Week of December 30, 2002
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South Carolina Tale: DC's Sprinter Lost, MTU Drive Shafts Gainedby JACK LYNE, Site Selection Executive Editor of Interactive Publishing
CHARLESTON, S.C. South Carolina may have narrowly lost out to Georgia to manufacture DaimlerChrysler's (DC) Sprinter vans, but the Palmetto State has landed another of the company's expansions:
Available Building Big FactorA suitable building in North Charleston was a major factor driving MTU Drive Shafts' location choice, Tykal said.
And that building wasn't just any run-of-the-mill structure. Freightliner, another DC company, owned the building, one of two facilities on the North Charleston site that came into Freightliner's portfolio when the company acquired Western Star in 2000.
After the Western Star plant closed, Freightliner last year decided to locate an 800-employee American LaFrance operation in one of the vacant facilities (For more, see "American LaFrance Relocates to South Carolina, Projects 800 Employees at New Site," Aug. 5's Blockbuster Deal of the Week.) With MTU Drive Shafts' move-in, the two DC companies will become next-door neighbors.
South Carolina's incentives were another major factor in MTU Drive Shafts' site-selection decision, Tykal explained. Details of those incentives are still being fleshed out with state officials, he added. Among the incentives likely to be part of the final package are job-tax credits, property tax breaks and employee-training aid, Tykal said.
MTU has garnered some 26 percent of the worldwide market share in manufacturing passenger-vehicle drive shafts. The company also manufactures diesel and gas engines for ships, distributed power plants, heavy vehicles and rail.
The North Charleston plant will go online in 2004, staffing up to 200 workers on three shifts by 2006, Tykal said.
KTH Adding 125 Workers to
Supply Honda from Leesburg, Ala.
by JACK LYNE, Site Selection Executive Editor of Interactive Publishing
LEESBURG, Ala. Leesburg, a tiny northwest Alabama town that bills itself as "the Crappie Capital of the World," has reeled in a big expansion catch - one riding atop Honda's rising tide in the Yellowhammer State.
Leesburg Project Mirrors Lincoln ExpansionKLP's expansion will closely follow Honda's Lincoln timeline. The company will break ground on its Leesburg expansion in January, adding 125 new workers by 2004, Boyer said. Honda's expansion, for which ground was broken in late November, will be completed by 2004, officials with the automaker estimate.
KLP's project will also mirror another aspect of Honda's Lincoln expansion. With the addition of a new production line, the expanded Lincoln plant will be capable of producing multiple vehicles. (The automaker is expected to decide in 2003 whether to build another vehicle at its Alabama operation.)
Similarly, KLP's expanded plant - which will include 109 new welding robots, as well as a new 1,500-ton transfer press - will be able to manufacture steel frame components for multiple vehicles.
"With this new equipment, it is possible that we will be able to add sport utility-vehicle and light-pickup-truck frames to our line in seconds," Boyer said. "We will be able to construct different frame parts for different vehicles, depending on consumer demand."
"This is a fantastic deal for Leesburg," said Mayor Ed Mackey. "This will really help the town and bring more people and businesses to spend more tax dollars." About half of KLP's current employees come from Cherokee County, he explained.
"Our economy," Mackey added, "has grown over these last few years because of KLP," which broke ground in Leesburg in June of 2000. Since then, the city has added a convenience store, a pharmacy, a Dollar General store, a Subway outlet and a video store, Mackey explained.
Changes Afoot for State Economic Development?KLP's expansion announcement and Honda's groundbreaking coincided with a possible major revamping of the state's economic development structure.
Gov. Don Siegelman (D) is leaving office in January, following a narrow loss in November's election to Bob Riley (R).
"Education and quality job growth go together hand in hand. It's extremely important that the incoming administration recognizes that point," Siegelman said at the Lincoln groundbreaking for Honda, whose $158-million incentive package in 1999 was the first contract that Siegelman signed as governor.
Gov.-elect Riley has said that he may push for a commission, largely made up of private-sector leaders, to oversee state economic development efforts. That commission would hire the Alabama Development Office head - who would then continue in that post even with gubernatorial changes. Riley is already on record as favoring a similar commission structure to oversee the state's transportation agencies.
Alabama Power Company, another major force in state economic development, is developing a paper outlining how such a state economic development commission might operate. That paper, the utility says, will be presented to state economic developers to solicit their opinions.
Lexmark Postpones $50M, 200-Employee Hungarian Plant, but Project Still Looks Probable
Executive Editor of Interactive Publishing
TATABANYA, Hungary Lexmark International has, for the moment, hit the "Stop Print" control on its planned $50-million, 200-employee plant in Tatabanya, Hungary.
Citing the slowdown in demand for electronic goods, the Lexington, Ky.-based printer manufacturer has told its Hungarian partners that it is indefinitely postponing its previously announced plans to build the facility, which would manufacture laser and matrix printers.
Lexmark officials at the company's Kentucky headquarters, however, haven't publicly commented on the Hungarian delay. News of the postponement broke early this month, when Tatabanya Mayor Janos Bencsik told the Budapest Business Journal about Lexmark officials' late-November visit, where the company announced that it was putting the brakes on the expansion.
Project Still Looks a Likely GoThe world's second-largest laser printer manufacturer, however, doesn't appear to be throwing in the towel on the expansion in Tatabanya, the city some 37 miles (60 kilometers) west of Budapest that Lexmark chose last year after a two-year site search. Lexmark in a letter late last month to local Hungarian partners emphasized that it isn't abandoning the project, only temporarily suspending it.
Another sign suggesting that the project is still very much alive: the 31-acre (12.4-hectare) tract in a Tatabanya industrial park that Lexmark purchased last year. State and local officials, in fact, joined Lexmark officials in the summer of last year in laying a cornerstone at the site for the proposed 430,556-sq.-ft. (40,000-sq.-m.) plant.
The land purchase coincided with the company's establishing a subsidiary, Lexmark International Hungária, to manage the expansion project. Lexmark also tapped a project manager for its initial Hungarian manufacturing sortie.
And that pre-project infrastructure will remain in place. Lexmark is keeping its Tatabanya acreage and will also continue to operate its Hungarian subsidiary, according to Peter Berethalmi, a lawyer with Nagy and Trocsanyi, which is representing the U.S.-based printer manufacturer in Hungary.
Another factor auguring will for the project's ultimately reaching fruition is Lexmark's comparatively healthy business position within its industry. Last year's sales of $4.14 billion marked an 8 percent annual increase. In addition, the company's earnings per share this year have increased in each quarter.
Project Underscores New Global Markets' ComplexitiesThe delay is not the first for the Hungarian project, which has illustrated the complexities that often earmark a maiden voyage in establishing a major manufacturing operation in a new international market.
Lexmark in 2001, for example, pushed back the expansion project until June of 2002, citing troubles in obtaining building permits.
The delay, the company added, was also partially due to the pending merger between Hewlett-Packard and Compaq Computer, Lexmark's two main international customers. Ironically, while Lexmark's plans are on temporary hold, Hewlett-Packard is now reportedly considering building its own plant in Hungary.
The Hungarian project has also drawn protests from employees at Lexmark's plant in Orleans, France. Some of the production now performed at the French facility would move to the new Hungarian plant. (For more on this trend, see "East Beats West? European Manufacturing Strength May Surprise Some" in the November 2002 issue of Site Selection.)
Then there's the matter of the $1.27-million non-refundable grant that the Hungarian government awarded to Lexmark's Tatabanya expansion project.
That issue, at least, appears to have already been resolved. The grant monies were never fully turned over to Lexmark, Hungarian officials said.
Now, while Lexmark ponders the next turn in its Hungarian expansion plans, the incentive funds it had landed will be distributed to other firms that have applied for assistance, state officials said.
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©2002 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.