“‘T'” is for Texas,” goes the ancient country twanger.
But “T” is for a lot of other things, too – Tundra and prime-time truck turf, for example – in explaining Toyota’s decision to locate its 2,000-employee, US$800-million plant in San Antonio, Texas.
The assembly operation will annually churn out some 150,000 Toyota full-size Tundra pickups. And the Japanese automaker clearly wanted to position its sixth North American plant with ready access to Texas – significantly, the largest U.S. market for full-size pickups.
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The big Texas market, in fact, inspired Toyota’s initial inkling to begin building the Tundra in 1999 in Princeton, Ind., said Toyota President Fujio Cho. That inspiration struck, he recalled, when Toyota officials were attending a Dallas Cowboys’ game in the 1990s and looked out over the stadium parking lot.
“Spread before them were thousands upon thousands of full-sized pickup trucks, row after shining row,” Cho told a San Antonio crowd. “Our planners realized then that American pickups were not solely commercial vehicles, but widely used by everyone for regular transportation. The result was the Toyota Tundra.”
City Initially a Long Shot
Texas’s massive market alone, though, didn’t make the Lone Star State an automatic lock for the Tundra project. Sites in Alabama, Arkansas, Mississippi and Tennessee were also key contenders for the plant, for months the subject of fervid speculation.
Late last year, San Antonio was “only a long shot” in the location hunt, said Toyota Motor Manufacturing North America Senior Vice President Dennis Cuneo. Instead, a site in West Memphis (Marion), Ark., was getting increasingly strong consideration. Toyota’s interest in San Antonio, however, was rekindled after a pivotal September meeting with Republican Gov. Rick Perry.
“That meeting really energized the Texas bid,” the Toyota executive said. “We were very impressed with what we thought would be the available work force and the business-friendly nature of this community and this state.”
Toyota’s re-energized interest was so strong, in fact, that it looked at a dozen rural locations before coming across lucky No. 13: a 2,000-acre (800-hectare) greenfield site on San Antonio’s southern edge.
Still, the site suffered from a major shortcoming, one revolving around another “T” word – trains. One of Toyota’s plant-site requirements is having at least two rail lines in place., in order to drive costs down. At the time, only Union Pacific had existing rail access to Toyota’s favored site. But the railroad agreed to grant rail access to the property to competitor Burlington Northern Santa Fe.
Other Incentive Offers ‘Much Richer’
Even then, the site lacked a crucial element in being up to logistical snuff: a seven-mile (11.2-kilometer) rail spur.
Funding that spur was part of the state’s $133-million incentive package. The Texas Legislature in mid-March authorized the Texas Department of Economic Development to spend $15 million from the state’s Smart Jobs Program to build the rail infrastructure. The other key element of the state’s incentive package, Cuneo said, was the $27 million in state training funding.
Other parts of the state/city/county incentives for the project include: $47 million in phased-in taxes and waived fees; $15 million for site utility infrastructure; $14 million for land; $10 million for site preparation; and $3 million for a city-provided job-training center. In the end, though, it was labor, market and site considerations – not incentives – that made Texas fit Toyota’s needs to a “T.”
“Believe me, the other states were competitive,” Cuneo said. “They had good sites. Their incentive packages were much richer.”
Toyota, in fact, left a large chunk of incentives sitting untouched on the negotiating table. The automaker could’ve received as much as $34 million in school and hospital-district tax abatements. Toyota declined, saying it wanted instead to be a contributor to the local community.
“Toyota has long been known as a good corporate citizen, as well as an industry leader,” said Perry, the man whose enterprising, late-in-the-game meeting ultimately led the automaker to Texas.
It might not be the first location that would come to mind for a worldwide distribution center. But for Des Moines-based Firestone Agricultural Tire Division, the outer limits of Polk County, near Ankeny, were just right for a US$20-million, 850,000-sq.-ft. (78,965-sq.-m.) center for replacement tires, expected to be complete in 2004.
Key to the deal: $4.5 million in tax abatements over 10 years from the Iowa Department of Economic Development’s New Jobs and Income Program. Even with that break, the company will still pay around $300,000 in annual property taxes. From the 70-acre (28-hectare) site, tires will ship to customers in the U.S., Canada and 70 other countries. The project is being built by Panattoni Development, with Firestone signing a 15-year lease. Best of all, the company will save around $1 million a year by consolidating facilities.
“When I came here eight months ago, we were utilizing one warehouse we owned and four public warehouses outside this facility to handle the tires for our replacement market,” says Clair McCloy, division controller for Firestone Agricultural Tire Division, calling it “an extremely inefficient operation.”
So the stage was set for consolidation, as long as it made fiscal sense. Negotiations with Polk Co. officials yielded the tax breaks, in the form of a new economic development area located near an upcoming new Interstate exit.
“The area can be a good industrial base in the future, but we are more or less the guinea pig,” says McCloy, adding that the tax base will swell immediately from the project, given the relatively meager tax take from the former farmland.
Although the search began with a 10-mile (16-Km.) radius, the chosen site is a mere four miles from Firestone’s manufacturing plant.
Ankeny is already home to major operations for John Deere, which is coming off a fiscal first quarter that saw it beat forecasts based on strength derived from strong sales in construction vehicles, riding lawn mowers and other non-ag machinery.
Asked how the middle of Iowa becomes an international shipping point, McCloy says the division’s largest customer base is still in the U.S. and Canada, with the folks at Deere always in mind.
“We work very closely with John Deere as a major supplier,” he says. “We have nothing firm planned, but we may have discussions about a mounting facility out of that warehouse for their tires. There was always a possibility we could have put something much closer to where they are, but the driving force was it needed to be reasonably close to our plant.”
Amherst, N.Y., touted by many as a Rust Belt boomtown, has outperformed 341 other U.S. municipalities to claim the title of “safest city in America” from Morgan Quitno Press. The rankings looked at national crime rates in six different crime categories, then held cities against that standard. Of the Top 25 cities in the rankings, California boasted eight, while New York had five and Michigan four.
Amherst appears more than safe for corporate invesment as well. The metro boasts 20 industrial and office parks. The number of projects has steadily risen since the mid-1990s, including a recent $3-million investment from French firm Saint-Gobain Advanced Ceramics and a $2.4-million headquarters investment by software company SofTrek. Laure Manuszewski, director of administrative services for the Amherst Industrial Development Agency, says that existing business is the city’s mainstay.
“We started with several of these companies when they first located here,” she says, “and we’re lucky enough to keep them and watch them grow in our community.”
1,400 Jobs to Greater Vancouver
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In February, Omaha, Neb.-based West Corp. and San Jose, Calif.-based eBay both chose the Vancouver, B.C., area to locate major customer service operations.
West, a major CRM provider, will create up to 800 jobs at its 51,000-sq.-ft. (4,738-sq.-m.) facility in Saanich’s Gateway Park. The company operates 42 centers in North America and India.
“Every detail of this contact center’s design is aimed at creating a positive environment for our employees,” says Mark Lavin, president of West’s Operator Teleservices division. “We are deeply impressed by the quality of the Victoria work force and feel the city is a great choice that will allow West to continue to provide excellent service for our clients.”
For its part, eBay will occupy 70,000 sq. ft. (6,503 sq. m.) at the Willingdon Park office complex in Burnaby, where it expects to employ up to 600 people. In addition to the factors cited above, eBay officials cited the relative proximity to their San Jose headquarters and their customer support center in Salt Lake City. The center will be eBay’s fourth customer support center, with others in Dreilinden, Germany, and, ironically, West Corp.’s hometown of Omaha.
Greater Vancouver is home to some 2 million people, or half the population of British Columbia. Both companies expected to begin hiring immediately, with operations to commence in April.
