Week of January 19, 2004
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Toyota's Portland Site Also Opening Up
Supreme Industries Bringing 120 Manufacturing Jobs to Northern Oregon
by JACK LYNE, Site Selection Executive Editor of Interactive Publishing
Supreme Industries, in contrast, saw Woodburn, a city of some 20,000 residents 32 miles (51 kilometers) south of Portland, as the answer in meeting its Northwest demand.
Seattle is the company's largest market in the region, said Mike Oium, who manages Supreme's western operations. And setting up in Woodburn, just off Interstate 5, positions the company to serve not only Seattle, but also Portland, San Francisco and Vancouver, Canada, as well. Supreme had heretofore served the Northwest from one of its plants in California's Moreno Valley, east of Los Angeles.
Supreme's Vacant Site WillThe former Silvercrest facility also met Supreme's other major location considerations. The existing facility will enable the company to get its new Oregon operation quickly online. And the building's previous occupancy by another manufacturer will make the retrofit cost-effective as well.
Rapidly Get It Up and Running
Total retrofit costs will be about $200,000, said Oium. The state agreed to pony up half of that amount. Those funds are coming through the $100,000 that Gov. Ted Kulongoski (D) has committed from state strategic reserve funds; the governor has the option of tapping those funds to boost economic development.
The Woodburn plant will be Supreme's first new manufacturing plant since 1995. The Oregon project's timing, Oium explained, is designed to dovetail with the slow but steady upsurge of the U.S. economy.
The Supreme plant comes as a welcome counterpoint in northern Oregon, where many companies have been cutting back. One of the biggest recent losses was registered in Salem, where Sumitomo Mitsubishi Silicon Corporation announced late last year that it was shutting down its 620-employee silicon wafer manufacturing
Portland: Mt. Hood Chemical WillMeanwhile, another outwardly similar situation was surfacing farther north in Portland: One company was readying to expand at a site that another was abandoning.
Expand HQ on Toyota's Vacated Site
The Portland situation, however, is quite different. The company that's leaving is Toyota, and it's departing only to expand and improve operations.
The property in question is the 32-acre (13-hectare) site that the Port of Portland Commission currently leases to Toyota Logistics Services. Toyota expects to vacate the industrially zoned site by January of 2005, relocating its auto processing operation to new facilities it's constructing on the Port's Terminal 4 waterfront. (For more details, see our earlier Oct. 12, 2002, report, "Portland Project Highlights Toyota's Green Commitment.")
Eager to revitalize the site that Toyota will be leaving, the Port Commission has approved the sale of nine acres (3.6 hectares) of the property to Mt. Hood Chemical Corporation. (Commissioners decided to sell Toyota's leased site because the Port no longer considers the property strategic for its marine operations.)
"Toyota's relocation gives the Port the opportunity to redevelop the area above Terminal 4 for companies like Mt. Hood Chemical that are committed to our community and that need space to grow and continue to provide jobs," said Port Business Development Director Carl Warren. "Selling it keeps an Oregon-based company in the state. It also supports the Port's ongoing efforts with other local and state authorities to support business expansion here in Portland and elsewhere in Oregon."
Site's Availability May Have KeptThat was certainly the case with Mt. Hood Chemical.
Mt. Hood Headquartered in Oregon
Without the Port site, the company would've seriously considered relocating and expanding elsewhere, including out of state, President Tom Mulflur said.
"We're an Oregon company and we've been headquartered in Portland for more than a century," Mulflur explained. "However, there aren't a lot of nearby North and Northwest Portland sites available for building new warehousing and distribution facilities. So we were pleased when we learned the property above Terminal 4 would be coming available in 2005."
The specialty cleaning products company will build a new 90,000-sq.-ft. (8,100-sq.-m.) headquarters on the Port property. That facility will replace Mt. Hood Chemical's existing 53,000-square-foot (4,770-sq.-m.) operation in Northwest Portland.
Additional workers will be hired to staff the larger headquarters, Mulflur said. But he didn't project how many new jobs would be created.
National Adding 100 Jobs,
More Capacity at Maine Operation
by JACK LYNE, Site Selection Executive Editor of Interactive Publishing
National's Investment in PortlandNational's South Portland expansion is part of the company's ongoing growth pattern since it first came to the city in 1987. The local operation currently employs 550 workers and spans 575,000 sq. ft. (51,750 sq. m.).
Operation Has Topped $1 Billion Since 1995
"National Semiconductor has been an important business partner in Maine," stated Governor John Baldacci (D). "They have steadily increased operations over the years and worked tirelessly with the city and state to improve the area business climate.
"Since 1995," Baldacci added, "the company has invested over $1 billion."
National's latest investment more than doubles the $25 million it spent last year for equipment and facilities upgrades in South Portland.
National's $58-million investment, however, won't be going for new work space. The company's existing local facilities have enough room to accommodate the expansion, Edmonds said.
Instead, National's South Portland expenditures will be for chip-making machinery. Individual chip-making tools alone cost anywhere from $800,000 to $4 million, Edmonds said.
BETR Incentive Bettered Maine ChancesThat investment focus on equipment increased the importance of Maine's Business Equipment Tax Reimbursement Program (BETR) for National's expansion. Edmonds, in fact, said that the company might've considered expanding elsewhere without the state incentive.
BETR reimburses companies for the local taxes that they've already paid on equipment purchases.
But National won't be spending as much on equipment as it might have. It's buying used equipment that was previously utilized in U.S. fabs that closed during the semiconductor industry's most recent downturn. Purchasing used equipment will cut National's South Portland expansion expenditures by half, Edmonds said.
The "buy-used" tactic is part of National's strategy to ensure that its U.S. operations remain competitive with low-cost chip operations in Asia. Another key element in that competitiveness strategy is high-end automation, which is already a major feature in the South Portland operation.
"We are proud of our site's ability to stay competitive in the global manufacturing market due to our high level of automation and very productive manufacturing work force," said Edmonds.
Michigan Mounts Fierce Fight, but Huge Electrolux Plant Still Mexico-Bound
by JACK LYNE, Site Selection
Task Force 'Puts Its Foot Down'It didn't take a psychic to guess the likely outcome from the Greenville plant's evaluation: Pack up and head south.
That, though, was before a very determined group of local, state and federal officials formed the Electrolux Task Force.
The task force's mission was simple: find ways to persuade the Swedish company to remain in Greenville.
"It's us as a community putting our foot down and saying we won't lose any more manufacturing jobs to Mexico or China," said Gov. Jennifer Granholm (D), a prominent member of the Electrolux Task Force.
State Offers $121 Million in SubsidiesGranholm floored her powerful foot on the economic development accelerator. The governor soon signed a reauthorization of the Michigan Economic Growth Authority that included a provision specifically aimed at Electrolux. The governor offered the company assorted tax breaks that would've been worth $80 million over 20 years if it remained in Michigan.
Other state incentives followed, rapidly swelling the total package of subsidies to $121 million. In addition, Michigan offered to create a Renaissance Zone around the plant; that designation would've allowed Electrolux to operate virtually free of state and local taxes for up to 20 years.
The United Auto Workers also got involved in the uphill retention effort. UAW officials huddled with Electrolux management and offered changes in the union's existing labor agreement. Those proposed contract modifications (which weren't publicly disclosed) would've saved the company $31.6 million a year at the Greenville plant, according Don Oetman, director of the UAW's Region 1D (which includes west Michigan).
City Offered New Plant, Free LandAnother big effort came from the small city (pop. 8,000) that's home to the Electrolux plant. Greenville city officials offered to provide a new $30-million building for the company. The existing 1.7-million-sq.-ft. (153,000-sq.-m.) plant is almost 100 years old. Specifically, the city proposed to hire a private developer, who would've built and financed the plant and then leased it back to Electrolux. Greenville's package also included a free site.
Also stepping up for the state was perhaps Greenville's most famous native son: 82-year-old Fred Meijer. Meijer is founder and chairman emeritus of Meijer Inc., a family-owned grocery and general merchandise retailer with a large, four-state Midwest network. He was born in Greenville, and now lives in Grand Rapids, where his company is headquartered.
After hearing of his hometown's plight, Meijer wrote a personal check for $25,000 to aid the city's retention effort. The prominent retailer also offered Greenville unlimited free use of his company's airplane.
In addition, the city and the Michigan Economic Development Corp. each ponied up $12,000 apiece to hire a consultant to aid in the retention effort.
Electrolux Hesitates, but Only BrieflyBy now, the retention effort was a story with very strong news legs. Area media outlets made it a prominent and frequent presence.
The media-savvy task force issued a statement after all the retention aid had been lined up. The collective assistance that had been amassed, it asserted, "puts forth meaningful and systemic remedies that substantially meet the requirements established for us by Electrolux North America."
By then, the retention alliance had turned the heat up very high. High enough, in fact, that Electrolux hesitated at the switch. It postponed for a week the final verdict on Greenville, initially set for Jan. 9.
"This is such a significant decision that we want to be sure that we have done the evaluation as thoroughly as we possibly can," an Electrolux spokesman said in explaining the rescheduling.
But that, it turned out, only postponed what apparently was already inevitable. The plant was going south, Electrolux Home Products North America President and Chief Executive Keith McLoughlin announced.
"Unfortunately" McLoughlin explained, "we face significant competitive challenges in today's global economy. Most notably, all of our major competitors have located, or announced that they soon will locate, production facilities in Mexico putting us at a large cost disadvantage."
Electrolux: Move Will Save $81 Million a YearClosing down the Greenville plant will also entail costs, which Electrolux estimated at $163.3 million.
On the other hand, the relocated Mexican plant's costs will be dramatically lower. Electrolux officials, in fact, estimated that the move will save the company $81 million a year.
Labor costs will deliver most of those savings. Greenville workers are making $13 to $15 an hour. Mexican workers will make about $2 an hour.
"Electrolux's decision today is heart-wrenching news for Greenville and Michigan," Granholm said after the relocation was finalized. "I could not be more disappointed that the company ultimately chose cheap, foreign wages over a highly skilled American work force with fair wages and quality health care."
But Granholm maintained, "This not a knockout punch. The people of Greenville have long demonstrated that their community is a great home for industry, and the state is committed to helping the community."
The governor immediately directed state agencies to begin "to work together to strategize new job development tactics for the city and to help Electrolux employees find new employment as quickly as possible."
The Greenville plant won't close until some time in 2005, Electrolux officials said. The Mexican plant will build a new refrigerator, they added.
So, too, would've the Greenville operation - at least if it had remained open.
Editor's note: For more on the white goods industry's southward migration, including Whirlpool's recent announcement of its Mexican project, see the Mexico Spotlight in the January 2004 Site Selection.
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