Site Selection magazine
twitter linkedIn facebook email email
ONLINE INSIDER
A Site Selection Web Exclusive, December 2015
SHARE THIS ON SOCIAL MEDIA
WEB Exclusive story

Globetrotting Multinational Remains in Gift Capital

Whirlwind Tour Convinces SCL To Stay Home with HQ

ONLINE INSIDER
Recently named by Copenhagen Economics the most attractive and magical EU country for FDI, Finland was widely reported to be a close runner-up in the quest to land SCL.
Photo by Markus Kiili, courtesy of Visit Finland (http://www.markuskiili.com)

by ADAM BRUNS,
Site Selection Managing Editor

After surveying its global prospects and fielding offers almost too good to be true, closely held Arctic Circle-based multinational S.C. Ltd. (SCL) has decided to keep the home fires burning at the North Pole.

"This is where we got our start," said SCL spokeswoman Holly Jolie, "and this is where we're going to stay."

But the story of this mega-project — which flew under most media radar by the code name "Project Workshop" — is the story of how one little North Pole company town has weathered the storms of the worldwide marketplace and still remained the ultimate global village.

Polar Hub

Jolie says the organization first began scouting for a site on Dec. 21, 2015 ... a bit late in the season to start shopping, according to some experts. But SCL was thinking long-term.

"The logistics vectors have changed over the years," she says. "We had to adjust our thinking accordingly, and see if the routes and suppliers we'd always used were still worthy of our Excellence in Logistics Factors [ELF9001] certification."

Holly Jolie
Holly Jolie
SCL spokeswoman

Her point is buttressed by recent moves among northern hemisphere ports to open themselves up to more trade and shipment volume. The players range from Russia to Norway to Alaska. As development moves further up the latitudes, it was only a matter of time before SCL had to re-evaluate its options, especially considering the natural resources in and around its home base that might provide both energy source and financial ballast for its manufacturing operations.

The looming prospect of a lease termination added more urgency to the process ... though no one with North Pole Development could confirm the existence of alternate tenant prospects.

A team was assembled to conduct the site search, including representatives from the toy and sugarplum divisions, as well as sleigh operations. Candidate sites had to meet strict criteria including but not limited to reindeer feeding grounds, sleigh-port runway length, community college resources and dual polar express rail.

It has been reported that some consideration was given to seaport status as well, but Jolie would not confirm whether SCL has given any credence to melting icecap scenarios and their potential impact on the organization's North Pole hub.

As is often the case, labor negotiations were crucial to the process. Some have called for the Pole to seek right-to-work status, but longtime union leader Felix Navidad, head of the Northern Organization of Elven Laborers (NOEL), said the quality and productivity of SCL's labor force has never been in question.

"Sure we've had to make minor concessions in terms of job classifications," he told Site Selection. "But we've kept up with the times in terms of technology training, and overall morale has never been jollier."

 

Candidate sites had to meet strict criteria including but not limited to reindeer feeding grounds, sleigh-port runway length, community college resources and dual polar express rail.

Even so, once the Request For Proposals went up on SCL's Web site, the offers popped up fast and furious, from places as diverse as Anchorage, Alaska; Murmansk, Russia; and Churchill, Manitoba. Among the suitors:

  • Santa Claus, Indiana, where the Santa Claus Industrial Park offers more than 200 acres with all utilities in place and a location in the center of the bustling NAFTA Corridor;
  • The South Pole, longtime rival of its polar opposite, as it tries to diversify from its lonely-team-of-scientists economic base;
  • A coalition of shuttered car plants, linked under a new brand, “The Workshops Network”;
  • Yiwu, China, which The Guardian reports already makes 60 percent of the entire world's Christmas decorations;
  • The Lunar Economic Development Agency, in order to have a backup plan in case NASA’s moon station is too pie-in-the-sky; the 238,000-mile commute to Earth, however, could be a sticking point.
  • Ski Dubai, already conveniently located in the Mall of the Emirates, and ready to aid the UAE in its goal of economic diversification;
  • A mountain Norway owns, which thousands want to gift to Finland, raising concerns about who would be SCL's landlord.

A sack full of tax breaks, enterprise zones, training funds and outright cash was dangled in front of the North Pole site seekers.

bd071220c
SCL headquarters, shown here during typical blizzard conditions, will enlarge its bootprint by some 960,000 sq. ft. (89,184 sq. m.) when the expansion is completed in 2017.

"We've seen a lot of unique incentive offerings over the years," said Jack Frost, lead site selection consultant for SCL, "but some of these packages were so nice they were naughty."

Open records requests by media crying "corporate welfare" in several territories have largely been quashed by judges sympathetic to the need for secrecy where gifts are concerned.

Getting the Goods

Indeed, packages and their destinations were one of the lead criteria in the site search, said a source close to the process. After checking the list twice, SCL decision-makers narrowed their options from 100 to half a dozen, making extended visits to each finalist for a final, detailed evaluation.

"We kicked the tires in each community," says Jolie, "assessing everything from elf housing to the potential for developing a supplier campus in existing buildings." Such consolidation has been the global trend in the gift production industry, which has seen production steadily climb since bottoming out during the wave of re-gifting that struck in the late 1990s.

Final negotiations with NOEL were tense, as were the real estate dealings over SCL's long-term lease at the North Pole.

"We managed to re-work certain subordinate Clauses to give ownership more flexibility in what we choose to do on the land," says Jolie. Innovative practices employed include establishment of a Tax-free Opportunity Yuletide Zone (TOYZ) and the promise of expedited permitting and red-tape reduction in the case of future expansion. (Red ribbon, however, is still permitted.)

North Pole economists have projected that the retention of SCL headquarters will have an economic impact worth between US$4 zillion and $582 zillion, though some critics dispute those numbers, citing other gift-giving factors such as birthdays, and the rise in incidental generosity.

24-7-365

Big numbers or small, a ribbon-cutting is scheduled for December 25, 2016, when SCL hopes to have completed a vast new headquarters/manufacturing/distribution complex, including such amenities as in-house childcare, a double-decker data center, semiconductor fabrication capability and a Just-In-Time gift card distribution facility. Action is already lively and quick, as SCL is expected to soon announce a design-build contractor to lead the project.

Some have speculated that, like other corporate relocation projects, this one just came down to where the CEO wanted to live. Holly Jolie says CEO Kris Kringle and his spouse were "influential participants" in the site selection process, but that executive amenities were weighted to contribute only 15 percent to each candidate site's overall score.

Reindeer Photo Finland
When news spread of SCL’s site search, locations the world over were on it like reindeer on Christmas.
Photo by Markus Kiili, courtesy of Visit Finland (http://www.markuskiili.com)

Reached by iPhone 7 early this week, Kringle demurred on the dollar figures and his role in the project's final selection, but did offer some insight into the organization's strategy:

"Even as we have grown into a conglomerate, we have always kept our roots as a workshop firmly in mind," he said. "We are dedicated to ho-ho-holistic growth. We have no more markets to conquer ... we just want to be optimally focused on serving as the catalyst for gift-giving, whatever the season."

Was he suggesting that personal generosity and general goodwill might move beyond the seasonal and become a year-round market?

Kringle let loose with a belly laugh: "Hey, you said it, not me."

Adam Bruns
Managing Editor of Site Selection magazine

Adam Bruns

Adam Bruns has served as managing editor of Site Selection magazine since February 2002. In the course of reporting hundreds of stories for Site Selection, Adam has visited companies and communities around the globe. A St. Louis native who grew up in the Kansas City suburbs, Adam is a 1986 alumnus of Knox College, and resided in Chicago; Midcoast Maine; Savannah, Georgia; and Lexington, Kentucky, before settling in the Greater Atlanta community of Peachtree Corners, where he lives with his wife and daughter.

   



comments powered by Disqus

The Site Selection Online Insider keeps a strong and steady finger on the fast-changing pulse of corporate real estate and economic development. This web exclusive content gets to the heart of the new projects and developments that everyone wants to know about, now. And telling those stories well is part of the Insider's commitment.


Site Selection online is a worldwide service of Conway, Inc. ©1983-2017, all rights reserved.
Data is from many sources and not warranted to be accurate or current.
For contact information visit our staff page or send general information queries to Cathie Wendt.
Send direct technical inquiries or comments to webmaster bounce@conway.com. View our Privacy Policy.
HOME | SITE SELECTION MAGAZINE ARCHIVES | SUBSCRIBE