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LG Chem opts for Holland
5/12/2010
By Joe Boomgaard | TransActions
jboomgaard@mibiz.com
HOLLAND — So much could have gone wrong with the deal that eventually brought LG Chem to West Michigan. In fact, a last-minute property demand almost killed the deal.
When a proposal came across Lakeshore Advantage President Randy Thelen’s desk from the Michigan Economic Development Corp. in early 2009, he had no idea about the identity of the company, only that it had high electricity demands, needed to be in an industrial zone and might need light rail access.
Despite the unknowns, he decided to take a nontraditional approach of engaging the community business leaders in the business attraction effort. Once he heard that the community had made the cut for the final 13 sites, his unconventional methods kicked into gear.
More than just a cornfield
When LG executives came in from Korea for a site tour, “I made one strategic decision. I decided to open it up and called on several top business leaders,” Thelen told a group of contractors at a recent Associated Builders and Contractors West Michigan Chapter seminar. He brought the leaders together with the LG executives for dinner the night before the tour, put them up in a good room, took them to Lake Michigan to see the sunset, and tried to show that the community wasn’t just selling a couple of cornfields for a development.
“Our value proposition is not the price of our dirt, it’s the attitude of our community,” Thelen said. “That’s what helps us fight above our weight class. We had to out-hustle the competition.”
The visit wasn’t perfect. The meal was “mediocre,” for starters, and the group had issues with translation. It was clear that some in the party weren’t excited to be in Holland since their other operation was clear across the state in Troy.
But the move paid off. Holland found out it was included in the list of sites the company submitted when it applied for the Department of Energy grant, but the company had gone silent. Still, Thelen and the Holland businesspeople persisted in their efforts. Convinced that if the community were to have a chance in the case it was selected as a finalist, Thelen and crew set about getting their ducks in a row. They lined up the right resources and anticipated the answers to LG Chem’s questions.
Once the grants were announced, LG’s representatives called and said they were coming again in August.
“One of the hurdles we are up against is the perception that we’re farmers who know how to bend metal but that we can’t do advanced manufacturing in the hinterland,” Thelen said. To counter that belief, Thelen arranged meetings with advanced manufacturers in the area and then set up a tour of Gentex — at 9 o’clock in the morning on a Sunday in Zeeland — and it happened.
Nearly sunk by last-minute demands
Again, the city made the cut to be in the top five. LG said it was sending a team on Sept. 11 in advance of its CEO making a visit on Sept. 17. “Nothing could go unanswered. It had to be perfect,” Thelen said. The group he worked to coalesce in the “dark period” assembled for the meeting at Haworth’s headquarters.
“Instantly, within 12 minutes, we had a problem. They said they wanted the site to be 300 feet wider,” he said. “That involved two new property owners, another city and a township, and we had less than 24 hours. Their consultants said this would delay the project, but we went on.”
Shortly thereafter, Thelen called Tom Postma, sales advisor at Colliers International, and explained the problem. It was after hours and Postma was attending his son’s sporting event.
If the property deal couldn’t happen, the CEO wouldn’t come and the deal was off.
“We’ve been investigating the property for a couple of years, but we only had a relationship with one of the sellers out of the three,” Postma told TransActions. “We knew the history and who the owners were, but we needed to get it tied up by tomorrow afternoon.”
So Postma set to work calling one of the property owners that night, setting a meeting with them in the morning. After finding out that David Slikkers, CEO of Tiara Yachts, grew up next to the other property owner, Postma called Slikkers — who was on vacation in California — and had him make contact with the woman. The news came back — Postma was in. The next day, he met with her and they agreed to move forward with a deal.
“We were lucky,” Postma said. “Everyone realized the importance of bringing jobs to the area and they were very cooperative and good to work with.”
Shh! You’re the one
With the deals lined up, Thelen would welcome the CEO to Holland and again have him meet with the business leaders, talk about the business environment — both good and bad, and tour Gentex. A couple of weeks later, the company called Thelen and said they were coming to Holland — “but don’t tell anybody.”
The city of Holland, which bought the properties and is in the process of annexing them to the city, will sell them to LG Chem later this year.
“Randy choreographed that superbly,” Kris DePree, of Colliers, told TransActions. “He had the real estate and construction guys coming in, the BPW, plus he had the senior executives in town, the leaders of our local companies, to help meet with LG and sell the community. The city council and the mayor always sell the city, but you had businesses that will be competing for human resouces, yet they were still helping to sell our community. I believe that’s unique to Holland.
“It’s great that Randy was able to figure out how to do that. Randy gets a lot of requests from the MEDC, and when he calls us, we scurry. With most of them, nothing happens. But that one deal like this every six years — or every 15 years — makes it worth all the work. It’s gratifying that this community looks at itself as a community, that we have that teamwork, from the CEOs to the people like us working in the background to make it all come together.”
Thelen said the project coming to fruition was a testament to the community. Instead of getting down in the dumps as the economy faltered, the people of Holland were able to come together and recruit the second largest Korean company, the 69th largest in the world. And that was on top of Johnson Controls-Saft being awarded $300 million in federal grants to also make lithium ion batteries in Holland.
Size envy
By the end of this year, Thelen expects about 1.2 million square feet of buildings to be under construction and breaking ground. The initial investment is about $1 billion, and he legitimately thinks the region will have 10,000 new jobs by 2020 and an overall investment of $2 billion.
“We have something taking place here that’s the envy of the country,” he said.
Postma and DePree said the activity in Holland has worked wonders in boosting people’s confidence. They said a few parties have looked at the former Life Savers plant because of its proximity to both the LG Chem and JCI battery plants.
“We’re probably six months to a year away before we see some of the suppliers that will need to be located in the area, but we should see the uptick then,” Postma said.
He cited Request Foods new plant and two other industrial construction projects as evidence that the area is seeing more cautious optimism. While there is some larger inventory on the market, the number of sites with 10,000-50,000 square feet is limited. Postma said to expect to see more demand for those types of projects in the next year as well.
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