Project Compass + New Star The Race to Win ThyssenKrupp’s $3.7 Billion Steel Production Facility. Bob Hess Cushman & Wakefield Global Business Consulting. Topics. Introduction to Cushman & Wakefield Global Consulting Project Compass + New Star strategy and specifications
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Project Compass + New StarThe Race to Win ThyssenKrupp’s $3.7 Billion Steel Production Facility
Cushman & Wakefield Global Business Consulting
Cushman & Wakefield Global Supply Chain Services
& Due Diligence
Real Estate Infrastructure
Project Compass Strategy and Specifications
Project CompassMobile, Alabama
Carbon steel processing and stainless steel production
Increased carbon steel production / processing for German market
New carbon slab production for NAFTA and EU Markets
Project Compass is integral to ThyssenKrupp’s global strategy to grow NAFTA market share and improve cost positions.
We began the project wondering: “Will ANY site meet these specs?”
Logistics costs comprise 50% of Project Compass’ annual costs.
Inbound Supply Chain: Louisiana
Slabs: 4.1 MMT via Panamax Ship
Unload Barge at Mill
Unload Slabs to Port (Mill)
Load Slabs to River Barge
Inbound Supply Chain: Alabama
Stocking Point or Customer
Outbound Supply Chain
…all worth it for a once in a lifetime project!
Project Evolution and Site Selection Approach
Four factors determined the search area: coastal port(s) for inbound slabs, barge-navigable water ways; anticipated customer concentrations; and business climate.
Request for Information (RFI) and sites issued to search-area states.
RFI responses received and catalogued.
Site inspections and community/utilities meetings used to select Preferred Sites.
Sites evaluated against Critical Success Factors, and classified as Retain, Marginal or Eliminate.
The project initially progressed through phases of parallel analysis of candidate sites and ports on both the East and Gulf coasts.
Desktop Flaws Analysis
12 sites / 6 ports
equals 250 km
Throughout the project, candidate locations/sites were evaluated based on their performance against seven Critical Success Factors and their cost profile (20-year net present value).
Quality of Life
20-Year Total Costs
(one-time and recurring)
Availability & Quality
Site Suitability & Quality
Ease of Implementation and Timing
% denotes decision weight
Supply Chain Effectiveness
Cushman & Wakefield and ThyssenKrupp developed working teams and methodologies to deploy a holistic business-case approach to identify the optimal location solution for Project Compass.
Methodologies / Teams
Optimal Location Solution
Port and Location Strategies
Site Selection/Due Diligence
Business Case Development
Workforce Profiling and Financial Modeling
Incentive & Real Estate Negotiations
Program Management Oversight
In three months of analysis and site visits, the 12 Preferred Sites were narrowed to three Finalists (Arkansas, Louisiana, and Alabama).
12 Sites in 7 States
…ThyssenKrupp Stainless joins project - a ~$1 billion expansion!!…
Multiple executive site and port tours
Logistics network modeling
Finalists: Further Due Diligence & Incentives
Iterative business case and IRR modeling
Extensive Due Diligence on Three Finalists
Extensive financial and logistics modeling, coupled with engineering and site constructability analysis, revealed Alabama and Louisiana sites as superior candidates.
Refined Logistics Modeling
Greater site-specificity on modes, carriers, rates, and distribution models
Labor Market Analysis
Manufacturing industry presence, market-based wages, and education and training resources
Site Constructability / Permitting Analyses
Site-specific facility design, site prep cost estimation, and site conditions assessments
Incentives potential assessments, in-person meetings and Requests for Proposal
Facility Design and Site Development Costing
The good news: Two great sites... The bad news: How do we decide?…
Unique pros and cons of the sites were nearly balanced.
30+ individually weighted factors re: operating conditions, risks, timing, etc.
…in the end, leadership and commitment