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A Headquarters Location Should Make Sense From Both a Business and an Image Point of View.

Labor force, quality of life and proximity to markets determine the outcomes of most headquarters decisions.

  [ 3/1/2001 ]  By: Rachael Hedgcoth, Associate Editor   Print This Article  Reprint/License This Article  E-mail This Article To A Friend  
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While the economic speed limit may have dropped by a few miles in recent months, there is little indication that headquarters projects have experienced diminished activity over the past year.

Business still has to get done, and there are still new markets to tap. Therefore, all types of headquarters operations continue to open their doors worldwide.

We took a look at some headquarters projects that have occurred in the last 12 months, and discovered what made some communities winning tickets for various companies. Ideally, your headquarters facility should make perfect business sense, as well as make a statement about what type of company you have.

Find out straight from the horses' mouths what cities won the hearts of headquarters investments and why.

Piaggio soars into Greenville

When Italian aircraft maker Piaggio Aero Industries decided it would launch North American operations, it put the Southeast under the microscope for some very good reasons. The company ended up choosing South Carolina for its facility.

"Almost 30 percent of the turboprop and light-jet airplanes in the United States are located in the Southeast, and within a 90-minute flight on the Avanti from Greenville," said Steve Hanvey, president and chief executive officer of Piaggio America Inc.

Piaggio, which makes the twin-engine Avanti airplanes, saw a market it could tap into in the United States. After all, nearly 75 percent of the global general aviation market is located in the United States, according to Hanvey. Hence the need for a North American headquarters.

"The Piaggio Avanti P-180 offers this market unique features of a large cabin - equal to some mid-sized jets - coupled with high performance," said Hanvey. "The aircraft cruises at 41,000 feet, at a maximum cruising speed of 395 knots. These performance numbers are in the range of some of the smaller jets, but at a lower cost of operation than a jet."

Piaggio America's operations started small in the winter of 2000, but the company has hopes of eventually growing its Greenville work force to about 100.

The company currently operates out of a facility at Donaldson Center Industrial Air Park, just south of Greenville. It is Piaggio's only U.S. facility, and employees there deliver and support the Avanti throughout the Americas.

At present, about 10 employees handle marketing and sales, supply management, customer service and product support from Greenville. Piaggio America is also establishing a network of service facilities in the United States that will support Avanti owners.

The twin-engine turboprop Avanti is constructed in Italy and then flown over to the United States to get dressed up according to the customer's specifications. It arrives on American soil with no interior to speak of, and no detailing.

The airplane then gets decked out with selected pinstriping and svelte interiors by a Piaggio partner in Texas.

Incentives also played a role in luring the Italian aircraft company.

"A major consideration in choosing Greenville was the state tax incentives offered, as well as the proximity of the Donaldson Center Airport and the number of aircraft in the Southeast region of the United States," said Joe Oebbecke, vice president of business management for Piaggio.

As for work force issues, Greenville measured up in that department too.

"We felt that with the state and county technical training system, and a pool of highly skilled labor, albeit not in the aviation field, we could build the work force necessary to staff the service and completion center we plan on building at Donaldson," said Oebbecke.

The Yellow Brick Road leads to Kansas for Denmark-based company

Times have changed for Denmark-based Grundfos Inc. The maker of sophisticated high-tech pumps had been located in the United States for nearly 30 years, and had operations in Allentown, Pa., since 1989.

However, in recent years, the time zone differences and air travel had become issues for the company that was growing its North American operations. To improve operations efficiency, the company conducted its own study to determine which U.S. cities might be lucrative locations for a new headquarters facility.

"We looked at 23 cities, all located in the Midwest and Eastern U.S.," said Victor Lukic, president and chief executive officer of Grundfos Pumps Corp., North America. "Dallas, Atlanta, Indianapolis and Kansas City were the four cities that we put a lot of energy into evaluating."

In the end, it was a town that Lukic had never heard of - Olathe, Kan., in the southwest part of the Kansas City Metro - that proved the perfect fit for Grundfos' relocation plans.

A 59,000 square foot facility in the Olathe Technology Park offered the desired space, and the company was especially impressed with the professionalism that Kansas City officials extended toward Grundfos. It is there that the company expects to employ around 100 people, with the first starting in April.

Grundfos' pumps are used in office, industrial, agricultural and residential building projects.

"We considered numerous locations for our North American headquarters, and narrowed it down to Kansas City and Indianapolis," said Lukic. "What impressed us was the level of commitment that the team in Kansas City demonstrated. They used an approach similar to that of a business partner rather than a typical government, which made it easy to decide in favor of Kansas City."

Incentives came into play, but Grundfos kept an eye on the big picture to make sure all other needs were met.

"If Kansas City had a weak work force, or a poor airport - KC airport is the best - or was on the extreme East or West Coast - all the incentives in the world wouldn't have made a difference," said Lukic. "But, when we are splitting hairs ... it was a very significant factor."

The incentives that Lukic referred to include a training incentive from the state of Kansas administered through the nationally acclaimed Johnson County Community College system.

Beyond those factors, Olathe's central location was a major plus for the company.

"Kansas City is a great size at 2 million people, and is literally in the middle of everything, considering geography and the U.S. population base," said Lukic. "This is absolutely perfect for us as a regional headquarters for North America."

Headquarters grow best where they are planted

For Disa Industries, the world's second largest manufacturer of abrasive blast cleaning machines, some soul searching was in order when the company needed to expand operations.

Disa has been headquartered in Seminole, just east of Oklahoma City, since 1973 when it started business. But in the last half of 2000, the company faced an impending expansion and a decision on where to locate for its long-term future.

Would it stay put in Oklahoma or would it go elsewhere?

In the end, it was a relatively simple decision for Chuck Prucha, president of North American Operations for Disa. Disa announced in December that it would expand operations in Seminole and grow its manufacturing space from 40,000 square feet to 80,000.

Why did the company stay?

"The reasons for that decision were many. First of all, Seminole has become my home, and the Oklahoma work force is second to none," said Prucha. "In addition, I think the Seminole plant has the greatest potential for growth because of those factors. This is a can-do community - Seminole has always been very responsive to our needs and that's been key to our success."

First Penn-Pacific Life Insurance Co. also decided to expand close to home. It is integrating its two suburban Chicago offices into a new headquarters facility in Schaumburg, Ill.

The company, a wholly-owned subsidiary of Philadelphia, Pa.,-based Lincoln Financial Group, will transfer most of its 400 associates to the new offices.

It was economic incentives that helped convince Relizon to retain its headquarters in the Dayton, Ohio, area. A financing package from the Port Authority there will help Relizon enjoy cost savings via low interest loans for building-related items.

The 475 Relizon employees are currently undergoing the transition into the new $21 million, 150,000 square foot facility. The company, which provides business communications and customer relationship management services, considered 20 other sites, but downtown Dayton offered the best overall package.

For MVP Group, the decision regarding where to locate a headquarters and distribution center was a relatively easy one as well.

"The highly productive Port of Charleston allows us to serve the entire Southeast region efficiently," said Troy Propes, president of MVP.

The company manufactures candles and lamps and is relocating its operations to Charleston, in southeast South Carolina. The $5 million investment will bring about 75 jobs to the area.

Still other companies, such as Signal Communications Systems, have their needs best met on the West Coast. For the privately owned telecommunications, voice mail, and computer networks provider, Fresno, Calif., is where it's at.

Signal opened an 8,000 square foot facility in mid-2000 that houses centralized operations and warehouse space.

"Fresno is the hub of the Valley's technology base, and this move brings us closer to many of our customers, a skilled work force, and our technology partners," said Dan Awbrey, president of Signal. "The business environment is ideal for an aggressive expansion plan and for attracting the right people to help us grow as a company."

Preference with a capital 'P'

Everywhere around the United States, headquarters are growing and popping up, and each project is as individual as the company itself.

There is no one set of criteria that any given business looks for in locating a headquarters operation. Headquarters expansions and relocations are not cookie-cutter projects that fit a pre-made mold.

A headquarters operation is like any other project in many ways. The company has specific work force needs, long-term goals and quality of life issues that must be addressed.

Rachael Hedgcoth is the associate editor of Expansion Management Magazine. You can contact her at rhedgcoth@penton.com

 

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