Week of November 17, 2003
  Project Watch
But 1,000 Laid Off in New York

Central City tower
J.P. Morgan Chase's 850-employee call center will be located in the recently opened 1-million-sq.-ft. (90,000-sq.-m.) Central City tower (pictured).
J.P. Morgan Rings Up Western
Canada for 850-Worker Call Center

by JACK LYNE, Site Selection Executive Editor
of Interactive Publishing

SURREY, B.C., Canada – "Project Trident": That was the codename that Canadian business recruiters hung on a hot prospect.
        But unlike the popular sugarless gum of the same name, Trident turned into a sweet deal for Western Canada: Financial-services heavyweight J.P. Morgan Chase is bringing an 850-employee call center to Surrey, B.C., part of the Vancouver metro.
        "This is the biggest announcement I've made in 10 years here," Mayor Doug McCallum told the Surrey City Council. "It's a great success story about the relationships we have nurtured."

Jobs Moving from New York
But Surrey's success was very un-sweet elsewhere. Canadian recruiters' reasons for codenaming the project went beyond the savvy practice of ironclad confidentiality. They knew that if Trident became a done deal in Surrey, other U.S.-based workers would be losing their jobs.
Gordon Campbell
J.P. Morgan Chase, said British Columbia Premier Gordon Campbell (pictured), recognized "our ethnically diverse population" in Greater Vancouver, where more than 90 different languages are spoken.

        That's what happened. The Surrey center's announcement simultaneously signals the end of 1,000 of J.P. Morgan's U.S. call center positions. Those jobs are located in a three-building complex in Hicksville, N.Y.
        The lion's share of the Hicksville positions, all of them in credit-card customer service and collections, will be transferred to British Columbia. About 100 jobs will be relocated in J.P. Morgan's existing call centers in Houston; San Antonio; Tampa, Fla.; and Tempe, Ariz.
        The positions migrating north will settle inside the recently opened 1-million-sq.-ft. (90,000-sq.-m.) Central City Tower, located some 20 miles (32 kilometers) south of downtown Vancouver. The call center will lease 150,000 sq. ft. (13,500 sq. ft.) inside the 25-story structure, which is owned by the Insurance Corp. of British Columbia.
        "It's great news for us, and it's great news for the city of Surrey," said British Columbia Premier Gordon Campbell.
        The project arrived as British Columbia was very ready for some good news. The province is still reeling from a summer fire season that was its worst in half a century.

Savings Drove Decision
Money was the driver in the decision by the second-largest U.S. bank, with total assets of $793 billion.
        The new Surrey location will significantly cut J.P. Morgan's costs, company officials said. The bank, however, didn't provide any specific figures indicating how much it may save.
        Part of its savings will likely be in labor. Linx BC, the province's lead agency for attracting call centers, commissioned a study in 2001 of the province's customer service operations. Starting salaries for British Columbia call center agents, that study found, averaged only $8.96 an hour. (Agents' starting wages ranged between $6.25 and $13.40 an hour.)
        J.P. Morgan's opportunity to tap Canada's potential savings opened up with the approach of the June 30, 2004, lease expiration date for the bank's call center space in Hicksville.

Deep, Multilingual Labor Pool Also a Factor
But savings weren't the sole motivator in the move, according to company spokeswoman Kristin Batteria. J.P. Morgan, she said, picked the British Columbia location in part because management decided that the bank needed another call center located in the West Coast time zone.
        The Vancouver area's deep supply of multilingual labor was also a major consideration, added Batteria. J.P. Morgan's global operations span 50 nations, she pointed out.
Mayor Doug McCallum
"This is the biggest announcement I've made in 10 years here," Mayor Doug McCallum (pictured) told the Surrey City Council.

        Ninety different languages are spoken in the Vancouver area, according to provincial officials. And Surrey's labor pool is located in British Columbia's fastest-growing urban area.
        "They see Greater Vancouver as a diverse population, and they recognize our population is ethnically diverse," Campbell said. The bank, the premier added, gained "a real plus" in accessing that diversity by locating near Simon Fraser University's Surrey campus.

Jobs Cross Border Going North,
Firefighters Crossed Going South
The Hicksville layoffs will take effect in about six months, bank officials said. J.P. Morgan is providing all laid-off employees with a year's pay in severance.
        Those same workers are also being offered the opportunity to transfer to J.P. Morgan's other call centers. The bank is providing relocation assistance, including a $5,000 grant. Call center managers in New York, however, reported that they expected few of the laid-off workers to transfer, citing the inconvenience of moving.
        Surrey won't be an option for a transfer destination. All of the jobs at the new British Columbia center will be filled with local-area employees, bank officials explained. The Surrey center will open in April of next year, they said.
        Ironically, J.P. Morgan's announcement of its cross-border migration of jobs came shortly after British Columbia's highly regarded firefighters had crossed over into California to help battle that state's devastating conflagration. After the province offered its help, California officials phoned Campbell to accept.
        The Canadian crew was fresh off its own fiery battles. More than a thousand fires have broken out in British Columbia this year. Blazes became so severe this summer that Campbell declared the first-ever province-wide state of emergency.
        More than 150,000 acres (60,000 hectares) were destroyed. Damages are currently estimated at around $470 million - more than 10 times the provincial government's annual budget. The Canadian government is providing aid, including more than $77 million from the national Disaster Financial Assistance program.

Editor's note: For more on Vancouver's call center advantages, read about PeopleSoft's experience in the Western Canada spotlight in the March 2003 issue of Site Selection.

Jobs Will Top 150

Dow Corning headquarters
Though Dow Corning has its headquarters in Midland (pictured), the company also considered existing operations' sites in Connecticut, Florida and New York.
Dow Corning Consolidating Operations to Form New
Unit in Michigan

by JACK LYNE, Site Selection Executive Editor
of Interactive Publishing

WILLIAMS TOWNSHIP, Mich. – Lured in part by Michigan's $7.6-incentive package, Dow Corning is consolidating operations in three other states to form a new business in Williams Township, Mich.
        The new venture, Dow Corning Compound Semiconductor Solutions (CSS), will create as many as 164 jobs in Williams Township, which is located just outside Midland, Mich. Midland is the headquarters city of Dow Corning, the 50-50 Dow Chemical/Corning joint venture, as well as the birthplace of Dow Chemical.
        The new business will manufacture semiconductor materials and provide R&D services for products in the compound semiconductor industry.
        "We will be locating our business in Midland close to Dow Corning's critical mass of technical capabilities, research and development assets, and strong manufacturing disciplines," said Robert Johns, global director of CSS. "Consolidating our operations will give us synergies to accelerate our implementation and achieve world-class quality material specifications and economies of scale."
        Economies of scale are abundant in and around Midland, often referred to by its nickname, "Dow Town." More than 6,000 people are employed by Dow Chemical and its subsidiaries in the central Michigan city. Many of those locals work at the same site on which Dow Chemical founder Herbert Dow built his first manufacturing plant in 1897. Dow Chemical's tract has since enlarged to a sprawling 1,900-acre (460-hectare) complex that houses 550 facilities and 30 production plants.

Expanding in Dow's Existing Space
Dow Corning is taking advantage of its large local presence by locating CSS within the company's Advanced Engineering Materials division, which opened in Williams Township in 1987. The newly formed business unit will be part of Advanced Engineering Materials, which makes silicon-based sealants, adhesives and coatings used in products that include cell phones, fax machines and home appliances.
        CSS will consolidate Dow Corning operations that are now located in California, Connecticut and Florida. The company acquired those assets earlier this year. It bought Sunnyvale, Calif.-based GAN Semiconductors, a startup in which Dow Corning was already an investor; and the parent firm also purchased Sterling Semiconductor, a Tampa, Fla.-based subsidiary of Uniroyal Technology that also had operations in Danbury, Conn.
        The company will spend $21.8 million in setting up the combined operation in Williams Township, Johns said. About $5 million is allocated for an expansion that will add space at Advanced Engineering Materials' complex. Another $16.8 million will be spent on new machinery and equipment.
        The new unit in Michigan will create 140 jobs in its first five years, said Johns, who described CSS as "a high-growth operation." Employment totals could rise to 164 workers by 2014, Dow Corning officials projected.
        Dow Corning's new unit will aim at some growing market sectors in the compound semiconductor industry (which employs semiconductors formed by using two or more elements). The Williams Township operation will focus on products that will be used in high-brightness light-emitting diodes for next-generation lighting and in blue-laser diodes for next-generation optical data storage.
Dow Chemicals' Michigan Operations complex
The Midland area's economies of scale include Dow Chemicals' "Michigan Operations" complex (pictured), a 1,900-acre (460-hectare) site that houses 550 facilities and 30 production plants.

        Locating the new operation in Williams Township, said Johns, will enable CSS to fully utilize the knowledge and resources of Dow Corning's electronics, microelectronics and polycrystalline silicon materials businesses. The new subsidiary's location will also allow it to tap Dow Corning's programs in research photonics and electronics materials, he added.

Incentives Help Seal Deal
Despite Dow Corning's huge Midland-area presence, CSS wasn't an automatic lock for Michigan.
        "I'm not sure this would have been our chosen location without the cooperation of the state and local governments," Johns told the Bay City Times. "We're always looking in Michigan because of our heritage there, but we were also looking at sites in Connecticut, New York and even Florida, because that's where the existing operations are."
        Michigan's incentives, however, helped sealed the deal for Dow Corning, Johns said. The Michigan Economic Development Corp. (MEDC) is providing a 12-year Single Business Tax credit valued at $4.5 million, as well as a High-Technology Tax Credit worth an estimated $697,000.
        In addition, the MEDC and Williams Township are expected to join in providing another $2.4 million in incentives through a 12-year, 50-percent abatement of property taxes on real and personal property.
        Dow Corning will break ground on the CSS expansion in early November. Company officials anticipate that construction will be completed by September of next year, with the facility beginning operations in October with a 40-employee staff.

Dow AgroScience Also Lands State Subsidies
Michigan has also awarded incentives to another Dow Chemical subsidiary, Indianapolis-based Dow AgroScience.
        The MEDC has awarded the unit a brownfield Single Business Tax Credit to upgrade one of its facilities in Midland. Midland city officials are also providing a $1.2-million tax abatement to facilitate the upgrade.
        Those incentives will help bring the Dow AgroScience facility, which was built in the 1950s, up to current chemical manufacturing standards. Once revitalized, the operation will manufacture a new rice herbicide that's scheduled for a 2005 launch, company officials said.

Editor's note: Read about Dow and other Michigan mainstays in the Michigan Spotlight, appearing in the 50th Anniversary January 2004 edition of Site Selection.

VW's Resende, Brazil assembly plant
VW's new Mexican assembly plant will be based on the automaker's existing assembly operation in Resende, Brazil (pictured).

VW Announces New Mexican Truck/Bus Plant, Doesn't Disclose Location

by JACK LYNE, Site Selection Executive Editor
of Interactive Publishing

WOLFSBURG, GermanyVolkswagen will soon have a bigger Mexican manufacturing footprint. The German auto giant has announced plans to build a new plant in Mexico that will assemble trucks and buses. Mexican consumers are the target market for the new operation's output. VW is aiming to capture 15 percent of the nation's heavy commercial vehicle market by 2006.
        "For 2006, we will reach a capacity of up to 2,000 trucks in Mexico," the company said in a brief statement released from the company's headquarters in Wolfsburg.
        The Mexican market currently buys about 19,000 heavy commercial vehicles a year. That positions Mexico as Latin America's second-largest market for heavy commercial sales, trailing only Brazil.
        VW, however, has released very few particulars about the planned assembly plant, including its employment at full capacity.
        The plant site also hasn't been announced. Some industry observers feel that the new operation's location-less announcement may be designed to boost Mexican states' receptivity in offering site selection subsidies.
Puebla, Mexico
VW's current presence in Mexico is epicentered in Puebla (pictured), where the company has 16,000 VW employees on a 740-acre (296-ha.) site.

        On the other hand, VW is already running on a pretty tight timetable for site decision-making - at least if it sticks to the schedule outlined in announcing the project. The automaker is aiming for construction to begin by the end of 2003. And it wants to begin production by mid-2004.

Operation Will Be Modeled on Brazilian Plant
VW has specified the operation on which the Mexican plant will be modeled: the automaker's truck and bus assembly facility in Resende, Brazil. Located in the Rio de Janeiro area, the Brazilian operation opened in late 1996.
        Since then, the Resende plant has registered notable success. VW now ranks No. 1 in the Brazilian market for heavy trucks, and it's No. 2 for buses. The plant's success prompted VW to announce a $400-million, five-year investment in the operation in April of 2002. The investment, which is being used to add equipment, train workers and develop new products, doubles the automaker's initial outlay in the plant.
        The Resende plant, however, operates on a far larger scale than what VW has planned thus far for its new Mexican operation. The Brazilian facility this year will assemble about 27,000 units; that's almost 14 times the Mexican plant's projected output at full capacity.

Cummins' Mexican Plant Will Supply Engines
Some clue about the Mexican plant's location may lie in one key supplier link. Engines for the vehicles assembled in Mexico will be supplied by the Mexican unit of Cummins Inc., VW said.
        Cummins makes engines in Mexico in San Luis Potosi City, part of the nation's central region. Some analysts feel that VW may choose to locate near the Cummins plant.
        VW's plant in Resende uses a modular assembly system known as Consortio Modular. Seven suppliers (Delga, Eisenmann, Iochpe-Maxion, MWM/Cummins, Rockwell and VDO) have set up "mini-plants" at the Brazilian plant. Suppliers attached pre-assembled modules to the vehicles.
        It doesn't appear, though, that the Mexican plant will totally emulate Consortio Modular. The Resende plant will ship some of the required parts to the Mexican facility for assembly, VW officials said. But some other parts that will be assembled in VW's new plant will be made in Mexico, they added.
        VW's current presence in Mexico is epicentered in Puebla, located 60 miles (96 kilometers) east of Mexico City. The automaker's operation there has the scale of a small city.
        Some 16,000 VW employees work at the Puebla plant, which is located on a sprawling 740-acre (296-hectare) site. And some 25 supplier operations employing more than 4,000 workers are clustered near the Puebla plant.

Editor's note: Look for more coverage of both the Mexican industrial scene and the North American automotive sector in the January 2004 50th Anniversary edition of Site Selection.


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