Week of January 28, 2002
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Detroit Metro Lands HQ for Auto E-Commerce Power Covisint
SOUTHFIELD, Mich. -- Ending two years of site selection speculation, budding e-commerce power Covisint has picked Southfield in suburban Detroit for its corporate headquarters location.
$59.3 Million in State IncentivesThat Detroit-metro decision also merited a US$59.3 million state incentive package from the Michigan Economic Development Corp. (MEDC). The state's incentives include up to 20 years of exemption from the Michigan Single Business Tax, plus assistance for Covisint in recruiting technology workers.
MEDC offered the incentive package to Covisint in mid-November of last year. Jan. 13 loomed large in that multimillion-dollar bid. The state's offer included a Jan. 13 deadline date for Covisint to chose a headquarters site; a decision by that date to locate in Michigan would trigger the $59.3 million in tax incentives.
The original deadline, however, moved back. Covisint was granted a 30-day extension while it discussed its project with local governments. Those discussions resulted in both Southfield and Detroit offering incentives.
The value of the Southfield's incentives, however, has not yet been made public. Covisint's choice of Southfield, company officials explained, is contingent upon the City Council's approval of the local tax incentives. (The deal, they added, is also contingent upon negotiating a satisfactory agreement with Covisint's prospective new landlord, Southfield-based REDICO.)
E-Commerce Clout Ups New Economy CachetLike any Internet start-up, Covisint was eager to obtain capital-conserving incentives for its headquarters project.
The company, however, is hardly a garden-variety 'Net start-up. Covisint seems positioned to become the electronic glue that holds together a substantial slice of the auto industry. A heavyweight team of DaimlerChrysler, General Motors, Ford Motor Co., Nissan of Japan, Renault, Commerce One and Oracle joined together in 2000 to found the company. (PSA Peugeot Citroen has since joined the initiative.) Many analysts are betting that Covisint, which will connect automakers with thousands of suppliers, will become Earth's biggest e-commerce company. The business-to-business Internet exchange will annually handle an estimated $200 billion in purchasing.
That New Economy cachet was one factor that fed the widespread wooing of Covisint. Michigan, with its strong roots in the Old Economy, made no bones about its desire to land the project.
"It's very important for the perception the rest of the world has of us, the image we send out to the rest of the country, that we keep them here," MEDC Chief Executive Officer Doug Rothwell told the Detroit Free Press. "It's part of our repositioning Michigan outside the state. It could be the largest Internet company in the world, so we think that it could be an anchor that shows everyone Michigan is part of the New Economy."
HQ Will Employ 330 by 2003The Detroit area's preeminent auto cluster provided an obvious attraction for Covisint.
Early on in the site search, however, some saw Motown's automotive mass as a potential negative. Some analysts feared that Michigan's status as home court to General Motors, Ford and DaimlerChrysler - Covisint's majority owners - could draw a critical eye during the Federal Trade Commission's antitrust investigation of the B2B Internet exchange. That issue, however, was put to rest rapidly, as Covisint received FTC clearance in September of 2000.
Covisint's move into its new headquarters may be as much as a year away. The nine-story Oakland Square Building that will house the company's operations base is currently under construction. Covisint will lease between 80,000 sq. ft. (7,200 sq. m.) and 100,000 sq. ft. (9,200 sq. m.) on four floors in Oakland Square, according to a company spokesperson. Covisint is also obtaining option expansions at Oakland Square, he added.
The company anticipates enlarging its headquarters work force to some 330 employees by early 2003, officials said. Long-term projections for the headquarters headcount range as high as 500 employees.
In addition to its Southfield operation, Covisint has established major offices in Amsterdam and Tokyo.
Biotech Player Qiagen Opens
North American Headquarters in Maryland
GERMANTOWN, Md. -- Qiagen, the multinational biotech player so hotly recruited during its Eastern Seaboard site search, has officially opened its North American headquarters in Maryland. The 24-acre (9.6-hectare) campus site in Germantown, Md., is the new home of Qiagen Sciences, the wholly owned U.S. subsidiary of Netherlands-based Qiagen N.V.
Massachusetts, Virginia StrongMaryland had heavy competition for the Qiagen deal. The site search spanned the Eastern Seaboard from North Carolina to Massachusetts, company officials said. Massachusetts and Virginia were particularly strong competitors.
Competitors for Qiagen Project
Early on, Qiagen zeroed in on Boston, attracted by the area's host of world-class universities and medical institutions.
Then, however, Lt. Gov. Kathleen Kennedy Townsend (daughter of Robert F. Kennedy) used her family's Bay State heritage to contrast Massachusetts with Maryland during Qiagen officials' visit to the Old Line State.
Boston later fell out of the hunt for the Qiagen operation (though apparently due more to cost considerations than the lieutenant governor's pitch, according to company officials). That left Germantown and Richmond, Va., as the finalist sites.
A major factor tipping the location scales toward Montgomery County was its status as the home of the National Institutes of Health, which Vice President of North American Operations Michael Burgett called "probably our biggest customer in the world." Qiagen, Burgett added, also picked the area because of its high-profile biotech cluster, its federal research laboratories and universities, its two international airports and its quality of life.
"We chose Montgomery County for our U.S. headquarters because it allows us to be close to our customers and provides an excellent environment for expanding our R&D program," said Burgett, who is also general manager of the Germantown manufacturing and research facilities. "Montgomery County also has a large commercial and academic biotechnology base, which is very attractive to us," he added.
Gov. Parris Glendening trumpeted the opening of the operation in the heart of Maryland's growing biotechnology corridor. "The arrival of this biotech leader supports our commitment to attracting economic development and reinforces Maryland's position as a pro-business state, which offers outstanding assets, including a highly skilled work force, to the biotechnology and pharmaceutical industry," Glendening said.
Qiagen likely isn't done yet expanding at the Montgomery County site. The company's long-term plans for the Germantown location call for constructing another 100,000 sq. ft. (9,000 sq. m.) of space and adding 200 more employees. Qiagen has some 1,400 employees worldwide and has been growing rapidly. In 2000, it increased its total employment by 42.2 percent.
Briefly . . . Quick Takes
DAVENPORT, Neb. -- Oregon Trail Ethanol Coalition is reportedly in the process of assessing engineering firms to design a $60 million ethanol plant at an as-yet undisclosed site in Nebraska. The proposed plant would produce 40 million gallons of grain-based fuel per year. Nebraska's Legislature last year provided an incentive for ethanol investors: a production credit of 18 cents per gallon. The production credit, which applies to both new plants and ethanol expansion projects, extends over an eight-year period, with a maximum payment of $22.5 million per plant. The Oregon Trails Ethanol Coalition, based in Davenport, Neb., has chosen a board of directors. However, to qualify for the Nebraska production credits, new ethanol production facilities must be online by June 30, 2004.
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