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hen national electronics retailer Best Buy needed to place a regional distribution center in the Southeast, the Georgia Center for Site Selection played a pivotal role.
What’s unique about the GCSS? It’s operated by a utility cooperative association — the Georgia Electric Membership Corp. (GEMC) in Atlanta. The center helps businesses, both large and small, establish or expand their operations in Georgia. The center offers full-service site location assistance and provides information on local communities, available buildings, and financing and incentives options.
While the GEMC trade association represents Georgia’s 42 EMCs, its primary mission, says Facilities Location Manager Joe Riley, is to help Georgia’s rural communities improve their economies and bring a higher standard of living to their residents.
In the case of the Best Buy distribution center, that’s exactly what’s happening. The 700,000-sq.-ft. (65,100-sq.-m.) facility, expandable to 1.3 million sq. ft. (120,900 sq. m.), brought 300 new jobs and much-needed US$40 million in investment capital to rural Dublin, Ga. Little Ocmulgee EMC supplies the power.
“Site development has been an emphasis of GEMC from early on,” says Riley. “For example, we now make use of a GIS system that makes it easy to track all the services that go to a specific site. We also operate both a site bank and a building bank where a company can go and select the best site and the best building for their business. Plus, our site development people are constantly working with the economic developers in the local communities.”
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That means working not only with companies to locate sites, but also with the communities to make their sites development-ready.
“We want to help a community spend its money wisely. So, one of the first questions we ask is, how can this site be developed?” notes Riley. “Many of these sites, especially those in our rural communities in Georgia, were historically used for agriculture. But the agriculture jobs are going away. We now convert former pecan and peach orchards into industrial and commercial sites. Land availability is not a problem in Georgia.”
The GEMC economic development program centers around three initiatives: facilities location, community development and site development. In many corporate facility projects, all three departments work together to get the deal done.
In addition to the Best Buy project, the GEMC’s Center for Site Selection helped the following projects locate in Georgia in the past 12 months:
- Behr Processing’s 210,000-sq.-ft. (19,530-sq.-m.) plant for paint and stain manufacturing and distribution in Henry County just south of Atlanta. The $15 million facility will employ 150 to 200 people.
- Step2 Corp. in Peach County. The 102,500-sq.-ft. (9,533-sq.-m.) facility is a manufacturing plant for rotational, plastic molding used in children’s toys, mailboxes, lawn and garden products and other items. The $5 million plant will employ up to 150 people.
- Arriscraft International’s $6 million plant on 100 acres (40 hectares) in Crawford County southwest of Macon. More than 100 people ultimately will work at this plant making architectural stone work.
- Unilever’s $50 million, 600,000-sq.-ft. (55,800-sq.-m.) distribution center in South Fulton County in metro Atlanta. About 300 people will work at this plant served by Greystone Power.
- F&P Georgia Manufacturing Inc. in Rome in Floyd County, Ga. This 125,000-sq.-ft. (11,625-sq.-m.) facility will employ 70 to 80 people making suspension components for automobiles. The $13 million project is a supplier to Honda in Alabama.
The last project is noteworthy, given the fact that it is not served by an EMC. Georgia Power provides electricity to this site, but the project received help from the Georgia Department of Industry, Trade and Tourism, the Georgia EMC trade association, local economic development authorities and Georgia Power.
This is an important distinction, notes GEMC spokeswoman Tracy Heath: “On all projects, our key role is to provide whatever is needed,” she says. “Sometimes we are the lead on a project and we invite GDITT into the process, but other times GDITT are the leaders and we assist in whatever way possible. Georgia has a teamwork approach to site selection, and we simply act as a member of that team.”
Confronting Challenges in an Era of Change
Most utility executives will tell you that breaking ground on a site for a new power consumer is the easy part of their job. The hard part, they say, is navigating the twin minefields of political change and a slowing economy.
Economic development by utilities has become complicated by energy deregulation, the West Coast power crisis and budgetary cutbacks dictated by the recent recession. At a recent forum of the Utility Economic Development Association in Orlando, several investor-owned utility executives admitted that 2001 was their most challenging year ever in the area of business recruitment, retention and expansion.
Robin Spratlin, head of economic development for Atlanta-based Georgia Power, told conference attendees that it is more important now than ever to “know what you bring to the table, focus on building relationships with site selection consultants, and get the state involved early on with your projects.”
Donna Buccheit, economic development manager for PPL Electric Utilities in Allentown, Pa., emphasized two imperatives in the new era: cooperation and speed. “Always meet the deadlines of the project, and always refer projects to other utilities,” she noted. “Be a team player.”
But is it possible to be a team player when the rules of the game constantly change? Take electricity deregulation, for example. Some experts blame California’s power shortages of 2001 on the state’s attempt to deregulate the power industry.
Others say it was a case of supply and demand — and the Golden State didn’t make sure its supply of electricity kept up with the demand of a rapidly increasing population and power-hungry businesses like web server farms and telecommunications hotels.
One community that’s bucking that trend is Victorville in Southern California between Los Angeles and Barstow. The municipally owned power company is building Southern California’s first new energy plant in more than a decade.
The 750-megawatt, natural gas generated power plant will serve up to 750,000 homes and is scheduled to begin operations in 2003. During its 27-month construction, the project will employ more than 300 workers. When fully operational, the plant will employ 25 people full time and pay about $3.5 million annually in property taxes.
Groundbreaking at the High Desert Power Project site west of Interstate 15 was held on April 5. The plant is being built by Constellation Energy Group’s merchant energy affiliate Constellation Power Source, based in Baltimore.
The plant is designed to use one-third less fuel and significantly reduce air emissions compared to fossil fuel power plants currently operating in Southern California. The plant’s state-of-the-art emissions controls will make it one of the cleanest gas-fired plants in the nation.
Victorville is also home to the Southern California Logistics Airport, the former George Air Force Base, a 5,000-acre (2,025-hectare) multi-modal business complex that integrates manufacturing, industrial and office facilities with a dedicated international cargo airport.
Victorville isn’t the only energy supplier beefing up its capacity to manage demand. North of the U.S. border, Hydro-Quebec is developing the electric power resources necessary to accommodate the CDN$2 billion expansion of Alcan Inc.’s Alma smelter in Northern Quebec.
The provincial government of Quebec has allotted 500 megawatts of power to support doubling capacity of Alcan’s Alouette smelter at Sept Iles to 486,000 tons for CDN$1.4 billion.
Quebec produces 2.4 million tons of primary aluminum every year — 10 percent of total Western output — and 90 percent of that is shipped to the U.S., Europe and elsewhere for processing into finished products.
Robert Jean, manager of industrial promotion for Hydro-Quebec in Montreal, says his company’s primary recruiting tool is “our rates, those being very competitive, among the best in the world, and very stable for the long term as our cost structure is mostly fixed.” About 97 percent of Hydro-Quebec’s electricity is produced from water.
“Also, we work with potential customers on technical issues that could affect their decision in locating their new plant,” notes Jean. “Power quality, schedule of electric connection, cost and availability of a second source of supply, choice of electricity versus oil or gas, etc.,” are all important issues for Hydro-Quebec’s customers.
The Quest for Data: The New Holy Grail
Site selection consultants contend, however, that it isn’t enough to provide cheap electricity. To be competitive in the race to attract expanding companies, utilities must provide a wealth of data.
Audrey Taylor, president of Chico, Calif.-based Chabin Concepts Inc., has assisted Sony Corp., 3M, Spectra-Physics Lasers, Signal, Pacific Gas & Electric, Packard-Bell and Lifetouch National Schools Studies in facility locations. Her advice to utilities? “Your web site is not a marketing tool,” she says. “It is a communications tool.”
Taylor says the utilities that do their job the best “disseminate the right location evaluation information to site selectors via web sites; provide efficient delivery of information tied to project investment; and determine the best position to add value to the client’s process.”
In addition to updated information on electricity rates, utilities should provide data on area employers and business activity; telecommunications infrastructure; major motor carriers in the region; state and local taxes; incentives programs available to corporate expansions; labor and wage surveys; and a searchable site/building database.
Dennis Donovan, senior managing director of The Wadley-Donovan Group in Morristown, N.J., was even more blunt in his critique: “Utility economic development organization web sites need a dramatic overhaul. They need to be redesigned,” he contends. “When I started in this field 30 years ago, utility EDOs were No. 1 in this area. That is no longer the case. They are slipping into oblivion.”
Donovan advocates “a new model of service delivery” for utility economic development work. He says that a “seismic shift” in the way site selection is done today requires utility EDOs to change the way they collect and disseminate data. Donovan’s recommends that all utility EDO web sites:
- Include a two-page county statistical profile for each county in their service area.
- Provide a link to the International Economic Development Council standards database for each county.
- Provide a searchable site/building database that provides essential information on each property (i.e., size, ceiling height, truck docks, etc.).
- Provide hot links to national site selection portals such as www.developmentalliance.com.
Deal-Making: More Than Data
In the long run, of course, more than data is needed to secure a deal. Creative incentives packages often make or break a site location decision.
In Central Florida, investor-owned utility Progress Energy is utilizing an innovative lending program to assist developers. The Industrial Building Fund is a rotating fund for use in the construction of speculative shell buildings for manufacturing use.
Through this program, Progress Energy or one of its subsidiaries will actively partner with a local community to provide one-third of the project costs, up to a maximum of US$400,000 per project, interest-free for up to 36 months.
George Livingston of NAI Realvest Partners in Maitland, Fla., says the program is a godsend for industrial developers hit hard by a downturn in tourism spending. The principal requirement for securing the loan is that Florida Power, a Progress Energy company, must be the retail vendor of electricity used at the site. Also, the building must be designed for industrial use and be at least 40,000 sq. ft. (3,720 sq. m.).
Each project must have at least one equity or financing partner in a limited liability corporation. Equity/financing partners may include park owners, landowners, building contractors, local development organizations, governmental agencies and financial institutions.
Tapping into Florida’s reservoir of surplus power is a vital economic development tool, say the leaders of the state’s five investor-owned electric companies which produce the bulk of electrical power for Florida’s major markets.
Last year, Florida ranked second in the nation in production of kilowatt hours, according to the U.S. Energy Information Administration. Florida’s Public Service Commission projects that the state’s power companies will develop another 13.68 megawatts of winter power capacity through the year 2009.
