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Shamrock Foods Site Search Case Study

BACKGROUND


Shamrock Foods/Shamrock Dairy, headquartered in Phoenix, Arizona is a dairy foods manufacturer. They do private label work for Kroger and Arby’s and have their own labels in refrigerated sections of Subway as well as other grocery chains.

Hart Corporation’s Carolinas/Virginias Regional office was contacted by the Executive Vice President of Shamrock Foods, who originally inquired about a speculative shell building Hart was marketing in Martinsville, Virginia. Shamrock company officials explained that they were seeking an East Coast production facility as they currently only operated from West Coast locations. Their need was for an FDA-approved facility of 100,000 to 130,000 square feet with a minimum of 25’ clear ceiling heights. Approximately 20,000 to 30,000 square feet of space would need to have refrigerated storage to accommodate 2,000 pallet spaces. They would also need five dock-high loading doors. Their preference would be to locate in a right-to-work state. Additionally, they would need a minimum of 100,000 gallons of water and sewer per day for process use. The sewer system at the sites under consideration would have to be able to accommodate a TSS of 1,000 parts per million and a BOD of 3,000 parts per million.

SITE SEARCH


Hart’s Carolinas/Virginias brokerage team outlined the benefits of working through Hart Corporation on this site search. Since Hart tracks every available industrial facility over 40,000 square feet in the non-metropolitan U.S. marketplace, Hart representatives could provide a list of those facilities to Shamrock Foods within their desired geographic location that met the company’s structural requirements. Hart’s representative also outlined his 27 years of experience in assisting firms in siting manufacturing facilities in the Carolinas and Virginias. From this point, it was agreed that Shamrock would provide a non-disclosure agreement for the Hart representatives to sign and move forward with the site search utilizing Hart’s experience and resources. There were 15 available industrial buildings on the market at the time of Shamrock’s initial search that met their structural criteria. Hart “culled” through those properties to see which locations had the available water and sewer capacity desired by Shamrock Foods.

The initial round of inspections for the East Coast facility focused in on four available industrial facilities, three of which were in Virginia and one of which was in Maryland. Shamrock Foods had ruled out locations in any other states except Virginia, West Virginia and Maryland due to the price sensitivity for its raw material - dairy milk.
From the initial round of inspections, it was determined that the speculative shell building in Martinsville, Virginia met Shamrock’s criteria best. Unfortunately, once Shamrock Foods came to that conclusion, the building was under agreement of sale and had to be removed from further consideration.

In the interim, Hart Corporation generated additional leads for available food processing facilities that were submitted to Shamrock Foods for consideration. These included a former ice cream plant of 90,855 square feet on 12.5 acres in Bristol, Virginia, a former dairy facility that would be closing down in Florence, South Carolina as well as a dairy facility that was closing down in Newport, Kentucky. It was determined by Shamrock Foods that each of these three facilities was older and had a high degree of functional obsolescence. Their desire was to pursue a much newer production facility.

At this point, in addition to working directly with Shamrock Foods, Hart was coordinating project activities with the Virginia Economic Development Partnership to establish labor and investment data for the proposed East Coast manufacturing facility. This would assist Hart in dealing with state, local and regional officials in putting together their incentive package for Shamrock Foods as an inducement to locate in one of the selected states and communities that would be under consideration.

It should also be noted that throughout the entire search process, Hart Corporation secured non-disclosure agreements from any parties that were introduced to team members from Shamrock Foods. Those team members traveled with Hart Corporation during the site selection process anonymously under the project code name Project ECMF (East Coast Manufacturing Facility.)

Three months from the original inquiry, management at Shamrock Foods decided to move forward with the construction of a new processing plant, rather than acquire an existing facility. Shamrock’s clear direction was a preference for a location in Virginia. They wanted to consider sites in Virginia where certain incentives existed such as
Tobacco Opportunity Funds, enterprise zones, New Market Tax Credits, etc. Based on the initial site requirements, particularly the water and sewer usage and TSS/BOD levels, Hart selected 19 sites in 15 counties for further evaluation. Those municipalities and counties that were selected (that could potentially handle the water and sewer requirements) were along the I-81 corridor, down the Highway 29 corridor and Southside Virginia locations.

In further refining the site search, Hart Corporation worked with Shamrock officials to determine the geographic zones within which their dairy milk acquisition costs would be the lowest. From there, Hart Corporation could concentrate its site search evaluations on sites within the two lowest priced dairy milk price support zones.

Hart Corporation selected the seven best sites for Shamrock’s next visit to the East Coast. Those sites were selected based on constructability, public versus private ownership, New Market Tax Credits eligibility and enterprise zones eligibility. Each site selected also provided the level of water and sewer capacities necessary to support the project. Each location was within the optimum dairy milk price support zone. Those seven sites included sites in Augusta County, the City of Staunton, Rockingham County, the City of Harrisonburg and Culpepper County. All of those sites were in Virginia.

Prior to the next round of evaluations, Hart developed a set of project bid specifications to introduce to the general contractor community. Hart Corporation also selected four qualified general contractors for Shamrock to meet and interview during the site visits.

Four months into the project, Shamrock returned to the East Coast to conduct site and community visits through Hart. Hart arranged meetings with state and local economic development officials to review potential incentive packages at each location as well as arranged site inspections, in coordination with regional and local economic development directors, including community tours and meetings with workforce training coordinators, employment recruitment coordinators, local utility providers and local manufacturers.

Additionally during this round of site visits, Hart and Shamrock conducted interviews with the recommended general contractors and from there selected down to two contractors for further discussions.
After the site visits were concluded, Hart began drilling down and further evaluating the cost for each location’s surcharges for BOD and TSS discharge into the local municipal systems. Those locations were ranked from least expensive to most expensive. The two locations that ranked as least expensive included a site in Augusta County and a site in Culpepper County, Virginia.

At Shamrock’s direction, Hart Corporation gave instructions to two of the selected general contractors to evaluate the Augusta County site and the Culpepper County site for constructability and the presentation of a budget cost projection based on the specifications previously put together by Hart. In this manner, Shamrock Foods would get the benefit of a general contractor’s prospective on the constructability of each site and the site development costs associated with each of the two sites in comparison.

Approximately five months into the site selection process, Hart Corporation called for proposals to be submitted by Augusta County and Culpepper County. The request for proposal was also submitted to the Virginia Economic Development Partnership and to the Shenandoah Regional Partnership. A date was set to receive proposals from each location for Shamrock Foods’ comparison. Additionally, Hart called for contractor proposals and site evaluations by those contractors for the same date. Utility providers from each of the two sites were requested to provide cost comparisons based on the project parameters.

At the sixth-month mark, Hart arranged for Augusta County officials to inspect Shamrock Foods operations in Phoenix, Arizona. At this point, Augusta County was the front-runner based on comparative site evaluations. In the project’s seventh-month, Shamrock’s Board of Directors approved moving forward with a proposal to build a new East Coast production facility in Augusta County. Hart assisted with document and agreement preparation required by the county and state and assisted Shamrock Foods in finalizing their agreement with the general contractor that had been selected.

In the eighth-month, Shamrock Foods announced plans to build a dairy production facility in Augusta County which would be accompanied by a $50 million investment and 60 new jobs to the region. Shamrock Food officials broke ground on a state-of-the-art 130,000 square foot facility to be located in Mill Place Commerce Park. The investment allowed the company to better serve the East Coast market and meet growing demand for its “On the Go” milk and “Rockin’ Refuel” brands. Officials from Augusta County, Shenandoah Regional Partnership, the Virginia Economic Development Partnership and Governor Bob McDonnell were present for Shamrock Foods announcement.

OUTCOME


Virginia successfully competed against Maryland and West Virginia by offering the right infrastructure mix, a strong local dairy milk supply chain and advanced manufacturing workforce and a strategic location along the I-81 corridor.

Shamrock Foods Case Study PDF

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