2006 CiCi Awards: Corporate Investment

28 Feb, 2006

CiCi Awards, 2006:

Corporate Investment & Community Impact

Trade & Industry Development is pleased to present its First-Annual Corporate Investment & Community Impact (CiCi) Awards. This unique, unparalleled awards program recognizes corporate locations and investments with a focus on both the company investing in a community and the economic developers responsible for securing that investment. Recognition is bestowed on companies and community developers in two distinct categories of site selection: Corporate Investment, as well as Community Impact.

Subsequent to consultation with numerous industry experts, academics, journalists, site selection consultants and economic developers, the editorial staff of Trade & Industry Development established stringent criteria necessary for award consideration and polled its extensive database of communities and economic developers asking for their most significant site selection transactions and corporate establishments in 2005. More than500 submissions were received from throughout North America.

With an eye toward evidence of significant investment and community impact, the editorial panel narrowed its selection to the top 15 outstanding entries in each category.

Despite the backdrop of a tenuous economy impacted by a continuing war, rising oil prices and hurricane destruction in the Gulf Coast, the following 30 companies and communities came together in 2005 to create 18,623 new jobs, retain 29,248 existing jobs, and make investments totaling $16,764, 000,000.* Such investments occur only when a symbiotic relationship is established between companies and communities. As the relationship grows, the economic benefits grow as well.

*Data provided by respondents, and includes estimations based on future growth.

Corporate Investment

It is in that spirit of union that we present our Corporate Investment & Community Impact (CiCi) Awards 2006, Corporate Investment category. As the name implies, this category is directly related to overall capital investment in a particular location, taking into account both overall capital investment and job creation. Congratulations to the top 15 Award recipients, 2006. We believe you will find the brief highlights of their accomplishments impressive.

Chrysler Group - Belvidere, Illinois

In January 2005, the Chrysler Group, a unit of DaimlerChrysler, the world’s fifth-largest auto manufacturer, announced receipt of almost $36 million from an Illinois state investment package, the result of Illinois Governor Rod Blagojevich’s Opportunity Returns economic development strategy. This leveraged a $419-million major retooling of the Chrysler Group’s nearly40-year-old Belvidere Assembly Plant. The retooling has allowed the Chrysler Group to add a second shift at the plant and to create more than 1,500 new jobs across the region (1,000 at the plant alone). In February 2006, the Chrysler Group celebrated commencement of production of its all-new 2007 Dodge Caliber at the Belvidere Assembly Plant. Along with the new vehicle, the plant is also launching an innovative flexible manufacturing process that will provide the company the ability to make up to three models and test-build a fourth model on one assembly line. Plans are in place to launch production at the Belvidere Assembly Plant of another new model, the 2007 Jeep Compass.

Tom LaSorda, president and CEO of the Chrysler Group, credited the Illinois Governor as being “a valuable partner to business and labor in Illinois,” stating the Belvidere Plant is a “great example of that.” He further explained, “Our investment has greatly increased the Belvidere Plant’s flexibility, which is a key factor for success in this fast-changing marketplace. This facility will be producing vehicles that will be available in almost 100 markets around the world.”

Human resources also played a key role in the retooling investment decision. According to DCEO Director Jack Lavin, “Due largely to its highly skilled workforce, the Belvidere Assembly Plant is one ofthe most efficient Chrysler plants in North America. When the company decided to expand, that factor certainly tipped the scales in our [Belvidere, Illinois’] favor.”

DaimlerChrysler - Sterling Heights, Michigan

DaimlerChrysler announced in March 2005 that it will invest more than $506 million to retool, modernize and improve its stamping and assembly operations in Sterling Heights, Michigan. The project will retain a total of 20,782 Michigan jobs, including 5,123 directly by the company. An incentive package offered by the Michigan Economic Development Corporation (MEDC) helped convince DaimlerChrysler to reinvest in Michigan rather than other competing sites in North America. (DaimlerChrysler had considered shutting down the assembly and stamping plants, built in 1953 and 1965 respectively, and moving production to other North American locations.)

”DaimlerChrysler has been a long-time partner in Michigan’s economic success,” Governor Jennifer M. Granholm said. “Retaining these jobs will secure the creation of future advanced manufacturing jobs throughout the state and perpetuate our historical legacy of automotive leadership and innovation.”

In February 2005, the MEDC approved a Single Business Tax credit valued at approximately $18.8 million as well as an Economic Development Job Training Grant valued at $500,000 to win the project. The city of Sterling Heights approved 50 percent abatement of the company’s new personal property taxes for 12 years at the assembly facility and 8 years at the stamping plant, with an estimated total of more than $17.8 million.

The project is also expected to generate more than $6.5 billion in personal income for Michigan workers over the life of the tax credit. The average weekly wage for the DaimlerChrysler workers is $926. Union workers at the plants agreed to new work rules that require small work teams and set a framework for fewer job classifications, which Chrysler believes will streamline operations and provide the company more flexibility to respond to changes in the marketplace.

DaimlerChrysler - Fenton, Missouri

Two of the most modern, most flexible automotive assembly plants that allow workers to assemble as many as four different automobile models at one time will be the result of DaimlerChrysler’s December 2005 announcement of its plan to invest $1 billion to revamp and retool its South and North plants off Interstate 44 in Fenton, Missouri. The $1-billion investment is slated to occur over a five- to six-year period, ensuring the stability of DaimlerChrysler’s current Fenton workforce of 6,200 at the two plants. DaimlerChrysler’s investment will be aided by $32 million in state incentives. The funds will be allocated over several years: $16 million will go to job training bonds under Missouri Job Retention and Retraining program and $16 million will be allocated under the Business Use Incentives for Large Scale Development, or BUILD Missouri program. In addition to the state incentives, Fenton had already committed to abate Chrysler’s local property taxes, generating a $46-million savings over the next 15 years if the automaker invests the full $1 billion. Chrysler said the local tax-abatement package was critical to its proposal.

Beyond the favorable state and local incentives that influenced DaimlerChrysler’s investment decision were: a positive business climate that includes newly enacted worker’s compensation and tort legislation; access to quality suppliers; exceptional worker productivity and reasonable labor costs; and good cooperation with the United Auto Workers union.

DaimlerChrysler’s extraordinary investment decision is particularly significant in that it comes at a time when two of the other major automotive manufacturers have announced plans to close plants and slash their workforces.

The cooperative efforts of the Missouri department of Economic Development, City of Fenton, and St. Louis County Economic Council were cited as instrumental in negotiating and securing the deal.

EADS - Mobile, Alabama

Brookley Industrial Complex in Mobile, Alabama is the newest site of choice for EADS (European Aeronautic Defense & Space) North America. Announced in June 2005, ground was broken in January 2006. The location will house a Military Modification and Assembly Line (MMAL) for the production of KC-330s in the U.S. An Airbus Engineering Center (EADS along with BAE Systems jointly own Airbus) will be co-located at the site and, at full capacity, employ more than 150 aerospace engineers. It is scheduled to open in January 2007 and will be responsible initially for assignments related to Airbus’ new A350 aircraft. It is also the first step in a potentially larger-scale industrial site to be built should the Northrop Grumman KC-30 Advanced Tanker cargo aircraft, of which EADS is a principal subcontractor, receive an order to modernize the U.S. Air Force’s aerial refueling tanker fleet. Depending on the size and pace of the Air Force order, the total facility investment could reach $600,000 and direct employment levels could be as high as 1,000 workers.

The site chosen by EADS is surrounded by deepwater port access, two major interstate connectors, five Class I railroads, a wide-body air strip capable of landing NASA’s Space Shuttle and a skilled aerospace workforce.

According to U.S. Senator Jeff Sessions, “Alabama has successfully built a world-renowned automotive industrial capability and now looks forward to becoming the next aerospace center of excellence for large aircraft production in the United States.” Indeed, Bill Sisson, vice president of economic development for the Mobile Area Chamber, pointed out, “There are only two aircraft manufacturing centers in the world --- [in] Everett, Washington and Toulouse, France.” He believes the new EADS development “has the potential to create a third.”

Thirteen different local entities worked on this project under the State of Alabama’s Alabama Development Office.

Freescale Semiconductor - Austin, Texas

Freescale Semiconductor, a spin-off of Motorola Inc., has chosen to keep Austin, Texas, as its global headquarters, despite fierce competition from other cities and states around the world, and the now-independent company plans to invest about $600 million and create about 500 new jobs during the next 10 years at the site.

Freescale is a global leader in the design and manufacture of semiconductors for the automotive, consumer, industrial, networking and wireless markets. Its revenue in 2004 was $5.7 billion, with its major customers including DaimlerChrysler Ag, Delphi Corporation and Siemens, Inc., which account for 55 percent of Freescale sales. Motorola accounts for 26 percent of its sales. Freescale became a publicly traded company in July 2004 after 50 years as part of Motorola, Inc.

Approximately 600 people, whose average salaries are more than $100,000, are employed at Freescale headquarters. Throughout 30 countries, the company employs 23,000 people.

“Austin is a high-tech city with an attractive quality of life. It is an appealing environment for the innovators we need at Freescale,” said Michel Mayer, Freescale CEO, in a memo to employees. He also noted the proximity of two great universities—the University of Texas at Austin and Texas A&M.
Chamber Chair Kirk Watson of Watson, Bishop, London and Brophy stated the competition to retain Freescale in Austin was “fierce,” and acknowledged, “It is our task now in the business community to do all we can to help Freescale build on its success, to work with them to create the transportation infrastructure and business climate they need to continue to grow and prosper.” Watson noted that the Greater Austin community worked together to come up with a package of incentives consistent with economic development policies that had been adopted previously by local governing bodies.

Goldman Sachs - New York, New York

Goldman Sachs broke ground on November 29, 2005 for a new 2.1-million square foot tower to be built on Site 26 at Battery Park City, the first new headquarters to be built in the Lower Manhattan section of New York City since 1986. The 43-story stainless steel and glass building, with a curved wall facing the Hudson River, will cost more than $2 billion and will house 7,400 Goldman employees engaged in investment banking, investment management and trading operations. It will be one of the largest commercial office buildings in the country to achieve LEED Gold Certification using the latest green building technologies.

In return for the retention of more than 9,000 existing jobs and the creation of up to 4,000 new jobs in Lower Manhattan (at this and other sites), Goldman will receive a total public incentive package estimated at $115 million, independent of PILOT payments, over a 15- year term and Liberty Bonds. The package includes a $25-million JCRP grant, and sales and property tax abatements through a lease with Battery Park City. Additionally, Goldman was awarded with $1.65 billion in Liberty Bonds.

The project’s direct employment will support another 23,000 indirect jobs in New York State and is expected to generate tax revenues of more than $2.6 billion for NYC and $2.1 billion for NYS over the term. Total economic benefit from the project is expected to exceed $33 billion. In addition, Goldman has pledged $3.5 million toward a new community library and $1 million toward a new community center, and will pay $150 million in civic facility and other fees that will directly benefit the neighborhood.

Empire State Development and the New York City Economic Development Corporation played an important role in facilitating the agreement with Goldman.


Holcim Cement - Ste. Genevieve County, Missouri

The Boards of Directors for Holcim (US) Inc. and its parent company, Holcim Ltd gave final approval in November 2005 to move forward on the construction of the Ste. Genevieve Project, a large cement production facility located in Ste. Genevieve County, Missouri. When construction is complete and the plant begins operations in 2009,the plant will employ approximately 200 workers and be the catalyst for $1 billion in capital investment, plus new state and local taxes generated by the economic activity. Four million metric tons of cement are expected to be produced each year.

Before the Boards’ approval, Holcim officials carefully considered the results of a detailed feasibility study that was conducted after regulatory permits were finalized in 2004. The feasibility study also factored in changes that have occurred in the economy and the cement market since plans for the project were first announced in1999.

At the peak of the three-year construction process, the project will create approximately 1,000 construction jobs for workers from all across the region. In addition, over the first 11 years of the cement plant’s operation, Holcim will contribute approximately $35 million to Ste. Genevieve County schools and other county entities.

“Holcim has been a part of the region for more than five years,” said Russell Wiles, senior vice president, Holcim (US) Inc. “People all across the area have been tremendous supporters of our efforts. And that community support was a key factor in the decision to move forward.”

Holcim’s Ste. Genevieve Project, which sits on approximately 3,900 acres along the border of Ste. Genevieve and Jefferson Counties, will be among the most environmentally efficient cement plants in the world. Initial construction activities at the Ste. Genevieve project site began in August of 2005. Approximately 50 people began work on those activities at the Holcim site.

IBM - Albany, New York

Furthering the State of New York’s position as a leading semiconductor location, IBM, Albany NanoTech, and ASML, the world’s leading semiconductor lithography supplier, announced on January 5, 2005 they would invest more than $2 billion in separate, but related, semiconductor/nanoelectronics initiatives.

Specifically, IBM and its alliance partners will invest $1.9 billion to expand IBM’s state-of-the-art 300mm fab in East Fishkill, New York, creating at least 200 jobs. IBM and Albany NanoTech (ANT) will collaborate to create the Joint Center for Semiconductor Research at the University at Albany’s Albany NanoTech. IBM and ANT will invest in excess of $200 million to establish a five-year joint R&D program that will focus on multiple future semiconductor technology nodes as defined in the International Technology Roadmap for Semiconductors. As a result of this project, 550 jobs are expected to be created in New York State’s Capital Region.

ASML Holding NV will create a $400-million nanochip research and development facility at the Albany Center of Excellence in Nanoelectronics. The new International Multiphase Partnership for Lithography Science and Engineering (IMPLSE) is ASML’s first R&D center outside Europe. The new center will bring together global technical expertise and state-of-the-art resources in nanoscale lithography to the ever-expanding 300mm wafer Albany NanoTech complex, home of the University of Albany Center of Excellence and the recently created college for nanotechnology, the most advanced such complex of any university in the world.

The Tech Valley’s synergy, workforce, quality of life, and the quality and diversity of companies played a role in the deal.

New York Governor George E. Pataki’s office, Empire State Development, Albany NanoTech, SUNY Albany and NYS Office of Technology & Academic Research worked together to provide the best package possible.

Intel - Chandler, Arizona

Intel announced in July 2005 it is planning to spend $3 billion to build a new, 522,000 square foot manufacturing facility at its Ocotillo site in Chandler, Arizona. Construction on this 300mm fabrication facility has begun and is expected to be completed in mid-2007. Up to 3,000 skilled trades people will support the construction project and the project will create up to 1,000 new Intel jobs. Intel’s average payroll per worker in Arizona is $122,000, including bonuses and benefits.

Chandler’s Economic Development Department estimates every new job Intel creates will generate 2.5 additional jobs to support the growing community. One study states that when multiplier effects are included, Intel’s operation in Arizona accounts for 24,160 jobs in the state and $1.7 billion in labor income. The total impact of Intel’s operation on Arizona’s gross state product is $2.4 billion.

“Arizona has been home to some of Intel’s most important product development and manufacturing activities,” said Tom Franz, vice president and general manager of Fab/Sort Manufacturing. Intel already has billions of dollars in capital investment and approximately 10,900 employees in Arizona. Further explaining the company’s decision to expand its investment in the location, Franz said, “Arizona provides a positive business environment with access to critical transportation infrastructure, a competitive tax climate, access to research universities, a strong community college system and a flexible permitting system that works well with our proactive environmental management programs.”

Another major attraction to Arizona for Intel was a bipartisan tax measure Governor Janet Napolitano signed into law. The new Sales Factor law required a combined new investment of $1 billion in Arizona to trigger this incentive --- which Intel did with this one project.

Intel worked with the City of Chandler, ADOC, the Greater Phoenix Economic Council, the Governor’s office and State Legislators in negotiating the deal.

Kronospan Gmbh – Oxford, Alabama

Kronospan Gmbh, an Austrian-based wood manufacturing company, will build its first United States facility in Oxford, Alabama. The project represents a capital investment exceeding $500 million and the company will hire 700 employees when it reaches full capacity.

The April 2005 decision was the result of months of planning and negotiation by Alabama Governor Bob Riley, various state agencies, Kronospan’s leadership, local elected officials and the Economic Development Council of Calhoun County. The process began in earnest when Governor Riley led a recruitment mission to Europe in July 2004 and began personally negotiating with Kronospan officials.

Governor Riley stated, "This decision by Kronospan will have a tremendously positive impact on the area and create hundreds of good-paying jobs for our workers. We’re proud that the world’s leading manufacturer of wood laminated flooring products is going to be one of Alabama’s corporate citizens and we look forward to a long and prosperous relationship with this company for many years to come."

Economic Development Council Chairman Fred Denney echoed Governor Riley’s, Senator Marsh’s and Mayor Smith’s comments. "This has been a team effort from the beginning," Denney said. "The Mayor and Council in Oxford, the County Commission, my fellow EDC members, state agencies, our legislative delegation, Governor Riley and his staff and, of course, our friends at Kronospan have all been working intensively to make this happen.”

Kronospan is Europe’s largest manufacturer of wood-based panel products, including the manufacturing of laminate flooring. The company is renowned for its technical ability, innovation, and design and operations technology. The company’s extensive portfolio includes a wide selection of products and services.

MedImmune – Frederick, Maryland

MedImmune, a global leader in manufacturing medications targeted to infectious diseases, cancer and inflammatory diseases, will build its new biologics manufacturing facility in Frederick, Maryland. The company already has a significant presence in the state with its corporate headquarters in Gaithersburg, Maryland and a bio-manufacturing facility in Frederick. With this expansion, it plans to add up to 840 new jobs in the state by 2008.

In the initial phase of the four-phase project, to be completed by 2009, MedImmune is expected to invest $250 million in construction costs, including adding two additional commercial-scale bioreactors as well as 331,000 square feet of office, laboratory and manufacturing space to accommodate up to 225 additional employees. In Phase II, the company expects to invest another $250 million over three to four years. Phases III and IV may take up to 10 years to complete.

Company officials cited Maryland’s positive climate for biotechnology companies as a key factor in their decision to expand in the state. Among its assets, MedImmune found Maryland ranks first in the United States in its percentage of professional and technical workers and second highest in its concentration of doctoral scientists and engineers. The state, which has been recognized as one of the key areas globally for biotechnology, is also in close proximity to numerous federal laboratories and institutions of higher learning, including the University of Maryland Baltimore, which recently built a $200-million BioPark, and the East Baltimore Biotechnology Park, which is located next to Johns Hopkins medical campus.

The company received support from the Maryland Department of Business and Economic Development, the Frederick County Office of Economic Development and the City of Frederick Department of Economic Development.

Micron Technologies, Inc. – Manassas, Virginia

In a move to expand its presence in the semiconductor industry and establish a presence on the East Coast, Micron Technologies is the throes of accomplishing a three-phase expansion project in Manassas, Virginia. The project will account for 860 new jobs and $1.2 billion in investment over three years. Partially responsible for its decision to expand in Virginia was its acquisition of the Manassas facility from Dominion Semi Conductor in 2004. The Dominion plant was the only plant in the U.S. that was manufacturing the 300mm wafer and Micron realized that, among its other facilities, it was the only one that could handle the new equipment it needed.

For phase one of the project, which has been completed, Micron added more than 300 employees and spent $400 million in machinery and equipment improvements, in addition to the initial investment of $900 million it and its predecessors had made. Once Micron’s expansion is completed, the company will have invested $ 1.2 billion in the upgrade of its fabrication in Manassas and account for 860 new jobs.

Funding by Virginia for educational and training programs at Virginia Tech, George Mason and Northern Virginia College has been secured to increase the number of technicians and engineers available to Micron. The Virginia Economic Development Partnership, Virginia Community College and Virginia Tech worked together to ensure Micron’s expansion in Virginia., as did the City of Manassas Office of Economic Development.

Steve Appleton, Micron chairman, president and CEO, concluded, “Virginia’s commitment to pro-business tax policies and an educated workforce are key factors in helping Micron."


SeverCorr - Lowndes County, Mississippi

The infusion of 1,494 jobs, $57,645,000 in total labor income and $3.5 million in State General Fund Revenue is the estimated operational result of the $700-million steel mini-mill being constructed by SeverCorr in the Tennessee Valley near Columbus, Mississippi in Lowndes County. It is expected that some 1.5 million tons of flat-rolled steel sheets will be produced annually to supply more than 10 automotive plants in the Southeast, including Nissan Motor Company’s Canton, Mississippi facility.

In addition, it is estimated construction will generate 3,710 man-years of employment, $144,720,000 in total labor income and $8.3 million in State General Fund Revenue. The sustained workforce will be 450 employees who will earn an average annual salary of $70,000 plus a competitive benefits package. One the many residual benefits of the project is the Lowndes County Public School System will receive more than $1 million yearly in negotiated tax revenues.

A primary attraction for SeverCorr to this megasite was the certification by McCallum Sweeney Consulting, a site-selection firm, through the TVA (Tennessee Valley Authority), which indicates sites are ready to go and relatively risk free. In other words, “shovel ready.” Additional benefits of the site are its location on four-lane divided interstate highways and access to air, water and rail.

SeverCorr has plans for future expansions ranging from $100 million to $500 million in total investments and new jobs. Four steel-related companies have announced they will locate near or on the SeverCorr property. Collectively, they will invest $300 million in facilities and employ 500 to1,000people.

The Mississippi Development Authority, Columbus-Lowndes County Development Link and TVA worked on the project and negotiated the complex financial package with SeverCorr and the State of Mississippi, which included direct involvement of Governor Haley Barbour.

Shintech – Iberville Parish, Louisiana

Shintech, the U.S. subsidiary of Shin-Etsu Chemical Co., Ltd. of Japan, the largest worldwide polyvinyl chloride producer, is embarking on a $1-billion capital investment project for the construction of a new manufacturing facility in Iberville Parish, Louisiana that has access to rail, highway and deep water. The facility, which will be located on 1,725 acres just south of Plaquemine, will require more than 2,000 construction workers at peak and create approximately 150 new permanent jobs once the facility becomes operational. According to an economic impact study conducted by Louisiana State University Economist Dr. James Richardson, the facility will bring to the state of Louisiana an estimated $448.1 million in business transactions, $139.1 million in household earnings and 4,446 direct and indirect jobs in the30-month construction period alone. The state will also see an economic boost with $8.2 million in annual tax revenue once the facility is operational.

Michael J. Olivier, secretary of Louisiana Department of Economic Development, concurred with those facts. He said, “In addition to providing significant employment opportunities for local residents, the facility will be an economic boost to the state and Iberville Parish by contributing millions of dollars in tax revenue during both the construction phase of the project as well as once the facility begins to operate.”

Shintech intends to start up operations at the Iberville site in late 2006.

Toyota – Woodstock, Ontario, Canada

The creation of 2,000 new jobs and a $1.1-billion project heralded the June 2005 announcement that Toyota is establishing a significant presence in Woodstock, Ontario in Oxford County. It represents the first Greenfield investment for an assembly plant in Ontario in nearly 20 years. The new assembly plant will be constructed on an almost 1,000-acre site. Woodstock Mayor Michael Harding said the project “represents perhaps the single largest industrial investment in North America in 2005.”

The construction phase of the project is expected to take two years, allowing production to begin in 2008. The plant will employ innovations in flexible manufacturing technologies and processes. It is anticipated the new facility will be capable of producing 150,000 Toyota RAV4 sport utility vehicles annually.

Partly responsible for Toyota’s decision to locate in Woodstock was its proximity to Toyota Motor Manufacturing Canada in nearby Cambridge, Ontario, which will manage the new facility. This close proximity affords both Toyota entities enhanced productivity opportunities such as sharing staff and attracting potential suppliers. The company also found the site’s location at Highways 401 and 403 and access to a regional skilled labor pool attractive.

The Warden of Oxford County Don Woolcott anticipates the new Toyota plant “will pay dividends to all of the residents of Oxford County. The plant will generate significant property tax dollars, which will lighten the burden of the homeowner; it will create both direct and indirect employment for residents of the County; and additional business for all areas of the economy.”

Numerous parties were responsible for helping to make the project a reality. They include: the City of Woodstock Economic Development Department; the Province of Ontario; the Federal Government; and the Township of Blandford-Blenheim, which helped in the boundary-adjustment process as the Toyota land was originally in the Township of Blandford-Blenheim.