Atlas Negotiates Incentives for Fortune 500 Manufacturing Company
|Location:||Central and South Central|
Project Overview: We worked with one of our Fortune 500 manufacturing clients who needed to redeploy existing assets—shift M&E—to one of its other locations due to a plant closure. Our client focused its relocation efforts on its existing Central and South Central US locations. We initially considered 5 states within the footprint that best suited the company’s needs, but quickly narrowed it to 3 finalist states. We worked through the most important overall cost criteria, including lowered utility costs and the availability of cost offset incentives, as well as critical non-cost criteria such as the availability of skilled labor and a more favorable regulatory environment.
Since this project consisted of expansion to an existing footprint, we concentrated our efforts on identifying and securing competing incentive offers for each of the finalist locations. We then assisted our client in quantifying and determining the usability of the incentives offered. Finally, post decision, we assisted with our client’s compliance with the incentives package.
Keys to Success: At Atlas Insight we understand the value of incentives in helping to reduce the internal payback period hurdle many companies face. Since this project involved plant closure, it was important to the client that they were not visible during the initial process. Our client said that our representation of them during the process, and the knowledge we had in benchmarking the incentive packages, were key to their internal process.
Incentives Secured: The estimated incentive values were modeled into the project proformas, allowing our client to understand the true costs and offsets in each scenario. The $1.68 million in incentives, included:
- $500,000 Cash from a Deal Closing Fund
- $380,000 in Tax Credits
- $300,000 in Property Tax Exemptions
- $500,000 in a Utility Rate Reduction Rider
Site Selection – Licensed Sales Center
|Location:||Mountain and Western U.S.|
|Jobs:||Up to 600 new|
|Incentives:||Over $10 Million|
Project Overview: A financial services client had three existing customer service center locations in the Central and Eastern time zones near major cities. Our client was experiencing higher than desirable labor costs and turnover rates, primarily due to competing businesses waiting for a candidate to pass
the rigorous licensing requirements and then offering the employee bonuses for changing employers. Atlas Insight was asked to assist with the identification of a location where our client could expand their capacity, reduce overall costs and broaden their geographical footprint, all in an environment where
they could scale the operation without fear of their employees being poached by competitors. There were a many factors that were considered, including time zones, ability for a quick hiring ramp up of jobs, quality of candidates, historical low turnover rates, etc..
Keys to Success: Atlas recommended that the client consider a Tier 3 or 4 city to help alleviate the pressures of competing companies offering bonuses and higher wages for licensed property and casualty agents. We screened approximately 85 locations initially on both qualitative and quantitative factors to develop a short list of locations. We screened out locations that we considered to have similar labor competition, were too small to ramp up quickly, or where the market was saturated with contact center employees. Because our client’s timeline was short, we developed a system where we sent two teams, each including representatives from Atlas and our client to the short listed communities for initial assessments. We arranged for meetings with local political figures, interviews with other similar employers, and interviews with each state’s Department of Insurance to discuss testing and licensing requirements.
Incentives Secured: Our client chose a location in an Atlas recommended city, despite that location falling slightly short in our initial pass/fail requirements for minimum community size. Our client received an incentive package of over $10 million for their $25 million capital investment project, which included the construction of a new building. Our client considered the location to be a tremendous success as its initial hiring class saw a 100% pass rate on their license test, and a 100% retention rate. Our client also benefited from a 20% reduction in cost and ultimately closed down one of their legacy facilities and shifted capacity to this new location. The incentive package included Cash Grants, Property, Tax Abatements, Training Grants and Tax Credits
Site Selection – Processing Center
|Location:||Kansas / Missouri|
|Incentives:||$10+ Million in Discretionary Incentives|
Project Overview: A major financial services client was looking to reduce their real estate footprint by consolidating redundant locations in one of their business units. It had identified an existing operation in Texas that would be closed and its processing would be relocated to a facility in Kansas City, Missouri. Atlas Insight was initially engaged to negotiate the incentives for this relocation. During the process, however, it was identified that the Kansas City location was not ideal for multiple reasons, and the lease on that property was soon expiring. Atlas was asked to finish the negotiations for the consolidation project, and the scope of the engagement was expanded to include the review of the Kansas City location to determine if it should be seated on the Missouri or the Kansas side of the border. There were two options that were under consideration, one to extend the existing lease in Missouri, while the other would relocate to Kansas. If the relocation was chosen, it would be important to retain as much of the existing workforce as possible.
Keys to Success: Atlas analyzed tax considerations in both Kansas and Missouri and determined ways to maximize the incentives for retention in Missouri or relocation to Kansas. During the course of that extension, Kansas introduced a new incentive to attract businesses. Atlas was monitoring this Legislation (Atlas monitors all pending incentive legislation on a regular basis) and alerted the Company that it may want to reconsider its initial decision. The Company ran the numbers with the new incentive possibility and determined that if the incentive was to be offered, the relocation would be worthwhile. The Legislation passed and the company relocated to Overland Park, KS achieving tax savings, employee retention, more efficient space, less square footage under rent, and overall productivity enhancements, and the Company was extremely pleased with the results.
Incentives Secured: Aside from employee retention, more efficient space, less square footage under rent, and overall productivity enhancements, Atlas helped to secure an incentives package valued at over $10 million including Employee Withholding Tax Rebates, Training Grants and Investment Tax Credits.
Atlas Negotiates Incentives for Major Financial Services Firm
|Location:||Southeastern U.S. / Western U.S.|
|Jobs:||Over 500 New|
|Incentives:||$6+ Million for each selected site|
Project Overview: A financial services client that had recently acquired a major competitor was looking to expand their footprint. Our client had an existing operation in the Central time zone, and was accustomed to locating in cost efficient markets. Atlas Insight was asked to assist with the identification of a location where our client could expand their recently acquired division, and combine the acquired company’s strategy of operating in low cost markets with strong educational partnerships, with the client’s philosophy to locate in markets that are larger and more accessible.
Keys to Success: Our client had already prepared a list of 50 cities it wanted to consider for the project. The Atlas team reviewed the list and made a recommendation that an additional five cities be added to the original list. Our client agreed with this approach and the assessment of candidate cities began by reviewing both qualitative and quantitative factors to develop a short list of locations that would receive field visits. After this initial screening was completed, five of the eight shortlisted communities were locations Atlas had recommended for consideration. After field visits were conducted, the top two locations were selected. Our client felt that either would be a strong choice. One of the finalist locations
was one of the original 50 cities supplied by the client, and the other was one of the five communities that Atlas had recommended be added to the list. Our client was extremely pleased with Atlas’ knowledge of various communities and the fact that our recommendations had scored so well in the process. After an extensive review, our client chose to locate in the city that was on their original list of 50, but was so impressed with the other finalist location recommended by Atlas, that they are now in the process of locating a second facility in that city. Both locations exceeded all of the client’s original goals.
Incentives Secured: Atlas negotiated incentives in both finalist locations and secured lucrative incentive packages that were considered in the final decision making process. The estimated incentive values were modeled into the project pro-formas, allowing our client to understand the true costs and offsets in each scenario. Each location offered at least $6 million in incentives including up-front Cash Grants, Training Grants, Withholding Tax Rebates, Sales Tax Rebates and Free Land.