The Institute for Business and Home Safety found a remote site near Chester, S.C., using the assistance of economic developers at Duke Energy. The facility will include a wind tunnel that can replicate the effects of a Category 3 hurricane.
Photo courtesy of Duke Energy
by RON STARNER,
That’s just the list of demands tied to energy usage. On top of that, corporate clients want certified sites, plant locations surrounded by best-in-class infrastructure, access to ample state and local incentives, flexible work-force training programs, and a community that aggressively supports the interests of business.
Who can provide all that? The answer may surprise you — a handful of electric utility economic development organizations.
Every year, Site Selection ranks the top utilities in North America based upon their actual economic development performance in the previous calendar year. The most important criteria are jobs and capital investment, but the magazine also takes into account innovative programs and services that meet the needs of industrial customers, creativity and flexibility in working with corporate clients to facilitate project activity, the input of leading site selection consultants, and extensive interviews — over the course of a full year — with company executives who have located real deals.
Based upon the criteria listed above, Site Selection announces the following companies as the Top Ten Utilities of the Year: Alabama Power; DTE Energy; Duke Energy; Entergy Corp.; Georgia Power; Hydro Québec; Memphis Light, Gas & Water; Oncor; PPL; and Tennessee Valley Authority.
The top-performing utilities are based in diverse locations, from Birmingham and Dallas to Detroit and Montreal and many places in between. But they all have this one thing in common: They are constantly focused on delivering an improved bottom-line performance to their customers.
John Krug, a site selection consultant and vice president with Development Advisors LLC in Charlotte, tells Site Selection that “the number one thing a utility can do to encourage business growth and support economic development is to provide their customers with reliable, low-cost energy. Most of our clients are manufacturers and they’ve maximized efficiencies in their operations. So reducing their cost of energy, directly or indirectly, is as essential to them as blocking and tackling is to football.”
Krug adds that “smart planning and delivery of infrastructure is also crucial. Communities that cannot meet the utility demands of customers in a reasonable amount of time will perpetually lose economic development opportunities.”
Having a best-of-breed utility does not guarantee that a community will win a project, but it sure helps. Based upon information derived from the Conway New Plant Database, a service of Site Selection, the 10 winning utilities landed more than $30 billion in capital investment and generated more than 120,000 new jobs during 2009.
A common denominator for many of these projects was the presence of a certified site. “We are constantly being bombarded with certification opportunities from the public and private sector,” says Ed McCallum, principal of McCallum Sweeney Consulting in Greenville, S.C. “Project opportunities and the subsequent location decisions are being dictated as much by how fast a project ramp-up can occur as [they are by] going to the optimal business location.”
Electric utilities, in many cases, are taking the lead on certified sites — and they are reaping a big reward on that investment.
McCallum’s colleague Mark Sweeney adds that utilities today must take a leadership role in building regional coalitions. His advice to utilities is straightforward: “Exercise your important role as a regional development organization with creative programs that support regional economic development efforts and provide the resources necessary that individual communities in your territory may not be able to do.”
David Smith, president of the Utility Economic Development Association, tells Site Selection that when you find a top-performing utility, you also find an upper management committed to the cause of economic development.
“Without exception, that is what characterizes a top utility,” says Smith, an economic development manager for Duke Energy in Cincinnati. “We can all put together the best justification for our existence, but someone at the top must believe that we can make a positive impact on the community.”
The following, presented in alphabetical order, are the Top Utilities of the Year:
A key player in facilitating that location decision was Alabama Power, based in Birmingham. “In large part, that decision was based on the productivity of the Alabama worker,” says Greg Barker, vice president of economic and community development for Alabama Power. “That was the overriding factor. Mercedes had to be completely confident that they will have the work force that can provide the high-quality product their customer has come to expect. It was just that simple.”
Still, it was no simple task for Alabama Power to garner $2.3 billion in capital investment and generate 9,713 new jobs for its service territory in 2009. “There were two primary factors behind our success,” adds Barker. “One was our preparation. We work with our partners to make sure we have the right kind of incentive programs, labor force and sites. The second factor is the very strong partnership we have for economic development with the governor, the Alabama Development Office and the Economic Development Partnership of Alabama. We have great economic development leaders throughout this state, and that includes some excellent leaders at the local and regional level too.”
A stepped-up marketing program that targets influential site selection consultants was launched in 2009, notes Barker, and greatly contributed to the state’s success. “Those marketing efforts have really paid off for us,” he says. “We continue to see solid activity from the site selection community. They have been a big part of bringing projects to Alabama.”
Barker also credits the company’s speculative building financing program and site assessment program with delivering several important project wins to the state.
“It is tough because people have this perception of Michigan and Detroit in particular,” says King. “We try to educate folks. If you look around, the intellectual capacity here in Michigan far outweighs just about any other place in the country. University of Michigan, Wayne State and Oakland University are all huge collections of top-notch talent and engineering knowledge. The labor is here, and it is very highly skilled labor. The real challenge is just to get people here. It doesn’t mean that they will select Michigan, but they will walk away with a different image.”
Actually, in 2009, a lot of corporate site selectors chose Michigan. DTE Energy played a role in securing $4.9 billion worth of capital investment and 23,373 jobs in its Southeast Michigan service territory.
“From a utility perspective, we get involved early in the process,” King says. “We make sure that we have strong relationships with all of our partners, and we have aligned our staff with an industry focus. We have designated people working on wind, solar, advanced battery storage, nuclear energy [and other sectors].”
Those efforts helped the state land VenTower Industries in late 2009. The $2-million wind energy manufacturing plant went to Monroe and brought 150 jobs with it.
“We have account managers who work with customers on a day-to-day basis,” adds King. “We don’t just work to get you here and then leave you alone. Someone will be assigned to work with you daily. The support structure is here to do that.”
“One of our most successful initiatives of the past few years has been the Site Readiness Program,” says Clark Gillespy, vice president of economic development, business development and territorial strategies for Duke Energy in the Carolinas. “We have helped develop 79 sites in the last five years. A number of these have landed notable projects. American Titanium is a $420-million project in Laurens County in South Carolina. Apple is building a $1-billion data center 30 minutes from Charlotte in Maiden in Catawba County. And we helped the Institute for Business and Home Safety find a remote site near Chester, S.C., for constructing a huge wind tunnel that can replicate the effects of a Category 3 hurricane.”
Altogether in 2009, Duke helped communities land more than $2 billion in capital investment and some 9,785 jobs. “It takes a team effort,” says Gillespy. “We have been working in concert with people at the state level to attract federal dollars for projects. And from a legislative standpoint, we seek out what is needed to attract these companies to our communities.”
Duke is also a national leader in pushing alternative energy and sustainability practices. “The industries we attract and the way in which we conduct our own business must be sustainable,” adds Gillespy. “People, profits and planet — you have to do right by all three. We are big proponents of nuclear power, and we have started a big push for electric vehicles.”
It worked. With $1.7 billion in new capital investment and 8,899 jobs secured in 2009, Entergy brought economic growth to its four-state service territory of Texas, Arkansas, Louisiana and Mississippi.
“Launching the Entergy Site Selection Center online has allowed our states and our community partners to jump into the middle of this GIS technology and put some very strong demographic information around their available buildings and sites,” says Mike Maulden, director of external affairs for Entergy in Little Rock, Ark. “This is information that businesses use to make site selection decisions, and we are providing this information at no cost to them. The site has been adopted by the state agencies in Arkansas and Louisiana, and it is working.”
Among the big project wins for Entergy in 2009 was a $210-million, 500-job food-processing plant for ConAgra Foods Lamb Weston Inc. in Richland Parish in Northeast Louisiana.
“Manufacturing plant projects are certainly picking up again,” notes Maulden. “We have been on a steady rise since the low point in 2008. We are seeing lots of activity in heavy transportation equipment, alternative energy projects and industrial machinery.”
Maulden says it has helped that electric utility rates have been either stable or declining in Entergy’s service territory due to lower natural gas prices.
In 2009, Georgia Power helped spread that wealth around the state with a bevy of job-creating corporate facility projects. Throughout its service territory, the utility assisted in the landing of $2 billion in capital investment and the generation of 10,379 jobs.
“We saw a lot of success last year,” notes Fletcher. “We saw major headquarters locations in Georgia like NCR and First Data in Metro Atlanta. We benefited from the consolidation and moving of data centers. Mitsubishi Power Systems located its $325-million combustion turbine facility in Savannah. And Dendreon, a pharmaceutical company, located a $70-million facility project in Union City.”
Fletcher says the launch of SelectGeorgia.net proved to be an extremely effective online tool for reaching consultants and prospects. “We also enhanced our brownfields site identification and improvement program in Georgia,” he adds. “But for economic development efforts to be truly successful, our leaders must be focused and working together, and we must set the right strategy for communities and industries. And then you determine what your services need to be and you market your product. We do all of that in Georgia.”
The numbers are not as important as helping workers and their families prosper, Fletcher says. “I flew recently out of Atlanta on Korean Air to Seoul with about 100 or so Kia employees,” he notes. “One of them told me that he had been looking for work for more than a year. He had this big smile on his face. That made me proud. It is not all about the numbers. Every one of those jobs equates to a family and to someone in that family who needed employment, and we helped meet that need.”
Consider the third one accomplished in the first year. With $5.7 billion in capital investment secured and 10,823 jobs generated in 2009, Hydro-Québec got off to a resounding start.
Among the major highlights of 2009 were a $1.2-billion aluminum manufacturing plant for Alcoa in Deschambault, a $775-million petroleum plant expansion for Ultramar in Levis, and a $215-million biotechnology R&D facility for NeuroCité in Québec City.
And that doesn’t include the utility’s own investments into the economic growth of the province. In 2009, Hydro-Québec spent $2.7 billion on electric power generation projects. Between 2005 and 2020, the utility will invest a total of $14.4 billion on generation infrastructure.
Renewable energy is a core component of the utility’s strategy. Hydroelectric power is used for 98 percent of the company’s generation and is totally renewable. Over the next decade, the utility will spend $6.5 billion to install 1,550 megawatts of hydroelectric generation at four new plants.
The utility also plans to purchase two 250-MW blocks of Québec-generated wind power and 125 MW of power produced in Québec by new cogeneration facilities using biomass as the primary fuel.
The company is also conducting research on new energy sources such as hydrokinetic power from ocean currents and tides, geothermal energy, and salinity gradient power generated by the difference in salinity between saltwater and freshwater.
“We have several things going for us, and we are a piece of that at Memphis Light, Gas & Water,” says Bill Bullock, who manages economic development for the electric utility serving Shelby County, Tenn. “We are strategically located along three interstate gas pipelines. We offer low-cost and high-quality artesian water. Interstate highways criss-cross here in Memphis. Five Class I railroads serve Memphis. We have the No. 1 cargo airport in the world. The Mississippi River facilitates barge traffic. And FedEx can ship virtually everything to a company’s customers the next morning.”
The utility played a significant role in securing tax advantages for the medical device industry in 2009 — a move that paid off when Smith & Nephew purchased a building in 2009 and freed up some existing space for expansion.
Other big deals included Norfolk Southern’s $258-million commitment to an intermodal rail hub and other logistics support facilities in Memphis and Collierville; a $122-million surgical instrument plant expansion for NuVasive Inc.; and a $50-million manufacturing plant expansion for Praxair.
“Our customers are our stakeholders,” says Bullock. “As we help industry in Memphis succeed and grow, it raises the entire community’s economic tide, provides jobs for our customers and spreads the utility’s fixed costs over more units. That, in turn, benefits more customers. So, as we are able to attract and retain industry, it returns most of the value to our stakeholders.”
For Oncor Electric Delivery, that commitment stretches over more than a century of community service. “We have been building relationships and coalitions across our system for a long time,” says Preuninger. “A lot of folks here have worked hard to build that tradition and support our communities.”
In 2009, that commitment spurred $4.4 billion in capital investment and the creation of 12,212 jobs throughout the Oncor service territory — a vast region covering 91 counties and 401 cities in Texas.
Major deals of 2009 included a $184-million data center for Cisco Systems in Allen; $47-million headquarters for the Botanical Research Institute of Texas in Fort Worth; and $40-million manufacturing plant and headquarters for Lineage Power Holdings in Plano.
“The Texas market is very unique,” Preuninger adds. “We are more highly deregulated than the other states in our region, so the electric utility rates here are truly negotiable. There are no published rates, so literally every single project can negotiate its own deal.”
Preuninger says Texas has benefited considerably from data centers, logistics facilities and headquarters projects. “Texas had a big year in 2009,” he notes. “We have a great labor force, strong work ethic and a great location in our favor. Distribution centers remain a hot industry here, and we continue to see a lot of interest in new locations for data centers.”
Landing $3.7 billion in capital investment and generating 8,084 jobs throughout its service territory in Central and Eastern Pennsylvania, PPL yielded a bumper crop of large projects.
Highlights included a $125-million cellulosic biofuel plant for Northeast Ethanol & Renewable Resources in Taylor; a $1-billion coal gasification plant for Future Power PA in Good Spring; and a $50-million factory expansion for Nestle Purina PetCare in Mechanicsburg.
PPL serves 1.4 million customers in 29 counties and maintains more than 48,000 miles of power lines from Williamsport to Bethlehem and from Scranton to Lancaster and many places in between.
“There is still a base of manufacturing in this part of Pennsylvania, and several industries are growing here right now,” Bernhard says. “Allentown even has a campaign, called Urban Made, that focuses on building up the manufacturing base of the city. A lot of small shops and machine operations are growing.”
Bernhard also cites the growth of the medical device industry and other life sciences firms throughout the region. The logistics sector is also ramping up in the region, he notes.
“We are also seeing lots of activity in solar power, landfill gas generation and other kinds of alternative energy projects,” he adds.
“Wacker did a global search before selecting this site,” says John Bradley, senior vice president for TVA Economic Development in Nashville. “We were competing with the world for this project. We had Volkswagen, Toyota, Hemlock Semiconductor and Wacker all announce within about 18 months. That is pretty amazing, and we are very excited about this.”
Since its inception, the TVA Megasites Program has netted 5,600 direct jobs and $5 billion in capital investment, according to Bradley.
In 2009, TVA helped its communities in seven Southeastern states land $4.2 billion in capital investment and create 25,906 jobs.
“We began a data center initiative in late 2009,” Bradley says. “Those projects carry high loads, high capital investment and great jobs. We hired a consultant, Deloitte, to do a site identification program for data center sites throughout the entire TVA service area,” a region that spans 80,000 square miles (207,200 sq. km.).
“The goal is to get our communities more prepared for these projects,” he adds. “That is why we launched the Valley Investment Initiative in October of 2009. It is a true retention program that provides help for companies making a capital investment. We have also enhanced our TVA Sites database — the largest single industrial database out there for buildings and land.”
From Site Selection magazine