Tim Sullivan, former chief executive officer of South Milwaukee-based Bucyrus International Inc., is leading an effort to move Orlando, Fla.-based REV Group Inc. to Milwaukee.
REV Group, formerly known as Allied Specialty Vehicles, manufactures specialty vehicles such as ambulances and shuttles at 15 locations, many of which are in the Midwest. The company has more than 5,000 employees. Sullivan has served as CEO since 2014.
Milwaukee beat out Chicago in attracting the headquarters of the $2 billion company, which Sullivan said was because of Wisconsin’s strong manufacturing heritage. The decision was sweetened by undisclosed competitive tax incentives offered by the Wisconsin Economic Development Corp., he said, which the company will receive in return for creating 50 jobs over the next two years.
“I think it’s a reputation of being kind of the manufacturing center of the Midwest,” Sullivan said. “We’ve gotten it through both hard work but also some attrition in adjacent states (such as Michigan and Illinois). It’s not an anti-business environment in the State of Wisconsin right now. It’s a very pro-business environment, which is not exactly what you have in Illinois and Chicago. In fact, I think it’s the complete opposite.”
This isn’t the first time Sullivan has brought a major headquarters to Milwaukee. Sullivan left Bucyrus when it was acquired by Peoria, Ill.-based Caterpillar Inc. in 2011, and in 2013, moved the corporate headquarters of Fortune 1000 $2.4 billion manufacturer Gardner Denver and about 40 to 50 jobs from Philadelphia to Milwaukee.
Sullivan was unable to convince the 18 employees in REV Group’s Orlando headquarters to move to chilly Milwaukee, so he will hire a whole new 18-person executive team in the next few weeks as he works rapidly to move the company’s operations. None of the company’s work will remain in Florida.
“(Milwaukee is) a real tough sell, especially at this time of the year,” he said. “I have a lot of contacts in the Milwaukee-Chicago area, and the news kind of leaked out a few weeks ago and I’ve been inundated with old colleagues, friends, acquaintances, so the resumes are stacking up. I think we’ll be fine. Replicating the people I have in Orlando is not going to be that difficult because there’s a lot of people who know manufacturing in Milwaukee and Wisconsin.”
The Wisconsin Economic Development Corp. has been talking to the REV Group, but a contract hasn’t been signed yet for the incentives, said Kelly Lietz, a spokesman.
“It’s premature for us to say what, if any, assistance we’ve offered to the group, but I can confirm that we’ve talked to them and we’re aware of their plan to move their headquarters to Milwaukee,” Lietz said. “We welcome all such inquiries from companies looking to leverage Wisconsin’s strong business climate to grow their operations.”
Neither Sullivan nor Lietz could specify a timeline for completion of the incentive contract.
“They have indicated that they want to be in Wisconsin because it’s a strong manufacturing state, and that’s where discussions like this typically start, and then they look at competitor states, which they have done,” Lietz said. “They’ve narrowed it down to a small number of states and Wisconsin’s in the mix.”
Sullivan said if he could make the move to Milwaukee tomorrow, he would. But more likely, REV Group will move in the next 30 to 60 days, and will have another three months of transition as he hires his new team.
A final decision has not been made on the Milwaukee office locations. The company will have a 6,000- to 8,000-square-foot administrative headquarters office downtown for senior leaders, close to its legal and accounting firms, and a 10,000- to 12,000-square-foot operational office location immediately outside of downtown, Sullivan said. That location could potentially include manufacturing operations in the future, he said.
Jim Paetsch, vice president of corporate relocation, expansion and attraction for the Milwaukee 7 Regional Economic Development Partnership, which was involved in attracting REV Group, said the firm plans to establish one office downtown and another in the suburbs, but declined to disclose the specific locations.
“We’re really moving very quickly in our growth, so we want to make sure as we look at that growth, we want to pick spots that may make sense for us going forward,” Sullivan said.
Matt Hunter, a vice president at CBRE, said REV Group toured the 411 East Wisconsin building downtown on Jan. 15 and believes the group was looking at four to five other buildings in downtown Milwaukee that day. He said the company is looking for 7,000 square feet of space and had a high priority on views.
“I think they are focused at 833 (East Michigan) and one of the spaces they are seriously considering is a sublease with Jason,” Hunter said.
Jason Inc., parent company to a global family of manufacturers, announced in September it would occupy 26,043 square feet in the 833 East building, which opens March 1. Jason Inc. originally announced it would lease 12,506-square feet in the building.
REV broker Steve Pape, with Greywolf Partners Inc., and Mark Irgens, developer of 833 East Michigan, would not comment on the search.
Representatives from Jason Inc. could not be reached for comment.
Another commercial real estate source, who gave a tour to the REV Group said at this point, sub-leasing with Jason Inc. is the company’s second choice. He was unsure what the group’s first choice is at this point, but said they have ruled out the U.S. Bank Center.
“They are looking for something upscale and nice,” he said.
Sullivan would not comment on a possible sublease with Jason Inc. or moving to 833 East.
“Clearly we want to be downtown for our official headquarters, but I think we’re going to be at least 50 people and some of the jobs that we’re going to have could easily be officed in the immediate area, too,” Sullivan said. “We may split the group, we may not. We’ll decide that here in the next couple of weeks.”
“The downtown area is expensive compared to some of the suburban locations and some of the other functions that we’d be looking to put outside would be operational in nature and not so much administrative,” he said.
REV Group is currently owned by New York private equity firm American Industrial Partners, which is nearing the end of its investment window, Sullivan said. So he plans to take the REV Group public in the next 12 months to expand its available capital and growth potential.
“We’re about a $2 billion company today and I believe we can double that size within a couple of years, but to do that, you’re going to need access to capital,” he said. “Obviously, with private equity capital somewhat limited, once you’re in public markets you have the capital to grow the company much more rapidly.”
That growth will be driven by REV Group entering new markets and introducing new specialty vehicle products, and will probably result in more jobs in the Milwaukee area over the next few years, Sullivan said.
“It’s a huge market as far as specialty vehicles are concerned,” Sullivan said. “We build 20,000 vehicles a year and we’re… significant, but we’re not as significant as we could be. We have over 500,000 vehicles on the road today. Think about doubling that.”
Milwaukee Mayor Tom Barrett said Sullivan’s comments about the strong workforce in Milwaukee was music to his ears.
“I’m pleased to welcome REV to Milwaukee,” Barrett said. “It’s great when a CEO recognizes that Milwaukee as a city and a region has so much to offer.”
