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From Site Selection magazine, May 2011

Coast to Coast HQ Watch

Skype’s new HQ in Palo Alto is bringing together operations from San Jose and Brisbane, Calif.

lot of moves are in the works by corporate headquarters across the U.S., for reasons ranging from cost containment to Asia attainment.

The latter is one of the primary motivators for Fairchild Semiconductor's move of its HQ from South Portland, Maine, back to San Jose, Calif., returning to the Silicon Valley roots that cultivated the company in its original location of Mountain View in the 1950s. Fairchild CEO Mark Thompson told Bloomberg that being close to the pool of talent in Silicon Valley was a big reason for moving back. But the company also wanted its leaders literally nearer to operations and customers in Asia. The company's fabrication plant and corporate offices in Maine, which employ 800, will not be affected.

Fairchild spokesperson Patti Olson says the move further aligns the company with markets and customers in such countries as India and Vietnam. "It also places Fairchild in close proximity to some of our major customers — also located in Silicon Valley," she says.

According to the company's most recent 10-K, the only other corporate offices it maintains are in Singapore. Of the 19 major manufacturing, warehouse, design and office locations it maintained around the world as of December 26, 2010, 11 were in Asia, including three in South Korea, two in China, and one each in Cebu, Philippines; Hong Kong; Penang, Malaysia; Taipei, Taiwan; and Tokyo. The firm had been based in South Portland since its spinoff from National Semiconductor in 1997.

The region also recently saw a 97,000-sq.-ft. (9,011-sq.-m.) lease and relocation at Stanford Research Park in Palo Alto by communications software firm Skype, which is consolidating from locations in Brisbane, Calif., and on eBay's San Jose campus. CresaPartners managed the design, construction, and furniture selection process to support a more creative and collaborative environment. Additional services included budget and schedule development, building activation, and build-out, and now phase two is under way.

"What sets CresaPartners apart is their commitment and their energy to deal effectively with time-critical issues," said Alex Bruce, Skype's global head of real estate and facilities, in a press release. "Our North American headquarters project in Palo Alto was no exception, presenting distinct challenges with an aggressive schedule, a tight budget, and complex coordination needs."

Sweet Spots Down South

Atlanta continues to be a headquarters haven. On April 13, Health Lean Logistics, a healthcare logistics and distribution company, picked the city for its U.S. headquarters and logistics base. A division of Spain's Gesaworld Group, the company will create 100 jobs, with the potential for a significant amount of additional indirect jobs through subcontractors and various service providers. The firm has developed a unique system to manage the consumption and supply of materials in healthcare facilities, and save those facilities' proprietors money in the process. In addition to clients in Spain and Portugal, it has a significant customer base in Latin America.

"Atlanta is a leading international cluster of both applied information technology to the healthcare sector and supply chain logistics, and our arrival is one more proof as to how these living clusters attract best practices players regardless of geographical origin," said Dr. Albert Tarrats, CEO of Health Lean Logistics. "The advantages gained by having direct flight access to our other international locations in Central and South America, as well as a number of other synergistic variables, separated Georgia from the rest of our choices."

HLL plans to partner with Georgia Tech's Supply Chain and Logistics Institute to share mutual expertise, and to collaborate on the institution's logistics projects in Panama and Costa Rica.

On the same April day that HLL came to town, the Atlanta Development Authority (ADA) announced it was meeting its commitment to aluminum rolled products and can recycling firm Novelis Inc. by providing a $150,000 relocation grant from its Economic Opportunity Fund (EOF). The EOF is a deal-closing fund, created in 2006, that ADA manages on behalf of the City of Atlanta to entice significant business investment and job creation projects.

With the EOF offer in place, Novelis Inc. had announced in February 2010 that it would expand its Atlanta headquarters and consolidate operations from Cleveland, Ohio, adding 135 new jobs over two years to their existing 90 employee headcount.

Novelis has already exceeded its commitment by adding 150 new jobs and retaining 90. In addition, Novelis has invested nearly $14 million in 100,000 sq. ft. (9,290 sq. m.) of leased space in the Two Alliance building located on Lenox Road in Atlanta's Buckhead community.

In Florida, marine and aerospace engine component maker Chromalloy is doubling down. First, in early March it chose to invest $35 million in an industrial casting center and ceramic core manufacturing facility in Tampa, choosing to expand at its existing complex rather than build new in Texas or Nevada. In late March, the company, part of the Carlyle Group, announced it was moving its corporate HQ from Orangeburg, N.Y., to Palm Beach Gardens, bringing 70 jobs that pay an average salary of $88,000. Incentives totaling nearly $1 million from the city, Palm Beach County and the State of Florida helped the company pick the location over offices in eight other states.

Finally, it takes a mover to relocate. But sometimes those movers have to relocate themselves to best serve their customers. Such is the case with BuildMyMove, the country's first provider of instant, binding online moving quotes for full service interstate moves, which in February announced plans to relocate its U.S. headquarters from Akron, Pa., to Overland Park, Kan., creating up to 50 new jobs in the state by the end of 2011 and an estimated 100-plus jobs over a five-year period. A cash infusion from Five Elms Capital and tax credits from the Kansas Department of Commerce helped to facilitate the relocation.

"We believe the Kansas City area is the best location to grow a business given the low cost of living, cultural opportunities and highly educated population," said Rich Cray, COO for BuildMyMove. "The city ranks first in the United States for engineering talent on a per capita basis."

According to a release from the state commerce department, Fred Coulson, managing partner of Five Elms Capital, played a significant role in the company's relocation to Kansas. "Kansas City has been a leader in transportation for decades due to its central location and entrepreneurial culture," said Coulson. "We are excited to partner with BuildMyMove as it joins the next generation of transportation innovators in the area."

Roads to Somewhere

The completion of the Pacific Coastline Corridor should help logistics from locations such as Tijuana, home of ProLogis’ Tijuana Industrial Center, above. Previously, says a recent ProLogis report, “the cities of Tijuana and Mexicali along with the entire peninsula of Baja California were largely detached from the interstate fabric of the Mexican economy.”

etaliatory tariffs on $2.5 billion worth of U.S. manufactured goods may soon be cut in half and then eliminated altogether, thanks to the U.S. Dept. of Transportation's proposal for re-opening cross-border trucking with Mexico, published in the Federal Register in mid-April. The tariffs were put in place in response to the U.S. government's failure to certify Mexican truckers for travel on U.S. highways, per NAFTA.

"For two years American manufacturers of a wide range of products have been paying 15 to 25 percent more than our competitors in Mexico, losing market share to manufacturers in China, Brazil, Canada, Japan, and other countries," blogged National Association of Manufacturers (NAM) Director of International Trade Policy Doug Goudie, noting that some U.S. manufacturers may never recover that market share. "We urge the Obama Administration to sign the agreement after the 30-day comment period and move expeditiously to certify the Mexican carriers, and end the tariff retaliation."

In the meantime, those Mexican truckers are traveling some better highways at home. In late February, the ProLogis Research Group released a report entitled "Mexico's Evolving Network of Modern Interstate Roadways" that outlines the country's expanded and modernized road system since launching the National Infrastructure Program in 2007. A total of US$41 billion from the $230-billion program is going toward transport infrastructure. ProLogis says the road building is on track for its scheduled completion by 2012.

When the projects are completed, Mexico will then have two new, modern north-south transportation corridors to complement the existing NAFTA Highway, along with two new east-west corridors. Among the projects:

  • The 772-mile (1,242-km.) Mazatlán-Matamoros Corridor will serve as the Port of Mazatlán's gateway to such cities as Durango, Torreón, Saltillo, Monterrey, Reynosa, and Matamoros. About 70 percent complete, it will feature the Baluarte Bridge, the longest and highest cable-stayed bridge in Latin America, which will save travelers three hours in their travels between Mazatlán and Durango.
  • The Manzanillo-Tampico Corridor will run 612 miles (985 km.) from Port Manzanillo on the Pacific Coast to Tampico on the Gulf Coast, "weaving through the cities of Guadalajara, Aguascalientes, and San Luis Potosí," and shaving more than three hours off the coast-to-coast drive. The project also includes modernizing the short roadway along the Pacific Coast, which connects Manzanillo to the growing port city of Lázaro Cárdenas. The new work includes two loop highways around Guadalajara and San Luis Potosí.
  • The Pacific Coastline Corridor: "Now nearly complete, this major north-south corridor extends about 3,075 km. [1,911 miles] and, in time, should integrate Mexico's northwest and western cities and regions into the fabric of the national economy."
  • The Gulf Coastline Corridor will extend 153 miles (246 km.) and connect the cities of Veracruz, Tampico and Monterrey, with a branch road to Matamoros. It will greatly improve connectivity for the oil and gas industry.
  • Perhaps of most interest to manufacturers scouting Mexico, a new extension of the NAFTA Highway is on the way. "At present, any freight traffic moving along the NAFTA Highway must travel through Mexico City on its way to or from the Port of Lázaro Cárdenas," explains ProLogis. "When completed, this new extension of the NAFTA Highway (known as the Atlacomulco-Piedras Negras) will permit freight traffic to be routed to or from the port without having to go through Mexico City. In particular, the up-and-coming cities of Querétaro, San Luis Potosí, and Aguascalientes will then have direct access to the Port of Lázaro Cárdenas as well as the Port of Manzanillo."

Out of the Deep Freeze

Genesis Casket Co. will make 30,000 caskets a year at this complex formerly belonging to SMC Corp., a maker of pneumatic automation products.

vansville, Ind., counted itself as "The Refrigerator Capital of the World" for much of the past century, especially after Whirlpool came to town and bought out everybody in 1956. That changed in August 2009, when Whirlpool announced its main plant in Evansville would close, costing the community 1,100 jobs as refrigerator production moved to Mexico.

One bright spot was the retention of approximately 300 jobs at the company's Refrigeration Product Design Center (PDC). Now another bright spot has emerged, as local developer The Kunkel Group in April finalized the purchase of 1.2 million sq. ft. (111,480 sq. m.) at the plant, leaving 500,000 sq. ft. (46,450 sq. m.) under Whirlpool's ownership. Whirlpool has also entered into a lease agreement with The Kunkel Group for additional space for the PDC.Chuck Harper, vice president of The Kunkel Group Realty, said his team has been in talks with several new and existing businesses about locating on the property.

In Indianapolis, reuse is also the order of the day, as Genesis Casket Co. announced in February its plans to open a manufacturing and distribution operation at a property formerly belonging to SMC Corp., and hire 300 employees by 2014. Cassidy Turley/Indianapolis negotiated the sale.

Genesis and its partner, Gestamp North America, Inc., based in Troy, Mich., will invest $16.5 million in equipment to manufacture and distribute metal caskets throughout North America. Genesis expects to produce 30,000 caskets in its first full year of operation. The company will begin hiring workers at an average wage of $26 per hour over the next few months. The Indy site won out over options in Michigan and Kentucky.

"Indianapolis is central in proximity to many major markets which make it a preferred location from an operations and logistics perspective," said William Anthony (Tony) Colson, Genesis CEO, noting that Indianapolis was also his hometown.

— Adam Bruns

Chinese Connections Multiply

China Airlines is making inroads for its cargo needs at a building near LAX on the West Coast (above). Meanwhile, a new measure under consideration by the Missouri Senate would boost the Midwest China Hub Commission’s efforts to draw Chinese cargo to Lambert-St. Louis International Airport.

ith the help of Newmark Knight Frank, Avila 8, LLC, in April disposed of a 57,000-sq.-ft. (5,295-sq.-m.), 22-dock warehouse two blocks from LAX Airport. "China Airlines Limited acquired the facility to handle an increase in cargo shipments," said Newmark Knight Frank's Ron Burkhardt.

Not far away, in Riverside, Calif., self-powered RV maker MVP RV expects to see a $310-million injection of capital from Winston Battery Ltd., based in Shenzhen, China, in order to promote motor home exports to China.

"Additionally, Winston Battery Limited will provide capital for the development of all-electric recreation vehicles and charging systems," explained a fact sheet on U.S.-China commercial relations released by the White House in January prior to the visit of Chinese President Hu Jintao. "The goal is to export over 10,000 Class A (self-powered, bus-sized) motor homes and 20,000 Class C (self-powered, van-sized) motor homes to China in the next 3-4 years. MPV estimates the value of these exports to be over $5 billion."

In April the White House nominated U.S. Secretary of Commerce Gary Locke to be the new ambassador to China.

In Missouri, meanwhile, the Missouri Senate's jobs, economic development and local government committee approved the Aerotropolis Trade Incentive and Tax Credit Act, a $480-million, 15-year program designed to entice international cargo shippers to use Lambert-St. Louis International Airport and to build distribution facilities in a zone extending 50 miles (81 km.) around it.

The measure supports the ongoing efforts of the St. Louis group called the Midwest China Hub Commission.

As described in a blog from SNR Denton senior managing director Brian Grace, the former director of public policy and legislative affairs for the Missouri Department of Economic Development who helped spearhead passage of the state's successful Quality Jobs incentives program, up to $60 million in tax credits would be provided based on weight of international shipments out of Lambert.

"The bill would allot up to $300 million in tax credits to build the cargo facilities, covering costs such as demolition, development and construction, as well as real estate and lawyers' fees," wrote Grace. "The remainder of the subsidy — $120 million in tax credits — would cover 75 percent of the interest costs for building the warehouses, so long as the interest rate didn't exceed 7 percent a year. Tax credits for gateway zone facilities could be issued until 2026. The recipients also would be exempt from paying income and corporate franchise taxes and could keep half of their employee withholding taxes — money that would be on top of the tax credits."

— Adam Bruns

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