.
The new 1-million-square-foot campus in Austin will directly create 3,635 jobs generating about $273 million in new wages over the next 10 years. The Apple facility in Texas will become one of four major global operations centers for the tech giant outside of its California HQ.
Project Impact Estimates
- 3,635 direct jobs, 12,384 indirect/induced jobs (over 10 years)
- Personal income impact estimated at $273 million (direct)
- New 1-million-square-foot campus will generate an overall Economic Output impact of $5.7 billion for the state over 10 years
The impact of this project on the state is estimated at 16,000 jobs (direct and indirect), $1.4 billion in personal income and an overall Economic Output impact of $5.7 billion.
Austin is no stranger to BF’s annual Economic Development Deal of the Year competition. The $3.6-billion expansion of Samsung Austin Semiconductor’s huge chip fab complex was our 2010 Deal of the Year Gold Award winner.
Samsung has committed to investing more than $13 billion in the Austin facility, which has vaulted Texas into second place among national leaders in semiconductors, behind only California. The 2010 project netted more than 7,600 new jobs (direct and indirect) and came with an estimated economic impact of nearly $2 billion over the first three years of operation.
Last year, the Austin Chamber of Commerce was the winner of our first annual Economic Development Excellence Award (Population Greater Than 500k). Austin also had an excellent showing in our 2012 Metro Rankings Report, taking first place in our coveted Economic Growth Potential ranking (employment greater than 450k).
Projects:Airbus Assembly Facility (Mobile, AL Chamber of Commerce); eBay Campus (Utah Governor’s Office for Economic Development); Caterpillar Production Plant (Georgia Department for Economic Development); Bridgestone Americas Tire Plant (South Carolina Department of Commerce).
The number of projects deserving of recognition in our annual Economic Development Deal of the Year contest always exceeds the number of awards categories. This year, our judges have selected four entries to receive our Honorable Mention Awards.
Airbus announced in July that it will invest $600 million in an aircraft assembly facility at the Brookley Aeroplex in Mobile. The plant—which will assemble A319, A320 and A321 passenger aircraft—is expected to commence operations in 2015, creating 1,000 new jobs. The assembly facility will hit full capacity in 2018, when it is expected to produce up to 50 aircraft per year.
“Mobile’s selection as the only site in the Western Hemisphere assembling aircraft for Airbus cements Alabama’s status as an up-and-coming aerospace manufacturing giant,” said Business Facilities Editor in Chief Jack Rogers.
Mobile’s victory in the fierce competition for the Airbus plant was the culmination of a seven-year effort by state and local officials to land the prize from Europe’s aerospace giant. The triumph also marked a stunning turnaround from the disappointment of the U.S. government’s reversal of a 2008 decision to award Airbus’s parent, EADS, a huge U.S. Air Force refueling tanker project. EADS had selected Mobile as the site for tanker production, but in 2011 Congress rebid the project and awarded it to Boeing.
The decision by eBay to construct a new 40-acre campus in Draper, UT will directly bring 2,200 new jobs to the state, creating more than $1.6 million in new wages over the next 20 years.
“The ongoing eBay expansion is another success story for Utah’s burgeoning software and IT industry cluster,” Rogers said, noting that industry giants including Microsoft, Twitter, Adobe and IM Flash already have put down roots in the Beehive State.
Rogers added that the Economic Development Deal of the Year judging panel was impressed by the cooperation between eBay and Utah to develop alternative energy resources, including wind energy power generation, which will be used to provide electricity to the Draper facility.
“eBay chose Draper for a customer support center in 1999 primarily because of the quality of the workforce, favorable business climate and proximity to San Jose,” said William Lasher, eBay senior director. “As the Draper facility grew, we became increasingly aware that the business conditions in the state were ideal.”
The Economic Development Tax Increment Financing eBay received from the state, coupled with incentives from local cities, were helpful when eBay made decisions about whether to grow the Draper operation during the past 10 years (creating 1,000 new jobs). Lasher said. eBay was especially impressed with the level of involvement from state and local economic development agencies in working with eBay to solve its problems and meet its needs, he added.
Caterpillar reviewed proposals from more than 100 locations in the U.S., as well as sites in Canada and Mexico, before selecting Athens, GA to be the home of its new $200- million factory. The Georgia plant, which will employ 1,400, will manufacture construction equipment previously produced in Sagami, Japan.
An emphasis on the availability of workforce training, including presentations from Georgia Quick Start and Athens Technical College, helped seal the deal. The Georgia Department of Economic Development, the Economic Development Authorities of Athens-Clarke and Oconee counties, and Electric Cities of Georgia all played a role in shaping the proposal for the Caterpillar project.
“Georgia put its best foot forward in presenting all of its resources to this industry giant,” Rogers said.
The Caterpillar project will have an estimated direct Economic Output impact of $2.92 billion over the next 10 years, directly creating more than $78 million in new wages. When it made the decision to put the new plant in Athens, Caterpillar already was operating facilities in Griffin, LaGrange, Toccoa and Thomasville, GA, so the equipment giant was very familiar with the benefits of locating in a manufacturing-friendly state.
Bridgestone Americas $1.2-billion investment in the construction of a new 1.5-million-square-foot off-road radial (ORR) tire manufacturing facility on a site in Aiken County, SC—and a 474,000-square-foot expansion of an existing tire plant nearby—marked the largest single initial capital investment in South Carolina’s history.
“Bridgestone’s decision to transplant technology and manufacturing to South Carolina that had been exclusive to its facilities in Japan is another indication of the Palmetto State’s emergence as a world-class manufacturing competitor,” Rogers said.
The Bridgestone facility is expected to have a direct Economic Output impact of nearly $2 billion over the first two years of operation, directly creating more than $362 million in new wages.
The new ORR manufacturing plant is part of the company’s global sourcing strategy. The facility will be a greenfield site in the Sage Mill Industrial Park in Aiken County. Previously, large and ultra-large ORR tires had been produced exclusively at Bridgestone’s Shimonoseki and Kitakyushu plants in Japan. Bridgestone will install ORR production technologies developed in Japan in the new plant to more effectively respond to customer needs and growing global demand. The new plant will be a green facility—it is expected to meet LEED Construction Certification environmental standards.
Business Facilities congratulates all of the winners in our 2012 Deal of the Year competition. Nominations are now being accepted for future consideration here.
Picking The Winner
The 2012 Economic Development Deal of the Year recognizes the locations and economic development agencies that landed the highest-impact corporate expansions announced between July 1, 2011 and the entry deadline of October 28, 2012. 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 website, www.businessfacilities.com, on December 30.