Week of December 18, 2006
  Blockbuster Deal


Globetrotting Multinational Remains
in Gift Capital

by ADAM BRUNS, Site Selection Managing Editor

Whirlwind Tour Convinces SCL To Stay Home with HQ

     After surveying its global prospects and fielding offers almost too good to be true, closely held Arctic Circle-based multinational S.C. Ltd. (SCL) has decided to keep the home fires burning at the North Pole.
    "This is where we got our start," said SCL spokeswoman Holly Jolie, "and this is where we're going to stay."
    But the story of this mega-project — which flew under most media radar by the code name "Project Workshop" — is the story of how one little North Pole company town has weathered the storms of the worldwide marketplace and still remained the ultimate global village.

Polar Hub
    Jolie says the organization first began scouting for a site on Dec. 21, 2004 ... a bit late in the season to start shopping, according to some experts. But SCL was thinking long-term.
    "The logistics vectors have changed over the years," she says. "We had to adjust our thinking accordingly, and see if the routes and suppliers we'd always used were still worthy of our Excellence in Logistics Factors [ELF9001] certification."
Holly Jolie
SCL spokeswoman

    Her point is buttressed by recent moves among northern hemisphere ports to open themselves up to more trade and shipment volume. The players range from Russia to Norway to Alaska. As development moves further up the latitudes, it was only a matter of time before SCL had to re-evaluate its options, especially considering the natural resources in and around its home base that might provide both energy source and financial ballast for its manufacturing operations. The looming prospect of a lease termination just added more urgency to the process ... though no one with North Pole Development could confirm the existence of alternate tenant prospects.
    A team was assembled to conduct the site search, including representatives from the toy and sugarplum divisions, as well as sleigh operations. Candidate sites had to meet strict criteria including but not limited to reindeer feeding grounds, sleigh-port runway length, community college resources and dual polar express rail. It has been reported that some consideration was given to seaport status as well, but Jolie would not confirm whether SCL has given any credence to melting icecap scenarios and their potential impact on the organization's North Pole hub.
    As is often the case, labor negotiations were crucial to the process. Some have called for the Pole to seek right-to-work status, but longtime union leader Felix Navidad, head of the Northern Organization of Elven Laborers (NOEL), said the quality and productivity of SCL's labor force has never been in question.
    "Sure we've had to make minor concessions in terms of job classifications," he told Site Selection. "But we've kept up with the times in terms of technology training, and overall morale has never been jollier."
    Even so, once the Request For Proposals went up on SCL's Web site, the offers popped up fast and furious, from places as diverse as Anchorage, Alaska; Murmansk, Russia; and Churchill, Manitoba. Among the suitors:
  • Santa Claus, Indiana, where the Santa Claus Industrial Park offers more than 200 acres with all utilities in place and a location in the center of the bustling NAFTA Corridor;
  • The South Pole, longtime rival of its polar opposite, as it tries to diversify from its lonely-team-of-scientists economic base;
  • Shanghai, China, because it's on everybody's list this year.
  • The Lunar Economic Development Agency, in order to have a backup plan in case NASA’s recently announced moon station is too pie-in-the-sky; the 238,000-mile commute to Earth, however, could be a sticking point.
    A sack full of tax breaks, enterprise zones, training funds and outright cash was dangled in front of the North Pole site seekers.
SCL headquarters, shown here during typical blizzard conditions, will enlarge its bootprint by some 960,000 sq. ft. (89,184 sq. m.) when the expansion is completed in 2008.

    "We've seen a lot of unique incentive offerings over the years," said Jack Frost, lead site selection consultant for SCL, "but some of these packages were so nice they were naughty."
    Open records requests by media crying "corporate welfare" in several territories have largely been quashed by judges sympathetic to the need for secrecy where gifts are concerned.

Getting the Goods
    Indeed, packages and their destinations were one of the lead criteria in the site search, said a source close to the process. After checking the list twice, SCL decision-makers narrowed their options from 100 to half a dozen, making extended visits to each finalist for a final detailed evaluation.
    "We kicked the tires in each community," says Jolie, "assessing everything from elf housing to the potential for developing a supplier campus in existing buildings." Such consolidation has been the global trend in the gift production industry, which has seen production steadily climb over the past decade despite the wave of re-gifting that struck in the late 1990s.
    Final negotiations with NOEL were tense, as were the real estate dealings over SCL's long-term lease at the North Pole.
    "We managed to re-work certain Subordinate Clauses to give ownership more flexibility in what we choose to do on the land," says Jolie. Innovative practices employed include establishment of a Tax-free Opportunity Yuletide Zone (TOYZ) and the promise of expedited permitting and red-tape reduction in the case of future expansion.
    North Pole economists have projected that the retention of SCL headquarters will have an economic impact worth between US$4 zillion and $582 zillion, though some critics dispute those numbers, citing other gift-giving factors like birthdays and a rise in incidental generosity.

    Big numbers or small, a ribbon-cutting is scheduled for December 25, 2008, when SCL hopes to have completed a vast new headquarters/manufacturing/distribution complex, including such amenities as in-house childcare, a double-decker data center, semiconductor fabrication capability and a Just-In-Time gift card distribution facility. Action is already lively and quick, as SCL is expected to soon announce a design-build contractor to lead the project.
    Some have speculated that, like other corporate relocation projects, this one just came down to where the CEO wanted to live. Holly Jolie says that yes, CEO Kris Kringle and his spouse were "influential participants" in the site selection process, but that executive amenities were weighted to contribute only 15 percent to each candidate site's overall score. Reached by cellphone early this week, Kringle demurred on the dollar figures and his role in the project's final selection, but did offer some insight into the organization's strategy:
    "Even as we have grown into a conglomerate, we have always kept our roots as a workshop firmly in mind," he said. "We are dedicated to ho-ho-holistic growth. We have no more markets to conquer ... we just want to be optimally focused on serving as the catalyst for gift-giving, whatever the season."
    Was he suggesting that personal generosity and general goodwill might move beyond the seasonal to a year-round market?
    Kringle let loose with a belly laugh and said with a twinkle in his voice, "You said it, not me."

©2006 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.