Cloak-and-dagger building deal blows up on Naperville
A Swedish manufacturing company that sought the right to construct a mysterious research and development facility in Naperville using only the code name "Project Panda" won't be following through on the project and the building that's nearing completion.
SKF Group, a manufacturer of ball bearings, seals and lubrication systems, approached city officials through an attorney in July 2014. The planning and zoning commission approved the project without knowing which company was putting it forward.
The city council followed suit in August 2014, expediting the usual approval process by at least two weeks once council members learned of the high-tech jobs SKF promised to bring.
"I don't want to take a chance of messing up this deal. This is the kind of deal every city wants," Naperville Mayor Steve Chirico said last year as a council member.
The 130,000-square-foot building at 1203 Warrenville Road was projected to employ 200 people whose research in materials testing would contribute to energy-saving products.
But last month, SKF told the city and the Naperville Development Partnership it would not be occupying the building because of changing business conditions. Instead, the company will work through the Chicago real estate broker DTZ to find a new tenant who can use the space.
"The U.S. research center was designed to be the complement to this expanded global network of centers," said Walt Delevich, an SKF spokesman. "As we looked at it when these plans were finalized it was the beginning of 2014. At that time the business environment looked a lot more positive. We were seeing some decent growth.
"Since then, we've had declining rates of growth and increasing uncertainty about the business climate, especially in one of our biggest markets, China."
That uncertainty, along with a new path being taken by the company's new CEO, Alrik Danielson, led SKF to halt the project in Naperville as well as others in the Netherlands and Sweden.
"It was seen as the most prudent move to hold some of these projects that hadn't progressed beyond a certain point," Delevich said. "We stopped some of these new efforts in order to redirect the funds that would go there into some other priorities."
SKF will hold back from developing the inside of the Naperville building to its specifications. But the structure itself is expected to be substantially complete by the end of September, said Todd Metzger, real estate manager for SKF.
"It's currently an empty shell that can be customized to the next user's needs," Metzger said. "That should be helpful to us as we look to identify a new user."
Naperville officials said they feel some disappointment that SKF changed course after all of their efforts to welcome the project into the city, despite neighbor concerns about traffic, noise and privacy disruptions. But having the company pull out before hiring local employees is not the worst-case scenario, Chirico said.
"The good news is we're not losing existing jobs, it's future jobs," Chirico said. "It would have been a lot worse had we had a company that located here, hired people and then all the sudden they lost all their jobs."
Christine Jeffries, president of the Naperville Development Partnership, said the next step is to work with the broker and SKF to find a suitable user.
"What we're looking for is a new company to do a similar type of activity, research and development," Jeffries said. "We have a great confidence that all of the key factors that led to SKF selecting this Naperville location will attract a new user."
The city again will tout its highly educated workforce, proximity to two international airports and nearby presence of major research centers at Fermi and Argonne national laboratories during what's expected to be a nationwide search, Jeffries said.
SKF shares Naperville's concern for finding an end user for the building.
"Our most important thing is to find a good tenant with good jobs for the local community there where they can still customize and create an interior environment that works for their business," Delevich said.
The city hadn't awarded SKF any incentives, but the company had been promised $2.2 million in state tax credits over 10 years. Officials said those credits won't be given now that the company will not use the building or hire new employees in Illinois.