THE LABOR FACTOR Advanced Industries’ Reliance Upon A Highly Skilled Workforce
ADVANCED
A COMPLEX BUSINESS PARADIGM Tech Companies Partnering With Host Communities
INDUSTRIES
Fall 2014
CHANGING GEOGRAPHY
FINANCIAL PERFORMANCE
Restructuring of the Global Auto Industry
Incentives as Part of the Competitiveness Equation
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ADVANCED
2014 EDITOR’S NOTE Advanced industries have been described by the Brookings Metropolitan Policy Program
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Editor’s Note
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The Role of Labor in Advanced Manufacturing
and McKinsey & Company as “the nation’s most strategic innovation and STEM (science, technology, engineering, and math) worker-intensive industries [that are] prime movers of regional and national prosperity in developed countries.” Brookings and McKinsey have further identified 23 sectors with above-average R&D investment as being advanced industries. Among these are the automotive and aerospace industries, including related suppliers, which we have chosen to focus on in this special publication. We first look at the need for skilled labor in advanced industries, which are working to close the skills gap through internships and co-op and
Advanced manufacturing will continue to be reliant upon human interaction for the application and management of technology.
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Increasing world competition is driving an increasingly complex business paradigm for aerospace and other technology companies.
12
and utilizing local educational resources. They are partnering with their host communities in other ways as well, in order to grow in place, benefiting from tax abatements, exemptions, and rebates, as well as training and other incentives. A closer look at the auto industry, in particular, reveals its geographic spread and how new lightweighting technologies are leading to further industry investment.
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by experts in the field and will prove valuable to companies in advanced industries. If you would like to contact any of the contributors, email me at gerri@areadevelopment.com. Full contact
Advanced Manufacturers Utilize Incentives to Improve Financial Performance
Incentives have moved from the fringes of a project to being a part of the competitiveness equation in bringing manufacturers back to the U.S.
23
Automotive Lightweighting Leads to Industry Investment
New fuel economy and greenhouse gas regulations are leading to the demand for new materials as well as new manufacturing and design methods to lightweight vehicles.
29
The articles in this publication were written
The Changing Geography of the American Auto Industry
Where is auto production currently concentrated, and where will the industry expand in the future?
training programs. They are working with the states and communities in which they are located
Tech Companies Partner With Host Communities
European Automakers Look to North America
Direct investment in North America is allowing European automotive companies to distinguish themselves from their competitors.
32
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information for all of the sponsoring organizations that can help with your location and expansion needs is listed in the back of this magazine.
Editor
ADVANCEDINDUSTRIES | 2014
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ADVANCED
2014
INDUSTRIES
The Role of Labor in Advanced Manufacturing
Direct investment in North America is allowing European automotive companies to distinguish themselves from their competitors.
Advanced manufacturing will continue to be reliant upon human interaction for the application and management of technology. By Brad Lindquist, Senior Managing Director, Newmark Grubb Knight Frank
An Authoritative Definition Advanced manufacturing, however, is not dependent on pursuing the lowest-cost environment around the globe. Advanced manufacturing, while lacking an authoritative definition, is more likely to be: • Capital-intensive utilizing expensive machinery and equipment requiring a low-risk location (when
These days, it is hard to find a new project announcement for a business that manufactures or produces something in the United States that is not classified under the “advanced manufacturing” umbrella. It is used repeatedly, after all, as the universal description for just about any and all manufacturing operations taking place in the United States and other developed countries. It is readily apparent that in the past decade, any manufacturing processes a company identifies that are not
considering natural disaster, economic, political, and social stability) • Energy-intensive with extremely sensitive equipment highly dependent on a reliable power supply • Labor-intensive, yet requiring fewer positions, with an increasing demand on higher-skilled labor to execute necessary tasks due to process automation • Proprietary in nature and based on unique knowledge requiring strong intellectual property laws
reliant upon technology, yet driven by manual labor, have already shifted production to lower-cost countries. Many companies that sought to capitalize on decreasing their
U.S. as a Leader As a leader of innovative manufacturing solutions, the
operational costs overseas, and in particular in China, are
United States is well positioned in the global economy to
now experiencing the effects of rising labor-cost pressures,
see increased/continued investment and projected related
resulting in their search for the next emerging “hot spot”
activity for these so-called advanced manufacturing
location that can provide low-cost, unskilled labor that is the
operations — from the revival of the domestic automotive
foundation for traditional manufacturing.
industry through innovative and cutting-edge technologies,
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to growth in related transportation industries and sectors
creating greater efficiencies for the production of everyday
that have also visibly improved (such as aircraft, trains, and
consumer goods, such as those in the food and medical
spaceships). Advanced manufacturing techniques are also
industries.
Advanced Industries Work to Close the Skills Gap
Quality education and training that fills the pipeline of skilled workers are key drivers of economic growth and prosperity. As the nation faces major workforce hurdles in the coming years, there are a handful of companies and states that are proactively solving the issues to meet future challenges.
When the nation’s growing gap in skilled workers came to the forefront, Iowa’s leaders quickly mobilized and through public/private partnerships implemented initiatives to focus on science, technology, engineering, and math (STEM) education. Co-chaired by Iowa’s Lt. Gov. Kim Reynolds and Vermeer CEO Mary Andringa, Iowa’s STEM efforts have garnered national attention among educational and policy leaders in Washington, D.C., as one of the best state models. “We’re a state that collaborates and makes things happen quickly,” says Mary Andringa, CEO, Vermeer Manufacturing Corporation. “And nothing is more evident of this fact than our STEM initiatives.” To date, more than 3,100 Iowa K–12 classrooms have implemented STEM programs, with nearly 100,000 students involved in the various programs. Awareness of STEM and its importance among Iowans has reached 41 percent in 2013. Based in Pella for more than 65 years, Vermeer is a global manufacturer of heavy-duty agricultural and industrial equipment like bale processors, compost turners, and pipeline drills. More than 2,400 engineers, machinists, welders, assemblers, IT, logistics, and marketing professionals work in Iowa for Vermeer. “Our workforce is more than skilled and productive, they are engaged,” says Andringa. “They take great effort to understand the in-market needs of our customers and end-users.”
Welders at Vermeer Manufacturing in Pella, Iowa, keep their skills sharp with ongoing training at local community colleges.
Vermeer feeds its talent pipeline through extensive college-level co-op programs, internships, and training programs that reach down into the high school and middle school levels. With an office at Iowa State University’s Research Park, several engineering students split their time working for Vermeer on-campus or at the production facility. Iowa’s network of 15 community colleges offers comprehensive educational programs and often adapts or enhances curriculum to meet the needs of area employers. “By leveraging state funding, we’ve collaborated with Des Moines Area Community College to enhance the welders training program,” Andringa explains. “With this financial and educational support, we’ve been able to elevate the skills of our current welders and add more to our workforce with each session we hold.”
ADVANCEDINDUSTRIES | 2014
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other critical location factors typically associated with the key criteria cited above are competitive advantages for the United States when compared with other developed nations. As the leading innovator of new advanced technologies, the U.S. is able to compete on a global scale, even with a relatively high cost of labor; because the application of technology and innovation support advanced levels of production, the volume of labor required is reduced. In addition to offsetting the high-cost labor market with fewer overall jobs, the U.S. appears to be enjoying a period of abundant energy resources, and offers among the lowest-cost energy for developed countries anywhere in
Courtesy: Illinois Network for Advanced Manufacturing
Why is the United States currently well positioned for these projects? With the exception of the U.S. tax climate,
Manufacturing maintenance training at Daley College, Chicago
the world. Additionally, the overall risk profile (economic and social stability) of the U.S. is relatively low. There are
the past few years. A typical manufacturing position requires
effective intellectual property laws and a high level of
a different profile of employee than in previous generations.
transparency on how business is conducted. Finally, despite
Reportedly, more than 27 percent of all manufacturing
an aging infrastructure network, there is still access to highly
employees have a bachelor’s degree or higher. The wages
reliable core utilities, such as water, sewer, telecom, gas, and
of manufacturing jobs continue to rise as well (which may
electric — all important factors when determining where to
be a reflection of the growth of advanced skills to support
invest hundreds of millions of dollars or more for a single
the changing manufacturing base) with an average annual
operation. Yet, an underlying factor remains the access and
manufacturing salary in the U.S. at nearly $60,000.
availability of skilled labor.
The continued innovation and technology implications infiltrating and driving manufacturing advancements
The Labor Factor It has been a common theme to hear about the shortage of skilled labor, despite the relatively high unemployment over
dictate very specific human interaction and support. The ability to develop and retain talent for these specific projects and industries is imperative to their success. Where other
Courtesy: Illinois Network for Advanced Manufacturing
key location criteria can be measured very directly (cost of electricity, state tax structure, risk of natural disasters), the ability to measure the implications of labor is more difficult to attain. No single factor can clearly establish the ability of a location to offer the immediate presence of labor skills. Comparative wage levels may reflect a long tenured workforce in their respective positions rather than the skill level of the labor force. Educational attainment for a location can’t be pegged to a specific industry or labor subset. And there are dozens of other criteria that can be considered, but still not clearly point to the right labor environment for a project. Labor economists can assess specific positions relative A student at Southwestern Illinois College uses a CNC machine to create a metal object to specifications programmed into the machine.
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to their respective industry presence, seeking to establish trends and growth in a particular location to determine the
ADVANCED
INDUSTRIES capacity of a labor market to support a project’s needs. A
competing for the same type of skilled labor (think life
high presence of a particular skill may indicate a general
sciences or aviation clusters). Other projects may also seek
“herding” effect, whereby projects and companies are Continued on page 11
Today’s innovative companies require highly skilled workers — a need that cannot be overstated. Kentucky is among those states that have focused their efforts on supplying the workforce that current and future companies need. The key has been to eliminate the bureaucracy and, in its place, offer personalized services depending on the needs of the individual company. To accomplish this, Governor Steve Beshear announced the creation of the Kentucky Skills Network. The network combines the efforts of several state government and educational institutions to provide one-stop workforce services and resources for new and existing employers. This includes customized recruitment and training solutions, as well as implementation assistance. Qualifying Kentucky companies are eligible for recruitment and job-screening services at no cost. Additionally, flexible grant funding is available to offset the costs of customized and in-house training needs and to establish apprenticeship programs and to provide free safety and OSHA training. State tax credits are also available for approved training programs for existing employees of qualifying companies. Last year alone, training was provided for more than 83,000 Kentuckians in fields including manufacturing, healthcare, information technology, energy, distribution, and research and development.
Workforce Training Vital to Business Health
An Automotive Success Story One of the most popular and effective tools used through the Kentucky Skills Network involves grants and tax credits. One company that benefited from a grant was INOAC, a Tier II supplier of instrument panels to Ford and Toyota — two companies that contribute to Kentucky ranking third in the nation in automotive production. In 2009, INOAC needed to train its workforce in new production processes. The supplier formed a partnership with the Springfield-Washington County Economic Development Authority, the Kentucky Community and Technical College System, and the Kentucky Cabinet for Economic Development. The Kentucky Skills Network provided INOAC no-cost recruitment services and awarded the company a $160,000 grant to offset the cost of two years of employee on-the-job training. INOAC was also able to secure additional training assistance from the local community and technical college. As a result, INOAC was able to grow its Springfield workforce from 180 four years ago to 330 today. According to Kurt Krug, vice president of North American Human Resources for INOAC, business leaders are sometimes unaware of how government agencies can help, or they may fear red tape and rejection, but he’s impressed with Kentucky’s team approach. He notes, “Kentucky is doing some very good, creative things…the way I see it, everyone benefits. It’s a true partnership.”
ADVANCEDINDUSTRIES | 2014
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ADVANCED
2014
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Tech Companies Partner With Host Communities
Direct investment in North America is allowing European automotive companies to distinguish themselves from their competitors.
Increasing world competition is driving an increasingly complex business paradigm for aerospace and other technology companies.
software development projects executed in Puerto Rico (and that’s just a snippet of mankind’s recent workforce development accomplishments). At the same time, the fall of the Soviet Union in 1989
By Jeff Troan, Director,
has led the world to the realization that any sustainable
Lockheed Martin Economic Development Opportunities
economic system has to be rooted in capitalism. That, combined with other environmental factors like improved
American management structure and process owes its origins to three individuals: Deming,
networking capabilities and the spread of English as a
Drucker, and Sloan. Of the three, W. Edwards Deming
productivity in the former Eastern Bloc and developing
probably remains the most pertinent today. His definition
world, opening both new markets and new production
of quality as a product “produced to the customer’s
location opportunities for the world’s corporations.
specification, at or ahead of schedule, at the lowest possible
common business language, has led to an explosion of
And so, the planet has become a very competitive
cost” forms the basis of a host of process optimization
place, where it is increasingly difficult to differentiate one’s
programs, from Six Sigma to Total Quality Management.
company based solely on heritage factors like business
Since the early 1980s, aerospace and technology
process optimization and workforce. What arises is an
companies around the world have embraced Deming’s
extension of the business process optimization model to the
principles, and strained waste and defects from the
business climate.
manufacturing process. That has led to the realization
This trend isn’t something one can ignore as a product
by many business sectors that, given targeted workforce
line manager, site selector, or commerce official. In a mature
development support, a very broad class of labor can
industry sector, even the most process-efficient company
produce high-technology products around the world.
with the highest quality workforce will find survival
Thus, today we see German cars produced in rural China,
challenging if its tax climate is unfavorable, it operates
communication satellites built in southern Mississippi, and
in an area with a high cost of living (driving up its labor
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ADVANCEDINDUSTRIES
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costs), utilities are expensive and/or unreliable, and the
continue to produce, where natural capitalist principles
infrastructure is aging. Capitalism, despite its many faults, is
would drive the work elsewhere.
a wonderful driver of efficiency. Unless you’re producing at
Economists break out producers into two categories: core
or near Deming’s optimal production point, Adam Smith’s
and noncore. Core businesses import cash into a community
invisible hand will strike you from the field, posthaste.
and export product (either a good or service) outside the community (either domestic or internationally). These
Extending Business Process Optimization to the Business Climate New business managers at major aerospace and
are the core engines of capitalism that propel all the other sectors of the economy. Noncore businesses take the “spend” generated by the payroll and procurement of core businesses
technology corporations talk about discriminators and
and create secondary activity. These businesses are also
disruptors. Discriminators provide a notable technical, cost
important because they create induced employment in
or schedule advantage that improves the chance of winning
sectors as diverse as construction and retail. They also create
a major proposal or building market share. Disruptors
the taxable transactions that provide the revenue necessary
are much more rare. They are such significant changes
for municipalities to maintain public services and retain core
in operating practice, that it is difficult for a competitive
employment.
intelligence team to predict them, and they have a market reshaping impact on new work.
A community that lacks core employment is either in economic decline, or serving as a bedroom community to someone else’s core business (economic seepage). A community that lacks noncore employment
THE PROCESS OF MAINTAINING THE BALANCE BETWEEN CORE AND NONCORE BUSINESS HAS BECOME MUCH MORE COMPLEX.
can’t generate secondary and tertiary taxation and employment. The core money slips away (economic leakage). The process of maintaining the balance between core and noncore business has become much more complex over the last 50 years. Gone are the days following World War II, when the United States had the majority of the viable production capacity on the planet. First, Europe and Japan recovered
Business climate modifications are reaching proportions
production capacity, followed by the modernization of the
that put them in the disruptive category. Boeing’s relocation
former Eastern Bloc nations, and finally the developing
to South Carolina and Oklahoma; L3 Corporation’s
world. The significant core business loss that the United
relocation of Aircraft Maintenance, Repair and Overhaul
States endured during the early years of the 21st century
operations to Waco, Texas; Northrop Grumman’s new
has reduced the number of core employers, and made the
aircraft design and manufacturing facilities in Saint
surviving companies very cost-conscious.
Augustine and Melbourne, Florida; and Airbus’ new aircraft
To attract and retain (yes, retain) core businesses in
fabrication facilities in Alabama are just a few examples of
the twenty-first century, communities will have to offer
disruptive level moves in aerospace and technology.
significant workforce development support, combined with
Business climate modifications are the province of
a business climate package that makes their companies
public-sector economic developers, the consulting agencies
competitive with producers that enjoy lower labor costs and
that support them, and the corporations forward-thinking
more favorable taxation.
enough to see the paradigm shift. Economic development is
The good news is, to a large extent, noncore businesses
a method by which a local community can artificially modify
will follow the new cash spend of core businesses, so they
its business climate to enable targeted industry sectors to
can endure a harsher business climate than one’s core
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ADVANCEDINDUSTRIES
ADVANCED
INDUSTRIES engine, rebalancing community financial models. However,
core business employees locate (and spend their salaries) in
communities should remain cognizant of quality-of-life
the community.
issues and acceptable residential housing stock, to ensure
Workforce Training Takes Flight in the Aerospace Sector
“But shouldn’t every company be taxed the same?”
Workforce development is critical to a state’s economic development mission. This is particularly true when it comes to Mississippi’s expanding aerospace industry, which was launched in the 1930s when Pioneer Aerospace, a part of Zodiac Aerospace, began manufacturing parachute systems in the state. After decades of continued growth, Mississippi is now home to more than 20 aerospace leaders as well as NASA’s Stennis Space Center.
State officials collaborate with companies and Mississippi’s 15 community colleges to tailor workforce-training programs to meet specific company needs. When GE Aviation announced the opening of its 300,000-square-foot facility in Batesville, Miss., in 2008, company officials cited a successful working relationship with the state and its universities as key to its location decision. The company collaborated with Northwest Community College to train workers in the sophisticated skills necessary to manufacture composite parts for GE’s GEnx jet engine, including fan platforms and fan case assembly. In 2013, GE Aviation expanded to meet global demand. Based on the success of its Batesville location, Ellisville became the company’s second location in the state, and the company invested $56 million to employ 250 workers at its 344,000-square-foot composites manufacturing facility. GE Aviation partnered with Jones County Junior College for workforce training and credits the success of its Mississippi operations to its partnership with the state’s community colleges. These institutions offer programs of particular interest to aerospace companies, including aviation maintenance technology, avionics, and unmanned aircraft systems. “GE Aviation’s growing partnership with the state of Mississippi is creating long-term economic growth,” said David Joyce, president and CEO of GE Aviation at the opening of the Ellisville facility. “We couldn’t be happier with our Batesville operation, and we look forward to the growth of our new Ellisville operation.” Mississippi’s nine public universities also play a vital role in research and development. Established in 1948, the Raspet Flight Research Laboratory at Mississippi State University is the largest university flight lab of its kind in the U.S., and its business incubator provides an economical start-up facility for companies like GE Aviation, Aurora Flight Sciences, and Stark Aerospace.
Rolls-Royce opens its second jet engine test stand at NASA’s John C. Stennis Space Center in Mississippi. The Outdoor Jet Engine Test Facility performs jet engine testing on the latest, most advanced Rolls-Royce civil aircraft engines, including the Trent 1000, which powers the Boeing 787 Dreamliner, and the Trent XWB, which powers the Airbus 350XWB.
It’s no wonder that the companies located in Mississippi’s aerospace corridor continue to grow. In fact, 2013 and 2014 have yielded significant expansion for Raytheon, Rolls-Royce, General Atomics, and Aurora Flight Sciences.
ADVANCEDINDUSTRIES | 2014
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The answer is, really, no, and such a policy can be very
climate, it does have its disadvantages. Such a strategy has
destructive to community economic balance.
the following negatives:
First, flat taxation is never fair. For example, communities that tax primarily on capital investment inherently
• An accounting write-off of all assets at the former operations site;
overburden capital-intense industries, and those that
• Carrying cost on the vacant facility before resale;
primarily tax wages, unfairly burden research and
• The cost of the new facility;
development firms.
• Operations shutdown as the company relocates tooling
Second, different employers face different economic
to the new site (or purchase of duplicate tooling);
pressures and provide different value to the local economy.
• Relocation of key employees to the new location;
In the new world economy, “new cash spend” is king,
• Recruiting of most of the workforce as new; and
and that can only be provided by a dwindling number of
• Significant training obligations to enable the new
core employers. Economic balance is maintained by the community through a combination of judicious fiscal policy, modified taxation, and affordable housing stock.
workforce. Many of these costs can be covered via a well-negotiated economic development partnership with the new town’s public-sector coalition (state and local government,
What the Paradigm Shift Means to Aerospace and Technology Companies Core businesses in the aerospace and technology sector
domestically). A good package will include all four categories of economic development incentives: (1) statutory; (2) discretionary; (3) legal construction; and (4) legislative.
need to be attuned to the business climate and partner with
Generally, a legislative move is utilized to commit enough
host communities to preserve a competitive position. Until
funds from general revenue to support project financing. This
recently, this usually meant moving operations to a receptive
is also a good time for the public coalition to modify ancillary
community, because public-sector economic development
statutes to best accommodate the targeted industry in general.
officials tended to view economic development packages for heritage employers unfavorably.
Once complete, the public coalition constructs facilities to the requirements of the company, and leases them the
While moving an entire operation (millions of square
assets at a discounted rate. In many states, such public-
feet and thousands of jobs) to a new community is certainly
sector “ownership and lease” will define a form of legal
a decisive way to improve a company’s overall business
construction that exempts the property from ad valorem taxation. Discretionary and statutory economic development programs can then be combined to help support equipment relocation, calibration, and installation, as well as play a major role in workforce development and recruiting. Key employee relocation costs seem to be the most difficult expense to get reimbursed, but they occasionally can be recovered through a discretionary fund. All that said, many companies fail to realize that this support is not free, and they are going to be bound by possible recapture obligations by the same contract that brought them the favorable business climate. Economic development recapture, commonly known as “clawbacks,” comes in many forms. In general, failure to achieve job generation, average salary, and capital investment goals means the corporation
A Lockheed Martin F-35 fighter aircraft being produced at the company’s factory in Fort Worth, Texas
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ADVANCEDINDUSTRIES
will forfeit part or all of its economic development partnership support. Recapture terms may increase its lease rates, or the
ADVANCED
INDUSTRIES public coalition may simply require cash penalties for failure
is both ethical and cost-effective. Even states like New Jersey
to meet targets. Further, many states have “digital rules”
and California are now participating with multiple economic
on recapture, where missing a target by one job can cost the
development programs that look to retain key employers.
corporation a significant penalty.
Companies need no longer assume they have to relocate
Clawbacks have to be considered in the company’s
to survive. The changing emphasis in the public sector on
financials and either covered via termination liability from
retaining the economic base opens a myriad of options, from
its customers, if possible, force majeure, or reserve funds.
facilities consolidation efforts to new business economic
The economic development contracts are best monitored
development partnerships. These preserve and improve
as part of the quarterly financial process, so that operations
the heritage workforce and minimize new investment in
management remains aware of the consequences of its day-
facilities and infrastructure.
to-day decision-making.
So, whether you are a corporate executive or a public-sector
The good news is that the heritage model is changing, as
policymaker, I will leave you with a passage from Charles
the public sector is coming to the conclusion that preserving
Darwin. “The future belongs not to the strongest or most
core employment through economic development principles
intelligent, but to those most able to adapt.” Good hunting.
new or emerging locations to deploy
device manufacturer. It is critical that
their assets, requiring a more intense
partnerships between the business
process and business involvement to
community and higher education
access or develop the core labor skills
institutions are established.
required.
If the skills gap in manufacturing
••
Role of Labor Continued from page 5
projects and the presence of a local training institution, whether it’s the local community college or a major university.
REGARDLESS OF MANUFACTURING SECTOR, A COMPANY MUST HAVE THE NECESSARY SKILLED WORKFORCE AVAILABLE FROM THE START.
Many states now include grants directly to educational institutions as part of incentive and inducement packages to attract substantial new projects/investment/job creation opportunities. These grants may not directly benefit a company’s bottom line, but establishing the foundation for a sustainable workforce pipeline
Partnering With Educational Institutions
positions is as wide as we are lead to
through partnership with local higher
believe, then it is even more imperative
educational institutions is a critical
Regardless of industry or sector
that the business community takes
component to the long-term viability
of manufacturing, a company must
a proactive approach to addressing
of many companies to successfully
have the necessary skilled workforce
the issue in partnership with local
operate in a particular location.
available from the start. The best
learning institutions — creating new
States and communities that are
community will have the ability to
programs, training workshops, etc. to
able to demonstrate support for the
provide or develop a workforce with
meet their needs rather than remaining
development of people skills will
the requisite skills, whether it is for
silently on the sideline. It’s no wonder
be best positioned to see continued
a company that manufactures and
that there is often a tight connection
growth in the advanced manufacturing
assembles executive jets or a medical
between advanced manufacturing
sector.
••
ADVANCEDINDUSTRIES | 2014
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ADVANCED
2014
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The Changing Geography of the American Auto Industry
Direct investment in North America is allowing European automotive companies to distinguish themselves from their competitors.
Where is auto production currently concentrated, and where will the industry expand in the future? By Dennis Cuneo, Partner, Fisher & Phillips LLP
economic development. A typical auto plant will employ up to 5,000 people, with above average wages and benefits, and will generate thousands of spinoff jobs. According to the Center for Automotive Research in Ann Arbor, Mich., every assembly plant job creates a total of 10 jobs in the supplier and support industries.
An ancient Greek philosopher once commented that there is nothing permanent except
— both by the automakers and their suppliers. Booz & Co.
change. This is certainly true of the American auto industry,
estimates that the global auto industry spent $102 billion
which has been transformed over the past three decades.
on R&D in 2013, about four times more than the aerospace
The companies making vehicles in America changed, and the
and defense industry.1 A Brookings’ study notes that high-
location of auto production also changed. Future change in the
value engineering and R&D-intensive industries, such as
industry could impact its manufacturing geography once again.
automotive, are “the prime movers of regional and national
The auto industry also spurs huge R&D expenditures
prosperity.”2 That explains why so many state and local
A Brief History The restructuring of the American auto industry began in the 1980s — and accelerated during the Great Recession,
economic developers continue to focus on attracting auto investment. When I first started working in the auto industry in
which resulted in the bankruptcies of GM and Chrysler.
the early 1980s, five companies — GM, Ford, Chrysler,
Since the Great Recession, the industry has recovered,
American Motors, and Volkswagen — assembled vehicles
with U.S. production close to pre-recession levels. The
in 21 states scattered throughout the nation. In addition
industry is once again profitable and growing, leading to
to their traditional base in the Midwest (Michigan, Ohio,
new opportunities for communities seeking auto-related
Indiana), the Detroit 3 operated plants on both coasts and
investment.
in the South/Southwest. Over the next three decades,
Auto assembly plants are among the crown jewels of
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the Detroit 3 restructured, closing plants in several states,
and consolidating most of their American manufacturing
people in the corridor. This investment in new auto assembly
operations into their traditional Midwest base. At the same
capacity has been followed by new supplier investment in
time, the Asian and European automakers started building
the region. Missouri, for example, has recently announced 10
cars in the traditional automotive states, such as Ohio and
supplier expansions and new plants, creating 1,000 jobs.
Indiana, and also in the Southern States, which saw a rapid growth in vehicle manufacturing.
Rapid Expansion of Mexico’s Auto Industry
Auto Alley and the Auto West Corridor
of the Auto West Corridor is its proximity to Mexico, which
Another factor that may contribute to the future growth After three decades of restructuring by the Detroit 3,
is emerging as a major automotive hub. Twenty years after
and expansion by Asian and European automakers, most
the passage of NAFTA, Mexico has attracted significant new
auto production in America is now consolidated in an area
automotive investment. BMW and Mercedes are the latest of
nicknamed “Auto Alley,” roughly defined as the corridor
a string of automakers that have announced plans to build
between I-65 and I-75, running from the Great Lakes to the
new assembly plants there.
Gulf Coast.3 While auto production is likely to remain centered in
As Mexico’s auto assembly has expanded, so has it auto parts sector. Delphi, which was formerly GM’s parts
Auto Alley, the auto industry is also expanding west of Auto
division, is one of several parts manufacturers that have
Alley, in an area that I will dub the “Auto West Corridor.”
shifted a significant portion of their North American
This area is roughly bounded by I-55 in the east and I-35 in
production to Mexico from the U.S. Mexican parts content
the west, extending from Illinois to Texas, and is home to 10
in American-built vehicles has increased fourfold since the
auto assembly plants. States in this corridor are well placed
enactment of NAFTA. On average, a vehicle made in the
to compete for future automotive investment.
United State contains more than $4,000 worth of Mexican-
When GM and Ford consolidated most of their
made parts.5 For example, Ford’s Wayne, Michigan,
manufacturing in Auto Alley, they did not close their
assembly plant sources 27 percent of its parts from Mexico,6
assembly plants in Illinois, Kansas, Missouri, and Texas. Since
and Volkswagen’s Chattanooga plant sources 15 percent of
the Great Recession, these automakers have announced more
its parts from Mexico.7
than $3 billion in new investments in those plants, creating several thousand new jobs. A recent Brookings’ study notes
The rapid expansion of the Mexican automotive industry has raised alarm bells, especially in some of the Southern
that the Kansas City metro area, with large GM and Ford assembly plants, is now the second-largest auto-industry trading hub in North America, after the Detroit area.4
VEHICLE PRODUCTION IN NORTH AMERICA
Over the past decade, Toyota built two new assembly plants west of the I-65/I-75 corridor — in Tupelo, Mississippi, and San Antonio, Texas — and recently announced that it will create a new North American headquarters near Dallas that will employ 4,000 people. Nissan started up its Canton, Mississippi, plant in 2002, also west of the I-65/I-75 corridor, and is in the process of expanding the facility. Mitsubishi recently expanded production at its Normal, Illinois, plant, and Chrysler added a third shift as part of the $700 million expansion at its Belvidere, Illinois, plant. Taken together, when the current expansions are completed, the six automakers will employ over 40,000
ADVANCEDINDUSTRIES | 2014
13
States, which haven’t seen a new greenfield assembly plant
percentage of the content of American-made vehicles.
since Volkswagen announced its Chattanooga plant in 2008.
To be sure, the auto industry is alive and well in
Although some see Mexico’s burgeoning auto industry as
Automotive Alley, which has seen some $29 billion in new
a threat, it is an opportunity for others. The auto industry
investment (in existing plants) since the Great Recession.8
in North America is rapidly integrating, with vehicles and
But the recent new investment in the Auto West Corridor
parts moving across the border in both directions. Proximity
and its proximity to Mexico suggest that states in this
to Mexican parts suppliers could provide a logistical
corridor may be in a position to compete for the next new
advantage for plants located in the Auto West Corridor, if
greenfield U.S. auto assembly plant.
the trend toward increased Mexican parts content continues. As illustrated in the table on page 16, assembly plants located in the southern part of the corridor are closer to
The West Is Back In Play Moving further west, northern California is an emerging
Mexico than many of the assembly plants located in Auto
hub of automotive activity, with the Tesla plant in Fremont,
Alley. Fewer miles from Mexico means lower transportation
California, and the uptick in automotive activity in Silicon
costs for Mexican parts, which are making up an increasing
Valley.
The corridor of suppliers to the automotive industry that has developed in Mexico Bajio’s Region is important to the many car and truck makers that have chosen to locate their manufacturing facilities there. Castro del Rio Technoindustrial Park (CDR) — a Marabis Development and the largest private industrial park in the state of Guanajuato — is home to many of these companies, basically because it is just 17 miles from the GM plant and 21 miles from the VW engines plant, both in Silao; 18 miles from the Mazda plant in Salamanca; and 42.5 miles from the Honda plant in Celaya. Nissan Aguascalientes is also located only 112 miles from CDR; Mexico City is only 200 miles away; the U.S. border can be reached in nine hours; and both east and west coast seaports are within just six hours.
Automotive Suppliers Cluster in Central Mexico’s Industrial Parks
To top it off, the park offers a premium utility infrastructure with available, expandable sites. More than 700,000 people live within a 15-mile radius, providing a young, qualified workforce at a competitive cost. Additionally, and very important for a development of its kind, a public institution (CONALEP) can train technicians on-site; this is thanks to the Schaeffler Group which initiated this program based on the German model of creating a tailor-made training program, another important advantage for suppliers to the automotive industry and other firms. Within the past eight years, 57 companies — including more than 45 international firms — have set up shop in CDR. Marabis Group has one more industrial park in the neighboring area besides CDR in Irapuato — Marabis Abasolo, also in the state of Guanajuato, is only 40 minutes away from CDR, with the same world-class infrastructure that international companies are looking for to run a successful industrial manufacturing operation.
14
ADVANCEDINDUSTRIES
Packed with onsite resources for non-stop performance: At MidAmerica Industrial Park, we’re all over the map with onsite assets that keep your operation on go 24/7. Maximize workow with abundant onsite power generation, onsite water, high-speed data and three onsite training and higher education facilities. Stay on go with onsite rail connections and an onsite airport featuring a 5,000-foot runway. Also onsite: a dedicated management team plus outstanding dining and accommodations, healthcare services 7 days a week, and an event-ready Expo Center. All this, with a shift-seasoned workforce ready round-the-clock. Get The Works. Get non-stop resources for unstoppable performance right here, right now, at MidAmerica.
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our Fortune 500 leaders and other great companies on the move.
AREA0317.indd 1
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Four decades ago, California was home to five auto
more technology and software, the nine largest automakers
assembly plants operated by the Detroit 3. After the
and three largest global auto suppliers have set up offices
NUMMI joint venture shuttered the last remaining auto
and R&D facilities in Silicon Valley. A company best known
assembly plant in California in 2010, most observers wrote
for its Internet search engine, Google, is making a significant investment in the auto industry as it develops self-driving, autonomous vehicles. It recently unveiled a prototype vehicle that it designed and
ANOTHER FACTOR THAT MAY CONTRIBUTE TO THE FUTURE GROWTH OF THE AUTO WEST CORRIDOR IS ITS PROXIMITY TO MEXICO.
built without a steering wheel, brake pedals, or an accelerator. A video of the vehicle, which can be found on YouTube, shows happy passengers going along for a ride in a driverless car. Some in the industry are speculating that Google may be the next new automaker. Among auto industry experts, opinions differ about when fully autonomous vehicles will be viable. IHS, a
off auto production in the state. But a newcomer, Tesla, has
prominent auto industry forecasting firm, predicts 54 million
successfully started up operations at the former NUMMI
autonomous vehicles will be on the road within 20 years
plant, and now employs several thousand people there.
— and that by 2050 nearly half of all vehicles will be self-
Tesla builds electric vehicles and is looking for a site for a $5
driving.
billion “giga-factory” to make batteries, which it says will
Whatever the outcome, the development of the
employ 6,500 people. As of this writing, Tesla has narrowed
autonomous vehicle is yet another indication that the auto
its search to five states, all located in the Southwest and
industry is in another, long-term disruptive phase, which
West.
will have implications on where vehicles are developed and
Silicon Valley has recently attracted significant auto-
built. New developments could lead to new opportunities.
related investment, causing one tech blog to proclaim that
States and regions once considered “out of the mix” for new
the valley is becoming “the new Detroit.” As vehicles add
auto investment might find they are back in the game. 1
Auto Alliance, 2013 report on Auto Innovation Brookings, “Metro North America: Cities & Metros as Hubs of Advanced Industries & Integrated Goods Trade” 3 One of the first to coin the term “Auto Alley” was Tom Klier, an economist with the Chicago Fed. See his book with James Rubenstein, Who Really Made Your Car? Upjohn Institute, April 2008 Canada, which abuts the northern tip of Auto Alley, is a significant auto manufacturing hub — but it has lost several plants and lags behind Mexico for new auto investment. 4 Brookings, “Metro North America: Cities & Metros as Hubs of Advanced Industries & Integrated Goods Trade” 5 Scotiabank, Global Auto Report, March 2014 6 “Economic Contribution of the Ford Michigan Assembly Plant,” Center for Automotive Research 7 “Volkswagen Growing Plants With Strong Routes in North America,” Automotive Logistics, April 2013 8 Center for Automotive Research 2
DISTANCE TO SAN LUIS POTOSI, MEXICO (a major automotive and logistics hub) Toyota, San Antonio TX GM, Arlington TX
605 miles 891 miles
GM, Kansas City MO
1,425 miles
Volkswagen, Chattanooga TN
1,580 miles
Ford, Louisville KY
1,730 miles
Chrysler, Toledo OH
1,980 miles
Ford, Wayne MI
2,060 miles
16
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••
ADVANCED
INDUSTRIES
2014
Advanced Manufacturers Utilize Incentives to Improve Financial Performance By David Leverett, Consultant Partner, HMC Global
Incentives have moved from the fringes of a project to being a part of the competitiveness equation in bringing manufacturers back to the U.S.
Boston Consulting Group, worker productivity has been growing faster in the United States than in Western Europe and China. From 2005 to 2010, worker productivity in the U.S. grew at 2 percent annually, while the major economies
By Gregory Burkart, Practice Leader,
of Western Europe averaged only 0.4 percent. This trend
Site Selection & Business Incentive Advisory Services
continued in 2011 and 2012, with U.S. productivity
Duff & Phelps, LLC
increasing 2.6 percent and 2.2 percent, respectively, while Europe averaged only 1.1 percent increases. Compared with China, U.S. workers are 2.8 times more
The U.S. economy has begun to rebound.
productive. In 2010 real output per worker was $120,000
By 2015, some experts are predicting that the manufacturing
in the U.S. versus $35,000 in China. Even though Chinese
sector could add approximately 1.1 million jobs over the
productivity is increasing, by about 8.4 percent per year,
2010 base.1
their productivity is not rising fast enough to offset annual
Three factors are driving the resurgence of U.S.
wage increases of 18 percent. The Boston Consulting Group
manufacturing. First, the U.S. dollar is weak. The favorable
estimates that by 2015, the total labor-cost savings of
exchange rate helps the U.S. become a competitive producer
manufacturing goods in China will be only 10 percent to 15
of goods and attracts foreign investment. In 2002 $1
percent when productivity-adjusted labor is considered.
purchased 133 Yen. Today, that same dollar purchases only
Third, Chinese logistics costs are rising. The total cost
100 Yen. The same is true with the Euro, despite all of the
of China’s logistics rose by 18.5 percent in the first half
troubles on the continent. Today $1 buys only 0.75 Euros
of 2011 due to rising prices of raw materials, labor, and
versus 1.14 Euros 10 years ago.
lending rates. Transport costs rose by 15.5 percent, storage
Second, the U.S. labor force is becoming more
costs soared 22.7 percent, and interest expenses jumped
competitive. As productivity rises faster than wage costs,
24 percent. At these levels, China’s logistics costs are more
unit labor costs in the U.S. are falling. According to The
than double the average in Western Europe, Japan, and the
ADVANCEDINDUSTRIES | 2014
17
United States. Moreover, when you add a risk premium for
employment, with the remaining training grant delivered
“black swan” events, the costs are even higher.
after associates have been employed for 180 days. Program
With increasing global competition, state and local governments have the tools to improve the financial strength
participants may also choose to submit their training expenses and seek a reimbursement of their costs.
of manufacturers locating within their communities. As manufacturers analyze locations in the U.S., they should
Abatements, Exemptions, and Rebates For companies investing in capital-intensive equipment
consider tapping into economic development incentives to further improve their performance.
to increase their productivity, abatements, exemptions, and rebates are particularly important ways to reduce operating costs and increase EBITDA
SIMILAR TO AN ABATEMENT, A REBATE OR REFUND REDUCES A TAX LIABILITY; HOWEVER, A COMPANY PAYS THE TAX AND LATER RECEIVES A REFUND.
(earnings before interest, taxes, depreciation, and amortization). Some professionals use these terms interchangeably; however, there is a slight difference between each one. An abatement is typically a partial reduction in a future incremental tax, whereas an exemption is usually a complete waiver of the tax for a particular activity. A good example of an abatement is Michigan’s P.A. 198, which offers 50 percent
Let’s look at some of the generally available incentives
reductions in the incremental increase in property taxes
that (1) reduce operating costs, (2) lower upfront
resulting from a project. For an exemption, Florida offers
investments, and (3) enhance productivity. Also consider a
another good example, as the state recently enacted a sales tax
case study of an automotive supplier to demonstrate how
exemption for manufacturing and processing equipment.
to think creatively about these basic incentives, combining
Similar to an abatement, a rebate or refund reduces a tax
several programs into a holistic solution that juices your
liability; however, the timing is delayed. For a rebate or refund,
financial performance even more.
a company pays the tax and then, at a later point, receives a refund. A good example is the property tax rebate in some
Training Incentives Productivity is the lynchpin to U.S. competitiveness.
North Carolina communities such as Charlotte, which offers the Business Investment Program (BIP) grants. Using this program,
If manufacturers are repatriating projects, and if highly
grant recipients must consummate the qualifying investment
automated shop floors are critical to their productivity, then
and pay all property taxes before grants are paid.
states and local communities need to offer a highly skilled
Payments or fees in lieu of tax (PILOT or FILOT) are a
workforce. A common incentive is training, which comes in
closely related incentive offered in many Southern States. To
a number of forms. For example, Louisiana has instituted the
promote manufacturing, South Carolina offers a statutory
FastStart program that replicates a private-sector consulting
five-year property tax exemption as well as four types
model. It has been recognized as one of the best in the
of FILOTs known as “Big Fee,” “Little Fee,” “Simplified
country because it provides a comprehensive, free service
Fee,” and “Super Fee.” Under a “fee,” a manufacturer
to companies including employee recruitment, screening,
may negotiate a lower assessment ratio, reducing it from
training development, and training delivery.
10.5 percent to a lower percentage but not below 6 percent
For companies that want to conduct their own training,
(4 percent is the minimum for certain projects investing
Tennessee offers an excellent program. The Tennessee
larger sums and creating jobs). In addition, a company may
FastTrack Job Training incentive is a cash grant that pays
negotiate for a fixed millage rate or adjust the millage rate
50 percent of the committed training grant after 90 days of
every five years for the period of the fee.
18
ADVANCEDINDUSTRIES
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Help With Infrastructure Improvements
each state and entitlement communities — generally larger
Since logistical costs are also critical to luring manufacturers
cities and counties — to promote the employment of low- to
from China, reliable infrastructure is important. Having good
moderate-income individuals. For projects in non-entitlement
freeway access, efficient rail yards (with access to multiple
communities, a manufacturer may approach the state to tap
carriers), and a port with efficient and predictable labor
into its statewide allocation of CDBG funds.
relations is the backbone of low logistics costs. On top of the property tax exemption and FILOT, South Carolina offers the Special Source Revenue Credit (SSRC)
Other Incentives To offset other startup costs, some states and local
that can be used to pay for infrastructure improvements. In
communities offer cash grants, favorable financing, or free
connection with the “Little” or “Big” fees, a local community
land. The most sought-after incentive is cash. Several states,
may use the SSRC as either a credit against the fee payment
such as Texas and Florida, offer grants to close deals. Texas
or float a bond and use the SSRC to pay the principal and
has the “deal-closing” Enterprise Fund that has provided
interest. In addition to infrastructure, a manufacturer
approximately $380 million for projects from FY 2004 to FY
may use the proceeds of the bond or the credit to acquire
2011. Other states (e.g., Michigan’s 21st Century Investment
or improve real property or pay for personal property
Fund) are more entrepreneurial with their incentives
dedicated to the project.
and offer equity injections, loan-interest loans, or credit
In addition to state-level grants, many local communities
enhancements to their expanding manufacturers. Another financing tool is Tax Increment Financing (TIF).
have access to the U.S. Department of Housing and Urban Development’s (HUD) Community Development Block Grant
Approximately 48 of the 50 states permit local governments
(CDBG) funds. Manufacturers may tap these grants to pay
to use some form of TIF. To start a TIF, a local community
for public infrastructure such as roads, water, and sewer lines
creates a district and within its boundaries captures the
or water treatment facilities. HUD distributes CDBG funds to
incremental increase in one or more taxes. For example, in
Silo Approach $9.2 million incentives
Holistic Approach $12.2 million incentives
33%
$12.20
$1.0
$9.2
$3.0 $4.50 vs. $5.75 IRB finance Site prep Land Roads
$1.0
$2.5
$2.5
$1.9
$1.9 $2.4
$2.4 $1.4
Sales Tax
$1.4
Property Income Tax Tax
Training
Cash Grant
Real Estate Cash Grant Lease
Training Income Property Tax Tax
The whole, in some instances, can be greater than the sum of its individual parts. Combining little know features of traditional incentives into a holistic solution often creates more value than merely focusing on individual incentives.
20
ADVANCEDINDUSTRIES
Sales Tax
ADVANCED
INDUSTRIES Pennsylvania a TIF may capture property taxes, sales/use
The statute permits a TIF to reimburse for items including
taxes, gross receipts, gross or net profits, or income taxes.
construction, demolition, remodeling, or reconstruction
Once a community captures the increment, there are
costs; new buildings or structures; acquisition of machinery
a couple options for conveying the benefit to a company.
and equipment or land; public infrastructure located outside
If authorized under statute, a TIF Authority may pay the
TIF boundaries, if the investment will directly benefit a
incremental taxes to a manufacturer to reimburse for eligible
project; financing costs, including issuance of bonds or
expenses or float a bond and use the captured taxes to
establishment of reserve funds; professional services;
repay the bond. Pennsylvania permits fairly broad uses.
administrative costs, including reasonable time spent by city
Advanced manufacturing has been defined as the use of innovative technology to improve products or processes — and that just about takes in all of today’s manufacturing. The use of these innovative processes improves products and, importantly, gets them to market faster. With that in mind, many advanced manufacturing companies are looking at certified or shovel-ready sites. This has been an advantage for MidAmerica Industrial Park, which is located just 40 miles east of Tulsa, Oklahoma, at “America’s Crossroads.” It’s where interstates 40 and 44 intersect, allowing next-day delivery to nearly a quarter of the U.S. population. At 9,000 acres, MidAmerica’s BuildNow program provides shovelready sites ranging from small parcels to larger tracts with all utilities in place. The park also owns the water and wastewater treatment systems and carries an umbrella NPDES permit to cover discharge requirements for industries. MidAmerica has been designated a “certified industrial park” by the Oklahoma Department of Commerce. Since it’s owned and operated by a public trust, red tape and fees have been eliminated and construction can begin almost immediately. Among the park’s manufacturers are companies such as American Castings, Berry Plastics, RAE Corp., and Performance Pipe. Shawn Spears, plant manager at Performance Pipe, notes, “Our MidAmerica facility is the most effective in the entire system — for production as well as delivery. Often this plant is chosen to deliver product that logically should be delivered from another facility. The MidAmerica plant is so efficient that even though product must be shipped further, it is still costeffective to produce and ship from here in Pryor, Oklahoma.” Spears also cites the “can do” attitude of the people who run the park and those who work in the support services in and around it. Dalton Babineaux, former president of American Castings, agrees: “A huge plus we did not count on when we located at the park was the opportunity to partner with other companies in the area. We are very fortunate to have such talent…as our neighbors.” Among the park’s talented companies is Google, which operates two data centers there. And, in September 2013, Google purchased the 1.4 million–square-foot former Gatorade manufacturing and distribution facility located next to its MidAmerica campus.
Shovel-Ready Sites Help Provide Speed to Market for Advanced Manufacturers
ADVANCEDINDUSTRIES | 2014
21
or authority employees; relocation costs; and reimbursement
reductions in electric, cable, water, or sewer rates or waive tap-
of prior expenditures related to allowed costs.
in fees. A good example is ReCharge New York, which has 910
In some instances, nontraditional incentives are available
MW of power allocations available for businesses that meet
that do not provide cash or tax relief but can be of significant
its program criteria. Another example is the Tennessee Valley
value. Private-sector utility companies, along with local
Authority, which offers a five-year credit against future utility
communities that own their own utility services, may grant
bills through its Valley Investment Initiative.
Creating a Holistic Solution for Manufacturers by Combining Traditional Incentives
NORTH CAROLINA IS A GREAT PLACE TO DO BUSINESS! In fact, Site Selection magazine ranked North Carolina 2nd in its annual Top Business Climate survey for 2013. So if you’re looking at North Carolina, let ElectriCities’ Economic Development team illuminate the way. We represent more than 70 public power communities across the state. To help serve you better, contact Brenda Daniels, Manager of Economic Development at 800.768.7697, ext. 6363 or bdaniels@ electricities.org for more information.
CONCORD
MONROE
International Business Park Location: 4541 Enterprise Dr., Concord, NC 28027 Building size: 88,527 s.f. expandable up to 141,000 s.f. Year built: 2011 Acreage: 12.8 acres Ceiling height: 28 feet Dock doors: 4
Monroe Corporate Center Location: 447 Goldmine Rd., Monroe, NC 28110 Building size: 102,000 s.f. Year built: 2013 Ceiling height: 30 feet clear Dock doors: 4 dock-high, 1 drive-in Flooring: Stone
In Georgia one local community combined several traditional incentives to create a unique solution for an auto supplier. It floated a tax-exempt bond, repaying the bond with lease payments and recaptured tax revenues. The community used the proceeds to construct a facility owned by its Industrial Development Authority (IDA) and leased it to the manufacturer. The lease was triple net and resulted in a savings of $1.25 per square foot, largely because the implicit cost of funds was 5.63 percent versus 12.0 percent that a private developer would have to pay. The triple net lease was a gross rate in practice because the manufacturer received property tax abatement from
22 AREA0306.indd 1
KINSTON
SHELBY
Highway 70 West Industrial Park Location: 2010 Smithfield Way, Kinston, NC 28504 Building size: 40,000 s.f. expandable to 160,000 s.f. Year built: 2009 Acreage: 9 acres with additional 8 acres available Ceiling height: 30 feet Dock doors: 2 dock-high, 1 drive-in Flooring: 10 mil vapor barrier
Foothills Commerce Center Location: 1001 Partnership Drive Shelby NC 28152 Building size: 100,000 s.f. expandable to 200,000 s.f. Year built: 2013 Ceiling height: 30 feet Rail: .56 miles Walls: Structural precast concrete 100% ESFR
CONCORD
CONCORD
Using this project as a template to spur
Concord Airport Business Park Location: 7055 Northwinds Dr., Concord, NC 28027 Building size: 150,000 s.f. Year built: under construction Ceiling height: 32 feet clear Dock doors: 20-30 side loading Flooring: 6 inch concrete Adjacent to Concord Regional Airport
Concord Airport Business Park Location: 7035 Northwinds Dr., Concord, NC 28027 Building size: 400,000 s.f. Year built: under construction Ceiling height: 36 feet Dock doors: 40-80 side loading Flooring: 6 inch concrete Adjacent to Concord Regional Airport
other development, the community today
the taxing authorities, while the IDA paid for the common area maintenance and the insurance on the structure. The IDA split a $1 million OneGeorgia Authority cash grant with the manufacturer; $500,000 for tenant improvements and $500,000 for site grading and infrastructure development.
touts its economic success by attracting over $3 billion of new capital investment and having created 20,000 jobs within the last 10 years. 1
••
“US Manufacturing Nears the Tipping Point — Which Industries, Why and How Much?” bcg.perspectives, The Boston Consulting Group (Sirkin, Zinser, Hohner and Rose, 3/22/12)
ADVANCEDINDUSTRIES 24/07/14 7:47 PM
ADVANCED
INDUSTRIES
2014
Leads to Industry Investment
Direct investment in North America is allowing European automotive companies to distinguish themselves from their competitors.
New fuel economy and greenhouse gas regulations are leading to the demand for new materials as well as new manufacturing and design methods to lightweight vehicles.
Courtesy: BMW Press Club
Automotive Lightweighting SGL Automotive Carbon Fibers production, Moses Lake, Washington
economy of passenger cars and light-duty trucks. In 2009, new national fuel economy and greenhouse gas (GHG) standards for vehicles were proposed in the U.S. These new regulations harmonize the National Highway Traffic Safety Administration (NHTSA) CAFE standards and the U.S. Environmental Protection Agency (EPA) GHG regulations. NHTSA is
By Joshua Cregger, Project Manager;
tasked with regulating fuel economy and EPA is tasked with
and Greg Schroeder, Assistant Director,
regulating GHG emissions — though they are closely related,
Manufacturing, Engineering, & Technology:
meeting one regulation does not guarantee meeting the other
Center for Automotive Research
regulation. With harmonization, automakers will be able to satisfy both sets of regulations.
Federal government regulations in the
The first phase of the regulations, which covers vehicle
United States require that the portfolio of vehicles sold each
model years 2012 through 2016, will increase the combined
model year become increasingly fuel-efficient over time.
required CAFE for light-duty vehicles (trucks and passenger
These regulations facilitate the use of various fuel economy-
cars) to an estimated 35.5 miles per gallon (mpg) by the end
improving technologies, such as alternative fuels, electrification,
of that period. This level of fuel economy is a substantial
advanced powertrain, energy-efficient peripherals,
increase from the previous mandates, which in 2011 required
aerodynamic improvements, and vehicle lightweighting. Let’s
a combined light-duty vehicle CAFE of 24.1 mpg. Similarly,
examine the national regulations, automotive lightweighting
the second phase, which covers vehicle model years 2017
technologies, and related capital investment needs.
through 2025, will increase the CAFE requirement for lightduty vehicles to an estimated 54.5 mpg by the end of that
Fuel Economy and Greenhouse Gas Regulation Corporate Average Fuel Economy (CAFE) regulations were first enacted by Congress in 1975 as a policy to increase fuel
period. The national fuel economy and GHG standards have already had an effect on the design of new vehicles and
ADVANCEDINDUSTRIES | 2014
23
are poised to have an even greater influence on vehicle innovation in the near future. For the first time, the
Automotive Lightweighting Technologies Vehicle weight is a considerable factor in vehicle fuel
combined CAFE for passenger cars and light duty-trucks
economy; it is estimated that a 10 percent reduction in vehicle
exceeds 30 mpg. (See chart on page 27.)
mass can result in a fuel economy improvement of up to 5
The U.S. auto industry is the world’s third-largest, trailing only powerhouses China and Japan. Since the industry’s collapse in 2008, the U.S. economy has struggled; however, recent industry trends seem to indicate the $34 billion cash infusion of 2008 to two of the Big 3 industry players (GM and Chrysler) is beginning to have a broad and positive impact on the U.S. economy. Gains in the industry are occurring in places like North Carolina, which ranks 10th among all states in total automotive cluster employment, even though it doesn’t have a single auto assembly plant: 34 of the top 150 North American OEM parts suppliers have a facility in the state. Its prime East Coast location, a nationally-acclaimed STEM education initiative, engineering programs at two universities, a nearby independent auto test track, and an available mega-site are a few reasons why nearly two dozen automotive suppliers call eastern North Carolina home, and several have announced plans to expand over the past few years.
Is the U.S. Automotive Sector Really Recovering?
Expanding OEMs Among these, Keihin Carolina System Technology (KCST) of Tarboro expanded in 2011, creating 50 new jobs and investing more than $13 million to expand its 370-employee facility that manufactures engine control units and electronic assemblies for Honda, Honda Power Sports, and Acura. In nearby Goldsboro, Cooper Standard, a leading supplier of body sealing, fuel, brake and emissions, thermal management, and antivibration systems expanded its body and chassis facility to accommodate new products and programs. The $17.9 million expansion created 137 new jobs. Carolina Technical Plastics (CTP), a plastic injection molding plant in New Bern, N.C., added 25 employees in 2011 and made substantial investments into its plant, ensuring its ability to meet growing consumer demand. Due to its strict quality standards and superior technical abilities, CTP has been awarded the opportunity to manufacturer 18 new products for The Brose Group, production that had been housed in Mexico. And just last year, ASMO, a Japanese-owned manufacturer of front wiper motor linkages, arms, and blades as well as radiator fan motors announced plans to create 200 new jobs and invest at least $100 million at its Greenville, N.C., facility by the end of 2016. If short-term lessons from major auto manufacturers and a diverse range of suppliers, like those in eastern North Carolina, are any indication of the future, the U.S. automotive industry and the U.S. economy have a genuine basis for confidence.
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ADVANCEDINDUSTRIES
Numbers don’t lie. Iowa has one of the nation’s lowest costs of doing business. We’re a right-to-work state with a cost of living that’s below the national average. Ours is an environment built for businesses to prosper. It’s why our advanced manufacturing exports are up 179%. Why the growth of our bioscience companies has far outpaced the nation. Why we’re home to over 94,000 of the nation’s most savvy finance and insurance pros. Why our diverse economy is third in the nation in job growth. Dig more into the numbers at iowaeconomicdevelopment.com. With numbers like these, no wonder we’re “Iowa Nice”. iowaeconomicdevelopment.com
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to 7 percent.1 Though achieving greater fuel economy is a
materials used to create vehicles. During that time period, there
main driver for many lightweighting material and process
was increased use of advanced high-strength steel (AHSS),
technologies, there are other benefits. Weight reduction is also
composites, and aluminum, as well as a decrease in the use of
appealing to automakers because it tends to increase other
iron castings and regular (mild) steel. As automakers continue
performance factors valued by consumers: ride and handling,
to implement lightweighting strategies, these material trends
braking, and acceleration. Another key motivation for using
will persist and may even accelerate.
new and more highly engineered materials is to improve vehicle safety and crashworthiness.
Government and industry are heavily investing to support lightweighting. The states of Michigan and Ohio have leading research efforts in materials lightweighting. The recently announced American Lightweight Materials
LIGHTWEIGHT MATERIALS AND NEW FORMING AND ADVANCED JOINING TECHNOLOGIES WILL SIGNIFICANTLY REDUCE THE WEIGHT OF NEW VEHICLES.
Manufacturing Innovation Institute (ALMMII), a public-private partnership and a National Network for Manufacturing Innovation (NNMI) institute, will have its main office in Detroit, Michigan, and will conduct significant activities in Columbus, Ohio.2 The federal government’s $70 million contribution to ALMMII will be matched with at least $78 million in private funds. ALMMII will focus on the use of lightweight metals in transportation applications.
By switching to lightweighting materials — such as high-
In February 2014, the federal government announced that
strength steel, aluminum, magnesium, and composites — and
it would be accepting applications for the creation of another
adopting new forming (e.g., hot stamping and high-integrity
relevant NNMI institute, which would be focused on advanced
casting) and advanced joining (e.g., adhesives, friction stir welding,
composites manufacturing (primarily focused on carbon fiber
fasteners, and laser welding) technologies, automakers will be
and glass fiber reinforced composites).3 As with ALMMII, the
able to significantly reduce the weight of new vehicles. By 2025,
federal government will support the institute with $70 million
automakers are expected to reduce the average vehicle mass by 10
to be matched with private funds.
percent or greater versus their 2010 counterparts. From 1995 to 2010, there were substantial changes in the
Advanced High-Strength Steel (AHSS) — New AHSS implementations are developed every year. By using highstrength steel over mild steel, companies can create thinner components (decreasing vehicle weight) while achieving the same crash performance, although the adoption of highstrength steel poses some challenges to the manufacturing and assembly processes. Third-generation steels are being developed that are ultra-high strength and more formable than
Courtesy BMW Press Club
other AHSS. Unlike some AHSS materials, third-generation steels do not require a special forming process, such as hot stamping, and are able be cold-formed like mild steel, thus using much of the existing steel-based infrastructure in the industry. Third-generation steels are currently under development, but could be used in vehicles in the near future. BMW i production at Moses Lake: 120 carbon fiber tows right before they get wound on spools
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ADVANCEDINDUSTRIES
These third-generation steels are seen as a threat to other lightweight materials, such as aluminum, due to their potential
ADVANCED
INDUSTRIES to provide lightweighting with very little cost penalty.
Worldwide, 18 percent of new vehicles will have all aluminum bodies by 2025, up from less than 1 percent of new vehicles
Aluminum — Manufacturers and material providers are also
today.6 In the U.S., high-volume pickup trucks are expected to
working on new alloys and joining technologies to increase the
lead this transformation to aluminum.
use of aluminum in vehicles. Replacing steel with aluminum
Responding to increased demand for aluminum, suppliers
can help reduce vehicle weight by 35–45 percent. Aluminum
are working to increase capacity. Alcoa, one of the world’s largest
is already a dominant material in powertrain, heat exchangers,
producers of aluminum, is investing $300 million to build a new
and road wheels. It is also an emerging material for vehicle
production line in Davenport, Iowa, and $275 million to add more
bodies (e.g., fenders and roofs) and closures (e.g., hoods, doors,
capacity at a plant in Alcoa, Tennessee.7 Novelis, another producer
and trunk/gate). In 2012, 34 percent of hoods on new vehicles
of rolled aluminum, has invested $120 million to add new capacity
were aluminum, and by 2015 it is expected that 48 percent of
at a plant in Oswego, New York. Other companies such as
hoods will be made from aluminum.4 In 2012, the average new
Constellium NV, Aleris Corp., and Wise Metals Group are looking
vehicle was 9.0 percent aluminum; aluminum in vehicles is
into making U.S. investments.
expected to increase to 10.4 percent by 2015. In January 2014, Ford unveiled its 2015 F-150, which is
Composites — Composites also have great potential for a
the first high-volume aluminum-bodied vehicle to go into
variety of applications, as they can be customized by varying
production. The new model is 700 pounds lighter than the
the mix of polymers and reinforcement fibers to meet the
outgoing F-150. Ford is investing $359 million to retool the
specifications of particular components. Advancements in
Dearborn Rouge River plant body shop, paint shop, and final
colors, feel (soft skin feel), resistance to ultraviolet rays, and
assembly to accommodate the change. Following Ford’s lead,
proper management of thermal expansion properties have
other automakers are considering introducing aluminum-
enabled the use of composites for many components both
bodied vehicles.5 According to a recent report from Ducker
inside and outside the vehicle (fascias, lids, air foils, knobs, and
Source: NHTSA 2014
Corporate Average Fuel Economy Summary by Year, 1978-2013
ADVANCEDINDUSTRIES | 2014
27
other components). A significant portion of the interior seating
(e.g., mold flow analysis, formability, and crash simulations).
and trim involves plastic, rubber, and composites. Automakers have examined using composite body panels
Economic Development Opportunities Opportunities to attract investment abound in the current
in their vehicles and, with its excellent strength-to-weight ratio, there has been particular interest in using carbon-fiber–
market. To meet fuel economy and GHG emissions regulations,
reinforced composites in vehicle bodies. Such materials have
automakers will continue to change the material makeup of
already been used in Formula 1 racecars, supercars (e.g.,
their products. The inclusion of these materials in vehicles will
Bugatti Veyron), and airplanes (e.g., Boeing 787).
require new investments on the assembly line, as automakers retool and recalibrate their facilities to handle new materials. Meanwhile, automotive suppliers, in an
AUTOMAKERS WILL RETOOL AND RECALIBRATE THEIR FACILITIES IN ORDER TO HANDLE THE NEW LIGHTWEIGHTING MATERIALS.
attempt to keep up with higher demand from the automakers, will continue to expand their existing plants as well as building entirely new facilities, just as BMW’s demand for carbon fiber and Ford’s demand for aluminum have already led to new investments in U.S. plants supplying those materials. Though lightweighting is creating some new opportunities in the material supplier space, there are many more opportunities in the overall material
Carbon fiber-reinforced composites are also used in the
supply chain. As materials change, all the parts of the supply
BMW i3, which was released in November 2013, and in the
chain must also change. For instance, the areas of design
BMW i8, which was released in June 2014. The raw material
engineering, prototype development, tooling, fabrication, and
is produced in Japan and sent to SGL Automotive Carbon
joining will see many opportunities as automakers continue
Fibers (a joint venture plant owned by BMW and SGL Group)
the push for vehicle lightweighting. Economic developers
in Moses Lake, Washington, where it is converted into carbon
will continue to focus on assisting existing companies that are
fiber strands. The carbon fiber strands are sent to Germany,
transitioning to work with new materials that require more
where they are woven and processed into automotive parts
complex engineering, enhanced skills, and R&D support.
••
before being shipped to the BMW factory in Leipzig for final assembly. In May 2014, SGL Automotive Carbon Fibers announced that, due to the high automotive demand for carbon fiber, the Moses Lake plant would undergo a $200 million expansion, tripling its capacity and making it the largest carbon fiber plant in the world.8 Forming, Joining, and Modeling — In addition to the materials themselves, much of the advancement in the automotive materials relates to manufacturing and design methods. Some of the biggest developments in materials technology involve application technologies such as joining (e.g., resistance spot welding, fasteners, adhesives, weld bond adhesive, laser welding) and fabrication (hot forming, thin-wall die casting, composite molds, and aluminum forming) techniques. Material assessment is also important, and computer-aided engineering (CAE) is used to model new materials
28
ADVANCEDINDUSTRIES
The Center for Automotive Research (CAR) is a nonprofit organization based in Ann Arbor, Michigan, with more than 40 years of experience in leading industry research and events, as well as developing new methodologies, forecasting industry trends, advising on public policy, and sponsoring multi-stakeholder communication forums. 1
NHTSA. (2012). “Corporate Average Fuel Economy for MY 2017-MY 2025 Passenger Cars and Light Trucks.” National Highway Transportation Safety Administration, U.S. Department of Transportation. Pages 435-436. August 2012. 2 ALMMII. (2014). American Lightweight Materials Manufacturing Innovation Institute (almmii.org). 3 DOE. (2014) “Clean Energy Manufacturing Innovation Institute for Composites Materials and Structures.” Advanced Manufacturing Office, Energy Efficiency & Renewable Energy, U.S. Department of Energy. February 25, 2014. 4 Ducker. (2014). “2015 North American Light Vehicle Aluminum Content Study.” Ducker Worldwide for DriveAluminum, the Aluminum Association’s Aluminum Transportation Group. June 2014. 5 Priddle, Alisa. (2014). “F-150 Is Catalyst as Aluminum Goes Mainstream in Auto Industry.” Detroit Free Press. July 13, 2014. 6 Ducker. (2014). “2015 North American Light Vehicle Aluminum Content Study.” Ducker Worldwide for DriveAluminum, the Aluminum Association’s Aluminum Transportation Group. June 2014. 7 Martell, Allison and Mason, Josephine. (2014). “Alcoa and Novelis Steel For Next Test in Aluminum Auto Race.” Reuters. June 19, 2014. 8 BMW. (2014). “BMW Group and SGL Group to Triple Production Capacities at Moses Lake Carbon Fiber Plant.” BMW Group. May 9, 2014.
ADVANCED
INDUSTRIES
2014
European Automakers Look to North America
Direct investment in North America is allowing European automotive companies to distinguish themselves from their competitors.
By David Leverett, Consultant Partner, HMC Global
Direct investment in North America is allowing European automotive companies to distinguish themselves from their competitors. By David Leverett, Consultant Partner, HMC Global
These risks are particularly acute for the closely integrated and infrastructure-sensitive production chains of the European automotive industry. Long-term strategic alliances with suppliers, an environment supportive of active product development, and heavy dependence on a broadly educated and highly engaged workforce are all defining elements of the European approach to automotive
The recent resurgence in direct investment
manufacturing. Duplicating (or even just approximating)
in North America by European automotive manufacturers
this productive but complex relationship outside of
is hardly surprising. Continued flat sales projections
Europe requires educational, legal, and labor structures
and production inflexibility in Europe have forced the
that simply do not exist in many developing markets.
industry outward to livelier markets. China and other large
European manufacturers have discovered over the last
developing regions are obvious targets given their dramatic
few years (often the hard way) that basing production site
recent economic expansion and continued expectations of
decisions primarily on projected host-market growth and/
strong increases in transport demand and discretionary
or low production costs is unlikely to result in creating the
spending. As European automotive brands are well regarded
manufacturing environment they require.
in these markets, they certainly have the potential to generate attractive margins that can no longer be achieved at home. But these fast-growing, younger markets bring
Some Options In short, the traditional model of overseas production
with them certain risks. Political uncertainty, currency
siting, based primarily on chasing market growth and/or
instability, inconsistent regulatory environments, weak legal
low production costs, has proved too unstable for European
protections, and unreliable distribution infrastructures are
automotive firms defined by their more long-term strengths of
just some of the issues that can quickly turn overseas direct
branding and product innovation. Production investments in
investment into a loss-making affair.
high-growth markets with underdeveloped legal and business
ADVANCEDINDUSTRIES | 2014
29
infrastructures have all too often resulted in grand profits being marginalized by unpredictable “local costs of doing business,”
years as an important factor
Key Attractors for European Automotive FDI in the USA* 83%
accompanying chart.
75% 58%
applied regulations (both
Even just 10 years ago 51%
and insufficient control of production quality. And for most European manufacturers, retreating back
that list, for most companies,
46% 34%
in staffing and trade), lack ownership and profit rules,
Market Potential
selection. The top seven results are illustrated in the
95%
such as inconsistently
of IP protection, restrictive
in their production site
Trainable Immediate Academic Export Forwardand Vertical and Support Infrastructure Thinking Adaptive Horizontal System Tax Workforce Support for R&D Environment Infrastructure
Lower Costs
* % based on times included in the top-3 motivations for U.S. FDI, as publicly announced by European automotive firms and their representatives (2010–2013)
to solely producing at home
would have had only two elements: market potential and lower cost. And thus, most of the European automotive firms that chose to develop offshore production were making their calculations based on
is simply not an option. Relatively high production costs and
similar assumptions and weightings. That is not to claim
general rigidity in the local manufacturing infrastructure make
that the members of Europe’s automotive industry have
it impossible for European-based firms to competitively cater
operated as a monolithic entity, pursuing identical objectives
to the world’s demand for their products by export alone. This
and utilizing identical methodologies. But, historically,
condition is further exacerbated by the increased tendency
these firms have faced relatively little latitude in production
of many developing countries with high market potential
mechanisms in their heavily regulated home markets. And
to actively discourage imports in what they see as critical or
until recently, overseas production siting decisions by these
lucrative manufacturing industries.
firms have been dominated by the rather straightforward
But in North America, European automotive firms find
combination of seeking high regional growth and low
a business and legal environment that has maturity and
production costs. Thus, facing very similar circumstances,
stability equal to their own, but with greater operational
these firms unsurprisingly often pursued very similar paths.
flexibility and projected market growth. And the advanced infrastructural support in much of North America encourages many European automotive firms to employ
Defining Choices But firms now recognize the importance of these broader
a more complex mix of tangible and intangible factors
metrics to the success of their overseas productions and are
when evaluating potential production sites. Thus, more
actively tailoring the mix to better suit their increasingly
value can be placed on production factors that promote
divergent strategies. Where Fiat may place greater value on
long-term presence, such as the ability to maintain a skilled
buying into traditional U.S. industry infrastructure and local
and adaptable workforce, access to a modern support and
brands, BMW finds the export links supporting its South
distribution infrastructure, strong legal protections, R&D
Carolina operations vital to the plant’s success and its overall
support, a stable political and economic environment, and
global strategy. Mahle places a heavy weighting on good access
responsive capital markets.
to a trainable and adaptive workforce, while ContiTech’s siting
A recent report commissioned by HMC Global, a
strategy focuses on supporting both its automotive and non-
leading foreign direct investment consultancy, ranked the
automotive segments. These firms, their objectives, and even
key attractors for European automotive firms choosing
their methods can no longer be painted in a single hue. They
to produce in North America. This information is based
are each distilling the factors that have made their companies
on the times each indicator was publicly announced by
successful and looking for ways to constructively introduce
manufacturers and their representatives over the last three
those elements into their overseas production.
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ADVANCEDINDUSTRIES
MEXICO’S CENTER FOR BUSINESS & INDUSTRY Build to Suit Facilities for Lease or Sale / Land for Sale / Design Build
Within the past eight years, 57 companies — including more than 45 international firms — have set up shop in CDR, the largest private industrial park in the state of Guanajuato • Premium utility infrastructure with available, expandable sites • More than 700,000 people live within a 15-mile radius, providing a young, qualified workforce at a competitive cost • A public institution (CONALEP) can train technicians on-site • 17 miles from the GM plant and 21 miles from the VW engines plant in Silao • 18 miles from the Mazda plant in Salamanca • 42.5 miles from the Honda plant in Celaya • Within 6 hours from east and west coast seaports and 9 hours from the U.S. border
Located in Abasolo, also in the state of Guanajuato, Marabis Abasolo is only 40 minutes away from CDR, with the same world-class infrastructure that international companies are looking for to run a successful industrial manufacturing operation
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And it is the distributed nature of business governance
or borders. With recent announcements about BMW and
in North America that is enabling European firms to
Daimler beginning production in Mexico, soon all European
create a more tailored fit for their specific production site
automakers producing in North America will have major
requirements. Automotive manufacturing in North America
production sites in at least two of the region’s three nations.
has now expanded well beyond the traditional bases in the
Component suppliers are also following the trend.
Midwest states, with Canada, Mexico, and all continental
European automotive firms are openly embracing the
U.S. regions seeing growth in greenfield investment over
wide range of siting choices available in North America and
the last few years. Each nation, each state, even each city
carefully building production capability that suits multiple
or county can offer different approaches and advantages,
strategic objectives beyond simply boosting the bottom line.
giving interested firms the opportunity to better match a
This approach is doing more than just helping these companies
location to its operating objectives, structure, and practices.
improve the probability of success in their overseas direct
This process is further advancing in complexity as firms
investments. It is providing them with new opportunities to
build broad integrated production networks across multiple
fundamentally distinguish themselves from their competitors
states and nations in the region. They are increasingly
— not just at the marketing and branding level, but also at the
relying on the excellent communications and transport
very heart of any manufacturing firm, i.e., in production and
infrastructures in North America to pick and choose the best
development. Firms that have a clear understanding of this
mix of sites for the various elements of the production chain
will be well positioned to make the most of the automotive
— while showing less and less regard for distance and/
production environments developing in North America. ••
SPONSORS DIRECTORY ALABAMA C3 AIDT The Alabama Robotic Technology Park is Alabama’s premier training center tasked with providing highly advanced training specifically for robotics and automation technologies. The RTP consists of three individual training facilities — each targeted to a specific industry need: The Robotics Maintenance Center, the Advanced Technology Research and Development Center, and the Integration, Entrepreneurial and Paint/Dispense Training Center. Rick Maroney Alabama Robotic Technology Park 6505 US Hwy 31, Tanner, Al 35671 256-642-2600 info@alabamartp.org • www.alabamartp.org
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IOWA 25 Iowa Economic Development Authority (IEDA) The Iowa Economic Development Authority (IEDA) is a publicprivate partnership endorsed by the Governor and Iowa legislature. We focus on educating start-up companies and helping existing companies become more innovative while retaining and attracting companies that are creating jobs. Our role is to make Iowa a great place for business. Debi V. Durham, Director Iowa Economic Development Authority 200 E. Grand Ave. Des Moines, IA 50309 515-725-3000 • 515-725-3010 business@iowa.gov http://www.iowaeconomicdevelopment.com/
NORTH CAROLINA 22 ElectriCities of North Carolina, Inc. ElectriCities is a not-for-profit government service organization representing 70+ NC cities and universities that own electric distribution systems. A site selection professional can receive detailed reports from our extensive databases on dozens of NC sites, from mountains to coast within 48 hours of a request. We’re your turnkey services partner. Brenda Daniels, Manager, Economic Development ElectriCities of North Carolina, Inc. 1427 Meadow Wood Blvd. Raleigh, NC 27604 1-800-768-7697 ext. 6363 bdaniels@electricities.org • www.electricities.com
KENTUCKY C4 Kentucky Cabinet for Economic Development Kentucky is open for business. Whether your company is looking for an ideal location, competitive utility rates, a highly skilled labor pool, or flexible workforce development programs, Kentucky is the choice for companies to do business. Explore the many advantages of the Commonwealth and you’ll find Kentucky will go the extra mile to exceed your needs. Mandy Lambert, Commissioner, Business Development Kentucky Cabinet for Economic Development Old Capital Annex • 300 W. Broadway Frankfort, KY 40601 Mandy.Lambert@ky.gov • www.ThinkKentucky.com
7 NCEast Alliance The NCEast Alliance is a regional economic development corporation serving approximately one million residents within several small metropolitan and micropolitan areas from the fringe of the Research Triangle to the Atlantic Coast. The Alliance provides community capacity building and provides companies with location and expansion assistance including identification of available sites and buildings. Kathy Howard, Vice President, Client & Workforce Development NCEast Alliance 3802 Hwy. NC 58 N. • Kinston, NC 28504 252-522-2400 • Fax: 252-523-9017 info@nceast.org • www.nceast.org
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ADVANCEDINDUSTRIES
OHIO 19 JobsOhio Ohio is the only state in the nation now positioned to capitalize on the economic game-changers that experts say will drive future prosperity in the global marketplace. The catalysts, including shale energy, big data, advanced manufacturing, talent, and infrastructure, are already making a difference for category-leading national and international businesses that now call Ohio home. JobsOhio 614-224-6446 contact@jobsohio.com www.jobs-ohio.com OKLAHOMA 15 MidAmerica Industrial Park MidAmerica, Oklahoma’s largest industrial park, is located at “America’s Crossroads” and offers a robust infrastructure, shovel-ready sites, exceptional incentives, and three on-site training centers at no cost. Home to E.I. duPont, Siemens, Google, and other Fortune 500 companies. Ted Allison, CEcD, Director of Economic Development MidAmerica Industrial Park P.O. Box 945 • Pryor Creek, OK 74362-0945 918-825-3500 or 888-627-3500 tedallison@maip.com www.maip.com MEXICO 31 Castro del Rio TechnoIndustrial Park To date, 57 companies have located in Parque TechnoIndustrial Castro del Rio (CDR) in the state of Guanajuato, providing a young, quality work force with on-site training, a premium utility infrastructure, and close proximity to automotive assembly and supplier plants. Marabis Abasolo, featuring same quality infrastructure, is only 40 minutes away from CDR. Castro del Rio TechnoIndustrial Park Carretera Federal Km. 125+250 Tramo Irapuato-Silao Río Danubio No. 845, C.P. 36810 Irapuato, Guanajuato, México 52 462 625 4968 info@castrodelrio.com.mx www.castrodelrio.com.mx
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