MNCAR Focus/Minnesota Lands New Companies, Assists in Expansions

Minnesota Lands New Companies, Assists in Expansions



Minnesota lands new companies, assists in expansions

 

When Japanese machine tool manufacturer Matsuura Machinery USA was looking for space for its new U.S. headquarters, it literally could have located anywhere in the country. It chose St. Paul.

 

Matsuura USA, a wholly owned subsidiary of Japan-based Matsuura Machinery Corp., signed a 10-year lease for 38,000 square feet at the River Bend Business Center at 325 Randolph Ave. It moved into the space in spring.

 

The new building was a speculative project developed by the St. Paul Port Authority and St. Paul-based Wellington Management in 2011; it was developed with private financing and some tax-increment financing proceeds.

 

Landing the company was a huge boon for the city and state.

 

 

 

“It’s the U.S. headquarters of a $170 million-a-year company. We are back on the map,” says B. Kyle, vice president of business development at the St. Paul Port Authority.

 

 

 

A Minnesota connection

 

John Schwartz, Matsuura USA president who was charged with selecting a location, grew up in the northern Twin Cities suburbs.  He recognized that the Upper Midwest, and Minnesota in particular, is a strong manufacturing region. Matsuura’s exclusive distributor -- Productivity Inc. -- is located in Plymouth.

 

Matsuura USA officials also liked that there was available real estate inventory in the Twin Cities; they didn’t want to build new. They liked Minnesota’s strong workforce and work ethic, and the lower facility costs compared with cities like Chicago.

 

Matsuura USA began looking at sites in Minnesota in early 2012 and had narrowed in on a couple of existing buildings in suburban locations. The Port Authority came late in the game in September 2012, but knew it could be competitive in delivering a quality building, Kyle says. The Port Authority, Wellington and Phil Simonet -- principal of Bloomington-based Paramount Real Estate Corp. and the broker representing the team -- walked Matsuura officials through the building.

 

They literally could have gone anywhere,” Simonet says. “River Bend III is a really hi-tech looking office/warehouse building, so it’s the kind of image that they want to present to the client base that they pursue.”

 

They also liked the airport access. “Those guys travel all over the place – not only North America and Canada -- but back and forth from Japan. They’re only about 10 minutes from the airport.” Also, the majority of their visitors/clients fly in to see them.

 

Simonet credits the Port Authority for landing the deal. “They were instrumental in encouraging them to come here,” he says. “They invested a lot of time. The people from Japan came over here multiple times, including the owner, to be personally involved in the deal. It was a big deal for them to obligate themselves to a 10-year lease on this much space. It took a lot of brainpower to put together; it was a very creative deal.”

 

 

 

Networking and relationships are crucial

 

 

 

The number one issue in the deal was the available space, Kyle says. “It was a new spec building with all of the requirements they needed for size,” she says. “Wellington Management was tremendously creative and flexible with some of the changes required. Their machines require deeper concrete beams in the floor so we had to reinforce the flooring. The dock door had to be made bigger because these machines are so monstrous.”

 

 

 

Number two is relationships. “In this community, it’s all about relationship-building,” Kyle says. “Louis Jambois (president of the St. Paul Port Authority) sits on the board of Enterprise Minnesota. I sit on the board of the Minnesota Precision Manufacturing Association. Our purpose is to target really professional manufacturing companies.”

 

 

 

Kyle concurs with Simonet that other integral factors in Matsuura’s decision were Minnesota’s strong workforce and strong manufacturing base and the site’s access to the airport.

 

 

 

“And another was the fact that we’re not a Chicago location, for traffic in and out of the city,” she adds. “So Minnesota is a good sell. And this is a market-rate deal, as far as Matsuura is concerned. We initially used TIF to get that development done, but this was not a public subsidized deal.”

 

 

 

Minnesota steps up to the plate

 

“Any company is going to need workforce, real estate and financing,” says David Griggs, vice president of business investment for Greater MSP. “For those three things, Minnesota is very well-positioned. From a financing perceptive, we’re in a very strong position with an amazing concentration of banking institutions. From the workforce perspective, we’re very strong. And from the real estate perspective, we have a very good, but diminishing inventory of sites and buildings that companies can go into or begin construction on.” Griggs also says the cost of doing business in Minnesota it is very affordable.

 

Forbes recently ranked Minnesota eighth on its “2013 List of the Best States for Business.” The study focuses on six key metrics: costs, labor supply, regulatory environment, current economic climate, growth prospects and quality of life.

 

Griggs points to a couple of large, recent deals that Minnesota landed, including Emerson Process Management, which is opening a $70 million global headquarters in a former ADC Telecommunications building in Shakopee. The company will add 500 new jobs.

 

“Why they went there was there was an existing, brand-new, never-occupied building, so they were able to put it into service and save a lot of time and money,” he says.

 

Minnesota and Shakopee officials approved a $6 million public subsidy package for Emerson. Funding came from the state, the city of Shakopee, Scott County and the Burnsville-Eagan-Savage School District.

 

 

Meanwhile, the Toro Co. has begun construction on a $25 million expansion at its headquarters and R&D center in Bloomington. The deal is supported by a forgivable loan provided through the Minnesota Investment Fund. The $30 million fund provides financing to help add new employees and retain jobs. Approximately $6.5 million from the fund has been committed for 13 deals so far in 2013, reported the Twin Cities Business Journal (Sept. 13, 2013).

 

 

“We had to compete for them to expand their R&D facility here and not in any of the other multiple locations they have in the U.S. and around the world,” Griggs says. “They had options in multiple states. The state stepped up with a nice grant. The city of Bloomington was at the table with us to compete for their business. That’s something we as region are really starting to understand -- that along with having Fortune 500 and 1000 companies or just multi-nationals, they have options. We as a region have to be much more aggressive on helping them choose to expand here.”

 

 

 

Deals are ‘won or lost” at local level

 

Greater MSP works closely with the Minnesota Department of Employment and Economic Development in providing possible incentives such as grants, loan programs, TIF, etc.

 

“It becomes very individual from company to company in terms of what they need,” Griggs says. “The conversation is never the same so our partners also change. Sometimes LifeScience Alley is a key component to winning a deal. Sometimes it’s private industry. Sometimes it’s a supplier/buyer relationship that’s the central focus. One of the key things we need are good listening skills—listening to a company and trying and understand their core issues and work very hard to solve them.”

 

Griggs says every deal they do is won or lost at the local level.

 

 

“It’s our local municipality and partners that in the end win deals for us,” he says. “They’re the ones signing off on everything. The state is a key partner, but when a company has multiple choices on where they’re going to go in the region and around the world, they’re looking for a community that will be a partner with them. It’s the connection that a company makes to a local community that makes the difference.”