Area Development Q2 2015 by Area Development

50th Anniversary

COST-EFFECTIVE SUPPLY CHAINS

AUTO/AERO FIRMS REDRAWING THE MAP

ISSUE

AREADEVELOPMENT S I T E

A N D

F A C I L I T Y

P L A N N I N G

www.areadevelopment.com

www.facilitylocations.com

Q2/2015

Economic Strength

Location benefits go far beyond the bottom line.

Leadership & Vision

Training

Special REPORT

Collaborative lla abo orati Communities m uniti mmu ANALYZING the economic and workforce data for 373 MSAs to determine which U.S. cities are creating jobs and nurturing sustainable economic development.

Employers want available & affordable skilled workers.

+ 2015 Gold & Silver Shovel Awards 21 STATES RECOGNIZED FOR NEW INVESTMENT AND JOB CREATION

A holistic economic development strategy is most important.

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CONTENTS 15 Navigating Data Center

59 The Art and Science

Each data center’s design — and the decision of where to locate it —will differ according to the needs of its end user.

By identifying critical factors up front, food companies position themselves to succeed in a new market.

26 Creating & Maintaining

61 Renewed Expansion

A detailed mapping of the supply chain, locational considerations, and the use of foreign-trade zones can all help to reduce supply-chain costs, while increasing velocity.

For companies in the renewables industry, preparing for expansion to capture growth needs to be done with care in order to capture the best deals and position the company in the marketplace.

20 Energy Costs And

75 U.S. Infrastructure

FEATURES

Data center operators need to not only analyze and monitor their energy usage but also constantly evaluate their energy procurement.

Public investment in infrastructure sits at its lowest level since records have been kept because of underfunding across all levels of government.

13 The Evolution of

55 Auto/Aero Firms

Since Area Development’s inaugural issue 50 years ago, the economic development process has changed dramatically.

Redrawing the Map

100 Real Estate Executives

Strong sales in the auto industry and a rebounding aerospace sector are spurring new facility/expansion projects in legacy as well as new locations.

Headquarters decisions underscore the important role of real estate in a company’s long-term vision.

COVER STORY

Site Selection & Design

A Cost-Effective Supply Chain

77 AREA DEVELOPMENT analyzes economic and workforce data for 373 MSAS to determine which U.S. cities are creating jobs and nurturing sustainable economic development.

Economic Development

Strategies For The Data Center Market

Exclusive Online Content

of Locating a New Food Plant

for Renewables

Funding Needs More Than a Quick Fix

Make Their Mark

www.areadevelopment.com

NOW ONLINE... Features

Data Centers

• Project

• The

Definition Improves Project Delivery

• Understanding

Economic Incentives In Site Selection • Veterans — A Natural Fit To Close The Skills Gap

Mystery Impact Of Data Centers • Parameters To Consider In The Data Center Location Decision • The Changing Landscape Of Data Centers Front Line:

NIH Expands Its REACH

AREA DEVELOPMENT | Q2/2015

Volume 50 | Number 2 Q2/2015

Quote:

“Only now did I recognize the reciprocal relationship which exits between manufacturing power and the national system of transportation, and that the one can never develop to its fullest without the other.” Friedrich List (1789–1846), a leading 19th-century German-American economist who developed what today is called the “National System of Innovation.”

10 First Person

4 Editor’s Note

Economic Growth Off to Slow Start

Peter Zeihan, Geopolitical Analyst

12 Front Line

DEPARTMENTS

Metro Areas Join in Export Initiatives

6 In Focus Millennials as Drivers of Workplace Design

104 Ad Index /

Web Directory

8 In The Know • How the Location Decision Affects LEED Certification • Business Location Tracker

Special Investment Report

TEXAS T DAY SPECIAL REPORT

Texas’s industrial growth hasn’t been confined to one industry — or one region — and the state is continuing to build on its successes.

Shovel

2015

Join Our Newsletter areadevelopment.com/newsletter

Corridors & Logistics Hubs Shape The Location Decision • Global Supply Chain Faces A Complex Mix Of Issues • Resolve To Keep Up With These Logistics Trends • Airports — Open For Business

AREADEVELOPMENT

States are recognized for their achievements in 2014 in attracting investment and creating high value-added jobs.

Awards

Intermodal Sites • Freight

Follow Us On twitter.com/areadevelopment Online Database Resources www.facilitylocations.com Follow Us On www.fastfacility.com

FOR FREE SITE INFORMATION, CALL 800-735-2732, EXT.

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If you’re considering relocating or expanding your business then Hoosier Energy should be top of mind. Our searchable property data and shovel-ready sites reduce big decisions down to manageable choices that could ﬁt on the head of a pin. You’ll ﬁnd the power of working with us is a lot more than the power we supply. Whether its existing facilities, a new site or community incentives, we have all the connections to positively impact your business.

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EDITOR’SNOTE

Q2/2015

Economic Growth Off to Slow Start According to economists, harsh winter weather, a drop in oil prices, West Coast port disputes, and a stronger dollar coupled with slow growth overseas are all responsible for the sluggish growth of the U.S. economy. In late April, the Commerce Department reported that GDP — the value of goods and services produced in the United States — only expanded at a seasonally adjusted rate of 0.2 percent in the first quarter of 2015, much less than the 1 percent rate economists had been expecting. Nonetheless, PricewaterhouseCoopers Q1 2015 Manufacturing Barometer reveals optimism among U.S. industrial manufacturers regarding the U.S. economy. In fact, the level of optimism — 76 percent — is the highest since the fourth quarter of 2005. “As we see increasingly positive views about the domestic economy among U.S. industrial manufacturers, a majority of management teams continue to indicate plans to hire skilled workers and invest in their businesses,” said Bobby Bono, PwC’s U.S. industrial manufacturing leader.

www.areadevelopment.com EDITORIAL E-mail: editor@areadevelopment.com Editor Geraldine Gambale Staff and Contributing Editors Lisa Bastian Craig Guillot James Berger Cynthia Kincaid Dale D. Buss Beth Mattson-Teig Dave Claborn Phillip Perry Mark Crawford Mali R. Schantz-Feld Dan Emerson Steve Stackhouse Clare L. Goldsberry Karen Thuermer DESIGN/PRODUCTION Art & Design Patricia Zedalis Production Manager Jessica Whitebook Production Assistant Talea Gormican

Where will this investment take place? Although the economic development process has changed since Area Development was first published 50 years ago, one fact remains: “CEOs favor states that foster growth through progressive business development programs, low taxes, and a quality living environment,” according to the latest Chief Executive magazine Best & Worst States for Business survey. Among these states are many that are also receiving Gold and Silver Shovel awards from Area Development this year in recognition of garnering investment and high-value added jobs in 2014. One state in each of five population categories was recognized with a Gold Shovel award, and Silver Shovels went to 16 runner-up states. One project in each of the population categories was also recognized as a “project of the year.” (See report on page 29.)

EXECUTIVE

Also in this issue is our annual Leading Locations report. Area Development’s research desk ranked 373 MSAs against 21 economic and workforce indicators to determine the 100 Leading Locations, as well as the leading MSAs among big, mid-size, and small cities, and within nine geographic regions of the U.S. (See report on page 77.) These cities/MSAs understand how business works and are nurturing sustainable economic development.

Business Development Matthew Shea (ext. 231) mshea@fastfacility.com

Publisher Dennis J. Shea dshea@areadevelopment.com Sydney Russell, Publisher 1965-1986 ADVERTISING SALES William Bakewicz (ext. 202) billbake@areadevelopment.com Valerie Krpata (ext. 218) valerie@areadevelopment.com ONLINE SERVICES Digital Media Manager Justin Shea (ext. 220) jshea@areadevelopment.com

Web Designer Carmela Emerson BUSINESS SERVICES Reader Service Barbara Olsen (ext. 225) olsen@areadevelopment.com Circulation Gertrude Staudt circ@areadevelopment.com CONFERENCE SERVICES

Editor

Program Manager Annie Gregson (212) 579-4469 annie@areadevelopment.com

2015 Editorial Advisory Board Justin T. Bickle Project Manager, Corporate Real Estate, DHL Global Business Services Rose Burden Executive Director, Southeast Area Negotiated Incentives Leader, Ernst & Young Christine Bustamante National Co-Leader, Global Location and Expansion Services, KPMG Gregory Burkart Managing Director, Specialty Tax Practice Leader, Duff & Phelps, LLC Les Cranmer Senior Managing Director, Savills Studley Dennis Cuneo Partner, Fisher & Phillips LLP Tim Feemster Managing Principal, Foremost Quality Logistics

AREADEVELOPMENT

Larry Gigerich Managing Director, Ginovus Stephen Gray CEO, Gray Construction

EXECUTIVE OFFICES Bradley Migdal Executive Managing Director, Business Incentives Advisory Services, Transwestern

Minah C. Hall Managing Director, True Partners Consulting LLC

John Morris Leader of Industrial Services for the Americas, Cushman & Wakefield, Inc.

Scott Kupperman Founder, Kupperman Location Solutions, LLC

Kathy Mussio Managing Partner, Atlas Insight

Scott Redabaugh Managing Director, Dan Levine Practice Leader, Location Strategies and Economic Development Jones Lang LaSalle Oxford Economics, Inc. Dick Sheehy Director, Advanced Planning & Site Selection, CH2M HILL Jamie M. Lominack Real Estate Manager, Michelin North America Bill Luttrell Senior Locations Strategist, Werner Global Logistics, Werner Enterprises, Inc. Michael McDermott Consulting Manager, Global Business Consulting, Cushman & Wakefield

Eric Stavriotis Senior Vice President, CBRE Thomas Stringer Esq. Director, Business Advisory Services, Ryan & Company

Halcyon Business Publications, Inc. President Dennis J. Shea Finance Mary Paulsen finance@areadevelopment.com All correspondence to: Area Development Magazine 400 Post Avenue, Westbury, NY 11590 Phone: Toll Free: Fax:

516.338.0900 800.735.2732 516.338.0100

MEMBER of

Dean J. Uminski Executive, Site Selection Consulting, Crowe Horwath LLP

FOR FREE SITE INFORMATION, CALL

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INFOCUS

Millennials as Drivers of Workplace Design By Josh Kuriloff, Executive Vice Chairman, Cushman & Wakefield Millennials — people ages 18–34 — now comprise more than 50 percent of America’s workforce, and that percentage is growing. To promote job recruitment and job retention, and to enhance productivity, it is strategically prudent for employers, planners, developers, and architects to understand the work environment this demographic favors. So, with perhaps a wee tilt toward generalization, let me highlight some workplace preferences of the millennial generation.

Making Connections

Josh Kuriloff, executive vice chairman and member of C&W’s Global Advisory board of directors, is a 29-year veteran of the commercial real estate industry and one of the highest-ranking brokerage professionals at C&W.

Millennials are not keen on conventional private offices. Corner offices no longer represent a badge of success. These workers tend to favor transparent space that promotes a team environment and an energized atmosphere. They look to connect with each other — and the workplace design can capture what is known as “activity-based working.” They like unplanned meetings, and want to seize upon “aha!” ideas arising from spontaneous encounters. Serendipitous moments are inspirational and drive big ideas. Design today is intended to trigger innovation, fresh ideas, and a sense of community. Good design is a catalyst that fosters conversation — and unanticipated epiphanies. Even cubicles, once intended to preserve privacy, now promote collaboration with lowered partitions and improved ergonomics. Rejecting static conference rooms, many millennials feel at ease in a setting that tends to mirror the kind of environment where they were raised: WiFi access, charging stations, and an emphasis on mobility and movement.

Sustainability This generation is tuned in to sustainability. Many are concerned about the construction materials that comprise their workplace, preferring “green” environments that qualify for LEED certification. They want energy-efficient work environments — they like to be illuminated by energy-efficient lighting — and they favor green roof decks, especially those offering outdoor space. Millennials do not want to devote hours each day to commuting. They favor living, working, and relaxing in the same vicinity. That is why today’s best-performing real estate markets, particularly the “gateway cities,” are urban settings. Cities are safer and greener than ever — and fit comfortably with the lifestyle of employees in their “live, work, and play” world. Fewer and fewer millennials keep 9-to-5 hours. Many come and go as they please. That is why employers want to offer a funky, cool environment — a conducive setting with amenities that keep workers engaged in the office.

Health and Wellness Health and wellness are high on the millennials’ list. They would rather work in a setting featuring such amenities as outdoor space, access to fresh air, bike storage, fitness facilities, and health food courts. Access to food is also important to this workforce. They prefer cafes and lounge areas. Many workplaces have oversized kitchens offering healthy snacks all day. Taking a wellness-oriented mindset, some workstations are now staffed by employees who prefer a new trend: standing up while working. Some employers are also considering allowing some desks to electronically elevate. These design approaches are not only practiced by scrappy start-ups and the mature technology companies like Google and Facebook. Many world-class multinationals — such as Barclays, JPMorgan, MasterCard, IBM, Sony, and Revlon — adopt these features in their quest to attract and retain young employees. And what is possibly the best reason to design offices that appeal to millennials? Well, these are the workers who will one day run the company.

AREADEVELOPMENT

FOR FREE SITE INFORMATION, CALL 800-735-2732, EXT.

225, OR VISIT US ONLINE AT www.areadevelopment.com

Pry into the advantages of locating your business in Mississippi.

Cut out a place for your business in Mississippi with our new sites and building database.

Carve out the exact information you need on our new website.

Take a turn through MDA’s newsroom. Get to the point quickly with comprehensive target industry pages.

Punch through interactive maps for detailed infrastructure information.

Mississippi’s incentives come with a twist — they’re customized.

Use our workforce training search tool. You’ll be hooked.

LOCATING? EXPANDING? WE’VE GOT THE TOOL FOR THAT. Functional? Handy? Specialized? Yes, all that and more. Having the right tool for the job makes a difference. Mississippi’s new website is the perfect multi-tool for location and expansion. We’ve streamlined, honed and

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Track business relocations and expansions on Area Development Online.

INtheKNOW

We track announcements of all significant investment and job-creation projects throughout the United States and Canada at www.AreaDevelopment.com/NewsItems. Studies/Research/Papers on Area Development Online. We cull insightful corporate real estate-focused studies, research, and papers from credible industry sources at www.AreaDevelopment.com/Studies.

BUSINESS LOCATION TRACKER CenturyLink Opens Washington State Data Center

Auto Sealing Facility Expansion In Findlay, Ohio

A global communications, hosting, cloud and IT services company, CenturyLink, Inc., opened its new data center in Moses Lake, Wash., adding hydro-electric-powered data center services to its portfolio.

Freudenberg-NOK Sealing Technologies, a joint venture in the Americas between Freudenberg and Co. in Germany and NOK Corp. in Japan, will invest $8.6 million to expand its Findlay automotive sealing facility.

Electronic Tablet Maker To Accelerate New York Expansion Bak USA, a START-UP NY participant, will accelerate sales, expansion, and production at its facility in Buffalo, creating an estimated 167 new jobs with an additional 100 planned positions to be created ahead of schedule.

REI Plans Goodyear, Arizona, Distribution Center Leading outdoor retailer REI will open a third distribution center in Goodyear, Ariz. The 400,000 square-foot facility on 34 acres in the Phoenix suburb should be operational in July 2016 and employ approximately 120.

Volvo to Build $500 Million Manufacturing Plant in South Carolina Volvo Car Corp. has selected Berkeley County, S.C., for its first manufacturing facility in the Western Hemisphere, which will create 2,000 new jobs over the next decade and up to 4,000 jobs by 2030.

MG Foods Invests $2.55 Million To Expand Into Longview, Texas The former Coors facility in Longview, Texas, has been purchased by MG Foods, which cooks, preps, and packages frozen and fresh food products. The $2.55 million expansion will create 120 jobs.

EVINE Live Expands Kentucky Operations Formerly known as ShopHQ, electronic shopping company EVINE Live has invested $25 million to more than double its warehouse and call center operations in Bowling Green, creating up to 150 new jobs.

Sports Car Maker Opens $100 Million Atlanta Experience Center-Headquarters Porsche Cars North America has opened its new 27-acre Porsche Experience Center and headquarters in Atlanta, Ga., representing the company’s largest investment outside Germany.

NAM Has New Board of Directors How the Location Decision Affects LEED Certification According to a new study from Cushman & Wakefield — “Pursuit of Sustainability” — as more consumers consider not only the products that companies make, but also how and where those products are made, companies are increasingly incorporating sustainability goals such as LEED (Leadership in Environmental and Energy Design) certification into their industrial facility planning process. Therefore, in order to achieve LEED certification, companies must not only consider the design of their facilities, but also their location, notes the study. Further, corporate site selectors, economic developers, real estate professionals, and regulators need to understand the relationship between environmental sustainability and industrial location decisions. 8

AREADEVELOPMENT

FOR FREE SITE INFORMATION, CALL

Since one third of all credits required for LEED Platinum certification depend on property and location attributes not traditionally present at greenfield sites or less densely populated locations, manufacturers seeking Platinum certification are increasingly looking at urban environments for their facilities. These attributes include development density/community connectivity, access to public transportation, brownfield redevelopment and site suitability, and on-site renewable energy generation potential and/or access to renewable power. Since development timelines and one-time costs may be higher in these urban locations than at greenfield sites, this creates a “tension” among location criteria.

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

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FIRSTPERSON PETER ZEIHAN

GEOPOLITICAL ANALYST

You’ve always loved maps. What is it about maps that so captivated you? Zeihan: As a kid I was always interested in what was beyond the next hill. There are so many things to know, see, and do. Maps are the key to all of them. So whenever I’m looking at a region for the first time, or revisiting it for a client, I pull up every map I can find. Maps are the gateway to understanding how everything fits together. What is geopolitics? Zeihan: Geopolitics is the study of place and how place shapes everything. Geopolitics has shaped global history and human evolution as long as we have had the ability to read and write. Geopolitics also is messy, involving everything from finance to culture to cuisine to war. Can you briefly explain Bretton Woods and why it is so important? Zeihan: Before World War II, major power centers such as Germany, England, and Japan used their navies to guarantee themselves resources and market access. And they clashed over those resources and markets. Hostility was a structural feature of the system, all but forcing war. At the end of World War II, the U.S. ended this system by committing its Navy to enforcing free trade. And that’s how things have been since 1944. The idea that international trade is a public good is central to how the world works, but it’s not central to how the U.S. works. We’ve been backing away bit by bit for the last 25 years. We have a President now who has not initiated or completed a single trade negotiation with anyone. Why do you think the impact of shale on the U.S. and the wider world promises to be enormous? Zeihan: We are looking at North America being oil selfsufficient by the end of next year. By conservative estimates, there’s enough shale oil to last 20 to 25 years. That assumes no increases in exploration and that oil production costs do not drop any further. The U.S. is now not just exporting natural gas to Mexico, but also to Canada. We are looking at a radically different energy environment, one in which the

AREADEVELOPMENT

U.S. can meet all of its needs. What impact will aging demographics have on the U.S. and the world? Zeihan: When the baby-boomers retire, it’s going to cause a bit of a financial Armageddon. We are stressed about this and we should be. People in their 50s and 60s are our tax base. This is where all the money comes from to fund the government. And when they turn 65, they will move from contributors to the system to dependents upon the system. So the American fiscal situation is going to be very dark. But as a percentage of the population, the babyboomers are the smallest of their cohort, compared to the global boomers. Everyone else’s problem with financing this mass retirement is going to be far greater than it is in the United States. And Gen Y doesn’t exist anywhere else in the world except in New Zealand. It’s like everybody in 1965 suddenly forgot to have kids. You will see a collapse in the consumption base in countries as diverse as China, Japan, Russia, Italy, the United Kingdom, and Germany. What impact will these trends have on U.S. manufacturing? Zeihan: Manufacturing is going to be a mixed bag. The old way of having assembly plants in 18 different countries is probably going to go away. Under Bretton Woods, transport is safe, cheap, and protected. When you remove the American Navy from the equation, it becomes much less safe. I see a return of the old-style massive industrial park where several steps of the production process happen in fairly close proximity. So if you have a country that you have a positive relationship with that has a different wage structure, you will probably see a lot of manufacturing facilities going up along those borders. I expect the U.S.-Mexico border to look very positive in the future. But if you are involved in a 20-step supply chain that touches Asia and Europe, you can pretty much count on that vanishing. You’ve mentioned that the U.S. has a unique geographical footprint, as compared to much of the

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world, which sets up the country for continued success. Please explain. Zeihan: The Greater Midwest is the single largest chunk of contiguous arable land in the world. From a food production and population-sustaining point of view, it is by far the best. But what really makes it work is the Greater Mississippi system. It overlays the best land, which includes the intercoastal waterway that goes all the way up to Chesapeake Bay. Nearly all of the American population, well over 85 percent, is within 100 miles of one of these navigable waterways. It’s much easier to move goods on water than it is on land. Counting “merely” the cost of locomotion and fuel, waterways have a 12 to 1 advantage over road transports. Factor in everything else from infrastructure to insurance and it goes up to 50 to 1. You believe the next 15 years will be an extraordinary period for the U.S. Why is that so? Zeihan: I think the next 15 years will be a very painful process for most of the world, but I think it will be least

painful in the U.S. You’re going to be watching the stability that we grew up with fall away. But the U.S. will be the number-one destination for skilled immigration and capital flight. We will have the resources that we need. Elsewhere in the world, you’re going to be looking at resource wars, industrial collapse, and economic depressions. By 2030, the U.S. boomers will have mostly died off, and the financial crush of supporting their pension system and healthcare will be gone — but the rest of the world just keeps getting older, sicker, and less viable. That is when the American century really begins.

THE ASSIGNMENT One of Area Development’s staff editors recently interviewed Peter Zeihan, a former analyst at the geopolitical security firm Stratfor and author of The Accidental Superpower. Zeihan discusses the North American shale boom and the role of the U.S. in protecting global trade.

When it comes to successfully expanding or relocating your business,

Nebraska’s low energy costs, central geographic location, and high-quality, low-cost workforce SURYLGH VWUDWHJLF DGYDQWDJHV IRU \RXU EXVLQHVV 7R À QG RXW KRZ WR KDUQHVV 1HEUDVND·V power, contact the economic development professionals at Nebraska Public Power District.

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FRONTLINE

Metro Areas Join in Export Initiatives

o date, 28 cities across the country have come together under a pilot program called the Global Cities Initiative (GCI) to develop their foreign direct investment plans and volume of exports. Launched in Los Angeles in March 2012, GCI is a $10 million, five-year project of Brookings and JPMorgan Chase aimed at helping the leaders of metropolitan America strengthen their regional economies by becoming more competitive in the global marketplace by leveraging assets and focusing on key indicators such as advanced manufacturing, exports, and infrastructure. A number of lessons have been learned by participating cities regarding promoting their locations for FDI as well as exports. Consequently, strategies are being put in place. Portland, Oregon, for one, released a metro export plan and is shifting the region’s economic development orientation toward global trade. “We are doing outbound trips, taking firms overseas, connecting businesses with other businesses, and creating sales opportunities and joint-venture relationships,” states Chris Harder, manager of Economic Development for the Portland Development Commission (PDC). PDC launched the Greater Portland Export Initiative Business Plan and completed the Westside “Freight Access and Logistics Analysis” to determine critical freight movement patterns from Westside computer and electronics companies to the Portland International Airport and other transfer points, and recommended improvements to the surface transportation system, travel patterns, and other options to improve business fluidity. PDC also implemented a pilot program for under-exporters, trained economic development professionals on export assistance, increased public awareness of export opportunities, organized trade

AREADEVELOPMENT

By Karen E. Thuermer

missions, and signed the city’s first Trade City Partnership with Mayor Janssen of Jaraguá do Sul, Brazil. “Our current work on exports has revealed significant interest throughout the world in both Portland companies and our way of life, with the Daimler Trucks North America $150 million investment our most recent example,” says PDC Executive Director Patrick Quinton. As another example, Indianapolis has developed a comprehensive Metro Indy Export Plan that aims to grow the number of exporting companies in the region 20 percent by 2020. “By shifting our economic strategy to a global approach, we will be able to expand the resources available to companies looking to tap into the international marketplace and meet the high demand for U.S. goods and services,” notes Michael Huber, Indy Chamber president and CEO. The plan includes a support system for small- and midsized enterprises exploring international markets. This encompasses export training, a single point of contact for export assistance, free online market data and analysis, and a “matchmaking” portal to find shared transportation and logistics opportunities to lower costs. The plan also promotes mentoring and supply-chain relationships between major exporters and new entrants, creating industry-wide opportunities. “For Indianapolis to remain strong in the long term and create the jobs we need, we must have local systems in place to help firms export goods, services, and ideas across the globe,” explains Indianapolis Mayor Gregory A. Ballard. “Our export plan is the foundation of that effort. It positions Indianapolis to grow into a center for advanced production and services and helps ensure economic prosperity for the region.”

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ECONOMIC DEVELOPMENT

The Evolution of Economic Development Since Area Development’s inaugural issue 50 years ago, the economic development process has changed dramatically. By Steve Stackhouse

ommunities have always depended upon a healthy local job market and a solid tax base — those are realities that have never changed and never will. But, in many ways, the economic development process that brings in those jobs and employers has changed dramatically in the past half-century. A look back at 50 years of economic development evolution begins with the prizes that communities seek. “Fifty years ago it was largely about industrial manufacturing,” says Larry Gigerich, managing director at Ginovus, who has been working in economic development for roughly half of that timespan. The drive to lure big factories to town was so prevalent that people referred to the practice as “smokestack chasing,” Gigerich observes, adding that communities in the South were particularly known for doing so. “They were looking to get manufacturers that were located in the Mid-Atlantic, the Northeast, or the Midwest. North Carolina was an early pioneer, wanting to grow industry and ensure that people had higher incomes.” Of course, facilities with lots

of high-paying jobs remain quite attractive, but these days they’re less likely to be big factories. “As we’ve seen the economy change and go in different areas, it’s not just manufacturing but logistics, IT, life sciences, shared services, data centers,” Gigerich notes. “We’re not a manufacturing economy as much, though some states still are,” agrees Dean Uminski, principal and certified economic developer with Crowe Horwath LLP. And even in places where manufacturing is still a big part of the mix, times have changed, says Mark Sweeney, senior principal at McCallum Sweeney Consulting. “The manufacturing facility itself has changed so much,” he says. “The ratio of capital to labor is so much higher than it used to be. It’s not unusual to have a million-to-one ratio of investment dollars to jobs. It’s not typically the very large job creator that it was.”

Logistics and Labor Given the nature of the global economy, logistical considerations often play a greater role in manufacturing site decisions these days, Sweeney adds — “looking at the entire supply chain and seeing it globally.” That often means paying more attention to the proximity of such things as international ports or airports. And that’s not the only reason for paying more attention to logistics, says

Tim Feemster, managing principal with Foremost Quality Logistics. Building efficiencies into the supply chain and getting the most for every transportation dollar is a much more complex science than it was 50 years ago. After all, he says, back in those days, “Most freight was regulated, so it wasn’t nearly as big an impact.” With deregulated air, truck, and rail transportation options, there’s a much greater ability to really squeeze out incredibly significant cost-efficiencies as part of a careful location decisionmaking process. Also vastly different today, compared with 50 years ago, are the kinds of skills needed to work at a warehouse or distribution center, Feemster adds. Facilities that once provided a lot of work for lowerskilled laborers now are much more in need of workers with expertise in robotics and computing, he says. “It’s not your father’s warehouse anymore. We have a more sophisticated workforce requirement.” That, of course, is true across virtually all industries, including manufacturing, which also used to need a lot of lower-skilled workers but now requires fewer people, but a whole lot more expertise. “With advanced manufacturing and robotics, we’ve eliminated some of the workers, but it’s highly skilled,” says Uminski, whose economic development experiences have included helping find locations for steel industry facilities. AREA DEVELOPMENT | Q2/2015

“Within manufacturing, the overall demand for skills has gone up considerably, and continues to push the envelope,” agrees Sweeney, who is based in the part of the country once known for smokestack chasing. “The South, a long time ago, stopped selling on cheap labor,” he notes.

Evolving Incentives Another big change through the years has been the relative importance of economic development incentives. Certainly, the idea of offering something to sweeten a potential deal is nothing new, but the wild one-upmanship really took off as international automotive manufacturers started seeking locations for massive assembly plants in the ’80s and especially the ’90s, Sweeney says. Now, it’s hard to imagine a deal without significant incentives of some sort. “Most companies have some level of expectation that incentives will be part of the location decision,” he says. That said, the makeup of incentive packages has evolved even as the dollar value has increased. “A lot of incentives were used to offset upfront project costs,” Gigerich explains. “Local communities and states have become more sophisticated. Many areas are trying to create pools that are more flexible.” Incentives tied to initial site development have been joined by other kinds of tax breaks and a lot of emphasis on training assistance. And as incentives have evolved, accountability has grown. More deals include clawback provisions and other measures designed to hold recipients to their end of the bargain, Gigerich says. “Government entities expect companies are going to do what they say they are going to do.”

“Years ago you didn’t have access to as much information as you do now,” Uminski agrees. And that, he adds, has helped speed up the whole process of choosing a location. “The time has been compressed, from start to finish.” A process that might have taken 12 to 18 months, or even longer for a massive project, takes only a fraction of the time, Gigerich observes. “In today’s world, if it’s longer than nine months it’s unusual. The industry has grown more sophisticated, and there is so much more information available in today’s world to expedite the process.” In fact, all of the newer and more easily accessible information resources have helped location professionals whittle down the list of possibilities much further before they ever get in touch with local economic development officials for negotiations. “Now, we’re eliminating lots of locations before you even reach out,” Gigerich says. What was once a long list of initial contacts is often down to just five or seven, “and it’s not unusual to get it down to two or three before starting to engage with local economic development officials.”

“A lot of incentives were used to offset upfront project costs.”

Increasing Information Also evolving dramatically has been the economic development and location selection process itself. “Like everything else, it’s now dominated by information — the demand for information in location decisions,” Sweeney says. “It’s a much more objective, corporate, highly defensible decision, as opposed to an individual’s personal choice.”

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Changing Cast of Characters And finally, the cast of characters has changed as the economic development story has evolved. Fifty years ago, not that many locations had organizations working specifically on economic development matters, but today there are economic development organizations in nearly every jurisdiction, including local municipalities, regions, and every state government, Gigerich observes. Meanwhile, there are many more consultants too, including quite a few focused just on location and economic development, and many more that are linked to accounting/ consulting firms, law firms, and real estate agencies. “I’ve seen more willingness of economic development organizations to work with site consultants,” Uminski observes. “We’re viewed as allies. I’m not sure that before, they understood the value that we bring to the process, but now that value is more readily accepted.” ■

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NAVIGATING DATA CENTER SITE SELECTION & DESIGN Each data center’s design — and the decision of where to locate it — will differ according to the needs of its end user.

The popular image of a data center is often as exotic as it is misleading. Granted, some really are as portrayed in the movies: high-tech bunkers hewn out of remote mountains. But most are not, and the reality is that both the centers themselves and their locations can differ enormously. While it’s true that these highsecurity, environmentally controlled facilities are rarely marked on maps and often lie behind deliberately anonymous exteriors, the desire for a low profile is just one of many factors considered by data center developers when choosing a location. Each data center’s design will vary according to its end user, and each developer will have a different mix of priorities — from baseline cost to security and transport links — ensuring that no two projects will be the same. These facilities, which house the countless servers that together power both the Internet and the global financial system, are a critical part

of the interconnected infrastructure around our planet. But what determines where they are sited?

The Bare Essentials While many infrastructure projects link cities — think roads, railways, pipelines, and airports — data centers need not be physically close to the users of the technology they support. If, in theory, they could be sited anywhere, in practice, site selection is invariably determined by a series of technical considerations. No matter what other variables go into the developer’s decision matrix, any potential data center location must have two things to even be considered: a truly reliable, high-capacity power supply and communications connectivity that delivers speed plus diversity. A loss of electrical power would clearly be disastrous for a data center, so all are fitted with backup generators and an uninterruptible power supply as standard. Nevertheless, a proven and reliable power grid is a high priority for a data center location.

By Bob Marsh, Director, Turner & Townsend Ferzan Robbins

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This does not mean that a developer will automatically choose an urban location over a rural one. True, urban areas will have a power infrastructure already in place, and are likely to have alternative sources of power as well as resilient communication connections. While an urban location may have easy access to the existing power grid, this says nothing about the reliability of the power supply, nor its availability. Conversely, a data center sited in a rural area will usually be purpose-built, and in conjunction with utility providers, to ensure it has the most advanced connectivity and most robust power supply.

Security Is Essential Security of power supply is only one of the concerns influencing data center design and site selection. While the servers themselves are designed to be resilient — both to cyber attack and power outages — resilience is

Who are the DATA CENTER DEVELOPERS? There are principally three types of data center clients: owners that design and operate their own facilities (private or public); developers that host; and providers of a managed service. Private-sector owner-occupiers tend to be the most innovative, invest in research and development, and will typically customize their data centers to meet specific needs. Developers and managed service providers, particularly those that are “colocation service providers,” have a different aim: they want their space to be flexible, to offer the widest appeal to potential customers. Some are now employing a modular approach so that space can be developed and brought into operation as customers are signed up. Each client will have its own view on what is the right balance between costs versus resilience. Among the complex calculus is the fundamental question, “Does the benefit of preventing $x million of damage or downtime outweigh the cost of installing the necessary protection?”

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often built into the design of data center buildings too. Banking service providers and governments — for whom just a few minutes of downtime could have dire consequences — often demand the highest level of resilience. This tends to mean high levels of duplication of infrastructure, commonly referred to as redundancy, which carries a cost premium. But in physical terms it can also mean building a “bomb-proof” data center. Developers whose risk assessment may include a terrorist attack as much as a hacker-led one may specify that the site be reinforced with steel and concrete, or even sited underground. In addition to the obvious security measures expected at a sensitive site — such as a high-security perimeter fence — there is an array of structural techniques that can be used to make the data center itself resistant to physical attacks. Known as “hardening,” these techniques can range from adding fortified blast walls to installing layered countermeasures to prevent intruders. Human threats can vary greatly, meaning a comprehensive hardening program will need to be able to counter both the brute force of an exterior physical attack — such as a rogue vehicle penetrating the outer perimeter — as well as interior attacks. As a result, many facilities incorporate attack-rated walls, vaulttype doors, biometrics, and mantraps to protect the various internal areas of the building. Of course data centers don’t need to be built on a new site to be high security. While a custom-built data center can be fitted with the latest in intruderprevention measures, some centers have been built in pre-existing secure sites. One of the best known is the headquarters of the Swedish ISP Bahnhof, built in a former nuclear bunker. The site, which was once a Cold War command center, is in a series of granite caves 100 feet beneath a park in Stockholm. Similar sites exist in former military bunkers in Switzerland, and in the British city of Manchester a data center operates in a former Bank of England gold bullion vault. The site is 25 feet underground, has granite walls six feet thick, and a 12-tonne bomb-proof door.

Weather and Geological Threats If the threat of physical attack is hard to quantify, there are other risks to a data center’s integrity that can be calculated with a higher degree of precision, i.e., extreme weather and seismic activity. Of course all data centers will be sited away from flood plains, and

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No matter how you cool your data center, Hoosier Energy has all the hot spots. By offering ideal sites across 59 counties in central and southern Indiana and southeastern Illinois, we can support anything from data hotels to mega centers. And rest assured, weâ&#x20AC;&#x2122;ve got the megawatts to meet all your needs the instant you throw the switch. Letâ&#x20AC;&#x2122;s discuss your plans. We not only have the tools to make your move easy, we have the data to make it attractive.

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far from areas of historic mining activity in order to prevent the risk of subsidence. The hurricane threat on the East Coast of the U.S. is a crucial factor both in the siting and design of data centers. Sites in the lee of natural landscape features will be sought after, and the buildings themselves will be designed to withstand very high wind loads. In northern states, data centers will be designed to cope with heavy accumulations of snow on the roof and walls; and on the West Coast and in areas of seismic activity, designs will include the very latest earthquake-resistance technology. How much protection a data center developer seeks from this sort of natural threat will depend on two key factors: whom the data center will be operated by/for and the cost. The greater a data center’s resilience to these natural threats, the greater the cost. Those clients seeking the highest levels of redundancy will want a data center impervious to “once in a century” weather events. However, a developer with a more limited budget for hardening may settle for the ability to withstand “once in a decade” storms.

every month, speed to market is crucial. A location where the planning or construction process is likely to be longer will have a higher opportunity cost than a rival site that’s able to come online and start generating revenue sooner. But no developer will chose a site on cost alone. And while remote rural areas may offer the cheapest land, proximity to urban areas makes it easier to attract the skilled workforce needed both to build and run a large facility. The importance of good transportation links shouldn’t be underestimated either. A big facility will employ up to 100 staff, so good road links are a must, even if security concerns mean a data center is likely to be set back from a high-speed road such as a freeway.

CENTER’S RESILIENCE TO NATURAL THREATS, THE GREATER THE COST.

The Key Metric Data center efficiency is frequently judged on the facility’s cost per watt of electricity consumed. This yardstick can be affected by countless factors — from the design of the building itself to the density with which the servers are packed together to how they are cooled. Servers generate significant heat when in operation — hence cold regions hold an obvious appeal for data center developers. Sites like Facebook’s 30,000-square-meter facility in Sweden are able to use outside air for cooling for 10 months of the year, and such free cooling clearly provides a huge cost savings. Technology and site design are crucial to a data center’s cost per watt performance, but so too is the cost of the land, as well as construction and permitting costs. Many local authorities offer tax breaks to attract data centers to their regions, for reasons of prestige and job creation. They can offer other incentives too, such as competitive utility costs or reduced sales tax on major equipment. The speed at which a site can be developed is also a significant factor. With the global demand for data rising

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The Future These cost variables are being shifted by the constantly improving technology of the servers themselves, and their associated IT infrastructure. The cost per watt is being driven down as servers become more efficient — both in terms of power consumption and the density at which they can work optimally. Technological advances, such as the arrival of highly efficient water-cooling systems, are allowing data centers to pack ever more servers into the same space, and this trend is set to continue. But there’s no sign yet of data center developers seeking smaller sites — with many new facilities being designed with plenty of spare capacity. As server density increases, data center developers are less likely to run out of physical space than they are to run out of the power needed to run them, or the ability to cool them sufficiently. In the future, the ability to ramp up the power supply could become the single most important requirement for a data center location. Data centers are already estimated to consume 3 percent of the world’s electricity. While the impact on the power grid of the growing demand for data is being mitigated by advances in server technology, the IT giant Cisco projects that global data center traffic will triple in just a five-year period. With global data demand increasing at breakneck speed, innovation in both server technology and data center design is essential to ensure this vital infrastructure keeps up.

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ENERGY COSTS AND STRATEGIES FOR THE DATA CENTER MARKET Data center operators need to not only analyze and monitor their energy usage but also constantly evaluate their energy procurement.

The recent dynamics of the energy market, with oil and gas prices falling dramatically, further illustrate the need for data center operators to actively manager their energy portfolios. The industry is energy-intensive, with the total cost of operations (TCO) significantly affected by the cost of energy. Fluctuations in energy prices can play havoc on operating budgets, affecting wholesale data center operators and their clients and having a direct impact on the bottom line. Data centers invest in complex building management systems that can monitor and provide a tremendous amount of information on energy consumption. This data is used to develop strategies and investments to reduce the facilities’ PUE (power usage effectiveness metric) and therefore save energy. Another area that should have the same level of focus is energy procurement. Energy procurement needs to be analyzed, monitored, and evaluated constantly to assure the

operator has an understanding of the dynamics of the market and can make informed energy-related decisions (conservation investments, site location, leases, renewables, etc.).

Energy Environments Data centers operate in two energy environments: Regulated markets: The cost of energy will be a function of the supplying utilities energy mix (nuclear, gas, oil, renewables), tariffs, and cost to supply service (delivery charge). The operator has little room to manage costs other than alternative methods to reduce consumption (conservation, cogeneration, renewables). Those operating in a regulated market should: • Have a strong level of communication with their utility • Understand the utility tariff and the many subsections or provisions • Take advantage of any incentives (conservation, renewables, economic development, etc.) • Be active in large energy users

By William P. Steffens, Principal, Sugarloaf Associates LLC

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groups (if one doesn’t exist, start one) •Monitor state impacts on energy policy (new or modified laws, energy commission actions, etc.) Unregulated markets: This environment allows an operator to purchase energy with annual contracts or “float” the market; it provides more flexibility but also adds a level of complexity and risk, and requires much more due diligence. Those operating in an unregulated market should: • Know their cost of energy • Understand their options: Retail ~ Purchase energy from the utility ~ Purchase through a third-party provider Wholesale ~ Purchase direct • Develop an energy purchasing strategy: ~ “Float” the market ~ Fixed cost contracts ~ Block and index • Do all of the items suggested in a regulated environment

This caused the price of electricity to rise, with the average monthly price for some users in excess of $0.20/kWh in January 2014,

Guess who is building a $2 billion global command center in Mesa, AZ? There is good reason Apple, Inc. is inǀesƟng in Desa͕ ͘ Desa ďoasƚs ƚhe reaů esƚaƚe͕ inĨrasƚrƵĐƚƵre and ďƵsinessͲĨriendůǇ eĐoͲsǇsƚeŵ ƚo sƵƉƉorƚ sƚaƚeͲoĨͲƚheͲarƚ daƚa Đenƚer oƉeraƟons͘ Mesa is delivering the data center of 2025 in 2015. Here’s how: ͻ ͻ ͻ

Where Do Energy Prices Go From Here? Last year’s “polar vortex” came as a severe shock to the energy industry and users. The spot market price for natural gas (the primary source for energy production in many markets) peaked at over $20/dth in the Northeast.

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Zeůiaďůe͕ redƵndanƚ͕ green Ɖoǁer ZoďƵsƚ Įďer neƚǁorŬ ǁiƚh darŬ Įďer aǀaiůaďiůiƚǇ ηϭ saĨesƚ ůoĐaƟon Ĩroŵ naƚƵraů disasƚer in ƚhe h͘^͘ ŵerging ĐǇďer seĐƵriƚǇ ĐůƵsƚer WƵďůiĐͲWriǀaƚe ƉarƚnershiƉ oƉƉorƚƵniƟes

sisiƚ mesaaz.gov/datacenters͕ or Đaůů 480-644-3562 ƚo ůearn aďoƵƚ sƉeĐiĮĐ͕ shoǀeůͲreadǇ oƉƉorƚƵniƟes in Desa͘

19/02/15 7:06 PM

AREA DEVELOPMENT | Q2/2015

CURRENT STATUS OF ENERGY DEREGULATION FALL 2014 WA MT

OR ID WY NV CA

MI IA

NE UT

PA IL

KS OK

Electric & Natural Gas Natural Gas Partial Electric No Electric or Gas Deregulation Partial Electric & Gas – PG&E

compared to an average of $0.09/kWh for the market. The current energy market provides a completely different view, with energy prices in steep decline. The year-end 12-month strip price for natural gas was approximately $3.20/dth with the price falling about 20 percent from where it was a little over one month prior. This decrease will have a positive effect on electricity prices. These events, all within one year, illustrate the volatility of the energy market. Despite this drop, there are factors that will have a negative impact on natural gas prices for the long term. These include: • Exporting — The price of natural gas in Europe is double the domestic price.

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DC WV

NJ DE MD

AR MS

Energy Deregulation Status

VT NH MA NY CT RI

* Washington, D.C., is deregulated

• Coal plant retirement and the shift to natural gas for electric production • Transportation (conversions from diesel and gasoline) The question is, how long will this positive outlook for energy last and what should be your energy-purchasing strategy? Regulated markets: There will be little impact on tariff rates, unless the cost of natural gas stays low for an extended period. Utilities usually have a hedging strategy for fuel purchases and, as a result, cannot take full advantage of spot market prices; therefore, savings will lag the market. Unregulated markets: Because of the drop in fossil fuel prices, there will be downward pressure on electric

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Volatility in the energy

prices. Because of fuel hedging strategies, the drop will not be proportional to the drop in natural gas and oil. Hourly and spot market rates will be favorable, while fuel prices stay low. The current outlook is for a continued drop in fossil fuel prices. The hourly price of electricity is still exposed to volatility due to weatherrelated events. These events can cause capacity shortages and drive up the spot market price for natural gas in affected markets and, therefore, the price of electricity, as proven by the polar vortex. Recent events and the volatility in the energy market

MARKETS AMPLIFIES THE NEED FOR DATA CENTER OPERATORS’ DUE DILIGENCE .

MESA: A Smart Location For Intelligent Companies

only amplify the need for data center operators and users to do their due diligence and have a resource (internal/external) that can provide input on a strategy for energy purchasing. This level of knowledge can then be used to minimize the facilities energy costs/risk and provide valuable information for the economic evaluation of equipment purchases based on energy efficiency.

Will Steffens is a principal of Sugarloaf Associates LLC, an energy economics company, with over 35 years of experience in the utility industry. He can be contacted at 201-694-3249 or wsteffens@sugarloafassociates.com.

Kim Lofgreen, Marketing and Business Development Manager City of Mesa, Arizona Office of Economic Development ••• 20 East Main Street, Suite 200 P.O. Box 1466 Mesa, Arizona 85211-1466 480-644-3962 Fax: 480-644-3458 Kim.lofgreen@mesaaz.gov www.mesaaz.gov

With a population of nearly 500,000, Mesa, Arizona, is home to major operations for global companies such as Apple, Boeing, FUJIFILM, Mitsubishi, Bridgestone, MD Helicopters, Nammo Talley, and Ulthera, among others — and for good reason. Mesa boasts the real estate, infrastructure, and businessfriendly eco-system to support stateof-the-art international companies. Mesa’s industries of opportunity include healthcare, education, aerospace/aviation, technology, and tourism.

Learn more about the Elliot Road Technology Corridor where Apple will be investing in a $2 billion global command center at www.mesaaz.gov/techcorridor. Learn about Data Center opportunities at www.mesaaz.gov/datacenters.

The Boeing Mesa Facility building Apache Longbow helicopters.

To learn about other opportunities, visit www.mesaaz.gov/economic or call 480-644-3962.

AREA DEVELOPMENT | Q2/2015

Indiana Offers Data Centers Strong Electric and Fiber Networks

Harold Gutzwiller, Manager, Economic Development/Key Accounts Hoosier Energy ••• P.O. Box 908 Bloomington, IN 47402 812-876-0294 hgutzwiller@HEPN.com www.HoosierSites.com

Indiana has joined the growing list of states focusing on the data center sector as part of its economic development strategy. The state is centrally located in the Midwest and has a number of diverse geographic areas that are ripe for data center growth. Its economic development community is a strong supporter of data center development, and has recently developed marketing strategies to attract this sector. Biggins Lacy Shapiro & Co. (BLS & Co.) has worked with several of the state’s major utilities to assess the opportunities and to prequalify sites that are particularly attractive for data centers. INFRASTRUCTURE Of course, infrastructure is one of the driving forces in siting data centers, with electric and fiber as the most critical factors. Indiana’s co-op electric utilities recognize the value of data center development, as demonstrated by Hoosier Energy’s investment in infrastructure. Hoosier Energy’s policies and procedures ensure the industry’s needs are met. From a fiber perspective, Indiana has strong north/south and east/west routes to allow for the flow of data, and to interconnect its multiple networks for redundancy and reliability. CLUSTERS Currently, the Indiana market has two main data center clusters: the Indianapolis and South Bend metro areas. The primary node within Indiana

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is Indianapolis, which provides connectivity both north/south and east/west. Indianapolis data centers serve the regional business community and can support the growth in demand by the healthcare industry. South Bend benefits from its close proximity to universities and its strategic location along major fiber routes between New York and Chicago. Northern Indiana cities like Gary are in an ideal position to attract more data center development, given their location close to Chicago, which has a high concentration of data centers supporting financial services and commodities markets. (The Chicago metro area is the fifth largest data center in North America, with an estimated 1.96 million square feet of space, according to the Urban Land Institute.) Other underdeveloped areas with potential to attract data centers include New Albany/Louisville, Terre Haute, Columbus, Lafayette, Marion, Fort Wayne, Shelbyville, Evansville, and Muncie. INCENTIVES Economic developers, business, and government officials are currently working on new legislation to provide meaningful incentives to companies investing in data center facilities. Specifically, the legislature is considering a sales tax exemption on the construction of data centers. This action, coupled with legislation passed in 2012 allowing communities to offer incentive programs to help offset the impact of personal property tax, has poised the state for significant growth in this sector.

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Switch SUPERNAP

Adam Kramer, Vice President of Government & Public Affairs Switch ••• adam@supernap.com www.supernap.com

Where you run your business actually matters. “Motivated by invention. Driven by perfection” is not just a tagline; it is a way of life and is Switch’s commitment to its clients. No other colocation facility in the world is built, functions, offers or looks like the Switch SUPERNAP. Switch, the developer of SUPERNAP data centers, is the revolutionary technology solutions company led by inventor and solutionist Rob Roy. As Founder and CEO, he holds 218 patents and patents pending that have produced an essential and future-forward transformation in data center architecture, engineering, technology, and operations. Over a decade ago, Rob Roy envisioned the great challenges that data center technology would face across multiple requirements, from security to efficiency to redundancy. He knew the designs of existing data centers would not support the needs of an industry in exponential growth. It was time to Switch the entire concept of data center design. His mission: redesign and redefine the data center down to the smallest detail. The result: the invention of a set of extraordinary design solutions that has revolutionized every aspect of the industry. Rob Roy’s vision for his company also resulted in the creation of the SUPERNAP CORE Cooperative. It is the world’s only $3 trillion independent purchasing and collaboration ecosystem, guided by the company’s unique operating ideology called “Truth in Technology.” His vision for a shared tech-

nology environment has created the most efficient means of storing data. Regardless of a company’s size, the return on investment by choosing Switch SUPERNAP is unmatched by any other colocation company in the world. The Switch awardwinning Tier IV Gold SUPERNAP data centers are certified as the highest-ranking colocation data centers in the world and are maintained by the highest-rated mission critical operations teams. SUPERNAP facilities are the first and only carrier-neutral colocation data centers to be certified Tier IV Gold in Operations by the Uptime Institute and are also certified Tier IV in both Design and Facility categories. With more on-net, independent cloud providers than any other physical cloud gateway, SUPERNAP connects thousands of clients and providers from within the facility. SUPERNAP enables unparalleled mission critical solutions that make a difference in innovation, ROI, and communities as a whole for clients ranging from sophisticated startups to Fortune 100 powerhouses. SUPERNAP is the recognized world leader in colocation design, development, and mission critical operations. Locations include dual campuses in Nevada as well as forthcoming SUPERNAP international locations. While many data centers are built and run by real estate developers, SUPERNAP thrives under the leadership of Rob Roy, an innovative technologist whose business is reinventing data centers. Rob Roy continues to refine, innovate, and invent what’s next.

AREA DEVELOPMENT | Q2/2015

INTERMODAL SITES

Creating & Maintaining a Cost-Effective Supply Chain A detailed mapping of the supply chain, locational considerations, and the use of foreign-trade zones can all help to reduce supply-chain costs, while increasing velocity. By Curtis Spencer, President, IMS Worldwide Inc.

on the terms of sale and ensures that each custodian functions appropriately to keep the goods moving in transit 3. Financial documents necessary to keep the supply chain moving at the appropriate pace without stops and starts between the custodian transfers within the supply chain • Letters of credit, payment for cartage/drayage, terms of sale, etc.

n order to operate and execute a supply chain cost effectively, it is important to correctly map the details of the supply chain. Mapping a supply chain actually takes four separate flow charts, as follows: 1. Individual custodians who move goods from one point to the next point within the supply chain — This route or segment links the names of each custodian who has a role in moving goods from origins to destinations. For example: • Foreign manufacturing center – stuff container – truck to foreign port – in gate at foreign ocean terminal – load to vessel – steam to destination port –unload to arriving terminal – truck to rail terminal – load on rail to destination inland city – discharge at inland rail terminal – truck to distribution center – truck to store or pick for fulfillment 2. Third-party service providers or the buyer/seller who actually manages the individual custodians (above) based

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4. Information bursts that are necessary to support the timely transfer of custody from one custodian to the next in order to keep the pace of the supply chain intact • This would include the information such as the manifest, bill of lading, seal details, delivery notification, gate in/out notices, entry filing, entry release notice, and proof of delivery A good supply-chain manager or a third-party logistics service provider will manage and balance the tension between lowest cost end-to-end delivery and speed to market. Speed in a supply chain always adds costs, but cost must always be balanced against the requirements for delivery deadlines or production requirements. The key element to a successful supply chain is predictability, in terms of time between origin and destination and the control of costs to keep the supply chain competitive.

Locational Considerations Site selection often plays a role FOR FREE SITE INFORMATION, CALL

in the costs associated with supply chains. In order to “get it right,” the site selector must understand the complexities of both the inbound — from foreign factory to distribution or fulfillment center — and the outbound — from distribution center to retail stores, production centers, or as direct fulfillment to individual consumers — components of the supply chain. Getting it right means that both the inbound and outbound components of the supply chain function at the lowest costs, while allowing goods to arrive and depart meeting all key milestones between the production center and the consumer. Some of the most important locational elements to be considered due to their impact on supply-chain costs are heavy-haul truck corridors, distance from rail intermodal terminals, trucking distances to/from stores, access to local and regional package delivery services, and available labor. Proximity to a rail intermodal terminal, and selecting a site that can be served “through the fence” from the terminal rather than on public roads, can mean a difference of saving hundreds of dollars on every container move required from the user or thirdparty provider. One or two miles can save millions of dollars annually in transportation costs. This means that the building user saves as much as a dollar per square foot in rent each year as a result of good transportation management analysis.

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

Identifying Anomalies One way to make a supply chain more competitive and cost-effective is to establish event notices that identify when time-activated anomalies occur within the supply chain. For example, if the truck route from the foreign factory to the ocean terminal is just over five miles, it is expected that the terminal in-gate notice will be received within one hour of departure from the factory. If this event does not occur or notice is not received from the ocean terminal in-gate, an event notice is generated internally to determine if a security compromise has occurred within the supply chain. These notices may also serve as an indicator that a custodian is not performing as promised. In either case, such an event notice protocol provides visibility into the details of each custodian and their activities, part of the overall mapping exercise that can offer insight into events that cause disruption, add costs, or change the delivery expectation for the arrival of goods.

New “Dimensional” Weight Achieving a cost-effective supply chain may be done in a matter of inches. Both FedEx and UPS are changing their parcel shipping calculations to be based on “dimensional weight” and not just the actual weight of the package. This means that for qualifying packages (packages measuring less than three cubic feet are exempt from this new pricing) the shipping rates will be calculated based on the greater amount of actual weight or dimensional weight. Under the previous system, a box weighing five pounds

AREA0354.indd 1

would be charged based only on the weight of the box. However, now, based on its size, the box could be billed under the new formula as if it weighed 20 pounds. This change in shipping costs, if not anticipated and integrated into the engineering and packaging metrics, may result in only a few inches of volume in a carton costing exponentially more in transportation costs. Shippers will need to reduce package size — not just weight — to cut shipping costs. Manufacturers will be pressured to reduce the size of products in order to decrease both their weight and size to save on shipping costs. In some cases, a few inches will make the difference between dimensional weight fees and actual weight shipping charges.

Foreign-Trade Zones The final consideration for managing supply-chain costs is the evaluation and use of the foreign-trade zone (FTZ or Zone) program as a tool to decrease the overall costs, increase supply-chain pace, and provide the FTZ user with a more competitive cost structure. The federally managed Zone program produces three distinct opportunities to save money in supply chains and to lower overall operations costs: 1. Duty delay and/or duty reduction: All goods entering the U.S. are subject to a “duty rate” based on formulas for imports from U.S. Customs and Border Protection (CBP). Under normal programs, duties are paid at the time of entry

AREA DEVELOPMENT | Q2/2015

26/11/14 4:32 PM

into the commerce of the United States. However, under the FTZ program, duties are only paid on goods when they are removed from the FTZ, producing a strong cash-flow benefit to the users who store goods in their FTZ. Outside the FTZ, goods that arrive for production or manufacturing are assessed duties at the time of their arrival based on their duty schedules. If such goods are assembled, and the assembled duty rate is different, they must apply for duty drawback in order to gain a “refund” on the duty paid on the higher cost components. However, in an FTZ, the duty is not paid on the components that arrive in the zone. Only when the finished products are removed from the zone is the duty calculated (based on the duty schedule of the finished good, not the components), and the lower duty is due to be paid when the product is removed or sold from the zone. 2. Inventory tax exemption: In an FTZ, certain inventory taxes are exempted in specific states. In this case, goods held in an FTZ are not subject to the ad-volorem or inventory taxes, or are subject to a reduced tax rate based on payment in lieu of tax agreements between the tax authority and the user. 3. Merchandise processing fees: These fees are paid when

a Customs entry is filed with CBP. The fee is paid based on the value of the goods documented in the entry. Upon review of the entry, CBP will post a release; and the goods are considered “domestic” and can be moved after the entry fees are paid to CBP. Each entry requires that a fee, entry, and release be completed. In an FTZ environment, rather than pay multiple entries and wait for multiple releases, the FTZ operator only pays one entry fee per week, regardless of the number of entries filed. This “weekly entry” program allows the FTZ operator to access goods immediately upon discharge from a ship or airplane, which also increases the velocity of the supply chain and, in many cases, saves the zone user millions of dollars annually. In sum, there are many ways to manage supply-chain costs, resulting in more efficient and predictable supply chains. Many importers, exporters, and third-party logistics providers do not conduct a detailed mapping of their supply chains, which can result in delays or shrinkage within supply chains. In addition, these companies often overlook the benefits of the foreign-trade zone as an effective tool to manage supply chains, while simultaneously reducing costs and increasing the supply chain’s velocity. ■

CENTRAL, CONNECTED, CAPABLE.

Central Location. Connected Routes. Capable Workforce

The Joplin region is a great place for your business. Kevin Welch, Director Joplin Regional Partnership ••• 417-624-4150

Kwelch@joplincc.com JoplinRegionalPartnership.com

The Joplin region, anchored by the Joplin, Missouri, metropolitan area, and the Pittsburg, Kansas, and the Miami, Oklahoma, micropolitan areas, offers a quality business climate. The area’s market reach, productive workforce, reasonable operating cost, and high quality of living make the Joplin region an ideal location. The Joplin region’s central location is enhanced with great transportation routes. The region is near the population center of the United States. Central to the North American market, the area is nearly equidistant from Los Angeles and New York as well as the Mexican and Canadian borders. The region has north-south highway access on U.S. 69 and I-49 and

AREADEVELOPMENT

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east-west interstate access on I-44. Cultural enthusiasts, artists, performers, extreme sportsmen, and nature lovers can all find a place in the Joplin region to call home. Parks, museums, wildlife, and entertainment characterize the Joplin region’s quality of life. The area is home to an eclectic blend of entertainment venues and festivals. Shoppers and diners delight in the variety of shopping and eateries offered throughout the region. The region boasts award-winning public schools and numerous private school options. Quality medical care options are offered by two major medical centers and four other hospitals.

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

Special

Report

Shovel

2015 Awards

AREA DEVELOPMENT | Q2/2015

Special

Report

f the last year in the economic development arena

has shown anything, it’s how serious the competition for new projects has become. States and localities understandably have raised their general expectations with the U.S. economy generating stronger growth prospects, confidence in American manufacturing on the rise, and a number of high-profile siting, expansion, and relocation decisions fueling economic development pursuits. But many companies at home and abroad have remained

TEXAS S ( pop. 26.96 million)

Company

City/County

Toyota Motor North America, Inc. 7-Eleven, Inc. ADP

Plano

3,650

$345 million

Irving El Paso

N E

1,250 1,100

$56 million $41 million

Active Network JGC America Freeport LNG Formosa Plastics Natgasoline LLC Phillips 66

Dallas Houston Freeport Beaumont Old Ocean

N N N E N N

1,000 1,000 350 200 240 25

$13 million N/A $11 billion $2 billion $1.9 billion $1.5 billion

NRG Energy/ JX Nippon Oil & Gas

Thompsons

N/A

$1 billion

Point Comfort

N/E # Jobs

Gold Shovel Winner

Inv. Amt.

reluctant to part with capital to invest in new and augmented facilities while the U.S. and global economies remain “iffy.” And a handful of states have indicated they’re getting more serious about chasing new business by cutting tax rates and taxes. Area Development’s annual Gold and Silver Shovel Awards recognize individual states for their overall economic development effectiveness. This year, we honor 21 states for their achievements in 2014 in garnering company investment and job creation. At a time of intensifying competition, these states and communities have proven that they understand what makes for winning economic development strategies. Their governors and legislatures not only have determinedly Industry held the line on taxes, in most cases, but also have relentlessly pursued Hdqtrs. other paths to business-friendliness, Hdqtrs. including providing reasonable Human Resources incentives, improving infrastructure, Management training workforces, and establishing an Hdqtrs. overall environment of cooperation with Engineering business that helps create vibrant new LGN Exports economic presence in communities and Olefins sustainable employment today and for Methanol the future. Ethane, Propane, Butane Power Plant

STATES WITH POPULATIONS

12+ MILLION

REPRESENTS A STATE/LOCAL SPONSOR

CA ALIFFORN NIA

( pop. 37.69 million)

Company

City/County

UPS

Ontario Airport San Leandro Seal Beach Redlands & Moreno Valley San Diego Rancho Bernardo Fontana

Osisoft Boeing Amazon

Illumina Petco CSI Tubular Products, Inc. Underground Elephant Kinkisharyo Superior Farms

Inv. Amt.

Industry

700

$289 million

Logistics

E E N

350 1,500 1,500

$15 million $30 million $195 million

Technology Engineering/Design E-Commerce

E E

300 263

$50 million $84 million

Life Sciences Hdqtrs.

105

$15.6 million

Flat Rolled Steel

San Diego

100

$25 million

Technology

Palmdale Dixon

E E

250 100

$30 million $16 million

Railcars Food Processing

Silver Shovel Winner

AREADEVELOPMENT

N/E # Jobs

STATES WITH POPULATIONS

FOR FREE SITE INFORMATION, CALL

12+ MILLION

12+ MILLION POPULATION CATEGORY • Texas — GOLD SHOVEL • Texas receives the 2015 Gold Shovel award in its population group. However, for the first time in several years, the supremacy of Texas as an economic giant and a job-producing machine is being challenged. The 2014 plunge in global oil prices has slashed demand for the state’s most abundant commodity, and the Texas economy is taking a hit in employment and overall economic activity as a result. Now comes the biggest test yet of Texas’s continued leadership in U.S. job growth and economic vitality. The early signs are promising. Once again CEOs have deemed Texas the best state in the nation for business, according to the annual survey by Chief Executive magazine. Texas moved into 2015 still leading all other states in job

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

Methodolo

Area Development’s

annual Gold and Silver Shovel Awards recognize states for their achievements in attracting high value investment projects that will • Ca California create a significant number of new jobs in their communities. We collected information from all 50 states about their top-10 — SILVER job-creation and investment projects initiated in 2014 (only those S H • SHOVEL projects that actually had monies invested, “broke ground,” began an expansion, started new hiring, etc. were considered). Based As much as many A on a combination of weighted factors — including the number of new CEO CEOs bash California’s jobs to be created in relation to the state’s population, the combined busi business environment, dollar amount of the investments, the number of new facilities, the it reta retains a certain diversity of industry represented — five states achieving the highest mome momentum in economic weighted overall scores are awarded Area Development’s develo development because of 2015 Gold Shovels in five population categories: 12+ million, its geog geographic size, its large 8+ to 12 million, 5+ to 8 million, 3+ to 5 million, population, population its location on the and fewer than 3 million. Runners up in each West Coast, and the inexorable of these population categories are awarded some of its main dynamism of so 2015 Silver Shovels.

including digital technology, industries, includin raising most of America’s movie-making, and rais fruits and vegetables. Not eve even the devastating drought now afflicting California can be expected ex to slow the economic juggernaut too much. Finally, under Governor Jerry Brown, the state is trying to make some attempts to reach out to aggrieved owners of existing businesses and to outside companies. Its new

The world’s best companies are making Plano their home. Our population is diverse. Our workforce is highly educated. Taxes are low and cost of living is one of the best in the nation. And our quality of life is known nationally as one of the best places for families to live and work. For information and accolades, visit Planotexas.org.

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growth and nudging its unemployment rate down. n. An increasingly diverse economy that also includes manufacturing, technology, and healthcare is helping keep Texas afloat. And thanks to its aggressive attempts to bring more companies to o Texas, the state landed one ne of the biggest economic development prizes of 2014: 014: the decision by Toyota’s U.S. arm to move its headquarters rters to northern Texas from southern outhern California, along with 3,650 50 jobs, over the next couple of years. Other big announcements ments included the planned addition of 1,250 jobs as 7-Eleven constructs a new headquarters in Irving, Texas, and a passel of investments by energy companies in downstream processing of oil and gas.

FLORIDA

(pop. 19.55 million)

Company Northrop Grumman Telemundo Communications Group, Inc. International Paper Pensacola Mill FedEx Ground Lockheed Martin Trader Joe’s Edge Aerodynamix, Inc. U.S. Tennis Assn. General Electric Oil & Gas FedEx Ground

City/County

N/E # Jobs

Inv. Amt.

Industry

Brevard County Miami-Dade County

1,800

$500 million

150

$260 million

Escambia County Marion County Orange County Volusia County Bay County

$123.2 million

Paper Mill

165

$122.9 million

200

$82.4 million

450

$78 million

120

$77.9 million

Orange County Duval County

154

$60 million

500

$56 million

Polk County

$43 million

Distribution/ Logistics Mission Systems & Training Distribution/ Logistics Aviation/ Aerospace Regional Hdqtrs. Oil & Gas Industry Products Distribution/ Logistics

Silver Shovel Winner

Aviation/ Aerospace Regional Hdqtrs.

STATES WITH POPULATIONS

12+ MILLION

*PROJECT OF THE YEAR

NEW YORK

( pop. 19.57 million)

Company

City/County

SolarCity GigaFactory Pratt and Whitney Valeant Pharmaceuticals/ Bausch & Lomb Dealertrack Technologies The Gap Regeneron Ferguson Enterprises Praxair - Technical Center Etsy

Buffalo

3,000

$5 billion

Solar Panels *

Middletown Rochester

N E

100 112

$140 million $200 million

Aerospace Optical Products

North Hills

357

$100 million

Fishkill Rensselaer Coxsackie Tonawanda

E N N E

1,200 300 95 22

$96 million $69 million $40.5 million $38.8 million

Software Development Distribution Biotechnology Distribution Engineering/R&D

Brooklyn N (NYC) /Hudson Manhattan N (NYC)

340

$37.8 million

1,000

$12.1 million

Media Math

Silver Shovel Winner

N/E # Jobs

Inv. Amt.

Industry

E-Commerce Hdqtrs. Mktg./Advertising

STATES WITH POPULATIONS

PROJECT of the YEAR

SolarCity Buffalo, New York If any Rust Belt city could use an economic development jolt, it’s Buffalo. So landing the next-biggest outpost of the new “green” economy offered by Elon Musk — after the Tesla battery “gigafactory” — was a huge score for the city and for western New York. SolarCity chose a former brownfield site in South Buffalo, at the RiverBend industrial site, for a $750 million factory that the state is building for the company, bringing 3,000 jobs. SolarCity will invest $5 billion in the whole project. Owned by the State University of New York, the site is part of the Start-Up NY program launched by Gov. Cuomo that offers companies significant incentives to locate on New York college and university campuses and tap into the technology and talent there. “We have to change the mentality of Buffalo, [and] one of the leading solar companies in the world is coming on board and making this the largest advancement in Buffalo’s economy in a generation,” Gov. Cuomo said in September. In April, the state negotiated a four-month window with SolarCity to locate an even bigger factory at the site if the company gets to the point of further expansion.

12+ MILLION

REPRESENTS A STATE/LOCAL SPONSOR

California Competes Tax Credit initiative, launched last year to replace the poorly performing Enterprise Zone Program, is aimed at “high-value” businesses growing in the state. And California officials noted that the state added 320,000 jobs in 2014 and, at 1.5 million, had added more private32

AREADEVELOPMENT

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sector jobs since the recession ended than any other state. Among the state’s biggest economic development projects last year was a decision by Boeing to expand its engineering/design facility in Seal Beach, with 1,000 of the projected 1,500 jobs coming from Washington State. Also, 800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

For Development, a State of Opportunity.

GRANTS. TAX CREDITS. ACADEMIC PARTNERSHIPS. THEY’RE ATTRACTING BUSINESS, AND NOTICE. New York State wins a Silver Shovel Award for Economic Development Every year, Area Development magazine recognizes the country’s highest-performing states for company investment and job creation. We’re delighted to have received a Silver Shovel Award. In the 12 months preceding March 2014, we added 108,200 private industry jobs. A number of initiatives were responsible for this, including generous grants and tax credits, innovative academic partnerships, Business Incubators and Innovation Hot Spots. How can New York State help your business move ahead?

Find out at ny.gov/business

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Amazon has opened fulfillment centers in Redlands and Moreno Valley, California, strengthening the online retailer’s regional presence. Initial plans were to hire around 1,500 workers at the two new facilities.

City of Brotherly Love, just weeks after new Pennsylvania Governor Tom Wolf took office. “I’m going to make it so that companies can prosper better in Florida than anywhere else in the world,” Scott told Area Development. So far, so good. Florida leapfrogged over North Carolina and Tennessee to grab the No. 2 spot in the 2015 rankings of “Best & Worst States for Business” by Chief Executive • Florida — SILVER SHOVEL • magazine, and Scott said he wants “to make sure Florida Florida Governor Rick Scott is so confident of the rising is the No. 1 state for doing business.” The state “cut taxes appeal of his state as a business location that he took the 40 times in 2014 and will cut another $673 million in taxes in very aggressive step of openly traveling to Philadelphia 2015,” he said. “We also have cut 3,100 regulations since I’ve in February to pitch Florida to business leaders in the been in office, including streamlining the permitting process.” More companies took notice in 2014, especially in the manufacturing arena that Scott has been trying to emphasize. ( pop. 12.77 million) The biggest win for Florida was a new Northrop Grumman plant in Brevard Company City/County N/E # Jobs Inv. Amt. Industry County where the company will make the new B-2 bomber. In exchange for Comcast Corp. Philadelphia N 1,500 $1.2 billion Mass Media investing $500 million and creating zulily Inc. Bethlehem N 1,200 $26.8 million E-Commerce 1,800 jobs, the company got nearly $21 Proctor & Gamble Shippensburg N 1,000 $93 million Consumer Goods million in state incentives. The Vanguard Group Malvern N 850 $60 million Financial Services

PE ENNSYLVVANIA

FedEx Ground Nordstrom, Inc.

Dietz & Watson American Wire Research Inc. General Electric Martin’s Pastry Shoppe

Jackson Township West Donegal Township Philadelphia Wilmerding

500

$25 million

369

$76.6 million

Distribution/ Logistics Fulfillment Center

E N

158 150

$35.6 million $28.9 million

Food Mfg. Welding Wires

Findlay

$32 million

Chambersburg

$62.8 million

Digital Fabrication Technologies Food Mfg.

Silver Shovel Winner

STATES WITH POPULATIONS

12+ MILLION

( pop. 9.99 million) Company

City/County

Unisys Chime Solutions Inc.

Augusta Morrow

N N

700 1,120

$7 million $4.6 million

Beaulieu Int’l. Group Acuity Brands Keurig Green Mountain, Inc. The Kroger Co. Fiserv, Inc. TSYS

Cartersville Conyers Douglasville

N E N

350 700 550

$200 million $16 million $337 million

Morrow Alpharetta McDonough

N N N

120 500 450

$175 million $41 million $2.5 million

Castellini Foods

Conley

300

$51.5 million

WorldPay US, Inc.

Atlanta

595

$9.6 million

Gold Shovel Winner

N/E # Jobs

Inv. Amt.

STATES WITH POPULATIONS

REPRESENTS A STATE/LOCAL SPONSOR

AREADEVELOPMENT

Industry

FOR FREE SITE INFORMATION, CALL

IT Business Process Outsourcing Textiles Light Fixtures Food Processing Distribution Financial Services Payment Processing Food Processing Payment Processing

8+ TO 12 MILLION

• New York — SILVER SHOVEL • The state has been filling TV airwaves over the last year or so with advertisements for its Start-Up NY campaign that features major incentives — such as 10 years without paying taxes — for new and expanding businesses that locate on or near eligible university or college campuses. And sure enough, one element in the state’s ability to land the 3,000-employee SolarCity “gigafactory” for Buffalo last year was the winning site’s affiliation with the Start-Up NY program. CEOs still point out that New York’s overall tax structure for most companies, and most individuals, remains onerous. But a spokeswoman points out that Governor Andrew Cuomo has been “implementing a comprehensive economic development strategy” since 2011 that has “achieved dramatic progress” resulting in, among other things, the creation and retention of hundreds of thousands of jobs in the Empire State. Indeed, the diversity of New York’s 10 listed economic development wins in 2014 bespeaks an economy with great appeal to business decision-makers.

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

• Pennsylvania — SILVER SHOVEL • Although Pennsylvania remains a high-tax state, it has moved up seven spots to 35th on Chief Executive’s “Best States/Worst States” list. And Governor Tom Wolf told Area Development that he is “a different kind of governor — one who has built and run a successful business.” The state did face big challenges in 2014, including a $2 billion budget deficit and a crisis in education. Wolf promised to “take the state government in a new direction with a strategic focus on making Pennsylvania an engine for economic development and a magnet for private-sector entrepreneurs who will create good, high-wage jobs and grow the middle class.” Wolf’s hopes are reflected in the new, $1.2 billion, 59-story skyscraper that is rising on Arch Street in Philadelphia. It’s being erected to house Comcast’s Innovation and Technology Center when it is finished in 2017 and to provide 1,500 new jobs. None of the state’s

other listed 2014 projects comes close to that impact; but typical was a plan hatched by Nordstrom to spend nearly $77 million to build a new fulfillment center, with 369 jobs, in West Donegal Township.

8+ TO 12 MILLION POPULATION CATEGORY • Georgia — GOLD SHOVEL • Georgia finished a very strong year in economic development in 2014 and didn’t even catch a breath in 2015 before the state landed a major new coup: stealing the U.S. headquarters of Mercedes-Benz from New Jersey, where it had been for a half-century. Along with 1,000 jobs, it’ll now move to near Atlanta. The Mercedes-Benz jobs will add to what already is a very strong automotive sector in Georgia, which saw a 149 percent increase in investment in fiscal 2014 and a 15 percent increase in jobs in the state. In other strong sectors, Georgia saw a 57 percent increase in company investments in the aerospace industry during the fiscal year, and a 25 percent increase in jobs. In logistics and distribution, another key part of the Georgia economy, there is a 152 percent increase in investment. In fiscal 2014, 69 percent of total new projects

NAMED TOP STATE FOR BUSINESS BY AREA DEVELOPMENT, CNBC AND SITE SELECTION. From our skilled workforce to global access to an unequaled operating environment, there are so many reasons why you should locate your business in Georgia. Here’s another: Georgia Power project managers will work closely with the Georgia Department of Economic Development to assist you with labor analysis, market data, available properties – whatever you need – at no charge. To get the scoop on all Georgia has to offer, visit SelectGeorgia.com.

AREA0407.indd 1

AREA DEVELOPMENT | Q2/2015 35 25/04/15 4:23 PM

For instance, a new Pratt & Whitney turbine-coating plant in Middletown brings an investment of $140 million and 100 jobs, with groundbreaking slated for mid-2015. And a $96 million investment in an expansion of an existing Gap distribution center in Fishkill will bring 1,200 jobs to the state.

( pop. 9.99 million) Company

City/County

General Motors LLC Plasan Carbon Composites Inc. Eberspacher North America Inc. Molina Healthcare of Michigan Challenge Manufacturing Co. S&P Data LLC Spartan Stores HA Automotive Systems Inc. Suniva Dicastal North America, Inc.

Detroit Wixom

E E

1,750 620

$800 million $29 million

Automotive Automotive

Brighton

545

$122 million

Automotive

Troy

462

$20.3 million

Pontiac

450

$50 million

Healthcare Servicing Automotive

Troy N Grand Rapids E Troy N

421 372

$4.4 million $18.3 million

Call Center Distribution

368 350 300

$28.8 million $12.2 million $139.6 million

Automotive Alternative Energy Automotive

Saginaw Greenville

N/E # Jobs

N N

Silver Shovel Winner

Inv. Amt.

Industry

STATES WITH POPULATIONS

8+ TO 12 MILLION

REPRESENTS A STATE/LOCAL SPONSOR

( pop. 9.86 million)

Company

City/County

Vertex Rail Technologies Sealed Air Corp County HCL America

New Hanover County Mecklenburg County Wake County

Aon Hewitt

Mecklenburg County Richmond & Sampson Counties Forsyth County Catawba County Mecklenburg County Wake County

Enviva

Reynolds American, Inc. GKN Driveline AvidXchange Inc. Advanced Auto Parts, Inc. BorgWarner Turbo Systems

Buncombe County

Silver Shovel Winner

N/E # Jobs

Inv. Amt.

Industry

1,300

$50.9 million

Railcars

1,262

$68.4 million

Plastics

1,237

$9 million

270

$7 million

160

$214.2 million

Information Communications & Technologies Human Resources Consulting Energy Products

293

$120 million

Vapor Cigarettes

228

$113 million

Automotive

603

$21.4 million

Business Services

600

$5 million

Business Services

150

$55.8 million

Gas Engines

STATES WITH POPULATIONS

were expansions of existing businesses, and 31 percent were from companies investing in Georgia for the first time. Information technology also is vibrant in Georgia, and among the IT projects announced in 2014 was a $7 million headquarters of a Unisys operation that will be new to Georgia. 36

AREADEVELOPMENT

FOR FREE SITE INFORMATION, CALL

8+ TO 12 MILLION

Adding to its 23,000 jobs already in the state, Unisys has begun hiring for the 700 jobs it will create at the new facility in Augusta. Another exciting announcement was that Keurig Green Mountain would make its new cold-pod brewing systems at a new plant in Douglasville, Georgia, investing $337 million and creating 550 jobs there.

• Michigan — SILVER SHOVEL • Michigan’s Governor Rick Snyder has led a vast reform of the state’s business culture in favor of companies and growth, including adopting a right-towork law in 2013 and elimination of an onerous Single Business Tax. The entire state came together to pull the City of Detroit through bankruptcy last year. “Michigan is making slow but steady progress,” Chief Executive magazine reported in its annual “Best States/ Worst States for Business” survey of CEOs. Basically, Michigan is riding the auto wave, which has been a great vehicle for the state since the depths of the Great Recession and the U.S.-taxpayer bailouts of General Motors and Chrysler in 2009. American consumers have kept the industry recovery building for six years, and the Detroit Three and major suppliers have been adding jobs and capacity in Michigan. In April, for instance, GM announced that it would invest $5.4 billion in factory enhancements in the U.S. during the next three years — including nearly $800 million in three facilities in Michigan. Of last year’s top projects for Michigan, six were automakers or suppliers, including GM’s decision to invest another $800 million in its DetroitHamtramck plant and add 1,750 jobs there to make sedans.

• North Carolina — SILVER SHOVEL • The state continues its reputation as one of the most business-friendly places in the country, rising to No. 3 in Chief Executive’s 2015 “Best States/Worst States” rankings. 800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

Governor Pat McCrory switched horses for economic a China-based company that will build its first North American development, bringing in a new czar who had done well in automotive-glass manufacturing facility in Moraine. Initial plans Missouri. But, more important were the comprehensive tax were for about 800 jobs over five years with a total investment reforms that North Carolina passed, dramatically bumping the of more than $232 million. However, in January, the company state up from No. 44 last year in the Tax Foundation ranking of increased job projections to 1,550 with a total investment of $360 state business climates to No. 16 this year, the single largest million. Procter & Gamble and McLane Co. both announced big jump in the history of its listing. The largest improvement was new distribution centers. Still, one of the biggest wins for Ohio in restructuring of individual income taxes into a single-bracket 2014 was the white-collar Global Operations Center of General system with a rate of 5.8 percent, compared with a previous Electric, which chose a gentrifying downtown Cincinnati location top rate of 7.75 percent, and a generous standard deduction. for a new headquarters that will add 1,400 to GE’s jobs base in the The corporate income tax also is phasing down to 6 percent city in a $107 million development. from 6.9 percent. The durable diversity of the North Carolina economy was evident in top projects that ranged across many verticals. Vertex Rail Technologies has been hiring people for its plan to build railcars in New Hanover County with a $51 million investment, creating 1,300 jobs. India-based information technology services company HCL In fact, Site Selection magazine ranked North Carolina 2nd in its annual Top America plans to add more than 1,200 Business Climate survey for 2013. So if you’re looking at North Carolina, let jobs in the state, as does specialty ElectriCities’ Economic Development team illuminate the way. We represent packaging manufacturer Sealed Air more than 70 public power communities across the state. To help serve Corp. And, Enviva, a biomass-fuel you better, contact Brenda Daniels, Manager of Economic Development at provider to industrial-scale customers, 800.768.7697, ext. 6363 or bdaniels@electricities.org for more information. will spend more than $200 million to construct new facilities in Richmond and CONCORD KINSTON Sampson counties. International Crossing Highway 70 West

NORTH CAROLINA IS A GREAT PLACE TO DO BUSINESS!

The Buckeye State has been making a bigger case for itself in economic development circles lately, cutting taxes by more than $3 billion since Governor John Kasich took office, streamlining its regulatory climate, and modernizing workforce-development programs to better align Ohio workers’ skills with indemand jobs. Its leap in the 2015 Chief Executive “Best States/Worst States” rankings was one of the biggest this year, to No. 22 from No. 27, echoing the types of gains recently achieved by Midwestern gainers Indiana, Wisconsin, and Iowa. In part, this reflects a recognition that Ohio is competing against the entire world — not just against the rest of the region — for global manufacturing jobs. To that end, some of Ohio’s biggest wins were manufacturers, such as Fuyao Glass,

Industrial Park Location: 2010 Smithfield Way, Kinston, NC 28504 Building size: 40,000 s.f. expandable to 160,000 s.f. Year built: 2009 Acreage: 9 acres with additional 8 acres available Ceiling height: 30 feet Dock doors: 2 dock-high, 1 drive-in Flooring: 10 mil vapor barrier

CONCORD

Concord Airport Business Park Location: 7055 Northwinds Dr., Concord, NC 28027 Building size: 150,000 s.f. Year built: under construction Ceiling height: 32 feet clear Dock doors: 20-30 side loading Flooring: 6 inch concrete Adjacent to Concord Regional Airport

International Business Park Location: 4541 Enterprise Dr., Concord, NC 28027 Building size: 88,527 s.f. expandable up to 141,000 s.f. Year built: 2011 Acreage: 12.8 acres Ceiling height: 28 feet Dock doors: 4

CONCORD

SHELBY

Concord Airport Business Park Location: 7035 Northwinds Dr., Concord, NC 28027 Building size: 400,000 s.f. Year built: under construction Ceiling height: 36 feet Dock doors: 40-80 side loading Flooring: 6 inch concrete Adjacent to Concord Regional Airport

Foothills Commerce Center Location: 1001 Partnership Drive Shelby NC 28152 Building size: 100,000 s.f. expandable to 200,000 s.f. Year built: 2013 Ceiling height: 30 feet Rail: .56 miles Walls: Structural precast concrete 100% ESFR

AREA DEVELOPMENT | Q2/2015 AREA0424.indd 1

• Ohio — SILVER SHOVEL •

Business Park Location (Under Construction) Building size: 277,253 s.f. Build-to-suit office space Ceiling height: 32’ clear height Sprinkler: ESFR Sprinkler System Dock doors: 70 dock doors with 10 knock-outs Trailer: Storage onsite Depth: 240’ Column spacing: 45’ typical Doors: Two drive-in

09/05/15 7:35 PM

*PROJECT OF THE YEAR

( pop. 11.57 million) Company

City/County

General Electric

Cincinnati

1,400

$106.8 million

zulily, Inc. Proctor & Gamble

Gahanna Union

E N

900 801

$430,000 $108.7 million

Fuyao Glass America, Inc. ADS Alliance Data Systems, Inc. Columbus Steel Castings Co. McLane Company, Inc. Whirlpool Corp. Speedway LLC Borger’s Ohio Inc.

Moraine

800

$232.5 million

Global Operations Center* E-Commerce Distribution/ Logistics Automotive

Columbus

700

$84 million

Financial Services

Columbus

550

$16 million

Steel

Findlay

425

$121 million

Distribution

Greenville Springfield Norwalk

E N N

400 350 230

$40 million $13.3 million $60.5 million

Appliances Energy Hdqtrs. Automotive

Silver Shovel Winner

N/E # Jobs

Inv. Amt.

STATES WITH POPULATIONS

Industry

8+ TO 12 MILLION

REPRESENTS A STATE/LOCAL SPONSOR

*PROJECT OF THE YEAR

( pop. 6.49 million) Company

City/County

Volkswagen Group of the Americas Under Armour, Inc.

Chattanooga

2,000

$600 million

Automotive*

Mount Juliet

1,500

$102 million

SL Tennessee, LLC Academy Sports + Outdoors Fresenius Medical Care Bridgestone Americas Tire Operations, LLC Mohawk Industries, Inc. Target Corp.

Clinton Cookeville

E N

1,000 700

$80.5 million $100 million

Knoxville Nashville

N E

665 607

$140 million $232.6 million

Distribution/ Logistics Automotive Distribution/ Logistics Medical Devices Tires

Dickson Memphis

N N

320 462

$180 million $52.3 million

Beretta USA Corp.

Gallatin

300

$45 million

Plastic Omnium Auto Exteriors, LLC

Chattanooga

300

$65 million

Gold Shovel Winner

N/E # Jobs

Inv. Amt.

STATES WITH POPULATIONS

Industry

Ceramic Tiles Distribution/ Logistics Aerospace/ Defense Automotive

5+ TO 8 MILLION

PROJECT of the YEAR

General Electric Cincinnati, Ohio The location of the General Electric North American sharedservices center became even more important early this year when one of the world’s biggest conglomerates decided to shed its financialservices arm — thus betting even more heavily on the varied industrial operations that would center around the new shared-services center. Ohio won the competition when GE decided to place the center at The Banks on the Ohio River in downtown Cincinnati, offering incentives that could total more than $51 million in job-creation tax credits if the company exceeds its current pledge of 1,400 new jobs. The 85 percent for each job covers 15 years. “We chose The Banks because we had the opportunity to be an economic catalyst for the exciting development activities already under way along the riverfront and in downtown Cincinnati,” General Electric CEO Jeffrey Immelt told the Cincinnati Enquirer. “The Banks is the new front door to Cincinnati and a centerpiece of the city’s revitalization efforts. It provides many of the amenities that help us attract and retain top talent [and is] a very attractive site for employees that will also have a big impact on Cincinnati’s downtown development.”

REPRESENTS A STATE/LOCAL SPONSOR

5+ TO 8 MILLION POPULATION CATEGORY • Tennessee — GOLD SHOVEL •

Tennessee continued to build on its credentials as a nexus of manufacturing, especially automobiles, and as a logical mid-country focus for distribution and logistics industries 38

AREADEVELOPMENT

FOR FREE SITE INFORMATION, CALL

that has its roots in the fact that FedEx is headquartered in Memphis. The state was ranked No. 4 in the 2015 Chief Executive list of “Best States for Business,” fresh off the momentum of the announcement of Volkswagen’s expansion of its auto plant in Chattanooga with plans to add 2,000 manufacturing and engineering jobs at the site, with an investment of $600 million. 800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

2015 SILVER SHOVEL AWARD WINNER OHIO IS REVOLUTIONIZING THE MANUFACTURING INDUSTRY. CHECK OUT JOBS-OHIO.COM/ADMANUFACTURING TO DISCOVER HOW.

OHIO IS EASY TO FIND.

JUST LOOK FOR THE MOST ADVANCED MANUFACTURING IN THE WORLD. Ohio has an enduring legacy in manufacturing and is at the epicenter of the additive manufacturing revolution. We have galvanized the efforts of industry, universities, thought leaders and government, an alignment that is producing breakthrough after manufacturing breakthrough. From prototype to production, Ohio is leading the way. The race is on. Be the ďŹ rst to get your clients to the future.

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AREA0428.indd 1

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Under Armour, and the planned creation of nearly 2,700 jobs.

( pop. 6.67 million)

Company

City/County

N/E # Jobs

Inv. Amt.

Industry

Zenefits (Your People, Inc.) Asurion Orion Health Sturm, Ruger & Co. Weebly, Inc. Knight Transportation, Inc. Tractor Supply Co.

Scottsdale

1,300

$13.6 million

Business Services

Phoenix Scottsdale Prescott Scottsdale Phoenix

N N E N E

800 500 390 460 400

$12 million $6.1 million $50 million $1.2 million $14.7 million

Business Services IT/Div. Hdqtrs. Small Arms Information Tech Transportation/ Warehousing Distribution/ Warehousing Bioscience/ Research Photo Printing Business Services

• Arizona — SILVER SHOVEL •

Arizona enjoys an economy that is growing around all manner of newera industries including information technology, bioscience, and business Casa Grande N 267 $88 million services. While the state’s economy actually wasn’t outperforming the Labcorp Phoenix N 210 $65 million nation’s in 2014, a recent forecast calls for Arizona job growth to accelerate Shutterfly Tempe N 183 $41.6 million from 1.7 percent in 2014 to 2.1 EGS Corp. Tucson N 650 $452,000 percent in 2015, and eventually to 2.8 percent by 2017. Most of the job gains Silver Shovel Winner STATES WITH POPULATIONS 5+ TO 8 MILLION during the period are expected in service-providing sectors, particularly trade, transportation, and utilities; professional and business services; ( pop. 6.54 million) education and health services; and Company City/County N/E # Jobs Inv. Amt. Industry leisure and hospitality. These four sectors alone are expected to account Hat World, Inc. Indianapolis N 758 $21.8 million Distribution/ for 68.3 percent of net job growth Hdqtrs. during the next three years and will Ulta, Inc. Greenwood N 537 $51.6 million Distribution help keep the state’s economy strongly Center diverse and forward-looking. GE Aviation Lafayette N 200 $100 million Aircraft Engines In 2014, Arizona’s biggest economic Lowe’s Homes Indianapolis N 1,000 $20.5 million Customer Centers, LLC Support Center development wins reflected this diversity. Toyota Motor Princeton E 300 $100 million Automotive Among the biggest jobs announcements Manufacturing, were the 1,300 positions that are Indiana, Inc. expected as Zenefits invests nearly $14 Tate & Lyle Lafayette E 10 $90 million Food Processing million to build a new, 100,000-squareMaplehurst Bakeries Lebanon E 219 $77.8 million Food Products foot hub in Scottsdale to service TOA (USA), LLC Mooresville E 220 $72.1 million Motor Vehicle the cloud-based human-resources Fukai Toyotetsu Jamestown N 195 $73.6 million Metal Stamping technology company. Zenefits began Indiana Corp. Parts hiring in late 2014 after selecting the Alcoa (Howmet LaPorte E 329 $100 million Nonferrous Castings & Services) Foundry Greater Phoenix area for its “talented workforce and an expanding tech Silver Shovel Winner STATES WITH POPULATIONS 5+ TO 8 MILLION community,” said Parker Conrad, CEO and co-founder of Zenefits, according to a state press release. And, in September, Tractor Supply Company broke ground in The contretemps over unionization of the plant was a reminder Casa Grande for a new 650,000-square-foot distribution center to other site selectors of the state’s strong anti-union culture. for the nation’s largest retail farm and ranch supply store chain, Tennessee’s still-growing status as an automotive headquarters an $88 million investment that is expected to create 267 jobs. also was augmented by supplier announcements, including expansion of the SL Tennessee plant in Clinton, with the investment of $80.5 million to create 1,000 jobs, and $65 million • Indiana — by Plastic Omnium Auto Exteriors in Chattanooga, promising 300 jobs at a new facility. SILVER SHOVEL • Tennessee also landed three major wins in distribution and logistics, with an announced $250 million-plus in investments in The Hoosier State drew ire from some CEOs in the spring three new facilities by Target, Academy Sports & Outdoors, and of 2015 as “progressive” businesses reacted to Indiana’s 40

AREADEVELOPMENT

FOR FREE SITE INFORMATION, CALL

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

Opportunity City -Forbes

We have impressive numbers. And they all add up to one great location. The numbers donâ&#x20AC;&#x2122;t lie. The Columbus Regionâ&#x20AC;&#x2122;s creative climate and investment-friendly economy are creating more success stories than ever. To learn more, visit columbusregion.com

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AREA0420.indd 1

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Special Report

PROJECT of the YEAR

Volkswagen of America Chattanooga, Tennessee Just three years after seeing Volkswagen open its first U.S. manufacturing plant in a generation with a sprawling operation in Chattanooga, the state last year secured a new commitment from the German automaker to expand the plant to begin building a new sport-utility vehicle there by late 2016. Volkswagen plans to add 2,000 jobs in auto assembly and another 200 in research and development to the 1,500 people there who already make the Volkswagen Passat sedan. The company plans to spend $600 million in Tennessee and $900 million overall in the effort. Tennessee provided a $166 million grant for costs associated with development and preparation, infrastructure, production equipment acquisition and installation, and facility construction, as well as a $12 million grant for employee training. The victory for Tennessee came against the controversial backdrop of unionization prospects for the plant and even as Volkswagen was mired in the first year of lower U.S. sales after a strong three-year run. But among those happy about VW’s decision was Ron Harr, president and CEO of the Chattanooga Chamber of Commerce, who said the city “will have a much easier time recruiting additional automotive suppliers to help [VW] build out [its] supply chain.”

clumsy enactment of a religiousliberties law that was interpreted by gay-rights activists as a discrimination threat. The controversy clouded another year of remarkable gains by the state that arguably has become the leading state in the Midwest for effective economic development. Last year, for instance, Indiana enacted its largest-ever state tax cut, and in early 2015 placed its corporate income tax on a reduction schedule to 4.9 percent. Ranking No. 6 in the latest Chief Executive “Best States for Business” list, Indiana was the highest-placing state from the nation’s traditional manufacturing belt. Yet Indiana keeps gaining mainly by securing more economic development commitments from its traditional industries, which include manufacturing and, considering its location along the East-West corridor, distribution. For example, Toyota announced a $100 million expansion of its Princeton assembly plant that is expected to provide 300 new jobs for people making the hot-selling Highlander SUV. It will bring Toyota’s total investment in Indiana to $4 billion. Meanwhile, another big win was GE

Aviation’s announcement of an investment of $100 million in a new jet-engine facility in Lafayette that is to create 200 jobs. By early 2015, General Electric already had upped its plans by an extra $15 million and 30 more jobs and had begun hiring.

• Wisconsin — SILVER SHOVEL • The Badger State is in the midst of a remarkable run up the economic development ladder of visibility. Under Governor Scott Walker, Wisconsin has emerged as a model of fiscal progress and new thinking for a former Rust Belt state whose economy had ossified a bit. Wisconsin began 2015 by becoming America’s 25th right-to-work state, ensuring its place in more siting decisions than before, and continued its recent march up the “Best States/Worst States” rankings by Chief Executive to No. 12 for 2015, two notches higher than a year earlier. Walker told Area Development that one of his main goals for 2015 is “attracting more foreign direct investment in Wisconsin,” partly by

( pop. 5.74 million) Company

City/County

Meijer

Pleasant Prairie Janesville

SHINE Medical Technologies, Inc. Schreiber Foods, Inc. Niagara Bottling Insinkerator TRANE, Inc. Agropur Pace Industries United Natural Foods, Inc. Schreiber Foods, Inc.

Green Bay Pleasant Prairie Racine & Kenosha La Crosse Weyauwega Grafton Prescott Richland Center

Silver Shovel Winner

N/E # Jobs

Inv. Amt.

Industry

256

$146 million

Distribution

141

$88 million

Medical Isotopes

N N

160 76

$87 million $75 million

Dairy Products Bottled Water

E&N 1,062

$65 million

E E E N

496 168 187 314

$62 million $55 million $40 million $37.5 million

Garbarage Disposals Centrifugal Chillers Dairy Products Aluminum Castings Distribution

150

$30 million

Dairy Products

STATES WITH POPULATIONS

5+ TO 8 MILLION

REPRESENTS A STATE/LOCAL SPONSOR

AREADEVELOPMENT

FOR FREE SITE INFORMATION, CALL

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

AREA0414.indd 1

05/05/15 4:05 PM

taking trade missions to Europe and Asia. Wisconsin’s biggest economic development wins in 2014 bespoke an economy that remains heavily reliant on gains in its traditional strengths, heavy manufacturing and food processing. They included Schreiber Foods’

announcements of a total of nearly $120 million in two new and existing facilities for cheese-making, totaling more than 300 additional jobs, as well as a $40 million expansion announcement of Pace Industries’ aluminumcastings plant in Grafton. But the biggest listed Wisconsin announcement of 2014 was Meijer’s commitment to build a $146 million distribution center *PROJECT OF THE YEAR in Pleasant Prairie to support the Michigan-based supercenter retailer’s ( pop. 4.77 million) ambitious expansion into America’s Company City/County N/E # Jobs Inv. Amt. Industry dairy land. Hiring began in March for the first four Meijer stores in the LPL Financial York County N 3,000 $150 million Broker/Dealer state. Holdings Service

SOUTH CAROLIINA The Lash Group

York County

2,400

$57.3 million

Giti Tire

Chester County Spartanburg County Spartanburg County Florence County Greenville County Dillon County Greenville County

1,700

$560 million

Healthcare Services Tires*

800

$1 billion

Automotive

500

$1 billion

Carbon Mfg.

500

$55 million

450

$2.1 million

Food/ Packaging Insurance

N N

400 80

$115 million $400 million

$110 million

BMW Toray Carbon Fibers America, Inc. Ruiz Food Products, Inc. Esurance

Wyman Gordon GE Power & Water

Portucel, S.A.

Greenwood County

Gold Shovel Winner

STATES WITH POPULATIONS

Aerospace Mfg. Process Development/ Prototyping Wood Pellets

3+ TO 5 MILLION

( pop. 4.83 million) Company

City/County

Science and Engineering Services International Automotive Sitel Baxter International

Huntsville

450

$70 million

Aerospace

Anniston

359

$35 million

Hamilton Opelika

E E

300 200

N/A $300 million

Oxford Pharmaceuticals Regions

Birmingham

200

$29.4 million

Automotive Components Call Center Medical Eqpt. & Supplies Biosciences

Birmingham

195

$18.6 million

Remington Outdoor Co. GE Aviation Evonik Corp.

Huntsville

2,410

$110 million

Auburn Theodore

E E

100 79

$50 million $113.7 million

Honda Mfg. of Alabama LLC

Lincoln

150

$71.8 million

Silver Shovel Winner

AREADEVELOPMENT

N/E # Jobs

Inv. Amt.

STATES WITH POPULATIONS

Industry

Corporate Operations Aerospace/ Defense Aerospace Advanced Mfg./ Chemicals Automotive

3+ TO 5 MILLION

FOR FREE SITE INFORMATION, CALL

3+ TO 5 MILLION POPULATION CATEGORY • South Carolina — GOLD SHOVEL • South Carolina just keeps adding to its momentum in gaining manufacturing jobs, with Volvo announcing in May of this year that it would invest $500 million to build a plant in Berkeley County, S.C., employing 4,000. The factory, just outside of Charleston, will make the latest generation Volvo models for the U.S. and export markets, expected to roll off the assembly line in 2018. In fact, job creation in the Palmetto State is expected to grow by another 1.9 percent in 2015, echoing the 2 percent increase last year, according to a University of South Carolina economist. Manufacturing job growth at giant employers such as Boeing and BMW has been fueling South Carolina’s progress. So have businessfriendly policies including top-notch workforce-training programs and incentives. “South Carolina has been winning tremendous new business per capita,” says Andy Mace, managing director of Global Business Consulting, Supply-Chain Solutions, for Cushman & Wakefield. “That state is punching above its fighting weight.” Among the major punches landed by South Carolina in 2014 were the $560 million Giti Tire plant that has broken ground in Chester County and that will employ 1,700, as well as

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

THE WAY YOU GET MORE

PRODUCTIVITY IS NOT BY TAXING IT.

MANUFACTURING RUNS STRONG IN WISCONSIN.® The way we build things isn’t what it used to be. And neither is the way Wisconsin does business. In fact, we’ve gotten so bold that we virtually eliminated the tax on income from manufacturing activity in the state. With a highly skilled workforce and a world-class supply chain, the right parts are in place for building your business. To learn more about what the Manufacturing and Agriculture Tax Credit can do for you In Wisconsin, call 855-INWIBIZ (toll free) or visit Manufactured.InWisconsin.com.

In Wisconsin® is a registered trademark of Wisconsin Economic Development Corporation.

AREA0431.indd 1

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Special Report

PROJECT of the YEAR

Giti Tire Chester County, South Carolina The 10th-largest tire company in the world finally decided to establish a North American manufacturing facility, and Giti Tire selected Chester County, South Carolina, for a $560 million plant that it expects to create 1,700 new jobs over the next decade in order to satisfy burgeoning demand in the continental market. Singapore-based Giti makes both passenger and light-truck tires for the original-equipment and replacement markets. Its first U.S. plant will sprawl to about 1.8 million square feet on a 1,100-acre site near Richburg, South Carolina, and is expected to fabricate about 30,000 tires daily when it opens by the end of 2016. South Carolina won the Giti plant for the rural, economically stressed area for a number of reasons. It already is the largest tire-production state, with three other major brands manufacturing there. Giti Tire heard Governor Nikki Haley speak at a Wal-Mart conference in 2013, and Giti is a major supplier to Wal-Mart. The state helped by awarding Chester County a $38 million grant to help lure Giti, as well as job-development tax credits that it also has extended to Giti’s competitors in the state. South Carolina’s broad advantages — including technicalcollege and transportation and export infrastructure, as well as a growing reputation for businessfriendliness — sealed the deal with Giti.

BMW’s planned $1 billion expansion of its Spartanburg assembly complex and the addition of 800 jobs. Other major manufacturing wins included a new $1 billion carbon-fiber manufacturing plant by Toray in Spartanburg County, adding 500 jobs, and a $115 million plant by Wyman Gordon in Dillon County, yielding 400 jobs, that will supply the aerospace as well as power-generation industries worldwide.

• Alabama — SILVER SHOVEL • The state has been advancing in a major way as a locus of automotive and aerospace manufacturing over the last several years, and its biggest economic development wins of 2014 strongly reflected this important trend. For instance, the state beat out more than two dozen others to land Remington Outdoor Co.’s decision to open a stateof-the-art manufacturing plant with more than 2,000 workers in Huntsville. The iconic firearms and ammunition brand plans an investment of $110 million in

a site previously occupied by Chrysler manufacturing. Madison County Commission Chairman Dale Strong maintained that the Huntsville area won the plant because of “our pro-business environment, along with the region’s extensive manufacturing experience.” Meanwhile, Alabama also landed other major projects in the aerospace and automotive sectors, positioning the state’s three assembly plants to produce more than one million vehicles in 2015, which would comprise about 6 percent of the expected U.S. sales total of about 17 million vehicles this year. However, the state does have some work to do: Governor Robert Bentley is working on programs to boost career- and college-readiness in the state and to modernize incentives for job creation, while reducing Alabama’s reliance on borrowing for incentives.

• Kentucky — SILVER SHOVEL • Kentucky is one of a number of states in the nation’s heartland that

( pop. 4.39 million) Company

City/County

Ford Motor Co. Quiver Ventures, LLC

Louisville Bowling Green Louisville Simpsonville Louisville

E N

650 80

$209 million $155.9 million

Automotive Aluminum

N N E

750 410 500

$13.3 million $18.7 million $35.7 million

Customer Service Automotive Healthcare Hdqtrs.

Walton

354

$52 million

Hebron Bagdad

N N

299 31

$21.9 million $115 million

E-Commerce Distribution Apparel Distilled Spirits

Auburn

147

$85.3 million

Food Mfg.

Elizabethtown

247

$70.4 million

Automotive

TPUSA, Inc. Faurecia Seating Kindred Healthcare Operating, Inc. eBay Enterprise TeeSpring, Inc. Diageo Americas Supply, Inc. Champion Petfoods USA, Inc. Metalsa Structural Products, Inc.

Silver Shovel Winner

N/E # Jobs

Inv. Amt.

STATES WITH POPULATIONS

Industry

3+ TO 5 MILLION

REPRESENTS A STATE/LOCAL SPONSOR

AREADEVELOPMENT

FOR FREE SITE INFORMATION, CALL

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

Think advantages? Think Kentucky. Need more reasons to locate your business in Kentucky? Let us work with you to check off all the boxes on your “needs” list. When you make the decision to choose Kentucky, we’re going to make you look good. Give us a call today!

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AREA0415.indd 1

05/05/15 4:09 PM

Special Report has been benefiting from the boom in U.S. auto sales and the general expansion of American vehicle exports. Four of its top economic development wins in 2014 stemmed from car output, including Ford’s decision to invest another $209

million into its longstanding assembly plant in Louisville, generating an additional 650 jobs there. Other auto projects include Quiver Ventures’ plans to invest more than $150 million to create 80 jobs initially in a plant in Bowling Green to make aluminum panels for vehicles. Not only will it comprise the single-largest capital investment in the region in more than ( pop. 4.62 million) a decade, but the aluminum capacity will tap right into the nascent industry Company Parish N/E # Jobs Inv. Amt. Industry trend to use aluminum to “light-weight” vehicles, signified by Ford’s new F-150 Computer Science Bossier N 800 $34 million Technology Corp. (CSC) Parish Center pickup truck. CGI Lafayette N 400 $13.1 million Technology Kentucky is also one of the leading Parish Center locations in the country for the aging-care Yuhuang Chemical St. James N 400 $1.9 billion Methanol sector. Kindred Healthcare plans to build Parish a six-story facility in downtown Louisville 4th Source Jefferson N 320 $100,000 Software/IT that will consolidate several company Parish Operations operations, creating 500 new jobs. “This IntegriCo Composites Webster N 300 $20 million Plastics Parish Products expansion will allow us to significantly Perficient, Inc. Lafayette N 245 N/A Software increase the training and educational Parish Development opportunities in Louisville for many of AM Agrigen Industries St. Charles N 150 $1.2 billion Fertilizer Mfg. our employees, as well as enhance their Parish clinical expertise,” explained Kindred Cheniere Energy Cameron E 120 $6 billion Industrial Gas CEO Benjamin Breier upon making the Parish (LNG) expansion announcement. Venture Global LNG Cameron N 100 $4.3 billion Industrial Gas Parish (LNG) Meanwhile, Kentucky also introduced Castleton Commodities Plaquemines N 50 $1.2 billion Methanol the idea of “home rule” for the right to Int’l. Parish work, late in the year in Warren County. The Bluegrass State has yet to adopt a Silver Shovel Winner STATES WITH POPULATIONS 3+ TO 5 MILLION statewide right-to-work rule. *PROJECT OF THE YEAR

• Louisiana — SILVER SHOVEL •

( pop. 2.80 million) Company

City/County

Tesla Motors

Reno MSA

6,500

$5 billion

Switch, Inc.

Las Vegas MSA Reno MSA Reno MSA

440

$225 million

N N

100 150

$75 million $32.4 million

371

$32 million

353

$23.3 million

N N N

300 150 600

$20.1 million $222.1 million $10 million

800

$4.4 million

Ashima Devices Petco Animal Supply Stores, Inc. K2 Energy Solutions Inc. Catamaran, LLC Cenntro Motor Corp. Ghost Systems Amazon.com.kydc LLC Asurion

Las Vegas MSA Las Vegas MSA Reno MSA Reno MSA Reno MSA Las Vegas MSA

Gold Shovel Winner

N/E # Jobs

Inv. Amt.

STATES WITH POPULATIONS UNDER

REPRESENTS A STATE/LOCAL SPONSOR

AREADEVELOPMENT

Industry

FOR FREE SITE INFORMATION, CALL

Lithium Ion Batteries* Business IT UAVs (Drones) Logistics/ Operations Lithium Ion Batteries Prescription Benefit Mgmt. Electric Vehicles Business IT Logistics/ Operations Business IT

3 MILLION

Louisiana has gotten the attention of site selectors as never before. In a decade since Hurricane Katrina and under business-minded Governor Bobby Jindal, Louisiana has “demonstrated that even a state with entrenched bureaucracy and a poor tax structure can improve its appeal when determined to change its policies,” as Chief Executive put it. As a result, Louisiana climbed to No. 7 in the magazine’s 2015 list of “Best States for Business” from No. 9 in 2014. In fact, as 2015 dawned, in the energy industry’s biggest retrenchment in the United States, Sasol — the South African state oil company — delayed an expansive $14 billion project in southwestern Louisiana to make diesel out of natural gas. But downstream processing remains more insulated

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

against the oil-price fall than the exploration business, and downstream is where most of Louisiana’s business lies. In 2014 the state got announcements of major new investments in that area from Yuhuang Chemical, which plans to invest $1.9 billion in a methanol plant in St. James Parish, bringing 400 jobs, and a $1.2 billion project for making fertilizer by AM Agrigen Industries in St. Charles Parish, offering 150 jobs. The biggest success for Louisiana’s economy, however, has been diversification, and 2014 punctuated that strength. Computer Science Corp., for example, broke ground on a new technology center in Bossier Parish, which represents a $34 million investment and is expected to produce 800 jobs, while CGI announced a $13 million technology center in Lafayette Parish that is expected to create 400 jobs.

FEWER THAN 3 MILLION POPULATION CATEGORY • Nevada — GOLD SHOVEL • The economic development coup of the early 21st century was won by Nevada in 2014 when it landed the $5

billion Tesla battery plant that promises up to 6,500 jobs over time. In a state that long has depended on boom-and-bust businesses such as mining and tourism, plopping the Tesla “gigafactory” down in the middle of the desert will ripple through the economic sands for decades. But it’s not as if Nevada has been standing still otherwise, and it gained a number of new facilities in 2014. Some echoed Tesla’s decision, such as with the establishment of a $20 million new electric-vehicle plant in Reno by Cenntro Motor, and a $32 million plan for expansion of a lithium-ion battery plant, producing nearly 400 jobs, by K2 Energy Solutions in the Las Vegas MSA. “We have found the Reno-Sparks market offers a diverse workforce that is rich in talent,” commented Kevin Neal, Cenntro’s U.S. VP of Operations and Human Relations, to state officials, “and we have identified a wealth of suppliers within the state that understand our commitment to delivering a cost-effective, quality product to market.” Other decisions underscored the state’s emergence as a center of digital technology and other growing businesses. For example, drone manufacturer Ashima Devices announced a new plant in Reno with a $75 million investment that is to produce 100 jobs. And Ghost Systems

>> HOW ABOUT DRONES, ROBOTS & ELECTRIC CARS ?

AREA0430.indd 1

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Special Report has opened its $222 million new cybersecurity facility in the Reno area that is expected to fill 150 jobs.

• Kansas — SILVER SHOVEL • Politicians and businesses in Kansas have faced frustrations as

PROJECT of the YEAR

Tesla Reno, Nevada In what was arguably the biggest economic development coup since Tennessee landed the original General Motors Saturn plant a generation ago, Nevada nabbed the much-sought Tesla battery-making “gigafactory” for a site 25 miles east of Reno. The five-million-square-foot megaoperation is to cost Tesla up to $10 billion in construction and purchases over the next 13 years ($5 billion near-term investment), promises up to 6,500 jobs eventually, and already has put Nevada on the map as a major new industrial power after it beat out Arizona, New Mexico, Texas, and California for the project. In exchange, Nevada doled out $1.1 billion in sales tax and real and personal property tax abatements and $195 million in transferable tax credits as well as one last sweetener: a measure making it legal for Tesla to sell directly to Nevada residents, without having to go through a traditional dealer of the type that all existing automakers use. Nevada Governor Brian Sandoval noted, “The gigafactory will mean nearly $100 billion in economic impact over the next 20 years.”

they wait for the economic benefits to kick in of a huge tax-cut plan enacted in 2012 that included repealing the state’s top individual income-tax bracket of 6.45 percent, lowering its bottom two brackets, and exempting from taxation all income earned by pass-through entities. In 2014, the state legislature also began a five-year phase-out of mortgage-registration fees, giving homebuyers some specific tax relief. Although critics believed these measures would not stimulate the state’s economy, February 2015 Labor Department data shows Kansas’ job growth tied with that of Utah as fastest for that month, according to Investors.com. In fact, a diverse roster of companies began some significant economic development projects in Kansas last year, ranging from engineering to plastics to industrial belts. Two of the most notable are call centers. Advanced Call Center Technologies signed a sixyear lease for a building in Junction City and took possession in June, with plans to hire about 600 new workers during the next five years. And Alliance

AREADEVELOPMENT

• Mississippi — SILVER SHOVEL •

Mississippi has certainly benefited from Toyota and Nissan expanding their presence in auto-making in the state, with cars being at the center of some of Mississippi’s most significant economic development wins of 2014. Nissan, for instance, plans to add 500 jobs at its plant in Canton; GRAMMER has begun production at its new $30 million auto parts facility in Shannon that is expected to create 650 jobs and also serve as the company’s North American headquarters; and Borg Warner announced a $43 million investment in a powertrain facility in Water Valley that should add 158 jobs. Another big gain was the announcement that

( pop. 2.90 million) Company

City/County

Intouch Solutions

Overland Park Salina Lenexa

El Dorado National Alliance Data Services Black & Veatch Advanced Call Center Technologies FedEx Ground Package

N/E # Jobs

Inv. Amt.

350

$23 million

N E

415 531

$30 million $18 million

Overland Park Junction City

500

$16 million

625

$2 million

Olathe

257

$36 million

Rubbermaid Inc. CTP Transportation Products Flexsteel Industries

Winfield Fort Scott

E N

320 290

$27 million $9.5 million

Edgerton

153

$51 million

Security Benefit Corp.

Topeka

301

$4 million

Silver Shovel Winner 50

Data Services decided to expand an existing credit-card servicing operation in Lenexa, with an $18 million investment in a 33,000-square-foot expansion that resulted in the hiring of about 200 new employees by the end of 2014 and is to create an additional 300 jobs by 2017.

FOR FREE SITE INFORMATION, CALL

Industry Marketing/ Consulting Specialty Vehicles Credit Card Servicing Engineering Services Customer Service Center Distribution/ Logistics Plastics Industrial Belts Distribution/ Logistics Financial Services

STATES WITH POPULATIONS UNDER

3 MILLION

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

INVEST IN NEVADA Less than one day’s drive to more than 40 million customers and five major US ports serving the Pacific Rim Consistently ranked in Top 10 among states for business friendliness No corporate or personal income tax, no inventory tax, no franchise tax, no unitary tax, no special intangible tax Affordable large-scale real estate Robust technology infrastructure Able and willing workforce in a right-to-work state Diverse, rewarding quality of life

“It’s a great, get-things-done state.” –Elon Musk

800.336.1600 • www.diversifynevada.com

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Special Report Williams-Sonoma is expanding a distribution center in Olive Branch, with an investment of $17 million expected to create 900 new jobs, in addition to 650 existing jobs. Overall, state officials believe that Mississippi is emerging as a prime location for global companies to find an available and productive work force, competitive energy and operating costs, and one of the most efficient permitting processes in the country. The state also has a strong infrastructure including two deepwater ports to facilitate exports. Governor Phil Bryant told Area Development that, among other improvements, the state is “continuing to invest in our workforce to keep Mississippians equipped with the right skills to be both employable and productive in today’s marketplace.”

• Utah — SILVER SHOVEL •

Utah has been running head to head with Texas and North Dakota for job growth, and with the collapse of oil prices and much of the economic activity from hydrocarbon exploration, the state could be expected to emerge at the head of the three-state pact in 2015. Key clusters in Utah’s diverse economy include IT and software, aerospace and defense, and financial services. Utah also ranked third in U.S. exports last year, on the U.S. Chamber of Commerce’s Enterprising States Dashboard. It’s typically ranked high in third-party evaluations of state business climates, including No. 1 by Forbes in 2014, citing a “very pro-business climate,” energy costs that are 26 percent below the national average, and a “robust employment outlook.” One of Utah’s growing strengths ( pop. 2.99 million) has been its maturing as a highCompany City/County N/E # Jobs Inv. Amt. Industry technology hub dating back to 30 years ago when it was home Mississippi Silicon Burnsville N 200 $200 million Silicon Metals to two of America’s largest McDermott International Gulfport N 100 $125 million Pipeline Finishing software companies, Novell Williams Sonoma Olive Branch E 900 $17 million Distribution and WordPerfect. In 2014, this GRAMMER Inc. Shannon N 650 $30 million Automotive characteristic was much in evidence, Nissan Canton E 500 N/A Automotive with expansion announcements Calbee Senatobia N 254 $51 million Snack Foods by Jive Communications and Green Bay Converting Hattiesburg N 300 $48 million Towels/Tissue Maritz CX in the tech sector. The FNC Oxford E 310 $20 million Hdqtrs. biggest impending job gain listed Borg Warner Water Valley E 158 $43 million Powertrains is the 705 positions expected to ISA TanTec Vicksburg N 366 $10.1 million Leather Products be produced by an expansion of Varian Medical Systems’ U.S. Silver Shovel Winner STATES WITH POPULATIONS UNDER 3 MILLION headquarters in Salt Lake City, REPRESENTS A STATE/LOCAL SPONSOR where the company broke ground in August to add to its manufacturing of x-ray systems. Another big win was Goldman Sachs’ plan to ( pop. 2.90 million) expand its Salt Lake City offices Company City/County N/E # Jobs Inv. Amt. Industry and add 350 jobs over the next 20 years, with an investment of $40 Varian Medical Systems Salt Lake City E 705 $40 million Life Sciences million. And outdoor gear company Cabela’s Tooele N 85 $66 million Distribution Cabela’s is investing $66 million in Houweling Nurseries Juab N 282 $79 million Agricultural a new distribution center in Tooele Oxnard, Inc. Products County’s Ninigret Depot business CSM Bakery Pleasant N 100 $30.4 million Food Products park. •••••• View Goldman Sachs AAA Young Living Jive Communications Vista Outdoors Maritz CX

Salt Lake City Davis County Lehi Lehi Davis County South Jordan

Silver Shovel Winner

350

$40 million

Financial Services

N E E N E

290 445 576 90 425

$20 million $89 million $6.4 million $10 million $1.3 million

Insurance Personal Products IT/Software Hdqtrs. IT/Software

STATES WITH POPULATIONS UNDER

3 MILLION

Information for this report was compiled by Area Development’s Editor, Geraldine Gambale. Article was written by Dale Buss, Staff Editor.

REPRESENTS A STATE/LOCAL SPONSOR

AREADEVELOPMENT

FOR FREE SITE INFORMATION, CALL

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

Contact Jeff Edwards President and CEO jedwards@edcutah.org

AREA0416.indd 1

Economic Development Corporation of Utah 1-800-574-UTAH (8824) www.edcutah.org

Theresa Foxley Managing Director Corporate Recruitment and International Trade tfoxley@utah.gov

Governor's Office of Economic Development 1-855-204-9046 business.utah.gov

05/05/15 4:11 PM

SPONSORS GEORGIA

GEORGIA DEPT. OF ECONOMIC DEVELOPMENT With global leaders such as Mercedes-Benz USA, Porsche, and KIA Motors, Georgia has become an automotive hub. Offering direct access to more than six OEMs, the industry’s highest skilled talent coupled with an interconnected logistics system, low cost of living, and competitive incentives, Georgia has attracted more than 120 automotive manufacturers in recent years. Robert Payne, Director of Account Management Georgia Department of Economic Development 404-962-4000 communications@georgia.org w w w. G e o r g i a . o r g

NEVADA

NEVADA GOVERNOR’S OFFICE OF ECONOMIC DEVELOPMENT With a talented workforce, education and training partnerships for industry, a business-friendly environment, affordable large-scale real estate, and unmatched technology infrastructure, industry-leading companies such as Tesla are calling Nevada home. Nevada Governor’s Office of Economic Development 1-800-336-1600 success@diversifynevada.com w w w. d i v e r s i f y n e v a d a . c o m

GEORGIA POWER Georgia Power is the largest subsidiary of Southern Company, one of the nation’s largest generators of electricity. With an international reputation for excellence in economic development, the company has helped bring more than 121,000 jobs and $24 billion in investment to Georgia over the last decade alone. Jonathan Sangster, General Manager, Economic Development Georgia Power 404-506-2216 econdevga@southernco.com w w w. S e l e c t G e o r g i a . c o m

ECONOMIC DEVELOPMENT AUTHORITY OF WESTERN NEVADA (EDAWN) EDAWN is a private/public partnership committed to recruiting and expanding quality companies that have a positive economic impact on the quality of life in the Greater Reno-Sparks region. Our vision is to be known as a world-class EDO, with strong local partnerships, regional respect and cooperation, and a national reputation for innovation and creativity. Stan Thomas, Executive Vice President, Marketing and Competitive Expansion EDAWN 775-829-3731 sthomas@edawn.org w w w. e d a w n . o r g

KENTUCKY

NORTH CAROLINA

MICHIGAN

OHIO

KENTUCKY CABINET FOR ECONOMIC DEVELOPMENT International companies from all over the world are locating to the Bluegrass State and our existing industries are expanding to keep up with growing demand. These companies represent a plethora of industries, including automotive manufacturing, logistics and distribution, national headquarters, and more. Mandy Lambert, Acting Commissioner Business Development Kentucky Cabinet for Economic Development 502-564-7140 E c o n d e v @ k y. g o v w w w. t h i n k k e n t u c k y. c o m MICHIGAN ECONOMIC DEVELOPMENT CORP. Bold changes have made Michigan more businessfriendly than ever. Business taxes are lower than any time in decades. Combined with our economic developing tools, automotive and manufacturing leadership, world-class talent, and geographic advantage, we are fueling new economic growth and new business opportunities. Robert Wilson, Senior Project Manager, Site Consultant Services Michigan Economic Development Corp. 517-763-4156 • 1-888-565-0052 wilson9@michigan.org w w w. m i c h i g a n b u s i n e s s . o r g

MISSISSIPPI

MISSISSIPPI DEVELOPMENT AUTHORITY Consistently ranked as a top state for business, Mississippi’s list of global companies continues to grow. From the state’s efficient permitting process to its business-friendly climate, more companies are discovering how a Mississippi location and workforce can give them a competitive advantage. Becky Thompson, Interim Director, Global Division Mississippi Development Authority 1-800-360-3323 locateinms@mississippi.org w w w. M i s s i s s i p p i . o r g

AREADEVELOPMENT

ELECTRICITIES OF NORTH CAROLINA, INC. ElectriCities is a not-for-profit government service organization representing 70+ NC cities and universities that own electric distribution systems. A site selection professional can receive detailed reports from our extensive databases on dozens of NC sites, from mountains to coast, within 48 hours of a request. We’re your turnkey services partner. Brenda Daniels, Manager, Economic Development ElectriCities of North Carolina, Inc. 1-800-768-7697 ext. 6363 Mobile: 919-218-7027 bdaniels@electricities.org w w w. e l e c t r i c i t i e s . c o m JOBSOHIO JobsOhio, a private, non-profit corporation, helps businesses locate, expand, and prosper in Ohio. Our managing directors have extensive work experience in various industries so they understand the needs of business and stand ready to assist you. JobsOhio 614-300-1151 contact@jobs-ohio.com jobs-ohio.com COLUMBUS REGION/COLUMBUS 2020 The Columbus Region is one of the fastest-growing areas in the Midwest and the second-strongest metro in the country for job creation. Within 10 hours of 47 percent of the U.S. population, the region is home to 15 Fortune 1000 companies and one of the highest populations of college students in the nation. Matt McCollister, VP, Economic Development Columbus Region/Columbus 2020 614-225-6953 m m @ c o l u m b u s re g i o n . c o m w w w. c o l u m b u s re g i o n . 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 FOR FREE SITE INFORMATION, CALL

location with unparalleled infrastructure, a highly qualified workforce backed by game-changing education reform, a low tax burden, and a collaborate environment with a business-friendly administration. Allen Borden Assistant Commissioner, Business Development Tennessee Department of Economic and Community Development 615-532-1294 a l l e n . b o rd e n @ t n . g o v TNECD.com KNOXVILLE-OAK RIDGE INNOVATION VALLEY Innovation Valley is east Tennessee’s regional economic development initiative that is managed by the Knoxville Chamber. The diversity of the region gives companies access to world-class resources and assets that make it a prime business location in the U.S. Doug Lawyer, CEcD, Vice President, Economic Development Knoxville-Oak Ridge Innovation Valley 865-637-4550 d l a w y e r @ k n o x v i l l e c h a m b e r. c o m w w w. k n o x v i l l e o a k r i d g e . c o m

TEXAS

PLANO ECONOMIC DEVELOPMENT The world’s best companies are making Plano their home. Toyota Motor North America considered over 100 sites to consolidate their entire North American operations. Toyota picked Plano. Sally Bane, Executive Director, Plano Economic Development 972-208-8300 sallyb@plano.gov w w w. p l a n o t e x a s . o r g CITY OF SUGAR LAND Located 20 miles southwest of Houston, the City of Sugar Land is a master planned community and home to numerous high-profile regional and international corporations. Sugar Land has an aggressive incentive program, a luxury corporate airport with U.S. Customs, and one of the lowest tax rates in Texas. Jennifer May, Director of Economic Development City of Sugar Land 281-275-2229 jmay@sugarlandtx.gov ecodev@sugarlandtx.gov h t t p : / / w w w. s u g a r l a n d e c o d e v. c o m /

UTAH

UTAH GOVERNOR’S OFFICE OF ECONOMIC DEVELOPMENT With business-friendly accolades from Forbes, the U.S. Chamber of Commerce, 24/7 Wall Street, and others, Utah has earned consideration for expansion projects in multiple industries. Robust transportation and broadband infrastructure in concert with a young, healthy, educated workforce are compelling factors. Michael O’Malley, Business Marketing Director Utah Governor’s Office of Economic Development 801-538-8680 business.utah.gov businessutah@utah.gov

WISCONSIN

WISCONSIN ECONOMIC DEVELOPMENT CORP. Manufacturers operating in Wisconsin benefit from a location and a business environment ideally suited for growth. Applied research, skilled workers, a strong supply chain, and solid infrastructure drive production in industries ranging from food processing to bioscience and information technology. Connect with resources and opportunities for business success In Wisconsin®. Wade Goodsell, Business Attraction Account Mgr. Wisconsin Economic Development Corp. Wa d e @ I n W i s c o n s i n . c o m Select.InWisconsin.com

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

INDUSTRY REPORT

Auto/Aero Firms Redrawing the Map Strong sales in the auto industry and a rebounding aerospace sector are spurring new facility/expansion projects in legacy as well as new locations. By Dale Buss

ust when it seemed that every feasible automaker lately had announced initial or increased investment in manufacturing in North America, one more entered the fray: Volvo. Even though the brand’s U.S. sales are barely half of what they were several years ago, and Volvo has disappeared from the carshopping lists of most Americans, the Chinese-owned, Sweden-based company announced in May that it is going to build an assembly plant in South Carolina and spend about $500 million to do it. “Volvo Cars cannot claim to be a true global car maker without an industrial presence in the U.S.,” said CEO Håkan Samuelsson in explaining the company’s decision to build an American plant, which would be its first. “Today, we became that.”

Overhauling and Expanding Auto Plants And so it goes in the ongoing expansion and redrawing of the map of automotive manufacturing in North America. Both domestic and foreign-owned carmakers continue to overhaul and expand their plants in order to keep up with the stubbornly vibrant U.S. auto market as well as, increasingly, to export vehicles whose manufacturing quality now matches anything abroad. The South and Southeast as a mega-region now rivals the traditional industrial Midwest and Plains States for most output. The mammoth Tesla battery plant now under construction near Reno, Nevada, gives auto-component production another, stillrare outpost in the West. And humming factories in Texas are helping stretch the boundary of America’s automotive footprint south nearly to the Rio Grande. “Tesla going to Nevada was…almost exclusively an incentive play” as the

company garnered nearly $1.3 billion in financial concessions by the state, says Larry Gigerich, managing director of site selection consultant Ginovus. “But Texas probably has an opportunity to become a bigger player in the auto industry due to its ability to support the West Coast and yet still supply the Midwest, Southeast, and Mountain regions of the U.S.,” he says. However, American manufacturing in Texas and elsewhere is being pressed by the fact that the rise of automotive production in Mexico these days is more dynamic than anywhere else on the globe. Carmakers increasingly are being lured there — often instead of siting new production in the United States — by labor costs that are nearly as low as China’s, quality levels that compete with America’s, logistic simplicity with proximity to both the Atlantic and Pacific oceans, and Mexico’s

AREA DEVELOPMENT | Q2/2015

negotiation of more than 40 different free-trade agreements that give exporters from Mexico duty-free access to markets that contain 60 percent of the world’s economic output. All told, automakers and parts suppliers have earmarked more than $20 billion of new investments in automotive manufacturing for Mexico, and industry analysts see Mexico’s current annual production of 3.2 million cars and light trucks rising by more than 50 percent to five million by 2018. There have been seven new assembly plants announced in Mexico since 2009 and only one in the United States. The automakers beefing up Mexican output include Nissan, General Motors, Ford, Fiat Chrysler, MercedesBenz, and Volkswagen. Parts suppliers include Magna International, which recently began construction on a $135 million automotive-exteriors plant in Queretaro, in central Mexico.

Continued Strong Auto Sales For now, it’s mostly the continued strong growth in U.S. vehicle sales that is behind new manufacturing investments all over the continent. Sales grew for the sixth straight year in 2014 as they rebounded steadily out of the Great Recession, and most economists look for another gain in 2015 — probably even approaching the record pre-recession total of 17 million units. In fact, the U.S. market now is seen globally as the glimmering and reliable star of a sales picture that includes continuing struggles in Europe and slowing growth in China. Volvo wasn’t alone in searching for a site for a potential new U.S. assembly plant. Jaguar Land Rover also has been sniffing around for a possible assembly plant location. Such a plant likely would be in the South. And why not? Hyundai has announced plans to expand its factory in Alabama to ramp up output of sport-utility vehicles. And BMW said it would spend $1 billion to boost production at its South Carolina plant by 50 percent by next year, the fifth expansion there. Volkswagen plans to add output at its plant in Chattanooga, Tennessee, despite having two off years in U.S. sales. Daimler will build the next-generation Mercedes Sprinter van in a new plant in South Carolina, reports say, after deciding to move its U.S. administrative headquarters to Atlanta from New Jersey. And Nissan has announced a

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new $160 million supplier-park project at its assembly plant in Smyrna, Tennessee, which is expected to support more than 1,000 new parts-making jobs. At the same time, Midwestern and Plains States keep picking up additional investments by not only General Motors, Ford, and Fiat Chrysler, but also Toyota, Honda, and other Asian automakers that long have had a big presence in the region. GM indicated in April that it planned to spend more than $1 billion to expand and upgrade its iconic Technical Center in Warren, Michigan, and to create more than 2,000 jobs at the site. And in Missouri, for instance, the Detroit Three and suppliers have invested more than $2 billion in the auto sector over the past few years and created thousands of new jobs. “The Midwest is home to large, well-established OEMs and their supplier bases, so new capacity additions there are perhaps more likely to involve existing facility expansions,” says Andy Mace, managing director of Global Business Consulting, Supply Chain Solutions, for Cushman & Wakefield. “New, large-scale greenfield investments are more likely in the Southeast given the region’s demonstrated ability to offer ample land and infrastructure resources, lower labor costs and [lower] union presence, an expanding supplier base, robust workforce-training programs, and business-attraction incentives. In addition, proximity to ocean ports in the Southeast provides strong inbound and outbound connectivity to overseas suppliers and customers.” One factor that U.S. automakers and economic development officials will be watching, however, is the steady rise of the dollar over the last year. Because of the weakening of the euro against the dollar in that time, for example, some executives of Germany-based Daimler are said to favor recalibrating the company’s ambitious plans to expand output in the United States.

New Aerospace Boom There’s also been a geographic reshaping of a U.S. aerospace industry that is enjoying its biggest expansionary era in many years, albeit less extensive than the reshaping taking place in the auto sector. The aerospace manufacturing sector has rebounded in the United States after the Great Recession and pullbacks in federal defense spending, with more than $25 billion in investments since 2012, according to the ICF International consulting firm. Jobs and manufacturing work that had been moving to China and other sites have begun moving back to the United States over the last three years. “Three years ago it looked like everything was heading to China,” Kevin Michaels, aviation consultant for ICF, told IndustryWeek. “Now that’s changed…The U.S. at this point in time has become the hot spot in aerospace manufacturing.” Seattle-based Boeing and Europe-based Airbus, of course, are the big players in global aerospace manufacturing, so their strategies and activities outline the new boom in the industry in America. Boeing last year snared the biggest single tax break any state has ever given to a single company when it got 800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

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Georgia’s low cost of doing business, availability of skilled labor and global supply chain are just a few of the reasons why Kia, Porsche and Mercedes chose Georgia. Combine this with one of the nation’s busiest sea ports for automobile exports and imports, and the number one workforce training program for manufacturing - and you have a recipe for success. Visit Georgia.org/Automotive to find out how you can become Georgia’s next success story.

We SPEAK Business Georgia Department of Economic Development

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08/05/15 6:03 PM

Meanwhile, Airbus is opening a production Washington Governor Jay Inslee to sign line in Mobile, Alabama, creating 1,000 a package of incentives valued at $8.7 DETROIT THREE new jobs to produce a new A320 airplane billion over 27 years, designed to keep AND SUPPLIERS that is expected to begin rolling out tens of thousands of Boeing jobs in of the $600 million facility in 2016. the Puget Sound region and ensure HAVE INVESTED “Alabama’s biggest opportunity that Washington would remain the MORE THAN $2 BILLION in 2015 could lie in the aerospace geographic anchor for the company IN THE AUTO SECTOR industry,” Governor Robert Bentley for decades to come. Yet the company OVER THE PAST FEW says, noting that his economic subsequently said it would move development team has targeted about 2,000 high-paying engineering YEARS AND CREATED supplier and spinoff jobs from the jobs in its defense division — not THOUSANDS OF NEW Airbus project. covered by the Washington incentives JOBS. “The aerospace industry will resemble — from the Seattle area to facilities in autos in terms of where the growth takes Oklahoma City and St. Louis by 2017. place,” according to Gigerich. “The legacy Meanwhile, Boeing also is investing another aerospace investment is on the West Coast and a couple $1 billion in Phase 2 of its plant in North Charleston, of other states, but the South is on the map now in terms of South Carolina, where it plans to as much as triple aerospace.” construction of 787 Dreamliner jets, potentially doubling As aerospace burgeons again, still other, more unlikely employment. The biggest significant caveat is the yet-tostates are trying to get bigger pieces of the action. For be-held election to determine whether the plant would be example, Raytheon announced in March that it planned to unionized by the Machinists union. expand its operations in Indianapolis, creating 250 jobs over So important does Governor Nikki Haley consider the the next few years to support various military platforms, election that she had warned about it in her State of the State technologies, and products. And Florida leaders are talking address in January: “I cannot express to you the extent to up the state’s proximity to major aircraft facilities, military which this is a game-changer when we are trying to bring new bases, and aerospace and defense companies that already are businesses to our state,” she said. “We have a reputation — in the state. ■ internationally — for being a state that doesn’t want unions.”

THIS LAND IS YOUR LAND.

REALLY. With the resources, opportunities and incentives the Tulsa region offers, your business can thrive and immediately land a leadership role in our community. You won’t ﬁnd a more welcoming economic climate. Visit GrowMetroTulsa.com/MoveForward to download our regional business overview.

Brien Thorstenberg | Senior Vice President of Economic Development brienthorstenberg@tulsachamber.com | 800.624.6822

58 AREA0402.indd AREADEVELOPMENT 1

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13/04/15 7:40 PM

SITE SELECTION

The Art and Science of Locating a New Food Plant By identifying critical factors up front, food companies position themselves to succeed in a new market. By David Sours and Lucy Durbin, CBRE Food Facilities Group

ocating your perfect food manufacturing facility — it’s a simple project, really. That is, if you have ample time, capital, and numerous other resources at your disposal.

Large- Versus Small-Cap The process can appear routine for the large-cap company. For example, your long-term business expansion plans contemplate increasing market share in target regions, balancing proximity to raw goods contracts and suppliers, as well as to customers and clients receiving finished products. Your logistics studies identify a small geography where all supply-chain factors appear to balance optimally. Labor analysts work closely with economic incentives consultants to further finesse your top markets of choice. Of course, there are no existing “state-of-the-art” buildings available, so you begin to evaluate design-build engineers and contractors. The project focus becomes identifying the ideal parcel of land. Over the course of multiple years, you work aggressively with teams of experts, including real estate professionals, site selectors, engineers, architects, contractors, zoning professionals, and

economic developers to drive the project from concept to completion. States, counties, and municipalities compete for your business through tax abatements, rebates, job training, assistance with variances and impact fees, and infrastructure improvement programs. For the rest of food companies, particularly in the small- and midcap sectors, finding your next plant is an imprecise science of balance and compromise. The addition of a new plant to a small- or mid-cap company’s network means major growth potential but also major risk. Such projects frequently have the potential to fundamentally shift a company’s market share, sometimes doubling or tripling production capacity. As your company grows from a local to regional player, or a regional to national player, company structure and processes around real estate and site selection often take shape concurrently. As a result, your company can find itself contemplating critical factors late in the process, or even after the plant is completed and in operation. In our business, we work with food companies at all points of the business continuum, from introduction through growth and maturity, and occasionally through change or decline. We have the unique opportunity to analyze business needs and costs associated with new food plants. In doing so, we can help companies avert potentially disastrous, opportunistic investments, or at least to avoid missteps that AREA DEVELOPMENT | Q2/2015

others have made. Frequently we are also engaged to restore operations to idled or failing food plants where the business concept, labor market, supply chain structure, raw goods resources, or other factors have fallen short. Across all scenarios, understanding the attributes and shortcomings of a food plant and its location is indispensable to long-term sustainability of a future food operation.

New Versus Retrofit In contrast to the large-cap companies, on average, smalland mid-cap companies commence the real estate search process with the need to be in operation within 6–12 months. There is typically a catalyst such as a client-driven demand, or market-driven trend prompting the need for more production capacity. Private equity directives, new customer contracts, and other growth initiatives also fuel short time lines. Companies often begin with the vision of building a new plant to discover (they hope quickly) that the timeline for site identification, site inspections, permitting, design, construction, and equipment installation is not viable. Realizing the time constraints, food companies either search for existing food plants that are adaptable to the company’s specific use or other suitable buildings that lend themselves to retrofit. After eliminating ground-up construction as an option, the next step is usually to survey existing food plants within a broad regional geography. This is where food companies sometimes go wrong. The hope is to find an existing food plant configured for compatible food production, within the target size range, and with a workable production layout. Usually the aforementioned scenario has the lowest acquisition costs. New food plant construction can be four to seven times the cost of a viable second-generation plant, prior to production-specific reconfiguration and improvements. The appeal of a “turnkey” option (or at least one requiring minimal alterations) appears to be the path of least resistance.

Supply Chain, Labor, and Incentives Overall, transportation and labor costs outweigh real estate and occupancy costs within the supply chain. Allured by the ease of readily available plants, however, food companies can encounter unnecessary and unanticipated operations costs as their newly established production lines begin to churn out product. As we work with food company clients to locate new production facilities, we advocate thorough examination of the costs of doing business before contemplating real estate. These costs include proximity to growers and raw goods; inbound and outbound trucking costs, including viability of back-hauls; time sensitivity of the transportation of perishables; interstate access and efficiency of routes; and weather and topography constraints. In conjunction with supply-chain analysis, labor analytics are crucial to the sustainability of a food manufacturing operation. Current cost and supply of labor are vital to a start-up; however, attrition rates, projected supply of labor, and wage growth over time are imperative to underwriting location risks. A community may readily welcome a

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new plant to the community, supplying an initial burst of available labor, but what happens when the company decides to expand the plant, add three production lines, and triple its workforce? When evaluating current and future labor, it is also important to assess specific skillsets of the workforce, as well as community businesses that will compete for labor. For example, a food plant may vie for the same labor sector as an oilfield services firm; however, food companies generally cannot compete on wages with oilfield services. Significant gaps within the above mentioned sectors could greatly outweigh the savings of an inexpensive second-generation food plant that may lack adequate labor or that does not fit well within a company’s supply chain. Once we have identified workable areas (or eliminated the unfeasible), existing real estate and community incentives come into play. Within suitable geographical limits, a plant’s existing refrigeration, utility infrastructure, building systems, and processing equipment may offer substantial value to a food company, driving cost savings and speed to market. Community incentives may also serve to overcome some plant deficiencies. For example, beyond typical economic incentive packages, communities can offer food-industryspecific education and job training, assist in structuring competitive supplier contracts, and fund construction of surrounding infrastructure improvements as well as upgrades to water, sewer, and electric utilities. Sometimes the pairing of an optimally located warehouse with an aggressive community willing to participate actively in the expense of transforming a more basic industrial facility into a food plant can win out to an existing food plant.

Realizing “the Perfect Plant” Over the past 10 years, we have witnessed increased sophistication and intentionality among food companies in their planning for new food plants. Every food manufacturer has highly unique requirements that impact the building and location. By identifying critical factors up front, food companies position themselves to succeed in a new market, based on the success of their business operation. As we work with food companies, we work to hedge against external factors that could negatively impact the long-term success of a plant. The art of identifying a food plant is no longer exclusive to the large-cap company. Sure, there are time and cost barriers to the mid-cap and smallcap companies; however, by thoroughly evaluating and understanding labor, supply chain, and economic incentives in the context of analyzing the intricacies of existing food plants and retrofit candidates, mid-cap and small-cap companies can also realize “the perfect plant.” ■

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ENERGY

Renewed Expansion for Renewables For companies in the renewables industry, preparing for expansion to capture growth needs to be done with care in order to capture the best deals and position the company in the marketplace. By Richard Greene, Senior Associate, Investment Consulting Associates (ICA)

enewable energy and energy efficiency have been not only key targets for innovation, but also are growth areas for the world and the U.S. in terms of production and new jobs. To capitalize on this growth as an expanding company, or to capture it to a geographic location, requires special site selection consideration, analysis, and criteria.

Market Growth First, consider the market. Given the recent falling costs of traditional energy fuels like oil and gas, are renewable energy solutions still competitive? The answer is “yes.” Though demand for energy is increasing, renewables are growing at higher rates. Globally, renewable generation is estimated to rise to 25 percent of gross power generation in 2018 (7,200 Terawatts), up from 20 percent in 2011 as deployment of a variety of technologies spread out throughout the world. Closer to home and according to the U.S. Energy Information Administration, the U.S. market is estimated to grow 3.5 percent in 2015 and 2.6 percent in 2016 to a total of 10.08 quadrillion Btus. Further, in 2016, the non-hydropower renewables portion of power generation is expected to grow by 5.2 percent. Growth comes with help from governments, helping to seed innovation and adoption. From a federal level in the U.S., the Obama administration has encouraged the

Destination States for Renewable Energy Projects 2013-2014 (152 Total Projects including Guam)

1 WI

SD WY

1 NV CA

AR MS

1 TX

TN OK

DC WV

13 RI

CT NJ

1 AK

market with its “all-of-the-above energy strategy” supporting energy independence, reduction in carbon emissions, and job growth. Its goals are to: • Install 100 megawatts of renewable capacity across federally subsidized housing by 2020; • Permit 10 gigawatts of renewable projects on public lands by 2020; • Deploy three gigawatts of renewable energy on military installations by 2025; and • Double wind and solar electricity generation in the United States by 2025. A significant portion of energy use is with commercial and industrial

Source: fDiMarkets.com

buildings, using upwards of 50 percent of the nation’s energy. Facility efficiency is a prime target for energy use reduction. The Better Buildings Initiative of the American Recovery and Reinvestment Act of 2011 seeks to make buildings 20 percent more energy efficient through 2020, as well as accelerate private-sector investment. Despite the lack of action in federal legislature and roll-back of federal and state incentives, the renewables and energy-efficiency markets continue to grow. And industry is meeting the challenge with new technologies. One of the most promising areas of opportunity is the innovation in battery storage both for residential and AREA DEVELOPMENT | Q2/2015

commercial buildings. Elon Musk’s April announcement of the Tesla Powerwall, providing battery storage for the residential market, is a game-changer. In addition, advances in utility-sized storage potential and other technologies, including flow batteries of UniEnergy Technologies, currently being tested in Pullman, Wash., by utility Avista, show great promise. These advances solve a key issue presented by the use of many renewable energy products by managing renewable energy output into the grid even when the sun isn’t shining or the wind isn’t blowing. The energy storage market itself is expected to grow 250 percent as deployments increase from 62 megawatts in 2014 to 220 megawatts in 2015.

“

BETWEEN THE YEARS 2013 AND 2014, THERE HAS BEEN CONSIDERABLE

EXPANSION ACTIVITY IN THE RENEWABLE SPACE.

renewable energy generation installations. One can now go to the local Target and buy thermostats that can control residential lights and heat through a smart phone. Financing solutions have taken away the p costs of installing solar power generation equipment on homes, and still provide a reduction in the cost of energy.

Current Landscape

Between the years 2013 and 2014, there has been considerable expansion activity in the renewable space. OF Analysis of fDiMarkets.com data for the U.S. counts 152 new projects FDIMARKETS.COM DATA established in those years. These range FOR THE U.S. COUNTS from manufacturing to installation and service. The most targeted state 152 NEW PROJECTS for establishment is, by far, California, U.S. Job Opportunities with Texas, Massachusetts, Nevada, and With this growth comes new jobs. Arizona topping the list for the most Worldwide 6.5 million jobs were projects. These 152 projects generated calculated in 2013. In the U.S., there are IN THOSE YEARS. 7,343 jobs at an announced capital such a variety of estimates now that expenditure of US$243.2 billion. the Bureau of Labor Statistics no longer According to the IncentivesMonitor, calculates them. The most compelling is the most popular states for capturing the estimate of nearly 1.9 million jobs in project incentives include New Mexico, the U.S. alone in 2013. Their distribution New York, North Carolina, Louisiana, Virginia, Florida, and by type of renewable is shown in the accompanying chart. Michigan, generating over one half of the deals announced With consumption growing, expansion to manufacture, during the two-year period (See accompanying maps). assemble, install, and service is eminent, though the growth has not been as early predictions indicated a decade ago. What has taken off are electronic solutions for controlling Special Site Selection Criteria and reducing energy usage in government, commercial, What makes these state markets so attractive to industrial, and residential properties, and in the financing of expanding renewable energy and efficiency companies? It is a variety of factors, of course, but top of the list is market Destination for Announced Renewable Energy Incentive Deals 2013-2014 (49 Deals) opportunity. Companies making successful expansions take the time to understand the competitive landscape ME WA 1 and how cost structures fare with VT MT ND NH traditional energy sources. Criteria MN NY MA OR 2 5 for location analysis in this industry ID CT WI SD MI RI 3 include: WY PA NJ

ANALYSIS

ESTABLISHED

2 CA

IL UT

2 KS

IN WV

TN NM

AL MS TX

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DE MD

Source: ICA IncentivesMonitor

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MARKET ANALYSIS: • Cost of industrial and residential electricity • Capacity constraints and opportunity for growth • Government policy for purchase of renewable energy and energyefficient products, as well as for conservation programs • Competitors in the marketplace and their cost structures • Utility policy on reverse metering

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INFRASTRUCTURE: • Federal, state, and local governments’ commitment to new grid distribution and biofuels infrastructure • Utility programs for distributing “green” energy LABOR AVAILABILITY: • Availability of industry-specific work force — engineers, scientists, system integrators, etc. • Job-training programs — customizable to manufacturing processes and to develop integrators and service personnel

however. Many state governments have been examining their incentive portfolios, including effectiveness on creating jobs and introducing metrics to account for them. Reporting is more often than not required, so a thorough analysis supporting expansion plans for capital expenditure and jobs created is important. All these industry-specific criteria are in addition to the usual suspects that should always be a part of a balanced location search and include: • Demographic growth trends • Availability and cost of labor • Availability and cost of land and property

SUPPLIERS: • Presence and capacity of industryspecific suppliers • Logistics from industry-specific suppliers PHYSICAL PLANT: • Land availability for assembly of large components as applicable INCENTIVES: • Renewable energy installation and generation incentives • Energy-efficiency conversion and usage incentives for industrial, commercial, and residential buildings Nearly all states and geographically smaller locales have programs that — although not specifically targeting renewable energy company attraction — can be applied to any incoming mobile investment or expansion that creates jobs. Where they exist, renewableenergy-specific programs may be combined with and augment traditional incentives, which include: • Tax credits or refunds for building and equipment • Low-cost or interest-free loans • Value-added tax/goods and services tax reductions or abatements • Research programs • Employee training grants • Employee search assistance • Property search assistance • Infrastructure preparation for expansion or greenfields Reviewing an area’s incentives program mix will uncover the opportunities for programs that can work together. The states noted in the accompanying maps have proven attractive to this industry. Be careful of clawbacks and restrictions, AREA DEVELOPMENT | Q2/2015 AREA0409.indd 1

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assessments and requirements, comparative location modeling, and cost analyses and cash flows are extremely useful in examining location 1% opportunities and narrowing the field 2% to determine the best fit of finalist Renewable Fuels 3% locations. Incentives, of course, are part 8% Biogas of the mix, and the analyses provide for Hydropower 8% successful negotiation and application. Biomass 45% Opportunity abounds for those Solar that can seize it. For companies in Wind the renewables industry, preparing 16% Geothermal for expansion to capture the growth Other (waste-to-energy, needs to be done with care in order to fuel cells, wave and ocean) secure the best deals and position the 17% company in the marketplace for the long-term. For economic development Source: RenewableEnergyWorld.com, January 2015 (compiled by ICA) agencies, examining the needs of the industry and mapping criteria to local assets and adjusting incentive platforms to the industry are worthwhile exercises. They will assist • Supplier availability and distribution logistics in attracting this growing industry and bring the benefits • Cost of utilities of green power generation and efficient use of energy to • Communications and IT infrastructure residents. ■ • Quality-of-life issues, particularly for relocating managers

US Renewable Energy Jobs 2013

We recommend that all criteria be customized to the company and its specific activity, prioritizing appropriately, since one size does not fit all. A variety of techniques including company and investment

RICHARD K. GREENE is a senior associate with Investment Consulting Associates. He advises governments and developers on renewable energy strategy, green urban renewal, and business attraction. Greene has worked domestically and internationally with renewable energy companies on location strategy and funding since 2000.

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TEXAS T DAY Texas’s industrial growth hasn’t been confined to one industry — or one region — and the state is continuing to build on its successes. By Dan Emerson

or many Texans, the recent slump in oil prices probably evoked a feeling of déjà vu, and memories of a similar “oil bust” that happened in the 1980s. But that downturn also had a positive, long-term impact, since it served as a catalyst for state leaders to make a conscious effort to diversify the Texas economy. As a result, the state is now better positioned to deal with slumps in a particular sector, even one as large as the oil and gas business. That’s according to the Federal Reserve Bank of Dallas, which recently reported that while job growth has slowed in recent months, the state’s employment would still grow this year. Sectors contributing to that economic diversity include advanced technology and manufacturing; aerospace, aviation, and defense; biotechnology/life sciences; and information and computer technology. Today, oil and mineral-related revenue makes up only 10 percent of the state’s total tax collections, compared to 20 percent in the 1980s, according to Fed data.

While Texas only has 8 percent of the country’s population, the state has created nearly one third of all new private-sector jobs in America since 2000. “That would have been impossible without a diverse economy,” says Tracye McDaniel, the new president of the Texas Economic Development Corporation. Another data-point reflecting Texas’ broad-based economy is the fact that 118 of the largest U.S. corporations are headquartered there. McDaniel points out that Texas’ recent growth hasn’t been confined to one region or industry. According to Forbes magazine, this year the state has five of the 10 fastest-growing cities in America, “and each city is on the list for a completely different reason,” McDaniel says. “Houston’s growth has been driven by energy and exports, whereas in Austin, it’s technology and culture. San Antonio has a thriving financial sector, and in Dallas-Fort Worth, it’s all of the above.” Case in point, investment company Charles Schwab is

AREA DEVELOPMENT | Q2/2015

Greetings from the Lone Star State! It’s no secret that everything is bigger in Texas, and the same is true of our economy. Texas is a national leader in job creation, energy, exports, agriculture, and so many other areas. The key to our success comes directly from our people and the business climate they’ve worked to create. In every aspect of life, Texans value freedom more than anything else. It’s in our DNA, and it is reflected in our business climate. As Governor, I will work to keep it that way and ensure we reach greater heights than ever before. When I was elected Governor, I made a promise to the people of Texas — a promise to keep Texas a beacon of opportunity and the best state in the nation to live, work, raise a family, and run a business — and to make it even better. To accomplish that, my economic development team will make it a priority to encourage entrepreneurship and effectively leverage our business recruitment and retention tools to expand economic opportunity at every level. Texas is already a leader in this arena, but we know there is more that we must do. We will assess, improve and, in some cases, restructure our economic development programs to maximize efficiency and effectiveness for companies and taxpayers. We will make our economic development efforts bigger, broader, and bolder, and be more aggressive in attracting companies and foreign direct investment so that we become not just a national leader, but a world leader in job creation. The most important thing government can do is to create an environment that any business can thrive in — and then get out of the way. That’s the type of environment Texas offers. I will ensure that employers are free from the burdens of over-taxation and overregulation and entrepreneurs are free to start a business without needless government hurdles standing in the way. That type of environment is attractive to employers across all industries, which is why Texas has been able to sustain growth that is so broad, deep, and diverse. On behalf of the State of Texas, I invite you to come and take advantage of all the unique opportunities Texas has to offer. I look forward to working with you to make sure that even the future is bigger in Texas. Sincerely,

Greg Abbott Governor of Texas

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TEXAS T DAY developing a $200 million campus in North Austin, and plans to double its workforce in the city from 1,000 to 2,000 employees. CEO Walt Bettinger explained that Austin’s “highly educated talent pool” was the primary factor in the location decision, along with incentives including $4.5 million from the Texas Enterprise Fund.

INDUSTRY CLUSTERS

In recent years, state leaders have focused intensely on cultivating industry clusters. For example, the high-tech cluster in Austin has blossomed in the past few years. The Texas Enterprise Fund provided economic incentives to land Facebook’s first major expansion outside California, as well as 3,600 new jobs from Apple. And, Google announced it’s leasing 200,000 square feet to establish a major presence in

Austin, in the Green Water Treatment Plant redevelopment, which is due for completion in early 2017. One of the state’s latest success stories is the city of San Antonio, which recorded job growth of more than 3 percent in 2014, according to Mario Hernandez, president of the San Antonio Economic Development Foundation. In recent years, the Alamo city has quietly developed into a cybersecurity hub, with more than 80 companies in that category. The National Security Agency and U.S. Air Force have major cybersecurity operations in the area. One reason San Antonio has become a popular location for the broader IT sector is that the city has the largest municipal-owned electric and gas utility in the country, CPS Energy. “Exceptional rates and reliability” are two benefits that confers, according to Hernandez. In fact, both Microsoft

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PROMOTING BUSINESS

city of converse

The state of Texas offers a number of incentives to promote business expansion and location.

Economic Development Corporation

WE’RE GROWING PLACES

Located on Loop 1604, the City of Converse has easy access to IH 35, IH 10 & San Antonio. We are an ideal city for living, shopping & business with proposed development sites for • Commercial & Industrial • Residential & Multi-Family • Entertainment & Recreation • Institutional

• Texas Enterprise Fund: Sometimes referred to by state officials as “the deal closer,” the fund is a cash grant for projects that offer significant projected job creation and capital investment, and wherein a single Texas site is competing with another, viable out-ofstate option.

Tax abatements and incentives are being offered to qualifying business. 10 281

1604

410

CONVERSE

1604

• Texas Capital Access Program: The program provides financing for businesses and nonprofits that face barriers in accessing capital, or fall outside of conventional lending guidelines. Loans may be used for working capital or the purchase, construction, or lease of capital assets. To be eligible, companies must have fewer than 500 employees and be based in Texas, or have at least 51 percent of their employees in the state.

SAN ANTONIO 90

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• Texas Emerging Technology Fund: The fund provides research and commercialization grants to eligible, early-stage companies. • Grants: Texas also provides several types of grants to communities and businesses to fund projects, from public infrastructure projects in non-entitlement communities to cancer research and laboratory facility construction. • The Skills Development Fund: The fund provides training grants to businesses to partner with a community or technical college to fill specific needs. • Tax Refunds and Exemptions: The Texas Enterprise Zone Program provides state tax refunds in exchange for meeting certain capital investment and jobcreation targets. State Sales and Use Tax exemptions are provided to taxpayers who manufacture, fabricate, or process tangible property for sale. The Texas Economic Development Act provides a 10-year limitation on the taxable value of property, extended to a taxpayer who agrees to build or install property and create jobs.

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· IN THE HEART OF TEXAS · THE CITY OF CAMERON HAS INVESTED MILLIONS ON INFRASTRUCTURE AND DEMONSTRATED THEIR PRO-BUSINESS ‘GET-IT-DONE’ ATTITUDE WITH REAL PROJECT INCENTIVES. CAMERON IS LOCATED IN THE MIDDLE OF THE TRIANGLE BETWEEN HOUSTON, DALLAS/FT. WORTH AND SAN ANTONIO - PROVIDING EAS< ACCESS TO ALL THREE URBAN AREAS. CAMERON IS RIPE FOR COMMERCIAL AND INDUSTRIAL DEVELOPMENT. IT’S THE PERFECT TIME TO MAKE YOUR MARK IN TEXAS. FOR MORE INFORMATION ON HOW CAMERON CAN WORK FOR YOU PLEASE VISIT US AT WWW.CAMERONINDUSTRIALFOUNDATION.COM OR CALL US AT (254) 697-497

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and Oracle have recently opened major facilities in the city as well. Bexar County’s large and growing workforce of young adults has also made San Antonio a prime location for call centers and distribution centers, both of which are labor-intensive types of facilities. San Antonio’s developed infrastructure of major highways, railways, and airports has made it a key distribution center for central and south Texas. For example, Dollar General is building a massive, onemillion-square-foot distribution facility. When Dollar General announced its choice of San Antonio, Chairman and CEO Rick Dreiling said the company has “found Texas a great place to do business,” citing its nearly 1,200 stores and 9,400 employees in the state. And a Dallas-based developer has built a 512,000-square-foot distribution warehouse on the city’s south side for heating- and cooling-systems manufacturer Carrier Corp. South San Antonio has become a growth epicenter, with the addition of a 2,000-acre Toyota manufacturing complex that employs 4,000 people. The nearby Southport Business Center has 172 acres of industrial land for sale, along with retail and office space. It’s in a targeted reinvestment area, offering incoming businesses significant government incentives, Hernandez notes. The steady growth in San Antonio has also benefited a number of surrounding communities. One example is Converse, a San Antonio suburb of about 21,000 residents, which has nearly doubled its population since 2000. Converse has been adding about 200 homes per year at a steady rate, according to Kate Silva, executive director of the Converse Economic Development Corp. Fittingly, Converse’s major employers include several construction-related companies including the Featherlite Division of Fort Worth-based Acme Brick, Ingram Readymix, and MeadowBurke, which make concrete products. To

handle the growth and attract more businesses to Converse, one current priority is improving the transportation infrastructure on the north side of town. The San Antonio suburb of Seguin is looking forward to the 2018 opening of a $58.5 million manufacturing plant and research center by Grupo Siro, a major food company based in Spain. The state is investing $800,000 from the Texas Enterprise Fund for the plant, which will create more than 200 jobs and represents the company’s first investment in North America.

TEXAS T DAY

ENERGY SECTOR EXPANSIONS

Even with the recent downturn in oil prices, there is still expansion taking place in that sector across Texas. Chevron Corp. which employs about 9,000 people in the Houston area, bought more than 100 acres near the Grand Parkway, and will decide later this year whether to go ahead with a 50-story downtown office tower. The Texas Enterprise Fund has awarded Chevron a $12 million grant for the project. Irving-based petroleum giant Exxon is developing a 385-acre campus on I-45 in north Houston, scheduled for completion this summer. It will accommodate about 10,000 employees, and has been driving other, new development in the area. The Houston suburb of Tomball made news last year with the opening of oil services giant Baker Hughes’ new, Western Hemisphere Education Center. Baker Hughes only has two such facilities, and the other one is in Dubai. “So that puts us on a global platform,” says Kelly Violette, executive director of the Tomball Economic Development Corp. The facility hosts 600 trainees per month, so it has had a major, beneficial impact on the Tomball area’s economy. The Tomball EDC arranged a $913,000 grant to develop infrastructure for the new Baker Hughes facility, which is indicative of the city’s “aggressive” approach to developing incentives packages for companies that will add

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Not all of the recent economic development news has been coming from Texas’ largest population centers. to the area’s employment base, Violette says. Violette notes that the Tomball area has enjoyed “a tremendous amount” of residential growth just outside the city limits, due to the recent expansions by Exxon Mobil, Southwest Energy, and Noble Energy. Plus, Breau Machine Works completed a major expansion of its manufacturing facility, and Houston-based Grimes industrial has relocated a portion of its manufacturing operation to Tomball. Meanwhile, two Japanese companies have announced plans to invest about $1.2 billion in Houston-based Freeport LNG’s expansion of its natural gas liquefaction and LNG loading facility on Quintana Island near Freeport, Texas. The $14 billion project will include development of three liquefaction plants. The Freeport facilities will join a long list

of logistical and shipping hubs in Texas, which have helped make the state the country’s top exporter for the past 13 years. Texas exports for 2014 totaled almost $289.02 billion, up from over $279.5 billion in 2013.

TECH-DRIVEN GROWTH

Not all of the recent economic development news has been coming from Texas’ largest population centers. For example, the western plains city of Lubbock has been sowing the seeds for future, tech-driven growth. With four universities, including Texas Tech and the Texas Tech Health Sciences Center, Lubbock has long focused on research and development and commercialization of new technology. “What we’re seeing is the development of an entrepreneurship cluster, “ according to John Osborne, president and CEO of the Lubbock Economic Development Alliance. The Alliance has two business parks; one is the Reese Technology Center, a 2,500-acre facility on the site of a former U.S. Air Force base. With tenants including Denmarkbased Vestas Wind Systems, Zachry Engineering Corp., Wyle Aerospace Group, the National Institute for Renewable Energy, and the National Wind Institute of Texas Tech University, it’s a major research hub. Corporate ag leaders

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Bayer CropScience and Monsanto have also established significant research facilities in Lubbock. Slated for a June 1 opening, Lubbock’s second business park, the $29 million Texas Tech University Research and Technology Park recently announced its first tenant: Chicago-based Chromatin, Inc., which has invented and commercialized more than 100 agricultural products, and sells sorghum seed to more than 20 countries worldwide. The park will provide a hub for advanced research in plant sciences, which the company expects will lead to new applications in medicine and other areas of bioscience. Lubbock offers traditional job creation incentives at the local level, but also “non-traditional” incentives, including opportunities to partner with the area’s universities and the technologies they develop, Osborne points out. In southern Texas, the state’s aerospace industry is getting a boost in the form of more than $15 million in state incentives to help the private company SpaceX build a commercial satellite launch facility near the Gulf Coast city of Brownsville. The planned STARGATE facility will also include research labs, with the help of a $4.4 million Emerging Technology Fund grant to the University of Texas at Brownsville; UT is providing a matching grant.

The facility will test and commercialize a new, phased-array antenna system that will replace fixed satellite-dish tracking communication systems.

MORE WORK TO DO

Of course, rapid growth brings certain challenges. While Texas’ economy remains strong, state leaders know there is more work to do to ensure an environment in which any business can thrive and grow, Tracye McDaniel says. “Under Governor Abbott’s leadership, we are working to simplify our regulatory environment, speed up our permitting process, and build the transportation infrastructure to support a growing population and diversified economy.” Like many states, Texas faces the challenge of providing enough skilled workers to meet the requirements of increasingly high-tech industries. Today’s technology-driven economies demand well-trained workforces, and providing those educational resources represents one of the crucial challenges for the continued growth of the Lone Star state. One of the state’s primary initiatives in this area is the Skills Development Fund program, which assists businesses and trade unions by financing the design and implementation of customized job-training projects. ••

NEXT STOP: TOMBALL,TEXAS expand improve relocate

Whether your goal is to , or your business, the Tomball Economic Development Corporation (TEDC) is committed to getting you on the fast track to success. Your ticket to Tomball grants you access to everything Houston has to offer Zith all the beneÀts of small town living! Conveniently located just 30 miles Northwest of Houston’s central business district, Tomball offers low property taxes, a thriving economy, exceptional educational opportunities, and attractive relocation and expansion incentives.

Scan To Begin Your Journey!

29201 Quinn Road, Suite B s-s Tomball, TX 77375 s-s 281.401.4086 s-s 888.401.7322 s-s tomballtxedc.org

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Sponsors

AMARILLO ECONOMIC DEVELOPMENT CORPORATION Amarillo, Texas, is positioned mid-continent with coast-tocoast access on I-40 and international access to Mexico and Canada on I-27 along the planned “Ports-to-Plains” trade corridor. The Amarillo EDC’s mission is to promote business expansion in the Greater Amarillo area that builds a stronger, more diversified economy. Aggressive business incentive programs are funded from the proceeds of a halfcent sales tax for economic development. Reagan Hales, Director, Marketing & Communications Amarillo Economic Development Corporation 801 S. Fillmore, Suite 205 Amarillo, TX 79101 806-379-6411 re a g a n @ a m a r i l l o e d c . c o m w w w. a m a r i l l o e d c . c o m CITY OF ARLINGTON OFFICE OF ECONOMIC DEVELOPMENT Arlington, located at the epicenter of the thriving North Texas region, is quickly becoming a hub for engineering, advanced manufacturing, technology, and medical science industries. Beyond our world-class entertainment is the backbone of our city: economic vitality, a competitive business environment, and a diverse, skilled workforce. Bruce C. Payne, Economic Development Manager City of Arlington Office of Economic Development 101 W. Abram Street, Arlington, TX 76010 817-459-6155 ecodev@arlingtontx.gov w w w. a r l i n g t o n t x . g o v / e c o d e v

CAMERON INDUSTRIAL FOUNDATION Cameron is within 150 miles of 17 million people — located 30 minutes east of IH35 with Waco, Bryan/ College Station, and Austin approximately one hour away. Plastic manufacturing, specialty metals fabricating, institutional furniture manufacturing, agri-business, and oil industry testing and training call Cameron home; low cost land, good transportation, and business-friendly. Ginger Watkins, Economic Development Director Cameron Industrial Foundation 102 E. First Street P.O. Box 432 Cameron, TX 76520 254-697-4970 Fax: 254-697-2345 gwatkins@ c a m e ro n i n d u s t r i a l f o u n d a t i o n . c o m w w w. c a m e ro n i n d u s t r i a l f o u n d a t i o n . c o m GREATER CONROE ECONOMIC DEVELOPMENT COUNCIL Located within the Houston/Sugarland/Woodlands MSA, Conroe is the county seat of Montgomery County, Texas, which is one of the 10-fastest growing counties in the U.S. Conroe serves as a labor shed of nearly 225,000 within a 30-minute drive. Close to the Port of Houston and Houston Airport System’s international gateway, we are a growing community with excellence in advanced manufacturing, distribution, and office and professional services. Fred Welch, Executive Director Greater Conroe Economic Development Council 501 West Davis Street Conroe, TX 77301 936-522-3014 Fax: 936-756-6162 welch@gcedc.org w w w. g c e d c . o r g

CONVERSE ECONOMIC DEVELOPMENT CORPORATION What makes our location so perfect for opportunity? We’re 14 miles from downtown San Antonio and six miles from the I-35. There are the People of Converse. We’re smart but well-grounded and committed to seeing our city grow and change in the right way. And we’re Prepared for what we want to achieve. We are working to help companies and investors make the right choices. Converse is Perfectly Situated for creating opportunities. Katherine E. Silvas, Executive Director Converse Economic Development Corporation 403 South Seguin Converse, TX 78109 210-659-9163 ksilvas@converseedc.com, http://converseedc.com/ GREENSPOINT DISTRICT Houston’s Greenspoint District is strategically positioned and globally connected, providing domestic and international companies a convenient and costeffective area to locate their business, as well as access to a highly trained workforce. The District’s proximity to the Gulf of Mexico and central U.S. location cut days and dollars in the movement of products and supplies. These benefits have attracted a diverse mix of companies to Greenspoint. Regina Lindsey, Chief Development Officer & VP Greenspoint District 16945 Northchase, Suite 1900 Houston, TX 77060 2 8 1 - 8 7 4 - 2 1 3 1 ( O ff i c e ) 2 8 1 - 8 7 4 - 2 1 3 7 ( D i re c t ) 281-874-2151 (Fax) r l i n d s e y @ g re e n s p o i n t . o r g w w w. g re e n s p o i n t . o r g

ARLINGTON, TEXAS Perfectly Situated

Arlington is in the spotlight and is perfectly situated at the epicenter of a thriving North Texas region. Our strong economy, skilled workforce, and globally-recognized industries make Arlington a prime location for investment. Dare to dream? Land here.

ARLINGTON: WHERE DREAMS GET DONE ArlingtonTX.gov/ecodev | ecodev@arlingtontx.gov | 817.459.6155

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LONGVIEW ECONOMIC DEVELOPMENT CORPORATION Longview is a thriving community located in Northeast Texas, along I-20, two hours east of Dallas and one hour west of Shreveport, Louisiana. Longview is the center of economic activity for a significant part of Northeast Texas. As our nickname implies, the “Piney Woods” is known for its abundant trees and water. Cultural, career, and educational opportunities provide a wonderful place for families and businesses to grow. Susan Mazarakes-Gill, CEcD, Executive Director Longview Economic Development Corporation 410 N Center St. Longview, TX 75601 903-753-7878 Fax: 903-753-3646 Info@LongviewUSA.com w w w. L o n g v i e w U S A . c o m LUBBOCK ECONOMIC DEVELOPMENT ALLIANCE Lubbock’s highly skilled and educated workforce, proximity and connection to major national and international markets, and affordable utility and living costs make it the ideal place to grow your business. Known as the “Hub City” of West Texas, our diverse economy is based on manufacturing, agriculture, wholesale and retail trade services, as well as government, education, and healthcare. Mike Hatley, Director of Business Recruitment Lubbock Economic Development Alliance 1500 Broadway Lubbock, TX 79401 800-687-5330 mike.hatley@lubbockeda.org w w w. l u b b o c k e d a . o r g

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MARBLE FALLS ECONOMIC DEVELOPMENT CORPORATION We serve the City of Marble Falls, Texas, the gateway to the Highland Lakes area of Texas Hill Country. Our mission is business retention, expansion, and recruitment. We provide technical assistance. Christian Fletcher, Executive Director Marble Falls Economic Development Corporation 801 Fourth Street Marble Falls, TX 78654 830-798-7079 c f l e t c h e r @ m a r b l e f a l l s e c o n o m y. c o m h t t p : / / m a r b l e f a l l s e c o n o m y. c o m ODESSA ECONOMIC DEVELOPMENT CORPORATION Odessa, Texas, is located in West Texas, where government works for business in an extremely favorable climate. As the center of energy generation, we offer low-cost electricity rates, Freeport exemptions, along with job-creation and property-tax incentives through our Type A economic development sales tax revenues. Odessa has the competitive edge when it comes to working with new businesses that want to make West Texas their new home. Scott Jones, Director of Economic Development Odessa Economic Development Corporation 700 North Grant, Suite 200 Odessa, TX 79761 432-333-7880 Fax: 432-333-7858 i n f o @ o d e s s a e c o d e v. c o m http://odessatex.com/

PLANO ECONOMIC DEVELOPMENT Plano, Texas, located 19 miles north of downtown Dallas, is the fourth-largest city in the Dallas-Fort Worth region with over 266,000 residents and is home to many leading global corporations. A Plano location provides companies with workforce talent, a competitive business climate, world-class business parks, and superior accessibility. A 30-minute drive to DFW International Airport (world’s third-busiest) and a Central Time Zone location provide quick access to both U.S. coasts and direct flights to international destinations. SALLY BANE, Executive Director Plano Economic Development 5601 Granite Parkway, Ste. 310 Plano, TX 75024 972-208-8300 sallyb@plano.gov w w w. p l a n o t e x a s . o r g PORT ARTHUR ECONOMIC DEVELOPMENT CORPORATION The Port Arthur Economic Development Corporation (PAEDC) is a Type A sales tax corporation created to enhance Port Arthur’s business climate and overall economic development and tax base. PAEDC is responsible for encouraging and developing business growth and attracting new businesses to Port Arthur such as manufacturing, distribution, warehouses, commercial, and industrial. Floyd Batiste, CEO Port Arthur Economic Development Corporation 501 Procter Street, Port Arthur, TX 77640 409-963-0579, Fax: 409-962-4445 F B AT I S T E @ PA E D C . O R G w w w. PA E D C . O R G

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SAN ANTONIO ECONOMIC DEVELOPMENT FOUNDATION Recognized by Forbes as Americaâ&#x20AC;&#x2122;s new â&#x20AC;&#x153;Capitol of Influenceâ&#x20AC;? for its diverse and skilled workforce, central location, rich culture, and accessibility, San Antonio also offers low business costs and a pro-business economy that attracts investment from more than 30 countries around the world. The 15 colleges and universities in the area educate 160,000 students, providing a steady supply of skilled talent to the MSAâ&#x20AC;&#x2122;s workforce of more than one million.

TEXAMERICAS CENTER (TAC) TexAmericas Center (TAC), just west of Texarkana, TX, is one of the largest industrial parks in the Americas, with 12,000 developable acres. TAC provides its customers with the most innovative, value-driven real estate solutions to meet changing market conditions and facility requirements. Tenants at TexAmericas Center boast some of the lowest utility costs in the country, access to flexible financing, and a robust labor market with one-stop training services.

Tom Long, Executive Vice President of Business Recruitment San Antonio Economic Development Foundation 602 E. Commerce St. San Antonio, TX 78205 210-226-1394 tlong@sanantonioedf.com w w w. s a n a n t o n i o e d f . c o m

Eric Voyles, Executive VP/CEDO TexAmericas Center 107 Chapel Lane New Boston, TX 75570 903-223-9841 Fax: 903-223-8742 E r i c . Vo y l e s @ Te x A m e r i c a s C e n t e r. c o m w w w. Te x A m e r i c a s C e n t e r. c o m

CITY OF SUGAR LAND The City of Sugar Land is an award-winning community located 20 miles southwest of Houston, with one of the most favorable business climates in Texas. Long recognized as a great place to live, Sugar Land has also gained a well-deserved reputation as one of the top locales in the U.S. for business relocation and expansion, in part because of its skilled, productive and educated workforce mirrored with an aggressive incentive program. Jennifer May, Director of Economic Development City of Sugar Land Office of Economic Development 2700 Town Center Blvd. North Sugar Land, TX 77479 281-275-2229 Fax: 281-275-2217 jmay@sugarlandtx.gov ecodev@sugarlandtx.gov h t t p : / / w w w. s u g a r l a n d e c o d e v. c o m /

TOMBALL ECONOMIC DEVELOPMENT CORPORATION Whether your goal is to expand, improve, or relocate your business, the Tomball Economic Development Corporation (TEDC) is committed to getting you on the fast track to success. Your ticket to Tomball grants you access to everything Houston has to offer with all the benefits of small town living! Kelly Violette, Executive Director Tomball Economic Development Corporation 29201 Quinn Rd. Suite B Tomball, TX 77375 281-401-4086 kviolette@tomballtxedc.org w w w. t o m b a l l t x e d c . o r g

Greenspoint District

Strategically Positioned in North Houston

281.874.2131 www.greenspoint.org

- Among the lowest lease and land rates in Houston Region #LASS Ă&#x2DC; OFĂ&#x17E;CE SPACE AVAILABLE FOR THE Ă&#x17E;RST TIME IN YEARS 4ALENT POOL EXCEEDING MILLION WITHIN MINUTE COMMUTE

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INFRASTRUCTURE/TAXES

U.S. Infrastructure Funding Needs More Than a Quick Fix Public investment in infrastructure sits at its lowest level since records have been kept because of underfunding across all levels of government. By Dan White, Senior Economist; and Sarah Crane, Economist; Moody’s Analytics

State Gains From Higher Infrastructure Investment vs. Baseline State

Infrastructure Gross state investment, product, $ bil

Alabama Alaska Arizona Arkansas California Colorado Connecticut DC Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming U.S.

$11.2 $5.0 $19.1 $5.5 $116.1 $15.7 $7.9 $5.0 $2.8 $56.1 $27.1 $3.3 $3.3 $33.9 $14.1 $9.5 $7.8 $9.6 $13.0 $2.2 $12.2 $15.7 $18.1 $15.3 $6.7 $13.2 $2.7 $7.0 $9.2 $2.3 $22.8 $5.9 $84.3 $21.1 $2.2 $28.8 $8.8 $10.2 $30.3 $1.8 $11.7 $2.6 $12.0 $73.8 $9.0 $1.2 $18.1 $27.5 $3.8 $12.9 $3.3 $862.9

Jobs, ths

$ bil $20.2 $8.6 $33.4 $9.8 $200.0 $28.1 $15.1 $5.0 $8.9 $97.6 $48.2 $6.1 $5.8 $62.4 $25.7 $16.8 $13.4 $17.4 $22.6 $4.0 $23.2 $31.2 $35.5 $28.2 $11.9 $24.0 $4.6 $12.3 $15.9 $4.3 $40.0 $10.3 $146.5 $38.5 $4.1 $52.4 $15.5 $18.3 $54.5 $3.3 $20.9 $4.6 $22.7 $130.0 $15.5 $2.1 $32.5 $47.1 $6.8 $24.4 $5.6 $1,535.9

Sources: Census Bureau, BEA, BLS, Moody’s Analytics

212.3 45.4 295.0 92.1 1,408.1 234.8 100.2 43.0 75.0 909.5 387.8 31.0 50.9 485.6 234.1 163.0 133.4 169.3 227.8 39.4 201.0 193.3 279.9 198.9 110.6 239.1 38.8 116.7 109.4 31.1 254.3 134.4 1,069.6 398.6 31.4 455.0 137.0 148.7 468.4 19.5 208.3 45.3 213.6 1,058.1 136.8 21.5 313.5 375.3 72.3 210.0 54.9 12,683.1

he pending shortfall in the Federal Highway Trust Fund has rekindled the annual debate surrounding U.S. infrastructure spending. The problem is getting bigger with time and, as a result, possible solutions are becoming much less palatable. Government investment in structures — defined by the Bureau of Economic Analysis as everything from roads to school buildings to transmission lines — has sharply declined as a share of the economy in the last decade, and today sits at its lowest level since records have been kept. On a per capita basis, real government spending on structures is the lowest it has been since at least 1950.

Growing Costs Three main factors are to blame. First and foremost, the costs of expanding and maintaining the nation’s infrastructure are growing faster than the revenue streams devoted to fund them. This is most obvious in the relationship between transportation infrastructure and gasoline taxes. The per gallon federal fuel tax of 18.4 cents has not moved since 1993. As a result, inflation has slowly eaten away at the purchasing power of those collections. These dynamics also hold true at the state level, even though state policymakers have been much more proactive at raising fuel taxes. This is good for consumers, but terrible for the programs supported by the taxes — in this case transportation spending. It is no coincidence that since the last time the federal gas tax was raised, highway, street, and bridge construction jobs have increased at half the pace of the rest of the construction industry and only two thirds the pace of the overall labor market. The burden of paying to expand and maintain the country’s infrastructure is spread widely across the three levels of government. However, the data show the pace of funding growth has been much more sluggish at the federal level. The Federal Highway Trust Fund has become so unsustainable as a result that the government has had to make continual supplemental appropriations from the general fund just to keep it solvent. The structural imbalance in the fund has widened to about $13 AREA DEVELOPMENT | Q2/2015

billion per year. Second, construction costs have accelerated more quickly than overall prices. This means that not only has the U.S. been investing fewer dollars in infrastructure, but those dollars also are not going as far as they once did. Infrastructure input prices, especially for items such as asphalt, steel scrap, and concrete, have risen twice as fast as overall prices since 2000. Finally, states and local governments have been increasingly unable to prioritize discretionary spending on infrastructure because of growing mandatory pressures from Medicaid and pensions. This has prevented them from more fully offsetting softer federal support despite increasing state gas taxes. More than three quarters of states have a higher fuel tax levy than the federal government, but fuel taxes as a share of total state taxes have still declined from 6.7 percent in 1993 to just over 5 percent today. State and local government policymakers remain a bit gun-shy when it comes to borrowing in the shadow of the Great Recession. Some of this hesitancy flows from federal funding uncertainty brought on by continued budget showdowns. If policymakers across all levels of government can surmount these obstacles, both fiscal and political, and get back in the habit of investing in infrastructure, the economic benefits would be immense.

What’s Needed The best demonstration of how far we have fallen behind as a nation on infrastructure investment is to project what it would take to get back to historical averages. To maintain public investment in infrastructure at 1.9 percent of real GDP over the next decade — equal to the average rate over the last 20 years — federal, state and local governments would need to boost spending by a total of $863 billion above current levels. This compares with a baseline forecast of about 1.5 percent of real GDP, assuming current funding levels, which equates to an additional $86 billion averaged annually across all three levels of government, or an approximately 30 percent increase from 2014 levels. The economic implications of such a move would be immense. Using an economic multiplier of 1.78, in line with past research for a relatively stable point in the business cycle, we can intuit a 10-year nominal GDP impact of more than $1.5 trillion. In the Moody’s Analytics macroeconomic forecast model this would support an additional 12.7 million jobs over 10 years versus the baseline, a cost of roughly $120,000 per job. There would also be offsetting negative impacts to the economy from higher taxes and borrowing costs. The largest offset would come from higher tax burdens for drivers and businesses, taking up a greater portion of disposable incomes that would otherwise be spent on other goods and services. Gas taxes, in particular, are very regressive, hitting lower-income Americans who generally spend a greater percentage of their earnings on consumer staples such as fuel, food, and shelter. States with poorer populations and with longer commuting patterns would be disproportionately affected by higher gas taxes.

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Getting to $863 billion in additional infrastructure spending over the next 10 years is a tall order. The extra $86 billion per year breaks down to about $20 billion in federal funding versus $66 billion in state and local government funding, holding the current funding breakdown constant. The preferred political solution in Washington leans heavily toward repatriation of corporate profits held overseas. Such a move would be a more politically palatable one-time funding boost that could get us through the next election cycle but no further. The one-time funding available through repatriation or a transition tax would be a powerful tool to use in transitioning U.S. infrastructure spending to a longterm solution, but that is where things really get tricky.

Looking for a Long-Term Solution No single long-term solution has presented itself as the obvious heir to the federal gas tax. While most agree that a long-term solution should ultimately be tied to usage, none of the budding contenders, ranging from mileage fees to carbon taxes, are ready for prime time when it comes to administrative or other practical hurdles. The states will likely need to lead the federal government. States and local governments can also help further offset federal weakness by continuing to embrace toll roads and other forms of public-private partnerships to make ends meet and keep infrastructure up to date. Under the White House’s Grow America plan and similar congressional proposals, the federal government would cover about $26 billion of the average necessary $86 billion annual increase, leaving a $60 billion bill for state and local governments. Put in perspective, that is the equivalent to a nationwide gas tax increase of 47 cents, 2.5 times the current federal levy. Given states’ already-stressed budget situations, more of the solution will have to come from the federal government than it has been willing to shoulder over the last few decades. Which brings us to the only other, and least popular, option: gradually raising the federal gas tax and indexing it with a construction-specific price index to buy enough time to get to that new long-term solution. Raising the current levy while indexing it to inflation makes economic sense and is the simplest and most immediate way to increase infrastructure investment, but not even oil priced at $45 per barrel will be able to make it politically palatable enough for most lawmakers. Any movement toward getting back in the habit of funding infrastructure for more than a few years would require herculean political will from the president and congressional leaders, as well as from state legislators and governors across the country. Furthermore, any permanent fix would also require more than just repatriation and indexation of the gas tax. This year, it is all but assured that Congress will lack the political will necessary to pass more than another shortterm fix to the Federal Highway Trust Fund, even though the dynamics of a new Congress, a second-term president, and plunging oil prices present some of the most favorable conditions for a long-term solution in some time. The economic benefits would be worth the risk.. ■ 800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

Economic Strength The benefits of this mindset go far beyond the bottom line.

Leadership & Vision

Training Collaborative olllaborativ Communities om mmu unitie

AREA DEVELOPMENT ANALYZES economic and workforce data for 373 MSAS to determine which U.S. cities are creating jobs and nurturing sustainable economic development.

Employers also want readily available, skilled workers who are affordable.

A holistic economic development strategy is most important.

SPECIAL REPORT

Note: Area Developmentâ&#x20AC;&#x2122;s research desk compiled the statistics for this report. Locations were ranked according to the methodology explained herein. Location profiles/articles researched and written by Mark Crawford, Staff Editor. Interactive report available at www.areadevelopment.com/Leading-Locations.

SPECIAL REPORT AREA DEVELOPMENT ANALYZES the critical data that business leaders assess when considering locations in order to produce a list of those U.S. MSAs that are creating a track record of economic success.

This

is the fifth year that

clusters or corridors that gain national attention.

Area Development has

All these things increase the leverage a

undertaken its “Leading

community has for attracting new business, as

Locations” study. The four key categories used

well as its ability to offer compelling incentives

in determining state rankings for 2015 — prime

to top-level companies — creating a track

work force, economic strength, year-over-year growth, and “recession-busting” attributes — are all critical factors for business leaders to assess when considering a location or expansion. Every employer wants ready, well-qualified workers who are motivated, skilled, and require little training. There are also big benefits in locating

“

in communities with track records of economic

WHEN CITIES INVEST IN THEMSELVES, THEY CREATE A PLACE WITH A HIGH QUALITY OF LIFE.

growth. These cities/MSAs understand how business works and have the leadership, vision, and creativity to nurture sustainable economic development year after year — and not just in good economic times. Perhaps what is most telling about a city or community is how it handled a bust cycle, or a recession — how did it get through? How did it still create business investment? How did it create jobs? How did it keep looking forward and creating positive results? Most community leaders would agree that what is most

“

record of economic success. Included in the Leading Locations report on AreaDevelopment.com is an interactive table that will allow viewers to sort the rankings of all 373 MSAs included in this year’s study. The report includes an overall ranking that is based on 21 economic indicators. Area Development also created category rankings that are based on sub-groups of indicators from the 21 used for the overall results (refer to the methodology to learn more). Readers can use filters to easily

segment MSAs by region, population size, and state, or use the search field to locate specific MSAs. The expanded version of the chart displays how each city ranks in every one of the 21 indicators used in the study.

PRIME WORK FORCE Labor is always a top consideration for any business

important for economic sustainability is not a one-time, lucky

location or expansion. Companies want to be in areas

swing at the plate that brings in a big company, but a holistic

with plenty of highly skilled, available workers who have

strategy of economic development with well-thought-out

a reputation for productivity and reliability. HR directors

goals. Community and business leaders then collaborate to

also want to be sure the area is large enough to provide

make the necessary investments to achieve those goals five,

additional workers if needed, should an expansion or two

10, or 15 years down the road.

be necessary in the future. If there are too few workers in an

The benefits of this mindset go far beyond the bottom line. When cities invest in themselves to create a strong workforce and a prosperous, conscientious business

area, the overall labor market becomes more competitive, driving up costs. Most of the cities that scored well in the “Prime Work

community, they create a place with a high quality of life.

Force” category share some key attributes, especially

This leads to in-migration of talented people with multiple

having a strong university and technical colleges in the

skills and talents. Successful companies will attract suppliers

area. These education assets attract students, many of

and other business investment — possibly even creating

whom stay after graduation and become part of the highly

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100 LEADING LOCATIONS Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 35 37 38 39 40 41 42 43 44 45 46 47 48 49 50

CITY/MSA Denver-Aurora-Broomfield Houston-Sugar Land-Baytown Grand Rapids-Wyoming Greeley San Francisco-San MateoRedwood City San Jose-Sunnyvale-Santa Clara Seattle-Bellevue-Everett Columbus Boulder Austin-Round Rock-San Marcos Dallas-Plano-Irving Boise City-Nampa Midland Salt Lake City Provo-Orem Fort Worth-Arlington Odessa Orlando-Kissimmee-Sanford Fargo Fort Collins-Loveland Oakland-Fremont-Hayward Louisville-Jefferson County Portland-Vancouver-Hillsboro Nashville-DavidsonMurfreesboro-Franklin Boston-Cambridge-Quincy Jacksonville College Station-Bryan Santa Ana-Anaheim-Irvine Cincinnati-Middletown Ann Arbor Oklahoma City San Diego-Carlsbad-San Marcos Naples-Marco Island Longview Chicago-Joliet-Naperville Minneapolis-St. Paul-Bloomington Corpus Christi Bend North Port-Bradenton-Sarasota Tyler Charlotte-Gastonia-Rock Hill Bismarck Napa Warren-Troy-Farmington Hills Madison San Luis Obispo-Paso Robles Fort Wayne Indianapolis-Carmel Raleigh-Cary Des Moines-West Des Moines

*2010 Census

State

Population*

CO TX MI CO CA

2543482 5946800 774160 252825 1776095

CA WA IN CO TX TX ID TX UT UT TX TX FL ND-MN CO CA KY-IN OR-WA TN

1836911 2644584 76794 294567 1716289 4235751 616561 136872 1124197 526810 2136022 137130 2134411 208777 299630 2559296 1283566 2226009 1589934

MA FL TX CA OH-KY-IN MI OK CA FL TX IL MN-WI TX OR FL TX NC-SC ND CA MI WI CA IN IN NC IA

2863943 1345596 228660 3010232 2130151 344791 1252987 3095313 321520 214369 7883147 3279833 428185 157733 702281 209714 1758038 108779 136484 2475666 568593 269637 416257 1756241 1130490 569633

Rank 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 66 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100

CITY/MSA

State

Elkhart-Goshen Canton-Massillon Sioux Falls Lake County-Kenosha County Las Vegas-Paradise Tulsa Sacramento-ArdenArcade-Roseville Columbia Charleston-North CharlestonSummerville Atlanta-Sandy Springs-Marietta Columbus Baton Rouge Lincoln Peabody Albany-Schenectady-Troy Durham-Chapel Hill West Palm Beach-Boca RatonBoynton Beach Trenton-Ewing Asheville Dubuque Iowa City Greenville Casper Fort Lauderdale-Pompano Beach-Deerfield Beach Lubbock Reno-Sparks Victoria Santa Rosa-Petaluma Kalamazoo-Portage San Antonio-New Braunfels St. Cloud Lansing-East Lansing Kansas City Portland-South PortlandBiddeford Richmond Los Angeles-Long Beach-Glendale Williamsport New York-White Plains-Wayne Elizabethtown Bakersfield-Delano Green Bay Ithaca Wilmington Ogden-Clearfield Honolulu Milwaukee-Waukesha-West Allis Miami-Miami Beach-Kendall Lexington-Fayette Pittsburgh St. George

Population*

IN OH SD IL-WI NV OK CA

197559 404422 228261 869888 1951269 937478 2149127

MO SC

172786 664607

GA OH LA NE MA

5268860 1836536 802484 302157 246481

NY NC FL

870716 504357 1320134

NJ NC IA IA NC WY FL

366513 424858 93653 152586 189510 75450 1748066

TX NV TX CA MI TX MN MI MO-KS ME

284890 425417 115384 483878 326589 2142508 189093 464036 2035334 357412

VA CA PA

1258251 9818605 116111

NY-NJ KY CA WI NY DE-MD-NJ UT HI WI FL KY PA UT

11576251 119736 839631 306241 101564 705670 547184 953207 1555908 2496435 472099 2356285 138115

AREA DEVELOPMENT | Q2/2015

SPECIAL REPORT

Methodology

TOP 30 BIG CITIES CITY/MSA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

State

Rank within Leading Population Locations

Denver-Aurora-Broomfield CO Houston-Sugar Land-Baytown TX Grand Rapids-Wyoming MI San Francisco-San MateoCA Redwood City San Jose-SunnyvaleCA Santa Clara Seattle-Bellevue-Everett WA Austin-Round Rock-San Marcos TX Dallas-Plano-Irving TX Boise City-Nampa ID Salt Lake City UT Fort Worth-Arlington TX Orlando-Kissimmee-Sanford FL Oakland-Fremont-Hayward CA Louisville-Jefferson County KY-IN Portland-VancouverOR-WA Hillsboro Nashville-DavidsonTN Murfreesboro-Franklin Boston-Cambridge-Quincy MA Jacksonville FL Santa Ana-Anaheim-Irvine CA Cincinnati-Middletown OH-KY-IN Oklahoma City OK San Diego-Carlsbad-San Marcos CA Chicago-Joliet-Naperville IL Minneapolis-St. Paul-Bloomington MN-WI North Port-Bradenton-Sarasota FL Charlotte-Gastonia-Rock Hill NC-SC Warren-Troy-Farmington Hills MI Indianapolis-Carmel IN Raleigh-Cary NC Lake County-Kenosha County IL-WI

2543482 5946800 774160 1776095

1 2 3 5

1836911

2644584 1716289 4235751 616561 1124197 2136022 2134411 2559296 1283566 2226009

7 10 11 12 14 16 18 21 22 23

1589934

2863943 1345596 3010232 2130151 1252987 3095313 7883147 3279833 702281 1758038 2475666 1756241 1130490 869888

25 26 28 29 31 32 35 35 39 41 44 48 49 54

educated workforce. University research also creates spinoff companies that tend to hire local workers, as well as attract outside business investment. The overall result is an in-migration of talented, educated workers; job and wage growth; and a more diverse labor pool.

Area Development ranked 373 MSAs across 21 economic and work force indicators. These 21 indicators were pulled from seven (7) data sets (sub-categories) originating from four sources: the Bureau of Labor Statistics, Bureau of Economic Analysis, U.S. Census American Community Survey, and Moody’s Analytics. Each MSA earned a ranking within each of the 21 indicators based on its statistical performance within that indicator. The MSA with the best performance in a certain indicator earned a ranking score of “1” and the MSA with the worst performance earned a ranking score of “373.” To calculate “Overall Ranking,” we added the total ranking across all indicators for each MSA and then divided by the total number of indicators to reach an average ranking. The MSA with the lowest average earned the #1 overall ranking, while the MSA with the highest average ranked #373 overall. We also calculated overall ranking across four categories: “Prime Work Force,” “Economic Strength,” “Recession-Busting Cities,” and “YearOver-Year Growth.” To calculate the overall ranking within these four categories, we produced an average ranking across only certain sub-category indicators. An indicator did not have to be exclusive to our category rankings. For instance, the “Employment Growth Net 3-Year Change as Percentage of Population” was used within both the “Economic Strength” and “Recession-Busting Cities” categories. We have also produced a set of lists, using our overall results and category results, grouping the MSAs by region and size. We ranked the Top 5-20 MSAs in each region (defined by Area Development Online taxonomy), and we also ranked the top MSAs across three size groups: “Small” (population <160,000), “Mid-Sized” (population 160,000–600,000), and “Big” (population >600,000). We ranked the cities within each size group against our overall rankings and “Prime Work Force,” “Economic Strength,” “RecessionBusting Cities,” and “Year-Over-Year Growth” categories.

For example, Richmond, Virginia, is well known for its nearly 30 colleges and universities, including Virginia Commonwealth University, the state’s largest university. Rich Richmond’s population has grown by 6.7 percent from 2010

For a full explanation of the methodology behind our Leading Locations report, go to www.areadevelopment.com/Leading Locations2015/methodology.

to 20 2014. The larger Richmond MSA has grown from 1.2

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million to more than 1.26 million over the same time period, an increase of 4.3 percent — very solid in-migration

ECONOMIC STRENGTH Factors that indicate economic strength include per capita

numbers. As a result, the Richmond region offers a highly

real GMP, manufacturing/goods-producing employment,

educated workforce, with about one third holding post-

and employment growth — for the most recent year as well

secondary degrees.

as the last three- and five-year periods. Another key factor

Employers also want readily available, skilled workers who

is unemployment rate. Economic strength is ultimately tied

are affordable. Some industries, such as manufacturing, prefer

to job creation and the ability to withstand economic ups

right-to-work states because they have lower unionization

and downs. Successful communities do this by supporting

rates. Another way to keep labor costs down is by utilizing

traditional and already established businesses, as well as

low-cost or no-cost training programs provided by states and/

targeting new industries that bring solid potential for long-

or counties. Quick Start, for example, provides high-quality

term growth and high-paying jobs, such as automotive,

training services at no cost to qualifying new or expanding

aerospace, biomedical, electronics, and clean energy.

businesses in Georgia. Last year Quick Start partnered with

This kind of diversity pays off. For example, Charlotte-

Hyundai DYMOS and West Georgia Technical College to

Gastonia-Rock Hill, NC/SC, ranks eighth among big MSAs

develop the 350-person workforce for Hyundai DYMOS’ new

for economic strength and twelfth overall in this category.

manufacturing facility in West Point, Georgia, where it will

Its economy consists of a variety of sectors that create a

manufacture manual transmissions, axles, and seats.

solid economic base that helps the city withstand economic

Quick Start is developing job-specific training based

downturns and other challenges. Top industries include

on company-specific technology. To facilitate this, Quick

finance, healthcare, defense, aerospace, aviation, food

Start designed and built a simulated conveyor system

products, chemicals, and energy. During the past decade,

and production line at Quick Start’s LaGrange training

nearly 7,000 companies have invested more than $8 billion

facility, where new employees can start hands-on training.

in Charlotte facilities. This kind of economic strength also

The organization is also providing customized company

attracts foreign investment — Charlotte is home to consuls

orientation and safety, leadership, and technology training.

for more than a dozen countries, including Austria, Canada,

“Thanks to Quick Start’s support, we will be able to start

France, Germany, Great Britain, Italy, Mexico, Nicaragua, and

our Georgia business much more easily,” says John Kim,

Switzerland.

president of Hyundai DYMOS Georgia.

Analysis

Partnerships between government agencies and

A “Video” of Change

By Les J. Cranmer,

SENIOR MANAGING DIRECTOR,

Savills Studley

A key to understanding the results of the Leading Locations report is to first understand the methodology — and how it differs from most published industry ranking reports. Of the 21 data fields examined, only 4 captured actual comparative rankings; the remaining 17 captured the rate of change. With all fields being considered equal (and not weighted), this means that those MSAs with a positive change (lower unemployment as an example) will move to the top half of the listing. Those with negative change will drop to the bottom half, and some MSAs (that perhaps continue to maintain strong attributes) will end up in the middle of the pack. In essence, the report provides outstanding insight and value in tracking movement across prime metrics. As some published industry lists and rankings provide a “snapshot” of year-end community accomplishments, this report can best be described as a “video” of change over the last three years. Some of the dynamics that can be observed in the results include the growth of high-tech regions such as Northern California, Austin, and Denver, which are clearly established “industry clusters” enjoying natural expansion primarily in that industry sector. The South and Southwest regions seem to be changing as a result of corporate migration (in the past two decades, the number of Fortune 400 companies based in Texas grew to 50 from 15) and the preferences of the millennial generation. According to the Brookings Institute, “Millennials overwhelmingly prefer western cities such as Houston and Denver.” As a result, the New York City region lost 20,369 millennials from 2010 to 2012. Any location consultant worth their salt wants to be the first to identify an up-and-coming community not yet identified by peers and corporate clients. The Leading Locations report, and the methodology used to track the changes occurring in regions, is extremely critical to identify these underpursued communities that typically would not be considered due to past impressions.

AREA DEVELOPMENT | Q2/2015

TOP 20 BIG CITIES –“Economic Strength” CITY/MSA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Denver-Aurora-Broomfield Houston-Sugar Land-Baytown Grand Rapids-Wyoming San Jose-Sunnyvale-Santa Clara San Francisco-San MateoRedwood City Seattle-Bellevue-Everett Dallas-Plano-Irving Charlotte-Gastonia-Rock Hill Orlando-Kissimmee-Sanford Salt Lake City Austin-Round Rock-San Marcos Louisville-Jefferson County Boise City-Nampa San Diego-Carlsbad-San Marcos Fort Worth-Arlington Santa Ana-Anaheim-Irvine Warren-Troy-Farmington Hills Minneapolis-St. Paul-Bloomington Nashville-DavidsonMurfreesboro-Franklin Oklahoma City

State

Overall Economic Strength Population Rank

CO TX MI CA CA

2543482 5946800 774160 1836911 1776095

1 1 3 4 8

WA TX NC-SC FL UT TX KY-IN ID CA TX CA MI MN-WI TN

2644584 4235751 1758038 2134411 1124197 1716289 1283566 616561 3095313 2136022 3010232 2475666 3279833 1589934

9 10 12 14 15 17 18 20 21 22 23 25 26 28

1252987

private industry also help build a robust business climate. Among small MSAs, Bowling Green and South-Central Kentucky ranked in the top-10 for economic strength. This region maintains a rich history of traditional manufacturing, including automotive, food, and textiles/clothing. To diversify, South-Central Kentucky’s 10 counties are working together to attract new industries by developing training and certification programs and “work-ready” communities. As a result, Nemesis Arms, a leading manufacturer of innovative tactical rifle systems, announced in December 2014 it would move its operations from California to Edmonson County. “Nemesis Arms coming to Edmonson County — the result of the combined efforts of economic development organizations in South-Central Kentucky — demonstrates why regionalism is one of the greatest assets we have,” states Ron Bunch, president of the Bowling Green Area Chamber of Commerce.

Overall Year-OverYear Growth Population Rank

TOP 20 BIG CITIES–“Year-Over-Year Growth” CITY/MSA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

State

Houston-Sugar Land-Baytown TX Grand Rapids-Wyoming MI Louisville-Jefferson County KY-IN Dallas-Plano-Irving TX Denver-Aurora-Broomfield CO Las Vegas-Paradise NV Boise City-Nampa ID Cincinnati-Middletown OH-KY-IN Fort Worth-Arlington TX San Diego-Carlsbad-San Marcos CA Seattle-Bellevue-Everett WA San Francisco-San MateoCA Redwood City Oklahoma City OK Sacramento-Arden-Arcade-Roseville CA Jacksonville FL Chicago-Joliet-Naperville IL Salt Lake City UT Boston-Cambridge-Quincy MA Austin-Round Rock-San Marcos TX North Port-Bradenton-Sarasota FL

Another key to long-term economic strength is keeping business costs low, which helps companies maintain their margins and keep workers employed

5946800 774160 1283566 4235751 2543482 1951269 616561 2130151 2136022 3095313 2644584 1776095

2 4 5 6 7 9 10 14 17 17 19 20

— especially during tough economic times. Florida

1252987 2149127 1345596 7883147 1124197 2863943 1716289 702281

20 22 23 24 25 27 29 30

within the top 50 Leading Locations in the overall

has some of the lowest business costs in the country. Its unionization rate for private-sector manufacturing is fourth-lowest in the United States. Florida has also eliminated the manufacturing and equipment sales tax, saving the state’s manufacturing companies about $141 million annually. These low-cost advantages are some of the reasons why four Florida MSAs — Orlando-Kissimmee-Sanford, Naples-Marco Island, Jacksonville, and North Port-Bradenton-Sarasota — all placed “Economic Strength” category.

YEAR-OVER-YEAR GROWTH Maintaining strong economic growth — year after year — is the mark of strong economic development leadership. Cities that show year-over-year growth typically follow well-devised economic development plans and make the investments needed to retain and attract business.

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Diversification is always critical for economic stability,

manufacturers. Crosby Group/

especially for bringing in technology industries with high

Lebus Manufacturing, a maker

growth potential for the future. It doesn’t have to be a global

of lifting and rigging products,

firm — a start-up with a good product in a well-equipped

recently announced it would

business incubator can have a significant impact on the

invest $45 million in a facility at

local and regional economy. Working together in regional

the park. The Longview Economic

partnerships is often the best way to develop infrastructure

Development Corporation

and training, as well as the marketing needed to attract top-

(LEDCO) will provide a $2 million

level companies.

grant over a three-year performance period to close the deal.

Longview, Texas, ranked third overall for year-over-year

Joe Bob Joyce, board president for LEDCO, notes that the

growth in our survey. The Longview MSA ranked sixth in

incentives package “proves to company officials that we want

employment growth among Texas MSAs at 4.4 percent.

Crosby/Lebus to invest and grow in Longview.”

Manufacturing accounts for 12 percent of all jobs in the labor

Another year-over-year leader is the Boise City-Nampa

force — mostly machinery and fabricated metal products.

MSA in Idaho, which ranked tenth overall among the Lead-

The city continues to support its current manufacturing

ing Locations in this category. Its diversified economy in-

industries, as well as reaching out to others — such as food

cludes food processing, agriculture, traditional and advanced

and beverage — that are a good fit for its available workforce.

manufacturing, software, and sustainable energy. A young

The city also invested in critical infrastructure, such as the

(average age 33) and highly educated workforce of 330,000

Longview Business Park along Interstate 20, to attract more

is within a 45-minute draw of the area. The Boise Valley

AREA0411.indd 1

30/04/15 6:36 PM

AREA DEVELOPMENT | Q2/2015

SPECIAL REPORT Economic Partnership markets the MSA aggressively, espe-

milestones have been met. This incentive is one reason why

cially its highly skilled workforce and low business costs. A

Gayle Manufacturing Company, a provider of structural steel,

new state incentive — the tax reimbursement incentive — is

is relocating its headquarters from California to Caldwell (part

generating a lot of relocation interest. This credit is issued to

of this MSA) and building a new steel fabrication manufac-

a company on an annual basis, providing its performance

turing facility. “Gayle Manufacturing’s relocation is a prime ex-

TOP 20 BIG CITIES–“Prime Workforce” CITY/MSA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

State

Denver-Aurora-Broomfield Houston-Sugar Land-Baytown Boston-Cambridge-Quincy Chicago-Joliet-Naperville Austin-Round Rock-San Marcos Boise City-Nampa Honolulu Grand Rapids-Wyoming San Francisco-San MateoRedwood City Richmond Jacksonville Oakland-Fremont-Hayward Seattle-Bellevue-Everett Washington-Arlington-Alexandria Lake County-Kenosha County Dallas-Plano-Irving Bethesda-Rockville-Frederick Portland-Vancouver-Hillsboro Cincinnati-Middletown Charleston-North CharlestonSummerville

Analysis

Overall Prime Workforce Population Rank

CO TX MA IL TX ID HI MI CA

2543482 5946800 2863943 7883147 1716289 616561 953207 774160 1776095

8 10 14 16 21 26 28 30 32

VA FL CA WA DC-VAMD-WV IL-WI TX MD OR-WA OH-KY-IN SC

1258251 1345596 2559296 2644584 4377008

35 42 45 46 50

869888 4235751 1205162 2226009 2130151 664607

51 55 56 58 63 66

ample of the opportunities and interest Idaho is seeing as a direct result of the tax reimbursement incentive,” indicates Clark Krause, executive director of the Boise Valley Economic Partnership. “In the Boise Valley alone, we have seen a 150 percent increase in companies interested in relocating to our area or expanding existing locations here.”

RECESSION-BUSTING ATTRIBUTES Sometimes a community can get through a recession in decent shape because it has an industry or two that provide lower-cost, essential commodities that everybody needs — for example, food products. This, however, is usually not the case. Most communities that handle recessions better than others have a diverse economic base. They also tend to focus on their core strengths to proactively support businesses and create a positive business climate. To identify these communities, we analyzed the amount of change in key economic indicators from 2009 to 2014, providing a reliable measure of economic

The Western U.S. Makes a Strong Showing

By Larry Gigerich, MANAGING DIRECTOR,

Ginovus

Area Development’s Leading Locations statistics for small (less than 160,000 residents), midsize (population between 160,000 and 600,000) and large (more than 600,000 residents) metropolitan statistical areas (MSAs) are consistent with our firm’s findings and our clients’ experiences. The analysis focused on workforce statistics, income/earnings, per capita product output, and economic diversity/strength. These rankings reflect the continued strength of the western half of the United States in terms of human capital and economic performance. In particular, Colorado and Texas have several communities in the top five of the three population groupings. Colorado has come in strong in the Mountain Region due to economic growth and a strong workforce. It will be interesting to watch whether the cities in Texas perform worse in the future, due to their dependence on the energy industry and the lower energy cost market conditions, or if they are able to maintain their strength through diversified industries.

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TOP 20 BIG CITIES–“Recession Busting” 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Overall RecessionBusting Population Rank

CITY/MSA

State

San Jose-Sunnyvale-Santa Clara Houston-Sugar Land-Baytown Grand Rapids-Wyoming Denver-Aurora-Broomfield Bakersfield-Delano Fort Worth-Arlington Louisville-Jefferson County Warren-Troy-Farmington Hills Seattle-Bellevue-Everett Orlando-Kissimmee-Sanford Dallas-Plano-Irving Charleston-North CharlestonSummerville Portland-Vancouver-Hillsboro San Francisco-San MateoRedwood City Santa Ana-Anaheim-Irvine Austin-Round Rock-San Marcos Jacksonville Boise City-Nampa Nashville-Davidson-Murfreesboro--Franklin Oklahoma City

CA TX MI CO CA TX KY-IN MI WA FL TX SC

1836911 5946800 774160 2543482 839631 2136022 1283566 2475666 2644584 2134411 4235751 664607

2 4 6 8 11 12 13 14 15 19 20 21

OR-WA CA

2226009 1776095

23 26

CA TX FL ID TN

3010232 1716289 1345596 616561 1589934

26 28 29 30 31

1252987

AREA0427.indd 1

performance during and after the Great Recession. In general, cities that fared the best had low overall business costs, including cost advantages in labor, property and leasing, incentives, and corporate taxes. For example, top-25 recession-busting MSA PortlandVancouver-Hillsboro in Oregon is the seventh-best state in the U.S. for favorable business climate, according the Tax Foundation. In Oregon, corporate business tax accounts for less than 3.5 percent of the gross state product. Although a corporate tax is applied, Oregon uses a single-factor corporate tax calculation, another cost advantage. Portland-Vancouver-Hillsboro’s speedy recovery from the recession was also helped by its economic diversity, with deep roots in clean technology, advanced manufacturing, athletic and outdoor clothing, and software and technology. Rapidly emerging sectors are medical devices and healthcare, food processing, and global logistics. All these companies are supported

13/05/15 5:51 PM

AREA DEVELOPMENT | Q2/2015

by a highly talented and diverse workforce exceeding

Healthcare announced it would build a $39.5 million, six-

985, 985,000 workers, 33 percent of whom have bachelor’s

story building in downtown Louisville that will consolidate

degr degrees.

several company operations, creating 500 new jobs.

L Portland, thirteenth-ranked “recession-busting” Like Louisville-Jefferson County (Kentucky) has focused on

BIG CITIES (population >600,000)

supporting and expanding its key business sectors of logistics, advanced manufacturing, food and beverage, and healthcare. In 2014, Kentucky reported 350 qualified

DENVER-AURORA-BROOMFIELD, COLORADO

location or expansion projects valued at $3.7 billion, which

The Denver-Aurora-Broomfield Metropolitan Statistical Area

are expected to create nearly 15,000 jobs. As one of the

(MSA) in Colorado has a current population of almost 2.7

top locations in the country for the rapidly growing lifelong

million. As of January 2015, the unemployment rate in

wellness and aging care sector, Louisville continues to

Denver was 4.6 percent, a reflection of the 46,200 jobs the

attract investment in this area. In December 2014, Kindred

city added in 2014. An additional 45,000 jobs are expected to be created in 2015, representing a 3 percent growth rate. All three cities have similar diverse economies, including

TOP 30 MID-SIZE CITIES CITY/MSA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Greeley Boulder Provo-Orem Fargo Fort Collins-Loveland College Station-Bryan Ann Arbor Naples-Marco Island Longview Corpus Christi Tyler Madison San Luis Obispo-Paso Robles Fort Wayne Des Moines-West Des Moines Elkhart-Goshen Canton-Massillon Sioux Falls Columbia Lincoln Peabody Durham-Chapel Hill Trenton-Ewing Asheville Greenville Lubbock Reno-Sparks Santa Rosa-Petaluma Kalamazoo-Portage St. Cloud

AREADEVELOPMENT

State CO CO UT ND-MN CO TX MI FL TX TX TX WI CA IN IA IN OH SD MO NE MA NC NJ NC NC TX NV CA MI MN

Rank within Leading Population Locations 252825 294567 526810 208777 299630 228660 344791 321520 214369 428185 209714 568593 269637 416257 569633 197559 404422 228261 172786 302157 246481 504357 366513 424858 189510 284890 425417 483878 326589 189093

4 9 15 19 20 27 30 33 34 37 40 45 46 47 50 51 52 53 58 63 64 66 68 69 72 75 76 78 79 81

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advanced manufacturing and other high-tech industries like aerospace, telecommunications, biotechnology, and clean energy. The Solar Technology Acceleration Center in Aurora is the largest test facility for solar technologies in the U.S. In fact, metropolitan Denver and the Northern Colorado corridor combined rank sixth in the country for clean-energy employment. Denver is also emerging as a financial services center. WorldRemit, a London-based financial services firm, recently announced it would open a North American headquarters and operations center in Denver. “Denver offers the perfect combination of a highly skilled workforce, supportive local authority, and idyllic location,” says WorldRemit CEO Ismail Ahmed. “The city is gaining a reputation as a go-to destination for the burgeoning financial-tech sector and stealing the thunder of New York and Silicon Valley.” Denver-Aurora-Broomfield, Colorado

strengths

• Knowledge-based industries play above-average role • Sturdy housing market; prices at a new peak • Rapidly improving migration and strong population growth • Highly skilled workforce • High employment diversity and low volatility

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Overall TOP 20 MID-SIZE CITIES –“Economic Strength” Economic Strength CITY/MSA

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Elkhart-Goshen Greeley Boulder Longview Corpus Christi Fort Collins-Loveland Fort Wayne Provo-Orem Canton-Massillon Naples-Marco Island Santa Rosa-Petaluma Fargo Madison College Station-Bryan Ogden-Clearfield Lake Charles San Luis Obispo-Paso Robles St. Cloud Ann Arbor Spartanburg

AREA0405.indd 1

State

IN CO CO TX TX CO IN UT OH FL CA ND-MN WI TX UT LA CA MN MI SC

Population 197559 252825 294567 214369 428185 299630 416257 526810 404422 321520 483878 208777 568593 228660 547184 199607 269637 189093 344791 284307

Rank 5 6 16 19 24 27 32 33 34 36 37 49 50 52 58 59 63 66 67 68

upside • Tourists continue to flock to

Denver and boost leisure/ hospitality employment more than expected

• Lower oil prices push faster real

consumer spending growth, providing a broad-based jolt to the economy

HOUSTON-SUGAR LAND-BAYTOWN, TEXAS Houston-Sugar Land-Baytown represents a current population of nearly 6.4 million people and shows steady population growth. Net migration in 2013 was 17,210 people. One reason for this in-migration is that the Houston area is a good place to find a job. Metro Houston created 120,600 jobs in 2014, a 4.2 percent

21/04/15 7:08 PM

AREA DEVELOPMENT | Q2/2015

Houston-Sugar Land-Baytown, Texas

strengths

TOP 20 MID-SIZE CITIES –“Prime Workforce” CITY/MSA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Tyler Columbia Ann Arbor Fargo Blacksburg-ChristiansburgRadford Provo-Orem Peabody Savannah Greeley Boulder Portland-South PortlandBiddeford College Station-Bryan Greenville Augusta-Richmond County Champaign-Urbana Bremerton-Silverdale Asheville Columbus Durham-Chapel Hill Kalamazoo-Portage

State

Overall Prime Workforce Population Rank

TX MO MI ND-MN VA

209714 172786 344791 208777 162958

2 5 6 9 11

UT MA GA CO CO ME

526810 246481 347611 252825 294567 357412

12 13 15 18 19 23

TX NC GA-SC IL WA NC GA-AL NC MI

228660 189510 556877 231891 251133 424858 294865 504357 326589

24 25 31 33 35 37 38 39 44

• Global leadership in oil and gas technology supports technical and professional service jobs

• Significant trade and export links, owing to location on Texas Gulf Coast

upside • Strong job and income growth boosts single-family construction faster than expected

• Improvement of distribution facilities boosts trade, transportation businesses

GRAND RAPIDS-WYOMING, MICHIGAN Total employment in the Grand Rapids-Wyoming MSA is projected to grow 3.2 percent in 2015, according to the W.E. Upjohn Institute for Employment Research. Total unemployment in the region has fallen to about 4.6 percent — a result of a resurgence in manufacturing, construction, and retail. In October 2014 Forbes.com ranked Grand RapidsWyoming fifth-best in the country for regional economic growth on a per capita basis from 2010 through 2013,

increase over the previous year, according to the U.S. Bureau of Labor Statistics — placing Houston third in the country for job creation.

TOP 20 MID-SIZE CITIES –“Year-Over-Year Growth” CITY/MSA

Key industries for job growth in the Houston-Sugar Land-Baytown MSA are energy, education, healthcare, professional and business services, transportation, utilities, construction, mining, and logging. Sugar Land continues to see big investments from a diverse range of industries. In 2014 the city announced projects totaling $89 million in capital investment that will create 2,304 new jobs. Top players in Sugar Land are Minute Maid, United Healthcare, Texas Instruments, Schlumberger, and Fluor Corporation. Petroleum and chemicals are especially important to the Baytown economy. In 2014 ExxonMobil Chemical Company announced it would build a multibillion-dollar ethane cracker in Baytown to provide ethylene feedstock for downstream chemical processing. It has committed $1 million to the Community College Petrochemical Initiative, a training program offered by nine Houston-area com community colleges, to help create its future workforce.

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Overall YearOver-Year Growth Population Rank

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Greeley Longview Boulder College Station-Bryan Beaumont-Port Arthur Fort Wayne Lake Charles Elkhart-Goshen Ann Arbor Fort Collins-Loveland Tyler Kalamazoo-Portage Corpus Christi Tuscaloosa Canton-Massillon Portland-South PortlandBiddeford Fargo Kennewick-Pasco-Richland Killeen-Temple-Fort Hood Laredo

State CO TX CO TX TX IN LA IN MI CO TX MI TX AL OH ME

252825 214369 294567 228660 388745 416257 199607 197559 344791 299630 209714 326589 428185 219461 404422 357412

1 3 8 11 12 16 28 32 33 35 36 38 40 41 42 48

ND-MN WA TX TX

208777 253340 405300 250304

50 52 53 59

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Overall TOP 20 MID-SIZE CITIES â&#x20AC;&#x201C;â&#x20AC;&#x153;Recession-Bustingâ&#x20AC;? RecessionBusting CITY/MSA

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

State

Greeley Provo-Orem Canton-Massillon Longview Spartanburg Elkhart-Goshen Naples-Marco Island Fort Wayne Corpus Christi Boulder Fargo Lake Charles Lafayette Fort Collins-Loveland Ann Arbor Merced Reno-Sparks College Station-Bryan Santa Rosa-Petaluma Columbia

CO UT OH TX SC IN FL IN TX CO ND-MN LA LA CO MI CA NV TX CA MO

Population 252825 526810 404422 214369 284307 197559 321520 416257 428185 294567 208777 199607 273738 299630 344791 255793 425417 228660 483878 172786

Rank 3 5 9 10 16 17 22 25 32 40 44 47 47 50 54 54 57 66 73 76

based on a study by the Bureau of Economic Analysis. At 7.8 percent, Grand Rapidsâ&#x20AC;&#x2122; per capita gross domestic product (GDP) growth rate (2010â&#x20AC;&#x201C;2013) more than doubled the national growth rate of 3.8 percent. Key industries are advanced manufacturing, life sciences, agribusiness, aerospace and defense, and information technology. With these productive science-based sectors, it is not surprising that Grand Rapids-Wyoming ranks 13 for science and engineering occupations as a percentage of total workforce. In 2014 Grand Rapids-Wyoming announced 22 projects totaling $315 million capital investment, creating 2,183 jobs. For example, Chinese auto supplier Dicastal North America decided to establish its first U.S. facility in nearby Greenville. The $140 million plant will hire 300 workers over the next four years to manufacture aluminum-alloy wheels. The company explored 35 sites in seven states before making its final decision.

SUGAR LAND.

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AREA0423.indd 1

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AREA DEVELOPMENT | Q2/2015

TOP 30 SMALL CITIES CITY/MSA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Columbus Midland Odessa Bend Bismarck Napa Dubuque Iowa City Casper Victoria Williamsport Elizabethtown Ithaca St. George Kokomo Bowling Green Mankato-North Mankato Coeur d’Alene Ames Auburn-Opelika Mount Vernon-Anacortes Logan Morgantown Billings State College Wheeling Sherman-Denison La Crosse Owensboro Niles-Benton Harbor

State IN TX TX OR ND CA IA IA WY TX PA KY NY UT IN KY MN ID IA AL WA UT-ID WV MT PA WV-OH TX WI-MN KY MI

Rank within Leading Population Locations 76794 136872 137130 157733 108779 136484 93653 152586 75450 115384 116111 119736 101564 138115 98688 125953 96740 138494 89542 140247 116901 125442 129709 158050 153990 147950 120877 133665 114752 156813

8 13 17 38 42 43 70 71 73 77 87 89 92 100 107 110 112 115 117 122 126 130 131 132 134 135 138 139 140 141

MID-SIZE CITIES (population 160,000-600,000) GREELEY, COLORADO Greeley is the second-largest city in northern Colorado and operates as a major retail trade center for agricultural producers in Wyoming, Nebraska, and Colorado. The market value of agricultural products for Greeley and surrounding Weld County is about $1.5 billion annually. Greeley is also in the heart of Colorado oil country — its second key industry. Food processing, construction, and retail are also on the rise. Major companies are State Farm, Noble Energy, and JB USA — the biggest producer of meat protein in the world. According to statistics cited in the June 2014 “U.S. Metro Economies” by the U.S. Conference of Mayors, Greeley was ranked as one of the leading cities for future economic growth — about 4.8 percent — almost twice that of the U.S. Investment continues in agriculture and energy. Leprino Foods, a producer of mozzarella cheese, is constructing an 800,000-square-foot plant that will employ 500 people. The company’s milk needs will boost the local dairy herd population by 60,000 animals. When it comes to energy, Weld County has more oil and gas well permits than any other county in Colorado. The wide-open plains around Greeley are ideal for generating wind energy. To keep up with increased demand for wind turbines, local turbine manufacturer Vestas is hiring 400 new workers to expand production at its Windsor facility, just a few miles from Greeley.

Grand Rapids-Wyoming, Michigan

strengths

Greeley, Colorado

• Growing biotech and healthcare center • Many economic development initiatives and

strengths • Strong manufacturing base with exposure to relatively noncyclical

• Diverse manufacturing base, including technologically advanced

• Strong population growth and a large working-age population

upside

• Cheaper energy boosts growth in non-oil–related industries more

food manufacturing

pro-business environment companies

• Population growth exceeds expectations as the booming downtown

upside than expected, buoying the economy

helps retain more college graduates

• Better than expected life science investment fuels faster income gro growth; consumer industries benefit

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BOULDER, COLORADO For just over 100,000 residents, Boulder packs a powerful

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

Overall TOP 20 SMALL CITIES –“Economic Strength” Economic Strength CITY/MSA

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

State

Odessa Midland Victoria Columbus Kokomo Napa Mankato-North Mankato Bismarck Iowa City Bowling Green Billings Battle Creek Coeur d’Alene St. George Casper Sherman-Denison Williamsport Bend Dubuque Monroe

TX TX TX IN IN CA MN ND IA KY MT MI ID UT WY TX PA OR IA MI

Population 137130 136872 115384 76794 98688 136484 96740 108779 152586 125953 158050 136146 138494 138115 75450 120877 116111 157733 93653 152021

Rank

7 11 13 40 50 55 60 70 75 85 91 93 94 100 102 105 109 111 117 122

economic punch. Key sectors are aerospace, bioscience, cience, ih clean tech, information technology, and software. With the University of Colorado-Boulder, a top research university, and 17 federally funded research laboratories, Boulder has a reputation for innovation and scientific leadership. Leading companies in Boulder that draw from the ranks of skilled graduating students include Google, IBM, Ball Aerospace, Lockheed Martin, Medtronic/Covidien, and Micro Motion. As a result, Boulder is home to one of the most highly educated and entrepreneurial populations in the country. A February 2015 study by NerdWallet showed that Boulder had the highest density of startups among the cities it studied. According to the PricewaterhouseCoopers/ National Venture Capital Association (NVCA) MoneyTree Report™, over the past five years more than $850 million has been invested in Boulder companies, representing more than

PU T US ON YOU R R A DA R !

Together with our private-business and public-sector partners, we are

Chamber of Business & Industry of Centre County

AREA0438.indd 1

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AREA DEVELOPMENT | Q2/2015

Overall Prime TOP 20 SMALL-SIZE CITIES –“Prime Workforce”Workforce 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

CITY/MSA

State

Columbus Lawton Bend Hinesville-Fort Stewart State College Fairbanks Flagstaff Pocatello Niles-Benton Harbor Ithaca Auburn-Opelika Bismarck Morgantown Dubuque Logan Great Falls Cape Girardeau-Jackson Sumter Bangor Elizabethtown

IN OK OR GA PA AK AZ ID MI NY AL ND WV IA UT-ID MT MO-IL SC ME KY

Population

Rank

76794 124098 157733 77917 153990 97581 134421 90656 156813 101564 140247 108779 129709 93653 125442 81327 96275 107456 135632 119736

Therefore, it is not surprising that Provo-Orem has

1 3 4 7 17 19 21 27 28 34 39 41 43 48 49 51 57 58 60 64

an outstanding high-tech reputation. A number of global IT companies, including Novell, WordPerfect, and PowerQuest, originated in Provo-Orem. Provo was listed as the second-best performing city in the U.S. in 2013 by the Milken Institute and was ranked a top city for IT job growth by NewGeography.com in 2014. Skilled scientists and engineers graduate into the MSA’s workforce every year from Brigham Young University and Utah Valley University. The Associated Press recently ranked Provo-Orem eighth in the nation for venture money invested in tech startups during the first nine months of 2014. However, Provo-Orem scored first for average dollars per deal — $51.3 million, almost three times more than the numbertwo city (San Francisco) at $18.4 million per deal.

Provo-Orem, Utah

strengths • Large, dynamic high-tech industry • Stable employment and research spillovers from Brigham Young

one quarter of the total venture capital investment in Colorado firms. And so far that momentum has carried over into 2015 —

University

• Strong population growth and high educational attainment • Low business costs

five of the 23 venture capital deals in Colorado during the first quarter of 2015 involve Boulder companies, totaling $28 million.

Overall

Boulder, Colorado

strengths • Several emerging growth industries • Extremely high educational attainment and above-average per capita income

• Strong house price appreciation and superior consumer credit quality

upside • Construction employment receives stronger than expected lift as homebuilding accelerates and infrastructure is expanded

• Venture capital inflows foster stronger IT job growth, generating outsized job and income gains

PROVO-OREM, UTAH The Provo-Orem MSA has a population of more than 500,000 people and one of the youngest workforces in the country. It also has an enviably low unemployment rate of about 3 percent. Provo is home to Brigham Young University — one of the country’s top universities for spinning off startup companies from innovative university research.

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YearTOP 20 SMALL CITIES –“Year-Over-Year Growth”Over-Year Growth CITY/MSA

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Williamsport Midland Odessa Columbus Coeur d’Alene Bowling Green Jonesboro Mankato-North Mankato Sherman-Denison Victoria Bismarck Lewiston-Auburn Wheeling Billings Napa Owensboro Pocatello Battle Creek Harrisonburg Elizabethtown

State

PA TX TX IN ID KY AR MN TX TX ND ME WV-OH MT CA KY ID MI VA KY

Population 116111 136872 137130 76794 138494 125953 121026 96740 120877 115384 108779 106216 147950 158050 136484 114752 90656 136146 125228 119736

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

Rank

13 15 26 45 49 61 62 65 70 72 86 86 93 95 99 105 107 112 113 116

upside

Forge Group, a manufacturer of

• Faster than expected household formation leads to stronger housing

critical safety-forged components

demand, higher prices, and more construction

• Demand for locally produced flash memory chips strengthens more than expected

• Low costs and high educational attainment attract new industries

for the automotive industry, will spend $7.5 million to expand its 138,000-square-foot Columbus production center.

SMALL CITIES (population <160,000) COLUMBUS, INDIANA Columbus recently experienced its fifth straight year of economic growth in 2014. Nominal GDP, employment, labor force, and income continue to improve. Job growth in 2014 was 4.1 percent, placing Columbus 14th out of 363 MSAs in the U.S. The Columbus economy is driven by manufacturing — in fact, nearly 40 percent of the local employment is manufacturing-related. Automotive is the key industry. Cummins, Enkei, PMG, Faurecia, and other automotive-related

Why Columbus, Indiana is the #1 Location in the U.S.

firms operate in the area, including top tier-1 and tier-2 suppliers. To support other advanced manufacturing industries, the Advanced Manufacturing Center of Excellence, a 43,000-square-

Three times the national average for engineers and more mechanical engineers per worker than any metro. Home to leading North American R&D Centers and one Fortune 200 Global Headquarters. Nationally ranked amenities and project-based STEM education programming in Grades K-16.

foot facility shared by several local universities and colleges, opened in 2012. The center aims to facilitate collaboration between industry and academia to develop training in topics such as materials and heat treatment,

Surprised that Columbus, Indiana is consistently ranked one of the top locations in the U.S.? Now is a great time to take a closer look at the unexpected opportunities this unforgettable community has to offer.

mechanical engineering/mechatronics, and robotics. As a result of this proactive support, manufacturers continue to invest in Columbus. For example, Sunright America, North America’s largest manufacturer of metal fasteners, recently completed a $34.6 million expansion.

columbusIN.org | 812-378-7300

In another expansion move, Impact

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TOP 20 SMALL CITIES–“Recession Busting” CITY/MSA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Odessa Columbus Casper Williamsport Elizabethtown Midland Bend Battle Creek Bismarck Springfield Napa Coeur d’Alene Kokomo Owensboro Victoria Iowa City Dubuque Cleveland St. George Fond du Lac

State TX IN WY PA KY TX OR MI ND OH CA ID IN KY TX IA IA TN UT WI

Overall RecessionBusting Population Rank 137130 76794 75450 116111 119736 136872 157733 136146 108779 138333 136484 138494 98688 114752 115384 152586 93653 115788 138115 101633

1 7 18 24 34 35 47 59 61 62 67 68 69 71 74 88 98 99 103 106

Columbus, Indiana

strengths • Strong manufacturing base with exposure to global markets • Stable housing market with low foreclosure activity • High affordability for residents and businesses

upside • Rising educational attainment attracts business investment • Sturdy job market induces more residents to relocate to the metro area

• Strong employment growth spurs better than expected inmigration

MIDLAND, TEXAS In 2013 the Milken Institute ranked Midland the fifth-bestperforming small city in the U.S., with top-place finishes for five-year job growth and wages and salaries growth. In its “U.S. Metro Economies GMP and Employment Report for 2014,” the U.S. Conference of Mayors ranked Midland first for projected annual growth by 2020 — a whopping 7 percent. Currently the unemployment rate is about 3.7 percent.

TOP 5 NEW ENGLAND CITIES CITY/MSA 1 2 3 4 5

State

Boston-Cambridge-Quincy MA Peabody MA Portland-South Portland-Biddeford ME Bridgeport-Stamford-Norwalk) CT Providence-Fall River-Warwick RI-MA

Rank within Leading Population Locations 2863943 246481 357412 926545 1600852

25 64 84 120 121

Midland’s dominant industry is oil and gas, which is experiencing a significant slowdown — Midland lost 300 oil jobs from February to March 2015. However, strong performances by manufacturing, hospitality, and other business services sectors helped offset these losses — from March 2014 to March 2015, Midland added 7,100 new jobs. Midland continues to diversify its economy with the

Analysis

Technology, Energy Dominate the Top Rankings

By Jim Eskew,

SENIOR VICE PRESIDENT,

JLL

A look at the top 20 or so markets in the 2015 “Leading Locations” reveals the dominance of two significant sectors, technology and energy, in propelling a number of top-ranked communities to economic success. And, as in last year’s report, some locations have found success with one or two other distinct industries that continue to thrive. Manufacturing industries are driving economic growth in a number of Leading Locations. Top-20 “Recession-Busting” Elkhart, Ind., for example, continues to be the U.S.’s recreational vehicle and musical instrument manufacturing capital. Grand Rapids, Mich., third in the “Overall” ranking, has rebounded from the global financial recession on the strength of furniture, plastics, auto parts, and other types of manufacturing. Nine of the top 15 locations in the “Overall” ranking have dominant, thriving technology sectors, illustrating that the technology industry is not just in Silicon Valley these days. Austin has moved up the “Overall” rankings from 15 to 10, while Boulder moved up from 30 to 9. Not surprisingly, five of the top 20 “Overall” top locations have energy-driven economies. All bets are off as to whether energy prices will remain low and undercut their economic growth. White-collar industries also provide a path to success. The professional services sector has driven the growth of top-20 “Economic Strength” contender Charlotte, N.C., for instance, while tourism drives Orlando, Fla. Dallas, Denver, and Salt Lake City — all in the top-15 “Overall” locations — are good examples of healthy, diversified economies with corporate appeal. 94

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addition of aerospace. The Midland airport received a spaceport

in about 23,000 new jobs. Even with the current low oil

license in September 2014 and is now officially the Midland

prices, the March 2015 OEI is still 7.5 percent higher than it

International Air and Space Port. Tenants include XCOR

was a year ago.

Aerospace and Orbital Outfitters, a space suit manufacturing

The analysts behind the Odessa Economic Index

company. In October 2014, Orbital Outfitters started construction

believe that oil prices will almost certainly recover and

on its new test, manufacturing, and headquarters facility.

again drive the Odessa economy. In the meantime, both

“We couldn’t have gotten here without the support of the Midland community and city leaders,” says Jeff Feige, CEO of

consumer activity and outside income remained strong in 2014, especially hotel-motel tax collections. The housing

Orbital Outfitters. “The city of Midland has welcomed us with open arms, and we just can’t wait to get this facility up and running.”

Midland, Texas

strengths • Vast amounts of recoverable oil and natural gas

• High birth rate and strong in-migration • Low business costs, especially office rents

upside • Downtown redevelopment leads to more non-energy jobs and a more diverse economy

• Population growth surprises to the upside, and consumer-related industries impress

Odessa, Texas, has experienced the fastest growth in the country from 2010, 15.2 percent - US Department of Commerce

ODESSA, TEXAS Located in the heart of the Permian Basin in Texas, Odessa is a long-

#2 Metropolitan Statistical Area in America for Best Job Growth - Forbes Magazine

established center of oil and gas activity, with a well-established network of producers and suppliers.

#2 city for Economic Growth - Business Insider

The current drop in energy prices has slowed production and caused slight attrition of the workforce. Other top

Odessa, Texas

employers in the city are Saulsbury Industries (electrical/construction), Odessa Regional Medical Center, and Investment Corporation of America (financial). Odessa has enjoyed continuous economic growth from 2010 to 2015. Over that five-year time period, the

Now more than ever, Odessa is the right place in Texas for your business. With abundant energy, Odessa has the infrastructure, workforce and environment to assure your company succeeds. Use your imagination and make Odessa home. A vibrant, energetic city in West Texas where the sky, literally, is the only limit. Visit odessatex.com to learn more about Odessa, Texas.

Odessa Economic Index (OEI) has expanded by 67 percent, averaging more than 13 percent per year, resulting

AREA0425.indd 1

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AREA DEVELOPMENT | Q2/2015

09/05/15 7:38 PM

TOP 5 PLAINS CITIES CITY/MSA 1 2 3 4 5

State

Fargo Bismarck Sioux Falls Lincoln Omaha-Council Bluffs

ND-MN ND SD NE NE-IA

TOP 10 MID-ATLANTIC CITIES CITY/MSA 1 2 3 4 5 6 6 8

Albany-Schenectady-Troy Trenton-Ewing Williamsport New York-White Plains-Wayne Ithaca Wilmington Pittsburgh Washington-ArlingtonAlexandria 9 Erie 10 State College

State

Rank within Leading Population Locations 208777 108779 228261 302157 865350

Rank within Leading Population Locations

NY 870716 NJ 366513 PA 116111 NY-NJ 11576251 NY 101564 DE-MD-NJ 705670 PA 2356285 DC-VA- 4377008 MD-WV PA 280566 PA 153990

TOP 10 SOUTHERN CITIES CITY/MSA

State

1 Louisville-Jefferson County KY-IN 2 Nashville-Davidson-MurfreesboroTN Franklin 3 Baton Rouge LA 4 Elizabethtown KY 5 Lexington-Fayette KY 6 Lake Charles LA 7 Bowling Green KY 8 Auburn-Opelika AL 9 Birmingham-Hoover AL 10 Fayetteville-Springdale-Rogers AR-MO

19 42 53 63 142

65 68 87 88 92 93 99 101 133 134

Rank within Leading Population Locations 1283566 1589934

22 24

802484 119736 472099 199607 125953 140247 1128047 463204

62 89 98 106 110 122 123 125

The “Strengths” and “Upside” bullet points for each of the nine profiled MSAs were taken from Moody’s Analytics U.S. Précis® Metro reports (www.economy.com/precis), which offer concise analysis and data on the current and expected economic conditions for all U.S. metropolitan areas. Each three-page report covers an individual metro area and includes a five-year forecast from Moody’s Analytics’ simultaneous econometric model, which is updated monthly. Forecasts of key indicators that drive metro area economies include Gross Metro Product (GMP), industry diversity, employment, personal income, population, housing activity, migration flows, and personal bankruptcies. Moody’s Analytics’ exclusive indicators — including cost of doing business, cost of living, risk-adjusted return, and short- and long-term employment growth — allow for quick and easy comparisons across metro areas.

and construction markets are also fairly steady. Other key economic sectors for Odessa are logistics and distribution and manufacturing. The city continues to upgrade and expand its industrial park and invest in workforce training programs. Odessa is also exploring ways to diversify its economy, including bringing in more advanced manufacturing companies, as well as clean-energy projects that include wind, clean coal, and nuclear energy.

TOP 10 MOUNTAIN CITIES CITY/MSA 1 2 3 4 5 6 7 8 9 10

Denver-Aurora-Broomfield Greeley Boulder Boise City-Nampa Salt Lake City Provo-Orem Fort Collins-Loveland Las Vegas-Paradise Casper Reno-Sparks

AREADEVELOPMENT

State CO CO CO ID UT UT CO NV WY NV

Rank within Leading Population Locations 2543482 252825 294567 616561 1124197 526810 299630 1951269 75450 425417

1 4 9 12 14 15 20 55 73 76

FOR FREE SITE INFORMATION, CALL

Odessa, Texas

strengths • Vast amounts of recoverable oil and natural gas • High birthrate and strong in-migration • Improving quality of workforce • Superior credit quality

upside • Population growth surprises to the upside, and consumerrelated industries impress

• Expansion of wind energy reduces volatility *****

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

Sponsors INDIANA COLUMBUS ECONOMIC DEVELOPMENT BOARD Columbus, Indiana, is known for its manufacturing prowess, engineering strengths, and world-renowned architecture. Highly advanced, durable goods manufacturing drives the local economy, ranking the county in the top 2% of the U.S. for manufacturing employment. Information on corporate relocations and expansions by Cummins, Toyota, PMG, and more is at www.ColumbusIN.org. Jason Hester, CEcD, Executive Director Columbus Economic Development Board 500 Franklin Street Columbus, IN 47201 812-378-7300 • Fax: 812-372-6756 jhester@columbusin.org w w w. C o l u m b u s I N . o r g

NEW JERSEY MERCER COUNTY As New Jersey’s capital county, Mercer County is a center for commerce and culture in the Garden State. Located midway between New York City and Philadelphia, Mercer County’s 12 municipalities are home to more than 366,000 people in 226 square miles. Brian M. Hughes, County Executive Elizabeth M. Muoio, Director Mercer County, New Jersey Office of Economic Development and Sustainability McDade Administration Building 640 South Broad Street, Room 504 Trenton, NJ 08650 609-989-6555 b u s i n e s s a d v o c a t e @ m e rc e rc o u n t y. o r g w w w. b u s i n e s s i n m e rc e r. c o m

TOP 20 SOUTH ATLANTIC CITIES CITY/MSA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

State

Orlando-Kissimmee-Sanford FL Jacksonville FL Naples-Marco Island FL North Port-Bradenton-Sarasota FL Charlotte-Gastonia-Rock Hill NC-SC Raleigh-Cary NC Charleston-North CharlestonSC Summerville Atlanta-Sandy Springs-Marietta GA Durham-Chapel Hill NC West Palm Beach-Boca FL Raton-Boynton Beach Asheville NC Greenville NC Fort Lauderdale-Pompano BeachFL Deerfield Beach Richmond VA Miami-Miami Beach-Kendall FL Blacksburg-Christiansburg-Radford VA Myrtle BeachSC North Myrtle Beach-Conway Spartanburg SC Savannah GA Tampa-St. PetersburgFL Clearwater

Rank within Leading Population Locations 2134411 1345596 321520 702281 1758038 1130490 664607

18 26 33 39 41 49 59

5268860 504357 1320134

60 66 66

424858 189510 1748066

69 72 74

1258251 2496435 162958 269291

85 97 104 108

284307 347611 2783243

109 111 113

PENNSYLVANIA CHAMBER OF BUSINESS & INDUSTRY OF CENTRE COUNTY (CBICC) Centre County boosts a flourishing high-tech business sector and a thriving job market. A strong support ecosystem for entrepreneurship and business startups makes the area the ideal location to turn innovative ideas into commercial success. A central location and proximity to major transportation corridors add to the benefits of conducting business in Centre County. The CBICC is a valuable resource for information about development opportunities within the region. Vern Squier, CEO Centre County Industrial Development 200 Innovation Boulevard,Suite 150 State College, PA 16803 814-234-1829 vern@cbicc.org w w w. c b i c c . o r g

TEXAS CITY OF ARLINGTON OFFICE OF ECONOMIC DEVELOPMENT Arlington is located at the epicenter of the thriving North Texas region — one of the top economic engines in the world. Beyond our worldclass entertainment is the backbone of our city: economic vitality, a competitive business environment, and a skilled workforce. Learn why Arlington is among Area Development’s 100 leading locations. Bruce C. Payne, Economic Development Manager City of Arlington Office of Economic Development 101 W. Abram Street Arlington, TX 76010 817-459-6155 ecodev@arlingtontx.gov w w w. a r l i n g t o n t x . g o v / e c o d e v

TOP 20 MIDWEST CITIES CITY/MSA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

State

Rank within Leading Population Locations

Grand Rapids-Wyoming MI 774160 Columbus IN 76794 Cincinnati-Middletown OH-KY-IN 2130151 Ann Arbor MI 344791 Chicago-Joliet-Naperville IL 7883147 Minneapolis-St. Paul-Bloomington MN-WI 3279833 Warren-Troy-Farmington Hills MI 2475666 Madison WI 568593 Fort Wayne IN 416257 Indianapolis-Carmel IN 1756241 Des Moines-West Des Moines IA 569633 Elkhart-Goshen IN 197559 Canton-Massillon OH 404422 Lake County-Kenosha County IL-WI 869888 Columbia MO 172786 Columbus OH 1836536 Dubuque IA 93653 Iowa City IA 152586 Kalamazoo-Portage MI 326589 St. Cloud MN 189093

3 8 29 30 35 35 44 45 47 48 50 51 52 54 58 61 70 71 79 81

AREA DEVELOPMENT | Q2/2015

SPECIAL REPORT

GREATER CONROE ECONOMIC DEVELOPMENT COUNCIL Located within the Houston/Sugarland/Woodlands MSA, Conroe is the county seat of Montgomery County, Texas, which is one of the 10-fastest growing counties in the U.S. Conroe serves a labor shed of nearly 225,000 within a 30-minute drive. Close to the Port of Houston and Houston Airport System’s international gateway, we are a growing community with excellence in advanced manufacturing, distribution, and office and professional services.

TOP 15 SOUTHWEST CITIES CITY/MSA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Houston-Sugar Land-Baytown Austin-Round Rock-San Marcos Dallas-Plano-Irving Midland Fort Worth-Arlington Odessa College Station-Bryan Oklahoma City Longview Corpus Christi Tyler Tulsa Lubbock Victoria San Antonio-New Braunfels

State TX TX TX TX TX TX TX OK TX TX TX OK TX TX TX

TOP 15 PACIFIC CITIES CITY/MSA

State

1 San Francisco-San MateoCA Redwood City 2 San Jose-Sunnyvale-Santa Clara CA 3 Seattle-Bellevue-Everett WA 4 Oakland-Fremont-Hayward CA 5 Portland-Vancouver-Hillsboro OR-WA 6 Santa Ana-Anaheim-Irvine CA 7 San Diego-Carlsbad-San Marcos CA 8 Bend OR 9 Napa CA 10 San Luis Obispo-Paso Robles CA 11 Sacramento-Arden-Arcade-Roseville CA 12 Santa Rosa-Petaluma CA 13 Los Angeles-Long Beach-Glendale CA 14 Bakersfield-Delano CA 15 Honolulu HI

AREADEVELOPMENT

Rank within Leading Population Locations 5946800 1716289 4235751 136872 2136022 137130 228660 1252987 214369 428185 209714 937478 284890 115384 2142508

2 10 11 13 16 17 27 31 34 37 40 56 75 77 80

1836911 2644584 2559296 2226009 3010232 3095313 157733 136484 269637 2149127 483878 9818605 839631 953207

6 7 21 23 28 32 38 43 46 57 78 86 90 95

FOR FREE SITE INFORMATION, CALL

GREENSPOINT DISTRICT Houston’s Greenspoint District is strategically positioned and globally connected, providing domestic and international companies a convenient and cost-effective area to locate their business, as well as access to a highly trained workforce. The District’s proximity to the Gulf of Mexico and central U.S. location cut days and dollars in the movement of products and supplies. These benefits have attracted a diverse mix of companies to Greenspoint. Regina Lindsey Chief Development Officer & Vice President Greenspoint District 16945 Northchase, Suite 1900 Houston, TX 77060 2 8 1 - 8 7 4 - 2 1 3 1 ( O ff i c e ) • 2 8 1 - 8 7 4 - 2 1 3 7 ( D i re c t ) 281-874-2151 (Fax) r l i n d s e y @ g re e n s p o i n t . o r g w w w. g re e n s p o i n t . o r g LONGVIEW ECONOMIC DEVELOPMENT CORPORATION Longview is a thriving community located in Northeast Texas, along I-20, two hours east of Dallas and one hour west of Shreveport, Louisiana. Longview is the center of economic activity for a significant part of Northeast Texas. As our nickname implies, the “Piney Woods” is known for its abundant trees and water. Cultural, career, and educational opportunities provide a wonderful place for families and businesses to grow.

Rank within Leading Population Locations 1776095

Fred Welch, Executive Director Greater Conroe Economic Development Council 501 West Davis Street Conroe, TX 77301 936-522-3014 • Fax: 936-756-6162 welch@gcedc.org w w w. g c e d c . o r g

Susan Mazarakes-Gill, CEcD, Executive Director Longview Economic Development Corporation 410 N Center St. Longview, TX 75601 903-753-7878 • Fax: 903-753-3646 Info@LongviewUSA.com w w w. L o n g v i e w U S A . c o m LUBBOCK ECONOMIC DEVELOPMENT ALLIANCE Lubbock’s highly skilled and educated workforce, proximity and connection to major national and international markets, and affordable utility and living costs make it the ideal place to grow your business. Known as the “Hub City” of West Texas, our diverse economy is based on manufacturing, agriculture, wholesale and retail trade services, as well as government, education, and healthcare. Mike Hatley, Director of Business Recruitment Lubbock Economic Development Alliance 1500 Broadway Lubbock, TX 79401 800-687-5330 mike.hatley@lubbockeda.org w w w. l u b b o c k e d a . o r g

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

ODESSA ECONOMIC DEVELOPMENT CORPORATION Odessa, Texas, is located in West Texas, where government works for business in an extremely favorable climate. As the center of energy generation, we offer low-cost electricity rates, Freeport exemptions, along with job-creation and property-tax incentives through our Type A economic development sales tax revenues. Odessa has the competitive edge when it comes to working with new businesses that want to make West Texas their new home.

Jennifer May, Director of Economic Development City of Sugar Land Office of Economic Development 2700 Town Center Blvd. North Sugar Land, TX 77479 281-275-2229 Fax: 281-275-2217 jm a y @ s u g a r l a n d t x . g o v ecodev@sugarlandtx.gov h t t p : / / w w w. s u g a r l a n d e c o d e v. c o m /

Scott Jones, Director of Economic Development Odessa Economic Development Corporation 700 North Grant, Suite 200 Odessa, TX 79761 432-333-7880 • Fax: 432-333-7858 i n f o @ o d e s s a e c o d e v. c o m http://odessatex.com/ PLANO ECONOMIC DEVELOPMENT A Plano location provides companies with workforce talent, a competitive business climate, world-class business parks, and superior accessibility. A 30-minute drive to DFW International Airport (world’s third-busiest) and a Central Time Zone location provide quick access to both U.S. coasts and direct flights to international destinations. Sally Bane, Executive Director, Plano Economic Development 5601 Granite Parkway, Ste. 310 Plano, TX 75024 972-208-8300 sallyb@plano.gov w w w. p l a n o t e x a s . o r g SAN ANTONIO ECONOMIC DEVELOPMENT FOUNDATION San Antonio, Texas, America’s new “Capitol of Influence” (Forbes), is recognized for its diverse and skilled workforce, central location, and rich culture. It offers a “Culture of Business” that supports industry sectors including advanced manufacturing, aerospace, bioscience, alternative energy, IT, and the second-largest federal cyber community in the nation. Tom Long, Executive Vice President of Business Recruitment San Antonio Economic Development Foundation 602 E. Commerce St. San Antonio, TX 78205 210-226-1394 tlong@sanantonioedf.com w w w. s a n a n t o n i o e d f . c o m CITY OF SUGAR LAND Located 20 miles southwest of Houston, the City of Sugar Land is a master planned community and home to numerous high-profile regional and international corporations. Sugar Land has an aggressive incentive program, a luxury corporate airport with U.S. Customs, and one of the lowest tax rates in Texas.

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LOCATION ANALYSIS

Real Estate Executives Make Their Mark Headquarters decisions underscore the important role of real estate in a company’s long-term vision. By Brian Cohen, Senior Vice President, Transwestern

A Long-Term Decision

E MPL OYEE C OM M U T E IMPACT ANALYS I S Disribution of employees by drive time category 35%

CURRENT COMMUTE PATTERN (FINANCIAL DISTRICT)

ALTERNATE COMMUTE (SUBMARKET A)

ALTERNATE COMMUTE (SUBMARKET B)

30%

% OF EMPLOYEES

25%

20%

15%

10%

0-10

11-20

21-30

31-40

COMMUTE TIME IN MINUTES

41-50

51+

Source: Transwestern

eadquarters location decisions present companies an opportunity to realign the corporate “home base” with current strategic and operational objectives. They also can be a catalyst for management to facilitate change and move an organization forward based on their vision for the future. These decisions are high-value, high-profile events that put corporate real estate executives in a position to advance the organization. The manner in which a commercial real estate executive approaches a headquarters decision depends on the specific needs of the company, but

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general keys to success include seeking input upfront from stakeholders (HR, finance, operations, management, etc.) to create a repository of relevant information, as well as a sense of ownership in the decision process; identifying the issues that matter most to the organization and focusing the team’s energy and resources on these concerns; applying quantitative techniques wherever possible, which helps diffuse political agendas, while expediting and simplifying the decision process; and documenting the process in a strong business case that supports the recommended real estate solution. FOR FREE SITE INFORMATION, CALL

Since it is not unusual for a company to occupy a headquarters facility for 10 years or more, a variety of considerations need to be addressed: • What is the optimal location? • What are the space requirements near- and long-term? • What level of quality and amenities match the image the company wants its headquarters to convey to employees, clients, and shareholders? • What is the likely occupancy duration and what degree of flexibility is needed for extension, expansion, contraction, or termination? • What type of work environment will maximize productivity and effectiveness? • And last but not least, what transaction structure makes the most sense, and what will be its financial impact? In addition, a clear understanding of the company’s strategic plan, key measures of success, and risk factors should be used to drive the decision. A fundamental first step is awareness of how the company competes in the marketplace. Does it compete on cost, service, innovation, speed-to-market, or some other competitive advantage? In many cases, the real estate decision variables described above can play a role in supporting and strengthening this competitive advantage.

800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

How Much Space Do We Need? Commonly asked by stakeholders at the outset of a headquarters decision process, the chief financial officer, who is charged with financial stewardship of the firm’s resources, and the chief operations officer, who is charged with execution, may have very different answers to this question. So how does the company’s commercial real estate team offer an objective, analytical approach to help all stakeholders agree on size and level of flexibility for future growth or contraction? One way is to model growth by using historical growth data and year-over-year volatility to determine expected future growth, Source: Transwestern along with high and low estimates. This approach helps size the facility for the “most likely” or “average” growth scenario and enhances understanding of potential future expansion and contraction needs. Other techniques that can be effective are using company revenue projections or broader economic projections (such as the growth rate of the subject industry) as starting points for forecast development. For companies in acquisition mode, it is helpful to develop scenarios that incorporate potential future acquisitions based on an understanding of how acquisitions are integrated and how they impact space needs. It also is important to consider shifts in the way the organization’s workplace will evolve in the future, as many companies are shifting to denser and more agile workplace environments, which can decrease overall space requirements.

Selecting a Location Location preferences can be rooted in a number of business issues, but the most common are access to employees; access to customers, suppliers, or partners; and a desire to take advantage of cost differences between regions. One tradeoff that companies commonly consider is the willingness to accept a higher cost structure in order to locate near a highly skilled workforce. An example of this tradeoff can be found in the experience of one leading Bay Area software developer, which is always seeking to hire the brightest programmers and most creative designers to compete successfully within its niche. As the company analyzed the implications of a move to Sacramento, California, it realized that it could save $8.00 per square foot annually on occupancy costs (22 percent savings) and $13,000 per employee annually in labor costs (16 percent savings). While a move to Sacramento could lower the company’s cost structure and boost earnings, it might also undercut the company’s competitive advantage and destroy its position as a market leader. After sizing up the potential

cost savings associated with such a move, the company dismissed this option. When human capital is at issue, the location analysis tends to zero-in on demographics, industry concentration/ clustering, and employee recruitment and retention. Analysis of these factors may focus on the labor needs of the company as a whole or on specific segments of the company’s work force. For example, a labor force distribution map is used to illustrate the distribution of the labor force across a region, providing an overall sense of the density of the labor pool to support the company’s general recruitment needs, without regard to specific/niche skill sets that may be required. By contrast, a city-by-city industry cluster analysis is used when comparing alternative locations in cases where industry-specific skill sets are required to support the operation. In these cases, analysis of industry size, concentration, and growth patterns are critical to success. Examples include pharmaceutical research and development personnel, software engineers, and experienced insurance underwriters. An existing employee demographics map shows where the existing workforce lives, giving the team a sense of which locations will minimize commute-related impacts and attrition. A commute disruption analysis takes employee demographics a bit further, providing a quantitative look at specific locations that are pre-determined by the team.

“Location Drivers” Can Differ by Function When a headquarters facility contains different functions and management has no desire to split functions into separate facilities, companies may be forced to make informed tradeoffs during the location process. Consider the case of an international textiles company seeking its first U.S. site. In addition to using the location as its U.S. headquarters, the facility would also function as a AREA DEVELOPMENT | Q2/2015

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U Z A E , SI RUCT IA IN V N SE TIO ST ER

manufacturing and distribution center. As might be expected, the location criteria were very different for the headquarters versus the manufacturing/distribution components of the operation. The manufacturing/distribution component of the decision was driven by the cost of manufacturing (labor, utilities, etc.) and distribution (inbound and outbound transportation) for raw materials and finished goods. Also at issue were the availability of water resources for the manufacturing process and access to a textiles-oriented labor force. The lowest-cost location was identified using a network optimization model, a mathematical tool that identifies the location with the optimal cost structure based on transportation costs, production costs, customer service levels, and other variables. Locations that performed well from a cost and customer service standpoint were then screened for labor supply and water availability. The headquarters component of the decision was driven by a desire to focus on business development. The company wanted to use the headquarters facility to showcase its technology and products so it needed to be easily accessible for existing and future customers. The optimal location for access to customers was identified with a mathematical model that weighted all current and potential future customers based on order volume. The model used actual order history for current customers and a management list of targeted future customers and their anticipated future order volume. In addition to analyzing weighted distance from key customers and prospects, airport accessibility from specific major cities was included as part of the decision criteria. In this case, the optimal location from a business development and customer relationship standpoint was in the Northeast, while the optimal location from a manufacturing/distribution standpoint was in the Southeast region. Ultimately, management had to weigh the tradeoff of producing a lower-cost product in the Southeast versus producing a higher-cost product closer to customers in the Northeast. The company chose the former and dealt with the customer access issue by locating near a major city with an international airport. AREADEVELOPMENT

Economics: The Common Thread

Economics play a leading role in most headquarters location decisions; therefore, it is critical to prioritize the financial drivers that will impact decision-making. Is minimizing the cash net present value (NPV) the primary financial objective? Or is minimizing profit and loss impact more important? Is the company interested in capital conservation to the point that it would accept a higher recurring rent structure in order to avoid a nearterm capital outlay? Are there financial constraints that must be honored for the company to stay in compliance with existing debt covenants? Understanding the answers to these questions enables the team to tailor the analysis to the specific information needed by company management. If a company is considering multiple states or regions for its headquarters location, it makes sense to start with a regional location analysis, which compares the major costs of doing business in one region versus another. This analysis will employ average lease or purchase rates as a basis for modeling occupancy costs (rather than specific real estate opportunities) and will include all of the locationspecific costs that impact the company’s cost structure, offset by economic incentives negotiated with state and local authorities. After the alternate locations are narrowed, the model is refined to incorporate the economics of specific real estate opportunities and refined further as the company, owner/seller, and economic development authorities exchange proposals and counterproposals. One important point to recognize is that economic incentives do not make a bad location good. It makes the most sense to first identify locations that will support sustainable competitive advantage and then engage more deeply with authorities on negotiation of economic development incentives. Once location finalists are identified, the real estate process begins in earnest. Depending on the company’s financial objectives and desire for flexibility, its needs may be better aligned with one type of transaction over another, and a lease-versus-own analysis should be explored. This has become especially important in light of imminent changes to lease accounting rules. Ensuring the commercial real estate team has the multifaceted skill set necessary to address this final factor in the headquarters location decision can drive measurable value for an organization. A well-planned and executed headquarters location decision process has many facets. If the process is framed properly and includes the appropriate stakeholders, and if political agendas can be set aside in favor of an analytical approach, headquarters decisions can be additive to the company’s top-line growth and help executives manage cost structure and risk. ■

S CO

IT AL CA LO S, DE EY CR L K N REA . RE TIO A S P O TER ISION R UA DEC Q E AD HE ESTAT

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FOR FREE SITE INFORMATION, CALL

As senior vice president in TRANSWESTERN’S TENANT ADVISORY SERVICES group, BRIAN COHEN (brian.cohen@transwestern. com) directs the firm’s consulting services practice, which delivers strategic real estate decision support to corporate clients. His experience includes national site selection, headquarters and back-office location optimization, and overall portfolio strategy. 800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

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Vital. Useful. Updated Daily. The best information on site selection and facility planning available online • Current News: Real estate & industry news, and economic indicator reports updated throughout the day • Valuable Resources: Tax and incentive information, development contacts, and insightful surveys • Latest Studies, Research, White Papers: Aggregated from the top consultants, think tanks and institutions, and distilled into usable information • Reviewable Archives: Search the Area Development archives for content, opinion, and reports spanning the last five years from the top industry minds

Visit – www.areadevelopment.com

Providing What Others Don’t

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Page

ARIZONA 63

City of Mesa www.MesaAZ.gov/Datacenters

CONNECTICUT 14

Economic Development Authority of Western Nevada www.edawn.org sthomas@edawn.org Nevada Governor’s Office www.DiversifyNevada.com Success@DiversifyNevada.com

Switch SUPERNAP www.Supernap.com Adam@Supernap.com

NEW YORK

Georgia Department of Economic Development www.Georgia.org/Automotive

Empire State Development www.NY.Gov/Business

NORTH CAROLINA

Columbus Indiana Economic Development Board www.ColumbusIN.org jhester@ColumbusIN.org Hoosier Energy Economic Development www.HoosierSites.com hgutzeiller@HEPN.com

Electricities of North Carolina, Inc. www.Electricities.com/ecodev bdaniels@Electricities.org

INDIANA 93

3, 17

OHIO

Mississippi Development Authority www.Mississippi.org locateinms@mississippi.org

MISSOURI Joplin Regional Partnership www.JoplinRegionalPartnership.com kwelch@JoplinCC.com

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Lubbock Economic Development Alliance www.LubbockEDA.org Mike.Hatley@LubbockEDA.org

Marble Falls Economic Development Corporation www.MarbleFallsEconomy.com cfletcher@marblefallseconomy.com

Odessa Economic Development Corporation http://OdessaTex.com info@OdessaEcoDev.com

Chamber of Business & Industry of Centre County www.cbicc.org vern@cbicc.org

Knoxville Oakridge Innovation Valley www.KnoxvilleOakridge.com dlawyer@KnoxvilleChamber.com Tennessee Department of Economic and Community Development www.TNECD.com allen.borden@tn.gov

San Antonio Economic Development Foundation www.SAopportunity.com www.SanAntonioEDF.com tlong@SanAntonioEDF.com

City of Sugarland www.Sugarlandecodev.com ecodev@sugarlandtx.gov

TexAmericas Center www.TexAmericasCenter.com Eric.Voyles@TexAmericasCenter.com

Tomball Economic Development Corporation www.TomballTXedc.org kviolette@TomballTXedc.org

UTAH Utah Governor’s Office of Economic Development www.Business.Utah.Gov businessutah@utah.gov

TEXAS

NEBRASKA Nebraska Public Power District http://econdev.nppd.com/ econdev@nppd.com

Longview Economic Development Corporation www.LongviewUSA.com info@LongviewUSA.com

Port Arthur Economic Development Corporation www.PAEDC.org Fbatiste@PAEDC.org

TENNESSEE

MISSISSIPPI

PENNSYLVANIA C4

Converse Economic Development Corporation www.ConverseEDC.com ksilvas@converseEDC.com

JobsOhio www.Jobs-Ohio.com contact@Jobs-Ohio.com

Tulsa Regional Chamber www.GrowMetroTulsa.com/MoveForward BrienThorstenberg@TulsaChamber.com

Michigan Economic Development Corporation www.MichiganBusiness.org/AD wilson9@michigan.org

Plano Economic Development www.PlanoTexas.org sallyb@plano.gov

OKLAHOMA

MICHIGAN

Greater Conroe Economic Development Council www.gcedc.org welch@gcedc.org

Kentucky Cabinet for Economic Development www.ThinkKentucky.com Econdev@ky.gov

Page

Cameron Industrial Foundation 68 www.CameronIndustrialFoundation.com gwatkins@CameronIndustrialFoundation.com

The Columbus Region www.ColumbusRegion.com mm@ColumbusRegion.com

KENTUCKY 47

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Greenspoint District www.Greenspoint.org rlindsey@greenspoint.org

Mercer County Office of Economic Development and Sustainability www.BusinessinMercer.com businessadvocate@mercercounty.org

GEORGIA

Georgia Power www.SelectGeorgia.com econdevga@southernco.com

NEW JERSEY

FLORIDA Greater Fort Lauderdale Alliance www.LessTaxing.com pdoty@gflalliance.org

Page

NEVADA

City of Maricopa www.MaricopaMatters.com

Cheshire Economic Development Corporation www.CheshireCT.org jsitko@CheshireCT.org

Advertiser

The Amarillo Economic Development Corporation 67 www.AmarilloEDC.com/PortfolioofSuccess reagan@amarilloEDC.com City of Arlington www.ArlingtonTX.gov/ecodev ecodev@ArlingtonTX.gov

FOR FREE SITE INFORMATION, CALL 800-735-2732, EXT.

WISCONSIN Wisconsin Economic Development Corporation Select.InWisconsin.com Wade@InWisconsin.com

225, OR VISIT US ONLINE AT www.areadevelopment.com

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FacilityLocations.com

Find the Right Location for Your Next Business Site, Facility or Headquarters FacilityLocations is a GIS map-driven, online economic development directory used to research potential locations during the business re-location or expansion process.

Discover Search and identify potential site and facility locations within big, easy-to-navigate, GIS-driven maps

Research Drill-down into location profile pages: • Google Streetview and Bing Bird’s Eye Imagery • Heat Maps and Data Layers • Downloadable Point-and-Click Radius Demographics Reports • Available Property Listings and Key RE Assets

Connect A directory with 6000+ listings including: • Local and Regional Economic Development Contacts • Port Authority Contacts • Utility Contacts • Foreign Trade Zone Contacts • Foreign Inward Investment Contacts If you are an economic development agency and want to have an enhanced listing with a location profile on FacilityLocations.com, please contact Dennis Shea at 800.735.2732 x 208 or dshea@areadevelopment.com

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