Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 4, 1990 TAG: 9003022816
SECTION: BUSINESS PAGE: BUS1 EDITION: METRO
SOURCE: GEORGE KEGLEY and LESLIE TAYLOR STAFF WRITERS
DATELINE: LENGTH: Long
John Panettiere, chairman of Grove Manufacturing, met with Salem Mayor James Taliaferro and City Manager Randy Smith at the old Sav-A-Stop site on Cook Drive. There had been several months of telephone calls and letters, but it was the first time Taliaferro and Smith had met face-to-face with Panettiere, the man whose company would bring Salem its largest industry in 35 years.
The group toured the building. Conversation focused on Grove's possible purchase of 10 1/2 acres of city-owned property adjoining the site, property that was crucial to Grove's expansion needs.
Panettiere and Taliaferro liked and respected each other from the beginning. The Pennsylvania industrialist admired the Salem building contractor's straightforward approach. Taliaferro, in turn, admired Panettiere's up-front style.
They had a mutual friend in John Burress, a Salem native whose heavy-equipment company, J.W. Burress Inc., is the largest distributor of Grove's cranes.
"Panettiere liked the fact that the mayor tells it like it is," said Joe Yates, Salem's director of planning and community development. "He's not a snow-job type guy. If something stinks, he tells you it stinks."
Panettiere said he was impressed that Taliaferro would take time to show him through the Sav-A-Stop building, a move that eventually will bring a $12 million payroll and annual tax revenues of $280,000 to Salem when Grove's plant is in full production. Employment at the aerial work platform factory is expected to be 800 to 1,000 within three years.
Since June, the Grove search has survived environmental, bankruptcy and legal problems involving Sav-A-Stop, as well as a newspaper story that delayed and changed company plans, according to Mark Heath, executive director of the Roanoke Regional Partnership. Salem won over 16 other sites in three states.
Six different dates, the first in October, were set for closing the Grove transaction before all the obstacles were removed.
The day before the Salem plant announcement finally came, Feb. 5, the company changed its name from Grove Manufacturing to Grove Worldwide and named Panettiere chairman, in addition to his posts as president and chief executive officer.
The chase began in March 1989, when the Hart Corp., an industrial real-estate firm from Philadelphia, told the Regional Partnership of the Roanoke Valley about Grove's search for a building to house its rapidly expanding business of manufacturing aerial work platforms.
In May, Tom Greenwood, marketing manager for the state Department of Economic Development, added the Sav-A-Stop building to Grove's list of prospective plant locations.
The first visit by a Grove official to the Salem site was by Gary Spickler, senior vice president/manufacturing, on June 7. Spickler came back with Panettiere and Wayne Nicarry, the founder of Grove, for a second look a week later.
When a price was established the day after Panettiere and Taliaferro toured the building, Grove said it was too high and called for a new study of available buildings in the region from Delaware to Kentucky. That list included Roanoke's shell building and structures in Buena Vista and Culpeper.
But the Buena Vista site dropped from contention because Grove was concerned about the need for flood protection at the former REA Magnet Wire building. The Army Corps of Engineers' timetable for building that city's flood-protection project did not meet the company's expansion timetable, according to Stuart Litvin of Rockbridge Area Economic Development Commission.
Real estate problems with a building owner in another country and an out-of-town agent ended Grove's interest in a Culpeper building, said Jim Witherspoon, executive director of the Culpeper Chamber of Commerce.
Heath, executive director of the partnership, coordinated the negotiations between Grove, Hart and the city of Salem for the Sav-A-Stop site throughout the summer.
Because the Sav-A-Stop site had been funded through the use of industrial revenue bonds, the property had been transferred to the Salem Industrial Development Authority after Sav-A-Stop's reorganization in bankruptcy court in Florida. The transaction enabled the authority to transfer Sav-A-Stop's interest to whomever Grove decided the bond should be transferred to, according to Robert A. Craighead, authority chairman.
By July, Grove was looking favorably at the Sav-A-Stop building, but new worries arose about the labor supply. Rodney Benchoff, human resources vice president for Grove, came to the Roanoke Valley for two days of talks about the labor situation with executives of Fabricated Metals, Roanoke Electric Steel and Gardner-Denver. These industrialists assured Benchoff he would find an adequate supply of labor.
When Hanson PLC, Grove's British owner, turned negotiations toward a lease instead of purchase of the Sav-A-Stop building, Hart-Salem Associates was formed as a Hart subsidiary. Hart-Salem bought the building from the Salem Industrial Development Authority for $2.4 million for a seven-year lease to Grove.
A key factor in the transaction is Grove's purchase of the 10 1/2 adjacent acres from the city of Salem for $100,000 for use as a parking lot and for expansion. Grove had wanted an existing building with adjoining space for expansion.
Panettiere said Heath's diligence in pursuing Grove helped tip the scales for Salem. Heath says he has spent more than three-fourths of his time since last May coordinating the Grove effort. Heath was on Grove's trail for nine months, clearing a path through a thicket of environmental, bankruptcy and legal problems.
During the slow process of winning Grove, Heath traveled up the Shenandoah Valley to its headquarters in Shady Grove, Pa., three times. The Grove people made at least 25 trips to Salem for engineering, personnel and other studies.
Heath said his wining and dining, contrary to the public perception of economic developers' practices, consisted of "peanuts on the plane and a 10-minute stop at Hardee's" before calling at Grove headquarters in Shady Grove, a village of 1,175 just north of Hagerstown, Md.
Grove's name was kept under wraps even as Heath discussed the company's interest in the site with Salem officials, not revealing it until Grove expressed its interest in buying city-owned property next to the Sav-A-Stop site.
"It was only when I had a need to know that I found out - when they got serious about the property and wanting to acquire our acreage next to Sav-A-Stop," Smith said. "That's when the mayor and I met with John Panettiere and other Grove people."
Smith noted the almost instant friendship between the mayor and Panettiere but was hesitant to overplay its role in Grove's decision to locate in Salem, adding that many factors played into the decision.
"The whole meeting was very cordial," Smith said. "Panettiere was in search of answers about the building and whether they could get the property next door."
Taliaferro "asked straight questions and gave straight answers," Smith said. "There was no smoke screen. He always comes across as representing the city in an honest, genuine manner. It doesn't matter if the guy is moving a small business with two employees or someone with 1,000 employees."
Grove's attorneys had "a million" questions about the city-owned property, meaning someone had to produce a million answers, Smith said.
"There were times I wondered whether it would go through or not because of the legal details," he said. "That's the difference in a large industry. You put together a million-dollar deal, I guess you have to ask a lot of questions."
Yates, the Salem director of planning and community development, helped gather the information that could answer Grove's questions. Yates said he never had any direct contact with Grove's people, and communicated instead through partnership director Heath.
"They would send letters saying they needed the following questions answered, and I would give answers to the questions," Yates said. "There were questions about warehouse space, truck docks, whether there was rail access, whether the property was in the flood plain."
Yates said the letters with questions came close to a screeching halt after the Roanoke Times & World-News reported in August that Grove was considering the acquisition of the Sav-A-Stop building. That held up the transaction about six weeks, Heath estimated.
The story got back to the Grove plant in Shady Grove, where the work force of more than 2,000 feared their jobs might be moved to Virginia. Grove's English owner, Hanson PLC, did not like the story because it disclosed the company's plans. Pennsylvania's economic development authorities, once the story surfaced, scurried around to make an offer to keep Grove from expanding outside their state.
Grove's staff "went into damage control to assure the people they were not moving the plant," Heath said.
"Talk about just dying," Heath said. "I was at a low point" when that story appeared. Grove used the story "against us as a negotiating tool. They're not dumb," he added.
Panettiere listened to presentations from Pennsylvania development people and Heath had to make his approach again, "hitting it harder. We reminded them [Grove] of the reasons they gave" for wanting the Salem building in the first place.
One major advantage for Salem over the Pennsylvania offer was Virginia's industrial training program, arranged by the Economic Development Department through community colleges.
The expansion project depended on finding an existing building, Heath said. Grove's expanding market requires more manufacturing space in less time than it would take to build a factory.
The newspaper story told competing cities such as Lynchburg and Greensboro, N.C., about Grove's intentions, Heath said. "We would prefer to tell everybody what we're doing, but the real down side is that it brings in additional competitors," he said last week.
Heath said he had "pretty tedious" times dealing with the newspaper story, environmental and weather problems, bank financing, arranging a lease and the complexities of getting approval from Sav-A-Stop's bankruptcy court in Florida.
Heath talked with Smith about his progress with Grove three or four times a day, and their telephone conversations often extended to nights and weekends.
"We talked an awful lot," Smith recalled of his conversations with Heath after the story appeared. "I never discussed the article with Grove directly. I was embarrassed that it happened. They didn't know us that well. For all they knew, we were the ones who leaked it.
"At that point, I didn't know whether they thought they could trust us or not."
Although Virginia's economic development rules prohibit direct inducements to industrial prospects, Grove asked for and received a low-interest loan from the Roanoke Valley Development Corp. and Greater Roanoke Valley Development Foundation, in addition to nine months of free rent on the leased Sav-A-Stop building. These organizations help finance development projects, operating through the Roanoke Regional Chamber of Commerce office.
The rent came through private business contributions, arranged by Gordon Willis and John W. Hancock Jr., prominent corporate executives in Roanoke.
Asked if Salem had offered Grove any incentives, Yates said, "We didn't cut Grove any better deal than anyone else. We try to be presentable and work with people. That's the best thing we can do.
"Our incentives are we offer the city of Salem, quality of life, an electric department that responds quickly when the lights go out at 3 a.m. - just good services," he said.
Another six-week delay was blamed on the environmental cleanup of hydraulic fluid that had leaked from Sav-A-Stop's trash compactor. City of Salem crews did the cleanup, probably at one-fourth the commercial cost, Heath said, and the bankruptcy court provided the payment from Sav-A-Stop's assets.
Trish McNamara, a vice president for Hart Corp., the Philadelphia real-estate firm, said Heath "knows how to put things together and pull different people together. I don't think anybody else could have done that."
McNamara is showing the shell building in Roanoke's Centre for Industry and Technology. She's preparing to show the AT&T building, soon to be vacated at Fairlawn in Pulaski County. She is working with a prospect for the Buena Vista building, and she also sold a shell building in Christiansburg.
The Sav-A-Stop lease is the most complicated McNamara has seen in her 10 years in industrial real estate. Her company's lawyers called it "the Empire State Building" of leases, coming in at more than 100 pages.
Grove's goal is to lead the aerial work platform market when its Salem plant reaches capacity, just as it has captured a major share of the crane market, Heath said.
Grove added "Worldwide" to its name because its operational and geographic growth made the move "not only possible but necessary," Panettiere said. Overseas sales account for better than 30 percent of Grove's annual revenues of more than $600 million.
Last Tuesday, Panettiere was in Roanoke to address the Regional Partnership of the Roanoke Valley at its annual breakfast meeting. He spoke of his impressions of the valley.
"From the outset, we were received with sincere smiles, straight talk and firm handshakes," Panettiere said.
Drawing from Grove's search for a plant site, he said, "location is more than just a place. It's zoning, tax base and schools" and many other things. People are the most important part, he said, and in the Roanoke Valley, "We found a motivated work force."
by CNB