Week of June 7, 2004
  Project Watch

U.S. Xpress Adding 500 to 1,000 Jobs at East Tenn. HQ

by JACK LYNE, Site Selection Executive Editor of Interactive Publishing

BRAINERD, Tenn.U.S. Xpress Enterprises has loaded a large chunk of its own growth onto the fast track, announcing plans to add 500 new jobs at its headquarters in Brainerd, Tenn. And over the longer term, the trucking firm may add another 500 positions at its Chattanooga-metro operations base.
The metro around Chattanooga (pictured) is home to about
1,350 of U.S. Xpress' employees, more than 16 percent
of the company's total work force of some 8,600 workers.

        U.S. Xpress is expanding on a 40-acre (16-hectare) tract that the company says it's going to buy in Silverdale Industrial Park, which is owned by the Hamilton County government. The property sits across the street from U.S. Xpress' existing headquarters facility, which was built and opened in 1998. (The current headquarters structure will remain in place after the expansion.)
        The company will initially build a new 50,000-sq.-ft. (4,500-sq.-m.) office building on the park site. That facility will house 500 new positions, including a mix of executive, managerial, professional and clerical positions to support U.S. Xpress' trucking and transportation-logistics operations, U.S. Xpress Co-Chairmen Max Fuller explained in announcing the project. Construction will begin within the next six to 18 months, he said at corporate headquarters.
Patrick Quinn
"We've had great success in hiring the people we need from the local labor pool," said Co-Chairman Patrick Quinn (pictured).

        In addition, the newly purchased Brainerd site is large enough to accommodate a second new building. U.S. Xpress tentatively plans to add that second new facility within the next five to seven years - at least if the company's business growth continues on its current upward spiral, said Co-Chairman Patrick Quinn, who founded the firm with Fuller in 1986.
        The company recorded net income of $7.6 million last year on sales of $930.5 million. 2003's performance marked a 590.9-percent increase in net income. U.S. Xpress now ranks as the fifth-largest publicly owned U.S. truckload carrier.

16 Percent of Company's Total
Work Force from Chattanooga Metro
The skill and availability of the area's work force were major factors in deciding to expand in the Chattanooga area, Quinn explained.
        "We've had great success in hiring the people we need from the local labor pool," he said. "Building on our successes by continuing to grow [here] just makes sense."
        U.S. Xpress should certainly know quite a bit about local-area labor. The headquarters that the company built in '98 allowed it to consolidate 500 employees, some of them already working at other Hamilton County locations, others working in different cities.
        Today, U.S. Xpress' Brainerd headquarters work force has grown to 800 employees. And the company has about 1,350 employees altogether in the entire Chattanooga metro. That represents more than 16 percent of U.S. Xpress' total work force of some 8,600 workers.
U.S. Xpress truck
All of U.S. Xpress' 6,000 trucks are tracked by a company satellite system, and all are equipped with e-mail and VORAD (vehicle on-board radar) technology, which warns of potential hazards.

        "Building our headquarters in Hamilton County in 1998 has proved to be an excellent choice," Fuller said. "We've had great support from the county, the city of Chattanooga and the Chattanooga Chamber. This project is the next phase in our on-going partnership with this community."

Bullish Demand Driving Expansion
That next-phase East Tennessee expansion, added Quinn, is being driven by greater demand for the services of the company's dedicated contract and regional businesses, and for its subsidiary, Xpress Global.
        Formerly known as CSI/Crown, Xpress Global provides logistics services for the floor-covering industry. U.S. Xpress offers regional service in the U.S. Midwest, Southeast and West on trips of 200 to 550 miles (320 to 880 kilometers).
        On longer trips, the company offers a lower-cost alternative to compete with airfreight with its "near-airfreight services," using teams of drivers for trips of 400 to 3,000 miles (640 to 4,800 kilometers). U.S. Xpress can send a truck from New York to Los Angeles in 65 hours, for example, or from Seattle to Miami in 73 hours, according to company officials.
        The firm also offers exact-time services, with pickups and deliveries at the specific times that customers indicate.

Technology a Major Park
Of Company's Trucking Strategy
The company's transport-logistics system has garnered wide praise, both from inside and outside the shipping industry. Bridgestone Tire Topic Magazine, for example, said of U.S. Xpress, "Sometimes we get an opportunity to see the future by observing an organization that's already there - an organization doing today what most of us dream of doing tomorrow."
        The company's techno-savvy has been a major factor in its growth, maintained Trevor Hamilton, chief economic development officer for the Chattanooga Area Chamber of Commerce. "U.S. Xpress has been recognized as setting the industry standard for integrating technology into all aspects of their business," he said.
        The company's satellite system enables it (at well as its customers) to constantly monitor exactly where its trucks are at all times. All of U.S. Xpress' some 6,000 trucks are equipped e-mail, as well as with VORAD (vehicle on-board radar) technology, which warns of potential hazards, such as stopped or slow-moving vehicles. In addition, the company continually checks weather, traffic delays and highway construction for all of its en-route trucks.

Turnover Rate One-Third
Lower Than Industry Standard
The company's success has included recording a turnover rate a third lower than the trucking industry average. Quinn attributes that lower turnover in part to teaming husbands and wives in trucking teams. About one-fourth of U.S. Xpress' drivers are females, compared to the industry average of 5 percent.
        The fast-growing operation further tries to increase employee-friendliness by integrating features more typically found at smaller trucking companies. The firm, for example, doesn't bounce drivers from one dispatcher to another as its trucks move into different regions. Instead, U.S. Xpress uses "driver managers," who maintain a single point of direct contact with their assigned truckers throughout their routes.

Schering-Plough Developing North NJ Site for 1,700 Employees

by JACK LYNE, Site Selection Executive Editor of Interactive Publishing

Chairman and CEO Fred Hassan
Chairman and CEO Fred Hassan (pictured) called the Summit consolidation "integral to our plans for building the new Schering-Plough."
KENILWORTH, N.J.Schering-Plough Corporation has just made a lot of moving companies in northern New Jersey very happy: The health-care heavyweight has announced that it will develop its huge - and, for the moment, virtually vacant - complex in Summit, N.J., relocating at least 1,700 area employees to the site by the end of the year.
        Located about 14 miles (22 kilometers) west of Newark, Schering-Plough's 13-building Summit development includes 1.7 million sq. ft. (153,000 sq. m.) of R&D and office space. The company bought the 88-acre (35-hectare) site from Novartis in 2000 for $170 million. Novartis moved out in April 2003; since then, the complex has stood almost totally empty.
        Deciding what to do with that big piece of the portfolio has been part of Chairman and CEO Fred Hassan's review of Schering-Plough's operations since taking over the troubled company in April of 2003. Selling the sprawling tract was one option the company considered, Hassan said.
Claritin products
Schering-Plough's products include Claritin (pictured). The allergy medication was a hot seller early, but has cooled of late, contributing to the company's recent struggles.

        Instead, Schering-Plough decided that the site's cost and operational efficiencies were too good to pass up.
        "Developing the Summit site and bringing more of our people together will be integral to our plans for building the new Schering-Plough," Hassan said in announcing the project at the company's headquarters in Kenilworth, N.J. "As we move forward with our five-stage action agenda, we are making decisions and investments designed to support the long-term, sustainable growth of this company."
        The decision supports one of Hassan's major goals: cutting company costs by $200 million a year. Schering-Plough's $8.3 billion in 2003 sales marked an 18.1-percent drop-off and produced a $92-million loss.

Move-Ins Starting This Summer
Hassan came to Schering-Plough with a reputation as a corporate turnaround artist, owing to his work with another then-ailing firm, Pharmacia. After taking over as CEO in 1997, Hassan resuscitated Pharmacia, which Pfizer bought last year for $60 billion. As The Wall Street Journal observed in 1999, "He has made something of a silk purse from a sow's ear."
        Schering-Plough hasn't estimated how much it will save with the consolidation in Summit. And, considering the project's byzantine relocation scenario, it probably doesn't really know yet.
        That scenario, though, will begin to materialize soon. About 60,000 sq. ft. (5,400 sq. m.) of the Summit development's space would require only minimal renovations before move-in, Schering-Plough officials said.
        The first employees who'll be relocating are 100 auditing workers now spread out in offices in Kenilworth, Madison and Springfield. That group will complete its move-in by late this summer.
        Another 350 employees with Schering-Plough's consumer health-care and animal-health businesses will move in next. Now located in Berkeley Heights and Union, that group will complete their relocation by the end of this year, company officials are hoping.
Newark, N.J.
With the consolidation, the redeveloped Summit complex will house 1,700 employees 14 miles (22 kilometers) west of Newark (pictured), creating Schering-Plough's second-largest concentration in New Jersey.

        "Wherever possible, we intend to build contiguous work spaces so that our teams can work closely together," Hassan explained. "This creates important synergies and efficiencies, and reflects the new culture and global operations of the company we are building."

Ciba-Geigy Housed 2,500 at Site
Schering-Plough says that it will spend about $20 million in developing the site.
        The site will initially house administrative and business functions. The company, though, is also redeveloping much of the complex's 1.2 million sq. ft. (108,000 sq. m.) of R&D space, anticipating that the site will become a major research operation for Schering-Plough.
        And the development would certainly seem to have enough space to accommodate more than the 1,700 workers who're scheduled to move in. At peak employment, the complex housed 2,500 employees for Ciba-Geigy, which first built on the site in 1937. (Ciba-Geigy merged with Sandoz in 1997 to create Novartis.)
        The consolidation's cost-effectiveness will get a further boost from $4.4 million in state incentives. Schering-Plough received that subsidy in 2002 in a grant from the New Jersey Economic Development Authority that was contingent on having at least 323 employees at the Summit site.
        The company hasn't decided yet what it will do with the offices that now house the employees who'll be transferred to Summit. Schering-Plough owns some of the facilities, while it leases others.
        And the move will be even more complex than it ostensibly appears. As the company explained in a statement, "Not all employees affected would necessarily be moving to Summit. For example, in order to bring functional activities together, some employees may be relocated to Kenilworth, and some in Kenilworth may move to Summit."
        Schering-Plough has 30,000 employees worldwide, 7,000 of them in New Jersey. The Summit consolidation won't result in any layoffs, the company said. It will, though, create Schering-Plough's second-largest concentration in the Garden State, trailing only the company's headquarters in Kenilworth, which is eight miles (13 miles) southeast of Summit.

Gov. Mike Huckabee
Announcing Hino's new plant at the company's site in Marion (pictured), Gov. Mike Huckabee explained that the project's job-creation and investment numbers aren't yet firmed up.

Hino Motors Will Build
New East Arkansas Plant,
but Specifics Are Scarce

by JACK LYNE, Site Selection Executive Editor of Interactive Publishing

MARION, Ark. – Auto-industry heavyweight Hino Motors Ltd. is definitely headed to Marion, Ark.
        But a persistent question remains: Just what is the Toyota Motor Corp. subsidiary bringing to the Arkansas Delta? At this point, project particulars are foggy.
        For certain, Hino Motors Manufacturing U.S.A. has purchased a 160-acre (64-hectare) site in Marion, an East Arkansas city of some 16,500 residents that sits across the Mississippi River from Memphis, Tenn. And that site will almost certainly house an auto-parts manufacturing facility.
        The project job and investment numbers, however, remain unclear. And there's a possibility that the Japanese company's site could house more than a parts plant.
        Gov. Mike Huckabee (R) announced the Hino project during the first week of May at a press conference, held on the Tokyo-based company's Marion site.
        "What we're seeing now is all the pieces coming together," Huckabee said, citing the three other auto-parts firms in the last year that have announced eastern Arkansas projects.
        Winning the Hino project, the governor said, had a lot to do with the state's losing another major project: Toyota's 2,000-employee, $800-million truck assembly plant, which went instead to San Antonio, Texas, in February of 2003.
        Arkansas nonetheless got high marks in offering a 1,400-acre (560-hectare) site in Crittenden County - which includes Marion. Toyota even praised runner-up Arkansas in a company press release for "its transportation infrastructure, work force and incredibly positive attitude."
        "We didn't win the battle for that plant," Huckabee said. "But the fact we were the runner-up put Crittenden County on the radar screens of economic developers across the country and around the world."

Hino Super Dolphin Profia truck
Hino for 30 years has been Japan's No. 1 seller in of medium- and heavy-duty diesel trucks, including the Super Dolphin Profia (pictured). The company introduced Japan's first truck in 1918.

Speculation Runs Rampant
Toyota's familiarity with the area is underscored by Hino's location. The subsidiary looked at 20 U.S. sites, according to Hino officials. The one it chose, inside Marion's 2,100-acre (840-hectare) Railport Industrial Park, sits across the street from the giant tract that the Natural State offered the automaker.
        Exactly what goes on that acreage remains to be seen.
        Hino, Huckabee explained in Marion, "will be building on this site behind me a plant that will be manufacturing parts and components for the trucking industry." But full project specifics, he added, wouldn't be firmed up until Hino officials came to Marion in July for the plant's scheduled groundbreaking.
        And that was true. But in the absence of more specifics, speculation snowballed.
        A story made the Associated Press wire reporting that the parts plant was a precursor to a Hino truck assembly plant. That would've been landmark news for Arkansas, the lone U.S. southern state without an auto manufacturing facility.
        Further ripening the rumors was the fact that Hino has been Japan's No. 1 seller of medium- and heavy-duty diesel trucks for 30 years. Other newspaper reports began to appear estimating that the project would create as many as 1,000 jobs.
        Conjecture hit such a high level that company officials decided to clear the air by going to Arkansas much earlier than planned.
        Hino "hasn't reached the stage to announce [Marion plant] specifics," Senior Managing Director Bunju Hagiwara explained through an interpreter at a press conference at The Peabody Little Rock Hotel.
Marion's Railport Industrial Park
Hino's selection of a site in Marion's 2,100-acre (840-hectare) Railport Industrial Park (pictured in an aerial photo) puts it right across the street from the 1,400-acre (560-hectare) site that Arkansas offered Toyota for its huge truck plant.

        And there's a good reason for that. Hino won't know the full specifics on the size of the plant that it will need until the supplier gets Toyota's figures on how many parts it will need, he said.
        Hagiwara did characterize the 1,000-jobs estimates as "very exaggerated." The plant will likely employ 200 to 300 workers with production beginning in 2006, he said.

Hino Aiming for 10 Percent of
U.S. Truck-Sector Market by 2010
But the Little Rock press conference won't likely full squelch speculation over the possibility of a Hino truck assembly plant in Marion.
        One factor that will fuel conjecture is the company's goal of capturing 10 percent of the U.S. medium- and heavy-duty diesel truck market by 2010. Currently, Hino has no U.S. manufacturing presence. And its 2010 market goal would require at least a 10fold increase from the company's current U.S. annual sales of 3,000 trucks (all imported from Japan).
        "We're very happy and satisfied with the land," Hagiwara said. "Marion was the most attractive [site]. It offers easy access to the freeways and a container rail yard, both of which are very favorable for distribution, and a high-quality labor force."
Sen. Blanche Lincoln (D)
The U.S. Commerce Department's $1.5-million grant to Marion for site improvements will fund "much-needed infrastructure improvements in preparation for the Hino plant," said Sen. Blanche Lincoln (D), part of the state's congressional delegation in Washington that successfully lobbied for federal aid.

        He added, however, that it will likely be awhile before Hino would even consider the Arkansas site for a truck plant.
        "Once we reach 10,000 units a year, and if we decide to build a plant in the United States, Marion will be a strong candidate," Hagiwara explained.
        Even so, another factor could dictate a Marion truck plant, he allowed. Hino does consignment work for Toyota to meet excess demand. And if Toyota's truck sales exceed what the San Antonio plant can produce, Hino would likely build an assembly plant to up output, Hagiwara said.

Multiple Transport Modes
For the moment, the company is receiving a $2.4-million grant from the Arkansas Department of Economic Development. In addition, the state's congressional delegation in Washington successfully lobbied for a $1.5-million U.S. Commerce Department grant to Marion for site improvements.
        The company's other parts plant in Ontario, Calif., is currently under construction. That $22.5-million, 120-employee facility is scheduled to begin production in November of this year.
        Hino's East Arkansas entry follows three other recent auto-industry projects in the region:
        • Denso Corp. is building a 217,000-sq.-ft. (19,530-sq.-m.) facility in Osceola that eventually will employ 500 people.
        • Eakas Corp. is constructing a 91,000-sq.-ft. (8,190-sq.-m.) manufacturing facility in Wynne that will hire 250 workers making exterior auto parts.
        • Systex Products Corp. is building a smaller, 40-employee plant in Osceola that will supply Denso.
        Those projects, combined with the new Hino plant, will create 1,000 new jobs.
        The region's multimodal transportation system is a major draw for operations in which moving products is essential. Five major rail lines intersect near Marion, as well as two interstate highways, east-west I-40 and north-south I-55. And sitting close by is the Mississippi River, the largest, busiest U.S. inland waterway.
        Hino's Marion site illustrates those multiple modes. Railport Industrial Park is bounded on the north by the Union Pacific Intermodal Railport. And Hino's location is three miles (4.8 kilometers) from both I-55 and I-40, eight miles (4.8 kilometers) from the Port of West Memphis, 12 miles (4.8 kilometers) from the Port of Memphis, and 18 miles (4.8 kilometers) from Memphis International Airport.

Editor's note: Look for more on Hino Motors' plant in the Natural State in the Arkansas Spotlight in the upcoming July 2004 issue of Site Selection.




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