America’s Largest Urban Manufacturing Proposal?

A proposal to create the largest urban manufacturing facility in the country had its first public hearing Monday afternoon.

The proposal is by Komatsu Mining, which is based in West Milwaukee, but whose huge parent company, Komatsu, is based in Tokyo. The proposed sale of a city-owned lot for Komatsu’s $285 million South Harbor Campus proposal came before the City Plan Commission.

Komatsu announced plans to relocate its mining equipment manufacturing campus from West Milwaukee to the city’s Harbor District in late September. “It’s arguably the most complex project I’ve worked on in all my years in city government,” said Department of City Development Commissioner Rocky Marcoux.

The city plans to sell almost all of its 13.56-acre lot located at the eastern end of Greenfield Ave. It would retain a 45-foot-wide strip (1.6 acres)  along the harbor front for use as a riverwalk and potentially a cruise ship terminal. Space for a sidewalk (.3 acres) would also be retained along E. Greenfield Ave.

The city has an agreement to sell the land for $152,000 per acre, the same price We Energies will receive for its 45.96-acre site that is also part of the Komatsu proposal. The city will first need to spend approximately $500,000 to perform an environmental cleanup on the site. The site, acquired by the city in 1982, was long used for coal storage.

We Energies, which owns the former Solvay Coke site, could end up spending over $40 million on its remediation according to Marcoux. The company was a customer of Solvay Coke and is one of many parties liable for the site’s cleanup.

DCD economic development specialist Dan Casanova explained that part of We Energy’s cleanup involves the Kinnickinnic River. Similar to the city’s deal, the company would retain ownership of a 30-foot-wide strip running along the river and harbor to indemnify Komatsu against cleanup needs. A riverwalk would be built atop We Energy’s land.

The city will pay for both riverwalk segments, unlike its normal formula of paying for 70 percent of the riverwalk costs. On the We Energies site the city will not pay for any of the dockwall construction costs. The riverwalk would wrap around a 1.2-acre parcel that is not part of the development deal. The riverwalk would be designed to allow Komatsu to load materials from docked ships over it.

After nearly an hour discussing the myriad details involved in the broader proposal, the commission unanimously recommended the city move forward with the sale. The proposal will next go before the Common Council. The design and size of the buildings Komatsu intends to build are expected to comply with existing zoning, according to Casanova, and won’t be subject to city legislative approval.

A $40 million tax-incremental financing district to subsidize the project’s development and other neighboring infrastructure improvements is pending. That proposal will need Common Council approval, but is outside of the scope of the City Plan Commission. The state would also allocate up to $59 million in tax credits to the deal.

We Energies will also pay to lower the roadways under the bridge on E. Greenfield Ave. and the bridge on S. Kinnickinnic Ave. south of the Kinnickinnic River by one foot. The adjustments will allow truck traffic to access the site.

Komatsu intends to build a 410,000-square-foot manufacturing facility on the We Energies site. The city site, divided from the We Energies site by railroad tracks, would be used for a 170,000-square-foot office building and 20,000-square-foot company museum and training facility. The company hopes to relocate to the campus by 2022.

The Decline of Coal

Commissioner Whitney Gould questioned why the city would subsidize a coal mining equipment manufacturer. John Koetz, president of surface mining for Komatsu, said that Gould’s analysis of the decline of coal was correct, but that Komatsu’s business is increasingly not coal driven.

“More than two-thirds of our business is based on mining copper, iron ore and rare earth metals,” said Koetz. He waved his cell phone as an example of where the materials are going. “Our anticipation is alternative fuels will fuel growth for our business in the long term.”

The company intends to use solar panels, wind spires, a closed-loop heat treat system, LED lighting and other sustainability solutions to reduce energy use on the facility by 75 percent compared to its current campus. Water use is intended to be reduced by 80 percent. “Our plan for this project is near zero emissions,” said Komatsu representative Matt Beaudry.

Both Marcoux and Koetz referred to the proposal as the largest urban manufacturing proposal in the United States.

Casanova added that the city was worried when Komatsu purchased the longtime metro Milwaukee-company Joy Global, but the parent company’s broad portfolio has the potential to help it weather the cyclical nature of mining. Komatsu has 57,500 employees in 142 countries. The company manufactures equipment used for construction, mining, forestry and industrial machinery.

Its Komatsu Mining division has approximately 10,000 employees worldwide. The city incentives are based on estimates that the company will have at least 946 employees at the new site.

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Related Legislation: File 181205