Area Development Magazine - Q3 2014

INTERMODAL FACILITIES SPUR DEVELOPMENT

SUCCESSFULLY MANAGING MEGA-PROJECTS

REVOLUTIONARY ADVANCES IN TECHNOLOGY

AREADEVELOPMENT S I T E

A N D

F A C I L I T Y

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P L A N N I N G

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Q3/2014

top states for doing business

2014 BUILDING AGILITY INTO THE SUPPLY CHAIN CHALLENGES OF FAST-TRACK DEVELOPMENT

Indiana Ohio

+

North Carolina

Tennessee

8

5 Alabama Mississippi 4

First Person: Michelin’s John Tully Additive Manufacturing Becoming Mainstream

9

7

10

Texas

Louisiana

2

6

South Carolina

3

Georgia

1

Manufacturers Lose IP to Security Breaches

Special Sp S p pecial peci Report R Re eport eport

CANADA C ANADA ADA

Metro Atlanta Office with Tax Credits ϭϵϬ͕ϬϬϬ ^& ǁŝƚŚ ŝƐĐŽƵŶƚĞĚ ZĞŶƚ ĂŶĚ hƉ ƚŽ Ψϭϲ͕ϱϬϬ͕ϬϬϬ ŝŶ dĂdž ƌĞĚŝƚƐΎ

$200,000 Referral FeeΏ 125% of Standard CommissionΏ 9 9 9 9 9 9 9

dĂdž ƌĞĚŝƚƐ͗ Ψϴϲ͘ϴϰͬ^& ŝŶ ƉŽƚĞŶƚŝĂů ƚĂdž ĐƌĞĚŝƚƐ͕ ĞƋƵĂů ƚŽ ϳ LJĞĂƌƐ͛ ƌĞŶƚΎ ŝƐĐŽƵŶƚĞĚ ZĞŶƚ͗ Ψϭϲ͘Ϯϱͬ^& ŐƌŽƐƐ ŽĨĨŝĐĞ ƌĞŶƚ͖ ůŽǁ ĚĂƚĂ ĐĞŶƚĞƌ ƌĞŶƚ ^ƵƐƚĂŝŶĂďŝůŝƚLJ͗ ^ĞǀĞŶͲĨŝŐƵƌĞ ƐƵƐƚĂŝŶĂďůĞ ƌĞŶŽǀĂƚŝŽŶ ĂŶĚ ƵƉŐƌĂĚĞƐ ŽǀĞƌĞĚ WĂƌŬŝŶŐ͗ ^ŽůĂƌ ƉŽǁĞƌͲŐĞŶĞƌĂƚŝŶŐ ĐŽǀĞƌĞĚ ƉĂƌŬŝŶŐ ;ϱ͘ϲͬϭ͕ϬϬϬͿ /ŶĨƌĂƐƚƌƵĐƚƵƌĞ͗ ^ƵďͲĨůŽŽƌ ƉŽǁĞƌ ĂŶĚ ŵƵůƚŝƉůĞ ĨŝďĞƌ ĐŽŶŶĞĐƚŝŽŶƐ ĂƚĂ ĞŶƚĞƌ͗ /ŶĐůƵĚĞƐ ϰϬ͕ϬϬϬ ^& ĂĚũĂĐĞŶƚ ĚŝƐƚƌŝďƵƚŝŽŶͬĚĂƚĂ ĐĞŶƚĞƌ ŽŶǀĞŶŝĞŶĐĞ͗ ůŽƐĞ ƚŽ ŵĂũŽƌ ŚŝŐŚǁĂLJƐ ĂŶĚ ϯϬ ŵŝŶƵƚĞƐ ƚŽ d> ĂŝƌƉŽƌƚ

SunriseCenter.com Contact Jennifer Scott at 404-267-1967 or Jennifer@SunriseCenter.com Ύ dĂdž ĐƌĞĚŝƚ ĂƐƐƵŵĞƐ ϭ ĞŵƉůŽLJĞĞ ƉĞƌ ϮϬϬ ^& ǁŝƚŚ Ψϯ͕ϱϬϬ ' ƚĂdž ĐƌĞĚŝƚ ƉĞƌ ŶĞǁͬƌĞůŽĐĂƚĞĚ ĞŵƉůŽLJĞĞ dž ϱ LJĞĂƌƐ͘ Ώ ZĞƋƵŝƌĞƐ ƚĞŶĂŶƚ ƚŽ ĐĞƌƟĨLJ ƚŚĂƚ ŝƚ ĚŝƐĐŽǀĞƌĞĚ ƚŚĞ ƐƉĂĐĞ ĨƌŽŵ ƚŚĞ ƌĞĨĞƌĞĞ͖ ůĞĂƐŝŶŐ ĐŽŵŵŝƐƐŝŽŶ ŝƐ ĮƌƐƚ ŵŽŶƚŚ͛Ɛ ƌĞŶƚ н ϱй ŽĨ ƚŚĞ ƌĞŵĂŝŶŝŶŐ ůĞĂƐĞ͘

AREA0323.indd 1

19/08/14 4:17 PM

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CONTENTS 13

top states for doing business

57 Design Firms’ Increasing Role In The Location Process Project development elements like site selection, master planning, and business climate analysis have become design firm buzzwords.

COVER STORY Area Development presents the results of its 5th annual survey of a select group of highly respected location consultants who have a nationwide client base. The results reveal their top state choices for overall Business Environment, Labor Climate, and Infrastructure/Global Access as well as respective sub-factors.

Indiana Ohio

9

7

North Carolina

Tennessee

8

5 Alabama Mississippi 4

10

Texas

Louisiana

2

6

67 Intermodal Facilities/

FEATURES

2014

59 Revolutionary Advances in Technology Electronics, photonics, and digital media are combining to create exciting technologies for the future.

64 Successfully Managing Mega-Projects Choosing the right project delivery strategy, managing risk, and developing specific policies and procedures will ensure a project is completed on time and within budget.

South Carolina

3

Georgia

Inland Ports Spur Development As regions strive for a role in supply chains, inland port projects are gaining momentum.

74 Meeting the Challenges of FastTrack Development Constant communication — including real-time collaboration — between an owner, project developer, engineers, construction managers, etc. is key to fasttracking a project.

76 Building Agility Into the Supply Chain With delivery speed now a competitive differentiator, companies must ensure they have a “shippable” delivery on hand.

82 On Site, and On It Dedicated 100 percent from design through start-up, an onsite owner’s representative solves problems and adds value.

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Exclusive Online Content

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NOW ONLINE...

In Focus: New Development of Small Industrial Facilities Expected as Inventory Dwindles In Focus: Five Features of Successful Business Relocations and Expansions First Person: A California Pioneer Brings Source Manufacturing Jobs Back to Ohio Front Line: A “Transformative” Trade-Agreement Model for the U.S. Location Notebook: Union Pacific Intermodal Opens in Santa Teresa, New Mexico

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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Volume 49 | Number 3 Q3/2014

Quote:

It is not the strongest or the most intelligent who will survive but those who can best manage change.

Charles Darwin, English naturalist and geologist (1809–1882)

4 Editor’s Note

Manufacturing Continues to Bounce Back

12 Front Line

Light Manufacturers Create a Unique Supply Chain in Central Ohio

DEPARTMENTS 6 In Focus Four Tips for Renewing Your Office Lease

8 In The Know • Business Location Tracker • U.S. Is Top FDI Destination • Additive Manufacturing Becoming Mainstream • Manufacturers Lose IP to Security Breaches

88 Ad Index/ 10 First Person

Web Directory

John Tully, Development Director, Michelin

Editor’s Report www. locationcanada.com

Special Investment Reports

CANADA

2014

A Global Business and INNOVATION LEADER

62 Southern Indiana

At the FOREFRONT of

Advanced Manufacturing WIDENING the

Channels of Trade

71 California’s Central Valley 79 Ohio 84 Florida’s Eastern and Mid-Gulf Coasts

A COMPETITIVE

Tax Regime Opportunities in CLEAN TECHNOLOGY

C1 LOCATION CANADA With its world-leading business advantages, CANADA continues to be a top destination for investment.

(C1 follows page 32.)

JLL: Domestic Oil Production Spurs Regional and Manufacturing Industry Renaissance

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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 2014 by Area Development® magazine. ISSN: 1048-6534. Printed in the U.S.A. Area Development® is a registered trademark of Halcyon Business Publications, Inc.

AREA DEVELOPMENT | Q3/2014

3

EDITOR’SNOTE

Q3/2014

Manufacturing Continues to Bounce Back Economic activity in the manufacturing sector continues to expand, according the Institute for Supply Management (ISM).

The most recent ISM report says July’s expansion represents the 14th consecutive month of manufacturing growth. The Purchasing Manager’s Index (PMI) jumped from 55.3 in June to 57.1 in July. Importantly, the overall economy grew for the 62nd consecutive month, according to ISM statistics.

In fact, a survey of manufacturers taken at the end of the second quarter by the National Association of Manufacturers/IndustryWeek reveals they are optimistic about the future — projecting both the largest increase in capital spending (2.3 percent from Q3 2014 to Q3 2015) as well as the greatest expectations for sales (4.1 percent over the aforementioned period) in more than two years. However, more than 70 percent of those surveyed are still concerned about rising healthcare and insurance costs, as well as taxes and government regulations — issues that may temper their enthusiasm.

Nonetheless, where should those manufacturers who do plan to invest in new or expanded facilities spend their money? Area Development asked that question in its 5th annual survey of location consultants. Their picks for the Top States for Doing Business 2014 — based on overall business environment, labor climate, and infrastructure/ global access and respective sub-factors — are presented in this issue. Our report indicates that, for the most part, the Southern States continue to hold the location consultants’ attention, although the industrial Midwest appears to be bouncing back.

A report by the Boston Consulting Group (BCG) argues that a mix of economic forces “is fast eroding China’s cost advantage as an export platform for the North American market” (http://www.bcg.com/documents/file84471.pdf). The report further notes, “When all costs are taken into account, certain U.S. states, such as South Carolina, Alabama, and Tennessee, will turn out to be among the least expensive production sites in the industrialized world” — states that are among those ranked highly by our responding consultants.

If you have any questions about this latest survey, or any of the other features in our Q3 issue, please email me at gerri@areadevelopment.com.

www.areadevelopment.com EDITORIAL E-mail: editor@areadevelopment.com Editor Geraldine Gambale Staff and Contributing Editors Lisa Bastian Cynthia Kincaid James Berger Beth Mattson-Teig Lisa Buddecke Phillip Perry Dale D. Buss Jim Romeo Dave Claborn Mali R. Schantz-Feld Mark Crawford Steve Stackhouse Clare L. Goldsberry Karen Thuermer DESIGN/PRODUCTION Art & Design Patricia Zedalis Production Manager Jessica Whitebook Production Assistant Talea Gormican EXECUTIVE Publisher Dennis J. Shea dshea@areadevelopment.com Sydney Russell, Publisher 1965-1986 ADVERTISING SALES William Bakewicz (ext. 202) billbake@areadevelopment.com Valerie Krpata (ext. 218) valerie@areadevelopment.com ONLINE SERVICES Digital Media Manager Justin Shea (ext. 220) jshea@areadevelopment.com Business Development Matthew Shea (ext. 231) mshea@fastfacility.com Web Designer Carmela Emerson BUSINESS SERVICES Reader Service Barbara Olsen (ext. 225) olsen@areadevelopment.com Circulation Gertrude Staudt circ@areadevelopment.com CONFERENCE SERVICES Program Manager Annie Gregson (212) 579-4469 annie@areadevelopment.com

Editor

EXECUTIVE OFFICES

2014 Editorial Advisory Board Justin T. Bickle Economic Development Specialist, Niagara Bottling, LLC Rose Burden Executive Director, Southeast Area Negotiated Incentives Leader, Ernst & Young Christine Bustamante National Co-Leader, Global Location and Expansion Services, KPMG Gregory Burkart Managing Director, Specialty Tax Practice Leader, Duff & Phelps, LLC Dennis Cuneo Partner, Fisher & Phillips LLP Tim Feemster Managing Principal, Foremost Quality Logistics Larry Gigerich Managing Director, Ginovus Stephen Gray CEO, Gray Construction

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AREADEVELOPMENT

Halcyon Business Publications, Inc.

Minah C. Hall Managing Director, True Partners Consulting LLC Scott Kupperman Founder, Kupperman Location Solutions, LLC

Kathy Mussio Managing Partner, Atlas Insight

President Dennis J. Shea

Scott Redabaugh Managing Director, Jones Lang LaSalle

Jamie M. Lominack Real Estate Manager, Michelin North America

Dick Sheehy Director, Advanced Planning & Site Selection, CH2M HILL

Finance Mary Paulsen finance@areadevelopment.com

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

Noah Shlaes Managing Director, Newmark Grubb Knight Frank

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

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

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

Jeff Troan Director, Economic Development Opportunities, Lockheed Martin

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

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

FOR FREE SITE INFORMATION, CALL

All correspondence to: Area Development Magazine 400 Post Avenue, Westbury, NY 11590 Phone: Toll Free: Fax:

516.338.0900 800.735.2732 516.338.0100

MEMBER of

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

AREA0316.indd 1

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INFOCUS

Four Tips for Renewing Your Office Lease

By Stephen F. Graw, Senior Advisor, Sperry Van Ness/Nashville

When it comes to lease renewals, smart tenants are playing offense, not defense. Your landlord’s primary objective is to make a profit, so understanding the renewal process can save you and your business money. It’s always a good idea to have a grasp of the landscape and do your research, just like you would before making any other major investment.

As a broker, these are four of the most important preparations I recommend to businesses before signing on the dotted line again:

Stephen F. Graw, a commercial real estate broker who represents both investor and tenant interests, with a focus on the office field, joined the Sperry Van Ness Nashville office in 2012. Capable of handling transactions ranging from largescale sales to flexible short-term leases, he provides services on all levels of real estate need and property type.

1. Find a great broker — Great brokers are crucial in lease negotiations. They ask the hard questions and have market research unavailable to tenants, and complete the due diligence to ensure all items in the contract are accurate and you are getting a fair deal. Because brokers are highly informed and experts in the field, landlords are typically more receptive to their proposals than those that come directly from tenants. Additionally, brokers help lay the groundwork to ensure that you sustain a healthy tenant-landlord relationship after the lease is signed.

2. Understand the market’s big picture — Be aware of the general direction the real estate market is heading. Most leases call for base rental rates to rise between 2 and 3 percent annually. If market rents are overtaking that rate and will be for the foreseeable future, then you request that your new lease be for a longer term than your current one, such as seven to 10 years instead of three to five years. Likewise, if rents are falling, then I advise negotiating for the shortest-term lease possible, which will allow you to renegotiate better terms in the following years. It is also important to consider the varying expense of your insurance and taxes, as a lease price makes those small increases year over year. Ensuring your landlord adjusts your lease’s base year during a renewal helps to manage those costs.

3. Do your research — Unlike property deeds, commercial real estate leases are not public documents — but that doesn’t mean you can’t find your own market data. Try touring properties for lease in your desired areas and inquire about rental rates, lease types, operating expenses, and tenant improvement packages. Also, seek out business owners leasing space in the area you’re looking and ask if they’ll share their lease terms. Just because a rate increase is within legal limits doesn’t mean it’s within reason for the property or area of town. Even if you plan on staying in your space, you want to find other options to create leverage with your current landlord.

4. Always have options — Just because you have no intention to move, doesn’t mean you shouldn’t research other spaces. You never know what you will discover, whether it be information useful in negotiating your current lease or a new property altogether. Brokers will make your real estate requirements accessible to competing landlords, and exploring alternative spaces creates a competitive environment among landlords, giving you an edge in negotiations. Research will also provide a safety net in case you aren’t able to work out an agreement with your current landlord.

Completing the research will also provide you with basic knowledge of the area and help in leasing decisions down the road.

Following these steps will help to ensure you get the best deal on your office renewal lease and offer peace of mind that you have done the research, understand your options, and selected the deal that’s best for your company. Your office space has a large financial impact on your company and highly affects the workplace environment you are creating for your employees. Taking a few extra steps throughout the process to renegotiate your lease is worth the returns.

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AREADEVELOPMENT

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A ECON OM IOW IC

Location Fort Dodge, IA 50501 Available Acres: 447

Location F90 & R16 Van Meter, IA 50261 Available Acres: 288

Transportation Summary Nearest Interstate: I-35 is 20 miles away Nearest 4-Lane Highway: Highway 20 is 5 miles away Nearest Commercial Airport: Des Moines International Airport (DSM) 90 miles Rail Served: Yes Property and Area Description This site is centrally located within the NAFTA corridor. The site has all of the components for large industrial utility users and infrastructure consumers.

Global leaders such as Cargill, Valero and CJ Bio America are tenants within the Iowa’s Crossroads of Global Innovation.

Utilities Summary Electric & Natural Gas Distribution: MidAmerican Energy Company Telecommunications Local Service Providers: WebsterCalhoun Cooperative Telephone Sewer & Water Distribution: City of Fort Dodge Contact Kelly Halsted 515-995-5500

Transportation Summary Nearest Interstate: I-80 is 2 miles away Nearest 4-Lane Highway: Highway 6 is 7 miles Nearest Commercial Airport: Des Moines International Airport (DSM) 19 miles Rail Served: No Property and Area Description Located just southeast of the community of Van Meter and only a few miles from the Des Moines

IOWA FALLS / HARDIN COUNTY INDUSTRIAL SITE

WEST METRO INTERSTATE AND RAIL PARK

Location JJ Avenue &140th Street Iowa Falls, IA 50501 Available Acres: 245

Location I-80 and Highway 6 Dexter, IA 50070 Available Acres: 255

Transportation Summary Nearest Interstate: I-35 is 21.2 miles away Nearest 4-Lane Highway: US 20 is 5.1 miles away Nearest Commercial Airport: Mason City Municipal Airport (MCW) 58 miles Rail Served: Yes Property and Area Description This land is between the Canadian National and Union Pacific rail lines. Rail Preliminary Design is nearing completion on connection

track and manifest yard. Electric service borders north and south boundaries, gas transmission line is also present.

Utilities Summary Electric Distribution: Midland Power Cooperative Natural Gas Distribution: Alliant Energy, Northern Natural Gas Telecommunications Local Service Providers: Mediacom, Century Link Sewer & Water Distribution: City of Iowa Falls Contact Cindy Litwiller 641-648-5604

Transportation Summary Nearest Interstate: I-80 zero miles Nearest 4-Lane Highway: Highway 6 zero miles Nearest Commercial Airport: Des Moines International Airport (DSM) 35 miles Rail Served: Yes Property and Area Description Bordered by I-80, Highway 6 and Iowa Interstate Railroad, this is

NT AUTHO ME RI OP TY EL V E

VAN METER VISION PARK

E

WEBSTER COUNTY AG CENTER

E R TIFI

You’re looking for sites that are development-ready and risk-free. Iowa’s Certified Sites can deliver, making the decision to locate in Iowa an easy one.

C

READY WHEN YOU ARE.

D

D

SIT E

Metro. This land is currently agricultural.

Utilities Summary Electric & Natural Gas Distribution: MidAmerican Energy Company Telecommunications Local Service Providers: Paetec, Century Link Sewer & Water distribution: City of Van Meter Contact Linda Wunsch 515-987-2020

an ideal site for warehousing, distribution center, manufacturing or other uses requiring rail or interstate access. Large water and electric supply are on site. This site also has access to a large, highly educated workforce.

Utilities Summary Electric & Natural Gas Distribution: MidAmerican Energy Company Contact Linda Wunsch 515-987-2020

iowaeconomicdevelopment.com/SiteLocation/CertifiedSite

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30/07/14 4:13 PM

IN THE KNOW U.S. Is Top FDI Destination According to a 2014 AT Kearney survey of 300 global executives, the United States is the top destination in the world for foreign direct investment (FDI). In 2013, the United States surged past Brazil, China, and India, retaking the number-one position for the first time since 2001. And for 2014, the United States extended 2014 FDI Confidence Index® Ranking its lead with one of the highest confidence scores on record for any country — the nation 2012 2013 2014 Country was ranked first by respondents from every 4 1 1 United States geographic area and industry.

1

2

2

China

20

4

3

Canada

8

8

4

United Kingdom

3

3

5

Brazil

5

7

6

Germany

2

5

7

India

6

6

8

Australia

7

10

9

Singapore

17

12

10

France

In addition to being the most likely destination for FDI, no other country surveyed has experienced as profound a change in the expectations of business: 49 percent of respondents — compared to 39 percent in 2013 and 23 percent in 2007 — indicated that their outlook for the United States is significantly more positive now than it was two years ago. In fact, never in the 16-year history of this AT Kearney survey has a country had such a positive net position (43 percent). The survey findings are reflected in the global investment of billions of dollars by U.S. and foreign firms in recent years, further strengthening the U.S. economy.

Additive Manufacturing Becoming Mainstream Additive manufacturing or 3DP is becoming mainstream; it has the potential to bring jobs back to the U.S. and add to the nation’s global competitiveness, but challenges must also be addressed.

According to a recent report from PricewaterhouseCoopers, 3D printing (3DP), also known as additive manufacturing, may be triggering a transformation in U.S. industrial manufacturing — affecting everything from product design and production to restructured supply chains. The report, “3-D printing and the new shape of industrial manufacturing,” prepared in conjunction with the Manufacturing Institute, indicates that two thirds of the 100-plus industrial manufacturers surveyed are currently implementing 3DP either by experimenting with the technology or by already using

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it for prototypes or final products.

“Applying 3DP for rapid prototyping is nothing new for many manufacturers as it enables them and their suppliers to sidestep the often laborious and costly traditional processes,” says Bob McCutcheon, PwC’s U.S. industrial products leader. “However, we’re starting to see signs that the technology is on the cusp of becoming mainstream, and companies need to understand the disruptions and the opportunities that it could create.”

In fact, despite all the advances in additive manufacturing, companies employing this technology still face the challenge of finding the right talent to utilize it in carrying out designs.

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

Track business relocations and expansions on Area Development Online.

Studies/Research/Papers on Area Development Online.

We cull insightful corporate real estate-focused studies, research, and papers from credible industry sources at www.AreaDevelopment.com/Studies.

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

BUSINESS LOCATION TRACKER KUKA Aerospace Plans Washington State Maintenance Facility

New Data Center and Headquarters Facility for Des Moines, Iowa, Metro Area

A leader in automated systems for aircraft manufacturing and assembly, KUKA Aerospace, is locating its first U.S. facility outside of Michigan in Everett, WA, with about 75 employees.

IP Pathways plans to open its new data center and corporate headquarters in Urbandale, IA, that will bring 54 new high-paying technology jobs to the area.

Siemens Rail Expanding Its Allegheny County, PA, Facilities Siemens Rail Automation will expand engineering/production capabilities in Pittsburgh as part of a project that will create 129 new jobs in Allegheny County.

Engineering Company To Locate New Manufacturing Center In Virginia

Overstock.com To Increase Salt Lake County, UT, Employee Base

Mayville Engineering is investing $10 million to expand its Virginia operations at a new manufacturing facility in Atkins, Smyth County, which will create 160 new jobs.

Overstock.com will bring 333 additional jobs to Utah over the next 10 years; in the past, these jobs have been contracted out of state.

Tribridge Plans Expansion of Its Tampa Headquarters New Indiana Manufacturing/ Distribution Center To Create 300 Jobs

New Food Processing Operation for Warren, Arkansas Blue Rooster plans to open a poultry deboning operation in Warren, AR, creating approximately 100 jobs in the area.

The new manufacturing/distribution facility in Plainfield, IN, for Tempur Sealy International, Inc., a manufacturer and distributor of mattresses and other products worldwide, will be operational by 2015.

A technology services firm — Tribridge — plans to create up to 200 new IT jobs with the expansion of its headquarters in Tampa, FL, thereby doubling its workforce by 2016.

Manufacturers Lose IP to Security Breaches According to a survey of businesses IT managers worldwide, 21 percent of manufacturers suffered a loss of intellectual property (IP) within the past year.

Malware was the most common cause of data loss incidents for manufacturers, although other types of cyber-incidents — including software vulnerabilities, theft of mobile devices, network intrusion, etc. — were also cited as sources of IP leakage.

Securing intellectual property is important to a company’s competitive position because insights gained through R&D or other high-tech proprietary solutions give a firm an advantage over its competitors — which can be lost if the competitors gain access to that

knowledge without, in fact, incurring the initial R&D costs.

Manufacturers understand the importance of securing their intellectual property. According to the survey, they rank “internal operational information” and “intellectual property” as the two types of non-financial data they fear losing the most. Fear of losing “customer/client information” is ranked the lowest out of all business segments, probably because manufacturing facilities are less likely to store this information in the first place.

The survey of nearly 4,000 IT managers across 27 countries was conducted by Kaspersky Lab in partnership with B2B International.

AREA DEVELOPMENT | Q3/2014

9

FIRSTPERSON JOHN TULLY

DEVELOPMENT DIRECTOR

Where did Michelin Development start in North America?

Tully: Michelin Development was originally established in North America in 2006, when the company was faced with a plant closure in Kitchener, Ontario. To help alleviate the economic aspects of a plant closure in the community, Michelin introduced the Michelin Development concept, which provides interest-free loans to create job opportunities as well as business advice and counsel.

In its past eight-year history in North America, Michelin Development has already helped to grow 84 small businesses and was instrumental in creating over 1,300 jobs in Kitchener, Ontario; Opelika, Alabama; and in the Upstate South Carolina area.

Michelin Development also exists today in European countries.

MICHELIN

economically disadvantaged businesses within the 10-county region of the Upstate.

Can you provide an example of a “success story” generated by the program in your home state of South Carolina or elsewhere?

Tully: Boyd Cycling is one of the most successful clients to come through the Michelin Development program.

Originally a manufacturer of entire bicycles and wheels when it started in 2009, the trajectory of its entire business changed when the company received a loan from Michelin Development in 2010.

Boyd was able to use the funding to invest in a higher-end, better quality product and reach a whole new customer level. It’s now known for its high-quality wheels and has doubled in size since receiving a loan from Michelin Development.

I understand there have been some new developments in Nova Scotia, Canada, recently. Can you fill us in?

Tully: Most recently, in March of this year, Michelin Canada announced the very difficult decision to reduce tire production at the Michelin Pictou County plant in Nova Scotia. As the company recognized the significance of the Michelin Pictou County site in the local community and local economy, the Michelin Development program has been launched to assist in the creation of new jobs in the small business sector in the neighboring communities that surround the site.

Michelin Development will make $2 million available for five-year small-business loans up to C$100,000 at prime interest rates.

What additional services does Michelin Development provide?

Tully: Our community development program provides up to US$50,000 in South Carolina and Alabama and, as mentioned, up to C$100,000 in Nova Scotia for low-interest, individual small business loans and business expertise to foster and encourage private-sector job creation in the community.

How does a company qualify for these services?

Tully: For the Michelin Development Upstate South Carolina program, we welcome applications from socially or

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AREADEVELOPMENT

Has that spawned other developments?

Tully: Aside from financial support, we connected with our corporate public relations team to help generate news stories to grow Boyd’s customer audience, put the company in touch with financial advisors for advice on how to properly manage the new business revenues, as well as provided counsel from our marketing director for our bicycle tire division for industry collaboration. Co-op opportunities are still being explored, and we have used Boyd wheels on our tires when we exhibit at trade shows and events here in the U.S., which has given it a whole new level of exposure as a small business.

Additionally, Boyd is one of the sponsors of the Michelin Tri-Club and offers all employees an impressive discount on its products. The relationship continues to offer benefits for a large segment of the population here.

What is the level of a company like Michelin’s social responsibility to the communities in which it operates?

Tully: Fostering strong relationships with and supporting the local communities where Michelin operates remains a top priority for the organization across the globe.

One component of Michelin’s “2020 Ambitions” is the commitment to have 100 percent of Michelin sites deploy

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

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

a community involvement program and to encourage employee involvement in local community actions. Across the globe, Michelin employees donate 30,000 working days a year. Michelin supports education programs, athletic and art initiatives, road safety campaigns, and more.

Are there other examples of how Michelin has helped to foster positive relationships with the communities in which it operates?

Tully: Since 2009, the Michelin Challenge Education program has provided support to high-poverty public elementary schools in the form of tutors, mentors, lunch buddies, and financial contributions. Michelin’s goal for the program is to provide human capital to positively impact the lives of disadvantaged children.

With an emphasis on reading, math, and science, the program has spread from South Carolina to communities

throughout North America. In 2012, hundreds of Michelin employees logged more than 7,000 volunteer hours at 18 public schools across North America (15 elementary schools, two middle schools, and one high school). Improved test scores among those children who benefit from Michelin Challenge Education validate that the involvement of Michelin employees is making a measurable difference.

THE ASSIGNMENT Forming positive relationships with the communities in which they are located is important for companies, large and small. These relationships foster further economic growth within the host communities. With that in mind, Area Development’s editor recently interviewed John, Tully, the director of Michelin Development, formed specifically to offer support to new small and medium-size businesses.

When it comes to successfully expanding or relocating your business,

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

econdev.nppd.com 800.282.6773, ext. 5534 econdev@nppd.com

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AREA DEVELOPMENT | Q3/2014

11

FRONTLINE

Light Manufacturers Create a Unique Supply Chain in Central Ohio

A

merican industrialist Henry Ford developed the assembly line to mass-produce his company’s Ford automobiles. The process revolutionized the auto manufacturing industry.

A cluster of manufacturing businesses in Central Ohio is adopting the same supply-chain assembly line process for the health and beauty industry, hoping for the same results. Ten light manufacturing companies have taken up residence in a recently built business park known as the New Albany Personal Care and Beauty Innovation Campus within the New Albany (Ohio) Business Park, just northeast of Columbus.

“We are a master-planned community,” says Scott McAfee, public information officer for the City of New Albany. “Fifteen years ago, everything out there was a vision in a cornfield.” But that has changed. The business park has garnered $342 million in private investment in the last three years, according to McAfee, and now hosts 2.5 million square feet of office space, with hopes that more companies will come to call New Albany home.

The commitment to the business park is serious. The New Albany Community Authority recently authorized $2.9 million for local infrastructure projects, many of them aimed at the business park. New street lighting and trees will be added to the area at a cost of $700,000. Another $400,000 will be earmarked for extending the sewer system, and $50,000 will be used for fiber-optics improvement.

Additionally, many of the companies are being incentivized by the city of New Albany to build LEED certified buildings. “We are incentivizing them for being green,” McAfee says.

A production line at KDC, a developer and manufacturer of health and beauty products

By Cynthia Kincaid

Ohio, New Hampshire, Virginia, Canada, and England. They include Accel, Alene Candles, Jeye’s, Vee Pak, Knowlton Development Corp. (KDC), and Axium Plastics.

What makes the campus most newsworthy, however, is the synergy that the tenants have deliberately developed in order to grow their businesses and create cost efficiencies. The companies work together as a supply chain to create a wide variety of packaged healthcare and beauty products, including cosmetics, soaps, shower gels, and air fresheners.

Some of these companies manufacture the soap products, some make the plastic bottles or tubes that contain the product, and some make the cap that goes on top of the bottle or tube. Rather than sending trucks across the country to complete the manufacturing process, products are now developed and completed at the business park and then shipped all over the world.

“Many of the companies are working together and creating this vertical supply chain to create products on one campus,” explains McAfee. “The products would literally have to travel thousands of miles to be completed otherwise.” McAfee points out that the business park is ideally situated in terms of logistics, since Central Ohio is located within 500 miles of half the populations of Canada and the U.S. The synergy between the companies has proven good for expansion. “These companies all came with some of their own clients, and now they are able to expand because they have been working together to help each other,” McAfee adds. “They are pulling their resources together and finding new markets that weren’t open to them before they moved here.”

Developing a Synergy The companies have located to the business park from

12

AREADEVELOPMENT

No doubt, Henry Ford would be proud.

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

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

TOP T O

2014

10

G Georgia Texas South Carolina Alabama Tennessee Louisiana Indiana North Carolina Ohio Mississippi

top states for doing business

Next Bestt Florida Kentucky Illinois Arizona Arkansas Oklahoma Missouri Michigan Virginia Nevada

Indiana Ohio

9

7

North Carolina

Tennessee

8

5

South Carolina

Alabama Mississippi 4

10

Texas

Louisiana

2

6

3

Georgia

1

Best Overall Business Environment

Best Overall Labor Climate

Best Overall Infrastructure/ Global Access

Texas • Georgia South Carolina • Alabama Louisiana • Florida

Georgia • South Carolina Texas • Alabama North Carolina

Tennessee • Georgia Texas • Ohio Illinois

Next Best: Mississippi, Tennessee

Next Best: Ohio

Next Best: Indiana

The

Deciding Factor.

A quality workforce makes the difference between failure and success.

That’s why Area Development’s 2014 survey of site selection professionals ranked Georgia #1 in the U.S. — for the quality of our workforce and for Georgia Quick Start, what CBS Evening News called, “the nation’s oldest and most successful” program of its kind.

Here are some reasons why:

“Above all things, Quick Start’s services to us ǁere a criƟcal Ĩactor in the Ěecision to builĚ our Ɖlant here in 'eorgia͘͟ – Hyundai DYMOS

“When we were going through the very rigorous Ɖrocess oĨ site selecƟon ͙ Quick Start was a big ĚiīerenƟator͘͟ – Starbucks

“Kne oĨ the reasons we chose this area was because oĨ the availability oĨ a skilleĚ workĨorce anĚ the oƉƉortunity to Ɖartner with 'eorgia Quick Start͘͟ – Caterpillar

www.GeorgiaQuickStart.org

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2014

BUSINESS ENVIRONMENT

top states for doing business

• •

LABOR CLIMATE INFRASTRUCTURE/ GLOBAL ACCESS

tive labor costs, labor climate for right-to-work states, labor climate for non-right-to-work states, leading workforce-development programs

»

Infrastructure and Global Access: distribution and

supply-chain hubs, rail and highway access, certified sites/

S

parking growth in business investment and jobs has proven more difficult than expected for states as they have emerged from the Great Recession. Capital spending and, especially, job creation have remained below par as corporate chiefs and business owners stick with a conservative philosophy until they perceive signs of a true boom. So the fight for the attention of site consultants and CFOs is more pitched than ever.

shovel-ready programs, competitive utility rates, energy reliability and smart-grid deployment, water outlook, including availability and cost Three major features of the list pop up. First, it continues to be dominated by states in the South and midSouth that have managed to extend the momentum in landing business development that they have enjoyed for some time (mostly, these states just switched positions within the top 10).

Second — and probably more intriguing because it is a new development — the list includes two states from the industrial Midwest. The presence of Indiana and Ohio on the 2014 list indicates that these states in particular, and the upper Midwest in general, are scratching their way back into position as major players in the U.S. economic-development derby.

And third, the state of California finally proved unable, in the new list, to hang on to its 10th place ranking in the

With that in mind, Area Development is publishing

2013 survey. The state’s reputation with site consultants

our fifth annual Top States for Doing Business survey of

keeps taking hits — witness Toyota’s announcement

site consultants, ranking the states based on their number

earlier this year that it plans to move its corporate head-

of mentions by the consultants in three overall categories

quarters and 4,000 jobs to suburban Dallas from southern

and 18 subcategories:

California. And so this year, California placed in the top

»

states in only three of the 18 sub-categories, notably

Business Environment: overall cost of doing busi-

ness, incentive programs, corporate tax environment, co-

ranking third for access to capital and project funding, no

operative state government, access to capital and project

doubt a legacy of the continued success of Silicon Valley.

funding, speed of permitting, most favorable regulatory

The following profiles of each of the top 10 states pro-

environment

vide insight into why each state is among the surveyed

»

consultants’ top choices for new and expanded facilities.

Labor Climate: availability of skilled labor, competi-

1. Georgia

the breadth of its strong performances

“are a testament to the commitment

IT’S DIFFICULT TO BEAT TEXAS on

over most of the 18 categories voted on

from Georgia businesses, communities,

any list of economic development power

by the consultants, including top-three

economic development partners, and

states these days, but Georgia did exactly

finishes in 12 of them.

the people of Georgia,” Gov. Nathan

that in the Area Development survey of

The Area Development honor follows

Deal said in a statement, indicating his

site consultants, nudging Texas down

other recent recognition of Georgia’s rise

confidence that “more businesses will

into the No. 2 spot after it finished No.

in the ranks, which included its choice

consider expanding or relocating here.”

1 a year ago. Georgia’s accomplishment

by a CNBC study as the No. 1 place

was especially impressive because of

for business in America. Such rankings

Georgia’s success has come from dead reckoning in areas that are crucial

AREA DEVELOPMENT | Q3/2014

15

to business locators. That includes the state’s welcoming and

a continuing string of business expansions and reloca-

business-friendly government, to be sure. And employers are

tions over the last year. One of the biggest was the plan

enthusiastic about one of the Georgia legislature’s most recent

hatched by Kia to expand its auto-making operations in

moves: passing significant workers’ compensation reform that

the state as the Korean automaker increases its share of

cuts costs for business.

U.S. car sales. Its Georgia workforce has, in fact, helped

The state also enjoys a strong infrastructure, featuring Hart

the brand move to the top of automotive-quality percep-

International, one of the world’s most efficient passenger air-

tions among American consumers. In fact, Georgia’s Quick

ports; two deepwater ports; and one of the nation’s most exten-

Start has ranked as the leading workforce development

sive surface-transportation networks. (The consultants ranked

program among site consultants polled in the Area Devel-

Georgia No. 2 for its overall infrastructure and global access.)

opment Top States for Doing Business survey in each of

No wonder that Georgia has been able to announce

the five years it has been conducted.

OVERALL BUSINESS ENVIRONMENT

2.

3.

1. TEXAS GEORGIA SOUTH CAROLINA

4. ALABAMA 4T. LOUISIANA 5. FLORIDA

Next Best: Mississippi, Tennessee

Overall Cost of Doing Business

1. South Carolina 2. Georgia 3. Texas

4. Alabama 5. Louisiana

Next Best: Florida, Mississippi

Incentives Programs

1. Louisiana 2. South Carolina 3. Georgia

4. Texas 5. Alabama

Corporate Tax Environment

16

Texas Nevada Florida South Dakota

AREADEVELOPMENT

5.

5T. 5T. 5T.

1. Georgia 2. South Carolina 3. Louisiana

4. Texas 5. Alabama

Next Best: Indiana, Tennessee

Access to Capital & Project Funding

1. Texas 2. Georgia 3. California

4. New York 5. South Carolina Next Best: Florida

Speed of Permitting

1. Alabama 2. Texas 2T. Georgia

3. South Carolina 4. Louisiana 5. Mississippi

Next Best: Tennessee

Most Favorable Regulatory Environment

Next Best: Oklahoma

1.

2.

3.

4.

Cooperative State Government

Indiana Tennessee Utah Wyoming FOR FREE SITE INFORMATION, CALL

1. Arizona 2. Texas 3. Louisiana

4. Alabama 5. Georgia 5T. South Carolina

Next Best: Mississippi

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

FIND OUT WHY ACADIANA IS HOME TO THE

HAPPIEST CITY IN AMERICA

OUR RESOURCES Five ports to the Gulf of Mexico, major and fully certified airports, rail access and the intersection of I-10 and I-49 through the heart of Acadiana result in the easy flow of business and industry throughout the area. LUS Fiber has one of the nation’s largest Fiber-to-Premises networks capable of delivering symmetrical speeds of up to 1 Gigabit per second. Our industries of oil and gas, aviation, healthcare and digital media flourish here.

OUR PEOPLE Top work-force training programs, community colleges and universities offer educational opportunities to meet the needs of businesses and communities. The Acadiana culture is welcoming, inspiring and people living here are happier than anywhere else in the nation.

OUR COMMITMENT What makes people living here happy is not only the unique and welcoming culture of the area, but also our commitment to support area business with tax incentives, an aggressive site selection program and encouragement of the entrepreneurial spirit.

Come to Acadiana-Louisiana-USA‌ one of the fastest growing regions in Louisiana.

TEAMACADIANA.ORG | (337) 593-1411

AREA0321.indd 1

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2014

top states for doing business that ended in 2012. The pillars of its success include a pro-business environment, strong work force, improving schools, and an infrastructure that allows efficient access to global markets. Plus, there are no personal or corporate income taxes.

2. Texas

The ongoing U.S. boom in natural gas and oil explora-

TEXAS KEEPS RACKING UP BIG ECONOMIC development

tion and production, thanks to “fracking,” is juicing the Texas

wins, such as the Toyota headquarters relocation. But the state

economy as well, especially because the Gulf Coast also is home

has slipped in the consultants’ ranking to No. 2.

to the nation’s biggest concentration of oil refineries.

No state in the past few decades has put together a

The continuing advantages of Texas were enough to get

run like Texas, which alone was responsible for about one

Toyota to move its headquarters over the next few years to

third of America’s net-job gains over a decade-long period

Plano, near Dallas; that move will add to a substantial auto-

OVERALL LABOR CLIMATE

1. GEORGIA 2.

3.

SOUTH CAROLINA

4.

5.

TEXAS

ALABAMA NORTH CAROLINA

Labor Climate (RTW)

1. South Carolina 2. Texas 3. Georgia

3T. North Carolina 4. Alabama 5. Mississippi

Next Best: Florida, Indiana

Next Best: Ohio

Labor Climate (Non-RTW) Availability of Skilled Labor

1.

1T. 2.

3.

Michigan Indiana Ohio Texas

4. California 4T. North Carolina 5. Illinois

Next Best: Georgia, New York

Competitive Labor Costs

1. Alabama 2. South Carolina

3. Mississippi 4. Texas 5. Georgia

Next Best: Arkansas, Louisiana

18

AREADEVELOPMENT

FOR FREE SITE INFORMATION, CALL

1. Missouri 2. Kentucky 3. Ohio

4. New Mexico 5. Colorado

Next Best: Pennsylvania, Wisconsin

Leading Workforce Development Programs

1. Georgia 2. Louisiana 3. South Carolina

4.

5.

Alabama North Carolina

Next Best: Tennessee

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

MCKINSEY & COMPANY CITES BIG DATA AS ONE OF THE EMERGING GAME CHANGERS OF THE 21ST CENTURY. GET THE WHOLE STORY AT JOBS-OHIO.COM/GAMECHANGERS.

BIG DATA KNOWS WHAT WILL HAPPEN IN THE FUTURE.

THAT’S WHY IT’S MOVING TO OH1O. IBM. dunnhumbyUSA. Teradata. JPMorgan Chase. The list of best-in-class data-driven companies thriving in Ohio is growing by the day. Hmmm. What do they know that you don’t?

THE FUTURE IS HAPPENING IN OHIO. GET THERE FIRST.

AREA0308.indd 1

24/07/14 7:51 PM

motive base in the state that also includes a General Motors assembly plant in Arlington and Toyota’s pickup-truck factory in San Antonio. Also exemplary of Texas’s appeal is the opening

3. South Carolina

of a customer-service center in far North Dallas by Kohl’s, the

THE PALMETTO STATE long has been held in high regard

Wisconsin-based department-store retailer that will employ

by the economic development community, but South Carolina

1,500 people within four years.

picked up two huge new testimonials this year from a couple of

But the state is not without its challenges. Texas’ tough

the biggest names in global manufacturing. BMW and Boeing

problems with drought discourage some businesses. And

each announced crucial new and expanded roles for their South

site consultants might not like the fact that Texas retains

Carolina operations.

a so-called “margin tax” as its primary business levy; it’s

The companies could cite South Carolina advantages

considered complicated and onerous — at least by Texas

such as its low overall cost of doing business (site consul-

standards.

tants ranked the state No. 1 in this regard). The state was

OVERALL INFRASTRUCTURE/ GLOBAL ACCESS

1. TENNESSEE 2.

3.

GEORGIA TEXAS

4.

5.

OHIO ILLINOIS

Next Best: Indiana

Distribution/Supply Chain Hubs

1.

2.

3.

3 T.

Tennessee Illinois Georgia Indiana

3T. Texas 4. Ohio 5. California

Next Best: Pennsylvania, Kentucky

Rail & Highway Access

1. Illinois 2. Texas 3. Georgia

3T. Ohio 4. Indiana 5. Tennessee

Next Best: Missouri, Pennsylvania

Competitive Utility Rates

1.

2.

2T. 3.

3T. 3T.

Alabama Tennessee Kentucky Georgia Louisiana South Carolina

4.

4T. 4T. 5.

5T.

Arkansas Texas Washington Mississippi North Carolina

Energy Reliability/ Smart Grid Deployment

1. Texas 2. Georgia 3. North Carolina

4. Tennessee 5. Ohio

Water Outlook (Availability & Cost)

1.

2.

3.

3T.

Michigan Indiana Ohio Wisconsin

4. Illinois 5. Minnesota 5T. Tennessee

Certified Sites/Shovel-Ready Programs

1. Tennessee 2. South Carolina 3. Georgia 20

AREADEVELOPMENT

4. Alabama 5. North Carolina

FOR FREE SITE INFORMATION, CALL

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

AREA0216.indd 1

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2014

top states for doing business

also given especially high marks for its incentive programs,

even before Boeing committed to producing the new stretch

cooperative state government, and certified sites/shovel-

version of the Dreamliner at its plant in North Charleston, S.C.,

readiness in the Area Development survey. Site consultants

which will become the first Boeing jetliner model to be built

ranked South Carolina No. 2 for all three of the aforemen-

solely in a nonunion factory.

tioned factors.

Meanwhile, BMW said it would expand its plant in

Probably the most consistent advantage of South Carolina

Spartanburg County with a $1 billion investment that will

is the quality of its workforce. South Carolina is a right-to-work

create 800 new jobs and make the facility the biggest

state with a low unionization rate of 3.3 percent overall, and

exporter of autos anywhere in the United States.

— at 1.3 percent — the lowest unionization rate in the United States for the private sector.

The state’s ReadySC workforce-training system includes recruiting, screening, training, and other aspects of workforce

4. Alabama

preparation. ReadySC, for example, committed to help Boeing

ALABAMA REMAINED SOLIDLY IN POSITION NO. 4

hire 3,600 people over the next several years. And that was

in the Area Development survey of site consultants. This may

2014 top states Commentary To compete effectively in the global marketplace, states continue to revise their tax structures and incentive programs to attract new jobs and capital investment.

Companies looking to expand their manufacturing operations in today’s global marketplace likely will consider states with a probusiness environment and a well-trained workforce.

As the economy and technology continue to evolve, states and employers are working together to make sure that workers develop the skills they need to meet

the requirements of the advanced manufacturing jobs available in the 21st century.

While the national production workforce continues to decline as a whole, manufacturing jobs continue to boost our economic recovery.

Manufacturing expansions have been on the rise the past two years as the national economy strengthens from the 2008 recession. As previously noted in Area Development’s 28th annual Corporate Survey as well as its 10th annual

Consultants Survey, both corporate decisionmakers and consultants to industry rank “availability of skilled labor” as the most important factor in deciding on a location for business. Current trends in manufacturing require employees to have advanced knowledge and skills, and accessibility to such a well-trained workforce helps in determining a state’s competitive edge for new capital investment and jobs. Employers are finding that the labor force has not adapted, however, which has resulted in more

low-skilled and low-wage workers.

Worth noting from this year’s survey of site consultants is that several of the states that were ranked at the top for overall labor climate, availability of skilled labor, and competitive labor costs also happen to be states that have a higher sector of their workforce in manufacturing. This might suggest that these states have recognized their employers’ needs and take a larger role in developing workforce programs to match those needs.

By Dean Uminski, Principal, Crowe Horwath LLP

22

AREADEVELOPMENT

FOR FREE SITE INFORMATION, CALL

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

MADE IN THE USA P E R F E C T E D IN M I S S I S S I P P I mississippi.org/industries

OPPORTUNITY IS ABUNDANT IN MISSISSIPPI Nissan North America — Canton, Mississippi

A growing list of global companies call Mississippi home. Centrally positioned in the fastest growing region of the country, the state’s location provides industries with a strong competitive advantage.

Mississippi offers a welcoming business climate with a ready, skilled workforce and one-stop environmental permitting. The state’s robust infrastructure and available site inventory make Mississippi a prime location for today’s companies searching for tomorrow’s business solutions.

AREA0322.indd 1

MISSISSIPPI RANKS

MISSISSIPPI’S

MISSISSIPPI RANKS

TOP 5

ENERGY COSTS

TOP 5 IN ADVANCED

OVERALL COST OF

up to

20%

DOING BUSINESS LOWER MANUFACTURING

Expansion Solutions Magazine, 2013

Area Development Magazine, 2012

© Mississippi Development Authority 2014

Opportunities await. Find out more at mississippi.org/industries.

THAN THE NATIONAL AVERAGE

19/08/14 3:52 PM

2014

top states for doing business

be based on the strength of its significant and growing accom-

“They’ve done a nice job in Alabama for Mercedes,” Sean

plishments in transportation manufacturing and the success

McAlinden, executive director of the Center for Automotive

of the state’s long-term economic development plan known

Research in Ann Arbor, Mich., told Area Development.

as Accelerate Alabama. Accelerate Alabama was launched in

And the state has also “done a nice job” for the airplane and

2012 and concentrates on optimizing Alabama’s advantages in

aerospace industry. Alabama was the traditional home of Saturn

infrastructure, workforce training, and other areas in working

rocket manufacture during moon-shot days, and now its United

with 11 major industries.

Launch Alliance factory in Decatur turns out a range of $200 mil-

The state’s most notable development is the continued climb

lion to $1 billion in rockets to carry an array of satellites into space.

in importance of car production, with Alabama as host to major

And in its first U.S. production, Airbus plans to begin manu-

facilities for Mercedes-Benz, Honda, and Hyundai that produced

facturing its A320 family of passenger jets in Alabama next year.

more than 915,000 vehicles last year. Mercedes launched out-

That will add to the European consortium’s existing engineer-

put of its C-Class sedan, while Toyota moved ahead with a $150

ing presence in Alabama. It will also prompt development of a

million expansion of its Alabama engine plant. Meanwhile, the

supplier infrastructure, joining Boeing’s operations in the state to

state’s auto-supplier sector added 2,300 new jobs in the year

make Alabama one of America’s air-transportation manufactur-

ended in June to keep up with burgeoning final demand.

ing leaders.

2014 top states Commentary Commen OVERALL RANKING: Georgia continues to lead the pack through an undeniably strong operating environment lead by a seamless economic development effort inclusive of all key representatives. This is demonstrated by high rankings in speed of permitting and cooperative state government. A “can do” attitude pervades all aspects of the economic development approach.

BUSINESS ENVIRONMENT: South Carolina has

leveraged its low cost of doing business to transform into an advanced manufacturing powerhouse and a favored destination of foreign direct investment.

A coordinated effort to train and ensure the constant supply of skilled labor along with aggressive incentive programs has yielded one of the most competitive markets in the country.

LABOR CLIMATE: Availability of skilled labor is typically the most important location decision factor. The survey results reflect the

long-standing advantage of the Great Lakes region (MI, IN, OH, IL) drawing from its manufacturing legacy.

The region may not be as competitive on cost, but companies are willing to pay for the peace of mind in a deep labor pool.

Low-labor-cost locations generate significant interest from companies, especially in manufacturing. However, many companies locate plants in more expensive locations with larger skilled labor pools in an effort to control for risk.

INFRASTRUCTURE: Tennessee enjoys being at the center of everything — population growth, legacy and emerging manufacturing belts, and major consumer hubs. The state’s strong interstate highway system and air cargo capabilities give the state a multimodal advantage. A robust utility network tied in with development-ready sites ensures that Tennessee sites regularly make it to the short list.

By Michael McDermott, Consulting Manager, Global Business Consulting, Cushman & Wakefield

24

AREADEVELOPMENT

FOR FREE SITE INFORMATION, CALL

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

THE STAGE IS SET FOR YOU IN TENNESSEE. Fiscally-sound and shovel ready. Experience the state that sits center stage and is conveniently accessible to most major U.S. markets.

Backed by the best balance sheet in our nation, you’ll find an unmatched business climate that has no plans of changing its tune.

Put us to work at TNECD.com.

AREA0312.indd 1

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2014

top states for doing business

be prominent factors in the decision-making process,” said Tennessee Economic and Community Development Commissioner

5. Tennessee

Bill Hagerty.

THE VOLUNTEER STATE CONTINUES TO LEVERAGE

Notably, Tennessee — with its effective history of water

its geographic position at the virtual center of the United States

development stretching all the way back to the creation of the

into a pronounced advantage in infrastructure factors in the

Tennessee Valley Authority as a water-based platform to help

2014 Area Development survey of site consultants, helping

drag the state out of the Great Depression — also was the top-

ratchet Tennessee up two spots to an overall No. 5 ranking this

cited state outside the Upper Midwest for the availability and

year compared with No. 7 last year.

cost of water.

In fact, Tennessee placed No. 1 in overall infrastructure

Tennessee also ranked No. 6 in workforce development

and global access as well as No. 1 in two subcategories within

in the 2014 survey. No doubt some site consultants were

that ranking: distribution/supply-chain hubs and certified sites/

chagrined at the high-profile tussle earlier this year between

shovel-ready programs. It also placed No. 5 for its rail and high-

Tennessee politicians and supporters of United Auto Workers

way access.

representation at the Volkswagen plant in Chattanooga. The

“Companies choose to locate in Tennessee for a number of

union narrowly lost an organizing vote in February, and recently

reasons, but our pro-business environment, ideal central loca-

Volkswagen AG committed to building a new mid-size SUV in

tion, and advanced transportation and logistics system tend to

an expansion of the Chattanooga site.

2014 top states Commentary As I look over the survey results, a few items remained constant: the Southeast is still viewed as the leader, the Midwest is coming back, and does anyone look at the West?

The survey shows the same results we have become accustomed to seeing for the past five years.

This data does not shock me, nor do I expect it to shock any of my fellow site selectors across the country. These are states

that not only show well when you bring a project on site, but also do a fantastic job marketing and recruiting. This really makes a difference to our clients.

In greater than 50 percent of my meetings with clients, the first question they ask is whether they should move to one of the states on the top-10 list.

So I have to wonder, why is that the case? Is it good marketing? I am going to go out on a limb and say

no, it is the coordinated effort of all the branches of state government.

I think the marketing departments are effective, but of the states listed as top-10 places to do business, a coordinated economic development team is in front of every project. Additionally, these states get the executive branch involved, and that involvement is tipping the scales.

Today’s economic

development landscape has become a team sport.

The states that are leading the pack are looking to drive business to the state, and all the regions work together to find the right home for the company looking at the state. There are a lot of location factors that could be equalized with states that are not on this list, but they sometimes miss out because they fail to recognize that economic development is a team sport.

By Bradley Migdal, Executive Managing Director, Location Advisory & Economic Incentives, Transwestern

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according to nonprofit Film L.A. — the city of Los Angeles’ film

6. Louisiana IN HOLDING ON TO ITS NO. 6 POSITION in the Area

office. Of the 108 major-studio productions released into theaters last year, 18 were shot substantially in Louisiana, according to the report.

Development survey from 2013 to 2014, Louisiana has consoli-

There’s also huge momentum behind Louisiana’s already-

dated its reputation among site consultants as one of the most

strong position in hydrocarbon processing and transportation, as

accommodating state governments under Gov. Bobby Jindal.

the fracking boom takes hold across America’s mid-section and

Louisiana tied with Alabama for No. 4 in overall business

much of the new supply is funneled to and through Louisiana.

environment and is in the top four in several important sub-

For example, Sasol, the South African oil company, is proceeding

categories, including No. 1 in incentives programs. The state has

with one of the largest foreign-direct investments in the history

combined a business-friendly approach with enduring advantages

of the U.S. with a liquid-fuels complex that will require construc-

such as a highly productive and well-trained workforce and a

tion outlays of up to $21 billion. The Sasol project in Southwest

modern transportation infrastructure.

Louisiana will benefit from $2 billion in incentives proffered by

Since 2008, the state has secured projects that are creating

the state. It’s also likely to create about 1,200 permanent jobs.

more than 83,000 new direct and indirect jobs and more than $54 billion in new capital investment, along with hundreds of millions of dollars in new sales for Louisiana’s small businesses.

Among the global companies investing are BASF, Nucor, Dow,

7. Indiana

Bell Helicopter, Chiquita Brands, and Procter & Gamble.

INDIANA IS LEADING A CHARGE by upper Midwest states

Major projects from leading digital media/technology com-

to compete with the recently ensconced economic develop-

panies — including IBM, CenturyLink, CSC, GE Capital, CGI,

ment powerhouses in the South and mid-South. The Hoosier

Gameloft, and EA — are joining such investments. And, perhaps

State rode America’s manufacturing boom — with state-level

due to an aggressive state program of tax incentives for the film

corporate-tax reform and a new right-to-work law, among other

industry, in 2013 the Louisiana film industry overtook that of

factors — to the No. 7 spot in the Area Development survey

California for the title of “film-production capital of the world,”

of site consultants, as Indiana also benefited from some of its

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2014

top states for doing business

traditional advantages.

Crory signed a bill that reduced North Carolina’s already-low

One believer is Debbie Smith, managing director of America Place, a commercial real estate developer in Jeffersonville, Ind., across the Ohio River from Kentucky, which landed a Fortune

corporate income tax rate by 29 percent, to 6 percent this year from 6.9 percent, and then again to 5 percent in 2015.

Since then, Gov. McCrory led the devising of a 10-year

500 auto supplier in its first building and is developing one mil-

strategic plan for economic development in North Carolina. The

lion square feet of space. “I’m speaking with a lot of executives

plan includes recommendations that the state should nurture

in the manufacturing industry, and Indiana is the place they

high-performing industries already committed to the state,

want to be,” she says.

undertake broad-scale regulatory reform, streamline tax credits

What’s going on? Indiana’s geographic advantages showed

to encourage venture capital investment, and so on.

up big in site consultants’ ranking it highly in the survey as a

Consultants to industry continue to rank North Carolina

distribution and supply-chain hub and for its rail and highway

highly in crucial infrastructure areas including competitive utility

access. Indiana also placed in a tie for No. 1 with Michigan for

rates, energy reliability and smart grid deployment, and certified

its availability of skilled labor and No. 2 for water availability and

sites/shovel-ready programs. North Carolina updated its Certi-

cost — both legacy attributes as well.

fied Sites program, which has vast digital capabilities.

But what helped Indiana vault closer to top-of-mind for the

The state also has continued to rank highly for its labor

consultants surveyed by the magazine were some very recent

climate, with the nation’s lowest unionization rate, and in the

developments. First, in 2012, Indiana became the first new

quality of its workforce. Thanks in part to the presence of the

right-to-work state in many years, suddenly putting it on dozens

educational institutions in its Research Triangle, North Carolina’s

of new site-consideration lists.

expanding and diverse labor force is up to the demands of

Also, last year, the Indiana legislature passed what was

today’s knowledge-based industries.

“probably the best individual income-tax reform recently,” according to Scott Drenkard, economist and manager of state projects at the Tax Foundation. It maintained the third-lowest corporate income tax rate, at 4.9 percent, while also institut-

9. Ohio

ing a moderate cut in individual income taxes and speeding

THE BUCKEYE STATE IMPRESSED SITE CONSULTANTS,

up repeal of the inheritance tax. Surveyed site consultants

as Ohio became the second Midwest state to join the list for

rewarded Indiana with a No. 5 showing this year in corporate

2014, placing No. 9. Like Indiana, much of Ohio’s positive

tax environment.

showing stemmed from its legacy advantages. It placed No. 4 in the overall infrastructure/global access category because of its central location, distribution and supply-chain infrastructure, rail and highway access, and water outlook as a Great Lakes state.

8. North Carolina

But Ohio also placed a strong No. 6 in overall labor climate.

THE TAR HEEL STATE SLID TO THE NO. 8 spot from the

This reflected not only the deep pool of skilled labor (No. 2), but

No. 5 spot last year in Area Development’s survey of site consul-

also progress in how business utilizes this advantage in Ohio.

tants. But the drop more than likely reflected more aggressive

The state has stopped short of adopting the right to work, as

efforts and more impressive improvements by competing states

neighboring Michigan and Indiana have done, but the consul-

than anything “gone wrong” in North Carolina.

tants responding to the Area Development survey ranked Ohio’s

Indeed, by many indicators, the business climate in North Carolina just keeps getting stronger. In 2013, the state passed a comprehensive tax-reform package that was hailed by some analysts as the best by any state in decades. Gov. Patrick Mc-

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labor climate as No. 3 among all non-right-to-work states, over traditional favorites such as New Mexico and Colorado.

Also, Ohio has made great strides in improving its business climate. The Ohio legislature laid claim to the largest year-to-

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year tax cut of the 2013 legislative sessions with a cut of $2.7 billion over three years, including breaks for small businesses as well as individuals. And Gov. John Kasich can argue in his 2014

10. Mississippi

re-election campaign that Ohio has gained nearly a quarter-

MISSISSIPPI SLIPPED ONE SPOT BUT RETAINED A PLACE

million private-sector jobs under his tenure, though it has

on the consultants’ list, at No. 10 compared with No. 9 in 2013.

rebounded from a worse low than most of the U.S. after the

Among the perceived biggest strengths of the state was the

Great Recession.

overall business environment, where it ranked No. 6. In the sub-

One surprising new area of growth for Ohio, and for some other Midwest states, has been the siting of some call centers in the state, as U.S.-based companies have been “onshoring” call-

category of the overall cost of doing business, Mississippi also tied for No. 6 with Florida.

Consistent with those rankings were other strong showings

center labor to placate consumers dissatisfied with dealing with

by Mississippi that spoke to its overall rise in business climate:

non-native English speakers around the globe. For example,

speed of permitting (No. 5), most favorable regulatory envi-

Zulily, a Seattle-based online discount retailer, committed to

ronment (No. 6), and competitive utility rates (tied for No. 5).

building a call-center campus with 900 jobs in the state, adding

Mississippi also placed No. 3 in competitive labor costs and No.

to the 1,000 it already employs at a distribution center in Ohio.

5 for labor climate among right-to-work states.

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19/08/14 3:48 PM

2014

This rising status has been reflected in more wins for Mis-

top states for doing business

sissippi in targeted areas including automotive and aerospace.

Tokyo-based Yokohama Tire plans to locate a commercial truck tire plant in West Point, Miss., creating 500 new jobs and potentially up to 2,000 jobs. And France-based Eurocopter is expanding its plant in Columbus, Miss., to serve as a final helicopter assembly and test site.

The state also is a major center for oil and gas investment as the fracking economy booms, with more than 13,000 miles of pipelines

The Mississippi legislature also took a major step toward

supporting Mississippi’s important role.

creating a more sound business tax base last year by exempting

Additionally, Mississippi has also entered the film-incentive

manufacturers form paying a 1.5 percent sales tax on energy.

derby, offering rebates of up to $10 million per project. The 2014

Otherwise there would be tax pyramiding, or the compounding

James Brown biopic, Get On Up, was filmed entirely in the state. ■

of the tax burden as products make their way through the chain of production. The reform was “a small, but important, step in

This report was prepared by Geraldine Gambale,

the right direction,” said Scott Drenkard, of the Tax Foundation.

Editor; story was written by Dale Buss, contributing editor.

2014 top states Commentary The results are in for the 2014 Top States for Doing Business Survey. We all have different opinions regarding who made, who did not make, or who should have made the list.

But the survey is reaffirming that several states in the Southern region are at the top of the list.

Looking at this year’s survey and comparing it to the past surveys, we can see that a lot of progress has also been made in other regions as well.

States such as Indiana, Ohio, and Michigan are moving up rapidly. Other individual states have done well in their own right but are not on the list. Why do these Southern States keep reappearing at the top? Understanding their advantages, some natural — but most based on good

solid strategy — does provide lessons for other states.

Historically, the South hasn’t always been at the top of such lists. In fact, relatively recent dire circumstances forced states in this region to reassess and implement complete new strategies.

The Carolinas’ main textile industry was hollowed out and had to be replaced with new sustainable industries. Although blessed with natural resources, in the mid 1980s, Texas realized it was too dependent on the oil and gas industry and concluded it had to diversify the economy — which it did quite successfully. Most Southern States also turned to attracting FDI as a means to creating new jobs. Louisiana is the

latest in the region making sweeping changes to the way business is done. The bottom line — over the past few decades the South has reorganized and has gone after capital investment in a very serious way.

The result — the region is the most successful in embracing and fine-tuning a free-market platform — which certainly encourages direct investment. The Southern States perform extremely well in most aspects of promoting, attracting, servicing, and retaining investments as reflected within the survey results. They are competing head-on with each other in this dynamic region, which forces keen competition.

This is all good news for the investor. From their perspective, the region

offers a location where it can set up easily, source locally or import using local world-class ports, make a product at a reasonable price with reasonable regulations, and sell a product directly into the heart of the largest consumer base in the world — with the biggest expansion of this base being their own region.

To the South, this means jobs. To continue this success, the region must provide skilled workers, and the workforce development agencies of these states are among the best. The reason the South dominates the survey — they work together to welcome and nourish the investor.

Expect the Southern States to be here on the list next year as well.

By Bill Luttrell, Senior Locations Strategist, Werner Enterprises

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SPONSORS ALABAMA 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, Director AIDT One Technology Court Montgomery, AL 36116 334-242-4158 director@aidt.edu www.aidt.edu GEORGIA Georgia Quick Start Georgia Quick Start, the nation’s oldest and most successful work force training organization, provides comprehensive, customized training — free of charge — to qualified companies locating or expanding in Georgia to ensure the highest quality work force required for business success.

Rodger Brown, Executive Director of Marketing Georgia Quick Start 75 Fifth Street NW, Suite 400 Atlanta, GA 30308 404-253-2800 • Fax: 404-253-2821 www.georgiaquickstart.org rbrown@georgiaquickstart.org Sunrise Center • 190,000 SF for lease in Metro Atlanta • Opportunity Zone tax credits up to $16,500,000 • Below-market $16.25/SF full-service rent • Office space, data center, and distribution center • Class A sustainable renovation • Multiple fiber providers and significant power • 1 month free rent + $2.40/SF of TI, for each lease year Jennifer Scott Sunrise Center 3120 Breckinridge Blvd.

Duluth GA, 30099 404-267-1967 Jennifer@SunriseCenter.com www.SunriseCenter.com ILLINOIS/INDIANA Hoosier Energy Hoosier Energy is an electric generation and transmission cooperative providing electricity and other services to 18 electric distribution cooperatives, in central/southern Indiana and southeast Illinois. The Hoosier Energy economic development team provides a wide array of services including site and building searches, incentive guidance, site analysis, and electric rate estimates.

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.HoosierSites.com

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LOUISIANA 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 MISSISSIPPI Mississippi Development Authority Opportunity is abundant in Mississippi.

A growing list of global companies and entrepreneurs call Mississippi home. The state’s strategic location offers easy access to U.S. markets, and recent tax and energy reform add to Mississippi’s growth capacity. Find out why Mississippi is ranked one of the top states to do business at mississippi.org.

David Ramsey Global Business Division Director Mississippi Development Authority P.O. Box 849, Jackson, MS 39205 601-359-3155 dramsey@mississippi.org www.mississippi.org OHIO Grow Piqua Now Grow Piqua Now exists to strengthen the community’s business environment by coordinating resources with an effective regionally integrated economic development program. Through a focused Plan of Work, with the assistance of state and regional partners, and committed board members, GPN is creating economic development opportunities for Piqua area businesses and residents.

Justin Sommer, Executive Director Grow Piqua Now 326 N. Main Street Piqua, OH 45356 800-251-1742 Fax: 937-778-0809 jsommer@piquaoh.org www.GrowPiquaNow.org JobsOhio Ohio is the only state in the nation now positioned to capitalize on the economic game-changers that experts say will drive future prosperity in the global marketplace.

The catalysts — including shale energy, big data, advanced manufacturing, talent and infrastructure — are already making a difference for category-leading national and international businesses that now call Ohio home.

JobsOhio 614-224-6446 contact@jobsohio.com www.jobs-ohio.com TENNESSEE Dyersburg/Dyer County C. of C. Dyer County is located in Northwest Tennessee, FOR FREE SITE INFORMATION, CALL

about 75 miles north of Memphis, and is bordered on the west by the mighty Mississippi River. Dyersburg/Dyer County is the regional hub of a 10-county area, including parts of Tennessee, Missouri, and Arkansas.

W. Allen Hester, President/CEO Dyersburg/Dyer County Chamber of Commerce 2000 Commerce Ave. Dyersburg, TN 38024 731-285-3433 Fax: 731-286-4926 ahester@dyerchamber.com www.dyerchamber.com Knoxville-Oak Ridge Innovation Valley With its heritage of innovative science and technology breakthroughs and solid, businessfriendly values, Knoxville-Oak Ridge Innovation Valley is a prime business location. Innovation Valley in East Tennessee is home to over 75 corporate headquarters and is a major hub for manufacturing and innovation with world-class research at Oak Ridge National Laboratory and the University of Tennessee.

Doug Lawyer, CEcD Vice President of Economic Development Knoxville-Oak Ridge Innovation Valley 17 Market Square #201 Knoxville, TN 37902 865-637-4550 dlawyer@knoxvillechamber.com www.knoxvilleoakridge.com Tennessee Department of Economic and Community Development Business is a sound investment in Tennessee.

As a fierce competitor on a global scale, the Volunteer State provides expanding or locating companies a central location with unparalleled infrastructure, a highly qualified workforce with a focus on education and training, a low tax burden, and a collaborative environment with a business-friendly administration.

Allen Borden, Assistant Commissioner, Business Development Division Tennessee Department of Economic and Community Development 312 Rosa L. Parks Avenue Nashville, TN 37243-0405 615-532-1294 • Fax: 615-741-7306 allen.borden@tn.gov TNECD.com http://tnecd.com http://tn.gov/ecd TEXAS Temple Economic Development Corporation Temple, Texas, is a community with a diverse economic base that includes healthcare, distribution and warehousing, and manufacturing as its foundation. Within 180 miles of a population of 18 million, Temple is strategically located in the heart of the Texas Triangle (Dallas, Houston, San Antonio, and Austin) on I-35.

Charley Ayres Director of Business Development Temple Economic Development Corporation 1 South First Street Temple, TX 76501 254-773-8332 cayres@choosetemple.com www.choosetemple.com

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SITE/FACILITY PLANNING

DESIGN FIRMS’ INCREASING ROLE IN THE LOCATION PROCESS BRPH construction administrator, Skip Brothers, analyzes plans with a team member at the $100 million Harris Engineering Center currently under construction in Palm Bay, Florida.

W

hen a community is vying for a coveted relocation or expansion project, economic development leaders form a robust team of partners that work in concert to build the best business case.

Architecture and engineering firms are routinely part of this team. But in a changing business landscape that is currently ripe for industrial progress, these same design firms are coming to the table as part of the conversation, yet, with a new seat location.

The process of client engagement for design firms is evolving from a late-stage entry into the game by RFP response to a proactive approach that includes crucial due diligence factors that come before any facility design can even be conceptualized.

Project development elements like site selection, master planning, and business climate analysis have become design firm buzzwords considered in the same light as blueprint, AutoCAD, and sustainability.

As the dialogue changes, so too does the level of integrated service clients are receiving from one source.

This shift in thinking is the new reality design firms are embracing as industrial and manufacturing companies seek ways to shorten facility development lead times and

bring their product to market more quickly than their nearest competitor.

Beth Kirkland, a career economic development professional who has served on both the private industry and community sides of the profession, talks to Brian Curtin, president of BRPH, an international architecture, engineering, and construction services firm, on the trending role of site selection in the design process, how firms can adapt to the changing landscape, and how the seamless process benefits growing companies.

Beth: While not entirely new, the concept of designers serving in some site selection capacity appears to be taking hold as a strong trend within the design industry. How did this concept evolve?

Brian: As economic development has evolved from a Department of Commerce responsibility to a publicprivate partnership model, AEC

(architecture, engineering, construction) firms find themselves involved in project development more often and earlier in the process. We are partners at the table alongside corporate real estate executives, labor analysts, economic development officials, higher education leaders, and technology experts — all with the same goal in mind: how can we help this company create jobs in the desired location in an expeditious manner while controlling cost and mitigating risk? This is where trust is gained and relationships are formed. AEC firms are seeing their role expand from supporting economic development organizations with preliminary design concepts and cost estimates to facilitating requests directly from clients to lead their site searches and community comparison efforts.

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in full, but how does this impact a company’s bottom line or time constraints?

Brian: Capital-intensive projects require significant due diligence before a company can make the final decision to expand or look for a new location. Companies are riskaverse and cannot move forward without the assurance that the site is developable today, and that their transportation logistics and facility needs can be met. Zoning, permitting, wetlands delineation/mitigation, and environmental assessments are time-consuming and costly, yet companies must move at the speed of market demands. Companies are turning to trusted advisors who know their industry and have experience conducting site evaluations and facility design simultaneously, thereby controlling costs while fasttracking the project.

Beth: So, if these integrated services are taking companies there faster and more economically, what types of services make up the most common pre-design core competencies?

Brian: This depends on the level of sophistication required from a relocating or expanding company. In some cases, there are dozens of sites to analyze or the site requirements are so specific that it becomes like finding a needle in a haystack. But a large majority of clients utilize any combination of the following services on the path to a new facility: SITE FEASIBILITY STUDY — Is the site shovel-ready? It should be for sale or lease. Environmental phases 1 and 2 are complete and a mitigation plan is in place. Utilities (water, wastewater, electric, gas, and fiber) are at the site or plans exist to extend them to the site with required capacity. Costs are known and are competitive. Transportation logistics are conducive to the company needs or can be addressed within the desired timeframe.

MASTER PLANNING — This process takes into consideration the long-term needs of the client (both public entities and corporate end-users) and often incorporates phased facility plans. It is a structured planning process that includes input from the right people. The master plan serves as a “roadmap” for future projects and the information required to budget the necessary funds to complete additions and upgrades. Master planning establishes the architectural theme, infrastructure systems such as water and sewer, parking concerns, traffic flow patterns, standards for all major engineering disciplines, landscape patterns, and phasing of the project.

PROGRAM MANAGEMENT — In this role, the entire project is managed on behalf of the client allowing them to focus on their core business. This includes scheduling and sub-contract management. This is particularly important in manufacturing when operations must continue while bringing a new facility online.

responsiveness of state and local government decisionmakers is just as important as the economic development programs and policies that they manage. Communities with a track record of successfully establishing and expanding businesses are attractive. Prospective companies are looking for ways to mitigate the cost of expansion. Free land, tax incentives, and workforce training grants are all important.

However, as the saying goes, “time is money.” Thus, shovelready sites and fast-tracked, hassle-free permitting are critical.

LABOR MARKET ANALYSIS — This is a critical component in the research we conduct. Not only do we look for available qualified labor, but we also take into account the future pipeline of labor in the region. Is there a training program or dedicated academy to supply the company? Are such programs linked to the middle and high schools in the area to ensure that students are aware of future employment opportunities? Are area employers engaged in curriculum development?

INCENTIVES NEGOTIATION — States and communities offer incentives to set themselves apart in an otherwise equal solution for the company between two locations. Companies seek incentives, both statutory and negotiated, to allow an expansion to move forward that would otherwise miss a critical shift in the market they serve. An understanding of the differences among states and counties in tax policy, as well as knowledge of geographically induced development zones, is imperative.

Beth: As design firms expand their scope of services, how likely is it that seamless design and expansion/relocation solutions continue to grow throughout the industry?

Brian: When services expand, the disciplines required to provide those services also expand. Having a team of professionals that understand and embrace economic development, in combination with design and planning, helps enhance the traditional seller-doer model. Competitive firms must be in tune with the economic and business development trends of the markets they serve. When speed to market is of paramount importance to a growing company, a truly diversified design firm has the ability to enhance a client’s market position. There is no greater opportunity, no greater selling point, and no greater testimonial than successfully enhancing a client’s business objectives through integrated design-led site selection services. ■ Brian Curtin, P.E., is president of BRPH, an employee-owned international architecture, engineering, and construction services firm.

Beth Kirkland, CEcD, has 25 years of business development experience and provides industry expertise to BRPH’s design-led site selection program. She is a past Chair of the Florida Economic Development Council.

BUSINESS CLIMATE ANALYSIS — Beyond regional and community demographics, the availability and

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INDUSTRY REPORT

Revolutionary Advances in Technology Electronics, photonics, and digital media are combining to create exciting technologies for the future.

By Mark Crawford

S

and communications technology (ICT), defense and national security, energy, and health and medicine. The global photonics market produces about $500 billion in products every year — which are critical components for booming global ICT and telecommunication markets (estimated to be worth about $4.5 trillion combined).

Unfortunately, the U.S. has not kept pace in recent years with other countries (for example, Germany and China) regarding photonics research and development. To improve U.S. competitiveness, in 2012 the National Research Council proposed the National Photonics Initiative, which supports increased collaboration among private-sector companies, universities, and government on photonics research and commercialization.

Advancements in photonics are creating interest in shifting from electron-based devices to products that depend on photons (light). This change is expected to result in devices that are smaller, faster, and more energy-efficient. For example, lighting systems that rely on photonics can reduce electricity usage by up to 50 percent — which also reduces greenhouse gas emissions because fewer fossil fuels are consumed. Another example is the liquidcrystal display (LCD) that is so prevalent in electronic devices today. Standard LCD technology consumes a substantial amount of energy — up to 40 percent of total display power is consumed by backlighting alone. However, new photonic products — such as organic light-emitting diodes — have the potential to greatly reduce the energy consumption in Photonics LCDs. Photonics is the Key photonics clusters science and application in the U.S. are located of light. Sectors that in Arizona, California, depend on photonics Colorado, Michigan, include advanced The energy is adjusted on a 532nm laser source to measure the fluorescence North and South Carolina, manufacturing, information intensity of an organic dye in solution. courtesy CREOL

cientific disciplines are often remarkably interconnected — research discoveries in one field (photonics, for example) — can lead to advances in other fields, such as electronics. When these discoveries are combined, using advanced microelectronic and nanotechnology techniques, novel applications become feasible for other high-tech industries such as aerospace, computer science, robotics, quality control systems, bioengineering, and medical devices.

Photons (light) have several advantages over electrons for transporting energy and data. In electronics, traditional semiconductors are reaching their performance limits for capacity, speed, heat, and energy consumption. Thanks to new research breakthroughs, both photonics and electronics can be built into integrated systems that are only a few atoms thick. And, as new components become smaller, lighter weight, and more flexible, engineers have more options for design creativity.

Advances in these fields will continue to revolutionize the electronic products that are so embedded in our lives today, such as the Internet, smartphones, video games, television, barcode scanners, etc.

Photonics, electronics, and digital media are all moving forward in a steady front, creating new products that improve quality of life around the globe. These industries are also key drivers in stimulating economic growth, creating jobs, and improving global competitiveness.

AREA DEVELOPMENT | Q3/2014

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and Florida. One of the country’s largest photonics research institutions is Stanford University’s Photonics Research Center. Here cross-disciplinary scientific teams work on lasers, optics, solar cells, neuroscience, microscopy, and other light-related projects. Discoveries include a recently announced eye implant for people suffering from macular degeneration and other retinal diseases. The implant consists of tiny photodiodes that are implanted under the retina and can transmit images using photons.

Another top research organization is the University of Central Florida’s College of Optics and Photonics (CREOL).

Research areas include lasers, fiber optics, semiconductors and integrated photonics, optics imaging, and sensing and display. The college recently received about $1.3 million in federal grants for defense-related work on lasers, x-ray diffraction systems, and related technology. UCF researchers are working on photonics projects that have global implications, including a method for using high-energy lasers to trigger rain or lightning. Another team is using nano-transfer printing to create nanostructures that can be engineered to bend light around an object, so that it appears invisible. The scientists hope these nanostructures can be eventually manufactured in larger sheets and used to cover objects such as fighter jets, so they are invisible to detection systems.

Electronics and Photonics Merge Photonics and electronics can be brought together at the scale of a computer chip. Global ICT companies are developing silicon photonic computer chips, which enable the download of large digital files, at much faster datatransmission speeds. For example, two to three seasons of a high-definition television show could be downloaded in a matter of seconds.

Photonic and electronic systems can both be constructed on the same silicon chip, creating a complex microcircuit that seamlessly transfers data from one system to the other.

Silicon photonic chips can also be manufactured in high volume at reasonable cost using standard semiconductor fabrication methods.

Because silicon microphotonics can do more with less power, they are especially attractive to large energy users like date-center operations. With the increased bandwidth and Internet speeds, these chips will make it easier to process “big data” — a procedure that many companies are embracing to streamline operations, evaluate markets, and analyze customer preferences.

Top semiconductor sectors include Texas, California, New York, and Michigan. Austin — nicknamed “Silicon Hills” — continues to be a hotbed of semiconductor research and development. Semiconductor and software firms attract nearly half of the venture capital that is invested in Austin’s private sector. Major producers are Freescale Semiconductor, Spansion, and Samsung. Recently announced expansions by electronics and ICT firms in Austin include National Instruments ($80 million, 1,000 new jobs) and Oracle ($5.4 million, 200 jobs).

In New York, GLOBALFOUNDRIES continues to

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introduce advanced semiconductor platforms for advanced manufacturing industries. In May 2014 the company announced a 55-nanometer semiconductor-manufacturing platform designed specifically to meet the stringent and evolving needs of the automotive industry. This platform will be used to develop more sophisticated semiconductors to power safety, body, powertrain, and information/ entertainment applications in vehicles.

“Better fuel efficiency, higher safety standards, increased in-vehicle communications capabilities, and more demanding consumer requirements are all driving the need for more performance and lower-power integrated circuits for these systems,” says Paul Colestock, director of segment marketing for GLOBALFOUNDRIES. Other top research areas in electronics include microelectronics and nanotechnology, communications, networking, power and energy systems, and biomedical imaging and sensing. For example, Azoi recently launched a health-monitoring device called Wello that fits onto a smartphone and measures vital signs, including blood pressure, electrocardiography, heart rate, blood oxygen, temperature, and lung function.

“We have developed a technologically advanced, yet easy-to-use tool to monitor health and facilitate better lifestyle choices,” says Hamish Patel, CEO at Azoi. “Our device is a not-so-small engineering feat in microelectronics, nanosensors, imaging, data analytics, and design that will hopefully help the world become a healthier place.”

Digital Media Photonics, electronics, and micro-scale and nano-scale manufacturing play huge roles in the advance of the digital media industry. Digital media includes gaming, film and television, heath technology, robotics, smart systems, and “wearables.”

One of the hottest digital-media sectors is wearables — personalized digital-media communication devices that are worn on the body (for example, fitness trackers, gaming controls, etc.).

“Wristbands, smart watches, medical devices, and smart glasses will drive the market of wearables,” writes Ozoda Muminova on www.theguardian.com’s digital media trends blog. “This includes Google Glass, which will of course steal attention in 2014, creating imaginative opportunities for marketers. Advertising will get even more targeted — location, content, context, and mood-based ads; sponsored content cards; pay-per-gaze payment models; and integration with print, outdoor, and television.”

“According to research firm NPD, wearable device shipments will hit 48 million units this year and explode to 91 million in 2015,” reports Don Reisinger at www.eweek. com. “The operating system is essentially a stripped-down version of Android that has been redesigned to take full advantage of the small displays found in a smart watch or other wearable computing devices.”

Digital media is also expanding the capabilities of medical devices and instruments. When combined with 800-735-2732, EXT. 225, OR VISIT US ONLINE AT www.areadevelopment.com

wireless technologies, these products can transmit and analyze data in real time — making them ideal for at-home care monitoring. Digital media is also being used to track the migration of disease and to mobilize emergency responses, which are critical for containing outbreaks, pandemics, or other health threats.

Amelia Burke-Garcia, director of the Center for Digital Strategy and Research for Westat, a research corporation in Rockville, Maryland, recently co-authored an article in the Journal of Public Health that examined how digital media is being used for public health research and communications.

She indicates that more healthcare organizations are turning to digital media to communicate with larger segments of the population, especially for disease management information and news alerts.

Another rapidly growing segment of digital media is the Internet of Things (IoT), which refers to the explosion of smart devices or smart products that provide immediate access or control through the Internet. This demand for real-time connectivity is also leading to the development of new automation tools and sensor technologies that improve our “smartness” — smart homes, smart cars, biochips, monitoring devices, etc.

Muminova indicates that the IoT market, and all its supporting devices, will show significant growth in 2014: “Business Intelligence forecasts the number of IoT-enabled objects to go from just under 1.85 billion in 2013 to over 2.5 billion in 2014 and 9 billion in 2018, when they will account for half of all Internetenabled devices,” he says. “Imagine smart objects surrounding us in smart homes, offices, and on the streets. Or everyday objects and appliances that can monitor their environment, report their status, receive instructions, and even take action based on the information they receive from our PCs, smartphones, and tablets. This will start an era in which we no longer search for things, but they search for us and location-based marketing becomes ubiquitous.”

Robert Hof, in a recent Forbes. com article that discusses key trends in consumer electronics, indicates that new developments in sensor technologies will lead to increased autonomy. “For example,” he says,

“the use of sensors such as accelerometers and gyroscopes in all kinds of products will allow these products to work fairly independently in response to external stimuli. When we start to embed camera devices on the front of the car, we can do adaptive cruise control to stay in the lane. Some cars now have ‘park assist’ that beeps when there’s a parking space and then tells you to take your hands off the wheel so it can park automatically. So, we’re starting to digitize these everyday things. We can then make decisions more quickly, or let machines do tasks on our behalf.” ■

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Southern Indiana SPECIAL INVESTMENT REPORT

A SOUTHWEST INDIANA NEWS/ ANNOUNCEMENTS

• Indiana University School of Medicine will build a multi-institutional health science education and research medical campus in downtown Evansville.

The new $69.5 million 230,000-square-foot facility will open summer of 2017 and will serve approximately 1,800 students.

• Midwest Fertilizer Corp. will build a $2.4 billion stateof-the-art manufacturing facility in Posey County that will create 150 high-wage jobs. Once the facility goes online, it will result in a reduction in U.S. imports of nitrogen and urea-based fertilizers, keeping those dollars in the U.S. and, more importantly, in Southwest Indiana.

• Toyota Motor Manufacturing Indiana, Inc. (TMMI), Indiana’s largest automotive assembly plant, produces 300,000 vehicles a year, currently employing 4,500 workers in Southwest Indiana. TMMI’s recent $400 million expansion consolidated global Highlander and Highlander Hybrid production into Southwest Indiana.

SK JUST ABOUT ANY ECONOMIC-DEVELOPMENT PROFESSIONAL IN Southern Indiana what characterizes the local economy and one of the first things you’ll hear is “our people know how to work and how to make things. They’re good at it.”

That’s the word from Darrell Voelker, director of the Harrison County Economic Development Corp. and president of the South Central Indiana Economic Development group. A bit to the west, the message is similar: “We are good at making things and distributing them,” says Greg Wathen, president and CEO of the Economic Development Coalition of Southwest Indiana. “And we’re getting better at it and more sophisticated at it.”

Move past that simple description, though, and the story gets more complex. Southern Indiana is the hilliest and most wooded part of the state. Much of it is rural, yet it also benefits from a strong presence in technology R&D and financial services, a growing medical sector, significant architecture, and internationally prominent Big Ten higher education. There’s even a massive Naval base that has neither ships nor a major body of water.

Manufacturing & More Driving Growth But manufacturing is the best place to begin when discussing what makes the Southern Indiana economy tick. “Manufacturing drives a lot of it, as it does in Indiana as a whole,” Wathen says. Transportation equipment is a big part of that. Near the southwest corner of the region is a major Toyota truck plant that turns out Sienna minivans, Sequoia pickups, and the majority of the world’s Highlander SUVs. The city of Greensburg in the southeast part of the state hosts a major Honda plant. Beyond the thousands of direct jobs, these plants and assembly operations elsewhere in Indiana and nearby states support thousands more jobs at component suppliers across Southern Indiana.

There’s also General Motors, with a casting plant in Bedford that makes aluminum engine blocks and was recently targeted for millions in new investments. Add to that the operations of Cummins Inc., a global, Fortune 500 engine-maker headquartered in the southern Indiana city of Columbus. Its commitment to Southern Indiana includes a $100 million expansion at its plant in Seymour. Historically, Cummins has been a model corporate citizen — its best-known legacy is the world-class architecture found all over Columbus, funded through the vision of a longtime Cummins CEO. Plastics also play a big role, Wathen observes. In Mount Vernon, which is in the far southwest corner of the state, SABIC operates one of its largest innovative plastics facilities worldwide, manufacturing and exporting high-end plastic resins. Not far away in Evansville is the headquarters of Berry Plastics, which at more than $5 billion in annual revenues is one of the biggest plastic-packaging producers in the world.

The region is big in metals, too, says Wathen, particularly aluminum. He says there are fewer than a dozen aluminum smelters remaining in the U.S., and one of the biggest is Alcoa’s Warrick Operations, a more than 9,000-acre site along the Ohio River just to the east of Evansville. Two more smelters are less than an hour away on the other side of the river, Wathen adds.

Mount Vernon’s major plastics

By Steve Stackhouse

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operations will soon be joined by a massive fertilizer manufacturing facility. Midwest Fertilizer, set to break ground later this year, represents a more than $2 billion foreign investment and will manufacture nitrogen-based fertilizers for the American market.

Beyond manufacturing, Wathen points out that the largest Indiana-domiciled banking company, Old National, is headquartered in Evansville. As major Indianapolis-based banks one-by-one were acquired by out-of-state institutions, Old National continued to strengthen and grow across the state and region, remaining independent.

Meanwhile, Evansville is the focus of an unusual development in medical education, says Jeremy Sowders of the Radius Indiana regional economic development partnership. The Indiana University School of Medicine is joining together with the University of Southern Indiana, the University of Evansville, and Ivy Tech Community College on a downtown Evansville facility that will turn out the next generation of doctors, nurses, and other allied health professionals. It’s an innovative collaborative approach for addressing the labor shortage expected to hit the medical professions in coming years.

A Military Presence A lesser-known driver of development in the southern part of Indiana is a 100-square-mile military complex in Crane, about midway between Evansville and Indianapolis. Sowders notes that the installation has multiple tenants, including the Naval Surface Warfare Center Crane Division, the site of sophisticated military R&D conducted by a large, highly trained workforce including numerous Ph.Ds. Also onsite is the Crane Army Ammunition Activity, a supplier of munitions that supports hundreds of jobs.

Just outside the military site is Westgate@Crane Technology Park, a high-tech development for those doing contract work for the military R&D operations in Crane.

It’s also a prime spot for capitalizing on the intellectual property developed there. For example, the $14 million Battery Innovation Center facility hosts industry and research partners striving to develop and commercialize cutting-edge battery and energy storage technologies.

Crane sits along a brand-new stretch of Interstate 69, which is giving the region significant new connection possibilities. The highway is now complete from Evansville to Crane, and the section heading north toward Bloomington is now under construction. The project will eventually connect with the existing I-69 in Indianapolis.

meet infrastructure needs that bigger cities take for granted.

Such problems aren’t insurmountable, to be sure, but they require extra consideration.

Wathen adds that “it can be a challenge to attract new workers� for the growing manufacturing sector.

Manufacturing jobs can pay quite well, he points out, but they require specific types of education — and not necessarily the traditional college degrees that society encourages so many young people to pursue. “A big challenge is replenishing the workforce pipeline,� he explains.

Still, economic development officials point out, workers raised here tend to have a work ethic that serves companies well — a culture reflecting the area’s roots in agriculture, forestry, furniture manufacturing, and the like. As Voelker notes, “The mentality — the work ethic that made this a big manufacturing region years ago — is still here.â€? â–

Southern Indiana Resources: Harold Gutzwiller, Economic Development Manager Hoosier Energy 812-876-0294 hgutzwiller@HEPN.com www.HoosierSites.com Greg Wathen, President & CEO Economic Development Coalition of Southwest Indiana Evansville, IN 812-423-2020 gwathen@southwestindiana.org www.southwestindiana.org

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Confronting Challenges The interstate and the manufacturing rebound bode well for the region, but local officials know there are challenges ahead as well. “These are primarily rural areas,� Voelker points out. That means it can sometimes take extra effort to

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construction management

Successfully Managing Mega-Projects Choosing the right project delivery strategy, managing risk, and developing specific policies and procedures will ensure a project is completed on time and within budget.

By Brian Relle, Director; and Clay Gilge, Principal; Major Projects Advisory, KPMG LLP

than utilizing different teams during various stages of a project to promote accountability, transparency, and responsibility. The core team should include the following key personnel: project director, engineering manager, procurement manager, construction manager, and commissioning and startup manager.

C

onstruction “mega-projects” live up to their reputations in many ways, including megasize, mega-cost, mega-complexity, and mega-risk. Managing a megaproject such as a major infrastructure initiative or plant development project requires improved project management controls to avoid mega-costs and schedule overruns.

Early planning and organization of a construction mega-project sets the stage for everything that happens after project authorization. Once machinery, materials, and manpower enter the picture, much of the planning flexibility disappears. By being smart about project delivery and contracting strategies and by putting appropriate project management controls in place, many project risks can be mitigated or eliminated. Adhering to the following leading practices for planning and organizing mega-projects will promote successful project completion.

Assign the project team early — Assign members of the project team right from the very start. It is best to assign a core team that will remain involved throughout the project rather

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Choose the right project delivery strategy — Selecting the right delivery strategy will drive the project’s cost, schedule, quality of design, construction approach, and long-term maintenance demands. The spectrum of projectdelivery strategies ranges from those where the construction owner is fully involved in the management and execution of the project to where its involvement is minimal, and it relies on a turnkey contractor to coordinate all aspects of the project.

Delivery strategies can generally be placed into the following four categories: 1. Traditional: design-bid-build, where time is not a driving factor 2. Collaborative: construction management at risk, where there is a need for early feedback from construction experts before the design is complete 3. Integrative: the owner, designer, and contractor all have a stake in the project and operate in the best interests of the project 4. Partnership: public- and privatesector partners work together to FOR FREE SITE INFORMATION, CALL

execute large infrastructure projects with minimal public agency outlays Selecting a project delivery strategy is dependent on a construction owner’s desire for controlling various aspects of the project. For example, some owners have good in-house engineering departments that can prepare process and piping designs for others to build. Other owners may be more comfortable handling the purchasing of all the major equipment items. Whatever project delivery method is selected should be aligned with the owner’s scope objectives, resources, speed to market, cost and quality expectations, contracting and contract administration capabilities, and overall risk appetite.

Develop realistic estimates — Project teams need to be both cautious and realistic when developing project estimates. Have the core team validate initial concept estimates and identify significant estimating errors and omissions. During the design development stage, rely on parametric cost estimates and benchmark data that are recognized industry-wide, rather than on your own internal estimates. Develop pricing models based on a range of possible outcomes.

As the project moves into the feasibility stage, conduct preliminary studies that produce a “design basis” estimate including all engineering quantities, craft and supporting labor hours, commodity pricing, equipment pricing, project management costs, and

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internal company costs such as shared services, management time, financing costs, and interest expenses utilizing appropriate engineering and procurement resources.

Depending on the length of the project, factor in the impact of price escalation on commodities, labor, and equipment.

The project estimate should have a predictive accuracy of minus 15 percent to plus 20 percent. If the estimate is prepared correctly, the project team effectively represents that the estimate is realistic and achievable, that quantities and pricing have been checked and validated by both internal and external engineering resources, and that the project team is committed to managing cost within the relative percentage band surrounding the budget estimate.

Your project team will also develop estimates of the time needed for completing the project. The duration and completion dates of interim milestones such as detailed engineering, long-lead equipment procurement, site work, and testing and commissioning will be discussed and agreed upon. It is important that experienced Critical Path Method (CPM) schedulers and estimators are involved in the development and vetting of the project’s initial schedules.

Actively manage project risks — Risk management is about identifying risks, both internal and external, to the successful completion and implementation of the project. Project risks and their attendant questions can be characterized as follows:

• Technical risk: How mature is the proposed technology?

What happens if the technology fails?

• Scope risk: Is the project scope defined adequately in sufficient detail?

• Schedule risk: Are activity durations reasonable? What is the risk of extending the project?

• Cost risk: Are cost estimates based on current market pricing? Have allowances for undefined project components, design development, escalation, and other contingencies been included?

• Human resources risk: Will sufficient skilled resources be available when needed? How can they be retained for the duration of the project?

• Regulatory risk: Have all regulatory risks been defined?

Are any permits or approvals on the project’s critical path?

• Safety and security risk: Is craft labor trained in construction safety procedures? Is the project in a locale where there is a significant security risk to personnel and property?

• Political risk: Is the project subject to periodic funding approvals? Does the project have strong political approval and backing?

Project risks should be captured in a risk register, a dynamic document that is updated throughout the project as new risks are identified and other risks are closed out.

The project team should also determine the cost impact of

PROJECT MANAGEMENT AND CONTROL CATEGORIES Project-specific policies and procedures should address the following project management and control categories:

Cost and Financial Management

Procurement Management

- Budgeting - Payment process and administration - Project cost reporting - Estimating/forecasting - Contingency management - Cash flow reporting - Value engineering

- Procurement planning - Solicitation and source selection - Contracting - Contract administration - Materials management - Contract closeout

Strategy, Organization, and Administration - Roles and responsibilities - Communication planning - Project infrastructure and systems - Document control and records management

Schedule Management

Project Controls and Risk Management - Change order management - Risk management - Design standards and specifications - Regulatory compliance - Quality control and inspection - Environment, health, safety, and security (EHSS) - Project management self-assessments - Lessons learned

- Schedule planning and development - Schedule updating - Schedule change management - Schedule integration

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significant risks and opportunities through quantitative cost risk analysis. Probabilistic techniques such as Monte Carlo simulation are used to calculate the amount of reasonable risk contingency that should be carried in the project budget.

Similarly, quantitative schedule risk analysis may be used to determine a realistic project completion date.

Obtain senior management buy-in — Every corporate megaproject must have strong senior management buy-in to be successful. Before the project is approved, a complete project charter, project execution plan, baseline budget, and baseline schedule must be prepared and vetted by the project team.

Engineering designs to approximately 35 percent completion, cash flow models, financial analysis, and funding methods all must be evaluated and developed to the point that the project can be visualized and built “on paper.” Most importantly, the project must be strategically aligned with the company’s and stakeholders’ current goals and objectives and considered the best use of capital funds by senior management.

The project is reviewed by a capital projects committee or investment committee — made up of executives from various company functional units, including CEO, CFO, finance, legal, internal audit, and operations. Regional and divisional managers also play a role, particularly when the project will be built outside of the company’s usual area of operations.

A project sponsor should be appointed whose role is to report on the progress of the mega-project, discuss project risks

We’re the

and challenges, and update senior management regarding the project’s financial and other resource requirements.

Develop project-specific policies and procedures — The success of a mega-project depends on successful collaboration within the extended project team, which includes the construction owner’s team; joint venture partners; lenders; insurers; outside counsel; the engineering, procurement, and construction (EPC) contractor; subcontractors; suppliers; and others. Collaboration requires a robust set of policies and procedures, clear roles and responsibilities, and frequent communication.

While a company may have policies, guidelines, and procedures for managing large capital projects, it is recommended that the project team develop tailored policies and procedures appropriate to the specific needs and circumstances of the mega-project.

Project managers cannot manage a mega-project simply by drawing on industry experience and applying technology.

Being thoughtful and deliberate about the controls put in place during the planning and organizing phase can increase the probability of a successful project and increase the confidence executives have that the project will be completed on time and on budget. ■ The views and opinions expressed herein are those of the authors and do not necessarily represent the views and opinions of KPMG LLP.

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DISTRIBUTION/LOGISTICS

Intermodal Facilities/Inland Ports Spur Development As regions strive for a role in supply chains, inland port projects are gaining momentum.

By Rich Thompson, Managing Director, Supply Chain & Logistics Solutions; and Keith Stauber, SIOR, Managing Director, Industrial Services; JLL

S

imilar to its starring role in the 19th century westward expansion, rail — the “Iron Horse” — is picking up steam. Though trucks remain today’s primary shipping method for domestic freight distribution, rail is fast emerging as a top criterion in both logistics strategy and industrial real estate development.

According to new JLL research, a looming capacity shortage in the trucking industry — coupled with rail’s high efficiency — is causing logistics suppliers and transportation providers to turn their focus to intermodal solutions. As a result, 30 inland port facilities have either opened or been formally announced since 2000 — including 19 since 2008 alone.

These new intermodal facilities could spark the development of another estimated 172.3 million square feet of related facility and industrial space. When combined with business park infrastructure costs, they could represent investment potential above $10 billion. While these are just estimates, the indicators point to a looming reality for multiple regions.

All Signs Point to Intermodal The trend toward intermodal facilities/inland ports is relatively new — and has taken off fast. In 1980, the volume of U.S. cargo carried by rail as part of an

intermodal distribution system was just 3.1 million containers and trailers.

By 2013 that volume had quadrupled, reaching 12.8 million units. Moreover, the American Association of Railroads reports that by March of this year, intermodal traffic had risen over 9.9 percent from March 2013, representing the 52nd consecutive year-over-year monthly increase.

Taking a step back from the numbers, it stands to reason that marrying the best of both rail and truck capacity could help drive costs out of the supply chain, while empowering more efficient goods delivery. So why are we seeing an increased push to intermodal facilities

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now? There are a few factors in this fast-emerging industrial development strategy, including: • Trucking capacity shortage: A truck-only approach is no longer sustainable. “The mother of all capacity shortages” is coming, predicts the National Transportation Institute Founder and President Gordon Klemp. This widely expected shortage stems from several factors, from new restrictions on the number of hours drivers can be on the road and rising insurance costs, to the fact that fewer members of the new working generation are pursuing trucking careers compared with their close-to-retirement counterparts.

THE DESIRE TO DEVELOP HIGHLY FUNCTIONAL INLAND PORTS IS WELL BEYOND THE CONCEPTUAL PHASE.

• Increasing demand for efficiency: High-speed delivery for the lowest cost possible is becoming the norm rather than the exception, and rail transport is typically four times more fuel-efficient than truck transport, thus playing a significant

part in its growing appeal. Trains are also more efficient than trucks in terms of the amount of cargo they can carry, considering that shipping containers can be double-stacked on trains, driving productivity across the board. This efficiency extends to environmental impact too, with rail transportation considered 60 percent more environmentally friendly than truck transportation.

• The need to reduce risk: A well-documented increase in natural disasters around the world can have many consequences, including seriously impairing distribution logistics by blocking or destroying roads, stymying drivers, or simply creating unforeseen traffic snarls. Together with truck driver shortages, these risks are inspiring many supply chain professionals to minimize risk by investing in developing more than one way to transport goods.

Partnering for Intermodal Success Gaining Traction The desire to develop highly functional inland ports is well beyond the conceptual phase. Coinciding with the rise in intermodal transport, there has been a marked increase in industrial facility development near rail yards. In JLL’s recent sampling of 250,000-square-feet-plus warehouse/ distribution facilities located within a five-mile radius of U.S. rail yards, roughly half of the 574 buildings surveyed had been built after the year 2000.

More than ever, we are seeing growing collaboration between supply chain professionals, transportation providers, third-party logistics companies, corporate shippers, and real estate developers and owners, who — by working together — can identify the best land opportunities capable of aggregating rail and truck traffic.

For inspiration, consider the example of Alliance Texas, developed by a partnership between a railroad and real estate developer that was the first fully integrated modern inland port/intermodal facility in the country. Sprawling across 17,000 acres, this inland port features both a Burlington Northern Santa Fe (BNSF) intermodal facility and an airport.

Public agencies are also serving as important partners.

Spurred by the Transportation Investment Generating Economic Recovery (TIGER) portion of the American Recovery and Reinvestment Act of 2009, the Department of Transportation’s competitive grants have allotted roughly $4.2 billion to capital investments in surface transportation infrastructure. Inland port grant recipients have included the Northeast and Midwest U.S. National Gateway Project, which connects Northwest Ohio to Chambersburg,

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Following are Pennsylvania; the Railroad New projects since 2000 Potential real estate to be some other market Crescent Corridor developed in square feet highlights: Intermodal Freight Illinois: Since Program rail projects BNSF 5 31,500,000 opening the highly in Memphis and CSX 5 19,964,000 successful BNSF Birmingham; and Logistics Parkseveral intermodal KCS 4 12,500,000 Chicago in 2002, facilities in the Los NS 8 44,975,000 the Prairie State Angeles/Long Beach UP 7 54,342,550 has recently added area. to its intermodal Railroad executives CN 2 9,000,000 roster the are involved CP 0 0 RidgePort Logistics too, beefing up Center — a 1,500infrastructure and Total 31 172,281,550 acre development modernizing facilities with construction in large metro areas potential for almost like Atlanta and 15 million square feet of space — and the Union Pacific-Joliet Chicago, as well as identifying new areas for facility Intermodal Center, which offers construction potential for an construction and line expansion. In a February 2014 press additional 20 million square feet. release, the CSX Railroad estimated that nine million truckloads in the eastern U.S. could be candidates for Kansas: Open since late 2013, the BNSF Intermodal and intermodal rail conversion; it is, therefore, investing $2.3 Logistics Park KC sits on the transcontinental line between billion in intermodal facilities in Florida and Canada.

Chicago and the ports of Los Angeles and Long Beach. Its Meanwhile the Norfolk Southern (NS) plans to invest $2.5 current annual capacity of 500,000 container lifts is expected billion in new facilities and infrastructure for its Crescent to triple to 1.5 million upon build-out, and to attract 100 Corridor line, which spans 11 states from the Southeast to million square feet of new industrial development within a the Northeast, based on the notion that demand will enable 350-mile radius. the line to remove an estimated 1.3 million long-haul trucks annually.

North Carolina: More than 15 million square feet could be developed in conjunction with the unique Charlotte Mapping Market Demand Regional Intermodal Facility, which opened in December for Intermodal Development 2013 thanks to a partnership between Norfolk Southern and While new intermodal developments are cropping up municipal authorities, including the city of Charlotte and across the country, three major markets are seeing the most Charlotte Airport. near-real construction activity: Dallas/Fort Worth, Central Pennsylvania, and Northern New Jersey together account for From coast to coast, inland ports are poised to 51 percent of rail-near-big-box development activity, or 10.1 revolutionize both supply chain logistics and industrial million square feet of the 19.8 million square feet currently real estate strategy. Maximizing the efficacy and value of under way. distribution by developing modern intermodal facility These three otherwise diverse markets share some space can improve connectivity between the nation’s important traits: land availability, a sizable population, markets, as well as add significant value to the entire and, perhaps most importantly, inland ports with network of supporting partners, from developers and rail connectivity to other major cities. For example, corporate occupiers to distribution, logistics, and transport Dallas/Fort Worth, which holds first place in near-real professionals alike. Case in point: Markets with intermodal construction across all markets, offers rail connectivity rail facilities currently boast the highest rent growth — to both Chicago (the nation’s busiest inland port), and a trend we expect to continue as the Iron Horse regains its Southern California (the busiest seaports, through which prominence in modern industrial expansion. ■ 40 percent of imports enter the U.S.).

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California’s Central Valley SPECIAL INVESTMENT REPORT

T TULARE COUNTY NEWS/ ANNOUNCEMENTS

• ImMODO Energy Services has invested over $40 million in its first portfolio of five large-scale solar projects in Tulare County that will produce 22 megawatts of clean renewable energy. The projects are located near the communities of Kingsburg, Ivanhoe, Exeter, Lindsay, and Tulare.

• Forest Wood Fiber Products, based in Lake Elsinore, has chosen to relocate its operations to unincorporated Tulare County. The supplier of premium soil amendments, playground wood chips, and stable bedding has embarked on an ambitious strategic plan for growth.

• Tulare County has seen a steady rise in filming in the last three years. Mooney Grove Park in Visalia is the first large-scale Bollywood production shot in Tulare County. The film is in Punjabi, a language spoken in the Punjab region of Pakistan and India.

• Tulare County Agricultural Commissioner announced that annual crop production set an all-time record of $7.8 billion in 2013, which places Tulare County as the top agricultural-producing county in the nation. Milk is the leading agricultural commodity with a gross value of $2.1 billion.

HE BUSINESS OF AGRICULTURE IS GENERATIONS OLD. The business of space is a new frontier. They get along just fine in California’s Central Valley, which enjoys what is essentially a microcosm of an entire nation’s economy. Or perhaps “microcosm” is the wrong word, because there’s nothing “micro” about it — the economy here dwarfs that of many nations.

It’s a region of great contrasts. More than four million people call it home, and so do hundreds of thousands of cows. It’s a region big on oil production that also happens to have some of the world’s biggest wind and solar power installations. More than 200 crops grow here, and so do dozens of companies developing new aerospace technologies and countless other innovations.

The common thread is growth. “Growth is strong,” says Richard Chapman, president and CEO of the Kern Economic Development Corp. “We know 80 percent of the state’s growth is going to be in the Valley.”

Number One in Ag-Producing A logical place to begin a discussion of growth is agriculture. “Agriculture is a big deal for Tulare County and all of the Central Valley,” says Michael Washam, economic development manager for Tulare County. In his county alone, agricultural production is worth $7.8 billion, just over $2 billion of which is dairy, he says.

“We’re the number one ag-producing county in the nation and also number one in dairy production in the nation,” agrees Paul Saldana, president and CEO of the Tulare County Economic Development Corp. That’s a real economic stabilizer, even when things are shaky in general, because people always need to eat. “We’ve seen stability through the recession because of that,” Saldana explains.

Kern County actually holds the number-two rank for commodities in the U.S., according to the just released Agricultural Crop Report. It seems practically anything grows in the Central Valley — the crops are diverse. They’re evolving, too. Washam notes that recent years have seen an increase in the production of nuts and stone fruits, driven by export demand as well as the fact that they’re higher-value crops than many row crops.

What really drives the economy isn’t just growing those crops and dairy farms. The Valley is dotted with manufacturing facilities that turn out familiar food products. The list includes a who’s who of national and international brands that have recognized the importance of being in the nation’s biggest ag-production region, along with homegrown companies such as Ruiz Food Products, whose El Monterey brand provides work for a couple of thousand people locally and has fed nationwide expansion. The list keeps getting longer, Saldana points out. “Two companies are building new cheese-producing facilities,” he says, and a citrus products company is getting ready to add more jobs soon. Tulare County’s combination of excellent interstate highway connections and rail services makes it well situated for food processing and goods distribution operations.

“We’re seeing a lot of exporting of Atwell Island solar farm, Tulare County

By Steve Stackhouse

AREA DEVELOPMENT | Q3/2014

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“fracking” remains to be seen. Releasing hidden energy deposits is an iffy business, and there’s not always agreement with regard to how much oil and gas are trapped in layers of rock far below the surface. The development is made even more challenging by increasing opposition to the practice of fracking, due to environmental and seismic concerns.

Whatever happens in that part of the energy sector, it’s clear that renewable energy is continuing its ascent in the Central Valley. Chapman says his area is home to the world’s largest wind farm, and the biggest solar installation is under construction.

Renewable energy is a growing source of employment and prosperity, according to Washam, who points to the construction jobs driven by continual development of solar products, one after another. Through its innovative commercial solar program, Tulare County has had 18 utility solar-grade projects approved over two years.

“We’ve sometimes had up to 600 solar construction jobs at one time. They’ve been staggered so we’ve had good, constant work available,” he says. It’s not just the big installations either, he points out. Home solar installations are going through the roof, so to speak. “One of every five or six building permits is single-family solar.”

dairy products,” Washam adds. That can take lots of forms, including powdered milk and formula, which require production and processing. “There’s a lot of interest in milk plants as well as cheese. A lot of companies are expanding their production capacity.”

“But we’re not just limited to agriculture,” Saldana observes. Consider the fact that the Central Valley is right in the middle of the most populous state, with the added benefit of major port operations not far away. That makes it ideal for distribution and logistics. Again, it’s a long list of familiar names that take advantage of the location, from Best Buy to Dollar General to Sears to Target to Walmart.

“We’re about four hours or less from 90 percent of the state’s population,” Chapman points out.

Traditional and Renewable Energy California’s Central Valley is home to thousands of oil-producing wells. In fact, Kern County is one of the topproducing oil counties in the U.S., with some of its fields producing oil for more than 100 years!

And, as in other parts of the country, there’s growing interest in hydraulic fracturing to try to tap into even more potential riches from the Monterey shale formation that encompasses some 1,750 square miles and is believed to hold more energy than some of the most productive shale formations in North Dakota and Texas.

How much of a future there is in Central Valley

A Rapidly Growing Economy Energy isn’t the only area in which the future is on

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display in the local economy. Chapman points to the Mojave Air and Space Port, where some five dozen companies are engaged in high-tech development.

Perhaps the most visible are the operations of Sir Richard Branson, who has given celebrity status to the potential for commercial spaceflight at Mojave.

All of this is just a small picture of what makes the economy tick in the Central Valley — but it certainly is ticking. Growth is practically off the charts. For example, earlier this year, Kern County was named among the topfive metro areas nationally for upward mobility, and second in job growth for millennials, thanks to the proliferation of work in science, technology, engineering, and mathematics.

It is, in fact, the number-four region for STEM jobs, according to the Brookings Institution.

That means workforce issues are always on the minds of local officials. “We are growing so rapidly and skillset levels are increasing with technology in all of the industries,” Chapman points out. It’s a challenge across the country, of course; however, the Central Valley has the benefit of high quality of life, which makes attracting top talent that much easier.

Dealing With Challenges What the Valley really needs to attract right now is more rain. “We’re all struggling with the drought in California,”

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Michael Washam, Economic Development Manager Tulare County Economic Development Office 559-624-7128 mwasham@co.tulare.ca.us www.TulareCountyEconomicDevelopment.org

Washam says. The ongoing California drought has hit record levels this summer, and a recent report from the University of California-Davis says the economic impact on the Central Valley could be significant. Losses in crop revenue could hit $800 million, according to the report, with another $200 million in lost dairy revenue and $400 million in increased costs of pumping.

Californians are meeting the challenge in a variety of ways. With surface water depleting, users are turning to groundwater. Importing water is another option getting more attention, and water banking is a solution that helps users stay afloat.

Even amid such challenges, local economic development officials have all kinds of reasons to be upbeat, and plenty of selling points to keep the future bright. As Chapman notes, “The cost of doing business is 93 percent of that in the U.S., even though we’re in California.”

Saldana agrees: “If you look at it from site location, we have all of the things a company needs.” ■

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19/08/14 4:06 PM

construction/design SITE SELECTION

Meeting the Challenges of Fast-Track Development Constant communication — including real-time collaboration — between an owner, project developer, engineers, construction managers, etc. is key to fast-tracking a project.

By Dave A. Kemper, PE, Senior Principal, Stantec

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high-profile tenant is interested in a facility somewhere in a specific county. They will bring over 1,100 jobs initially (with expansion to 2,500+) to the local economy and name recognition within the commercial real estate market. What’s the catch? Their new, very large facility must be designed and permitted within four months, followed by 10 months of construction — an extremely fast-track schedule. If the owner/developer team can’t guarantee this schedule can be met, the deal is off, and the tenant will go elsewhere. How does one ensure that the project follows this aggressive timetable so that the user and those jobs come to the chosen county?

Using a fast-track methodology is a must in this case. Fast-track delivery is a method of implementation where various elements of both the design and construction phases overlap to expedite completion of the project. This approach is highly applicable to site development-related design and permitting, as this typically defines the critical path to the all-important “start construction” date. Particularly in commercial real estate, where move-in and occupancy dates are critical, fast-track design and construction can make the difference between obtaining a major tenant or missing out on an opportunity for the local economy. Going the fast-track route, however, comes with some challenges. These five tips can help.

A fast track schedule brought a major tenant — PricewaterhouseCoopers — to MetWest International in Tampa’s Westshore Business District.

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1. Complete your baseline work early. Early completion of baseline work (including geotechnical, traffic, survey, wetland, and cultural resource investigation) is essential to “jump start” the design process. Otherwise, design work is ineffective and weeks/ months can be lost in the project schedule.

Robert Cunningham, a 35-year land survey veteran with Stantec, advises owners and developers to “release the survey early, as a part of the due diligence process, or immediately thereafter. The engineer’s hands are tied until the survey work is complete.” Cunningham says he is encountering more and more major site development delays because owners are not releasing the survey work early.

“It’s becoming a major issue affecting project milestone deadlines and overall schedules,” he says.

Early release of all baseline work can present a significant financial exposure; however, that risk needs to be considered in context with the overall risk management program for the project since these costs typically represent less than 1 percent of the total project construction cost. Bottom line?

Start your baseline work as quickly as possible; you’ll be glad you did.

2. Go with a one size (almost) fits all approach. Projects with established prototype building designs lend themselves very well to fast-track development. The prototype design can be adapted to the site early in the process, ideally during the due

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different versions of a site plan, particularly in the early diligence phase, allowing everything else to be accelerated phases. Direct the civil engineer to submit these plans (final site design, permitting, approvals, construction time). early to get the site permitting process started. When Many commercial/retail tenants have set move-in deadlines, plans are resubmitted, integrate these design evolutions keyed to occupancy dates or seasonal cycles. Prototypes are and communicate (and document) these revisions with typically flexible and may adapt to different sites without the project team. Even with the best of intentions, not substantial modifications. Therefore, reuse of a building all revisions or refinements will be accomplished in the design reduces design time because, in theory, the majority design/permitting process; expect them to continue into of design has already been completed. the construction phase. Changes will happen, but stay on Kent Walling, director of Operations–Central Florida top of them and manage the process! for Taylor and Mathis of Florida, LLC, used a prototype 5. Make decisions in real time. Establish a streamlined for the MetWest International office project in Tampa’s decision-making process and make sure you are focused on Westshore Business District. “Our MetWest 2 tower was the making timely project decisions to keep the design moving same basic building design as MetWest 1. We just relocated forward. Without clear direction and owner/developer the tower and saved significant design time,” he says. approvals, the design team will “Because we used a prototype not move at full speed. design, a pad-ready site, and Tampa’s Westshore Business completed zoning beforehand, District, mentioned above, is this project cut nine months located in Hillsborough County, off the schedule. This would Florida, which has established have taken much longer on any fast-tracking procedures for other site and we could have projects. “Once applications lost a major tenant.” Due to the are made, up-to-the-minute fast-track design, MetWest 2 progress updates on the status of was able to attract a significant the review process are provided, occupant, a 240,000-squarethus allowing the designer to foot, built-to-suit office for respond quickly and in realPricewaterhouseCoopers. time,” says Jim Ford, interim 3. Know your partners Timely decisions, prototype design, pre-submittal meetings, and owner commitment were all key aspects in the Amazon.com building official at Hillsborough and communicate! Strategic Fulfillment Center project.

County. “Our fast-track projects and established relationships continue to be a success largely with local, state, and federal due to the attention to detail and unending communication agencies are critical to any successful project. Most owners/ of all members of the team, including the developers, developers rely particularly on their civil engineers to push a designers, and tenants.” project along due to their understanding of local conditions and requirements. A good rule of thumb is to have your engineer solicit initial input from the regulatory authorities In Sum via informal reviews, before formal submittals. This can be Back to our opening scenario. This fast-track requirement mutually beneficial, and gives the team a feel for potential was the case in Tampa Bay, and the project team made issues, scheduling objectives, and anticipated requirements. it work, following the tips above. The owner chose a Also, holding regular and frequent meetings makes consultant firm that they trusted and, working with the important dialog and decision-making easy. appropriate agencies, they cut the design and permitting “We see a fewer number of turn-arounds and steps in time in half. The design documents produced were high the review process when the consultant has taken the time quality because the designers already had the benefit of to reach out to us before the process starts,” says Yolanda client direction and agency input, well before plan submittal Triplett, Program Development supervisor with Orange deadlines.

County, Florida. “Our pre-review meetings allow the Constant communication was a key factor to the success customer to establish a personal relationship and discover of the project and included real-time collaboration between our expectations. It’s really an essential component to fastthe owner, tenant, project developer, business park master track permitting any project.” developer, real estate brokers, architect, civil engineer, 4. Embrace — and manage — change. Although not construction manager, attorney, and other team members. ideal, a fast-track situation typically requires “locking in” In the end, Tampa Bay will be the proud home of the new a footprint and site plan very early, knowing or expecting Amazon.com Fulfillment Center in Ruskin. The 1.1-millionthere will be changes. This is particularly relevant to the square-foot facility is set to open this September after a tight, civil/site engineering aspects of the project — given civil 13.5-month project schedule. The team’s ability to work design is typically on the schedule’s critical path. The together and secure this tenant will bring a net gain of 2,500 key is to manage the change process and not get caught jobs (including permanent and seasonal once fully opened) off-guard when the architect moves a door, adds a service to the local economy, a boost that could have been missed if bay, or reconfigures a parking lot. It’s typical to have the fast-track challenge wasn’t embraced. ■ AREA DEVELOPMENT | Q3/2014

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LOGISTICS/DISTRIBUTION

BUILDING AGILITY INTO THE SUPPLY CHAIN E-COMMERCE SALES With delivery speed now a competitive differentiator, companies must ensure they have a “shippable” delivery on hand.

$327 BILLION 2016 $200 BILLION 2014

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f the logistics industry got together and sponsored a sporting event, the Tour de France would be a fitting choice. Like many supply chains, it spans several weeks, covers thousands of miles, and requires considerable teamwork to complete. Equally important, its winner is often not the athlete who dominates at the beginning of the race, but rather the one who manages to execute an especially strong finish — a scenario that describes one of today’s biggest transportation opportunities in a nutshell.

“These days, it’s no longer enough for companies simply to have highly efficient product flow from origin to business destination,” says Will O’Shea, chief sales and marketing officer of XPO Last Mile, the country’s largest provider of last-mile heavy goods delivery. “If they can’t be equally adept at delivering their goods to end consumers when those consumers want them, they run a significant risk of losing revenue to other companies that can.”

One of Area Development’s field editors recently spoke with O’Shea about why agile home delivery has become such a game-changer — and how it could permanently blur the lines between companies’ manufacturing locations, distribution

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77% OF CONSUMERS NOW EXPECT SAME-DAY SERVICE FOR CERTAIN KINDS OF GOODS

networks, and retail/customer-facing operations.

AD: Between Amazon’s news about testing drones, Fed Ex’s recent announcement about starting to charge by package size, and all of the stories about how many purchases were received late last holiday season, it seems like home delivery has garnered a lot more headlines lately.

O’Shea: And that’s probably just the tip of the iceberg, because the types of purchases that require lastmile home delivery are on the rise.

According to Forrester Research, annual U.S. e-commerce sales are well over the $200 billion mark already, and they’re expected to increase another 45 percent (to almost $327 billion) by 2016. Plus, the value of large product last-mile delivery is now estimated at $12 billion. And that doesn’t even begin to factor in the powerful value of catalogue and direct response sales.

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Even more important, consumers’ home delivery expectations have increased dramatically. Ten years ago, if you’d promised customers that their orders would arrive within one to two days — and you consistently kept those promises — your company would have been a rock star. Now many consumers are beginning to wonder why they can’t get their orders within one to two hours instead. In fact, nearly 77 percent of consumers may now expect same-day service for certain kinds of goods, according to a 2013 study underwritten by Intermec.

AD: That’s a significant difference. Have companies’ delivery solutions truly gotten that much better over time?

O’Shea: In some cases, yes. For example, there are now some national companies like ours that specialize in providing timely and reliable last-mile service for certain kinds of

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products. Shipping information systems have experienced huge advances. And companies like Amazon are constantly adding to their networks and capabilities. However, those levels of speed are still not across-the-board kinds of things.

In fact, most companies admit that trying to keep up with the omni-channel explosion is a huge challenge for their business. But they know it’s a challenge they can’t ignore.

AD: Why have consumers come to expect such high levels of service if companies aren’t really capable of providing it yet?

O’Shea: Part of it’s driven by mobile connectivity. People have become so accustomed to being able to use their phones to do things at the click of a button — including comparing prices, checking to see if a particular product is in stock, and placing an order — that it’s becoming increasingly difficult for them to wrap their minds around the fact that products can’t move at the same lightning speed. If they can see it on the screen or at the store, they can’t fathom why it can’t be at their homes almost immediately.

Also, a lot of it is being inspired by companies that are using delivery speed as a competitive differentiator.

When companies like eBay and Google show that they can successfully deliver within hugely ambitious delivery windows — even if it’s only in select markets or for certain products — it prompts consumers to question why other companies can’t do the same. Ultimately it makes those new levels the “new normal” that every business has to aim for if it wants to stay in the game.

AD: How tolerant are consumers when businesses CAN’T keep up with these faster order-to-delivery speeds?

O’Shea: In today’s highly competitive business arena, there’s not a lot of room for failure — either in terms of shipping speed, product availability, or order accuracy.

According to a 2013 survey conducted by Pitney Bowes, 47 percent of consumers pay more attention to shipping as part of the overall shopping experience than they did even a few years ago. Another study suggested that 40 percent of e-commerce consumers have abandoned their online shopping carts when they’ve realized a delivery time would be too slow. Adding to that, 29 percent of respondents to a study conducted by Voxware said they’d take both their e-commerce and brick-and-mortar business somewhere else if they received even one incorrect delivery from a company.

Plus, we all saw last holiday season how a small percentage of late deliveries — 3 to 4 percent by some estimates — made it seem like more items were delivered late than delivered on time, and how that impacted some carriers’ and retailers’ brand reputations for the worse.

AD: Those are some pretty high stakes! So what does this mean from a logistics site selection perspective?

O’Shea: If you’re a national company that wants to stay competitive, then having a good supply of shippable “local” inventory on hand — or inventory that’s very close to being local — is going to be a must, because it’s the only way you’re going to be able to keep pace with customer expectations as they evolve.

AD: Sounds like a tall order. Will companies have to operate more warehouses or fulfillment centers — or change the mix of cities in which their distribution centers are located — in order to achieve it?

O’Shea: In some cases, yes, especially if they have highly centralized distribution footprints and a widely dispersed customer base — or if their current facilities don’t have enough room to allow for the kinds of labor-intensive picking and packing areas that will be required. Plus, companies may begin to place more value on having some DCs that are close to major parcel carriers’ hubs so that they can extend their daily cut-off times for customer orders.

Look for this to happen in markets like Memphis, Louisville, Philadelphia, and Indianapolis.

AD: Besides proximity to consumers, are there any differences in terms of what a highly efficient omni-channel–era warehouse looks like versus its traditional counterpart?

O’Shea: Consumer fulfillment operations are more labor-intensive, which means they’ll generally have more employees or temps working in them than a traditional DC. As a result, companies will need to more strongly consider how much access they’ll have to a highly qualified labor pool — and ample parking — when comparing sites. In addition, the HVAC, fire protection, disaster recovery, and other safety requirements will be more intense.

Clear ceiling heights of 36 to 40 feet are also highly recommended, because whether companies combine their traditional and fulfillment space under one roof or operate a stand-alone fulfillment center, using mezzanines can help stratify the various activities that are required.

It will also be imperative to thoroughly check out the typical zone-to-zone charges and average delivery times for their carriers of choice from each potential site, because even small differences can really add up.

AD: All of these recommendations are well and good. But many companies may not be in a position to add to or modify their DC footprint quite as rapidly as the consumer marketplace seems to be changing.

O’Shea: There are plenty of other options. For example, companies can use their suppliers to ship single orders directly to their customers instead of to their stores or distribution centers.

AD: Which is why even manufacturers or suppliers that don’t sell directly to customers may find themselves involved in the omnichannel arena?

O’Shea: Exactly right. Plus companies can always take advantage of third-party logistics providers’ locations, because those locations are often situated in the most populous consumer markets.

But it’s also important to note that most companies already have a lot of shippable local inventory in place that can be used for fulfillment purposes, even if they don’t think of that inventory in those terms.

AD: Can you explain that?

O’Shea: That’s the product situated in their brick-and-mortar AREA DEVELOPMENT | Q3/2014

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sales operations. Unless companies are lucky enough to be able to operate dozens of warehouses near almost every consumer they sell to, their local stores or offices are going to be their best chance at fulfilling most same-day or next-day orders — whether it’s via outbound delivery or customer pick-up.

AD: Give us an example of how this works.

O’Shea: Let’s say that we’re a business that has sold new appliances to a newly built, 10-unit condominium complex in St. Petersburg, Florida. The builder purchased the appliances through our online commercial sales center, and they’ll ship directly from the manufacturer to the complex, with arrival scheduled for October 10. Many of the new owners of the pre-sold units are scheduled to close on their condominiums and move in the following day.

Unfortunately, when the delivery arrives, it turns out one of the built-in wall ovens was damaged and can’t be installed.

If our company’s only option is to ship a replacement from our nearest distribution center in Dallas, it would result in a delay of at least a couple of days, meaning someone’s closing would have to be pushed back, the builder would incur extra carrying costs, and the owner would be justifiably angry. Plus our company might lose the builder’s future business because of the issue. But, thankfully, our business has a retail store in Tampa that has the same oven in stock. We immediately notify the store to pull that oven, arrange for an immediate pick-up, and get it to the complex in time for it to be installed later that day. Everything from the client relationship to the new

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owner’s peace of mind has been saved. That’s the essence of omni-channel efficiency.

AD: It sounds good in theory. But are most companies’ retail or office locations adequately designed to pull off this kind of hoop-jumping?

O’Shea: It may require some reconfiguration or expansion of companies’ retail or customer-facing office space. Among other things, they’ll probably have to expand their stores’ back rooms to accommodate order staging and packaging.

And they’ll either have to train their store sales personnel to provide order fulfillment or hire fulfillment personnel to take care of it. Plus, companies may have to invest in more robust warehouse management systems or order management systems — and additional licenses. But it’s definitely achievable. In fact, many companies are already doing this to some degree.

AD: So if a company isn’t already thinking of how to use all of its operations to help enable or provide better delivery service…

O’Shea: Then there’s no time like the present to get started — because the chances are good that there are several competitors who already have a game plan. The omni-channel isn’t a fad or flavor of the month. It’s the shape of the future. ■ XPO Last Mile — part of XPO Logistics (www.xpologistics.com), one of the fastest-growing providers of logistics services in North America — is the largest provider of last-mile logistics of heavy goods through its XPO Last Mile business. The company serves more than 14,000 customers in the manufacturing, industrial, retail, commercial, life sciences, and government sectors.

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13/05/14 6:06 PM

Ohio SPECIAL INVESTMENT REPORT

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HE OHIO ECONOMY HAS MULTIPLE DRIVERS, and together they’ve been steering the state into the fast lane the past couple of years. Advanced manufacturing, automotive and chemical manufacturing, food processing, along with such sectors as financial services and IT, set the pace as private-sector employment grew by more than 170,000 jobs between 2011 and 2013.

That’s the word from JobsOhio, a private nonprofit focused on job creation in Ohio.

The momentum has continued this year, with the organization’s efforts resulting in more than 44,000 jobs created or retained in the first half of 2014 — many of those jobs in manufacturing, but many that are not.

A Diversified Economy

GROW PIQUA NOW NEWS/ ANNOUNCEMENTS

• Nitto Denko Automotive Ohio Inc. is adding a 20,000-square-foot facility in Piqua to its operations.

• Hartzell Air Movement will move 30 jobs to its Piqua, Ohio, headquarters to cut lead times and increase efficiency.

• The City of Piqua has unveiled plans for a $10 million redevelopment to transform its downtown riverfront, including an amphitheater and avenues for recreation activities.

It’s a happy story that’s being told across the state. “In general, the economy continues to improve coming out of the recession,” says Jacob Duritsky, managing director of research for Team Northeast Ohio in Cleveland. Justin Sommer, assistant city manager and economic development director for the city of Piqua, points to the hundreds of jobs in his part of the state that are linked to an expansion at Whirlpool’s KitchenAid plant, a Procter & Gamble distribution center, and a $200 million Fuyao Glass Industry Group facility that is the state’s largest Chinese investment ever.

And Johnna Reeder, president and CEO of REDI Cincinnati, is thrilled by GE’s choice of Cincinnati for a U.S. service center that’ll create 1,800 new jobs. “That’s the largest single new jobs announcement in Ohio in a decade. It’s projected to produce a $1 billion per year economic boost for the region.”

Duritsky says manufacturing continues to make up a significant part of the economy in his part of Ohio, in the neighborhood of 20 percent, but “we’ve seen a lot of diversification in employment,” he adds. For example, healthcare employment has grown by 20 percent since 2014.

That’s not just caregivers, either — an expanding Northeast Ohio healthcare research sector has seen expenditures nearly double since 2000, and has generated some 700 patents in that timeframe. The opportunities inherent in that R&D work hold promise for generating growth in other sectors, Duritsky says. “Our strengths in healthcare and our strengths in manufacturing are coming together.”

Diversity is on display in Cincinnati, too, according to Reeder. Advanced manufacturing is a prime sector, but “we have seen continued growth in advanced Hartzell Air Movement is moving jobs to its Piqua, energy; biohealth; consumer products and Ohio, headquarters

By Steve Stackhouse

AREA DEVELOPMENT | Q3/2014

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brand development; food processing and agriculture; and finance, insurance, and IT,” she says. There are nine Fortune 500 headquarters in the metro area, she points out, one of the most prominent being Procter & Gamble.

Hosting such a giant in consumer products has brought the region an expertise Ohio State University in marketing and branding — “There are 60,000 marketing and branding professionals in our region,” Reeder notes.

Geographic and Economic Sectors JobsOhio views the state in six distinct regions and partners with economic development organizations in each of them. All have their successes to report.

The Appalachian Partnership for Economic Growth last year had its hand in the creation of more than a thousand new jobs and the retention of more than 2,100. There were commitments for more than 2,000 new jobs and nearly $400 million in investment due to the work of the Dayton Development Coalition. In Northwest Ohio, the Regional Growth Partnership reported 1,300 new jobs and $408 million in investment last year. Team NEO and Columbus 2020 each tallied about five thousand new jobs, and Cincinnati USA Partnership for Economic Development’s work helped create more than 3,500 jobs in 2013.

The statewide organization gives particular attention to a series of industry sectors it believes reflect the state’s competitive advantage, core sector strength, and capital-intensive productivity. They’re industries that have been growing more quickly than the private sector as a whole, and they tend to have jobs with above-average salaries. Targeted industries, in order of jobs created last year, include advanced manufacturing; information technology and services; financial services; food processing and agribusiness; automotive; energy; biohealth; aerospace and aviation; and polymers and chemicals.

The reasons for Ohio’s economic success are many, according to local economic development officials. Location is a major factor, according to Sommer. “West-central Ohio is all about access — access to markets, access to workforce, access to suppliers, access to customers. The state of Ohio is a day’s drive from 50 percent of the American population and 65 percent of manufacturing.”

Low costs are a big draw, too, according to Reeder.

“In fact, KPMG this year not only ranked us second in the country on a list of the least costly locations to do business but also seventh in the world for our extremely favorable tax structure.”

Piqua, Ohio...total accessability!

Grow your business ...Grow your life.

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GrowPiquaNow.org

100 MI.

300 MI.

600 MI.

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Developing the Workforce Like economic development officials across much of the country, those in Ohio say workforce development is an ongoing challenge. “As the economy grows and the baby-boom generation starts to retire, we need to have enough workers with enough of the right skills,” observes Jay Foran, senior vice president of business attraction for Team Northeast Ohio.

Sommer agrees that impending retirement of a significant portion of the workforce means there’s work to do. “We’re very engaged in developing the emerging workforce into the industry sectors that are strong regionally, including STEM-related fields, engineering, mathematics.”

JobsOhio is engaged in similar work, striving to identify the state’s most in-demand jobs needs with regard to workforce readiness. The organization keeps its eye on state labor-market stats and projections, current job posting trends, and data from the state’s online job forecasting tool. This info is critical to the talent pipeline work of businesses, workforce partners in local areas, as well as the education community.

Workforce issues are both a challenge and an asset, says Steve Schoeny, development director for the city of Columbus. His is an education-driven region, he says

— home of Ohio State University and some five dozen other postsecondary institutions that together host more than 140,000 students. “For a lot of companies that’s a real attraction,” he notes, particularly for companies with a lot of baby-boom employees approaching retirement.

“They know they have a constant pool of workers coming in.”

Reeder explains the challenge of getting the word out about the area’s advantages; reputation is an issue, she says. “It’s not that we have a bad reputation, instead it’s that we have no reputation,” she observes.

“Midwesterners by nature are humble, but we are learning to better shout out our successes from the rooftops, and lately we’ve had a lot of successes to share.” ■ Ohio Resources: JobsOhio 614-224-6446 contact@jobsohio.com

www.jobs-ohio.com

Justin Sommer, Executive Director Grow Piqua Now Piqua, Ohio 800-251-1742 jsommer@piquaoh.org www.GrowPiquaNow.org

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construction management

On Site, and On It Dedicated 100 percent from design through start-up, an on-site owner’s representative solves problems and adds value.

By John Hernandez, SSOE Group

budget is a necessity when time is money.

Maintaining Project Focus

P

rojects go faster with advocates.

A project engineer (or construction project coordinator) is an owner’s representative who champions the needs of the project above all others and remains dedicated 100 percent to the job from design through startup. In the process, he or she adds value by solving problems.

As an example, take the cooker that almost missed production season.

A new process line was being installed to help a food manufacturer meet the demands of the rapidly approaching “production season.”

A central player in the process line was a new hydrostatic cooker. It was not delivered with industrialgrade pumps, as expected, but

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with commercial-grade pumps.

The pumps needed to be upgraded as soon as possible; however, the pumps were furnished by the cooker manufacturer in Europe, and having the manufacturer return the pumps received and order new ones would take too long to arrive on-site.

Rather than waiting for the correct model of pump to be shipped from overseas, the owner’s representative attempted to meet the deadline in a different way. He recommended ordering the pump from the domestic supplier that provides other pumps in the plant, then sorting out payment issues with the original supplier later.

Problem solved; schedule maintained.

Keeping a project on time and on FOR FREE SITE INFORMATION, CALL

Throughout the lifecycle of a program or project, an experienced onsite owner’s rep serves as a valuable resource to the staff project engineer or to the plant manager, both of whom have multiple accountabilities. The staff project engineer may be based at corporate headquarters and may travel among various project sites, while the plant manager focuses primarily on production. In these cases, the on-site rep can keep the project team focused on the approved project scope to avoid “scope creep,” i.e., uncontrolled changes or added objectives that might otherwise compromise the schedule and exceed the project budget.

To keep scope creep at bay during a project requires the ability to bring together all of the stakeholders in one place, at one time, in order to resolve the issues that arise during the course of any capital project. In the above example, the on-site owner’s rep had an office trailer delivered to the site weeks before construction began. The trailer office provided stakeholders with a meeting place outside their offices and plant conference rooms — avoiding potential interruptions — enabling them to concentrate on design reviews and project coordination.

In addition, the owner’s rep maintained a complete, up-to-date library of all project documents. These

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were available to any stakeholder who needed to refer to them at any point during the project.

firm, the person will need to learn the organization and earn the trust of local employees.

Hiring the Right Person for the Job

Member of a firm with no other project contract: Pro: Finally, a consultant who is a member of a firm with no An on-site owner’s rep must have a clear understanding other project contract can exhibit 100-percent dedication and the of the mission, objectives, and project scope. For this reason, freedom from any perception of conflicting loyalties among the it is important to hire the rep at the conceptual design owner’s project team and other contractors. This person may phase, especially for a large, complex project. He or she also have experience on previous also must have the ability to •••••••••••••••••••••••••••••••••••••••• projects, broad experience in work under a tight schedule.

•••••••••••••••••••••••••••••••••••••••• the industry, or transferable The rep also must have Throughout the lifecycle of experience and insights from engineering and construction a project, an experienced on-site other manufacturing sectors. experience. It is extremely Con: However, if the rare to find an individual who owner’s rep serves as a valuable independent owner’s rep is has all of the structural, civil, resource to the staff project hired after the design has been electrical, instrumentation, completed, a great deal of time and mechanical knowledge engineer or to the plant manager. can be lost on the learning curve required to manage any to reach full understanding of the manufacturing construction or •••••••••••••••••••••••••••••••••••••••• •••••••••••••••••••••••••••••••••••••••• project scope and organization. installation project. That’s why That learning usually equates to the individual must have ready lost time and increased cost. access to experts in other disciplines when necessary. Ideally, this expertise is in-house at the rep’s firm.

The right person for the job must be able to gain the trust In Sum of the project team and, in some cases, overcome the resistance Effective management of any construction project in a that often goes with the territory. Professional engineering manufacturing environment is a full-time job. By hiring credentials provide credibility, but even more important are the rep to work on-site, it is possible to assure coordination tact, persistence, and a collaborative approach that comes from of trades and maintain project focus. Investing in such the simple fact that these people have a plant to run! To be sure, a consultant will save time (and, therefore, money) in the capital project will ultimately increase the productivity of completing a manufacturing project. Being on-site is the their plant, but until then, production goals must be met. If the only sure way to be on it. ■ owner’s rep has been involved in past projects, that history can help to overcome resistance, as well as provide valuable John Hernandez is a section manager with SSOE Group (www.ssoe.com), a global engineering, procurement, and practical and cultural experience. construction management firm. He can be reached in SSOE’s This rep may be hired from several sources, e.g., Toledo, Ohio, office at 567-218-2120 or from the ranks of current employees, from one of the John.Hernandez@ssoe.com. consulting engineering firms on the project, or from another engineering firm with no other contracts for the project.

Click on to the world’s foremost What are the advantages and risks of each of these choices?

»

Current employee: Pro: A current employee knows the organization’s project team and the chain of command for review and approvals.

Con: However, the individual may not be local or may be over-committed with simultaneous projects, or both in the worst-case scenario.

Member of one of the consulting engineering firms on the project: Pro: A member of one of the consulting engineering firms on the project is either local or will relocate for the duration of the project and will be dedicated to the job 100 percent of the time. The person may also have experience on previous projects, broad industry experience, or transferable experience and insights from other manufacturing sectors.

Moreover, this person is likely to have ready access to experts in other disciplines as necessary.

Con: Nevertheless, if there is no prior experience with the

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Florida’s Eastern and Mid-Gulf Coasts

SPECIAL INVESTMENT REPORT

H

GREATER FORT LAUDERDALE NEWS/ ANNOUNCEMENTS

• Prolexic Technologies, the global leader in Distributed Denial of Service (DDoS) protection services, has relocated its global corporate headquarters and security operations center to Fort Lauderdale.

• Stemtech International has relocated its corporate headquarters and manufacturing/ R&D facility from San Clemente, CA, to Pembroke Pines.

• American Express’ regional headquarters will expand to a new 400,000-square-foot state-of-the-art facility in Sunrise and provide offices for most of the company’s 3,000 employees.

• Ultimate Software has proposed investing $40.2 million in its Weston corporate headquarters campus and will add 400 new jobs to the existing 800 local employees.

OW MANY PLACES IN THE WORLD CAN CLAIM to be on the cutting edge of both space and ocean transportation? It’s a striking illustration of the economic diversity you’ll find as you scan down the East Coast of Florida and then partway up the Gulf side. There’s a lot going on in this slice of the Sunshine State.

With regard to the ocean — the Panama Canal is in the midst of an expansion project that will soon double its capacity and enable larger ships to pass through. Miami, meanwhile, will be “the first major port on the East Coast to handle that size of ships,” says Jaap Donath, senior vice president for Research & Strategic Planning at The Beacon Council in Miami. A dredging project is deepening the port to 50 feet to allow the big ships access.

It’s the closest U.S. port to the Panama Canal and is a bustling destination for both cargo and cruise ships. The port is getting ready for the future in other ways, too, including boosting its cargo-handling capabilities to serve bigger vessels. A tunnel project will give the port greater access to other transportation arteries.

A Place on the Spaceflight Map And then there is space. Florida, of course, has long had a major place on the spaceflight map with its NASA operations at the Kennedy Space Center. The area’s space business took a hit in 2011 with the shutdown of the space shuttle program and the related layoffs of thousands of people. But that’s not the end of the story, notes Lynn Pitts, director of Economic Development, Florida Power & Light. “What’s changing is we’re going from NASA to private-sector companies involved in space,” he says.

Examples include SpaceX, Stratolaunch, and Sierra Nevada, which have operations there.

Boeing also has a major presence, and earlier this year announced plans to convert a former space shuttle facility to allow it to land, refurbish, and relaunch X-37B reusable unmanned spacecraft.

Somewhat closer to the ground but still flight-related, Brazilian plane maker Embraer recently announced plans to expand its assembly operation in the Florida community of Melbourne to turn out midsize business jets. And Northrop Grumman Corp. is adding jobs, Pitts says. In May, the company announced plans to create up to 1,800 jobs through expansions at its campus in Melbourne. Northrop Grumman already had announced plans for a Manned Aircraft Design Center of Excellence in Melbourne and an Aircraft Integration Center of Excellence in St. Augustine.

Diversifying the Economy Such headlines offer a glimpse into the way Florida has responded to

Port of Miami

By Steve Stackhouse

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The only state to master the sun and the cloud.

es calling Florida With more than 26,000 high-tech compani more to oljer home, itĹ&#x;s clear that the 6Xnshine 6tate has puting to surgical than just beautiful weather. From cloud com ing high-tech technologies, Florida is laser-focused on help tax climate, ndly -frie businesses prosper. Featuring a business sted in inve n 0% personal income tax and nearly $8 billio nts to engineer your R&D every year, Florida has all of the compone workforce of more success. Combined with a talented high-tech ntly ranks #1 for curre da Flori than a quarter million, it’s no wonder business. for ate innovation. Consider Florida. The perfect clim

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challenges, such as that posed by the phase-out of the space shuttle program. Another glimpse came in response to the recent economic downturn.

Florida has been accustomed to economic success through organic growth, but as Pitts notes, the influx of prosperity took a hit.

“Unemployment was a couple of percentage points above the national average,” he notes. The state responded with a significant regulatory streamlining and a concerted effort to reach out to the business community. “The business perception of Florida turned around, and a lot of people started big projects here,” Pitts says. “We’re trying to diversify and get more manufacturing, more corporate headquarters, more technology-based companies.”

South Florida already had a fair number of corporate headquarters. As Pitts notes, Miami is something of a gateway to the southern hemisphere and an ideal location for such things as international banking and Latin American headquarters.

But there’s always room for more. The Greater Fort Lauderdale Alliance, for example, boldly went out in search of headquarters and landed some healthy catches, including a dozen or more in the past few years. The area is now home to about 150 corporate or international regional headquarters.

Recent Investments Meanwhile, the Fort Myers area last year landed a big fish when it lured the world headquarters of car rental giant Hertz from New Jersey. Its $50 million project was expected to bring in some 700 jobs, according to Pitts. At the time of the announcement, company officials pointed to Florida’s Eastern and Mid-Gulf Coasts Resources: Crystal Sircy Senior VP Business Development Enterprise Florida, Inc. Orlando, FL 32803 1-877-YES-Florida Fax: 407-956-5599 csircy@enterpriseflorida.com www.enterpriseflorida.com Peggy Doty Executive Assistant & Project Coordinator Greater Fort Lauderdale Alliance CEO Council Fort Lauderdale, FL 33301 954-627-0134 Fax: 954-524-3167 pdoty@gflalliance.org www.lesstaxing.com

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FOR FREE SITE INFORMATION, CALL

their acquisition of Oklahomabased Dollar Thrifty, noting that they felt a Florida address would be an attractive draw for retaining and relocating valuable Dollar Thrifty employees rather than losing them.

Big manufacturing operations are certainly attractive for economic development officials anywhere, but midsized projects are also quite pleasing to leaders in Florida, which historically has been known more for tourism and agriculture. Over along the western edge of the peninsula, one example is Air Products. The company earlier this year opened a liquefied natural gas heat exchanger manufacturing plant in Palmetto, and noted that proximity to Port Manatee made the site irresistible.

Global opportunities should continue to grow in the Miami area, with the establishment a couple of years ago of a “mega” foreign-trade zone. It’s a streamlined arrangement that allows companies located on the right parts of the map to operate their own industrial facilities as FTZs, according to Donath. “Now any building can be designated as a foreign trade zone.”

Also poised for growth are R&D-intensive industries, including those related to biotech and healthcare, according to Pitts. Scripps Florida, Max Planck Florida Institute, the Torrey Pines Institute for Molecular Studies, and other institutions join the state’s universities in drug development and other groundbreaking work, and that holds a lot of promise for business and employment growth.

Nurturing Talent Donath notes the importance of continuing to nurture that kind of brainpower to keep moving the area forward.

That’s why the region assembled its One Community One Goal’s Academic Leaders Council, comprised of the leaders of six major universities and the local public schools. “They meet on a quarterly basis,” Donath says, with wide-ranging goals that include beefing up programs in life sciences, aviation, and trade/logistics, along with other workforce initiatives geared toward strengthening the local economy.

He says it’s all part of answering a critical question: “Can we find the labor we need with the skills we need?”

Given how successfully this piece of Florida has adapted to the challenges of recent years, there’s a good bet that the answer will be “yes.” As Donath notes, though some measures of the economy aren’t quite where they were before the recession hit, normalcy is returning. “It’s improving. A lot of things are happening.” ■

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ADINDEXWEBDIRECTORY Advertiser

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ALABAMA

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KENTUCKY

AIDT www.aidt.educ director@aidt.edu info@aidt.edu

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Kentucky Cabinet for Economic Development www.ThinkKentucky.com econdev@KY.gov

ARKANSAS

LOUISIANA

Economic Development Alliance for Jefferson County www.jeffersoncountyalliance.com info@jeffersoncountyalliance.com

Acadiana Economic Development Council www.teamacadiana.org rebeccas@teamacadiana.org

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CALIFORNIA

MISSISSIPPI

Tulare County Economic Development 73 www.TulareCountyEconomicDevelopment.org mwasham@co.tulare.ca.us

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

CONNECTICUT

NEBRASKA

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

Nebraska Public Power District ww.nppd.com econdev@nppd.com

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TEXAS Cover 4

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Lubbock Economic Development Alliance www.lubbockeda.org Mike.hatley@lubbockeda.org Temple Economic Development Corporation www.ChooseTemple.com cayres@choosetemple.com TexAmericas Center www.texamericascenter.com bill.cork@texamericascenter.com

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WISCONSIN

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Wisconsin Economic Development Corporation www.InWisconsin.com wade.goodsell@wedc.org

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CANADA NEVADA

FLORIDA Enterprise Florida www.enterpriseflorida.com csircy@enterpriseflorida.com

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GEORGIA Georgia Quick Start www.georgiaquickstart.org rbrown@georgiaquickstart.org

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Hoosier Energy Economic Development www.HoosierSites.com www.HEPN.com hgutzwiller@HEPN.com Southwest Indiana Economic Development Coalition www.southwestindiana.org gwathen@southwestindiana.org

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JobsOhio www.jobs-ohio.com contact@jobsohio.com

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Iowa Economic Development Authority www.iowaeconomicdevelopment.com info@iowa.gov business@iowa.gov

Invest in New Brunswick www.investnb.ca

MidAmerica Industrial Park www.maip.com info@maip.com

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ONTARIO City of Brampton Economic Development Office www.brampton.ca/b-more

Dyersburg /Dyer County Chamber of Commerce www.dyerchamber.com ahester@dyerchamber.com

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Tennessee Department of Economic & Community Development www.tnecd.com www.tn.gov/ecd/ allen.borden@tn.gov

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

CentrePort Canada www.CentrePortCanada.ca Diane.Gray@CentrePortCanada.ca

NEW BRUNSWICK

Ontario Investment and Trade Centre www.InvestInOntario.com info@InvestInOntario.com

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QUEBEC Aéroports de Montréal www.admtl.com

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MANITOBA

Knoxville-Oakridge Innovation Valley www.knoxvilleoakridge.com dlawyer@knoxvillechamber.com

IOWA

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Grow Piqua Now www.GrowPiquaNow.org jsommer@piquaoh.org

TENNESSEE

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ALBERTA Alberta’s International Region www.internationalregion.com info@internationalregion.com

OKLAHOMA

INDIANA

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OHIO

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

Rent Athens LLC www.rentathens.com www.SunriseCenter.com Jennifer@SunriseCenter.com

NV Energy Economic Development www.nvenergy.com

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CRÉ Vallee-du-Haut-Saint-Laurent www.hub-30.com info@hub-30.com

225, OR VISIT US ONLINE AT www.areadevelopment.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 required for industrial use. This means a great reduction in time and risk for businesses eager to grow in Wisconsin.

Take the next step and discover how your business will succeed In Wisconsin®. Contact our Business Attraction Account Manager, Wade Goodsell, at 608.210.6813 or wade.goodsell@wedc.org. Learn more by visiting Certified.InWisconsin.com

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

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MAKE

KENTUCKY A FACTOR IN YOUR SITE SELECTION LOW BUSINESS COSTS A recent national report ranks Kentucky’s business costs among the lowest in the country.

It’s hard to beat that.

LOGISTICAL ADVANTAGE Kentucky is home to two global air cargo hubs and is located at the center of a 34-state distribution area in the eastern U.S., making us a logistics dream. We can move products easily and efficiently by air, rail, road and water to all points of the globe.

QUALITY WORKFORCE Last year, Kentucky’s workforce partners facilitated the training of nearly 85,000 Kentuckians. We’re also one of the first states to implement a statewide Work Ready Communities program, ensuring a steady pipeline of skilled talent.

LOW ENERGY COSTS Kentucky boasts the 6th lowest industrial power costs in the country, and the lowest in the eastern U.S. It’s one of the reasons why site consultants have ranked our competitive utility rates #1 in the country.

COMPETITIVE TAX CLIMATE The Tax Foundation ranks Kentucky as the 7th most business-friendly state in the country for new firms and the 6th lowest tax cost state for new corporate headquarters.

PROGRESSIVE INCENTIVES Kentucky offers a full suite of tax incentive programs that provide the flexible financial assistance businesses need when locating, expanding or reinvesting in Kentucky.

QUALITY OF LIFE Life outside the office just couldn’t be better. As ranked by CNBC in 2014, Kentucky offers the nation’s lowest cost of living in the country, and housing costs up to 30 percent lower than the national average. Top that with breathtaking countryside and vibrant city life, and you have a place that you never want to leave.

Want more information?

ThinkKentucky.com | (800) 626-2930

We can be your deciding factor.

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