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Case Studies

Ideal climate and access to ports entices Mexico-based Zagis' state-of-the-art cotton spinning facility - its first investment in U.S.

Zagis

Growing textile company seeks fertile climate for new mill

Zagis is the textile division of Grupo ZAGA, one of Mexico's most prominent industrial and commercial conglomerates. Established in 1980, Zagis is the leader in natural and synthetic textile fiber spinning in Latin America. By ensuring a high-quality product and using the latest technology, Zagis has grown consistently, producing more than 77 million pounds of textile fibers annually. In addition to its facilities in Mexico, Zagis operates facilities in South America.

In 2006, company executives evaluated this growth and determined that the time was right for its first investment in the United States. In its pursuit of producing the highest-quality product with the latest technology, Zagis leaders developed plans for a state-of-the-art facility, featuring the world's most advanced cotton spinning methods.

In order for Zagis to proceed with these plans, several hurdles had to be crossed. There were several layers of complexity that would come with such an investment, and the company needed to identify local partners who could assist in navigating the complex system of requirements. Zagis officials also required access to raw materials, as well as access to ports and freight lines to distribute their products. Finally, the company leadership required a location where state and local partners supported their vision and facilitated the company's new investment.

In addition to the support the company required from state and local partners, Zagis had to identify a location that had a fertile climate ideal for cotton growth and cultivation. Zagis partnered with several North Carolina textile executives to identify such a place. Together, these partners narrowed their search to locations in Texas, Mississippi and Louisiana.

Louisiana cultivates Zagis investment with help of local partnerships

The fertile soil of the Gulf Coast has long been an ideal location for cotton crops, and Texas, Mississippi and Louisiana all met this challenge. LED officials recognized Zagis' location search as an opportunity to demonstrate its commitment to business development.

In 2006, LED officials met with Zagis leadership to identify solutions for the company's needs. The state-of-the-art equipment planned for the new facility required a large amount of electricity and would potentially strain the local power grid. To facilitate such advanced equipment and meet the company's energy needs, LED partnered with local officials in Jefferson Davis Parish. These officials worked with Zagis to identify opportunities where the local officials could step in and improve the local infrastructure to support the company. Additionally, the State Bond Commission approved $10 million in Jefferson Davis parish industrial bonds to fund these infrastructure supports.

Louisiana officials also offered support to Zagis as company officials prepared for the challenges of a new investment. LED identified skilled bond counsel, local attorneys and banking and accounting support. The state also offered the services of LED FastStart® — the No. 1 rated workforce recruitment and training program in the nation — to identify, screen and recruit potential talent for Zagis.

In addition to this local support, LED provided Zagis officials several state incentives to support their new investment. Zagis received a $2.4 million performance-based loan, as well as the state's Industrial Tax Exemption and Quality Jobs incentives.

Lacassine selected as site for first U.S. investment

In 2007, as Zagis approached the end of its search for a U.S.-based location, the company established Zagis USA, the America-based branch of Grupo ZAGA's textile division. In July 2008, Louisiana state and local leaders joined Dan Feibus, COO of the newly-formed Zagis USA, as he announced the company's selection of Louisiana for their new state-of-the-art facility.

Zagis selected the proposed location in Jefferson Davis Parish in the town of Lacassine. Strategically located, this site provided financial savings for Zagis. By locating to Lacassine, Zagis had one of the lowest yarn production costs in the world. The Lacassine site had access to Interstate 10, which provided the added benefit of access to ports along the gulf and the Mississippi River. Access to raw materials, the proximity to ports and strategic freight lanes and reliable and affordable power also supported the company's lower production costs.

"Louisiana, for a long time, has had all of this amazing potential. If you look at where it sits, if you look at where the highways run, if you look at where the Gulf is, on paper, it is tough to beat. It is different from the rest of the country," said Feibus, "Zagis chose Louisiana because of its location relative to raw material, its infrastructure — interstate, rail, ports — and the strong entrepreneurial support from Louisiana's departments of economic development and agriculture."

According to Feibus, the identification of support through bond counsel, local attorneys and banking and accounting support set Louisiana apart from its competitors.

"Louisiana is willing to sweat the details, understand what your business is about and work with your company to tailor the right solution," said Feibus.

Zagis sees success in Louisiana, plans second phase

Zagis USA officials and engineers developed plans for 128,000-square-foot facility, featuring some of the world's most advanced, open-ended cotton spinning technology. Construction on the new facility was competed in December 2009.

The first major U.S. business entity operated by ZAGA Group proved successful for the company, utilizing up to 15 to 20 percent of Louisiana's cotton crop. The company created and successfully filled 79 positions at the facility in Lacassine.

To support Zagis' commitment to developing the most advanced cotton spinning process in the world, LED FastStart developed several courses to train employees. FastStart developed lean manufacturing courses to encourage the development of effective manufacturing processes.

As Zagis' Lacassine facility went online and began the company's first successful production run in the U.S., the company began plans for a second facility. Part of the company's initial investment of $75 million will be dedicated to an additional facility in Louisiana. Company executives are currently evaluating sites in Louisiana for an additional mill.

Related Incentive

Industrial Tax Exemption

100% property tax abatement for up to 10 years on a manufacturer's new investment and annual capitalized additions.

Key Industry

Agribusiness

Innovative research centers and a wealth of raw materials aid a billion-dollar agriculture industry.

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