Manufacturing

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2007 CiCi Awards - Community Impact Top 15

28 Feb, 2007

By: Kevin M. Mayer,Linda Dobel

Boeing C-17 Program — Long Beach, California


If an industrial operation scheduled for termination is sufficiently large, even a brief reprieve can have far-reaching consequences. Such is the case with the Boeing plant’s C-17 program in Long Beach, California. The program was to have been extended through 2008, and no longer. Were this schedule to prevail, the first cuts would have been made in August 2006, affecting Boeing’s suppliers in 42 states across the nation.

To preserve the C-17 program, a wide-ranging effort was organized. City, utility, regional, and state officials assembled a “Red Team.” Members of this team took every opportunity to communicate the benefits of the C-17 program to the public and elected officials. Team members also developed plans to reduce costs. Ideas for cost reductions included tax credits and fuel flowage rebates.

The Red Team was able to cite compelling benefits. Retaining the program would preserve 5,500 direct Boeing jobs. Although these jobs are based in the City of Long Beach, the economic impact of direct and indirect jobs and suppliers stretches across California and the nation. There are 669 Boeing suppliers representing a total C-17 impact of $8.4 billion.

The Red Team’s efforts helped shape the Defense Authorization Bill signed by President Bush in 2006. The signed legislation saved the program for a year, through November 2009.

The immediate effects of extending the program are impressive, not the least because the average salary for aircraft manufacturing is $85,000. Another year’s total earnings are projected to reach $467.5 million, with nearly $7.8 million tax revenue contributed to the Los Angeles County area, and at least $21.8 million tax revenue contributed to all local government. But the Red Team believes its work is far from finished. It continues its efforts to support the program beyond 2009.

East Penn Manufacturing Company — Lyon Station, Pennsylvania

East Penn Manufacturing, a leading producer of lead-acid batteries, has helped power the Berks County economy since 1946. In fact, East Penn is currently the county’s largest employer. And it was named one of Fortune’s “100 Best Companies to Work For.” But even such a reliable company as East Penn needed a boost when it contemplated expansion plans.

East Penn’s headquarters and manufacturing facilities in Lyon Station cover more than 490 acres. The company claims to have the largest, most modern single-site battery manufacturing facility in the world. But it wanted to be even larger.

According to Pennsylvania Governor Edward G. Rendell, the state is investing $21.4 million in the first phase of East Penn’s expansion plans. This investment will leverage $108 million in private investment toward the $130 million project. The project is expected to create at least 500 new jobs within three years and preserve 4,828 existing positions.

State grants, loans, and tax credits will help East Penn expand its waste water treatment facility, which will allow for the expansion of its entire operation. The first phase of the project includes construction of a new battery plant, a new distribution facility and related infrastructure. The company will also expand its existing battery plants and health and safety center.

Part of the incentives package is a $6,416,800 loan from the Pennsylvania Infrastructure Investment Authority. These funds will be used for environmental cleanup. An iron ore pit will be capped and contaminated ground will undergo remediation. This work will ready the site for construction of a new battery manufacturing facility.

East Penn’s products serve the commercial, marine, automotive, telecommunications, industrial and stationary markets. As a result of East Penn’s expansion, even more of these products will come from Berks County. East Penn founder and chairman DeLight Breidegam said, “Since the company was founded, we have invested heavily not only buildings and machinery, but in the company’s most valuable resource — the people of East Penn.”

Sanderson Farms — Waco, Texas

When Sanderson Farms, Inc. announced it intended to bring a poultry processing plant to Waco, Texas, news accounts emphasized not only the building of the business and the local economy, but also the building of strong families. This theme was reinforced by the company’s history as well as the company’s reputation as an employer.

Sanderson Farms Inc. dates back to 1947 when it began as a farm supply business operated by D.R. Sanderson Sr. and his two sons, D.R. Sanderson Jr. and Joe Frank Sanderson. Poultry production was added to the business, and then in 1955 the company was incorporated. Today, under the guidance of CEO Joe Sanderson Jr., it is a top-quality chicken producer.

Sanderson Farms’ 10-year history in Texas has gained the company the respect of state officials for its impeccable business practices. “They are obviously a very responsible employer. Their business practices are very reflective of Waco’s values and our interest in providing jobs to support healthy families,” said Waco Mayor Virginia DuPuy. “This will include such a good number of entry-level jobs as well as higher paying jobs for people in a variety of disciplines.”

Sanderson Farms will build a 170,000-square-foot, $50.5 million poultry processing plant and a 65,000-square-foot, $11.5 million hatchery. The company will bring 1,300 jobs to Waco when this complex is at full capacity, making it the single largest job-creation project in Waco’s history. Groundbreaking for the facility is slated for the spring with operations expected to begin May 2007.

Texas helped secure this company’s move to Waco with a $500,000 commitment from the Texas Enterprise Fund. Other incentives included an eight-year tax abatement provided by the City of Waco and McLennan County. Infrastructure extensions to serve the two industrial sites were designed and built by the Waco Industrial Foundation. Also, Sanderson Farms was designated an Enterprise Zone project and qualifies for refunds of state sales and use taxes.

Haier Group — Camden, South Carolina

Two words: jobs and China. When you hear these words, you probably think of American investments flowing to manufacturing operations located in China. But sometimes the investments flow the other way. Such is the case in Camden, South Carolina.

The Haier Group, sometimes called the General Electric of China, intends to invest an additional $100 million in its Camden facility. Haier is China’s largest and the world’s fourth-largest manufacturer of major household appliances. It first invested in Camden in1999. Expanding its Camden operations will boost employment at this site from 200 to 1,000.

Haier’s expansion is especially welcome news in this region, which has been hurt by continuing decline in the textile industry. “Any time a facility based in South Carolina plans to increase its employment by five-fold, it’s obviously good news for the state,” Governor Mark Sanford said. “In this case, it’s particularly significant because it re-emphasizes our administration’s commitment to making sure trade with China isn’t a one-way street. We want to make sure that …South Carolina is an integral part of [China’s] growth strategy within the United States.”

At this time, South Carolina is leading the nation in recruitment of foreign investment with the highest rate of direct foreign investment per capita. Foreign investment has enhanced South Carolina’s ability to compete in the global economy. Another advantage is the state’s port facilities. The Port of Charleston was ranked number one in North America for customer satisfaction by World Trade Magazine.

The expansion announcement was made just prior to a state dinner attended by Vice Premier Wu Yi and a high-level Chinese delegation. Madame Wu occupies the third most powerful position in the Chinese government. The state dinner, hosted at the South Carolina Governor’s Mansion, also welcomed Senators Lindsey Graham and Jim DeMint and Commerce Secretary Taylor, among others.

Triumph Foods — East Moline, Illinois

East Moline may be destined to become hog processor to the region. While that may not sound as poetic as nearby Chicago’s old nickname — hog butcher to the world —state and local authorities are still pleased. In a June 2006 announcement, they highlighted the positive while describing a deal for a new 620,000-square-foot pork processing plant on a 116-acre site.

The plant has been planned by Triumph Foods, which expects to invest $135 million in the project. According to Governor Rod R. Blagojevich’s office, the project will create 350 new jobs by 2009 and a total of 1,000 new jobs by 2010. According to the Institute for Decision Making at the University of Northern Iowa, the new plant could generate 2,900 spin-off and support jobs, with an estimated $437 million dollar impact on the local economy in the first year.

State and local officials assembled an incentives package that totaled almost $16 million. The package included tax credits over the next ten years based on job creation, a development grant to East Moline to improve water and sewer infrastructure, job training funds, and other incentives, including investment tax credits and tax exemptions. In addition, East Moline approved $20 million in tax increment financing assistance, which will help pay for an on-site sewage pre-treatment facility and off-site water and sewer improvements.

Rick Hoffman, CEO of Triumph Foods, cited the location’s intrinsic advantages: “With its large, available workforce, central location, and great road and air access, the Quad Cities region is an excellent fit for us and was the best choice for our new, state-of-the-art processing plant.”

Local officials recognized concerns over the project’s potential drawbacks. “We are excited to be working with a modern facility that will implement best practices, ultimately producing minimal environmental impact while providing an important economic boost to the community,” said Illinois EPA Director Doug Scott. “We will work to guide Triumph and East Moline through the regulatory process to operate in both an environmentally and community-friendly way.”

Novartis — Holly Springs, NC

With avian flu a looming threat, there is a pressing need for rapid vaccine production. To meet this need, Swiss pharmaceutical giant Novartis set out to build a new vaccine manufacturing plant, one that would employ its novel cell culture technology instead of traditional egg-derived manufacturing techniques.

Several states, including Georgia and Maryland, had sites that were vying to be the first U.S. location that would use the new technology. But, ultimately, Novartis Vaccines and Diagnostics chose to locate in Holly Springs, North Carolina. The project involves a minimum investment of $267.5 million over the next five years. It is expected to create 350 new jobs in Wake County. On average, each new job will pay $49,900, plus benefits, which is more than the Wake County average of $34,270, not including benefits.

Both state and local institutions contributed to the incentives package that attracted Novartis. The state provided a One North Carolina Fund Grant of $3 million as well as a Job Development Investment Grant of up to $6 million. Novartis will also qualify for up to $7.65 million in tax credits.

Wake County provided a grant of $3.1 million, and the town of Holly Springs provided $17.67 million in land and site improvements. Community College training was valued at $2.48 million.

“Novartis’ strategic investment to build a next-generation influenza vaccines manufacturing facility in North Carolina demonstrates our continued commitment to vaccines innovation," said Joerg Reinhardt, CEO, Novartis Vaccines and Diagnostics. "With its growing capabilities in bio-manufacturing, North Carolina provides a strong platform for the continued growth of the Novartis’ vaccines business.”

The North Carolina Department of Commerce estimates the project will generate a cumulative gross product value of about $1.5 billion. It also estimates a positive, cumulative net state revenue impact of almost $41.3 million.

Hoku Materials — Pocatello, Idaho

The nation is working to diversify its energy sources, and Idaho is working to diversify its economy. These two trends come together in the City of Pocatello, soon to be the site of a $220 million polysilicon production plant. The plant will produce a highly pure form of silicon, the key material used to make solar cells.

The plant will be built by Hoku Materials, a division of Hoku Scientific. When it initiates operation in 2008, the plant will have a payroll of 200. Hoku Materials is interested in partnering with Idaho State University to develop a highly trained “ready workforce” that will help improve college graduate retention rates. The infusion of high-paying manufacturing and technical jobs is expected to reduce the out-migration of the area’s skilled workforce, and complement the employment opportunities in other sectors. National businesses with a local presence include Heinz Frozen Food, Union Pacific Railroad, and AMI Semiconductor.

An array of state and local institutions have worked together to attract high-technology companies to southeastern Idaho. These institutions include Idaho Commerce & Labor, Bannock Development Corporation, the City of Pocatello, and Idaho State University. The state has offered $1.2 million in workforce training funds to Hoku Materials and $200,000 to the City of Pocatello to offset public facility costs necessary to facilitate Hoku’s plans. In addition, tax increment financing has been made available through the Pocatello Development Authority.

Mayor Roger Chase of the City of Pocatello stated, “Having worked closely with the company’s management team over the past several months, we are excited to have them become part of the Pocatello community.”

“The support of Mayor Chase and the Bannock Development Corporation helped seal the deal,” said Idaho Commerce & Labor director Roger B. Madsen. “Hoku’s advancements in the area of fuel cell technology hold a lot of potential for partnerships with the Idaho National Lab. A project like this and any additional spin-offs could help move our state into the next generation of energy development.”

United Solar Ovonic — Greenville, Michigan

There’s lots of green in Greenville, Michigan. There’s the green of renewal: To offset future declines in fossil fuels, an increasingly vibrant industrial sector in Greenville is developing alternative energy … green energy. And of course, this sector expects to be profitable. That’s another kind of green.

Greenville is looking forward to anew, high-tech Ovonic solar cell manufacturing facility. It will be built by United Solar Ovonic LLC, a wholly owned subsidiary of Energy Conversion Devices, Inc.

The project represents an investment of $129 million. It will create up to 563 jobs, including 200 directly by the company, within the next five years. This project paves the way for the potential of five more plants and up to1,000 additional jobs in Michigan.

Assistance from the Michigan Economic Development Corporation (MEDC) helped convince the company to choose Greenville over a competing site in South Carolina. Incentives from state and local authorities amount to about $37 million.

Parts of the incentive package include a Single Business Tax credit approved by the MEDC. This credit is valued at $5.7 million over 20 years. A $5 million federal Community Development Block Grant approved by the MEDC and awarded to the city of Greenville will fund needed infrastructure improvements to support the new plant. The city has proposed a tax abatement valued at approximately $3.6 million over 12 years for the project. The MEDC and city are expected to support a 15-year, tax-free Renaissance Zone for the site, worth an additional $20.4 million to the company.

State and local governments are also providing United Solar Ovonic with additional incentives to invest up to an additional $600 million for up to five more plants in Greenville and up to 1,000 new jobs.

Governor Jennifer M. Granholm said, “The city’s leadership and its outstanding workforce helped win United Solar Ovonic’s major new investment, adding another strong anchor for Michigan’s alternative energy industry.”

Automatic Data Processing — El Paso, Texas

While it is already renowned as one of the world’s largest providers of payroll and tax filing services, Automatic Data Processing (ADP) will be even more prominent in El Paso, Texas. That’s because a new ADP facility in El Paso is expected to create more than 1,000 new jobs. For the new hires, ADP won’t just process the paychecks, ADP will sign them.

A $3 million grant from the Texas Enterprise Fund helped lure the ADP expansion to El Paso, along with the region’s highly skilled, bi-lingual workforce and excellent quality of life. Texas is also providing $900,000 in workforce development funds to ensure that local workers have the skills they need, such as client management and communication abilities, strong computer skills and accounting backgrounds, to succeed at ADP.

ADP''s Solution Center will provide business-to-business support as the company focuses on inbound calls to assist clients using ADP’s payroll-related applications as well as ADP’s automotive-dealer-related products and services.

“We are pleased to be expanding our presence in the State of Texas with the opening of a new Solutions Center in El Paso,” commented Gary C. Butler, president and chief operating officer of ADP. “As an industry leader, we are able to offer our ADP associates a comprehensive benefits package, ongoing training, and professional development, providing the opportunity for personal and career growth.”

“From the state’s total investment, Texas will reap a strong return six times greater than the tax dollars spent up front, and that’s just in terms of ADP’s $23.8 million capital investment,” said Governor Rick Perry.

Federated Department Stores — Portland, Tennessee

In Middle Tennessee, near the state line, just south of Kentucky, an economy is in transition. For decades, families in this rural area made their living farming, primarily tobacco. But now the economy is becoming increasingly industrial.

In February 2006, ground was broken at a site that will become a 595,000-square-foot distribution center. It is part of a $130 million, two-year effort by Cincinnati-based Federated Department Stores. Federated’s center, to be staffed by 500 new hires, will handle the direct-to-consumer orders. These orders constitute Federated’s fastest-growing segment, and are expected to reach $750 million in 2008.

The center’s location, in Portland, was a good fit with Federated’s plans. “Portland was an optimal site for this important new facility because the location was central to our customers and suppliers, as well as having easy access to the I-65 transportation corridor,” said Federated Vice Chair Tom Cole.

State and local authorities also assembled an incentives plan. It included applicant screening and assessment, on-the-job training, state jobs tax credits, sales and excise tax credits, an infrastructure grant, a utility rate discount, utility consulting and technical services, and local property tax abatement.

But before the project became a reality, several obstacles had to be overcome. Federated needed a new water tower, an interstate interchange, roadwork leading into the site, a new power substation, and other development. Also, the company was concerned about the potential workforce, but state officials arranged interviews with human resources executives from the Gap, Bridgestone-Firestone, and other companies in the region. Ultimately, Federated cited both workforce quality and low operating costs as compelling reasons to locate in northern Middle Tennessee.

Huber Engineered Woods LLC — Emanuel County, Georgia

If you could see within walls and floors and below roofs, you would probably see more than a few panels and other structural members made of oriented strand board (OSB). Just as OSB lends strength to a building, OSB manufacturing can lend strength to a community.

One such community, Georgia’s Emanuel County, already produces OSB for residential applications. But it will soon produce more. That’s because Huber Engineered Woods LLC plans to invest more than $200million in an expansion of its OSB business in Emanuel County. The new plant will provide up to 150 new jobs. It is slated for start-up in 2008 and will have an annual production capacity of more than 650 million square feet once fully operational.

According to Andy Trott, president of Huber Engineered Woods, the company decided to expand its Emanuel County operation in part due to the state and county’s support of the project. Other considerations included proximity to a sustainable wood supply, excellent transportation and services infrastructure, access to customers, and a skilled labor pool.

The company received a $4 million grant, job tax credits, local property abatements, and assistance from Quick Start, the state’s workforce training program. The Georgia Department of Economic Development, the Swainsboro/Emanuel County Joint Development Authorities, and the Georgia Department of Technical and Adult Education were key partners in the project.

The new jobs are a welcome addition not only to Emanuel but also the surrounding communities. Emanuel qualifies as one of Georgia’s Tier 1 (economically disadvantaged) counties. Several businesses in the county utilize the region’s forests for timber, building products, cabinetry, and turpentine. All these businesses benefit from Emanuel’s proximity to 10 medium-sized and large cities within a 175-mile radius. Interstate 16, the major thoroughfare between the ports of Savannah and the rest of the Southeast, passes through the southern portion of the county, allowing easy access to markets.

Chris-Craft Corporation and Indian Motorcycle Company — Kings Mountain, North Carolina

In July 2006, two venerable company names — Chris-Craft and Indian Motorcycle —were confirmed to be part of a package deal in which both would open facilities in North Carolina. The companies are both properties of Stellican Limited, a London-based equity firm that specializes in the acquisition and revival of distressed companies with famous brand names.

The two facilities represent an investment of approximately $42 million. Together, these facilities are expected to create 807 jobs over the next two years. At Chris-Craft, the average annual pay for the newly created positions will be $32,000, plus benefits. At Indian Motorcycle, the average annual pay will be $47,000, plus benefits. Both these figures compare well to the Cleveland County average annual pay of $28,000, not including benefits.

The new jobs are welcome news in Cleveland County, which had an unemployment rate in 2005 of 7.1 percent, when the state average was 4.7 percent. During the site selection process, the pool of workers was tested with a blind classified ad. The number and quality of the responses was encouraging to the companies, particularly Chris-Craft. “This state has a workforce with the skills we need to build boats. Former furniture makers and woodworkers are ideal employees for us,” said Stephen Heese, Chris-Craft president.

Each company was approved for a grant from the One North Carolina Fund. For Chris-Craft, the grant was $250,000. For Indian Motorcycle, the grant was $100,000. Both of these state-approved grants were contingent on the approval of local grants. These were provided by Cleveland County, which met its matching obligations with a $970,000 grant for the two projects.

Additional incentives were provided by a performance-based Job Development Investment Grant, which is based on a percentage of withholding taxes paid by the new company employees. If the companies create all of the jobs called for under the agreement and sustain them for ten years, Chris-Craft and Indian Motorcycle could receive a combined maximum benefit of $7.56 million.

Target — Allenwood, Pennsylvania

In the central region of Pennsylvania, the loss of manufacturing jobs over the past four years had been a source of concern. Significant employers such as Pennsylvania House, BBA Non Woven, and JPM had disappeared. Although a rise in commercial employment partly compensated for these setbacks, the future was unclear.

It was in this atmosphere of uncertainty that Great Stream Commons Business Park was created. Funded by $13 million in bonds floated by Union County, Great Stream Commons awaited suitors while tax obligations, the responsibility of local taxpayers, loomed ahead. Then, in August 2006, prominent retailer Target Corporation signed a sales agreement to build a warehouse distribution center at the site.

“One of the reasons national companies like Target choose Pennsylvania is because of the quality and availability of our workforce and our competitive business environment,” Governor Edward G. Rendell said. “With at least 500 new jobs coming to Union County, this project is terrific news for the region’s hardworking men and women.”

Construction is to begin in July 2007, and occupancy is scheduled for February 2009. Once construction is completed, a 1.6 million square-foot distribution center will stand on a 166-acre site. Parking space will accommodate 700 cars and 900 trucks.

The Union County Industrial Development Corporation worked with Target and the Governor’s Action Team to secure a $2.25 million funding offer from the Department of Community and Economic Development for the project. In addition, Union County obtained a$600,000 grant from the Pennsylvania Department of Transportation to be used specifically for intersection upgrades.

Target currently has 30 distribution centers in 21 states and 1,444 stores in 47 states. The company gives back more than $2 million a week to its local communities through grants and special programs. Since opening its first store in 1962, Target has partnered with nonprofit organizations, guests and team members to help meet community needs.

Cardone Industries — Harlingen, Texas

During remanufacturing, durable original components are recycled while worn parts are rebuilt or replaced. In other words, remanufacturing brings new life to old components. Perhaps the most familiar type of remanufacturing applies to automobile parts. But could a type of remanufacturing apply to industrial sites? Recent events in Harlingen, Texas suggest that it can.

In Harlingen, Cardone Industries, a global supplier of automotive products, purchased a building once occupied by Fruit of the Loom. The company started operations with 100 employees and began retrofitting the 680,000 square-foot building. Cardone projects a workforce of 500 and an annual payroll of over $7 million within five years. Cardone’s 500 jobs will account for 25 percent of manufacturing jobs in the city.

Cardone focuses on selling remanufactured brakes, drive trains, electronics, motors (for windows and wipers), pumps, and steering components. It also makes and sells all-new parts.

The American automotive aftermarket tends to be insulated from economic downturns. And, with the sector’s emphasis on recycling, efficiency, and conservation, strong growth is anticipated. About half of the durable parts in an automobile can be recycled. “When people think about the automotive industry, they tend to focus on the big automakers and forget just how big the automotive aftermarket really is,” said Marie McDermott, president ofthe Harlingen Chamber of Commerce.

Chamber representatives facilitated negotiations between Cardone and local authorities, which included members of the Harlingen Development Corporation Board and City Commissioners. The negotiations were fruitful, leading to an incentives package that included tax abatements and training programs.

“Cardone fits in perfectly with Harlingen’s long-term development plans since it is locating on the 509 corridor with fast access to the Free Trade International Bridge,” said Ana Borchardt, economic development director at the Harlingen Chamber. Cardone is expected to pursue future market opportunities in Latin America, and the Harlingen location is considered a key to developing that sector.

Royal Concrete — Okeechobee County, Florida

Modularity. This quality, along with portability and affordability, is often found in objects as small as an electronic gadget or as large as a piece of office furniture. But what about even larger objects? What about … buildings? In fact, modular buildings are produced by a company called Royal Concrete Concepts. And the company itself is modular, in a sense, considering it may, like many companies, disperse its operations and expand where it pleases.

Royal Concrete Concepts had a choice when it came time to expand its operations. And it chose to expand in Florida’s Okeechobee County, making a capital investment of more than $20 million. This figure includes real estate investment, construction costs for the new manufacturing facility, and the purchase of new manufacturing and business equipment. The company’s new modular building manufacturing facility is expected to create more than 1,300 new high-wage jobs in rural South Florida.

The average pay for employees of Royal Concrete Concepts is about $40,000 per year. This average exceeds the Okeechobee median household income by approximately $10,000 per year. To help secure these jobs for Okeechobee, state and local authorities assembled an incentives package that tapped the Qualified Targeted Industry Tax Refund Program and the Development Transportation Fund.

“This is a wonderful milestone for Royal Concrete,” said Wally Sanger, president of Royal Concrete. “We’re thrilled with this expansion, and so proud of the positive impact we have on the region.”

“With its convenient location and access to rail lines, Okeechobee County is the ideal location for Royal Concrete’s new manufacturing facility,” said Lynn Topel, executive director of Florida’s Heartland Rural Economic Development Initiative. “Royal Concrete is precisely the type of high-wage, high-value company that we’re committed to helping, and we’re excited to share in the success of their expansion.”

 

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