SB&D's Ten Top 10s 2006

Ten Deals in 2005 that Broke the Mold

By Mike Randle

New Airport in Northwest Florida

It's been awhile since a new airport broke ground in the U.S. Other than the proposed new airport in Bay County, Fla., it will be quite some time before another one is built.

The state of Florida has grown like few states in the U.S. over the last couple of decades. The vast majority of that growth has taken place in Central, Southwest and Southeast Florida. However, rapid growth is expected to take place in Northwest Florida as markets such as Pensacola, Panama City and Tallahassee attract more people and companies, some of which will be at the expense of other parts of the Sunshine State.

In preparation for that growth, leaders in Northwest Florida have partnered with the St. Joe Company in an effort to relocate the Panama City-Bay County International Airport to a 4,000-acre greenfield site that will be part of WestBay, a 75,000-acre planned development that is one of the largest in the South's history. Of that 75,000 acres, 30,000 mostly waterfront acres of land are slated for conservation, making WestBay Florida's single-largest land conservation effort made by a private company.

Included in the development are 5,000 housing units, 4.4 million square feet of commercial, industrial and retail space, lodging and two marinas. But the new airport is the reason this deal was one of the 10 that broke the mold in the South. The airport will feature a 12,000-foot runway, state-of-the-art terminal and aviation-related commercial development. The new Panama City-Bay County International Airport will be the first airport built in the U.S. after 9/11 and the first in the state of Florida since Southwest Florida International Airport opened in Fort Myers in 1983.

Philip Morris' $300 Research Center in Richmond

In 2003, Philip Morris officials made the difficult, yet profitable decision to move its headquarters from New York City to Richmond, Va. In April of 2005, Altria's Philip Morris USA announced it would build a $300 million, 450,000-square-foot research and development center that will house about 700 highly paid workers when it is completed next year. If big tobacco is trying to reinvent itself, then Philip Morris is the poster-child of that effort.

Work at the center, which is being built at the Virginia BioTechnology Park in Richmond, will focus on scientific research in the development of new tobacco products that will address the medical issues caused by smoking and other tobacco uses. Virginia Commonwealth University, which hatched the Virginia BioTechnology Park idea way back in 1990, will be involved in the project. Richmond won out over Raleigh-Durham's Research Triangle Park in the Philip Morris deal, the largest for the company since the early 1980s.

Huge Wind Farm to be Built off Texas Coast

It wasn't nearly the largest announcement made in the South in 2005 in terms of investment or jobs, yet when it's built it will look like it. One of the more interesting deals reported last year was made by Galveston Offshore Wind LLC, a division of Louisiana-based Wind Energy Systems Technologies. The company announced in October it is building a 50-turbine wind energy farm seven miles off of Galveston Island, located just southeast of Houston. Each turbine will have blades with diameters of 100 yards. The wind farm will produce about 150 megawatts of electricity, almost all of which will be used in neighboring Galveston.

The state of Texas has leased about 11,000 acres in the Gulf of Mexico to Galveston Offshore Wind and the company has already received a permit from the Army Corps of Engineers to build two meteorological towers to collect wind measurements in an effort to determine where exactly the towers will be built. The company will also study the migratory habits of birds in the area. One of the concerns of environmentalists, who are firmly in support of the project, are the number of birds that may be struck by the turbines.

The $300 million project is expected to be completed in 2010. Two other offshore wind farms are also being discussed in the U.S.; one off the coast of Massachusetts and the other off the coast of New York.

Wachovia's $400 Million Data Center in Birmingham

If it costs $300 million to build 50 turbines -- all of which are the length of a football field -- on 11,000 acres in the Gulf of Mexico, how can a mere 210,000-square-foot data center set on 70 acres cost $400 million? Well, that's what North Carolina-based banking giant Wachovia is spending on the "Fort Knox" of data centers in Birmingham. According to Wachovia officials, when completed the degree of security at the center will be unmatched anywhere else in the world. Built to withstand and remain operational during any manmade or natural disaster, Wachovia's data center will feature redundancies for every system that is needed to support the facility, including power, heating and cooling, water and communications systems. Only about 30 to 40 workers are expected to be housed at the facility. Birmingham has "green zone" status based on the Federal Emergency Management Agency and U.S. Geological surveys. Wachovia completed the purchase of the former SouthTrust, which was headquartered in Birmingham.

Toyota Partners with Savannah River National Lab on Hydrogen Storage Research

Toyota's announcement in September that it will invest $2 million into research with the Savannah River National Lab in South Carolina is not a deal that everyone will remember. But it is a project that may pave the way for next generation automotive power systems. The growing Japanese automaker is working with engineers at the new Center for Hydrogen Research, which is located just outside the Savannah River Site in Aiken, S.C., to develop a lighter-weight and less costly hydrogen fuel storage system for hydrogen powered vehicles. Officials in Aiken developed the Center for Hydrogen Research as a speculative project. Today, over 60 Lab-based researchers work at the center and the project has grown to involve a coalition of South Carolina institutions, including Clemson University, South Carolina State, the University of South Carolina and the SRNL.

The Toyota announcement in Aiken is one that "broke the mold" because the Southern Automotive Corridor has been incredibly successful at one aspect of the automotive industry, but is lacking in another. Foreign as well as domestic automakers have invested tens of billions of dollars over the last two decades on manufacturing plants in the South. However, almost all of the research and design functions for current generation automotive products and systems remains in the Midwest, mostly in Michigan. An increase in automotive R&D is a natural next step for the Southern Auto Corridor and Toyota's commitment with the Center for Hydrogen Research in Aiken is a perfect example of that.

Murdock's North Carolina Biotech Project Valued at $1 Billion

California financier David Murdock's plan for establishing a biotechnology research campus in Kannapolis could grow to a $1 billion development that would create 5,000 jobs, according to projections. Murdock, who owns Dole Food Co. Inc. and real estate development firm Castle & Cooke Inc., plans to transform a 250-acre former Pillowtex Corp. plant and an adjacent 100 acres in downtown Kannapolis into the North Carolina Research Campus. The campus, which Murdock wants to develop in conjunction with the University of North Carolina system, would create 5,000 jobs, but spinoff employment could eventually grow to 30,000. Murdock will personally establish a $100 million venture capital fund to attract what is anticipated to be 100 biotech companies to the campus.

What makes the project one that broke the mold centers on David Murdock and the location of Kannapolis. In 1982, Murdock bought Cannon Mills and 660 acres of surrounding real estate from Cannon's heirs, which included the Kannapolis central business district. In 1984 Kannapolis was incorporated and in December of 1985 Murdock sold Cannon Mills to Fieldcrest Mills for $250 million. But Murdock did not sell the real estate that surrounded the sprawling Kannapolis plant.

In the early 1990s Fieldcrest Mills became Fieldcrest Cannon. The company was sold to Pillowtex for $700 million in 1997, three years after NAFTA was implemented. Three years later, in November of 2000, Pillowtex filed for Chapter 11, but emerged from bankruptcy in 2002. However, in November 2003 Pillowtex filed a new petition for bankruptcy, this time resulting in total liquidation. The deal terminated the employment of thousands of workers in the South. But no place in the region lost more from Pillowtex's collapse than what Kannapolis, N.C. lost. Over 4,000 workers lost their jobs in Kannapolis, or roughly 10 percent of the city's total population. Not only that, Pillowtex's Kannapolis facility made up most of the city's downtown area.

Now the 82-year-old Murdock is back with a development that will essentially rebuild the downtown business district of Kannapolis. The project looks to be on sound footing with N.C. State, The University of North Carolina at Chapel Hill and the University of North Carolina at Charlotte partnering with Murdock in significant measures. Many ideas have been put into the plan, however the central theme centers on nutritional research and its role in fighting diseases. Demolition of the 100-year-old textile facilities began in the summer of 2005.

Nissan's Headquarter Relocation to Nashville

Headquarter relocations to Nashville from outside the South have been regular affairs for a few years now. Clarcor, Asurion and Louisiana-Pacific have all relocated their headquarters to Nashville from outside the region since 2003, as have other companies. But when Japanese automaker Nissan announced in late 2005 it would pull up its stakes from SoCal and take its 1,300-employee North American headquarters to the Music City, some high-brows were seen with mouth's agape.

While Nissan has more operations in Tennessee than any other U.S. state, including one of the largest auto assembly plants in the world in Smyrna, Tenn., the announcement represents the first-ever for an automotive company doing business in North America. Yes, Nissan is the first automaker to move its North American headquarters to the Southern Auto Corridor, the only place in the U.S., by the way, where the industry is growing. That being the case, it likely won't be long before another automaker decides to pick up stakes and move its headquarters to the South.

Tenet Healthcare in New Orleans: The City's First Big Deal Post-Katrina

Tenet Healthcare Corp., announced in late October of 2005 that it plans to invest about $500 million to establish a new health care network in New Orleans. The announcement was the first major private investment and job generating project since Hurricane Katrina flooded much of the Crescent City in late August. The health care provider was the largest in the New Orleans region prior to the hurricane and has operated in the city for almost 100 years. The effects of Katrina damaged two of Tenet's urban campuses, the Memorial Medical Center and the Lindy Boggs Medical Center. Three of the other hospitals in the New Orleans region operated by the company were damaged as well. Tenet officials have said that the damage caused by Katrina will give the company an opportunity to "reinvent" how it will offer healthcare services in the future. The proposed new healthcare network has been named the NOLA Regional Health Network.

Trevor Fetter, Tenet's president and CEO said in October that he believes that over time the majority of New Orleans' population will return. "Research shows that, over time, at least a majority of the population is expected to return, augmented by many more who will be drawn to the incredible reconstruction effort that has only just begun."

Tenet officials maintain that the cost of creating the new health care network may be more than the $500 million announced initially. However, they expect a significant portion of the cost will be covered by insurance settlements.

Fluor Relocates Corporate HQ to Texas from California

In last year's Ten Top 10s we named California Gov. Arnold Schwarzennegger as one of the Ten People Who Made a Difference in the South. Here's part of what we wrote: "Thousands of new jobs have been created in the South over the last couple of years by companies leaving California and setting up shop in numerous Southern states. That's especially true in Texas, where Dallas-Fort Worth has benefited greatly from the migration. We admit that Gov. Schwarzenegger has accomplished plenty in the short time he has run the state of California, including actions on the revenue, environmental, judicial, workers comp reform and education fronts in the nation's largest state. Because of that, we assumed he would be able to stem the tide of relocating California companies. But he hasn't and we thank him for that, making him one of our Ten People Who Made a Difference."

Well, 2005 also saw dozens of companies based in California either relocate their headquarters or their entire operations to the South. Nissan's announced move from the Los Angeles area to Nashville was the most notable in 2005. But to us, engineering giant Fluor Corporation's decision to relocate its headquarters from Southern California to Dallas/Fort Worth was the ultimate example of California corporate flight. After all, Fluor is one of the most respected consultants in site selection. They have been contracted by many of the world's largest corporations in an effort to find cost-effective, suitable locations for their expansions and relocations. It's about time that Fluor showed to the world that it practices what it preaches by moving its headquarters from California to the South.

Gambro in Opelika, Ala.

In April of 2005, Gambro Renal Products, part of the Gambro Group, a Sweden-based global leader in renal and cell-based therapies, announced it would build a 100,000 square-foot manufacturing plant in Opelika, Ala. The plant will produce 10 million dialyzers annually to serve patients with kidney failure who must undergo dialysis treatment several times weekly for survival. Construction of the new plant, which will be built in Fox Run Business Park, has begun and is expected to be operational in about three years. The deal will create 150 new jobs.

What's unique about this deal and why it "broke the mold" is that it was one of only a handful of large deals that came from the life sciences sectors that landed outside of the South's traditional bio industry havens of Raleigh-Durham, Northern Virginia and Maryland. While unbeknownst to most people, Birmingham, Memphis, Oklahoma City, Austin, Richmond, Winston-Salem, Kansas City and St. Louis are just some of the markets in the South that have built large life sciences infrastructures in addition to Raleigh-Durham and the D.C. region. But it was tiny Opelika, located next to Auburn University, that topped all of the aforementioned life science centers when in came to one of the largest bio manufacturing deals in 2005. Go to www.BioIndustrySouth.com to learn more about the South's biotech industry.