Week of October 27, 2003
from Site Selection's exclusive New Plant database
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Operation May Employ 600
Bought for $1, 1MSF Former Bayer Complex Will House Nonprofit's Indiana HQby JACK LYNE, Site Selection Executive Editor of Interactive Publishing
Currently based in Oklahoma City, FTC will shift its headquarters to a 1-million-sq.-ft. (90,000-sq.-m.) complex that Bayer has sold - for a total of US$1 - to the 28th-largest U.S. charity. FTC may create as many as 600 jobs in Elkhart.
The Northern Indiana facility that will be the charity's new headquarters was once a manufacturing operation for Bayer Diagnostics, a subsidiary of Bayer AG (www.bayer.com). The plant closed late last year as part of Bayer AG's restructuring; its production work was relocated to existing plants in Bitterfield, Germany; Lerma, Mexico; and Myerstown, Pa.
The shutdown left Bayer with some hard choices:
One option was razing the facility. But demolition's estimated $20-million cost would've exceeded the structure's $12-million valuation. Another alternative was to simply abandon the plant - an outcome the company didn't want in an area in which it's long had a substantial presence.
So Bayer Diagnostics created a third option: selling the facility for $1. Bayer retained the services of Grubb & Ellis/Cressy & Everett (www.cressyandeverett.com), and in August 2002 launched its "Develop Northern Indiana" marketing campaign, which included working with local, state and regional economic development officials.
Bayer Diagnostics hoped for a quick sale. It was underwriting the marketing campaign, as well as footing the Elkhart facility's maintenance costs, which total millions of dollars a year.
The $1 offer generated substantial interest. It was 14 months, though, before Bayer decided that FTC fit the bill for the building's new owner.
"We're thrilled to welcome Feed the Children to our Elkhart community," Bayer Diagnostics Senior Vice President and General Manager Joe Martin said in announcing the sale. "Feed the Children's acquisition of the space brings another world-class organization to the Elkhart area and builds for the community's future with the promise of a major nutrition-focused R&D center. This is a true demonstration of what can be accomplished when business and the community work together."
Bayer Plant Employed 3,000 at PeakThe charitable group's move into Northern Indiana could create 600 new jobs over the long term, said FTC President Larry Jones. Jones founded the organization with wife Frances after their 1979 trip to Haiti.
FTC's presence will replenish some of the job losses from the closing of the Bayer plant, a fixture in Elkhart's economy for 64 years before its shutdown. The building opened in 1938 as part of the portfolio of Miles Laboratories, which Bayer AG acquired in 1978. At its peak, the plant employed 3,000 workers in Elkhart, a city of some 42,000 residents. About 500 workers were left when the facility closed in late 2002.
Initially, FTC will focus its Elkhart activities in the complex's warehouse space, setting up a 100-employee Midwest distribution facility in six to nine months, Jones said. And the charity has a lot to distribute. FTC last year shipped 63 million pounds (28.3 million kilograms) of food and 24 million pounds (10.8 million kilograms) of other essentials to needy children and their families in all 50 U.S. states and 51 foreign countries.
The Northern Indiana location will further broaden the organization's reach, Jones explained.
"This generous offer from Bayer will allow Feed the Children to accelerate the scope of our international efforts and will help us better serve the nearly 2 million families who are living at or below the poverty level within 300 miles (480 kilometers) of Elkhart," he said.
Planned R&D Center HasFTC's longer-term plan and its larger job-generation potential lies in the former Bayer complex's other square footage, particularly its laboratory and office space. FTC plans to use that space for an R&D center for children's nutrition.
Greater Job-Generation Potential
"We consider the Bayer building to be one of the most substantial facilities in Elkhart," Jones said. "It will provide us opportunities far beyond our original quest for a Midwest distribution headquarters. The Bayer building will be the cornerstone of our international expansion and will be absolutely critical as we work with various public- and private-sector partners to create a research and development center aimed at improving the nutrition of children around the world."
Jones estimated that the R&D center could create as many as 500 more jobs, most of them in research and administration.
But FTC, he added, will continue to have a strong presence in Oklahoma City; most of its current employees in the area will remain there. The Joneses will spend time at both the Oklahoma and Indiana locations, he said.
Hundreds of Firms Wanted $1 FacilityThe $1 sale price drew interest from hundreds of firms, including several nonprofits, Bayer officials said. But FTC, they explained, was the only nonprofit with sufficient financial resources. The organization had $553.4 million in contributions and sales last year. In addition, Bayer officials liked FTC's long-term plan for the property.
The health-care company, however, hadn't initially anticipated selling the complex to a charitable nonprofit. FTC's selection means that the city won't realize any tax revenues from the property. Bayer Diagnostics paid more than $370,000 in yearly taxes on the now-shuttered operation, company officials said.
But local officials nonetheless cheered the announcement of a new owner.
"We're extremely excited about having Feed the Children in Elkhart," said Mayor Dave Miller. "The organization's work is legendary both in the U.S. and abroad. And we're grateful to Bayer for making this possible. We consider the company one of our best partners and corporate citizens." FTC's arrival "will keep Elkhart in the worldwide spotlight," Miller added.
And Bayer Diagnostics will remain a very large player in Northern Indiana's economy. The Tarrytown, N.Y.-based company has about 1,100 of its 7,000 total employees located in the area.
The company also continues to expand locally. Bayer Diagnostics recently completed a $33-million expansion of its manufacturing operations in nearby Mishawaka, some 10 miles (16.1 kilometers) from Elkhart.
The firm also recently finished a $15-million upgrade of its Elkhart-headquartered Self-Testing Segment (STS). The latter in fact, will sit next door to FTC's 27-acre (10.9-hectare) site. Bayer subdivided the STS campus to give the nonprofit legal ownership of part of the site.
The $1 sale underscored what Grubb & Ellis/Cressy & Everett Vice President Jim Skillen called "Bayer's legendary ongoing commitment to our region." The company has contributed more than $1.2 million to a wide variety of community organizations. And Bayer recently donated $500,000 to the Economic Development Corporation of Elkhart County (www.edcec.com).
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