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Diageo Construction Is on Schedule

Dan Kirby addresses the Rotary Club of St. Croix.Construction is moving on schedule and this fall St. Croix will see massive concrete slabs poured and walls built at the Diageo Captain Morgan Rum distillery, a company official said Thursday.
Speaking to Rotary of St. Croix at its weekly speaker luncheon, Dan Kirby, Diageo U.S. Virgin Islands vice president of supply, provided new details of the construction schedule while emphasizing the environmentally friendly features of the plant and Diageo’s success at hiring mostly local workers to build the plant.
In October and November contractors will pour concrete for the factory’s slab foundation.
"We will be pouring over 16,000 cubic yards of concrete," he said. "That is over 1,600 trucks of concrete over perhaps a six-week time frame. This is a very aggressive schedule. We have to be up and running, we have to have mechanical completion by next October and shipping Captain Morgan by January of 2012."
Seralles, a long-established Puerto Rico rum distiller and marketer, makes Captain Morgan for Diageo right now, but that third-party contract expires at the end of 2011, Kirby said.
Asked how many workers were from the Virgin Islands as compared to the number brought in from outside, Kirby said more than 80 percent were local, as required by the Coastal Zone Management permit. That figure does not include spin-off spending and construction-related jobs that are not paid by Diageo directly, he said. As work continues in phases, requests for quotes and proposals will be made publicly, giving every local company the opportunity to compete for projects, he said.
"As of September 1st, 22 of 23 of subcontracts have been awarded to local companies, and with all the work coming up we are advertising in the newspaper and on the radio," he said.
But some contractors will be brought in from outside, especially for specialized work that is not readily available within the territory.
"We are on a rigid timeline and we have to be online, on schedule to meet our contractual obligations with our distributors," he said.
Though the Rotarians were mostly effusive in support of the distillery, one bone of contention for some was whether or not the Captain Morgan’s Rum would bear a label saying "made in St. Croix."
"I for one would like to see St. Croix on the label," said Rotarian Ava Gail Bourdon, arguing it would be a boost to efforts to market the island and establish in people’s minds the idea that St. Croix is where good rum comes from.
"Whether or not to put ‘made in St. Croix’ is still in discussion, it is still on the table," Kirby said.
St. Croix author and businessman Robert Merwin pushed local labeling too, saying he would like to sit down with Diageo’s marketing people to talk about it.
"My grandfather marketed St. Croix rum over a hundred years ago," Merwin said. "This should be part of the marketing, talking about how Captain Morgan is maintaining a tradition on St. Croix because we have been making and marketing rum for over 250 years."
The audience erupted in cheers and applause at Merwin’s comments.
Kirby repeated that the matter was still being discussed and was not in his hands. In the short term, labels will switch from "made in Puerto Rico" to "made in the Caribbean" because that moniker will be accurate before and after production switches to the Virgin Islands from Puerto Rico, he said.
Diageo has leased land on the northwest corner of the St. Croix Renaissance Park, adjacent to the Melvin Evans Highway to construct the plant. The Virgin Islands Government is financing the construction of the plant but will ultimately recoup the financing and take in nearly $3 billion in remitted rum excise taxes over the 30-year term of Diageo’s agreement with the government. Economic Development Commission tax benefits are to be granted to the company, too. The agreement also calls for either annual incentive payments or, alternatively, an option to receive a grant to pay for the construction of the plant. Diageo would get the same molasses subsidy and market support payment arrangement enjoyed by Cruzan Rum. In exchange, Diageo would develop, own and operate the plant, commit to making all of its Captain Morgan rum at the plant for at least 30 years and would be liable for damages and for paying the construction bonds entered into by the government if it breaches the agreement.
Captain Morgan is the number two rum in the world with sales of more than seven and a half million cases a year. Diageo, headquartered in the UK, owns Guinness, Johnny Walker, J & B, Smirnoff’s, Tanqueray, Jose Cuervo and of course Captain Morgan.

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