Week of May 27, 2002
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Lubbock's $10M Loan Fueling Tyco's 350-Employee Texas Expansion
LUBBOCK, Texas Lubbock, Texas is betting in a big way on Tyco Fire Protection Systems. The West Texas city has signed a deal to provide Tyco with a US$10-million loan. Tyco, in turn, has agreed to build a new $28-million, 250,000-sq.-ft. (22,500-sq.-m.) manufacturing plant in the city.
Parent Firm Closing 24 FactoriesThe deal in the Lone Star State comes during some tough bottom-line sledding for Tyco International, Tyco Fire Protection Systems' parent.
The Bermuda-based conglomerate announced in late April that it was closing 24 factories, six of them U.S. operations. The shutdowns are part of the company's elimination of 7,100 jobs, most of them in electronics and telecommunications.
Tyco International reported a $1.9-billion loss in its most recent quarter. Analysts expect the company to reap between $7 billion and $8 billion in its current sell-off of CIT Group, its financial services arm. Proceeds from the CIT sale will be used to pay down some $10 billion of debt that's due in 2003, Tyco International officials said.
Despite the parent firm's sharp cutbacks, Lubbock officials voiced confidence that the Tyco Fire Protection Systems local expansion will reach fruition. Tyco International, they point out, is the world's largest manufacturer and installer of fire and safety systems.
In addition, Tyco's investment commitment in Lubbock exceeds the $10-million loan. Tyco said that it would spend would spend $15 million for sprinkler-head manufacturing equipment in the Lubbock operation. And, in addition to the funds it will use from the city's loan, the company has said that it will spend another $3 million on its new manufacturing facility.
Tyco, Lubbock officials emphasized, is also no newcomer to the city. The company has been making sprinkler equipment at its existing plant in the city for more than 30 years.
City officials, however, say they're hoping that Lubbock's $10 million turns out to be a bridge loan. The city thought it had lined up a bank to provide conventional financing. That arrangement fell through, though, reportedly over concerns that the next City Council might balk at a previous agreement with Tyco.
A number of local banks have recently inquired about funding the project, according to Lubbock officials.
The swaps include Lubbock's trading 39 acres in Lubbock International Airport to Market Lubbock. That parcel, which has frontage on I-27, will serve as the site of Tyco's expansion.
In exchange, Market Lubbock will give the city 170 acres (68 hectares) of land located north of the airport.
The swapped parcels have been appraised at equal value, according to Mark Earle, director of Lubbock International. The Federal Aviation Administration has okayed the exchange, he added.
The land trade will enable Tyco to build its new facility in Lubbock International's master-planned Interport development. Spanning some 2,000 acres (800 hectares), Interport is patterned after Alliance Airport in Fort Worth, say Lubbock International officials.
Tyco's new facility in Interport will likely eventually house a flow-control operation, company officials said. The company last year closed Central Sprinkler Corp. in Lansdale, Pa., a Philadelphia suburb.
Tyco followed a similar strategy six years ago. The company closed its 65-employee Star Sprinkler plant in Milwaukee, transferring the jobs to Lubbock.
Germany's TKS Partnering with China's ANSC in $180M Steel Plant
"The Dalian line will supply hot-dip galvanized sheet mainly for the Chinese auto industry," explained Karl-Ulrich Kohler, executive board chairman of Dusseldorf-based TKS. "China is a prospering market; vehicle production there is expected to rise from 1.8 million units per year today to 2.4 million units in the year 2005."
At full capacity, the Dalian plant will annually produce 400,000 tons (360,000 metric tons) of hot dip galvanized sheet. The facility's output will break down into 320,000 tons (288,000 metric tons) of galvanized plate for automotive-industry use and 80,000 tons (72,000 metric tons) of plate for household-industry use, officials with the two joint venture partners estimated.
The new line, the first of its kind in northern China, will begin trial operations in the summer 2003, the partnering firms said.
Container Port Only 1.2The operation in Dalian, a northeast Chinese port city of some 5.5 million residents, will be TKS's ninth joint venture in China. Among those operations is China's largest joint venture thus far in the iron and steel industry - the $1.43 billion alliance with Shanghai Baogang Group on a plant that will annually produce 440,000 tons (396,000 metric tons) of stainless steel strip and sheet.
Miles from Plant Site
TKS, the steel division of parent ThyssenKrupp, is Europe's largest producer of flat steel and ranks as the world's third-largest. ANSC is the holding company for Anshan Iron and Steel Group, ranked last year among China's top 50 listed companies.
The new Dalian joint venture "is an important part of our strategy to extend our presence in target markets by building up local downstream production facilities," said Kohler. "By co-operating with leading domestic steel producers like ANSC, TKS is able to serve automotive customers on a global scale."
The German firm is transferring five employees to Dalian to manage the 333,333-sq.-ft. (30,000-sq.-m.) hot-dip galvanizing facility, TKS officials said. Another 190 workers will be hired from the local-area work force.
The Dalian location was chosen because of the area's infrastructure and logistics and the quality of the 32.1-acre (13-hectare) site, according to TKS officials. The hot-dip galvanizing plant will be located only 1.2 miles (two kilometers) from Dalian's container port.
TKS's attention to detail on the project includes commissioning industrial designer Friedrich Ernst von Garnier to design the color scheme for the Dalian facility.
"We want to use corporate colors not only to enhance the public's perception of the facility," Kohler explained. "We also believe that the colors - light green and gray-blue - will directly impact employee motivation and product quality."
Transamerica Bringing 200 Jobs to Arkansas
"We are proud to be part of Arkansas' future," said Alan Warrick, president of Transamerica Worksite Marketing. Warrick then proceeded to make his firm a bigger part of Arkansas' present.
Transamerica Worksite Marketing, he explained, is transferring 200 additional positions to Arkansas' capital city from its operation in Los Angeles. And, Warrick added, the company might further enlarge its Little Rock work force by hundreds of employees in the near-term future.
New Site Offers Room to GrowTransamerica Worksite Marketing already has room to grow in Little Rock. Its new three story-office building in Westlake Corporate Park sits on a site spanning almost 18 acres (7.2 hectares), which the company purchased in November. With one new building just completed on the tract, another is already on the drawing boards to accommodate the jobs moving from Los Angeles.
"With our current 17.9-acre (7.16-hectare) site, there is adequate room to accommodate an additional building for our projected growth," Warrick said.
The 200 new employees will begin moving in in Little Rock in the fall, company officials said. The new positions will be white-collar jobs, a spokesman said, but no information on salary levels was released. Transamerica Worksite Marketing didn't estimate how many of the 200 positions in Little Rock will be filled by transfers from California.
The company's newly topped-out office facility will accommodate 300 of its existing Little Rock employees.
Transamerica Worksite Marketing offers life, accident and supplemental health insurance for employers and employees through six insurance companies. The company is a subsidiary of Cedar Rapids, Iowa-based Aegon USA. Parent Aegon NV completed its acquisition of Transamerica in 1999.
Aegon NV has registered continuing strong business results in the face of the overall economic downturn. In 2001, the company reported a 16-percent rise in 2001 net profit. Thus far, company officials are anticipating similarly strong results for this business year.
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