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Propels Plants

Oregon helps PepsiCo get sports drink plant deal done quickly.

Officials from PepsiCo, Albany, Linn County and the State of Oregon celebrate the groundbreaking for the company's $250- million plant, which will manufacture Gatorade and Propel.


atorade and Propel, two popular sports drinks, help athletes recover quickly and then move on to the next workout.
   In Oregon, government officials adopted a similar, fast- moving approach. They propelled PepsiCo through the complex negotiations of a large deal so that the company's new factory can open as soon as possible.
   By fall of 2008, the US$250- million, 1.8 million- sq.- ft. (167,220- sq.- m.) plant in Albany should be open and churning out bottles of Gatorade and Propel for years to come.
   "The government officials in Oregon were very helpful," says Russell Burton, corporate manager for PepsiCo Global Real Estate in Plano, Texas. "The state was very supportive in guiding us to the right communities. They smoothed out the permitting process. Albany and Linn County were very helpful in putting the project together. It was definitely a collaborative process."
   The story of how the 500- job plant deal came to be is about as unique as the tale of how Gatorade became the drink of choice for tired athletes in Gainesville, Fla.
   Researchers at the University of Florida first developed the orange concoction in the 1960s as a way to re- hydrate the college's worn- out football players at halftime. Playing in conditions so hot and humid that their stadium is now called "The Swamp," the Florida Gators seemed to take on new life after filling their bodies with the cool liquid – and the Gatorade success story was born.
   The change in momentum was not quite as dramatic in Oregon, but closing the deal on the PepsiCo project required just as much teamwork and perseverance.
   The Governor's Economic Revitalization Team and Oregon Economic and Community Development Department worked with the city of Albany and local landowners toward site certification after PepsiCo first expressed interest in the site. To certify industrial lands through the Governor's Industrial Lands Certification program, the state government must work with the property owners, local Realtors, municipalities and other state agencies to compile a comprehensive site certification package.
   Since this package represents material that a prospective company normally would have to acquire on its own, the data report expedites the entire site selection process and can shorten a project's timeline dramatically.
   "Business moves fast, and to stay competitive state government must move at the speed of business," Oregon Gov. Ted Kulongoski said after signing the deal with PepsiCo on Oct. 26. "Our certification program is delivering results for Oregon and a healthy business climate for our state."
   Burton says the deal was the culmination of "an extensive due- diligence process that looked at a wide variety of factors – virtually every financial factor we can think of: labor, taxes, incentives, transportation and others."
   PepsiCo considered many locations, including sites in other Western U.S. states, says Burton, but the firm's "elaborate financial analysis" tipped the scales in favor of the pre- certified site in Linn County, Ore.
   The pre- approved site was key, he notes.
   "For a consumer products company like ourselves, we have to take a very close look at land availability, zoning and the availability of key infrastructure like roads, rail, gas, water and electricity," Burton says. "Incentives are always part of the financial analysis, as is the tax structure. But incentives are never the driver of the decision."
   The biggest hurdle for this project was overcoming a swamp of another kind.
   "The Albany location is challenging from a permitting standpoint because there are extensive wetlands," Burton says. "We are going through a rather lengthy design and permitting process, but we will still be able to break ground by the summer of 2007 and open in the fall of 2008."
   Burton says PepsiCo plans to exceed normal environmental requirements and apply for LEED Silver certification for the Albany plant. "The entrance to the plant in Albany will look significantly different because of the wetlands there," he adds. "We will preserve about 40 acres [16 hectares] at the north end of the site, which will be converted into a wetlands area with a natural stream running through it. The entrance will look more like a park than an industrial site."
   One thing Burton didn't worry about was the labor pool. Albany may have only 45,000 people, but the workers are well qualified, he says. "The Oregon work force is highly educated and in many cases under- employed. People like living in Oregon. It is a beautiful place. People like to live here regardless of their job. So we will be able to select many qualified employees."
   The state will assist with the hiring process too, as Oregon will provide extensive screening of all job applicants for the new plant.
   Jill Miles, national business development executive for the Oregon Economic and Community Development Department, says the PepsiCo plant is just the tip of the iceberg. "We are busier now than we have been at any time in the last two years," she says. "We are actually swamped right now. We have had some great announcements."
   Among the largest in recent months are a $61- million plant for Murphy Engineered Wood Products in Sutherlin and a $40- million plant for Amy's Kitchen in White City.
   Murphy will make wood products at its 225,000- sq.- ft. (20,902- sq.- m.) plant and create 90 jobs. Amy's Kitchen will cook up frozen pizzas at its 176,000- sq.- ft. (16,350- sq.- m.) factory and employ 400.
   "This is exactly what we want in Oregon," Gov. Kulongoski said as he celebrated the grand opening of the Amy's plant on Oct. 24. "We've attracted wonderful new companies to Oregon, and they've brought thousands of new jobs and major investments to our state – companies like Amy's Kitchen, Lowe's, Royal Caribbean, Yahoo, Wachovia, Google, MathStar and Genentech. And I pledge to you today that this is just the beginning."

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