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Week of March 10, 2003 Blockbuster Deal from Site Selection's exclusive New Plant database |
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Michelin Investing
by JACK LYNE, Site Selection Executive Editor of Interactive Publishing
ARDMORE, Okla. – Making bigger tires for Michelin (www.michelin.com) means a bigger investment - specifically, US$144 million's worth - in the company's Ardmore, Okla., (www.ardmore.org) plant.
$154M More in Southern Oklahoma Tire Plant "Increasingly, automakers and the public are demanding larger tires, more high-performance tires and more SUV tires," Pete Selleck, chief operating officer of Michelin Americas Small Tires, said in announcing the huge investment in increasing capacity at the south Oklahoma plant. "The investments we are planning will position us to meet those demands." Michelin North America actually had already committed to investment aplenty in the Ardmore plant, which heretofore has focused on manufacturing radial passenger and light truck tires. The North American arm of the Clermont-Ferrand, France-based company had earlier announced that it would invest $56 million in increasing production capacity in Ardmore, some 99 miles (158 kilometers) south of Oklahoma City. Michelin, though, decided to ratchet total investment in new capacity at Ardmore up to $200 million in light of fast-growing North American market demand for larger tires. Ardmore's landing the $144 million in added investment, though, wasn't a foregone conclusion, according to Gary Scheide, manager of the Michelin plant. "We knew we were competing for investment dollars against locations all over the world," Scheide said at the expansion announcement at the Ardmore plant. "Some of these locales offered incentives that seemed too good to pass up - no taxes, extremely low wages or other incentives that simply cannot be matched." Michelin Gets $25 Million from New Ardmore, according to Scheide, got the nod, "because of the work of the entire Ardmore plant, the work of [Ardmore Development Authority President] Wes Stucky and the leadership of our elected officials." "This project is an example of what happens when the community supports a company, and that company and the ADA have a true partnership," said Stucky. But incentives, Michelin officials said, were a major factor in the additional $156 million investment going to the plant in Oklahoma, the United States' No. 1 tire manufacturing state. Michelin is taking advantage of a bill passed last May by Oklahoma lawmakers that provides cash funding from bonds to tire manufacturers that make major investments in the state. Taxes from the companies that receive the bonds indirectly repay the bond-funding outlays. As a result of the new legislation passed in 2002, Michelin will receive some $25 million in cash this year, state officials said. ADA Will Build Addition, "Over the years, we have worked diligently to solidify the future of this plant," Stucky said at the project announcement. "Sometimes the activities in support of the plant were controversial, but we never wavered from the goal of making this the most important plant in the Michelin family and thus assuring its future and the future jobs for our citizens. Today, those efforts were rewarded, and our dreams were realized."
Spanning 1.5 million sq. ft. (135,000 sq. m.) and employing 1,841 workers, Michelin's plant would have a major economic impact in any city, but particularly in one the size of Ardmore. The city has a population of some 24,000 residents. The multimillion-dollar expansion, however, won't appreciably add to the plant's employee roster. The project will add about 50 jobs, said Michelin spokeswoman Nancy Banks, who described the expansion as "one that's aimed at keeping us competitive, rather than at adding jobs." Plant Almost Shut Down in 1990, Built in 1969 by Uniroyal Goodrich, the production facility was on the verge of shuttering operations in 1990 when Michelin stepped in to buy the building. Then, in May of 1995, a tornado destroyed the plant. Michelin decided to spend $45 million in rebuilding the facility. Almost miraculously, the company got the plant back online in only two months. The expansion announcement marked Gov. Brad Henry's (D) first visit to the city that's home to the oft-rejuvenated plant since he assumed office on Jan. 15. "This is just one of many, many visits for me [to Ardmore]," Henry said. "This $200 million investment didn't just happen. Ardmore and Oklahoma competed for this investment with a number of Michelin plants worldwide. Oklahoma makes more tires than any other state in the nation. We've got world-class people making world-class tires. What's good for Ardmore is good for Oklahoma." The state's new incentive program is also turning out to be good for other Oklahoma tire-makers. Goodyear Tire and Rubber, for example, will receive some $36 million from the state this year, according to development officials. The Ohio-based tire-maker last year began a $250-million expansion of its 2,300-employee plant in Lawton, Okla. Goodyear's expansion will add about 100 new workers at its Oklahoma plant. 
"Oklahoma actually provides compensation right up front for given portions of the investment," said Goodyear Vice President John Loulan. "As you reach certain thresholds, they'll literally cut a check to help support the investment, which is considerably different from what states historically have done." (For more on Goodyear's strategy, see "Good Year for the Capital," from the January Site Selection's Plains States Regional Review, "Open Spaces.") ©2003 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.
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