Week of February 11, 2002
  Project Watch
Barley Seals Deal

Grupo Modelo Heads North, Picks Idaho Falls for $64 Million Plant

Gov. Dirk Kempthorne
The genesis of the Grupo Modelo deal traces back to Gov. Dirk Kempthorne's May 2001 trade mission to Mexico. Kempthorne (pictured above) met with Grupo Modelo officials during a meeting with U.S. Ambassador Jeffrey Davidow in Mexico City, the brewer's headquarters city.
IDAHO FALLS, Idaho -- Grupo Modelo, Mexico's No. 1 brewer, is reaching all the way up to near the Canadian border to expand its operations. The Mexico City-based brewer has selected Idaho Falls, Idaho, as the site of a $64 million large-scale malting plant.
        The deal sealer was barley. Grupo Modelo selected Idaho because of the stability, quality and availability of its two-row irrigated barley, company officials explained. Up to 58,000 acres (23,300 hectares) of barley will be needed to meet the new plant's processing needs, Grupo Modelo executives said.
        Idaho knows barley. It ranks as the No. 2 U.S. state in barley production and is No. 1 in the U.S. West. Idaho growers harvested 730,000 acres (292,000 hectares) of barley valued at almost $150 million in 2000 (the most recent year for which totals are available).

Trade Mission Sowed Deal's Seeds
The deal had its genesis in Gov. Dirk Kempthorne's May 2001 trade mission to Mexico. Kempthorne met with Grupo Modelo officials during his meeting with U.S. Ambassador to Mexico Jeffrey Davidow in Mexico City.
        "Idaho's trade missions are resulting in sales," Kempthorne said in announcing Grupo Modelo's decision.
        "This business deal is a direct result of our international efforts in Mexico," said Idaho Dept. of Agriculture Director Pat Takasugi. "The governor paved the way with his 2001 trade mission, and many others have continued working to make this deal a reality."
        Landing the Grupo Modelo project marked Idaho's second strong shot of recent good news from the brewery business. Anheuser-Busch recently announced that it will double the capacity of its Idaho Falls malting facility. (Anheuser-Busch owns a little more than 50 percent of Grupo Modelo.)
        "Combined with the Anheuser-Busch expansion, Grupo Modelo's project will create a multi-million dollar economic opportunity year-in and year-out for Idaho farmers," said Idaho Dept. of Commerce Director Gary Mahn. "The economic ramifications of a value-added project like this will be felt throughout Idaho."

Broad-Ranging Incentives Sweeten Brew
Idaho also added value for Grupo Modelo through a wide-ranging incentive package. Grupo Modelo's new Idaho plant will be constructed with state support from Kempthorne's Rural Idaho Initiative and the Governor's Settlement Fund. The Regional Development Alliance will also use $600,000 from the Governor's DOE Settlement Fund to purchase property for the malting plant, which will be located near Anheuser-Busch's existing Idaho Falls plant. In addition, the rail facilities over which Grupo Modelo will ship and receive products will be constructed and funded by the Governor's Rural Idaho Initiative.
        Kempthorne praised the wide range of groups that collaborated in successfully recruiting the Grupo Modelo plant. In addition to the governor's office, the project recruiting team included the Depts. of Commerce and Agriculture, the city of Idaho Falls, the Idaho Barley Commission, the Idaho Grain Producers Assn., the Regional Development Alliance and the Eastern Idaho Economic Development Council.
        Grupo Modelo has not yet released employment projections for the Idaho Falls plant.

Honda's Model X design concept vehicle
Like the Model X design concept vehicle debuted at last year's North American International Auto Show (pictured above), the new Honda light truck model will feature a box-like shape, a pillar-less body side, "open-wide" doors and enough storage space to stow a surfboard 10 feet (3.03 meters) long.
Ohio Plant Tapped to Produce Honda's 'Model X' Light Truck

TORRANCE, Calif. -- Honda of America Manufacturing has tapped its plant in East Liberty, Ohio, to build an all new light truck model based on the popular Model X concept vehicle. Honda officials are pegging high hopes on the new model's appeal to the lucrative youth market.
        Honda chose the Ohio plant to build the new model after an internal review of the company's global manufacturing capabilities, Honda officials explained.
        The East Liberty plant's switchover to producing the light truck will underscore Honda's "New Manufacturing System" (NMS). Honda adopted NMS to provide faster, more efficient and more flexible manufacturing capabilities, company officials said.
        That flexibility will be evident in the production line changeover at the East Liberty plant, which implemented NMS in 2000. The Ohio plant currently produces the Civic Sedan, Civic Coupe and Civic GX natural gas vehicle. The same assembly line that is currently used in the East Liberty plant, however, will be used to produce the new light truck based on Model X.
        "This decision demonstrates the high level of flexibility within our North American manufacturing operations," said Honda of America Manufacturing President Koki Hirashima. The introduction of the new model, Honda officials said, won't affect the East Liberty plant's production output, which will remain at the current level of 240,000 vehicles per year. East Liberty plant, however, will be producing fewer Civics as it takes on manufacturing the new Model X truck. But with NMS, production at other Honda plants will offset the East Liberty plant's reductions in Civic production, company officials said.

Model Will Blend Truck,
SUV and 'a College Dorm'
Honda hasn't yet divulged the model name for the light truck that it will produce in Ohio. Company officials said, however, that the new model will closely emulate the multi-functional Model X design concept vehicle, which was introduced at the 2001 North American International Auto Show in Detroit.
        The Model X truck will open up a new niche for Honda, company officials noted.
        "The production of this innovative light truck model will further expand our manufacturing capabilities beyond our current production of passenger cars, motorcycles, all-terrain vehicles and engines," Hirashima said.
        Tom Elliott, executive vice president of American Honda, said that the new model will be "an important new addition to Honda's growing family of innovative light truck models." Young male buyers in particular are a major target market for the new model, Honda officials said. As with Model X, the light truck will feature a box-like shape, a pillar-less body side, "open-wide" doors and an inordinate amount of storage space. The flexible seating in the truck's interior, for example, will provide enough space to stow a surfboard 10 feet (3.03 meters) long, according to company officials.
        Like Model X, the new light truck, Elliott said, will combine "the best features of a pickup truck with the best features of a sports utility vehicle, and [it] adds a college dorm for good measure."
        The Model X-based light truck that will be made in Ohio had its genesis in an appropriate spot: the inaugural X Games in San Diego in 1998. From there, a core group of young Honda R&D engineers followed up on the idea by conducting informal focus groups at colleges and universities, beaches, campsites and mountain parks.
        The final product that will roll off the assembly lines in East Liberty "is a radical departure from traditional automotive design that we think will appeal very strongly to a new generation of car buyers," Elliott said.

St. Petersburg, Russia
Historic St. Petersburg (pictured) is home base to Bravo International, Russia's fastest-growing brewer, which Heineken has just acquired.

Briefly . . . Quick Takes

St. Petersburg, Russia -- Heineken has expanded in the Russian beer market in a big way, acquiring Bravo International, the country's fastest-growing brewer. The acquisition of the brewery in St. Petersburg "is valued at a maximum amount of $400 million, provided volume and price targets are met in the next 12 months," Heineken said in a statement. Brewing Heineken in Russia will allow the company to avoid the country's substantial import duties, providing a market edge for the Amsterdam-based brewer.
        The Russian beer market has doubled over the last three years, reaching a total volume of over 1.5 billion gallons (60 million hectoliters) in 2001. Some industry analysts expect Russia to move into the world's top five global beer markets over the next few years. The acquired brewery has a production capacity of 130 million gallons (5 million hectoliters), according to Heineken officials. Though it only entered the market three years ago, Bravo has already gained a 17 percent market share in the St Petersburg region and a 7 percent market share in the Moscow region.
        Heineken's move comes on the heels of BBH's announcement of its plans to purchase 70 percent of Voronezh Brewery, located in the city of Voronezh, some 250 miles (400 km.) south of Moscow. The brewery in southern Russia makes Baltika, Russia's leading beer brand. BBH simultaneously announced that it will further boost its Russian presence by building a $50 million brewery in the Samara region. The new brewery will initially have an annual capacity of 26 million gallons (10 million decaliters), but BBH officials said that capacity could readily be tripled to accommodate market demand.

CHICAGO, DALLAS, KANSAS CITY, LOS ANGELES and MINNEAPOLIS -- Calence, which builds and manages customized, client-centric networks, has considerably ramped up its U.S. presence, opening new offices in Chicago, Dallas, Kansas City, Los Angeles, and Minneapolis. The five new offices will focus on providing networking solutions and services to clients in various industries, including financial services, health care, manufacturing and technology, said officials with the eight-year-old company.
        Ranked No. 153 on the Inc. 500, Tempe, Ariz.-based Calence is expanding to capitalize on its continued strong growth, explained CEO and co-founder Mike Fong. "Calence has experienced consistent nationwide growth in each year of our existence, and we decided we could better serve our customers across the country by opening full-service regional offices," Fong said. The new office locations were picked, he added, to "expand our business practices . . . in the regions that we grew so strongly in in 2001."


©2002 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.