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Web surfing leads startup company to find its site

SeverCorr exemplifies how companies today are using the Internet to launch their site location searches.

[From Expansion Management magazine, 11/10/05. Reprinted by permission.]

It was late at night in September 2004, his children were in bed and Eddie Lehner decided to do some work. As the chief financial officer of startup company SeverCorr LLC, Lehner was trying to find a site for a state-of-the-art steel assembly facility that would supply the growing manufacturing sector in the South.

That may sound straightforward, but it was a little bit more complicated.The company was looking for a large parcel of land that had access to multimodal transportation. And it had to be in the South.

The company was also looking to shave time and money off the acquisition process, so it was hoping to find a site where environmental testing and soil surveys were already completed. “There is not a large population [of these types] of sites,” Lehner said.

For two years, SeverCorr raised capital and identified more than 50 potential sites in seven southern states. In August 2004, Lehner thought the company had found its site in Arkansas. But that site became too costly because of an overhaul of the state’s utility regulations in the wake of the Enron scandal.

At about this time, the Tennessee Valley Authority (TVA) was certifying two “megasites” in its vast region that would be ideal for the SeverCorr project. These two points intersected in cyberspace when Lehner accessed the Web from his home computer and logged onto www.TVAed.com, TVA’s economic development Web site. There, he found the two megasites — one in Columbus, Miss., and the other in Hopkinsville, Ky. — and all pertinent information related to both locations.

The sites were approved for major projects in assembly site location, site surveys were complete, and access to transportation and utilities was in place.

The rest is history.

After inquiring about both sites, SeverCorr decided to locate its facility in Columbus. The Mississippi site was chosen because it puts the company in the middle of the booming automobile manufacturing environment in the South.

The company expects to do business with Honda, Hyundai, Nissan and Toyota, not to mention any other automaker that decides to site a manufacturing plant in the region. “We’re in the cradle of our marketplace,” Lehner said. “There is good proximity to our end-user markets, a good infrastructure and a favorable business climate in the state.”

Ground was broken last month on the $850 million steel mini-mill at the Lowndes County Golden Triangle Megasite. The 1.2 million square foot plant will produce 1.5 million tons of steel annually when it becomes operational in about two years. The company will employ 450 workers at full production.

The Internet quickens the location pace

It would not have been impossible for Lehner to find the Columbus site without the Internet, but having the Web at his fingertips did reduce the time it took to find it. “You don’t have to contact any number of people in any number of states,” he said. “All the important components of a site are there for you, [such as] incentives, transportation and work force.”

The beginning of the site location process is where the Internet has had its most influence. Instead of having to initiate numerous calls to find out the wealth of information so critical to a successful site location decision, company executives can do it all at their own pace, in their own offices — or at home — and in complete anonymity.

Many cities and states fall out of contention before a site search begins just because their information is not readily available via the Web.

“If communities don’t have sufficient information on the Web, then they are eliminated out of the gate,” said Glenda Betts, project manager for TVA Economic Development.

Those cities and states with the more robust sites stand a better chance of being on the final list for location visits.

That’s why TVA has made a conscious effort to revamp its Web strategy during the past several years.

TVA, which encompasses 80,000 square miles in Tennessee and portions of six other states, began driving businesses to the Web in 2004. It revamped its Web presence by taking its old site, TVA.gov/econdev, and splitting it into several interconnected sites, including TVAed.com and TVAsites.com (which houses the organization’s property and land databases).

“We’re not only making a concerted effort to put the information on the Web, but we’re marketing the information,” Betts said. “We’re still in our infancy.”

TVA also undertook the effort to certify large industrial properties as megasites through McCallum Sweeney Consulting and load that information onto TVAed.com. Currently, there are five sites certified as megasites.

With the megasite certification program, TVA has made it possible for sites with the necessary attributes in place and the due diligence completed to be ready for expanding companies to build.

“The demand for certified industrial sites is one of the fastest-growing trends in the business, because companies want sites that are ready to go and relatively risk-free,” said Ed McCallum, senior principal for McCallum Sweeney. “Companies are under tremendous market pressures to make site decisions and start up facilities fairly quickly.”

Lehner said TVA came up with a comprehensive checklist of what companies look for in a big site, then put that information on the Web in an easy-to-use format.

Betts said this shift in thinking about the Web was the realization by TVA executives about the realities of today’s site location market. “In the past, we were more supportive than assertive as an economic development organization,” she said. “We realized how much more companies were using the Web. In order to become a competitive economic development player, we had to beef up those resources.”

Information fuels a successful site search

Site location decision-makers benefit the most from a robust Web site. All the information that is needed to make an informed decision is in one place. Information is power. With the right information, a company can make a location decision that pays dividends for years to come.

Make the wrong the location decision and the company will pay for that mistake for years to come. “Most of us go on the Internet these days and look for a mix of things we need,” said Dick Larman, director of business and project development for the Washington State Department of Community Trade and Economic Development (CTED). “There is a narrowing process where you have the ability to define and redefine your parameters. You may be able to learn something that you never thought of before the search began. That is the key to having added-value to the process.”

CTED’s Web site, ChooseWashington.com, has GIS technology that provides users with property information, demographic reports, interactive maps and business data that would otherwise take weeks to collect at a high cost.

Using the Web site, executives can quickly identify optimal locations for their businesses by searching communities and available property, creating market analysis reports, and identifying geographic advantages of doing business in Washington through interactive online mapping.

The mapping capabilities include the ability to zoom in and out, move the map, identify information and view geographic “layers” of information, such as parks, schools, airports, railroads, ZIP codes, points of interest and neighboring communities. Users can also create corresponding community demographic reports on such issues as labor force, education levels, consumer spending and population characteristics.

“We’ve been able to provide the strength of tools and a depth of understanding of what is available in Washington,” Larman said. “While information is just information, we try to put it in a format that provides some understanding of doing business in Washington.”

What can an executive considering an expansion into Washington state learn from ChooseWashington.com? The perception of the state is that it rains more often than not. But Larman said a check of the GIS data on the Web site would reveal to executives that the eastern two-thirds of the state (on the eastern side of the mountain ranges) is arid, receiving only 2 to 3 inches a rain in a typical year. “Companies might not have considered Washington because they thought there was too much rainfall,” Larman said. “They are surprised to find our climate.”

ChooseWashington.com has won two awards this year — for outstanding use of geographic information systems technology from the Environmental Systems Research Institute and the Economic Development General Purpose Award from the International Economic Development Council.

Saving time means saving money

Larman said that in today’s world, executives make their early decisions in the site location process based on either trusted relationships or, in the absence of such relationships, information culled from Web sites. Executives can build new relationships with a city or state based on that information.

“If we don’t have a direct working relationship with a company, the Web gets us 70 percent to 85 percent of the way there prior to a site visit,” he pointed out. “That’s the continuum we work with.”

TVA’s Betts said one of the most important issues facing expanding companies today is saving time, which equates to saving money.

“In the past there were just reams of information and many contacts that you needed to go through,” she noted. “In the [site location] game, the first thing is to get a company to take a look. We’re using the Web as one of those tools to get companies to take a look.”

That philosophy paid off for SeverCorr. Lehner said the fact that TVA had qualified the site from every point of view saved the company six to nine months in the site location process. “We wanted something with the shortest lead time,” he said. “We needed to have a site that was ready to serve. The Internet had all the information in one place.

“This site was a godsend,” Lehner added. “It is right in the middle of the market we want to participate in.”

And it is a site that was found in the middle of the night from a home computer. It just shows how the site location process has been changed by the adoption of the Web.

—By Ken Krizner, Managing Editor, Expansion Management