Area Development Q2 Issue 2017 by Area Development

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EFFECTS OF CORPORATE TAX REFORM

LEADING LOCATIONS FOR 2017

SUPPLY CHANGE: A MODULAR APPROACH

AREADEVELOPMENT S I T E

A N D

F A C I L I T Y

P L A N N I N G

I N N O VAT I O N C H A N G I N G L O C AT I O N A L N E E D S

W H AT C A N M A N U F A C T U R E R S EXPECT FROM WASHINGTON?

D I G I TA L D I S R U P T I O N : THE CEOâ&#x20AC;&#x2122;S TOOLKIT

HOW TECHNOLOGY WILL OVERCOME DEMOGRAPHICS

Q 2 / 2 01 7

ADVANCED TECHNOLOGY P L AY B O O K

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CONTENTS

ADVANCED TECHNOLOGY > PLAYBOOK 49 What Can Manufacturers Expect From the New Administration?

Changes in the tax code, regulations, and other government policy will affect manufacturers for better or worse.

60 The CEO’s Toolkit to

Lead Through the Digital Disruption

Companies are fighting for survival as the era of digital disruption dawns; a robust “people strategy” is one foundational element that should not be overlooked.

16 Innovation Is Changing Companies’ Locational Needs

In the field of manufacturing, a domino sequence is changing the locational needs of companies. What does this mean for decision-makers and what criteria should be used for evaluating the next wave of sites and facilities?

88 How Technology Will

Overcome Demographics

As robotics continue to evolve in both agility and intelligence, the day may come when site selectors can take labor availability out of the location equation.

68 Building a Thriving

Manufacturing Workforce

The use of modern recruiting and training techniques, as well as technology to improve knowledge transfer and productivity, will help a manufacturer to build an effective workforce.

73 How to Find

Manufacturing Talent

Does a skills gap really exist — or does it depend on where you’re located and what you are willing to pay?

OTHER FEATURES 14 Corporate Tax Reform to

Have a Positive, Domino Effect on the U.S. Economy

While the timing and details of a new corporate tax policy are still uncertain, it will change the business landscape for U.S. companies of all sizes for the better.

91 Supply Change: Why a

Modular Approach to Warehousing Could Be the Wave of the Future

With the supply chain challenges that companies will inevitably face, the time is now to explore a more varied approach to warehousing.

NOW ONLINE...

Exclusive Online Content • Greater Predictability, Fewer Surprises Through Use of BIM for Front-End Planning • Edible Gardens Enliven Industrial Properties • Textile Industry Making a Comeback in the U.S. Southeast

• Raising Minimum Wages: A Double-Edged Sword • Industry Leaders Speak on Issues Facing Small Manufacturers, and Optimism for the Future

80 Scouting Locations in an Era of Labor Scarcity: 10 Considerations

The tight labor market has made availability of skilled labor a paramount concern for companies looking to expand or open a new facility, but data alone will not help a company identify the community that will best meet its workforce needs.

www.areadevelopment.com • Environmental Considerations for a Prospective Port Tenant

• In Focus: For Property Managers, a Penny Spent Is a Penny Earned

• Lab Space is Hard to Find in Top U.S. Life Sciences Clusters

• Location Notebook: Tennessee Automotive on the Road to Prosperity

• Silver Tsunami Washing Over the U.S. Workforce

Area Development® Site & Facility Planning (USPS 345-510) is published five times per year (Q1, Q2, Q3, and Q4 — and Annual Directory in December) at Richmond, VA, by Halcyon Business Publications, Inc., 400 Post Ave., Westbury, NY 11590. Periodicals postage paid at Westbury, NY, and additional offices. Single copies, $10. Yearly subscription U.S. & Canada, $75; foreign, $95.

AREA DEVELOPMENT

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Volume 52 | Number 2 Q2/2017

Quote:

“…A root word of technology, techne, originally meant ‘art.’ The ancient Greeks never separated art from manufacture in their minds, and so never developed separate words for them.” Robert M. Pirsig (1928–2017), an American writer and philosopher, mainly known as the author of the book entitled Zen and the Art of Motorcycle Maintenance: An Inquiry into Values (1974)

DEPARTMENTS 4 Editor’s note

Meeting the Challenges of Advanced Technologies

6 In Focus

Alternative Workplace Strategies: Open Offices Gaining Traction

8 Business Location

SPECIAL REPORTS 21

Tracker

2017 Gold & Silver Shovel Awards

The work of economic development is a complicated mix of salesmanship, customer service, technical and legal expertise, communications, relationship-building, and a healthy dose of good fortune.

10 First Person

Larry E. Fast, Founder & President, Pathways to Manufacturing Excellence

12 Front Line

Regulatory Reform Taking Center Stage

100 Leading Locations for 2017

Typically outperforming other communities and MSAs, leading locations understand what businesses need to thrive.

104 Ad Index/

Web Directory

Texas Today

State and local leaders are continuing to drive economic growth in Texas through pro-business policies and workforce training initiatives.

Join Our Newsletter areadevelopment.com/newsletter

Online Database Resources www.facilitylocations.com

www.fastfacility.com

POSTMASTER: Send address changes to Area Development, Circulation Department, 400 Post Ave., Westbury, NY 11590. Subscribers requesting address changes must provide both old and new addresses. © Copyright 2017 by Area Development® magazine. ISSN: 1048-6534. Printed in the U.S.A. Area Development® is a registered trademark of Halcyon Business Publications, Inc.

AREA DEVELOPMENT | Q2/2017

EDITOR’SNOTE

Q2/2017

Meeting the Challenges of Advanced Technologies A new survey from Deloitte reveals that 83 percent of Americans believe manufacturing is important to the nation’s prosperity, and three quarters of those surveyed also feel the government should increase its investment in manufacturing. Commenting on the Deloitte study, NAM CEO Jay Timmons noted, “Modern manufacturing has captured the imagination of the American public and our elected leaders…People acknowledge the strong connection between this industry, the U.S. economy, and the American way of life.” With this in mind, for the second year in a row, Area Development is focusing on advanced manufacturing in our Q2 issue. Advanced technologies — e.g., 3D printing, robotics, digital factories — are the new face of manufacturing. Our Advanced Technology Playbook addresses such issues as what manufacturers can expect from the Trump administration, and how innovation is changing companies’ locational needs and even overcoming demographics; it also provides a “CEO’s toolkit” to lead through the digital disruption.

www.areadevelopment.com EDITORIAL E-mail: editor@areadevelopment.com Editor Geraldine Gambale Staff and Contributing Editors Dale D. Buss Craig Guillot Dave Claborn Cynthia Kincaid Mark Crawford Phillip Perry Dan Emerson Mark Schantz Tom Ewing Steve Kaelble Clare L. Goldsberry Karen Thuermer

DESIGN/PRODUCTION Art & Design Patricia Zedalis Production Manager Jessica Whitebook Production Assistant Talea Gormican EXECUTIVE

Further commenting on the Deloitte study, Michelle Drew Rodriguez, the manufacturing leader for Deloitte’s Center for Industry Insights, noted, “Helping Americans’ perceptions of manufacturing catch up with reality is a vital step in addressing the skills gap, as the U.S. manufacturing industry continues to create diverse jobs involving advanced technologies and innovation.” Area Development also looks at the labor force skills gap — and if it really exists — in our Workforce supplement contained herein. Leaders in the field report on how to find the manufacturing talent your company needs, even in an era of low unemployment. Modern recruiting and training techniques as well as the use of technology to improve knowledge transfer are among the tools discussed. The Manufacturing Institute has predicted 3.5 million manufacturing jobs will become available from 2015 to 2025, many requiring advanced technology skills. The articles contained in this issue and Workforce supplement will prove useful to understanding and meeting the challenge to keep your company on a growth track.

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 Business Development Matthew Shea (ext. 231) mshea@fastfacility.com Web Designer Carmela Emerson Circulation circ@areadevelopment.com EXECUTIVE OFFICES

Editor

Halcyon Business Publications, Inc. President Dennis J. Shea Finance Mary Paulsen finance@areadevelopment.com

2017 Editorial Advisory Board Josh Bays, Principal, Site Selection Group, LLC

Stephen Gray CEO, Gray Construction

Marc Beauchamp, Vice President and Partner, The CAI Global Group

Minah C. Hall Managing Director, True Partners Consulting LLC

Bradley Migdal Senior Managing Director, Business Incentives Practice, Cushman & Wakefield, Inc.

Christine Bustamante National Co-Leader, Global Location and Expansion Services, KPMG

Scott Kupperman Founder, Kupperman Location Solutions, LLC

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

Gregory Burkart Managing Director, Specialty Tax Practice Leader, Duff & Phelps, LLC

Dan Levine Practice Leader, Location Strategies and Economic Development, Oxford Economics, Inc.

Eric Stavriotis Senior Vice President, CBRE

Brian Corde, Managing Partner, Atlas Insight, LLC

Jamie M. Lominack Real Estate Manager, Michelin North America

Thomas Stringer Esq., Managing Director & Practice Leader, Site Selection & Business Incentives, BDO Consulting

Les Cranmer Senior Managing Director, Savills Studley

Bill Luttrell Senior Locations Strategist, Werner Global Logistics, Werner Enterprises, Inc.

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

Dennis Cuneo Partner, Fisher & Phillips LLP

Michael McDermott Consulting Manager, Global Business Consulting, Cushman & Wakefield, Inc.

Dan White Senior Economist, Moody’s Analytics

Tim Feemster Managing Principal, Foremost Quality Logistics

AREA DEVELOPMENT

Business/Finance Assistant Barbara Olsen (ext. 225) olsen@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

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PURE AGRIBUSINESS

When it comes to growing food and businesses, there’s one state that’s got the perfect climate for both. Michigan. Our weather patterns and soil variety help us grow everything from cherries to Christmas trees. Our food and agriculture industries contribute over $101 billion to the state’s economy. Which makes Michigan a top pick for your agribusiness.

michiganbusiness.org/pure-agribusiness

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INFOCUS

Alternative Workplace Strategies: Open Offices Gaining Traction By Robin Weckesser, President, a3 Workplace Strategies

Increasingly, companies are seeking creative, alternative workplace solutions that offer a variety of amenities and the latest technology to drive innovation and attract and retain top talent. Open offices continue to gain traction for many reasons, including cost savings resulting from a reduced footprint, recruitment, and the belief that openness promotes collaboration and productivity. Yet, while the office of the future has become more mainstream, many employees remain anxious about change, and senior managers in particular often feel a sense of entitlement and are reluctant to give up their privacy. The fact is that an open office isn’t an open-and-closed proposition. Usually, a workplace requires a carefully considered balance of customized layout options. Design considerations must start with a careful review of your organization’s culture, employee demographics, branding, and business objectives.

Robin Weckesser is president of a3 Workplace Strategies, a workplace consulting group based in San Jose and serving companies throughout the United States and worldwide. The firm provides a full range of project management and facilities management services. For more information, visit a3workplacestrategies.com or email rweckesser@ a3workplace.com.

Customize and adapt. There is no such thing as a one-size-fits-all workplace strategy, and many options can engage employees in the decision-making process. By applying evidence-based, best practices — including employee feedback, change management plans, and numerous other amenities such as on-site cafes and fitness centers — organizations can deliver open and hybrid offices that enhance workflow and productivity. Other amenities are increasingly part of new workplace solutions, and the most sought-after features include food, wellness programs, sustainability measures such as natural lighting and “green roofs,” courtyards, bike racks, and automated parking. Anticipate and manage pushback. As mentioned above, some employees may still feel uneasy about switching from private offices to collaborative space. While lack of privacy is part of their apprehension, they may also fear that giving up their office means compromising their status. Time-tested methods to approach pushback can help involve employees in the workplace transformation process. Traditional change management plans include sending e-mail updates, forming a core project team, interviewing key employees and stakeholders, and creating design mockups. More creative and tech-centric methods include podcasts, video updates, and an Intranet where employees can view plans and provide feedback. Change management plans work most effectively when they are tailored to your staff.

Here are some training examples to consider incorporating into your plan:

• Offer guided workshops to help staff reflect and visualize on how they work today and how they could work in alternative settings. • Take employees on a tour of alternative office environments and encourage them to talk with the staff there about their workplace. • Present proposed changes to employees. Then, candidly review the designs and address feedback and concerns.

Transform. As technology and workplace demographics continue to evolve, the office will continue its transformation to accelerate the production cycle and optimize performance. No longer tethered to our desks by a wire, we will become a more flexible workforce with employees enjoying more of a “live-work-play” lifestyle. With customization and the right project team, making the switch to an open or hybrid office can boost creativity, encourage collaboration, and make your employees feel welcome at their home-awayfrom-home. No matter your industry or location, with due diligence, strategic planning, inspired design, and a change management program, you can make the workplace of the future work for you today.

AREA DEVELOPMENT

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WHEN YOUR BUSINESS CAN BE ANYWHERE, THERE’S NO LIMIT TO HOW FAR YOU CAN TAKE IT. Why are so many logistics and distribution companies ﬁnding success in Florida? Because we have one of the most extensive multi-modal transportation systems in the world, including 15 deepwater ports, 20 commercial airports, 3,000 miles of freight tracks and 122,000+ miles of highway. So you have the ability to move your product anywhere in the world…fast. But with a population of more than 20 million residents as your local market, you may not need to. Discover what a future in Florida means for your business at ﬂoridathefutureishere.com/logistics, or call 877-YES-FLORIDA.

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Track business relocations and expansions on Area Development Online.

BUSINESS LOCATION TRACKER

We track announcements of all significant investment and job-creation projects throughout the United States and Canada at www.AreaDevelopment.com/NewsItems.

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01 NORTH CAROLINA. AXA Expanding in Charlotte, N.C. U.S. financial protection company AXA will invest $18 million to expand its operations center at University City’s Innovation Park in Charlotte, Mecklenburg County, N.C., adding 550 new jobs over the next five years.

05 GEORGIA Jackson Healthcare to Create 1,400 Jobs in Georgia One of the nation’s largest healthcare staffing firms, Jackson Healthcare, has broken ground on a $100 million expansion for its corporate headquarters in Alpharetta, Ga., which will accommodate 1,400 new associates.

02 MISSOURI Kraft Heinz Opens Expanded Missouri Facility Kraft Heinz Company has opened its $250 million expanded Kirksville, Mo., facility to accommodate seven new production lines for Oscar Mayer meats and 200 more jobs.

06 IDAHO McCain Foods to Expand in Idaho McCain Foods USA, a division of Canadian-based McCain Foods Ltd., plans to invest $200+ million and create 180 new jobs to expand frozen french fry production capacity in Burley, Idaho.

03 KENTUCKY Danish Firm Begins Louisville, Ky., Expansion LINAK U.S. Inc., a company that manufactures linear actuators, has started construction on its $33 million expansion in Louisville, Ky. The expansion is expected to create 413 full-time jobs.

07 UTAH

Medical Device Maker to Open Salt Lake City Headquarters Biomerics, a medical device plastics manufacturer, will build its new 200,000-square-foot corporate headquarters in Salt Lake City, Utah, representing $38.5 million in capital investment and the addition of 380 jobs to the community.

04 TENNESSEE Dyersburg, Tenn., Chosen for New Manufacturing Operation A leading manufacturer of structural storage racking systems, Frazier Industrial Company, will build a new manufacturing facility in Dyersburg, Tenn., creating 120 new jobs for Dyer County

AREA DEVELOPMENT

TEXAS Hudson Products Holdings Relocates Manufacturing to Rosenberg, Texas A leading manufacturer of air-cooled heat exchangers and axial flow fans, Hudson Products Holdings Inc. is relocating its manufacturing operation to the company’s headquarters outside of Rosenberg, Texas, representing a $6+ million capital investment and the creation of 150 jobs.

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FIRSTPERSON LARRY E. FAST FOUNDER & PRESIDENT PATHWAYS TO MANUFACTURING EXCELLENCE

Is there a difference between manufacturing workers in the past and workers today? Fast: In the past, we had analog controls and gauges, and we relied heavily on operator experience and tribal knowledge. The last couple of generations of manufacturing equipment have been digital. So today the machine operator has to be computer literate in order to access and manage the equipment. Companies now are looking for people that have a technical school background. There is more skill required now, both educationally and physically. What can be done to better prepare workers for the factory floor of the 21st-century? Fast: I would start with high school counselors in educating students by putting a positive face on a manufacturing career for someone who is not college-bound. We need to educate the educators. We want people to be able to envision themselves as being able to make a good living and be successful working in a manufacturing environment. So many high school graduates end up working in a restaurant or retail, and it’s hard to support a family and have discretionary income with the kinds of wages that are being paid there. Manufacturing jobs are typically much better paying than service jobs, so there’s a strong financial incentive to go into manufacturing. How important are soft skills for a potential factory-floor worker? Fast: There are lots of companies out there that are transitioning their cultures into team cultures. Knowing how to work in teams will be an important part of being successful on the shop floor. We have to be really careful. We have to bring people in that have the flexibility, the temperament, and the social make-up that it takes to work in teams. Folks that are uncomfortable in team settings may be the wrong people to work on the shop floor. They have to fit into the culture. You tend to like workers that have grown up participating in team sports. Why? Fast: I think it’s important because it shows that someone has developed a respect for the coach. They have learned to grow from a coach, and they’ve learned to support their teammates. Win or lose, on the field or off, there’s a real

AREA DEVELOPMENT

bonding that happens on teams. There’s no “i” in team. So it’s important that we bring people in that are open to working in that kind of environment and know how to do it. Tell us why you like potential workers to take the Myers-Briggs test. Fast: All of us have a four-letter MyersBriggs indicator. I find that teams work much better together if they understand each other’s profile. If you do this test as a team exercise, then each person gets to really understand the DNA of the other team members. If you don’t understand what the differences between team members are, they can become a grating issue with which you struggle every day. Everybody’s different and we have to be able to manage our way through that, and that only comes from understanding. You tell hiring managers to “trust your gut.” Please explain. Fast: Most of us have had the experience where the candidate had all the right answers to the specific questions but it just didn’t feel right. We need to explore that. Maybe we need a second interview. Typically in an interview, if you have a person that has the skills, is communicating effectively, and is open in the discussion, you can develop trust in an hour interview. But if you don’t feel like that when the interview is over, you have to pay attention to that. It’s so easy to make a bad hiring decision and then spend the next year trying to fix it. If it doesn’t feel right, talk to some more people. Many companies seem to be moving to a hiring model of permanent contract workers. What are your thoughts about that for the factory floor? Fast: I understand what companies are doing because of cost issues, but I don’t like the model. I don’t know how you build teams when you have people coming and going. They don’t feel an allegiance to the company. They are probably getting the least amount of wage that the company can get away with in the marketplace. And I doubt they are supported with strong education and training programs. I think the model is a cop out by the company. The only place I’ve seen it in a prevalent way is for those industries that are cyclical. I think it makes sense in that situation where you don’t have a long-term view of the

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capacity requirements. But I oppose it as a way to run the business. Why are technical schools so important to the factory floor hiring process? Fast: Whether you are a small company that doesn’t have training resources, or you’re a big company that has a learning center, there are still requirements for technical training where it doesn’t make sense to have the educational training expertise in-house. We have experts right down the street at the technical college that we ought to utilize. These schools do a wonderful job of not only teaching technical skills, but also teaching behavioral skills and what it takes to be successful on the shop floor. Every company should have some kind of relationship with a technical school. You place a premium on succession planning. Why? Fast: Succession planning is the long-term life-blood of business. We have to have a process in the plant so the shop floor folks understand that they have opportunities to learn a machine, if they have that kind of ambition. Supervisors have to understand that they can get into management, if

they have the skills and ambition. That’s how you perpetuate a culture and a performance expectation for the long term. If those opportunities aren’t there, you will lose some of your best people. What impacts do you think the Trump administration will have on manufacturing? Fast: In the last three months since the election, we’ve had an increase of 57,000 manufacturing jobs; 28,000 of those came last month, so there is certainly optimism out there. Let’s see if the rhetoric turns into actions that get executed in a positive way to grow manufacturing jobs.

THE ASSIGNMENT One of Area Development’s staff writers recently spoke with Larry E. Fast, a 35-year veteran of the wire and cable industry and author of The 12 Principles of Manufacturing Excellence: A Lean Leader’s Guide to Achieving and Sustaining Excellence, 2nd Edition. In this interview, Fast explains how manufacturing plants can institute a strategy for excellence on the shop floor and why soft skills are as important as hard ones.

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01/02/16 AREA DEVELOPMENT | Q2/2017

8:05 PM 11

FRONTLINE

Regulatory Reform Taking Center Stage

conomic development officials should be on the lookout for a report that was to be issued in mid-May from the Secretary of Commerce. The report will be the work product resulting from President Trump’s January 24 Memorandum, ‘‘Streamlining Permitting and Reducing Regulatory Burdens for Domestic Manufacturing.’’ The Secretary is instructed to develop a plan to implement the streamlining directive. Economic development officials might want to closely review the plan and ask, are these the right steps to help in our locality?

Public Comment The report will build upon public comments. The Office of Policy and Strategic Planning published a request-forinformation asking eight broad questions about federal permitting and regulatory challenges. The comment period started March 7th and ended March 31st. Regulatory reform always raises concerns about balance — that proposals could swing too far one way or another — either brushing aside issues of public health, safety, and environment or, conversely, being too timid, resulting in no substantive changes. The Department of Commerce received 170 public comments.1 It is a rich resource, chock full of real world experiences. Consider this (edited) example, submitted anonymously: Expanding our granite mine footprint has been excruciating. Five government entities (are) involved. The process has slowed to a crawl over the past four (!) years, and it seems that the government agencies can call the shots and drag their feet, however they please. We’ve hired lawyers at this point to finally put our foot down. Performing a perfectly environmentally safe and responsible mitigation has had so much red tape, it’s almost like the entities are either laughing at us or don’t want the building materials we produce. This isn’t anti-regulatory or anti-environment. It’s a plea

AREA DEVELOPMENT

By Tom Ewing

for help: make the process work so business can do its work.

NEDA’s Comments The National Environmental Development Association (NEDA) is an industry group including Boeing, Eli Lilly, P&G, and seven other large manufacturers. NEDA’s comments, focusing on EPA regulations, provide an insider’s knowledge on the complexities — and consequences — of current Clean Air Act regulations. Consider: • It can take 14 months to five years to receive a preconstruction permit, and that’s after the permit application is submitted and accepted. • Many U.S. projects are withdrawn because this timetable is so much at odds with market realities. • Projects stop despite advantages regarding low energy costs and the availability of raw materials. NEDA suggests 19 substantive changes to air-quality permits, including modeling revisions; reviews for new sources; “completeness reviews,” which finally allow projects to proceed; and changes to how “offsets” are calculated, i.e., allowing new facilities because older ones have shut down. Many people, even in business, think of regulations as something mildly irritable, mostly busywork. In fact, they are the purview of specialists, dealing with technical and legal issues well beyond everyday discussions. It’s the framework that allows, or stops, big-time economic expansion. That the system might work better is a tantalizing prospect. Frequently, with regulatory reform, it is difficult to get affected businesses to take the time to identify specific burdens. With this initiative, the Department of Commerce has a strong basis for moving forward. 1

https://www.regulations.gov/docketBrowser?rpp=25&so=DESC&s b=commentDueDate&po=0&dct=PS&D=DOC-2017-0001 for free site information, visit us online at www.areadevelopment.com

The 21st century economy has a 21st century address.

More companies in more industries from more locations are expanding in Ohio. That’s because Ohio delivers more. More talent. More access. Better infrastructure. More robust ecosystems. It’s enough to make you rethink what’s possible. Find out what Ohio can do for your business at jobs-ohio.com.

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10/05/17 12:35 AM

GOVERNMENT REGULATION

Corporate Tax Reform to Have a Positive, Domino Effect on the U.S. Economy While the timing and details of a new corporate tax policy are still uncertain, it will change the business landscape for U.S. companies of all sizes for the better. By Scott Parker, Chief Financial Officer, Gray, Inc.; and President, Gray Development

Current U.S. Tax System

• 35% corporate tax rate benefit from • Corporations storing capital abroad • Depreciation of investments

To put it in a more specific perspective, here is how the U.S. federal corporate tax rate of 35 percent compares to other countries:3

Proposed U.S. Tax System

• Germany: 15 percent • China: 25 percent • Japan: 23.9 percent • South Korea: 22 percent • United Kingdom: 20 percent • Taiwan: 17 percent • Mexico: 30 percent • Canada: 15 percent • Singapore: 17 percent • India: 30 percent

• Lower tax rates • Immediate tax write-offs • Repatriation of capital

he business landscape in the United States has historically been both favorable and positive relative to the rest of the world. Companies have thrived on the American consumer, the stability of the government, a strong U.S. currency, a balanced tax system, the workforce, abundant energy resources, and a trust that “fair play” will exist among businesses. When these dynamics are at work, the result is a strong economic environment. The U.S. has historically maintained a competitive advantage over other countries in these areas to one degree or another. However, over time, other countries have adopted certain business-friendly measures, cutting into U.S.-based companies’ share of the global economy. These changes have certainly impacted the U.S. manufacturing sector, though there has been a rebound of late. But, to grow and strengthen it further, some policy changes are in order. Specifically, tax policy is one area of weakness for the U.S., which President Trump plans to rectify.

The Current U.S. Tax System for Business Under the current system, the highest marginal federal corporate tax rate in the U.S. is 35 percent.1 It often surpasses 40 percent once state taxes are taken into account. This rate is the third highest in the world, with only the United Arab Emirates and Puerto Rico exceeding it. According to the Tax Foundation,2 the global average across 188 countries and tax jurisdictions is much lower, at 22.5 percent. U.S.-based corporations owned by foreign companies are bound by the same corporate tax rules on the profits from their U.S. business activities as U.S.-owned corporations. A second level of taxation may also be applied at the shareholder level depending on the method of distributing profits.

AREA DEVELOPMENT

It should also be noted that Ireland has a corporate tax rate of 12.5 percent and reportedly grew its economy 26.3 percent in 2015,4 due largely to this competitive advantage over other countries.

Proposed Corporate Tax Reform President Trump campaigned on a promise to drastically reduce the tax burden on both businesses and individuals. In late April, his administration proposed an outline of the most comprehensive tax code overhaul since President Reagan, with the highlight being to reduce the top business tax rate to 15 percent. The fundamental basis for the overhaul is to stimulate economic growth, thus creating more jobs and expanding the nation’s GDP. It appears President Trump’s administration intentionally left out a lot of detail when it released its plan.5 It’s hoped this will allow the House and

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Senate to streamline the negotiation process to arrive at a final, detailed plan. The highlights of President Trump’s corporate tax reform plan include: • A top individual income tax rate on pass-through businesses (such as partnerships) to 15 percent • A repeal of the corporate alternative minimum tax and the 3.8 percent Affordable Care Act (ACA) tax • A one-time opportunity to repatriate corporate profits earned (and held) overseas at a 10 percent tax rate • Elimination of corporate loopholes that cater to special interests, as well as deductions made unnecessary or redundant by the new lower tax rate • Immediate expensing of U.S. capital investments • Adoption of a “territorial” tax system, which typically excludes most or all of the taxable income that businesses earn overseas

this gives a distinct advantage to those who make goods within the U.S., especially if those goods have U.S.-sourced raw materials. Many countries have incorporated similar concepts, though under different names and methodologies. Some members of Congress have been strong supporters of this concept, both due to a belief that it would encourage businesses to produce more in the U.S. versus overseas, as well as to generate revenue to help pay for other parts of the tax plan. However, many goods currently sold to lower- and middle-income American consumers, most of which are made overseas, could see significant price increases. But the border adjustment tax was not included in the latest proposal from the Trump administration.

Beyond the lower rate, two ideas receiving a lion’s share of attention are the repatriation of foreign-earned profits and immediate expensing of new investments in U.S. capacity. First, by availing themselves of what is known as a “tax holiday,” U.S. companies could bring trillions of dollars held abroad back into the U.S. for investment into the domestic economy. Such a tax holiday has not occurred since 2004. Secondly, the opportunity for businesses to immediately write off capital investments could free up significant dollars for new businesses and expansions. For example, if a company decided to invest $10 million into a new or expanding facility, all of this investment could be immediately written off as a deduction instead of depreciating it over many years. In practical terms, companies would reduce their tax bills in the year they make the investments, thus creating a powerful investment incentive for companies big and small. An area of particular controversy had been whether the Trump administration would propose a border adjustment tax, which, in short, is a tax on imported goods. By default,

A simplified tax policy has the possibility of reaping significant benefits for all U.S.-based businesses. For capital-intensive businesses such as manufacturers, it is vital to retain as much capital in the business as possible to help fund the cost of facilities and the associated machinery and equipment. When 35 percent of every dollar earned is sent to Washington, as the current tax policy requires, it reduces the pool of funds that could otherwise be used to expand and grow the business. Tax reform will likely eliminate the temptation for companies to look overseas for lower corporate tax rates to advance their business goals. Historically, higher tax rates discourage work, investment, innovation, and savings — all of which play leading roles in advancing the economy. The caveat is that tax cuts often increase deficits and, thus, the national debt. However, one of the primary goals of the proposed tax code overhaul is to make it revenueneutral, meaning that it would have no impact in terms of increases or reductions on federal tax revenue.

The Impact of Corporate Tax Reform on U.S. Business

NANOTECH POLYMERS Mississippi knows how to put a little something together. The Mississippi Polymer Institute at the University of Southern Mississippi, is charged with using the advanced resources to help Mississippi’s industries grow. In Hattiesburg, Hybrid Plastics produces nanomaterial providing enhanced performance across a wide range of product categories such as coatings, personal care products, engineering thermoplastics and more. Mississippi also boasts two GE Aviation facilities, both of which produce advanced composite components for jet engines. Experience the power of Mississippi’s innovative partnerships.

MISSISSIPPI

INNOVATIVE mississippi.org/research

Continued on page 19 AREA DEVELOPMENT | Q2/2017 AREA0697.indd 1

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ADVANCED TECHNOLOGY > PLAYBOOK

Innovation Is Changing Companiesâ&#x20AC;&#x2122; Locational Needs In the field of manufacturing, a domino sequence is changing the locational needs of companies. What does this mean for decision-makers and what criteria should be used for evaluating the next wave of sites and facilities?

ith globalization and changes in technology, the world is changing. In manufacturing, we are experiencing a new wave of the industrial revolution: disruptive technologies are leading the way with both the products we are creating and advances in how we are building them. In how we live, we are experiencing a new wave of the urban revolution: urbanization and the increased population of our cities is here to stay; people of all ages, especially the savvy workforce creating new technologies, want to live in cities or their in-town suburbs. Combining these revolutions, the solution is clear: in order to stay competitive in the marketplace, companies need to retain and attract the technology workforce. To do this, location is key. Could it be time to relocate?

How did we get here? Before looking forward, it is always helpful to look back and understand the decisions that have created current conditions. Manufacturing companies found their start in cities, where there was a ready and able workforce. Infrastructure for transportation of raw goods and finished products was optimum. The headquarters and the factories were co-located for efficiency and prestige. For many years, this was what it took to be successful. Over time, innovation led to increased competitiveBy Cassie Branum, AICP, LEED AP; Senior Urban Designer, Senior Associate; Perkins+Will

AREA DEVELOPMENT

ness. Companies began creating research divisions born from ideas discovered on the assembly line. In 1900, this began with General Electric and their GE Labs, with AT&T, Bell Telephone, and General Motors following shortly after. The addition of research components to companies changed the locational drivers â&#x20AC;&#x201D; for modern research, cleanliness and concentration were key. On the other hand, cities at the time were dirty, noisy, and vibrating from early machines and transportation infrastructure. Slowly, research facilities moved out of cities into the countryside and, subsequently, many corporate headquarters and main production facilities were relocated there as well. This relocation strategy gave rise to the corporate campus. These now iconic environments were places for individual corporations to own their places in the world. These campuses remain a major development type today. They are typically situated in a secluded suburban pastoral site, designed like great academic institutions with a collection of buildings organized around a central open space and a single formal entry to the campus. In

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the 1940s, the corporate campus became the mark of corporate success, and talent followed: people could get out of the chaos of urban life and work toward the suburban American dream. Companies across the country bought into the dream. The challenge was the expense of creating the campus, especially for small companies. From this need, the speculative business park emerged. In the 1950s, the Route 128 Corridor in Massachusetts established this model, and with easy highway access, where everyone could have their own mini-campus. Like the campus model before them, these suburban environments further facilitated the American dream and the nuclear family, allowing corporations to continue recruiting and attracting top talent. These two models were our American baseline for years, and much of the world has followed our example. At each of these moments in time, site decisions were driven by the need to be competitive, beginning with ensuring space for research and innovation and ending with providing an attractive lifestyle for top talent.

What’s happening today? Today, attracting top talent is still the key to success, and winning battles in the talent war requires a multi-pronged solution. Location and the resulting lifestyle are still critical drivers in the mix. However, today’s top technology worker has a slightly different dream than his/her parents. Experience and a sense of purpose have become the hallmarks to happiness, often over the classic suburban white picket

fence. The fence is still important; it has just morphed. Sometimes it is a fence, sometimes it is a balcony or a roof terrace, and other times it is public space or park. The availability of a variety of choices has become significant. With this wave of the urban revolution, the ideal lifestyle is now centered primarily on central city locations with access to higher densities, in rich, mixed-use walkable environments that have a variety of transit options, quality open space, and the supportive social infrastructure to feel connected to the world. These locations are not always in the heart of the central business districts but they tend to be closer to them than are their suburban counterparts. There is always the exception, but generally this is the lifestyle context that should be considered when thinking about location. At the same time, companies need to continue advancing technologically. The research-tocommercialization continuum is being strengthen and condensed daily. This means that while lifestyle is important, another key locational driver must be access to and relationships with academic and research institutions. These relationships should span everything from sponsoring research to finding the next big innovation to facilitating a focused talent pipeline. Today these concepts of urbanism and innovation are coming together in “innovation districts,” conceived by Bruce Katz and Julie Wagner of the Brookings Institute1 as “geographic areas where leading-edge anchor institutions and companies cluster and connect with

EXCELLENCE BY DESIGN Mississippi’s world-class research universities drive innovation across a broad spectrum of industries. The University of Mississippi’s Center for Manufacturing Excellence works directly with the state’s manufacturers to develop the next generation of leaders. At Mississippi State University, the Federal Aviation Administration’s Center for Excellence for Unmanned Aircraft Systems pioneers the next generation of UAV technologies and policies. The University of Southern Mississippi’s Polymer Institute provides development, prototyping and testing services to Mississippi companies. Research Mississippi’s partnership advantages.

MISSISSIPPI

RESEARCH mississippi.org/research

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startups, business incubators, and accelerators.” While innovation districts are great places to locate, intelligent site selection should mean more than simply identifying a good innovation district near you.

What kind of location criteria should be considered? To achieve the umbrella goal of competitiveness along with the locational drivers, eight simple criteria for site selection should influence relocation decisions or current location evaluation. Unlike some of the measures used in the past, each of these criteria touches on a different aspect of the manufacturing business to create a more holistic way of considering location. Measure 1: Activity — The site should offer a multi-dimensional environment, including labs, offices, educational institutions, as well as businesses that are not at the core of the business mission but buoy it nonetheless. These may be coffee shops, restaurants, and support services like graphic designers and lawyers. There should also be a social environment, or at least positive momentum toward the creation of such a place, by incorporating the basics on which these places can thrive, such as housing and an existing resident population. Measure 2: Assets — The site should have significant physical infrastructure such as streets, utilities, transit service, and other amenities to support the robust, walking-centric environments that comprise the lifestyle goals of tech workers. In an ideal location, this infrastructure would be in place and not require a large investment to establish. Measure 3: Vibe — The site should have a character and identity that aligns with both the desired talent pool and potential clients. Measure 4: Connectivity — The site should be well connected beyond its immediate context. Elements like regional rail infrastructure and aviation connectivity should be taken into consideration.

AREA DEVELOPMENT

Measure 5: Proximity — The site should be physically close to academic and research institutions that could support the direction of the company. Further, locating near other like-minded research activities, startups, and incubators should be considered. Allowing people to gather and cross paths outside of a single company is critical to forming relationships, which tend to result in creative collisions and opportunistic collaborations. Measure 6: Synergy — The site should be positioned to take advantage of other logical investments and partnerships beyond the direct bottom line, leveraging efforts like city revitalization projects, arts and cultural events, etc. While this might seem tangential to the core business, this is an important driver for the tech worker and can be a tremendous differentiator for a company over time. Measure 7: Space — The site should be scaled and configured appropriately, and otherwise suitable for the proposed new uses. Depending on the locational needs, space for future expansion might be considered. Measure 8: Ownership — Combined with each of these measures, the site should also be considered from an overall investment standpoint, studying the real estate dynamics and five-year future of the city/place at hand.

In Sum Each site is unique and presents its own set of opportunities; these measures are intended to help pull apart that story. When considered as a whole, these criteria can help synthesize critical factors at play in maximizing locational effectiveness. In 2016, GE announced that their corporate headquarters was moving to Boston from the suburb of Fairfield, Connecticut. Does this mean everyone needs to leave the suburbs and move back to the city to be competitive? Probably not. Does it mean that one should consider his/her location before making any big investments? Absolutely. ≈ ≈ ≈ 1

https://www.brookings.edu/essay/rise-of-innovation-districts/

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Corporate Tax Reform Continued from page 15

“

TAX REFORM will likely eliminate the temptation for companies to look overseas for lower corporate tax rates to advance their business goals.

cially after the financial collapse in 2008 when banking regulations and credit availability tightened. These circumstances were particularly challenging for manufacturing companies that were growing or that didn’t have a strong balance sheet to present to a bank. Once a new tax code is in place, these types of companies would be able to take an immediate tax deduction to use as equity to justify their investment, thus encouraging further growth.

The Economic Domino Effect The bottom line is this: It is an immense undertaking to balance out all of the pros and cons of radically changing U.S. tax policy. Whether at the business or individual level, special interest groups are involved, uncertainty exists to unintended

The beneficial impact of the pro-

consequences that are likely to occur

posed changes should really help

on any one of the more significant

small- to medium-sized businesses

changes, and the mere task of un-

as they typically have more con-

winding thousands of pages of tax

straints on their sources and costs of

rules and regulations is no small feat.

capital. Also, small- to medium-sized

While the timing and details of a

businesses create the majority of new

new tax policy are still uncertain, it is

jobs in the U.S. year in and year out.

clear that this new plan will signifi-

In fact, according to the Small Busi-

cantly change the business landscape

ness and Entrepreneurship Council:

for U.S. companies of all sizes. Once

American business is overwhelmingly

a formal plan has been defined, com-

small business.6

panies will start to react even before

In other words, reductions in cor-

the plan is fully implemented. Ulti-

porate tax rates will have a height-

mately, businesses will behave dif-

ened impact on smaller companies

ferently as a result of tax reform that

versus larger ones when it comes to

will likely create a positive, domino

decisions to invest in new capacities.

effect on the economy. ■

The average manufacturing project in the U.S. by a small- to medium-sized manufacturer is between $5 million and $10 million. These manufacturers have often struggled to obtain the capital needed to make the investment to grow their businesses, espe-

ADVANCING BUSINESSES

http://www.oecd.org/tax/tax-policy/tax-database.htm https://taxfoundation.org/corporate-income-tax-ratesaround-world-2016/ 3 https://www2.deloitte.com/content/dam/Deloitte/global/ Documents/Tax/dttl-tax-corporatetax-rates.pdf 4 http://www.independent.co.uk/news/business/news/irelands-economy-grows-263-in-2015as-corporations-flock-to-low-tax-rate-a7133321.html 5 http://www.cnbc.com/2017/04/26/the-white-house-justoutlined-its-tax-plan-heres-whats-in-it.html 6 http://sbecouncil.org/about-us/facts-and-data/ 2

From nanochemicals enabling the ﬁrst synthetic organ transplant to the world’s most advanced warships, Mississippians can customize your product. Just ask Nissan, Toyota, Hybrid Plastics, Huntington Ingalls, GE Aviation or many of the other industry leading manufacturers located in the state. Mississippi has the productive workers and customized training programs, both for new and existing industries. Mississippi’s research universities have a strong reputation for partnering with industry to move innovation from concept to reality. The business advantages are clear. Choose Mississippi.

MISSISSIPPI

ADVANCED mississippi.org/advanced

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special report

GOLD SHOVEL & SILVER AWARDS THE WORK OF

economic development is a complicated mix of salesmanship, customer service, technical and legal expertise, communications, relationshipbuilding, and a healthy dose of good fortune. AREA DEVELOPMENT | Q2/2017

special report

METHODOLOGY Area Development’s annual Gold and Silver Shovel Awards recognize states for their achievements in attracting high-value investment projects that will create a significant number of new jobs in their communities. We collected information from all 50 states about their

It’s vitally important work to the prosperity and quality of life in a community or across a state. It’s a pursuit that can be frustrating one day and highly satisfying on another, with rewards that come from headlines, feathers in a cap and, most importantly, the satisfaction of building stronger communities. Who is succeeding at this work? The states honored in this year’s Shovel Awards. They’re compiling healthy and impressive rosters of projects and announcements, expansions and new facilities. They’re successfully surfing the waves of what is hot in terms of industries and growth, discerning what potential clients want and need, and acting quickly. They’re pulling together the winning combination of perfect site, attractive incentives, and collaborative attitudes. Read on to find out who is staying a step or two ahead of the competition. We’ve analyzed high-impact economic development projects from 2016 to arrive at the accompanying lists. We’re honoring 21 states for their wins in job creation and business investment. Some are frequent honorees on these annual lists, an indication that they’ve found the right recipe for success.

top-10 job-creation and in-

12+ Million Population Category

vestment projects initiated in 2016 (only those projects that

Illinois — GOLD SHOVEL

actually had monies invested,

It’s hard not to win a Gold Shovel award when Amazon is digging into multiple locations around the state, spending more than $350 million and promising work for 4,500. The company had little significant warehouse presence in Illinois as recently as two years ago, and since then has announced projects that eventually will total as many as 7,000 jobs. Illinois is a solid manufacturing state, and historically has had strong ties to the automotive sector. That link shows up in its 2016 projects, with the Fiat Chrysler

“broke ground,” began an expansion, started new hiring, etc. were considered). Based on a combination of weighted factors — including the number of new jobs to be created in relation to the state’s population, the

ILLINOIS

combined dollar amount of

GOLD SHOVEL WINNER

the investments, the number of new facilities, the diversity of industry represented —

Company

five states achieving the

Fiat Chrysler Automobiles

highest weighted overall

Rivian Automotive

population categories were awarded 2017 Silver Shovels.

300

$350 million

Automotive

1,000

$175 million

Electric Vehicles

443

$42 million

Automotive Parts

Edwardsville, Romeoville, Monee, Joliet

4,500

$355 million

Fulfillment Centers

Vetter

Des Plaines

300

$320 million

Medical Devices

Target

Dekalb

450

$50 million

Distribution Center

Amazon

Runners-up in each of these

E N

Area Development’s

5+ to 8 million, 3+ to 5 mil-

Industry

2017 Gold Shovels in

lion, and fewer than 3 million.

Inv. Amt.

Normal

Magna Exteriors

five population categories:

Belvidere

# Jobs

Belvidere

scores were awarded

12+ million, 8+ to 12 million,

City/County N/E

AAR Corp. Paylocity

Rockford

500

$40 million

Aircraft MRO

Schaumburg

500

$29 million

Headquarters

Berner Food & Beverage

Dakota

200

$70 million

Food Processing

American Academy of Pediatrics

Itasca

480

$50 million

Headquarters

pop. 12.83 million) STATES WITH POPULATIONS OF

AREA DEVELOPMENT

12+ MILLION

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

CALIFORNIA SILVER SHOVEL WINNER

Company

City/County N/E

# Jobs

Inv. Amt.

Snapchat

Venice Beach

1,194

$32 million

NextEV

Industry Mobile Applications

San Jose

917

$138.3 million

Automotive

Kite Pharma

El Segundo

621

$114.8 million

Biomedical Products

OWB Packers

Brawley

605

$38.5 million

Food Processing

Ulta

Fresno

542

$48.3 million

Distribution

Oakland

532

$91.5 million

Warehousing

Livermore

326

$25 million

Automotive

Lineage Logistics Draexlmaier Automotive Millennium Space Systems

El Segundo

284

$19.9 million

Aerospace

BioLegend

San Diego

258

$99.1 million

Biologic Products

Atara Biotherapeutics

Thousand Oaks

206

$40.4 million

Biopharma Research

GOLD & SILVER SHOVEL AWARDS

(pop. 38 million) STATES WITH POPULATIONS OF

12+ MILLION

*if texas were a nation

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AREA DEVELOPMENT | Q2/2017

special report

FLORIDA

SILVER SHOVEL WINNER Company

City/County N/E

# Jobs

Inv. Amt.

Industry

Amazon.com

Jacksonville

1,500

$198 million

Fulfillment Center

LignoTech

Fernandina Beach

$135 million

Advanced Materials

Daytona Beach N

175

$100.5 million

Life Sciences

B. Braun Medical, Inc. OneWeb Satellites

Merritt Island

250

$85 million

Aerospace

KLX Aerospace Solutions

Miami

400

$69 million

Distribution/Services

Arthrex

Naples

560

$65.3 million

Life Sciences

AutoZone

Ocala

240

$50 million

Logistics/Distribution

Bay County

170

$55 million

Aviation/Aerospace

Maitland

1,600

$28.4 million

Financial/Professional Services

Ft. Lauderdale

375

$27 million

Information Technology

GKN Aerostructures North America ADP, LLC Hotwire Communications, Ltd.

(pop. 19.9 million)

Represents a state/local sponsor

STATES WITH POPULATIONS OF

12+ MILLION

P E N N S Y LVA N I A SILVER SHOVEL WINNER

Company

City/County N/E

Royal Dutch Shell

# Jobs

Inv. Amt.

Industry

Potter

600

$6 billion

Petrochemicals

Northampton

680

$227 million

Shipping/Logistics

Palmer & Pittston Townships

850

N/A*

Fulfillment Center

Farrell

$80 million

Steel Products

Cerner Corp.

Malvern

250

$75 million

Healthcare IT

Northpoint Development Inc. - Hudson Bay Co.

Pottsville

207

$50 million

Distribution

Lebanon Valley Cold Storage

Lebanon

131

$38.7 million

Frozen Foods

FedEx Corp. Amazon

NLMK Pennsylvania, LLC

Almac Group, Inc.

Lansdale

312

$24 million

Pharmaceuticals

Champion Modular

Susquehanna Township

246

$4.8 million

Modular Homes

Targeted Pet Treats

Warren

115

$3.4 million

Pet Foods

* Confidential Represents a state/local sponsor

AREA DEVELOPMENT

(pop. 12.78 million) STATES WITH POPULATIONS OF

12+ MILLION

Automobiles plant in Belvidere landing a $350 million, 300-job investment as it retools for assembling the Jeep Cherokee. Also in Belvidere is a significant Magna Exteriors investment. Illinois’ more mysterious automotive story involves a Michigan startup called Rivian Automotive, which hopes to enter the electric car business and acquired the shuttered Mitsubishi plant in Normal. Details are few and there are no public prototypes, but the company has said it could ultimately employ as many as a thousand at the Illinois plant. Other projects run the gamut from a Target distribution center in DeKalb to headquarters headlines in the Chicago region. Also, German medical device/pharmaceutical firm Vetter has made a deal in Des Plaines. How sustainable is the state’s good news? Economists and pundits are not in agreement. The state’s political climate is not always predictable, leading to uncertainties about the future of various incentives that have helped fuel positive headlines. And a U.S. News series of rankings gave Illinois low marks in terms of growth in GDP, jobs, and overall employment. But the gains announced in 2016 are welcome news in many parts of the state.

California — SILVER SHOVEL The Golden State added more than 300,000 jobs last year, and economists expect it’ll keep outpacing the nation at least for the next few years. Most sectors moved in a positive direction as 2016 progressed. The noteworthy projects announced in 2016 represent a decent cross-section of the economy, from technology and life sciences to automotive and aerospace. Given California’s huge

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

TEXAS

SILVER SHOVEL WINNER Company GM Financial Amazon

City/County N/E

# Jobs

Inv. Amt.

Industry

Arlington

1,300

$35 million

Financial Services

Houston

1,000

$136 million

Fulfillment Center

Lockheed Martin

Fort Worth

1,000

$1.2 billion

Aerospace

McKesson Corp.

Irving

1,000

$157 million

Headquarters & Distribution

AmerisourceBergen Corp.

Carrollton

800

$113 million

Pharmaceutical Services

ExxonMobil

Beaumont

$1.2 billion

Polyethylene

Austin

250

$1 billion

Semiconductors

Corpus Christi

250

$800 million

Polyethylene & PTA

Samsung M&G Chemicals LyondellBasell Bed, Bath & Beyond

LaPorte

$700 million

Polyethylene

Lewisville

800

$23 million

Fulfillment Center

Represents a state/local sponsor

GOLD & SILVER SHOVEL AWARDS

(pop. 27.86 million)

12+ MILLION

l Award ove W Sh

er inn

Silve r

STATES WITH POPULATIONS OF

2 01 7

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AREA DEVELOPMENT | Q2/2017

GEORGIA

GOLD SHOVEL WINNER Company

City/County N/E

NCR

# Jobs

Inv. Amt.

Industry

Atlanta

1,800

$145 million

Financial Technology

Troup County

1,000

$530 million

Automotive

Anthem

Atlanta

1,800

$20 million

Information Technology

UPS

Atlanta

1,250

$400 million

Logistics/ Distribution

Home Chef

Dekalb County

1,200

$3.4 million

Packaging/ Delivery Services

Honeywell

Atlanta

800

$19 million

Information Technology

Kaiser Permanente

Gwinnett County

800

$51 million

Customer Service Center

Amazon

Jackson County

500

N/A*

Fulfillment Center

Dollar General

Butts & Spalding Counties

500

$85 million

Logistics/ Distribution

Athens-Clarke County

500

$4 million

Information Technology

Sentury Tire

Voxpro

(pop. 10.31 million)

* confidential

8+ TO 12 MILLION

STATES WITH POPULATIONS OF

Represents a state/local sponsor

MICHIGAN

SILVER SHOVEL WINNER Company

City/County N/E

# Jobs

Inv. Amt.

Industry

Amazon.com

Livonia

1,000

$90 million

Fulfillment Center

Fiat Chrysler Automobiles LLC

Sterling Heights

700

$1.5 billion

Automotive

Flex-N-Gate Fuyao Automotive North America Ford Motor Co.

Detroit

650

$95 million

Automotive

Plymouth

533

$66 million

Automotive

Livonia

500

$1.4 billion

Automotive

C3 Ventures

Flint

380

$10 million

Automotive

Lipari Foods

Warren

337

$36 million

Warehouse/ Distribution

Duo Security

Ann Arbor

301

$2.5 million

Information Technology

Auburn Hills

290

$5 million

Automotive

Chelsea

235

$158.5 million

Automotive

Valeo North America Gestamp North America

Represents a state/local sponsor

(pop. 9.93 million) STATES WITH POPULATIONS OF

AREA DEVELOPMENT

8+ TO 12 MILLION

population of potential customers, distribution will always be a jobcreating sector, too. Snapchat led the way with a pledge of nearly 1,200 jobs in its hometown of Venice Beach. The tech company has quickly grown into a major employer, and though that’s generally welcome news, an interesting twist to this story is that some locals are starting to resist its continued growth and are urging it to start considering expansions elsewhere. Meanwhile, an electric-car startup called NextEV has enjoyed a welcome mat in San Jose, where the company’s roster of engineers and developers is building quickly. Bioscience-related developments will bring hundreds of jobs in multiple places, led by the Kite Pharma manufacturing facility in El Segundo, where the latest T-cell therapies for fighting cancer will be produced. BioLegend’s headquarters campus in San Diego will be a center of development in the areas of cancer, neurosciences, and immunology. And Atara Biotherapeutics picked Thousand Oaks for R&D. Agribusiness is, of course, a major economic driver in California, and in this year’s list of top projects that sector is represented by OWB Packers, which agreed to reopen an idled beef packing plant in Brawley. That ode to California’s heritage is balanced by the off-world focus of Millennium Space Systems, a satellite manufacturer growing in El Segundo.

Florida — SILVER SHOVEL Tourism and agriculture are the biggest drivers of the Florida economy. That’s no secret, and the state gets more economic activity out of beaches, theme parks,

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

Georgia helps its business community export more than $38 billion in goods to 215 countries and territories annually.* The worldâ&#x20AC;&#x2122;s busiest airport, fastest growing port in the nation, and representation in 11 strategic markets around the globe are just a few of the reasons why these international companies - and many others - choose Georgia. Alcoa Bombardier Bridgestone Golf Engineered Fabrics Gerdau Ameristeel

GRUMA Honda Husqvarna Inalfa JCB

Kia Motors Manufacturing Georgia Kubota Linhai Mercedes-Benz USA

Merial Novelis Pirelli Porsche SANY

Sentury Tire Siemens Sonata Software Sony Ericsson

thyssenkrupp Toyo Tires voestalpine Wipro Yamaha

For more global insight visit Georgia.org.

*Based on a three-year calendar average.

Georgia Department of Economic Development

AREA0690.indd 1

11/05/17 3:47 PM

BILLION DOLLAR(S)

PROJECTS OF THE YEAR (2016) ARKANSAS Shandong Sun Paper

Arkadelphia

New

250 jobs

$1 billion

Paper/Timber

Tellurian Investments

Calcasieu Parish

New

551 jobs

$11.8 billion

Petrochemicals

Venture Global LNG

Plaquemines Parish

New

250 jobs

$8.5 billion

Petrochemicals

LOUISIANA

MICHIGAN Fiat Chrysler Automobiles LLC

Sterling Heights

Expansion

700 jobs

$1.5 billion

Automotive

Ford Motor Co.

Livonia

Expansion

500 jobs

$1.4 billion

Automotive

MISSISSIPPI Continental Tire

Hinds County

New

2,500 jobs

$1.5 billion

Tires

Potter

New

600 jobs

$6 billion

Petrochemicals

PENNSYLVANIA Royal Dutch Shell

TENNESSEE General Motors

Spring Hill

Expansion

1,431 jobs

$1 billion

Automotive

ALSAC St. Jude’s Children’s Hospital

Memphis

Expansion

1,800 jobs

$1 billion

R&D

Lockheed Martin

Fort Worth

Expansion

1,000 jobs

$1.2 billion

Aerospace

ExxonMobil

Beaumont

Expansion

40 jobs

$1.2 billion

Polyethylene

Samsung

Austin

Expansion

250 jobs

$1 billion

Semiconductors

TEXAS

NEW JERSEY SILVER SHOVEL WINNER

Company

City/County N/E

Amazon

# Jobs

Inv. Amt.

Carteret & Florence

2,000

Philadelphia 76ers

Camden

250

$82 million

Headquarters

Holtec International

Camden

235

$260 million

Energy Equipment

Allergan Sales LLC

Madison

300

$103.7 million

Headquarters

iCIMS

Holmdel

390

$41.1 million

Technology

Jersey City

2,150

$68.3 million

Financial Services

Newark

276

$57.9 million

Cabinetry

JPMorgan Chase Fabuwood Cabinetry Corp. Charles Komar & Sons

N/A*

Industry Fulfillment Centers

Jersey City

480

$22.2 million

Headquarters

Galloway

271

$26.2 million

Outdoor Products

Newark

350

$56.7 million

Technology

Barrette Outdoor Living Audible.com * Confidential

(pop. 8.79 million) STATES WITH POPULATIONS OF

AREA DEVELOPMENT

8+ TO 12 MILLION

orange groves, and tomatoes than a lot of jurisdictions get out of all activities combined, including those some might find less glamorous or tasty. For good measure, Florida cashes in big-time on such sectors as aerospace/aviation, life sciences, and financial services, and those industries are well represented in its list of top projects from 2016. In fact, in the financial/professional services world, ADP is a big player in payroll processing, and its regional headquarters project in Maitland makes it a big local player, too. More than 500 jobs linked to life sciences are part of the Arthrex project in Naples; the company is in the business of medical devices and surgical supplies. Meanwhile, Pennsylvaniabased B. Braun Medical’s $100 million investment in Daytona Beach is to generate nearly 200 jobs. And Jacksonville is welcoming development that is becoming increasingly common across the country — Amazon fulfillment that will provide work for 1,500. Aerospace investments include a 250-job OneWeb Satellites plant on the Space Coast that will get the area into the work of building satellites, not just launching them — the company hopes to turn out as many as 15 communication satellites a week. In making the announcement last year, the company’s CEO, Brian Holz, noted the importance of labor in the business of satellite construction. “Satellites today are really manufactured in artisan way: It’s labor-intense, very hands-on, and it takes a long time,” Holz told Florida Today.

Pennsylvania — SILVER SHOVEL Some 20 Fortune 500 companies call Pennsylvania home, and the state touts economic strength

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

special report

in manufacturing, life sciences, agribusiness, tourism, and such focused areas as plastics and natural gas. Projects ran the gamut across industries last year, from the state’s longstanding steel sector to pharmaceuticals to frozen foods. One of Pennsylvania’s biggest 2016 headlines came in April, when Royal Dutch Shell announced plans for an ethane cracker facility in Beaver County. It’s a big deal, because it’s the first major U.S. petrochemical project of its kind away from the Gulf Coast. The project is worth 600 ongoing jobs, which is plenty significant, but the real impact is much broader. That’s because the plant will supply a wide range of manufacturers that rely on polyethylene — that’s what ties this into the all-important plastics sector and promises to help that industry grow. The big business of healthcare IT is a great opportunity, too, and Pennsylvania benefits from its expanding connection to Kansas City-based Cerner, one of the leading creators of electronic medical record technology. Pennsylvania also joins the list of states with ties to Amazon, which plans 850 fulfillment center jobs. Also in the area of shipping and logistics, FedEx is investing $227 million in Northampton County, creating 282 full-time and 398 part-time jobs, according to the Governor’s office.

Texas — SILVER SHOVEL They may be miles apart, but Pennsylvania and Texas are holding similar Silver Shovel celebrations. Even as Pennsylvania cheers the promise of polyethylene away from the Gulf Coast, Texas continues to reap economic gains from polyethylene-related projects. Three of them are on the state’s list of major 2016 projects: ExxonMobil in Beaumont, M&G Chemicals in Corpus Christi, and LyondellBasell in LaPorte. Meanwhile, a thousand jobs are on the way from a major healthcare player, McKesson, which distributes pharmaceuticals and medical supplies. The company’s U.S. Pharmaceuticals Group is making the move from San Francisco to Irving. And, as Pennsylvania and other states roll out the red carpet for Amazon, so does Texas, where a Houston fulfillment center promises another thousand jobs. The biggest news, from a jobs perspective, came from GM Financial, the automaker’s in-house lender, which has Arlington operations. Business for GM Financial has been booming, so its operation is expanding to make room for 1,300 more people. In the aerospace sector, Lockheed Martin announced a 10-figure investment that is to yield a thousand jobs. Another billion-dollar investment will beef up Samsung’s Austin semiconductor operations.

Billion-Dollar There’s an undeniable prestige that comes from landing a project with a 10-figure investment. Billion-dollar deals don’t come along very often, they generate big headlines and well-deserved respect, they grow the tax base and they create jobs, typically quite a few jobs.

Projects of the Year Louisiana and has investment plans in Plaquemines Parish that surpass $8 billion. In Pennsylvania, Royal Dutch Shell announced $6 billion plans for an ethane cracker facility. ExxonMobil is another example in Beaumont, Texas.

What does a billion-dollar deal look like? There are always exceptions to any rule, but as the dozen megadeals announced in 2016 indicate, there are some pretty common characteristics. First of all, that price tag is as much an indicator of complexity as it is of size. Most billiondollar deals involve some sort of manufacturing operation that is technologically complicated. Automotive assembly fits that bill, as do petrochemical operations.

Pricey automotive investments often aren’t new facilities. It’s not difficult to spend a billion or more dollars retooling an existing plant to prepare for production of a different vehicle, or a new generation of components. Michigan provides a couple of examples, including a $1.5 billion Fiat Chrysler Automobiles investment planned in Sterling Heights and a $1.4 billion transmission project from Ford in Livonia. General Motors offers a similar example in Tennessee, as does Continental Tire in Mississippi.

The biggest project on the list from a dollar perspective involves Tellurian Investments, which wants to develop a liquefied natural gas terminal along the Calcasieu River in Louisiana. That deal carries a jaw-dropping price of nearly $12 billion. The only other projects that even come close are also petrochemical in nature. Venture Global is also developing LNG capacity in

Healthcare is an incredibly complex business, too, which is how ALSAC St. Jude’s Children’s Hospital in Memphis ended up on the billion-dollar list. The same can be said for semiconductors and aerospace — Texas offers examples from Samsung and Lockheed Martin. The other major investment on this list is in Arkansas, where Shandong Sun Paper of China is planning a major paper mill.

AREA DEVELOPMENT | Q2/2017

special report

NORTH CAROLINA

8+ Million to 12 Million Population Category

SILVER SHOVEL WINNER

Company

City/County N/E

# Jobs

Inv. Amt.

Industry

Amazon

Charlotte

1,500

$50 million

Fulfillment Center

Everest Textile Co., Ltd.

Forest City

610

$18.5 million

Textiles

Mountaire Farms

Siler City

600

$50 million

Food Processing

Avadim Technologies, Inc.

Asheville

E &N

551

$20.4 million

Biotech/ Pharmaceuticals & Headquarters

INC Research, LLC

Morrisville

550

$51.5 million

Biotech Headquarters

HAECO Americas

Greensboro

500

$60 million

Aviation MRO

Clayton

390

$210 million

Biotech/ Pharmaceuticals

Corning, Inc.

Hickory & Winston-Salem

355

$205 million

Fiber & Cables

GF Linamar

Mills River

350

$217 million

Automotive

GKN Driveline

Mebane, Sanford, Roxboro & Maiden

302

$206.6 million

Automotive

Grifols Therapeutics

(pop. 10.10 million) STATES WITH POPULATIONS OF

8+ TO 12 MILLION

ARIZONA

GOLD SHOVEL WINNER Company

City/County N/E

Raytheon Missile Systems Lucid Motors

# Jobs

Inv. Amt.

Industry

Tucson

1,975

$352.3 million

Areospace

Casa Grande

2,213

$735 million

Electric Vehicles

ADP

Tempe

1,500

$33.8 million

Business Services

Oscar Health Insurance

Tempe

1,250

$5 million

Insurance

Wells Fargo

Chandler

1,200

$25 million

Financial Services

Farmers Insurance

Phoenix

1,188

$41.3 million

Insurance

CIOX Health

Phoenix

2,820

$15 million

Business Services

Mesa

500

$60 million

Biotechnology

Dexcom Huhtamaki SK Food Group

Goodyear

300

$119 million

Consumer Products

Tolleson

550

$29 million

Food Products

Represents a state/local sponsor

(pop. 6.93 million) STATES WITH POPULATIONS OF

AREA DEVELOPMENT

5+ TO 8 MILLION

Georgia — GOLD SHOVEL Georgia is on a roll, according to economists, growing faster than the nation as a whole and on a trajectory for continued improvement. A U.S. Senate report last summer found Georgia among the top states in terms of private-sector jobs created since the Great Recession, with the tally up 12.6 percent. And that was before the impact of most of the stellar announcements of 2016 that earned the state a Gold Shovel. Leading the list of announcements was NCR, which shared plans to grow its world headquarters campus in midtown Atlanta with a second office tower. The company’s chairman and CEO, Bill Nuti, promised its campus would “become a technology landmark in one of the city’s fastest-growing neighborhoods.” Adding 1,800 jobs can only help with that landmark status. Insurance giant Anthem pledged a similar number of jobs at the Atlanta technology hub it announced last October, several months after announcing it would add more than 400 call center jobs in Columbus. Information technology, in fact, is growing rapidly, with Honeywell and Voxpro among those making big announcements. But the state’s prime Southern location and strong infrastructure also helped fuel multiple logistics, distribution, and delivery projects with hundreds of additional jobs promised. There was still room on the list of top projects for manufacturing, too, with Chinese tire producer Sentury Tire’s LaGrange plans for a production and research center employing

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AREA0692.indd 1

12/05/17 5:24 PM

special report Large JobCreating

Projects of the Year

It has long been said that money isn’t everything. In the case of economic development projects, many would argue that job creation is the most relevant measure, and sometimes the biggest job-creating projects aren’t the ones with the biggest price tags. For example, various kinds of financial or professional services operations, as well as contact centers, can often create a wealth of job opportunities. In many cases this kind of growth can happen with a comparatively small investment because these projects can go into existing facilities and be outfitted mostly with desks, phones, and computers. More than 2,800 jobs in Phoenix are planned by CIOX Health, manager of health information. Anthem is planning 1,800 jobs at an Atlanta technology hub. ADP wants to hire 1,800 in Virginia, 1,600 in Florida, and 1,500 in Arizona. JP Morgan Chase has plans for more than 2,100 jobs in New Jersey. While many warehouses are increasingly automated, it can still take a lot of people to handle fulfillment operations. Our focus on e-commerce expansions spotlights multiple Amazon projects, for example, that collectively are adding more than 17,000 jobs. In Georgia, nearly 2,500 jobs related to logistics and distribution are being created by UPS and Home Chef. And Under Armour needs a thousand people in Maryland to help distribute its products. Of course, major manufacturing operations can be big job-creators, too. The accompanying list offers numerous examples of major automotive operations in multiple places, from tire production to engines to high-tech electric vehicles. And there are thousands of aerospace jobs on tap as well.

AREA DEVELOPMENT

LARGE JOB-CREATING

PROJECTS OF THE YEAR (2016)* ARIZONA CIOX Health

Phoenix

Expansion

2,820 jobs

$15 million

Business Services

Lucid Motors

Casa Grande

New

2,213 jobs

$735 million

Electric Vehicles

Raytheon Missile Systems

Tucson

New

1,975 jobs

$352.3 million

Aerospace

ADP

Tempe

Expansion

1,500 jobs

$33.8 million

Business Services

Oscar Health Insurance

Tempe

Expansion

1,250 jobs

$5 million

Insurance

Wells Fargo

Chandler

Expansion

1,200 jobs

$25 million

Financial Services

Farmers Insurance

Phoenix

New

1,188 jobs

$41.3 million

Insurance

Venice Beach

Expansion

1,194 jobs

$32 million

Mobile Applications

Boulder

Expansion

1,000 jobs

$150 million

Information Technology

Maitland

New

1,600 jobs

$28.4 million

Financial/ Professional Services

NCR

Atlanta

Expansion

1,800 jobs

$145 million

Financial Technology

Anthem

Atlanta

New

1,800 jobs

$20 million

Information Technology

UPS

Atlanta

New

1,250 jobs

$400 million

Logistics/ Distribution

Home Chef

Dekalb County

New

1,200 jobs

$3.4 million

Packaging/ Delivery Services

Sentury Tire

Troup County

New

1,000 jobs

$530 million

Automotive

Normal

New

1,000 jobs

$175 million

Electric Vehicles

CALIFORNIA Snapchat

COLORADO Google, Inc.

FLORIDA ADP, LLC

GEORGIA

ILLINOIS Rivian Automotive

a thousand or more. In making the announcement, Sentury Executive Vice President Rami Helminen noted that “the education systems and high-quality workforce complement our leading-edge technology.”

Michigan — SILVER SHOVEL It’s hardly a surprise that the fortunes of Michigan rise and fall with the automotive industry. It’s been that way for generations, even as the sector has expanded significantly across the South and elsewhere. So you know things are running smoothly in the auto sector when the state’s jobless rate

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LARGE JOB-CREATING

PROJECTS OF THE YEAR (2016)* IOWA Cognizant Technology Solutions

Des Moines

Expansion

1,014 jobs

$9 million

Technical Services

Sparrows Point

New

1,000 jobs

$174 million

Distribution

Continental Tire

Hinds County

New

2,500 jobs

$1.5 billion

Tires

Topship LLC

Gulfport

Expansion

1,000 jobs

$68 million

Shipbuilding

Jersey City

Expansion

2,150 jobs

$68.3 million

Financial Services

ALSAC St. Jude’s Children’s Hospital

Memphis

Expansion

1,800 jobs

$1 billion

R&D

General Motors

Spring Hill

Expansion

1,431 jobs

$1 billion

Automotive

MARYLAND Under Armour

GOLD & SILVER SHOVEL AWARDS

MISSISSIPPI

NEW JERSEY JPMorgan Chase

TENNESSEE

TEXAS GM Financial

Arlington

Expansion

1,300 jobs

$35 million

Financial Services

Lockheed Martin

Fort Worth

Expansion

1,000 jobs

$1.2 billion

Aerospace

McKesson Corp.

Irving

New

1,000 jobs

$157 million

Headquarters & Distribution

Norfolk

New

1,800 jobs

$32.3 million

Financial/ Shared Services

VIRGINIA ADP

* See e-Commerce Projects of the Year chart for other large job-creating projects.

transmission plant will support production of the F-150 and Raptor trucks. A statement from Ford’s president for the Americas, Joe Hinrichs, observed that “Ford employs more hourly workers and builds more vehicles in the United States than any other automaker,” and the Livonia plan would add another 500. Even so, automobiles aren’t everything in Michigan. The state continues to focus attention on such sectors as aerospace, defense, cybersecurity, and agribusiness. And from a job-creation perspective, the biggest deal of the past year was an Amazon fulfillment center.

New Jersey — SILVER SHOVEL (5.1 percent, Dec. 2016) settles into a healthy place within a few tenths of a percent of the national rate. Indeed, read through the most noteworthy Michigan economic development projects revealed in 2016 and the vast majority are automotive. Many are big-dollar deals, such as the $1.5 billion investment planned in Sterling Heights by Fiat Chrysler Automobiles and the $1.4 billion project that Ford has on the books in Livonia. The plan in Sterling Heights is to retool in order to make the new Ram 1500 pickups. Ford’s proposal for the company’s Livonia

Diversity brings prosperity, as revealed in New Jersey’s list of 2016 economic development success stories. There are headquarters projects, technology developments, energy-related operations, cabinetry and fence manufacturing as well as distribution. A little bit of everything would seem to go a long way. The state stands to cash in on more than 2,000 financial services jobs that JPMorgan Chase is moving across the Hudson River from New York City to Jersey City. Another Manhattan export to Jersey City is apparel retailer Charles Komar & Sons. Meanwhile, the Philadelphia 76ers sailed

AREA DEVELOPMENT | Q2/2017

special report

COLORADO

SILVER SHOVEL WINNER Company

City/County N/E

# Jobs

Inv. Amt.

Industry

Agilent Technologies

Fredrick

170

$135 million

Pharmaceuticals

Amazon

Aurora

250

$27 million

Fulfillment Center

AstraZeneca

Boulder/ Longmont

400

$71.9 million

Pharmaceuticals

BP Lower 48

Denver

200

N/A*

Headquarters

Greenwood Village

800

$100 million

R&D

CoorsTek

Golden

$120 million

Ceramic Components

Google, Inc.

Boulder

1,000

$150 million

Information Technology

Leprino Foods

Greeley

150

$190 million

Food Processing

Partners Group

Broomfield

150

$14.6 million

Headquarters

Viega

Broomfield

190

$34 million

Headquarters

Charter Communications

(pop. 5.46 million)

* Confidential

STATES WITH POPULATIONS OF

5+ TO 8 MILLION

INDIANA

SILVER SHOVEL WINNER Company

City/County N/E

# Jobs

Inv. Amt.

Industry

Ryobi Die Casting (USA)

Shelbyville

150

$97.5 million

Automotive Parts

Blue Kingfisher, LLC

Fort Wayne

277

$181.2 million

Food Processing

Kohl’s Department Stores, Inc.

Plainfield

300

$176.5 million

Distribution

Heartland Pet Food Manufacturing

Richmond

165

$147.1 million

Pet Food Processing

Bedford

148

$145 million

Automotive

Salesforce.com, Inc.

General Motors

Indianapolis

800

$43.8 million

Professional & Technical Services

Mobi Wireless Management, LLC

Zionsville

521

$11.2 million

Professional & Technical Services

Forest River Manufacturing, LLC

LaGrange

425

$6.7 million

Recreational Vehicles

GuideSoft, Inc.

Indianapolis

400

$2.2 million

Professional & Technical Services

Celadon Trucking Services, Inc.

Indianapolis

375

$28 million

Transport Freight/ Trucking

(pop. 6.63 million) STATES WITH POPULATIONS OF

AREA DEVELOPMENT

5+ TO 8 MILLION

across the Delaware River to set up a state-of-the-art headquarters and training facility in the New Jersey community of Camden, creating 250 more New Jersey jobs. Like a number of states, New Jersey continues to benefit from the ever-expanding Amazon, which swept in with a 2,000-job announcement of new fulfillment centers in Middlesex and Burlington counties. The company already operates multiple centers in New Jersey and employed more than 5,000 people, but needed more facilities, it said, “to provide the fastest possible delivery times.”

North Carolina — SILVER SHOVEL Amazon’s nationwide growth includes 1,500 proposed jobs at a distribution center near Charlotte Douglas International Airport, one of North Carolina’s big 2016 announcements that helped add up to Silver Shovel honors. A nice mix of highend projects rounded out a healthy year in the Tar Heel State. The North Carolina economy has, in fact, been among the nation’s fastest-growing in recent years. Population is increasing and GDP growth has been through the roof, well ahead of the U.S. average. Though economists expect 2017 growth to be a bit slower, it’s still moving in a healthy direction. Beyond Amazon, other big announcements had three-digit job figures attached to them — hundreds and hundreds of attractive jobs. Three deals were in the biotech sector that loves North Carolina, two in automotive, another in aviation, and one in telecommunications cabling. Joining those were wins in the traditional sectors of textiles and food processing.

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

5+ Million to 8 Million Population Category

Arizona — GOLD SHOVEL When it comes to economic development success stories, Arizona is a regular near the top the list of states with population counts between 5 million and 8 million. Its Gold Shovel performance is the result of major projects in finance and insurance as well as business services, mixed with a number of highly diversified manufacturing highlights. Arizona economists are expecting a red-hot 2017, economically speaking — they’re fired up after the state celebrated a massive, multibilliondollar announcement by Intel barely a month into the new year. But 2016 was hardly shabby, with economic growth that topped 2 percent, surpassing the nation’s 1.6 percent gain in GDP. Population in Arizona continues to rise, unemployment is dropping, and job growth ranks highly. A major feather in Arizona’s cap was the decision by Lucid Motors to build a $735 million electric car factory in Casa Grande. A dozen other states wanted the project that’s due to create a couple thousand jobs and start production as early as next year. And nearly 2,000 aerospace workers are expected to join the Raytheon payroll in Tucson. Big announcements in the business services realm came from CIOX Health, manager of health information that’s planning growth of more than 2,800 jobs in Phoenix, and ADP, the payroll firm that’s moving 1,500 new hires into the former US Airways headquarters building in Tempe. Three major moves in finance and insurance together are bringing roughly 3,600 jobs. There are many new jobs in food products, consumer

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Consider City of Mesa for your corporate expansion or relocation. Mesa is a global hub for aerospace, defense, medical device, semiconductor and cyber security companies, including some of the world’s biggest players in technology and innovation (Boeing, Apple, FUJIFILM, Bridgestone). Employers enjoy a large, skilled workforce, low operational costs, abundant land space and a close-knit, corporate friendly community. Mesa is a smart location for intelligent companies. Visit us online and tell us about your project. M E S A A Z . G O V/ E C O N O M I C

AREA0694.indd 1

13/05/17 10:13 AM

AREA DEVELOPMENT | Q2/2017

special report

TENNESSEE

SILVER SHOVEL WINNER Company

City/County N/E

# Jobs

Inv. Amt.

Industry

General Motors

Spring Hill

1,431

$1 billion

Automotive

Cargill, Inc.

Memphis

163

$661 million

Flour Milling

Coopertown

600

$100 million

Distribution

Memphis

655

$81.8 million

Distribution

Bristol

585

$3.5 million

Travel Services

Monroe County

$218.5 million

Automotive Parts

Fedex

Murfreesboro

$189.5 million

Distribution Services

Wacker Chemical

Bradley County

$150 million

Chemicals

LeMond Composites, LLC

Oak Ridge

242

$125 million

Fibers & Filaments

ALSAC St. Jude’s Children’s Hospital

Memphis

1,800

$1 billion

R&D

Lowe’s Companies, Inc. DHL Agero JTEKT Automotive TennesseeVonore, LLC

(pop. 6.60 million)

Represents a state/local sponsor

STATES WITH POPULATIONS OF

5+ TO 8 MILLION

KENTUCKY

GOLD SHOVEL WINNER Company

City/County N/E

# Jobs

Inv. Amt.

Industry

General Motors

Warren County

620

$290 million

Automotive

FedEx Ground Package Systems

Boone County

$199.3 million

Distribution/ Logistics

Safran Landing Systems

Boone County

$150.3 million

Aircraft Systems

Thai Summit Kentucky Corp.

Nelson County

216

$110.1 million

Automotive

Jefferson County

850

$19.9 million

Financial Services

Alorica, Inc.

Daviess County

830

$6.4 million

Financial Services

Clinical Trial Services, Inc.

Kenton County

500

$36.4 million

Biotechnology

Woodford County

310

$57.1 million

Food & Beverages

Pulaski County

100

$63 million

Automotive

Woodford County

262

$47.4 million

Distribution

ComputerShare, Inc.

More Than a Bakery Toyotetsu America, Inc. Lakeshore Learning Materials

Represents a state/local sponsor

(pop. 4.40 million) STATES WITH POPULATIONS OF

AREA DEVELOPMENT

3+ TO 5 MILLION

products, and biotech — it’s a diverse set of headlines, which helps explain why Arizona does so well on these rankings year after year.

Colorado — SILVER SHOVEL Colorado is steadily growing the kinds of industries that every state envies — high-paying, forwardthinking, and attractive to highly educated young people. It’s the top state in the concentration of aerospace employment, third in the concentration of high-tech workers, and sixth in the concentration of workers in creative-class occupations, according to the Colorado Office of Economic Development & International Trade. The economy is on the move in biosciences, advanced manufacturing, electronics, defense, energy, and of course, tourism across the Rocky Mountains. Announced expansion last year was led by Google’s ongoing development of its campus in Boulder. The company bought more land and made room for more employees in 2016, and continues to line up space this year. More technology growth is in Greenwood Village, where Charter Communications announced its plans to fill up a 12-story office tower under construction. And the Coors family continued to brew its path beyond the beer business by expanding its CoorsTek engineered ceramics operation with a $120 million R&D and manufacturing facility in Golden. The state’s attractiveness as a business destination helped it grow its headquarters operations last year, too — three such expansions are on the list of Colorado’s biggest 2016 projects. The pharmaceuticals sector is on the rise in Colorado, as well. So is the somewhat lower-tech but always in-demand business of cheese

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(800) 626-2930 • ThinkKentucky.com

KENTUCKY’S BUSINESS CLIMATE IS CHANGING And we have a gold shovel to prove it! Kentucky already offers companies an ideal location, low business costs and incredible workforce. That led to a record number of new jobs announced last year. New for 2017, we bring Right to Work to the table. For companies considering a new or expanded location, that makes a good decision even better. With even more pro-business changes coming, you’ll want to Think Kentucky. We are becoming the gold standard.

Making Business Strong. Making Life Exceptional.

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ALABAMA

SILVER SHOVEL WINNER Company Lear Corp.

City/County N/E

# Jobs

Inv. Amt.

Industry

Brookwood

535

$27.7 million

Automotive

The Boeing Co.

Huntsville

470

$78 million

Aerospace

UTC Aerospace Systems

Foley

260

$20.4 million

Aerospace

Gerhardi Kunststofftechnik GmbH

Montgomery

235

$37.9 million

Automotive

Mollertech

Woodstock

222

$46.3 million

Automotive

Car Tech, LLC

Opelika

200

$71.8 million

Automotive

Eissmann Automotive North America Inc.

Pell City

200

$14.5 million

Automotive

Yulista Management Services, Inc.

Huntsville

200

$13.5 million

Aviation Services

Kronospan U.S. LLC

Eastaboga

160

$362 million

Forest Products

Dothan

100

$75 million

Aviation Technologies

CAE USA

(pop. 4.88 million) STATES WITH POPULATIONS OF

3+ TO 5 MILLION

IOWA

SILVER SHOVEL WINNER Company

City/County N/E

Farmers Energy Cardinal, LLC

# Jobs

Inv. Amt.

Industry

Atlantic

$189.9 million

Ethanol Plant

Templeton Rye Co.

Templeton

$25.9 million

Food/Beverage Processing

Simply Essential, LLC

Charles City

254

$29.9 million

Food Processing

Altoona

$30 million

Information Technology

Des Moines

1,014

$9 million

Technical Services

LightEdge Solutions, Inc. Cognizant Technology Solutions Keokuk Mills, LLC

Keokuk

200

$4.5 million

Steel Castings

Microsoft Corp.

West Des Moines

$417.7 million

Information Technology

Prestage Foods of Iowa

Eagle Grove

922

$239.3 million

Food Processing

LeMars

$40.4 million

Food Processing

West Des Moines

$36.7 million

Financial Services/ Insurance

Wells Enterprises, Inc. IMT Insurance Co.

Represents a state/local sponsor

(pop. 3.13 million) STATES WITH POPULATIONS OF

AREA DEVELOPMENT

— Leprino Foods’ growth in Greeley continues. It’s putting the topping on a tasty economic picture in Colorado.

Indiana — SILVER SHOVEL Indiana jobs were in the national headlines in 2016 in a bit of a mixed way, when the planned contraction of Carrier Corp. and other United Technologies operations in the state became an issue on the presidential campaign trail. The job losses were part of candidate Trump’s speeches, and then returned to the headlines when Trump and the vice-presidentelect, outgoing Indiana Gov. Mike Pence, hatched an incentive package that persuaded the manufacturer to hold onto some (but not all) of the Indiana jobs. With that, Indiana’s ongoing growth engine was obscured by controversial headlines, not the first time in recent years that has happened. While the nation was focused on Carrier, the state was adding many hundreds of jobs across the manufacturing sector, from pet food in Richmond to RVs in LaGrange to milk in Fort Wayne to auto parts in Shelbyville. That’s just part of the Indiana growth picture, though. It has long been a center of transportation and logistics activity, and that growth continued in 2016. And the state continues to make its mark in technology, with a constant stream of announcements. Most visible is Salesforce, which made plans for another 800 new jobs in Indianapolis and took on a big chunk of space in the state’s tallest building — enough space, in fact, that the building itself now goes by the Salesforce name, with the company’s logo recently replacing the Chase logo atop the tower.

3+ TO 5 MILLION

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Tennessee — SILVER SHOVEL The automotive industry has been good to Tennessee for many years, and 2016 continued the success story for the state’s top manufacturing sector. Promising a roughly 10-figure investment and more than 1,400 jobs, General Motors in Spring Hill is putting in a new high-efficiency engine program and other modernizations. And manufacturing jobs are promised in other areas, too, including chemicals, fibers and filaments, and flour milling. Distribution is also a longtime job creator in the state that’s the headquarters of one of the biggest names in delivery, FedEx. The fact that FedEx is delivering more jobs is not an unusual occurrence in Tennessee. But there are hundreds more distribution job opportunities on the way from rival DHL, and more from Lowe’s, among others. But Tennessee’s Silver Shovel award this year is really an honor for diverse job growth, as gains in manufacturing and distribution were supplemented by significant projects in services and healthcare research. In fact, the biggest prize on the list from a job-creation perspective is the expansion

project planned by ALSAC St. Jude’s Children’s Research Hospital in Memphis. As many as 1,800 new jobs are in the pipeline in the project that’s expected to double the institution’s economic impact on the area. And hundreds more will be working for Agero Inc., which runs calls centers that provide vehicle and driver safety, security, and information services.

3+ Million to 5 Million Population Category

Kentucky — GOLD SHOVEL It was a hot year in the Bluegrass State, as companies announced more than 300 new facility or expansion projects, with investment totaling more than $3 billion and job creation pegged at more than 16,000. More and more customers around the world are tapping into Kentucky products, as exports grew 5.8 percent to nearly $30 billion in 2016, led by aerospace products. That said, the financial services sector had a healthy impact on the list of significant projects that earned Kentucky a Gold Shovel award in its population category. Between projects announced by ComputerShare Inc. in Jefferson County and Alorica Inc. in Daviess County, some 1,700 jobs are on tap. Industry Computershare is in the business of stock and investor relations services, Fiberglass Products and announced that it would grow its Louisville operations from 250 to Carbon Fiber 1,100. Alorica, meanwhile, is bringing hundreds of customer-service Tires jobs to Owensboro. Technology Services Kentucky’s healthy economy also owes a lot to the automotive sector, Software & Services and 2016 qualifying announcements totaling half a billion dollars and a Automotive thousand or so jobs are already giving way to even more great news Pharmaceuticals in 2017. Auto investments have powered Kentucky’s Shovel award Adhesive Materials honors in many recent years, and in 2016 it was General Motors leadIndustrial Products ing the way. Even so, the state’s growth is broad-based, with victoEngineered ries in a diversity of sectors, includStructural Metals ing distribution, biotech, and food (pop. 4.94 million) processing.

SOUTH CAROLINA SILVER SHOVEL WINNER

Company

City/County N/E

China Jushi

# Jobs

Inv. Amt.

Richland County

400

$300 million

Teijin Ltd.

Greenwood County

220

$600 million

Michelin North America

Spartanburg County

350

$270 million

Robert Bosch LLC

Dorchester County

150

$175 million

Berkeley County

300

$154 million

Spartanburg County

480

$29 million

Greenville County

450

$45 million

Spartanburg County

150

$85 million

Techtronic Industries

Anderson County

250

$75 million

Tower International

Greenville County

140

$75 million

Blackbaud Magna International PL Developments Ritrama

STATES WITH POPULATIONS OF

AREA DEVELOPMENT

3+ TO 5 MILLION

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

e -COMMERCE * PROJECTS OF THE YEAR (2016) COLORADO Aurora

New

250 Jobs

$27 million

New

1,500 jobs

$198 million

New

500 jobs

New

4,500 jobs

GOLD & SILVER SHOVEL AWARDS

FLORIDA Jacksonville

GEORGIA Jackson County

N/A**

ILLINOIS Edwardsville, Romeoville, Monee, Joliet

$355 million

KANSAS Edgerton & Kansas City

New

2,000 jobs

$292.6 million

Expansion

1,000 jobs

$90 million

New

1,000 jobs

$250 million

New

1,000 jobs

$18 million

New

2,000 jobs

N/A**

New

1,500 jobs

$50 million

New

850 jobs

New

1,000 jobs

MICHIGAN Livonia

MINNESOTA Shakopee

NEVADA North Las Vegas

NEW JERSEY Carteret & Florence

NORTH CAROLINA Charlotte

PENNSYLVANIA Palmer & Pittston Townships

N/A**

TEXAS Houston

$136 million

* Projects represent Amazon fulfillment centers **Investment confidential

Alabama — SILVER SHOVEL It’s almost like a stuck record in Alabama, but it’s playing beautiful music that economic development officials will never tire of hearing. Automotive and aerospace manufacturing continues to drive healthy economic activity, enough for yet another Silver Shovel honor covering the news from 2016. It was

E-Commerce Scan through the list of projects spotlighted in this year’s Shovel Awards, from one state to another state, and you’re likely to experience a bit of déjà vu — an Amazon fulfillment center here, another one there, yet another, and another. There are Amazon distribution projects on the list in a dozen states. Some states have more than one. Altogether, more than 17,000 new jobs are on the list. It’s an astonishing ongoing rollout and expansion of a logistics strategy that’s being felt practically everywhere, it seems. As 2016 began, industry observers reported that the company already had more than 100 U.S. warehouses, and practically every month more were announced. Just in Illinois, the company in about two years went from having virtually no significant distribution operations to plans for multiple sites and thousands of employees.

Projects of the Year Indeed, early in 2016 one supply chain analyst who follows Amazon closely predicted that the company would open more than seven million square feet of fulfillment space across the U.S. over a two-year span. That’s ambitious, for sure, but it takes more and more sites, in ever-more ubiquitous locations, to keep up with the company’s increasingly ambitious delivery promises. Two days seemed pretty amazing, once upon a time, but these days the company is working to deliver purchases nearly as quickly as Domino’s delivers fresh pizzas. Where is it all leading? That’s the big question industry analysts are pondering, but it’s increasingly clear that the company is working to eliminate middlemen, even freight companies themselves. As that future unfolds, expect to see Amazon projects on these lists on a regular basis.

AREA DEVELOPMENT | Q2/2017

special report

not so much a huge win but a combination of good victories, including five automotive projects that together add up to the promise of about 1,400 jobs. For example, Lear Operations makes seats for the Mercedes plant, and its local employee count will be more than four times bigger once its expansion is up and running in a couple of years. Meanwhile, a German company named Gerhardi Kuntstofftechnik is planning its first North American plant to supply Alabama’s Hyundai plant. Good automotive news keeps building upon itself. Four more top projects are flying in from the aerospace and aviation technologies industry, led by Boeing’s plans in Huntsville. It’s part of a restructuring of its Strategic Defense & Intelligence System division that will transfer some jobs in and potentially create more, according to company officials. Altogether, the top aviation/aerospace-related projects will add a thousand jobs to the state’s economic picture.

Iowa — SILVER SHOVEL Those who know of Iowa as an agricultural state are certainly not wrong, as evidenced by the list of top 2016 projects

that helped land the state in Silver Shovel territory. Four major projects were tied to food processing, led by the announcement that Prestage Foods of Iowa will build a pork processing plant in Eagle Grove and create more than 900 jobs. Ron Prestage, of the family that owns the company, notes that “Iowa is the nation’s leading pork-producing state and currently produces more pigs than it can process.” Simply Essentials, meanwhile, announced plans to reopen a poultry facility in Charles City and put more than 250 people to work. And not to neglect the importance of corn to the state’s economy, Farmers Energy Cardinal unveiled plans for a corn ethanol plant in Cass County that would be a nearly $190 million investment. All that said, there’s much more than agriculture in Iowa, which benefits from a diverse economy featuring a healthy share of manufacturing, biotechnology, and finance and insurance operations. Three of the state’s major 2016 announcements were in technical services and information technology, including a thousand-job project from Cognizant Technology Solutions in Des Moines.

South Carolina — SILVER SHOVEL

UTAH

SILVER SHOVEL WINNER Company

City/County N/E

Honeyville, Inc.

Weber County

115

$23 million

Food Processing

Salt Lake County

400

$8 million

Software/IT

Entrata Property Solutions

Utah County

191

$6 million

Software/IT

Duncan Aviation

Utah County

700

$53 million

Aircraft Maintenance/ Painting

UPS

Salt Lake County

195

$207 million

Logistics/ Transportation

PillPack

Salt Lake County

300

$32 million

Pharmacy Services

Connexion Point

Salt Lake County

221

$9 million

Software/IT

The White Wave Foods Co.

Salt Lake County

105

$70 million

Food Processing

Lucid Software

Salt Lake County

339

$11 million

Software/IT

Packsize

Salt Lake County

354

$9.2 million

Packaging Systems

SoFi

# Jobs

Inv. Amt.

Industry

(pop. 3.05 million) STATES WITH POPULATIONS OF

AREA DEVELOPMENT

3+ TO 5 MILLION

A roster of big-dollar and wellbalanced projects made 2016 a fine year in South Carolina. Even as automotive giants Mercedes and Volvo work on new or expanded plants that promise significant rewards in the next few years, Michelin is adding to the auto-related excitement with plans for a tire distribution center in Spartanburg County that will add 350 jobs. Also in Spartanburg County, Magna International broke ground for an automotive seating facility that’ll be worth about 480 jobs. Noteworthy, though, is how much activity is outside the hard-driving automotive sector. China Jushi, for example, is creating 400 jobs in the fiberglass arena, joined by 220 more in carbon fiber technology, courtesy of Teijin Ltd. In making the Teijin announcement, Wayne Trotter, the company’s director of government relations, hailed “the diversity of Greenwood’s citizens, the community’s rich history of welcoming

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AREA0668.indd 1

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special report

foreign investment, and the excellent training opportunities available at Piedmont Technical College.” South Carolina’s top projects also showcase a growing software and technology presence, plus pharmaceuticals, adhesive materials, and engineered metals. As automotive operations continue to gain strength, so do many other parts of this diverse economy.

Utah — SILVER SHOVEL Add a Silver Shovel to Utah’s growing list of business accolades. The state is adding investment and jobs in a variety of highly desirable sectors, with software and information technology leading the way. It’s one of a half-dozen sectors that make up the strategic industry clusters pursued by the Governor’s Office of Economic Development, which has had noteworthy success promoting the “Silicon Slopes.” SoFi, for example, brings high-tech savvy to the lending arena (also known as financial technology or fintech), and made a 400-job announcement. Hundreds more Salt Lake County jobs were promised by cloud-based web tool provider Lucid Software and the healthcare analytics firm Connexion Point. And Entrata’s property management software is creating nearly 200 more in Utah County. What else is the state seeking? Aerospace and defense jobs are on the strategic list, and last year’s top projects include a major win there. Energy is an area of interest, along

MISSISSIPPI GOLD SHOVEL WINNER

Company

City/County N/E

# Jobs

Inv. Amt.

Continental Tire

Hinds County

2,500

$1.5 billion

Topship LLC

Gulfport

1,000

$68 million

Southern Motion

Baldwyn

600

$20 million

Niagara Bottling

Marshall County

$78 million

Premium Waters

Hinds County

$25 million

BPI Packaging

Olive Branch

150

$8 million

Ajinomoto Windsor

Oakland

$20 million

BMSI

with life sciences, financial services, and outdoor products/ recreation.

Fewer Than 3 Million Population Category

Mississippi — GOLD SHOVEL Diverse economic-development successes put Mississippi in the Gold Shovel category among states with fewer than 3 million in population. Recent major projects range from tire manufacturing and shipbuilding to the creation of furniture and the bottling of water. February 2016 was a banner month for the state, when the legislature gathered for a special session to approve incentives for two massive projects — the $1.5 billion Continental Tire project proposed for a site in Hinds County and a $68 million Topship development at the inland Port of Gulfport. In announcing the tire plant, Continental executive vice president Paul Williams touted the site’s “significant advantages for a future tire plant in terms of its large skilled workforce, as well as its ideal location and infrastructure.” The Topship facility will make vessels to serve the offshore oil and gas exploration industry. Together the two projects promise about 3,500 jobs as they develop. Groundbreaking for the tire plant was in November 2016, with completion expected in 2019, and the shipbuilding facility is due to be finished in 2018. Furniture manufacturing often goes hand-in-hand with the timber business, one of the state’s traditional strengths. In 2016, three significant furniture projects — Southern Motion, Delta Furniture, and Bauhaus — combined for the Industry promise of 800 new jobs. Food processing has been a mainstay as well, Tires with two of the three projects in this sector focused on bottled water — Shipbuilding Niagara Bottling and Premium WaFurniture ters. Meanwhile, the contract manuBottling/Packaging facturing operation announced in Olive Branch by BPI Packaging Water Bottling focuses on industrial coatings and Packaging performance chemicals. Food Processing

Burnsville

100

$6 million

Industrial Products

Delta Furniture

Houlka

100

$432,000

Furniture

Bauhaus

Ripley

100

$2.5 million

Furniture

Represents a state/local sponsor

(pop. 2.99 million) STATES WITH POPULATIONS UNDER

AREA DEVELOPMENT

3 MILLION

Kansas — SILVER SHOVEL Kansas has been a lightning rod for ideological conversation, with sharply differing opinions about the

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MISSISSIPPI

LEADING

“...MISSISSIPPI P ROV I DES T HE B EST O PT I O N S . ” - NI K O L A I S E T Z E R , C O NT I NENTA L T I RE

Continental Tire chose Mississippi to build the company’s most technologically advanced plant in North America, representing a $1.45 billion in corporate investment and creating 2,500 jobs. Our competitive labor costs, expedited permiting and relentless commitment to develop the workforce of the future www.mississippi.org | 1.800.360.3323

AREA0696.indd 1

made Mississippi the right choice for Continental.

13/05/17 10:17 AM

special report

KANSAS

SILVER SHOVEL WINNER Company

City/County N/E

Triumph Structures

Edgerton

TECT Hypervelocity, Inc.

# Jobs 310

Inv. Amt.

Industry

$39.3 million

Aerospace

Park City

$23.8 million

Aerospace

Amazon.com

Edgerton & Kansas City

2,000

$292.6 million

Fulfillment Centers

Essence of Australia

Overland Park

159

$22.4 million

Logistics/ Distribution

SelectQuote Insurance

Overland Park

476

$14.4 million

Insurance/ Contact Center

Xceligent

Overland Park

104

$2.8 million

Contact Center

Leawood

220

$19 million

Regional Offices

Atlas Aerospace, LLC

American Multi-Cinema, Inc.

Wichita

104

$17.5 million

Aircraft Parts

United Parcel Service, Inc.

Lenexa

100

$37 million

Logistics/ Distribution

Tecumseh

200

$30 million

Cellulosic Organic Fiber

Futamura USA Inc.

(pop. 2.90 million)

Represents a state/local sponsor

STATES WITH POPULATIONS UNDER

3 MILLION

NEVADA

SILVER SHOVEL WINNER Company

City/County N/E

Amazon

North Las Vegas N

The Honest Company

North Las Vegas N

1,000

$18 million

Industry Fulfillment Center

455

$9.4 million

Distribution

365

$19.1 million

Food Products

North Las Vegas N

119

$121.6 million

Propulsion Systems/Tools

320

$1.8 million

Back Office/IT

Reno

Pacific Dental Services Fanatics, Inc.

Inv. Amt.

Mary’s Gone Crackers Hyperloop One

# Jobs

Henderson

North Las Vegas N

374

$8 million

Distribution

Thrive Market, Inc.

Sparks

400

$3.6 million

Distribution

CML Media Corp.

Clark County

524

$496,300

Sutherland Global Services

Las Vegas

763

$4.8 million

Back Office

TH Foods, Inc.

Henderson

138

$23.3 million

Food Products

Represents a state/local sponsor

AREA DEVELOPMENT

growth policies it has pursued in recent years. But even as politicians and pundits have debated the merits or pitfalls of its economic policies, the state’s aviation and distribution sectors have continued to put marks in the “win” column. As in many states, some of the biggest gains have been promised by Amazon. In the case of Kansas, announced projects in Edgerton and Kansas City promise nearly $300 million in investments and a couple thousand jobs. But the state’s central location and strong logistics infrastructure caught the eye of others, too, continuing a positive trend in distribution and fueling hundreds of new jobs. The state’s aerospace sector added jobs in its Wichita hub and in nearby Park City, while Triumph Group announced plans to move aircraft-related operations from Missouri to the Kansas community of Edgerton. Meanwhile, the contact center sector, which helped Kansas earn recognition two years ago, garnered a pair of bright headlines for Overland Park, SelectQuote Insurance and Xceligent. SelectQuote has been continually building its Kansas workforce and has outgrown its headquarters facility in Leawood. Company officials said they chose expansion space in the millennialfocused Overland Park Xchange because of its “wow environment.”

(pop. 2.84 million) STATES WITH POPULATIONS UNDER

3 MILLION

Nevada — SILVER SHOVEL In a state best known for tourism, Amazon also had Nevada’s biggest single job-creating project of 2016, with an $18 million fulfillment center in North Las Vegas that promises a thousand jobs. The company and its affiliates already employ roughly 5,000 at other Nevada facilities in such places as Las Vegas and Reno, and the new center will focus on the distribution of mid-sized products.

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Of course, what makes Nevada so attractive to Amazon also gets the attention of a lot of others in the business of logistics and distribution, and those others also helped make the state an economic success story in 2016. Three other distribution projects in North Las Vegas (The Honest Company and Fanatics, Inc.) and Sparks (Thrive Market, Inc.) are expected to deliver more than 1,200 jobs combined. Nevada economists say business and professional services will be a key to the future, and in 2016, information technology and back office operations provided economic bright spots. Announcements in this area serve a variety of industries. CML Media, for example, is in the business

of mobile-responsive websites for clients, and it plans to create more than 500 jobs in Clark County. Pacific Dental Services, meanwhile, which announced plans for more than 300 jobs in Henderson, handles support operations for dental practices. Food products developments also added flavor to the state’s economy in 2016, with the two biggest projects (Mary’s Gone Crackers and TH Foods, Inc.) promising about 500 jobs. •••••• Information for this report compiled by Area Development’s editor; article written by Steve Kaelble, staff editor

sponsors ARIZONA

FLORIDA

GEORGIA

ARIZONA COMMERCE AUTHORITY The Arizona Commerce Authority (ACA) is the state’s leading economic development organization with a mission to grow and strengthen Arizona’s economy. The ACA uses a three-pronged approach: attract out-of-state companies to establish operations in Arizona; work with existing Arizona companies to expand their business; and help entrepreneurs create new businesses in Arizona. For more info, visit azcommerce.com and follow the ACA on Twitter at @azcommerce. Kevin Sullivan, Senior Vice President, Business Attraction and Expansion Arizona Commerce Authority 118 N. 7th Ave, Suite 400 Phoenix, AZ 85007 602-845-1261 k e v i n s @ A Z c o m m e rc e . c o m w w w. a z c o m m e rc e . c o m

CITY OF CAPE CORAL Cape Coral, Florida, consistently ranks among the top 10 areas for business start-ups. The largest city in Southwest Florida, Cape Coral is known for its attractive waterfront, competitive cost of living, and rapidly growing commercial base. The Economic Development Office provides assistance for business relocations and expansions to Cape Coral. Visit www. bizcapecoral.com to learn why this tropical city is the ideal fit for your business.

MESA Mesa is the 38th-largest city in the U.S. and second-largest in the Phoenix-Mesa metro. Mesa is larger than Miami, Minneapolis, and Atlanta and is host to companies such as Apple, Boeing, Bridgestone, FUJIFILM, Orbital ATK, Infineon, and Mitsubishi. Mesa is an important hub for aerospace, defense, medical device, semiconductor, and cyber security companies. Kim Lofgreen, Marketing and Business Development Manager City of Mesa Office of Economic Development 20 E. Main St., Suite 200 P.O. Box 1466 Mesa, AZ 85211-1466 480-644-2398 • Fax: 480-644-3458 k i m . l o f g re e n @ m e s a a z . g o v w w w. m e s a a z . g o v / e c o n o m i c

ENTERPRISE FLORIDA From a talented workforce to a strategic geographic location, Florida has the breathing room businesses need to grow. Freedom from high taxes and prohibitive regulations make Florida the #1 tax climate in the Southeast and 2nd-best state for business in the U.S. Learn how Florida can help your business thrive. Tim Vanderhoof, Senior Vice President, Business Development Enterprise Florida 800 N. Magnolia Ave, Suite 1100 Orlando, FL 32803 tvanderhoof@EnterpriseFlorida. com w w w. F l o r i d a T h e F u t u re I s H e re . c o m

GEORGIA DEPARTMENT OF ECONOMIC DEVELOPMENT The Georgia Department of Economic Development is the state’s sales and marketing arm, the lead agency for attracting new business investment, encouraging the expansion of existing industry and small businesses, aligning workforce education and training with in-demand jobs, locating new markets for Georgia products, attracting tourists to Georgia, and promoting the state as a destination for arts and location for film, music, and digital entertainment projects, as well as planning and mobilizing state resources for economic development. Tom Croteau, Deputy Commissioner, Global Commerce Georgia Department of Economic Development 75 Fifth Street NW, Suite 1200 Atlanta, GA 30308 404-962-4000 communications@georgia.org w w w. G e o r g i a . o r g

Dana Brunett, Manager, Economic Development City of Cape Coral 1015 Cultural Park Blvd. Cape Coral, FL 33990 866-573-3089 or 239-574-0444 ecodev@capecoral.net w w w. b i z c a p e c o r a l . c o m

GEORGIA PORTS AUTHORITY Georgia’s ports provide greater scheduling flexibility and market reach with direct links to I-95 and I-16, on-terminal rail, and 35 weekly container ship calls. The Savannah market features 21,000 acres ready for construction, while Georgia offers a business-friendly tax structure and targeted workforce training. Stacy Watson, General Manager, Economic & Industrial Development Georgia Ports Authority P.O. Box 2406 Savannah, GA 31402 912-964-3879 • Fax: 912-964-3869 swatson@gaports.com w w w. g a p o r t s . c o m

AREA DEVELOPMENT | Q2/2017

sponsors IOWA

MICHIGAN

PENNSYLVANIA

IOWA ECONOMIC DEVELOPMENT AUTHORITY Iowa offers lower operational costs, a fair regulatory environment and a strong, diverse economy. Companies thrive due to the collaboration among business leaders, government, and educational institutions. The skilled workforce, plus ideal quality of life, positions Iowa for future growth. Visit iowaeconomicdevelopment.com to learn more. Debi Durham, Director Iowa Economic Development Authority 200 East Grand Avenue Des Moines, Iowa 50309 515-725-3000 info@iowaeda.com www.iowaeconomicdevelopment.com

MICHIGAN ECONOMIC DEVELOPMENT CORPORATION Business in Michigan is on the rise. Taxes are the lowest in decades. Our economic development tools, manufacturing leadership, world-class talent, and geography are fueling business growth. Need more proof? Michigan is consistently in the top states for major new and expanded facilities.

PENNSYLVANIA DEPARTMENT OF COMMUNITY & ECONOMIC DEVELOPMENT Pennsylvania’s 2016 projects showcased the economic growth happening across a diverse variety of industries throughout the state. They ranged from petrochemicals, logistics, and healthcare to pharmaceuticals, food manufacturing, modular housing, and more. Together, they represent nearly $7B in capital investment, more than 7,100 new jobs, and five new facilities.

KANSAS KANSAS DEPARTMENT OF COMMERCE You’re looking for a great place to locate your business? Kansas is the place to start that search. From financial and technical resources and a skilled workforce to access to trade corridors that keep you connected with the world, as well as leaders who know business and have entrepreneurial spirit, Kansas will set up any business, in any industry, for success. Kansas is also ranked nationally in the top-10 as a probusiness state. Come home to Kansas to see what we can do to help you and your business invest, thrive, and prosper. Susan NeuPoth Cadoret, Business Development Kansas Department of Commerce 1000 SW Jackson St., Suite 100 Topeka, KS 66612-1354 785-296-5298 •Fax: 785-296-3665 s u s a n . n e u p o t h c a d o re t @ k s . g o v w w w. k a n s a s c o m m e rc e . g o v KENTUCKY KENTUCKY CABINET FOR ECONOMIC DEVELOPMENT Companies from all over the world are locating to the Bluegrass State, and our existing industries are expanding to keep up with growing demand. Kentucky’s new right-to-work status and pro-business approach is attracting a wide variety of industries, including automotive manufacturing, logistics and distribution, national headquarters, and more. Mandy Lambert, Commissioner for Business Development Kentucky Cabinet for Economic Development 300 West Broadway Frankfort, KY 40601 502-564-7670 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

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Nicole Whitehead, Director, Sales & Service Operations Michigan Economic Development Corporation 300 N. Washington Square Lansing, MI 48913 517-719-3157 whiteheadn@michigan.org w w w. m i c h i g a n b u s i n e s s . o r g / A D MISSISSIPPI MISSISSIPPI DEVELOPMENT AUTHORITY Mississippi celebrated a landmark day in economic development success when Continental Tire the Americas, LLC announced plans to locate in Hinds County, Miss. The world’s fourth-largest tire manufacturer will invest $1.45 billion and create 2,500 new jobs, while significantly reinforcing Mississippi’s leadership position in the Southern Automotive Corridor. Billy Klauser, Chief Economic Development Officer Mississippi Development Authority P.O. Box 849 Jackson, MS 39205 800-360-3323 • Fax: 601-359-4339 bklauser@mississippi.org w w w. m i s s i s s i p p i . o r g NEVADA NEVADA GOVERNOR’S OFFICE OF ECONOMIC DEVELOPMENT With a talented workforce, education and training partnerships for industry, a businessfriendly environment, affordable large-scale real estate, and unmatched technology infrastructure, industry-leading companies 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

Amy Zecha, Executive Director, Economic Development Marketing Pennsylvania Department of Community & Economic Development Commonwealth Keystone Building 400 North Street, 4th FL Harrisburg, PA 17120 717-346-7791 • 866-466-3972 ra-dcedcs@pa.gov azecha@pa.gov dced.pa.gov TENNESSEE NETWORKS SULLIVAN PARTNERSHIP Agero chose Bristol and Sullivan County after its site selection firm attended an inbound community familiarization event. “Once people visit our community and they see us up close and personal and how our team works together, it usually results in a win,” says Tom Anderson, Bristol’s Director of Economic Development. Clay Walker, CEO NETWORKS Sullivan Partnership 10368 Wallace Alley Street, Suite 1 Kingsport, TN 37660 423-279-7681 • Fax: 423-279-7683 cwalker@networkstn.com w w w. n e t w o r k s t n . c o m TEXAS TEXAS ECONOMIC DEVELOPMENT CORPORATION (TXEDC) Low taxes, strategic location, global access, and competitive incentives — these are just a few reasons companies like Hulu, Boeing, and Charles Schwab choose to grow in Texas. Add to that world-class infrastructure and the second-largest civilian workforce, and it’s no wonder Texas continues to lead the nation in job creation. Michael Chrobak, Executive Vice President Texas Economic Development Corporation 1005 Congress Ave, Suite 910 Austin, TX 78701 512-981-6736 michael@texasone.us www.texaswideopenforbusiness.c o m

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ADVANCED TECHNOLOGY > PLAYBOOK

What Can Manufacturers Expect From the New Administration? Changes in the tax code, regulations, and other government policy will affect manufacturers for better or worse.

ith a new administration in Washington and skilled labor requirements only increasing for manufacturers, Area Development’s editor posed some questions to Doug Woods, president of the Association for Manufacturing Technology (AMT), to get his organization’s latest take on manufacturers’ concerns. His responses follow:

AD: Has awareness of the importance of manufacturing’s role in the economy increased since you became president of AMT in 2009?

Woods: When I came to AMT, we were just coming out of a recession. It was necessary that our government, business and civic leaders focused on a jumpstart for manufacturing, as it is the industry that drives economic growth and job creation. Collaboration between those leaders helped lift manufacturing out of the downturn. At the same time, the landscape started changing at a dramatically rapid pace. Advanced manufacturing technologies like 3D printing, robotics, and digital factories captured the world’s attention when they introduced a whole new set of possibilities. The “maker movement” has drawn in an even more diverse audience — old and young, scientists and artists. In part because of these exciting developments, the opportunities afforded by careers in manufacturing suddenly sparked a new interest among students, and perhaps more importantly among their parents and teachers. At a time when student loan debt is at a

record high, technical and community college education is a great way to save on tuition costs. But even more importantly, demand is high for workers who have those technical skills.

AD: Has the Trump presidency intensified this awareness of manufacturing’s importance?

Woods: Over the last several years, there have been a number of public-private efforts that shine a light on the role manufacturing has in global competitiveness. Manufacturing jobs were the centerpiece of President Trump’s campaign to win the middle class, and his pledge to bring jobs back and create new jobs in the United States helped him win the election. So far, he’s maintained his focus on strengthening manufacturing jobs with quick action on regulatory reform. His budget was disappointing in its lack of support for manufacturing programs. We’re looking for some movement on infrastructure, trade, and tax reform to maintain momentum and to boost business confidence.

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ADVANCED TECHNOLOGY > PLAYBOOK AD: What are the implications for the Trump administration’s proposed tax rate changes on manufacturers?

Woods: I think it’s important to note that President Trump has not formally released a proposal, and has offered conflicting statements on individual provisions. However, he has said repeatedly that one of his top priorities is tax reform and he would like a bill passed this year. The President is expected to release his tax proposal soon, but the details are unknown. What is known is that the United States has the third-highest corporate tax rate in the world and is the only country among the G-7 nations with a worldwide taxation system. Our current tax system puts us at a competitive disadvantage with the rest of the world. The place to watch for tax reform is the House of Representatives. Although no bill has been formally introduced, the House leadership has a blueprint, developed by Speaker Paul Ryan, that would lower rates, eliminate deductions, and move the United States to a border-adjustable, territorial tax system in line with that of our trading partners. It is considered the vehicle for comprehensive reform. Specifically, the Ryan plan would reduce the federal corporate rate to 20 percent and create a 25 percent maximum rate for pass-through entities. It would allow for full expensing, which would allow companies to immediately write off capital equipment purchases in the first year. It also moves us to a territorial system of taxation with an immediate deemed repatriation of offshore earnings. After that, there would be a full exemption on earnings from foreign subsidiaries. Other highlights of the House’s tax plan include elimination of the corporate alternative minimum tax and estate tax, a repeal of almost every tax credit and deduction (with the exception of the permanent R&D tax credit), and a 20 percent border adjustability tax.

AD: What about the proposed “border adjustment” rules — the idea of taxing imports but not exports?

Woods: Not surprisingly, in the globalized world, the BAT is the most contentious part of proposed tax reform and may derail the effort for a comprehensive overhaul. The intent of the border adjustment is to bring U.S. tax policy in line with that of our trading partners with

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value-added tax systems. Import-heavy industries like retail have been lobbying hard against border adjustment, while companies like Boeing and GE have started a coalition to lobby in favor of it. The Senate is largely opposed to adding it, but eliminating it would be a non-starter in the House — especially since the revenue raised at the border would finance the lower rates and expensing provision. With the clock ticking, it may be more likely that we will see a less ambitious tax bill.

AD: How will the administration’s policies advance innovation in the manufacturing environment?

Woods: With the previous administration’s inception of the National Network for Manufacturing Innovation, we have seen the successful launch of technology-specific institutes to develop next-generation materials, processes, and more. Currently there are nine institutes in the network with six more set to come online in 2017. While the President has promised to bring back manufacturing jobs, he has also been proposing major cuts to a number of government agencies that fund and execute research into new technologies, such as important programs at the departments of Energy and Commerce. Like many industries, manufacturers are often hesitant to take risks on technology development that may not become profitable until the far future, or ever. Public-funded and academic research has been instrumental in discovering important technology breakthroughs, and eliminating the avenues for that would be detrimental to the industry’s ability to innovate. AD: Which types of manufacturing jobs do you think will be reshored because of Trump’s policies?

Woods: To keep manufacturing jobs here, then President-elect Trump threatened a 35 percent tax on companies that move jobs abroad; but that likely won’t happen. Most agree that raising taxes is not the way to encourage investment in the United States. Rather, if you create an environment conducive to innovation and growth, companies will stay and companies will come. This is a global world. Companies should locate where they can best serve their customers. The hallmark of the industry in the United States is

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high-value, high-tech manufacturing. Because of its large consumer base, good infrastructure, entrepreneurial culture, and world-class education system, this country has become a leading destination for foreign direct investment. Foreign direct investment in the United States reached a record high in 2015, with 70 percent of the new investment in manufacturing. The dollars are being spent on updated equipment and modern facilities that require a different type of workforce than the manufacturing jobs we lost. Automation has taken on most of the repetitive and lower-skill tasks on the shop floor. There’s a demand for new skills that can harness the power of advanced manufacturing technologies. As global manufacturers continue to have an appetite for setting up shop in the United States and the aging manufacturing workforce continues to retire, the number of available positions will grow. I’d recommend Congress and the administration focus on programs to educate and train the new manufacturing worker or companies will have no choice but to go abroad to look for them. This time the offshoring won’t be for cheap labor.

AD: Has progress been made on the “Smartforce” initiative to fulfill manufacturers’ need for skilled (STEM) workers?

Woods: Our Smartforce initiative remains active and continues its tireless outreach toward students, educators, and parents. In September, we hosted the 10th edition of the Smartforce Student Summit at IMTS (International Manufacturing Technology Show) and welcomed more than 20,000 students, parents, and

educators — a record turnout. We had a number of hands-on challenges for the attendees and a career fair for recent graduates or students nearing graduation. The federal government has also pushed for a greater number of registered apprenticeships through its ApprenticeshipUSA program, and we’ve seen an increase in state and regional initiatives to train veterans, women, and older workers; all of these initiatives are vital components for closing the skills gap.

AD: Can you discuss the role of robotics and whether humans will still be needed on the factory floor?

Woods: It’s not surprising that factories are using more automation and robotics than ever. Just as we no longer use horse-drawn plows to tend to our agricultural fields, technology has advanced and made manufacturing more profitable and productive. The downside is that robots have gotten a bad rap as “job stealers,” when it’s actually been shown that countries that use more robots also have more manufacturing workers. While it’s easy to imagine a dystopian future where businesses rely solely on machines, it’s been shown that organizations with the most automation aren’t necessarily the most successful. While automation is perfect for repetitive tasks, tasks that entail multiple options are still often out of reach for even the most capable robot. Consumer demand for customized products has made for more complexity in the manufacturing process. Likewise, manufacturing for things like small-batch luxury goods is unlikely to get handed off to the robots anytime soon. ≈ ≈ ≈

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In the economic development universe,

✪ BY DAN EMERSON

TEXAS TODAY An Eye on the Future

STATE AND LOCAL LEADERS ARE CONTINUING TO DRIVE ECONOMIC GROWTH IN TEXAS THROUGH PRO-BUSINESS

Texas is a state with an enviable track record. Numbers tell the story: the Lone Star State ranked number one in the country in capital investment — $48.3 billion, according to a 2016 Ernst and Young report; number one in mobile project jobs (i.e., those having a wide range of location options) — 38,400, according to EY; and tops in startup activity in its peer group of large states, according to the Kauffman Foundation. Texas also has the top city in the country in startup activity: Austin, according to the Kauffman report. In addition, Chief Executive magazine has rated Texas the best state in which to do business for the 12th year in a row. But, rather than resting on its laurels, Texas has its eye on the future, based on priorities state and local leaders have demonstrated in their efforts to drive continuing economic growth. “There’s a certain natural affinity to Texas for businesspeople because it’s viewed as a pro-business, low-tax, low-government-interference place for business,” says Bryan Daniel, the state’s executive director for Economic Development. “What we hear most often from relocating companies is that they are trying to get to places where the tax and regulatory structures are transparent, fair, and understandable,” Daniel says. “And, the availability of a skilled workforce that can go to work immediately is driving some of these decisions.”

POLICIES AND WORKFORCE TRAINING INITIATIVES.

Brandon Talbert, a director with Austin Consulting, says that viewpoint is accurate. “Texas has done a

lot of things right, in terms of making it easy to do business from a regulatory standpoint. And they’ve invested in infrastructure; they’ve spent a lot of money on roads, both at the local and state level, which is really important for manufacturing projects,” Talbert says. The state’s two largest cities, Dallas and Houston, “are still really hot markets, especially Dallas, which has a really diverse economy,” Talbert notes. The Dallas-Fort Worth metro area has more than 10,000 company headquarters, the largest concentration in the United States, the Dallas Business Journal reports. Also, Dallas is becoming recognized as an international city, Talbert points out: “The airports are huge assets for both Houston and Dallas.” DallasFort Worth is one of the top-ranking inland ports in the United States, in part, because of the region’s growing demand for e-commerce and North Texas’ population growth, according to a CBRE report.

SUBURBAN GROWTH Rick Hughes, an executive vice president in the Dallas office of Cushman and Wakefield, says Dal-

Texas Enterprise Fund

The Texas Enterprise Fund (TEF) is one of the largest “deal-closing” funds of its kind in the nation. The fund is used as a final incentive tool to help strengthen the state’s economy by attracting projects that offer signifi-

Greetings: It’s no secret that everything is bigger in Texas, and the same is true of our economy. If Texas were a nation, it would be the 10th-largest economy in the world. Texas is a national leader in job creation, with more than two million private-sector jobs added over the last decade, and has been the nation’s top exporter for 14 years running. The key to our success is twofold: the ingenuity and innovation of the hardworking men and women who call our state home and the economic framework that allows free enterprise to flourish. 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 through our low taxes, reasonable regulations, and right-to-work laws. As governor, I will work to keep it that way and ensure we reach greater heights than ever before. As one of many efforts to accomplish that goal, my economic development team is making 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 make our economic development efforts bigger, broader, and bolder and be more aggressive in attracting companies and foreign direct investment. But 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 remain free from the burdens of over-taxation and overregulation and entrepreneurs can start their businesses without needless government hurdles standing in the way. 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 and brighter in Texas.

Sincerely,

Greg Abbott Governor State of Texas

cant projected job creation and capital investment, and where a single Texas site is competing with another viable out-of-state option. There are several primary measures that every TEF project must meet in

order to be considered for an award, and every award dollar amount is determined using an analytical model applied uniformly to each TEF applicant. Variations in award amounts are influenced by the number of jobs to be created, the

expected timeframe for hiring, and the average wages to be paid. Since the program’s inception in 2004, the Texas Enterprise Fund has awarded more than $595 million to create approximately 83,000 jobs.

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las “has been the beneficiary of almost all (recent) nonTEXAS manufacturing relocations“ TODAY to Texas, citing major expansions by Toyota, Liberty Mutual Insurance, and State Farm Insurance. But the most striking growth is taking place in the suburbs around Dallas. According to 2013 Census population estimates, two of the nation’s 15 fastest-growing cities of 50,000 or more are the northern Dallas suburbs of Frisco and McKinney. Other examples include Plano, Denton, Garland, Carrollton, Richardson, and Allen, all of which have grown by at least 20,000 people since 2000, many by much more than that, according to Forbes magazine. In the suburb of Plano, Toyota North America will begin occupying its new, 100-acre headquarters campus this summer. Its 2.1 million square feet of space could eventually house more than 6,000 employees, the company says.

One of the biggest, new growth engines in the region is the $1.5 billion CityLine project in Richardson. The 186-acre, mixed-use development includes office, retail, a hotel, and thousands of apartments. State Farm Insurance and Raytheon have more than 10,000 workers in the CityLine development. Developers project that 30,000 people will eventually be employed at CityLine, according to Dallasnews.com. In recent years, DFW has become one of the nation’s top five data center locations. In terms of square footage for multi-tenant data centers, it ranks fourth, with 2.8 million square feet, according to 451 Research, a firm based in New York that analyzes information technology trends. Last November, Facebook announced its plans to triple the size of the data center complex it is building at AllianceTexas Business Park in north Fort Worth. The plan now calls for five buildings totaling nearly 2.5 million square feet of space, for an invest-

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ment of more than $1 billion. The center will draw power from a 202-megawatt wind farm that the company is helping to build about 100 miles northwest of Fort Worth, as reported by The New York Times (4/26/16).

two markets (Houston and Dallas) are still pretty cost-competitive, if not a little below what you would see in markets of comparable size on the East Coast and in the Southeast,” Austin Consulting’s Talbert says.

To win the project, Fort Worth and Tarrant County provided a total of $146.7 million in tax abatements for up to 20 years. During that time, the city, county, and an area school district will receive a total of $228.5 million in additional property taxes, according to the Fort Worth Chamber of Commerce. Cushman & Wakefield’s Hughes notes that the incentive packages the state negotiates with companies are based on three factors: quality of jobs (i.e., high paying), capital investment, and total investment (payroll plus infrastructure). The state’s lack of an income tax heightens the importance of property taxes as a source of state revenue, and therefore capital investment, he points out. “The state has recognized that modernization is a good thing.”

“From a manufacturing perspective, Houston is on fire,” Dalton notes, citing growth in categories including light assembly, food processing, and heavy machining. “Costs are relatively low here compared to other locations around the country, and there is a large, available work force with a good work ethic.”

ABUNDANT LAND Keith Dalton, president and CEO of KDW, Ltd., a Houstonbased design-build firm, says one of the sprawling city’s major assets is abundant land for development. “When clients are developing other projects either around the country or internationally, one of their biggest complaints is not enough land to expand in years to come, or it is too expensive. But (industrial) land prices in Houston are good, and there are virtually no entitlements that would present a barrier to development.” In addition to Houston, the availability of land for development is still very good even in Dallas. “From a national perspective, those

The Houston metro area also has its own growing suburbs, like Katy, Texas, located on Interstate 10, 20 miles west of Houston. Katy is part of the Texas Energy Corridor, home to many of the world’s major energy companies and a number of related industry clusters.

Odessa, Texas

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There’s room for new energy companies, also. In February, Japan-based Toshiba Mitsubishi-Electric Industrial Systems Corp., a Japanese maker of solar power inverters, broke ground for a $6 million plant in Katy.

✪

INCENTIVES PACKAGES ARE BASED ON Q UALITY OF JOBS, CAPITAL INVESTMENT, AND TOTAL INVESTMENT (PAYROLL + INFRASTRUCTURE).

H I G H R AT E O F I N - M I G R AT I O N Rapid growth can bring some challenges, such as labor shortages and rising land prices. “But Texas is one of the fastest-growing states in the country, with an influx of people relocating from other states and other countries,” Talbert says. A healthy percentage of those new residents are college graduates attracted by the career possibilities, he adds. Hughes says the presence of some of the top universities in the country has paid dividends in the form of a highly educated workforce in and around the large metro areas of Dallas, Houston, Austin, and, increasingly, San Antonio. Competition for skilled workers is intense, but Texas has another advantage, Hughes points out: a high rate of in-migration, with 350 to 375 people, on average, moving to Texas every day. “The state has created tens of thousands of jobs in the last 24 months, but we have been able to meet the job growth through in-migration.” According to data from the IRS, from 2013 to 2014, Travis County, Texas — part of the Austin-Round Rock-San Marcos MSA — attracted more new net residents — nearly

Texas Enterprise Zone Program

The Texas Enterprise Zone Program (EZP) is an economic development tool for local communities to partner with the state of Texas to promote job creation and significant

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62,000 — than the next 10 highest-ranked counties for net migration combined. Speaking of Austin, another fastest-growing region is the Austin-San Antonio Innovation Corridor along Interstate 35. The Texas Water Development Board has projected the population of the Austin-San Antonio corridor, made up of 13 counties, will swell from 4.27 million in 2014 to 5.71 million in 2030. One of San Antonio’s long-time employers, construction equipment manufacturer HOLT CAT, is building a new, $20 million headquarters facility, slated for completion in October. City officials hope the 85,000-squarefoot headquarters will serve as a catalyst for more development on the city’s east side. The San Marcos area, which is on the I-35 corridor, has added more than 2,700 new jobs since 2010, with $250 million in new capital investment. Last August, Amazon opened a new, 855,000-square-foot fulfillment center in San Marcos, which the company expects will eventually employ as many as 1,000 workers. Under the terms of an employment-based incentive

private investment that will assist economically distressed areas of the state. Approved projects are eligible to apply for state sales and use tax refunds on qualified expenditures.

The level and amount of refund is related to the capital investment and jobs created at the qualified business site. The refund for each designation can be an amount

ranging from a minimum of $2,500 per job for projects creating at least 10 net new jobs, to a maximum of $7,500 per job for projects creating at least 500 net new jobs.

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agreement, the city will refund to the company 85 percent of its ad valorem taxes on personal property and 40 percent of ad valorem taxes on real property for 10 years. The city will also rebate a sliding scale of sales taxes realized by the city over the first 20 years of the project.

ingly tech-driven industries. Texas’ Skills Development Fund provides customized training for companies and workers to increase skill levels and wages. Grants are provided to help a business, consortium of businesses, or trade union form partnerships with colleges to provide custom job training. The Skills Development Fund pays for the training, the college administers the

Meanwhile, a new-frontier industry cluster has been growing in South Texas. In August 2014, the state offered $2.3 million from the Texas Enterprise Fund to bring Elon Musk’s SpaceX’s commercial rocket launch facility to the Brownsville area. The nation’s first commercial rocket launch facility is expected to create 300 jobs and add $85 million in capital investment, according to the Governor’s office. Elsewhere in the region, one of the world’s largest helicopter repair facilities resides in Corpus Christi, while the cities of Waco, Amarillo, El Paso, Wichita Falls, McAllen, and Harlingen all have aerospace manufacturing facilities. ADDRESSING CHALLENGES Of course, Texas’ proximity to Mexico is among the reasons more projects look to expand in Texas. But, as Hughes points out, “We’ll see how everything plays out with NAFTA; a potential tariff could potentially help or hurt Texas” — and other states as well. Another major challenge facing states hoping to maintain strong economic growth is providing enough workers for increas-

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SPONSORS

TEXAS TODAY

grant, and businesses create new jobs and improve the skills of their current workers.

In addition, the Texas Workforce Commission has dedicated $1 million to support collaborations between Workforce Development Boards and economic development corporations (EDCs) to provide high-demand occupational job training in local workforce areas. Funds will be available through September 30, 2017. Along with helping established companies with deal-closing issues like taxes or workforce training, the state is also putting more emphasis on helping small businesses and entrepreneurs, Daniel explains: “Helping those folks can pay big dividends.” ✭✭

Abilene Industrial Foundation (AIF) The Abilene Industrial Foundation (AIF) is an affiliate of the Abilene Chamber of Commerce, working under contract to the Development Corporation of Abilene. The AIF is responsible for site selection assistance, marketing, and existing business retention/expansion, and is a source of comprehensive information for expanding the relocating business. Justin Jaworski, Executive Director Abilene Industrial Foundation 174 Cypress Street, Suite 300 Abilene, TX 79601 325-673-7349 • Fax: 325-673-9193 (Fax) justinj@abileneind.com www.developabilene.com Converse Economic Development Corporation Converse (population 18,198), is located in Bexar County, Texas, 15 miles NE of downtown San Antonio. Converse is pro-business and ready to help shape the future with planned growth. Converse has a streamlined incentive application and can issue building permits in less than 30 days. Via recent annexation, Converse will increase in square miles from 7.1 to 22.6 by the year 2032. Kate Silvas, Executive Director of Economic Development City of Converse Economic Development Corporation 110 W Legion Converse, TX 78109 210-659-9163 or 888-984-5020 (toll-free) • Fax: 210-659-0964 ksilvas@converseEdc.com www.converseEdc.com

BUSINESS FRIENDLY. FAMILY FRIENDLIER. MarbleFallsEconomy.com

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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. The LEDA team has expert knowledge and valuable relationships to ensure your business’ success. Carolyn Rowley, Director of Recruitment & Innovation Lubbock Economic Development Alliance 1500 Broadway, 6th Floor Lubbock, TX 79401 800-687-5330 carolyn.rowley@lubbockeda.org www.lubbockeda.org

Odessa Development Corporation (ODC) The Odessa Development Corporation (ODC) actively recruits and attracts new business as well as maintains our existing industry base. If your company is looking for an existing location or for land to build to suit your needs, there are a number of developers ready to help locate your business in Odessa.

Marble Falls Economic Development Corporation Marble Falls is the gateway to the Highland Lakes area of the Texas Hill Country, and is the regional retail, wholesale, trade, and service center for a primary trade area of 70,000 people and a secondary trade area population of 150,000. Marble Falls is a community where businesses and families thrive. Christian Fletcher, Executive Director Marble Falls Economic Development Corporation 801 Fourth Street Marble Falls, Texas 78654 830-798-7079 • Fax: 830-798-8558 cfletcher@marblefallseconomy.com www.marblefallseconomy.com

KINGWOOD

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Michael Chrobak, Executive Vice President Texas Economic Development Corporation (TxEDC) 1005 Congress Ave., Suite 910 Austin, TX 78701 512-981-6736 michael@texasone.us www.texaswideopenforbusiness.com

Strategically Positioned

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Wesley Burnett, CEcD, MPA, Director of Economic Development Odessa Development Corporation 700 North Grant, Suite 200 Odessa, Texas 79761 432-333-7880 • Fax: 432-333-7858 burnett@odessaecodev.com odessatex.com Texas Economic Development Corporation (TxEDC) Low taxes, strategic location, global access, and competitive incentives — these are just a few reasons companies like Hulu, Boeing, and Charles Schwab choose to grow in Texas. Add to that world-class infrastructure and the second-largest civilian workforce, and it’s no wonder Texas continues to lead the nation in job creation.

North Houston District Minutes from Bush IAH and only 22 miles from Houston’s port, North Houston District is strategically positioned to provide local, regional, and global access. The area has exceptional broadband infrastructure and land available for new development and redevelopment. Energy, logistics, technology, and manufacturing are a few of the industries represented.

TO CYPRESS

Robert Fiederlein, Vice President, Strategic Planning & Development North Houston District 16945 Northchase, Suite 1900 Houston, TX 77060 281-874-2131 rfiederlein@northhouston.org www.northhouston.org

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ADVANCED TECHNOLOGY > PLAYBOOK

The CEO’s Toolkit to Lead Through the Digital Disruption Companies are fighting for survival as the era of digital disruption dawns; a robust “people strategy” is one foundational element that should not be overlooked.

hether you have realized it or not, the era of digital disruption is already upon us. Triggered by the emergence of social media, mobile and cloud computing technologies, digital disruption is being redefined and accelerated by the Internet of Things (IoT) revolution. The American economy that once thrived on manufacturing is in transition, and more and more it’s evolving into a digital-services economy.

That means companies must adapt – or risk withering away. This new digital age is the connectivity of going from a thousand devices connected to the Internet to 500 billion by 2030. It will transform business. It will transform our lives, our healthcare system, cities and governments. Business models will rise and fall at an unprecedented pace. It is expected to create huge opportunities and probably $19 trillion in incremental economic value over the next decade. That’s the size of the U.S. economy and then some. A study done by the Babson Olin School of business published by Fast Company estimates that 40 percent of Fortune 500 companies would cease to exist in the next 10 years. The exponential increase in business opportunity will lead to the rise of new companies that can master the digital transformation and force the demise of companies that fail to do so. By Dushyant Sukhija

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What Is Digital Disruption? Digital disruption is using technology to transform everything about the way businesses are run and the way they interact with customers. Data being produced at a breakneck velocity will be leveraged to make customer acquisition easier and the customer experience front and center. Disintermediation between producers, suppliers, and customers will exponentially increase customer choices and shift the focus on collaboration to drive more customer value.

Disrupt…or Be Disrupted If you’re a leader in today’s world, whether you’re a government or a business leader, you have to focus on the fact that this is the biggest technology transition ever. This digital era will dwarf what’s occurred in the information era and the value of the Internet today. Make no mistake. As leaders, if you don’t transform to master the digital era to disrupt, you will get disrupted.

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And it’ll be a brutal disruption, where the majority of companies will not exist in a meaningful way 10 to 15 years from now.

Three Critical Success Factors for the new Digital Era There are three critical success factors that every leader will need to control to lead their organization through this new digital era. 1. BUILD TO LAST Every organization (or reorganization) must be built to have three characteristics. • Nimble: A nimble organization that is adapted to the emerging industry dynamics and competitive pressure is best suited to navigate market transitions and help you leap to a number one or two leadership position in the market. • Evolutionary: No organization should be stagnant but should continue to evolve as your business and the market evolve. There should be an emphasis on screening the market for inflections coupled with the readiness to adapt your organization to lead through them. • Integrative: Make the notion of integrated customervalue delivery the centerpiece of your organizational strategy and decisions. Define clear complementary roles for the organizational substructures, and assign success measures that add up to customer success. 2. EXERCISE RIGOROUS GOVERNANCE It is critical to have the right governance in place to ensure the effectiveness of every organization. Portfolio councils — as they had come to be called at Cisco, my former employer — had an important role in driving the right governance and execution of the various business entities. Although the makeup of councils at Cisco changed from year to year to adjust to market dynamics and strategic vectors, councils were generally of two kinds: Segment councils (also called business councils, such as the Service Provider Business Council) focused on market segments that included cross-functional executives from all functional areas, such as engineering, sales, and services. Functional councils, such as the Services Portfolio Council, would focus on aligning the various services-delivery portfolio components to the segment priorities (strategic vectors) for that year.

Portfolio councils were designed to ensure crossfunctional collaboration and integrated strategy oversight and planning. The key word here is integrated because it requires interlock of the cross-functional leadership teams that make up the councils at all three levels — customer satisfaction, margins, and revenue. • Customer satisfaction focuses on three elements: outside-in customer requirements (customer requirements derived from an external customer’s perspective), the right product and service offers (just good enough to deliver committed satisfaction levels), and a superior customer experience. • Margins hone in on three elements: maximize return on investment through an integrated cross-functional focus on the right big bets, drive efficiencies in portfolio delivery, and ensure a rationalized portfolio evolution (exit nonperforming elements and shift investments to big bets). • Revenue opportunities are maximized through three factors: an optimized (carefully selected) portfolio that drives the highest revenue, maximizes partner enablement and leverage, while ensuring full impact of the revenue opportunity on both the product and services businesses. Simply put, the portfolio council at Cisco was a great example of an effective organizational governance mechanism and was ultimately responsible for the entire life cycle of the strategy from understanding the market requirements and prioritizing the portfolio to execution, market launch, and optimization (or revision) of the market portfolio to adjusting to new market dynamics. 3. ORGANIZE FOR SUCCESS This brings me to the critical importance of the right organizational strategy as a key component of every CEO’s toolkit for the new digital economy. It can make all the difference if you want to build for sustainable profitability. Every new organization should include three aspects that enable organizations to maximize the intellectual capital of their people: affordability, scalability, and people clustering. • Affordability: To drive high margins, affordability becomes a key aspect of every business’s organizational strategy. Three criteria that should be carefully analyzed and proactively influenced during organizational design are resource forecasting, grade (job levels) distribution, and development cost.

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ADVANCED TECHNOLOGY > PLAYBOOK • Scalability: This dimension of organizational strategy just for our experienced people. We developed special enables the deployment of the least number of reprograms to prepare our junior talent to become the sources for the highest degree of customer success. The Cisco workforce of the future. leverage of partners, a talent pool acceleration strategy, • Drive exceptional thought leadership. It’s critical and a shared knowledge center enable organizations to to hire the right leaders because so much else can adapt to growth and scale. hinge on how they perform. Companies should look for • Clustering: This is a key factor in establishing and people with a command and understanding of the busimaintaining competitive advantage at the lowest cost. ness’ mission; who have stellar reputations and ability Specialized resources to attract new talent; and should be clustered in close who have the potential to ORGANIZATIONAL STRATEGY & proximity to physical or grow to the next level of leadership. regional locations for best DESIGN IS CRITICAL TO ENABLE When products are a practices sharing, thought A COMPETITIVE POSITION IN company’s focus, it’s leadership, and driving new THE NEW DIGITAL ECONOMY. important to invest in reinnovation. search and development, Organizational strategy and product innovation. and design is critical to enBut when it is services that drive a company’s sucable a competitive position in the new digital economy cess, then the investment should be in people. Get and has to be carefully built and evolved to secure and them inspired, because inspired people make the retain a long-term sustainable leadership position. difference. ≈ ≈ ≈

The People Strategy It should have become clear by now that there is one foundational element at the core of these critical success factors — a robust people strategy. It is crucial for businesses to understand that a services economy is about people, and the people who are key to making success happen are the managers and employees within the business itself. Employees are the true intellectual capital of the company and that means businesses must invest in their people. There are at least four ways businesses can “turn people into your secret weapon”: • Align employees to a common goal. No organization works well if everyone is a maverick, going off in his or her own direction. It’s important to communicate what the goal is and to make sure everyone is on the same page. • Create a nurturing environment. Any business should want to motivate its employees to excel. One way this can be done is through rewards and recognitions, so that employees know that their hard work and efforts are appreciated. • Harness employees’ intellectual horsepower. It’s important to get the most out of employees and that can be accomplished through helping them build their skills. Cisco, for example, used certification programs to train employees and promote personal growth. This wasn’t

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DUSHYANT SUKHIJA (www.dushyantsukhija.com), a former executive with Cisco Systems, is author of The Cisco Way: Leadership Lessons Learned from One of the World’s Greatest Technology Services Companies (www.theciscoway.com). He has an MBA from Santa Clara University in California and a Bachelor of Technology degree in electrical engineering from the Indian Institute of Technology in New Delhi, India. As a Silicon Valley thought leader and insider, he now shares his insights as a speaker at forums around the world.

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ADVANCED TECHNOLOGY > PLAYBOOK

How Technology Will Overcome Demographics As robotics continue to evolve in both agility and intelligence, the day may come when site selectors can take labor availability out of the location equation.

or those of you in my age bracket, you will no doubt remember the 1960s-era classic television show Lost in Space. One of the key members of that crew was a not-socleverly named charAutomated Guided Vehicles — or AGVs — are used to move materials around a manufacturing facility or warehouse acter called Robot. by navigating defined paths. Because, simply put, that’s what he was hard to teach, blind, stationary, and commanded only — a six-foot-tall chrome dude with retractable arms and the most rudimentary intelligence. But that archetype light bulbs for brains who was constantly warning Dr. is rapidly changing, and the impact they will have on Smith of pending dangers. For those of you who aren’t logistics networks could be profound. old enough to remember that show, more modern variants of the Robot character can be found in any Star Robotics in Action Wars movie; in the recent Jennifer Lawrence film, PasTwo years ago, I finished up a construction project sengers; and many, many others. One of my personal all-time favorites is Wall-E, but that is a story for another with one of our global accounts. In this case, the client day. In almost all cases, robots are portrayed as helpers needed to build a 350,000-square-foot, -20 degrees of their human counterparts, but in many ways they are Fahrenheit freezer to serve as a distribution center for superior. the ice cream it produces at the same site. As you might Such robots, so far at least, are the stuff of science imagine, building such a facility is both complex and fiction. The reality of robotics is something altogether costly. And while there were many firsts for me on that different. And the impact they are starting to have assignment, the one most relevant to this article was the in supply-chain logistics is just now being felt. Why? use of two robotic technologies: (1) Automated Guided Because up until just recently, robots were expensive, Vehicles (AGVs) and (2) Swiss Log’s PowerStore and Pallet Shuttle systems. In summary, as finished product comes off the line, By Randy Thompson, Senior Managing Director, it is boxed, palletized, wrapped in plastic, then moved U.S. Corporate Project Management, Cushman & Wakefield

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— all using automation — and placed on one of two AGVs. These devices, roughly five feet wide and eight feet long, transport the product roughly 50 feet to an induction lift, which starts the product on its way into the freezer. The AGVs have sensors all around them and know to stop if a human or other obstruction is in the way. In addition, they know to automatically return to their wireless charging station when they get tired, know how much product is coming their way, and know how to plan their work accordingly. No, they are not fluent in over six millions languages like the Star Wars’ character C-3PO, but they never need an oil bath and don’t complain as often as he did either. Then once in the warehouse (and remember, it’s -20 in there!), the PowerStore and Pallet Shuttle systems take the pallets and carefully place them into the racking for storage and later shipping. Could humans do these things? Sure. In fact, recent studies show that roughly 80 percent of current distribution centers/warehouses operate today with no automation at all. Just a bunch of people chasing product, driving fork trucks, and manually filling bins. But keep in mind, unlike their carbonbased cousins, robots don’t get sick, they never miss a shift because the bus was late or their car wouldn’t start, don’t go on strike, don’t have kids in daycare they need to go get, etc. So there are clear benefits to using automation, assuming the business case is there. And that business case is getting easier to make.

Using Demographic Studies Currently, the sort of robotic technology mentioned above would be expected in both manufacturing and distribution settings. But can advanced technology impact decisions about where to set up shop? Consider the following data a colleague in the logistics industry shared with me. He said, regarding labor in the logistic food chain: • 1980: 100 percent humans, 0 percent robots • 2010: 80 percent humans, 20 percent robots • 2020: 20 percent humans, 80 percent robots Now, some of you might conclude from the above this trend reflects the fact that robots are having more babies than humans. That would be wrong. Instead, what it reflects is that there a lots of repetitive, manual processes that do not require the advanced thinking of which humans are oftentimes capable. Do humans always use our advanced thinking abilities? Given recent

primaries and national elections, many on both sides would argue we do not. But that argument will not be settled here. For now, the important point to keep in mind is this: as economies grow, more workers are needed. Basic economics, right? But the population in the western world is shrinking. Add to that the ambitions of the millennial generation and it’s easy to understand why finding people willing to work in a distribution center (DC) or factory is an extremely difficult challenge. When Cushman & Wakefield site selection consultants help our clients find the ideal location for their factory or distribution center, one of the key metrics they use is a demographic study. Why is that important? Because the demographic study helps our clients understand the composition of a potential workforce in a given area. This is then used to help determine the potential pool of workers who might be willing to work in their DC and how much those workers will cost. There are a number of reasons you don’t see DCs or factories in cities like Manhattan or San Francisco. Two of the most important factors are land costs and labor costs. But imagine for a minute what it would mean to a given manufacturer if, instead of trying to hire and retain hourly labor in a third-tier market, they could instead make a one-time capital spend on robotic technology. In such a case, the only true “employees” would be the facilities people and engineers needed to train and keep said robots operating. Would that be a material change to the location dynamics? Industry consensus suggests it will.

The e-Commerce Effect There is another key trend that is also causing those involved in logistics to lose sleep and to question anew their logistics network strategy: e-Commerce. Not long ago, retailers shipped their goods by the pallet load. Not anymore. Instead, the growing trend on the part of consumers to order their goods online necessarily means logistics networks are working with “eaches,” which are an expensive proposition for most retailers. Consider the following: A global, well-known brand is spending millions of dollars to evolve their existing DCs into omni-channel fulfillment centers to address this very need. They say it is not at all unusual for their customers to order three sizes of the very same shoes. So

AREA DEVELOPMENT | Q2/2017

ADVANCED TECHNOLOGY > PLAYBOOK in their DC, their workers pick those three shoeboxes and send them through a sorter where they will eventually land at a shipping station. And, if all goes right, a few days later they show up at the customer’s address. He or she tries on the shoes, picks the one pair that fits the best, and sends back the two that don’t. Is this a problem? For the consumer, it is not. But for the online retailer it’s a nightmare. For generations their logistics networks all flowed one way: from factory to retailer to customer. But now, there is a huge and evergrowing reverse network needed for returns. Rather than shoes, this time imagine the retailer sells women’s blouses. They ship three identical blouses to their customer’s home, she tries all three, keeps the one that fits best and sends the others back. But now, the retailer needs to repackage and restock the two blouses their customer did not want. When done, the blouses both need to look never-before-worn so they can be shipped to the next customer who also orders three different sizes. The labor associated with this new paradigm is a huge issue for almost all retailers and is one they all are grappling to solve.

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What’s Coming? So with all this in mind, let’s peek around the corner just a little bit for a glimpse of what most see coming. First, robotics will continue to evolve in both agility and intelligence while reducing in cost. This will enable the robots to perform routine, repetitive work done in DCs and manufacturing plants while freeing up human capital to handle the more complex tasks. This will mean DCs will need fewer, but smarter and more highly compensated people. At a recent presentation, there was a panel of speakers, all of whom were industrial-focused developers. One of the speakers said, “The easy sites are gone.” And the others on the panel agreed. But what if you take the availability of labor outside the location equation? Does that open a whole new set of possible sites? Is there a day coming when DCs will be predominantly automated? Many think it will. And when that happens, the human workforce at that site will be relegated to folding and repackaging your returns. But only until robots are trained to do that, too. ≈ ≈ ≈

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WAREHOUSING/ DISTRIBUTION

Supply Change: Why a Modular Approach to Warehousing Could Be the Wave of the Future

With the supply chain challenges that companies will inevitably face, the time is now to explore a more varied approach to warehousing. By David Frentzel, New Harbor Consultants

What is modular warehousing?

f supply chain professionals voted for superlatives, warehousing might be a lock for “most likely to need disrupting.” Despite the fact that e-commerce has had an Amazonian impact on everything from average delivery sizes to companies’ preferred delivery frequency, many distribution centers are considerably less altered — and so are the mindsets behind their designs, which continue to be predominantly large-scale. Is a meaningful transformation even possible in an arena where new-and-different demands must ultimately co-exist with brick-andmortar realities? Thankfully the answer is yes — provided you’re willing to adjust your paradigm of what a workable warehousing framework looks like. To wit, maybe it’s time to consider adopting a more modular methodology for some of your warehousing activities.

Modular warehousing is a segmented yet strategic approach to distribution center (DC) design. It consists of (a) “deconstructing” a traditional warehouse by identifying its various essential functions and (b) developing a variety of scalable, agile modules for each function that can either be integrated with other functional modules within the same DC or serve as standalone yet virtually connected operations. Although this practice could involve physical, pre-constructed brickand-mortar components, most of the modules in question are more conceptual in nature, consisting of carefully designed, easily implemented plans that can be put into play in a wide variety of locales or settings — all working together to provide the wide variety of product assortments, valueadded services, and order fulfillment lead times demanded by today’s highly segmented marketplace. The beauty of the concept is that modules can be assembled and located in a wide variety of ways based on the current needs of various customer segments and then relocated, rearranged, or replaced as these requirements or other market conditions change. It also opens the door for some functions to

be located in settings that previously might not have been considered. For example, instead of processing consumer product returns at a company’s main order fulfillment center, companies could instead weigh the pros and cons of setting up separate, localized returns processing centers near courier stores or post offices. All of this is enabled by recent advancements in information technology that have provided supply chain professionals with unprecedented levels of visibility, optimization, and executional functionality. As a result of these things, numerous warehousing locations or activities can function as if they were co-located in one mega DC, even if they’re not.

How many modular plans/ designs does each warehousing function merit — and who should be involved in putting them together? It’s important to emphasize that just because functional modules are more focused and standardized than traditional warehouses, they are not unidimensional. In fact, to facilitate functional efficiency, users should be able to choose from a variety of standard designs for each module, because even at a deconstructed level, a one-size/ one-scenario configuration will rarely AREA DEVELOPMENT | Q2/2017

fit all. Thus the standard selection of modules for a company’s small order pick-and-pack function might include several highly automated configurations for challenging labor markets, as well as several manual configurations for markets where quality labor is in plentiful supply. And, the standard selection of modules for a module that assembles retail point-of-sale displays might include designs for small-, medium-, and large-sized markets. Material handling equipment (MHE), information technology, and automation/ robotics firms can take lead roles in helping shippers and third-party logistics providers design the right set of modules for their businesses, as can supply chain engineers or industry consultants. And — as is the case with standard warehouses — real estate companies and developers can assist in identifying and improving the best sites for each module or collection of modules.

Part of the inspiration and proof of concept for WAREHOUSE MODULES comes from the fact that many retail operations have already begun serving as extensions of companies’ delivery networks.

What kinds of warehousing functions might lend themselves to a modular approach? Traditional warehouses still work well with situations that involve stable, more uniform, and less stringent customer demands — or where bigger means better. However, many of the practices that usually take place within a distinct, well-defined area of a warehouse could lend themselves to a modular treatment if your company is so inclined; in fact, your company may have been applying a modular approach to them without even realizing it. These include consumer return processing operations, value-added services (VAS) work centers, small order fulfillment for traditional brick-and-mortar stores, high-value goods fulfillment, non-conveyable merchandise fulfillment, after-market parts dispatch, and climate-controlled storage. Any distribution practice that is customer-facing — like customer pick-up — could also be a good modular warehousing match, as could any process that is decidedly different from the rest of a company’s supply chain flow, such as product returns or disposal. In addition, any process that calls for high proximity to customers (same-day delivery, futuristic drone delivery, and 3D printing hubs come to mind) could be an ideal fit.

What kinds of rules should guide warehousing module design? Many of the rules that apply to traditional warehouses apply to the development of warehouse modules, too, especially in terms of engineering and connectivity. For example, in order to ensure their consistent efficacy from location to location and venue to venue, modules will need to be carefully optimized and tested via simulations and proof-of-concept pilots in the field. Additionally, because they may be located remotely — and thus may not have the benefit of an on-site warehouse manager’s supervi-

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sion — the use of visibility tools like tracking and tracing sensors, VR (virtual reality), and other technologies that enable managers to “walk the floor” virtually will be even more imperative. The bottom line? Even if modules are designed to fit into smaller spaces or operate on a smaller or more temporary scale, their success or failure could still have big and enduring implications — and they’ll need to be monitored and evaluated accordingly.

What types of real estate — besides the traditional industrial warehousing space — could warehouse modules work in?

Part of the inspiration and proof of concept for warehouse modules comes from the fact that many retail operations have already begun serving as extensions of companies’ delivery networks. Numerous store back rooms have in essence become their companies’ local fulfillment and returns centers, and logic suggests that it wouldn’t be difficult to establish other warehousing modules within them, too. Many warehouse modules could also find a hospitable environment in some of the once successful but now empty shopping malls that are located across the country, especially since these facilities possess several distribution-friendly attributes such as good transportation access, ample square footage, and substantial paved areas that could serve as effective truck-staging areas. Other promising candidates for warehousing modules include unused portions of companies’ manufacturing plants, abandoned industrial zones near urban areas, underutilized areas of office buildings, or within portions of other companies’ warehousing operations.

What’s the final takeaway for companies with traditional warehouses? Due to the fact that your company may already have its hands full trying to run its day-to-day distribution network or accommodate myriad big-box warehousing demands, it may be tempting to table thoughts of exploring modular warehousing until after several early adopters have demonstrated its viability. However, bear in mind that exploring a more varied approach to warehousing now may be exactly what the industry needs in order to address the many supply chain challenges that are inevitably coming —– and probably headed our way sooner rather than later. Plus, it’s important to remember that the very fact that warehousing has been operating with a business-as-usual mentality for so long may be precisely why it might be time to adopt a new approach. ■ DAVID FRENTZEL is a partner with New Harbor Consultants With over 30 years of experience, he currently focuses on helping companies to improve business outcomes with more effective supply chain and logistics strategies and operations. for free site information, visit us online at www.areadevelopment.com

TYPICALLY OUTPERFORMING OTHER COMMUNITIES AND MSAS, LEADING L O C AT I O N S U N D E R S TA N D W H AT BUSINESSES NEED TO THRIVE.

By Mark Crawford

2017 Note: Area Developmentâ&#x20AC;&#x2122;s research desk compiled the statistics for this report. Locations were ranked according to the methodology explained herein. Interactive report available at

www.areadevelopment.com/LeadingLocations2017

AREA DEVELOPMENT | Q2/2017

This is the seventh year that Area Development has migration of these high-value workers into the community, presented its 100 Leading Locations feature. Some 394 and wages (over one-, three-, and five-year periods). Most metropolitan statistical areas (MSAs) were ranked based technical jobs now require some level of postsecondary on their performance in four key categories: “Prime education, as well as computer skills — four- and two-year Workforce,” “Economic Strength,” “Year-Over-Year Growth,” post-secondary degrees are preferred. and “Five-Year Growth.” These factors Not only do employers want are, of course, all interconnected and enough skilled workers for their ideally self-supporting. For example, a immediate operations, but also for top-place ranking in five-year growth possible future expansions — even is often the result of positive perforif competitors move in and deplete mance in prime workforce, year-overSTRONG the labor pool. Therefore, forwardyear economic growth, and economic E C O N O M I C strength. Larger, “big-city” MSAs tend thinking communities are proactive in to perform better overall than midPERFORMANCE building a solid pipeline of potential size and small communities, simply employees. CAN BE because of their economic diversity This includes maintaining an B U I LT and scale. They also tend to attract educational system that provides UPON ONE more worker inflow because of the the skilled graduates companies OR A FEW opportunities and variety of lifestyles are looking for, especially for local they provide. INDUSTRIES industries. These education assets That said, a community doesn’t OR CLUSTERS will also attract students interested in have to have a highly diverse econoT H AT A R E working in these industries, many of my in order to be a Leading Location. I N H I G H whom will stay, hire on, and become Its strong economic performance can

A COMMUNITY’S

DEMAND. be built upon one or a few industries or clusters that are in high demand — for example, auto manufacturing. And, because they have experienced workers who are being replenished through inflow and education, more companies move in, creating a cluster. There is risk, however, in these situations when an economic (or commodity) downturn strikes: for example, a number of Texas energy-dependent cities have fallen toward the bottom of the list while, in comparison, cities with tech-based industries are doing well.

Prime Workforce

part of the community. University research also spins off new companies that require skilled workers. Yet another opportunity to create an enviable workforce is through state-run workforce development programs that are typically free and train workers according to specific company needs. Because of their economic diversity and advantages of scale, it’s not surprising that six big MSAs — San Francisco-Redwood City-South San Francisco, San JoseSunnyvale-Santa Clara, Nashville-Davidson-MurfreesboroFranklin, Oakland-Hayward-Berkeley, Seattle-Bellevue-

In just about any survey of executives, their number-

Everett, and Dallas-Plano-Irving — are in the top 10 for

one priority for site location is prime workforce — workers

prime workforce. However, there are small and mid-size

who are motivated, productive, reliable, loyal, and plentiful

communities that share this top-10 ranking, including

— both now and in the future.

Columbus, Indiana; St. George, Utah; and Gainesville,

Prime workforce indicators include the number of workers aged 18–44, their education level, total inward

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Florida. In Columbus, 37 percent of the 884,000-person

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100 Leading Locations Rankk CITY/MSA 1. San Francisco-Redwood CitySouth San Francisco 2. San Jose-Sunnyvale-Santa Clara 3. Oakland-Hayward-Berkeley 4. Columbus 5. Fort Collins 6. Santa Rosa 7. Nashville-DavidsonMurfreesboro-Franklin 8. Elkhart-Goshen 9. Bend-Redmond 10. Anaheim-Santa Ana-Irvine 11. Portland-Vancouver-Hillsboro 12. Seattle-Bellevue-Everett 13. Wausau 14. Indianapolis-Carmel-Anderson 15. San Luis Obispo-Paso RoblesArroyo Grande 16. Grand Rapids-Wyoming 17. Reno 18. San Diego-Carlsbad 19. Warren-Troy-Farmington Hills 20. Napa 21. Kokomo 22. St. George 23. Cincinnati 24. Sacramento-RosevilleArden-Arcade 25. Savannah 26. New York-Jersey CityWhite Plains 27. Denver-Aurora-Lakewood 28. Atlanta-Sandy Springs-Roswell 29. Chicago-NapervilleArlington Heights 30. Santa Cruz-Watsonville 31. Charlotte-Concord-Gastonia 32. Salt Lake City 33. Boston-Cambridge 34. Louisville/Jefferson County 35. Wilmington 36. Macon 37. Los Angeles-Long BeachGlendale 38. Dallas-Plano-Irving 39. Trenton 40. Barnstable Town 41. Columbus 42. Albany-Schenectady-Troy 43. Norwich-New London 44. Lake Charles 45. Albany 46. Urban Honolulu 47. Austin-Round Rock 48. Kalamazoo-Portage 49. Kahului-Wailuku-Lahaina 50. Las Vegas-Henderson-Paradise

State

REGION

CA CA CA IN CO CA

Pacific Pacific Pacific Midwest Mountain Pacific

TN IN OR CA OR-WA WA WI IN

South Midwest Pacific Pacific Pacific Pacific Midwest Midwest

CA MI NV CA MI CA IN UT OH-KY-IN

Pacific Midwest Mountain Pacific Midwest Pacific Midwest Mountain Midwest

CA GA

Pacific South Atlantic

NY-NJ CO GA

Mid-Atlantic Mountain South Atlantic

IL CA NC-SC UT MA KY-IN DE-MD-NJ GA

Midwest Pacific South Atlantic Mountain New England South Mid-Atlantic South Atlantic

CA TX NJ MA OH NY CT LA OR HI TX MI HI NV

Pacific Southwest Mid-Atlantic New England Midwest Mid-Atlantic New England South Pacific Pacific Southwest Midwest Pacific Mountain

Rankk CITY/MSA 51. 52. 53. 54. 55. 56. 57.

Jacksonville Lansing-East Lansing Raleigh Fond du Lac Camden Springfield West Palm BeachBoca Raton-Delray Beach 58. Detroit-Dearborn-Livonia 59. Chico 60. Niles-Benton Harbor 61. Milwaukee-WaukeshaWest Allis 62. Salinas 63. Hartford-West HartfordEast Hartford 64. Visalia-Porterville 65. Lima 66. Boulder 67. Orlando-KissimmeeSanford 68. Asheville 69. Gainesville 70. Corvallis 71. Jonesboro 71T. Saginaw 73. New Haven-Milford 74. Ann Arbor 74T. Tampa-St. PetersburgClearwater 76. Fayetteville-SpringdaleRogers 77. Vineland-Bridgeton 78. Janesville-Beloit 79. Medford 80. St. Louis 81. Charleston-North Charleston 82. Vallejo-Fairfield 83. New Bern 84. Portland-South Portland 85. Battle Creek 86. Salem 87. Appleton 88. Kansas City 89. Naples-ImmokaleeMarco Island 90. North Port-SarasotaBradenton 91. Gainesville 92. Albany 93. Provo-Orem 94. Toledo 95. Bowling Green 96. South Bend-Mishawaka 97. Eugene 98. Richmond 99. Sheboygan 100. Elizabethtown-Fort Knox

State

REGION

FL MI NC WI NJ IL FL

South Atlantic Midwest South Atlantic Midwest Mid-Atlantic Midwest South Atlantic

MI CA MI

Midwest Pacific Midwest

WI CA

Midwest Pacific

CT CA OH CO

New England Pacific Midwest Mountain

FL NC GA OR AR MI CT MI

South Atlantic South Atlantic South Atlantic Pacific South Midwest New England Midwest

South Atlantic

AR-MO NJ WI OR MO-IL

South Mid-Atlantic Midwest Pacific Midwest

SC CA NC ME MI OR WI MO-KS

South Atlantic Pacific South Atlantic New England Midwest Pacific Midwest Midwest

South Atlantic

FL FL GA UT OH KY IN-MI OR VA WI KY

South Atlantic South Atlantic South Atlantic Mountain Midwest Midwest Midwest Pacific South Atlantic Midwest South

Methodology

labor force is tied to

Area Development ranked 394 MSAs across 21 economic and work force indicators. These 21 indicators were pulled from seven (7) data sets (sub-categories) originating from three sources: the Bureau of Labor Statistics, 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 “394.” 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 #394 overall.

manufacturing. To support this intense demand for manufacturing skills, the city is intent on developing the talent to meet the future needs of employers. Columbus is home to the first K-12 project-based learning

magnet school in the nation, where students work collaboratively using technology and project-based learning to improve critical thinking, innovation, and real-

world problem-solving skills. Columbus is also We also calculated overall ranking across four categories: “Prime Work Force,” “Economic Strength,” “Five-Year Growth,” and “Year-Overhighly ranked for its partnerships with Indiana Year Growth.” To calculate the overall ranking within these four University-Purdue University of Columbus, Ivy categories, we produced an average ranking across only certain Tech Community College, and the Purdue College indicators. An indicator did not have to be exclusive to our of Technology to provide customized education and category rankings. For instance, the “Employment Growth Net training programs. 5-Year Change as Percentage of Population” was used within both the “Economic Strength” and “Five-Year Growth” categories. Economic Strength

We have also produced a set of lists, using our overall reKey factors in determining economic strength are per sults and category results, grouping the MSAs by region capita real gross metropolitan product (GMP), manufacturing/ (see online report) and size. We ranked the top MSAs goods-producing employment, employment net growth, and in each region (defined by Area Development Online local area unemployment rate changes (all evaluated over one-, taxonomy), and we also ranked the top MSAs across three size groups: “Small” (population <160,000), three-, and five-year periods). “Mid-Size” (population 160,000–600,000), and Economic growth is spurred by a variety of factors. Technological “Big” (population >600,000). We ranked the advancements, innovative and disruptive products, and new market cities within each size group against our applications can stimulate economic growth. Policy changes, tax breaks, overall rankings and “Prime Work Force,” and other incentives are also important, including workforce development “Economic Strength,” “Five-Year Growth,” and “Year-Over-Year Growth” categories packages. Economic strength is also reflective of sound management by local (see online report). and state governments, and their awareness of business needs. This helps For a full explanation of the methodology behind our Leading Locations report, go to www.areadevelopment.com/ LeadingLocations2017/ methodology.

keep business costs low and workers employed — especially during economic downturns. Technology is increasingly a key component in growing MSA and regional economies, such as Silicon Valley and the Bay Area. Both San Francisco-Redwood CitySouth San Francisco and San Jose-Sunnyvale-Santa Clara are in the top five for economic strength and are well-established as technology centers. For example, San Francisco produces more patents than any other city in the nation and attracts about 45 percent of

total venture capital investment in the U.S. Key to maintaining this talent-based, innovation

AREA DEVELOPMENT

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economy is the level of educational attainment among its workforce — more than 50 percent of Bay Area residents have four-year degrees or higher. The advantage of technology is not just the invention of a new consumer product or feature — it’s also its application as a tool in manufacturing, such as automation, robotics, and the Internet of Things. This maximizes productivity and quality and lowers costs. Even just one advanced manufacturing industry can drive an economy to excel. If the product demand is high, and a prime workforce exists, mid-size and small cities can also be economic powerhouses

TOP 30 Big Cities Rankk CITY/MSA

State

1. San Francisco-Redwood CitySouth San Francisco CA 2. San Jose-Sunnyvale-Santa Clara CA 3. Oakland-Hayward-Berkeley CA 4. Nashville-DavidsonTN Murfreesboro-Franklin 5. Anaheim-Santa Ana-Irvine CA 6. Portland-Vancouver-Hillsboro OR-WA 7. Seattle-Bellevue-Everett WA 8. Indianapolis-Carmel-Anderson IN 9. Grand Rapids-Wyoming MI 10. San Diego-Carlsbad CA 11. Warren-Troy-Farmington Hills MI OH-KY-IN 12. Cincinnati 13. Sacramento-RosevilleArden-Arcade CA 14. New York-Jersey City-White Plains NY-NJ 15. Denver-Aurora-Lakewood CO 16. Atlanta-Sandy Springs-Roswell GA 17. Chicago-NapervilleArlington Heights IL 18. Charlotte-Concord-Gastonia NC-SC 19. Salt Lake City UT 20. Boston-Cambridge MA 21. Louisville/Jefferson County KY-IN 22. Wilmington DE-MD-NJ 23. Los Angeles-Long BeachGlendale CA 24. Dallas-Plano-Irving TX 25. Columbus OH 26. Albany-Schenectady-Troy NY HI 27. Urban Honolulu 28. Austin-Round Rock TX NV 29. Las Vegas-Henderson-Paradise 30. Jacksonville FL

Region

Rank Within Leadingg Locations

Pacific Pacific Pacific

1 2 3

South Pacific Pacific Pacific Midwest Midwest Pacific Midwest Midwest

7 10 11 12 14 16 18 19 23

Pacific Mid-Atlantic Mountain South Atlantic

24 26 27 28

Midwest South Atlantic Mountain New England South Mid-Atlantic

29 31 32 33 34 35

Pacific Southwest Midwest Mid-Atlantic Pacific Southwest Mountain South Atlantic

37 38 41 42 46 47 50 51

opportunity is still key to where people want to live,” says Christian Schock, director of Planning, Community and Economic Development for the city of Wausau. “Last year, a Pew Research Trust project on the middle class ranked Wausau’s metro first in the country for equality. This highlights the importance of balancing economic opportunity with housing and lifestyle affordability.”

Year-over-Year Growth Year-over-year growth indicators reveal which communities had the strongest short-term economic growth. The indicators are employment growth net change as a percentage

— for example, Elkhart-

of population, local area

Goshen, Ind., and

unemployment rate

Wausau, Wisc. As

change, manufacturing/

an approximately 134,000-population MSA, Wausau’s

goods-producing employment net change as a percentage

economic performance is built on building materials,

of population, and per capita real GMP rate change

advanced manufacturing, healthcare, IT, and insurance.

— all for the one-year period from December 2015 to

It also has a bustling business campus and incubator

December 2016.

for startups. The city has also enjoyed steady growth in employment, educated workers, and wages. “While the nature of work has changed, economic

AREA DEVELOPMENT

These indicators are useful for identifying those cities (and their industries) that are “hot” in terms of economic growth. What are the developing economic

for free site information, call 800-735-2732, ext. 225, or visit us online at www.areadevelopment.com

IN JUST ABOUT ANY SURVEY OF

2017

EXECUTIVES, strengths? How can they be supported and improved? Is this an anomaly,

THEIR NUMBER-ONE PRIORITY

or the beginning of a trend? How will it impact other industries in the

FOR

Ind., which has seen a resurgence in

community? Year-over-year growth

S I T E L O C AT I O N

manufacturing since the end of the

hopefully leads to strong five-year

Great Recession. There are currently

growth — typically the mark of effective

PRIME WORKFORCE.

18 factories under construction

economic development organizations that make the needed investments

in the county (or ready to break ground). Nearly all contemporary

to retain and attract

manufacturing space

business.

is occupied, compared

TOP 30 Mid-Size Cities

Diversification is always beneficial for economic stability, especially bringing in knowledge-based industries that offer good wages and have high growth potential for the future. However, it doesn’t even have to be a large firm — a startup with a highdemand product in a well-equipped business incubator can have significant impact on local and regional economies. Working together in regional partnerships is a good approach for sharing risk, and developing infrastructure and training for attracting new businesses. In first place for year-over-year growth is Elkhart-Goshen,

Rankk 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.

Fort Collins Santa Rosa Elkhart-Goshen San Luis Obispo-Paso RoblesArroyo Grande Reno Savannah Santa Cruz-Watsonville Macon Trenton Barnstable Town Norwich-New London Lake Charles Kalamazoo-Portage Lansing-East Lansing Springfield Chico Salinas Visalia-Porterville Boulder Asheville Gainesville Saginaw Ann Arbor Fayetteville-Springdale-Rogers Janesville-Beloit Medford Vallejo-Fairfield Portland-South Portland Salem Appleton

State CO CA IN CA NV GA CA GA NJ MA CT LA MI MI IL CA CA CA CO NC GA MI MI AR-MO WI OR CA ME OR WI

Region

Rank Within Leadingg Locations

Mountain Pacific Midwest

5 6 8

Pacific Mountain South Atlantic Pacific South Atlantic Mid-Atlantic New England New England South Midwest Midwest Midwest Pacific Pacific Pacific Mountain South Atlantic South Atlantic Midwest Midwest South Midwest Pacific Pacific New England Pacific Midwest

15 17 25 30 36 39 40 43 44 48 52 56 59 62 64 66 68 69 71 74 76 78 79 82 84 86 87

to the 20,000,000 square feet of space that was available in 2009, according to Mark Dobson, president and CEO of the Economic Development Corporation of Elkhart County. Currently the unemployment rate is 3.2 percent; five years ago it was 10.2 percent. Wall Street 24/7 recently ranked Elkhart County as the number-one location in the state of Indiana for job growth in 2016, and tenth overall in the U.S.2 Other leaders for year-over-year growth include San JoseSunnyvale-Santa Clara, San Francisco-Redwood City-South San Francisco, and VisaliaPorterville, Calif.; and Norwich-New London,

AREA DEVELOPMENT | Q2/2017

TOP 30 Small Cities

Conn., which is enjoying rapid job growth due to a resurgence in manufacturing.

Five-Year Growth For five-year-growth, only the economic indicators ranking change from 2011 to 2016 were considered. This provides some measure of how well cities have recovered from the generally accepted end of the Great Recession. These indicators are employment growth net five-year change as a percentage of population, local area unemployment rate five-year change, manufacturing/goods-

Rank CITY/MSA

State

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.

IN OR WI CA IN UT OR HI WI MI OH OR AR NJ NC MI GA KY WI KY NY VA-WV ID NJ OR MI WA IN NY TN

Columbus Bend-Redmond Wausau Napa Kokomo St. George Albany Kahului-Wailuku-Lahaina Fond du Lac Niles-Benton Harbor Lima Corvallis Jonesboro Vineland-Bridgeton New Bern Battle Creek Albany Bowling Green Sheboygan Elizabethtown-Fort Knox Watertown-Fort Drum Winchester Idaho Falls Ocean City Grants Pass Jackson Mount Vernon-Anacortes Muncie Glens Falls Jackson

Region Midwest Pacific Midwest Pacific Midwest Mountain Pacific Pacific Midwest Midwest Midwest Pacific South Mid-Atlantic South Atlantic Midwest South Atlantic Midwest Midwest South Mid-Atlantic South Atlantic Mountain Mid-Atlantic Pacific Midwest Pacific Midwest Mid-Atlantic South

incentives.

Rank Within Leading Locations

A number of big MSAs are again in the top 10 â&#x20AC;&#x201D; for example,

4 9 13 20 21 22 45 49 54 60 65 70 71 77 83 85 92 95 99 100 102 104 108 110 115 125 129 130 135 136

San Francisco-Redwood City-South San Francisco, San JoseSunnyvale-Santa Clara, and Anaheim-Santa Ana-Irvine. However, first and second place are occupied by Napa, Calif., and Columbus, Ind., respectively. Other top-ranked mid-size and small cities are ElkhartGoshen and Kokomo, Ind.; Bend-Redmond, Ore.; and Reno, Nev. Napa/Sonoma County is booming. A recent Milken Institute study ranked Sonoma County first in oneyear economic growth among large metros for

producing employment

beverage and tobacco

five-year net change

product manufacturing,

as a percentage of

10th for job growth

population, per capita

from 2010 to 2015,

real GMP five-year rate change, and average hourly

and 21st for technology diversity. This last number is

earnings five-year rate change.

reflective of increasing economic diversity and advanced

Cities that are top-ranked in five-year growth are generally there because of a diversified economic base,

manufacturing. Kokomo, a community dominated by auto and

high-performing industries, a cooperative business

auto-part manufacturing, is frequently recognized for

climate, and an engaged economic development

its manufacturing presence, productivity, and strength.

community. These cities also tend to have low overall

This achievement is in part due to its high-quality

business costs, including cost advantages in labor,

workforce. About 18 percent of the Kokomo/Howard

property and leasing, and corporate taxes as well as

County population holds a bachelorâ&#x20AC;&#x2122;s degree or higher.

100

AREA DEVELOPMENT

for free site information, call 800-735-2732, ext. 225, or visit us online at www.areadevelopment.com

2017

TOP 20 Cities

Prime Work Force Rank CITY/MSA 1. San Francisco-Redwood CitySouth San Francisco 2. San Jose-Sunnyvale-Santa Clara 3. Nashville-DavidsonMurfreesboro-Franklin 4. Oakland-Hayward-Berkeley 5. Columbus 6. St. George 7. Gainesville 8. Seattle-Bellevue-Everett 9. Bend-Redmond 10. Dallas-Plano-Irving 11. Olympia-Tumwater 12. Salt Lake City 13. Denver-Aurora-Lakewood 14. Savannah 15. Orlando-Kissimmee-Sanford 16. Austin-Round Rock 17. Grand Rapids-Wyoming 18. Auburn-Opelika 19. Tallahassee 20. Reno

State

Rank Within Leading Locations

CA CA

1 2

TN CA IN UT FL WA OR TX WA UT CO GA FL TX MI AL FL NV

7 3 4 22 91 12 9 38 147 32 27 25 67 47 16 157 150 17

more nimble in responding to economic opportunities. Take Bend-Redmond, Ore., for example, which ranked in the top 10 for prime workforce and five-year economic growth. The Milken Institute also rated Bend-Redmond as the best-performing small city in 2016.4 Part of this success is due to the city’s recruitment of targeted industries such as high technology, biotech, recreational/ outdoor equipment, brewing and distilling, and data centers. “We also focus on helping existing businesses grow and expand,” says Roger Lee, executive director at Economic Development for Central Oregon (EDCO).

TOP 20 Cities

Economic Strength Rank CITY/MSA

The city’s Economic Development Income Tax (EDIT) job training program assists new and existing businesses with workforce training and development.

Becoming a Leading Location Leading locations typically outperform other communities and MSAs because they understand what businesses need to thrive. Community and economic development leaders are skilled at identifying their city’s strengths and weaknesses, especially in terms of what existing and targeted industries require — especially CEO confidence in long-term success. Ultimately, diversity is the key for long-term growth that can offer high-paying jobs and weather economic tides. This can be easier for large MSAs, which have wellestablished infrastructure, assets, and resources. Smaller communities also have a lot to offer and can actually be

1. Elkhart-Goshen 2. San Francisco-Redwood CitySouth San Francisco 3. San Jose-Sunnyvale-Santa Clara 4. Fort Collins 5. Kokomo 6. Indianapolis-Carmel-Anderson 7. Wausau 8. Anaheim-Santa Ana-Irvine 9. Santa Rosa 10. Lima 11. Oakland-Hayward-Berkeley 12. Boston-Cambridge 13. Kahului-Wailuku-Lahaina 14. Napa 15. Columbus 16. San Diego-Carlsbad 17. San Luis ObispoPaso Robles-Arroyo Grande 18. Portland-Vancouver-Hillsboro 19. Norwich-New London 20. Sacramento-RosevilleArden-Arcade

State

Rank Within Leading Locations

CA CA CO IN IN WI CA CA OH CA MA HI CA IN CA

1 2 5 21 14 13 10 6 65 3 33 49 20 4 18

CA OR-WA CT

15 11 43

AREA DEVELOPMENT | Q2/2017

101

TOP 20 Cities

Year-Over-Year Growth

Rank CITY/MSA 1. Elkhart-Goshen 2. San Jose-Sunnyvale-Santa Clara 3. San Francisco-Redwood CitySouth San Francisco 4. Norwich-New London 5. Visalia-Porterville 6. Kokomo 7. Barnstable Town 8. Springfield 9. Indianapolis-Carmel-Anderson 10. Lake Charles 11. Fort Collins 12. Madera 13. Nashville-DavidsonMurfreesboro-Franklin 14. Pine Bluff 15. Warren-Troy-Farmington Hills 16. Bowling Green 17. St. George 18. Salinas 19. Oakland-Hayward-Berkeley 19T. Jonesboro

Rank Within Leading Locations

State IN CA

8 2

CA CT CA IN MA IL IN LA CO CA

1 43 64 21 40 56 14 44 5 225

TN AR MI KY UT CA CA AR

7 316 19 95 22 62 3 71

of mechanical engineering in the U.S., advanced manufacturing drives the local economy, ranking in the top 2 percent of the U.S. for employment strength. Information on corporate expansions by Cummins, Toyota, Faurecia, and more is at www.ColumbusIN.org. Jason Hester, CEcD, President Greater Columbus Indiana Economic Development Corporation 440 Fifth Street Columbus, IN 47201 812-378-7300 @ColumbusEconDev jhester@columbusin.org www.ColumbusIN.org

TOP 20 Cities

Five-Year Economic Growth Rank CITY/MSA

“Often the very best opportunities for job creation start with companies already operating here. Central Oregon has a diverse economy with a variety of sectors. It is our goal to deepen the pool of companies in the form of new startups, relocations, and critical supply chains to continue the diversification of our economic base.”

˚˚˚

http://www.areadevelopment.com/skilled-workforce-STEM/q4-2016/skilled-labor-availabilitysite-selection-factor.shtml 2 http://www.elkhartcountybiz.com/wp-content/uploads/2014/11/2016-Annual-Report.pdf 3 http://www.pressdemocrat.com/business/6749946-181/sonoma-countys-economy-isbooming?artslide=0 4 http://www.bendbulletin.com/home/4902359-151/bend-ranked-best-performing-small-city-inthe-nation?referrer=popular

Sponsor Greater Columbus Economic Development Corporation Columbus, Indiana, is known for its manufacturing prowess, engineering strengths, and world-renowned architecture. With one of the highest concentrations

102

AREA DEVELOPMENT

1. Napa 2. Columbus 3. San Francisco-Redwood CitySouth San Francisco 4. Elkhart-Goshen 5. Bend-Redmond 6. San Jose-Sunnyvale-Santa Clara 7. Kokomo 8. San Luis Obispo-Paso RoblesArroyo Grande 9. Reno 10. Chico 11. Santa Rosa 12. Anaheim-Santa Ana-Irvine 13. Santa Cruz-Watsonville 14. Fort Collins 15. Kahului-Wailuku-Lahaina 16. Battle Creek 17. Grand Rapids-Wyoming 18. Janesville-Beloit 19. Fond du Lac 20. Naples-Immokalee-Marco Island

State

Rank Within Leading Locations

CA IN

20 4

CA IN OR CA IN

1 8 9 2 21

CA NV CA CA CA CA CO HI MI MI WI WI FL

15 17 59 6 10 30 5 49 85 16 78 54 89

for free site information, call 800-735-2732, ext. 225, or visit us online at www.areadevelopment.com

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ALABAMA

Alabama Industrial Development Training Alabama RTP (Robotics Technology Park) 66, 67 info@alabamartp.org www.alabamartp.org www.aidt.edu

ARIZONA

Arizona Commerce Authority kevins@AZcommerce.com www.AZcommerce.com City of Mesa kim.lofgreen@mesaaz.gov www.MesaAZ.gov/economic

C2, 70, 71

74, 75, C4

15, 17, 19, 45

Nebraska Public Power District EconDev@NPPD.com www.EconDev.NPPD.com

NEVADA

Nevada Governorâ&#x20AC;&#x2122;s Office of Economic Development success@diversifynevada.com www.DiversifyNevada.com

NORTH CAROLINA C3

SOUTH CAROLINA

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OHIO

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103

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86, 87

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TEXAS

Michigan Economic Development Corporation whiteheadn@michigan.org www.MichiganBusiness.org/AD Mississippi Development Authority bklauser@mississippi.org www.Mississippi.org

Page

Pennsylvania Department of Community & Economic Development ra-dcedcs@pa.gov azecha@pa.gov dced.pa.gov www.NewPA.com

TENNESSEE

Louisiana Economic Development 82, 83 paul.helton@la.gov www.OpportunityLouisiana.com/faststart

NEBRASKA

INDIANA

Greater Columbus Indiana Economic Development Board jhester@columbusin.org www.ColumbusIN.org

37, 64

MISSISSIPPI

GEORGIA

Georgia Ports Authority swatson@gaports.com www.gaports.com

MICHIGAN

Enterprise Florida, Inc. 7, 78, 79 tvanderhoof@EnterpriseFlorida.com www.FloridaTheFutureIsHere.com www.EnterpriseFlorida.com Georgia Department of Economic Development communications@georgia.org www.Georgia.org

Kansas Department of Commerce susan.neupothcadoret@ks.gov www.KansasCommerce.gov Kentucky Cabinet for Economic Development Econdev@ky.gov www.ThinkKentucky.com

Advertiser PENNSYLVANIA

Iowa Economic Development Authority info@iowaeda.com www.iowaeconomicdevelopment.com www.IowaEDA.com

LOUISIANA

FLORIDA

City of Cape Coral Economic Development dbrunett@capecoral.net ecodev@capecoral.net www.BizCapeCoral.com

IOWA

KENTUCKY

CONNECTICUT

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

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KANSAS

ARKANSAS

Arkansas Economic Development Commission shardin@arkansasedc.com www.ArkansasEdc.com

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Abilene Industrial Foundation justinj@abileneind.com www.DevelopAbilene.com

Converse Economic Development ksilvas@converseEdc.com www.ConverseEdc.com

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

North Houston District rfiederlein@northhouston.org www.NorthHouston.org

Odessa Development Corporation burnett@odessaecodev.com www.OdessaTex.com

Texas Economic Development Corporation michael@texasone.us www.TexasWideOpenForBusiness.com

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As the largest city in Southwest Florida with a year-round population of over 175,000, Cape Coral is among the fastest growing communities in the U.S. Our city offers existing facilities, industrial parks and a wide array of commercial sites. Forbes Magazine consistently shows the Cape Coral MSA in the U.S. top 10 for job growth. Join a host of reputable companies that already call Cape Coral home. At just 45% built out, our city is ideally suited for: • Medical • Corporate Headquarters • Light Manufacturing • Back Office Operations Why not build your business in a location that feels like a vacation the minute the work day ends? Contact our Economic Development team to get started on your new business destination today.

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Building a Thriving Manufacturing Workforce Page 68 How to Find Manufacturing Talent Page 73 Scouting Locations in an Era of Labor Scarcity: 10 Considerations Page 80

2017

Special Supplement to Area Development Magazine

(800) 626-2930 • ThinkKentucky.com

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CONTENTS FEATURES

68 BUILDING A THRIVING MANUFACTURING WORKFORCE

EDITOR’S NOTE

The use of modern recruiting and training techniques will help a manufacturer to build an effective workforce.

73 HOW TO FIND MANUFACTURING TALENT

Yet, as John Rees, director of Research at Avalanche Consulting, tells us, data alone will not help a company identify the community that best meets its workforce needs. Companies must look beyond the national unemployment numbers since they may be higher — or even lower — in specific areas of the country. And just because a location has a pool of available workers, those workers might not possess the specific skills a company requires.

EXCLUSIVE ONLINE CONTENT…

n April, the national unemployment rate fell to 4.4 percent — near a 10-year low — and below the Federal Reserve’s median forecast of full employment. As the labor market tightens, companies across many industry sectors are having difficulty filling jobs — especially those requiring the skills needed for advanced manufacturing.

In fact, manufacturing has become more and more technologically or robot-driven. According to an Association for Advanced Manufacturing white paper, from 2010 to 2016, more than 136,000 robots were shipped to U.S. customers — the most ever in the robotics industry. And while the use of robots has decreased the number of workers needed on the manufacturing production line, the association notes it can take an average of 70 days to recruit a skilled manufacturing production worker.

Does a skills gap really exist — or does it depend on where you’re located and what you are willing to pay?

80 SCOUTING LOCATIONS IN AN ERA OF LABOR SCARCITY: 10 CONSIDERATIONS Data alone will not help a company identify the community that will best meet its workforce needs.

Silver Tsunami Washing Over the U.S. Workforce It will take a creative and multi-tiered approach in partnership with communities, government, and educators for manufacturers to find the skilled work force they need.

SPONSORS/PROFILES ALABAMA

66 THE ALABAMA ROBOTICS TECHNOLOGY PARK — AN INNOVATIVE TRAINING CENTER info@alabamartp.org www.alabamartp.org

ARKANSAS

70 ARKANSAS: DEVELOPING THE WORKFORCE OF THE FUTURE shardin@arkansasedc.com www.arkansasedc.com

So how do companies find this manufacturing talent? Joshua Wright, director of Marketing and PR for Emsi, economic modeling specialists, says it depends on where a company is located and what it’s willing to pay.

FLORIDA

Additionally, innovative manufacturers are revamping their recruiting strategies by reaching out to educational institutions and community groups, according to Ed Potoczak, director of Industry Relations at IQMS, a global software company. They are also partnering with industry, governmental, and educational institutions. And once employees are hired, they are enhancing efforts to keep them engaged and drive retention.

78 FLORIDA —THE FUTURE IS HERE

74 CAPE CORAL, FLORIDA: A HOT SPOT FOR BUSINESS GROWTH dbrunett@capecoral.net www.bizcapecoral.com tvanderhoof@EnterpriseFlorida.com www.FloridaTheFutureIsHere.com

LOUISIANA

82 LOUISIANA’S CUSTOMIZED WORKFORCE SOLUTION paul.helton@la.gov www.OpportunityLouisiana.com/faststart

SOUTH CAROLINA

BREADTH. DEPTH. SUCCESS. SOUTH CAROLINA IS READY. pretulaks@sctechsystem.edu www.readysc.org

PUBLISHER: Dennis J. Shea ART & DESIGN: Patricia Zedalis EDITOR: Geraldine Gambale PRODUCTION MANAGER: Jessica Whitebook FINANCE: Mary Paulsen PRODUCTION ASSISTANT: Talea Gormican

ADVERTISING: Bill Bakewicz Valerie Krpata

DIGITAL MEDIA MANAGER: Justin Shea BUSINESS DEVELOPMENT: Matthew Shea WEB DESIGNER: Carmela Emerson

BUSINESS SERVICES: Barbara Olsen

2017 • 65

THE ALABAMA ROBOTICS TECHNOLOGY PARK — AN

INNOVATIVE TRAINING CENTER The Alabama Robotics Technology Park in Tanner, Alabama, is committed to providing a highly skilled, technically trained, and educated workforce; assisting public and private entities to develop new robotics systems and technologies; and promoting the creation, growth or expansion of companies through innovative technology solutions. RTP is one of the most innovative training centers in the country with three individual training centers, each targeted to a specific industry need. This specialized training, held to an ISO 9001-2015 certification standard, is offered at no cost to Alabama companies. Phase One, the Robotic Maintenance Training Center, is a 60,000-square-foot facility housing industry training programs where technicians are trained in industrial safety, robotics, and PLCs. Fully equipped with the leading industrial robotics and automation software in the world, this facility offers more than 30 industrial robots, an automatic welding lab, and a mock-up automatic manufacturing line. Phase Two, the Advanced Technology and Research Development Center, is a cutting-edge R&D facility focusing entirely on high-end robotics and automation projects. This 43,000-square-foot facility is used for the purpose of research, development, and testing of leading-edge automation and robotics used for industry, military projects, and space exploration. This facility also features a 0.95-mile outdoor circular test track. Phase Three, the Integration, Entrepreneurial and Paint/Dispense Training Center, allows companies to train in manual paint spraying techniques and robotic dispense training. The Integration/Entrepreneurial entity is used by Alabama’s new and existing businesses to build, install, and adapt automation equipment for new and existing manufacturing processes. The Paint/ Dispense Training entity offers opportunities for Alabama businesses to train in manual paint spraying techniques as well as robotic dispense training or can be used for dispense process 66 • WORKFORCE

research and testing. This 51,000-square-foot facility houses both aspects and began dispense training in summer 2016. In 2013, RTP debuted a mobile training lab that is used for outreach and to help teach K-12 students across the state of Alabama learn about careers in robotics and automation. The Mobile Robotics Training Lab is a 53-foot semi-trailer outfitted with the latest technology in robotics and automation. RTP also hosted the first annual AWS National Welding Skills manual and robotic competitions in December 2016. Student contestants from around the world showed their robotic arc welding skills and knowledge in the two-and-a-half-day competition. “With new companies moving to and existing companies expanding in Alabama, AIDT is continuously upgrading its skill set as a training organization,” said Ed Castile, director of AIDT. “By staying on top of new technologies and advanced production processes, AIDT is able to keep producing a highly skilled, welltrained workforce and keep our clients safe, productive, and profitable. We will continue to find ways to be innovative in our approach to training, developing, and recruiting the workforce.” Visit RTP at http://www.alabamartp.org/

Rick Maroney, RTP Director Alabama RTP (Robotics Technology Park) 6506 U.S. Hwy 31 Tanner, AL 35671 256-642-2600 info@alabamartp.org www.alabamartp.org

ADVANCED

ROBOTICS TECHNOLOGY & AUTOMATION TRAINING

ALABAMA RTP

ROBOTICS TECHNOLOGY PARK

TRAINING RESEARCH & DEVELOPMENT INTEGRATION & TESTING

www.alabamaRTP.org

WE ARE WORKFORCE DEVELOPMENT

WWW.AIDT.EDU

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BUILDING A THRIVING MANUFACTURING WORKFORCE THE USE OF MODERN RECRUITING AND TRAINING TECHNIQUES, AS WELL AS TECHNOLOGY TO IMPROVE KNOWLEDGE TRANSFER AND PRODUCTIVITY, WILL HELP A MANUFACTURER TO BUILD AN EFFECTIVE WORKFORCE.

hen asked about recruiting, hiring, and retaining skilled workers, most manufacturers across North America report that they are experiencing challenges. It is not surprising in light of recent observations by William A. Strauss, a senior economist in the Economic Research department at the Federal Reserve Bank of Chicago. In his keynote at the IQMS 2017 Pinnacle User Conference, “Economic Conditions and Factors That Impact Manufacturing,” Strauss explained that labor force growth is limited to an extent by the availability of potential workers. He noted that population growth in the United States is at 0.8 percent, and the population is aging. Baby-boomers represent a bigger portion of the potential workforce, he said, compared to younger members of the population considered to be in their years of prime employment. Compounding the recruitment challenge is that many parents of high school and college students envision factories as loud, chaotic places where the focus is on manual labor and the need for education is limited — a view far more accurate in 1977 than in 2017. The results are two-fold: Students with a strong academic focus are steered toward other career paths. Meanwhile, students placed in vocational tracks often lack the core science and math skills required for modern manufacturing jobs. Finally, the youngest entrants in the labor force, the millennials, bring a different set of priorities and expectations along with a fundamentally different relationship with technology. Fortunately, innovative manufacturers have developed strategies for overcoming these hurdles to build skilled and effective workforces. Let’s look at best practices in recruiting, training and knowledge transfer, employee engagement, and A multi-generational team provides experienced role models technology adoption they have developed to build and fresh ideas. modern manufacturing teams. By Ed Potoczak, Director of Industry Relations, IQMS

68 • WORKFORCE

Revamping Recruiting Strategies Today, attracting skilled talent extends far beyond manufacturers posting job notices to build a pipeline of people interested in their openings. Instead, it is important to generate a plan for consistent year-round public relations activities to present the company’s values, purpose in the market, support of individual employee interests, availability of ongoing training and education, modern technology, opportunities for advancement, and involvement in charitable and civic organizations. Manufacturers also need to reach out to providers of secondary and higher education along with community development groups. This may include sponsoring robotics design teams, offering plant tours, or participating in career fairs. Additionally, events can provide a positive peek behind the curtain, whether they are organized as part of national Manufacturing Day (www.MFGDAY.org) efforts or as independent initiatives. Another avenue is to creatively expose students in high school, technical schools, and community colleges through interactive tools such as EduFactor,1 a Netflixlike, cloud-based, video service developed by Edge Factor. Content features innovative designer-makers, the need for products in all aspects of life, and exciting careers in product design and production. Throughout these recruitment efforts, it important to reach out to women as well. According to 2016 data from the nonprofit Institute for Women’s Policy Research (IWPR),2 women hold fewer than 10 percent of jobs in the growing areas of advanced manufacturing, transportation, distribution, and logistics. Many companies that focus on engaging with young women in high school and college report greater success in filling important entry-level specialty and management roles.

Training for Today’s Job Demands Alongside recruiting, it is important to invest in training to help grow the pool of available skilled workers. In many cases, manufacturers can take advantage of opportunities to partner with industry, government, and educational institutions. For instance, Raise the Floor3 is a training program in the Cincinnati metropolitan area started by 26 women from the education, manufacturing, and

nonprofit worlds. It is helping fill middle-skill manufacturing jobs as a way for women to better their financial situation. Carissa Shutzman, a co-founder of Raise the Floor and a vice president at Gateway Community College in Northern Kentucky, said the group’s founders came together because of “a perfect storm” with a high number locally of unfilled, skilled jobs in manufacturing and a high percentage of under- and unemployed women. Another example is, 50 Strong, a subsidiary of midsize manufacturer Precision Thermoplastic Components. It has launched the 50 Strong Foundation,4 which awards scholarships to those engaged in or interested in pursuing careers in manufacturing. With these scholarships, recipients can defray the cost of attending a technical, vocational or trade school to grow their manufacturing knowledge and skills. Meanwhile, Dymotek, which was recently awarded 2016 Processor of the Year by Plastic News, demonstrates the success of combining outside education with in-house training and employee development. The company, which focuses on the demanding niche of liquid silicone rubber (LSR) molding, looks for people with the right culture and attitude — whether working at the local diner or auto shop. Then once they are hired, often as direct labor, the company educates them on LSR molding and manufacturing skills. Notably, some 24 percent of Dymotek’s full-time employees started as direct labor and then were promoted.

Engaging Employees Once employees are onboard, successful manufacturers recognize and address the different expectations of younger millennials and “Gen Edgers.” Older Gen Xers and baby-boomers remember starting careers with trivial, administrative tasks. By contrast younger employees are used to having adults, such as parents, teachers, and relatives, ask for their input on a daily basis. So they want to contribute immediately in a meaningful way. Communication is one key to engaging younger workers. Instead of simply assigning work, it is important for direct supervisors to consistently explain how those work assignments help colleagues, impact customers, and benefit society. Also critical is a commitment to mentoring

2017 • 69

ARKANSAS: DEVELOPING THE WORKFORCE OF THE FUTURE Rapid changes in our global marketplace require states like Arkansas to stay ahead of the growth in order to meet the needs of industry, especially in workforce development. Not only does Arkansas continue to lead the computer science and coding education movement nationwide, we are building foundations for student success in a variety of areas both in and outside of the classroom. When Gov. Asa Hutchinson took office in January 2015, he began the task of developing a workforce initiative that includes private-public partnerships with industries, twoyear colleges, technical colleges, and high schools. Through these mutually beneficial partnerships, students can have access to good-paying jobs after they graduate.

Gov. Asa Hutchinson speaks at Arkansas’ All State Coding Academy Competition. Hutchinson’s computer science initiative is growing a tech-based workforce.

For example, the Georgia-Pacific facility in Crossett developed the Federation for Advanced Manufacturing Education (FAME) program in collaboration with the University of Arkansas at Monticello College of Technology – Crossett. G-P offers a free education to students wanting to learn the advanced manufacturing process used at G-P’s Crossett plant. The company pays for tuition, fees, and books, and it pays the students to work at the mill 24 hours a week. When they have successfully completed the program, students will have a full-time job waiting for them.

In short, no matter what job skills are needed for businesses currently operating in Arkansas or for businesses considering relocation here, students are being given opportunities to respond to the demands of industry — whether it’s welding, computer coding, or manufacturing.

Other two-year institutions such as the University of Arkansas – Fort Smith and Arkansas Northeastern College are preparing workforces for the state’s growing steel industry.

Over the next 10 years, industry demands will undoubtedly continue to change. In Arkansas, we’ll stand ready to meet those demands with a trained and skilled workforce that is second to none.

We recognize that in today’s global economy, it is our responsibility to introduce students to 21st century career paths as early as middle school. While we are pleased with the growth of Gov. Hutchinson’s computer coding initiatives in high schools throughout the state, we are equally excited about the state’s computer science learning program called “Learning Blade.” This program introduces students as early as 5th grade to careers in STEM and technology-related fields.

Now, more than ever, Arkansas is open for business.

A better-educated workforce is a vital component of attracting business and industry. It’s about setting the stage for companies to come to Arkansas, grow here, and be successful here.

Scott Hardin, Director of Communications Arkansas Economic Development Commission (AEDC) 900 West Capitol Ave. Little Rock, AR 72201 501-682-1121 Fax: 501-682-7499 shardin@arkansasedc.com www.arkansasedc.com

70 • WORKFORCE

2017 • 70

ArkansasEDC.com/asa | 1-800-ARKANSAS

WE HAVE A WELL-TRAINED, EXPERIENCED AND EAGER WORKFORCE. STARTING WITH THIS GUY.

Some states say they’re serious about economic development. Arkansas is proving it, with a skilled and ready workforce that starts all the way at the top. Our Governor, Asa Hutchinson, is building the ideal talent delivery system with custom, ondemand workforce training to meet business needs and address skills gaps. The result is a state poised and ready to deliver market relevant workforce to the scale necessary to succeed. Go to ArkansasEDC.com/asa or scan this ad using the LayAr app on your smartphone to learn how you can join Asa and this amazing business venture we call Arkansas Inc. You’ll be in good company.

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“high-potential” employees. As new employees gain familiarity with how things get done, they should be thoughtfully challenged with meaningful responsibilities backed by guidance to provide coachable moments. Additionally, regular meetings for informal listening, feedback, and advice with seasoned employees and managers will be appreciated, and they will help minimize the risk of frustration leading to a quick exit from the company. While focusing on the wave of new talent, manufactures should also identify growth opportunities for Gen Xers who have years with the firm. These valuable employees, who often need to support growing family commitments, want to advance and unleash their passion to help grow the company. Importantly, integrating new employees into multigenerational teams can strengthen all workers. Exposing recent hires to the knowledge and style of experienced team members can provide them with helpful role models. At the same time, existing team members should be encouraged to leverage younger employees’ tech savvy, enthusiasm, and creativity to provide “fresh eyes” insights for the team and project.

Using Technology to Drive Retention Technology now touches most people’s daily lives — from millennials who don’t remember a time before smartphones to baby-boomers who use their mobile devices for shopping, social media, and more. These employees expect to take advantage of technology to make their jobs more efficient and effective. In particular, virtually every employee has a personal smartphone, so manufacturers can benefit by allowing — even encouraging — use of these devices for online research, collaboration, and social communications. Mobile devices also enable e-mail and text communications with colleagues and supervisors outside of business hours. Additionally, businesses can incent employees to use their smartphones for positive posts on social media to build the company brand. At the same time, preparing a reasonable policy for smartphone communications will protect intellectual property and confidential information. Investing in software to support operations in the back office and on the shop floor is increasingly critical. Well-integrated modern enterprise systems can provide ready access to valuable daily operating insights via many types of devices. Real-time data capture and analytics enable “instant” access 72 • WORKFORCE

to key information needed by the team to do their jobs whenever and wherever needed. Moreover, these systems help minimize the redundant work that frustrates all employees, empowering all team members to become more productive.

Enabling Effective Knowledge Transfer Many manufacturers face the need to accomplish a transfer of knowledge between retiring babyboomer managers, technicians, and operators and newer employees. Contemporary enterprise software provides powerful tools to support this effort. Notably document management systems integrated with other enterprise software can be used to deliver written work instructions, photo images, and even video clips for training employees on a work task or refreshing their skills. Manufacturers can make video recordings of experienced employees explaining how they do specific work tasks. These can be captured in one- to two-hour sessions and then edited later into short, digestible segments for daily use that can be accessed via the web or mobile devices. Additionally, manufacturers can leverage a significant amount of written and video training content provided by software vendors, equipment builders, and trade associations to their customers or association members. For example, the Precision Metalforming Association Education Foundation (PMAEF)5 is dedicated to the promotion and development of a skilled workforce for the metalforming industry. The PMAEF creates technical training materials for its manufacturing members to use in full-fledged apprenticeship programs or for refreshing skills.

In Sum To successfully build a sustainable, thriving workforce it is important to walk a mile in the shoes of those you seek to attract, hire, integrate, retain, and develop. By creatively applying modern recruiting and training techniques, creating meaningful work experiences, and leveraging technology to improve knowledge transfer and productivity, manufacturers will be well positioned to build an effective workforce.

http://www.edgefactor.com/edufactor/ https://iwpr.org/ http://www.raisetheflooralliance.org/ 4 https://be50strong.com/pages/50-strong-foundation 5 http://www.pma.org/news/article.asp?aid=8022 2 3

HOW TO FIND MANUFACTURING TALENT DOES A SKILLS GAP REALLY EXIST — OR DOES IT DEPEND ON WHERE YOU’RE LOCATED AND WHAT YOU ARE WILLING TO PAY?

or years, manufacturing executives have contended — in survey after survey and media story after media story — that they can’t find the talent they need to maintain and grow their operations. On the other side, academics and economics writers like Ben Casselman of FiveThirtyEight have argued1 that there’s “scant evidence” for a skills shortage in manufacturing. Which is it? Does a skills gap exist in manufacturing, or at least is it getting tougher to find manufacturing talent? Two things are certain: (1) The labor market is tightening, which is pushing up wages — even in manufacturing; and (2) job openings far outpace hires in manufacturing.2 Nonetheless, the best answer to the skillsshortage question is that it depends on where you’re located, the positions you’re looking to fill, and — perhaps most importantly — the compensation you’re willing to offer.

How to Spot a Shortage One of the best ways to spot a potential worker shortage, if you can find reliable data over time, is to analyze historic wage trends. When labor demand outstrips labor supply, wages should go up. “If finding qualified workers is so hard, for example,” Casselman notes, “then companies should be offering higher pay to attract and retain precious workers.” Metros With Fastest-Growing Manufacturing Earnings, That’s not the case 2012–2016 nationally. Growth in wages among manufac40.0% 33.4% turing workers in non35.0% 30.0% 25.1% supervisory roles has 25.0% 20.6% tracked about the same 16.8% 17.0% 20.0% 17.2% 13.3% 15.0% as the same category of 9.4% 7.5% 10.0% 6.3% workers in all private5.0% 0.0% sector industries.3 And Raleigh, Trenton, Corpus Christi, Columbia, San Jose-Sunnyvaleindustrywide per Emsi, NC NJ TX SC Santa Clara, CA which compiles admin2012–2016 Change in Manufacturing Earnings 2012–2016 Change in Private-Sector Earnings istrative data from the Source: Emsi 2017.2 Employees; earnings not adjusted for inflation BLS, growth in earnings was lower in manufac-

By Joshua Wright, Director of Marketing and PR, Emsi

2017 • 73

CAPE CORAL, FLORIDA: A HOT SPOT FOR BUSINESS GROWTH Cape Coral’s ideal, year-round climate, affordable real estate, and competitive cost of living continue to attract national attention. In fact, the Cape Coral metropolitan area is the fastest-growing in the nation, according to Moody’s Analytics. The Cape Coral Economic Development Office is effectively recruiting several new companies, among them corporate headquarters and several manufacturers. The largest city in Southwest Florida, Cape Coral is an ideal location for businesses ready to capitalize on the growing market. • As the 10th largest city in Florida, Cape Coral is an ideal location for relocating businesses due to its large, talented, and available workforce. • In 2017, Moody’s Analytics expects the metropolitan area’s population to expand 3.61 percent. The area is also projected to have the nation’s highest rates of employment growth (3.83 percent) and output growth (6.82 percent) fueled by expanding hospitality and housing markets. • The city boasts nearly 400 miles of navigable canals, and it’s surrounded by the Gulf of Mexico and the Caloosahatchee River, part of the federal Intracoastal Waterway, drawing international boaters. This key amenity is a boon to homeowners and business owners in several sectors: services, products and supplies, retail, and manufacturing. • A new conference center at the waterfront Westin Hotel will draw visitors from around the nation. The Cape Coral Economic Development Office has designed several areas of emphasis to enhance and tailor growth, including: • Veterans Investment Zone: The 240,000-square-foot Lee County VA Healthcare Center has exceeded its original projections in terms of patients, visitors, and service levels. This facility draws thousands throughout the region; an estimated 74 • WORKFORCE

Cape Coral is also known for ecotourism and is home to the largest population of burrowing owls in Florida — a big draw for birders and photographers from around the world.

260,000 veterans live in Southwest Florida. Nearby is the 15-acre Cape Coral Army Reserve Center. One component of this zone is the 222,000-square-foot Liberty Village under development on more than 430 acres of undeveloped land within one mile of the regional VA Healthcare Center. It will include a 131-bed assisted-living facility, 312 apartments, and retail. • Concourse at Cape Coral is a 171-acre parcel that is owned by the city, which will be seeking public-private partnerships for its development, including 55 acres for shopping and 50 acres for entertainment nestled in unspoiled nature with a lake on site. Competing in today’s global market can be demanding, so you want to be in a location with all of the right amenities: Safety, convenient transportation, and modern technological infrastructure are positives for your business and employees. Contact our Economic Development team to get started on your new business destination today.

Dana Brunett, Economic Development Manager City of Cape Coral 1015 Cultural Park Blvd. Cape Coral, FL 33990 239-574-0444 dbrunett@capecoral.net www.bizcapecoral.com

Cape Coral Economic Development Office (239) 574-0444 • (866) 573-3089 ecodev@capecoral.net www.bizcapecoral.com

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turing (8 percent) than all private-sector industries (10 percent) from 2012 to 2016 before adjusting for inflation. Skills gaps, though, are best diagnosed locally or regionally.4 The U.S. economy is composed of hundreds of metro area economies, some of which are similar or larger than the economies of major nations (e.g., the Los Angeles metro’s gross metro product at purchasing power parity almost equals Australia’s GDP).5 These MSAs, along with micropolitan and rural areas, combine to form an incredibly complex American economy. Next time you read or hear a bold proclamation on the truth or fiction of a national skills shortage, think about the complexity of our economy. All economics is local, and most skills gaps (if they’re not information, training, or wage gaps disguised as skills gaps) manifest themselves locally. So, where should manufacturing executives be most concerned about finding talent or most need to consider bumping up wages to compete for workers? Emsi looked at the 2012–2016 change in manufacturing earnings among the most populous 150 metros and in every state. (Note: These earnings are reported industrywide, so they include everyone from entry-level laborers to CEOs. We didn’t include supplements to income like 401(k) contributions.) We then examined wages and unemployment over time for a few key manufacturing occupations, both whitecollar and blue-collar positions, to get an indication of the jobs that are challenging to fill.

The Regions Seeing Manufacturing Wage Increases In the Raleigh MSA, the average manufacturing salary was $88,000 in 2016, up from $66,000 in 2012. That’s an increase of 33 percent before adjusting for inflation — more than 2.5 times faster than wages for all private-sector industries (13 percent) and faster than any large metro area. * Raleigh was one of several Southeast metros to see healthy manufacturing wage and employment spikes the last five years. Columbia, South Carolina, had the fourth-largest uptick among the 150 most populous MSAs, growing manufacturing wages 17 percent and jobs 6 percent. Mobile, Alabama; Fayetteville, North Carolina; and Savannah, Georgia, all ranked in the top

76 • WORKFORCE

10 with nominal wage jumps of 16 percent. In each of these metros, manufacturing salary growth from 2012 to 2016 outpaced private-sector earnings change. The same was true in Trenton, New Jersey, which ranked No. 2 with a 21 percent wage increase in manufacturing compared to 8 percent in all industries, and Corpus Christi, Texas (No. 3 at 17.2 percent compared to 6 percent for all industries). On the flip side are tech-focused metros like San Jose, Seattle, and Boston. San Jose ranked fifth in manufacturing wage growth (16.8 percent) and first in total private-sector wage growth (25 percent). The situation is much starker in Seattle, which ranked second in overall wage growth (16 percent) but 72nd in manufacturing wage growth (9 percent). These are high cost-of-living cities with ultra-skilled workforces. Tech manufacturing is an important part of their economies,6 but manufacturers haven’t kept pace in the salaries they’re offering. At the state level, Alaska (22 percent), Wyoming (15 percent), and California (12 percent) grew manufacturing wages the most in the last five years. Louisiana and North Dakota (both 11 percent) rounded out the top five, but manufacturing jobs in both states dipped from 2012 to 2016.

Bringing Unemployment Data into the Picture This data suggests that manufacturers in the aforementioned states and metros will face increasingly robust competition for talent. But wage trends are just one clue in the supply-and-demand picture. Another is unemployment. In January, Raleigh had an estimated 1,350 unemployed manufacturer workers, according to Emsi, which accounts for 5 percent of the metro’s total unemployed. Nationally, 8 percent of the unemployed have previously worked in manufacturing. In Trenton, there were just 254 unemployed in manufacturing, 4 percent of the regional total. Compare these two metros with San Jose, where 15 percent of the unemployed (over 5,400) were in manufacturing in January. The higher-than-average unemployment in manufacturing indicates that San Jose has excess manufacturing talent. These unemployed workers perhaps can’t find manufacturing jobs

Wages and Unemployment for Hand Laborers

that pay the bills or don’t have the advanced skills to meet industry needs.

Which Positions Are Hardest To Fill?

$12.60 $12.40 $12.20 $12.00 $11.80 $11.60 $11.40 $11.20 $11.00 $10.80

$12.49 $14.8%

13.4%

14.0%

11.3%

12.0%

$12.02

$11.74 $11.49

16.0%

10.7% 9.8%

$11.52

10.0% 8.0% 6.0% 4.0% 2.0%

2012

2013

Median Wages

A quarter of America’s 12.3 million manufacturing jobs are staffed in eight occupations, led by team assemblers; supervisors of production workers, inspectors, testers, and sorters; machinists; and hand laborers and freight, stock, and material movers. In our work with corporations developing strategic site selection and talent acquisition plans, we often come across companies that struggle to find hand laborers. This is also reflected in Manpower’s 2016 talent shortage survey.7 Laborers, after being absent in 2015, ranked higher than engineers and technicians in the top 10 hard-to-fill positions. Nationally, unemployment for hand laborers stood at 10.7 percent in 2016 after sitting at 14.8 percent in 2012 — an improvement but still a high jobless rate, which could be partially due to high turnover. What about wages? Median earnings for hand laborers rose 9 percent from 2012 to 2016 (4 percent on an inflation-adjusted basis). Still, the BLS reported that in 2016 these workers made just $12.49 per hour in median wages and $20.53 at the top 10th percentile. Another similar occupation that requires slightly more skills is packaging and filling machine operators and tenders. These workers are highly compatible to hand laborers, according to Emsi’s occupational compatibility index, and their wages have risen 9 percent to $13.60 per hour in 2016. Perhaps the most telling indication that the demand is rising for packaging operators? Their unemployment rate has dropped from 14.5 percent in 2012 to 8.2 percent in 2016, per the BLS’s Current Population Survey. These are both blue-collar factory positions. What about white-collar positions? One of the prime examples is industrial engineers. More than 170,000 of these high-skilled workers are employed in manu-

2014 Unemployment Rate

2015

2016

0.0%

Source: BLS

facturing (1.4 percent of total industry employment). Their median wages increased 7 percent the last five years and their unemployment rate has remained extremely low; it stood at 2.5 percent in 2016 and 2.7 percent in 2012.

The Bottom Line Manufacturers who are struggling to recruit workers have a few options. They can increase wages. They can consider other, more talent-rich locations. Or they can invest in automation. Many will likely do a combination of these things. (In most cases, companies need workers with advanced skills to run robots.) Regardless of the route they take, compensation is clearly on manufacturing executives’ minds. In Area Development’s 2016 Corporate Survey,8 labor costs catapulted to the third-most important site location factor after ranking No. 6 the previous year. Highway accessibility and labor availability, the No. 1 and 2 factors cited in the survey, have long been concerns, but rising wages are becoming more of a factor in business decisions. This is good news for workers and the economy, and a new reality for businesses.

* Raleigh’s manufacturing growth should be weighed against Durham-Chapel Hill’s decline. Among the 150 largest MSAs, Durham-Chapel had the biggest decrease in manufacturing wages, at -6.2 percent. Factory jobs also declined -13 percent there. This could be an artifact of businesses moving between the two twin MSAs (which used to be one joint MSA). 1

https://fivethirtyeight.com/features/dont-blame-a-skills-gap-for-lack-of-hiring-inmanufacturing/ https://fred.stlouisfed.org/graph/?g=dvZ3 3 https://fred.stlouisfed.org/graph/?g=6ZAc 4 http://www.economicmodeling.com/2013/12/03/using-regional-economic-developmentstrategies-to-diagnose-and-treat-skill-gaps/ 5 https://www.citylab.com/work/2017/03/the-economic-power-of-global-cities-comparedto-nations/519294/ 6 http://www.economicmodeling.com/2016/06/30/manufacturings-role-in-tech-markets/ 7 http://www.manpowergroup.us/campaigns/talent-shortage/ 8 http://www.areadevelopment.com/Corporate-Consultants-Survey-Results/Q1-2017/ responding-executives-confident-about-Trump-economy-skilled-labor-top-concern.shtml 2

2017 • 77

FLORIDA — THE FUTURE IS HERE

While the state has long been recognized for its impeccable weather, Florida’s pro-business climate is grabbing headlines in 2017. Over the last decade, state and economic development leaders have worked hard to make Florida the best state in the nation for business. With low regulations and even lower taxes, companies enjoy the freedoms to thrive. Beyond regulatory advantages, it’s Florida’s worldclass infrastructure that’s getting noticed. Florida supports more than 19.9 million residents and over 100 million tourists each year. From road to rail, to airports, seaports and spaceports, Florida will get your people, products, and ideas to the world — fast. It’s no surprise that companies are catching on. Over 50,000 businesses of all sizes and industries have set up shop in the Sunshine State since 2010, from education startup EverBright Media to automotive and transportation giant Hertz. Home to Worldwide Connectivity Florida is connected to the world in every possible way. From strong cultural and trade connections with Latin America to unmatched global reach via its modern ports, and its leadership in the budding commercial space industry, Florida is a true global hub for business. More than $160 billion of merchandise trade value flows through Florida’s ports each year, solidifying Florida’s status as one of the world’s leaders in international trade. The state is also recognized as one of the top five telecom hubs in the world. The

Network Access Point (NAP) in Miami serves as a major switching station for Internet traffic coming to and from Latin America, while other high-speed networks, such as the Florida LambdaRail and LA Grid, facilitate R&D efforts. A True Business Super State With the largest foreign-trade zone network and the fourth-largest GDP in the country, Florida is a leading player on the global scale. Florida is ranked the No. 1 state where Americans want to live according to the 2016 Harris Poll, and is well on its way to becoming the No. 1 state where Americans want to work.

Tim Vanderhoof, Senior Vice President, Business Development Enterprise Florida 800 N. Magnolia Ave., Suite 1100 Orlando, FL 32803 tvanderhoof@EnterpriseFlorida.com www.FloridaTheFutureIsHere.com

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WE HAVE AN EDUCATED, TALENTED AND DIVERSE WORKFORCE EAGER TO CHANGE THE WORLD. IMAGINE WHAT THEY’LL DO FOR YOUR BUSINESS. The only thing as impressive as our current workforce of 9.7+ million is our future one. Our colleges and universities are among the nation’s top performers of R&D and commercialization of technologies. So while we’re helping you succeed with today’s talent, we’re also preparing tomorrow’s. Discover what a future in Florida means for your business at ﬂoridathefutureishere.com or call 877-YES-FLORIDA.

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SCOUTING LOCATIONS IN AN ERA OF LABOR SCARCITY: 10 CONSIDERATIONS THE TIGHT LABOR MARKET HAS MADE AVAILABILITY OF SKILLED LABOR A PARAMOUNT CONCERN FOR COMPANIES LOOKING TO EXPAND OR OPEN A NEW FACILITY, BUT DATA ALONE WILL NOT HELP A COMPANY IDENTIFY THE COMMUNITY THAT WILL BEST MEET ITS WORKFORCE NEEDS.

oday, companies face one of the most competitive markets for labor in at least a decade. Twenty states have unemployment rates of 4 percent or less. Private employers have more than five million unfilled job openings, an increase of more than 600,000 positions during the past three years. Even companies without expansion plans are finding it increasingly difficult to secure workers. In January, a record three million Americans quit private-sector jobs, significantly offsetting the 5.3 million workers U.S. companies hired. The tight labor market has forced companies to make labor availability a paramount consideration when expanding existing operations and locating new facilities. While the availability of skilled labor has always played a role in the site selection process, it has often taken a backseat to other concerns such as site availability and business costs. This was even The Unemployment Situation truer during the recession. Securing sufficient 10% labor often proved relatively easy when millions of Americans were 8% out of work. With the labor market now reaching full employment, how 6% can companies scouting expansion and relocation locations find 4% an abundant and 01/07 01/08 01/09 01/10 01/11 01/12 01/13 01/14 01/15 01/16 01/17 skilled workforce? Month What questions Source: Bureau of Labor Statistics

By John Rees, Director of Research, Avalanche Consulting

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should they ask prospective communities? What data will help them make better-informed decisions? The following 10 factors should be part of any site selection discussion in which success depends on access to labor.

1. There is no national labor market —

all labor is local. Regardless of what’s happening nationally, it is critical to understand the labor dynamics of prospective communities as well as the specific workforce needs of your company. While the U.S. unemployment rate hovers near 5 percent, the figure is much lower in many regions of country (it is barely 2 percent in Ames, Iowa, and just 2.5 percent in Boulder, Colorado, for example). Alternatively, there remain metro areas where unemployment rates linger in the double digits. Even in communities characterized by high levels of unemployment, available labor may not align with your company’s operations. The unemployment rate for management and professional occupations, for example, is just a fifth of that for construction and extraction workers.

2. There are few truly local labor markets. Workers living within a community are rarely the sole source of your potential workforce. Labor markets do not follow strict jurisdictional boundaries. A substantial proportion of Americans cross county and metropolitan borders to reach their places of employment. Looking beyond the number of workers living within a community and examining the broader labor shed can have profound implications in determining a prospective site’s true talent pool. For example, every day Atlanta imports hundreds of thousands of workers from throughout Georgia. Workers are often willing to travel significant distances to secure greater employment opportunities. Nearly 10 percent of U.S. workers spend at least 60 minutes each way commuting to work.

3. Talent doesn’t always equal employment. When examining a community, it is crucial to appreciate the difference between jobs and people. Take Berkeley County, a community in the Charleston, South Carolina, region. It is home to fewer than 50,000 jobs but nearly 90,000 workers, a dynamic

completely absent in traditional sources of employment data. Fortunately, third-party vendors such as Emsi now regularly publish detailed information on the occupations of residents. The difference can be striking. Berkeley County, for example, is home to just 3,600 manufacturing occupations. More than 6,000 manufacturing workers, however, live in the community — a fact that hasn’t gone unnoticed by large employers like Volvo, which is currently building its first U.S. manufacturing plant in Berkeley County.

4. Look beyond unemployment rates. Without context, unemployment rates can be meaningless. It is like learning that the temperature is 50 degrees Fahrenheit without knowing the location or the season. While an unemployment rate can help quickly identify the number of unemployed people actively looking for work, it is of limited use in understanding how many people can be hired in a community.

5. Identify the talent magnets. When exploring locations for a new or expanded facility, it is important to examine the community’s track record of attracting new workers. In highgrowth regions, a continuous inflow of new workers into the region has facilitated substantial employment growth despite low unemployment rates. For example, both the Austin, Texas, and Lawrence, Kansas, metros had unemployment rates of 3.2 percent at the end of 2016. The labor similarities end there. During the past decade, the Lawrence region’s workforce rose by 2,200 jobs, an increase of less than 4 percent. During this same period, Austin’s workforce swelled by 270,000 jobs, an increase of 30 percent. Furthermore, U.S. workers are far less willing to move than in previous decades. Since the 1980s, the rate of domestic interstate migration has fallen by half. The result has largely created a winner-takeall environment in which a few metropolitan areas are absorbing a disproportionate share of skilled workers.

6. Find the Goldilocks locales —

those with wages that are “just right.” The immediate rewards of locales with the lowest

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LOUISIANA’S CUSTOMIZED WORKFORCE DEVELOPMENT SOLUTION Even before the Great Recession, Louisiana leaders set their sights on a new strategic direction for workforce training. Flexibility and innovation were programmed into state agencies and college campuses. New thinking expedited training. Skills in high demand received priority funding. And from this crucible of innovation, LED FastStart® was born. Eight years later, the Louisiana Economic Development program remains the U.S. gold standard for projectfocused workforce training. Louisiana’s nimble, collaborative approach touches the workforce supply chain at critical junctures: foundational programs in high school classrooms; intensive skills-training at advanced manufacturing centers on community college campuses; and industry-advised technology classes at research universities. With that foundation, LED FastStart professionals create a custom plan for recruiting, screening, and training a new workforce for expanding firms in target industries, such as advanced and traditional manufacturing, logistics, information technology, corporate offices, and petrochemicals. Manufacturers must create a net 15 jobs and service firms a net 50 jobs to be eligible for the cost-free, comprehensive solutions. Since 2008, FastStart has delivered highly customized training to 24,000 individuals at more than 150 expanding Louisiana employers. Increasingly, FastStart is a key influencer in why those employers choose to invest in Louisiana over other states and nations. “I was blown away with FastStart’s flexibility and their capability to customize,” says Tom Yura Sr., senior vice president and general manager for BASF’s chemical facilities in Geismar, Louisiana. The LED FastStart team includes dozens of experienced private-sector professionals from a range of

industries. The team’s goal — to help firms efficiently ramp-up through intelligent training — gives workers the skills they need from opening day. Customized training plans are drawn from an in-depth analysis of each company’s workforce needs. Elements of that training might encompass workforce safety, regulatory standards, industry-specific benchmarks, and leadership development for upper-level managers. Recruitment of well-suited job candidates is just as crucial. LED FastStart has created social media recruiting campaigns for technology firms as varied as video game developers Gameloft and EA, and Fortune 500 giants that include IBM, GE, and CenturyLink. Louisiana’s new approach to workforce development cultivates meaningful partnerships between state government, private industry, and higher education. In every case, regional workforce demand determines training programs and coursework. It’s a strategy that works for both employers and job-seekers, and one that spans the state.

Paul Helton Executive Director of Workforce Programs Louisiana Economic Development 627 North 4th Street, Suite 2-200 Baton Rouge, LA 70802 225-342-5543

paul.helton@la.gov www.OpportunityLouisiana.com/faststart

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operational costs can disguise federal immigration policy — long-term retention challenges. makes a thorough examination of As labor is often a company’s larga community’s demographic charest operational expense, locations acteristics increasingly important with the lowest costs often feature in the site selection process. WORKERS the lowest wages. Unless they are Communities that might appear at LIVING WITHIN geographically isolated from other first glance to have an abundance jurisdictions, employers in many of workers could be at risk of sufA COMMUNITY low-wage communities may find it fering a workforce shortage in the difficult to retain talent as existing years to come if they have a large ARE RARELY THE workers are continuously lured by foreign-born workforce or aging the higher earning potential that population. SOLE SOURCE can found elsewhere. This threat During the past decade, the is especially acute today when number of workers age 55 and OF YOUR U.S. workers are quitting in record older has increased at 20 times numbers. Over the long term, the rate of overall employment POTENTIAL some of the most stable sources growth. Today, more than 20 of labor are communities that percent of U.S. workers are age WORKFORCE. have lower wages relative to the 55 and older. While many AmeriU.S. but higher wages compared cans continue to work longer than to neighboring communities. This ever, the baby-boom generanot only provides companies with tion will eventually exit the labor a competitive operating environment, it also helps force. The impacts on individual locations will vary them attract a higher proportion of outside workers widely. In some Florida communities, more than half residing in the broader labor shed. of all workers are older than 45. To cite a previous example, although employers in Ames, Iowa, might 7. Today’s wages aren’t necessarily struggle finding workers in an era of 2 percent tomorrow’s wages. unemployment, they are also far less likely to be imJust as companies must appreciate the context pacted by a greying workforce — half of all workers surrounding unemployment rates, so too must they in the community are between the ages of 16 and 27. understand prevailing wage levels. After years of 9. Today’s students are tomorrow’s workers. relative stagnation, U.S. wages are rising once again. Local post-secondary institutions not only provide Perhaps even more importantly, they are increasing an insurance policy against an aging workforce, they across a wide variety of positions across the wage can also play an important role in delivering an imand skill spectrum. While inflationary wages have mediate workforce aligned to the specific needs of been traditionally associated with specialized work a company. Programs such as Georgia’s QuickStart such as software and information technology, last have long offered employers free workforce training year even Wal-Mart announced an across the board tailored to their labor needs. In recent years, other wage increase for more than one million workers. states have adopted even more ambitious higher In Texas, prior to the decline in oil prices, average education agendas. wages for truckers were increasing at a faster rate Several states now offer free community college than for software developers. Wages are the canary to high school students. In April, New York became in the labor force coal mine, and rapid increases may the first state to make tuition free at public four-year signal an increasingly restricted labor market. colleges. A requirement that students remain in the 8. Today’s workers aren’t necessarily state for four years after graduation to qualify for tomorrow’s workers. loan forgiveness will likely be a boon for New York An aging population — combined with shifts in employers. The requirement will not only increase

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the pool of available workers within the state, but these individuals will not be burdened with high levels of debt that might force them to forgo high demand, but lower-paying occupations due to financial constraints.

10. Not everything that counts

can be counted. While data can provide critical insights in the availability of labor, data alone will not help a company identify the community that will best meet its workforce needs. Quantitative information must be complemented with insights that can only be gleaned from discussions with local officials, local businesses, and economic development professionals. The presence of a post-secondary institution might be promising, but does the community have a track record of leveraging educational programming to support the needs of area employers? The state’s workforce website might feature glowing testimonials from high-profile companies, but what is the experience of smaller employers? What is the economic development vision of local leaders? Are they looking for a quick win or are they creating a long-term partnership that benefits all parties? The answers to these questions cannot be readily found on a spreadsheet.

Communities Are Responding to the Challenge Fortunately, communities are responding to emerging workforce challenges. Since 2010, Avalanche Consulting has conducted an annual survey of economic development professionals.1 More than 90 percent of the 145 economic development organizations responding to our February 2017 survey reported that delivering a skilled workforce has become more important in the site selection process. In response, survey participants are improving coordination with local colleges and universities, advocating for more career-oriented K-12 programs, and expanding access to workforce training. Ultimately, such initiatives will make it easier for companies to identify and invest in communities with the workforce necessary to thrive in today’s fiercely competitive environment.

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BREADTH. DEPTH. SUCCESS. SOUTH CAROLINA IS READY. readySC™ was established as an economic development training incentive designed to guarantee South Carolina could remain competitive through changing economic circumstances. It remains a key component of South Carolina’s economic development engine and has been recognized for more than 50 years as one of the nation’s premier programs of its kind. readySC is not a grant program but instead will commit to providing your organization with the recruiting and training services necessary to build your initial or expanding workforce. readySC will provide a qualified pipeline of training candidates and train those candidates to the specifications identified for entry-level positions in your organization. At no cost to qualifying companies, readySC provides recruiting, assessment, training development, project management, and implementation services. To qualify, companies must be (1) creating new, permanent, fulltime jobs for the state; (2) paying a competitive wage for the area; and (3) providing a benefits package that includes health insurance. readySC focuses on the recruiting and initial training needs of new and expanding organizations in South Carolina. It is a flagship program for the System and continues to be a top incentive for the state. More than 85 percent of companies who’ve made the decision to locate to or expand in South Carolina rank readySC’s services as playing a significant role in their ultimate decision to move here. readySC’s services are designed to build your company’s initial workforce; however, South Carolina’s efforts do not stop there. Working in tandem with the local technical colleges, our Apprenticeship Carolina™ program, and our e-Zone job retraining program, we strive to take your workforce from initial startup or early production to 100 percent proficiency. From your organization’s initial startup and early production goals 86 • WORKFORCE

to the company’s long-term growth strategy, South Carolina offers a comprehensive workforce solution custom-designed to meet your needs. Since its inception in 1961, readySC has played a key role in all of South Carolina’s major economic development wins, including GE, Michelin, BMW, Bridgestone, Boeing, Continental, Volvo, and Mercedes, among many others. readySC at a glance: • Trained nearly 4,000 individuals in FY 2015–16 • Trained over 289,000 people since 1961 • Served 78 companies last fiscal year • 53 percent of last year’s projects were new companies to the state, while 47 percent were existing companies undergoing expansions Breadth. Depth. Success. South Carolina is ready. Let readySC put their unparalleled experience to work for you. For more information visit our website at www.readySC.org.

Susan Pretulak, VP, Economic Development readySC – A Program of the SC Technical College System 111 Executive Center Drive Columbia, SC 29210 803-896-5276 pretulaks@sctechsystem.edu www.readysc.org

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