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Lucrative incentives helped lure Volvo to Lowcountry

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To recruit Volvo Car USA, South Carolina promised a three-year sponsorship and naming rights to the Family Circle Cup, up to $400,000 for temporary office space, up to $40,000 for a brand store in downtown Charleston and a 12-month product display at Charleston International Airport, according to documents obtained from the state Commerce Department.

A combination of state and privately funded incentives, including sponsorship of the Family Circle Cup tennis tournament and temporary office space, organized by Commerce Secretary Bobby Hitt and Gov. Nikki Haley helped secure Volvo's planned manufacturing facility near Ridgeville, according to state documents obtained by the Charleston Regional Business Journal. (Photo/File)

Fundraising is ongoing to pay for the automaker’s tennis tournament sponsorship. Efforts include a four-day, private event within a tent on tournament grounds that is paid for by area companies’ sponsorships. Officials did not disclose how much money needed to be raised to cover costs of the Volvo Car Open. The tournament started Saturday and runs through Sunday.

Those perks are in addition to about $200 million in state-provided incentives designated mostly for infrastructure projects, including site prep and a new interchange on Interstate 26 to serve the Volvo plant.

The Charleston Regional Business Journal obtained the Volvo incentives package and recruitment documents through a Freedom of Information Act request. Volvo is referred to as “Project Soter” in the documents — the original code name for the project before it became public.

The combined incentives were used to entice the Sweden-based automaker to choose Berkeley County for its future U.S. manufacturing site amid intense competition among other contenders, including Georgia.

A letter sent by Commerce Secretary Bobby Hitt on May 28 to a Volvo executive — whose name was blacked out in the documents — outlined the extra incentives, such as the sponsorship, which were not included in the initial offer letter to the company.

Those additional incentives were originally discussed at an April 29 meeting in New York City, during which state officials made their final presentation to Volvo executives.

Less than two weeks later, Volvo chose South Carolina for its plant.

Volvo has promised to invest $600 million and create at least 2,000 jobs in the Lowcountry; the car plant is expected to bring additional suppliers and have a ripple effect on the region’s economy. Volvo’s first S60 sedan is anticipated to roll off production lines in late 2018 at the Berkeley County site — the only facility in the world to produce the new model. The automotive campus is currently under construction in the Camp Hall Commerce Park near Ridgeville.

Company leaders have cited various reasons for putting down roots in South Carolina, including the site’s proximity to the Port of Charleston, the airport and the interstate; a skilled workforce and state-run training program; a large tract of land on which it can build; collaboration among state agencies; and the success of other mega manufacturers in the state.

Incentives also played a role. Most of the non-infrastructure incentives were not funded by the state; rather, they were paid for by Lowcountry agencies working in conjunction with Commerce officials, Hitt said.

The state will spend tax dollars on projects — via incentives approved by the S.C. Coordinating Council for Economic Development — if the projects provide infrastructure for the surrounding area that might bring in future jobs or companies.

Regarding the other incentives, Hitt said it is typical for Commerce to work with businesses and agencies in the respective communities to fund some additional perks to persuade a company to locate in South Carolina — such as the brand store or tennis tournament sponsorship offered to Volvo.

“This is the largest rural project that we’ve ever encountered as a state. It is going into an area where there have never been these types of jobs before, which are expected to reach out to half a dozen counties and stretch beyond I-95,” Hitt said. “It will be a remarkable project in part of the state that often doesn’t get the chance to have something with this much impact.”

Additional incentives breakdown:

Volvo Car Open — The sponsorship

In a May 8 letter, Duane Parrish, the director of the S.C. Department of Parks, Recreation and Tourism, offered Volvo a three-year title sponsorship of the largest women-only tournament in professional tennis, now known as the Volvo Car Open.

The tournament has been played on Daniel Island since moving from Hilton Head Island in 2001. It has seen past champions such as Serena and Venus Williams, Caroline Wozniacki, Justine Henin and Chris Evert.

The sponsorship includes national TV advertising during the tournament, naming rights to the stadium, signage around the tournament and the opportunity to have vehicle displays and test drives for attendees, documents show. Hospitality venues and box seats are also available to the sponsor for entertaining clients and staff during the tournament.

The value of the tournament sponsorship was not disclosed by fundraisers, Commerce officials or tournament organizers.

The tournament averages 90,000 attendees each year and reaches more than 10 million TV viewers worldwide, according to a news release announcing the sponsorship change.

Family Circle magazine was the sponsor of the Family Circle Cup since its beginning in 1973, making it the longest-running title sponsor in professional tennis. The magazine did not return requests for comment by press time. The tournament will continue to be owned and operated by Charleston Tennis LLC, a subsidiary of Meredith Corp., the Des Moines, Iowa-based national media group that publishes Family Circle magazine.

Lex Kerssemakers, president and CEO of Volvo Car USA, said in a statement that the sponsorship “is an ideal way for us to leverage our presence in the community.”

Volvo Car Open — Fundraising

Fundraising for the sponsorship is ongoing.

Companies and agencies across the state are being asked to pay anywhere from $3,000 to at least $50,000 to fund The Palmetto Club, which Hitt said is essentially “an event inside of an event” at the Volvo Car Open.

The Palmetto Club will be inside a 3,600-square-foot, private tent that will be on site at the tournament from today through Sunday. Attendees will have access to food and drinks, an outdoor lounge area large enough for 100 people, parking and entertainment. It is designed to bring business leaders, site consultants and Volvo executives under one roof.

The profit from that four-day event will be used to cover the event itself, as well as Volvo’s sponsorship this year, according to Darin MacDonald, who was hired in August to sell the sponsorships. He began selling late last year, after the event concept was designed.

Mostly $10,000, $25,000 or $50,000 sponsorships are being sought, said MacDonald, the events vice president for Love Golf Management, an event planning company.

MacDonald said the concept is to create “a social setting were business could be discussed, but at the same time, it would be a very relaxed atmosphere with access to the tournament and other activities” such as harbor cruises, live music at the tournament or tickets to watch matches. He expects around 125 attendees at the event each day.

Hitt declined to share how much money has been raised for The Palmetto Club event — and therefore for the tournament sponsorship — nor how much needs to be raised to cover the sponsorship. He said no taxpayer dollars or incentive funds are used for the sponsorship.

“We have worked with companies in the private sector to help us offset that cost,” Hitt said. “That effort has been ongoing for many, many months.”

MacDonald worked with Hitt, formerly of BMW Manufacturing Co., to create the BMW Charity Pro-Am celebrity golf tournament in Greenville in 2001. Now in its 15th year, that tournament raises money for area nonprofits, showcases BMW’s impact in the Upstate and brings money into the region each year. MacDonald said both The Palmetto Club and tournament sponsorship will similarly bring money into the Lowcountry and support Volvo’s growth in the region.

Those who have sponsored the event thus far “see the vision,” he said, and those who declined for this year have said that requests came too late because annual budgets were already finished.

MacDonald, who has talked with more than 100 companies so far, expects the first year to be small, similar to the BMW Pro-Am’s start, and then grow as Volvo’s presence increases in the Lowcountry. The fundraising process will repeat for the next two years of Volvo’s three-year sponsorship deal.

“The money that I’m really focusing on is the money to pay the sponsorship,” MacDonald said, referring to the naming rights of the tennis tournament but declining to provide a price tag. “That’s the commitment that’s out there.”

Volvo’s downtown Charleston brand store

The Charleston Area Convention and Visitors Bureau offered to identify and secure a location on King Street for Volvo to open a brand store and to pay the lease for six months — up to a maximum of $40,000 — documents show.

Visitors bureau CEO Helen Hill said in an email that Volvo has not moved forward on the store concept or location yet, noting that officials want to further study the Charleston market and region before opening a store. The bureau did not comment on where the funding for the lease payments would come from.

“This presence will provide an unparalleled means of introducing our visitors and residents to Project Soter’s products,” Hill said in a March 26, 2015, letter to the Commerce Department that was used to pitch to Volvo.

Hitt said the brand store will help connect visitors and residents to Volvo’s products, similar to Michelin’s store along Main Street in downtown Greenville, which was open from 2007 until last year.

Volvo’s temporary office space

Volvo was given two options for temporary office space while its automotive campus is under construction for the next few years, according to a lease proposal sent to Commerce by Colliers International – Charleston on April 22.

Volvo chose a nearly 16,000-square-foot space at the S.C. Research Authority’s new building at Nexton, a mixed-use development in Summerville, rather than a North Charleston site. SCRA is Volvo’s landlord, the lease shows.

The state offered to pay $400,000 to offset the company’s costs of upfitting the chosen space. The funding comes from a $20 million contingency fund that was presented to Volvo at the April 2015 meeting in New York; Volvo may allocate that funding to other priorities as needed, documents show.

“We try to spend our money on infrastructure that will last. When Volvo pulls out, we will have an improved property, and the improvement stays with the building for future users,” Hitt said, which he said is why this incentive can be funded with state money.

According to the lease, Volvo occupies much of the third floor of the SCRA Applied Research Center at 315 Sigma Drive off exit 199 along Interstate 26. Offices were fully built out and furnished at no cost to Volvo. Rent for the first year of the three-year lease is paid for as well, Commerce spokeswoman Adrienne Fairwell said in an email.

Volvo’s airport display

The Charleston County Aviation Authority, which owns and operates Charleston International Airport, offered to build a display platform for Volvo to showcase its products at the airport for one year, documents show.

The display is not expected to cost the airport anything, airport spokeswoman Charlene Gunnells said in an email, declining to elaborate further.

The airport plans to finish its $200 million terminal redevelopment project this summer, and airport officials want construction completed before a display location is determined. One option is between the baggage claim and rental car pavilions, Gunnells said. A rendering in the state documents shows a Volvo car displayed on a platform underneath the sky dome in the center of the airport.

“A key design aspect of the renovation is to showcase companies with a local presence, including many well-known Charleston and South Carolina brands,” Airports Director Paul Campbell Jr., also a state senator, wrote in a May 7 letter to Commerce. “If Project Soter were to join our community, we would be proud to feature a prominent company display in our airport.”

Published in the April 4, 2016, print issue

Reach staff writer Liz Segrist at 843-849-3119 or @lizsegrist on Twitter.

Reach Liz Segrist at 843-849-3119.

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