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Site Searching: Binswanger Negotiates a Win/Win for Cummins and the State of Indiana


After an exhaustive two-year site search that encompassed as many as 13 states, Cummins will begin upgrading its long-time hub facility in Columbus, Indiana, to produce a state-of-the-art, $250 million light-duty, clean diesel engine line.

The company has been a fixture in Southern Indiana, at this very Columbus facility in fact, for over 80 years.  And Cummins’ decision to invest between $15 and $30 million to renovate and upgrade approximately 500,000 square feet of the existing 1.4 million-square-foot building to produce its new engine line by 2010 guarantees the partnership well into the future.

So how did the engine giant go from looking at the entire Eastern U.S., considering both greenfield sites and existing facilities, to upgrading a facility they already owned?  Cummins commissioned Binswanger’s Advisory Services Division to spearhead the full-scale site search.

Binswanger’s site search philosophy is a macro to micro approach.

“Look at the biggest picture possible, cast a wide net, and then keep eliminating sites and areas until you shake out the most qualified matches,” said Jeff Chenen, Binswanger’s lead consultant on Cummins' public sector inquiry and evaluation work. 

But a site search is only as good as the evaluation criteria, and a real estate decision is only as good as the information on which it’s based.  Binswanger and Cummins spent considerable time compiling the search criteria.  Cummins did a detailed analysis of the necessary specifications for the new manufacturing standards, and Binswanger advised the company on how to approach incentives and costs.  In addition to facility and site specifications, the search matrix included financial factors related to tax incentives, logistics, labor costs and availability, education and training, and energy.

The macro analysis phase of the process became the most important for Cummins according to Mark Bode, corporate facilities architect and real estate director for the company.  Calling them “community issues,” Bode said macro analysis of factors like attraction, retention and labor markets is “the meat of any location decision.”

However, Cummins’ time restraints required an existing facility, which placed heightened emphasis on the micro approach to specific sites.  “We were pleased to see that Binswanger’s search matrix accommodated our needs at every step in the process,” said Bode.

A site search is much more than finding a site that meets the company’s requirements.  While developing the requirements, an information platform showcasing what the company will be bringing to the state must also be created.  In the case of Cummins, the state was looking at a $250 million dollar investment in the future of high-tech manufacturing, plus between 600 and 800 new jobs when the facility began production. 

Chenen said the key to a successful site search is helping both parties, the company and the state, identify and market what they can bring to the negotiating table.  The best-case scenario means the company desires the state just as much as the state desires the company.  When this happens, states are willing to optimize incentives to compete.  Binswanger’s site search process is designed to put forward a realistic picture that allows both parties to focus on what they need to invest to optimize the opportunity.

Bode said good data began pouring in from state economic development organizations and quickly became overwhelming.  “Packaging all of this data into a digestible format and then providing recommendations was the primary task we gave the Binswanger team, and their performance was near flawless.”

In addition to Chenen, the Binswanger Team included Bill Evans, a senior vice president at Binswanger, who managed the client relationship and also delivered reports to Cummins’ upper level management.  And team executive John Dues, vice chairman of Binswanger’s Advisory Services Division, oversaw the entire program.

Over the two-year period, Binswanger negotiated incentives packages with each of the competing states, sifted through all of the incoming info, prioritized it, clarified it and then prepared documentation and presentations for Cummins’ board of directors. 

“Ultimately, we had everything we needed to allow for a good decision and to derive the best value,” said Bode.

Indiana produced a $30 million package of state and local incentives highlighted by an extensive education and training plan that will provide a skilled advanced manufacturing workforce to support Cummins’ operations – one of the company’s chief criteria for the site search.

For more information on site searches, contact John Dues at jdues@binswanger.com or 703.873.5051.