How goes Emerald Auto's plan to bring a van assembly plant and 600 jobs to Hazelwood?
This article first appeared in the St. Louis Beacon: With 1,000 or so job applications already on file, the leadership team of a startup that wants to assemble “green” delivery vans in Hazelwood understands the first question many have about Emerald Automotive: When will the hiring begin?
The short answer: not yet.
"We have a lot to accomplish,’’ said Gary Marble, Emerald’s sales and communications director. "We’re optimistic about 2013. Things look like they’re falling into place and they’re going to work and I appreciate everyone’s patience. It’s been tough to sit back and wait.’’
The waiting began with the announcement in July 2011 that Emerald planned to build an assembly hub in St. Louis to produce the low-emission t-001, a hybrid electric van developed in the United Kingdom. Emerald estimated that it would create up to 600 jobs -- welcome news for a region that had lost nearly 9,000 auto manufacturing jobs between 2006 and 2009, including 2,500 at Hazelwood’s Ford plant and 6,365 at the Chrysler plant in Fenton.
The announcement followed months of behind-the-scenes negotiations between Emerald and officials from Hazelwood, the state of Missouri and the St. Louis Regional Chamber and Growth Association.
The original timetable called for the Hazelwood plant to be producing vans by 2014, but that has been pushed back because the company is still searching for funding -- about $160 million -- to build the facility, Marble said.
In addition to some private capital, Emerald has received a $3 million loan from Hazelwood and $2 million from the Missouri Technology Corp., plus a $5 million grant from the British government's Technology Strategy Board.
The company had hoped to snag a $100 million-plus loan from the U.S. Department of Energy's Advanced Technology Vehicle Manufacturing Program, but withdrew that application last summer to pursue private investment options after federal energy loans stalled in the wake of the Solyndra controversy. Solyndra, a solar-panel manufacturer, went bankrupt after getting a $535 million DOE loan.
Emerald was formed to produce the t-001 in North America through a partnership of Intelligent Energy and AGT Strategic Consultants, which are UK-based companies that developed the van. Andy Tempest, the CEO of Emerald, has been a major player in both companies.
Marble stressed that Emerald Automotive, which was incorporated in Delaware, is a U.S. company.
Investment prospects look good, Marble said, and he points to what the company has accomplished in the past 18 months:
- Marble said that Emerald's leadership team agreed that it was costly but important to bring the prototype to Hazelwood so that St. Louisans could see it. Completion of two prototypes of the van that were built in the UK. The van has won several innovation awards and also participated in the Royal Auto Club’s Future Car Challenge, a 63-mile route from London to Brighton.
- The company brought one of the prototypes to Hazelwood in September. The van was then exhibited at the high-efficiency truck users forum in Charlotte, N.C.
- Meetings with U.S. and European companies that operate large delivery fleets.
- A website detailing Emerald Automotive’s news, plus information for job applicants and investors.
"They understood that we have a lot of people here who have committed a lot to this. And we can talk all we want and show videos all we want, but until you physically see it and touch it and see it actually driven, it’s hard to get it,’’ Marble said.
The Beacon visited with Marble, who is the local face of Emerald Automotive, at its headquarters in Hazelwood, where the high-tech company is leasing office space in an unexpected venue: the Knobbe House, an historic farmhouse built shortly after the Civil War.
Marble, a former state representative, began working to bring the plant to Missouri while serving as district director and deputy chief of staff for U.S. Rep. Blaine Luetkemeyer, R-St. Elizabeth.
Here are more excerpts from the interview:
The Beacon: Emerald originally projected that it would be producing vans in Hazelwood in 2014. What is the current timetable?
Marble: We’re still possibly there. We want to have lines up, training done, a few vehicles out by the end of 2014. Our goal and plan is to be in full production in 2015.
We’re looking at a pie, and you have different parts of it that have to come together for the pie to be whole. One big part of the pie was the vehicle. We currently have two completed demonstrators that completed testing in Europe and are licensed for driving on the highways in England. They’re completely ready to roll.
We brought one of those over in September and it met with great success in meetings with customers and suppliers. The vehicle has been above and beyond what we had hoped.
The second thing we’re working on is the funding side. That is what got a lot of attention the past year. The DOE option -- we took that off the table when we realized they weren’t going to be doing loans. Truth is, I visited with some folks through DOE in the past few weeks, and they did not do a single loan in the past year. The application is sitting there; with a little bit of work we can get that reactivated and potentially pursue that revenue stream if we feel that it’s the best way to go. I talk to my friends in D.C., and we’re all watching very closely.
The third part is employment which is what most folks around here are anxious about. Until we get the next big chunk of money, it is difficult to pull the trigger on finalization of property and equipment and getting folks hired in. We’ve budgeted our money for 2013 and are looking at it as taking more time. We don’t want to get our cart before the horse. We continue to collect resumes. We have top-tier human resource managers that we are visiting with.
As far as a date, it is impossible to tell. I know folks would like to hear by X-Y-Z this will happen. But we’re confident it will happen. We have to be patient and do it right.
We still have not made any final decision on property. We have several that are putting plans together, not just on the property but on the facility itself. We haven’t yet done anything official on any of them but we could on any of them quickly.
All three sites are in Hazelwood. What we have stated from the beginning is our intention to be in Hazelwood. They are the city that stepped up and assisted us with the initial funding to get us to this point and we are very cognitive of that. So that’s the plan.
How is your search for private investors going?
Marble: We have several all over the world in the final stages of due diligence. The issue is being a brand-new company. It takes time, and rightfully so. We don’t want them to invest money until they’re as confident as we are that this thing is going to work. I talked to [Emerald CEO] Andy Tempest and things are actively moving forward, progressing well. It just takes time.
Andy and [Emerald CFO] Rian Urding and [General Counsel] Sharon Heaton have talked to people all over the world. We’re going wherever. Several are extremely interested. But the global economy -- the fiscal cliff -- you can’t control any of that. You continue to remain on message that we have a very efficient vehicle that is an electric drive delivery system that can save companies money and reduce emissions by 80 percent. That is what we’ve built. We’ve got two of them out there performing beyond what we’d hoped. We know what we’ve got. It’s the same product that has been there for two years.
This sounds like an uphill climb.
Marble: That’s fair.
It’s very difficult, but anytime you start any business it’s difficult. When you go through what these guys have gone through -- the engineers and Andy -- it’s definitely an uphill climb. We call it a disruptive technology. We are disruptive of what is the norm. We don’t build them like everybody else builds them. We’re not going to sell them like everybody else sells them. We have an aluminum chassis instead of steel. We’re trying to do more by hand than to automate up and down the line. Our final design is to have a clean room of assembly so the vehicle gets through 13-14 stations and when it rolls off that clean room and gets wrapped it’s ready to go to work for this big delivery company.
This has never been done. When you create new things and have all these new ideas and can do it cost-effectively, you have naysayers from those who have done it the other way. Every company that has started from scratch has gone through that. New technology takes time. It is painful. But it is advantageous to the community and society as a whole, as well as to the company and investors.
It has to be done. We have to do something. We can’t continue to have delivery vehicles at 15 to 20 miles per gallon spewing out CO2 and having the federal government through the (Environmental Protection Agency) issue restrictions to restrain what can be emitted without giving solutions to those things. We’ve found a solution.
In the U.S., taxpayers expect that if public funds are used to help create jobs those jobs will be located in their communities. Are there plans to build a factory in Great Britain?
Marble: Ultimately, having something in Europe is a possibility but from the very beginning the plan was to have the hub and the global hub and the main operations here. Like any other operation, when you get enough demand elsewhere -- when it becomes more cost-effective to build them elsewhere -- that may potentially be the case. [The British] will always have their fingerprints on many of the technologies and that doesn’t change because it’s an American company. Much of the European technology and engineering are in it.
Any more, to be honest with you, the past two to three years, everyone in the world is working so hard to create jobs and generate revenue and come up with new ways. Looking at everything on a macroeconomics scale, the world has gotten much, much smaller. This creation of a new product -- of new dollars coming into society -- everybody’s pulling for it.
Emerald Automotive is an American company. There was a lot of confusion due to the fact that Andy and Rian Urding and the engineering team are from Europe and some of the money originally for some of the technologies came from Europe, but the plan from the very beginning was to come here and build the global headquarters and export the vehicles to Europe or wherever. There are a lot of reasons for that; trained personnel and availability of resources are a big part of it. In addition to the fact that the [U.S.] domestic market is the largest in the world, so ultimately this is where most will be built and sold.
The idea has always been to build one plant here and to build up to 50,000 vehicles a year. Our hope is in the first two to three years to get to 10,000 per year which makes us very profitable.
Will eventually something happen in Europe? Hopefully, yeah. The hub will always be in Missouri in Hazelwood -- the global hub -- and that’s always been the commitment and the plan.
By locating in Hazelwood, you will be bucking a trend, which has been to move manufacturing out of the United States to countries where labor costs are cheaper.
Marble: That was the case for 20 years. Now you have things such as emissions laws and the public relations issues that are associated with emissions. If you have a dirty vehicle, that’s a public relations nightmare. People quit buying your product because you’re dirty, and they want clean things. That leads us to more technological advances and education advances than we have here in America. And which we always had. We were always the best. No one ever questioned that. The thing was that it got costly, and guys could do it overseas cheaper.
Now you need the best again. If you’re going to build something that’s never been done and use technology that’s never been used and be disruptive in the way that people normally anticipate things being manufactured, you better get it done right. And get it right the first time. And you better get the best at the table to do it.
In my view -- looking at it from my experience in the statehouse and working with the federal government with the U.S. congressional office and as president of the state trade association -- I believe there is a window of opportunity right now. And the reason is that demand is being pushed by more than just cost-effectiveness and money savings and trying to be as cheap as you can be.
Will these be union jobs?
The thing that has to be answered as we begin building vehicles is the amount paid to the employees, the benefits created -- then it is up to the employees as to whether they wish to organize or not. The folks at the United Auto Workers have been helpful to us. Whether they represent the workers or not, they want to see this company come in, and they want to see folks hired in. They’ve been wonderful as a partner and a friend. They want jobs in Hazelwood. They felt the pain when the Ford plant closed here, like everyone else.
Do they come in and represent the employees? That’s going to be up to the employees.
Either way, you’re going to have jobs. You’re going to have families taken care of, kids with clothes and taxes paid to local, state and federal government. That is what this is all about; let’s create some jobs. The economy is hurting. We’re thrilled that it’s in Missouri and going to be done here.
Here is a tough question: What if an investor were to insist that the plant be built elsewhere?
Marble: Truthfully, everyone we’ve talked to it’s more about the product and the profitability and the model we’ve built. If there were a reason, whatever that would be, that would be a decision Andy and the investors we currently have and the stockholders and the board of directors would have to make. And I can’t answer that. Good question. I don’t know. I know that everything 100 percent has been Hazelwood because they’ve stepped up. Unless there was a very good reason, I can’t imagine that. I specifically asked Andy that, and he said we are committed to Hazelwood. And so we are committed to Hazelwood.
How did you get your job at Emerald?
Marble: With my background at AIM [Associated Industries of Missouri] and in the [Missouri] House, I knew a lot about this kind stuff. I met Sharon Heaton who is the consultant and environmental attorney out of D.C. on another project with Blaine Luetkemeyer’s office. She called me when [Emerald] first called her -- this has been 2 ½-plus years ago. She wanted to know if Missouri would have an interest in bringing this new company to Missouri because she had other states interested. I took on the role of getting the Missouri side of it put together. I went to the RCGA, the state, various people I knew. Within a month or two, we had a proposal to bring to the table.
I’ve been involved with it from the very start of trying to make it happen. Last year, toward the end of the year they were needing help here with messaging and communications -- and also sales -- and we visited back and forth. I went to work for them in December of last year.
The t-001 is a lightweight electric hybrid delivery van targeted for large fleet operators. Emerald says the van, which can run 66 miles in electric mode, can reduce fuel costs from 50 cents to 8 cents a mile and drastically reduce CO2 emissions.
What they're saying:
David Cox, Hazelwood’s economic director:
“They’ve been literally all over the world talking to different people, and it’s the typical chicken-and-egg thing. Nobody wants to be the first one in,’’ Cox said.
“They’ve fallen back to Plan B so we expected it will drag out a little bit,’’ he added.
Cox says that Emerald keeps the city informed about its progress.
"One of the things I was impressed with: The first day they met us, that morning they came over and talked to the UAW guys at the office in Hazelwood. They said, ‘Look, it’s not going to be an automated process. It’s going to be small batches. It’s cost-prohibitive to set up all the robots. We need to know if there are people with automotive assembly skills still in St. Louis or who would come back to St. Louis. The UAW guys said, ‘We can find the people for you. ‘’
Jim Alexander, vice president of business recruitment at the RCGA:
"They’ve got a great team that understands the business, understands the technology, understands the niche business for vehicles. And that’s what’s going to make this company successful going forward,’’ he said.
Alexander cited the experience of Emerald CEO Tempest in developing niche vehicles. He believes the t-001 van is a well-timed solution for thousands of fleet delivery vehicles that have very specific needs.
"Andy just zeroed in on delivering a product that provides the performance that those fleet delivery companies want but also giving them a lower cost of operation and environmental benefit that they’re looking for,’’ he said. "That’s the brilliant part.’’
Confusion in Britain?
Some recent British trade publications have included quotes from Tempest that seem to conflict with Emerald’s stated plans for Hazelwood. Marble said he was aware of the reports and had discussed them with Tempest who thought his remarks had been misrepresented.
"Regardless of what’s been printed or said elsewhere, the fact is we’re going to build it in Hazelwood,” Marble said. "Andy’s direct answer was, ‘All jobs will be in Hazelwood.’ ”
Here are a few examples:
Fleet Van; December 2012: The writer laments the fact that the vehicle is to be built by "the Yanks.” He quotes Tempest as saying, "We have only built two of these vehicles so far and would love to put them into full production in the UK as they have been designed, sourced and built here. But we have to be realistic, and we have been approached by the state of Missouri in the USA. The Ford and Chrysler factories in St Louis recently closed and they are desperate to get new firms to come to the city and provide jobs. We have been offered incentives over a seven-year period and no one else has come up with an offer that anywhere near matches this, although no final decision has yet been made.”
The Charging Point; June 2012: The articles says that Emerald is still looking for an assembly hub and funding, "however a number of American news reports state that the company has pledged to install itself in Hazelwood, Missouri after receiving a grant from the local authority.’’
According to the story, "When asked about where final production would be based, Tempest replied: "Because of the nature of our clients, we will often have to consider final assembly in the countries where they are based. Nevertheless, we hope to keep the majority of work in Britain.”