February, 2003
  Incentives Deal of the Month
   from Site Selection's exclusive New Plant database
State's $14M in Incentives Help Sway Deal
Huntington, W. Va.
Sogefi's new plant will bring some 150 new jobs to the metro region centered on Huntington, W.Va. (pictured).
Sogefi's Choice: West Virginia Wins Auto Firm's First American Plant

by JACK LYNE, Site Selection Executive Editor
of Interactive Publishing
PRICHARD, W.Va. – "The rapport between our company and West Virginia's representatives in Europe, which also developed in several meetings with Gov. [Bob] Wise, has made our decision to locate here an easy one," said Emanuele Bosio, managing director of Italian auto-components manufacturer Sogefi (www.sogefi.it), said in recently announcing his company's latest location project.
        That "easy decision" will produce Sogefi's first North American plant: a 148-employee operation in Prichard, W.Va., 21 miles (34 kilometers) southwest of Huntington.
        In reality, though, Sogefi's choice wasn't so easy. At least not in the earlier stages of the search for its first North American site. For a while, in fact, the project looked destined to land in a far more northern locale.
Gov. Wise
"A company with the prominence of Sogefi will enhance the state's efforts to attract automotive companies," Gov. Wise (pictured) said at the project announcement.

        West Virginia, however, was able to land the project through a US$14-million incentive package, an attractive sale/leaseback on an available building and some aggressive recruiting by its European office.

Quebec Was Initial Choice

Things looked different last year. Quebec seemed destined to be the site where Sogefi would make its North American manufacturing debut. After also eyeing sites in Michigan, the company was firming up plans for the Canadian location.
        Enter the West Virginia trade office in Munich, Germany, which the state opened in 1998. The Munich office got wind of Sogefi's plans to expand its manufacturing into North America and contacted the Mantova, Italy-based company.
        Sogefi was willing to listen. The company, it turned out, wasn't all that crazy about its not-yet-formalized arrangement to locate a production operation in an undisclosed Quebec city. The Canadian plant, Bosio explained, would've been a joint venture - a partnering arrangement that the company generally avoids, he said.
        Talks with West Virginia officials eventually firmed up another deal - one enabling the company to establish its own independent North American operation in the Charleston metro. And that operation will grow, Bosio strongly suggested. The new factory, he said, will be "only a first step of Sogefi's presence in West Virginia."
Sogefi auto suspension systems
Sogefi already sells its auto suspension systems (pictured) and filters to the world's 10 largest automakers and every major truck manufacturer in Europe, with some $1 billion in sales in 2002.

        The company's step into Prichard will become fully operational in April of 2002, Bosio said. Sogefi's first North American plant will initially produce three million coil springs and 1.5 million stabilizer bars each year for North American-made Ford vehicles, he explained. Ford's North American plants, however, won't be the plant's sole customer over the long term. Sogefi also plans to sell its output to General Motors and DaimlerChrysler's North American plants, Bosio said. The company's goal in establishing the West Virginia operation is to capture at least 5 percent of the North American market share for Sogefi's suspension components and filters.
        North America was Sogefi's last world-region production frontier. The company, which has some 7,200 employees worldwide, already has existing plants in Argentina, Brazil, China, Egypt and Europe. Its biggest manufacturing footprint is in Europe, where it has 36 factories.

Sogefi: State Topped Contenders' Incentives

State incentives strongly influenced Sogefi in making West Virginia its first manufacturing footprint in North America, according to Bosio. West Virginia's incentives bettered the subsidies that Sogefi was offered in both Quebec and Michigan, he said.
        Sogefi's site pick, in fact, was announced inside a structure that's part of the project's incentive package: a vacant 50,000-sq.-ft. (45,000-sq.-m.) shell building in Prichard Industrial Park.
        The company is buying the building for an undisclosed price and investing $27 million to expand it to 215,000 sq. ft. (15,350 sq. m.). Once the expansion is complete, Sogefi will sell the building back to the Huntington Area Development Council (HADCO at www.hadco.org) for $6.3 million. Then the company will lease the space for 15 years at $1.95 a sq. ft., according to HADCO officials.
        The sale/leaseback is also structured to provide Sogefi with attractive long-term alternatives. At the 15-year lease's end, the company has an option to buy the building for its appraised value. In the bargain, it would receive for free the 21-acre (8.4-hectare) site on which the building is located, HADCO officials said.

State Also Ponying Up Grant, Interest-
Free Loan and Manufacturing Equipment

Other state incentives include a $3-million interest-free loan from the state Infrastructure Council (www.wvinfrastructure.com), which HADCO is providing for the plant's expansion. The West Virginia Economic Development Authority (www.wvdo.org) is also providing $10 million to acquire manufacturing equipment for lease to Sogefi. The auto-part company would then make payments in lieu of taxes on the state-owned equipment to Wayne County. That $10 million in leased equipment is part of the some $25 million worth of manufacturing gear that the company will install in the Prichard plant, Bosio said.
        In addition, the West Virginia Economic Development Grant Committee (EDGC) is providing Sogefi with a $990,000 grant to assist with redeveloping the Prichard facility. EDGC board member David Hofstetter praised the Sogefi project as "pure economic development" during the committee's vote.
        "Sogefi's location in the area of the I-64 automotive corridor continues West Virginia's efforts to target the industry," Wise said at the Prichard announcement. "We will continue to focus on attracting automotive companies as part of the state's economic development strategy. A company with the prominence of Sogefi will enhance those efforts."

ti0302bti0302b ©2003 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.