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ith the current state of affairs in California and the success of the Julia Roberts’ Oscar vehicle Erin Brockovich, utilities were not seen in the best light in 2000. But those in the corporate real estate field know better. They realize the important role utilities play in site selection and expansion.
Site Selection editors couldn’t agree more. This year, Site Selection‘s Top 10 Utilities of 2000 played a role in landing major corporate locations and new industries to their service areas. Some of the Top 10 went so far as to participate in turning around markets in their service areas, making accessible new locations for further investment.
In choosing this year’s top 10 utilities, Site Selection editors looked at two sets of criteria derived from responses to the magazine’s annual utilities survey. First and foremost were the numbers: the total number of new jobs created in a utility’s service area and amount of capital investment made in the service area. To level the playing field for those utilities in less populated service areas, Site Selection also looked at per capita numbers including number of new jobs per 1,000 population and amount of capital investment per capita.
Secondly, Site Selection editors took into consideration the services provided by the utilities. Innovative programs that may potentially impact the community or services provided to corporate customers weighed heavily on the final decision.
This year’s top 10 proved to be successful not only in helping land jobs and investment, but in providing exceptional customer service. Here’s a look at the winners.
With more than 23,000 jobs and US$3 billion in investment coming to American Electric Power’s (AEP) 11-state service area (the largest geographic area of any U.S. electric company), this utility is a true powerhouse in economic development. The group worked with other local economic developers to land 171 industrial, distribution and office projects during 2000.
Among some of the biggest announcements were Kimberly Clark Corp.’s $200 million expansion in Bixby, Okla.; General Motors Corp. $700 million, 1.5 million-sq.-ft. (139,355-sq.-m.) expansion in Shreveport, La.; and AM General’s new $210 million plant in Mishawaka, Ind., which will employ 1,500 in the production of a new Hummer-based sport utility vehicle.
The secret behind AEP’s success is the depth of its economic development team, says David Canter, manager of business development at AEP’s headquarters in Gahanna, Ohio. AEP’s team consists of 40 economic development professionals. “Our depth allows us to offer additional resources to assist in location searches,” he adds. “This includes a research function whose task is to assist the rest of the AEP team with a variety of products designed to assist in recruitment and community development initiatives.”
Among the many programs AEP offers is Procure, a Web-based interactive database of site/building/community information; a shell building program that provides debt service financing to local economic development groups to assist in building a shell building; and the Building Blocks program, which provides a virtual concept of a shell building including the architectural drawings of the facility.
“In addition, our research products are provided to individual companies during the site location process,” says Canter. “One such product is an economic impact analysis. Each impact analysis measures the direct and indirect impacts of a new business or expansion on local area output, employment, income and tax revenue. This is highly valued by our communities who use the data to assess the benefit of providing incentives to prospects.”
“Whether we are evaluating existing programs, planning an international trade mission, responding to a client or developing a Web page, Cinergy is always there to assist,” says Indiana Lt. Gov. Joseph E. Kernan. “After four years in this post, I have become very familiar with what it takes to attract and retain quality companies. Though often unheralded, utilities are an important player in that mix, and Cingery is simply one of the best.”
In 2000, Plainfield, Ind.-based Cinergy was especially involved in Chrysler’s $500 million, 748-job expansion of its transmission plant in Kokomo, Ind. Cinergy’s involvement consisted of facilitating meetings with local and state officials and assisting with their tax abatements, reports Scott Fulford, manager of economic development marketing with Cinergy. This expansion opened up between 800 and 1,000 acres (324 to 405 hectares) for additional industrial growth in Howard County and boosted Chrysler’s employment in Kokomo to 9,600.
Kokomo/Howard County Development Corp. President Gregory P. Aaron notes, “As a not-for-profit economic development organization with limited funding resources, our success has been a direct result of Cinergy’s cash and in-kind support.” Aaron points to such Cinergy programs as the Goldstar Marketing program, which helps fund the production of printed marketing materials, and its community demographics and site and building information among the many reasons for the area’s success.
In total, Cinergy’s 25,000-sq.-mile (6.5 million-hectare) service area of Indiana, Southwestern Ohio and Northern Kentucky saw some 8,548 new jobs and more than $2.9 billion in investments. Other big investors in Cinergy’s service area include GAF Building Materials, Medtronic Sofamor Danek, New Millennium Building, Takanichi-USA and TOA USA. These five companies alone committed more than $145 million in capital investments and created some 865 jobs.
Cinergy also worked with local economic development representatives, state officials and the U.S. Army to form the agreement on the transfer of the U.S. Army facility in Charlestown, Ind., to the local re-use authority. The group worked with outside consultants to develop a master plan/best-use study for redevelopment of the site. “This is a huge facility on a large parcel of land and encompasses numerous buildings,” Fulford notes. “Although difficult to deal with, it presents a tremendous opportunity to build a world-class commercial/manufacturing facility. The most unique part of this process is that we brought in our real estate services group to act as project manager for the site, overseeing the maintenance, the grounds and infrastructure, and the current operations using the facilities. Additionally, we are assisting in development of marketing materials. This is an example of our willingness to be creative and seek and fulfill needs where we can.”
Michigan couldn’t be the winner of Site Selection‘s Governor’s Cup for the fourth consecutive year without a lot of elbow grease being put into the effort. Consumers Energy/CMS Energy is part of the team the made that happen. In 2000, there were more than 14,700 jobs created in the group’s 9.9-million-population service area. Total investment exceeded $3.1 billion.
Being home to Motor City means that much of that investment came from the automotive industry. Delphi Automotive Systems, for instance, invested some $51.8 million and created 600 jobs in Troy, Mich., in 2000. Other major auto investments came from Behr America, Behr Industries, General Motors, Hayes Lemmerz, Michigan Automotive Compress, Tower Automotive Inc. and Yorozu Automotive North America. Together with Delphi, these automotive giants invested $303.2 million in Michigan last year, creating more than 2,500 jobs.
Though automotive is still king in Michigan, Consumers Energy Director of Domestic Economic Development Douglas A. Buikema says that his organization has helped the region diversify. “Michigan is coming on strong in the life sciences and the biotech area,” he reports. “CMS Energy/Consumers Energy works closely with the state economic development agency to bring these companies to the state. Our efforts are geared to one-on-one visits with specific companies that would do well by locating in Michigan. To date, many have located in Michigan, among which are a new cancer research institute, new heart research institute, new medical training facilities, and substantial expansions to hospitals specializing in cancer and heart treatments.”
Consumers Energy/CMS operates an international economic development organization with a wide range of economic development experience. “Our company supplies economic development training in business attraction and retention, as well as provide expertise to local companies in exporting their products and services internationally,” Buikema says. “We financially support the efforts of communities with economic development programs, and we stay close to the capital markets, often leading the way to supply capital requirements that new business requires.”
With investments from such energy-dependent operations as Intel Online Services’ $50 million Internet data center in Fairfax County, Va., and Infineon Technologies’ $1.1 billion semiconductor expansion in Henrico County, Va., it’s no surprise that Dominion Virginia Power, which recently merged with Consolidated Natural Gas, would be among the top utility companies for 2000.
“In addition to economic development, the Infineon expansion announcement involved the support of our bulk power group, which engineered, constructed and maintained a power supply to the semiconductor facility that resulted in no outages or power disturbances in nearly four years of operation,” says Kent Hill, senior manager of economic development with the Richmond, Va.-based utility.
Such involvement with existing business is key to Dominion Virginia’s and its service area’s (the eastern two-thirds of Virginia) success. Last year, Dominion Virginia played a significant role in moving the Richmond economy in a new direction with its involvement in a Capital One announcement that will result in more than 4,000 new jobs in Goochland County, Va. “This is significant in that Capital One has replaced Philip Morris, which has downsized operations, as the No. 1 employer in the region,” says Hill. “Our company was very involved in the early stages of site analysis as electric reliability, pricing and construction lead times were critical elements of the site selection criteria.”
And with all the concern over electric power reliability and pricing, Dominion Virginia Power’s role in economic development is expected to increase. Hill explains, “Our job is to provide a sense of calm and assurance that the power supply will be reliable and economically priced in our market area.”
Of the $994 million of investments recorded by Georgia Power during 2000, there were a large number of telecommunications projects, many of which were Internet hosting facilities. TelePlace and MCI/Worldcom are good examples.
“While not labor-intensive, these facilities are big energy users and bring significant revenue to Georgia Power,” says Becky Blalock, vice president of community and economic development with the Atlanta-based utility. “We played an important role in landing these projects. Our extensive knowledge of the electrical systems and reliability, coupled with our information on the telecommunications infrastructure in the state, was vital to these projects finding facilities in which they can operate successfully. And it was, in fact, this type of project which brought about the need for one of the new services we developed in 2000, our interactive telecom database.”
This database was created to meet the demand for data on central office locations and points of presence needed for the telecommunications industry. Typically gathering this information required meeting independently with many service providers. Georgia Power used its GIS capabilities to build a data set, with mapping capabilities, to capture information on points of presence, carrier availability and switch center locations. “The data, when combined with building and site information and overlaid with underground or Hi-Rely electrical network service, can provide a list of facilities that meet the needs of these clients and allows prospects to more fully evaluate the viability of a particular location,” says Blalock.
Georgia Power has also been involved with bringing new industries to its namesake state. The statewide utility helped land a biotech firm in Atlanta and Athens — a relatively new industry target for the state. Merial Ltd., the world’s leading animal health company and manufacturer of Frontline and HeartGard, decided to relocate its North American operations, both headquarters and R&D, from New Jersey to Atlanta and Athens, Ga., respectively. The project, which came to the utility from STAUBACH, involves 410 new jobs and a $32 million investment. Blalock says, “This is the first time Georgia has successfully recruited and located a headquarters of a major biomedical company, and it is an exciting development as Georgia continues to build its biotech industry.”
One project that stands out in the mind of Memphis Light, Gas and Water’s Manager of Economic Development Sherry DuBose is International Paper’s merger with Union Camp and Champion and its subsequent expansion. The new Memphis area facilities include expanded financial and customer services operations, testing laboratories, design and graphic arts, equipment storage and distribution for worldwide operations.
“It encompasses three separate expansion projects totaling more than 950 new employees and some $71.2 million in capital investment,” DuBose says. “MLGW worked with International Papers to consider available sites in the Memphis area and provided significant utility, business and statistical data highlighting Memphis’ strengths for the projects.”
MLGW helped bring 12,250 new jobs to Memphis last year and more than $1.8 billion in capital investment by putting emphasis on supporting both existing and new local startup companies. Two programs stand out in the utility’s repertoire: Existing Business Breakfast meetings and the new Memphis Business Incubator.
MLGW hosted two existing business breakfasts last year that focused on the state’s Manufacturing Means Jobs work-force development program and a new community health plan that enables small businesses to offer health coverage to uninsured employees. “In addition to the featured presentations, these meetings are excellent networking opportunities for businesses to meet, share information with each other and even explore partnering opportunities,” says DuBose.
The business incubator was needed to support Memphis’s emerging technology sector, explains DuBose, who serves on the incubator’s executive committee of the board as well as chairs the personnel committee. “Until last year, Memphis was the largest city in the U.S. without a business incubator,” she adds. “Memphis Incubator Systems offers its clients business counsel, financial oversight, access to business development firms and low overhead shared services.”
Currently there are 15 companies with more than 75 employees residing in the incubator.
Operating in Douglas County and parts of Sarpy, Washington and Saunders counties in eastern Nebraska, Metropolitan Utilities District (MUD) has been a big component of the area’s success. Last year, the group helped win some 3,000 jobs and more than $1.77 billion in investment.
Among some of the big investors in MUD’s 451,100-population service area were West Corp., Cargill Dow Polymers, ConAgra Foods, Union Pacific, Quest Communications and Caterpillar Claas. Together these companies created 1,200 jobs and invested $515 million in eastern Nebraska.
MUD worked particularly close with one of the biggest announcements made in its service area last year. First National Bank invested $200 million in its new 40-story tower in downtown Omaha. Mari Matulka, director of communications with MUD, says, “We worked with First National Bank to install a fuel cell operation to eliminate electrical disruptions for their credit card processing operations.”
Like many areas, eastern Nebraska is also looking to expand its industry base, and MUD is helping to further that goal. In another deal that is considered a breakthrough for the area, Cargill Dow will invest $300 million in Blair, Neb., for its NatureWorks PLA facility. The new plant will use 40,000 bushels of locally grown corn per day to produce polymer that can be used in consumer goods ranging from clothing and furnishings to cups, food containers and candy wrappers. The plant will employ 100 workers.
“We are absolutely thrilled that Cargill Dow selected the Blair Campus as the production for this exciting new corn-based technology,” says Blair Mayor Mick Mines. “Other worldwide locations were considered for this facility, so this is a significant economic success for Blair and all of Nebraska.”
CODENAME: Project Centurion. CONTACT: Deloitte & Touche. Sometimes confidentiality is extremely important, and if you’re involved in a project like T.J. Maxx’s 1.1 million-sq.-ft. (102,193-sq.-m.), 1,500-job warehouse that landed in northeast Philadelphia, then confidentiality is extremely important — not an easy accomplishment when you are involved in a project from the beginning.
“A reputable site location consultant contacted us with the lead,” says Greg Byrnes, director of economic development with PECO Energy. “We analyzed the requirement and provided a comprehensive package of information on four suitable development sites. We supplied radial demographics and detailed information on the quality and availability of the labor force. We explained the tax advantages of Pennsylvania’s Keystone Opportunity Zone program. We helped secure a major developer for the project, Liberty Property Trust. We coordinated efforts with the city of Philadelphia and the state’s commerce department, and we stepped aside at the appropriate time and let the deal happen.”
This kind of involvement is not unusual to PECO. Last year, the utility helped land some 15,290 jobs and $889 million in investments for its five-county service area of Philadelphia. Joining T.J.Maxx in the top investors category last year are The Vanguard Group ($500 million, 10,000 jobs over 10 years), CB Technologies ($19 million, 400 jobs), 833 Chestnut Street ($42 million, 500 jobs) and the Journal Register ($39 million, 150 jobs).
Sometimes there’s more to economic development than bringing in new industries. PECO, for instance, contributed heavily to the rebirth of the city of Chester in Delaware County, Pa. The utility transferred ownership of an old generating facility in Chester to Preferred Real Estate Investments for redevelopment. To be known as The Wharf at Rivertown, Preferred Real Estate will redevelop the 150-acre (61-hectare) site while preserving the historic, Gothic-style power plant. The building will be converted into 400,000-sq.-ft. (37,161-sq.-m.) of office space. Preferred plans to invest $225 million in the project that is expected to create 3,000 jobs. The project has already won its first tenant: High-tech software developer Synergy has taken 200,000 sq. ft. (18,581 sq. m.) of space there.
“Our organization played a pivotal role in this project by ‘acting as one’ for the good of the company and the communities we serve,” says Byrnes. “The results are yet to be realized, but the project might very well epitomize the benefits of urban redevelopment worldwide.”
Tennessee Valley Industrial Development Association was involved in the recruitment and expansion efforts of many companies in 2000. In fact, TVIDA helped attract some 53,617 new jobs and $976.3 million in investments to its 80,000-sq.-mile (21 million-hectare) service area in Tennessee, north Georgia, north Alabama, southwest Kentucky, southwest Virginia, western North Carolina and north Mississippi.
Among the many signature projects revealed last year is Nissan, which announced that it intends to expand its existing operations in Decherd and Smyrna, Tenn. Other significant announcements in 2000 include New Century Pharmaceuticals in Huntsville, Ala., and Iowa Beef Packers’ $40 million to $60 million investment in Nashville, Tenn. “These projects illustrate the diversity of companies TVIDA and the Tennessee Valley are able to attract,” says Sam Burke, managing director with TVIDA. “Wal-Mart also announced substantial investments in two TVIDA served locations. Shelbyville, Tenn., and Hopkinsville, Ky., were selected as sites for distribution centers. These announcements represent the creation of well over 1,000 new jobs and will bring significant capital investment to the local areas.”
In terms of new programs and services, TVIDA seems to follow the “if it ain’t broke, don’t fix it” philosophy, except that there is always tweaking along the way, according to Burke. For example, the group continues to modify its strategies and has broadened its target industry focus to include sectors in the new, high-tech economy. “And Site Selector, TVIDA’s Web-based site selection tool (www.tvida-siteselector.com), is constantly being updated and refined to provide customers with the most important, accurate information possible.”
The bigger the better is a common philosophy in Texas. The same holds true for the state’s utilities and economic development efforts. Take for example TXU Electric & Gas. This utility serves 136 counties, including 658 incorporated cities, in northern, central, eastern and western Texas — an area encompassing some 7.6 million people. Even more impressive are the 112,704 new jobs the utility helped land in its service area last year.
For TXU, 2000 was the year of warehouse and distribution centers. Some of biggest job producers in the warehouse distribution arena include Ford Motor Co. (874 jobs in two expansions), JCPenny Co. (1,356), Walgreen’s (1,104), Wal-Mart (1,310 jobs in two expansions), Mackie Automotive Systems (1,130) and Fleming (1,104).
“There were a total of 66 new locations and expansions by the end of the year,” says Mike McKinney, manager of economic development for TXU. “The watch phrase these days is ‘keep it moving and get it closer to the customers.’ The wholesale/distribution business is changing rapidly; e-business, telemarketing and other non-traditional strategies are being embraced by wholesalers and distributors. Moving the warehouse closer to the customers ensures flow-through delivery and supports just-in time manufacturing and assembly programs as well as quick-response policies. Texas ended up being a prime location for new technologically enhanced warehouse and distribution facilities.”
One distribution-type facility that McKinney views as a big success for his service area is TATUNG Co. of America’s 227,000-sq.-ft. (21,089-sq.-m.) operation in Arlington, Texas. TATUNG will repackage assembly of PC-related products and then distribute them to locations east of the Mississippi River.
“TXU Electric & Gas’s economic development department contacted TATUNG Corp. during a marketing trip to Taipei, Taiwan, in spring of 2000,” McKinney notes. “We spent a lot of time discussing the economics of product distribution out of Texas to the rest of the United States as opposed to distributing from California, which is where TATUNG’s U.S. corporate office is located. The Arlington facility will be their first location in the U.S. outside of California.”
