Week of October 28, 2002
from Site Selection's exclusive New Plant database
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Pending project would create more than 3,000 jobs and cover 2.5-million sq. ft.
Savannah the Preferred Site for New
$750-million Plant from DaimlerChrysler
But even as the balloons were falling from the ceiling in Savannah, DaimlerChrysler spokesmen said, "Not so fast." For the Stuttgart, Germany-based automaker, due diligence is a way of life.
"Further planning regarding the NAFTA Van plant will from now on solely focus on the site near Savannah in Georgia, USA," wrote Marc Binder, spokesman for the company's commercial vehicle division in Stuttgart, when queried by Site Selection. "A final decision, whether, when and in which steps the project will be implemented, is not yet taken."
In addition, while the announcement by state and community officials indicated a construction start date of July 2003, DaimlerChrysler spokesmen said no firm timeline has been established. The methodical approach may test some people's patience, but earns more respect than exasperation.
"They're very professional and they're very thorough, so their due diligence doesn't really leave anything out, and that takes time, " says Rick Winger, president and CEO of the Savannah Economic Development Authority, noting that the announcement was not a contrived rush, but a natural event in the process. "Both South Carolina and Georgia have fought hard to win this, and have offered things that are normally offered in this type of competitive battle. I think they recognize that both these governors stepped up and made a lot of strong efforts. So it is a natural thing that they want to say something about it. What you have is a need to talk about it from their perspective that regrettably doesn't match the schedule of the company, which would like to take longer to do this.
"The company has been gracious enough to say, 'Savannah has been selected if we come,' but they of necessity have had to do that with a caveat," continues Winger. "There are some formalities, not significant ones, and an approval process at their company."
Acting As IfDespite the hint of uncertainty, a blend of celebration and preparation has engulfed this historic city at Georgia's southeastern extremity. While the initial pool of contenders included locations like Windsor, Ontario, and Jacksonville, Florida, the final battle came down to Pooler, near the port of Savannah, and Summerville, near the port of Charleston, S.C. Representatives of the South Carolina Dept. of Commerce were notified of the decision in a letter from Rolf Bartke, senior vice president of the DaimlerChrysler Van Division. The Palmetto State had offered $346 million in incentives, but South Carolina officials said that was no match for Georgia's package. Total incentives from state and local communities in Georgia only came to $325 million, but the key element was that the 1,560 acres (631 hectares) at the juncture of I-95 and I-16 was already owned by the state ... no ifs, ands or options.
"They had been here visiting not quite three years ago," says Winger. "He was a single scout. The project was quickly put on the back burner. Oddly enough, it had been code-named BlueBell then too."
The site search returned to the front burner for DaimlerChrysler in March 2002, focusing once again on what Winger calls a beautiful site on the Savannah River named Mulberry Grove.
"When they did come back with a full team this time, and we showed them that site again, they quickly indicated that the site was not acceptable, which surprised us because we thought it had all the attributes we thought would be perfect for them," says Winger. "But what it lacked was a sizeable amount of visibility from the Interstate. It touched on I-95, but not in any sort of grand way. So we were about to be eliminated, and we remembered a site, and asked if we could show that to them, even though we didn't have it under control at all. They did give us a chance to do that. So we assembled five pieces into one big property."
The maneuver was accomplished by optioning the parcels, then transferring those options to the Georgia Ports Authority, which exercised them "because they have the financial capacity to do that," says Winger. "We needed it to be under an authority." Funding for the land purchase came from the state legislature.
DaimlerChrysler's Commercial Vehicle division is the largest manufacturer of commercial vehicles in the world, headed by Dr. Eckhard Cordes. Division revenues topped 30 billion euros in 2000, but leveled out last year, with a significant dropoff in operating profit. The Freightliner truck division suffered big losses in 2001, but is aiming to reduce its dependency on large fleets. In materials distributed by the division in September, the largest swaths cut in its projected path to profitability are by the NAFTA market entry of the van business and the division's growing overall emphasis in the Asian market, which it predicts will account for fully half of worldwide sales by 2011. The German company's 2001 commercial van sales in the U.S. grabbed a 15-percent share of the market, trailing Ford and GM.
All For One and One For AllWhile R. K. Sehgal, the commissioner of the Georgia Department of Industry, Tourism and Trade, did not return phone calls seeking comment, the quality of the department's leadership in pursuing the project was evident in the identities and testimony of the team members the department assembled.
Lindsay Thomas, senior vice president, governmental relations, for AGL Resources, was an active team member not only from the natural gas perspective, but from having served the Savannah area as a U.S. congressman, not to mention serving as president of the Georgia Chamber of Commerce.
"The way you work these things is you work them as a team," says Thomas. "At this stage, nobody is in there saying we have a new technology for gas or electricity. The first thing is to see and to meet all the people, to understand all the people. Then when you get into the construction and design of the plant, it's just a matter of putting your cards on the table."
It was no accident that one secret to the state's winning hand this time around was the fundamental involvement of Southern Co., the utility giant that basically founded the idea of economic development in the state decades ago. Robin Spratlin, general manager of economic development for Georgia Power, a division of Southern Co., says that her company was involved in Bluebell on the first go-round in 2000, when site location firm Lockwood Greene solicited their involvement. So they were ready when the project came around again.
"John Malone was our senior project manager for the project, and our engineering group provided a lot of critical services to them in terms of things they could do in preparing the site documents," says Spratlin, whose firm's sister company Savannah Electric will be the supplier to the plant. "We have a graphic artist and civil engineers in that group, and they did a lot of site work to support the state's efforts. This was one of those projects where the state really had to take the lead at the commissioner's level. They did, and they did a good job."
For his part, Winger, a former executive with Wachovia Bank, has already seen the Savannah economy get a big lift from the warehouse/distribution sector, especially at the city's Crossroads industrial park near both the airport and the port. But inevitably, the city and its surrounding communities are facing a crossroads of their own, and the next step is for the area to diversify that economy into manufacturing and technology operations.
"We have been slow to develop compared to cities north and south of here," says Winger. "There was a time not too far in the past when Savannah, Charleston and Jacksonville were all the same size. So it's kind of surprising we have sat here undiscovered. But the port is a big draw. It's a natural for the distribution business. Why it took so long I'm not sure. We have a lot of projects we're working on right now that we'd like to see round out the type of businesses that are already here."
Fifty acres of the Crossroads park have been donated for the construction of a new facility for the area's educational ace in the hole: the Georgia Tech Regional Engineering Program. In addition, training efforts will be administered by Savannah Tech, through the state's Quick Start program, as well as receive backing from area universities like Savannah State, Armstrong State and Georgia Southern University, just up the road in Statesboro. Winger says companies are falling over each other to get near the GTREP facility, and the DaimlerChrysler project might also feature an on-site training facility.
Positive VibrationsMany of the players agree that even as the smoke clears from the state vs. state battle, the spoils may go to both combatants in the end.
"Absolutely," says Winger. "The county manager of Jasper County across the river, which is one of South Carolina's poorest counties as measured by jobs and wages, would have been happy either way. They'll benefit from this, no question about it, and so will counties west of here. This is going to ripple out for 50 miles and more, maybe a lot more."
"I think the great benefit will be that even smaller communities will now be looked at for supplier options," says Spratlin. "There could be some spillover to South Carolina. Georgia has benefited immensely with suppliers locating here because of BMW [in South Carolina] and Mercedes-Benz, Honda and Hyundai in Alabama. And I think people tend to forget that we've had Ford and GM for an awfully long time in Georgia. So we're a natural for those suppliers."
Spratlin notes that Georgia is just starting to welcome visits from companies looking to supply the Hyundai project in Hope Hull, Alabama, so there will be a similar time lag in this announcement's wake. But nevertheless, her company is preparing, and she's certain that the state's office in Munich, Germany, is pulling together its own list of German supplier firms, even though many will be U.S. companies as well.
And as more OEM assembly plants continue to dot the region, a point of critical mass may mean critical profits for a multitude of companies.
"The more of these plants that come to the Southeast," observes Winger, "I'm not sure some suppliers couldn't handle multiple plants from one location."
Lindsay Thomas says the Savannah area now faces a mixture of challenges that might take some of the edge off the exhilaration, but he knows that the area is ready, and confesses to having had a great feeling about the project from the outset.
"In politics, you have to be able to read people ... not out-figure them, but pick up nuances as to whether their thoughts are positive are negative. When I went down there for that few days, I came away feeling very positive."
Now the area's residents and officials wait for those good vibes - like a special dose of secret Savannah mojo - to work their way into the arithmetic and strategy of their newfound friends in Stuttgart.
©2002 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.