Area Development Q2 Issue 2022 by Area Development

AN AUTOMATED FUTURE P14 Taking action now

GLOBAL MARKET VOLATILITY P26 Five ways to manage

LIFE SCIENCE INNOVATION P87 Design sets the stage

AREADEVELOPMENT SITE

AND

FACILITY

PLANNING

Q2/2022

THE BEST YEAR EVER?

2021 Corporations invested billions of dollars and added a record 6.4 million jobs in 2021 despite the ongoing pandemic and supply chain challenges.

17TH ANNUAL

SHOVEL AWARDS

P30

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Amazon HQ�, Arlington

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CONTENTS

30 Cover Story 17th Annual

GOLD&SILVER SHOVEL AWARDS

Area Development’s annual Shovel Awards highlight the nation’s swift post-pandemic economic recovery in 2021 with many projects being initiated that represent billions of dollars in investment and thousands of new jobs.

features

14 Taking Action Now

84 Retrofitting Office Space to Attract Life Sciences Companies

for An Increasingly Automated Future

The jobs created by automation will ultimately exceed those that are lost, but a federal program is needed to successfully navigate the transformation of the labor force.

26 Five Ways to Manage

In the life sciences industry, business is booming; here’s how office buildings can satisfy the sector’s unflagging demand for space.

A lack of space and developable land as well as power constraints will continue to drive data center site selection, with sustainability considerations and emerging technologies becoming increasingly important factors.

To survive and advance in manufacturing, it’s critical to have future-proof, flexible facilities.

87 Innovative and

20 The Energy Transition:

Moving Toward Renewable and CarbonNeutral Solutions The massive shift from fossil fuels to cleaner-sourced energy is not a simple or linear path forward.

Collaborative Design Sets the Stage for Life Science Innovation

81 Foreign-Trade Zones:

The Best, Zero-Cost Incentive for Your Business

FTZs can bring in millions of dollars in additional profits and cost very little to maintain relative to the investment.

90 Trends in Data Center Site Selection

Global Market Volatility

Life science labs need to accommodate present and future equipment needs and, most importantly, collaboration among the scientists and others who work there.

96 Rail Gains Advantage Amidst Supply Chain Snarls Rail lines, which link international cargo gateways to U.S. population centers, offer companies a costeffective, sustainable transportation option.

Area Development® Site & Facility Planning (USPS 345-510) is published four times per year (Q1, Q2, Q3, and Q4) at Lancaster, PA, by Halcyon Business Publications, Inc., 30 Jericho Executive Plaza– Ste 400W Jericho, NY 11753. Periodicals postage paid at Jericho, NY, and additional offices. Single copies, $20. Yearly subscription U.S. & Canada, $75; foreign, $95.

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Volume 57 | Number 2 Q2/2022

“

Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.

Milton Friedman (1912–2006),

”

American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences.

101 The Evolution of the

EXTRA EXTRA

Megasite

99 Putting Your Best Foot

As the need for nextgeneration megasites continues to grow, economic development professionals are helping end-users reimagine the site selection and site preparedness process.

Forward

Make sure the media gets it right when reporting on your company’s incentives.

departments

4 Editor’s Note

A re We Ready for 2022’s Economic Stall from 2021’s Massive Growth?

6 In Focus

The Impact of E-Commerce on Industrial Real Estate

8 In Focus

Safety First: The Benefits

of Construction Robotics

10 Front Line

Performing Physical Tasks Remotely

12 First Person

Evan van Hook, Chief Sustainability Officer, Honeywell

104 Ad Index/Web Directory

exclusive online content • In Focus: Demand for Industrial Land Surges

INVESTMENT REPORT

LOUISIANA:

Global Challenges Create Opportunities Louisiana has stepped up the development of environmentally friendly technologies, water management, and coastal protection, while also tapping its strong resources in healthcare, life sciences, aeronautics, and traditional economic sectors.

• Supply Chain Disruptions and Construction Industry Transformation • How Industrial Companies Can Avoid Security Breaches • People Power: How Talent Data Is Advancing Location-Based Decisions • How to Effectively Hire During the New Normal • Tennessee’s Economy Incredibly Resilient • An Electric Future Drives Kentucky’s Automotive Growth

POSTMASTER: Send address changes to Area Development, Circulation Department, 30 Jericho Executive Plaza– Ste 400W Jericho, NY 11753. Subscribers requesting address changes must provide both old and new addresses. © Copyright 2022 by Area Development® magazine. ISSN: 1048-6534. Printed in the U.S.A. Area Development® is a registered trademark of Halcyon Business Publications, Inc.

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Q2/2022

EDITORS NOTE Are We Ready for 2022’s Economic Stall from 2021’s Massive Growth?

ast year’s economic recovery from the pandemic-induced job losses of 2020 was surprisingly swift, as companies invested billions of dollars and added a record 6.4 million jobs. After nearing 15 percent in early 2020, U.S. unemployment registered just 3.6 percent in April 2022.

www.areadevelopment.com

2022 Editorial Advisory Board Josh Bays, Principal site selection group

Marc Beauchamp President & CEO cai global group

As the nation moves toward renewable energy and carbon-neutral solutions, one economic sector that should see these billions invested and thousands of jobs created is the automotive industry, specifically for the production of electric vehicles and the batteries to run them. Many of these projects are highlighted in this issue’s 17th Annual Shovel Awards report. Also highlighted are multi-billiondollar projects that will help to eventually alleviate the shortage of chips used in the production of these vehicles, as well as many of the other advanced technology products we use today.

H. Robert Boehringer III, Managing Director

In light of the pandemic, the life sciences sector is also expecting to see unprecedented gains in investment and employment, although companies in the biotech, pharma, and medical equipment industries are challenged by a lack of suitable space for expansion. Innovative and collaborative facilities design — as discussed in this issue — is, however, setting the stage for growth.

Economic Development Leader burns & mcdonnell

Global Location and Expansion Services

kpmg

Brian Corde Managing Partner atlas insight

Kate Crowley Principal baker tilly capital

Dennis Cuneo Owner dc strategic advisors

Courtney Dunbar Site Selection & Amy Gerber Executive Managing Director Business Incentives Practice cushman & wakefield Stephen Gray CEO gray

The nation’s energy transition is also discussed in this issue. According to Graycor’s Brian Gallagher, this is not “a simple or linear path forward,” but progress can be made if all stakeholders — businesses, utilities, developers, technical providers, and others — work together.

David Hickey Managing Director

Automation will also play a key role in fulfilling labor force needs. As McGuire Sponsel’s Jacob Everett says, “The robots are coming,” and actually, “some of them are already here.” As the speed of technology rapidly increases, Everett believes a government program is necessary to help companies manage this transition and upskill their workforces.

Scott Kupperman Founder

Needless to say, we’re not out of the woods yet when it comes to new waves of COVID-19 and its cascading effects of supply chain snarls, exacerbated by the war in Ukraine, and soaring inflation that is being met with rising interest rates. However, according to analysts, the U.S. economy remains strong and obstacles to future growth can be managed. We can only hope that government as well as industry is up for the challenge as 2022 appears to be setting us up for an economic stall.

Matthew R. Powers Managing Director

hickey & associates

Anthony Johnson President Industrial Business Unit clayco kupperman location solutions

Bradley Migdal Executive Managing Director Business Incentives Practice cushman & wakefield

Daniel Oney Managing Director newmark

Industrial Real Estate & EVP Retail/E-Commerce

jll

Carolyn Salzer Director Americas Head of Logistics & Industrial Research cushman & wakefield Chris Schwinden Senior Vice President site selection group

Eric Stavriotis Senior Vice President Advisory & Transaction Services cbre

Editor

Steven Tozier US-East Region Credit & Incentives Leader ey

Chris Volney Senior Director

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Publisher Dennis J. Shea dshea@areadevelopment.com

Editor Geraldine Gambale editor@areadevelopment.com

Production Manager Jessica Whitebook jessica@areadevelopment.com

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Staff and Contributing Editors Mark Crawford Steve Kaelble Dan Emerson Karen Thuermer Mark Schantz

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President Dennis J. Shea

Dan White Director Government Consulting

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BUILDING EXCELLENCE IN ABILENE, TEXAS

The Development Corporation of Abilene celebrates the 2022 Gold Shovel awarded to Texas. Abilene welcomes Great Lakes Cheese to Texas!

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IN FOCUS The Impact of E-Commerce on Industrial Real Estate

BY CAROLYN SALZER, Director, Logistics & Industrial Services,

CUSHMAN & WAKEFIELD As head of Industrial Research for the Americas, Carolyn Salzer leads the team and contributes to the coordination and production of local, regional, national, and corporate research analyses for 80 markets within the Americas.

E-commerce’s impact on the U.S. industrial market was notable during the extended expansion cycle from 2010 to early 2020. During the pandemic recession, it became even more obvious. E-commerce companies accounted for 28.2 percent of all industrial absorption from 2016 through 2019, and that number increased even more to approximately 40 percent from 2020 through 2021 as COVID-19 shifted consumer shopping patterns to more frequent online purchasing. In 2020, a record 97.5 million square feet (msf) was leased directly by e-commerce occupiers, while another 77.1 msf was transacted throughout 2021. These totals are even more robust when 3PLs, who directly support online retailers, are included. So far in 2022 e-commerce and 3PL companies have counted for over one third of total leasing. 6

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Over the last two years, the sweet spot for e-commerce demand has been facilities ranging from 500,000 sf to 1.0 msf as the appetite for large distribution centers persists. Meanwhile, demand for warehouses greater than 1.0 msf fell by 23.7 percent from Q4 2020 to Q4 2021 due in part to the dwindling options for spaces of this size. In the first quarter of 2022, the market saw 61 leases over 500,000 sf; 25 of those leases were ecommerce related. In the 300,000 to 500,000 sf range, there were 36 leases related to 3PL or e-commerce business. As consumers become more accustomed to purchasing online, their

requires intense use of logistics space, often demanding three to four times the logistics space of traditional brick-and-mortar retail replenishment. Online order fulfillment necessitates higher nominal inventory levels given the product variety and the fact that parcel shipping requires much more space than palletized shipping. Furthermore, e-fulfillment often includes other value-add services such as assembly and reverse logistics. Because e-commerce

AS CONSUMERS BECOME MORE ACCUSTOMED TO PURCHASING ONLINE, THEIR EXPECTATIONS WITH REGARD TO DELIVERY SERVICE AND SPEED MOUNT. expectations with regard to delivery service and speed mount. Transportation costs account for nearly 65 percent of total logistics costs and have become the focus of any strategy aiming to reduce supply chain costs. Inefficiencies converge around transportation, especially in dense urban areas. For e-commerce occupiers, reducing the delivery distance to 30 minutes or less is critical.

Intense Use of Logistics Space E-commerce fulfillment

fulfillment is much more space-intensive than traditional warehousing, the long-term structural growth rate of logistics real estate has increased in tandem with the growth of ecommerce, and this is expected to continue. Digital sales soared in 2020 amid the pandemic and grew by 14.6 percent in 2021, equating to $870.8 billion being spent online. Online sales surged more than four and a half times faster than total retail sales in 2020, growing by a staggering 31.8 percent, the

highest annual growth of any year and more than double the sizeable 14.1 percent jump in 2019. That propelled U.S. e-commerce penetration as a percentage of total core retail sales to a record high of 21.9 percent by Q2 2020 at the height of the pandemic and lockdowns. Although roughly onefifth of spending continues to come from digital orders, the e-commerce share of core retail sales declined to 19.1 percent as of Q4 2021. This is more a reflection of the significant rebound in brick-and-mortar sales that has steadily occurred as the economy reopened. It is now safe to say that the online shopping trends brought on by the pandemic are the new normal, and many retail categories have plenty of runway left to go. Supply chain investments made due to the ongoing pandemic such as technology, automation, and strategic site selection are likely to support increased digital sales in the future. This is especially true for segments that had low e-commerce penetration prior to the pandemic that had also recorded significant increases in online market share, such as the grocery and home improvement categories.

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IN FOCUS Safety First: The Benefits of Construction Robotics The use of construction robots can transform site safety for human workers, while monitoring processes that impact project timelines and budgets.

Accessing Challenging Sites

BY PRASOON SHRIVASTAVA, Founder and CEO,

ZEPTH With a background in construction and sustainability, Prasoon Shrivastava is an architect by profession, an entrepreneur by DNA, and a storyteller by practice.

A construction site can be a hazardous place; from slips and falls to material exposure, human workers undertake a certain amount of risk. It is the responsibility of construction site managers to take every precaution available to protect their workers. With the advent of new technologies such as robots, drones, and increasingly sophisticated data management platforms, ensuring the safety of human construction workers has never been more achievable. Construction robots can improve accessibility and visibility tremendously across construction sites by capturing standardized data even in dangerous conditions, enabling teams to use that data to inform safety monitoring processes.

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Mobile construction robots such as Boston Dynamics’ Spot enable project teams to access challenging job sites with ease. Autonomous and terrain-agnostic, these robots can tackle the dynamic nature of a construction site to efficiently and repeatedly capture unbiased data. Their capacity to traverse rough terrain and adapt to changing weather conditions allows them to safely capture as-built conditions on the site, even in hazardous and hard-to-reach areas. Robots such as Spot

robot to regularly and repeatedly capture consistent data, which will then be uploaded and saved into a common data environment for all project stakeholders to access. By providing rich, high-quality visual data through intelligent mapping cameras, construction robots greatly improve visibility throughout a project lifecycle. Integrated software solutions offer high-tech data interpretation tools to help teams quickly interpret the content generated.

Site Monitoring and Safety Management By generating comprehensive real-time site data, robots and connected project management platforms enable

ROBOTS AND CONNECTED PROJECT MANAGEMENT PLATFORMS ENABLE BETTER DECISION-MAKING ACROSS CONSTRUCTION TEAMS. can be operated by a remote team, keeping humans safely out of harm’s way.

Integration with Construction Management Platforms The cutting-edge project management platforms available in the market today offer seamless integration with mobile robots. Through these systems, remote project teams can map a defined route for the

better decision-making across construction teams. Data recordhandling and storage management provide managers with dedicated databases for visual insights, securely storing information for safety assessments, compliance testing, and auditing. With access to these comprehensive data records, teams can identify issues and collaborate on solutions much quicker. Data-driven models

can also help to prioritize worker safety. Site robots can identify issues and hazards with electrical and HVAC systems, foundation faults, or equipment mishandling, which ultimately prevents accidents for human workers. These comprehensive records ensure that such issues do not go unnoticed and that teams comply with safety protocols throughout all project stages.

A Win-Win: Prioritizing Safety while Improving Workflow Construction robots and integrated project management technology have the potential to transform safety conditions for human construction workers. At the same time, increasing site safety and monitoring processes will dramatically impact project timelines and budgets. Disorganized safety inspections and monitoring processes can drastically delay a project. Robots enable assessments to be performed quickly and efficiently, leading to a faster resolution of problem areas. Knowing their safety is prioritized, workers will be more productive, and workflows will be optimized. For construction managers, the choice to adopt technologies such as robotics and integrated management systems is a win all around.

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FRONT LINE Performing Physical Tasks Remotely Rapid advances in automation are even allowing some tasks in manufacturing facilities to be tackled remotely.

BY DAN EMERSON

One of the major societal effects of the Covid-19 pandemic — aka The Big Reset — has been rapid and widespread growth of remote work, as companies allow more employees to perform tasks from their homes…or elsewhere. The biggest shift has been among office-based businesses, which require fewer on-site workers doing physical tasks than manufacturing or supply chain operations require. But even in the latter categories, rapid advances in automation are enabling more workers to “go digital,” experts say. Korean battery-maker LG Energy Solutions is betting large on the future of remote work. It announced it will build a $1.7 billion, fully automated, smart factory in a Phoenix suburb, with remote support, manufacturing intelligence, logistics automation, and more.1 Full automation is no longer a ”wave of the future.” As more companies adopt the latest artificial

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intelligence technology, more employees — whose presence on-site was required by the physical tasks they perform — will be able to work remotely, experts say. “There is definitely a push toward automation

in the current tight labor market, says Graham Immerman, VP of marketing with MachineMetrics, a Northampton, Mass.-based software provider. “We’re operating within the greatest labor shortage in the history of industry. Employers really have no choice but to reduce the burden of non-essential tasks and decision-making through digitization and empower their workforce to do more with less,” says Immerman. “In manufacturing, nonproduction staff can be as much as 25 to 50 percent of total head count.” By using remote connectivity “theoretically, organizations can enable potential (other) work for these employees.”

Manufacturing Tasks That Can Be Performed Remotely In a blog post, the San Francisco-based data analytics company Sight

RAPID ADVANCES IN AUTOMATION ARE ENABLING MORE WORKERS TO “GO DIGITAL.” based on what I’ve seen the last couple of years,” says Jacob Everett, a site selection and incentives consultant with Indianapolis-based McGuire Sponsel. Everett says the pandemic “definitely accelerated the pace at which companies are either looking to implement or have implemented automation with the use of robotics. A lot of my clients are trying to automate some physical tasks and move workers into higherskilled, more knowledgebased roles.” Making it possible for companies to function, even thrive, with fewer workers is especially crucial

Machine listed some on-site manufacturing functions that could be switched to remote, with the help of digital platforms. They include production planners/ schedulers; software and process engineers, who would no longer need to rely on on-site observations; and maintenance workorder processors. Accomplishing this kind of major shift requires real-time access to data from the site, Sight Machine VP Sudhir Arni wrote.2 “That information is what enables the effective monitoring of assets and gaining precise insights on process,” Immerman says,

and also, “how to leverage remote workers to provide real-time support and expertise.” Strong, reliable connectivity is essential to enabling any remote workforce, he adds, “especially when the goal is to remotely access and visualize realtime data, to allow remote workers to make informed decisions at a moment’s notice, wherever they are.” One of the greatest drivers of productivity is being able to optimize health and maintenance of production equipment. But with less skilled labor it can be easier said than done. But, when machines go down, connectivity can enable an engineer to remotely access local data from manufacturing equipment. “You can remotely diagnose and even resolve machine issues from anywhere at any time,” Immerman explains. More remote automation obviously elevates the importance of secure broadband and reliable electricity. “If systems are going to have ‘hiccups,’ the more they automate, the more potential for increased downtime,” Everett says. As companies rely more on remote operation, how will that impact site selection criteria and processes? “For now, the site selection criteria are relatively similar to what they have been for the past five or 10 years,” Everett says. But it’s possible that less reliance on human capital might enable some companies to operate in some less densely populated areas. 1

https://www.prnewswire.com/newsreleases/lg-energy-solution-to-invest-krw1-7-trillion-in-its-first-cylindrical-batteryplant-in-us-301508818.html 2 https://sightmachine.com/blog/remoteoperations-in-manufacturing/

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A Division of the Missouri Department of Economic Development

FIRST PERSON But then when you focus on the subset of companies that innovate in ESG, you have another intuitive basis for why this is so important. That goes to customer demand. For example, if we are innovating in ways to help customers reduce their greenhouse emissions, then that becomes a key factor in their demand for our products and how we are performing internally. Shareholders also are looking at your business plans. They want to see that you are really investing in better products in this area. For that subset of companies, I think things have really come full circle. It is the internal performance that directly feeds into the products, and, for us, the products then feed into the internal performance because we try to use Honeywell products wherever we can to reduce our own emissions.

EVAN VAN HOOK, CHIEF SUSTAINABILITY OFFICER, HONEYWELL

Why are ESG policies important to corporations today as opposed to the way things were done in the past? van Hook: Having been in this area for so long, it is useful to distinguish between all corporations and corporations that specifically innovate in the sustainable area. ESG platform performance and transparency has become a critical part of doing business for all corporations. I think that for many reasons: first, the organic importance of the issues, particularly climate change and inclusion and diversity, but also all the mechanisms of transparency. Communication is so broad. Companies operate in a much more transparent world now. Everything is on view, and everything is known in a way it wasn’t before. Now there is a significant expectation for all corporations to perform well in ESG and to talk about transparency.

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What are Honeywell’s top priorities for implementing ESG issues/policies? van Hook: Unique to Honeywell, we build on an actual history in this area, as well as experience and systems that have been put together. Most companies today are in the exploratory phase. We have been doing this for nearly 20 years. For over the last 10 years, all of our greenhouse numbers have been third-party verified. The fundamental program is in good shape. Our priorities now are aligned with the Paris Agreement. We’ve done this by committing to carbon neutrality in our own facilities and operations. We also have committed to establishing a target that extends to our Scope 3 initiation with a science-based target initiative. We think we are among the largest of industrial companies to do this. Other areas of environmental and social include worker safety. We have always felt strongly that worker safety is an important part of ESG. The United Nations Sustainable Development Group recognizes it as a critical component of sustainable development. We, in addition to being one of the largest manufacturers of worker safety equipment of all kinds, also maintain a safety record that is well over four times that of the industries in which we operate.

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How do these build on Honeywell’s previous efforts in these areas? van Hook: What is unique about Honeywell is we started our program at the same time when the company was launching a comprehensive leanbased approach to manufacturing. This gave us the opportunity to build sustainability directly into lean. It has become a common language for the company. I like to compare this to the quality revolution of the 20th century, where an aspiration was imported into large-scale manufacturing. My sense is one must do the same thing with the sustainability revolution in the 21st century. We started that journey in 2004. It created a strong infrastructure. If we didn’t’ have that infrastructure, I would not feel as confident going forward. We improved our greenhouse intensity more than 90 percent through that process. For a large industrial, that is a lot. Now I feel that we can use this system to drive our achievements further in the future.

How does a more racially and ethnically diverse workforce help? van Hook: One thing important to note is, we have hired a diversity inclusion officer. But more than what she is doing, just the fact of including that officer within the company’s leadership is very important. Workplace respect and respect for inclusion and diversity are two of those core principles. If you don’t have these, you don’t work here. That is how the company thinks. Our CEO chairs several of our I and D committees. Our general council is an active member.

initiatives — that sets us apart. Also setting us apart is our level of commitment to innovation in this area.

Why is ESG important for Honeywell’s growth? van Hook: About 60 percent of our R&D goes to ESG-related outcomes. And about 60 percent of our revenues also derive from ESG-related products. That is how hard core we are driving these products. Since we are an engineering company, we drive products that are big heavy-hitters like our low global warming potential refrigerant and propellant. This is a new molecule, an HFO. We calculate that it has already avoided more than 260 million metric tons of CO2 from the atmosphere.

What are the challenges to meeting ESG goals? van Hook: Governance is going to be very important. This is a lot of data. This data must be absolutely accurate because ESG data is increasingly being reported like financial data. We not only see this as an important goal, but we are also innovating in that area as well. We do so many building systems and so much in the cloud with HCE that we see that system of record and transparency component of ESG as being an important innovation area. That helps us build on products. It’s critical that this data be accurate, credible, auditable, and can be reported to the government.

Do you have any concluding remarks?

All those things that people talk about regarding I & D are so true. There are many reasons to encourage it. If you do not have a diverse workforce, you miss out on many different points of view and miss out on understanding many markets.

van Hook: This is an exciting time with the company’s internal efforts starting to merge with the green economy. It’s a new revolution.

How does Honeywell see its ESG priorities setting itself apart from its competition?

Widespread emphasis on environmental, social, and governance issues, or ESG, is presenting manufacturers with an opportunity to propel their business into new directions. Evan van Hook, Honeywell’s Chief Sustainability Officer, provides Area Development with insight about ESG and Honeywell’s ESG goals.

van Hook: The system we have developed that incorporates ESG directly into lean differentiates us from most of our peers. Since ours emerged out of operations — as opposed to externally set

THE ASSIGNMENT

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LABOR

Taking Action Now for An Increasingly Automated Future The jobs created by automation will ultimately exceed those that are lost, but a federal program is needed to successfully navigate the transformation of the labor force. By Jacob Everett, CEcD, Consultant - Site Selection & Incentives, McGuire Sponsel

ecently, Elon Musk announced plans for the Tesla Bot,1 a humanoid robot that stands 5 feet, 8 inches tall. Musk said the robot “probably won’t work.” I hope he is wrong. Many people have an adverse reaction to discussions of automation and artificial intelligence. While I understand those fears, I believe we need to embrace automation. In fact, let’s put our foot on the gas — or set the autonomous electric vehicle at max speed. But as we accelerate toward automation, we must reposition our workforce for a successful journey. Whatever the outcome, the Tesla Bot is simply the continuation of a process that began decades ago to create ever more sophisticated forms of automation. The pandemic only quickened this movement as companies turned to automation out of necessity (currently 500,000 manufacturing job openings are unfilled) and for strategic reasons (automation can be very attractive financially, especially in the current period of exploding demand).

Navigating the Transformation While some taxation and public policy proposals aim at stopping or slowing the adoption of automation, myriad studies show such measures would be detrimental to the economy. The global economy is expected to struggle in the coming decade to keep up with demand driven by the baby-boom generation entering retirement, while still creating significant demand for goods and services combined with declining global birth rates — 2020 was the

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lowest rate on record in the U.S. Some fears are not unfounded. People worry automation would create mass unemployment. One report estimates 36 million U.S. workers could face job losses due to automation.2 Most experts agree much of this change will occur in the next decade. However, these experts also agree that the global economy will be able to navigate this transformation. A 2020 MIT Task Force on the Work of the Future report projected, “In the next two decades, industrialized countries will have more job openings than workers to fill them.” It further states, “History and economics show no intrinsic conflict among technological change, full employment, and rising earnings.”3 The review of significant work on this topic makes me optimistic about an automated future. I say, bring on the robots. I believe automation is an integral part of a growing global economy, and it has the potential to significantly improve the quality of life for millions of workers over the next decade. I also readily admit that this is going to be really hard. Much of the research on this topic suggests we can predict a labor transition en masse rather than mass unemployment. In other words, automation will surely eliminate the need for millions of jobs, but job creation across the economy will exceed those losses. Globally,

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5/26/22 12:43 PM

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”

but no country is prepared. In fact, most countries in tens of millions of workers will need to switch occupathe Organization for Economic Co-operation and Detional categories and learn new skills in the coming development have been spending less on worker training cade.4 And it is this transition of workers — not technoland labor market transitions during the past 20 years.8 ogy, robots or fear — that deserves our attention. Major labor disruptions conjure up visuals that are In the U.S., public spending in these two categories has hard to ignore: thousands of worknot only declined but ranks at or ers leaving the production line for near rock bottom. the last time, white-collar workers I recommend the federal govexiting an office building with their ernment act immediately to meet belongings in a box. These events this challenge. Modifying TAA or are location-based and easy for developing a new system is bound media to cover — and difficult for to be a lengthy and difficult road. has the public officials and government I suggest the federal government agencies to ignore. The displacecreate and fund a system that will potential to ment of millions of workers due to partner with states and regions automation will likely occur each to accomplish one very narrow significantly year with little publicity. The mass goal: transition affected workers will be in the combined impact on into new, permanent positions the individuals rather than the closure with maximum speed. This will of any single facility. take significant federal investquality of life The speed and sweeping nature ment. However, failure to address at which workers will be forced this effectively will likely lead to a for to transition will create unique crippled economy. demands on the public systems While this transition demands a of supporting those affected. The federal response, nothing stands labor force must be able to adapt in the way of states, regions, and over the next as swiftly as the automation takecities taking independent action. over. Slow or failed transitions are Leading successfully in this area the prime threat to the economy will pay huge dividends as local during this period, which can lead labor markets position themselves to high unemployment and defor the future. Those leading pressed earnings and demand. states and communities will also be in position to maximize their impact once federal dollars and The Need for Government programs flow to address these needs. to Step Up to the Challenge Collectively, we need to change the narrative on auMake no mistake: The robots are coming. Some of tomation. This imminent shift represents great opporthem are already here. Every day without action to retrain tunity. It will require the best of American ingenuity affected workers is a day the U.S. is falling behind. The and demand flexibility from each of us to learn new federal government needs to create and implement an things and pursue new frontiers. Government must infrastructure to manage labor during the next two decreate a new infrastructure to manage this transition, cades of change. Recent bills have been filed in the U.S. companies must invest in their employees, and indiSenate (20195 and 20186) but have gone nowhere. These viduals must invest in their skills to adapt to a new bills sought to expand the federal Trade Adjustment Asworld. As technology accelerates, so must we. The sistance (TAA) program, which played a major role in suptime to act is now. n porting workers who were displaced by NAFTA. A federal program is required to mount the massive effort needed to support workers during this reorgani1 https://www.cnbc.com/2021/08/19/elon-musk-teases-tesla-bot-humanoid-robot-forzation of the global economy. Experts agree that modrepetitive-tasks.html 2 https://www.brookings.edu/blog/the-avenue/2019/02/25/automation-and-ai-willern systems and institutions are not up to the task. The disrupt-the-american-labor-force-heres-how-we-can-protect-workers/ 3 https://workofthefuture.mit.edu/research-post/the-work-of-the-future-building-betterpace of automation’s disruption to the labor market jobs-in-an-age-of-intelligent-machines/ 4 is expected to be two to three times that of previous https://www.mckinsey.com/featured-insights/future-of-work/jobs-lost-jobs-gainedwhat-the-future-of-work-will-mean-for-jobs-skills-and-wages 5 periods of technological advancement.7 In addition, the https://www.congress.gov/bill/116th-congress/senate-bill/3034 6 https://www.congress.gov/bill/115th-congress/senate-bill/2982 automation of tasks will occur across geographies, in7 https://www.bain.com/insights/labor-2030-the-collision-of-demographics-automationand-inequality/ dustries (goods production, services, and everything in 8 https://www.mckinsey.com/~/media/mckinsey/industries/public%20and%20social% 20sector/our%20insights/what%20the%20future%20of%20work%20will%20mean%20for% between) and occupations (white-collar and blue-collar, 20jobs%20skills%20and%20wages/mgi-jobs-lost-jobs-gained-executive-summarydecember-6-2017.pdf hourly and salary). This transition will be worldwide,

AUTOMATION

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WORKERS

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T:8"

S A M U E L L . S TA N L E Y J R . President, Michigan State University

T:10.875"

“ TH E R E ’S T HI S A BILITY AMON G P EOPL E I N M ICH I G AN TO SOLVE PROBLE MS.” Dreaming. Innovating. Growing. It's how Michigan talent is making an impact on the world in key industries. From tech to mobility to advanced manufacturing, there's a different kind of hustle here. Expand your business in Michigan and get access to support, camaraderie and new opportunities. Make the move at michiganbusiness.org/pure-opportunity

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MICHIGAN Sets Strong Foundation for Workforce

nounced a $30 million scholarship initiative, Michigan Reconnect, for Michiganders 25 and older looking to complete an associate degree or a skill certificate program. In 2022, Governor Whitmer announced that 91,000 people have enrolled in the program.

Michigan combines this broad range of qualified talent with an affordable cost of doing business, ranking in the top 10 nationally for STEM degree completions at its higher education institutions and first in the country for its concentration of engineering talent. As home to over a fifth of the nation’s manufacturing workforce, Michigan has a density and diversity of highly skilled talent.

The program is a part of Governor Whitmer’s Sixty by 30 goal which seeks to build a better Michigan by closing the skills gap, increasing opportunities, and making Michigan more competitive for inclusive economic growth. The goal — to increase the number of working-age adults with a skill certificate or college degree from 49 percent to 60 percent by 2030 — is aimed at creating opportunities for better jobs and bigger paychecks.

s companies of all sizes around the world share the same challenge for finding, growing, and retaining highly skilled talent, Michigan is effectively positioning itself as home to one of the most talented, diverse, and abundant workforces in the country.

“One of our major goals is to develop a talent pipeline that’s going to serve the state of Michigan and the world. I see the state of Michigan ranked in the top 10 for favorable business environments, and I think it’s really a remarkable time to be in Michigan and be a part of what’s happening,” says Dr. Samuel L. Stanley, Jr., President of Michigan State University.

Skilling and Reskilling Michigan’s Workforce Over the years, the single-most pressing concern among companies of all sizes continues to be their ability to access and grow highly skilled talent. In recognizing that this nationwide problem will only continue to grow, Michigan is proactively addressing the impending talent shortage by investing in its workers and young people. In February 2021, Governor Gretchen Whitmer an-

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In response to the pandemic, the Futures for Frontliners state scholarship program was introduced in spring 2020 for Michiganders without college degrees who worked in essential industries. This scholarship provides frontline workers with tuition-free access to local community colleges to pursue an associate degree or a skills certificate, either full-time or part-time. Community colleges across the state are reporting a substantial uptick in enrollments for students over the age of 30, thanks in large part to these state programs covering most tuition costs for older students. Building on these efforts, the Michigan Economic Development Corporation has convened a Talent Action Team to launch the first focused effort on talent in the electric vehicle and e-mobility industry sector. Working alongside a core set of employers, higher education stakeholders, and partners including MICHauto, the Talent Action Team is in the beginning

for free site information, visit us online at www.areadevelopment.com

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Courtesy of MEDC

Each day, Michigan fosters the growth and development of its talent pipeline, ensuring a strong foundation is set for its workforce.

stages of a process to promote a Michigan workforce of lifelong learners who meet the needs of employers, and which will inform workforce initiatives to proactively prepare the talent needed for automotive mobility and electrification for current, emerging, and future jobs and career pathways.

One of the unique advantages of running a business in Michigan is access to its talented and diverse workforce and state resources for hiring, training, and development.

A Home Base for Remote Work One of the unique advantages of running a business in Michigan is access to its talented and diverse workforce and state resources for hiring, training, and development. The pandemic may have benefited Michigan’s workforce, as more people have relocated from big cities, perhaps lured by the state’s natural beauty and lower cost of living. For example, the number of people who moved from the East and West coasts to Traverse City, Michigan, increased by 50 percent during July and August 2020, according to The Associated Press.1 Talent is seeking to work from places that maximize work-life balance, and increasingly finding that balance in Michigan. The commute-free lifestyle of remote work coupled with Michigan’s affordable cost of living — Michigan is the fourth most affordable state, with

a cost of living 10% lower than the national average — frees up remote workers to enjoy more of what makes them happy. Throughout the state, communities help talent build their personal and professional networks.

In May 2022, project management platform Teamwork ranked Ann Arbor, Michigan, third in its list of best U.S. cities for remote workers,2 citing cost of living, average monthly salary, and recreational opportunities. Detroit and Grand Rapids also continue to rank among the top regions for housing affordability. “I think for dreamers, innovators, and entrepreneurs, Michigan affords the opportunity to dream bigger, build bigger, and to find many more folks who have that same mentality. Because here, there’s nothing, nothing, but opportunity,” says Dug Song, CEO of Duo Security. Each day, Michigan fosters the growth and development of its talent pipeline, ensuring a strong foundation is set for its workforce.

https://apnews.com/article/virus-outbreak-freedom-of-information-actmichigan-traverse-city-voting-2020-13e8288a2a915799489a6f88ef176d21 https://www.teamwork.com/blog/list-of-best-cities-for-remote-work/

This article was written by the Michigan Economic Development Corporation, which approved and paid for this post.

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ENERGY

The Energy Transition: Moving Toward Renewable and Carbon-Neutral Solutions The massive shift from fossil fuels to cleaner-sourced energy is not a simple or linear path forward. By Brian Gallagher, Vice President, Corporate Development, Graycor

overnments, owners, investors, and consumers are demonstrating a steady commitment to net-zero, carbon-neutral, and other goals, with a focus on replacing fossil-based energy systems with renewable energy sources. Who is going to do the work of bringing us this new future? If you’re in the global energy sector…you are. Leaders of manufacturing and power companies are faced with critical decisions on how to evaluate the best alternatives to fossil fuels and identify the pathways to make those alternatives a reality. So are electric vehicle manufacturers, battery manufacturers, and traditional original equipment manufacturers (OEMs). In addition to power and electrification companies, commercial,

industrial, and retail owners will need to consider accommodating new technologies such as electric vehicle (EV) charging stations. The massive shift from fossil fuels to cleaner-sourced energy is referred to as “energy transition,” and it is not a simple or linear path forward. No one knows this better than energy sector professionals, who are dealing with a convergence of regulatory, legislative, economic, environmental, and societal issues. Owners, utilities, and operators must develop plans that allow them to meet new sets of goals while meeting demand requirements. An element of these plans should be to work with engineering, construction, and technology providers during capital project planning. These professionals can help assess the company’s or facility’s current situation, help identify and evaluate alternatives, and develop recommendations and an approach. Specific services that can support owners as they implement changes include energy consulting, design, construction, and managed project delivery. Energy projects that lead companies toward their carbon-reduction goals will be a combination of renewable generation and integration, back-up generation, energy storage, carbon capture and storage (CCS), and transmission and distribution (T&D) infrastructure. Some owners are utilizing natural gas as a “bridging strategy” on their journey to a complete transition to clean energy. Working with engineering and construction professionals, owners can combine a variety of components and technologies to create a customized project that will help them not only meet their carbon goals but fulfill ongoing demand.

Energy Transition Options Some sectors, especially heavy industrial, may find it very difficult to transition away from fossil fuels. Carbon Continued on page 24

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The center of industry. The center of everything. NYC: A global innovation hub With unmatched talent, diverse funding sources, and a robust workforce and opportunity pipeline, NYC is a thriving business ecosystem and a powerhouse of equitable innovation—in industries from offshore wind to life sciences and beyond. Bring your business to NYC, with NYCEDC by your side—helping you make connections, forge strategic partnerships, and hit the ground running.

Visit edc.nyc/why-nyc.

he offshore wind (OSW) industry is a key element in New York City’s ambitious goal to transition to clean energy in the coming decades. The federal waters offshore from the city’s open and available coastlines are ideal locations for wind farms, making wind-generated energy a vital renewable energy resource for helping New York City meet its goals of 100 percent clean electricity by 2040 and carbon neutrality by 2050. In September 2021, then Mayor Bill de Blasio and New York City Economic Development Corporation (NYCEDC) announced a 15-year, $191 million Offshore Wind Vision Plan.1 Its aim is to develop best-in-class infrastructure for supporting the deployment of offshore wind farms in the New York Bight (the coastal area that extends from the Cape May inlet in New Jersey to Montauk Point on the eastern tip of Long Island). This investment will also support new wind-related manufacturing, installation, operations and maintenance, transmission, and other OSW activities to be located in NYC. In addition to meeting the city’s clean energy objectives, the OSW Vision Plan will: • Eliminate 34.5 million tons of CO2 — the equivalent of removing nearly 500,000 cars from roadways for 15 years • Create more than 13,000 jobs and generate $1.3 billion in average annual investment • Ensure 40 percent of job and

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investment opportunities are directed toward women, minorities, and environmental justice communities Three Core Objectives New York City plans to leverage its maritime infrastructure, its diverse talent base and workforce and business development ecosystems, and its capacity for innovation across all involved sectors, with three core objectives: 1. Sites and infrastructure — develop the technologies and infrastructure needed to support the construction and operation of 12 GW of offshore wind turbines 2. Businesses and workforce — train local businesses and workers to enter into the supply chain and provide the skill sets needed for the new, high-paying jobs that will result from these investments and new employment opportunities 3. Research and innovation — promote New York City-based R&D in offshore wind systems and technologies that can be exported around the world, building the city’s reputation as center of OSW innovation In time, New York City will develop the expertise to advise on and support other offshore wind projects along the East Coast and be a key provider of equipment, consulting, planning, and engineering expertise. The city will also support the creation of an OSW developer-funded accelerator for New York-based startups to help them develop next-generation OSW technologies that will make wind

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WIND TURBINES DO NOT ORDINARILY COME TO MIND WITH THOUGHTS OF NEW YORK CITY, BUT IF CURRENT PLANS GO FORWARD, THAT WILL CHANGE DRAMATICALLY IN THE NEAR FUTURE.

energy systems more efficient and less costly. Other investments will promote workforce training and support businesses that seek to create a diverse talent pool for the offshore wind industry. Choice Offshore Wind Sites New York City already has infrastructure in place to create OSW hubs in Brooklyn, such as the South Brooklyn Marine Terminal (SBMT), the Brooklyn Navy Yard, and the Red Hook Container Terminal. Staten Island is also strongly positioned to be a major contributor to the OSW Vision Plan — the Arthur Kill Terminal (AKT) would provide open access to the newly established federal offshore wind lease areas and also attract manufacturers of components to New York City Industrial Business Zones (IBZs), creating additional jobs through a growing network of supportive suppliers moving into the area. One spot where the OSW industry is likely to grow is Rossville, Staten Island, where the city recently released a request for proposals for a 33-acre waterfront site on the Arthur Kill. Between AKT, Rossville, and other nearby large sites on the south shore of Staten Island — combined with the island’s legacy maritime cluster of tug and barge businesses on the north shore — New York harbor is a powerhouse for advancing OSW renewable energy on the East Coast. Already under way, SBMT is the most advanced part of the OSW Vision Plan because of its existing infrastructure, facilities, and excellent location. New York City has committed $57 million in support of OSW development

at the South Brooklyn Marine Terminal, on top of $115 million invested over the past decade, which will transform SBMT into one of the largest offshore wind port facilities in the nation. Plans include heavy lift piers and establishing an OSW operations and maintenance base for the Norwegian energy giant Equinor. The terminal will also become a power interconnection site where wind energy from the Empire Wind 1 project will plug into the city grid providing power for half a million homes (this is power from Equinor’s first North American wind farm located 14 miles offshore from the Verrazzano Bridge). Additionally, Equinor will use SBMT for the next decade to stage and prepare OSW turbines for installation offshore as part of Equinor’s commitment to build their Empire Wind 1 & 2 and Beacon Wind 1 energy generation projects in New York State. Following Equinor’s use of the terminal to build wind farms, SBMT will play a role in the development of wind farms by other OSW developers — serving as a conveyor belt for the creation of the next generation of renewable energy. “The South Brooklyn Marine Terminal will launch a whole new industry for New York City,” said Mayor Eric Adams. “This is a transformative moment for New York City and our future of sustainable power and the goodpaying jobs it will create.” Future Investments Another aim of the OSW Vision Plan is to secure additional federal, state, and private funding to drive the core objectives forward at the highest possible speed to

By Mark Crawford

achieve the long-term goals of 100 percent clean electricity by 2040 and carbon neutrality by 2050, as well as to become an internationally recognized expert on OSW in the process. To help grow these bold plans , NYCEDC has established an Offshore Wind Industry Advisory Council, whose members are experienced in the offshore wind industry and will lend expert insights as development progresses. “These investments not only position New York City as a hub for the emerging domestic offshore wind industry, but also increase economic opportunities for the historically disenfranchised residents of Sunset Park in Brooklyn,” said K.C. Sahl, Northeast Energy Market Leader at VHB, a civil engineering firm active in the offshore wind industry and co-chair of the Offshore Wind Industry Advisory Council. “New York City is also modeling how large-scale climate and economic goals can be achieved through inclusive partnerships with public, private, and community-based stakeholders.” With 520 miles of coastline and one of the largest natural harbors on the East Coast that has attracted generations of maritime entrepreneurship, New York City is poised to be a major center for the development, construction, and long-term maintenance and operation of offshore wind farms on the East Coast. From legacy piers and new infrastructure to repurposed and new industrial spaces, there is an abundance of opportunities for growth of the offshore wind industry. 1

https://edc.nyc/program/offshore-wind-nyc

This article was written for the New York City EDC, which approved and paid for this post.

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The Energy Transition: Moving Toward Renewable and Carbon-Neutral Solutions – Continued from page 20 capture and storage (CCS) or carbon capture, utilization, and storage (CCUS) may provide a solution in these scenarios. Carbon capture can successfully divert the majority of CO2 emissions from power generating and industrial facilities. With CCUS, the captured carbon can be used in the production of manufactured goods or in industrial processes, or even in the creation of building materials. For CCS, storage of captured carbon within geologic formations provides deep-earth containment.

Types of alternative generation include:

• •

Hydrogen

Renewable natural gas (RNG), which is primarily methane Biofuels/biomass/waste-to-energy. Hydrogen fuel cells Solar, wind, and hydroelectric Combined heat and power (CHP) Aeroderivative gas turbines (backup power)

• • • • •

Transmission and distribution options can include:

• L ocalized energy generation, such as

“ The

electrification of vehicles is a major driver of the energy transition, principally because its effects — and its demands — are spread across a large segment of society.

distributed generation (in which electricity is generated for use on-site rather than being transmitted over long distances from a centralized facility) or microgrids (small enough to power industrial sites, small communities or areas with critical infrastructure) Modernization, or strengthening, of the grid, often by incorporating digitalization and/or advanced analytics Updating substations with wireless technology Improving oil or gas pipelines by reducing emissions, strengthening the network, etc.

• • •

Some renewable energy sources — notably wind and solar — are variable; that is, they do not offer the same consistency and reliability as traditional fossil fuels. Therefore, additional investments must be made to augment peaks in demand and shift loads. These investments include backup generation (and associated transmission systems), digitization, and, especially, energy storage. Battery storage systems are most common although longduration storage options, such as chemical, mechanical, gravitational, or thermal storage, may also be considered. The electrification of vehicles is a major driver of the energy transition, principally because its effects — and its demands — are spread across a large segment of society. EV and battery manufacturers are investing billions in greenfield and expansions. So are manufacturers in the EV supply chain, such as suppliers of chemicals, materials, plastics, microchips, semiconductors, and

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more. Traditional OEMs and their suppliers are investing capital in retooling and expanding their production. But it is the consumer need for widely available charging infrastructure, and the production and support spaces for those charging stations, that makes EV adoption such a game-changer. As the ubiquitous corner gas station gives way to EV charging stations, energy transition becomes apparent at a very granular level.

Industry Adoption So Far

Most major utilities have committed to significant decarbonization in the near future. Many are aggressively retiring existing assets that depend on coal and investing in bridging strategies, particularly coal-to-gas conversion systems, natural gas peaking facilities, and natural gas distribution. Currently, many renewable projects are going to existing coal sites due to the availability of land, permitting, and the ability to directly tie into the T&D infrastructure. Most utilities are also engaged in pilot scale and demonstration projects to prove commercial viability, often supported by funding from government agencies such as the Department of Energy (DOE). For utilities, the energy transition must account for reliability and resilience…yet this becomes more challenging in the face of extreme weather events. In some cases, new technologies such as artificial intelligence and machine learning may improve forecasting so that energy output can be more finely tuned. Many of the solutions that are being built to strengthen and diversify the system, such as strengthening the grid, building microgrids, or installing battery storage, will help offset the problems associated with extreme weather events, as well. Many large industrial and commercial companies have committed to switch to 100 percent renewable energy, setting ambitious net-zero and decarbonization targets, some as part of the RE100 initiative.1 Similarly, more than 300 large companies are part of the Renewable Energy Buyers Alliance.2 Early action steps include investing in on-site renewable generation, battery storage, and EV charging for vehicles and equipment. Many developers have also become involved in renewable energy projects. Typically, they work with energy companies or other owners to identify project opportunities and enter into power purchase agreements (PPAs). The developers take responsibility for identifying a location, securing financing, executing contracts, and arranging for construction. Commercial real estate owners, like large commercial and industrial companies, are investing in EV charging stations. for free site information, visit us online at www.areadevelopment.com

5/26/22 12:54 PM

Engaging Partners and Evaluating Alternatives Making changes on the scale demanded will require owners, utilities, operators, developers, technology providers, engineers, and contractors to work together from the conceptual phase of a project through to commercial operation and beyond. One thing to keep in mind is that contractors who have been in the power business for decades will have experience with other major historical transitions and will have strategies in place for rethinking processes from the ground up. They will be able to provide sophisticated, scalable estimating and construction and program management, general contracting, program management, and self-perform services. Computer modeling of the planned facility, along with simulations and other planning tools, can provide clarity on a project before ground is broken; with some modeling software, operations decisions can be integrated into the model. Partnerships with contractors and subcontractors will play an important role in project success. Many of the current decision-makers in power and oil and gas companies have deep experience in all the requirements surrounding fossil fuel generation and distribution, but now expertise must be built as companies transition to renewables, so establishing relationships with knowl-

edgeable partners will be vital. It’s easy to feel overwhelmed by the scope of the impending changes. But some challenges are already being clearly identified and effectively addressed by owners, engineers, and contractors. In addition to the bridging strategies already noted, undertaking small projects to start with can help owners ease into the transition. Small projects keep planning and construction more manageable — although they will typically be executed on a tighter timeline, meaning they will still require sophisticated preplanning and preconstruction efforts. Also, because energy transition projects require technologies that are relatively new, plans should be built in from a project’s inception to track and monitor the system performance well into the operations stage. The world is entering a new phase of energy production and consumption. While there are plenty of new challenges, the key to success will involve effective deployment of existing technical expertise, as well as reliance on industry relationships, to thoroughly assess the “knowns” of a given project and effectively tackle the “unknowns.” n 1

https://www.there100.org https://cebuyers.org

THIS IS WHAT OPPORTUNITY LOOKS LIKE. It may be hard to recognize because real opportunity is rare—but this is where sparks light fires that change the world. Where resilience and drive come together to design the future. What lies ahead? That’s up to you.

Make your move at DevelopFlintandGenesee.org.

AREA DEVELOPMENT | Q2 2022

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FACILITY PLANNING

Five Ways to Manage Global Market Volatility To survive and advance in manufacturing, it’s critical to have future-proof, flexible facilities. By Bryan Allen, EPC-Project Manager; and Charles Clinton, National Development Leader of Industrial Manufacturing Facilities; Burns & McDonnell

upply chain struggles…labor shortages…rising costs…crises — These are just a few of the massive challenges today’s manufacturers face, paired with some of the greatest demand ever seen. Determining the best path forward for success now and in the future can be confusing and daunting. While there’s no perfect one-size-fits-all solution, by asking the right questions, anticipating how challenges will impact business, and taking a comprehensive approach to updating and building facilities, manufacturers can future-proof operations and better manage global market volatility.

Asking the Right Questions Deciding on the most beneficial and profitable manufacturing facility projects for an organization, and making sure they will meet needs both now and in the future, starts with asking good questions. The most important question being, what problem (or problems) is the orga-

nization trying to solve? While it seems basic, it’s a critical question that sets the foundation for the most strategic next steps. Let’s say the response to that question is, “We want to increase profitability, but have a dated factory and can’t keep up with demand.” From there, additional questions that should be asked include:

• What will you do until that new factory is built to keep up with demand and address immediate issues costeffectively? How can you improve production now with your existing facility and bridge to the next one? Who are your customers now? Whom do you want them to be 10 years from now? What requirements or specs do you have? Are you going to own or lease your building?

• • • •

There are layers of macro and micro questions and evaluations that should happen before a project begins and the above are just a few examples.

Tackling the Top Five Industrywide Challenges With an Integrated Approach Understanding the greatest challenges the manufacturing industry is facing and knowing how those challenges directly impact every aspect of an organization’s business can help establish the right direction forward for implementing manufacturing facility projects. There is no “one-size-fits-all” solution, but having an awareness of basic considerations and options can help guide an organization on its unique path to success.

1. Labor Shortage Jasco Products’ new automated material-handling system for its omni-channel distribution facility in Oklahoma City is capable of buffering and fulfilling orders using roughly 32 percent less labor, while improving safety/ergonomics and significantly reducing costs associated with damaged product or errors in order fulfillment.

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Last year, nearly 50 million Americans left their jobs for new opportunities. These resignation rates, combined with the widening experience gap (due to an increase in retirees and decrease in new entrants into the field), have created significant challenges for manufor free site information, visit us online at www.areadevelopment.com

5/26/22 1:01 PM

facturers. How do you meet high demand with fewer employees managing production? How can you better attract and retain top talent? How can you optimize operations and bolster safety and health protocols to minimize risk/downtime?

2. Supply Chain

to determine where improvements could be made, automation could be incorporated, etc.

How can companies strengthen their supply chains without weakening competitiveness? By using strategies laser-focused on efficiencies and cost reductions for more than a decade, businesses have increasingly sent aspects of the supply chain overseas. When the pandemic hit, the system crumbled, and reliability and flexibility became paramount over cost savings. With the overlapping and interwoven nature of supply chain connections, the solution to strengthen a company’s ability to get its product to market consistently is equally complicated.

• • Renovate or expand office space to make it a more

Paths to success:

• • Evaluate current processes and working conditions

attractive, engaging, and sustainable working environment for employees. Through flexible workplace design, organizations can better boost engagement, productivity, and a company’s bottom line.

• • Invest in people — providing development and train-

ing opportunities to deepen teams’ knowledge base and skill set.

• • Analyze which aspects of the organization’s supply

chains failed to modify the approach.

• • Reduce the reliance on overseas markets and diver-

sify supplier networks to include partners within the same region, so organizations can continue to produce even if an area of the world shuts down. (Accomplishing

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this requires long-term capital planning to accurately predict need and building financially secure relationships with a broader network.)

• • Return to a vertically integrat-

ed approach to retain control over more aspects of the supply chain. This approach might involve expanding or optimizing the operations or footprint of production and storage facilities or incorporating appropriate storage capacity to keep supplies on hand.

Reducing manufacturing costs without compromising product quality or eliminating jobs is one of the greatest challenges organizations face.

3. Technology Our digital world is lifting connectivity and data growth to new heights. Taking advantage of these capabilities and information gives organizations a competitive advantage. However, it’s important to understand which technologies will have the greatest impact and highest ROI, and what associated threats and risks come with those technologies.

capabilities, helping identify the geographic regions where a manufacturer should focus growth. Commercial real estate firms can help identify potential sites and incentives programs.

• • To select a site, work with the

team responsible for the planning, design, and construction of the manufacturing facilities. This group has a deep understanding of the big-picture needs and fineprint details, from the specific demands a new plant places on local infrastructure to a manufacturing operation’s logistical demands, permitting challenges, and staffing needs.

5. Cost

Paths to success:

Reducing manufacturing costs without compromising product quality or eliminating jobs is one of the greatest challenges organizations face. And within the past several months, there is an even greater rise in cost of materials due to inflation, ongoing supply chain struggles, and natural gas prices.

• • Digital transformation goes beyond technology and

Paths to success:

process implementation. It’s about changing the foundations of business to improve efficiency and competitiveness based on those implementations. Any data technology project must be part of a big-picture strategy outlining the vision of the organization’s future state and how it will get there.

services, so you can explore several possible futures and make sound investment decisions that best serve your organization today and in the years to come, without expending unnecessary capital.

• • Look at how any new technology will impact the

• • Work with an estimator who listens to you. Every

people on your team. What training will be required? How will it change the way employees interact with the business and their roles?

4. Location As many as 70 or more variables can influence site selection — from infrastructure, logistical, and incentive considerations to permitting requirements, staffing needs, and community acceptance concerns. So, choosing a location for facilities is notoriously complex.1 If not complicated enough, today there is a shortage of space available.

Paths to success:

• • Know what resources are available and to whom to

turn: Some owners look first to their in-house engineering and strategic planning staffs, both of which can provide helpful insights on where and how the manufacturer can grow its business. Many accounting and business consulting firms also tend to offer site selection

AREA DEVELOPMENT

FiveWays.indd 28

• • Take advantage of pre-capital planning consulting

project has a cost to it, but by understanding your project goals, predicting costs by understanding market conditions, using supplier and subcontractor relationships for pricing and constructability and capturing cost history, and communicating this information in a timely and meaningful way to the project team, you can identify major cost savings. When developing your unique strategies for combatting these challenges, the right mix of people engaged in conversations and brainstorming from the start is critical to understand and develop holistic, forwardthinking solutions. It’s even better if that same, multifaceted team can partner with you to bring your projects to fruition, from start to finish. An integrated team approach is just that and the most cost-effective, seamless project delivery experience that can help improve agility, eliminate waste, and yield higher returns on investment. n 1

https://www.areadevelopment.com/construction-project-planning/Q2-2021/ turnkey-approach-to-manufacturing-location-decisions.shtml

for free site information, visit us online at www.areadevelopment.com

5/26/22 1:03 PM

SPEED TO MARKET IN THE ROANOKE REGION OF VIRGINIA

Most Diverse Economy in VA

Minute Drive from Metro to Mountains

Colleges & Universities in an Hour Radius

Million

Gallons Per Day of Water and Sewer Capacity

% of US Population within a Day’s Drive

Pad-ready sites from 10 to 130+ acres are waiting for your clients in the Roanoke Region of Virginia. Discover this thriving region where quality of life, higher education, and innovation meet.

CONTACT ME TO LEARN MORE

JOHN HULL | john@roanoke.org | 540.343.2012

www.roanoke.org

17 Annual th

GOLD&SILVER SHOVEL AWARDS

he national news headlines

development officials, and though

in 2021 shifted dramatically,

it’s always possible for plans to be

from wall-to-wall pandemic

revised or delayed by unforeseen cir-

coverage to stories of extraordinary

cumstances, the information was cur-

economic growth and recovery. After

rent at the time it was provided.

a dramatic downturn in 2020, the economy came roaring back with

As usual, we’ve identified states

unexpected gusto — and that enthu-

whose project activity has been ex-

siasm is reflected in the economic

ceptionally strong with Silver Shovel

development activity that was bring-

and Gold Shovel awards. In fact, the

ing smiles and applause across the

activity in a pair of states has gone

country last year.

even beyond what we would consider the Gold standard in terms of job

AREA DEVELOPMENT

ShovelArticleQ2.2022.indd 30

The 2022 Shovel Awards recognize

creation and investment — hence,

the best of all that good economic

our first two Platinum Shovel winners,

development news from the past

North Carolina and Tennessee. Please

year. These state honors are based

read on for some very welcome up-

on information provided by economic

beat news from 2021.

for free site information, visit us online at www.areadevelopment.com

5/25/22 3:28 PM

Platinum:

Beyond the Gold Standard

ning what has been dubbed a second headquarters in Nashville. That’s a $1.4 billion project that ultimately

When you look at the charts listing

could create as many as 8,500 jobs

the top projects in North Carolina

(see the Oracle sidebar for more de-

and Tennessee, you’ll notice lots

tails). In the community of Lebanon,

and lots of digits. We’re talking projects with job counts in the fourdigit range — and investments with 10-digit dollar figures, with billions here and billions there, billions all over. With news like that, it was clear that we’re going to need a bigger award — not just Gold, but Platinum. Tennessee’s list from the past year includes five projects promising a thousand or more jobs, three of them with investments topping a billion dollars, in diverse sectors. Two are linked to the fast-growing electric vehicle sector, which you can read more about further into this article. Ford Motor Co. is building much of its EV future in Tennessee and neighboring Kentucky — the Tennessee development is a $5.6 billion project in Haywood County, with 5,760 jobs in the crystal ball (see the sidebar on Ford’s Blue Oval City for more details). General Motors and joint venture partner LG Energy Solution, meanwhile, are doubling EV battery production with their Ultium

1,400 jobs are on the way with a Life

Cells LLC announcement in Spring

Technologies Corp. (which is owned

Hill. That $2.4 billion project prom-

by Thermo Fisher Scientific) project

ises 1,300 jobs when it comes online

that will produce bioprocess contain-

in 2023, bringing advanced and ef-

ers and fluid transfer assemblies.

ficient battery cell manufacturing

And pet products retailer Chewy Inc.

processes.

is planning a regional e-commerce fulfillment center in Mount Juliet that

Tennessee’s biggest job promise

is to create 1,200 jobs. Also, in the

comes from Oracle America, plan-

business of fulfillment and distribu-

AREA DEVELOPMENT | Q2/2022

ShovelArticleQ2.2022.indd 31

5/25/22 3:28 PM

More wins. More business. More growth on the horizon.

Arizona is home to cutting-edge companies that are pushing the world forward. For more than four decades, Intel has been one of those companies—building technology that can improve the lives of every person on the planet. As it continues to lead semiconductor innovation, Intel announced a $20 billion investment to establish two new factories in Arizona, making it the largest private sector investment in the state’s history. This historic investment has earned Intel Manufacturing Project of the Year, which marks the second consecutive year an Arizona company has been recognized for the achievement. Arizona’s 2022 Gold Shovel is the state’s fourth, and further cements Arizona’s reputation as the premier location to catalyze advanced technologies. Plus, Arizona offers a lifestyle that allows employees to achieve their personal goals with endless outdoor activities, vibrant arts and culture, easy commutes, and affordable housing. It’s this perfect balance that makes life better here—and provides the winning combination for global innovators.

22-ACA-0658 Area Development Print R07.indd 1

5/23/22 7:16 PM

2022

GOLD SHOVEL

PROJECT OF THE YEAR

AWARD WINNER

azcommerce.com

22-ACA-0658 Area Development Print R07.indd 2

5/23/22 7:17 PM

17th Annual

GOLD &SILVER SHOVEL AWARDS

Methodology AREA DEVELOPMENT’S annual Shovel Awards recognize states for their achievements in attracting

high-value

investment

tion, Amazon announced a pair of

projects that will create a signifi-

Tennessee expansions, in Alcoa (800

cant number of new jobs in their

jobs) and Clarksville (500 jobs).

communities. We asked for information from all 50 states about

Platinum honoree North Carolina, meanwhile, collected four billiondollar-plus deals. Apple is turning to the Research Triangle area to land a big East Coast presence, a billiondollar project worth 3,000 jobs (see the Apple sidebar for more details). Toyota Motor North America will cre-

their

top-10

job-creation

and

investment projects initiated in 2021. Based on a combination of weighted factors — including the number of new jobs to be created in relation to the state’s population, the combined dollar amount

ate 1,750 jobs in EV battery manu-

of the company investments, the

facturing in Randolph, a $1.3 billion

number of new facilities, and the

deal (see the Toyota sidebar for

diversity of industry represented

more details).

— five states achieving the highest weighted overall scores were

In the bio-pharmaceuticals arena,

awarded

Fujifilm Diosynth Biotechnologies

Gold Shovels in five population

plans to create 725 jobs through a

categories: 12+ million, 8+ to 12

$2 billion project in Holly Springs. It would be the continent’s biggest end-to-end biopharmaceutical manufacturing facility, and that together with an Amgen project creating 355 jobs are great feathers-in-the-cap for the Research Triangle region’s

Area

Development’s

million, 5+ to 8 million, 3+ to 5 million, and fewer than 3 million. The runners-up in each of the above population

MORE THAN SHOVEL READY

GOLD SHOVEL READY KENTUCKY HAS BUILD-READY

Kentucky has set a new, higher standard. With our certified Build-Ready sites, we have drastically shortened the time needed to plan and begin construction. With a Build-Ready site, a company is guaranteed that: • A building pad is ready • Zoning is in place • Environmental issues have been resolved • Infrastructure plans are set • Construction costs and timetables have been estimated • Funding plans have been developed, with sale and lease options • Building renderings are available

BUILD READY https://cedky.com/r/gold_shovel @cedkygov

17th Annual

GOLD &SILVER SHOVEL AWARDS

M A N U FA C T U R I N G

Project Of The Year Toyota Motor North America, Inc. to Produce EV Batteries in North Carolina

plus manufacture of EV conversion kits in Gilbert.

Electric vehicle batteries

The factory will have four

will be charging up the

production lines that each

In Silver Shovel honoree Nebraska,

economy of Greensboro-

will be able to produce

Kawasaki Motors Manufacturing Corp.

Randolph, North Caro-

enough batteries for

plans to add 550 jobs as it expands

lina, once Toyota Motor North

in its consumer products and rail car

200,000 EVs every year.

operations in Lincoln. Kawasaki in-

America opens its new $1.3 billion lithium-ion battery plant.

The company envisions expan-

tends to grow its assembly, paint, and

It’s to be called Toyota Battery

sions that would eventually

welding lines, and add in some auto-

Manufacturing, North Carolina,

allow enough battery production

mation. Also, in Nebraska, Nucor is

and begin production in 2025,

to power 1.2 million vehicles

expanding its Norfolk engineered bar

creating some 1,750 jobs.

annually.

mill, which would add 500 jobs. South Carolina is adding hundreds of pharmaceutical-related jobs, includ-

ARKANSAS

ing at Arthrex in Pendleton, Nephron Pharmaceuticals in Lexington County,

Silver Shovel Winner COMPANY

City/County

N/E

# Jobs

and Pall Corp. in Duncan. North

Inv. Amt.

U.S. Steel Osceola N 900 $3 billion Trex Company Little Rock N 500 $400 million Mars Petcare Fort Smith E 260 $262 million Westrock Conway E 250 $100 million Coffee Company Owens Corning Fort Smith E 5 $100 million Vista Outdoor Lonoke E 450 $22 million Custom Craft Poultry Little Rock N 290 $10 million Wipro Sherwood E 400 $3 million Hytrol Conveyor Fort Smith E 350 $20 million Company Butterball Huntsville & E 360 $8.7 million Ozark

Industry Steel Outdoor Living Products Pet Food/ Care Products Coffee Industrial Materials Firearms Ammunition Poultry Products Information Technology Conveyors & Eqpt. Poultry Products

(pop. 3.03 million) States with populations of 3+ to 5 million Sponsor: Arkansas Economic Development Commission Manufacturing Project of the Year

AREA DEVELOPMENT

52ADQ2.indd 60

Carolina is building upon its highly regarded furniture industry with a MasterBrand Cabinets expansion in Lenoir County, which could create 500 or more jobs. The firearms business has seen some significant movement from the Northeast to the South. For example, Smith & Wesson Brands is relocating its headquarters and some production and distribution from Massachusetts to Maryville, Tennessee. It’s a $125 million move that will bring along some 750 jobs. And Remington Firearms is making the move from New York to LaGrange,

for free site information, visit us online at www.areadevelopment.com

5/25/22 3:41 PM

SUCCESS STORIES BEGIN IN ARKANSAS “People ask me a lot, ‘What’s in the water in Arkansas that you can have such great companies founded there?’ And I tell them, ‘It’s the people.’” Warren Stephens, Chairman, President, Chief Executive Officer Stephens, Inc.

To learn more about how inspiring businesses are leading the way to a strong economy, visit ArkansasEDC.com/Stephens or scan to watch the video.

17th Annual

GOLD &SILVER SHOVEL AWARDS

N O N - M A N U FA C T U R I N G

Georgia, promising 856 jobs there.

Project Of The Year

Meanwhile, an expansion at Vista

Apple to Open East Coast Campus in North Carolina and Invest in Local Schools

Outdoor in Lonoke, Arkansas, will

Technology giant Apple

will focus on such things

add 450 jobs to help meet the surg-

is making a big splash in

as machine learning,

ing demand for ammo.

Wake, North Carolina,

artificial intelligence,

as it opens its first East

Projects in food processing are

software engineering, and

Coast campus. It’s a billion-dollar

other cutting-edge work. The

always the talk of the town. The

investment that will yield some

company is adding to its invest-

billion-dollar Alabama Smucker’s

3,000 jobs, part of the company’s

ment with a pledge of a $100

project mentioned above and in a

pledge to “double down” on its

million fund for local schools

sidebar is just the beginning of the

commitment to U.S. innovation.

and community initiatives, plus

projects linked to food. Gold Shovel

investments in North Carolina

winner Texas announced not just one

infrastructure.

but three cheese-related develop-

The Research Triangle campus

ments. Leprino Foods will be making mozzarella in Lubbock, eventually hiring 600 people in a two-phase

LOUISIANA

project. Great Lakes Cheese Co. makes a fair share of all of the pack-

Silver Shovel Winner COMPANY

City/County

N/E

# Jobs

Inv. Amt.

aged cheese Americans consume, Industry

Venture Global Cameron N 200 $10 billion Liquified Natural Gas Air Products Burnside N 170 $4.5 billion Blue Hydrogen Louisiana Green Fuels Columbia N 76 $700 million Renewable Biofuels Shintech Plaquemine E 30 $1.2 billion Polyvinyl Chloride Resins SafeSource Direct Broussard N 245 $773 million PPE Equipment PBF Chalmette Chalmette E 20 $240 million Petroleum Refining Bia Energy Operating Port of Caddo- N 75 $550 million Blue Company Bossier Methanol Amazon Baton Rouge, N 2,000 $400 million Fulfillment Shreveport Center Hunt Forest Products/ Bienville N 130 $240 million Lumber Mill Tolko Parish BioLab Westlake N 82 $170 million Chlorine

and its new facility in Abilene promises up to 500 jobs for Texans. And Cacique, LLC — maker of authentic Mexican-style cheeses, cremas, and chorizos — picked Amarillo for an $88 million dairy processing facility that’ll employ about 200 people. Over in Gold Shovel winner Kansas, another 247 cheese-related jobs are in the works in Dodge City. Hilmar Cheese Co. announced plans to build a new state-of-the-art cheese

(pop. 4.62 million) States with populations of 3+ to 5 million

and whey protein processing plant

Sponsors: Louisiana Economic Development; Southwest Louisiana Economic Development Alliance

there, with a $460 million capital

AREA DEVELOPMENT

ShovelArticleQ2.2022.indd 62

investment. The state will also be-

for free site information, visit us online at www.areadevelopment.com

6/1/22 1:12 PM

M A N U FA C T U R I N G

Project Of The Year Ford/SK Innovation To Make Batteries for EVs in Kentucky With gas prices more vola-

munity of Glendale, where

tile than ever, there’s no

it will make batteries for

better time to be thinking

electric Ford and Lincoln

come home to the largest producer

about driving electric ve-

vehicles. The complex,

of wheat protein in North America

hicles. That’s why virtually every

where production will begin in

when Summit Sustainable Ingredi-

traditional automaker is adding

2025, will be called BlueOval SK

ents brings a new $250 million facil-

more and more EV models. Ford

Battery Park, spreading across

ity online. It’s a vital ingredient for

is no exception.

1,500 acres, creating about 5,000

both human and pet foods and is

jobs, and representing a $5.8 bil-

among the many things impacted by

The company and partner SK In-

lion investment. Ford already has

global supply chain issues recently.

novation announced plans for an

two assembly plants in Kentucky

advanced battery manufacturing

— Louisville Assembly Plant and

If it’s Silver Shovel winner Idaho, you

campus in the Kentucky com-

Kentucky Truck Plant.

can expect developments related to potatoes. Sure enough, Lamb Weston

CONGRATULATIONS TO REGENERON’S WESTCHESTER COUNTY NY CAMPUS EXPANSION FOR BEING RECOGNIZED AS A PROJECT OF THE YEAR HONOREE. Minutes from Manhattan, Westchester County is home to a vibrant biosciences ecosystem comprised of academic institutes doing basic research, R&D startups, large manufacturers and supply chain participants, and related industry experts providing specialized consulting, financing, marketing and communications, and other important support services. Westchester County’s biosciences community enjoys access to world-class talent, a prime location in New York’s largest biosciences cluster and an outstanding quality of life.

AREA DEVELOPMENT

52ADQ2.indd 64

WESTCHESTERCATALYST.COM

for free site information, visit us online at www.areadevelopment.com

5/25/22 3:43 PM

N O N - M A N U FA C T U R I N G

Project Of The Year CoStar Group Expanding in Richmond, Virginia Nearly 2,000 new jobs are

plex will include a 26-story,

on the way to the banks

LEED-certified office tower

in American Falls is expanding its op-

of the James River in

that could become the

erations. French fries are on the menu

Richmond, Virginia. That’s

city’s tallest building if

for this project, pegged at $400 mil-

where CoStar Group is planning

plans proceed for demolition of a

lion and 180 jobs. But there’s more to

to expand its research and tech-

slightly taller existing, unrelated

the Idaho food business than pota-

nology center, in a $460 million

building. CoStar also will build a

toes — Bare Beans Co. in Rupert has

investment with a completion

six-story multipurpose building.

a new facility that cooks and pack-

date of 2024.

The company will become the

ages pinto, garbanzo, red, and black beans for food service use.

city’s biggest technology compaCoStar is a commercial real estate

ny, and one of its largest private

data provider, and the new com-

employers.

Elsewhere, the E. & J. Gallo Winery is setting up shop on the East Coast,

HOLLY SPRINGS, NORTH CAROLINA

INGS oli n a

HOLLY S

COME JOIN THE FAMILY!

N orth C

Home to 2 of the top 10 projects in North Carolina, winner of the Platinum Shovel Award.

hollyspringsnc.org

AREA DEVELOPMENT | Q2/2022

52ADQ2.indd 65

5/25/22 3:44 PM

KANSAS Gold Shovel Winner COMPANY

City/County

N/E

# Jobs

Inv. Amt.

Industry

MCI BPO Wichita N 500 $1.5 million Back-Office Operations WellSky Corporation Overland Park E 593 $9.9 million Healthcare Software Charter Overland Park N 510 $18.9 million Back-Office Communications, Inc. Operations Torch Research, LLC Leawood N 490 $55 million Computer Programming Services Netsmart Technologies, Overland Park E 425 $11.4 million Computer Inc. Programming Services TriRx Pharmaceutical Shawnee N 250 $70 million Animal Services Pharmaceuticals Hilmar Cheese Dodge City N 247 $459.2 million Food Company Processing Hill’s Pet Nutrition, Tonganoxie N 85 $251.5 million Pet Food Inc. Processing Bartlett Grain Cherryvale E 50 $322.8 million Soybean Company, LP & Oilseed Processing Summit Sustainable Phillipsburg E 55 $251.4 million Food Ingredients, LLC Processing

with a new state-of-the-art production facility and distribution center in South Carolina. It’s a $423 million investment that will create 496 new jobs over several years. Butterball is expanding a pair of turkey processing plants in Arkansas, promising 360 new jobs. Tyson Foods plans to hire 376 people in Danville, Virginia, making nuggets from Virginia-raised chickens. The company also makes fully cooked chicken products in Silver

(pop. 2.93 million) States with populations under 3 million Sponsor: Kansas Department of Commerce

Shovel winner Mississippi — it’s expanding its Vicksburg operation and adding nearly 50 jobs. Tyson makes bacon, too, and plans to

IDAHO

employ 450 people doing just that

Silver Shovel Winner COMPANY

City/County

N/E

# Jobs

Inv. Amt.

in Gold Shovel honoree Kentucky. The facility in Bowling Green will Industry

Lamb Weston American E 180 $400 million Food Falls Processing AZEK Boise E 146 $107.6 million Outdoor Decking Jervois Mining Ltd. Salmon N 164 $180 million Minerals/ Metals Shell Wendall N 12 $100 million Renewable Natural Gas Morton Buildings American N 25 $7.2 milion Manufactured Falls Buildings Bare Beans Company Rupert N 63 $2.9 million Food Processing Artisan Labs Hansen N 170 $1.9 million Cosmetic Prep WASCO Emmett E 35 $2 million Measurement Equipment Hempitecture Jerome N 20 $3.7 million Hemp Insulation Revelry Ketchum N 29 $1 million Promotion/ Branding

(pop. 1.79 million) States with populations under 3 million Sponsor: Idaho Commerce

AREA DEVELOPMENT

52ADQ2.indd 66

produce the Wright and Jimmy Dean brands. Pets have to eat, too, a fact that is creating jobs all over. In Silver Shovel honoree Ohio, Royal Canin announced a new Harrison facility that’ll employ 224 people. In Arkansas, Mars Petcare is investing a quarter billion dollars in an expansion that could create 260 jobs. Kansas gains a new Hill’s Pet Nutrition manufacturing facility in Tonganoxie, also worth a quarter billion dollars and promising 85 jobs.

for free site information, visit us online at www.areadevelopment.com

5/25/22 3:45 PM

Follow the Yellow Brick Road

gold shovels

Back-to-back Gold Shovel wins in 2020 and 2021 pave a new road for capital investment in the sunflower state. We have the plan, the policies and the people in place to make your project a success. Kansas is more shovel-ready than ever! www.kansascommerce.gov @KansasCommerce

17th Annual

GOLD &SILVER SHOVEL AWARDS

N O N - M A N U FA C T U R I N G

Project Of The Year

And, as is the case every year, thou-

FinTech Leader Fiserv Adding Jobs in New Jersey

sands of jobs are on the way in the

Fiserv is a leader in the

The company has more than

logistics sector, getting all these

business of payments

a thousand on its payroll

goods to market or at least the next

and financial services

in New Jersey already,

stop in the supply chain. We’ve al-

part of its global count of

ready covered a number of them

technology, and it’s planning a big financial and

more than 40,000 employees. Its

above, including quite a few Amazon

job impact on the economy of

Berkeley Heights facility will be a

projects with a thousand jobs each.

Berkeley Heights, New Jersey.

strategic center of excellence for

Alabama has a pair of Amazon fulfill-

That’s where the company

technology and product innovation,

ment centers on the way, too — in

intends to add nearly 2,000

including an innovation lab focused

Huntsville and Montgomery — each

technology-related jobs as it

on new use cases for banking, com-

promising 500. Walmart is bring-

pumps $105 million into a new

merce, and money movement.

ing 400 distribution jobs to Lyman, South Carolina, and FedEx is bring-

campus.

Biotech/Pharma/Medical Devices (1,000+ jobs) Catalent Indiana, LLC

Bloomington, IN

Intuitive

2,378

$350 million

Pharmaceuticals

Peachtree Corners, E 1,200 $500 million GA

Surgical/Medical Instruments

Ellume

Frederick, MD

1,500

$106 million

Pharmaceuticals

Regeneron

Tarrytown, NY

1,000

$1.8 billion

Biotechnology

Life Technologies Corp.

Lebanon, TN

1,400

$182.8 million

Medical Devices

HQ/Corporate Services/FinTech/Info Tech (1,000+ jobs) Visa

Atlanta, GA

1,000

$31.9 million

Discover

Chicago, IL

1,000

$45 million

Fiserv

Berkeley Heights, NJ

1,927

$105 million

Apple

Wake, NC

3,000

$1 billion

North Charleston, SC

1,200

$3.4 million

Information Technology

Nashville, TN

8,500

$1.4 billion

Information Technology

City of Richmond, VA

1,984

$460.5 million

TELUS International Oracle America, Inc. CoStar Group

AREA DEVELOPMENT

52ADQ2.indd 68

FinTech Financial Services FinTech AI/Software

Corporate Services

for free site information, visit us online at www.areadevelopment.com

5/25/22 3:45 PM

NET ZERO

CARBON PRODUCTION BY 2050

19.1%

BELOW THE NATIONAL

AVERAGE RATES

100%

RENEWABLE ENERGY

STRUCTURE OPPORTUNITY

FOR LARGE CUSTOMERS

WE BREAK GROUND SO YOU CAN, TOO.

Thank you, Area Development Magazine, for naming Nebraska a Silver Shovel winner for the 4th time. This award underscores our commitment to drawing robust companies to Nebraska—companies that bring jobs and economic growth to the state. Our innovative rates, comprehensive renewables, and some of the nation’s best reliability make investing in Nebraska an easy choice. And the personal relationship the OPPD Economic Development Team can offer your business will get your project across the finish line, fast. We’re ready to work with you to find sustainable, customizable solutions that are just right for your business today and well into the future. Reach out to our Manager of Economic Development, Brook Aken, CEcD, today to learn more about our available sites:

beaken@oppd.com | 531-226-3728

oppd.com/econdev

17th Annual

GOLD &SILVER SHOVEL AWARDS

It’s been a big year for manufacturing as well as logistics news, getting all these goods to market — or to the next step in the supply chain.

MISSISSIPPI Silver Shovel Winner COMPANY

City/County

N/E

# Jobs

Inv. Amt.

Biewer Lumber Winona N 150 $130 million Milwaukee Tool Grenada N 1,200 $60 million Jones Hattiesburg N 230 $40 million Tyson Foods Vicksburg E 44 $60.9 million Edelbrock Olive Branch N 200 $14.4 million New Way Trucks Booneville E 120 $4 million Leisure Pools Picayune N 100 $3.3 million Waste Management Tupelo E 330 $660,000 Aerosafe Global Olive Branch N 100 $2.5 million Voyant Beauty Olive Branch E 80 $13.2 million

Industry Agribusiness Tools Headquarters Food Processing Automotive Automotive Swimming Pools Customer Service Pharmaceutical Packaging Personal Care & Beauty Products

ing 200 to Dothan, Alabama. Bath & Body Works Direct is expanding in Commercial Point, Ohio, to the tune of 500 fulfillment center jobs, and more than 800 new Ohio logistics/

(pop. 2.97 million) States with populations under 3 million Sponsors: Mississippi Development Authority; Mississippi Power

distribution jobs are on the way at Gabriel Brothers in Springfield.

Jobs Beyond Manufacturing

COMPANY

NEBRASKA

It has certainly been a year of big

Silver Shovel Winner

manufacturing news, but there are

City/County

N/E

# Jobs

Inv. Amt.

Nucor Corp. Norfolk E 500 $58 million Instinct Lincoln E 120 $180 million Duncan Aviation Lincoln E 75 $18 million Vericred Omaha N 40 $23 million Wholestone Farms Fremont E 1,000 $225 million Kawasaki Motors Lincoln E 550 $200 million Manufacturing Corp. Viridis Chemical LLC Columbus N 50 $44 million Facebook Papillion E 100 $400 million Heartwell Renewables Hastings N 50 $350 million

Industry Steel Pet Food Logistics/ Transportation Health & Data Services Food Processing Rail Car & Aerospace Bioscience & Renewable Chemicals IT & Data Service Bioscience

(pop. 1.96 million) States with populations under 3 million Sponsors: Omaha Public Power District; Nebraska Public Power District

AREA DEVELOPMENT

52ADQ2.indd 70

plenty of major projects that don’t involve making something. Indeed, the majority of the biggest deals in Silver Shovel honoree Florida were in sectors other than manufacturing. For example, business data provider Dun & Bradstreet announced plans to relocate its corporate headquarters to Jacksonville. That $75 million investment comes with some 500+ jobs averaging $77,000 in pay. Codeboxx Technology Corp. announced plans to move its headquarters from Canada to St. Petersburg,

for free site information, visit us online at www.areadevelopment.com

5/25/22 3:46 PM

Thrive on the cutting edge When considering a new industrial or commercial site for your next venture, readiness is critical. With strong community partnerships, seasoned industry insight and a commitment to driving continued economic growth in Southeast Mississippi, our team is poised to work with you to strategically optimize your time to market.

mississippipowerED.com

17th Annual

GOLD &SILVER SHOVEL AWARDS

The job losses associated with the pandemic have all but evaporated, with record levels of job creation and low unemployment rates.

where it will continue

ing 450 jobs at a new location in

its business of training

Cincinnati. That Silver Shovel state is

people in the lucra-

also celebrating a Bitwise innovation

tive work of coding —

center in Toledo. Next door, Indiana

that’s a 375-job deal. A

is big on manufacturing but also is

HackerUSA headquar-

celebrating the 405-job expansion of

ters expansion in Coral

the Indianapolis-based software-as-a-

Gables is worth more

service company Kennected and the

than 450 jobs involved

455-job expansion of Fort Wayne-

in tech training.

based Ruoff Mortgage.

Guidehouse, a con-

Over in Kansas, a couple of thou-

sultancy and solutions

sand jobs are being created collec-

provider, announced new

tively by new locations and expan-

global headquarters in Fairfax

sions in the areas of back-office operations and IT/computer program-

County, Virginia. The company says it will create more than 1,000

ming. That includes an MCI BPO call

new jobs over the next three years.

center in Wichita, a Charter Commu-

Landing, which offers members

nications support center in Overland

a nationwide network of fully fur-

Park, a Torch Research operation

nished apartments, is relocating its

in Leawood, and Overland Park ex-

headquarters from San Francisco to

pansions of Netsmart Technologies

Birmingham in Silver Shovel winner

and WellSky Corp. Some 400 new

Alabama. Its plans include 816 new

IT jobs are on the way in Sherwood,

full-time jobs. The portfolio of com-

Arkansas, at a Wipro expansion. In

panies known collectively as Jones is

Mississippi, Waste Management is

building a new corporate headquar-

expanding its Tupelo customer-ex-

ters facility in Hattiesburg, in Silver

perience operation and creating 330

Shovel honoree Mississippi. The $40

new jobs.

million investment will create some And finally, you can’t watch sports on

230 jobs.

TV without seeing ads touting fast-

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In Kentucky, winner of a Gold Shovel,

growing sports-gaming businesses,

Consumer Cellular Inc. is creating

including FanDuel. That giant is

486 full-time Louisville management

bringing more than 900 jobs to metro

and call center support jobs at a new

Atlanta at a new hub focused on soft-

customer support center. In Ohio,

ware engineering, product develop-

the consulting firm Protiviti is creat-

ment, IT, and program design. n

for free site information, visit us online at www.areadevelopment.com

5/25/22 3:46 PM

No matter where you start, we’re here to help.

Learn more at commerce.idaho.gov/silvershovel

17th Annual

GOLD &SILVER SHOVEL AWARDS

SPONSORS ALABAMA ALABAMA DEPARTMENT OF COMMERCE The Alabama Department of Commerce is the state’s lead economic development agency. In addition to business development activities, Commerce promotes exporting and international opportunities for Alabama companies, assists small businesses, and positions the state for film productions. Commerce is home to the state’s primary workforce development program, AIDT. Greg Canfield, Secretary Alabama Department of Commerce 401 Adams Ave PO Box 304106 Montgomery, AL 36130-4106 800-248-0033 contact@madeinalabama.com madeinalabama.com

ARIZONA ARIZONA COMMERCE AUTHORITY The Arizona Commerce Authority (ACA) is the state’s leading economic development organization with a streamlined mission to grow and strengthen Arizona’s economy. The ACA uses a three-pronged approach to advance the overall economy: attract, expand, create — attract out-of-state companies to establish operations in Arizona; work with existing companies to expand their business in Arizona and beyond; and help entrepreneurs create new Arizona businesses in targeted industries. Sandra Watson, President & CEO Arizona Commerce Authority (ACA) 100 N. 7th Ave., Suite 400 Phoenix, AZ 85007 602-845-1200 Azcommerce.com CITY OF MESA OFFICE OF ECONOMIC DEVELOPMENT With a population of more than 504,000, Mesa is the 37th largest city in the U.S. and second largest in the Phoenix-Mesa metro. Mesa has a long history of encouraging the growth of technology-focused companies across numerous industries. Such companies include Apple, AT&T, Boeing, Bridgestone, Meta, Northrop Grumman, Waymo, and others. Kim Lofgreen Marketing and Business Development Manager City of Mesa Office of Economic Development 20 E. Main St., Suite 200 P.O. Box 1466 Mesa, AZ 85211-1466 480-644-2398 kim.lofgreen@mesaaz.gov w w w. S e l e c t M e s a . c o m GILBERT ECONOMIC DEVELOPMENT Gilbert, Arizona, is capitalizing on the community’s existing research and development activity, skilled workforce, and collaborative efforts to be a regional and national leader within technology-focused industry sectors. With a flourishing downtown and top-rated entertainment facilities, Gilbert has emerged as a top Arizona destination to live, work, and play. Jennifer Graves, Deputy Director Gilbert Office of Economic Development City of Gilbert 480-503-6971 • Cell: 480-815-5539 J e n n i f e r. G r a v e s @ G i l b e r t A Z . g o v w w w. G i l b e r t E D I . c o m

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SALT RIVER PROJECT (SRP) SRP is a community-based, not-for-profit public power utility and the largest provider of electricity in the greater Phoenix metropolitan area, serving more than 1 million customers. SRP is also the metropolitan area’s largest supplier of water, delivering about 800,000 acre-feet annually to municipal, urban, and agricultural water users. Karla Moran, Principal, Economic Development Salt River Project P.O. Box 52025 Phoenix, AZ 85072-2025 602-236-2396 Mobile: 480-748-9291 Karla.Moran@srpnet.com P o w e r To G r o w P H X . c o m

ARKANSAS ARKANSAS ECONOMIC DEVELOPMENT COMMISSION The Arkansas Economic Development Commission creates economic opportunity by attracting higher-paying jobs, expanding and diversifying local economies, increasing incomes and investment, and generating growth throughout Arkansas. Arkansas is a pro-business environment, operating leaner, faster, and more focused through a streamlined state government that acts on corporate interests quickly and decisively. Learn more at arkansasedc.com. Clark Cogbill, Director of Marketing Arkansas Economic Development Commission 1 Commerce Way, Ste. 601 Little Rock, AR 72202 501-682-5996 ccogbill@arkansasedc.com arkansasedc.com

FLORIDA ENTERPRISE FLORIDA From a talented workforce to a strategic geographic location, Florida has the boundless resources businesses need to grow. Freedom from high taxes and prohibitive regulations make Florida the Tax Foundation’s #1 tax climate in the Southeast and a top state for business. Learn how Florida can help your business thrive. Destin Wells, SVP Business Development Enterprise Florida, Inc. 800 North Magnolia Ave., Suite 1100 Orlando, FL 32803 407-956-5600 dwells@enterpriseflorida.com Enterpriseflorida.com

GEORGIA GEORGIA DEPARTMENT OF ECONOMIC DEVELOPMENT How do you build a top state for business? You start with a prime geographic location with global access, the world’s busiest airport and fastest-growing seaport, and a well-educated and trained workforce— all of this supported by state leadership focused on a partnership approach to ensure your success. Now more than ever, business wants what Georgia has. Georgia Department of Economic Development 75 Fifth St NW, Suite 1200 Atlanta, Georgia 30308 404.962.4000 Georgia.org

for free site information, visit us online at www.areadevelopment.com

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SELECTCOBB Devoted to fostering strong economic development in Cobb County, Ga., SelectCobb is a partnership that works to attract top-tier enterprises and talent. With our impressive array of competitive advantages to support growth — a world-class workforce, a healthy business climate, and an enviable location — we’re excited to welcome even more of the world’s trailblazers and industry leaders. Dana Johnson, Executive Director SelectCobb 1100 Circle 75 Pkwy., Ste. 1000 Atlanta, GA 30339 770-859-2358 d j o h n s o n @ c o b b c h a m b e r. o r g w w w. c o b b c h a m b e r. o r g

IDAHO IDAHO COMMERCE Idaho boasts one of the nation’s strongest state economies, is one of the nation’s least regulated states, and has made significant investments in transportation and broadband infrastructure. Idaho is the perfect place to grow. Hear from businesses who have grown with us at commerce.idaho. gov/silvershovel. Idaho Department of Commerce 700 W State St. Boise, ID 83702 208-334-2470 info@commerce.idaho.gov commerce.idaho.gov

KANSAS KANSAS DEPARTMENT OF COMMERCE Kansas Commerce is leading the state’s economic development efforts by applying our Framework for Growth and newly modernized incentive programs for the benefit of all Kansans. Our wholistic approach to community development, workforce development, and business development enhances the quality of life our state is known for. Paul Hughes, Deputy Secretary Kansas Department of Commerce 1000 SW Jackson Street, Suite 100 Topeka, KS 66612 785-296-3481 commercenews@ks.gov w w w. k a n s a s c o m m e r c e . g o v

KENTUCKY KENTUCKY CABINET FOR ECONOMIC DEVELOPMENT From single-employee startups to century-old brands, Team Kentucky helps businesses of all sizes select, grow, and succeed in Kentucky. With experts in Europe, Asia, and throughout the Bluegrass, Team Kentucky responds quickly, builds long-term relationships, assists with workforce training, and assures companies get the resources they need for success Kristina Slattery, Deputy Commissioner, Business Development Kentucky Cabinet for Economic Development Old Capitol Annex , 300 W Broadway Frankfort, KY 40601 502-564-7670 E c o n D e v @ k y. g o v C E D . k y. g o v h t t p s : / / c e d . k y. g o v

When Virginia partners with business, everyone wins Congratulations to the Commonwealth of Virginia and Virginia Economic Development Partnership for being recognized as Area Development’s Gold Shovel Award Winner. Stafford County salutes our outstanding state partners! Stafford welcomes our new investors: DHL, Amazon, Merritt Properties, FedEx, Peterson Companies, Flint Development, Matan Companies and more.

Located midway up the Eastern Seaboard, Stafford has an unbeatable last-mile advantage for logistics and technology ﬁrms with easy access to DC, and the lowest lease and land rates in Northern Virginia. The Stafford Advantage includes prime location, low business costs, and industry incentives speciﬁc to client needs. What’s Next? Stafford. Call 540-658-8681 or email econdev@staffordcountyva.gov

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LOUISIANA LOUISIANA ECONOMIC DEVELOPMENT Louisiana Economic Development is responsible for strengthening the state’s business environment and creating a more vibrant Louisiana economy. In 2021, LED attracted 64 new economic development projects representing over 18,100 new direct and indirect jobs, 9,700 retained jobs, and more than $20.5 billion in new capital investment. LED cultivates jobs and economic opportunity for the people of Louisiana and promotes business opportunity for employers of all sizes. Louisiana Economic Development 617 North 3rd Street Baton Rouge, LA 70802 2 2 5 - 3 4 2 - 3 0 0 0 • To l l F r e e : 8 0 0 - 4 5 0 - 8 1 1 5 OpportunityLouisiana.com SOUTHWEST LOUISIANA ECONOMIC DEVELOPMENT ALLIANCE The Southwest Louisiana Economic Development Alliance is the Chamber SWLA and the SWLA Alliance Foundation. We are here to serve expanding companies by helping to facilitate your projects. We serve five parishes (counties) of Allen, Beauregard, Calcasieu, Cameron, and Jefferson Davis parishes in Southwest Louisiana, on the I-10 corridor between Houston and New Orleans. George Swift, President/CEO The Southwest Louisiana Economic Development Alliance P. O. Box 3110 Lake Charles, LA 70605 337-433-3632 gswift@allianceswla.org w w w. C h o o s e S W L o u i s i a n a . o r g

MISSISSIPPI MISSISSIPPI DEVELOPMENT AUTHORITY The Mississippi Development Authority is the state’s lead economic and community development agency, with approximately 300 employees

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providing services to businesses and communities throughout the state. MDA works to recruit new business to Mississippi and retain and expand existing industry and business. The agency also promotes tourism throughout the state. Laura Hipp, Deputy Executive Director Mississippi Development Authority 501 N. West Street Jackson, MS, 39201 P.O. Box 849 Jackson, MS, 39205 601-359-3449 or 1-800-360-3323 lhipp@mississippi.org mississippi.org MISSISSIPPI POWER Mississippi Power is a one-stop resource for your project needs. We have the market experience, established contacts, knowledge of available sites, and can assist with making the right connections to make the process seamless. Mississippi Power Economic Development 2992 W. Beach Blvd. Gulfport, MS 39501 1-800-528-5196 mpcecodev@southernco.com mississippipowerED.com

NEBRASKA OMAHA PUBLIC POWER Omaha Public Power District’s blend of innovative rates, comprehensive renewables, and some of the nation’s best reliability make it just right for businesses. OPPD serves a population of 853,000 in 13 southeastern counties including Omaha and is the 12th largest electric public power utility in the U.S. per number of customers. Check out https://www.oppd. com/media/216550/quick-facts.pdf for more information on OPPD.

for free site information, visit us online at www.areadevelopment.com

5/27/22 3:25 PM

Brook Aken, CEcD, Manager Economic Development Omaha Public Power District 444 South 16th Street Mall, 2E/EP2 Omaha, NE 68102-2247 531-226-3728 888-781-4415 beaken@oppd.com oppd.com/business/economic-development NEBRASKA PUBLIC POWER DISTRICT Pair up reliable, low-cost clean energy with available sites and buildings, and a statewide teamwork approach with utility partner Nebraska Public Power District; discover why businesses love being in Nebraska. Always there when you need us. Learn more about Nebraska Public Power District’s economic development program at sites.nppd.com. Nebraska Public Power District Economic Development 1414 15th Street Columbus, NE 68602 402-563-5534 To l l F r e e : 8 7 7 - 2 7 5 - 6 7 7 3 econdev@nppd.com sites.nppd.com

NEW JERSEY CHOOSE NEW JERSEY Choose New Jersey is a privately funded 501 (c)(3) economic development organization with a mission to stimulate job creation and attract capital investment to New Jersey.

Cathy Scangarella, Chief Business Development Officer Choose New Jersey One Gateway Center 11-43 Raymond Plaza W #1420 Newark, NJ 07102 609-297-2203 cscangarella@choosenj.com w w w. c h o o s e n j . c o m

NEW YORK WESTCHESTER COUNTY Located 30-minutes from New York City, Westchester County, New York, is home to more than 200 companies and a labor force of more than 520,000. Westchester has a history of business excellence – from Fortune 500 companies like IBM, Pepsi, and Mastercard to bioscience giants like Regeneron to diverse startups. Bridget Gibbons, Director, Economic Development Westchester County 914-995-2952 B G i b b o n s @ w e s t c h e s t e r g o v. c o m https://westchestercatalyst.com

NORTH CAROLINA GREENVILLE EASTERN NORTH CAROLINA (ENC) ALLIANCE The Greenville Eastern North Carolina (ENC) Alliance is a public-private partnership that provides a comprehensive and collaborative approach to business recruitment, retention, and expansion in eastern North Carolina. The organization focuses on supporting existing industries while maximizing opportunities for new investment, job creation, and economic growth.

ai164728516144_GA Trend SC Workforce Half Page Ad.pdf 1 3/14/2022 3:12:42 PM

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Uconda Dunn, Vice President of Business Development Greenville Eastern North Carolina (ENC) Alliance 209 E. Fifth Street Greenville, NC 27858 252-751-3416 dunn@encalliance.com w w w. e n c a l l i a n c e . c o m NASH COUNTY Nash County is a thriving community uniquely located between the Research Triangle Region and I-95. The county offers a diverse workforce and industrial base, strong economy, a welcoming quality of life, and a lowcost location for growing small and large businesses. Always remember, Nash County is “Open for Business.” J. Andrew (Andy) Hagy, Director, Department of Economic Development County of Nash 120 West Washington Street, Suite 3072 Nashville, NC 27856 252-462-2737 Cell: 252-903-2292 A n d y. h a g y @ n a s h c o u n t y n c . g o v w w w. s e l e c t n a s h n c . c o m PITT COUNTY ECONOMIC DEVELOPMENT Pitt County Economic Development (PCED) is a department of Pitt County government in Greenville, NC, also known as the Greenville, NC MSA. PCED initiates, supports, and facilitates economic growth opportunities for Pitt County and eastern North Carolina through industry and talent retention, expansion, and attraction initiatives. Kelly Andrews, Director Pitt County Economic Development 111 S Washington St. Greenville, NC 27858 252-902-2075 K e l l y. a n d r e w s @ p i t t c o u n t y n c . g o v w w w. p i t t c o u n t y n c . g o v ROCKINGHAM COUNTY ECONOMIC DEVELOPMENT, SMALL BUSINESS AND TOURISM Rockingham County is experiencing exciting growth. With two interstates flanking both sides of the county, a regional workforce capable of meeting all employment needs, and a favorable cost-of-doing business environment, it is no wonder companies like Pella, Ontex, Nestle Purina, and Farmina have recently chosen to locate new facilities here. Tara Martin, Marketing Manager Rockingham County Economic Development, Small Business and Tourism 425 NC Hwy 65 Reidsville, NC 27320 336-342-8138 tmartin@co.rockingham.nc.us w w w. g o r o c k i n g h a m c o u n t y n c . c o m TOWN OF HOLLY SPRINGS Holly Springs is a global biomanufacturing hub located in Wake County, N.C., the third-fastest growing county in the country. Located minutes from the Raleigh urban core, an International Airport, Research Triangle Park, and three tier one research universities, Holly Springs boasts an ecosystem encompassing infrastructure, diverse talent, affordability, and quality of life. Come join the family! Irena Krstanovic, Director of Economic Development Town of Holly Springs 128 S Main St. Holly Springs, NC 27540 919-557-3923 Irena.krstanovic@hollyspringsnc.gov h t t p s : / / w w w. h o l l y s p r i n g s n c . u s / 1 8 0 7 / E c o n o m i c Development

OHIO JOBSOHIO JobsOhio is the state’s economic development organization charged with driving job creation and capital investment in Ohio through business attraction, retention, and expansion efforts. JobsOhio collaborates with public and private partners across Ohio to address the needs of growing businesses and support them with the resources necessary to succeed.

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Andrew Deye, VP, Strategy JobsOhio 41 S High St. #1500 Columbus, OH 43215 1-855-874-2530 JobsOhio.com ONE COLUMBUS One Columbus is the economic development organization for the 11-county Columbus Region. Working with local and state partners, we serve as the business location resource for companies across Central Ohio and around the world as they grow, innovate, and compete within the global economy. One Columbus 150 S. Front St. Suite 200 Columbus, OH 43215 614-225-6063 info@columbusregion.com columbusregion.com

SOUTH CAROLINA CENTRAL SOUTH CAROLINA ALLIANCE The Central SC Alliance (CSCA) is focused on cultivating economic advancement and enrichment in the heart of South Carolina. As the Central SC Region’s lead economic development organization, the CSCA represents eight member counties and the state’s capital city in recruiting companies from around the world. Nelson Lindsay, President & CEO Central South Carolina Alliance 1201 Main Street, Ste. 100 Columbia, SC 29201 803-733-1144 nlindsay@centralsc.org centralsc.org CHESTER COUNTY ECONOMIC DEVELOPMENT Chester County, S.C., the #1 manufacturing community in the Charlotte region and #1 in manufacturing job growth, is home to more than 50 manufacturers across industrial sectors. Over the past five years, CCED has made 19 announcements with $884.4 million in new capital investment and the creation of 1,484 jobs. Robert D. Long, CEcD Director Chester County Economic Development 3200 Commerce Drive, Suite B Richburg, SC 29729 803-377-1216 803-209-9133 (mobile) r l o n g @ c h o o s e c h e s t e r. c o m C h o o s e C h e s t e r. c o m COUNTY OF LEXINGTON Lexington County is home to some of the world’s most recognizable brands, including Amazon, UPS, Michelin, and Nephron Pharmaceuticals, which was recently named the county’s fastest-growing company. With manufacturing as our 3rd largest industry, in 2021, the county announced $364 million in investment and the creation of 472 jobs. Sarah J. Johnson, Director, Department of Economic Development County of Lexington, South Carolina 212 South Lake Drive; Suite 502 Lexington, SC 29072 803-785-6822 Cell: 803-904-2530 sjjohnson@lex-co.com w w w. L e x i n g t o n C o u n t y U S A . c o m

TENNESSEE TENNESSEE DEPARTMENT OF ECONOMIC AND COMMUNITY DEVELOPMENT It’s no accident that some of the biggest and most respected brands in the world have chosen to call Tennessee home. We provide companies a central location with unparalleled infrastructure, a highly qualified workforce backed by game-changing education reform, a low tax burden, and a collaborative environment with a business-friendly administration.

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Allen Borden, Deputy Commissioner, Business, Community and Rural Development Tennessee Department of Economic and Community Development Tennessee Tower, 27th Floor 312 Rosa L. Parks Ave. Nashville, TN 37243 615-741-1888 https://TNECD.com

TEXAS AMARILLO ECONOMIC DEVELOPMENT CORPORATION In attitude and approach, Amarillo is unlike most cities. Located in the middle of everywhere, Amarillo’s growing, dynamic workforce and favorable business climate support the vitality of diverse industries. The Amarillo Economic Development Corporation invites businesses and talent to take root, grow, and thrive in the Amarillo community. Hollie Shankle, Director of Business Development Amarillo Economic Development Corporation 1600 W. Tyler, Suite 1600 Amarillo, Texas 79101 806-379-6411 hollie@amarilloedc.com Amarilloedc.com CONROE ECONOMIC DEVELOPMENT COUNCIL Conroe, Texas, 40 miles north of Houston in booming Montgomery County, is the premier destination for you and your business. Idyllic business parks, convenient location, innovative infrastructure, skilled workforce, and premier educational opportunities make Conroe a top destination. With so much to offer, it’s no wonder More Is Made Here!

Danielle Scheiner, Executive Director Conroe Economic Development Council 300 W Davis St., Ste 510 Conroe, TX 77301 936-538-7118 info@conroeedc.org w w w. C o n r o e E D C . o r g DEVELOPMENT CORPORATION OF ABILENE The DCOA is the economic development driver of Abilene, Texas, with the goal to increase job opportunities and capital investment, as well as recruit and retain companies for Abilene. The DCOA leverages a partnership called DevelopAbilene to market Abilene as the premier location for business. Learn more at www.DevelopAbilene.com. Misty Mayo, President & CEO Development Corporation of Abilene 174 Cypress Street, Suite 301 Abilene, TX 79601 325-676-6390 M i s t y. M a y o @ a b i l e n e d c o a . c o m w w w. D e v e l o p A b i l e n e . c o m LUBBOCK ECONOMIC DEVELOPMENT ALLIANCE A highly skilled workforce, connection to national and international markets, and affordable cost of living make Lubbock the ideal location to grow. We understand the challenges in choosing a new location; our team approaches each situation with a solution-driven mentality to ensure the decisionmaking process is as seamless as possible.

Today’s Gallo Tomorrow’s Chester

Come discover why E. & J. Gallo Winery chose Chester County, SC, to invest $423 million and create 496 jobs for their new production and regional distribution center. Chester County is the #1 manufacturing community in the Charlotte region and is #1 in manufacturing job growth.

803.377.1216

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David Rushing, Director of Business Recruitment Lubbock Economic Development Alliance 1500 Broadway, Suite 600 Lubbock, Texas 79401 800-687-5330 lubbockeda.org

VIRGINIA CITY OF RICHMOND Whether you’re relocating, expanding, or starting a new business, the Richmond Department of Economic Development offers services designed to make your site selection simple and painless — with a robust sites and buildings database, up-to-date demographic and area data, and more. We are here to help you be successful. Leonard L. Sledge, Director of Economic Development City of Richmond 1500 East Main St, Suite 400 Richmond, VA 23219 804-646-7576 L e o n a r d . S l e d g e @ R VA . g o v w w w. r v a . g o v / e c o n o m i c - d e v e l o p m e n t / HENRICO ECONOMIC DEVELOPMENT AUTHORITY From state-of-the-art advancements in infrastructure to top tier talent and everything in between, you’ll find what you need to succeed in Henrico: #1 fastest data speeds in history; 1,000 new jobs created by Amazon; 1 of the largest swimming venues in the U.S.; 3 new “high schools of the future.” Anthony Romanello, Executive Director Henrico Economic Development Authority 4300 E Parham Rd. Henrico, VA 23228

804-501-7521 anthony@henrico.com w w w. h e n r i c o . c o m STAFFORD COUNTY DEPARTMENT OF ECONOMIC DEVELOPMENT & TOURISM Located midway up the Eastern Seaboard, Stafford County, Virginia has an unbeatable last-mile advantage for logistics and technology firms with easy access to DC, and the lowest lease and land rates in Northern Virginia. The Stafford Advantage includes prime location, low business costs, and industry incentives specific to client needs. Josh Summits, Business Development Officer Stafford County Department of Economic Development & Tourism 540-658-8664 jsummits@staffordcountyva.gov w w w. g o s t a f f o r d v a . c o m / w a r e h o u s i n g - d i s t r i b u t i o n / VIRGINIA ECONOMIC DEVELOPMENT PARTNERSHIP Virginia continues to raise the bar when it comes to talent development. Programs such as the Virginia Talent Accelerator Program and the Tech Talent Investment Program make sure Virginians are prepared for the jobs of today and the future. Jason El Koubi, CEO Virginia Economic Development Partnership 901 East Cary Street Richmond, VA 23219 804-545-5600 info@vedp.org w w w. v e d p . o r g

Reliable, low-cost power — plus a new attractive tax incentive for data centers — make Nebraska a great choice for new and expanding businesses. Contact Nebraska Public Power Districts’s experienced economic development team to find out more about our renewable and energy efficient options, shovel-ready sites, productive workforce and helpful attitudes.

Visit sites.nppd.com.

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for free site information, visit us online at www.areadevelopment.com

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BUSINESS GLOBALIZATION

Foreign-Trade Zones: The Best, Zero-Cost Incentive for Your Business FTZs can bring in millions of dollars in additional profits and cost very little to maintain relative to the investment. By Curtis Spencer, CEO, IMS Worldwide Inc.

ven though the FTZ program was created in 1934, its relevance today is huge. After the year 2002, when Customs allowed for weekly entry (which greatly increased the demand for zones in warehouse and fulfillment centers), the FTZ program entered an even more lucrative incentive profile. This profile is enhanced by the fact that over the last five years the U.S. government has decided to manipulate global trade that results in imports into the U.S. by increasing duty rates by a factor of 10. Prior to the Trump administration, the average duty rate in America for most imported goods was 2 percent. After the Trump years, and furthered by the Biden administration, the average duty rate right now for over $4 trillion worth of consumer products and retail goods is standing at around 20 percent. When I say $4 trillion, I’m talking about the sales price you and I pay as American buyers. Therefore, for companies that must work in the global environment, which is most of our retail brands and our consumer products, and the many parts and suppliers used in manufacturing, the FTZ is now essential. It’s not that everyone has decided to use an FTZ yet, but the rationale for FTZ use has

ZONE STRUCTURE Secretary of Commerce

U.S. ForeignTrade Zones Board

Secretary of Treasury/DHS

Local Customs

Local Grantee Grantee/ Operator

Customs Regulations

Site 1 UsageDriven Site Operator

Subzone Operator

Zone Operator

(Single or Multiple)

Site 2 (Industrial Park)

Zone User

Customs Broker

increased by 1,000 percent! Never in the history of the zone program have the FTZ benefits become more of an incentive for relocating, expanding, and helping current businesses compete in the marketplace. This program provides a federal incentive that impacts fees, federal taxes, and federal costs of importing into the United States. It works

just as well for manufacturers, warehouse/distribution companies, third-party logistics operators, and e-commerce players. If you’re involved in any kind of importing, then a foreign-trade zone is a must. If even 10 or 20 percent of a giant warehouse is filled with imported goods, the foreign-trade zone is a perfect way to mitigate those inAREA DEVELOPMENT | Q2 2022

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MERCHANDISE PROCESSING FEES EXPLAINED 20 receipts inbound per week. MPF $10,120

Shipments into Site In a single week and FTZ importer can save $9,694/week in MPF fees, or

Pre-Foreign-Trade Zone

$504,088 per YEAR!

75 shipments out per week; one entry filed at End of Week. MPF $506 Shipments into commerce with weekly entry.

the goods leave the zone, i.e., after they are sold)

Foreign-Trade Zone

FTZ Benefits So, what are the benefits of a foreign-trade zone? How are they used by companies to provide additional profits and create PPVs? It’s very simple in principle, but it has nuances and details just like any other tax incentive that you would use. The first and most important component of whether an FTZ works for a particular company is the evaluation of your level of imports. You can’t have foreign-trade zones benefit (savings) unless a company is importing AREA DEVELOPMENT

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• • Duty elimination (from scrap or exports) • • Duty reduction (through the inverted tariff process, only allowed in FTZs) • • D uty deferral (payment of very high duties only when • • D rastic reduction of merchandise processing fees

creased tariff rates. Let me get into the weeds a little bit about the FTZ benefit structure so that it becomes very clear as to how this program is a federal incentive to be used at the local level. The first thing to notice is that the foreign-trade zone program is built around a local grantee who has been given the approval by the federal government to establish, operate, market, and develop an FTZ in a given region. Every single state in the United States has a foreign-trade zone. There is no excuse now for not utilizing this mechanism. Knowledge of the program is still very limited as it appears to be a “dark art” or unbelievable benefit. At least that is what I hear when I travel around the country and speak about this program at various seminars and conferences. However, if you can learn the FTZ program benefits structure, how to spot potential FTZ benefits inside your own firm, you will enhance profit, create purchase price variances (PPVs), and get the attention of senior management. This has been proven over and over in zones in Houston, Los Angeles, Fort Worth, western Metro Phoenix, and the Central Valley in California. In just 10 years, a new foreign-trade zone located in the West Valley of Maricopa County, in Greater Metro Phoenix, has delivered a $2.4 billion economic impact annually on the Arizona economy.

something. So, the first and most important component of your analysis has to be whether or not you have imports. These can be direct imports or indirect imports, i.e., your firm is the importer of record, or you buy from someone who you know gets the product from imports. Once you determine your import level, then the benefit streams are as follows:

(MPFs) (see accompanying illustration)

This major benefit is the result of weekly entry being approved by Congress and then by Customs, allowing for one weekly entry to be filed by the importer, instead of one entry per bill of lading (import paperwork), or per container, etc. For large distribution centers and fulfillment centers that are usually pulling in 10–100 entries per week, the benefit is now very large, since the MPF was raised to over $500 per entry. Rule of thumb: If you are a distribution center (DC) or fulfillment center (FC) with imported goods, and you occupy more than 300,000 square feet inside a DC or FC, you probably qualify! Duty Elimination: Duty elimination occurs under two different scenarios: first, exports, when the exports were part of a manufacturing process; and secondly, through scrap. Imagine a company imports steel in coils and cuts those coils down to size. The average scrap rate is anywhere from 1 percent to 5 percent. When the duty rate on steel was 2 percent to 6 percent, these types of savings really did not matter. However, now the rate ranges greatly with some being 15 percent; and certain steel from certain locations is up to 51 percent duty rate! Now you see we have a huge benefit in not paying the duty on scrap. This is the same thing as duty not being payable on pink sweaters that got water damaged in the container. If the normal duty rate of the sweaters is 20 percent but is now higher because of the China 301 additional tariffs of 25 percent, the sweater duty rate is now 45 percent! If the whole container worth of water damaged sweaters must be destroyed, you will not only get your insurance to pay for the sweaters (including the duty rate), but you will also get the 45 percent duty back from Customs! Duty Reduction: This is my favorite form of benefit from FTZs. However, it is more complicated now with the 301 tariffs, but it is also in major use all over the U.S. If you import parts or raw materials into an FTZ (and this is only in a U.S. FTZ because of U.S. tariff laws), there is a very good chance that the duty rate on the parts will be more than the duty rate on the finished product that you for free site information, visit us online at www.areadevelopment.com

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are producing in the U.S. This does not make any sense, but tariffs began in 1779 and continue as upside down type tariffs today. So, in the 1950s, Congress amended the FTZ law to allow all those higher duty rates to be lowered to match the finished product rate for U.S. FTZ users! This is an enormous incentive because it levels the playing field for U.S. manufacturers, assemblers, etc. that compete with foreign-sourced producers. Those foreign competitors are buying those parts duty-free or at lower duty rates and assembling to sell to the USA and now U.S. producers can too. For example, cell phones imported carry a zero percent duty rate. The batteries, which must be imported separately because of fire hazard issues, carry a rate of 4.9 percent. Therefore, if I assemble the finished phone inside of an FTZ, I can lower the battery rate to zero percent. This will allow the producer to greatly save on the imported cost of the phone in total. This happens today for pharma, oil, autos, EVs, refrigerators, electronic doors, chips, Red Bull, for anything you can think of! Duty Deferral: This benefit, for the last 20 years, was the least beneficial one inside the FTZ tool kit. However, with duty rates now over 20 percent on average, especially for smaller importers, this is now a significant benefit. For example, if you import $1 million in men’s suits, where the normal duty rate is 25 percent, and now with the 301 duties on men’s suits adding another 25 percent, you are paying 50 percent duty. The $1 million purchase now costs $1.5 million to import. Your costs have gone up tremendously. However, in most consumer goods cases, you’re buying at $1 million and selling at $3 million, so you’ve got some margin to work with. In an FTZ, you don’t pay the $500,000 in duty until you sell the units out of your warehouse to the buyer. You have “deferred” a ginormous cost until the sale is completed; therefore, the cash flow “hit” is not so badly felt. And the outbound duty payments can be on a single suit, and you still don’t pay the duty on the rest until they are sold. In fact, you can hold that inventory until the units sell for as long as it takes, never having to pay the 50 percent duty until the suits sell. For smaller to medium sized-companies, this cash flow savings is the bomb!!

Using the Program

ROBUST WORKFORCE

STRONG QUALITY OF LIFE

CONVENIENT INFRASTRUCTURE AND MOBILITY

So, now that you understand the FTZ benefits a little better, how do you use the program to secure these additional profits and/or PPVs for your company? 1. G et a cost-benefit analysis performed by your CPA or your import compliance department. 2. Understand the operational requirements to manage an FTZ. It’s not rocket science, and there are very sophisticated, cloud-based, leasable software systems

Continued on page 98

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LIFE SCIENCES

Retrofitting Office Space to Attract Life Sciences Companies In the life sciences industry, business is booming; here’s how office buildings can satisfy the sector’s unflagging demand for space. By John O’Reilly, Global Lead; and Aisling Crowley, Head of Client Relations & Strategy; Unispace Life Sciences

n recent years, record-breaking investment flowing into the life sciences sector has prompted unprecedented growth. As life sciences firms expand their facilities to keep up with demand, available space to accommodate these growing businesses — especially in well-known industry clusters like San Diego, Boston, and the San Francisco Bay Area — remains scarce. Leasing space in traditional office buildings can provide a solution for life sciences companies with dry lab needs, as well as those involved in cell and gene therapies and R&D. For office landlords grappling with uncertainty as other industries embrace remote and hybrid work policies, the life sciences sector represents an untapped potential revenue stream. Additionally, in regions with the talent pipeline to sustain a life sciences cluster, retrofitting existing offices to meet these companies’ needs presents an opportunity for economic development organizations (EDOs) and developers to attract new businesses in this booming sector — without making significant upfront investments in new construction. It’s important for building owners and tenants alike to note that there’s more to adapting traditional office spaces to accommodate life sciences firms than simply bringing in lab benches and microscopes, and not every office building will be able to accommodate these companies’ needs. Here are the top three questions to explore when considering retrofitting office space for life sciences companies:

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1. Which life sciences tenants can realistically operate in an office building? Whether or not a particular life sciences tenant will be able to operate in an office building depends largely on the functions and activities that will be performed in the space. For example, wet labs where scientists work with biological materials rely on specialized systems for air filtration, plumbing, waste disposal, life safety, and fire protection. These systems tend to require significant more retrofitting and development to meet strict standards. But a dry lab, where the focus is on material science or electrical engineering, may lend itself more readily to an existing office location, even if the space wasn’t originally designed for lab work. Dry labs will require more robust MEP systems than a typical office tenant, but such equipment is not as displacing as systems required for wet labs. In addition to accommodating specialized equipment and infrastructure, the amount of space needed is a key consideration for determining what kinds of life sciences tenants an office building could host. Companies that are at commercialization stages or are GMP regulated will need a lot more square footage, and they may need additional space considerations such as loading and dock stations. Finally, building owners and companies need to consider the building’s other tenants, as well as any residential neighbors. Labs that expel chemical fumes via for free site information, visit us online at www.areadevelopment.com

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Best education system. Best pizza. Best golf course. #1 ranked place to live, obviously. With this combination, it’s easy to see why thousands of companies call New Jersey home. The benefits of living, working, and doing business here are wonderfully self-evident. We’re not just any state. We’re the State of Innovation.

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exhaust fans cannot be located adjacent to apartment buildings with outdoor space. And any facility where workers will be transporting hazardous materials in and out should have its own separate loading dock, a dedicated service elevator, and private storage areas. No office worker wants to share an elevator with someone in a hazmat suit carrying a cooler labeled “BIOHAZARD.”

2. What technical and facilities needs should office buildings be prepared to address?

“

Leasing space in traditional office buildings can provide a solution for life sciences companies with dry lab needs, as well as those involved in cell and gene therapies and R&D.

While some life sciences companies may have similar needs to a traditional corporate office tenant, others will require certain structural features and specifications that may not already be included in the space. The first and perhaps most important is sufficient access to power: on average, life sciences tenants use seven times as much electricity as regular office tenants due to air conditioning, exhaust fans, electrical load systems, and other specialized equipment. On a similar note, owners must ensure that the building floors can support any heavy equipment the tenant will need to install. In offices that are being retrofitted to include lab space, it’s important to keep in mind that these facilities require more complex mechanical systems as well as more risers and shafts than one might find in a typical office building. Labs may also require systems for vibration monitoring, disposing of chemical waste, and a more extensive HVAC system to maintain a highly controlled environment. Landlords and tenants — as well as their design and engineering partners — will need to work collaboratively to assess what’s possible and how to make modifications as needed. Lastly, landlords need to understand that these spaces may need to adhere to regulatory requirements and more stringent ESG (environmental, social, and governance) parameters depending on what the lab is researching or producing. Again, waste, water systems, and use of special gasses will need to be licensed appropriately if required.

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3. What sort of space will be attractive to life sciences companies?

Each company’s wants and needs for its space will be unique, but building owners seeking to attract tenants in the life sciences industry should familiarize themselves with these businesses’ preferences and requirements — and, if necessary, renovate their spaces accordingly. Broadly speaking, life sciences companies tend to value layouts with an open floor plan to facilitate collaboration and engagement. Comfortable break rooms that allow scientists and other staff to step away from their work and briefly recharge are also a popular feature. Depending on the type of equipment the tenants will need to install, it may also be necessary to make structural renovations, such as raising ceiling heights or building out the private loading docks and service elevators mentioned above. Landlords also need to consider usability characteristics that are unique to modern lab settings and go beyond square footage. Ensuring access to key talent, services, and utilities will be a winning formula for landlords. For example, with life sciences tenants shifting to digital processes and investments in data-driven research, access and integration to IT systems is essential. The most desirable facilities for longer-term tenants will also be able to accommodate future advancements and growth as they move beyond the R&D stage and begin to commercialize products. While the outlook for office space in many industries is uncertain given the shift to remote and hybrid work, the continuous discovery of new gene therapies, delivery technologies, and drugs in different molecules has led to a surge in demand for space within the booming life sciences sector. As developers and EDOs explore ways to establish new life sciences clusters in their communities, there is a growing opportunity to retrofit office buildings to accommodate these businesses. By asking strategic questions and working with well-rounded partners who understand the engineering, workplace, and design needs of the life sciences industry, these stakeholders can work together to identify and create spaces that satisfy all parties’ needs. n

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LIFE SCIENCES

Innovative and Collaborative Design Sets the Stage for Life Science Innovation Life science labs need to accommodate present and future equipment needs and, most importantly, collaboration among the scientists and others who work there. By Dr. Suzet McKinney, Principal and Director of Life Sciences, Sterling Bay

cutter lab designs that have prevailed for decades in the t is a thrilling time to be in the life sciences. life sciences no longer meet modern needs. An emergInvestment and employment in this sector have seen ing generation of life science workers in the biotech, unprecedented gains, especially since the outbreak medtech, and biopharma industries is increasingly of the COVID-19 pandemic. At the same time, the demanding more from speed of innovation their lab environments. has accelerated, as They want to work in demonstrated by the settings that promote rapid development and exploration, experimenproduction of mRNA tation, communication, COVID-19 vaccines, and collaboration, the to name just one. Of fundamental building course, there are a blocks of a modern host of other medical laboratory. conditions — ranging from neurological conditions, heart Designed disease, and cancer to for Success Alzheimer’s disease and In order to meet the diabetes — that require evolving needs of life the attention and best sciences tenants, real efforts of life science estate developers servinnovators. These forces ing the sector must have thrown a spotlight broaden their vision Suzet McKinney, principal and director of Life Sciences at Sterling Bay, on this critical American says that amid a scarcity of high-quality lab space, developers of life beyond the merely funcscience labs, buildings, and campuses are becoming much more industry as never tional, purpose-built sophisticated about how they design spaces and work with scientists. before. laboratory facilities and Yet, at the very mocampuses of decades ment of society’s greatest need for breakthrough pharpast. That journey begins with a collaborative relationmaceuticals, medical devices, and software, clinicians ship between the developer and the life sciences tenant. and researchers are being stymied by a scarcity of It goes without saying that the developer needs domain lab space — a problem that is only getting worse. Lab expertise; after all, you wouldn’t want someone who’s vacancy rates are at 5 percent compared to U.S. office never cooked a meal in their life designing your kitchen. vacancy rates of 17 percent, CBRE reports.1 In Boston, First and foremost, life sciences developers working with these tenants must be sophisticated about the scilab vacancies are 1.7 percent; in New York vacancies ence, while being responsive, flexible, and anticipatory. are 1.1 percent; and in San Francisco vacancies are 2.6 Decision-makers and executives with life sciences backpercent. grounds who can speak the language of their wet lab Adding to America’s growing lab space problem is tenants are an added plus. the issue of wet lab quality. The sterile, isolated, cookieAREA DEVELOPMENT | Q2 2022

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Lab vacancy rates are at 5 percent compared to U.S. office vacancy rates of 17 percent, CBRE reports.

developer needs to attend to contemporary trends in lab design. For example, large, open-plan labs with as many as 12 or more benches in a common space are giving way to smaller spaces with five to eight benches.2 To ensure adequate space, answers are needed to many questions, including:

• What types of equipment will go into the space? • What infrastructure (electrical, plumbing, HVAC,

LAN, etc.) will be needed? What special requirements (weight, heat, electrical load, cooling, vibration suppression, etc.) will the equipment require? How might the facility and its support systems grow within days, months, or decades?

• Beyond planning for space and equipment — equipment that is needed immediately and equipment that may be required in the future — today’s labs must be designed with the inbuilt capacity to adapt to unknown problems and unforeseen circumstances. And every design must take into account existing regulations and safety best-practices. Ensuring that a lab footprint is flexible, i.e., it can accommodate immediately needed and future equipment, is a huge advantage for early-stage companies. That’s because it is highly disruptive for a life sciences company to have to break down all of its equipment and pack up everything to move to a new space. Developers who build flexibility into spaces, future-proofing them for growth or changing needs, provide a singular advantage to their tenants. To accomplish this, the developer must be a partner with the lab client before, during, and after construction. Design is critical because it takes into account everything from how the equipment will be positioned within the lab to how each scientist works with colleagues, traffic flow within the lab, and other space considerations. How workstreams can be modified or improved for efficiency also goes into the design; this includes eliminating any perceived or anticipated bottlenecks within the facility, such as where business offices are located in relation to the bench spaces. Understanding the equipment needs from the user is the next important step. Lab equipment ranges from the smallest beaker or pipette, to benches and large machinery such as autoclaves. The developer needs to understand the size and scale of the equipment and plan spaces accordingly to accommodate the variety of machines and other equipment that will be used in the lab. Of course, electricity, water supply, and ventilation needs must be considered, too. All the while, the

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•

When it comes to upfront planning, scientists and researchers need purposefully built labs to do their work and to be best positioned for new scientific breakthroughs. The goal of working with clients throughout the process is to ensure that development plans are aligned with both scientific and business needs. That close communication with tenants should continue throughout the business lifecycle, allowing the developer to rapidly serve tenants’ evolving needs, as well as growing new partnerships and developing relationships between and among tenants.

Conversion Considerations No one can deny that there is a profound need for more high-quality lab space nationwide. However, life sciences developers are divided over the question of how best to meet that need. One solution is to convert underutilized office space into research suites. Yet it can be tricky — not to mention costlier — to repurpose an office, industrial, or retail space as a lab. There are numerous considerations3 driving the determination of whether a space is suitable for conversion, including:

• • S pace requirements and constraints: Cutting-

edge lab facilities will have a variety of spaces: open lab, lab support, computational, open office, write-up areas, enclosed offices, conference rooms, huddle space, break, collaboration, and interaction areas.

• • Life safety and fire protection: Space designed for office use, for instance, may not have been constructed to the robust levels that labs handling hazardous materials demand.

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• • A ir distribution: Unlike recirculated office air, a laboratory air distribution system may need to be separated. Labs working with toxic chemicals and gasses need fume hoods and enclosures.

• • E lectrical capacity: Because lab equipment de-

mands higher electrical loads, labs generally need upsized panels, plus backup and emergency power.

• • P lumbing: Wet labs may need much more water than an office building’s original restrooms.

Human-Centered Design In my experience, the collaboration and interaction areas are key. They must be a fundamental part of the initial design, not an afterthought. From our standpoint as a developer focused on life sciences, perhaps the most important element is how space promotes collaboration by satisfying the needs of its human occupants, the scientists and others working in the environment. A superior lab environment can attract the right talent too. Life sciences employment has continued to fare better than the U.S. job market with year-over-year growth up 7.9 percent and 11.4 percent in 2020 and 2021, respectively, according to Cushman & Wakefield, the glob-

al real estate services firm headquartered in Chicago.4 Since 2011, total U.S. employment growth has averaged 1.0 percent per year, while life sciences employment has increased by 6.6 percent per year, on average. Speaking of attracting talent, we have begun to see more and more calls for commercial real estate firms to bring on leaders with scientific backgrounds. To return to the analogy of designing a kitchen, there is a tangible advantage in having these real estate clients — who have very specific and exacting requirements driven by the type of science they are engaged in — have as their primary point of contact a real estate executive who understands those needs inherently because they too have worked at a lab bench. Human-centered architecture and amenities are important because, at the end of the day, buildings and laboratories don’t make scientific breakthroughs. Scientists do. By creating lab environments where research and the exchange of ideas is easy, enjoyable, and seamless, we increase occupant satisfaction and set the stage for innovation. n 1

https://www.cbre.com/insights/figures/us-life-sciences-trends-2021 https://www.labdesignnews.com 3 https://nap.nationalacademies.org/read/9799/chapter/5#71 4 https://www.cushmanwakefield.com/en/united-states/insights/life-sciencereport#:~:text=Life%20sciences%20employment%20has%20continued,%25%20per% 20year%2C%20on%20average 2

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DATA CENTERS

Trends in Data Center Site Selection A lack of space and developable land as well as power constraints will continue to drive data center site selection, with sustainability considerations and emerging technologies becoming increasingly important factors. By Pat Lynch, Senior Managing Director; and Josh Ruttner, Senior Research Analyst; Data Center Solutions, CBRE

hat makes a good location for a data center? There are quite a few factors, and some of the most important are the availability of space, land, and power. However, emerging technologies that will require edge computing — such as 5G, virtual reality and metaverse applications, AI, and self-driving cars — and sustainability and access to green energy are increasingly important considerations for data center site selection.

suburban locations like Hillsboro.3 CBRE ranks Portland second in the nation for tax incentives, with taxes representing only 2.7 percent of the data center project cost, significantly below the average of 8.7 percent.

Low Vacancy Rates

Edge Infrastructure

Market demand for data is constantly rising and must be matched by a dramatic rise in data center construction. Available data center space in major cities is severely limited. For example, popular markets like Northern Virginia and Silicon Valley have low vacancy rates of 5.1 percent and 1.6 percent, respectively. Finding suitable and available data center space in such low vacancy markets can be challenging, especially if a user only has six months to work with. The primary headwind for new construction in popular data center markets is limited developable land. We anticipate more vertical construction of data center space in these low vacancy markets to create opportunities to meet demand.1

Consumers today require faster prcessing speeds to access content related to 5G, virtual reality, and AI. In the not-so-distant future, technologies like self-driving cars and the metaverse will require edge infrastructure. All these emerging technologies are significantly changing the way we think about data center site selection, as they require lower latency and more info to be exchanged rapidly to avoid lag or delay. This will result in a need for digital infrastructure that is closer to end-users, which will bolster demand for edge data centers, which deliver faster services, with minimal latency, in suburban locations. Investments in edge computing are increasing and expected to climb substantially in 2022, with

Power Constraints Power constraints are also a major concern right now in high-demand primary markets and will remain the biggest threat to new developments. This lack of land and power availability has caused some data center migration from major cities to select suburban locations throughout the U.S. A prime example is Hillsboro, Oregon, which is in the middle of two of the biggest tech hubs in the U.S. — Silicon Valley and Seattle. According to Data Center Frontier,2 companies can save approximately 25 percent in operating expenses by relocating their data center use to Hillsboro from Silicon Valley, due to Oregon’s lack of sales tax and potential property tax exemptions in

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spending forecasted to reach $76.5 billion in the U.S. alone.4 Additionally, companies are now realizing that there are cost savings associated with edge data centers over the long run. In the past, companies would have their core data centers in primary markets. The cost to haul content back and forth via fiberoptic lines is extremely pricey. It is much more cost-effective to deploy a few racks into a nearby colocation data center. However, edge data centers can increase upfront costs. The circuits required to connect to all the edge sites can drive up the overall cost of the network, and the connections between major data centers used in a centralized compute architecture have become incredibly expensive.

Sustainability Climate change is another increasingly important site selection factor. Sustainability is now a major focus for most corporations, and data centers are striving to develop sophisticated ways to measure their ESG impact and activities. Some of the most important data center markets will need to address concerns about water scarcity and their supply of renewable energy. On the flip side, this will likely benefit markets with bountiful clean power. Over the years, data centers have redesigned their facilities to greatly reduce water consumption by using new technologies for water cooling, such as liquid cooling. New battery technologies are enabling data centers to use fewer and longer-lasting batteries. Data center providers are working closely with local utility companies to find more efficient ways to provide green energy options.

Jobs Act) into law. This legislation allocates $65 billion toward improving broadband Internet capabilities, primarily by expanding optical fiber and 5G networks. This massive investment in digital infrastructure has resulted in skyrocketing demand for data centers.5 The bill also includes funding for green energy infrastructure and innovation. Access to renewable power to reduce carbon emissions is always a primary concern when considering a potential site for a data center. The Bipartisan Infrastructure Bill presents an opportunity for utilities to upgrade power sources without passing the costs to the end-users. Finally, the global supply chain has been greatly impacted by the COVID-19 pandemic and this has impaired data center development. CBRE said in its 2022 Data Center Forecast, “As uncertainty looms amid pandemic-related restrictions for markets outside of the U.S., particularly in Asia-Pacific, material shortages and increased shipping delays into U.S. ports have the potential to delay new facility developments and impact refresh cycles of data centers. These delays could drive up costs, potentially raising rents in affected markets 4 percent–6 percent.”6 In sum, space, land, and power availability will continue to drive data center site selection but expect sustainability considerations and emerging technologies to be increasingly important factors over the next few years. n 1

https://www.cbre.com/en/insights/reports/north-america-data-center-trends-h2-2021 https://datacenterfrontier.com/portland-electricity-low-data-centers/ https://www.oregonbusiness.com/article/tech/item/19159-what-s-driving-the-hillsborodata-center-influx 4 https://www.cbre.com/en/insights/reports/north-america-data-center-trends-h2-2021 5 https://www.bisnow.com/national/news/data-center/infrastructure-bill-a-boost-fordata-centers-110837 6 https://www.cbre.com/en/insights/books/us-real-estate-market-outlook-2022/data-centers 2 3

Skyrocketing Demand In November 2021, President Biden signed the Bipartisan Infrastructure Bill (Infrastructure Investment and

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INVESTMENT REPORT

By Steve Kaelble

LOUISIANA:

Courtesy of LED

Global Challenges Create Opportunities

Louisiana’s location on the Mississippi River, which provides companies direct access to domestic and international markets, continues to be a major factor in driving statewide economic growth and diversification.

ust after the dawn of the 20th century, Louisiana’s first successful oil well launched a petroleum-based industry for which the state is well-known to this day. But more than a century later, the world increasingly is moving toward turning the page on fossil fuels for transportation — will that spell the end of Louisiana’s oil and gas story? No, but it definitely signals an intriguing plot twist. Many outside Louisiana may be unaware of the new chapters the state is writing in this story, answering the challenges of the day with forward-thinking ideas. The state is working to stay ahead of climate change challenges and, as a

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result, is building expertise that’s valuable globally. And it’s pushing technology advances literally to the moon, and making great strides in medical fields, too. Altogether, the challenges of the present and future are sparking impressive developments, along the corridor from Baton Rouge to New Orleans, and across the state. Climate change, in particular, promises an extraordinary impact in Louisiana, given the state’s miles and miles of coastline and waterways, its inevitable place in the path of dangerous weather events, and yes, its longtime reliance on a petroleum industry in the crosshairs of change. “We’re really focused on this new fron-

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“

WE’RE REALLY FOCUSED ON THIS NEW FRONTIER RELATIVE TO THE REDUCTION OF GREENHOUSE GASES…AND HOW THERE IS AN ENERGY TRANSITION OVER THE NEXT FEW DECADES…LEADING TO A BETTER ENVIRONMENTAL STEWARDSHIP, says Secretary Don Pierson.

tier — really beyond America, for all nations — relative to the reduction of greenhouse gases, and how there is an energy transition over the next few decades toward those reductions, all leading to a better environmental stewardship,” says Don Pierson, secretary of Louisiana Economic Development. “We will continue to use fossil fuels, they won’t go away, but we’ll be reducing utilization for refined fuels as we power our cars.”

Here are a few relatively recent examples of how that trend is playing out today in Louisiana:

• • The Greater New Orleans De-

velopment Foundation has led development of a proposal called H2theFuture, which is a green hydrogen energy cluster designed to decarbonize the south Louisiana Pierson says the state is posiindustrial corridor. The project was tioned for development of various among five dozen finalists nationally in the federal Build Back Better Regional Challenge.1 It’s all about moving toward a hydrogen-powered economy and includes creation of the New Energy Institute of America, a clean energy research center and startup incubator. When it was named a finalist, Michael Hecht, GNO’s president and CEO, noted Louisiana’s longstanding leaderOrigin Materials has announced plans to build a sustainable plastics facility employing carbon capture emissionsship in energy: “The reduction technology in Geismar, La. Pictured is a similar H2theFuture plan is project nearing completion in Ontario, Canada.

Environmentally Friendly Technologies

Courtesy Origin Materials

environmentally friendly technologies. “We anticipate there’ll be a lean toward a hydrogen-powered economy, and we do carbon capture and sequestration. We’re well suited in that we have a geology that supports it and pipelines here that currently carry CO2.”

the strategy for Louisiana to continue to lead into a lower-carbon future.”

• • Air Products is developing a

$4.5 billion clean energy complex that will be the world’s largest permanent carbon dioxide sequestration project.2 It’s designed to produce more than 750 million standard cubic feet per day of “blue hydrogen,” and carbon dioxide from the manufacturing process will be captured and permanently sequestered.

• • Renewable diesel projects

have been announced by Louisiana Green Fuels3 and Chalmette Refining,4 each worth hundreds of millions of dollars and each planning to create diesel fuel from sustainable, renewable sources. The Louisiana Green Fuels plant even promises a production process that would remove more carbon from the environment than it will produce.

• • Origin Materials, which calls

itself a carbon-negative materials company, has plans to invest at least $750 million developing a biomass manufacturing facility.5 The plant will utilize sustainable wood residue that comes in part from Louisiana’s timber mills and managed forests in order to make plant-based materials for packaging, textiles, apparel, and other products.

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INVESTMENT REPORT

• • The Syrah Technologies graph-

2005 hurricanes Katrina and Rita caused devastation across the southern part of the state and underscored the threats facing those along and near the Gulf Coast. State leaders stepped up their focus on coastal restoration, protection, and resilience. What emerged a few years later Even as the world gradually was the Water Institute of the Gulf, moves away from fossil-fuel-powa collaborative effort involving ered automobiles, that doesn’t the state, former U.S. Sen. Mary mean there’ll be no market for the Landrieu, and the Baton Rouge state’s petroleum producers, PierArea Foundation. The idea was to son notes. “Oil and gas are feed dive into the climate challenges stocks for composites, plastics, facing Louisiana’s coastal landpaints, adhesives. And we do a scapes, bring together researchers lot of advanced chemical manuat all levels, and ultimately build a facturing and have seen a lot of knowledge base that would not only expansion in those processes and help the state prepare for future the kinds of materials they are resiliency, but also create insights producing.” that could be exported globally. Pierson calls water management Focus on Water Management and Coastal Protection an emerging element in the state’s economy. “It’s certainly important here in Louisiana due to global Climate challenges have already warming, with lost acres of land had a significant impact on life to subsidence,” he says, adding in Louisiana. In particular, the that the state has identified financial resources to help build expertise and knowledge in water management, coastal protection, and restoration. “We’ve directed resources coming to us from offshore oil royalties. It’s not only a scientific exercise but one that is powered by an ongoing revenue stream that allows us to take action,” he says. Among many At NASA’s Michoud Assembly Facility in New Orleans, other activities, the workers trained by a partnership between LED FastStart, the Louisiana Community and Technical College System, Water Institute was and Nunez Community College are helping to fabricate involved in the creand assemble Artemis moon mission components.

Courtesy NASA

ite processing facility is expanding to the tune of more than $175 million.6 It’s part of the supply chain for electric vehicles, and the expansion will help it supply a component in lithium-ion batteries.

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ation of the state’s first Climate Action Plan, announced by Gov. John Bel Edward back in January, the first of its kinds in the Gulf South.7 The plan aims to limit the severity of climate change while maintaining economic competitiveness as the future becomes more and more low-carbon. “Our team was able to provide the task force with both qualitative and quantitative information across a wide swath of metrics and objectives to help inform their deliberations within a fast-moving planning process,” according to Alyssa Dausman, the institute’s senior vice president and chief scientist.

Satisfying Workforce Needs Beyond that strong focus on planet earth, Louisiana also has set its sights solidly on returning humans to the moon. The National Aeronautics and Space Administration is preparing to launch a test flight in the Artemis program this year, and the core stage of that Space Launch System rocket was produced at NASA’s Michoud Assembly Facility in New Orleans.8 Needless to say, this is not your everyday manufacturing — it’s rocket science, in fact. The state’s LED FastStart program is helping with workforce development needs, according to FastStart’s executive director, Paul Helton. “NASA’s Artemis mission is a great example of the level of sophistication, customization, and long-term support that LED FastStart provides to our partner companies,” he says. FastStart was engaged to meet short-term training and recruitment needs along with building a long-term workforce pipeline for Boeing’s Space Launch System project. “We led a team that in-

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New Orleans was early to the work of studying COVID deaths as the pandemic first began. In early April 2020, researchers there discovered that blood vessels in patients’ lungs were filled with clots. The discovery was so alarming and foundational that the Louisiana researchers pushed out a preprint version of their study, which had an immediate and positive impact on the treatments used by doctors across the country. In Baton Rouge, the community has seen half a billion dollars in health infrastructure investment in the past five years, according to Steven Ceulemans, executive direcHealthcare and tor of the Baton Rouge Health DisLife Sciences R&D trict. The district is pushing innovation forward on a number of fronts. Back on earth, Louisiana is tap“We received U.S. Economic Deping into its strong resources in velopment Administration funding healthcare and life sciences R&D. for a regional innovation cluster proAs with activities related to climate gram called the Louisiana Healthchange, it’s part a focus on future Tech Catalyst,” Ceulemans says. It opportunities and part a response will help create synergies between to current challenges — COVID-19, major health-related anchors. for example. He adds that the foundation is Louisiana State University’s part of the Gulf Coast Health SciHealth and Sciences Center in ences Corridor, which was another of the 60 national finalists in the Build Back Better Regional Challenge. “The two key Baton Rouge projects for our cluster include a new Innovation Center at Pennington Biomedical Research Center and a district gateway enhancement initiative to promote continuity and cohesion between our major health campuses.” The Water Institute of the Gulf is the research anchor of the Water Campus, an expansive public-private ecoThe Gulf Coast nomic development partnership on the Baton Rouge Health Sciences Corriverfront.

Courtesy TWIG

cluded the Louisiana Community and Technical College System and Nunez Community College to benchmark other educational programs supporting NASA operations across the country,” Helton says. Nunez Community College is equipped to provide a trained workforce for Boeing and all of the other partners at Michoud. Pierson says it’s a source of pride to have such a key component of the space program taking flight from Louisiana. “We’d like to think on the side of that rocket would be a logo that says ‘Cajun-certified.’”

ridor proposal was pulled together by the New Orleans BioInnovation Center. It aims to make strategic investments in health science industries along with workforce development targeted at women, rural residents, and people of color. Meanwhile, LSU’s Pennington Biomedical Research Center is emerging as a leader in treatment of obesity. It is home to the nation’s first integrated, interdisciplinary metabolic treatment center. The Bariatric & Metabolic Institute, recently renamed the Metamor Institute, aims to transform the understanding and treatment of obesity.9 According to Pennington’s executive director, John Kirwan, “Metamor is our obesity ‘moonshot.’” Amid all of this activity, Pierson says the state maintains its focus on its traditional sectors, even as they evolve. Agriculture is an ongoing source of pride, along with advanced manufacturing. And then there’s forestry, an age-old sector that is gaining efficiencies from computerized sawmills and processes that retain byproducts for such things as renewable-energy wood pellets — some of which are shipped overseas to produce electricity. Says Pierson, “We haven’t taken our eyes off the ball.” n 1

https://www.opportunitylouisiana.com/led-news/ news-releases/news/2021/12/13/two-louisiana-projectsamong-finalists-in-eda-build-back-better-challenge 2 https://www.airproducts.com/campaigns/la-bluehydrogen-project 3 https://www.opportunitylouisiana.com/led-news/ news-releases/news/2021/04/23/louisiana-green-fuelsplans-$700-million-renewable-diesel-refinery-in-caldwellparish 4 https://www.opportunitylouisiana.com/led-news/ news-releases/news/2021/06/24/chalmette-refiningannounces-potential-$550-million-renewable-dieselproject 5 https://www.timberprocessing.com/origin-materialsplans-biomass-based-facility/ 6 https://www.reuters.com/business/energy/australiassyrah-resources-expand-louisiana-graphite-processingfacility-2022-02-15/ 7 https://thewaterinstitute.org/media/in-the-news/louisiana-approves-first-climate-action-plan-in-the-gulf-south 8 https://blogs.nasa.gov/artemis/tag/michoud-assemblyfacility/ 9 https://www.pbrc.edu/news/media/2022/metamorinstitute-release.aspx

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INFRASTUCTURE/LOGISTICS

Rail Gains Advantage Amidst Supply Chain Snarls Rail lines, which link international cargo gateways to U.S. population centers, offer companies a cost-effective, sustainable transportation option. By Rich Thompson, International Director, Supply Chain & Logistics Solutions Leader, JLL

or companies around the world, supply chain snags have been top-ofmind for much of the past year. Delays are common, and U.S. domestic shipping rates for moving goods are up approximately 23 percent over 2020 levels, according to Cass Information Systems, Inc.1 High demand continues to outpace logistics capacity, and the chronic U.S. truck driver shortage only exacerbates delays. Amidst these trends, rail has become an important option for shipping goods across the United States — especially as trucking costs rise, too. Many companies rushed to stock inventories in 2020, and they now need help distributing goods to consumers. Remarkably, international trade accounts for approximately 35 percent of U.S. rail revenue, 27 percent of U.S. rail tonnage, and 42 percent of carloads and intermodal units, according to the American Association of Railroads (AAR), an industry trade group.2 The flow of goods arriving or departing by ship has led to record levels of demand and huge year-over-year growth — along with significant congestion — at top U.S. ports. By 20-foot-equivalent unit (TEU), which is the standard measure of container volume, the top U.S. container ports are Los Angeles/Long Beach, New York/New Jersey, Savannah, and Seattle/Tacoma. Other key U.S. ports by container TEU volume are Houston, Norfolk and Oakland (San Francisco),

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and Charleston, S.C.3 From these ports, the majority of consumer goods flow to the interior of the country to inland hubs and distribution nodes. Interstate highways and rail lines are the barbells that link international cargo gateways to U.S. domestic population centers. For most companies, trucking is the primary shipping method, and one often combined with rail in intermodal shipping strategies. Unlike a train, a truck does not require a rail terminal at every delivery point and can navigate dense urban markets. However, rail is gaining advantage as the price gap narrows between freight rail and trucking, and rail becomes more effective from a service perspective. Port congestion has led to very long waits for ships to load or unload cargo containers, and long waits for cargo to be loaded to and from trucks or railcars. Delays add to the costs, as ports charge fees for container storage and other services. Further adding to trucking’s downsides are the chronic truck driver shortage, rising fuel prices, and corporate environmental sustainability concerns.

Freight Rail’s Inland Reach Inland hubs such as Kansas City, Dallas, Chicago, Memphis, Atlanta, and eastern Pennsylvania benefit from direct rail service from major U.S. seaports. Containers are shipping via expedited unit trains,

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consisting of cars of a single type, such as tankers, hoppers or intermodal containers, that carry a single type of commodity — all bound for the same destination and often several miles long. These trains typically reduce delays for the end user as containers are only handled or “touched” two or three times between the arrival port and the cargo recipient’s loading dock. While an increasingly diverse mix of cargo is shipped via intermodal transportation, companies must understand the cargo mix and types of services provided at different terminals to make their real estate decisions. In Chicago, for example, BNSF Logistics Park Chicago in Elwood primarily handles international traffic to and from the West Coast, while the infill City of Chicago Corwith Terminal handles domestic containers to and from California and Dallas/Ft. Worth. Conversely, Norfolk Southern’s Landers Terminal in Chicago primarily handles double-stacked ocean containers traversing the premier corridor to and from northern New Jersey and Baltimore. Additionally, Norfolk Southern’s Atlanta Inman domestic terminal primarily handles containers headed to and from inland hubs in Croxton, New Jersey, and Rutherford, Pennsylvania.

Panama Canal Expansion Dynamics The Panama Canal expansion changed the competitive dynamics of shipping by rail from the U.S. West Coast. Shippers and U.S. port authorities have been upgrading near-dock transportation and storage capacity as the key U.S. East Coast and Gulf Coast ports see increased volumes of containerized cargo. Correspondingly, inland ports have grown in importance, as near-dock coastal land is increasingly valued at a premium and moving containers by rail to an inland port frees up valuable near-shore real estate — improving the flow of goods for bulk or automotive roll-on/rolloff (RORO) traffic. Over the long term, the majority of containerized imports will likely still flow from the U.S. West Coast, but East Coast ports will continue to grow market share. The re-shoring or “regionalization” of manufacturing is creating new opportunities for intermodal services and logistics real estate, especially in the automotive and industrial goods sectors. The Midwest is unique in that cities such as Chicago, St. Louis, Memphis, and Kansas City benefit from at least three Class I rail providers serving the market, whereas most coastal markets are only served by two individual railroads.

Growing Freight Volumes To keep inventory moving to its final destination and reduce costs, oftentimes logistics and transportation

hubs must transload 20- and 40-foot international containers from the gateway ports and repack the goods into standard U.S. 53-foot boxes. As a rule of thumb, three 40-foot containers can be re-packed into two 53-foot containers that, if double-stacked on a railcar, speed time to market and drive down transportation costs. As freight costs go up and delivery time or service requirements become more compressed, many companies are deploying distribution facilities closer to their end customers and shifting additional volume to rail — which is why freight volume has been shifting from the nation’s highways to rail over the past decade. The railroad industry has been a major driver of the economy for generations, with Class I railroads moving more than 1.7 billion tons of freight annually over 92,000 miles of track in 47 states. Today, about 40 percent of U.S. freight is shipped by the U.S.’ seven major railways, and along the country’s 47,500 miles of short-rail lines ranging from one to more than 1,500 miles long — more than any other mode of transportation. Intermodal shipping — combining trains and trucks — has been the fastest-growing transportation mode in the United States since the mid-1990s. The AAR said, during the first half of 2021, railroads handled the highest volume of intermodal traffic ever moved in that period. Intermodal volumes declined coming into 2021 because of the overall logjams in the global supply chain. However, intermodal shipping continues to be ideal for many kinds of goods, enabling shippers to reach diverse markets and balance the costs — including environmental costs — of trucking and freight rail. It’s all about the ongoing battle to drive costs out of the supply chain while at the same time delivering goods more quickly.

Rail Infrastructure Improvements Are Benefiting Shippers Having a robust and flexible infrastructure is crucial. Just as the nation’s busiest cargo seaports are investing billions to enhance their operational efficiencies, the continent’s leading rail operators are as well. Unlike trucks and barges, however, freight railroads operate overwhelmingly on infrastructure that they own, build, maintain, and pay for themselves. Class I railroads are undertaking massive infrastructure and technology improvements, expanding their terminal networks to boost efficiency and position themselves for long-term growth in the intermodal segment. From 1980 to 2020, America’s freight railroads spent nearly $740 billion — averaging approximately $25 bilAREA DEVELOPMENT | Q2 2022

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“

Rail is gaining advantage as the price gap narrows between freight rail and trucking, and rail becomes more effective from a service perspective.

lion a year — on capital expenditures and maintenance expenses, according to the AAR. With improvements in railroad service times and safety records because of signal and communications upgrades, freight rail has become more price-competitive with trucking. The major railroads have anticipated future growth, creating flexibility in their networks to absorb projected population swings in certain regions of the country. Also, track and line improvements are helping to add more capacity via trains with double-stacked containers traveling along key intermodal routes. As a result, railroads have more reliable schedules than in the past, and parcel carriers are able to move more product via intermodal centers in both trailer on flatcar configuration and in the traditional 53-foot containers. Further investments in rail infrastructure and technology, such as automated gate systems and other advances to improve in-freight matching, as well as more real-time inventory visibility, will add efficiency to intermodal shipping.

Rail’s Sustainability Advantage Despite carrying 40 percent of the nation’s freight, rail accounts for a mere 0.5 percent of total U.S. greenhouse gas emissions, per U.S. EPA data.4 Idling trucks, in contrast, contribute to approximately 20 percent of annual U.S. carbon emissions. On average, railroads are three to four times more fuel-efficient than trucks. A single freight train can replace several hundred trucks. Railroads are the most fuel-efficient way to move freight over land, moving one ton of freight more than 480 miles per gallon of fuel, on average. Today’s locomotives are far more fuel-efficient than

in the past, emitting fewer pollutants and greenhouse gasses (GHGs) over the past decade. Idling-reduction technology, such as stop-start systems, reduce unnecessary emissions-heavy idle time by 50 percent. Advanced software improves fuel efficiency up to 14 percent by calculating the most efficient speed, spacing, and timing of trains. Moving freight by rail instead of truck lowers greenhouse gas emissions by up to 75 percent, on average, by AAR analysis. Furthermore, if 50 percent of truck traffic moving at least 750 miles went by rail instead, greenhouse gas emissions would fall by approximately 26.2 million tons. In 2020 alone, U.S. freight railroads consumed 675 million fewer gallons of fuel and emitted six million fewer tons of carbon dioxide than they would have if their fuel efficiency had remained constant since 2000.

Rail Can’t Solve All Supply Chain Issues While no single freight mode can overcome today’s logistics snarls, the rising economic cycle of consumer spending and imports continues to bode well for freight rail. U.S. rail freight revenues are forecast to advance 4.7 percent per year in nominal terms through 2025, according to market research firm Freedonia Focus Reports.5 Trucks will, of course, always continue to play an important role in distribution, but rail transportation will continue to grow as a viable, cost-effective, sustainable transportation option for companies in the future. n 1

https://www.cassinfo.com/freight-audit-payment/cass-transportation-indexes/ november-2021 https://www.aar.org/facts-figures 3 https://container-news.com/top-10-the-busiest-container-ports-in-the-united-states/ 4 https://www.aar.org/wp-content/uploads/2020/06/AAR-Sustainability-Fact-Sheet.pdf 5 https://www.freedoniafocusreports.com/Content/News/2021/07/29/Freight-RailroadRevenues-to-Bounce-Back-in-2021-Expand-47-Annually-to-2025 2

Foreign-Trade Zones: The Best, Zero-Cost Incentive for Your Business – Continued from page 83 today that make the job a lot easier. Again, if you aren’t making a $2 profit for every $1 in cost, don’t pursue an FTZ. But the average savings inside a zone net of costs, is $7 of profit to $1 in costs. 3. Hire a reputable FTZ consulting firm to assist in the upfront application/activation process, and if you prefer to begin the operational process with professional assistance, have them quote you FTZ managed services. It’s much safer, faster, and easier on

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the enterprise to have professional assistance from day one. If implemented properly — and it’s been proven in multiple sized companies, multiple scenarios, and multiple locations — FTZs can bring in millions of dollars in additional profits, cost very little to maintain relative to the investment, and provide you PPVs for manufacturing. n for free site information, visit us online at www.areadevelopment.com

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TAXES & INCENTIVES

Putting Your Best Foot Forward Make sure the media gets it right when reporting on your company’s incentives. By Scott J. Ziance, Partner; and Jonathan K. Stock, Of Counsel; Vorys, Sater, Seymour and Pease LLP

EXTRA EXTRA INCENTIVES INCENTIVES INCENTIVES

ompanies receiving economic development incentives often have a great story to tell. The projects championed by those companies bring much needed jobs and investment to a local community. In exchange, the companies may receive various forms of economic development incentives, such as grants, tax credits, or loans. However, these incentives are not giveaways. Instead, the incentives are typically awarded on the condition that companies receiving them achieve certain metric commitments (i.e., jobs, payroll, and investment) to benefit the local community. For the media, the coverage of an economic development incentive should make for an easy “win-win” story since both the company and local community are benefiting. But what happens when the media gets it wrong? Media members regularly report on the values of incentives that are provided at the state and local level to facilitate economic development. Frequently, articles are well-researched, well-written, and balanced. Sometimes, however, media members make mistakes — whether because of tight deadlines, the complexity of transactions,

or bias. These stories may even contribute to projects being withdrawn. You may recall the portion of the Amazon HQ2 project that was planned for New York. In 2018, Amazon announced that it would be constructing a new 25,000-employee corporate campus in the Long Island City neighborhood of Queens, N.Y. Shortly after the announcement, negative news stories started appearing. Some of these stories emphasized the amount of the proposed tax incentives without mentioning the corresponding benefits to the local community. Others included embellishments and caricatures, such as the famous New York Post cover, which read “Queen’s Ransom: Amazon gets 2.5B tax break — and the right to a helipad — to move to New York.”1 While it is difficult to measure the impact of such stories, the same cannot be said of the ultimate outcome. Amazon pulled the plug on the New York portion of the HQ2 project. The purpose of this article is to help companies identify, and hopefully avoid, the types of media mistakes that commonly undermine economic development projects. We have described below five of the most common media mistakes related to incentives. At the end of the article, we have also offered a prescription to help companies avoid these common pitfalls.

istake #1 — Not Understanding the Types •• M

of Economic Development Incentives At a high-level, there are five common types of incentives provided to companies at the state and local level — tax exemptions, tax credits, grants, loans, and in-kind assistance. One significant mistake reporters make is in not considering the types of incentives being provided. When a story does not correctly distinguish among the types of incentives awarded, it can be misleading. For example, a $10 million grant and $10 million loan are not alike, and do not provide the same benefit to a company. Another example involves infrastructure. It may cost a community $5 million to widen a road and AREA DEVELOPMENT | Q2 2022

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complete other traffic improvements to make a site suitable for a prospect, but if that capital improvement is part of the government’s long-term plan for the area and there are multiple beneficiaries, is it really fair to describe it as being a $5 million incentive to the company?

the company’s tax liability may only be a fraction of the face value of the credit. In such circumstances, if a news story mistakes the face value of an incentive for the real value, it will significantly overstate the value of the incentive to the company.

• • Mistake #2 — Not Considering Present Value

• • Mistake #5 — Inaccurate Reporting

The media loves to report big numbers for incentives — but sometimes those numbers can be misleading. The majority of tax exemptions and tax credits are provided over a period of years, often 10 years, 15 years, or even more. In offer letters, governments nearly always express the value of incentives by referring to their nominal value. In other words, they describe a 15-year incentive that is estimated to be worth $10 million per year as having a value of $150 million. Anyone who has ever dreamed about winning the lottery and contemplated whether they would choose a one-time payment or the long-term revenue stream, however, knows that the present value of a future stream of payments is worth less than the sum of those future payments. Nevertheless, news stories commonly fail to distinguish between the nominal value of an incentive and its net present value, which results in such stories overstating the true value of the incentive.

istake #3 — Not Distinguishing Between •• M

Entitlements and Incentives Media stories often confuse entitlements with incentives. For example, a state may have a particular exemption within its existing tax code, which any business qualifying for the exemption is entitled to receive. That is not an incentive, but an entitlement. Any business qualifying for the exemption can receive it. Government offer letters sometimes tout the benefit of existing tax exemptions under current law. And the media can latch onto this information in a story. When that happens, the media may mistakenly suggest that a company has received an “incentive” when, in fact, the company is only eligible to receive the same tax exemption that any other similarly situated company is already entitled to receive under existing law. This type of mistake can either create the false impression that a company has received an incentive, when it has not, or significantly overstate the total value of any actual incentives received by the company.

istake #4 — Not Considering Real Value •• M

vs. Face Value Many states provide tax credits based on new jobs created, new investments made, or other metrics. Those credits often have a high face value (i.e., maximum amount), but the real value to the company is often just a small fraction of the face value. This is because such credits often can be used only to eliminate all or a portion of one type of tax a company pays in a state, and

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The first four mistakes listed above are often understandable, particularly given the complexity of the subject matter. The fifth mistake — inaccurate reporting — is more difficult to excuse. Some reporters and publications are generally opposed to economic development incentives and may use pejorative language to describe those incentives. A good example is incorrectly referring to an incentive as a “tax giveaway.” That description is simply inaccurate. Incentives nearly always have associated performance requirements, and often have extensive remedies and reporting requirements. These remedies commonly include a clawback provision where if a company fails to perform its metric commitments (e.g., jobs, payroll, and investment), the company may be required to repay some or all of the incentive. These are not “taxgiveaways” in any sense of the word when the company is also obliged to perform.

The Solution: Stopping the Mistakes Before They Happen The best way to avoid the most common media mistakes is to be proactive:

• Share good news. Any company receiving an incentive should have a positive story to tell. It will likely have a project, which will bring new jobs, payroll, and investment to the local community. These types of facts should be front and center in any discussion with the media once the project becomes public.

• Educate reporters. Many of the most common media

mistakes come from a misunderstanding of incentives. Take advantage of opportunities to educate reporters on incentives and encourage reporters to avoid the abovementioned mistakes.

• Media strategy. Every business receiving an incentive

should have a media strategy in place. While such a strategy is most critical for companies with larger projects and heightened media attention, it can benefit all companies receiving incentives. In our experience, many reporters do a terrific job, and there are a number of sophisticated business reporters who understand the issues addressed in this article. However, when media mistakes arise, it pays for companies receiving incentives and their representatives to be prepared. n

https://www.businessinsider.com/new-york-post-cover-amazon-hq2-controversy-2018-11

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SITE SELECTION

The Evolution of the Megasite As the need for next-generation megasites continues to grow, economic development professionals are helping end-users reimagine the site selection and site preparedness process. By Courtney Dunbar, Site Selection Director; and Corey Kingsland, Civil Engineering Section Manager; Burns & McDonnell

ompeting on a national and global scale for large economic development projects — and winning — is a sure sign of a community’s vitality. A community’s ability to position largescale, shovel-ready land tracts for investment consideration exponentially increases its ability to secure desired jobs and capital investment at the local level. For years, there has been a traditional understanding of megasite requirements. Originally created to meet the demands of the automotive OEM and allied industries, these sites were assumed to have consistent demands. Important factors have included fully contiguous land space; multimodal transportation, including access to rail; large-scale and redundant utility capacities; and the ability to accommodate massive square footage. In fact, so much priority was placed on factors such as rail access, minimum infrastructure capacity expectations, and contiguousness that benchmarks for the certification of sites mimicked similar factors across the U.S. for several decades. The fortunate communities with established megasites

poured a significant amount of both financial and planning resources into the sites’ preparedness and protection, carefully considering only potential users aligned with the longterm vision for the given area. Megasites have traditionally been coveted by local, state, and utility economic developers, due to the sites’ ability to attract industrial and allied end-users. The presence of employers of this magnitude often leads to subsequent investment, multiplying growth opportunities within the commercial and retail sectors at the local level. While some economic development organizations have undertaken many aspects of megasite development and management, history proves that the most successful endeavors involved positioning land tracts near first-rate multimodal transportation assets, including commercial airports. Other important features have included high-capacity utility attributes with expandability, rapid local permitting, risk-free environmental conditions, and population centers capable of supplying a robust and skilled workforce.

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end-users are requiring anywhere from 1,000 to 4,000 acres. This is a total game-changer in how communities, economic developers, and state legislators need to plan for identifying suitable land tracts free of extensive environmental hazards and other impediments. It is no surprise that project owners looking for large tracts of land are finding it challenging. There is plenty of land available, but these sizable tracts are often too far from large population centers, which are needed to help meet the employment demands of their facilities. In addition to the increase in land size, there has been a major shift in the investment threshold. Within the last year alone, end-users representing upward of $60 billion in investment and the creation of thousands of jobs have been approaching economic developers across the U.S. These unfathomably high capital-expense projects are challenging states and communities to develop unprecedented economic incentive packages to help close these deals. Those tasked with bringing much-needed development to their given communities need to broaden the way they look at the identification, preparedness, planning, design and construction of these economic drivers before a multibillion-dollar project developer expresses interest in their region. The most prevalent development as of late appears to predominantly consist of high-tech manufacturers in the aerospace industry, semiconductor manufacturers, and electric vehicle-related industries. As technology continues to evolve, the cost for launching rockets and other aerospace-related items (satellites, etc.) has significantly decreased, allowing more private companies to pursue creative, niche aerospace offerings that weren’t an option 20 years ago. Similarly, semiconductor producers are interested in expanding operations in the U.S. due to global supply chain disruptions, which have crippled some industries during the pandemic. Semiconductors play an important role in the production of everything from tech hardware to electric vehicles — both markets that are experiencing a significant uptick.

Megasite Identification and Preparedness For a state or community to be competitive in the megasite arena, legislators and economic developers must be willing to invest now to secure these end-users in the future. While there isn’t a one-size-fits-all approach to megasite identification, some key characteristics are listed below.

• • Utilities — It is paramount that end-users have

appropriate utility capacity. Most existing municipal systems, especially for smaller communities, lack the capacity and infrastructure to support such large developments. While it’s not usually economically viable to invest in upgrades prior to identifying an end-user, it is crucial that state and local communities understand how utilities — such as those for water, gas, and power

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— can be expanded to meet demand within a 24-month window or less. For smaller municipal water systems, hiring an engineering firm to study and assess creative solutions for expansion (i.e., withdrawing from a nearby river, obtaining additional groundwater aquifer rights, etc.) is a great first step to understanding the viability for accommodating significantly larger flows resulting from megasite development. For example, manufacturers can require large amounts of water for production, and they discharge vast amounts of water that can either be released back into the environment or reused in the production process. Alternatively, depending on the location, it may be feasible for the end-user to build its own on-site water and wastewater treatment plants. Since these treatment plants likely need to tie back into the existing municipal systems, understanding at the outset financing options, treatment plant costs, and potential future water/sewer improvements is extremely beneficial in the incentives negotiation process. Electric load is also a major consideration. Companies often demand more capacity than is currently available. Economic developers can’t expect to snap their fingers and be able to have maximum power capacity from day one. Coordination and strategic partnerships with power providers are essential in megasite master planning and identification. A focus on sustainability is even more crucial for new development projects. As companies work toward incorporating green solutions in their developments, one challenge that users face is the availability of alternative energy, clean energy sourcing, and meeting carbon-neutral goals with offset credits. The development of large on-site solar farms adjacent to megasites is just one example of how manufacturers are building more environmentally conscious and socially responsible facilities.

• • Transportation — Transportation infrastructure

near these sites typically includes rail, four-lane highway access, and air service nearby. A clear understanding of easements, access, and impediments can help make transportation buildout on sites less cumbersome. One transportation consideration that should be examined fully is rail. For users where equipment must be totally flat or the tiniest of vibrations can halt production, being near railways can be a deterrent. The threat of shaking caused by trains and other earth movement can lead to additional costs, such as pier drilling, a foundation solution used to support structures by placing cylindrical shafts deep underground into bedrock. Where it makes sense, industrial targets should be directed toward rail-serviceable land because there are usually more advantages than disadvantages. The key is to see that while rail may service the site, it will not be a hindrance. Vibration analysis surveys and other studies should be commissioned to back this assertion. In highly sensitive cases, it just makes good business sense to for free site information, visit us online at www.areadevelopment.com

5/26/22 12:17 PM

have geotechnical engineers investigate and evaluate soil, rock, groundwater, and human-made materials and their interaction with ground movements, earth retention systems, structures and foundations.

be fostered to make sure that large numbers of highly skilled workers can be hired quickly.

The Way to Success

For commercial enterprises considering a megasite and the economic development professionals working with them, knowing the answers to key questions complicated decision-making process when trying to early in the process will help decision-making run more determine where to locate a facility. The capital cost is smoothly. Conducting the proper upfront due diligence high, often landing in the high millions or low billions of and feasibility planning enables potential users to esdollars, and the return on investment is slow to materitablish the exact capacities needed at a site, such as alize. For these reasons, it pays to locate in areas where utilities, transportation, and labor, as well as determine legislative bodies have a favorable view of megasites what type of infrastructure expansion and capital imand the corresponding community growth they help provements may be required. fuel. Incentives such as abatements, tax credits, and Understanding land costs, purchase availability, tax increment financing (TIF) can impact a site’s develimpediments to developopment long term. ment, and permitting Consider the scetimelines is important, nario in Kansas, where as is developing a plan lawmakers expect to •••••••••••••••••••••••••••••••••••••••• •••••••••••••••••••••••••••••••••••••••• for how to phase any bring in thousands of potential infrastructure jobs with the $4 billion builds. An end-user Attracting Powerful Ecomust also have a good nomic Expansion (APEX) handle on what proAct. The act is aimed at grams, tax advantages, helping Kansas compete abatements, and incenon a national and global tives can be used to offscale for one company’s set expenditures. large economic development projects. The act creates a new incentives Questions to program so that the consider include: state’s Department of What are the infraCommerce can offer the structure costs? What company hundreds of environmental work has millions of dollars in into be done? What might •••••••••••••••••••••••••••••••••••••••• centives over the course a tiered infrastructure •••••••••••••••••••••••••••••••••••••••• of two years. Securing build look like? Are legislative support and there enough employbuy-in like this can help ees located within an make or break a projhour’s drive? How well ect. That is why having economic development and site does the transportation infrastructure serve the area? selection partners who can help identify and navigate What programs can be used to counter costs? Are these types of opportunities is critical.  TIFs, abatements, and other incentives available? What support is being offered by local development groups? Labor — One site preparedness factor that must Studies and documentation that thoroughly indicate be considered is whether a megasite can be effectively a site’s characteristics help decision-makers judge how accommodated at the community level. Rarely are it can be developed most cost-effectively. The trick is to companies immediately flush with the amount of labor make sure the end-user isn’t caught off guard at any required to successfully operate once the new developtime during the selection and development process, ment is built. Successfully managing this fact is key. since the company has the potential to inject millions of What needs to happen is a massive rallying of comdollars into a given economy. munity support, led by economic development profesWhen it comes to luring the next surge of megasite sionals across the state. To help make sure an adequate users, developments that offer ample utility and transworkforce is available to pull from, communities must portation capacity with space for expansion, reasonable already have — or have the potential to build — assets land costs, enticing incentives, and access to a wellsurrounding the site. In particular, solid connectivity to trained workforce will rise to the top. n community colleges and workforce training outlets must

• • Incentives — Large industrial users face a

Solar farms adjacent to megasites are an example of how manufacturers are building more environmentally conscious and socially responsible facilities.

••

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MISSOURI

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Area Development Q2 Issue 2022

Articles inside

The Evolution of the Megasite

Trends in Data Center Site Selection

Rail Gains Advantage Amidst Supply Chain Snarls

Putting Your Best Foot Forward

Innovative and Collaborative Design Sets the Stage for Life Science Innovation

Retrofitting Office

Foreign-Trade Zones The Best, Zero-Cost Incentive for Your Business

The Energy Transition Moving Toward Renewable and Carbon- Neutral Solutions

Taking Action Now for An Increasingly Automated Future