By Business Facilities Editorial Staff
From the January/February 2016 Issue
PROJECT TITLE: GOODMAN GLOBAL GROUP CONSOLIDATED CAMPUS
ENTERED BY: GREATER HOUSTON PARTNERSHIP
In 2012, Daikin Industries Ltd., a leader in the heating, ventilating and air-conditioning (HVAC) industry based in Osaka, Japan, secured the $3.7-billion acquisition of Goodman Global Group. Daikin pursued the acquisition primarily for Goodman’s significant presence in the ducted-style residential unitary HVAC segment in North America. Ducted heating and cooling systems long have been considered standard in the U.S., while the ductless systems produced overseas by Daikin are used extensively in the overseas market.
When the acquisition was completed, Daikin solicited bids (under the code-name Project Superbird) for a corporate campus consolidation of Goodman Group, a project which Goodman had originally begun planning in 2009 but had yet to execute.
The mega-project envisioned the construction of a $417-million, 4.1-million-square foot consolidated campus which would integrate manufacturing, offices, logistics/distribution and R&D in one facility; two separate manufacturing operations in Tennessee would also be transferred to the consolidated campus. Project Superbird sparked a fierce competition between several Gulf Coast and Southeastern U.S. locations.
The Gold Award winner of Business Facilities’ 2015 Economic Development Deal of the Year Award is the dynamic metro that landed Project Superbird: the Greater Houston Partnership (GHP).
The Goodman Group’s consolidated campus, which is under construction on a 90-acre parcel in West Houston, will directly create 1,800 new jobs while retaining 2,800 of Goodman’s Houston-based employees. The annual economic impact of the project is estimated at $3.1 billion.
According to the builders, the facility will be the largest tilt-wall building in the world from an industrial facility standpoint, and it will be second only in size to Boeing’s massive aircraft assembly plant in Everett, WA. The new campus, which will be known as ComfortPlex, will be the most technologically advanced HVAC manufacturing facility in the U.S. It will produce both ducted and ductless HVAC products; the manufacturing operations will consist of Daikin-, Goodman-, and Amana-branded residential and commercial heating and cooling systems. Other Daikin Industries operations, including Quietflex Manufacturing Co. and Daikin Marine Container are not impacted by the consolidation.
“Our selection of Houston as the location for our new campus was a result of careful analysis and business considerations,” Takeshi Ebisu, president and CEO of Goodman Manufacturing Company LP, said in a statement. “We know that Houston is one of the best cities in the United States for this type of expansion program. It offers an outstanding combination that includes the ability to provide an educated workforce, economic growth and a favorable year-long climate necessary for manufacturing and operational excellence.”
A ‘ONE-OF-A-KIND’ PROPOSAL
GHP’s team developed a “one-of-a-kind” proposal that offered available sites and suitable real estate, detailed incentive overviews and regional data. The team deployed a web-based app to permit the client to view available development parcels; the app also displayed parcel boundaries and ownership information. GHP produced an overview and analysis of potential incentive values for two top-tier candidate locations, as well as guidance on the applications process for these incentives. State transportation officials and their counterparts from Harris and Waller counties were brought in to discuss incentives programs, timing and applications.
GHP’s proposal also offered custom research on business climate and labor market data to amplify its “Why Houston for Operational Excellence” pitch to Daikin, highlighting Greater Houston’s status as a prime U.S. metro for investment and job creation.
The construction of the $417-million campus in Houston is the single-largest investment in Goodman’s history. According to statements from Daikin and Goodman, the consolidation firmly establishes Goodman as the North American “pillar” of Daikin’s global operations (along with Japan, China and Europe) and underline’s Daikin’s commitment to establish local, in-country manufacturing facilities. The project also is expected to grow Goodman’s business by introducing Daikin’s energy saving and power management technologies, such as remote monitoring, into their product offerings, and help Daikin’s overseas facilities absorb Goodman’s low-cost product knowhow, lean management expertise and supply-chain management strategy.
A surge in production by Goodman is anticipated, as Daikin is now selling Goodman’s ducted-style products through its global sales channel. Daikin’s ductless products also will surge through Goodman’s distribution network as an increasing number of North American builders adopt these HVAC systems. The new campus rising on a site near U.S. I-290 (three miles west of Texas State Highway 99) is expected to become operational by the middle of this year.
“Our successful growth has fueled the need for additional manufacturing capacity. The new campus will allow us to dramatically increase our production efficiencies and enable us to continue to serve our customers better than ever before from the leading market position that we hold today,” said Sam Bikman, Goodman’s senior vice president, Global Supply Chain.
Daikin Industries is the world’s largest manufacturer of heating, cooling and refrigerant products. As a Global Fortune 1000 company with over 50,000 employees worldwide, the company engages in the development, manufacture, sales and aftermarket support of heating, ventilation, air conditioning and refrigeration equipment, refrigerants and other chemicals. Daikin, which recently celebrated its 90th anniversary, also has manufacturing operations in 18 countries and a sales presence in more than 90 countries.
Greater Houston consistently has been one of the most robust metro economies in the U.S. in recent years. In 2015, Houston was the top-ranked city on Forbes’ annual Fastest-Growing Cities survey. The Houston metro area added a whopping 667,800 new jobs since 2005; the city’s 4.5 percent year-over-year job growth rate is the nation’s fastest. The median annual pay for college-educated workers is $71,900, fourth among America’s 100 largest metro areas in 2015.
PROJECT IMPACT ESTIMATES
Greater Houston has for decades been the epicenter of Big Oil. But in recent years, the largest city in Texas has established a well-earned reputation as a center of energy efficiency in the U.S.
In BF’s 2014 Metro Rankings Report, Houston was the top-ranked city in our Renewable Energy Leaders category. According to the U.S. Environmental Protection Agency (2014 statistics), the top 30 metros in terms of renewable energy use were consuming more than 2.8-billion kilowatts (kWh) annually, equivalent to eliminating the amount of carbon dioxide generated by the electricity use of more than 270,000 American homes. Houston earned our top ranking in Renewable Energy Leaders by contracting for an estimated 623,000 kWh of wind power to meet about 48 percent of its electricity needs.