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Week of May 26, 2003 Blockbuster Deal from Site Selection's exclusive New Plant database |
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Mercedes' Georgia Plant –
by RON STARNER, Director of Publications, Site Selection and Conway Data, Inc.
Sprinting to the Finish
Just last week, company executives still refused to confirm or deny that the much-anticipated factory would be built. All they would say is that, if it is built, it will be built in Georgia. "There are no real updates. We continue to look at the business case," said Trevor Hall, spokesman for DaimlerChrysler AG. "There is still no decision whether or not we will build the plant. If we do build it, it will be in Pooler. We continue to look at the market as a whole for commercial vehicles, and we'll make a decision in the course of this year. We're still weighing it, and still investigating it." Officials close to the project, however, told Site Selection that all signs point to a definitive vote to build the plant, with a timetable in place to begin construction in October. State Investment Already Tops $53 Million In fact, if one were to look at the site at the northeast quadrant of Interstate 16 and Interstate 95 in southeast Georgia, one would swear that construction had begun.In a manner of speaking, it has, said project manager Jim Ewing of the Georgia Department of Industry, Trade and Tourism (GDITT at http://gditt.georgia.gov). Addressing the 2003 Georgia Economic Development Association Spring Workshop last week in Young Harris, Ewing said the state has invested more than $53 million into the project, including $23 million to purchase the 1,560 acres (632 hectares) on which the 2.6 million-sq.-ft. (241,540-sq.-m.) plant would be built. "The timeline is that construction of the plant is set to begin in October 2003," said Ewing. "We expect the board of DaimlerChrysler to vote to do that on or before July 9." Ewing also said that Georgia has a strong advocate inside the company: Dr. Rolf Bartke, senior vice president of DaimlerChrysler AG and head of the Mercedes-Benz Vans Business Unit. Bartke has been a backer of the Georgia project from day one, said Ewing, and has made numerous site visits to meet with Georgia officials and his design-engineering team, KohlBecker (www.kohlbecker.de/english). Officials: No Impact from Canadian Cancellation Some in Georgia expressed concern last week after Chrysler canceled plans to build a $1.5-billion factory in Windsor, Ontario. But company officials quickly said the Canadian project had no impact on planned expansions in Alabama and Georgia.Buzz Hargrove, president of the Canadian Auto Workers, lamented the loss of Canadian jobs to America. "I remind the media and Canadian people we lost the Sprinter to Georgia, whose economy is one-third of Ontario's, but they put dollars on the table," Hargrove said. "They understood the importance of the industry, and they went out and got it. One of my concerns is you'll see another announcement that this vehicle (a planned pickup truck) or one similar to it will end up in the southern U.S. We fiddle and fool around and publicly denounce the idea of supporting investment in our country, then ask ourselves why we're not getting these decisions." One reason Canada may be losing automotive jobs to the U.S. has to do with incentives. To land the Sprinter van project, Georgia opened the bank. The state's total incentives package came to $295 million, or about $67,000 per job. That's still a far cry from the incentives package offered by Alabama to Mercedes-Benz to build its passenger-vehicle plant in Vance, Ala. To land that project, Alabama offered $168,000 per job. Charlie Gatlin, deputy commissioner of GDITT, shared the figures on what it cost Georgia to land the Sprinter plant: $85 million toward land and facilities; $65 million on infrastructure such as roads, water, sewer and rail; $35 million for work-force development; and $110 million in other financial assistance such as tax breaks and special legislative relief. Close Calls Have Earmarked Georgia's Efforts A critical deal component was securing legislative approval for the Enhanced Job Tax Credit, which pays qualifying employers up to $5,250 per job. An attorney for Mercedes told Georgia: "If you cannot pass this legislation, this is a deal-breaker."Georgia passed the bill, and the project was saved. "This was a very competitive project. And remember - these incentives were agreed to by former Georgia Gov. Roy Barnes (D)," said Gatlin. "After the elections last November, we had an obligation to Mercedes to sell this entire package to Gov. Sonny Perdue (R) and deliver this deal to the company. As it turned out, the legislation approving the final deal did not pass until midnight on the final day of the Georgia legislative session." That was just one close call among many throughout the 292 days it took to secure Project Blue Bell, as it was code named, said Gatlin. At one point in early 2002, "we had 72 hours to either win or lose the project," said Peggy Jolley, senior vice president of the Savannah Economic Development Authority (www.seda.org). "We had one mega-site, but we had five property owners, unknown land costs, unknown environmental issues and unknown historical significance." Researchers discovered that Union Gen. William Tecumseh Sherman had an encampment on the site during the Civil War. "Thank goodness it was Sherman and not Lee," said Jolley. The Georgia Ports Authority (www.gaports.com) stepped in and offered to buy the land for the state, with the understanding that the entire 1,560 acres (624 hectares) would be deeded over to Mercedes if the company selected the location. Dueling Presidents: Bush vs. Carter When Georgia officials learned later that Florida Gov. Jeb Bush (R) hosted a delegation of Mercedes executives from Germany and took them to meet his brother, President George W. Bush, in Washington, the Peach State had to respond. It did so by entertaining the delegation at the Governor's Mansion in Atlanta and inviting them to a private meeting with former President Jimmy Carter.When the dust settled last Oct. 17, Georgia beat out rival bids from Charleston, S.C., and Jacksonville, Fla., to win the 3,300 jobs and $155-million annual payroll Mercedes could bring to the Savannah market. The total economic impact of the plant is estimated to be $2.8 billion a year, with total direct and indirect employment topping 14,300, according to state economists. Everyone associated with the project agreed that Georgia's Quick Start job-training program was key to landing the deal. Jackie Rohosky, assistant commissioner of economic development programs for Quick Start, said, "This was the biggest project we've ever done." Rohosky and her team created a new technical degree program - called the Certified Manufacturing Specialist (CMS) program - that would deliver critical job-skill training for Mercedes through Georgia's network of technical schools. 
In the end, said Gatlin, Georgia proved that it was willing to do what other states would not. "We bought the land. We got the needed wetlands permits in record time. We began site preparation and assumed $53 million in risk," he said. "We did this. Florida and South Carolina did not." Now Georgia officials hope and pray that their investment pays off. ©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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