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How South Carolina won Volvo

VIDEO: The Volvo Deal

SC Governor Nikki Haley and Commerce Secretary Bobby Hitt talk about how they landed the Volvo Deal.
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SC Governor Nikki Haley and Commerce Secretary Bobby Hitt talk about how they landed the Volvo Deal.

Gov. Nikki Haley might have been the most nervous person at the University of South Carolina’s May 8 commencement.

As 1,886 students walked across the stage after hearing her address, she waited anxiously to learn whether Volvo would build a $500 million, 4,000-employee automobile plant in Berkeley County.

Initially, executives from the Swedish carmaker had planned to call Haley that evening with their decision after 10 months of talks. Then, Volvo officials decided to let South Carolina leaders know in person.

“They wouldn’t say, ‘No,’ if they were all coming?” Haley wondered.

But as Haley sat on the graduation stage at Colonial Life Arena, a member of her security detail, dressed in a garnet robe like other university officials, handed her a cellphone.

She read a text message from a Volvo representative saying company officials were running short on time, and they would not be able to make it to South Carolina.

Even though the governor had begun to hear reports that Volvo turned down South Carolina’s main competitor, Georgia, she worried a little: “Oh no, what does that mean?”

Haley returned to the Governor’s Mansion to get ready for a black-tie reception at USC. Wearing an evening dress, she waited for a phone call surrounded by her staff and S.C. Commerce Secretary Bobby Hitt and his staff.

At about 6 p.m., Lex Kerssemakers, chief executive of Volvo Cars North America, called.

Haley and her team waited as Kerssemakers spent a few minutes talking about the months of negotiations for his company’s first U.S. plant. Haley thanked the company for working with the state.

Then Kerssemakers delivered the news: The best fit for Volvo is South Carolina.

‘Its own roller coaster’

The call mimicked the tension of wooing the Swedish automaker, which started with a phone call to Hitt from a friend in the auto industry in July.

“This was its own roller coaster,” Haley told The State two days after landing the biggest economic-development deal in her five-year tenure.

Construction on the plant will begin in the fall and the first vehicles will be produced in 2018.

Haley and Hitt convinced Volvo to locate its first American manufacturing plant in South Carolina after secret trips to the automaker’s Swedish headquarters and a New York law office.

There were covert meals at the Governor’s Mansion and an East Bay Street restaurant in Charleston where Haley met quietly with a top Volvo executive while she was on vacation.

Landing the company also required Commerce leaders to meet with conservationists and environmental stakeholders to work out a compromise for handling the wetlands on the 2,881-acre heavily wooded site in Berkeley County slated for the plant.

The old Camp Hall timber plantation off Interstate 26 near Ridgeville was not the first choice.

The original site, also in the Lowcountry, was too small for the Volvo plant, Hitt said. Switching sites was a challenge, like swapping roommates, he said.

Berkeley County Supervisor Bill Peagler and Economic Development Director Barry Jurs learned on Feb. 5 that Camp Hall was South Carolina’s choice for Volvo – just three months before the plant announcement.

Later in February, Volvo officials toured the site and surrounding areas in a helicopter.

Once they landed, Sam Bennett, economic development director for the state-owned utility Santee Cooper, said he could not get a read on their impressions of the site.

“Unfortunately, I don’t speak Swedish,” Bennett said.

The helicopter trip allowed Volvo officials to see the proposed plant site’s proximity to the Port of Charleston, which was about 30 miles away by road.

Volvo officials visited the port twice, said S.C. Ports Authority president and CEO Jim Newsome. At any time, they saw between 5,000 and 7,000 vehicles waiting for shipment out on the Columbus Street Terminal, he said.

“What they saw convinced them that we could handle their business as they envision it ... with future growth capabilities,” Newsome said.

During other S.C. visits, Volvo officials toured Clemson University’s International Center for Automotive Research in Greenville, and spoke with officials from two of South Carolina’s biggest economic-development catches of the past two decades — aircraft maker Boeing in North Charleston and automaker BMW in Greer.

They also toured Trident Technical College in North Charleston, where Boeing workers are trained in a program designed specifically for the company, said Susan Pretulak, economic-development chief for the S.C. Technical College System.

“(Volvo) would have walked away with the idea this is real-time, real-life simulation type of training,” she said.

A few months ahead of the big announcement, the deal seemed to be on cruise control for South Carolina.

‘You want to do this yesterday’

Then negotiations stalled 4,400 miles from Charleston.

Haley and Hitt flew on a secret trip to Volvo’s headquarters in Gothenburg, Sweden, in March soon after switching proposed plant sites to Berkeley County.

The move made Volvo officials nervous, Haley said. Also South Carolina’s leadership didn’t know what their Georgia counterparts had offered, Hitt said.

“We went in thinking it was good, and all of a sudden, it just stalled,” Haley said.

The tone of the conversations with Volvo officials changed.

It went flat, she said. Haley and Hitt were not completely sure why. (Volvo officials were unavailable for comment last week in part because Thursday and Friday were Swedish holidays, a spokesman said.)

So Haley and Hitt began working immediately to convince Volvo leaders to have confidence in South Carolina.

Haley called two top executives who were not at the meetings at the Gothenburg headquarters.

“You want to do this yesterday,” she recalled telling them. “We want to help you do this yesterday – but we can’t do this if you don’t trust us.”

Hitt, a former newspaper editor and BMW executive, took a Volvo official in Sweden aside and said: “We’re both taking a risk. It’s time for us to join hands.”

Their pitches worked.

“It broke the staleness in the room,” Hitt said.

Environmental plan

After South Carolina leaders were able to restart negotiations with Volvo officials in Sweden, they needed to work with environmentalists back home about obtaining wetlands permits.

The plant would involve the loss of nearly 200 acres of the soggy depressions.

So during the winter, Hitt launched a series of meetings with natural resource agencies and conservation groups, knowing he might have a good trade to offer.

As his agency suspected, Hitt learned through the meetings that conservation groups were interested in protecting big slices of land surrounding the nearby Francis Beidler Forest and the Four Holes Swamp – scenic pieces of the landscape covered with deep swamps, blackwater rivers and wildlife, including hundreds of bird species.

At the same time, Commerce officials knew the wetlands at the Camp Hall site being marketed for Volvo had been degraded when timber companies converted the land to an industrial tree farm years earlier.

Add that no endangered species were found on the land – unlike a competing site in Georgia, Commerce officials were confident a deal could be struck with conservationists.

Hitt later brought many environmental groups together April 15 for a meeting at Santee Cooper’s Wampee Conference Center near Moncks Corner. The groups provided input on what they could accept, then toured both the Volvo site and several of the properties that would be preserved to offset the environmental impacts of the car manufacturing plant.

What resulted the next day was a permit application to the U.S. Army Corps of Engineers. The corps’ notice was the first time the public learned of the Volvo site location in South Carolina and the scope of the project.

The permit request to fill 195 acres still could be challenged, but it’s unlikely since most environmental groups are impressed with the wetlands protection package and input was sought, they say.

According to the agreement, money from state economic development bonds will be used to purchase much of the 2,500 acres that will be protected. Hitt said a report that the state is spending $12 million on land preservation was not far off.

“The main thing I had to get used to was the idea that this project would be a net positive for the state,” said Norman Brunswig, a former state Audubon director involved in the negotiations. “It had the potential to provide some really fine jobs in rural areas where people can’t find them. And it is my belief that Volvo will develop and operate at such a high level of environmental responsibility, it will actually fix some things that are broken in the system.’’

‘Very good poker players’

The week before the environmental compromise, Gov. Haley was on spring break on the week after Easter with her family at Kiawah Island.

A key Volvo executive was in Charleston one night and Hitt wanted the governor to swing by to have a glass of wine before a meal at an East Bay Street restaurant where the Commerce boss and the executives were dining.

Haley arrived with her husband, Michael, in a side door to avoid being noticed by other diners.

“It’s a date night, but (we) wanted to stop by,” Haley recalled. “I wanted him to know it was important enough for me to be there.”

The final pitch was made to Volvo officials just a few weeks later on April 29 in Manhattan.

Haley and Hitt took both state planes with representatives from Santee Cooper, the state ports and Berkeley County. The trip was Berkeley County supervisor Peagler’s first to New York.

Santee Cooper’s Bennett thought the presentation by the group of more than a dozen S.C. representatives was thoughtful and concise.

Still, Georgia representatives had visited Volvo officials the day before. So, South Carolina officials left unsure where the state stood with Volvo executives.

“They’re very good poker players,” Bennett said. “I give them absolute credit for that.”

Experience helps

Hours after Volvo officially announced to the public Monday that South Carolina would get the plant, Haley stood in front of more than 25 state and local officials at the Governor’s Mansion to celebrate what Hitt called a “win.”

Volvo got rewarded for picking South Carolina. The announced state and local incentives total more than $200 million so far.

Haley credited the state’s workforce, which had developed expertise at BMW, Boeing and a number of tire makers.

But political and business leaders praised the experience of Haley and Hitt in driving the deal.

The value of having Hitt negotiate the Volvo deal was tremendous because he understands the automotive industry, said Bennett and state Sen. Paul Campbell, R-Berkeley.

“Bobby coming out of BMW … he knew exactly what the car manufacturer looks for,” Campbell said.

Haley has made a mark in closing deals, Hitt said, honed after attending industry shows and going on foreign trade missions. She gives executives her personal cell number.

The governor used her negotiating experience in Sweden when executives seemed most nervous about South Carolina.

Haley said it was key to make sure they “knew that we were going to finish this project, not by putting the shovel in the ground, but by seeing the first car come off the line, and continuing towards expansion.”

Staff writers Sammy Fretwell and Andrew Shain contributed. Reach Cope at (803) 771-8657.

THE VOLVO NEGOTIATIONS

3 MOMENTS WHEN THINGS COULD HAVE GONE WRONG

LAST-MINUTE LAND SWAP. South Carolina late in the game switched the property it had been pitching, and the Swedes became silent. The swap clearly made them nervous, said Gov. Nikki Haley. But S.C. negotiators thought the new site was better for what Volvo had in mind. How to convince them?

OTHER PARTIES SUDDENLY AT THE TABLE. What do you do when you need to fill in 200 acres of wetlands? Was there a way to pacify conservationists so they wouldn’t object and lock up the deal in the courts? Talking to environmentalists was risky: Negotiations with Volvo were still secret, not to be shared.

THE LAST TENSE MOMENTS. Volvo executives had narrowed their preferred sites to Georgia and South Carolina. Then they told Georgia it was out of the running. S.C. officials waited for a visit from Volvo executives, seemingly to deliver the good news. Then Volvo said they couldn’t make it. Was it a bad sign?

What’s next

Economic development bonds: S.C. Department of Commerce will request roughly $120 million in economic-development bonds for the Volvo auto plant in Berkeley County. The borrowing must be approved by the Joint Bond Review Committee, which meets on June 3, and the Budget and Control Board, which meets June 16.

Environmental permits: The U.S. Army Corps of Engineers expects to decide on a wetlands permit for the Volvo plant site request within about four months.

Training program: S.C. technical college leaders will meet with Volvo officials to determine specifics for a customized recruitment training program.

Volvo’s plant in S.C.

4,000: Expected number of jobs by 2030

$500 million: Cost of the plant

$209 million: Announced state and local incentives for the plant

2018: Year that production should start

100,000: Number of vehicles produced annually

Volvo Timeline

July: S.C. Commerce Secretary Bobby Hitt, a former corporate-affairs manager for BMW, receives a call from a friend in the auto industry about Volvo’s interest. Commerce’s project team speaks to Volvo officials for the first time in August.

September 2-3: Volvo officials come to South Carolina for the first time to check sites, which later were narrowed to four.

October 1-8: Gov. Nikki Haley meets Volvo officials for the first time at the Governor’s Mansion.

Mid-February: South Carolina switches site locations to an old timber plantation in Berkeley County because the plant was too large for another Lowcountry location.

March 2-4: Haley and Hitt fly secretly to Volvo headquarters in Gothenburg where they meet with executives and tour a company factory. Commerce officials would make two more trips to Sweden in April.

April 15: Commerce officials meet with representatives of Berkeley County, the Army Corps of Engineers and environmental stakeholders to hammer out wetlands mitigation.

April 29: Haley and Hitt fly with a contingent of state and local officials to New York for a final meeting with Volvo attorneys. Georgia officials, hoping to land a plant in their state, visited the day before.

May 8: Volvo breaks the bad news to Georgia and then notifies Haley that South Carolina will get the company’s first U.S. plant.

Source: S.C. Governor’s office, compiled by Cassie Cope and Jeff Kidd

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