Energy and Space
the Hallmarks of Nebraska

Nebraska has seen an upsurge in the back office and financial services sector over the past few years, a trend that has only improved with the newfound worldwide awareness of operations dispersal. But it's the Corn Belt identity of the state that continues to drive some projects. Since a tax incentive for ethanol producers went into effect in January 2002, 24 different producers have applied for it, looking to add their multimillion-dollar facilities to the six current production facilities in the state.

Nebraska Average Retail Electricity Costs for 2000 for All Customers Compared with Other States Average Revenue Per Kilowatthour (Cents) Nebraska 5.31 South Dakota 6.32 Kansas 6.27 Missouri 6.02 Iowa 5.93 Colorado 5.88 Wyoming 4.34 Pennsylvania 7.82 California 9.66 National Average 6.78 Source: Energy Information Administration/ Electric Sales and Revenues 2000, January 2002

        "Nebraska is attractive to producers because of the incentives and because we have some of the infrastructure items needed to make producers successful," says Dennis Hall, manager of economic development for the Nebraska Public Power District. "We're the third largest producer of corn in the nation, we are second in the nation for cattle on feed, and we have some of the lowest electric rates in the nation."
        Projects by Cornhusker Energy and Nordic Biofuels are in the works. Hall says prospects are good for the industry because of ethanol's status as the only economically viable replacement for MBTE (methyl tertiary butyl ether). Competition is fierce, but he says Nebraska has an edge.
        "Other states might have a marketing incentive at the pump, but Nebraska is one of the few who gives the incentive to the producer directly," he says. "For those who qualify, that's like getting a financial head start."
        Another head start is available at the power meter, made possible by Nebraska's unique status in the U.S. as the only state where every utility is publicly owned.
        "That means the electric utilities are passing on electricity to customers basically at cost," says Hall. "One of the results of that is our rates are about 20 percent below the national average."
        The stalwart presence of Becton Dickinson (BD) Medical Systems in the state is only growing stronger, as the company expands on its $75-million investment in a pharmaceutical plant in Columbus with another $13-million investment in a 22,000-sq.-ft. (2,044-sq.-m.) facility that makes pre-filled syringes and other medical technology products. The company is also pursuing expansions in the small Nebraska towns of Holdredge and Broken Bow. By late 2003, BD will employ 1,400 people in Columbus alone.
        "For the BD Columbus East facility, managed by the pharmaceutical systems business, we have about 46 acres we purchased," says Dr. Terry Sprieck, BD Medical Systems operations manager. "The facility itself has a footprint of 210,000 sq. ft. [19,509 sq. m.] with another 30,000 [2,787 sq. m.] in a mezzanine. In the BD West facility, managed by the medical surgical businesses, that facility is approx. 450,000 sq. ft. [41,805 sq. m.]."
        All told, the various projects will involve $146 million invested, and up to 287 new jobs. Around $3 million in tax breaks was granted by the state.
        Sprieck was pleased with the progress on the East facility, which celebrated its grand opening in September, and with the sometimes complex exercise of integrating new equipment and processes with older equipment.
        "The facility was essentially complete from an infrastructure point of view in November of last year," he says. "There were a great deal of infrastructural systems like water for injection, HVAC and clean rooms that had to be brought on line and validated. In April and May [2002], we started new production from fully validated new process equipment to produce pre-fillable glass syringes sold to pharmaceutical companies. In September, we had our official grand opening, and throughout the summer we've been relocating the existing parts of the pharmaceutical systems business from the BD West plant to the new plant, simultaneously with installing new equipment and validating new capacity. This whole project was driven by capacity needs for our customers."
        Some of the space vacated at BD West will be used for some of the activities tied in with that facility's $13-million expansion. The total distance between the two plants is about 1.5 miles. And Sprieck says there is plenty green space for additional expansion.
        Nebraska's incentives program – with thresholds of $3 million in investment and 30 new jobs; $10 million in investment and 100 new jobs; or $20 million investment and no new jobs-- was boosted in 2001 by a measure that allows companies to use employee withholdings that normally go to the state to for employee benefit programs. As for the decision by the New Jersey company to grow out West, Sprieck says incentives were helpful, but only part of the picture.
        "It was one of half a dozen factors that led us to decide to invest in Nebraska and expand here," he says, citing preferential tax breaks and training grants as other keys. But the skills were already there.
        "It was a capacity expansion, so people were already in place doing the kinds of work that we need to do," he says. "If the expansion would have been put on a greenfield in North Carolina, it would have been very difficult to get the skill base started up as quickly as we needed to. The third factor was Nebraska, and BD in Nebraska, has had an excellent reputation with our corporate leaders in New Jersey as a 'can do' kind of facility. The overall work ethic of our managers and all of our associates in general is 'We'll get the job done.' So that had some weight. The fourth piece was that the pharmaceutical systems business is growing extremely strongly in the United States over the past seven years and is expecting to grow over the next five to six years. We have sister plants in Mexico City, Grenoble, France, and Fukoshima, Japan, all strong growth regions, particularly in Europe, and the Mexican plant supplies to Europe. So the customer base was saying, 'Hey, put something in the States.'"
        Asked if the ongoing study and tweaking of manufacturing regulations by the Food and Drug Administration has added a layer of difficulty in pursuing such projects, Sprieck says yes, but that's a good thing.
        "It adds a considerable amount of work and effort into any expansion," he says. "Frankly, in my opinion, that work is justified, because it's now done more often up front in the project rather than later on. Our company has always had the position of going to the FDA with our plans and seeking their buy-in very early. For the BD West project, those are quite sensitive facilities from an FDA point of view, and we approached them early on saying 'Here's our plans, here's what we're going to do and how we're going to do it, what do you think?' It took some time up front to get them to buy in. Then they come back six months after it's complete and do their audits, and they're much more on board."
        He says that the market also has been a tremendous factor in location decisions, but comes back to overriding traits of the Midwest and Plains that exist in both its environment and its people.
        "The Midwest offers great work ethic, reasonable tax bases, good energy and good water," he says. "Our process in pharmaceutical systems requires us to produce water for injection, which is water good enough to inject into your vein. You have to start with good raw material."