Robert Hess, Executive Managing Director, Consulting, Newmark Grubb Knight Frank (Spring 2011)
Last December ThyssenKrupp Steel USA and ThyssenKrupp Stainless USA held the grand opening for their combined new state-of-the art processing operations in Calvert, Alabama. The project represented the largest German foreign direct capital investment ever in the United States and also one of the largest private investments made in the United States in the last 20 years. The company put on a $10 million+ celebration and invited over 4,000 people, including federal and state dignitaries, customers and suppliers, employees and their families, and host of other special guests. Was this celebration warranted?
ThyssenKrupp launched this global expansion initiative almost 10 years ago. Many don't know that it was originally called Project Hercules and it was about diversifying their global footprint outside of Europe, leveraging the globe for competitive advantage, and deploying new technology and proven production processes that would revolutionize and forever change the steel industry in North America.
Halfway thru the 15-month site selection process that began in February 2006 and ended in May 2007, industry leaders and competitors got wind of the project and were befuddled that someone would fathom building a $3.7 billion, 2,700-person, 7 million-square-foot complex in a location where the infrastructure requirements would be astronomical and stretch the receptor state and localities beyond belief. Would the ROI be there for the company? Would the economic impact justify the $800 million incentive package? Would a German conglomerate be able to resource such a unique greenfield start-up in a new country with unfamiliar customs and requirements? How would all parties impacted be able to sustain the extraordinary performance needed to meet the stated goal of producing steel by the end of 2010?
The Promise Fulfilled
The celebration was warranted! Despite numerous board meetings back in Germany where echoes of "shuttle or downsize the project, preserve cash" gained traction due to the recession; mounting struggles with their equally sized massive project in Sepatiba, Brazil (the source of slabs to be processed in North America); and the extraordinary development issues back at the site north of Mobile (3,000+ acre greenfield site with huge infrastructure capacity building needs), ThyssenKrupp pulled it off!
Most Don't Know
It wasn't easy; ThyssenKrupp's stated core value of social responsibility was put to the test during the construction period. Many don't know that the company never laid off one employee during the recession, and every promise with respect to environmental compliance was met or exceeded at additional cost to the company (when not required). This was also one of the most successful permitting approval processes in the U.S. Army Corp of Engineers history, and the project included award-winning, aesthetically pleasing architecture and facility coloring, as well as berms to buffer the entire site from surrounding land uses.
Senior company executives and state and local officials said, "We must have good communications and solve problems together when they arise - we want to make this happen." Well it did happen, and the state of Alabama, ThyssenKrupp, and the thousands of people who made this mega project one of the most successful in U.S. history deserve to be congratulated.
Bob Hess is a leading advisor to corporations across the globe on complex location selection and expansion initiatives. He was in charge of the site selection advisory role for ThyssenKrupp.