Over the last several years, much has been written about the outsourcing of jobs - in both the manufacturing and service sectors - to overseas locations. States that years ago competed just with their neighbors are now competing with nations around the globe. Fortunately, though, many companies are still opting to set up or expand operations at home - and the editors of Area Development magazine wanted to acknowledge those states that have been among the most successful in securing these investments and to recognize their successes by establishing the annual "Gold Shovel" award.
To determine the award's recipient, Area Development contacted all 50 states and asked for verifiable information about the 10 top job-creation and investments projects that were actually initiated in the state during 2005. Rather than acknowledge announced projects and potential jobs that are slated to occur (which many times fail to materialize), the magazine collected data only on those projects that actually "broke ground," i.e., began construction or expanded a facility and initiated new hiring.
Each state was then rated based on the following five weighted factors: direct job creation numbers; new jobs per capita; amount of company investment; number of new facilities (either new to the state or at new locations within the state); and the number of projects creating high value-added jobs. With the highest weighted score overall, Alabama was selected to be the recipient of the 2006 Gold Shovel award.
The remaining states were compared only with those in one of three similar population categories. In each category, Area Development chose the states with the top three weighted scores to receive its runner-up Silver Shovel awards. In the "under 3 million population" category, Idaho tied with Iowa for a Silver Shovel award; Kansas and Rhode Island also received Silver Shovels. In the "3 to 10 million population" category, Arizona, Tennessee, and Virginia were the Silver Shovel award recipients. Illinois, Michigan, and Texas rated the highest in the "over 10 million population" field and received Silver Shovels.
What follows is more detailed information about some of the most high-profile and successful new projects announced by the winning states.
Gold Shovel Winner
The sole winner of the coveted Gold Shovel award, Alabama has a long list of new investments to brag about.
"I am truly proud that my administration is a partner in the economic progress that has been made in our state over the past three years. Alabama's economy has grown to be one of the strongest in the nation," says Alabama Governor Bob Riley. "It is an honor that Alabama's economic development accomplishments have been recognized through the Gold Shovel Award."
Alabama Development Office Director Neal Wade says his state is becoming "known worldwide" for its success in the highly competitive race for economic development projects. "This success is greatly a result of the partnerships we have forged with our economic development allies in the communities," he notes. "We have found we can be much more successful if we utilize corporate dollars, local dollars, and state dollars in a coordinated fashion to win projects."
For example, EADS North America chose the Brookley Industrial Complex in Mobile as the site for its $600 million EADS KC-330 advanced tanker U.S. production facility. Cited advantages include a strategically located complex on the Gulf of Mexico with existing runways, a deepwater port, and a skilled aerospace work force. An Airbus Engineering Center will be co-located with the production facility, which is expected to employ 1,150. (More than 70 sites from 32 states responded to the firm's RFI.)
And foreign firms are also choosing Alabama. Kronospan, Europe's largest maker of wood-based panels, is building its first U.S. manufacturing plant in Alabama. With its $500 million investment, the Austrian firm expects to ultimately create 700 new jobs in Oxford (east Alabama). The company selected this site because of the area's schools, quality work force, and proximity to I-20.
Silver Shovel Winners
Under 3 Million Population
"Receiving the Silver Shovel award underscores why Idaho is the best place in the country - and therefore the world - to live, work, and operate a business," says Idaho Commerce & Labor Director Roger B. Madsen. "The Idaho legislature has reinforced our progressive business climate with several incentives designed to maintain our low business operating costs and strengthen our broadband connectivity, work force training, community development, science and technology, and international trade programs." This probusiness climate helps to win new projects, including those that follow:
Wisconsin-based Marathon Cheese broke ground on its new $27 million Mountain Home plant last October. The facility should be completed this fall and eventually employ 550 people. The company currently packages about one million pounds of cheese daily at two plants in Wisconsin and one in Mississippi. Also impacting Idaho's diary industry, Gossner Cheese completed a $25 million Swiss cheese factory at the Burley/Heyburn Industrial Park in October 2005. Gossner will ultimately purchase over one million pounds of milk per day from southern Idaho dairy farmers.
And, Buck Knives first rolled product off the assembly line February 2005 at its new headquarters in Post Falls. Faced with increasing utility and workers' compensation costs in San Diego, management relocated the headquarters and all production to Idaho in an effort to literally save the company. The firm constructed a 128,000-square-foot facility, investing $10 million in the project and employing nearly 250 workers.
"We are pleased to be recognized by this award for our success in becoming partners with companies expanding in the state of Iowa," says Mary Lawyer, director of the Iowa Department of Economic Development. "Iowa is committed to creating new jobs in advanced manufacturing; life sciences; and insurance, financial services, and information solutions."
For example, fast-growing Nationwide Mutual Insurance has broken ground in Des Moines on a 286,000-square-foot addition to its Locust Street building. In the near future, the company will start construction of a freestanding building directly west of the headquarters. The company has committed $142 million to a multi-phase expansion that will add 656,000 square feet of space and create about 1,600 jobs overall.
Additionally, Farmland Foods Inc. is constructing an $81 million, 165,000-square-foot addition to its pork-processing facility in Denison, expected to add 219 new jobs when completed, and Genencor International (a division of international biotech company Danisco, based in Copenhagen) has begun a $35 million expansion at its Cedar Rapids plant.
"Over the past few years, we have seen our state's economy turn around and steadily improve. We have had growth for the past 24 out of 26 months. This is good news for Kansas and the economy. Our strategy is simple: we work to retain the jobs and industries we already have, attract new businesses, and keep our economy strong and growing," says Governor Kathleen Sebelius. Examples of some key projects that qualified Kansas for a Silver Shovel award are as follows:
Infonxx hired 500 people last year when it opened its Wichita call center and plans on hiring about 840 more in 2006/07. The firm answers 411 information calls for cell and landline phone customers. Company officials say they chose Wichita for the $16.36 million investment because the building was available and the work force was ready to start as well as "dedicated and genuine." They also liked that fact that local call center managers invited them for visits, and treated them not as competitors but as members of the community.
And General Motors (GM) invested $200 million to expand its Fairfax Assembly Plant in Kansas City last year, a move that will also add 280 jobs to its work force of 3,000. GM cited cooperative relationships with regional governments and labor unions - and a successful track record with the plant - as to why Kansas City was a strong candidate for expansion activity. Local government officials committed $146 million in revenue bonds and five years of tax abatements to help sweeten the deal.
"Since 2003, over $5 billion of new private investment activity has been recently completed, is under construction, or has been announced for Rhode Island," says Saul Kaplan, acting executive director of the Rhode Island Economic Development Corporation. "This is a profound expression of confidence by the private sector in Rhode Island's economic future."
For instance, GTECH Corporation has a new $80 million, 210,000-square-foot headquarters in Providence. It will be home to 500 employees and generate over $20 million in annual taxes for the city.
Additionally, Bank of America opened a new contact center last year in East Providence to mainly serve its consumer customers. It will create 900 new jobs. Anne Finucane, president of the bank's Northeast Market, says her company has been "extremely impressed" with the qualified work force. "The forward-thinking business environment, combined with the skill levels found in the region and particularly this state, is conducive to expanding and enhancing our service capabilities for the benefit of customers located across our geographic footprint."
Silver Shovel Winners
3 to 10 Million Population
"This award exemplifies the team spirit in Arizona's economic development arena," says Arizona Department of Commerce Director Gilbert Jimenez. "The state's fundamental infrastructure strengths, quality work force, and the commitment of state, local, educational, and economic leaders are aligned to offer companies incredible advantage."
Intel's new $3 billion "Fab 32" factory for producing microprocessors using the 45-nanometer manufacturing process is under construction in Chandler. The facility will create 1,000 jobs. Recently the state revamped its income tax formula for multistate corporations, decreasing the amount of sales revenue included in the tax calculation. According to Intel, this legislation was a big factor in choosing Arizona.
Pella Corporation, a leading door and window manufacturer, has opened a new $300 million manufacturing plant in Tucson that will ultimately create almost 450 new jobs. "Pella Corporation appreciates the diverse opportunities which abound in the state, the progressive focus on business, and the professionalism and pride that are part of the culture in the Arizona work force," says Mark Hinkie, President and COO of Pella's Vinyl Window and Door Division.
And, Republic Plastics located to San Manuel in July 2005, making an $8.5 million capital investment in this rural community. The firm employs about 120 and recently announced expansion plans. "Arizona is a natural place for our West Coast plant because it provides a strong base from which to do business and gives us access to our major new and growing markets," says Republic Plastics President and CEO Gino Inman.
"We're honored to be recognized for our economic development efforts by Area Development magazine with the Silver Shovel award," says Matthew Kisber, commissioner of the Tennessee Department of Economic and Community Development. In Tennessee, we enjoy a vibrant, low-cost business environment, a skilled work force, and great quality of life. Our strong infrastructure support and a host of quality educational institutions and research facilities make our state a competitive contender for job creation and expansion opportunities. With initiatives like FastTrack, and an emphasis on workers' compensation reform, work force development, and community development, we are continuing to get noticed. This award is yet another validation of the strength of Tennessee's business environment, and our ability to execute job-growth strategies that are creative and innovative."
For example, T-Mobile USA, Inc. is investing $16 million to build a new state-of-the-art, 77,000-square-foot customer service center providing the latest in telecommunications tools and customer-service technology. With 700 workers, it's the second customer service center T-Mobile operates in the state (the other is in Nashville). T-Mobile's Vice President of Government Affairs Tom Sugre says the service-oriented culture and residents in Tennessee are a "perfect match with T-Mobile's values."
And Nissan North America is moving its corporate headquarters and 1,300 jobs to Franklin. "We made a strategic decision to relocate our corporate headquarters here because of the long-term benefits associated with overall investment and operational costs," says Nissan President and CEO Carlos Ghosn of the $70 million investment. "By bringing key functions closer together, we also aim to create synergies, nurture creativity, and enhance our performance in the North American auto industry."
Another international company, Japan-based DENSO, is expanding its Maryville manufacturing facilities at a cost of $185 million. The project is adding 220,000 square feet to a 1.5 million-square-foot manufacturing space and some 500 employees. DENSO President Hattori says the expansion is "truly a tribute" to the quality of the company's Tennessee work force, adding that the Maryville operations "help us maintain [a] focus on innovation and creativity."
"As the state's chief jobs officer, I'm pleased that Virginia is a recipient of the Silver Shovel award," says Virginia Governor Timothy M. Kaine. "We are committed to providing a competitive, pro-business environment that attracts quality jobs to Virginia - and keeps them here."
For instance, Philip Morris USA is building a $300 million, 450,000-square-foot research and technology center in Richmond's BioTechnology Park that will create 500 new jobs. John Nelson, Philip Morris USA's president of Operations and Technology, says innovation has helped his company remain a leader.
ITT Industries Night Vision is investing up to $51.8 million to expand its facility capacity in Roanoke, creating 250 new jobs. Increased production is due to increased global demand for the firm's night vision products. Larry Curfiss, vice president and director of business development, says the "attentiveness and support" from Virginia and Roanoke County "make growth as a business easier. Because of our county and state partnership and talented work force, we are able to help protect those who protect us."
And Wolseley, the world's largest specialist trade distributor of plumbing and heating products, is building its $32.2 million, 220,000-square-foot North American headquarters facility in Newport News that will employ 420. "This centralized location enables our leaders to accelerate our vision of providing our customers with the most comprehensive offering of products and services available in the building industry," says Chip Hornsby, former CEO of Wolseley North America. The firm is a recipient of performance-based incentives that the state awards exceptional economic development projects with large numbers of employees and very high wages relative to average wages for that particular area.
Silver Shovel Winners
Over 10 Million Population
"In this ultra-competitive, global economy, companies have more choices than ever when it comes to where they want to do business," points out Illinois Governor Rod Blagojevich. "[Awards] such as these reaffirm that the business community and leading corporate executives are well aware of all Illinois has to offer and, in increasingly large numbers, are deciding to call our state home. Through collaboration and innovation, we'll continue to distinguish Illinois as a world-class place to do business."
For example, The Chrysler Group is investing $419 million in a major retooling effort of its Belvidere automotive plant that has added 1,000 new jobs and a third shift. Last year a second shift added 1,000 new jobs to the regional economy. The company indicated its highly skilled work force was key to the decision to expand at this location.
Iowa-based Pella Corporation built a new $29.9 million, 275,000-square-foot manufacturing facility in Macomb in 2005. It allows the window and door maker to expand its manufacturing operations and bring 480 new jobs to the area.
And Takeda Pharmaceuticals North America, Inc. is expanding and improving its North American headquarters operations in Deerfield, bringing 500 new jobs to town. The $46 million project - part of an emerging biotech corridor in northeast Illinois - consists of a 1.2 million-square-foot campus and a 5,300-square-foot remote delivery facility.
"Companies continue to choose Michigan for major new facilities and expansions, and we appreciate those investments being recognized through the Silver Shovel award," says Michigan Governor Jennifer Granholm. "Our efforts to help companies grow and create jobs in the state are paying off, and we expect that success to continue in 2006."
Last November, Robert Bosch Corporation broke ground on its new $37.5 million, 225,000-square-foot Plymouth Township Technical Center. The global automotive supplier's facility will initially employ 475 workers, and eventually house 2,400 employees. "Michigan continues to provide an ideal location for Bosch's operations, offering a close proximity to customers and an atmosphere that fosters growth for the future," says Bosch Chairman, President, and CEO Kurt Liedtke.
Haworth, one of the world's top office furniture manufacturers, is investing $42.7 million to consolidate its operations from four states to existing facilities in Holland, Allegan, and Big Rapids. The project, which will ultimately create more than 1,000 company jobs, includes a major reconstruction of its Holland world headquarters. "In the global tug of war for manufacturing jobs, this is a huge win for Michigan," says Don Jakeway, president and CEO of Michigan Economic Development Corporation (MEDC). "The right combination of state and local incentives helped us make a good business case for one of the world's most innovative office furniture companies to expand here in Michigan, rather than elsewhere."
Additionally, Quicken Loans Inc. is investing $29.1 million to expand its Michigan operations in Troy, a move resulting in 1,200 new jobs. MEDC convinced Quicken, the nation's largest online mortgage lender, to locate in Michigan rather than Nevada by offering the firm a Single Business Tax Credit worth more than $29.6 million over four years.
"No state has been more successful than Texas in making good jobs available to its work force," Governor Rick Perry says. "Our success at job creation is powerful evidence that Texas is on the right track to a prosperous future. We have made wise decisions by keeping taxes low, investing in an educated work force, limiting lawsuit abuse, and aggressively pursuing jobs. Our coordinated strategy to educate out-of-state employers about Texas' excellent business climate is working. And it is proof that our unprecedented investments in job-creation tools are paying real dividends for the people of this state."
In 2005 Washington Mutual selected San Antonio as the home for its new $80 million regional operations center, expected to ultimately employ up to 4,200 people. According to Washington Mutual's Chief Administrative Officer Benson Porter, the city was selected because of its business-friendly environment, strong work force, great quality of life, affordable housing, central location, "and a viable real estate solution to accommodate our growth."
And Tyson Foods is bringing 1,600 jobs to Texas as part of a deal that includes at least $13 million in incentives. With a $100 million capital investment in the Texas economy, Tyson has established its largest case-ready meat-packing plant in the nation in Sherman, located 60 miles north of Dallas. The facility will package more than six million pounds of beef and pork each week. Tyson's Chairman and CEO John Tyson says that the state's "strong business climate" put Texas in the running for the project and the $7 million received from the Texas Enterprise Fund "closed the deal."
Material for this special report was gathered and prepared with the help of Lisa A. Bastian, CBC.