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Cummins plans $30 million office building in Indianapolis


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Cummins Inc. will build a $30 million headquarters for its global distribution business in downtown Indianapolis, while maintaining its corporate headquarters in Columbus.

Cummins and the city of Indianapolis are announcing today that the company is acquiring a full city block that was cleared with the 2001 demolition of Market Square Arena, former home of the Indiana Pacers.

Cummins’ multi-story building will be just south of a proposed 28-story, $81 million high-rise residential tower retail development and will be bounded by Market, Washington, Alabama and New Jersey streets.

The property on which Cummins will build includes two parcels, both currently parking lots, said Deron Kintner, deputy mayor for economic development for the city of Indianapolis:

One is being donated to Cummins by the city.

Cummins is buying the other for $4.3 million from the Circle Area Community Development Corp., a nonprofit that purchased the property two years ago.

Indianapolis also is contributing $3.3 million in infrastructure improvements — such as sidewalks, curbs and parking — and a 70 percent abatement of the development’s property taxes over 10 years, Kintner said.

The deal was finalized last week, he said.

More than 100 employees who work in two downtown Indy offices — Capital Center North and OneAmerica Tower, both on Illinois Street — would relocate to the new facility when it opens in late 2016, Cummins spokesman Jon Mills said.

“This will allow us to create efficiency and consolidate our Indy offices,” Mills said.

Construction is expected to begin within a year, he said.

The new building will house about 250 employees when it opens but eventually will have enough space for about 400 workers, Mills said.

Employees who will work in the building will represent a range of departments, such as corporate communications, corporate responsibility, information technology, safety and security, and legal.

Also, some top company executives will have offices there, even though they will spend the greatest amount of their time while in Indiana at the Columbus corporate headquarters, Mills said.

Besides offices, the building will include first-floor retail space, a parking garage, and a learning center for training and development, and have public green space on the property, he said.

Cummins and Indianapolis will collaborate when determining which tenants will occupy the retail space, Kintner and Mills said.

Square footage and the number of stories the building will contain have not been determined because architectural work has not begun, Mills said.

However, the design of the building will be important, Mills said. “It will continue our legacy of architectural significance,” he said.

Property search

Cummins reached out to Indianapolis a year ago, saying it was looking at multiple cities for expansion and relocation of its distribution business, Kintner said. The former Market Square Arena property was one of multiple locations in Indianapolis that Cummins considered, he said.

Mills declined to specify which cities other than Indianapolis were in the running.

Having Cummins develop the block of property is in line with the city’s priorities, Kintner said.

“We always are searching to attract jobs of this caliber, a company like Cummins,” he said.

Indianapolis Mayor Greg Ballard echoed that sentiment in a statement issued in a news release.

“Cummins is a well-respected global leader in technology and innovation. Locating the global distribution headquarters of a Fortune 500 company downtown will bring new people, visitors and recognition to Indy as a worldwide economic center,” Ballard said.

Using the new building as the headquarters for the global distribution business fits with the company’s strategy to grow the footprint of the business, Mills said.

Distribution operations

Distribution — the moving of engines, services and support from one place to another — is one of Cummins’ four primary business units. The other segments are engines, components and power generation.

The distribution segment closed 2013 with $1.1 billion in sales in the fourth quarter, an 18 percent increase from the fourth quarter of 2012. The distribution segment’s 2013 year-end sales of $3.7 billion represented a 14 percent increase from 2012.

Cummins also plans to have all of its distributors under its company flag within the next couple of years, Mills said. Cummins is buying independent and joint-venture distributors, he said.

However, the global distribution business doesn’t have a home base as do other company segments, Mills said. The engine and components businesses are based in Columbus, and power generation is headquartered in Fridley, Minn.

Global distribution employees who would work in the segment’s downtown Indy headquarters would have corporate functions such like human resources, finances and information technology, Mills said.

“(Indianapolis) made great sense for us because of its proximity to a major airport and it’s on a cultural trail,” Mills said.

The cultural trail runs along the Alabama Street side of the property, and the planned green space will complement it, Mills said.

Columbus commitment

Mills also stressed the company’s commitment to Columbus, where Cummins was founded 95 years ago.

“The majority of our employees are based here, and we’re committed (to Columbus). It’s been a great city for us; the city continues to be a great partner,” Mills said.

“As Cummins continues to get stronger globally, we continue to get stronger here,” Mills said of Columbus.

Cummins is among six Indiana-based companies that are Fortune 500 businesses. It ranks third among state companies on the Fortune 500 list behind Indianapolis-based WellPoint and Eli Lilly and Co.

Cummins had 2013 revenue of $17.3 billion and serves customers in more than 190 countries.

PRIMARY BUSINESS SEGMENTS

The four primary business segments of Cummins Inc. are:

Engine: Its $10 billion in sales in 2013 represented the bulk of the company's $17.3 billion in revenue; headquartered in Columbus.

Components: Generated $4.3 billion in sales last year; also based in Columbus.

Power generation: Produced $3 billion in sales last year; headquartered in Fridley, Minn., north of Minneapolis.

Distribution: Accounted for $3.7 billion in sales in 2013; would be based in Indianapolis.

COMPARING FOOTPRINTS

Columbus

  • About 4 million square feet of office and manufacturing space in Columbus.
  • Roughly 7,600 of the company's 8,500 Indiana employees work in Bartholomew County.

Indianapolis

  • 30,000 square feet in two downtown Indianapolis office complexes.
  • More than 100 employees currently; number of employees would increase to 250 when new office building opens and becomes Cummins headquarters for its global distribution operations.

 

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