Gov. Jim Hodges hugged the Michelin Man's bulky body, and the crowd stood and applauded.

It was that kind of day in Greenville, S.C., at Michelin North America's headquarters. The state's fifth-biggest employer, Michelin North America (www.michelin.com), had just announced that it intends make a minimum US$400 million capital investment in creating up to 400 new jobs over the next five years in South Carolina.

"This new investment reaffirms Michelin's status as the leading international investor and employer in South Carolina," said Gov. Hodges (www.state.sc.us/governor/). "We are extremely pleased that Michelin has chosen to renew and deepen their commitment to the Palmetto State."

Michelin North America Chairman and President Jim Micali also emphasized the company's longtime presence in South Carolina, where it's amassed a work force of 9,000 and seven manufacturing facilities.

"Our development in South Carolina has been steady and extensive for the past 24 years, with total investments over $2 billion," Micali said. "We're expanding once again to meet the growing demand for our products, and we've selected this state because of its continuing pro-business environment and skilled work force."

Michelin's South Carolina expansion plans have major implications for its operations in many parts of the state. The biggest impact, though, will be in Anderson County, where Michelin's operations could account for some $200 million of the company's initial investment. Michelin intends to spend $90 million and add 100 jobs in a new Anderson County facility to expand the company's rubber-production operations to meet future growth needs, Micali said. Site preparation should begin in January 2000 for Phase I, company officials said.

But the Anderson County investment may increase substantially in Phase II of the South Carolina expansion plan, company officials said. Phase II investment could mean an additional investment of $90 million or more, upping total employment to 200. And over the longer term, the Anderson County location could see another $500 million in capital investment, Michelin North America executives added.

Other State Areas Will Feel Major Impact

In addition to the new Anderson County plant, Michelin's recently announced expansion plans will have a major impact on the company's existing facilities in Anderson, Greenville, Lexington and Spartanburg counties, including:

• Michelin will invest $40 million in its existing Anderson County plant in Sandy Springs that manufactures various semi-finished products.
• In Greenville County, Michelin plans to spend up to $90 million for new mold-production and a partial conversion to light-truck/ recreational tire production. Employment could rise by 100.
• Plants in Lexington County would receive $60 million to increase passenger, light-truck tire and large-tire production, creating 100 to 300 new jobs.
• Michelin expects to invest $30 million in its Spartanburg County locations to expand its truck tire production and retreading operations.

Notwithstanding all the hoopla inside Michelin North America's glass-walled Greenville headquarters, some details must be worked out before this deal can be considered done. As Micali explained at the announcement of the company's planned South Carolina expansion, "There still are certain conditions that must be met before we can proceed with our investment plans."

Those conditions were spelled out in a company press release that was sent out the day the announcement went public: "Michelin," the release said, "will move forward with the investments once it obtains:

"1. Approval by the Anderson County Council of special source industrial revenue bond financing and a fee-in-lieu-of-property-tax agreement, to take into account the new project in Anderson County.

"2. Timely closing of public roads on the proposed new site in Anderson County. Michelin is working closely with state and county officials to assure that alternative routes will be in place."

The release noted that Michelin's newest investment plans in South Carolina "could reach $900 million and 1,400 new jobs over the next 10 years . . . if the company proceeds with a later investment of $500 million at the new Lee-Dobbins site (in Anderson County) to increase radial tire manufacturing capacity." At the same time, Michelin North America's release made it clear that "such an [long-term] expansion depends entirely on market conditions and has not yet been determined by Michelin."

Players Express Optimism, Talk of Further Expansion

Michelin officials sounded optimistic about getting the deal fully done.

Said Micali, "Gov. Jim Hodges, Secretary of Commerce Charlie Way (www.callsouthcarolina.com), members of the Anderson County Council (www.sc-upstate-info.org/main/anderson/econ_dev.htm) and others have been most helpful, and I am confident that these conditions will soon be finalized."

The announcement also communicated Michelin's plans for further growth in South Carolina. Michelin chose to build another plant on the sprawling, 750-acre (300-ha.) Lee-Dobbins site (near the Anderson County Airport) because there wasn't enough land near its existing Sandy Springs plant to accommodate long-term expansion plans. "What the size of the Anderson County site means is planning for the future," said Michel Dube, facility manager for Michelin North America's Sandy Springs facility.

Michelin's planned expansion in the North American market, where it's faring well, contrast with the parent company's recent downsizing in its home market. In mid-September, Group Michelin announced that it will cut employment in Europe by 7,500 jobs over the next three years. Some plants will be closed in an effort to improve productivity in face of intensifying European competition from Bridgestone and Goodyear, company officials announced.

For South Carolina, though, Michelin's news was all good. The company's announcement also marked a further strengthening of the cluster of some 250 foreign-based firms that have located operations in upstate South Carolina (www.sc-upstate-info.org) -- an area that management guru and author Rosabeth Moss Kanter says "should be used as a model for other communities that want to succeed in the global economy."