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HOW Certified Sites SAVE TIME & MONEY
TECHNOLOGY
NEW MANTRA
Supply Chain Trends “Logistics, Labor, Love”
Q3/2013
top states for doing business Which States Best Satisfy Work Force Needs?
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www.facilitylocations.com
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INDUSTRIAL SITES REVIEWED, APPROVED AND READY FOR YOU IN WISCONSIN. Businesses that open their doors in Wisconsin know they are opening themselves up for unique advantages. Our state creates new opportunities for business growth by taking a bold approach to economic development, polices and initiatives. One example of this forward thinking is found in our Certified In Wisconsin program. It’s designed to create and enact consistent standards for certification of development-ready sites across the state. In simpler terms, we have in place all the key reviews, documents and assessments most commonly
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required for industrial use. This means a great reduction in time and risk for businesses eager to grow In Wisconsin®. For a complete list of the certified sites in our state, contact our dedicated Business Attraction Account Manager, Luke Fuszard, at 608.210.6846 or Luke.Fuszard@wedc.org. Or visit Certified.InWisconsin.com.
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MORE CAPACITY FOR STREAMLINED DISTRIBUTION TO KEY MARKETS > The largest single container terminal in North America > Two Class I railroads on terminal > Immediate access to two major interstates — I-16 (East/West) and I-95 (North/South) > 9,700 feet of contiguous berth space
STREAMLINING MORE at gaports.com/MORE
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CONTENTS 67 THE NEW LOCATION
FEATURES
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57 CERTIFIED SITES PAVE THE WAY FOR NEW BUSINESS
Companies seeking new locations hope to save time and money by looking at certified sites, which communities offer to lure in new business.
61 FINDING DATA CENTER LOCATIONS THAT FIT THE BILL
COVER STORY THE TOP STATES FOR DOING BUSINESS 2013 Area Development presents the results of its 4th annual survey of a select group of highly respected location consultants who work with a nationwide client base. The results reveal their top choices in 17 site selection categories.
Although there is no perfect data center site, by vetting prospective sites to see if they meet specific requirements, a company can find one as close to ideal as possible.
64 TECHNOLOGY TRENDS: REGIONALIZATION OF THE SUPPLY CHAIN
Technology companies are bringing product manufacturing and assembly closer to the customer and — more importantly — to R&D.
Exclusive O N L I N E Content
MANTRA: “LOGISTICS, LABOR, AND LOVE”
A simple five-step analytic process will allow you to align your corporate real estate and organizational goals and provide a consistent roadmap to a successful location outcome.
71 THE ABCS OF “GREENING”
THE WAREHOUSE FACILITY
Determining the warehouse facility’s carbon footprint — and then reducing it as much as possible — can put your company on the road to environmental sustainability.
84 WORK FORCE
DEVELOPMENT PROGRAMS CAN MAKE OR BREAK THE DEAL
With scant time and resources for recruiting and training workers, companies are looking at states that will help them to quickly satisfy their labor force needs.
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FEATURES NOW ONLINE... Reality Check: Making Data-Driven Decisions to Optimize Your Space The use of both quantitative and qualitative metrics allows facility managers to make better use of their real estate footprints, positively affecting their businesses and their employees. Intelligent Rural Cities Offer Big-City Benefits Without the Urban Challenges The broadband connectivity of the 21st century has made rural areas vital places to grow a business and a career. Employers Grapple with Higher Workers’ Compensation Costs Employers, who are getting hit with higher workers’ compensation costs as the insurance industry changes premium calculations, are instituting programs to control the impact of workplace accidents. Hot Markets for High-Tech Manufacturing Jobs Access to skilled labor, customers, and suppliers is paramount to high-tech firms’ location decisions, often trumping cost considerations. Area Development® Site & Facility Planning (USPS 345-510) is published five times per year (Q1/Winter, Q2/Spring, Q3/Summer, and Q4/Fall — 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.
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“Failure is an option …If things are not failing, you are not innovating enough.” Elon Musk, inventor and entrepreneur known for founding SpaceX and co-founding Tesla Motors and PayPal, and for proposing the “Hyperloop” (1971– ) Volume 48 | Number 3
Q3/ SUMMER 2013
4 EDITOR’S NOTE —
Re-crunching the Numbers — With the Same Results
DEPARTMENTS 6 IN FOCUS The Changing Role of Architects in Building Performance Analysis
8 IN THE KNOW • The People-Intensive Factory of the Future • Business Location Tracker
FIRST PERSON 10
David Cox, President/CEO, Purple Platypus
FRONT LINE 12
NC’s Research Triangle To Land New Information Superhighway
SPECIAL INVESTMENT REPORT 76 OHIO: A New Day The nation’s eighth-largest economy is aligning itself to the demands of the 21st century.
AD INDEX/WEB DIRECTORY 88
Web addresses to this issue’s advertisers
EDITOR’S REPORT 33 LOCATION CANADA With its industry diversity and leading advantages for business, Canada continues to be a top destination foreign direct investment.
Publisher’s Note: The 2013 Leading Locations Rankings (www.areadevelopment.com/LeadingLocations2013) In the initially released 2013 Leading Locations report, a data entry error resulted in the misalignment of rankings for some MSAs — these MSAs had wrongly attributed rankings stated in each of the four indicators used within the “Young, Prime Work Force” and “Prime Work Force Inward Migration” sub-categories (see online methodology for details.) As a result of the corrections, the “Prime Work Force” category rankings and the overall rankings for all MSAs were minimally affected and have also been updated and restated. E-mail jshea@areadevelopment.com for more information or any questions related to the above.
In Focus: Nature’s Cleanup Crew: Peace of Mind for Site Managers Front Line: Momentum Builds for U.S.-India Trade Agreement First Person: Eric Silagy, President, and Lynn Pitts, ED Director, Florida Power & Light First Person: Kenny McDonald, CEcD, Chief Economic Officer, Columbus 2020 First Person: Michael A. Finney, President and CEO of the Michigan Economic Development Corporation (MEDC)
Join Our Newsletter areadevelopment.com/newsletter
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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 2013 by Area Development® magazine. ISSN: 1048-6534. Printed in the U.S.A. Area Development® is a registered trademark of Halcyon Business Publications, Inc.
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EDITOR’S NOTE
Q3/SUMMER 2013
Re-crunching the Numbers — With the Same Results According to Kiplinger’s economic outlook, the pace of U.S. GDP growth should be solidly established by year’s end, resulting in approximately a 2 percent gain for 2013. Second quarter GDP growth registered 1.7 percent (although that figure may be revised upward), and third quarter GDP growth is projected to be about the same, with the economy picking up steam in the year’s final quarter. These optimistic projections are based upon recent improvements in job creation, a surging stock market, and a more robust housing market. Americans are more optimistic about the economy this year than last, and businesses also expect a slight uptick in economic output over the remainder of the year. The second quarter Business Roundtable’s CEO Economic Outlook survey shows modest improvements in sales expectations and hiring. Also, it appears Europe is beginning to recover from its lengthy recession, which bodes well for companies that sell to the European market. Interestingly, changes in the way GDP is measured make the economic recovery seem stronger — or the recent recession appear less severe in retrospect. According to new measurements from the Bureau of Economic Analysis, the U.S. economy expanded at an average annual rate of 2.3 percent between Q2 2009 and Q4 2012 (previously published as 2.1 percent). Apparently the government has revised the figures to include data that it says better capture the U.S. economy, including the “knowledge economy,” i.e., investments in research and development (including software), as well as entertainment and the arts. These sectors were previously included as components of other goods and services, but now will be measured as fixed assets to reflect their ongoing contributions to economic growth. Despite taking these new measurements into account, the current economic recovery is the weakest since WWII. As Bureau of Economic Analysis Senior Economist Brent Moulton explains, “We have not rewritten economic history.” Despite the revisions to GDP measurements, the BEA notes that durable-goods manufacturing is still the largest contributor to U.S. real GDP growth. The good news is that orders for durable goods showed four straight months of gains. However, they dropped sharply in July. Chad Moutray, chief economist for the National Association of Manufacturers, notes in a recent interview that the economy is “not growing fast enough.” What will it take to speed up economic growth? Robert Atkinson, president of the Information Technology and Innovation Foundation, writes in IndustryWeek (8/16/13) that what’s needed is a national manufacturing strategy that addresses protectionist trade policies and provides the necessary investment, infrastructure, and innovation support. There’s no time like the present to get this done.
www.areadevelopment.com EDITORIAL
E-mail: editor@areadevelopment.com Editor Geraldine Gambale Staff and Contributing James Berger John Borchardt Lisa Buddecke Dave Claborn Mark Crawford Clare L. Goldsberry Greg Guillot
Editors Susan Kleeman Beth Mattson-Teig Phillip Perry Jim Romeo Mali R. Schantz-Feld Monique Silverio Steve Stackhouse
DESIGN/PRODUCTION Art & Design Patricia Zedalis Production Manager Jessica Whitebook Production Assistant Talea Gormican EXECUTIVE Publisher Dennis J. Shea
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jshea@areadevelopment.com Business Development Matthew Shea (ext. 200)
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circ@areadevelopment.com CONFERENCE SERVICES Program Manager Annie Gregson (212) 579-4469
annie@areadevelopment.com EXECUTIVE OFFICES Halcyon Business Publications, Inc. President Dennis J. Shea
Editor
Finance Mary Paulsen
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2013 EDITORIAL ADVISORY BOARD Tim Feemster Managing Principal, Foremost Quality Logistics
Ed McCallum, Principal, McCallum Sweeney Consulting
Andrew Shapiro Managing Director, Biggins Lacy Shapiro & Co.
Larry Gigerich Managing Director, Ginovus
John Morris, Leader of Industrial Services for the Americas, Cushman & Wakefield, Inc.
Noah Shlaes Senior Managing Director, Newmark Grubb Knight Frank
Robert Hess Executive Managing Director, Newmark Grubb Knight Frank Andy Mace Principal Consultant, Cushman & Wakefield Global Consulting, Supply Chain Solutions
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Kathy Mussio Managing Partner, Atlas Insight Scott Redabaugh Managing Director, Jones Lang LaSalle
Thomas Stringer, Esq. Director, Business Advisory Services, Ryan & Company Dean J. Uminski Executive, Site Selection Consulting, Crowe Horwath LLP
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Workforce Data and Population Statistics Cost of Living, Tax and Utility Information Lubbock Business Park and Lubbock Rail Port Available Real Estate and Interactive Maps
800.687.5330 | Lubbock, Texas
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The Changing Role of Architects in Building Performance Analysis By Dr. Craig Wheatley, Director, IES (Integrated Environmental Solutions Ltd.)
The use of energy modeling as part of an integrated design process has become increasingly important in the role of the architect, and firms are now realizing that they must adopt new design practices to remain competitive. Incorporating performance analysis can seem like an added complication and is often perceived as laborious and time-consuming. However, specialists in building performance analysis, such as Integrated Environmental Solutions Ltd., have recognized this and are addressing these issues by offering architects software packages that make it easier for them to adopt analysis into their day-to-day practice.
Craig Wheatley is an expert in environmental engineering, with 14 years’ experience of engineering consultancy in the UK at the senior and executive levels. He also spent three years in the Department of Civil and Building Engineering at Loughborough University, England, undertaking a Ph.D. in the integration of detailed thermal and moisture modeling.
The American Institute of Architects (AIA) release of “An Architect’s Guide to Integrating Energy Modeling in the Design Process” is evidence of the growth in sophistication of energy modeling among architects. The guide was released in October 2012 with the accompanying statement: “Energy modeling is fast becoming a more useful means to better inform major design decisions early and often throughout the building design process. It can provide a roadmap to help practitioners lead their clients toward energy-efficiency goals, green code compliance, and building certification programs.” Unfortunately, most building performance simulation tools are deemed not compatible with architects’ working methods and needs. From the perspective of many architects, these tools are judged as too complex and cumbersome. This stems from the fact that most tools for analysis were developed by technical researchers, building scientists, or HVAC engineers concerned with empirical validation. There is a real need to fully comprehend architects’ problems in interacting with performance simulation tools — architects have different backgrounds, different knowledge processing methods, and are visually orientated. This is exactly what IES is trying to do with its new software package, which not only provides tools for energy modeling, but also recognizes the broader issues of daylight, solar shading, water, climate, and much more; it provides a fully comprehensive package of analysis tools to allow architects to analyze the full performance of an entire building in an integrated fashion. Such tools help architects to incorporate data-driven and integrated design into their processes from the opening charette. Being better informed on performance from the start of the design process allows architects to retain control over their design and not sacrifice aesthetics for performance, but rather marry them together. Imagine if you could use specific site understanding to automatically outline suitable bioclimatic architectural strategies for a project. Such pre-design sustainability direction is invaluable. Then once you have several viable options, the tools can help investigate and refine the most promising. In performance terms this means looking at the impact of different orientations, forms, constructions etc. and understanding potential passive or active systems the engineer might want to investigate. The world and economy are changing, and sustainable design is now on boardroom agendas. Building and architectural firms must adopt new design practices to remain competitive in this climate. Clients are demanding ever-higher energy and performance targets designed to save them money and deliver on corporate targets. We’re seeing that increasingly architects are starting to embrace and understand the power of analysis. We are definitely seeing a shift, and this is very positive for the future of sustainable building design.
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WHAT HAPPENS WHEN
MICHIGAN means
business It’s a new day for business in Michigan. Through a series of recent initiatives, Michigan is once again becoming a preferred place for business. Starting with a new flat 6% business tax. The elimination of personal property taxes. New right-to-work legislation. All added to redesigned incentive programs and
streamlined regulatory processes. All to create an ideal combination of opportunity, resources and passion for business right here in Michigan.
1.888.565.0052 michiganbusiness.org/AD
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Michigan Economic Development Corporation
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IN THE KNOW BUSINESS LOCATION TRACKER Construction Under Way on $155 Million North Dakota Biorefinery Cardon Outreach Expansion in Utah to Create 308 Jobs The provider of technology and services to healthcare facilities nationwide will invest $5.3 million to expand its processing facility in Salt Lake County.
Chrysler Group Plans $52 Million Expansion at Two Michigan Facilities
Midwest AgEnergy Group has begun to build its new biorefinery that will produce ethanol, distillers grains, and fuel-grade corn oil.
Chrysler investment in its engine plants in Trenton and Dundee will increase capacity of the Tigershark engine and create nearly 298 new positions.
Honda Plans $215 Million Expansion at Its Ohio Manufacturing Plants Honda’s investment in its Anna and Marysville facilities will add new powertrain technologies and a technical training center.
South Dakota Technology Center Under Construction Eagle Creek Software Services & the Vermillion Area Chamber are building the Vermillion Technology Center, which is expected to house 200 IT workers.
Trident Seafoods To Establish $41 Million Facility in Carrollton, GA
GM Adds $167 Million to Its Spring Hill, TN, Assembly Plant
German Automotive Supplier Establishing Kentucky Manufacturing Operation
General Motors will increase to $350 million investment in its Spring Hill assembly plant in order to produce new vehicles, thereby creating or retaining about 1,800 jobs.
Dr. Schneider Automotive Systems Inc. will build a $29 million manufacturing facility in Russell Springs, Kentucky, creating 155 full-time jobs.
The seafood harvesting and processing company has selected Carroll County for its new seafood processing facility that will create 175 jobs.
Go to www.AreaDevelopment.com/NewsItems to track business expansion & relocation announcements
THE PEOPLE-INTENSIVE FACTORY OF THE FUTURE A new report from IDC Manufacturing Insights — “Business Strategy: The Journey Toward the People-Intensive Factory of the Future” — claims that manufacturers, faced with tough economic challenges and a more complex marketplace — are rethinking how they operate. The survey points to the following key findings: • The factory of the future will be measured according to its production capability and flexibility — not just its current efficiency and capacity. • Going forward, manufacturers will produce modular platforms centrally while using local small factories, suppliers, and distributors to tailor final products for local demand. • Although there has been increased plant automation, people — and the flexibility and decision-making capabilities they provide — will be at the center of the factory of the future. Availability of skilled workers will be a key issue. The report notes that although manufacturing has taken a back seat to other industries in recent years, governments worldwide have come to the realization that their economies cannot be supported by service industries alone. Manufacturers, in turn, have renewed their focus on production in order to protect and enhance their technology. They’ve come to the realization that direct involvement in production fosters innovation and improves customer service.
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Momentum. Companies of all sizes and industries continue to choose the Tulsa region for its resiliency, its growth opportunities, talented workforce and affordable business costs. Tulsa ranked as a top metro area in more than 20 publications in 2012 and 2013 for its economy, real estate and quality of life – and people all over the world are taking notice. For more information, go to: growmetrotulsa.com.
Justin McLaughlin, CEcD | Senior Vice President | Economic Development | jmclaughlin@tulsachamber.com Tulsa Regional Chamber | One West Third Street, Suite 100 | Tulsa, Oklahoma 74103 | 800.624.6822
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Can you explain a bit about the beginnings of 3D printing and its evolution? David Cox: Additive manufacturing, as it’s called, or 3D printing began with the stereo lithography process — or SLA system developed by 3D Systems — in about 1986 and has progressed from there. However, it hasn’t been a smooth process; it’s had fits and starts. Today, in addition to SLA there are several other technologies including Fused Deposition Modeling (FDM), Selected Laser Sintering (SLS), and some metal printing (Direct Metal Laser Sintering or DMLS). The equipment has evolved as well, and today, in addition to desktop printers, there are smaller, DIY printers — some in the sub-1,000-dollar range marketed to inventors. There are even FDM printers in homes today for those technogeeks who like to play with the process. SLA is still the prevalent technology. All the service bureaus use SLA. The medical device industry uses SLA for product development. The problem is that it’s a messy process. Who are the major players in the industry? David Cox: Today, there are two major players in the 3D printing market – Stratasys and 3D Systems, which have contributed to a lot of the consolidation that has taken place over the past few years. Last year we saw the completion of the merger of Stratasys and Objet to create a $3 billion company. 3D Systems has been on a buying spree with its purchase of some competing technology along with materials developers and service bureaus. Of course, the down side of this consolidation is that the price of the equipment and the materials is going up. AD: While it’s taken 25 years, 3D printing or “additive manufacturing” is seeing some good success. What do you believe has contributed to the technology’s success in recent years? David Cox: The major contributor to the success of the technology is the fact that companies are able to compress their product development cycles and get their products developed and into the market faster and at reduced cost — particularly when companies are creating new products that involve plastic components.
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PURPLE PLATYPUS
3D printing means you can create prototype parts without having to build a mold first — which is expensive. There is a lot of talk about making end-use parts using 3D printing. Where do you see most of the activity in 3D — prototyping or actual end-use parts? David Cox: Ninety percent of 3D printing is still done for prototyping and product development — R&D activities. We see some demand for end-use parts but that’s few and far between. The types of (polymer) materials available are the number one reason, and cost is another. 3D printing is a one-off process. When you want to make one of something it’s inexpensive, but if you want 1,000, it’s not. Most people compare it to injection molding in which the molds are expensive but molded parts are pennies. What will make 3D printed parts for end-use applications more common? David Cox: Materials development and getting costs down. There are more materials now than in the early years of the technology, such as polycarbonate, ABS, and higherend engineering materials such as Ultem. As materials have gotten better and stronger, we are seeing some demand for end-use parts. The proprietary materials still rule the market, but there are major barriers to cost, for both the equipment and the materials. The equipment manufacturers don’t want to make the printers cheaper, and even the DIY printers haven’t made any big inroads into the market for the high-end professional-grade printers. Will 3D printing ever be primarily for end-use parts? David Cox: Until materials get better and cheaper, the answer is no. Moving forward, as materials are being developed there will be more and more opportunities for end-use part applications. The resolution has gotten there and is good for 95 percent of companies. But most product developers want the prototype in the material that the end product will be molded from for functional testing purposes. That’s been the big thing. You’ve mentioned the cheap DIY 3D desktop printers, but you don’t seem real excited about the potential for any real market share there. Why?
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THE ASSIGNMENT
David Cox: I really don’t see these low-end printers going anywhere. The problem with DIY is they’re a flash in the pan. They don’t make quality things. People think this machine will sit on your desk and you can print everything; however, each system uses different materials so you can’t get one system to print everything. Even if you buy one of these for cheap up-front, there’s still cost involved for the equipment and material. It will be interesting to see what will happen with these “tinkering” machines. Some people believe that 3D printing is the next big thing. Is it? David Cox: Do I think 3D printing is going to take over and all plastic injection molders will be out of business? No. Whether the government will put in these centers, who knows. There really hasn’t been any new 3D technology to come out in a long time. Unless a new way to skin this cat comes out or we get new materials — manufacturers are in it for the materials — it will remain to be seen.
Area Development’s staff editor Clare Goldsberry spoke with David Cox, president/CEO of Purple Platypus, which he founded in 2007, as an AM equipment seller and distributor for Stratasys, developer and manufacturer of FDM, Polyjet, and Objet — 3D printing technologies; and Purple Porcupine, a service bureau with 12 machines that print 3D parts for a variety of customers and markets. 3D printing, also known as rapid prototyping and additive manufacturing (AM as opposed to subtractive manufacturing), hasn’t exactly been an overnight success. After 25 years, the industry is finally getting the attention it deserves — some good, some bad. In fact, last year the government opened the first 3D technical institute in Youngstown, Ohio — the National Additive Manufacturing Innovation Institute — and plans 15 such institutes, if the administration can get the $1 billion in funding.
Global market access. Excellent labor force. Centralized transportation routes. Low energy costs. Thousands of businesses have already discovered what makes Nebraska a place of unequaled potential. There’s ample opportunity for you, too. Consider this your personal invitation to enjoy everything that makes business in Nebraska great.
G133605
Nebraska 800.282.6773, ext. 5534 | econdev@nppd.com
econdev.nppd.com NEBRASKA PUBLIC POWER DISTRICT
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NC’s Research Triangle To Land New Information Superhighway
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orth Carolina’s Research Triangle hopes to gain an edge with high-speed connectivity. The NC Next Generation Network (NCNGN or “NC Engine”) is a local public-private initiative aimed at providing open access, ultra-high-speed bandwidth at affordable prices to both residents and businesses throughout the region. Currently, typical bandwidth connections in the area run at 10 to 20 megabits per second. The NCNGN initiative would expand that 100-fold by delivering a one-gigabit connection. “We want to make sure that our area is one of the leaders to keep us innovative and keep the reputation that we have for being a high-tech area of innovation,” says Marc Hoit, vice chancellor for information technology and CIO at North Carolina State University in Raleigh. NC State is one of four local universities that have banded together with the communities of Cary, Carrboro, Chapel Hill, Durham, Raleigh, and Winston-Salem to spearhead the initiative. University of North Carolina at Chapel Hill, Duke, and Wake Forest universities also are participating in NCNGN. Although the universities are already equipped with super-fast bandwidth at 10 gigabits, the institutions also recognize the advantages of expanding that high-speed connectivity to the broader community. Some of the key goals behind the project are to reduce the digital divide by improving access to resources, enhance work force knowledge and skills, and promote economic development. “I believe this technology will attract industry that relies upon high-speed Internet performance,” says Ruben Gonzales, business development administrator at the city of Winston-Salem. “This infrastructure improvement will also benefit our existing companies, and I believe will also help keep companies here — especially those compelled to upgrade their own capacity to keep up with advances in their industries.”
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The key to executing the plan will be selecting thirdparty vendors that can both add new and leverage existing infrastructure to create an affordable network. The schools and the communities involved will offer their logistical and other types of support, as will a national nonprofit group, Gig.U, a broad-based group of over 30 leading research universities from across the nation that seeks to accelerate the deployment of ultra high-speed networks to leading U.S. universities and their surrounding communities. NCNGN issued an “invitation to negotiate” earlier this spring with a submission deadline of April 1. The group reviewed eight proposals, including one from Time Warner Cable. Unlike requests for proposals, which involve selecting a winning bidder, the “invitation to negotiate” has additional rounds of negotiations to reach best and final offers. These negotiations were under way in August, and the cities involved are hoping to have final contracts signed by October 11. (Each city has the option to choose the vendor of its choice.) Although completion of the project depends to some extent on the vendors chosen and their strategy for building new or leasing existing infrastructure, NCNGN is hoping that the higher connectivity will be available beginning in mid- to late 2014. North Carolina joins other locations such as Kansas City, Seattle, Austin, and Chicago that have launched similar efforts. The demand for higher bandwidth and the need to provide fiber connectivity is clearly the wave of the future, notes Hoit. “You can see that in everything you do from online storage to services in the cloud,” he says. High-speed connectivity will provide greater access to a variety of applications and resources ranging from in-home medical care to long-distance learning. “There are a lot of things that this is going to open up and allow, and it is clear that we have to head that direction,” he adds.
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1. TEXAS
A
s the economy improves and states continue to vie for new investment and jobs, they also seek the attention of site consultants who help companies make their new facility and expansion decisions. With that in mind, Area Development’s fourth annual Top States for Doing Business survey of site consultants ranks the states based on their number of mentions in 17 categories (scores were weighted based on position in each category and then overall). States were ranked on factors in the following categories: Business Environment (costs, taxes and regulations, incentives, etc.), Labor Climate (diversity, costs, development programs, etc.); and Infrastructure and Global Access (rail/highway access, shovel-ready sites, utility rates, logistics access). Following is more detailed information on the attributes of the top-10 states that provides insight into the rankings. Additionally, several site consultants who participated in the survey offer their comments.
2. Georgia 2T. South Carolina 4. Alabama 5. North Carolina 6. Louisiana 7. Tennessee 8. Florida 9. Mississippi 10. California
1. TEXAS Simply put, it’s hard to beat Texas — which maintains is number-one ranking among the surveyed consultants. “We've worked hard to make Texas the best state in the nation to raise a family and own a business,” says Governor Rick Perry. “We’ll continue to strengthen the economic pillars that have helped us become a national example of job creation and economic strength.” Those pillars include a pro-business environment, strong work force, and an infrastructure that allows efficient access to global markets. Texas has no personal income tax and no corporate income tax — a huge incentive for AREA DEVELOPMENT | Q3/Summer 2013
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companies to locate or expand in Texas. Therefore, it is not surprising that Texas has accounted for 33 percent of the nation’s net job gains over the past decade. It also sweetens the pot with the Texas Enterprise Fund (TEF), which provides funding and incentives to close deals on high-value business locations or expansions. To date TEF has invested about $500 million that has resulted in $20 billion in capital investment and more than 67,000 new jobs. Texas also offers a highly skilled, productive work force of over 12 million people with a wide range of skill sets. The unemployment rate is currently about 6.5 percent — the lowest of the 10 most-populated states. The state’s Skills Development Fund has provided more than $22 million to help companies offset the costs of employee training. From March 2012 to March 2013, Texas employment grew the fastest of the 10 largest states.
Key growth industries include energy, advanced manufacturing, aerospace and defense, biotechnology and life sciences, electronics, and IT. Manufacturing and distribution are well-supported by a modern, highly integrated transportation infrastructure of rail, highway, air, deepwater ports, and several large, well-planned intermodal complexes. Texas’ central location within North America facilitates domestic and international transportation, as well as easy access to markets. This infrastructure support has helped Texas be the number-one exporting state in the U.S. for 11 years in a row, with more than $264.7 billion in exports in 2012.
2. GEORGIA Georgia’s “pro-business” environment is the result of state statutes and sound economic development practices.
Overall Business Environment 1- TEXAS 2- SOUTH CAROLINA 3T- GEORGIA 3T- LOUISIANA 4- ALABAMA 5- FLORIDA
NEXT BEST: North Carolina, Arizona, Mississippi Overall Cost of Doing Business 123T3T-
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Overall Labor Climate 1- TEXAS 2- SOUTH CAROLINA 3T- ALABAMA 3T- GEORGIA 3T- NORTH CAROLINA 4- CALIFORNIA 5- KENTUCKY
NEXT BEST: Florida, Louisiana, Mississippi, Ohio Availability of Skilled Labor 1- Texas 3T- Michigan 2- North Carolina 4- Georgia 3T- California 5- Massachusetts
Most Diverse Labor Pool 123-
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Leading Work Force Development Programs 123T3T-
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Overall Infrastructure & Global Access 1- TENNESSEE 2T- GEORGIA 2T- TEXAS 3T- ILLINOIS 3T- SOUTH CAROLINA 4- ALABAMA 5T- INDIANA 5T- NORTH CAROLINA
NEXT BEST: Ohio
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Rail & Highway Accessibility Georgia 4T- Indiana Texas 4T- Tennessee Illinois 5- Ohio
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For example, Georgia was the first southeastern state to pass single-factor corporate tax apportionment. This legislation applies the 6 percent corporate tax rate only to the portion of income earned inside the state. Georgia also consistently maintains one of the nation’s lowest debt-per-capita levels. A modern and extensive transportation and logistical infrastructure allows Georgia to compete effectively in a global marketplace. Hartsfield-Jackson International Airport is the world’s busiest passenger airport and 10th-largest in the nation for cargo. Georgia’s deepwater ports and inland barge terminals are a major reason Georgia now ranks second nationally in exports. Atlanta is also the rail center of the South, with nearly 5,000 miles of railroad track and the largest intermodal facility on the East Coast. Quality and cost of labor is a key driver in every location decision. Georgia’s Quick Start work force development
program is one of the best in the nation and provides customized training at no cost to qualified companies in an array of industries. Nearly one million workers at 6,200 companies of all sizes have benefited from Quick Start. Georgia’s pro-business policies continue to attract new business investment. Thirty Fortune 1000 companies have headquarters in Georgia. General Motors, Hitachi, and Greenway Medical Technologies are just some of the companies that continue to invest and expand in Georgia. AT&T recently announced plans to build a research center in Atlanta to develop the company’s latest technologies and applications. “AT&T has been investing and innovating in Georgia since 1879,” comments Sylvia Russell, President of AT&T Georgia. “Our decision to locate this unique facility in Atlanta is recognition of the hard work Georgia has done to create a welcoming environment for businesses to invest, innovate, and create jobs.”
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Change has its advantages. For your business, South Carolina and Santee Cooper offer change in the form of an attractive tax base; low-cost, reliable electricity; right to work workforce; development opportunities and a host of other competitive advantages. Plus, a quality of life graced with Southern hospitality that will, well, change your life. And Santee Cooper, South Carolina’s largest producer of electricity, will be there to power your success. For more information, contact us at:
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EVERYTHING WE DO IS ORIGINAL. What does it take to compete with the best? It takes a workforce driven by pride to do things right. It takes relevant training programs that equip workers with the skills of tomorrow. And it takes leadership that’s ready and able to find solutions – no matter the challenge. Mississippi has what it takes to help your business compete with anyone. Find out why our workforce is ready for you at mississippi.org.
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2 T. S O U T H C A R O L I N A The Palmetto State has one of the fastest-growing economies and one of the fastest-growing manufacturing sectors in the country, according to the U.S. Department of Commerce. South Carolina’s real GDP growth rate of 2.7 percent in 2012 put it above the national average of 2.5 percent and the southeastern regional average of 2.1 percent. South Carolina exports totaled a record of more than $25.1 million in goods in 2012, thanks in part to a highly efficient transportation infrastructure, which includes the booming Port of Charleston. An inland port will open in September that will extend the capabilities of the Port of Charleston 212 miles inland, enabling goods to be shipped via container overnight along an existing Norfolk Southern rail line between Spartanburg and Charleston. The inland port will convert an estimated 25,000 containers that are currently being trucked on Interstate 26 to rail in one year. Annual capacity is estimated at 40,000 containers initially, with potential for expansion. As a right-to-work state, South Carolina has the lowest private-sector unionization rate in the country, at 1.3 per-
cent. ReadySC™, a work force development program that operates through the technical college system, is a key part of South Carolina’s economic development success. In fiscal year 2011–2012, readySC provided recruiting, assessment, training development, management, and implementation services for nearly 4,500 workers from 82 companies. A friendly business climate, highly integrated transportation network, and capable work force are key drivers for the resurgence of manufacturing in South Carolina — especially aerospace and automotive. Boeing is investing $1 billion in its operations and adding an engineering design center. For the second consecutive year, South Carolina ranked first in tire exports with close to a 30 percent share of all U.S. tire exports. When new Bridgestone, Continental, and Michelin plants coming online, it is predicted that South Carolina will be the biggest tire-producing state.
4. ALABAMA Alabama has a proven track record in economic development and 2013 promises to be another strong year. State and local leaders are working together to carry out Accelerate
2013 TOP STATES COMMENTARY By Ann Petersen, Senior Associate, Business and Economic Incentives, Jones Lang LaSalle As the Top States for Doing Business survey indicates, companies continue to be attracted to states with the ideal combination of shovel-ready sites, infrastructure, labor availability, and competitive operating costs. While those key preferences are not new, the survey underscores an overarching new trend of increasing demand for conducting business in the South and Southeast. In general, we are seeing a shift in corporate relocations toward these southern areas, indicating that business-friendly initiatives in these states are having a visible effect on attracting companies. Texas has been actively recruiting companies in other markets through a national advertising campaign, which may have contributed to its high placement in the survey rankings. Beyond Texas, such states as Georgia, North and South Carolina, and Tennessee have been aggressive in providing the ideal characteristics and demonstrating their responsiveness to business needs — and their success also is reflected in the survey results. North Carolina has created numerous successful corporate relationships in recent years. Of course, a challenge for all state economic development teams is the local political dynamic. States ranked highly for doing business today may increase or lose their appeal as the political winds blow. It is important for companies and their consultants to stay abreast of state and local trends that may affect incentive programs, taxes, zoning, and other site selection considerations. Many of the top-ranked states, and the municipalities within them, have proven their willingness and ability to create successful partnerships with companies. A growing emphasis on work force development, training, and education programs to strengthen the labor pool will only further solidify these states’ standings as great places to do business.
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Why SouthCarolina? Many world-class companies have chosen South Carolina. Find out why.
RANKED #1 IN COMPETITIVE UTILITY RATES RANKED #1 IN CERTIFIED SITES/SHOVEL READY PROGRAMS Ranked #2 for Doing Business in Area Development’s Top States Survey of Site Location Consultants A Right to Work state Most efficient port in the Southeast in Charleston
★
Boeing selected South Carolina for its new Dreamliner 787 assembly plant BMW has the largest work force of any U.S. auto assembly plant
Contact Fred Gassaway at
Fgassaway@SCpowerteam.com The Electric Cooperatives & Santee Cooper
Visit www.SCpowerteam.com 1201 Main St., Suite 1710, Columbia, SC 29201 I (803) 254-9211
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Alabama, the state’s long-term economic development plan based on three economic development drivers: recruitment of new business and industry, retention and expansion of existing businesses and industry, and creating jobs through innovation, entrepreneurship, research and development, and commercialization. Alabama is well known for its skilled work force and AIDT, one of the top training programs in the country that provides innovative solutions for Alabama’s new and expanding businesses, especially manufacturers. These companies are also attracted to Alabama’s solid transportation and shipping infrastructure — an asset that is increasingly important in a competitive global economy. Located on the Gulf Coast, Alabama has over 4,000 acres of port — including the Port of Mobile, an intermodal facility that will become the sixth-busiest port in the world after a $300 million expansion. Alabama’s ports are also connected to a 3,000-mile rail system and six interstate highways. Aerospace, automotive, bioscience, advanced manufacturing, distribution, IT, and chemicals are key, high-growth industries for Alabama. Major investments by Mercedes, Honda, Hyundai, and Toyota continue to drive the automotive sector. The new $600 million Airbus assembly facility being developed in Mobile will start producing the A320 family of jets in 2015. “The site was perfect, with an airport and ocean port and adequate land,” indicates Allan McArtor, chairman for Airbus Americas. “Work force was also vital — we were
encouraged by the auto industry’s success in Alabama because its manufacturing aspect is a trained skill similar to that of aircraft assembly.”
5. NORTH CAROLINA North Carolina’s diverse economy is supported by probusiness economic policies, a strong work force, and a modern and efficient transportation infrastructure. The state was ranked fourth-best state for business and second-best state for business costs by Forbes in December 2012. Key growth industries include advanced manufacturing, aerospace, automotive, biotechnology, sustainable energy, and information technology. A big reason North Carolina is a good place for business is because its business tax rate is one of the lowest in the country — and it just got even lower. In July, Governor Patrick McCrory signed legislation further reducing the corporate income tax from 6.9 percent to 6 percent in 2014, and then to 5 percent in 2015, a 29 percent tax decrease. North Carolina also has a world-class transportation system for shipping products around the globe. The state is within a two-day drive of 170 million U.S. and Canadian consumers and 65 of the country’s top 100 metropolitan areas. International trade is boosted by two deepwater ports, two strategically located inland terminals, and the sixth-largest major airline hub in the nation. North Carolina is a right-to-work state and has the lowest overall unionization rate in the nation at 2.9 percent.
States Most-Mentioned By Respondents (without regard to ranking in 17 categories)
1. TEXAS 2. South Carolina 3. Georgia 4. Alabama 5. North Carolina 6. Tennessee 7. Louisiana 8. Florida
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“Texas is a state where a dream can be put to work.” - Texas Governor Rick Perry
dĞdžĂƐ tŝĚĞ KƉĞŶ ĨŽƌ ƵƐŝŶĞƐƐΡ ŝƐ ŵŽƌĞ ƚŚĂŶ ũƵƐƚ ŽƵƌ ŵŽƩ Ž͘ It’s a commitment to create and sustain an environment that fosters business and entrepreneurship, trains the workforce of the future, and helps turn a dream into a realitLJ͘ Eo maƩer what the industrLJ, we are commiƩed to your growth and success͘ Come to Texas, we’re Wide Open for Business͘ To learn more about opportuniƟes in Texas visit
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Employers are attracted to North Carolina’s diverse pool of highly skilled and productive workers, as well as the state’s comprehensive work force development network and exceptional educational opportunities. Many of the state’s workers have the experience and technical training for advanced manufacturing operations, including automotive and aerospace. For example, GE Aviation will be expanding its manufacturing operations at four facilities in North Carolina. The project, which will create 242 new jobs at a capital cost of $195 million, will be assisted by a Job Development Investment Grant from the state.
6. LOUISIANA Since January 2008 Louisiana has enjoyed 33 consecutive months of private-sector job growth, an unemployment rate well below that of the nation and the South, and record levels of business investment and job creation. In the past five years, Louisiana has secured economic development proj-
ects that are creating more than 63,000 new direct and indirect jobs and more than $28 billion in new capital investment, along with hundreds of millions of dollars in new sales for Louisiana’s small businesses. This resurgence is largely due to the innovative economic policies put forth by Governor Bobby Jindal and the state legislature. Action items have ranged from removing unconventional business taxes to reining in government spending, reforming governmental ethics laws, revamping work force development programs, and implementing landmark education reforms for Louisiana students. These initiatives — combined with a highly productive and well-trained work force and a modern rail-air-highway transportation infrastructure that is well connected to more than 30 bustling ports — make Louisiana an ideal location for major capital investment. Key sectors are energy, IT, digital media, aerospace, automotive, and advanced manufacturing. Louisiana has also averaged 10 FDI projects per year over the last decade, with an average of 271 jobs per project and
2013 TOP STATES COMMENTARY By Dan Levine, Principal, MetroCompare LLC Each site selection engagement begins with the corporate client specifying project requirements that tend to limit search areas to a relatively few number of states. This year’s survey of consultants captures this dynamic more effectively than has sometimes been the case in years past. Massachusetts and Michigan, for example, rank among this year’s leaders in availability of skilled labor. Similarly, Illinois and Indiana are in the top tier for distribution and logistics. Not surprisingly, the survey results rank the southern states as national leaders in the overall cost of doing business and for favorable regulatory climate. But strong though the South might be, does anybody really believe that any of these states deserves a higher ranking than does New York City or Los Angeles in terms of global access? Similarly, it is not true that utility costs are always lower in the South as the results suggests, and some northern states (think South Dakota) have every bit as competitive a state tax climate as do any of the survey leaders. Nevertheless, Texas getting top honors as the best state for doing business should come as no surprise to anyone, whereas California ranking in the top ten is certainly an unexpected result. One of the most interesting variables to watch during the upcoming year is the availability of basic industrial space. The availability of suitable existing industrial space has proven to be a critical limitation during several recent engagements. Similarly, as domestic energy production soars and natural gas prices decline, those states that pass these savings along to industrial users will find their competitive positions greatly enhanced. Finally, a comment on incentives: It seems that the states that ranked well in the survey were those that not only offer significant incentives but tend to make their best programs available to most projects. In many other states that offer equally large incentive awards as do the survey leaders, it is much more of a hit or miss proposition as to whether your particular project will qualify for the most significant programs.
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capital investment totaling $45 billion. One of the largest projects is Sasol’s gas-to-liquid and ethane cracker complex in Southwest Louisiana, worth an estimated $16 billion to 21 billion. The South African company’s facility will be one the largest manufacturing projects in state history and one of the largest foreign direct investments in the history of the nation. “Working with Louisiana Economic Development has been really a pleasure for us,” says André de Ruyter, senior group executive for Sasol’s Global Chemicals and North American Operations. “We found them to be very businesslike, focused, supportive, and understanding of the needs of a major investor.”
7. TENNESSEE Low taxes and fiscal stability are key reasons why many
companies choose a city or state for expansion or relocation. According to Fitch Ratings, one of the country's top bond rating agencies, Tennessee has the lowest debt ratio of any state in the country. In 2012 Barron’s magazine ranked Tennessee as the third-best-run state. Tennessee is a right-towork state, has no personal income tax, and enjoys the second-lowest cost of living in the United States. Tennessee is also known for its manufacturing — the number of workers employed in manufacturing in Tennessee is almost a third greater than the national average. Education and work force partnerships that advance manufacturing in the state include the Regional Center for Advanced Manufacturing in Kingsport, a state-of-the-art training facility that helps create a pipeline of well-prepared applicants for manufacturing positions. In Chattanooga, Volkswagen and Chattanooga State Community College
2013 TOP STATES COMMENTARY By Robert Hess, Executive Managing Director, Consulting; Newmark Grubb Knight Frank Consistency and confidence are two major intangible business location drivers for our corporate clients these days. The results of the 2013 Top States for Doing Business survey demonstrate that the southeastern region of the U.S. really gets it. Risk management and certainty around investment decision-making is rising as a critical location factor, and Texas, Georgia, the Carolinas, Alabama, Tennessee, and Mississippi continue to maintain their business climate “edge” through focused advancement of their “business-friendly” policies as well as overall low structural costs. Recent entrant Louisiana into this mix of pro-business climate states is exciting and refreshing — not because I am biased – rather a demonstration that leadership does matter. Louisiana has aligned its public and private sectors across a number of target industries, tackled tough systemic issues like work force/skill development with positive results, invested in a world-class training capability, and structured aggressive targeted incentive programs that have resulted in marked improvement to the state’s survey ranking. I think many of my colleagues in the site selection business struggle with surveys, especially at the state level, because many of our clients look at clusters, eco-systems, or other spatial contexts like edge cities or urban core strategies. In addition, it does depend on the industry, the asset type, and tactical issues like supply-chain infrastructure, venture capital, site availability/readiness, and quality of life. You can take these geographic constructs and specific business condition needs and overlay them on the survey results and see why places like California, Michigan, Arizona, and Florida emerge throughout the survey as leading states for business development. Our business at Newmark Grubb Knight Frank in the last two years has taken a intentional turn toward deep labor analytics and talent attraction/ retention due diligence, and this trend will bode well for many of the states not on the list to compete for small and medium enterprise expansions and relocations that are less sensitive to business climate dynamics. Lastly, I am convinced that last-minute capital spending for many business sectors and complex corporate decisionmaking processes for public companies will continue to showcase states like Texas, Alabama, South Carolina, Georgia, Mississippi, and Tennessee. Why? Because these states understand that the speed of business through streamlined permitting and reasonable regulatory policy supports meaningful and sustainable job creation and investment.
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have partnered to create the Volkswagen Academy, which prepares new employees to work at the Volkswagen plant. Nissan, Volkswagen, and General Motors all have major production hubs in Tennessee. In fiscal year 2012–2013, 44 automotive projects created 6,662 new jobs in Tennessee and investments totaled nearly $1.1 billion. The state’s more than 900 auto manufacturers and suppliers are supported by a well-maintained transportation infrastructure that is one of the top-ranked in the country. Components include three rail systems, six commercial airports (including the world’s second-busiest cargo airport in Memphis), over 1,000 miles of navigable waterways, and interstates 24, 40, and 75 — all of which improve access to global markets.
8. FLORIDA Florida is starting to get some serious attention as a place to do business. Over the last two years, Florida has added
330,000 private-sector jobs and unemployment currently stands at about 7 percent. Florida’s Consumer Confidence Index rose to 82 points in June 2013, the fourth straight month of increases and the highest level in six years. This optimism is also reflected in migration patterns. The Demographic Estimating Conference expects more than 177,000 people will move to Florida by the end of this fiscal year and more than 200,000 per year until the end of the decade, resulting in a net in-migration. Governor Rick Scott has cut taxes and streamlined regulation and government operations. In 2012 he doubled the tax exemption for business income, eliminating the business tax for more 70 percent of businesses. So far the state legislature has eliminated about 2,500 regulations on business, including a tax on manufacturing equipment. A strong business climate only goes so far — a state also needs a talented work force and strong transportation infrastructure. Florida has a large pool of highly skilled workers
2013 TOP STATES COMMENTARY By Andrew Shapiro, Managing Director, Biggins Lacy Shapiro & Company Reviewing the 2013 survey results, I am struck by the consistency with which the southeastern states have captured the top spots in almost every category. There can be only one of two explanations for this: either Texas, South Carolina, Georgia, Louisiana, Alabama, and Florida indeed comprise the best locations for all manner of new jobs and investments, or these states are simply better at promoting themselves. While I have high regard for the business climate across much of the Southeast (indeed our firm just had two project announcements in South Carolina and Florida), I tend to favor the latter explanation. The fact is that we consultants are no more immune to persuasive marketing than are any other site selectors. Yes, we have our data and our models and our years of cumulative experience; however, we also tend to be more frequent readers/viewers of the trade journals and websites that economic developers use to position their markets; and let’s face it, we are much more likely to host a southeastern delegation in our offices, and share the podium with such colleagues at conferences. What other explanation can there be when Colorado does not show up at or near the top for skilled labor availability (Denver has one of the highest concentrations of engineers in the country), or when South Carolina and Georgia are rated as having one of the most favorable corporate tax environments despite the fact that the Tax Foundation places both states well in the bottom half of its rankings? And, finally, how is that New Jersey is absent from the rankings of top state incentive programs when its BEIP program has enabled companies to benefit from as much as $50,000 in grants for each new job created, its Urban Transit Hub Tax Credit can erase between 80 percent to 100 percent of qualifying investments in the major cities, and its BRRAG incentive has been among the strongest state job retention programs in the country? Looking at the big picture, what this survey says to me is that economic developers in the Northeast, Midwest, and even the West need to take a long hard look at the effectiveness of their marketing campaigns. They are just not working very well, are they?
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that is especially strong for high-tech industries and international trade. Workforce Florida also provides customized training programs and incentives to help companies become more efficient and profitable. Florida has one of the world's most extensive multimodal transportation systems, including international airports, deepwater shipping ports, extensive highway and rail networks, and multiple hubs. Over $162 billion in products were transported through Florida's airports and seaports in 2012. These business advantages are giving companies confidence to invest in Florida again: announcements include Amazon (3,000 jobs, $300 million), Hertz (700 jobs, $50 million), Boeing (550 jobs, $163 million), Navy Federal (700 jobs, $6 million), and Verizon (750 jobs, $50 million). For Verizon, its new location in Orlando will centralize its accounting, finance, and back office operations. “The region’s talent pipeline, which is full of finance and accounting graduates, was an integral factor in Verizon choosing to invest in Central Florida,” states Senior Vice President Michelle Robinson.
9. MISSISSIPPI Mississippi is on an economic roll. So far in 2013, 22 companies have announced new locations or expansions in the
state, totaling more than $663 million in new investment and 3,700 new jobs. One of the biggest projects is Yokohama Tire Corporation’s plan to build a $300 million commercial truck tire plant in the city of West Point. The first phase alone will create 500 new jobs, with the possibility of an additional 1,500 jobs as the plant expands. Governor Phil Bryant was recently ranked 14th by On Numbers for job creation among current governors. Mississippi offers customized incentive packages that fit the individual needs of companies looking to expand or locate in the state. Mississippi’s low energy costs, low cost of living, and competitive tax structure make it a prime location for facility location or expansion. The Kauffman Index ranked Mississippi fifth in its Index of Entrepreneurial Activity — an indication that the state supports all levels of business growth, including small start-ups. Manufacturing is one of Mississippi’s specialties, thanks to the pro-business environment, highly skilled work force, and outstanding shipping infrastructure. The state has a low rate of unionization among its workers. Partnerships with state colleges and universities have developed training opportunities for workers, attracting high-tech industries to the state. Mississippi’s modern highway-rail-air transportation system connects to all major U.S. markets, as well as the Mississippi River, Tennessee-Tombigbee Waterway, and
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state government that have incentivized companies to invest in the state. Recent relocation and expansion announcements include Samsung (2,000 jobs, $300 million), Amazon (1,785 jobs, $450 million), Advanced Call Center Technologies (2,000 jobs, $25 million), Vision Service Providers (400 jobs, $50 million), and Caterpillar (150 jobs, $25 million). The state government also recently passed legislation 10. CALIFORNIA that will phase out the enterprise zone program and replace this dated incentive with statewide sales tax exemptions on California added jobs at the fastest year-over-year pace in manufacturing, biotech, and R&D equipment; a hiring credit more than a decade, thanks to strong growth in key indusfor businesses in existing challenged areas on wages tries and several important economic policy changes by between $12 and $28 per hour; and a new unit that will offer corporations and small businesses tax credits as part of a new, more flexible incentive to create jobs in California. California continues to be a global export leader, with over $162 billion in annual sales of goods and services. It has the modern infrastructure to support high levels of trade, including 11 cargo airports and 11 cargo seaports. The ports of Los Angeles, Long Beach, and Oakland are among the busiest in the country. California also has 18 foreign-trade zones that facilitate shipping on goods and raw materials. With this high level of economic activity, it is no surprise that California is the number-one state for foreign direct investment. According Hendricks County, Indiana is a premier to Ernst and Young, California location for business thanks to a skilled received almost 50 percent of all venworkforce, a location close to population ture capital financing in the U.S. in centers, and a transportation network that 2011. Much of this is invested in includes access to four interstate highways, high-tech industries — especially a CSX rail system, and the Indianapolis information technology. California International Airport and FedEx remains the top state for IT jobs, Freight Terminal. which continues to drive venture capital investment, patents, innovaOur workforce is among the best in the tion, and the development of a wellnation, due to our exceptional schools and educated and highly skilled work the resources of excellent postsecondary force. institutions. The Hendricks College And there have been other recent Network connects companies and signs that California is on the right residents with Indiana colleges track: Governor Brown’s recent trade and universities to ensure a mission to China secured over $1.8 well-educated workforce. billion in deals, and California also opened a foreign-trade office in What are you waiting for? Give us a call. Shanghai — the first for the state in a decade. ••• major ports along the Gulf of Mexico. In May, the Governor signed landmark legislation that positions Mississippi as a leading destination for energyrelated economic development. It provides sales-tax exemptions on energy for manufacturing and a 25 percent rebate on research and development costs for companies.
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SPONSORS ALABAMA
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AIDT AIDT is responsible for recruiting, training, and developing Alabama’s work force for new and expanding industry. AIDT has provided thousands of skilled, motivated employees to Alabama industries since 1971. Training services are offered in many areas, at no cost, to new and expanding businesses throughout the state. ED CASTILE, Dir., AIDT One Technology Court Montgomery, AL 36116 334-242-4158 director@aidt.edu www.aidt.edu
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CALIFORNIA
GREATER FORT LAUDERDALE ALLIANCE
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Taxing” to more than 150 corporate and international regional headquarters including AutoNation, Citrix, DHL, Emerson, Microsoft, and Nipro Diagnostics through a cost-competitive business climate and no state personal income tax, combined with robust domestic and international air and seaports and exceptional quality of life.
City of Rancho Cordova Economic Development Department 2729 Prospect Park Drive Rancho Cordova, CA 95670 916-851-8780 econdev@cityofranchocordova.org business.cityofRanchoCordova.org
PEGGY DOTY, CEO Council Executive Assistant Greater Fort Lauderdale Alliance 110 East Broward Blvd., Ste. 1990 Fort Lauderdale, FL 33301 954-627-0134 pdoty@gflalliance.org www.lesstaxing.com
FLORIDA
ALABAMA DEPARTMENT OF COMMERCE The Alabama Department of Commerce helps bring jobs and investment to the state by recruiting some of the finest companies in the world to locate within the state’s borders and by helping companies located here expand. Call us to find out how we can help your company grow.
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GREG CANFIELD, Sec. of Commerce Alabama Dept. of Commerce 401 Adams Ave. Montgomery, AL 36130 800-248-0033 or 334-242-0400 Gerri.Miller@commerce.alabama.gov www.madeinalabama.com
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ENTERPRISE FLORIDA Florida — The Perfect Climate for Business. With our climate, business grows year round in Florida. We have the #1 tax climate in the Southeast, America’s #1 infrastructure, 0% personal income tax, and the nation’s #4 largest economy. And we’re just getting warmed up. Learn more about Florida's rich business landscape. CRYSTAL SIRCY, Senior VP Business Development Enterprise Florida 800 N. Magnolia Ave., Ste. 1100 Orlando, FL 32803 1-877-YES-Florida • Fax: 407-956-5599 csircy@eflorida.com www.perfectbusinessclimate.com
INDIANA
Cigna
HENDRICKS COUNTY ECONOMIC DEVELOPMENT PARTNERSHIP Hendricks County, Indiana — A perfect place to do business and better place to live. With a location that’s close to so many of the nation’s population centers, an extensive transportation network, a skilled work force, and an outstanding quality of life, we have become one of the nation’s premier business locations.
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GEORGIA POWER Georgia Power is the largest subsidiary of Southern Company, one of the nation’s largest generators of electricity. With an international reputation for excellence in economic development, the company has helped bring more than 100,000 jobs and $21 billion in investment to Georgia over the last decade.
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JONATHAN SANGSTER, General Mgr., Economic Development Georgia Power 75 Fifth Street NW, Ste. 175 Atlanta, GA 30308 404-506-7502 • Fax: 404-506-1474 www.SelectGeorgia.com econdevga@southernco.com
CINDA KELLEYHUTCHINGS, Exec. Dir. Hendricks County Econ. Development Partnership 5250 E US Hwy 36, Ste. 1103 Avon, IN 46123 317-745-2400 • Cell: 317-313-7381 • Fax: 317-745-0757 kelley@hcedp.org www.hcedp.org
Frisco
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STACY WATSON, Gen. Mgr., Econ. & Industrial Dev. Georgia Ports Authority P.O. Box 2406 Savannah, GA 31402 912-964-3879 • Fax: 912-964-3869 swatson@gaports.com www.gaports.com
GEORGIA
Plano, Texas. Smart people. Smart place.
Smart choice.
GEORGIA PORTS AUTHORITY The Georgia Ports Authority (GPA), including a dedicated economic development team, fosters international trade and new industry for state and local communities; promotes Georgia's agricultural, industrial, and natural resources; and maintains the natural quality of the environment. GPA’s efforts along with the state incentives for new and expanding industries have made the Southeast an attractive business option.
•• Greater Fort Lauderdale offers “Life. Less
CITY OF RANCHO CORDOVA Rancho Cordova is effectively known as the center of it all for businesses in Northern CA. Connectivity and affordability are the premier reasons businesses have chosen to locate in this city along US Highway 50. Discover how you can belong, prosper, and even play in this young and innovative community.
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Plano provides companies access to the entire Dallas/Fort Worth Metroplex. We’re only 30-minutes away from DFW International Economic Development Airport. Plano boasts a lower cost of living, less taxes and a young, talented and highly educated workforce. Call us or go online at 5601 Granite Parkway • Suite 310 planotexas.org and find out why CEO’s choose Plano. Plano, Texas 75024 • 972-208-8300 • planotexas.org
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HOOSIER ENERGY Hoosier Energy is a cooperative wholesale power generator whose diverse, reliable wholesale electric system generates and transmits electric power to 18 electric cooperatives serving 700,000 customer meters. From auto assembly plants to foundries to casinos, Hoosier Energy serves a variety of power needs and supports the growth of its members with numerous services. HAROLD GUTZWILLER Hoosier Energy P.O. Box 908 Bloomington, IN 47402 812-876-0294 • Cell: 812-360-4796 • Fax: 812-876-5030 hgutzwiller@HEPN.com www.HEPN.com INDIANA ECONOMIC DEVELOPMENT Indiana has the business environCORP. ment companies need to grow: a central location; a trained and talented work force; industry initiatives designed to stimulate growth, innovation, and profits; and a quality of life that’s second to none.
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KELLY NICHOLL, VP of Marketing Indiana Economic Development Corp. 1 N. Capitol Ave., Ste. 700 Indianapolis, IN 46204 317-232-4950 • Fax: 317-233-9851 knicholl@iedc.in.gov www.iedc.in.gov
KENTUCKY KENTUCKY CABINET FOR ECONOMIC Many of the world’s DEVELOPMENT most successful companies have discovered that Kentucky — land of the thoroughbred — is a great place to build their businesses. We invite you to write your own success story in Kentucky. We’re confident you’ll find the Bluegrass State has the winning tradition you’ve been seeking.
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ERIK DUNNIGAN, Comm., Business Development Kentucky Cabinet for Economic Development Old Capitol Annex 300 West Broadway Frankfort, KY 40601 502-564-7140 Econdev@ky.gov www.ThinkKentucky.com
LOUISIANA
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ACADIANA ECONOMIC DEVELOPMENT Acadiana Economic Development represents the primary economic development organizations in the Acadiana parishes (counties) of Iberia, St. Martin, Vermilion, St. Landry, Lafayette, Evangeline, and Acadia. AED’s marketing, advocacy, and business outreach stimulate long-term economic growth and job creation throughout the region. REBECCA SHIRLEY, Director Acadiana Economic Development 211 E. Devalcourt St. Lafayette, LA 70506 337-769-7646 • Fax: 337-234-3009 rebeccas@teamacadiana.org www.teamacadiana.org
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MISSISSIPPI
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MISSISSIPPI DEVELOPMENT AUTHORITY International industry leaders choose Mississippi for our dedicated work force, prime geographic location, and supportive business climate. But they also look to us for our innovative solutions to businesses’ needs and our passion for surpassing expectations. To learn more about the benefits of a Mississippi location, visit our website.
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MARLO DORSEY, Chief Marketing Officer Mississippi Development Authority P.O. Box 849 Jackson, MS 39205 601-359-3962 mdorsey@mississippi.org www.mississippi.org
South Carolina’s SANTEE COOPER largest power producer provides electricity to two million people and businesses directly and through the state’s 20 electric cooperatives; partnering low-cost, reliable power with our state’s attractive tax base, relocation incentives, and an unparalleled quality of life. GEORGE HAYGOOD Santee Cooper One Riverwood Drive Moncks Corner, SC 29461 800-833-7797 www.scprimesite.com george.haygood@santeecooper.com
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NORTH CAROLINA ELECTRICITIES OF NORTH CAROLINA, INC. ElectriCities is a not-for-profit government service organization representing 70+ N.C. cities and universities that own electric distribution systems. A site selection professional can receive detailed reports from our extensive databases on dozens of N.C. sites, from mountains to coast, within 48 hours of a request. We’re your turnkey services partner.
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SOUTH CAROLINA POWER TEAM The South Carolina Power Team represents the electric cooperatives and Santee Cooper in their industry recruitment efforts for South Carolina. The South Carolina Power Team provides professional, cost-free site location counseling to help new industrial and distribution facilities find a home and existing ones expand. FRED GASSAWAY, Exec. VP Marketing South Carolina Power Team 1201 Main St., Ste. 1710 Columbia, SC 29201-3212 803-254-9211 • Fax: 803-771-0233 Fgassaway@SCpowerteam.com www.SCpowerteam.com
BRENDA DANIELS, Mgr., Economic Development ElectriCities of North Carolina, Inc. 1427 Meadow Wood Blvd. Raleigh, NC 27604 1-800-768-7697 ext. 6363 • Mobile: 919-218-7027 bdaniels@electricities.org www.electricities.com
TENNESSEE
SOUTH CAROLINA
W. ALLEN BORDEN, Asst. Commissioner, Business Development Division Tennessee Dept. of Economic and Community Development 312 Rosa L. Parks Ave. Nashville, TN 37243-0405 615-532-1294 • Fax: 615-741-7306 allen.borden@tn.gov www.tn.gov/ecd
TENNESSEE DEPARTMENT OF ECONOMIC AND COMMUNITY DEVELOPMENT When you select Tennessee for your expansion or location, you’ll find a strong transportation network connecting to markets around the world, low business costs, flexible incentives, and a high quality work force. Visit our website to learn more about how we can help your company succeed and grow in Tennessee.
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MARION COUNTY ECONOMIC DEVELOPMENT COMMISSION Minutes from I-95 in the heart of the Charlotte-Raleigh-Charleston triangle, Marion County offers quick access to rail, three seaports, and four commercial airports. Its dedicated work force, industry incentives, and Southern hospitality make it a win for business and those seeking a rich quality of life.
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MS. JULIE NORMAN, Exec. Dir. Marion County Economic Development Commission P.O. Box 840 Marion, SC 29571 843-423-8235 rberry@marionsc.org www.marioncountysc.com
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TEXAS
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South Carolina provides readySC™ comprehensive work force solutions from entry-level training through advanced skill levels. Our internationally recognized readySC™ and Apprenticeship Carolina™ programs come together to successfully meet each organization’s work force needs. readySC™ delivers customized recruitment and training solutions for companies creating new jobs in the state. Apprenticeship Carolina™ helps client organizations create demand-driven registered apprenticeship programs. SUSAN PRETULAK VP of Economic Development readySC™ 803-896-5276 pretulaks@sctechsystem.edu www.readysc.org
LUBBOCK ECONOMIC DEVELOPMENT With a highly skilled and ALLIANCE educated work force, proximity and connection to major national and international markets, and affordable utility and living costs, Lubbock, Texas, is the ideal place to grow a business. Lubbock’s size affords businesses access to dedicated community leaders and personalized service, while providing a pipeline of personnel to fill work force needs. JOHN OSBORNE, President & CEO Lubbock Economic Development Alliance 1500 Broadway, 6th Fl. Lubbock, TX 79401 806-749-4500 john.osborne@lubbockeda.org www.lubbockeda.org MIDLOTHIAN ECONOMIC DEVELOPMENT Midlothian, Texas, offers thousands of acres of developable property centrally located within the DFW Metroplex with major highways and rail in a community prepared to help industrial, distribution, and retail businesses Make Something Great Here — for their business, employees, and customers.
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PLANO ECONOMIC DEVELOPMENT Plano, Texas, located 19 miles north of Dallas, is home to 265,000 residents. It has a national reputation as one of the best places to live and work, with excellent schools, low crime rate, and affordable homes. Plano offers incentives on a case-by-case basis to stimulate business attraction, retention, and expansion. SALLY BANE, Exec. Dir. Plano Economic Development 5601 Granite Parkway, Ste. 310 Plano, TX 75024 972-208-8300 • Fax: 972-208-8305 sallyb@plano.gov www.planotexas.org SHERMAN ECONOMIC DEVELOPMENT The Sherman Economic CORPORATION Development Corporation is a resource for business considering a new location in the North Texas region. SEDCO represents the Sherman area for new investment and jobs, manages and promotes real estate in Progress Park, and provides incentive funding for qualified projects.
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SCOTT CONNELL, Pres. Sherman Economic Development Corporation (SEDCO) 307 W. Washington, Ste. 102 Sherman, TX 75090 903-868-2566 • 800-981-2566 scottc@sedco.org www.sedco.org
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TexAmericas TEXAMERICAS CENTER Center, a land resource of nearly 12,000 acres, is located in Northeast Texas, 18 miles west of Texarkana, in New Boston, Texas. TexAmericas Center is central to the U.S. population, within 500 miles of the country’s geographic and population centers, and within 200 miles of five major cities. DERRICK MCGARY, VP of Public and Business Engagement TexAmericas Center 107 Chapel Lane New Boston, TX 75570 903-223-9841 • Fax: 903-223-8742 derrick.mcgary@ texamericascenter.com www.texamericascenter.com TEXAS OFFICE OF THE GOVERNOR ECONOMIC DEVELOPMENT & TOURISM The Texas economy continues to thrive across a wide range of industries. While Texas leads the nation with a diverse and robust energy sector, the state’s large work force and nation-leading infrastructure create a thriving network that supports IT operations, plastics manufacturing, call centers, and chemical projects — making Texas truly Wide Open for Business.
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AARON DEMERSON, Director Office of the Governor Economic Development & Tourism biztex@gov.texas.gov www.texaswideopenforbusiness.com
LARRY BARNETT, President/CEO 310 North 9th Street, Ste. A Midlothian, Texas 76065 972-723-3800 • Fax: 972-723-9301 LBarnett@Midlothian-TX.org www.Midlothian-TX.org
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FOR FREE SITE INFORMATION, CALL
800-735-2732, EXT. 225, OR VISIT US ONLINE AT WWW.AREADEVELOPMENT.COM
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SITE SELECTION
Certified Sites Pave the Way for New Business Companies seeking new locations hope to save time and money by looking at certified sites, which communities offer to lure in new business. By Beth Mattson-Teig
E
conomic development organizations are working to give companies the one thing that everyone wants today — more time. Tools such as expedited permitting and fast-track programs are becoming standard in the industry. Communities are now taking that focus on speed a step further as they continue to roll out certified sites that have fulfilled all of the development requirements, ranging from soil testing and entitlements to the installation of necessary infrastructure and utilities. These pre-qualified sites can be a big incentive for companies, especially those looking to move quickly on getting a new facility up and running. Working with a certified site that is “shovel-ready” can shave months off of a development schedule. That time-savings is a valuable commodity. “Today’s companies operate in a global market, and when they have new orders or a new contract, they want to be able to get to market quickly,” says John Hutchinson, director of public affairs and economic development for Gulf Power Company in Pensacola. “So, being able to quickly have a new business site ready to go is at the top of their minds.” In April, Gulf Power Company launched its new “Power Up” Site Certification Program. The “Power Up” program is designed to accelerate the development of industrial and large commercial sites for new business development and expansion
Memphis Megasite
in Northwest Florida. Gulf Power currently has 14 applicants for its site certification program. It could take up to a year for those sites to work through the application and review process before meeting the requirements and qualifying for that certification designation. According to news sources, this is the first certified sites program to be offered by Gulf Power, as well as the first program of its kind to be offered in the state of Florida. Gulf Power recognized that in order for local communities to be more effective in their marketing efforts, they needed a product to sell. “When companies come and you show them a cow pasture, you don’t get a second look,” says Hutchinson. Although site certification initiatives have been around for years, such programs have been on the rise in recent times. Public-private ventures as well as city and state programs have been proliferating from Oklahoma City to Louisiana. North Carolina, for example, launched one of the first statewide certification programs in the country. Since 2001, North Carolina’s Certified Sites Program has certified more than 95 sites spanning almost 25,000 acres. The program provides another reason for companies to consider locating in North Carolina. For example, last fall Altoona, Pa.-based Sheetz Inc. announced its plan to build a new distribution and food manufacturing facility on a certified site in Burlington, N.C. The company expects AREA DEVELOPMENT | Q3/Summer 2013
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to invest $32.8 million in the facility and create 254 jobs by the end of 2018. Sheetz Convenience Restaurants, which operates more than 425 locations across six states, will use the new facility to service its growing base of restaurants in North Carolina and Virginia. The company broke ground on the new facility in June, with an opening scheduled for December 2014. And in June, the Tennessee Department of Economic and Community Development announced the first six Select Tennessee Certified Sites, under a program that was launched about a year ago with the goal of helping the state’s communities prepare available sites for investment and expansion.
Vetted Sites Provide Incentive Certification provides a standard-
MEGA SITES LURE BIG FISH
ized tool by which both development professionals and business prospects can review prospective sites for compatibility with their needs. A certified site is a property that has gone through a rigorous pre-qualification process. Although standards can vary depending on the individual state or individual economic development agency, certified sites have met a lengthy list of readiness criteria and have the documentation to prove it. For example, under Tennessee’s certification program, a site must have at least 20 developable acres with proper zoning in place, all utilities — or a formal plan to extend utilities — must be in place at the site, and it must provide truck-quality road access. Certifications are typically conducted by site consultants and oftentimes a team of consultants that might include
knew that more original equipment manufacturer (OEM) Economic development projects were organizations are hoping to coming, were hit a home run in attracting likely to consider super-sized projects. But in the Southeast, order to play in the big leagues, and would be in a they need to have the “mega hurry. So that sites” ready and waiting for motivated us to those opportunities. get prepared with a catalog of large, ready sites,” says TVA Senior The super-sized success Vice President of stories make it easy to Economic Development understand why tackling John Bradley. “We still the hefty job of readying think there are more mega sites remains a transportation-related worthwhile endeavor. Case manufacturers coming and in point is the Tennessee we are ready.” Valley Authority’s Megasites Certification Although TVA’s Megasites Program. Since 2004, Certification Program has seven sites in the TVA officially ended, TVA region totaling more than Economic Development 12,000 acres have been continues to market two certified. Ultimately, those sites have helped to attract available certified mega more than $5 billion in new sites — the I-24 Megasite featuring 2,100 acres in investment from firms such as Volkswagen, Toyota, and Hopkinsville, Christian County, Ky., and West Severstal. Tennessee’s Memphis “We knew the market was Regional Megasite that includes 1,720 acres in the ripe when we started this core site with additional program. We studied the surrounding acreage. automotive market and
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engineering and environmental professionals, representatives from the local utilities, and members of the local economic development organization. “The skill, depth, thoroughness, and market value of certifications varies widely,” says Mark M. Sweeney, a senior principal at McCallum Sweeney Consulting in Greenville, S.C., which has been doing site certification work for the past 15 years. The certification process works to assemble current and accurate information into a single, useable package that makes it easier for businesses to compare and contrast their options. “The removal of uncertainty and speed are the two main calling cards for this initiative,” says Mike Downing, acting director of the Missouri Department of Economic Development (DED). Since it was introduced five years ago, the
Such mega sites have emerged around the country from Florida to Indiana. For example, CSX Corp. has certified mega sites in six states: Kentucky, Florida, Virginia, South Carolina, Alabama, and Indiana. In particular, the South has a high concentration of mega sites with more than a dozen certified mega sites. Mega sites are not defined by any national standard. However, they are generally known as sites of 1,000 or more acres. Although not all mega sites are also certified, a number of them have gone through the process of obtaining a certification by fulfilling certain prerequisites such as environment assessments, soil testing, permitting, and the installation of necessary infrastructure. One recent addition is the new 1,800-acre mega site at the Crawford Diamond Industrial Park in Nassau County, Florida. In June, Crawford Diamond
FOR FREE SITE INFORMATION, CALL
became the state’s second certified mega site. The site is approved for up to 10.5 million square feet of industrial land use, which can include manufacturing, assembly, warehousing and distribution, logistics, or an intermodal inland port. The mega site was certified by property owner TerraPointe LLC, which is a real estate subsidiary of Jacksonville, Fla.-based Rayonier Inc. Certified sites do have a leg up on the competition because companies know that they are not starting from scratch. “Users can see the value in having a site certified, because they recognize their ability to be up and operational in a faster time frame,” says Dan Camp, director of project management with TerraPointe. “Folks are about risk-reduction wherever possible, and the shorter the time frame that you can make for a company to make a decision, and then have them be up and operational, is very important.”
800-735-2732, EXT. 225, OR VISIT US ONLINE AT WWW.AREADEVELOPMENT.COM
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Missouri Certification Program has certified 16 sites encompassing more than 2,800 acres with an additional four applicants that are in various stages of the review process. Those certified sites are playing a bigger role in attracting new business, adds Downing. If a company is looking at building a facility in an open cornfield, it would have to do its own due diligence in terms of land surveys and environmental engineering assessments. It would also have to check for clear property and title, and check that the current capacity of the infrastructure such as power and water are adequate for the company’s needs. All of this has already been done and independently tested on certified sites. “I won’t say that companies only locate on certified sites, because there is a lot more to site selection than that. But, if they are looking at a specific community and it has a certified site, that will be the first one that they always look at,” says Downing. For example, Columbia, Mo., currently has three certified sites under the Missouri Certified Site Program that span 510 acres. That certified site status has allowed the city to gain the attention of companies looking for specific site requirements. In fact, Columbia’s certified sites are on the short list for two current site selection projects.
Weighing the Pros & Cons In sum, the main advantages of certified sites for the end user are time-savings and cost savings. “Some companies
Like much information provided in the real estate business, the data is presumed accurate at the time of collection and certification. have been quoted as saying such sites save many weeks in the site selection process and many months — six or more — in the site development process,” says Sweeney. Cost savings will vary widely, but can reach $50,000 or more for mega sites (see sidebar), he adds. Another big advantage of certification programs, particularly for industrial users, is greater access to information that is both reliable and thorough. Certified sites are attractive to businesses because of the readiness of information, accuracy and depth of information, identification of property risks, and even mitigation of those risks. “The thorough due diligence process that these sites have undergone removes risk and uncertainty by uncovering and addressing potential obstacles that can delay a project,” says Brandon Talbert of Austin Consulting, which worked on Tennessee’s certification program along with The Foote Consulting Group. Certainly, one question that remains is what happens if at some point in the future there is a problem with the site. That
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varies depending on the individual program and entities involved. “In most cases, the certification program is owned by the property owner or economic development agency contracting for the certification,” says Sweeney. However, their liability is largely limited by caveats associated with property information provided to prospective users. Like much information provided in the real estate business, the data is presumed accurate at the time of collection and certification. “Typically, no warranty is given or implied,” says Sweeney. Companies that decide to purchase or lease a certified property do so only after their own assessment. One potential negative is that some companies may take the certification at face value and not do any of their own evaluations or check to make sure that facts are accurate and current. Nonetheless, there is a clear trend of more sites going through some level of site-readiness assessment, including full certification. To some extent, such certification programs are raising the bar for those communities or states competing for business. One of the drivers behind the new Gulf Power certification program is that the company recognized that it needed certified sites in order to compete with neighboring states such as South Carolina, Alabama (known as AdvantageSites), Mississippi, and Georgia that all have robust site certification programs. Gulf Power officials also hope that because of its certification program, area communities will begin to give more consideration to preparing for new growth. “When you ask some communities where their next commerce park is going to be, they haven’t a clue, because they haven’t thought about it,” says Hutchinson. So, an added benefit is helping communities think about growth in an orderly way that ultimately makes them more competitive to attract new business, he concludes.
MEGA SITES ALABAMA
Bay Minette, Baldwin County: 3,020 acres
FLORIDA
Crawford Diamond Megasite, Callahan: 1,800 acres Cecil Commerce Center, Jacksonville: 1,500 acres
INDIANA
Chinook Mine Site, Clay/Vigo Counties: 4,500 acres
KENTUCKY
Chinook Mine Site, Clay/Vigo Counties: 4,500 acres Glendale Megasite, Glendale: 1,551 acres West Kentucky Megasite, Graves County: 2,130 acres I-24 Megasite, Hopkinsville: 2,100 acres
Columbia, Missouri
Ranked on Area Development Leading Locations. Centrally located on major highways. Highly educated workforce, low cost of living.
NORTH CAROLINA
Mid-Atlantic Logistics Center/Int’l Logistics Park, Brunswick County: 2,200 acres
SOUTH CAROLINA
I-95 Megasite, Dillon County: 1,920 acres
+RPH WR WKUHH 0LVVRXUL &HUWLÀHG 6LWHV
I-95 Megasite, Clarendon/Sumter Counties: 1,400 acres
Ewing Industrial Park ͙͘͡Ǥ͝͝ Ƥ Ǣ ͚͛͠ Ǥ Ǥ Discovery Ridge Research Park Ǧ ͙͙Ǥ͟͞ ǡ ͛͘Ǥ͘͘ ǡ ͙͠Ǥ͟͟ ǡ ͜͜Ǥ͛͡ ͙͟Ǥ͙͟ Ǥ
Conder Megasite, Kershaw County, 1,468 acres
Sutter Industrial Site ͙͘͟Ǥ͠ Ƥ Ǥ Ǥ
White Hawk Commerce Park, Florence: 1,200 acres
For more information, contact J. Michael Brooks, President Ǧ ǡ Ǥ ͘͘͝ ǡ ͙͚͘ ǡ ǡ ͚͙͘͞͝ ͛͟͝Ǥ͙͜͜Ǥ͚͜͝͝ ̻ Ǥ ǣȀȀ Ǥ Ǥ Ȁ Ǧ Ȁ Ǧ
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AREA0152.indd 1
FOR FREE SITE INFORMATION, CALL
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TENNESSEE
Memphis Regional Megasite, Memphis: 1,720 acres (plus 3,000 under option)
VIRGINIA
Mid-Atlantic Advanced Manufacturing Center, Greensville County: 1,545 acres
800-735-2732, EXT. 225, OR VISIT US ONLINE AT WWW.AREADEVELOPMENT.COM
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SITE SELECTION
Finding Data Center Locations that Fit the Bill Although there is no perfect data center site, by vetting prospective sites to see if they meet specific requirements, a company can find one as close to ideal as possible. By Tracey Hyatt Bosman, Managing Director and Midwest Practice Leader, Biggins Lacy Shapiro & Co. (BLS & Co.)
D
ata center location searches begin with a seemingly endless list of requirements. By the time one rules out all areas with any chance of flood, hurricane, tornado, ice storm, wildfire, earthquake, or lightning — and rules out all areas near a rail line, gas transmission line, oil pipeline, airport, or nuclear generation site — there’s not much left — and this is before factoring in cost and availability of utilities, tax structures, economic development incentives, or the exhaustive design requirements for the building itself, whether new or existing, In other words, there is no perfect data center location. Acknowledging this at the outset allows the site selection team, including those internal to the company as well as their external advisors, to focus on determining which characteristics are preferred versus required, which flaws are fatal, and which can be mitigated at a reasonable cost. Budget, infrastructure availability, design requirements, and disaster risks demand compromises on every data center site search. However, where to make those compromises is a decision that is unique to each project and driven by the business objective of the facility (disaster recovery, financial trading, records storage, cloud applications, multitenant, etc.) and the individual preferences of the company, its CIO/CTO, and other team members.
The Need for Due Diligence The need for due diligence, however, does not vary. Data center operations are highly risk-averse — it’s not possible to overemphasize this point. If there is one thing less tolerable than a known risk associated with a site, it’s the presence of an unknown risk. Mission-critical facility operators are rigorous in their review of potential locations. Partners who understand the unique business structures, infrastructure requirements, and operating standards that drive mission-critical facilities, and who thus can effectively facilitate the due diligence process, are highly valued. This has led some utilities, developers, and economic developers to establish programs to proactively identify potential data center sites and have them vetted by an independent firm. The location selection process and accompanying due diligence won’t result in a perfect data center location, but they will lead the company to the optimal location for the project. Additionally, any compromising on site criteria will have been done deliberately (rather than unintentionally), allowing the company to consider options for offsetting any less-than-optimal attributes, such as mitigating weak power redundancy infrastructure with enhanced back-up generation capabilities and utilizing economic development incentives to compensate for the additional cost.
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Power, Speed, Uptime, and Talent Are Required Many factors affect the selection of a data center location, but utility infrastructure, uptime, talent, and speed are always the focal points.
Utility Infrastructure Few people are unaware of the large electric loads (usage) of data centers. Naturally, due to the amount
of power they need, data centers are very price-sensitive to a location’s cost of electricity. The cost is more than centers per kWh, though. Data centers have unique ramp-up needs and reserved capacity demands. The utility’s ability to accommodate these requirements can have a significant impact on cost. Likewise, the mission-critical aspect of the data center, requiring it to be online at all
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times, drives rigorous power redundancy and reliability requirements. The utility’s “cost-to-serve” and revenue credit policies must be factored into the overall cost of providing the requisite power. •• New Trend: Increased power requirements — Whereas previously, data centers may have only required 100W or 150W per square foot, many of today’s data centers must have between 200W and 300W per square foot. This presents problems for many existing facilities looking for new users, as the power distribution to and through the building was typically built for lower power densities. Data centers also require robust fiber infrastructure. The speed at which data can be transferred to other locations (referred to as “latency”) is critical. Data centers also require redundant fiber routes to the facility and have a strong preference for multiple providers. •• New Trend: Microwave technology — Microwave and millimeter wave technology are being deployed to move data faster, offering point-to-point transmission of data and avoiding the traffic and limitations of having to follow existing fiber routes. Financial exchanges, in particular, have been early adopters of these technologies. Microwave technology is allowing companies to consider locations once thought too distant or too remote for a data center. The computer servers in the data center generate an immense amount of heat, driving the need for powerful cooling systems to prevent the computing equipment from overheating. Many (but not all) data centers use water-based technology for the cooling system, making a plentiful and cost-effective water supply an important location consideration. Increasingly, data center operators are utilizing outside air (“free cooling”) to cool the equipment, resulting in a focus on locations in cooler climates.
Uptime Data centers are expected to be “up” and running at all times. No service interruption of any kind is tolerable, so data centers are extremely risk-averse. A thorough review of the potential for natural or man-made disasters will be an integral component of any data cen-
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ter site selection process. The need to be constantly online is also reflected in the redundancy requirements of the utility infrastructure and the ability of staff and vendors to be able to reach the data center at all times.
People True, data center operations don’t focus as heavily as other industries on the availability of labor when choosing a new location. That should not, however, be interpreted to mean that IT talent isn’t a critical component in the facility’s success. Historically, most companies have made the assumption, and reasonably so, that due to the low headcount required to run the facility, they would be able to either locate the needed talent in the local market or relocate a few people to the chosen location. •• New Trend: Need for IT talent — Increasingly organizations are collocating more staff with the physical data center. Companies providing Internet, cloud computing, or related services are locating sales staff at “customer experience centers” at the data center to showcase the company’s technological capabilities. Collocation facilities are providing office space for their customers’ IT staff and vendors. These trends, combined with today’s shortage of certain IT skill sets, is causing data center operators to place greater emphasis on labor considerations when siting a data center. This includes analyzing the availability of IT talent in the local market, as well as paying more attention to the attractiveness of the location and the building itself in order to attract top IT talent to work at the facility.
Tracey Hyatt Bosman, Managing Director and Midwest Practice Leader of BLS & Co. (www.blsstrategies.com), develops and executes incentives and location selection strategies for BLS’ corporate and institutional clients. She has 20 years of professional experience across a wide range of sectors, including data centers, manufacturing, headquarters, back office and contact center operations, and logistics.
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Speed •• New Trend: Compressed Timeframe — As with many corporate projects in the current economy, it is frequently difficult to obtain internal approval to improve or acquire new real estate assets until and unless the need is urgent and critical. This hesitancy results in drastically compressed timeframes. Companies simply cannot wait while a utility or economic development organization looks for a site that, even if found, hasn’t been vetted. They want fast answers and a high level of confidence that there won’t be any deal-crashing surprises during the due diligence phase. AREA DEVELOPMENT | Q3/Summer 2013
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INDUSTRY REPORT
Technology Trends: Regionalization of the Supply Chain Technology companies are bringing product manufacturing and assembly closer to the customer and — more importantly — to R&D. By Steve Stackhouse
T
he pace of technology innovation seems to grow continuously, as high-tech products get ever-more powerful yet increasingly affordable. And in recent years, it has been getting ever-more difficult to find tech products made somewhere near home — if your home is not in Asia, that is. In that respect, times certainly changed over the past few decades. Now, it seems, times are starting to change back. Consider the announcement from Apple last December. As one of the world’s most admired tech companies, Apple turned heads when it pledged to begin making some of its Mac computers in the United States, and said it would pump $100 million into the effort. It’s a relatively small splash, considering the fact that Macs are far from the biggest part of Apple’s business these days, but the symbolism was powerful. Greg Matter, vice president at Jones Lang LaSalle, who advises technology firms on their real estate needs, also points to the example of Motorola Mobility. The company announced in May that it would make its Moto X smartphone in Texas, creating some 2,000 jobs. “That’s something that 12 years ago you would never have seen,” he comments. And a smartphone assembled in the United States? Unheard of, until now, despite the fact that the U.S. is one of the world’s biggest smartphone markets. Indeed, a May 2013 report from Jones Lang LaSalle called “Perspectives on Technology
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Manufacturing” proclaims “American high-tech manufacturing is on the rebound.” A slow rebound, to be sure, with a growth rate averaging just 0.7 percent over the next five years, but any growth is a big deal, considering what’s been happening during the past decade or two.
Shuffling the Supply Chain Does that mean technology companies will be shutting down big facilities in lower-cost countries and bringing all their business to America? Not necessarily. “What we’re seeing is a FOR FREE SITE INFORMATION, CALL
regionalization of the technology supply chain,” Matter says. “It’s not necessarily re-shoring of the supply chain, but right-shoring. That entails having production in close proximity to consumers.” “It’s less about companies leaving China and Asia; it’s that the markets continue to evolve,” agrees Raj Vohra, manager in Deloitte Consulting’s Real Estate and Location Strategy practice. Tech companies, he says, “have an infrastructure set up throughout the world. How can they refine it to better serve the markets they’re in?”
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That means some of the production in China, for example, will serve China itself and other Asian markets, and more of the work in Brazil will be destined for nearby locations. Facilities in Central and Eastern Europe will potentially serve that region in this kind of supply chain, and North America might be served by an increasing amount of manufacturing in Mexico — and the United States. If you’re feeling a bit of déjà vu, you’re not alone. “If you look at the historical transition of global supply chains, we’re looking more like we did in 1950 than we did in 2000,” Matter observes. Not the same, by any means, but increasingly similar. There are a number of reasons for this noteworthy shift. A significant factor is the cost differential — it has been shrinking, thanks to rapid wage inflation in China. Back in 2000, U.S. labor costs were 23 times what they were in China, according to Jones Lang LaSalle, but they’re now just eight times higher and the narrowing continues. At the height of the migration of technology manufacturing toward China, wages there were about 60 cents an hour, but they’re now $3 or even $6 an hour in some places. “Labor rates along the coast of China have reached closer to parity with labor costs in some other parts of the world,” says Clarence Chen, principal at PricewaterhouseCoopers. “China isn’t the default simple answer anymore. In the grand scheme of things, things aren’t that clear anymore.” It doesn’t help that transportation costs are skyrocketing. According to Jones Lang LaSalle’s report, back in 2005, Chinese-produced parts arrived at U.S. ports costing 22 percent less than comparable parts made in America. By 2008, that gap had closed to less than 6 percent — but even that’s just part of the story.
are looking at having their R&D closer to their production lines and pilot lines,” Matter observes. Indeed, a November 2012 report titled “Manufacturing the Future: The Next Era of Global Growth and Innovation” — from the McKinsey Global Institute and McKinsey Operations Practice — found that industries with simple processes and fairly low-intensity R&D can separate production from development fairly easily. However, “the complexity of the production process and the degree of innovation required in the industry dictate strong links between R&D and production,” the report states. That doesn’t necessarily mean all production needs to take place near R&D. McKinsey notes that many companies have established a “lead factory” model, so that process development can happen in the same vicinity as product development. Once production processes are perfected, they can then be spread to manufacturing
operations around the world, closer to the end markets and in keeping with the regionalization model. Bringing manufacturing closer to R&D is causing some counterintuitive things to happen, according to Matter. “Silicon Valley has seen a resurgence of technology manufacturing, and this is contrary to people’s belief system of where manufacturing will land because it has such a high cost of operation.” But the idea can work both ways. “I think another trend is reverse innovation, and that’s not helpful for North America,” Vohra says. The traditional model, he observes, has involved conducting R&D in the company’s established big market in North America or Europe, then pushing the product out to the world. “But a lot of companies are [developing products] in the local market to meet the local market’s characteristics,” he explains. In this situation, a locally developed product can then go global. One company,
Manufacturing Near Development As tech products get increasingly complex, it becomes more important that production not be so far away from R&D — or, that at least some production takes place closer to where the product was developed. “Firms AREA DEVELOPMENT | Q3/Summer 2013
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Vohra says, was having trouble selling its x-ray equipment in China. “They locally developed a smaller portable machine to serve that market better, and that product has gotten a lot of global traction as well.” “One thing has become very clear,” says Alex Blanter, principal at PricewaterhouseCoopers. “Deciding where to locate an R&D facility is more complex than it was five or 10 years ago. The last several years, as in manufacturing, the cost comparison has shifted, not just because of direct costs but training.” Vohra says the traditional U.S. hot spots for technology R&D will continue to be strong. That, of course, includes Silicon Valley and the Boston area, and Austin also is a strong contender, he says. “These have critical mass and have had good success,” according to Vohra, who also cites Atlanta as being on the move. The Jones Lang LaSalle report notes, “When a strong supply of college-trained workers is critical to a company’s success, nobody provides more than the U.S. This American intellectual capital advantage makes it easier to develop pro-
“ COMPANIES It’s less about
LEAVING
China and Asia;
totypes and test models of products here.” Though the United States has just 5 percent of the world’s population, it has a third of the high-tech researchers, who together perform 40 percent of the world’s R&D, the report states, citing economist Richard Freeman.
Factors to Consider
The volume of American R&D is a real key to future technology prosperity, according to Dr. William Harris, the president and CEO of Science Foundation Arizona, who formerly helped appropriate federal grants through the U.S. National Science Foundation. In his view, it’s not so much that technology manufacturing is returning to the United States. “However, the next generation of high value-added production and manufacturing will develop here,” he says. “Intellectual property issues trump any labor cost savings, and as technology development costs increase as a share of total product cost, the benefits of remote, low-labor-cost production diminish.” Labor quality will increasingly become more important than labor cost, according to Matter. The challenge, adds Harris, is providing that quality labor. “The quality of the available work force is driven by quality of the K-12 education and community college systems, especially in the STEM disciplines,” he says, referring to science, technology, engineering, and mathematics. That’s why training incentives can be a vital factor in a location decision, according to Matter. So can such considerations as taxes. “The factor of sales and use taxes is something people are definitely focusing on because of the capital investment required to develop these facilities,” he says. “Many are very automated and require significant capital investment.” “It is important for states to be truly business-friendly,” Harris says, “Excessive or unreasonable business regulations are poisonous to establishing new manufacturing operations.” On the other hand, “increasingly, successful states are going to establish independent entities that can help build successful university-industry research partnerships, particularly in the engineering and computer science areas,” Harris explains. An example is his organization, Science Foundation Arizona, which connects industry with university research and focuses on helping the state’s education system build the kind of work force required to succeed in the future. “All locations will offer state and location incentives in support of a new manufacturing operation,” the Jones Lang LaSalle report notes, “and in today’s competitive climate, areas newer to high-tech manufacturing often offer the best package of incentives that can include tax concessions, economic grants, reimbursements, and training partnerships through local institutions.”
it’s that the
markets continue to evolve.
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LOGISTICS/DISTRIBUTION
The New Location Mantra: “Logistics, Labor, and Love” A simple five-step analytic process will allow you to align your corporate real estate and organizational goals and provide a consistent roadmap to a successful location outcome. By Tim Feemster, Managing Principal, Foremost Quality Logistics Inc.; and Joseph Tillman, Senior Researcher, Supply Chain Visions
Consider a recent case of a real estate VP who was chided in her performance review because she didn’t go with the lower rent rate of $2 per square foot. The 750,000-square-foot facility she chose was a buck more per square foot or $3. On the surface it appears she just cost the organization $750,000 annually, but by understanding the new site selection mantra of “logistics, labor, and love,” she may have just made an exceptional deal.
Logistics, Labor, and Love
F
ashion trends and site selection are similar — what’s hot this year may not be in vogue the next — and definitely not in the next five years. For many organizations, corporate real estate philosophy hasn’t evolved much. They’re still following the old mantra of “location, location, location.” However, more progressive companies are beginning to change their corporate real estate philosophy to catch up to the 21st century idea of “logistics, labor, and love.” They are bringing logistics and real estate under one roof, and building an organizational consensus on strategy that aligns the goals and objectives of both groups. While many organizations like to showcase their collaborative spirit, we’ve found many continue to operate with silos. The functional areas of an organization are hardly aligned to the overall goals or with the other functional areas. Part of this stems from the fact these functions don’t sell, produce, or operate anything — they are simply overhead. In addition, many organizational goals revolve around sales growth and profits within certain customer service criteria. It’s this gray area of “within certain customer service criteria” that causes misaligned goals between the functional areas. For instance, corporate real estate is typically charged with managing all real estate tasks for the organization. Essentially the corporate real estate team negotiates leases, finds properties, buys land and/or buildings, etc. Its overall performance is assessed by its ability to get tax and labor incentives, low rent, and low prices, inevitably leading it to pick the lowest-cost provider. While these intentions are noble, they are not necessarily in step with the overall goals of the organization and with other functional areas.
This new mantra of “logistics, labor, and love,” for industrial and manufacturing site selection, puts the shift in corporate real estate philosophy into focus. The logistics function has the responsibility to deliver the organization’s products at the lowest total cost within “certain customer service criteria.” Therefore, the big drivers in choosing any site for warehouses and distribution centers (DCs) are transportation and labor costs. According to the latest “State of Logistics Report” from the Council of Supply Chain Management Professionals, transportation costs are 62.8 percent of total logistics cost. Labor and customer service costs totaled an additional 5.9 percent, and rent is only 3.9 percent. Rent is only a very small piece of a DC's “total” cost. Figure 1 provides a breakdown of all costs for a DC or warehouse. Understanding and finding ways to mitigate transportation and labor costs should be the focus. The facility at $2 per square foot was located in an area with AREA DEVELOPMENT | Q3/Summer 2013
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Figure 1
Breakdown of Distribution Center Costs 70%
62.76%
P e rc e n t of Log i s ti cs C os t
60% 50% 40% 30%
22.90%
20%
5.86%
10%
3.90%
3.83%
0%
Transportation
Inventory
Warehouse Labor est.
0.75%
Warehouse Administration Fixed est.
Cost Category
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Other
no easy direct access to a major highway interchange and a long way away from a critical intermodal ramp. The annual transportation cost differential for the $2 site was over $4.5 million per year. Be careful of local governments and developers who may sing a siren song to beguile you to invest in their community. When you ignore logistics and labor costs and base your site selection decisions on local governmental “love� and/or incentives alone, you may incur higher costs in later years. Love is an important criterion in the site selection process, but the financial implications of free land, tax abatements, and other incentives should be among the last criteria considered in order to achieve a total cost analysis.
Five Steps to the Right Site There is no simple formula for choosing the right site. Many companies leave money on the table because they jump too fast to the end of the process. We have outlined a five-step
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“
process that will maximize the benefit to your organization, while minimizing the risks of making a mistake around this deceptively complex and critical decision. It will ultimately help you align your corporate real estate goals to the overall corporate goals.
It’s a good idea to have a backup site in case you cannot come to terms with a specific landlord or owner.
STEP 1: Strategic Context and Criteria Development First, create a strategy for the site selection process designed to support your business strategy and run the site location mathematical model to project supply chain costs. Next, assemble the
ABC Co. MSA Screening Scenario A
Figure 2
Labor Market Traits
Weighting
team, articulate your basic requirements, and develop preliminary cost profiles to determine the relative importance of such factors as labor quality, logistics and operating costs, quality of life, and quality of operating environment. Time to complete this step will be dependent on available cost data and the length of time to run the site location analysis. Multiple iterations of the “model” are common due to the tweaking of the input data elements. While this step is being completed, you can start step two and run it in parallel with the data gathering.
Accessibility
Labor Cost
Bilingual Work Force
Operating Regulatory Cost Environment Structure
Quality of Life
10.00%
5.00%
5.00%
15.00% 25.00% 7.00% 15.00% 8.00% 10.00%
Labor Availability Score
Labor Quality Score
Airport Score
Road Access Score
Score
Score
Score
Score
Score
Overall Weighted Average
1. Baltimore
5.0
1.0
7.0
7.0
7.0
5.0
5.0
3.0
1.0
5.14
2. St. Louis
5.0
1.0
7.0
7.0
5.0
5.0
5.0
5.0
3.0
5.10
3. Louisville
7.0
5.0
3.0
5.0
7.0
5.0
3.0
5.0
3.0
5.10
4. Indianapolis
7.0
3.0
5.0
7.0
5.0
5.0
3.0
5.0
3.0
4.90
5. Cincinnati
3.0
3.0
7.0
5.0
7.0
5.0
3.0
5.0
3.0
4.80
6. Lexington
7.0
5.0
3.0
3.0
7.0
5.0
1.0
5.0
5.0
4.70
7. Kansas City
5.0
3.0
5.0
5.0
5.0
5.0
5.0
5.0
3.0
4.70
8. Charleston, WV
7.0
1.0
1.0
5.0
7.0
5.0
1.0
5.0
5.0
4.70
9. Richmond-Petersburg
5.0
1.0
3.0
5.0
7.0
3.0
3.0
5.0
3.0
4.56
10. Philadelphia
5.0
3.0
7.0
3.0
7.0
1.0
5.0
5.0
1.0
4.52
11. Columbus, OH
3.0
3.0
5.0
3.0
7.0
3.0
3.0
7.0
3.0
4.42
12. Nashville
7.0
5.0
5.0
5.0
3.0
5.0
3.0
5.0
5.0
4.40
13. Norfolk, VA
5.0
1.0
3.0
1.0
7.0
5.0
5.0
7.0
1.0
4.36
14. Jackson, MS
7.0
5.0
3.0
3.0
3.0
7.0
3.0
5.0
7.0
4.34
15. Dallas
5.0
1.0
7.0
7.0
3.0
5.0
7.0
5.0
1.0
4.30
16. Washington, D.C.
1.0
N/A
7.0
3.0
7.0
1.0
3.0
5.0
1.0
4.27
17. Birmingham
5.0
5.0
3.0
5.0
3.0
5.0
3.0
7.0
5.0
4.26
18. Oklahoma City
5.0
5.0
5.0
5.0
3.0
7.0
3.0
3.0
5.0
4.18
19. Biloxi
5.0
5.0
5.0
1.0
3.0
5.0
3.0
7.0
7.0
4.16
20. Shreveport
7.0
5.0
3.0
3.0
3.0
5.0
5.0
5.0
7.0
4.10
Rank Metropolitan Area
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Step 2: Initial Screening Make an initial screening of locations that meet your requirements. Rate communities in a specific geographic area on each key requirement on a scale from 1 to 10: labor attributes, cost structure, operating environment, access to infrastructure, etc. List the top four or five candidates and analyze their benefits based on such variables as number of overall and average distances to customers and expected delivery time. Use the results of this step and Step 1 to narrow the list of possible locations. See Figure 2 for an example initial screening chart.
Qualitative Cost Matrix
Figure 3 $5.0 million
Step 3: Location Assessment and Process Planning
• City 1
$5.5 million $6.0 million
• City 2
$6.5 million
• City 7 • City 4
$7.0 million
• City 5
• City 6
$7.5 million $8.0 million $8.5 million
• City 3
$9.0 million
1.00
2.00
Low
3.00
4.00
5.00
6.00
Qualitative Factors
7.00
Create a qualitative-cost matrix for each location on your list, showing the trade-offs. If, for example, the matrix shows “city 4” rates 20 percent lower for quality (of labor force, operating environment, etc.) than “city 5,” but that “city 5” costs 10 percent more, you now have a clear idea of the tradeoffs between the two cities. You use this matrix to create a shorter list of locations. See Figure 3 for an example of a qualitative-cost matrix.
Step 4: Field Visits
Conduct field visits to the remaining locations on your list. Assess them for potential site-building operations, High incentive possibilities, a deep dive into the labor market, and logistics infrastructure and costs. This is the first time you should be in contact with the local economic development offices. Distribute requests for proposals and analyze the proposals you receive.
8.00
9.00
Step 5: Negotiation and Selection Prioritize and finalize the negotiation process relative to the final two or three locations. After the final incentive packages are presented, the team meets to make the final choice based on all the components — logistics cost, qualitative elements, and economic incentives. While the negotiation is being done with the economic development representatives, you are also negotiating with landlords for leases and/or purchase of a site. In addition, develop a letter of intent to give to the two or three finalist sites. It’s a good idea to have a backup site in case you cannot come to terms with a specific landlord or owner. Once you have your lease/construction costs in hand, you go back to the winning economic development group to sign up for your incentives.
A Consistent Roadmap This five-step process should take your company from defining for itself the key business success attributes, through translation to location attributes, and the vetting of potential markets and locations against these to yield an optimal place and site to do business. Attributes and their weightings vary across business types, but the repeatable analytic process will provide a consistent roadmap and discipline to ensure a successful outcome. Don’t forget “logistics, labor, and love” as the key strategy and process for industrial/manufacturing site selection.
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The ABCs Of “Greening” the Warehouse Facility Determining the warehouse facility’s carbon footprint — and then reducing it as much as possible — can put your company on the road to environmental sustainability. By Rajiv Saxena, Vice President, Global Supply Chain Engineering, APL Logistics
I
f businesses’ energy consumption stories were best-selling mysteries, it wouldn’t be difficult to figure out “whodunit,” because the terms “supply chain” and “carbon footprint” often seem to be synonymous. In fact, according to some estimates, transportation and logistics may account for up to 75 percent of most companies’ carbon emissions. While it’s true that supply chains will always involve higher-than-average energy demands, that doesn’t mean your company can’t find multiple ways to “green” its logistics from end to end. And one good place to start is with your warehouses — or, more specifically, your warehouses’ carbon footprints.
What Goes Into a Warehouse Carbon Footprint Calculation? To some people, the concept of a carbon footprint calculation requires no introduction. Simply put, it’s a way to measure the impact that a particular function, facility, or activity has on the environment so that a company, department, or individual can make better, more sustainable decisions. In the case of warehouses, some of the key ingredients besides square footage, headcount, and total hours of operation include: E-grid emissions: Here in the United States, all men may have been created equal — but all megawatt hours are not. Each of the 26 sub-regions within our country’s three power grids emits a different level of carbon dioxide — ranging from a high of more than 2,000 pounds per megawatt hour in Pennsylvania to a low of just over 819 pounds per megawatt hour in New York State. As a result, an electrical appliance or forklift operating at a facility in one area of the country is going to account for a considerably different level of greenhouse gas than that same appliance or forklift operating in another area.
Material-handling equipment: It’s not just about how many pieces of industrial equipment a facility uses. It’s also about whether those piece of equipment are forklift or pallet jacks; how they’re powered (propane or electricity); where they’re operated (in some e-grid sub-regions, propane and electric power sources are roughly equal, and in others, i.e., the higher power grid regions, propane is going to have the lower level of carbon emissions); and whether they’re sit-down or stand-up (the latter is generally more energy-efficient). Each piece of equipment’s wattage or gallons per mile/gallons per hour, whichever is applicable, is another important consideration. Warehouse, office, and miscellaneous equipment: Plugging in key data about heat-shrink machines, conveyors, layer-picking devices, or other machines that might be in use on a warehouse floor may be the most important aspect of this particular category. However, it’s important not to forget that even small pieces of equipment operating in other areas of a facility, such as breakroom refrigerators and microwaves or office computers and printers, are carbon footprint contributors, too, even if they are fairly negligible ones. Heating, cooling, and insulation: A simple assessment of a facility’s heating and cooling systems and their energy-efficiency ratings is merely the tip of the iceberg. A thorough assessment also must examine how many exposures a facility has to the outer environment — windows, truck doors, doors for personnel to travel in and out of — as well as what kinds of materials were used for a facility’s walls (and how thick they are), what types of roofing shingles have been used (and AREA DEVELOPMENT | Q3/Summer 2013
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what their R factor is), and how many days per year each system is in use. Lighting: In addition to tallying the number and wattage of fixtures used, companies also must distinguish between the type of lighting used — metal halide or fluorescent/incandescent (which is considerably more energy-efficient) — and factor in things like the hours these lights are used, and whether or not energy-saving devices like auto-sensors are in place. The importance of this particular category cannot be stressed enough, because it usually is the single largest contributor to a warehouse’s carbon footprint. Waste: Unless a warehouse is actively participating in a recycling program, it could be sending tons of plastic, cardboard, and other waste to landfills each year — as much as one pound per 100 square feet of warehouse, according to The Rosenthal Group, a waste and recycling management firm — with an equally dramatic impact on the environment. Thus, it’s
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Unless it’s participating in a recycling program, a warehouse could be sending tons of waste to landfills each year. essential to record and capture what type of trash compactor a company is using (including the type and compaction ratio), the size of dumpsters it’s using in tons, and the frequency of how often its trash is collected. Real-world, reliable references: When it comes to assigning the proper values or ratings to all of the aforementioned things, there are several highly helpful primary and secondary sources available. Some — including
Midlothian, Texas continues to prove to be an ideal location for distribution, warehousing and logistics facilities. Already home to distribution facilities for some of the largest U.S. retailers, our location on the southern end of the DFW Metroplex means: t Fast Access To Four Interstates t Central U.S. Location t Large, Skilled Workforce Available Come visit us and discover how your next move can be the start of something great. 310 North 9th Street, Suite A, Midlothian, Texas 76065 t 972-723-3800
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the Environmental Protection Agency, Department of Energy, National Institute of Standards and Technology, and National Oceanographic Data Center — are government agencies. Others, such as LEED and Energy Star, are private or government initiatives. Plus, there are many academic organizations, e.g., Utah State University’s Climate Center, and private companies that specialize in things like lighting design, roofing and climate control, etc. — specialties that could enable companies to drill down into certain areas of their calculations more quickly or thoroughly.
How Can a Warehouse Carbon Footprint Calculation Be Used? By now, it should be clear that warehouse carbon footprint calculations are multifaceted, many-layered processes, ones that are usually best undertaken with the help of sophisticated algorithms. Their potential applications and benefits are just as diverse — and as relevant for companies that are locked into longtime leasing agreements or purchases as they are for those that are in a state of facility-related expansion or transition. Among other things, they can be used to: • Compare the environmental merits of one facility versus another; • Choose the most sustainable structural attributes for a facility during construction or renovation; • Evaluate different kinds of materialhandling equipment with sustainability in mind; and • Select the most environmentally friendly heating and cooling solutions. They also can be used to gain important sustainability insights such as: • Figuring out which facilities in a company’s network have the largest carbon footprints and therefore are most in need of “greening”; • Identifying which areas within a particular facility are the most — or least — sustainable; and • Determining how many carbon offsets should be purchased for a particular facility. Just as important, they could be used for all of the above. The key thing is to actually use them because whether a warehouse’s carbon footprint figure winds up being far larger or smaller
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than initially expected, one thing is certain: In order to be considered part of the sustainability solution instead of the sustainability problem, the calculations should be regarded as a springboard, not just considered a fait accompli. In other words, even warehouses that are green enough to earn Energy Star ratings or LEED certifications will usually have plenty of room for environmentally friendly improvement. For example, since doing carbon footprint calculations at 35 of our facilities in North America, APL Logistics has reconfirmed the environmental value of investing in lighting conversion initiatives wherever we can — especially now that we know that metal halide lighting has a carbon footprint that is nearly three times greater than that of fluorescent lighting. More of our facilities also have launched more ambitious recycling programs, including some that feature partnerships with polymer companies that will come and pick up all of those facilities’ baled plastic waste and use it to make new products. And several of our facilities in the North have reconfirmed the importance of using roofing materials with higher R factors or greater insulation in order to ward off heat loss. Just as impor-
Warehouses are not the only places in supply chains where opportunities for sustainable improvement abound.
tant, we’ve now made doing at least one green project per year a required component of our ongoing Lean Six Sigma and JDI programs.
The Last (Green) Word
Obviously warehouses are not the only places in supply chains where opportunities for sustainable improvement abound. From conducting better transportation optimizations to implementing more fuel-efficient mode shifts, there are numerous ways companies can reduce the environmental impact of their logistics — and many reasons why they should. However, it is something that you as real estate and site selection professionals are especially qualified to advocate and oversee, not to mention an important step in the right direction. Realistically speaking, logistics may always have one of the world’s larger carbon footprints, because you can’t get products from point A to B without some form of transportation and (usually) at least some degree of warehousing. However, with a little work and a lot of cooperation from all involved, there’s no reason why logistics can’t tread a little more softly.
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Special Investment Report The Great Seal of the state of Ohio depicts a
OH Special Investment Report
OHI
rising sun over Mount Logan in southern Ohio’s Ross County — a new day. Ohio Secretary of State William Creighton, Jr. first sketched the scene in 1803 as this territory west of the Alleghenies turned into the country's 17th state. The symbolism is as apt today as it was then, as the nation’s eighth-largest economy aligns itself to the demands of the 21st century.
Special Investment Report
OHIO: A NEW
DAY Special Investment Report
O By
Dave Claborn
Sixty percent of the U.S. and Canadian population lies within a day’s drive, making Ohio an ideal location for manufacturing — machinery, automobiles, plastics, appliances, and steel, among others. It has been that heavy reliance on manufacturing that is both Ohio’s strength and, at times, its Achilles heel. Because of Ohio’s manufacturing concentration, “We are known as a pro-cyclical state,” explains Dr. Richard Vedder, an Ohio University economist specializing in U.S. economic history. “In periods of upswing, Ohio is, historically, prone to move a little faster than the national average.” On the other hand, “when we have a recession, we’re really clobbered.”
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So, it was no surprise that between January 2007 and January 2009, Ohio’s gross domestic product dropped from $467 billion to under $452 billion, a loss of 3.4 percent in two years. But since then, Ohio’s recovery has outpaced national growth rates (Ohio, 13 percent; the U.S., 8 percent) with GDP close to $510 billion by January 2012 (Economic Analysis, Federal Reserve Bank of St. Louis, http://research.stlouisfed.org/fred2/series/OHNGSP). Despite the steep losses from the Great Recession, manufacturing remains a mainstay of the Ohio economy, accounting for 16.7 percent of the state’s GDP. “The fact is, if Ohio stops being a manufacturing state, we’re going to become a bankrupt state,” notes Dr. Edward W. (Ned) Hill, dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University. “It’s what we do,” says Hill. “It’s what our competitive advantage is. But realize that being a manufacturing state is a very different set of skills and opportunities than it was 10 years ago.”
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ADVANCED MANUFACTURING Bronson Jones, VP & general manager of Banner Metals Group in Columbus, couldn’t agree more. What started as a tool and die shop in 1921 is thriving today as an example of Ohio’s robust advanced manufacturing capabilities. Banner makes metal parts for diverse industries ranging from construction and lawn care to aircraft brakes, with Boeing and Airbus as major customers. The company employs 52 in a 72,000-squarefoot building tucked into the rapidly gentrifying Grandview suburb. To stay competitive, Banner recently added three robotic weld cells to its lineup of large presses, CNC, and stamping machines. Banner is a member of the Edison Welding Institute (EWI) located just a few blocks away. EWI is the largest engineering and technology organization in North America dedicated to materials joining. In 2012, Banner teamed with EWI to use simulation to
develop thick material applications and improve its welding operations. In March of this year, the company accepted EWI’s Edison Center Innovation Award at Ohio’s Advanced Manufacturing Luncheon. “Manufacturing is much more automated, much more sophisticated,” says Jones. “The safety requirements are top-notch.” The Banner Metals general manager says it is time to dispel old perceptions about manufacturing. “It’s not dirty. It’s a clean, airconditioned environment. Companies that have stayed up with the times and kept current — they’re the ones that are doing well.” To stay current, Jones has taken advantage of Ohio’s Incumbent Workforce Training Program that pays half the cost for existing employees to upgrade their skills. Banner is sending several employees to robotic and CNC training utilizing state grants. Statewide, the first $20 million was spoken for the first day the grants were available. The Ohio Development Services Agency (DSA) is offering another $30 million this year. “It’s a huge investment in our existing work force,” says DSA Director David Goodman. Banner’s success has been a case study in the judicious use of state programs. The training grants and low-interest loans the company received for technology purchases have helped Banner win growing aerospace business. Sales have increased 75 percent in the last three years, according to Jones. Banner is just one of the state’s metals companies that keep Ohio ranked first in ferroalloy output (59.4 percent of U.S. production) and products made from purchased steel such as pipes, tubes, and stampings and assemblies. But metals and advanced manufacturing are just one piece of a complex web that is Ohio’s economy, says Cleveland State’s Professor Hill. “Ohio is very much a ‘portfolio’ economy. It’s not one-size-fits-all because we’re so big and so diverse as a state. The things that work well for Columbus or well for Cleveland aren’t going to work well for Marion or Dayton.”
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Ohioans built 1.4 million light trucks and cars in six assembly plants during 2012. The number looks
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WHERE COMPANIES THRIVE Join Ohio’s remarkable concentration of successful companies which benefit from a: • Competitive tax environment that includes no tax on business income, inventory, and investments in equipment • Common sense regulatory approach to business, providing predictability • Enhanced productivity with a skilled workforce of nearly six million Ohioans • Flexible, responsive, and innovative economic development team with relationship-focused industry experts Come thrive in Ohio. Contact JobsOhio today. Jobs-Ohio.com | 614.224.6446 | @WhyOhio on Twitter
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to increase significantly in 2013. Honda, GM, Chrysler, and Ford account for the 13 models produced in the state. Over 85,000 Ohioans are employed making vehicles or parts for them. Honda, alone, accounts for 16 percent of Ohio’s automotive work force — 13,500 people are employed making Accords, Civics, and CRVs — not to mention thousands more making fuel tanks, seats, brake assemblies, and the other parts required in a modern automobile. Fifty-seven of Ohio’s 88 counties claim at least one Honda supplier plant. Ohio is ranked second nationally in Tier 1 automotive suppliers. Ohio’s automotive industry is supported by robust research and development. In fact, the new Accura NSX super car was designed entirely at Honda’s R&D facilities near Marysville, Ohio. It will be produced in a new $70 million assembly plant nearby. Nearly every U.S. carmaker utilizes the unique 7.5mile oval in Union County, northwest of Columbus, that is the Ohio Transportation Research Center. In a public-private partnership, the state of Ohio and Honda earlier this year completed a $16 million repaving project, allowing for test speeds of up to 200 miles per hour. Down the road, in the center of Columbus, Ohio State University’s Center for Automotive Research is breaking new ground, producing the “Buckeye Bullet,” the world’s fastest electric-powered land vehicle with a top speed of nearly 315 miles per hour. The Buckeye Bullet project is led by Dr. Giorgio Rizzoni and is a joint effort with Monaco’s Venturi Automobiles. The team of Ohio State engineering students hopes improvements in design and power components will send the new Buckeye Bullet 3 beyond the 400 mph mark on the Bonneville Salt Flats in September 2013.
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about the business of “slipping the surly bonds of earth” ever since — among them, astronauts John Glenn and Neil Armstrong. Over 100,000 Ohioans are employed in the aerospace industry today. They include those building the world’s most sophisticated jet engines in Cincinnati’s GE Aviation plant to the aerospace engineers at the Air Force Research Laboratory housed at Wright-Patterson Air Force Base near Dayton. Six hundred companies spread across the state manufacture aerospace and defense products, many of them supplying Boeing and Airbus, which makes Ohio the top state supplying the two major aircraft manufacturers. Aerospace manufacturing is coupled with research in Ohio. Cleveland’s NASA Glenn Research Center boasts 33 specialized testing facilities, from hypersonic wind tunnels to the 152,000-square-foot engine research plant. Twenty Ohio colleges and universities have aerospace engineering and research programs. Recently, for example, Ohio State University won a $2.5 million award from the Air Force’s Aerospace Systems Directorate to develop computational technologies that will be used in designing what the Air Force calls low-speed, long-endurance, highly maneuverable vehicles as well as hypersonic flight and space vehicles. The Ohio Department of Transportation is leading a teamed effort with Indiana to become one of six test sites across the country for unmanned aircraft. Research would be conducted at a Springfield, Ohio, facility, while drones would be tested in restricted airspace over Indiana. The center, if approved by the FAA, would study how unmanned aircraft as big as airliners to as small as model airplanes can mix with the nation’s air traffic.
ENERGY Ohio has been in the energy business since its founding in 1803, building mills, digging coal, finding ways to shape the raw energy above and below ground into systems that could fuel the agricultural and industrial revolutions of the past — as well as today’s information technology and advanced manufacturing economies. It was Ohioan Thomas
ENERGY: AEROSPACE AND AVIATION
Just over a century ago, from their Dayton bicycle shop, Orville and Wilbur Wright produced the world’s first successful airplane. Ohioans have been
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Find the Right Location for Your Next Business Site, Facility or Headquarters FacilityLocations is a GIS map-driven, online economic development directory used to research potential locations during the business re-location or expansion process.
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Connect A directory with 5000+ listings including: • Local and Regional Economic Development Contacts • Port Authority Contacts • Utility Contacts • Foreign Trade Zone Contacts • Foreign Inward Investment Contacts If you are an economic development agency and want to have an enhanced listing with a location profile on FacilityLocations.com, please contact Dennis Shea at 800.735.2732 x 208 or dshea@areadevelopment.com
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Edison, after all, who pioneered the mass distribution of electricity. Today, that spirit of innovation continues to
thrive throughout Ohio. Quietly, day in and day out, the 159,200 solar panels positioned on 83 acres adjacent to the Wyandot County Airport emit enough electricity, when the sun shines, to power over 9,000 homes. They do it without burning anything or creating a carbon footprint. PSEG Solar Source based in Newark, N.J., owns the 12-megawatt solar farm that began operations in 2010 and sells the power to Columbus-based American Electric Power. The photovoltaic cells were made by First Solar in Perrysburg, Ohio. It was Charles Brush of Cleveland who designed one of the world’s first electricity-generating wind turbines in 1886. Today, 127 years later, hundreds of modern wind turbines spin in Northwest Ohio, generating 426 megawatts of electricity with another thousand megawatts under construction. In Ohio’s eastern and southeastern counties, the oil and gas play in Ohio’s Marcellus and Utica shale deposits is generating income and excitement. In 2012, 625 new wells were drilled, providing 4.85 million barrels of oil and over 73 billion cubic feet of natural gas. The shale play is bringing new wealth to landowners and jobs to many Ohio companies, such as engineering firms and steel tubing manufacturers.
AGRIBUSINESS AND FOOD PROCESSING Campbell’s soup, Bob Evans sausage, Orville Redenbacher popcorn, Smucker’s jam, and Dannon yogurt are just a few of the iconic food products made in Ohio. Food processing is a $9.5 billion industry across the state. With 14.5 million acres in agriculture, it is the combination of that rich farmland coupled with proximity to the eastern U.S. market and a dense web of rail, waterways, and highways that allows agribusiness and food processing to thrive in Ohio. Close to 60,000 Ohioans are employed in the sector. Ohio’s low tax structure makes the state attractive to food processors. The corporate franchise tax has
been eliminated. Under the broader-based commercial activities tax, products shipped outside the state (a significant portion of Ohio food production) aren’t taxed at all. Recent additions to Ohio’s food processing sector include an $88 million, 100-job expansion to Dannon’s yogurt plant in Minster. The company claims it is the largest yogurt manufacturing plant in the world. And, Daisy Brand announced in June that the company’s third sour cream manufacturing plant would be built in the Northeast Ohio town of Wooster. The $116 million, 200,000-square-foot investment creates 89 jobs. The new plant will serve the company’s East Coast markets when it opens in 2015.
INFORMATION TECHNOLOGY Ohio is rich with colleges, both private and public. The 80,000 graduates who emerge from those schools each year are an intelligent and creative work force for Ohio’s growing IT sector. The presence of Ohio State University and the school’s willingness to leverage multiple disciplines into a data analytics curriculum was a key factor in IBM’s recent decision to locate its global data analytics center in Columbus. The tech giant expects to employ 500 in the new center. IBM found a ready customer base for its “Big Data” solutions in companies like Cardinal Health, Limited Brands, and Nationwide Insurance headquartered in Columbus. Ohio-born companies such as CompuServe, LexisNexis, and CheckFree paved the way for IBM’s investment in the state. Collaboration among IT professionals is fostered through local organizations such as Cincinnati Tech, TechColumbus, Global Cleveland, and the Northeast Ohio Software Association. Cleveland State University economist Ned Hill says Northeast Ohio has had a data analytics cluster for many years centered around the insurance companies located in the Cleveland area. “Allstate has a massive data center here, as well as Progressive and a few others,” says Hill.
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BIOMEDICAL
Cleveland, once known mostly as a steel town, is becoming much more diverse. A major catalyst for
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Special Investment Report that is the Cleveland Clinic — Ohio’s second-largest employer (behind Wal-Mart). Richard Vedder, the Ohio University economist, is well aware of the influence of the world-class medical institution. “We all know about the growth of the healthcare industry,” explains Vedder. “That’s something of a national phenomenon, though Ohio has done better than the average state in that. The Cleveland Clinic is rated by U.S. News and World Report as the best medical place in the United States for [its heart program]. You know, when the king of Saudi Arabia needs an operation, he stops in Cleveland. He doesn’t go to New York or London — he goes to Cleveland.” Not surprisingly, the Global Center for Health Innovation is located next to Cleveland’s Convention Center, showcasing the latest in healthcare technology, education, and commerce. South on I-71, biomedical innovation is happening in Columbus as well, particularly in and around Ohio State’s construction of a billion-dollar addition to its medical center. Ohio conducts 17 percent of all U.S. clinical trials, ranking the state first in the Midwest and seventh nationally. One of those trials is generating lots of excitement at Ohio State: thus far, 900 leukemia patients have been tested at Ohio State’s Comprehensive Cancer Center with the drug Ibrutinib. So far, says the center’s Dr. John Byrd, every patient tested has seen his/her leukemia go into remission. “It causes the cells to regress and stop growing,” he notes. The FDA is fast-tracking Ibrutinib for approval based in part on the OSU trials. Ohio’s Third Frontier innovation funding is also a major catalyst to biomedical research and commercialization. At the University of Cincinnati (UC), for example, $5.9 million from Ohio’s Third Frontier Wright Projects Program has established the Ohio Center for Microfluidic Innovation. Microfluidics involve the manipulation of tiny amounts of fluids inside polymer-microchips. Applications include biosensors and medical devices. UC is also home to an Ohio Center of Excellence in Nanoscale Sensor Technology. UC microfluidics and nanoscale research has led to dramatic breakthroughs in the speed and sensitivity of immunoassay diagnos-
tics. Cincinnati-based Siloam Biosciences is commercializing the UC research through a “lab-on-a-chip based Point-of-Care test platform” that it expects will revolutionize bedside diagnostic abilities.
POLYMERS AND CHEMICALS In 1870, when the city fathers of Akron enticed Benjamin Franklin Goodrich to bring his rubber company to their town, the die was cast for Ohio to become a leader in the rubber, polymer, and chemical industries. While tire-making has moved to other locales, its legacy is seen in the 1,300 polymer and chemical firms calling Ohio home and the nearly 90,000 people who work in them. The industry is supported by robust research. The University of Akron’s College of Polymer Science and Polymer Engineering is globally known and ranked among the United States’ top five graduate programs in the field. Battelle Memorial Institute in Columbus, Ohio State’s Center for Advanced Polymer and Composite Engineering, Bowling Green State University’s Center for Photochemical Sciences, and Kent State’s Liquid Crystal Institute are among the research centers developing the next generation of advanced materials.
FINANCIAL SERVICES In reality, it is a small city, perched on the northern edge of Columbus in southern Delaware County. If it had a name, it might be Chaseville. It is 10,000 people who converge daily to form JPMorgan Chase’s back office operations center in what is known as Polaris — a highly successful mixed-use shopping, restaurant, housing, and office complex. Statewide, Chase employs 23,000 — it’s Ohio’s third-largest private-sector employer. The financial services sector is one of Ohio’s largest, employing 173,000 people and adding $34 billion to Ohio’s gross state product. The 230 banks, 350 credit unions, and 250 insurance companies in Ohio make the state one of the most concentrated centers for insurance and financial services in the nation. SPONSORS
TECHNOLOGY: Columbus Region/Columbus2020 www.columbusregion.com • mm@columbusregion.com JobsOhio www.jobs-ohio.com • contact@jobs-ohio.com
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LABOR
Work Force Development Programs Can Make or Break the Deal With scant time and resources for recruiting and training workers, companies are looking at states that will help them to quickly satisfy their labor force needs. By Mark Crawford
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abor is almost always the number-one priority for every major site selection decision. Many consultants start the screening process for their clients by defining work force density within geographic regions — this is especially important for larger projects of 500 employees or more. Once a potential pool of reliable and productive workers is identified, the next major consideration is the ability of the state or region to help recruit and train the work force. “Some companies have strong internal training resources,” says Buzz Canup, founder of Canup and Associates in Greenville, S.C. “However, many businesses are very
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lean today when it comes to designing, developing, and implementing their own training programs and rely on outside assistance.” Most site selection consultants would agree that only a handful of states do an outstanding job at work force training and development. Many of these programs are in the South, including Georgia, Alabama, Louisiana, and North and South Carolina, and serve as models for other states. “These programs work so well because the states individualize training initiatives to meet the needs of companies,” comments Larry Gigerich, managing director for Ginovus in Indianapolis. “The states FOR FREE SITE INFORMATION, CALL
design and deliver the curriculum to new employees, based upon the specific needs of the company. These states also have the ability to provide physical space for training activities, as well as training manuals for use on an ongoing basis. There is also a strong emphasis on meeting the certifications and credentials that companies require for their employees.” Providing state resources to effectively meet a company’s work force training needs is a win/win situation. “Through their business investments in capital, plant operations, business purchases, and employee payrolls, these companies will generate a significant return on investment for the state,” indicates Gary Perilloux, press secretary for Louisiana Economic Development. “For that reason Louisiana developed FastStart®, our turnkey training program, to help companies become more successful, and to help Louisiana become more prosperous.”
The South Leads the Way The South, without question, is the leader in state-run work force development programs. Many of these states provide well-funded, centralized, mobile, and flexible training departments that custom-design materials and programs to meet a company’s needs. This training is typically free of charge to employers that meet state requirements for job creation, and helps offset location or expansion costs.
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Certified Work-Ready States Kentucky launched its Work Ready Communities initiative in 2012. To date, 75 of the state’s 120 counties have joined the program, which was developed by business leaders, education leaders, and economic development experts. Only a few states have begun certifying counties as “work-ready” based on the quality of their labor force. Kentucky has one of the most rigorous certification programs in the nation. Certification requires that counties must meet a two-year commitment that includes gathering local support from education and business leaders as part of the application for a Kentucky Work Ready Community designation. Counties must meet requirements in six areas, including high school graduation rate, National Career Readiness Certificate holders, demonstrated community commitment, educational attainment, soft-skills development, and digital literacy. “When we look at the role work force plays in corporate decision-making, we see a common theme — that a well-trained work force is critical to where companies choose to locate or expand,” says Erik Dunnigan, commissioner for the Kentucky Department for Business Development. “The Kentucky Work Ready Communities certification assures companies that we’ve aligned our education and economic assets to provide the most qualified talent.”
“Other states may try to make the same kind of presentation,” says Canup, “but they don’t have same level of experience or a central training group. Some just work through a technical college and only rely on the capabilities of an individual educational institution. Success varies with this approach. Some colleges do a really good job, but others don’t — it is difficult to maintain statewide consistency with this kind of system.” In 1961 South Carolina became the first state to create a centralized, statesupported work force development group to work with new and existing businesses. The program operates through the South Carolina technical college system. “The South Carolina program has been very successful over the years and was instrumental in developing new industries after the state’s textile industry went overseas,” states Canup. “The program is especially skilled at developing training and operating procedures for advanced manufacturing plants.” Today the program is called readySC™ and provides recruiting, screening, and training for employees that is custom-designed to meet a company’s needs. Since its inception, the program has trained about 270,000 employees for more 2,000 companies.
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Jason Premo, owner of ADEX Machining Technologies in Greenville, first learned about readySC™ from the Greenville Chamber of Commerce and Greenville Technical College. “It’s challenging for small companies like us to work on a lot of the internal development that’s needed because we don’t have the internal resources or budgets that larger companies do,” says Premo. “We’ve been leveraging the resources readySC™ provide for free to train our leadership team and our associates on the factory floor. This has helped us grow and actually create more jobs faster than we would have on our own.” In the late 1060s, Georgia initiated a similar program called Quick Start, which provides free work force training services to qualified businesses in the state. A company’s training needs are determined through a project analysis that often requires an on-site visit to determine any processes or technologies that might need to be adapted to an operation in Georgia. A training plan is then submitted to the company. “Quick Start designs pre-employment training, assessment, and selection processes that enable client companies to attract, assess, and select the best applicants according to company-defined criteria,” says Rodger Brown, executive director for marketFOR FREE SITE INFORMATION, CALL
ing for Georgia Quick Start. “Our training professionals work with company leadership and subject-matter experts to develop and deliver performance-based training on the company’s own equipment and processes, using the latest training materials and methodologies.” A good example is Caterpillar’s new $200 million, 1,400-employee manufacturing facility in Clarke and Oconee counties. The company relied on Quick Start and Athens Technical College to set up a state-of-the-art training facility, including a mock assembly line. “As we hire employees and bring them in, every employee, including myself and members of my management team, will go through that simulated work environment,” says Todd Henry, manager for the Athens plant. “It not only teaches the hands-on skills that we need to assemble our equipment, but also the principles of the Caterpillar production system, which is really the backbone of our manufacturing operation.” In Louisiana, FastStart™ provides customized employee recruitment, screening, training development, and training delivery at no cost to companies that meet eligibility requirements and are aligned with Louisiana's economic development targets — especially digital media, software development, service industries, advanced and traditional manufacturing, warehouse and distribution/logistics, and research and development. So far, after four years of operation, FastStart™ has provided 18,000 workers with more than 225,000 hours of training and instruction. “A key component to FastStart™ is that it does not box companies into a preconceived program,” says Perilloux. “Each client is unique and benefits from a highly customized approach that captures the culture and priorities of the organization and delivers the proper amount and type of training.” In 2010 Paris-based Gameloft, a leader in digital gaming, was considering a number of U.S. sites for a new game development studio, including New Orleans. The company placed a high priority on selecting an area with a pool of young talent and an enriching
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lifestyle. In response, FastStart™ designed a custom website that included an overview video about Gameloft. Within two months, these efforts attracted more than 60,000 page views, two million impressions, and 1,700 job applicants. Most importantly, nearly 700 of these applicants were highly qualified and possessed the skills Gameloft required. As a result, Gameloft selected New Orleans for its development studio. “FastStart is a very experienced group of people that helped us brainstorm and find ideas for hiring staff,” indicates Samir El Agili, Gameloft’s general manager for the United States and South America. “We’ve been constantly impressed with the amount of work they’ve done — whether it’s print ads, social media sites, or film. It’s great to work with them.”
Other States Are Catching On Site selection consultants have noticed that a number of other states — including Indiana, Iowa, Kansas, Kentucky, Tennessee, Colorado, Idaho, New Mexico, Texas, Arizona, Oregon, and Utah — are also accomplishing good things with their work force development programs. “Work force development has been a pivotal site selection determinant for a number of our site selection projects over the years,” indicates John H. Boyd, principal with The Boyd Company in Princeton, N.J. “Among our clients, I would point to the effectiveness of Arizona's work force development program in its support of Progressive Insurance’s policyholder service center in Phoenix.” Arizona’s Job Training Program is a reimbursable grant program that supports the design and delivery of job-specific customized training. “Clients can apply for grants that return up to 75 percent of the costs of training net new employees,” says Boyd. “Training that upgrades the skills of our clients’ existing employees can be reimbursed up to a maximum of 50 percent.” In Oregon, Business Oregon connects companies with the state’s network of community colleges for training. “Our Royal Caribbean Cruises client benefited from this program during the start-up of its new customer service center in Springfield,” adds Boyd. “The college contracts directly with the client and training programs take place either on campus or at our clients’ office or plant.” Utah is also coming on strong. Its Custom Fit program, which is a partnership that includes the Utah College of Applied Technology, other academic institutions, and local business communities, assists companies with a variety of training costs. The state also just passed legislation to create and fund a $10 million STEM Action Center, whose goal is to build a highly capable work force for industries that require employees with strong education in science, technology, engineering, and math (STEM). The state currently has a shortage of STEM-savvy workers and hopes the action center will help close STEM education achievement gaps in both public and postsecondary education. “The STEM Action Center will be a hub of collaboration for communities, industries, higher education, and public education,” says Carol George, Utah’s state science advisor. “The essential goal of this legislation is producing a collegeeducated STEM work force that can meet the needs of our growing high-tech industries, including medical devices, software development, and biotechnology.”
SOUTH CAROLINA stands apart by providing a comprehensive workforce solution from entry level training through advanced skill levels. Our internationally recognized readySC™ and Apprenticeship Carolina™ programs come together to successfully meet your specific workforce needs.
Customized recruiting strategies Customer-specific entry level skills training Specialized advanced skills training Nationally-recognized apprenticeship programs
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Alabama Department of Commerce www.MadeInAlabama.com gerri.miller@commerce.alabama.gov
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Alabama Industrial Development Training www.aidt.edu info@aidt.edu director@aidt.edu
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MARYLAND Cecil County Office of Economic Development www.ccgov.org lwebb@ccgov.org
CALIFORNIA City of Rancho Cordova Economic Development Department http://business.cityofRanchoCordova.org econdev@cityofranchocordova.org
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CONNECTICUT Cheshire Economic Development Corporation www.cheshirect.org jsitko@cheshirect.org
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MICHIGAN Michigan Economic Development Corporation www.michiganadvantage.org
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The Columbus Region www.columbusregion.com mm@columbusregion.com
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JobsOhio www.jobs-ohio.com contact@jobs-ohio.com
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OKLAHOMA MidAmerica Industrial Park www.maip.com tedallison@maip.com Tulsa Regional Chamber www.growmetrotulsa.com jmclaughlin@tulsachamber.com
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Marion County Economic Development Commission www.marioncountysc.com rberry@marionsc.org
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Santee Cooper www.santeecooper.com www.scprimesite.com george.haygood@santeecooper.com
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South Carolina Power Team www.SCpowerteam.com fgassaway@SCpowerteam.com
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TENNESSEE Tennessee Department of Economic & Community Development www.tn.gov/ecd allen.borden@tn.gov
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Lubbock Economic Development Alliance www.LubbockEDA.org john.osborne@lubbockeda.org
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Midlothian Economic Development www.Midlothian-TX.org LBarnett@Midlothian-TX.org
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Plano Economic Development www.planotexas.org sallyb@plano.gov
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Sherman Economic Development Corp. www.sedco.org http://www.shermansites.com/ scottc@sedco.org
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TexAmericas Center www.texamericascenter.com derrick.mcgary@texamericascenter.com
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Texas Economic Development Corporation www.TexasWideOpenforBusiness.com biztex@gov.texas.gov
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VIRGINIA Southern Virginia Regional Alliance www.GoSouthernVirginia.com lcockram@gosouthernvirginia.com
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KENTUCKY Kentucky Cabinet for Economic Development www.ThinkKentucky.com Econdev@ky.gov
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INDIANA Hendricks County Economic Development Partnership www.hcedp.org kelley@hcedp.org
NORTH CAROLINA ElectriCities of North Carolina, Inc. www.electricities.com bdaniels@electricities.org
readySC www.readysc.org pretulaks@sctechsystem.edu
Dallas Fort Worth Airport www.dfwairport.com Phendershot@dfwairport.com
NEBRASKA Nebraska Public Power District http://econdev.nppd.com/ econdev@nppd.com
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The horsepower in Kentucky is as strong as ever. As companies look for ways to produce better products for less, they increasingly look to Kentucky. Why? We offer some of the nation’s lowest industrial electricity costs, a competitive tax structure, and an ideal location within 600 miles of two-thirds of America’s population. We’ve also revamped Kentucky’s incentive programs so they’re now among America’s most aggressive and effective. And of course there’s the Bluegrass State’s famously unsurpassed quality of life. But we’re only skimming the surface. It’s no wonder why many of the world’s most successful companies have discovered that Kentucky, land of the thoroughbred, is a great place for business. With the track record to prove it, we’re willing to wager that you’ll find Kentucky a winner across the board. Contact us today to learn more. We think you’ll like the pace here. Call 800-626-2930 or visit www.ThinkKentucky.com.
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