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Procter & Gamble Co. picks Box Elder

Groundbreaking of paper-product plant expected in early '08

Procter & Gamble Co. rolled out plans Wednesday to build a Charmin and Bounty paper-products manufacturing plant in unincorporated Box Elder County.

Procter & Gamble Family Care said the facility will include a new paper machine, converting lines and warehouse space. Groundbreaking is expected in early 2008, with the new paper machine starting up in early 2010.

The Box Elder County plant north of Bear River City is expected to be an initial $300 million investment with approximately 300 employees, on its way to perhaps 1,000 employees a few years later.

"Utah is proud that Procter & Gamble has chosen to locate its newest manufacturing plant here," Utah Gov. Jon Huntsman Jr. said in a prepared statement. "It's been an honor for me over the past several months to get to know many from the P&G team. I look forward to officially welcoming one of America's top corporate citizens to the state of Utah."

"Procter & Gamble is excited to be joining the community of Box Elder County, Utah," Mary Lynn Ferguson-McHugh, president of P&G Family Care, said in a prepared statement. "We are looking forward to working in partnership with this community for a long time. This facility will increase the number of skilled jobs available in northern Utah while enabling P&G to better serve consumers in the western U.S."

Box Elder County Commissioner Clark Davis said the site is near Bear River City, about 14 miles west of Brigham City on a road referred to locally as the Iowa String.

Procter & Gamble Family Care has five manufacturing sites in the United States: Albany, Ga.; Cape Girardeau, Mo.; Green Bay, Wis.; Mehoopany, Pa.; and Oxnard, Calif. The Box Elder County plant will be the first new Family Care manufacturing facility in the United States since Oxnard began operation in 1973, the company said.

The facility will be in a "greenfield" (farmland) and will be part of P&G's paper products division, which produces Bounty paper towels, Charmin toilet tissue and Puffs tissue.

The plant initially will produce about 80,000 tons of Bounty and Charmin per year and may add Puffs later, Kuta said.

It will be the company's first new greenfield site in the United States in 30 years.

Celeste Kuta, a spokeswoman for P&G Family Care, declined to discuss financial incentives offered by competing locations but acknowledged that P&G had several options for the plant location. It also simply could have expanded existing facilities.

"What it really boiled down to was, what was best value for our shareholders," she said. "We had to look at what provided the best long-term benefit to us. Incentives are part of it, but obviously there are operating costs and the whole package. We had to evaluate all this data and look to see if we would be there for a long term or be there 50 years or 100 years, what's going to provide best value for our shareholders for the long term, and Utah came out on top."

The five existing paper-products locations were considered for expansion, and Utah was a finalist for the greenfield option, along with Port of Murrow, Ore., and Walla Walla, Wash., Kuta said.

"We could have built it there or continued to put new lines in existing plants and that could have been at any of the five," she said.

"They were both extremely competitive," she said of the other greenfield option locations. "The people there were very professional, very easy to work with and really delivered everything we asked them to. It was really close, an extremely tough decision. Any of those sites would have worked for us, they were all that good. One came out a little bit better."

"We are very excited about the beginning of this long-term relationship with the state of Utah and Box Elder County," Matthew Donthnier, human resources manager for the new site, said in a prepared statement Wednesday. "We anticipate great opportunities to leverage the local work force and culture (and) to provide superior products to our customers in the western U.S. This is a partnership where we will both win big."

The process of landing P&G's project involved Huntsman, the Governor's Office of Economic Development, the Economic Development Corp. of Utah, Box Elder County, Brigham City and other state and local agencies and utilities.

Much of the process was "hush-hush," with state and local officials dealing on a first-name-only basis with P&G representatives. Gregg Wassmansdorf, vice president and manager of the Location and Incentive Practice at Colliers International, contacted EDCU in September 2006 on behalf of his client, but EDCU did not know it was P&G until this summer.

Wednesday's announcement came eight days after the Governor's Office of Economic Development Board approved a potential $85 million tax-rebate incentive to try to land the plant.

Members of the Governor's Office of Economic Development Board said last week a new P&G facility would ramp up to 500 employees by the year 2012, 900 by 2018 and 1,000 by 2028.

The state incentive is tied to employee pay, they said, although projected wages are more than twice the county median of $21,694.

State documents indicated the plant will represent a $540 million capital investment, including $315 million in the project's first phase.

New state revenues are expected to be more than $98.5 million over 10 years and $280 million over 20 years, according to board documents. New state wages over 10 years will top $400 million. Over 20 years, they are expected to be more than $1 billion.

The state incentive, approved at a special board meeting, will be a tax rebate of half of new state revenue for the first five years the plant is operating, then lower percentages over the remaining 15 years of the incentive. The net incentive is 30 percent of new state revenues, or about $85 million. The company will be required to commit to keep the operations in Utah at least 20 years.

Box Elder County had been working on a local incentive in the form of refunding incremental property taxes for up to 20 years.

Utah's incentive for P&G is the largest in the state's history. The previous high was approved in March 2006 for IM Flash Technologies LLC's headquarters in Lehi. The incentive was estimated at the time to be about $15 million. It involved a rebate of up to 30 percent of new incremental state revenue over a five-year period after the plant is operating.

Cincinnati-based P&G has more than 138,000 employees in more than 80 countries and provides products and services to people in more than 180 countries.

P&G, founded 170 years ago this month, had revenue of $76.5 billion, operating income of $15.45 billion and net income of $10.34 billion for the year ended June 30. During the fiscal fourth quarter, the company reported revenue of $19.3 billion, operating income of $3.4 billion and net income of $2.26 billion. It has 23 brands that each generate more than $1 billion in annual sales and 18 brands with sales between $500 million and $1 billion.

Overall, the company has nearly 300 brands. In press materials, it notes that its brands "touch the lives of people around the world" three billion times a day.

The company's market capitalization is more than $200 billion, making it the seventh most valuable company in the country and 13th-ranked in the world.