Georgia site, smaller than Winston-Salem's, competing for Herbalife
Nov 09, 2012 (Menafn - Winston-Salem Journal - McClatchy-Tribune Information Services via COMTEX) --Herbalife Ltd. is considering a site in Gwinnett County, Ga., off Interstate 985 for a build-from-scratch manufacturing plant that could be significantly smaller than the Dell Inc. plant option under consideration in Winston-Salem.
Winston-Salem and Forsyth County officials are competing with Gwinnett for the 100.2 million project that would create 493 local jobs over three years.
The Atlanta Business Chronicle reported today that the proposal from Gwinnett County officials is for a 350,000-square-foot plant near the town of Buford. The commitment for that kind of space appears to be along the lines of what Herbalife officials want, the publication said.
By comparison, the 110 million former Dell plant has 750,000 square feet of space. Herbalife officials have expressed an interest in expansion room no matter which site they choose.
The Winston-Salem City Council will hold a public hearing on its incentive proposal at 7 p.m. Nov. 19. The council's finance committee will address the proposal Monday.
Forsyth commissioners will hold a public hearing on the project on Nov. 26, according to Ed Jones, deputy county manager.
Neither Gwinnett County Manager Glenn Stephens nor members of the county Chamber of Commerce's economic development team could be reached for immediate comment today about the county's proposal to Herbalife.
Herbalife has not returned requests for comment since details of the Winston-Salem and Gwinnett proposals became public Thursday.
According to the proposal for Project Galaxy, the name given to the Herbalife project, the aim of the Los Angeles nutrition supplement company is opening an East Coast plant by June. That ambitious production goal appears to give Winston-Salem an advantage.
Mayor Allen Joines said today he was not concerned that Herbalife might be interested in a smaller manufacturing plant.
Penny Whiteheart, executive vice president of Piedmont Triad Partnership, said, "Nearly all the manufacturing projects we see want the ability to expand the facility in the future.
"Companies want flexibility and are often looking for new sites in response to expected growth. It could be a benefit to Forsyth County to have a company in the former Dell facility, with the ability to quickly expand when their business ticks up in growth again."
Similar to reporting in the Winston-Salem Journal this week, the Atlanta publication is saying Herbalife has narrowed its choice to the two sites, and local and state incentives will play a significant role in its expansion decision.
It's not clear what the Gwinnett offer is, but the Atlanta publication expects Georgia could use some of the 99 million that its legislature set aside from a national mortgage settlement for economic development grants.
By comparison, Herbalife is being offered economic incentives worth up to 10.5 million from North Carolina, 2.25 million from the city and up to 1.15 million from Forsyth.
Part of the city's incentive offer is 450,000 in upfront payments from the pool of incentive money returned by Dell under clawback provisions after the closing of its plant.
Besides the upfront money, Winston-Salem said it would provide 1.8 million over seven years from its economic development project fund. The money would go toward helping offset Herbalife's cost of buying the Dell plant and upfitting the facility.
Jones, the Forsyth County deputy manager, said today Forsyth will not offer an upfront payment from the Dell clawback money. The county has not provided details of its offer.
Analysts say a pivotal part of the local bid is what price Dell will request for the plant. Dell spokesman David Frink said Thursday that while the company is actively marketing the plant, "we are not disclosing the price point."
Herbalife said in its Oct. 30 third-quarter earnings report that its board of directors approved spending up to 130 million on an East Coast manufacturing plant.
John DeSimone, Herbalife's chief financial officer, said during a talk with analysts Oct. 30 that "this new facility is necessary in order to meet product supply needs and to in-source products currently made at third-party contract manufacturers."
Herbalife would commit to spending 53.6 million on capital improvements and 46.6 million on machinery and equipment. The jobs would pay an average annual wage of 40,194, generating an annual payroll of 19.8 million by year three.
"The majority of the jobs will be in the areas of administration, production, quality assurance and quality control," according to the proposal. "The company is aware of, and committed to, the community's desire to hire local employees."
"The company has assessed each market on availability of a skilled workforce, operating cost factors and logistics," the city documents said. "The availability of economic incentives at the state and local level will play a key role in the final location decision."
Whiteheart, of the Piedmont Triad Partnership, said the Triad is an attractive site for manufacturing because of its central location along the East Coast and the state's interstate system.
"The location advantages of Winston-Salem and the Piedmont Triad will help a manufacturer be successful in getting products to markets in North America and globally and will also facilitate the recruitment of highly productive employees from our manufacturing focused workforce," Whiteheart said.
"For the right user, say a fast-growing company, the former Dell facility could be a great way to get a quick start in an excellent location."
Having a speculative building built and largely ready for occupancy is generally a luxury to communities the size of Winston Salem or Greensboro, said Ray Collins, president of Collins Commercial Properties Inc. in Winston-Salem. Collins is an expert on large economic development projects in the Triad.
"Given the large investment that Winston Salem and North Carolina made for Dell, it is almost providential that a replacement tenant is on the horizon," Collins said.
"As the saying goes, when a door closes, a window of opportunity opens, if you can find it."
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