Area Development Q4 Issue 2020

EXPANDED INCENTIVES FOR REMOTE WORK

COLD STORAGE IS HOTTER THAN EVER

RESHORING PHARMA MANUFACTURING

AREADEVELOPMENT SITE

AND

FACILITY

PLANNING

Q4/2020

Supply Chain Executives Respond to the Surge

W W W . A R E A D E V E L O P M E N T. C O M

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At NV Energy, our economic development experts work strategically with businesses, site selectors, real estate brokers/developers and economic development agencies to facilitate business location and expansion within Nevada. Our team can partner with your company to assist in a variety of ways, including: • Pricing and calculation of utility rates and tariffs • Facilitate site visits to help you find the best location for your company • Provide information on incentives, labor force, training programs, Nevada’s tax advantages and more

NEVADA SITE LOCATOR Buildings. Land. Demographics. GIS.

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CONTENTS

16 COVER STORY • Boom in E-Commerce Creating Workforce Opportunities

FOOD PROCESSING

• Growth Surge Sparks a Logistics Free-For-All

57 F inding the Sweet

• Supply Chain Executives Respond to the Surge

Spot in Food Plant Location Decisions

• Trends in Industrial Design Accelerated

59 W orkforce:

A Primary Ingredient in the Evolution of the Food Industry 61 C old Storage Is Hotter Than Ever

features

12 Expanded Incentives Support the Growth in Remote Work

68 Developing and

Executing a Site Selection Game Plan

Local economies are benefitting from adding new jobs — whether those jobs are performed on-site or remotely — and they are incentivizing them too.

After an internal assessment of the company, the location team should focus on key success variables, appropriately weighted, and consult with needed subject matter experts.

25 Restarting Delayed Capital Projects

63 H ow to Navigate the Reshoring of Pharmaceutical Manufacturing

66 R obust Development

A collaborative approach to re-evaluation of delayed capital projects is in everyone’s best interest.

Plan Encourages Innovation and Expertise 67 R edevelopment of Space for Booming Life Sciences Firms

54 Attaining a

Big-Picture Perspective With a Facility Master Plan

LIFE SCIENCES

71 ANNUAL SELECT SITES DIRECTORY

Don’t attempt a manufacturing site and facility master plan without these “must haves.”

Area Development® Site & Facility Planning (USPS 345-510) is published four times per year (Q1, Q2, Q3, and Q4) at Lancaster, PA, by Halcyon Business Publications, Inc., 400 Post Ave., Westbury, NY 11590.

Periodicals postage paid at Westbury, NY, and additional offices. Single copies, $20. Yearly subscription U.S. & Canada, $75; foreign, $95.

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Volume 55 | Number 4 Q4/2020

GOVERNMENT “When contemplated in its extreme, almost any power looks dangerous.”

Ruth Bader Ginsburg (1933–2020), former Associate Justice of the U.S. Supreme Court from 1993 to 2020

29

special supplement

departments

4 6 8 10

31 R ecruiting and Retaining Today’s Manufacturing Workforce

Area Development recently asked Kylene Zenk — director of the Manufacturing Practice at UKG (Ultimate Kronos Group) for her input on recruiting and retaining a skilled workforce in the age of COVID-19.

Editor’s Note

Is There a “Better Normal” Ahead?

In Focus

The Evolving Role of Outdoor Spaces

Front Line

V ocational Training Alliances in Tough Times

First Person

ick Williams, Director of Business R Intelligence and Analytics, Michelin North America, Inc.

72 Ad Index/Web Directory exclusive online content

34 S ustaining Industrial Labor Needs During and After

• Climate Change Concerns Begin to Take Center Stage

Finding and retaining a skilled workforce continues to be a critical need, and those unemployed during the pandemic may need training and help with other issues to step into those open roles.

• Trends in Office and Industrial Parks

the Pandemic

39 The Future of the Workforce Is a “Better Normal”

Redefining the workforce in a post-pandemic world will likely be driven by the ideals of our largest generation — millennials.

46 Leveraging the Workplace in Recruitment Strategies Companies whose goals and priorities are reflected in their workspaces, supporting the well-being of their employees, are more likely to attract and retain top talent.

• Nondisclosure Agreements: Best Practices and Special Public Entity Issues • Aligning Supply Chain with Corporate Social Responsibility • Why Are Foreign-Trade Zones Making a Comeback?

• How Technology Is Making Data Collection for Incentives Programs Applications Easier • FDI in Turbulent Times

50 F ive Key Factors at Play When Satisfying Workforce Requirements

The global pandemic has magnified the significance of workforce training options and incentives in the site selection process.

What’s Next: Leveraging Mergers and Acquisitions with Incentives Find these articles and more @ www.areadevelopment.com

POSTMASTER: Send address changes to Area Development, Circulation Department, 400 Post Ave., Westbury, NY 11590. Subscribers requesting address changes must provide both old and new addresses. © Copyright 2020 by Area Development® magazine. ISSN: 1048-6534. Printed in the U.S.A. Area Development® is a registered trademark of Halcyon Business Publications, Inc.

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EDITORS NOTE

Q4/2020

Is There a “Better Normal” Ahead?

www.areadevelopment.com EDITORIAL

A

s we head into 2021, the coronavirus pandemic is still with us, with hopes for a soon to be released effective vaccine sending the stock market — and our hopes for a return to “normalcy” — surging. Meanwhile, the pandemic has brought into sharp focus several industry sectors that we turn our attention to in this issue.

COVID-19 accelerated the rise in e-commerce. In the U.S., online shopping increased by 30 percent in the first six months of 2020 compared to the same period in 2019.1 This trend shows no signs of slowing down, presenting real estate and labor challenges ahead. With consumers expecting faster deliveries, supply chain decision-makers are looking deeper into urban and suburban areas to set up “last-mile” facilities.

E-commerce has also surged in the food and beverage industry, with the coronavirus pandemic changing how we shop for food — and even where we eat.

With people avoiding dining out, more food is being bought for cooking at home, and consumers are ordering it remotely and having it shipped so they won’t even need to venture into the grocery store.

And, needless to say, COVID-19 has brought the life sciences sector to the forefront. Recent geopolitical and economic trends have caused concern about overseas production of pharmaceuticals. In fact, a presidential Executive Order signed in August aims to accelerate the development of “essential medicines” domestically.

Also included in this issue is our annual Workforce supplement, in which we look at how the workforce will be defined in a post-pandemic world, as well as how industry can find and retain the skilled workforce it needs now and into the future.

This has been a year like no other. We will continue to bring you insightful articles in 2021 to meet the needs of growing your company as we look ahead to what some are now calling not just a “new normal,” but a “better normal.”

1

https://www.digitalcommerce360.com/2020/08/25/ecommerce-during-coronavirus-pandemic-in-charts/

Editor Geraldine Gambale editor@areadevelopment.com Staff and Contributing Editors Lisa Bastian Dave Claborn Mark Crawford Dan Emerson Tom Ewing

Tom Gresham Mark Schantz Steve Kaelble Karen Thuermer

DESIGN/PRODUCTION Art & Design Patricia Zedalis Production Manager Jessica Whitebook jessica@areadevelopment.com

EXECUTIVE Publisher Dennis J. Shea dshea@areadevelopment.com Sydney Russell, Publisher 1965-1986

ADVERTISING SALES William Bakewicz (ext. 202) billbake@areadevelopment.com

ONLINE SERVICES Digital Media Manager Justin Shea (ext. 220) jshea@areadevelopment.com Web Designer Carmela Emerson

CONFERENCES/EVENTS Business Development Manager Matthew Shea (ext. 231) mshea@areadevelopment.com

CIRCULATION circ@areadevelopment.com

FINANCE finance@areadevelopment.com

Editor

EXECUTIVE OFFICES Halcyon Business Publications, Inc. President Dennis J. Shea

2020 Editorial Advisory Board Josh Bays, Principal, Site Selection Group, LLC Marc Beauchamp, President and CEO, The CAI Global Group H. Robert Boehringer, III, Managing Director, Global Location and Expansion Services, KPMG Brian Corde, Managing Partner, Atlas Insight, LLC Les Cranmer, Senior Managing Director, Savills Kate Crowley, Principal, Baker Tilly Capital, LLC Dennis Cuneo, Former SVP, Toyota

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Amy Gerber, Executive Managing Director, Business Incentives Practice, Cushman & Wakefield

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

Stephen Gray, CEO, Gray

Paul Naumoff, Principal, National Director of Tax Credits and Investment Advisory Services, EY

Michael Kruklinski, Head of Real Estate, Siemens Energy and Siemens USA Scott Kupperman, Founder, Kupperman Location Solutions, LLC Dan Levine, Practice Leader, Location Strategies and Economic Development, Oxford Economics, Inc. Bill Luttrell, Director of Corporate Real Estate, Werner Enterprises, Inc.

Eric Stavriotis, Senior Vice President, Advisory & Transaction Services, CBRE Margy Sweeney, Founder & CEO, Akrete, Inc. Dan White, Director, Government Consulting and Fiscal Policy Research, Moody’s Analytics

Business/Finance Assistant Barbara Olsen (ext. 225) olsen@areadevelopment.com All correspondence to: Area Development Magazine 400 Post Avenue, Westbury, NY 11590 Phone: 516.338.0900 Toll Free: 800.735.2732 Fax: 516.338.0100

Joshua Wright, Vice President, Economic & Workforce Development, Emsi

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Big moves should generate big returns. A Maryland move does.

We’re talking a tech-savvy talent pool and infrastructure that make crucial markets more accessible than ever. And companies here don’t pay the price of other tech hubs. Point your clients to markets that generate ROI, like D.C. suburb Silver Spring (66% more affordable than San Francisco), or Baltimore (43% more affordable than New York).

Open.Maryland.gov

IN FOCUS The Evolving Role of Outdoor Spaces Outdoor collaboration zones can provide workers with a sense of safety and return to “normal” in a post-COVID-19 world. people back to a sense of normalcy.

Nature’s Influence on Our Wellbeing

•

BY LOUISE SHARP, PRINCIPAL, HLW

Operating out of HLW’s Los Angeles office, Louise Sharp’s resume is replete with award-winning projects that are known for their iconic, practical, and artful nature.

This year has been hallmarked by re-evaluation. On all levels, people have taken a second look at their habits, spaces, and lifestyles and have had to adjust greatly to meet the new needs of today. With safety as a priority, people entered their homes in March, and most have not returned to a “normal” lifestyle.

On a macro-level, spaces must be reimagined in order for people to return safely and once again participate in day-to-day activities without fear of getting sick or infecting others.

One solution is moving traditionally indoor spaces outdoors. The office is a great example of how outdoor solutions can help to bring

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It is well known that nature can have a positive impact on a human’s well-being. Simple solutions like plants and windows that look onto natu-

and separation.

This is an opportunity for facility managers to look at their buildings and reimagine their available space to create outdoor escapes people will want to go to. By providing a rooftop or patio for building occupants to use, workers will be excited to go back to the office to use spaces they might not have access to in their own home.

Creating the Outdoor Office Office space has often been shaped from

An indoor/outdoor workspace at Procore Technologies, a construction software management company, is both uplifting and welcoming.

ral environments have been shown to boost attitudes and make people feel calmer. Prior to the pandemic, people had more engagement with nature and the outdoors, whether that was walking through a farmers’ market to get to the office or going to a nearby park for lunch. Oftentimes these outdoor spaces were also associated with social gathering and interaction with others. Without these daily activities, working from home can increase the feelings of isolation

the inside out, but perhaps now is the time to think outside in. Buildings have become sealed, containing environments –– many of which do not even have operable windows. As the demand for sanitization increases, there has become a greater emphasis on fresh air rather than purified air.

Outdoor collaboration zones offer that benefit.

These zones can be structured in a few different ways depending on the needs of the workers. A workspace can

be a series of pavilions (fully built out or partially enclosed) within a larger outdoor environment with interstitial spaces in between for individual work. These can include greenhouse type spaces that are more enclosed, with flexible furniture solutions to adapt to different interactions. Now is the time to push the boundaries of what we think an office space can be.

If we provide the same diversity in seating and working setups in our outdoor spaces as we do for our indoor spaces, it can only benefit the user.

As we navigate this “new normal” and bring our work outdoors, one of the challenges of open-air space actually may be its greatest strength. With the need for people to be constantly connected to their devices, creating an outdoor space that supports technology can sometimes prove to be difficult, given that it requires certain IT and weatherproof infrastructure that may not already be present in the area. However, with all the talk about Zoom fatigue and the desire for human connection, a question is raised about whether or not these optimized, outdoor spaces could or should remain tech-free. If what we’re craving is a venue for safe, human-to-human collaboration, a quiet spot outside may be better suited as a moment of relief and disconnect than simply another location to video chat after all.

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Better health care companies mean a better Kentucky During a time when health care is especially crucial, Kentucky companies are making a significant impact. From producing and distributing PPE to assisting health care providers with supply chain technology to supporting development of potential treatments for COVID-19, Kentucky’s health care related technology, service and manufacturing industry is contributing vitally in the fight against the coronavirus, all while creating high-quality job opportunities. The industry includes headquarters operations, pharmaceutical makers, medical equipment designers and producers, medical device manufacturers and health care product distributors. Together, they’re paving the way toward a better Kentucky and a better world.

The Bluegrass means business.

(800) 626-2930

CED.ky.gov

FRONT LINE Vocational Training Alliances in Tough Times

© Reel Video & Stills, Inc./Brian Erkens

Companies and communities must continue to invest in and destigmatize vocational training in order to bridge the manufacturing skills gap.

Students learn on industry-standard equipment at Tri-County Tech, which sets them up for a seamless entry into the workforce.

•As if manufacturers are

BY KAREN E. THUERMER

not challenged enough

by COVID-19, many face shortages of appropriately skilled workers to keep their tech-savvy factories competitive.

A 2018 report by Deloitte and the Manufacturing Institute1 estimated the manufacturing industry would have as many as 2.4 million jobs to fill by 2028. Last year, the National Association of Manufacturers (NAM) reported in 3rd quarter 20192 that the top concern among manufacturers was the inability to attract and retain a quality workforce.

Stephen Gold, president/CEO of the Manufacturers Alliance for Productivity and Innovation (MAPI), recently wrote in IndustryWeek that the skills gap today isn’t so much about a lack of STEM majors, but companies foregoing investment in training and four decades of stigmatizing vo-

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cational education.3 Yet, some communities and corporations are trying to address this problem by working together to create vocational training programs to attract more

dual-credit,” he explains.

“By the time they graduate from high school, they will have earned a certificate from Tri-County and be well on their way to earning their associate degree.”

These same students also can participate in work-based learning at neighboring businesses, which can lead to meaningful careers that pay family-sustaining wages.

“For businesses, this is an opportunity to create a crucial recruitment pipeline, decrease turnover and help influence, mold, and shape potential future employees,” Kelly adds.

Kansas City has also implemented efforts to

“VOCATIONAL TRAINING IS BECOMING MORE IMPORTANT THAN EVER….,” students to advanced manufacturing.

One example is TriCounty Technical College in Pendleton, S.C. Grayson Kelly, vice president of Institutional Advancement and Business Relations at the college, says its program is unique as it co-locates business and industry with K-12 education through the Hamilton Career and Technology Center in Westminster, S.C., and postsecondary education through Tri-County Technical College.

“High school students have the opportunity to get a head start on college by taking courses for

address growing worker needs in tech and logistics positions.

“Vocational training is becoming more important than ever to deliver an agile, skilled talent pipeline that makes it possible for companies to attract and retain a workforce that meets their unique requirements,” states Elli Bowen, vice president of Business Development at KC SmartPort.

Examples include KC Tech Academy, an industry-led, two-year competency-based training program currently offered to high school juniors and seniors

in select school districts in the Kansas City region, and Skilled KC Technical Institute, which focuses on careers in high demand but in short supply in the Kansas City region.

Skilled KC’s first three programs (advanced manufacturing, software development, and biotechnology lab technician) were launched on Sept. 8, 2020.

Columbus, Ohio, offers yet another example of a robust program. Jeff Spain, director of the Manufacturing Extension Partnership (MEP), Columbus State Community College (CSCC), explains that CSCC “ties existing curriculum to corporate workforce needs and tries to generate a talent pool that can address the innovative changes we see develop within manufacturing each year.”

One program that has thrived during COVID is CSCC’s Modern Manufacturing Work Study (MMWS.) Spain describes it as an “earn and learn” program that combines classroom and lab-learning with the opportunity for a paid workstudy position at a local industry partner. CSCC has awarded more than 50,000 degrees and has a near $1 billion dollar annual impact on the local economy.

1

https://www2.deloitte.com/us/en/pages/ manufacturing/articles/future-of-manufacturing-skills-gap-study.html 2 https://www.nam.org/nam-survey-uncertainties-continue-to-drive-concern-5966/ 3 https://www.industryweek.com/talent/ education-training/article/21142785/ renewing-the-case-for-career-and-technical-education

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FIRST PERSON RICK WILLIAMS | DIRECTOR OF BUSINESS INTELLIGENCE AND ANALYTICS | MICHELIN NORTH AMERICA, INC.

deploy its current talent, and which areas are “target rich” with talent that’s attractive to the company. Lastly, data can be very useful for enterprises to work with local communities to spur types of local talent investment that benefit both the people and the enterprise.

Why are people analytics important when a company is choosing a location for a new facility or an expansion project?

Williams: There are many factors that need to be considered when vetting a new location, and information about the local talent is one of them. Companies will use people analytics to answer important questions such as: •W ill there be enough local talent to staff the level of employees needed?

Can you define people analytics for our readers?

Williams: People analytics is described as the method of analytics which can support leaders as they make decisions about their employees and workforce. This method applies statistics, technology, and expertise to large sets of HR data, which should result in better business and management decisions by an organization. Another way of looking at this is how to get the best return on investment from their people — in an analytical, data-driven way.

How can the use of data help industrial companies satisfy their workforce requirements?

Williams: Data can prove instrumental to inform industrial companies on the best way to satisfy workforce requirements — from understanding the current company workforce characteristics (retirement rate, longevity with the company, skills of each person, time to reach full competency in a post, etc.) to the insights needed to best recruit (number of available workers in a geographic area, skills of graduates of nearby universities, population growth/decline near industrial sites, etc.).

Data can help a company understand how to best

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•W ho else would the enterprise be competing with for these employees?

•C an the company pay the salaries that this location would command?

•W ould people want to re-locate here?

Leveraging people analytics can give critical insight to these questions for a potential location.

How does this approach help in cultivating a company culture as well as team-building, and why is that important?

Williams: Understanding the talent in an organization and using that understanding to make strong investments in current and future employees sends a strong message: People matter. When this is done well, it’s possible to build a more engaged workforce that recognizes the emphasis their leadership places on them. This recognition creates a virtuous cycle within an organization, which not only attracts talent but retains talent.

Many workers believe automation will replace their jobs, but can you explain how it can maximize employee talent and potential?

Williams: In the current era, we are embracing a digital revolution. This revolution brings with it explosions in

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the speed of business, the amount of data produced, and a breadth of capabilities companies must bring to the table in order to remain competitive. When this is considered at scale, automation is a key tool for employees — not a risk for their jobs.

Automation coupled with advanced analytics can help augment the intelligence and impact of workers in their jobs. It releases the workers to leverage their true expertise in a job — which was formerly hidden by rote repetition or repetitive tasks. Employees who show a clear understanding of how to leverage automation, rather than fearing it, will find themselves addressing the more interesting and complex subjects in their area — making themselves and their companies more successful in these competitive markets.

INFRASTRUCTURE

As we come out of the pandemic, what advice would you give an organization about scaling its workforce back up?

Williams: This pandemic has introduced an unprecedented level of uncertainty. Many of the traditional models of predicting what comes next are simply not equipped to speak with confidence. Companies need to focus on understanding where their commercial opportunities are — and deploying talent to those areas. No company wants to scale up blindly and put its people and future at risk. Use this time to invest in the current staff and chart a path to the future.

What should companies’ overall approach to human resources management be?

Williams: People matter. Companies overall approach to resource management should be the embracing of this simple fact. Using the vast amount of information at our disposal today, companies should know their talent better than ever before — and the deployment of this knowledge toward respecting and investing in employees should be tangible to the entire workforce.

THE ASSIGNMENT In 2008, Rick Williams joined Michelin working in the IT department.

Rick held various positions within the IT department until the end of 2012 when he and his family moved to France. While in France, Rick led several international IT groups which supported the aircraft business line, all commercial agencies, and the geographic zone of Africa, India, and the Middle East for marketing and sales. Rick returned to the United States in 2016 as program and delivery manager for the digital initiative to transform marketing and sales worldwide through salesforce.com.

In January 2018, Rick was named to his current position, director of Business Intelligence for Michelin North America. He recently answered questions posed to him by Area Development’s editor about fulfilling a company’s workforce needs in these unprecedented times.

GEORGIA MOVES AT THE SPEED OF BUSINESS World-class transportation systems – airport, sea port, trucking, and rail – provide Georgia companies unparalleled access to domestic and global markets.

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>

WORKFORCE/INCENTIVES

Expanded Incentives Support the Growth in Remote Work Local economies are benefitting from adding new jobs — whether those jobs are performed on-site or remotely — and they are incentivizing them, too.

By Steve Kaelble

U.S. Workers’ Frequency of Remote Work in Response to COVID-19 To what extent are you working remotely to avoid catching or spreading the coronavirus?

Always 51

31 18

Sometimes

Never 60

45

34 21

41

40

37

36

22

24

41 36 23

42 40 33 25

20

0 April

May

June

July

August

September

Source: Gallup, 2020

S

o much about life has changed dramatically since the onset of the coronavirus pandemic. We’ve upped our game with hand hygiene and gotten used to wearing a mask in public. We’ve learned a lot about food carryout and delivery. And for millions of Americans, we’ve had a crash course in remote work.

Indeed, as of an October 2020 Gallup survey,1 fully a third of the American workforce was “always” working remotely, and another quarter said they were working remotely “sometimes.” The share of remote workers in October was down a fair amount from what it was earlier in the pandemic, but still huge. And of those still working remotely, two thirds said they’re happy to keep it that way, at least for now. Some are content to work at home in order to stay safe, but according to Gallup, quite a few have found they just like it this way.

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Meanwhile, many employers have found they like it this way, too. A growing number of major companies are saying their workers can stay home indefinitely,2 maybe permanently. Overhead is down; risk is lower.

And perhaps to the surprise of some previously skeptical executives, employees are figuring out how to make it work and stay productive, even as they alternate dog walks and loads of laundry with their Zoom meetings.

“With major companies such as Twitter, Nationwide Insurance, Nielsen, Shopify, Slack, and Zillow saying their workers can stay remote forever, it is projected that although the current percentage of remote workers will decline post-COVID, there will still be a major increase in remote workers,” says Tracy King Sharp, chief operating officer at Boyette Strategic Advisors. “Some for free site information, visit us online at www.areadevelopment.com

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WORKFORCE are estimating that an approximately 25 to 30 percent of the workforce will be working from home multiple days per week once the crisis is over,” and that certainly matches what Gallup has found.

Telework Positions Taken into Account It’s a remarkable shift in work practices and attitudes, and it upends some of what had been a standard way of thinking on the part of local and state officials in charge of building the job base.

Economic development has pretty much forever been about facilitating new or expanded workplaces where people physically go to work. But it’s now clearer than ever that the local economy benefits from adding new jobs one way or another, regardless of whether those workers get dressed and drive to the office or put on their slippers and walk to the den.

The state of Virginia had already figured this out well before we learned the new word “COVID.” Stephen Moret, the president and CEO of the Virginia Economic Development Partnership, says the state has adopted new statutory language that lets his organization take telework positions into account when offering performance-based economic development incentives. In other words, if a company is due some sort of incentive benefit tied to creating new jobs, it doesn’t matter where that work occurs, as long as those jobs are held by Virginia residents.

“The important thing to know is that this predated the pan-

demic, in our regular legislative session in 2019,” Moret says.

“Remote work had been growing rapidly, and it occurred to us that most incentives presuppose a single geographic location for an economic development project.”

Not anymore. Now, all that matters is that the beneficiaries of these new jobs live and work in Virginia. The change, he says, covers all state agencies and the benefits they provide. For any state program that has something to do with encouraging new jobs, remote workers are just as good as on-site workers.

There’s been quite a bit of interest from employers, Moret says, notably in the technology sector. Tech companies already had learned the value of remote work even before the idea was forced upon them this past March.

But there’s a lot of interest, as well, in regions that might not have been first in line to land tech jobs in the past. “We have a strong desire to position rural regions and small metropolitan areas for growth,” Moret says.

The extension of incentives means high-paying jobs can now land in a lot more places, and that is great for economies that may have been left behind before.

The Michigan Economic Development Corp. is onboard with the idea, too. Its Michigan Business Development Program offers the flexibility of counting remote-working jobs, as long as all program and job requirements are met. The MEDC can count jobs created on a statewide basis, not just at a par-

THE RIGHT PEOPLE Collaborations with universities, technical colleges, and businesses ensure Georgia’s workforce is prepared for the jobs of the future – providing companies with the talent needed for success.

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ticular physical location, provided that the jobs are created as a result of an expansion or location of business. If it encourages business and job growth in the state, why not?

For example, auto insurer Clearcover recently announced it would open a new virtual office in Detroit and create 300 jobs.3 Needless to say, now’s not the ideal time to open up a brand-new office and pack it with 300 people. But MEDC helped move the project forward with assistance supporting the creation of the 300 future hires under the stipulation that they must reside in Michigan, even if they’re working remotely for the foreseeable future.

Attracting New Residents Meanwhile, Sharp says that quite a few jurisdictions have figured out just how valuable remote work can be to local economies, pandemic or not. And in fact, some communities are using the benefit of remote work to attract new gainfully employed taxpayer residents. Here are some examples of programs aimed at promoting remote work at specific locations: • The Tulsa Remote program enhances the Oklahoma city’s existing workforce by bringing in new talent. The program pays qualifying remote workers $10,000 to move to the city, some of it upfront, some in monthly stipends, and some after living in Tulsa for a year. Participants can even get help finding housing, plus free desk space at a downtown coworking facility. About 100 people took advantage of the program in 2019, and the hope was to bring in 250 more for 2020.

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• The Remote Shoals program aims to lure remote workers to The Shoals area of Alabama. The program looks for people with remote gigs or self-employment who have a minimum annual income of $52,000. If they move to the area, they can get an incentive of up to $10,000. This program also launched in 2019 and has drawn interest from across two thirds of the states.

• The Savannah Remote Technology Worker Incentive offers a relocation reimbursement of $2,000 to qualified remote technology workers who make the

“

Tech companies already had learned the value of remote work even before the idea was forced upon them this past March.

move to the Georgia community.

The Savannah Economic Development Authority had already offered a relocation reimbursement to qualifying companies moving to Chatham County. Back in May, the incentive was extended to individual workers, in hopes of attracting employees of large companies across the country to live in Savannah while working for a company based elsewhere.

New Layouts for Existing Workspaces Clearly, remote work is not just a necessary response to the

pandemic, but potentially a new way of doing business that can be beneficial to some jurisdictions that could really stand to attract high-paying remote jobs and the well-paid people who fill them. But what does it mean for the places where some of these jobs used to be planted in-person, such as downtown areas?

It’s a mixed bag, according to Moret. It doesn’t necessarily mean downtown markets will be flooded with vacant space.

“There’s an increase in remote working, but there also will be an increase in social distancing in terms of how offices are laid out,” he points out.

That said, having fewer employees spaced out across more square feet per employee may be acceptable to landlords, but from the perspective of downtown retailers, fewer employees means fewer cups of coffee and lunches sold. Economic shifts and rumbles will continue, for sure, as the picture sorts itself out.

In the meantime, says Sharp, “there is also the prediction that the longer people work from home, a greater adoption of remote working will be seen.

Before COVID, surveys repeatedly showed that around 80 percent of employees want to work from home at least some of the time.”

And the October 2020 Gallup survey confirms that a lot of people are liking what they have been experiencing. n

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https://news.gallup.com/poll/321800/covid-remotework-update.aspx https://www.entrepreneur.com/article/354872 3 https://www.detroitnews.com/story/business/2020/08/25/clearcover-auto-insurancecompany-open-detroit-office-employing-300/3431777001/ 2

Georgia.org/ProBusiness

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

11/25/20 10:40 AM

Boom in E-Commerce Creating Workforce Opportunities The COVID-19 pandemic has accelerated the rise in e-commerce and created opportunities for fulfillment jobs, along with a need for increased automation and training.

By Matthew R. Powers, Executive Vice President, Retail/E-Commerce Distribution; and Rob Wheeler, Senior Vice President, Industrial Integrated Portfolio Services; JLL

T

o say that COVID-19

has altered our world is an understatement. Among the pandemic’s many adverse effects is the impact on brick-andmortar retailers. UBS analysts projected1 that 100,000 retail locations could close by 2025 if Americans continue the online shopping craze perpetuated by COVID-19.

The pandemic is just the latest blow to a trend in brick-andmortar downturn. Previous years have seen record closures due, in part, to online retail giants dominating retail.2 Meanwhile, steady (and rising) unemployment numbers3 have left many out of work.

But there is an expected bright spot in the culmination of these two problems: The rise of e-commerce could fuel a massive need for fulfillment center workers.

Fulfillment Jobs Represent a Major Opportunity With the ongoing shift from brick-and-mortar to online shopping, workers displaced by traditional retail or other affected industries may be able to transition their skills to

e-commerce fulfillment centers.

This realm will see continued job growth for the foreseeable future, and while many common skills can easily transfer to fulfillment center positions, the working conditions might be even more favorable than in other industries.

As compared to traditional warehouse jobs, e-commerce fulfillment centers feature an upgraded, often air-conditioned and updated work environment.

Additionally, the job functions of packing and preparing SKUs can be less labor-intensive than most traditional blue-collar jobs — and, in many cases, offer better wages.

But What About Automation Taking Jobs?

It’s true; automation will continue to increase, especially as human capital continues to become more costly.

We’ve known for years now that automation is a gamechanger for fulfillment, but the significant

capital investment required has remained a barrier to entry for smaller retailers. Many have opted to wait for the technology to mature and become more affordable. However, after COVID-19 spurring e-commerce consumer demand to unforeseen heights, many companies are more willing to invest in automation to keep up. And retailers who don’t embrace automation will experience a serious loss of market share.

That said, automation begets job opportunities. Some jobs managing or working alongside automated systems require

e-tailers want a presence in smaller markets simply to satisfy the need for fast shipping.

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Courtesy of XPO Logistics, Inc.

more advanced skillsets, but there is a wide range of new opportunities with this technology. It’s been estimated that automation will create more than 130 million new jobs across industries,4 and upskilled and reskilled workers will have a leg up.

In fact, in some areas, community colleges actually offer direct certifications to a specific company’s fulfillment and distribution centers.

For example, Mid-America Industrial

On the Horizon: Development in Smaller Regions

Traditionally, the opportunities for e-commerce blue-collar labor pointed to large metro markets.

While this may have been true in e-commerce’s infancy, we’re seeing a trend of greater development in small and mid-sized markets.

There are a few reasons: First of all, retailers are answering the competitive nature of finding warehouse workers.5 In larger markets, there’s strong competition for labor — wages are going up and proximity to home is a huge factor for many workers.

In some regions, a fulfillment center’s location on a tollway is enough to deter someone from applying there.

To illustrate, for a major market like Chicago, the same The right combination of people and technology is warehouses built critical to meet consumer demands, as pictured here at an XPO warehouse. in two similar cities could have dramatically different success attracting labor based on the need for Park outside of Tulsa, Oklahoma, employees to take a toll road during has a university campus and their commute. This is why hypertechnology training center within the accurate labor analysis — with realpark. Tenants of the park can send time data — is a top consideration employees to the training center to for warehouse placement. help develop work skills and improve As an example, JLL utilizes many retention. different sources of data to analyze Interestingly, this type of real-time job postings and their educational program does more details. This includes the number of than improve the job outlook for days the job has been posted, the an area’s eligible workers — it wages for each position at the zip also entices organizations to code, or drive-time level throughout build in certain areas. Fulfillment the United States. With this type center location, as it turns out, is of powerful insight, developers, increasingly more important to investors, and tenants can understand attracting labor.

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the demand for skilled labor, get valuable intel on regional wages, and create competitive job postings.

The second reason that major retailers and e-tailers want a presence in smaller markets is simply to satisfy the huge demand for fast shipping. Major retailers are now investing in smaller “hub” locations in markets like Indianapolis, Baton Rouge, and Raleigh as a means of accessing the “last mile” of distribution.

Will Your Company Cash in on the Boom?

It’s clear that this challenging moment in our history is reshaping many industries. If you’re hoping to mobilize your warehouse to take advantage of e-commerce opportunity, these are the things you should keep in mind: •C onsider targeting the many workers displaced by traditional retail or other affected industries, whose skills can likely transition to e-commerce fulfillment centers.

•T here’s never been a better time to invest in automation, and market players who don’t embrace this shift will feel the negative effects.

•C ompanies that invest in upskilling and reskilling workers through internal training and/or community partnerships will continue to have an advantage in attracting labor.

•“ Last-mile” development outside of major markets will continue to thrive, and the location of these facilities will determine who can compete for labor. n 1

https://www.usatoday.com/story/money/2020/04/21/100000-retail-stores-could-close-by-2025-ubs-report/2997122001/ 2 https://www.forbes.com/sites/jamesconca/2020/08/21/ the-coronavirus-accelerates-onlines-destruction-of-brick-mortar-shopping/#50bd937a4734 3 https://www.pewtrusts.org/en/research-and-analysis/blogs/ stateline/2020/08/28/unemployment-likely-rising-in-11-states 4 https://www.washingtonpost.com/technology/2018/09/18/machines-will-create-million-more-jobsthan-they-displace-by-world-economic-forum-says/ 5 https://www.shrm.org/resourcesandtools/hr-topics/ employee-relations/pages/finding-and-managing-warehouse-workers.aspx

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

11/25/20 11:00 AM

Growth Surge Sparks a Logistics Free-For-All Delivering on consumer demands poses a challenge for real estate and supply chain decision-makers.

By Ben Conwell, Senior Managing Director & Practice Leader for eCommerce and Electronic Fulfillment for the Americas, Cushman & Wakefield

E

-commerce has exploded

in recent years, but as COVID-19 emerged the sector has seen unprecedented growth.

While many industries battled disruptions, e-commerce provides opportunity. E-commerce and logistics companies are accelerating planned innovation and restructuring initiatives to stay ahead of the curve — if that’s even possible — spurring the implementation of three to five years of advancements in a span of just five months to keep up. It’s akin to upgrading the jet while traveling at Mach speed.

This significant growth in online sales shows no signs of slowing, with Deloitte forecasting1 e-commerce sales to increase by 25–35 percent year-over-year during this upcoming holiday season, compared to an increase of 14.7 percent in 2019.

Retailers and shippers cannot deliver on these demands unless the broadest selection of inventory is positioned close to significant populations. It all boils down to having the right inventory in the right places at the right time.

Nothing happens on the shop floor, whether digital or physical, that doesn’t have an impact on the supply chain. Ever-changing

consumer behaviors mean real estate and supply chain professionals must make quick decisions during a time when nearly every aspect of the industry is in flux. Everything from network planning and building size to labor and automation is changing — not to mention the expectation of free and faster shipping.

Real Estate Challenges Ahead Planning for real estate expansion into new logistics facilities has never been more challenging. Even before the virus wreaked havoc across the globe, fundamentals including a near-historically-low vacancy rate of 5 percent in Q1 2020,2 upward pressure on rents, and increased demand for quality space created barriers for real estate decision-makers. Add in pandemic-driven disruptions and peak holiday shopping season and you have a recipe for never-beforeseen demand for last-mile delivery stations and fulfillment centers.

The logistics and industrial asset class is the only real estate sector to remain resilient during the pandemic. The industrial sector has managed to see over 159 million square feet of positive absorption

year-to-date, putting the market on pace to surpass 200 million square feet of positive absorption for the seventh consecutive year.

Investment activity is still reasonably high, with a range of large institutions and REITs continuing active investment in industrial product since the pandemic began, with most of the top buyers of industrial real estate closing deals in multiple months across multiple geographies.

Although industrial sales are down year-over-year, investment activity is in line with 2017 levels, which at the time was considered a very liquid market. The same cannot be said for any other product type.

Industrial has been a top performing asset type since 2016 and is expected to continue. The most recent ULI survey3 expects industrial to post 4.5 percent positive returns in 2020 accelerating to 10 percent by 2022. This compares to an overall total return forecast for all property types of -1.7 percent in 2020 and 5.6 percent in 2022.

Location and Labor It takes more than a well-designed building to make a logistics facility successful. The search for an ideal logistics location requires an intricate

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balance between location and labor availability. You need to be close to the consumer to facilitate fast delivery, but also in a location that provides a qualified and sustainable employee pool.

E-commerce orders are fulfilled differently than wholesale or traditional store replenishment.

Rather than being palletized, orders are shipped as “eaches,” which are received, stowed, picked, and shipped individually. This process requires a greater number of associates than comparable legacy warehouses.

When searching for a location, it’s important to weigh all the factors. A proper labor analysis digs into employee drive-times, extent of existing warehouse jobs, turnover, number of eligible workers, unemployment and wage rate trends. It’s also vital to consider labor availability for peak season.

It’s common for large e-commerce facilities to see hiring needs double to support peak holiday shopping season — the most critical time of the year for most players — leaving no margin for error in underwriting labor.

Why Not Automate?

With labor sometimes in short supply, automation is often a consideration. However, the tradeoff between automation and labor is a huge business decision. The initial capital investment to implement automation can be massive. Also, automation or robotics can make scaling operations for peak season difficult because it locks operations into a specific process flow. This can result in a loss of agility to adjust for future throughput shifts.

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Every e-commerce retailer or fulfillment operator must land on which lane is a better fit for current (and future) operations. The math differs based on the nature of the items fulfilled, the delivery level of service, availability of capital, and variability in throughput. And having more automation doesn’t always equal a smaller labor force because it doesn’t necessarily replace human labor, rather it works alongside associates to make jobs safer and more productive. Automation also requires workers to perform maintenance, coding, and other tasks to keep the machines running smoothly.

“Last-Mile” Hurdles With consumers expecting everfaster delivery speeds, e-commerce players must weave operations deeper into urban and suburban areas. These so-called last-mile facilities are where the packages are sorted and loaded into vans or other vehicles for the last leg of the delivery journey. Recent trends in e-commerce have turned a marathon into a sprint to locate these types of infill facilities.

Infill and suburban logistics locations face several hurdles. The two biggest are finding an existing building with the right functionality or a redevelopment site with the right potential and obtaining community support (and zoning) to allow the extra traffic counts and noise that may be created by delivery vehicles.

When it comes to building layout, a last-mile facility doesn’t commonly require a lot of dock doors and clear height. Among key requirements are extensive parking areas for

associates and vans, and a huge vehicle staging and loading room.

There has been a lot of buzz about the potential to convert vacant retail space into logistics or last-mile facilities. The challenges, however, can be significant due to building conversion costs, site layout, and other retailers’ and community NIMBY (not in my back yard) objections. Prologis estimates that retail-to-logistics conversions could amount to 5-10 million square feet per year resulting in 50–100 million square feet over the next decade.4 This equates to less than 1 percent of all existing logistics real estate and less than 3 percent of typical annual new construction of logistics real estate in the top 25 U.S. markets. To date there has been more chatter than execution of this strategy.

Significant capital is exploring such conversions, but any measure of success remains to be seen.

With Demand Comes Opportunity Demand for a variety of logistics facilities will continue to surge with the accelerated penetration of e-commerce providing in-roads for investors and developers to build on. We need only look at our own shopping patterns to see why. Still, challenges remain for retail, supply chain, and real estate professionals when solving the logistical puzzle created by today’s consumer. n 1

https://www2.deloitte.com/us/en/pages/about-deloitte/ articles/press-releases/a-tale-of-two-holiday-seasons-asa-k-shaped-recovery-model-emerges-consumer-spending-heavily-bifurcated.html 2 https://www.cushmanwakefield.com/en/united-states/ insights/us-marketbeats/us-industrial-marketbeat 3 https://americas.uli.org/research/centers-initiatives/centerfor-capital-markets/barometers-forecast-and-data/ 4 https://www.prologis.com/logistics-industry-research/ logistics-real-estate-sizing-retail-conversion-opportunity

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11/25/20 11:02 AM

Supply Chain Executives Respond to the Surge Supply chain executives at XPO Logistics discuss the surge in e-commerce, which is going to play out for a long time to come.

Ashfaque Chowdhury, President, Supply Chain – Americas and Asia-Pacific; and Erik Caldwell, President, Last-Mile; XPO Logistics, Inc.

T

he COVID-19 pandemic

has dramatically changed our lives, and each one of us likely has a personal story to tell that underscores that fact. But there are also stories to be told of sweeping changes that virtually all of us have felt. One of those is the altered state of the global supply chain.

The supply chain is, after all, an element of daily life that has an impact, either directly or indirectly, on just about everyone on the planet. The pandemic put a spotlight on the critical nature of this industry. Truck drivers and warehouse employees became everyday heroes on the front lines, making sure essential goods got where they needed to go. At the root of those changes is the explosive growth in e-commerce, as homebound consumers embraced online purchasing for everything from food and other necessities to furniture and appliances.

Two senior executives from XPO Logistics, a top-10 global supply chain services provider, recently answered Area Development’s questions about their new normal.

Ashfaque Chowdhury is president of XPO’s supply chain operations in North America, Asia, and Latin

America. Erik Caldwell is president of the company’s last-mile business, which delivers heavy goods to consumers’ homes on behalf of some of the largest companies in the world. They oversee two critical pieces of the supply chain that e-commerce has impacted directly.

AD: We can well imagine that some changes brought about by the pandemic are temporary, while others are more permanent. What changes are here to stay for the foreseeable future?

Chowdhury: The increase in e-commerce is a trend that’s going to play out for a long time to come.

The pandemic has accelerated e-commerce to levels that we would have expected in 2025.

E-commerce is growing faster than brick-and-mortar, and this growth has tremendous implications for supply chains. Delivering a product through the e-commerce channel, compared to delivering it through a store channel, requires significantly more resources in the warehouse and logistics area. That means the right combination of people and technology is critical to meet this new consumer demand.

Holiday peak this year is expected

to be like nothing we’ve seen before and we’re hiring 25,000 seasonal and permanent workers worldwide to support it. This, coupled with the deployment of robots that can work alongside our employees to increase efficiency, will be the defining moments of what some are calling the “mother of all peaks.”

Caldwell: That new normal leads to the need for reverse logistics in returning online orders. The overall volumes are challenging, but we’re pretty adaptable at handling the increase in last-mile home deliveries of large bulky items. Returns are much more complex, and we’re doing a lot more returns processing — as the shift to e-commerce has created more returns. Our technology is the savior there, since our systems integrate so tightly with our retail customers’ systems — that’s what makes it possible to get items back on the shelves so quickly.

AD: In what other ways has technology helped you manage this crisis?

Caldwell: Throughout the pandemic our tech teams have been developing, enhancing, and deploying systems that have given us the productivity gains we’ve needed

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Courtesy of XPO Logistics, Inc.

to meet the surge in demand. Things like automated route optimization and our capacity planning tools have helped, and our XPO Connect platform has given us better dispatch tracking and visibility with real-time updates, and they help reduce fuel consumption. Deliveries are contactless, so we’re able to keep consumers and our employees safer.

Chowdhury: Certainly automation, in the form of robotics and collaborative robots or “cobots,” has given us a much higher degree of physical separation of employees. It’s

Smart technology, for example, has enabled us to fine-tune the positioning of our workforce in a much more granular and efficient way. We’re also using virtual reality (VR) to train new hires on how to work safely with robots, which improves the onboarding process.

AD: Given the labor shortage and how essential it is to retain employees, how have you kept your frontline workers motivated under the difficult working conditions they’ve been dealing with during the pandemic?

E-commerce has accelerated to 2025 levels. XPO has 200 million square feet of warehouse space globally.

really helped us double productivity rates and improve accuracy by up to 40 percent and, more importantly, created safer working conditions for our workers. That wouldn’t have been possible without the many robots we’ve deployed in warehouses around the world.

Predictive analytics and AI technology have given us a much better idea of where and when resources are needed and what to expect so we can quickly adapt to the changing demand dynamics created by the virus. Our XPO

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Chowdhury: Communication and showing appreciation go a long way. We’ve provided appreciation pay to tens of thousands of frontline workers to acknowledge their dedication and sacrifices.

Communication has been robust — we’ve rapidly adapted to communicating virtually, and we’ve increased the frequency of virtual town halls. We’ve done a lot of listening. We’ve heard from our employees what their challenges are, and we’ve changed policies to make it easier for them to do their jobs.

Caldwell: The fact is, our frontline workers have always been very motivated, and that hasn’t changed. At every level people show up and want to do a good job every day. I don’t think COVID changed that at all. We didn’t have to go out and supermotivate people. Of course, they can’t help but be uplifted by the way the nation has appreciated supply chain professionals on the front lines and everything they’re doing to keep the country moving forward.

AD: What would each of you say is the number-one lesson you’ve learned from your experience with the pandemic?

Chowdhury: I think the first lesson is that sometimes the unthinkable does happen. It’s important for leadership to swiftly respond to it, to lead people and pull the responses together to deal with something that is completely unprecedented.

Waiting to deal with the problem and hoping it will get better doesn’t help. Swift recognition and response are critical. Embrace change and adapt to it.

Caldwell: My number-one lesson is that no matter how fast you need to move, you need to share best practices along the way. Every day XPO employees were posting their ideas and experiences on Workplace, our internal employee communications tool, so they could be shared across verticals, regions, and business units. Externally, we released a pandemic safety whitepaper, “Essential Support for Essential Workers,”1 that we made available for free download. I’m very proud of that, and if our lessons learned can help others, all the better. n 1

https://news.xpo.com/2432/xpo-logistics-pandemicsafety-whitepaper-support-for-essential-workers/

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

11/25/20 11:20 AM

Trends in Industrial Design Accelerated Future-proofing, building vertically, and mixed-use product integration are three trends that will shape the design of industrial assets for years to come.

By Dan MacDavid, Principal, AO Architects

I

ndustrial real estate has

experienced healthy growth over the past five years, but no one could have forecast that a global pandemic would be a boon for the sector.

The global shutdown resulting from the coronavirus outbreak has forced many consumers to change their shopping habits, drastically accelerating the penetration and adoption of e-commerce worldwide. In the U.S., online shopping increased by 30 percent in the first six months of 2020 compared to the same period in 2019.1 This e-commerce surge has put remarkable pressure on retailers to quickly move their inventory online and bolster their distribution networks, resulting in nearly unprecedented demand for warehousing and logistics space across most primary and secondary logistics markets.

While this e-commerce surge isn’t going to revolutionize industrial design, it will accelerate trends in the sector. Three trends specifically will keep shaping the design of industrial assets in upcoming years:

Future-Proofing The industrial sector is undergoing a significant transformation driven by innovative

new technologies such as automated warehouses and autonomous drones and trucks. COVID-19 is only accelerating the adoption of these technologies as more companies implement solutions that keep warehouses operating during unexpected crises. For architects, the principal challenge is to design and implement programmatic and structural elements that can evolve as new technologies are innovated each year. Infrastructure for future electric delivery vehicles is one such example found in most site designs today.

and fire safety codes, to the high costs of urban construction, there are many important new design factors. Yet, despite these obstacles, the future of warehouse is undoubtably vertical in dense U.S. markets like Seattle, Los Angeles, San Francisco, and New York; land is scarce in these dense markets and consequently much more expensive, pushing the design vertically to gain area over a smaller footprint, and allowing to keep up with demand for same-day delivery as it reaches new heights.

Building Vertically

Mixed-Use Product Integration with Industrial

Today the majority of industrial assets are single-story, tilt-up concrete construction, which is economical, durable, and has a relatively short construction timeline. However, this established model does not suit dense, urban e-commerce hubs with limited land availability at premium prices.

Developers are starting to explore multistory warehouses, which face complex challenges to build. From the engineering challenge of designing taller tiltup walls or changing over to steel frame structures with metal skins, to stringent city building restrictions

While industrial traditionally has been relegated to peripheral industrial zones, it is now becoming increasingly integrated with other uses such as retail, hospitality, entertainment, and office. Local governments and developers are creating mixed-use industrial master plans to better serve their communities by attracting a variety of businesses that complement and strengthen one another. This model not only generates strong business synergies, it also helps mitigate risk by diversifying business types so that economic stability doesn’t hinge on any single sector. Architects are AREA DEVELOPMENT | Q4 2020

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designing these industrial master plans to emphasize place-making and to comply with building typology requirements, such as street exposure, parking, trucking, automobile circulation, pedestrian ways, and common areas.

Industrial master plan facilities are becoming increasingly sophisticated, evolving with new technologies and customer demand. Working with an architectural firm with expertise in function, format, and aesthetic appearance is critical to ensure the success of an industrial project. n 1

https://www.digitalcommerce360.com/2020/08/25/ecommerce-during-coronavirus-pandemic-in-charts/

The industrial sector is undergoing a significant transformation driven by innovative new technologies such as automated warehouses and autonomous drones and trucks.

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

11/25/20 11:22 AM

>

CONSTRUCTION/PROJECT PLANNING

Restarting Delayed Capital Projects A collaborative approach to re-evaluation of delayed capital projects is in everyone’s best interest.

By Shawn Buchanan, Vice President/General Manager; and Brian Gallagher, Vice President, Corporate Development; Graycor Southern

COVID-19

disrupted many aspects of life, including causing owners to temporarily halt planning and construction of capital projects. Even projects that were well under way suddenly experienced shut-downs as companies navigated health and safety concerns, encountered supply chain problems, and re-evaluated priorities in the face of market uncertainty.

A study conducted by Independent Project Analysis (IPA)1 in spring 2020 revealed that 76 percent of companies surveyed were “planning to delay projects due to the COVID-19 pandemic’s effects.” Moreover, respondents said, on average, that they had suspended approximately 15 to 20 percent of their projects with anticipated suspension times lasting for at least 10 to 20 weeks.

With those suspension periods now largely drawing to a close, companies must decide how — and if — to resume their delayed projects. IPA concludes from its research that “projects stopped and restarted in execution incur 4 percent greater cost growth than projects that continued uninterrupted, and projects stopped and recommenced during construction experience 11 percent more cost growth compared to projects that halt and resume in the middle of detailed engineering.”

To mitigate losses, owners must carefully re-evaluate the factors that will determine a project’s success. Previous plans, facility requirements, safety approaches, supply chains, workforce availability, schedules, benchmarks, and more should all be assessed and reconsidered.

Communication, Collaboration, Flexibility: The Underpinnings The stakes are high when restarting a delayed project, and additional action steps are required beyond those taken during typical capital project execution. This is no small demand, considering that “typical” capital projects are already complex. Despite the added complications of a resumed project, the underpinnings of success are the same: communication, collaboration, rigorous data analysis, and flexibility.

Project stakeholders from all sides must work together. While anxieties spurred by the economic and health crises could understandably provoke quick reactions, causing firms to conservatively address risks and protect their own interests, in fact it is more imperative than ever to function as a team, gather as much upfront information as possible, and follow through with systematic deployment.

This includes engaging contractors early in the re-evaluation process. By applying the principles of early contractor involvement, or ECI, contractors and owners can achieve greater certainty in terms of estimation/cost, project planning, safety, communication, constructability, and risk management. This approach also reduces errors and changes in later project phases.

Companies must decide how — and If — to resume their delayed projects.

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Action Steps for Re-Evaluating Delayed Projects

New

pacted numerous contractors in different ways. Before restarting a project, owners should review and address the previously selected contractors to verify their availability and financial stability. Changes in the project scope and schedule could impact the proposed project team. As many contractors have downsized, key members of the project team may no longer be available. Craft availability continues to be a critical challenge, as regional labor pools are subject to myriad state and local regulations pertaining to COVID (travel, lodging, etc.), potentially impairing a contractor’s ability to ramp up to meet schedule commitments in a timely manner.

New contract terms and conditions, as well as project documentation, may be required to address COVID-19-related liability. A reexamination of all parties’ insurance policies and coverage is advisable.

Additionally, in upcoming months, firms would do well to watch court decisions that are being handed down interpreting a previously littleused contract clause known as force majeure (defined as unforeseeable circumstances that prevent someone from fulfilling a contract). These court decisions will determine the extent to which the pandemic will be considered a force majeure event that mitigates some contractual obligations.

CONTRACT

The first question the team should ask is, does the project still meet the business’s needs, considering that market factors may have shifted? If anything, the COVID-19 pandemic accelerated market shifts based on behaviors of consumers and businesses.

This has impacted how customers find, select, purchase, and receive products. A key step in re-evaluating delayed projects is assessing the market drivers in specific industry segments and how disruptions or shifts will impact demand. More important, these shifts will impact how industrial facilities are utilized.

Fundamental tradeoffs may need to be made between cost and schedule as new goals and timelines are assessed and negotiated. Make sure the team understands how cost or schedule will be impacted by new safety and COVID procedures. While added safety protocols on active job sites have slowed the overall pace of work in order to accommodate new socialdistancing norms, project teams must maintain the perspective that a lack of stringent site safety protocols could lead to far lengthier site closures due to mass infection among craft personnel, or loss of key management assets.

Capital costs that were assessed at project outset should be revisited. Costs for contractors, labor, materials, critical process equipment, fabrication, and more may have changed. Supply chains and lead times for materials and equipment may have also been dramatically affected by the pandemic. Owners and project representatives should communicate with all contractors, suppliers, and vendors one-on-one, confirming that they are still available to handle the project and re-examining variables. Identify, for example, scheduling issues such as whether any milestones have been missed.

It is also important to assess where contracts and financials stand, including construction work that has been completed and/or paid for. Performing a site assessment is critical for viewing construction status firsthand. Additionally, the team should re-assess where the project stands with regard to permitting.

The pandemic and economic challenges have im-

terms and

CONDITIONS may be

required to address

COVID-19 related

LIABILITY.

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It May Not Be Business-As-Usual When construction has resumed, the team should not expect business-as-usual on the job site. Experts predict that restrictions will be lifted gradually, probably with inconsistencies between geographic areas and possibly with some new waves of lockdowns and disruptions. To the extent possible, these changes should be enumerated and planned for during the project re-evaluation stage.

For example, social distancing, sanitizing, disinfecting, and cleaning requirements will certainly require new provisions in place for job-site safety and may reduce job-site productivity. Safety managers will need to include training and screenings for their safety programs and site-specific plans. Site security measures should be ready to put into place should the site experience another full shutdown. for free site information, visit us online at www.areadevelopment.com

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more will help teams fully understand the new challenges Maintaining flexibility and adaptability is critical; brought about by COVID-19 — and will help them meet while it is impossible to foresee exactly what will affect those challenges. n the project as time goes on, multiple “if/then” scenarios can be established and accommodated. Perform cost1 https://www.ipaglobal.com/news/article/stopping-and-restarting-capitalprojects-in-the-covid-19-landscape/ benefit analyses that can be used in the event of new slowdowns to inform which aspects of the project should be fully stopped and which can be merely slowed.

Standard workflows should be reexamined to see where efficienLexington, Kentucky is what a great place to do cies can be gained — with efficienbusiness looks like. A city with smart, educated talent, cies being defined not only accordthriving in a community with a high quality of life. ing to traditional measures, but also keeping in mind new kinds of costs imposed by social distancing and the like. For example, there may be an opportunity for off-site assembly or prefabricated components to eliminate job-site congestion and tighten the construction schedule. Similarly, now is a good time to fully leverage cloud-based solutions and remote collaboration platforms.

Even after construction has re#5 Best-Run City in America sumed, the team should continue –WalletHub to track all of the indicators it used when assessing the project for re#8 Percentage of Population with start, because the availability and an Advanced Degree stability of resources may continue –US Census Bureau to fluctuate. For example, supply lines may remain unpredictable, #6 Cities with the Lowest Startup Costs companies may see spikes in work–SmartAsset er absenteeism, and financially challenged contractor companies #2 Best Cities for New College Grads may continue to experience staffing –SmartAsset changes. A successful project outcome will depend on the team performing ongoing risk assessment and management, considering the likelihood a given scenario will play out and paying special attention to scenarios that would have the most severe impact.

Now more than ever, a collabECONOMIC DEVELOPMENT orative approach to project planning, including the re-evaluation of delayed capital projects, is in everyone’s best interest. Working together on data collection and analysis, risk management and

HERE’S OUR

PROOF

AREA DEVELOPMENT | Q4 2020

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2020 Manufacturers’ Recruitment and Retention Efforts

A “Better Normal” in the Workforce’s Future

Satisfying Workforce Needs: Five Key Factors at Play

Page 31

Page 39

Page 50

Sustaining Industrial Labor During & Post-Pandemic

Leveraging Workplaces in Recruitment Strategies

Page 34

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CONTENTS F E AT U R E S

39 The Future of the Workforce

31 Recruiting and Retaining Today’s

Redefining the workforce in a post-pandemic world will likely be driven by the ideals of our largest generation in the workforce — millennials.

Manufacturing Workforce

Area Development recently asked Kylene Zenk — director of the Manufacturing Practice at UKG (Ultimate Kronos Group), a leading global provider of HR services and workforce management solutions— for her input on recruiting and retaining a skilled workforce in the age of COVID-19.

34 Sustaining Industrial Labor Needs During and After the Pandemic

Finding and retaining a skilled workforce continues to be a critical need, and those unemployed during the pandemic may need training and help with other issues to step into those open roles.

Is a “Better Normal”

46 Leveraging the Workplace in Recruitment Strategies

Companies whose goals and priorities are reflected in their workspaces, supporting the well-being of their employees, are more likely to attract and retain top talent.

50 Five Key Factors at Play When

Satisfying Workforce Requirements

As the U.S. demographic changes, manufacturers and other companies must step up their diversity and inclusion efforts in order to fulfill their workforce needs.

34 PROFILES/ SPONSORS

46

50

36, 37 KENTUCKY

44, 45 MISSOURI

48, 49 TEXAS

Kentucky Fosters Investment, Job Creation Ced.ky.gov

Missouri: Laser-Focused on Workforce Development MissouriOneStart.com

Education: A Driving Force Behind Lubbock’s Downtown Revitalization Carolyn.rowley@lubbockeda.org Lubbockeda.org

40, 41 MISSISSIPPI Mississippi’s Workforce Advantage mississippi.org

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RECRUITING AND RETAINING TODAY’S MANUFACTURING WORKFORCE Area Development recently asked Kylene Zenk — director of the Manufacturing Practice at UKG (Ultimate Kronos Group), a leading global provider of HR services and workforce management solutions — for her input on recruiting and retaining a skilled workforce in the age of COVID-19.

AD: How has COVID-19 changed the employee experience in manufacturing, and what facets of this should organizations retain going forward?

Zenk: Since the start of the COVID-19 pandemic, employees have been experiencing a drastically different work environment. Thousands of manufacturers across the U.S. and around the world were deemed essential during the pandemic, and their production lines

Workers at manufacturing firms have continued to produce the essential goods that the global community relies on.

haven’t stopped. They’ve continued to produce essential goods that the global community relies on — from the food we eat to the clothes we wear and cleaning supplies we use in our homes. As some manufacturers increased output and others reconfigured operations to satisfy urgent demands, employees had to adapt.

Their work behind the scenes has helped to ensure that others working on the frontlines — whether in hospitals, pharmacies, grocery stores, or other essential businesses — have had the goods and supplies they need to do their jobs safely and effectively.

For all these reasons, frontline manufacturing workers deserve more than our gratitude — they deserve all the benefits of a great employee experience: work-life balance encouraged through flexible scheduling policies; modern and mobile workplace technology that simplifies daily tasks; financial peace of mind enabled by employer-provided payroll benefits, like earned wage access; career development opportunities; a supportive manager; and so much more.

In navigating this “new normal,” many manufacturers have already cultivated a safe and engaged frontline workforce by putting these people-first practices in place. Employers have built trust and transparency within their organizations — they’ve not only improved employee engagement but also the employee experience. As we look ahead to a future without COVID-19, it’s important that these positive strides are not lost.

ylene Zenk, Director, Manufacturing Practice, K UKG 2020 • 31

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Rather, manufacturers should continue investing in these and other critical efforts and technologies to maintain frontline employee engagement, making this part of their long-term corporate culture strategy.

AD: Manufacturing leaders seem to recognize that developing and attracting skilled talent is more important than ever, but how do we do this? What strategies can help leaders attract and engage employees?

Zenk: Manufacturing’s skilled talent shortage isn’t going away on its own. Research from the Workforce

workforce. Internal referrals are often the best recruitment tool, so creating a great experience for today’s employees will support recruitment efforts in the end.

With the availability of social media and sites like Glassdoor, it’s becoming more and more critical that manufacturers take steps to positively influence the narrative being told by their greatest brand ambassadors.

Consider also that the average consumer has probably experienced the impact of supply chain disruption for the first time this year — when they couldn’t find the cleaning supplies or personal care products they wanted on the grocery store shelves. In this way,

FRONTLINE MANUFACTURING WORKERS deserve more than our gratitude — they deserve all the benefits of a great employee experience.

Institute at UKG1 found that in the 12 months prior to the start of the COVID-19 pandemic (March 2019– 2020), two-thirds of manufacturers agreed that their organization had difficulty recruiting skilled talent.

Layered on top of this, around 2 in 5 said they were experiencing higher-than-average voluntary employee turnover during this period (44 percent) and saw a spike in retirements (40 percent).

But that was before COVID-19 hit. Now, we are in a period where the pandemic has accelerated the need for manufacturers to focus on their people. Adopting strategies to develop and attract skilled talent and to optimize the existing manufacturing workforce is more important than ever.

Manufacturers need to double down on their efforts to demonstrate why talented individuals should come to work for them versus a competitor or in another field.

And, when thinking about attracting the future workforce, a great place to start is to engage the current

the COVID-19 pandemic has brought the critical and meaningful role of manufacturing into focus for many.

And with this newly favorable perception certainly comes an opportunity for the industry to accelerate its efforts to build awareness and educate the next generation of workers (i.e., students) about the incredible career potential in modern manufacturing.

Finally, employee engagement — which Gallup2 finds is particularly low among manufacturing workers — needs to become more of a central focus. A good place to start is to prioritize professional development and knowledge-transfer initiatives, like upskilling, cross-training, apprenticeships, and mentorships.

Keep in mind that frontline workers in manufacturing may now also be feeling a greater sense of purpose and pride in their work and looking for ways to advance in their careers. We’ve all witnessed the incredible impact that this collective has had in helping our nation get through the early months of this pan-

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MANUFACTURERS NEED TO DOUBLE DOWN on their efforts to demonstrate why talented individuals should come to work for them versus a competitor or in another field.

demic intact — but they’ve lived it. Many are now seeing first-hand how the products that they help produce benefit the global community. Take this opportunity to amplify employees’ sense of pride and help them grow with your company.

AD: The manufacturing industry has been battling a skilled-labor shortage for years. Have we made any headway?

Zenk: Yes, I’m confident that we have made progress. With each manufacturing organization to embrace digital transformation, our industry advances forward.

Today, modern manufacturing offers a wealth of exciting and lucrative career opportunities for skilled members of the workforce, as well as incoming Gen Z talent.

We’ve also seen manufacturers embracing new, successful strategies to overcome the challenges of recruiting talent in a tight labor market. Over the 12 months preceding the start of the COVID-19 pandemic, the Workforce Institute at UKG found that many manufacturers were taking steps to strategically diversify their candidate pool by recruiting individuals with nontraditional experience — e.g., veterans, secondchance workers, individuals graduating from nonprofit job placement programs, persons with disabilities or special needs, refugees, retirees, and others (see full breakdown on page 10 of the report from the Workforce Institute). And, in fact, 81 percent said this approach helped to directly address their organization’s skilled labor shortage.

AD: When we connected last year,3 you shared with Area Development’s readers the importance of engaging and meeting the diverse needs of a multigenerational workforce. Flash-forward 12 actionpacked months: Are there any new considerations to take into account?

Zenk: In the COVID era, all generations of the workforce are facing a totally new set of challenges at work and at home. For employers, meeting the needs of the workforce means being flexible and understanding

when an employee — a parent — has to rearrange her work schedule to accommodate her child’s new virtual school routine. Or when an older worker — perhaps with a pre-existing condition that makes him/her more susceptible to the virus — requests to work from home, or to come into work during the second or third shift to minimize contact with others.

Or maybe you’ve recently hired a high school graduate — who doesn’t have a lot of savings in the bank and has just leased a new car. Instead of feeling anxious about being able to pay his bills, that employee should be able to grab his mobile device and pick up a few extra work shifts; look at his scheduling preferences and expand his availability so that managers can fit him into the schedule more easily; and maybe he can even sign up for early access to his earned wages using the suite of financial wellness tools provided by his employer.

Today’s manufacturing workforce is diverse, with employees spanning many different stages of life. Even though we’re all living through COVID-19 together, each generation is experiencing the crisis differently.

Keep in mind that the employee experience cannot be one-size-fits-all.

AD: Diversity issues are now important in satisfying workforce needs. How can employers lean in on these topics to enrich the employee experience?

Zenk: Just as it’s important to recognize that the workforce has a diverse makeup of different generations, many other demographics can come into play.

It’s important to consider how your organization can embrace and celebrate diversity among its workforce and create opportunities to include and elevate the voices and identities of employees from all backgrounds. Doing so will create a more inclusive and equitable environment for all.

~

1

https://workforceinstitute.org/wp-content/uploads/2020/09/Close-the-Talent-GapPre-pandemic-Insights-Inform-Future-Workforce-Strategies-in-Manufacturing.pdf https://www.gallup.com/workplace/238085/state-american-workplace-report2017.aspx 3 https://www.areadevelopment.com/skilled-workforce-STEM/workforce-q4-2019/ recruiting-and-managing-multigenerational-workforce.shtml 2

2020 • 33

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SUSTAINING INDUSTRIAL LABOR NEEDS DURING AND AFTER THE PANDEMIC Finding and retaining a skilled workforce continues to be a critical need, and those unemployed during the pandemic may need training and help with other issues to step into those open roles.

W

hile the COVID-19 pandemic continues to accelerate consumer and workplace trends that were, in many cases, already under way pre-pandemic, challenges and opportunities in finding, training, and retaining an efficient industrial workforce remain constants for distributors and manufacturers. Effective site selection decisions hinge on a complex cost/quality balance of labor, logistics, and location. It is critical that occupiers remain vigilant in fostering a workplace and workforce

that delivers on performance objectives while meeting current and future pandemic-driven challenges. With labor costs making up as much as 70 percent of warehouse operating expenses, the focus on workforce potential in existing and future locations continues to be one of the most critical components of ongoing innovation for successful occupiers.

Much of the conversation has centered on the agility of suppliers and distributors and how they have been able to meet the peaks and valleys of volatile demand (or early in the pandemic, temporary facility shutdowns). Certainly, higher than typical demand for online order fulfillment in spring 2020, as U.S. e-commerce demand increased 44 percent in Q2 YoY,1 meant that occupiers were implementing creative solutions to find more interim worker resources, and some of those solutions will remain for ongoing fulfillment demand as it finds its new equilibrium for the rest of 2020 into 2021.

Similarly, manufacturers are reevaluating anticipated product volume and workforce demands as consumption patterns settle, with new opportunities related to some sectors considering “right shoring� in reaction to supply chain disruptions encountered in 2020 and lessons learned during the pandemic. Some sectors, such as PPE (personal protective equipment) and pharmaceuticals, may also find new opportunities as government mandates or company decisions on inventory holding positions drive new demand patterns

By B ethany Clark, Senior Managing Director, Strategy & Operations, Logistics & Industrial Services, Americas, Cushman & Wakefield 34 • WORKFORCE

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in locations around the globe and in North America, specifically.

Whatever the future holds for how consumers buy, suppliers distribute, and manufacturers produce, meeting industrial labor and workforce needs will bring new opportunities and challenges that will help drive differentiation among successful users. Questions surrounding quantity, cost, and quality of industrial labor offer multiple dimensions for examination and discussion.

Unemployment and Labor Availability As of September 2020, U.S. unemployment was reported at 7.9 percent, translating to 12.5 million people.2 While this indicates continued improvement in the jobs situation since the April 2020 unemployment rate of 14.7 percent at the to-date height of the pandemic this year, there are still significant numbers of potential workers that could find employment opportunities in the warehousing/distribution, transportation, and manufacturing sectors.

Many wonder why some industrial occupiers,

an abundance of available workers for warehousing/ distribution or transportation jobs, which are currently in greater demand. There are certainly transferable skillsets, competitive wages, and career opportunities to encourage those workers to transition, but high unemployment in one sector does not necessarily equate to abundant labor in another.

There are many factors contributing to the lack of available workers that industrial employers should consider when addressing the current workforce and preparing for future labor needs. Among them are: • COVID safety and return to work: Some workers may be reluctant to return to work over concerns about coronavirus exposure. This includes workers who may be immunocompromised, or may reside with family members who are, and do not want to risk exposure to the virus.

• Family care constraints: Across the country, there are varying solutions to how children are returning to school or daycare, with some facilities offering virtual learning or daycare facilities remaining closed. During the pandemic, workers may be supporting school-age

HIGH UNEMPLOYMENT IN ONE SECTOR does not necessarily equate to abundant labor in another. including e-commerce distribution, are still having difficulties finding enough labor in some markets to meet upticks in demand and peak seasonal hiring. In September 2020 there were over 300,000 materialmoving-worker jobs posted in the U.S.,3 up over 30 percent from the same month YoY, and up nearly three times from September 2016. While some of this may be due to temporary demand that may level off postpandemic, the reality is that seasonal holiday hiring for warehousing and distribution has been growing each year and starting earlier (in late summer) and ending later, as many workers are needed to process returns of online purchases after the holidays.

As hotels, restaurants, and shops closed temporarily (or permanently) in the early stages of the pandemic, more than 8.5 million workers in the retail and hospitality/restaurant industries were impacted in March and April 2020 with temporary or permanent job losses. Some thought this might translate into

children with virtual learning or may not have access to childcare or family/eldercare options, limiting their ability to go to an on-site job or to work the hours required.

• Transportation and access to facilities: Before e-commerce, many large warehouses or manufacturing plants were traditionally in locations requiring a commute by car. Current trends now allow for lastmile facilities and smaller plants to be located in areas accessible via public transportation.

• Skillset gaps: As industrial operations have become more complex, with more technology or automation implemented over the years, job skill requirements have also progressed. Workers may not have the required skillsets or may be deterred by the time and training required to gain them.

Continued on page 38

2020 • 35

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KENTUCKY FOSTERS INVESTMENT, JOB CREATION

F

rom single-employee startups to century-old brands, Team Kentucky helps businesses of all sizes select, grow, and succeed in Kentucky.

With experts in Europe, Asia, and throughout the Bluegrass State, Team Kentucky responds quickly, builds long-term relationships, assists

companies through myriad services and programs, including by providing incentives that aid business expansion, site selection and evaluation assistance, workforce training grants, permitting and licensing assistance, and helping scale startups, to name just a few.

Our team of dedicated business development professionals puts this mission into action.

We provide fast, efficient, and personalized service, while helping companies make their ambitions a reality.

While the commonwealth’s iconic bourbon industry likely comes to mind when thinking of Kentucky — and rightfully so — the state also boasts a rich, storied history in Within a day’s drive of two-thirds of the U.S. population, Kentucky is located at the center of a 34-state distribumanufacturing. Contion area in the eastern U.S., placing it within 600 miles of sider that its thriving over 65 percent of the nation’s population. This strategic position poses enormous distribution advantages for automotive industry businesses. dates to 1913, when Ford’s Louisville aswith workforce training, and assures sembly line rolled off its first Model T. companies and entrepreneurs get Today, Kentucky leads the nation in the resources they need for success. automobile production per capita, and it ranks third among states in Our mission is to foster investment overall production. and job creation throughout Kentucky in partnership with the Kentucky’s diverse profile of busibusiness community. We support ness sectors includes those histori-

Jeff Taylor, Commissioner, Business Development

Team Kentucky Old Capitol Annex 300 West Broadway Frankfort, KY 40601

cally ingrained, as well as innovative industries of the future. Some major industries growing in Kentucky include agritech, automotive, aerospace, chemicals, food and beverage, healthcare tech and manufacturing, logistics, plastics and rubber, and primary metals.

By locating in Kentucky, companies benefit from a range of advantages. The state ranks among the least costly places in the U.S. to do business, featuring nationally low industrial electricity costs. Additionally, its ideal central geographic location powers Kentucky’s worldclass logistics infrastructure, allowing companies to ship their products virtually anywhere in the world overnight. These benefits, plus a highly skilled and available workforce and an abundance of buildand shovel-ready sites, represent a few of the reasons why more and more companies choose to call Kentucky home.

Come experience how Team Kentucky supports business growth and success.

Contact the Kentucky Cabinet for Economic Development at 800-626-2930 or CED.ky.gov.

800-626-2930 CED.ky.gov

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The training revolution starts with Kentucky In Kentucky, the skilled workforce of the future has the opportunity to begin their manufacturing careers before they even receive their high school diploma.

That’s because of an innovative apprentice-style program called KY FAME, which partners students interested in advanced manufacturing with employers in search of a workforce with the necessary skills to succeed in a constantly evolving environment.

Upon completion of the unique training program, students have the option to begin work immediately or further their education with vital experience in hand before they begin their careers.

Kentucky has positioned itself as a leader in the workforce training revolution. Find out more about how we can help your business find and train your current – and future – workforce.

(800) 626-2930

CED.ky.gov

Sustaining Industrial Labor Continued from page 35

• Perceptions surrounding industrial jobs: Warehouse and manufacturing operations have changed over the decades — very different from historical misperceptions of heavy-lifting jobs in dark, dusty warehouses. In many sectors, facilities are temperature-controlled and hightech with more worker amenities, and many of these jobs leverage broader skillsets (e.g., workers managing highly automated manufacturing equipment or robotics) allowing for more clearly defined career paths.

Ideas and Approaches to Recruiting and Retaining an Effective Industrial Wo r k fo rce Just as the pandemic has accelerated or amplified some consumer and industry trends that were already

time” feedback on activity accuracy or productivity?

• Get creative: Are there potential worker pools in the community that remain untapped? If so, is there a simple or creative tweak that can be made to better access that untapped talent pool? For example, could the operation offer adjusted shifts to better accommodate childcare or school schedules? Are there public transportation adjustments the occupier can request from the local municipality that would allow for greater access to the facility during certain shifts?

• Solve for the present while solutioning for the future: Unexpected or seasonal demand may require temporary labor, leveraging staffing agencies, or implementing referral bonuses for existing employees to help supplement the workforce. Solving for the immediate need is the priority, but as seasonal demands turn into longer stretches of time throughout the year, a more strategic approach may be warranted. Consider forming an informal group of human resources and operations managers among other local employers to

IT IS CRITICAL THAT OCCUPIERS REMAIN vigilant in fostering a workplace and workforce that delivers on performance objectives while meeting current and future pandemic-driven challenges.

in play, the ability to find and retain productive workers in an industrial operation remains a longstanding objective for every successful operation. Here are some things to consider: • Understand workforce pain points: Is the operation struggling to keep up with unexpected demand due to a lack of workers or inefficient process/product flows?

Is the operation finding workers, but suffering high turnover or, instead, struggling to get workers to minimal production levels? Are workers leaving for higher wages or benefits at another employer in the area?

• Revisit the approach to training: Are the right supervisors involved in training new hires? Is it a focused activity or something they are asked to do “while they also do their own work”? Are production goals for team members involved in training modified to allow the extra time needed to correctly train a new hire? Is there any technology-enabled training that can help speed the process and provide the new hire “real-

discuss successful strategies for effective worker recruitment and retention. Ensure periodic and ongoing conversations with operations, facility management, HR, I/T, and other stakeholders at the facility and corporate level to discuss future plans for operational improvements, automation, or anticipated changes in workforce requirements.

A major key to successfully attracting and retaining qualified labor lies in the ability of distributors and manufacturers to promote the career opportunities the industrial sector has to offer. Changing perceptions and increasing the understanding of the skills and career paths available in these important, and often growing, sectors of the economy will have lasting effects on the overall stability of the industrial workforce.

~

1 2

https://www.digitalcommerce360.com/article/quarterly-online-sales/ https://www.bls.gov/news.release/archives/empsit_10022020.htm https://www.cnbc.com/2020/09/11/hiring-begins-for-hundreds-of-thousof-roles-for-holiday-shopping-season.html

3

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THE FUTURE OF THE WORKFORCE IS A “BETTER NORMAL” Redefining the workforce in a post-pandemic world will likely be driven by the ideals of our largest generation — millennials.

T

he world as we all knew it changed earlier this year with the onset of the COVID-19 pandemic.

Seemingly overnight, everything that we used to think was normal had changed, and things that once were deemed impossible for the workplace became the “new normal.” Now, seven months later, most of us have gotten used to this “new normal” — embracing the work-from-home lifestyle, using new technology, wearing masks, social distancing, and connecting virtually. But what comes next? Eventually this pandemic will end, a vaccine will be readily available, and we will attempt to return back to our “normal” lives.

But what does this next “new normal” look like? Can our next “normal” be an even “better normal”?

Who will lead the way t o a “ b e t t e r n o r m a l” ?

The millennial generation is most commonly identified as people born between 1981 and 1996.

Currently the largest living generation in the U.S.,

millennials will account for 75 percent of the American workforce by 2025. With such a powerful force in numbers, millennials are reshaping the way companies need to think about the future of work in a postpandemic world.

The Deloitte Global Millennial Survey 2020 1 revealed that despite the individual challenges that millennials are facing, they have remained focused on larger societal issues, both before and after the onset of the pandemic. The pandemic has reinforced millennials’ desire to help drive positive change and to continue to push for a world in which businesses mirror that same commitment to society, putting people ahead of profits and prioritizing environmental sustainability. According to Evelyn Orr, vice president and COO of the Korn Ferry Institute, the results mirror the movement for a new conception of capitalism that marries profits and social impact to create a virtuous cycle of prosperity.

“There is a growing demand to connect business success with social progress. What differentiates CEOs now is being radically human,” says Orr.2 Millennials aren’t just entry-level employees anymore; millions have now moved into management and our passions and beliefs will continue to shape branding and culture, all while our demands for societal change will keep impacting strategic decision-making for many years to come. The “better normal” has to be one in which we all care a little more. Otherwise, what is the point of it all?

Continued on page 42

By Laura Wachowiak, Operations & Marketing Manager, CRESA 2020 • 39

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MISSISSIPPI’S WORKFORCE ADVANTAGE

I

ndustry-leading companies around the world consistently cite Mississippi’s talented and diverse pipeline of workers as a primary reason for locating or expanding operations in the state. Every day, Mississippians are engaged in the production of some of the most sophisticated products on the planet, including unmanned aerial systems, 3D-printed rockets and other advanced aerial systems and components for space exploration, warships for

Hinds Community College is spearheading Continental’s customized workforce training initiatives.

the U.S. Navy, and some of the world’s most recognized and sought-after automobiles. Men and women throughout the state take pride in a job well done, which is

evidenced by the fact that “Made in Mississippi” is a stamp of quality widely known around the world.

Mississippi’s economic development partners take proactive measures to develop a workforce prepared to tackle the in-demand, high-tech careers of tomorrow. The state remains steadfast in its efforts to evolve its workforce training initiatives — as times change, so do the needs of industry. Mississippi is focused on growing partnerships between industry and the state’s educational institutions, including its research universities and nationally recognized community college network, so companies can be confident their employees are always up to any task.

One industry leader realizing the benefits of Mississippi’s quality workforce training programs is Continental, the world’s fourthlargest tire manufacturer.

Continental recently opened its $1.45 billion tire manufacturing plant in Central Mississippi — a facility that will employ 2,500 workers at full capacity.

Hinds Community College is spearheading the company’s customized workforce training initiatives. The partnership also recently announced the launch of its Production and Mechatronics Apprentice Programs, which offer a paid, on-the-job learning experience with the global leader and industry certifications.

Continental’s decision to locate in Mississippi was driven by the state’s

Bill Cork, Chief Economic Development Officer 601-359-3593 1-800-360-3323 bcork@mississippi.org

commitment to developing a world-class workforce — a decision that will benefit Continental and its employees for generations.

In addition to building strong training partnerships, Mississippi offers qualified industries a robust portfolio of incentives, which includes the Mississippi Works Fund. The fund allows the state’s community colleges to enhance their training programs by allocating more than $50 million over 10 years to assist companies that locate or expand in the state with their unique training needs. Seventy-five percent of the funds are allocated to new job creation, while 25 percent are allocated toward training an existing workforce and workforce certification.

Mississippi knows a skilled workforce is the top priority for companies as they look to invest in the communities that they call home.

Economic developers throughout the state are committed to building the best workforce in the nation — a workforce ready for the jobs of tomorrow.

To learn more about Mississippi’s workforce advantage, go to mississippi.org or call the Locate Mississippi team at 1-800-360-3323.

501 N. West Street, Jackson, MS 39201 P.O. Box 849, Jackson, MS 39205 mississippi.org

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WE KNOW THAT DIVERSITY ISN’T JUST A BUSINESS VALUE.

IT’S A PATH TO BETTER IDEAS.

Mississippi offers a perfect combination of quality of life and quality of minds. Thanks to our strong research universities and record-setting improvements in K-12 education, we are ensuring a talented and diverse pipeline of knowledge economy workers who are prepared to solve your toughest challenges and amplify your greatest opportunities.

VISIT MISSISSIPPI.ORG/OPPORTUNITY TO LEARN MORE.

U.S. ARMY ENGINEER RESEARCH AND DEVELOPMENT CENTER (ERDC) WOMEN OF COLOR STEM AWARD RECIPIENTS. FROM LEFT TO RIGHT: DR. REENA PATEL, LULU EDWARDS, BARBARA PILATE, AND VICTORIA MOORE (NOT PICTURED).

DOD SUPERCOMPUTING RESOURCE CENTER VICKSBURG, MISSISSIPPI

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21/10/2020 10:27

The Future of the Workforce Continued from page 39

W h a t w o u l d a “ b e t t e r n o r m a l” in the workplace even look like?

The pandemic has given businesses the opportunity to reset and reexamine what we considered “normal” and to emerge as a better workplace. A major part of this emergence will be remodeling the workforce, creating efficient, productive, and engaged employees who will help organizations make the change.

The ideas about the future of the workplace are not entirely new; they are trends that we already saw

they spend in office. The pandemic has finally forced the companies that were dragging their feet to fall in line. Now more than ever, we realize that working from home is possible for most office jobs and that productivity can increase when employees are allowed flexible work options. The future of work will lead us to a results-based workforce rather than an hours-based system. Everyone is different and work product cannot be based on time spent, but rather the quality of the work produced.

That being said, not everyone can or even wants to work from home all the time. The “better normal” in a post-pandemic world will allow employees to be more flexible and work in a way that is best for both them and their companies.

THE FUTURE OF WORK will lead us to a results-based workforce rather than an hours-based system. happening before the pandemic began — only now the demand for change is happening much faster. The pandemic has really only expedited what was already on the horizon for a millennial workforce.

The Adecco Group’s CEO Alain Dehaze says, “The world of work will never return to the ‘normal’ we knew before the pandemic struck. The sudden and dramatic change in the workplace landscape has accelerated emerging trends such as flexible working, high-EQ leadership, and re-skilling, to the point where they are now fundamental to organizational success.”3 So, what does it look like? We can begin by reflecting on the ways that millennials have already evolved the workforce. Normalizing mental health discussions, workplace flexibility, and more digital communication have become the new norm and have helped reshape today’s workplace to be more casual, open, and flexible. To begin our path to the “better normal,” we need to build off of what we have already changed to create an environment that works for all of us.

T h e “ b e t t e r n o r m a l” i n c l u d e s flexible hours and hybrid work.

For years, millennials have been striving for a more flexible work culture, where they are evaluated for the impact that they create rather than the amount of time

T h e “ b e t t e r n o r m a l” i n c l u d e s a s t ro n g , d i v e r s e , a n d p u r p o s e f u l c u l t u re .

The pandemic brought to light what most millennials already knew: businesses with strong cultures supported with clear values will change faster and emerge post-pandemic in better shape. Strong culture has always been a good predictor of success for organizations, but the importance of culture escalates in a world of historic change and massive uncertainty.

All organizations are now seeing the power of culture in action — as well as the hinderance of a misaligned culture. Diversity and inclusivity in the current climate of social injustice and political unrest are finally getting the attention that they have deserved for so long, and the “better normal” of the workplace will depend on organizations focusing on these issues.

T h e “ b e t t e r n o r m a l” i n c l u d e s n e w t e c h n o l o g y.

The adoption of new technology was well under way long before the pandemic hit. But, the overnight switch to remote work forced many companies to adopt new technology much faster than they ever imagined. As the “digital natives” growing up during the turn of the new millennium and the dawn of the digital age, millennials have often led the adoption and use of

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technology. Relying on the ability to always access information, the millennial generation is accustomed to an on-demand lifestyle. The introduction of MySpace, Facebook, YouTube, the iPhone, and just about every other social network and game-changing piece of technology marks a pivotal point in our “coming of age.” We are no longer willing to accept organizations dragging their feet on adopting new technologies. The pandemic has proven that — when forced — everyone can learn to keep up with new technology — just ask your grandma on your next family zoom call!

More is needed to create the foundation for a “better normal.”

While some of these adoptions will change what our workplaces will look like, millennials will need more from their employers for a truly “better normal” in the workplace. Humanity, company purpose, and empathetic leadership will create the foundation for the “better normal” that we all desperately need.

• Humanity — The Pew Research Center conducted a survey4 exploring which lessons U.S. adults are taking away from the current pandemic: 86 percent of those surveyed said there are lessons for humankind to learn from the pandemic: lessons in society’s failure to face up to problems like racism, economic inequality, and climate change, as well as which workers are actually essential to the economy. A key takeaway is the need for humankind to come together with a common purpose, focusing not on what divides us, but what unites us, and to treat others well, with compassion and kindness.

Chairman and CEO of Dell Technologies Michael Dell says there is a silver lining to the “new normal” we find ourselves in: “It could lead to a human transformation, where we have more empathy, more generosity, more gratefulness, more kindness, more selflessness, and maybe some more humility.”5 • Company purpose — Millennials want to understand how their contributions are making an impact on not only the company, but also society as a whole.

We want our work to align with our values and a career path that gives us a sense of meaning and purpose on a larger scale. This is even more important now that work life and home life have become the same thing. People’s identities have long been tied to their jobs, but now more than ever those lines have blurred, and we can no longer accept a disconnect between the two.

This pandemic has reminded us that people are

the most motivated when they can connect to their work and feel that they are making contributions to a greater purpose. Workers at some companies have found meaning and inspiration in their jobs as their companies started producing disinfectants, hand sanitizers, face masks, and other equipment in high demand during the pandemic.

• Empathetic leadership — Before the pandemic began, top leaders already knew that empathy was an important part of leadership. A BusinessSolver State of Workplace Empathy Study6 found that 80 percent of CEOs believe empathy to be a key to success, but only 48 percent of employees believe companies as a whole are empathetic. Now, with the onset of the pandemic, empathy in the workplace is even more critical than ever before.

Empathetic leaders are also more likely to view diversity and inclusion as a key part of a business’ success. In inclusion-focused workplaces, it is easier to acquire and retain talent, increase performance and innovation, and boost employee engagement. Our future workplaces should reflect the diverse nature of our society.

In Sum Every organization has experienced a forced push toward the future of work in ways that have tested their ability to adapt. While this has led to some exceptional actions, the sustainability of those actions is where the path towards a “better normal” will begin — a path that must not only be paved with good intentions, but with meaningful change.

Organizations face a choice between returning to a world that is just a version of the old — or building a “better normal” that is viable for the future. The risk is more than just being left behind — it’s the possibility of never being able to catch up to those who have already figured this out.

As the pandemic continues to drive massive societal and organizational changes, we have the opportunity to redesign the future of work, building on the lessons learned throughout this pandemic. Eventually, the pandemic will end, but the significance of the way we interact will carry into the post-pandemic world, shaping the way that we work and hopefully creating a “better normal” for us all.

~

https://www2.deloitte.com/global/en/pages/about-deloitte/articles/ millennialsurvey.html https://www.kornferry.com/insights/articles/in-business-we-trust 3 https://press.adeccogroup.com/news/sweeping-workplace-changes-expectedin-a-post-pandemic-world-says-research-from-the-adecco-group-eb8b-2cb12.html 4 https://www.pewforum.org/essay/what-lessons-do-americans-see-for-humanityin-the-pandemic/ 5 https://www.delltechnologies.com/en-us/webinars/cio-forum-remoteworkforce.htm#collapse 6 https://www.businessolver.com/resources/state-of-workplace-empathy 1

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MISSOURI: LASER-FOCUSED ON WORKFORCE DEVELOPMENT

P Courtesy of Ozarks Technical Community College

roviding a skilled workforce remains one of the top priorities for Missouri’s Governor, Mike Parson, and even though the coronavirus continues to affect how companies conduct business, he remains laser-focused on Missouri’s pipeline of skilled and talented workers.

Our comprehensive workforce development program ensures you have the right workforce, with the right skillset, at the right time.

The Missouri One Start team fills this need and has been at it for 30+ years, having been made a full-fledged division in 2019. Their dedicated, highly experienced workforce development team has already trained over 800,000 workers and is fully focused on workforce development in the Show Me State.

Your Team Trained Your Way Personalization and flexibility are

Kristie Davis, Director

key in how the program works. One Start’s workforce experts meet with clients to find out exactly what type of training is needed, and let businesses have a say in how best to deliver the training via any combination of preferred training vendors, in-house staff, or a statewide network of community colleges and technical schools. This allows businesses to tailor training to their unique needs.

For clients of the training program, a full suite of recruitment assistance is also available at no charge. In 2020, recruitment took center stage as companies providing essential products and services expanded their capacity. One Start rose to the occasion, creating job boards, recruitment microsites, and utilizing social media channels to reach specific areas where workers were needed.

From preemployment assessments and screening to hosting recruitment events, this dedicated team provides the resources needed to ensure companies have the right workforce, with the right skillset, at the right time.

provided by Missouri One Start, we can ensure our businesses have a skilled workforce to not only meet the demands of today’s workplace, but also tomorrow’s,” says Kristie Davis, director of Missouri One Start.

Missouri’s Talent Pipeline Apprenticeship Missouri keeps the pipeline filled with skilled labor across a myriad of high-demand jobs. For the second year in a row, they ranked second in the nation in the number of completed apprenticeships. The state currently has 13,560 active apprentices in more than 489 registered programs, involving more than 3,600 employers.

For adults 25 or older who desire to return to school, the state’s Fast Track program provides grants to offset the expense of higher education. This financial aid program addresses workforce needs by encouraging adults to pursue a certificate, degree, or industryrecognized credential in an area designated as high need.

In It for the Long Haul For businesses already in Missouri, there’s assistance for upskilling and recruitment, so employers remain competitive long after the groundbreaking. “Through the resources

Missouri One Start P.O. Box 478 301 W. High Street Jefferson City, MO 65102

573-526-9239 MissouriOneStart.com

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LEVERAGING THE WORKPLACE IN RECRUITMENT STRATEGIES Companies whose goals and priorities are reflected in their workspaces, supporting the well-being of their employees, are more likely to attract and retain top talent.

F

or most recruiters finding prospective employees is only half the battle. As challenging as it may be to sift through resumes and emails, when that one outstanding candidate comes along, there is an even greater obstacle: making sure he or she chooses to work with your organization.

So how can one company stand out against another? Salaries and benefits are a huge factor, but they are certainly not the only variables considered.

Company culture also plays a crucial role and, in many cases, may be the deciding factor for prospective employees. When a candidate visits a company’s office for an interview, the workplace design contributes to their first impression, showcasing a company’s culture.

Architecture and design is one way to grab the attention of prospective employees, but it also entices employees back into the office, once it is safe to do so, and builds the company’s culture. Strategically designing a space to support the well-being of its occupants can have a positive impact on how the office is perceived by visitors as well as current and future employees. In this way, the role of amenities is more important than ever.

Atlassian is an Australian-based software company that develops products for software developers, project managers, and content management. Pictured is the company’s outdoor amenity space in their stylish Austin office.

U n d e rst a n d i n g E vo lv i n g P ro s p e c t i ve and Current Employee Needs

W h a t t h e Wo r k p l a ce C a n O f fe r Over the last few years, we have witnessed the evolution of workplace design — with the adoption of technologies, programs, amenities, and support systems to cater to the various wants and needs of employees.

From fitness centers to coffee bars and cafes, mini-golf, beanbag lounge areas, and more, workplace amenities have become a vital aspect of workplace strategy.

Not only does workplace design illustrate a brand’s history and identity, it can also engage all employees to come together as a team, create emotional connections to the office, and promote wellness and agility in the way we work both individually and in groups. But in the age of COVID-19, companies must reconsider what amenities will truly attract employees back into the office, especially after they emerge from a more comfortable work-from-home lifestyle.

It is no surprise that the COVID-19 pandemic has

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altered the way we look at the traditional office. Many have grown accustomed to the advantages of working remotely, especially with the flexibility it provides. However, isolating has made people long for those spontaneous social interactions that were once an expected part of day-to-day life. Although some have started to return to the office, it is evident that company culture, as well as life in general, will not be the same.

Amenity spaces that once attracted employees with bells and whistles are mostly unused at the moment, with increased sensitivities toward spaces that have high-touchpoints. The coffee bar is an excellent example of this; it has been used as a space where staff could breakaway, chat with others, brew their own coffee, or take some time away from their desks.

In an effort to limit the number of people congregating close together, this amenity needs to be reinvented. So, what comes next? The goal has always been to attract and retain employees. To keep this momentum, employers must now re-evaluate what their

means companies can reallocate wasted space and replace it with amenities or flex spaces that employees can benefit from, like lounge spaces for reading, working, and collaboration.

Even prior to the pandemic, many workplace design concepts incorporated breakout spaces, private lounges, and communal areas to support different working styles and preferences. As people continue to grow into the habit of having more flexibility while working from home, employers will need to modify their existing spaces to accommodate this desire.

Utilizing Green or Outdoor Spaces If there is a positive aspect that the pandemic has brought to the workplace, it is that we have become more open to discussing our anxiety, stress, and feelings of uncertainty. While workplaces want to entice their employees to come back to the office through physical amenities, they must also be respectful of those with anxieties surrounding the virus or other

COMPANY CULTURE PLAYS A CRUCIAL ROLE and, in many cases, may be the deciding factor for prospective employees.

employees or future employees might want through the lens of a pandemic.

It is imperative that companies decide how to maintain existing amenities by altering them in a way that makes the entire staff feel comfortable. Rather than having a self-serve coffee station, how about a barista or automated touchless coffee service? Although it may not be feasible for some businesses, it is just one of the many solutions to limiting contact.

Another modification could be embracing activitybased working, which provides employees with settings for a variety of workplace activities. With activitybased working, employers can make the most of their space by having team members share desks and the shared spaces among them. Eliminating unused desks

stressors. As a result, we can expect to see companies adopt policies and spaces that support mental health.

For those who choose to come into the office, but still want spaces of respite for meditation, an uptick in green or outdoor spaces will be seen, as some might still feel anxious working in close quarters with others indoors and suffer from the general stress the pandemic has brought on.

This need for the outdoors has also given way to the implementation of more workplace solutions that incorporate biophilia. Though biophilic design has been a trend in recent years, workplace designers are

Continued on page 49

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EDUCATION: A DRIVING FORCE BEHIND LUBBOCK’S DOWNTOWN REVITALIZATION

F

rom the moment a city is established, the downtown district flourishes into a place where people gather — and businesses thrive. Lubbock was no different. Historical photos of the 1920s depict a bustling downtown, serving as a “hub” for goods and services. This was the norm for Lubbock for nearly 50 years until the night of May 11, 1970 changed the course of downtown for decades.

The storm came unexpectedly,

Students live, learn, work, and play in Lubbock’s downtown.

crashing into the heart of Lubbock.

The F-5 tornado devasted homes, businesses and took the lives of 26 people. From then on, the city started rebuilding, and now downtown Lubbock continues its revitalization efforts with public and private investments.

Serving as one of the many partners in downtown and catalytic proj-

Carolyn Rowley, Director of Business Recruitment & Innovation

ects, education has proved to be a driving force of growth. In 2014, the Lubbock Economic Development Alliance (LEDA) began exploring the possibility of adding an academic center to downtown. Leaders recognized a need for a community college in Lubbock as well as attractions that would bring people to the downtown area daily.

the premier destination for performing and visual arts in the region. This catalytic project, estimated at more than $155 million, brings Broadwaystyle shows and state-of-the-art stages for students at area school districts to perform. As the cornerstone for entertainment, The Hall blends world-class performances with community outreach programs.

After years in the works, the South Plains College Lubbock Center will open in the former Lubbock City Hall and bring 2,500 students downtown every day. This development fuels area business, creating a higher demand for restaurants, entertainment, and housing in the area.

Already, this project has spurred more purchases of downtown buildings, including a new restaurant set to open across the street from the academic center. Students will have the opportunity to live, learn, work, and play in a burgeoning downtown scene. As 70 percent of community college students work while going to school, the South Plains College Lubbock Center in downtown also increases availability of a workforce for these businesses.

The Business District touts the historic Pioneer Building — the first building fully renovated in downtown — which plays host to the West Table Kitchen & Bar, The Brewery LBK, condominiums, and a pocket hotel. Catty-cornered, Burklee Hill Vineyards opened a winery serving their Texas High Plains vino and local eats. Just to the west, the Valencia Group just completed their boutique hotel, the Cotton Court Hotel.

The spark of investment in downtown is leading to more people and businesses living and working in the area. As one investment starts a chain reaction, this cooperative approach to economic development lays the foundation of growth for decades to come.

The effects of these investments in the area are seen throughout the downtown district. In the heart of the Cultural Arts District, steps away from art galleries and a local brewery, The Buddy Holly Hall of Performing Arts and Sciences elevates Lubbock as

Lubbock Economic Development Alliance (LEDA)

806-723-8246 Carolyn.rowley@lubbockeda.org Lubbockeda.org

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Leveraging Continued from page 47

looking beyond green walls to bring the idea of biomimicry through the office by bringing the outdoors in.

Through indoor plants and increased outside air, people longing for a connection to the outdoors will

benefit from fresh air circulation and flow.

Thus, in the age of communal and open workspaces, it is not uncommon or difficult to convince a potential employee that your of-

fice will give them the opportunity to socialize and work in a place that’ll feel like a “hang-out” spot.

Communication and social engagement has always been a norm throughout office and company culture, but others are worried they won’t be given the quiet time they need to get their work completed if there is too much chatter. We often hear stories about how many distractions there are at home — everything from children learning remotely, pets requiring attention, and so forth. However, it is easy to overlook how many distractions are at the office as well, especially with so many amenities available. This is a case-by-case basis and is dependent on an individual’s work style; however, demonstrating to future and current employees you have provided a comfortable space that works just for them makes all the difference in establishing a productive and comfortable environment.

First Impressions Are Key

Thrive in

LUBBOCK Time for a change? Move to downtown

Lubbock where you can live, work and play.

LUBBOCKEDA.ORG

When communicating with a potential new employee, one of the most important goals every recruiter wants to establish is not only trust, but also a positive lasting impression. By understanding the evolving needs and preferences of current and prospective employees, companies are more likely to attract and retain top talent, as it will be clear when goals and priorities are aligned. As a whole, an office is the first non-digital impression that is made to prospective hires.

Aside from what they read about the company online, what the candidate sees or experiences firsthand will be the ultimate deciding factor. It’s pivotal to make the first impression count.

~

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FIVE KEY FACTORS AT PLAY WHEN SATISFYING WORKFORCE REQUIREMENTS The global pandemic has magnified the significance of workforce training options and incentives in the site selection process.

A

n IT company approached the state of Indiana a few years ago with a mammoth proposal — one that would absorb every software engineering student the state’s universities and colleges would graduate. Not some of them, all

of them. As a state official at the time, I found the proposal transformative but the ability to deliver on that type of commitment daunting. Our analysis brought home five important considerations that apply to state and local governments, site selectors, and businesses even more today.

Demographics Matter

To train employees for a lithium-ion battery manufacturer whose facility is under construction, Georgia Quick Start refurbished a space off-site with hands-on simulations mirroring the exact processes employees will use. Here, an employee learns to use computer-enabled microscopy to perform a quality check of the consistency of a coating applied to a battery component.

Every community, small or large, that has witnessed the closure of a major employer knows the pain of the scramble that follows: find a replacement or the jobs will migrate elsewhere. Communities should have a strategic workforce plan that realistically addresses training and retraining needs. Successful communities assess their available talent and look to capitalize on compatible skill-based opportunities.

Employers continue to find pockets of specialized labor in different parts of the country. The upper Midwest maintains a manufacturing tradition despite downturns. Financial services congregate in the Northeast, IT on the West Coast, and so on. These are broad generalizations that are not universal or predictive, but they speak to a more basic question about how easy or difficult finding talent in a particular place may be. Communities that leverage these existing strengths will be more successful at attracting and retaining talent and subsequently attracting similar or related businesses.

The cost of that labor is an important factor in con-

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COMMUNITIES SHOULD HAVE a strategic workforce plan that realistically addresses training and retraining needs.

sidering availability of labor. Is employment at-will the norm? Are right-to-work laws in place? What does current wage data for specific job descriptions in a particular county reveal? How do these trends compare to the national average? To other parts of a state? Are other employers drawing from the same talent pool?

Jobs are certainly mobile but the workforce itself may be adaptable in place. Think of it as workforce elasticity. Some workers will move readily; others will be reluctant to do so. The upshot: geographic areas of the country retain some of the character of the workforce that would more readily describe the workforce of a prior generation but with an overlay of modern skills. This characteristic emphasizes the need for problem-solving skills, integrating IT

and systems learning into existing skills, leadership skills, customer service skills, and life-long learning and retraining.

Tra i n i n g O p t i o n s M a t te r In the IT company example cited, the availability of informatics graduates was critical. Despite the availability of college graduates from around the country, companies will continue to evaluate the number and size of colleges and universities proximate to a proposed site. Local community colleges and vocational training programs likewise factor into the regional pipeline of talent. Partnering with universities and colleges is the new normal. The strength or weakness of these partnerships will impact a location decision

The world has changed.

The importance of data hasn’t.

W H AT E V E R Y O U R S I T U AT I O N , E M S I D ATA I S H E R E T O H E L P.

FOR SALE

COMMUNITY

BROKER

EXECUTIVE

helping businesses recover

adapting to a new market

assessing location needs and options

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positively or negatively.

The availability of alternative training programs continues to expand. These include in-house programs, skill certification programs, and for-profit options. These programs offer speed and reliability.

Studies highlight apprenticeships as a work-based model to learn new skills while putting those skills to use. Skill-based learning and training has a beneficial impact on wage growth.

Specialized programs for in-demand skills — master electricians, IT specialists, truck drivers, among others — have surfaced as viable options when supply is limited. Skill-based credentialing will supplement traditional university degree credentials and will grow in importance as a site selection factor. This type of credentialing will ensure a better fit for employers and improve the quality of the talent pool.

and localities are more likely to expect businesses to target specific skills for training and to include historically disadvantaged workers among the recipients of the training.

Corporate surveys1 routinely rank skilled labor availability as a top priority when researching locations. As a result, states and localities highlight the benefits of their respective programs. The trend is for more detailed and data-driven analysis. Businesses focus more on specific skills and specialized talent availability. States and local economic development organizations often partner with universities and colleges for degree programs in targeted areas. These partnerships will continue to develop and be refined as greater and greater specialization develops.

For businesses, labor availability may be a top priority, but costs remain important. States and

SPECIALIZED PROGRAMS for in-demand skills have surfaced as viable options when supply is limited.

State and Local Programs Matter Virtually every state has a program that promises worker training assistance. The Quick Start program in Georgia has been recognized as a model for customized job training. Effective training programs share several common characteristics: speed, flexibility, and results. Trainees are prepared on day one. Effective programs provide a pool of talent that helps businesses streamline the hiring process. The availability of these and similar programs can directly impact a site selection. Our business clients evaluate the costs, timeline, flexibility, and ease of use of these programs.

Tra i n i n g I n ce n t i ve s M a t te r Training programs traditionally qualified as nonfinancial incentives. Increasingly, communities have realized that workforce training tends to have a longterm impact. The training programs help create clusters of expertise, with larger congregations of specific skill sets that targeted industries find attractive. Because of costs associated with these programs, states

localities with lower-cost training programs will have an advantage.

Quality of Life Matters Corporate surveys also routinely rank quality of life among the top considerations in site selection. Quality of life is generally a complementary feature of labor availability. Successful communities understand that talent attraction and retention is essential for business attraction and that nontraditional amenities must be included in an overall basket of incentives.

While these factors have been important in recent negotiations, COVID-19 has magnified the significance of each of these elements in site selection. Our clients scrutinize the details closely before making decisions.

Successful communities will be prepared to address these factors directly during negotiations with prospective companies and site selectors.

~

1

https://www.areadevelopment.com/Corporate-Consultants-Survey-Results/ Q1-2020/34th-annual-corporate-survey-16th-annual-consultants-survey.shtml

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Industry is at a Crossroads.

It’s called Woodstock, Ontario, Canada The City of Woodstock is a rapidly growing, industry based community, centrally located in Southwestern Ontario’s manufacturing corridor. Uniquely positioned at the crossroads of super-highways 401 and 403, Woodstock boasts one of the most optimal ground transportation systems in the province. Quick and easy access to international airports, shipping ports and rail systems, further add to Woodstock’s logistical excellence.

With these attributes Woodstock has attracted more than $2 billion in new investment and created more than 4500 private sector jobs over the last decade.

At the intersections of industry, productivity and sustainability, it’s not surprising why economic powerhouses such as Toyota, Sysco & General Motors continue to invest in the City of Woodstock.

(519) 539 2382 x2115 information@cityofwoodstock.ca

www.cometothecrossroads.com

>

PROJECT PLANNING

Attaining a Big-Picture Perspective With a Facility Master Plan Don’t attempt a manufacturing site and facility master plan without these “must haves.”

By Michael D. Verdier, P.E., Vice President and Market Leader of Integrated Industrial Design, BHDP

L

eading a successful site and facility master plan challenges even the most seasoned leaders. After all, how often have you undertaken a master-planning process, only to be disappointed in the outcome, or worse yet, end up with a building that doesn’t align with your business goals? Based on over 30 years of working with manufacturing organizations, we have identified several master-planning process “must haves” that are vital to achieving successful, actionable and, most importantly, implementable site and facility master plans.

With construction cost trending upward at a rate of 3 to 5 percent annually — and an industry focused on continuous improvement, increased productivity, and driving product total direct cost down — constructing a new or expanding an existing manufacturing facility comes with a substantial investment. A master plan that will guide the long-term growth of a site is a critical component when considering any significant capital investment. Whether planning a major renovation, building expansion, a new building, or initiating land search for a new site, a comprehensive manufacturing master plan not only aligns goals and priorities, but also establishes a valuable framework that facilitates decision-making now and into the future. At the same time, a comprehensive manufacturing master plan ensures your organization’s ability to remain responsive to changing market conditions without compromising the long-term growth strategy of your business.

Master plans provide a big-picture perspective of an organization’s countless moving parts, offering a “roadmap” for how those parts will grow and

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shift over time. They chart a course between the present and future, identifying milestones along the way. Master planning is an adventure in communication as well as in design. It is a process of compromise and collaboration in support of shared goals. Effective master plans are flexible, living guidelines that anticipate future conditions and are the result of a focused and deliberate planning process.

Many organizations undertake master plans, but regrettably very few follow an established proven planning process or remain committed to the plan. Often stakeholders do not allocate enough time for defining the vision for the future and aligning the near- and long-term-business and capacity requirements, preferring to jump directly to execution strategies and concept development.

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

11/19/20 3:01 PM

Invite the right people to the table.

As any successful sports coach will tell you, you need a team with the right experience to win a championship title. And that is the same for the site and facility master-planning process. It is important to have a cross-section of expertise, who are willing to share their unique insights, representing all aspects of your business at the table from the very beginning. Early involvement of team members supports commitment to the planning process. Consistent participation ensures full team ownership of the final selected master plan.

Ideally, the team is led by a sponsor who has history with the company and experience working across multiple roles and functions throughout his/her career. This person can act as a liaison between the planning team and other senior-level decision-makers. The team sponsor is generally a senior-level representative, such as a director or VP, who is aware of the long-term business plans across the company and can help guide the planning team in a direction that aligns with the organization’s larger business strategy.

Visioning is the art of imagining the future.

Visioning sessions are an important tool in the master-planning process and help guide stakeholders in developing a shared vision of the future. Visioning sessions typically start with an interactive team workshop as part of the planning kickoff. Participants are asked to appraise where they are now and imagine the ideal future state. The team discusses company culture, operations, logistics, what is working well in the current state, and what an improved future state could look like. Gaps in alignment between strategy and facility design will be quickly revealed as key opportunities for the future.

This collective feedback is then used to develop a summary of aspirational goals the planning team seeks to have the master plan deliver. This summary is referred to as the “Vision Statement” and becomes a type of “lighthouse” to guide the planning team as they explore and evaluate options, ensuring decisions or choices made throughout the planning process remain consistent with the long-term shared vision of the organization.

Identify priorities.

Throughout the visioning session similar themes will begin to emerge from different functions on the site. The team focuses on these themes to identify the five key criteria — the “Drive to Five” — as pillars of the strategy that are believed to be most critical to achieving the shared vision for the site and their future. The “Drive to Five” are then expanded to establish clear measurable performance criteria from which master plan concepts

will be evaluated later in the process.

An example may be localizing production to avoid product import duties as well as transportation and warehouse costs, while simultaneously moving beyond a product allocation state where capacity limits compromise customer orders. In this example, master plan concepts would be evaluated on their ability to achieve the desired outcome and may include expanded production areas, optimizing on-site material and product storage methods, adding utility capacity, hiring more employees, or a combination of the aforementioned solutions. All of these decisions are interconnected: To make more products locally, the company needs additional production lines, a larger workforce, sufficient raw materials, and space to house the inventory and for people to work. It is a domino effect of interdependent process and design decisions.

Quantify current capacity.

While visioning the future is an important part of the site and facility master-planning process, it is equally important to analyze current capacity, such as production and packaging line (throughput), utility systems, material storage, loading/unloading dock positions, office space, and parking in order to successfully identify critical areas that could potentially impact masterplanning options. For example, if analysis indicates that an option may exceed chilled water or compressed air capacity in year two of the master plan, the team will need to identify the best location(s) in the concept plans to locate a new chiller, cooling towers, and compressor, while considering all the other competing priorities, such as expanded production building, expanded warehouse, more truck docks, etc.

The team examines current products and volume as well as year-over-year projections for increased production and future product additions. If there are multiple plants, consider each as a separate entity as part of a global capacity master plan. Sites across the globe are considered based on their potential upside capacity.

Existing facilities with the potential to increase production and distribution are identified and master plans for those sites are created.

In many organizations, different plants can be leveraged to concentrate production volumes where they have the highest logistical efficiency. This is where the insight of the team sponsor is critical to providing the highlevel insight for global capacity and projections across multiple sites. Knowing the production volumes, both current and forecasted, at each plant allows the team to correlate volume with lines and plan the physical space needs to satisfy the production capacity. This is perhaps the most important element of the master-planning AREA DEVELOPMENT | Q4 2020

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process, as decisions regarding production capacity drive expenditures for production line equipment, warehouse space, utility system expansion, parking, employees, and office space.

Uncover the details through due diligence.

“

A master plan

that WILL GUIDE the long-term growth of a site is a CRITICAL

within any organization, deserve to be respectfully heard and considered.

As the master plan progresses, it is important to hold regular team meetings that serve as a touch point for the various business segments to share insights and suggestions. These review and concurrence sessions keep the team aware of progress and ensure ongoing alignment to the plan.

They also serve as an opportunity to validate and refine the business and capacity plan if necessary, share planning progress, and make the necessary adjustments as the planning team develops concepts to be considered as part of an option evaluation session. By scheduling these sessions and reviewing progress against the project goals, you make sure you are not developing a great site and facility master planning solution for the wrong business need.

During the “Project Discovery” phase it is important to identify critiCOMPONENT cal needs and constraints through due diligence studies to collect data when considering and establish baseline information.

One approach to the operations porany SIGNIFICANT tion is to go through a “day in the life” of the plant starting from arrival at CAPITAL the gate and security, followed by a study of how people, materials, and INVESTMENT. products travel through the plant and perform their daily tasks. Flow, adjacency, and blocking diagrams can document functional space requirements and special needs, such as minimizing travel distances and Bring it all together. touchpoints, interaction and commuThe final phases of the masternication requirements between different departmental planning process are the “Option Development” and functions, and material-handling requirements. These “Option Evaluation” phases, with the final deliverable are all critical operational aspects to understand as part being a conceptual plan that aligns with the shared viof the planning and concept development effort. sion and long-term business and capacity plan identified In an example project for a client, there were special early in the master-planning process. To achieve this, considerations surrounding the transport of aircraft the planning team develops multiple concepts that they engines on site. The engines arrived on lowboys and believe will achieve the goals of the project and, during transferred to storage carts with limited ground clearan interactive session, evaluates them against previously ance for mobilization into the aircraft maintenance defined performance criteria as part of a weighting and building. This tiny detail affected the maximum slope ranking exercise. of the ramp into the maintenance building, defined The most important part of this exercise is the disthe height and width of the doors, appropriate bridge cussion that takes place among team members. The cranes and gantry cranes, and floor slab design to input from cross-functional team members provides name a few. Designers asked questions to gather as unique perspectives that the design team leverages to much detail as possible for planning, including the lodiverge and converge on new and improved concepts. cal building and zoning codes related to building clasThe planning team also feels ownership of the master sification, fire safety requirements, egress, setbacks, plan when they are involved in key decision-making exeasement, and other zoning restrictions. This type ercises. Discussion of incremental capital, operation loof due diligence lays the groundwork for defining an gistics, and other priority considerations not only helps executable master plan and for progressing the plan to guide master-planning teams to a low-capital solution through detailed design in the future. but also to identify value-added scope that will achieve additional benefits beyond base business requirements.

”

Get everyone on the same page.

While no project can accommodate every wish-list item, a site and facility master plan cannot be comprehensive without synchronizing the near- and long-term business needs with the operational improvement and cultural objective considerations of all key planning team members. Respecting and acknowledging the insight they offer can dramatically improve facility function and has the added benefit of giving users ownership in the solution. All ideas and feedback, from every level

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“Must haves” A well-executed site and facility master plan that includes the above “must haves” facilitates the establishment of long-term shared goals, aligned business priorities, efficient planning and decision-making, as well as organization ownership. This results in faster speed to market, while enhancing your organization’s competitive advantage in an increasingly competitive global marketplace. n for free site information, visit us online at www.areadevelopment.com

11/19/20 3:02 PM

FOOD PROCESSING

Finding the Sweet Spot in Food Plant Location Decisions As new food plant construction continues in 2020, companies must take into account the factors most critical to their bottom line in order to maintain profitability for the life of the facility.

By David C. Dixon, President, davidcdixonLLC

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ho doesn’t like cookies? The food industry usually avoids NIMBY objections. The facilities smell nice, they are not too big, and they often have a company store open to the public! This article is focused on food plants in the $20 million to $80 million range, perhaps 40,000 square feet to 120,000 square feet.

In future articles we can discuss finding and retrofitting existing buildings and the site selections of more challenging operations, e.g., animal slaughter.

A Strong Sector New food plant construction has continued in 2020. And as the year progresses, owners are also restarting projects that were delayed due to the uncertainties from COVID-19.

The sector continues very strong during the pandemic. Producers for retail, as expected, are overjoyed that people are re-learning to cook at home: Their sales are booming. Suppliers for food service also are not suffering, and many by now have made investments to retool for retail products. And yes, alcohol sales are up more than 25 percent year-to-year!

Sean Barr, director of Project Planning at The Austin Company, says it is “full steam ahead for the meat and poultry sectors. Automation investments are primary.

Companies can’t find enough qualified labor. Retrofits to keep workers safer, such as layouts that allow greater spacing between workers or modifications to eliminate touchpoints, are being done by most of our clients.”

Food safety continues to be a leading justification for new plants. Old plants either are too expensive to upgrade, sometimes just cannot be brought up to best practices due to challenges like low ceilings, or the busi-

ness interruptions required to do the work are too impactful to the business.

Mergers and acquisitions, driven in considerable part by activity of the private-equity sector, have led to new plants that combine several operations to reduce production costs or improve customer service levels. New plants have also been announced by non-U.S. owners wishing to produce in-country to avoid barriers to entry such as tariffs. One trend that has received much ballyhoo, reshoring, doesn’t seem to be happening, regrettably.

Site Selection Priorities

• •

• • •

•

Although the ranking changes somewhat based on the specific sector, the priorities for site selection in the food sector, continue to be: Availability of qualified labor at an acceptable wage rate Logistics that minimize costs and support high customer service: short shipping times from suppliers and to customers, the availability of backhauls, and in some sectors, rail sidings, intermodal, or ports nearby — Quick and unimpeded access to the highway interchange is critical.

Reliable power and, if possible, a site that is fed from two utility substations Sufficient water: quality, capacity, pressure, and reliability Sufficient wastewater treatment, with discharge permits that are not too expensive nor contain risky penalties for exceeding limits No hazards from adjacent sites, or on-site environmental contamination, and as the risk of climate change finally is fully embraced, risks of flood, AREA DEVELOPMENT | Q4 2020

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hurricane, or wildfire — These and other business interruption risks are priority factors.

• Manageable geotechnical issues • Speed to market — Food plants need to be designed and built in a hurry; 12 to 15 months from initial kickoff of design to start of production is typical.

Lengthy site searches need to be avoided. Anything that impacts schedule, such as wetlands mitigation or other permitting challenges, is scrutinized.

• Of course, the current low cost of gas makes sufficient gas to the property a necessity.

• Due to the magic of depreciation and a focus on annual operating costs, initial capital is often not the driver some think it is. However, extraordinary site costs — such as huge tie-in fees for utilities, significant retaining walls, rock removal, or added costs for unusual foundations — can knock a site out of competition.

An Ideal Site Once the upstream and downstream logistics considerations are decided, the following attributes would make a site ideal: • Clear title and no need for rezoning or combining parcels • No impediments to fully develop the site, such as excessive buffers or utility easements running through the property • No nearby hazards, such as odors, groundwater contamination plumes, schools, airports, CAFOs, or busy at-grade rail crossings • A prepared pad in an industrial park often is perfect: storm water might be preplanned off the parcel, geotechnical risk is avoided, utilities are at the street or very near, incentives may already be available for new owners, marketing materials are in place that inform demographics, area amenities, or other relevant statistics. Relationships with local or state EDAs may be strong. Community acceptance issues likely were confronted earlier when the park was developed.

• Of course, big and flat would be great!

And if this ideal site is within 45 minutes of a midsize or large urban area, you might have bus routes, a pool of labor, improved logistics, a larger Publicly Operated Treatment Works (POTW) that is more than happy to receive high-BOD waste, a strong community college network, and other benefits that a rural or small-town location cannot offer.

Branding and the relationship to site location is worth mentioning. How the facility presents from the highway and signage or special visual elements can be an attractive benefit. Most Midwesterners fondly recall the Hormel Chili can visible from I-90!

Technical Topics A few of the topics mentioned above deserve a bit more technical explanation: A large municipal POTW can accept high BOD waste

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streams from food plants because the normally high percentage of residential wastewater is lower in the nutrients that keep the bugs happy. Food plant waste streams help feed those bugs. And food plant waste streams don’t present the challenges that other industries do such as metals or toxic contaminants.

A flat site is good, but a slight slope from front to back makes designing storm water runoff elements much easier and cheaper.

Geotech risks include soils that are difficult to compact or have low bearing pressure that requires deep foundations. Food companies love simple spread footings. And don’t get me started on the dreaded “expansive soils” that require structural floor slabs.

Labor Considerations Labor deserves more discussion also. As automation replaces low-skilled labor, food plant workers need to become more skilled at machine operation. Modern owners also encourage contributions from line associates to identify operating improvements. This requires better training, higher skills, and the avoidance of high turnover. Owners who balked at paying a $10 wage for untrained temps to pack boxes are slowly, very slowly realizing they need to hire $20+/hour labor to run a $1 million filler or $1.6 million slicer.

A community college with close alignment to the needs of manufacturing is a desirable source for operations technicians, mechanics, and electricians who continue in short supply. Since the U.S. has suppressed unions for decades, apprenticeship training programs also disappeared, and community colleges are filling the gap. “Vo-tech” schools are no longer seen as a route only for those who cannot get admitted to a university. The Germans, in particular, are very frustrated at our inability to prepare Americans for working in factories, and they struggle to implement some of their apprenticeship systems in the U.S.

In Sum It is important, I believe, to mention my background is in operations, design, and construction. However, it is too common that those departments often are not on point for site selections. The CFO perspective that focuses on initial land cost, grants, or other incentives must be balanced by an analysis of both capital and operating costs rolled up into the impact on Cost of Goods Sold (COGS).

Doing this type of analysis helps decision-makers understand what is most critical to their bottom line. Hourly labor rates? Tax exemptions? Free-trade zones? Cost of land and site development? Electricity costs? Savings on materials and ingredients?

A bad site selection will be a drag on profitability for the life of the facility. Savings that were forecast to justify the investment will not be realized. It is a complicated decision involving many perspectives in a company and worth the time of a broad and dedicated team. n for free site information, visit us online at www.areadevelopment.com

11/19/20 3:06 PM

FOOD PROCESSING

Workforce: A Primary Ingredient in the Evolution of the Food Industry The global pandemic has accelerated changes occurring in the food and beverage industry, with a heightened focus on worker and consumer safety and automation technologies.

By Stephen Gray, President & CEO, Gray, Inc.

F

activity also leads to early retirement and fear of job reood processing is an ever-changing industry. Recent duction, thus pushing workers to find jobs elsewhere. years have ushered in a wave of change driven by The 2020 State of Food Manufacturing Survey Report consumer demands, technology advancements, from Food Engineering2 finds almost a quarter of procesand regulation shifts. Society has become much more aware of the food it consumes and how it is sourced. As sors stated their workforce decreased compared to last with other industries, millennials are vocal about their year due to workers leaving and the company not being preferences, which has able to replace them, or the motivated manufacturers, company not being willing including food processors, to replace them. to listen.

In short, workers are The food and beverage scarce, and as recent industry, in response, is events have evidenced, the transforming itself through food and beverage sector increasing production is essential. The workforce times, changing technoloshortage is creating a real gies, heightened food safety challenge for the industry regulations, and more inand forcing manufacturers Engineer checking automatic food packaging unit facility work. This evolution to look to other means and has been in the works for resources to fulfill its growsome time now and shows ing needs and demands. no indication of slowing down.

Add COVID-19 to the mix, and this change is taken Automation to the Rescue to an entirely different level, especially as it relates to “There is an ongoing need for automation, and spesupply chain disruption. Companies believe the majority cifically artificial intelligence (AI), to help limit human of COVID-related changes are here to stay. Manufacturexposure to infections and to enhance overall worker ers are making long-term adjustments to support these safety, speed, and predictability,” says Tyler Cundiff, demands. president of Gray, Inc. Food & Beverage Market.

To augment the ongoing workforce challenges, food and beverage manufacturers are turning to automation Where Are the Workers? methods to continue their production. Safety has always One particular area of focus and concern for the been paramount for processors, but COVID-19 has reindustry is the workforce. Food Processing magazine’s sulted in even stronger initiatives. annual survey1 released earlier this year points out the Automation technologies and strategies are answerneed for both skilled and unskilled workers. Part of this ing the call to enhance safety and help reduce the risk challenge is certainly due to the baby-boomers retiring, of human cross-contamination. Processors must keep but other factors also exist. its employees safe in environments where social distancAlthough M&A activity has slowed in the sector, it was ing isn’t always easy to implement. strong for a few years and shook up the workforce with Food Engineering validates this claim in its report statconsolidation, and even attrition of specific roles. M&A AREA DEVELOPMENT | Q4 2020

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industrial fields, food manufacturing is ing that processors are turning to robotstill often associated with hard, rigorics for new safety requirements and staffous labor. The truth is, automation has ing challenges, with 22 percent reporting stepped in to alleviate many of these plans to increase budgets in automation areas, but the perception for food and and controls hardware and software. Food beverage manufacturing jobs is still very and beverage manufacturers are rethinknegative. Food and beverage facilities ing how future plants are designed and today are equipped with state-of-the-art built as well as how existing plants can be To augment robotics and machinery, many of which retrofitted to accommodate new trends are run by human operators. Workers are that are likely to become standards. the ongoing needed to orchestrate the functionality of Food Engineering’s survey also found hardware, software, and tooling. that automation helps manufacturers workforce Greater awareness through training promaintain a competitive edge by speeding grams and outreach is a necessary compoup production and efficiency. challenges, food nent to modifying the inaccurate percepIn our experience, we’re seeing food tion of these careers. Schools that put a companies currently engaged in projects and beverage greater emphasis on science, engineering, to redesign and retrofit existing employee and mathematic (STEM) studies can also welfare areas to be more accommodating manufacturers push the trend in the right direction. for social distancing, cleaning, and perGray is working with one of our bevsonal hygiene protocols resulting from COare turning to erage customers on a new production VID-19 regulations and countermeasures. facility where automation technologies Gray Solutions, Gray’s digital arm, is automation are coupled with an intentional strategy seeing process controls trending toward to operate the facility (when complete) more integration of facility and utility methods to with a highly productive workforce. Highly controls systems. New processes are betechnically-trained employees operate ing designed with smart scheduling applicontinue their the sophisticated systems and software cations, where computer models schedensuring the plant runs a safe and highly ule individual processing assets based production. efficient operation. on product run times, availability, total productive maintenance (TPM), and other real-time variables. Automation is conIn Sum tinuing the trend toward full robotic solutions for high To sum it up, the workforce is shifting along with the touch-point areas, sampling systems, and high-volume industry. This year alone has brought challenges that packaging systems, as well as AS/RS applications. no one could predict or prepare for, yet the industry has According to Anderson Dahlen Inc. — a Gray comcontinued to thrive. Looking ahead, more change will pany that specializes in custom fabrication, contract inevitably occur, but I have no doubt that this resilient manufacturing, and design-build projects — food proindustry will continue to push itself forward and grow. cessors are upgrading their production operations with “U.S. food companies have had to make sweeping increased safety measures, including automation funcchanges to the entire global food delivery system almost tionality. Some of this is COVID-related, but many of overnight, while at the same time maintaining focus on these steps are expected to become permanent shifts to ongoing challenges such as sustainability, food safety, manufacturing processes. health and wellness, along with their own (front line) One specific example is the addition of unloader employee safety,” points out Cundiff. “These have been systems for bins and totes. In recent months, Anderson MASSIVE challenges. Farmers, processors, and distribuDahlen has seen a surge in inquiries for these systems tors have stepped up to meet these challenges with an since they eliminate manual labor and increase the rate eye toward the future to ensure that we will be even betat which inbound materials such as tomato paste and ter prepared for the next global disruptor, such as the peanut butter can be moved into process. The integraCOVID pandemic.” tion of these systems greatly enhances sanitary proceCundiff concludes that he has “seen firsthand that dures, thus creating a safer environment for workers and during this dynamic time food companies have had to a safer product for consumers. rely on trusted partners throughout all aspects of the industry to help them adjust and recalibrate extremely complicated dynamics that exist within an intricate supF&B Workforce of the Future ply chain system.” n To meet the increased demands of the industry, hiring, training, and retaining workers is a must. While automation can fill a void, workers are still desperately 1 https://www.foodprocessing.com/articles/2019/manufacturing-outlook/ 2 needed to meet the challenges of today and tomorrow. https://www.foodengineeringmag.com/articles/99124-2020-state-of-foodmanufacturing-survey For this, an education shift is necessary. Similar to other

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

11/19/20 4:11 PM

FOOD PROCESSING

Cold Storage Is Hotter Than Ever The Covid-19 pandemic has illuminated challenges and opportunities for both investors and occupiers of cold storage space.

By Steve Kozarits, Senior Vice President; and Lori Zuck, Managing Director; Transwestern

O

ur attitudes about food and beverage influence the brands we purchase, how we socialize, where we shop — and sometimes even where we live. Our expectations are high when it comes to product mix and availability. When our wants and needs are not met quickly, as was the case at the start of the pandemic, we are highly dissatisfied.

While food transport has been occurring for centuries, modes of delivery, advances in food safety, and time-sensitive supply chains have evolved to meet the changing desires of consumers across increasingly broad geographies. Often, new trends become ingrained habits that can alter consumer behavior and ultimately drive monumental business decisions. And that is how cold storage became one of the hottest topics in the commercial real estate industry.

requires strict preservation safeguards to avoid health hazards. At the same time, consumers’ preference for more natural foods with fewer chemical preservatives requires increased dependence on refrigeration for product transportation and storage.

Not Content with the Status Quo

Even with the many advances cold storage has enjoyed, there remains intense focus on increasing efficiencies, lowering costs, and building flexibility into the distribution centers equipped to store food and beverage.

This is true especially today, when e-commerce is not only powered by convenience but also by a heightened sense of health amid a pandemic.

The challenge is twofold: Like all e-commerce, getting product to consumers quickly is vital in meeting expectaWorker measuring temperature of boxes containing tions for instant gratification, ready meals in a cold storage warehouse but even more important is Defining the Sector ensuring the quality and safety The global cold chain conof what is delivered. At present, investors feel quite sists of two primary subsectors: refrigerated storage confident that cold storage is a safe bet for their capital and refrigerated transportation, with the former making investment, and occupiers are clamoring for modern up a larger share of the market. Overall, the value of warehouse space in key geographies to meet skyrocketthe sector is estimated at $218 billion for 2020 and is ing demand — especially related to grocery delivery. expected to reach $320.2 billion by 2025, according to Adoption of this highly specialized product type was a June report from VynZ Research.1 North America is the not unanimously embraced at the onset. Like every real second-largest cold chain market, as the U.S. is home to estate sector, cold storage presented pros and cons. On the most major players worldwide. one hand, grocery stores generate low profit margins This industrial niche is exploding due to a confluence and must rely on volume. Overhead costs — especially of factors. First, growing demand for food and beverage labor — are high, so pushing an e-commerce solution through e-commerce channels — which was greatly inmade sense. On the other hand, refrigerated storage tensified during COVID-19 — shows no sign of abating. facilities are expensive to build, costing at least twice as With many having more time to browse online at home, much per square foot as traditional warehouses. Once shopping habits ingrained over the past six months will complete, they are expensive to operate because these likely stick for a good portion of the population, and this AREA DEVELOPMENT | Q4 2020

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facilities are energy hogs and experience no downtime.

And once these facilities are built, their unique characteristics may not be suitable for subsequent users.

Challenges Met with Innovation Creative solutions have been rapidly incorporating efficiencies and cost controls to make cold storage a true game-changer for owners and occupiers.

• Investors want to build new cold storage facilities, but where?

Last-mile delivery sites are already in high demand and land is scarce. But ground-up construction is not always necessary. As grocery stores continue to experience weaker-than-historical walk-in traffic, expect to see a shift as some existing stores transition into cold storage distribution centers. This makes sense: Most assets are in high-density population centers and are prime candidates for “box-in-a-box” redevelopment. However, the economic benefits of a conversion do not always materialize, so careful cost/benefits analysis is important.

Similarly, older malls in areas with strong demographics can be repurposed to support the needs of cold storage, creating value that may far exceed an asset’s use as conventional retail space. Millennials are not attracted to malls the same way their parents and grandparents were, but location can influence the ongoing success of physical space that offers good transportation options and easy access to consumers.

• Users want higher ceiling heights, but how?

A relatively new fire suppression solution called an Oxygen Reduction System (ORS) has the potential to significantly reduce costs in cold storage and other warehouse facilities that exceed certain clear heights. ORS technology eliminates the need for traditional sprinkler pipes, which restrict ceiling heights to 50 feet or less, and creates a low-oxygen environment for buildings of any ceiling height. Hence, an asset can offer 120-foot clearance without affecting the cost-per-pallet position.

Future implementation of ORS will depend on whether fire marshals in local municipalities trust and approve use of this budding technology, but it shows promise.

Another challenge is that this environment is unsuitable for humans, and workers must carry oxygen with them when entering the facility to perform maintenance or inspections. Fortunately, other advances — most notably automated storage and retrieval systems (ASRS) — are helping to address the issue of worker safety.

• Facilities must keep labor costs in check, but by what means?

Some degree of automation is common in all industrial facilities, and cold storage is no exception. If humans can’t function in a low-oxygen environment, or employee density must be reduced for health and safety reasons, bring in “cobots,” or collaborative robots. A study by Interact Analysis predicts that cobots will ac-

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count for 30 percent of the total robot market by 2027, and the three biggest applications will be material handling, assembly, and pick-and-place.2 For example, Apex Motion Control, a specialist in automation for the baking and food industry, recently announced a new function for its Baker-Bot. In addition to decorating cakes, pick-and-place, and loading/unloading trays and pans, the company’s cobot can now handle palletizing tasks and be integrated into most production lines without the need for safety guarding. And because cobots are flexible and easy to set up, they are attractive to smaller companies that may not have previously considered automation in a warehouse setting.

• Sustainability efforts can save money, but will they pay off?

Cold storage facilities must run continuously, making them one of the most energy-intensive property types.

As in all sectors of commercial real estate, owners and users of cold storage space are investing capital to lower energy costs and reduce greenhouse gas (GHG) emissions. This includes incorporation of alternative energy solutions, reduction in water usage, and deployment of highly efficient refrigeration systems.

United States Cold Storage, one of the four companies dominating this space, harvests rainwater and has reduced GHG emissions by 12 percent, while increasing its cubic capacity by 31 percent over the past five years, proving that focused efforts pay off.

Location decisions also play an important role here.

In the Midwest, underground storage is an alternative to above-ground warehouses, though ceiling heights present a limitation. Cave-type facilities, common throughout Kansas, Arkansas, and other states, offer low humidity and refrigerator temperatures. Coincidentally, these same conditions also are ideal for the computer power supporting warehouse automation. Across the U.S., there are major differences in utility pricing and economic incentives for sustainability initiatives, so matching facility needs to regions or metros that offer the best economics is key.

Favorable Outlook These innovative solutions bode well for this sector.

As recent property sales have underscored, cold storage is not being affected by the general economic slowdown, though the number of operators may shrink as the leaders benefit from economies of scale and compress cold chain costs. It’s also good news for consumers, who have gotten very comfortable choosing their favorite food and beverage items from home.

Every problem has a solution, and when the solution supports the goals of all constituents, even better. COVID-19 illuminated challenges and opportunities that will ultimately strengthen cold storage’s performance as an asset class and industrial infrastructure across the board. n 1

https://www.vynzresearch.com/semiconductor-electronics/cold-chain-market https://www.interactanalysis.com/press-releases/cobot-market-to-account-for30-of-total-robot-market-by-2027-interact-analysis/

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11/19/20 4:14 PM

LIFE SCIENCE

How to Navigate the Reshoring of Pharmaceutical Manufacturing With global vulnerabilities in the supply chain and the ever-changing landscape of the “new normal,” pharma industry leaders need to have a clear map for the road ahead.

By Darren Jones, John Finan, and Cory Wendt, Baker Tilly US, LLP

I

n recent years, geopolitical and economic trends have been encouraging pharmaceutical drug manufacturers to shift their active pharmaceutical ingredient (API) sourcing and physical manufacturing plants onto domestic soil or near-shore locations. This has been a gradually turning tide that accelerated this year due to the COVID-19 pandemic and, in its wake, a presidential Executive Order requiring all essential medicines to be manufactured within the United States. While the U.S. Food and Drug Administration (FDA) has not yet disclosed the list of essential medications, it has become apparent that having a strategy for the reshoring of pharmaceutical manufacturing is crucial.

There are also intellectual property (IP) protection advantages when reshoring manufacturing, as limitations in international IP laws expose protected proprietary knowledge to infringement. The strength and protections afforded by U.S. IP laws are far more developed, and there is substantial jurisprudence by the U.S. courts in determining whether there is a violation of IP rights. Even remedies of IP infringement tend to be higher in the United States than most other jurisdictions. Lastly, with the increased demand on production, coupled with the fluctuations in the supply chain, manufacturers are likely to experience potential delays.

In the “Now, Next, Later Approach”1 proposed by

Baker Tilly authors Kate Crowley and Jeff Jorge, the authors clearly laid out the long-term supply chain changes that lay ahead. Having dealt with the “Now,” and being firmly placed in the “Next,” it is incumbent upon leaders in the pharmaceutical industry to have a clear map for the road ahead.

There is also an inherent lack of resiliency for many companies that arises from the regulatory and fiscal challenges in setting up production facilities. This is compounded by the sheer number of steps in the chain of custody that are required from production to final entry into the U.S. market. The global vulnerabilities in supply chain logistics and the ever-changing landscape of the “new normal” have challenged leaders in the industry to be agile and anticipate what is around the next corner.

The Final Push for Reshoring The presidential Executive Order signed on August 06, 2020 aims to “accelerate the development of cost-effective and efficient domestic production of Essential Medicines and Medical Countermeasures.”2 As part of the order, the regulatory, reporting, and approval processes through the FDA for the manufacturing of these drugs will be streamlined in order to reduce burden and incentivize rapid compliance with the order. While presidential executive orders can sometimes be vulnerable to a changing political landscape, the strengthening of domestic medical and pharma capabilities is an issue that has garnered AREA DEVELOPMENT | Q4 2020

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bipartisan support, indicating that this is likely to be a continued political priority in the years to come.

As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed by Congress with overwhelming, bipartisan support and signed into law by President Trump on March 27, 2020, the Department of Health and Human Services (HHS) was directed to enter into an agreement with the National Academies of Sciences, Engineering, and Medicine to understand the integrity of the U.S. supply chain in regard to: • “ Critical drugs and services” that are currently manufactured or sourced from offshore locations; •S crutinizing supply chain vulnerabilities that may cause disruption to U.S. public health, inclusive of emergency planning, incentivizing domestic manufacturing and strengthening supply chain capabilities (White and Case LLP, 2020); and •P roviding significant funding for the planning and reinforcement of the national advancement of medical supplies and healthcare provision.

cant consideration of location planning The proposed facility location needs also to be conducive to expansion, as the organization’s long-term diversification strategy will likely evolve with the rapidly evolving product lifecycle and new innovations. It would be prudent to have the capacity to expand as needed instead of having to seek new facilities for the plant as the volume and potential variety of drugs manufactured increases. In a possible scenario, there is the potential to offer contract manufacturing for other organizations; therefore, the plant selected should not limit any future expansion planning. As part of the Executive Order and the increased push for local medical advancement, economic hot zones have been offering tax incentives and decreased administrative red tape to reinforce the reshoring of drug manufacturing services.

Finally, where applicable, it is also important to consider the availability of adequate natural resources. For instance, if a robust water supply or the capabilities to dispose of hazardous waste materials is necessary, the

Core Strategies in Planning Some considerations such as capital generation, raw materials sourcing, entering production partnerships or contracting to a third party are industry agnostic.

However, others are unique to the nature of the drug or API (Active Pharmaceutical Ingredient) manufacturing industry, necessitating a specialized consideration of next steps to ensure adequate planning. As a part of long-term planning, there could be considerable impact of governments globally increasing their stockpile, which drives potential future global shortages in drug availability.

The first consideration is for the local availability of knowledge and talent as it pertains to the industry. Scientists, R&D advisors, and technicians are all the foundation of setting up domestic supply and require specialized education and training. Selecting a location that would be compatible with the recruiting and relocation of these key personnel is a strong factor to consider. If the plant is in a location that is too far from academic institutions that churn out such talent or hot spots of industry knowledge, it may be difficult to find the required staff. In addition, proximity to desirable cities or towns that attract young professionals is correlated with the willingness to relocate and may yield fewer top-tier candidates if not taken into consideration.

Secondly, geographic ease of access to natural egress channels and/or strategically located airport/ rail/ocean and overland shipping is a key aspect of location selection for the plant. Additionally, preferential geographical location is reinforced by a favorable local political environment, government regulatory collaboration, and economically positive structures. In particular, if supplies are being sourced internationally, the plant should be easily connected to the point of entry of these supplies’ importation, and expedited access to U.S. Customs, FDA, DEA, and USDA agencies should be a signifi-

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There are intellectual property (IP) protection advantages when reshoring manufacturing.

location selected must allow for the same. In fact, existing facilities that have been vacated serve as a prime location where several of the considerations above have already been taken into account and allow for an easier set-up process.

There is significant opportunity to gain a competitive advantage and reduce reliance on third parties, who may, in turn, be strained by a pervasive global increase in demand or imports. Whether your organization was planning to reshore manufacturing or has recently begun considering this, there are best practices that can minimize the likelihood of a false start. The process of bringing manufacturing capabilities within national borders is likely to be a balancing act between myriad stakeholders and requires significant time. With the partnership of a specialized supply chain advisor, the seemingly complex road map to reshoring manufacturing can be navigated with greater confidence and increase the long-term resilience of your organization. n 1

https://www.areadevelopment.com/covid-19-response/q2-2020/now-next-laterapproach-for-dealing-pandemic-challenges.shtml https://www.whitehouse.gov/presidential-actions/executive-order-ensuring-essentialmedicines-medical-countermeasures-critical-inputs-made-united-states

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11/19/20 4:18 PM

LIFE SCIENCES

Robust Development Plan Encourages Innovation and Expertise Venture capital groups are raising money to invest in U.S.- based infrastructure for large-scale bio-therapy manufacturing, the need for which was highlighted by the COVID-19 pandemic.

By Lisa Clarke, Executive Director, Destination Medical Center Economic Development Agency

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© William Forsman Photography

2019. The 90,000-square-foot building is more than estination Medical Center (DMC) is a unique 2090 percent leased, with Mayo Clinic as a major tenant. year, public-private partnership and economic Joining Mayo Clinic are Epic, Phillips, Wuxi Diagnostics, development initiative in Rochester, Minnesota, and Boston Scientific. University home to Mayo Clinic. Launched of Minnesota Rochester joins in 2013, the $5.6 billion plan is these multinational companies the largest in Minnesota’s history in a uniquely serendipitous enand one of the largest initiatives vironment where, outside of the currently under way in the U.S. building’s coffee shop, random The partnership combines Mayo collisions of students interactClinic private development with ing with researchers, educators, that of other developers and clinicians, and entrepreneurs rouinvestors, in addition to public tinely occur. infrastructure investment from In September 2020, Discovery the City of Rochester, Olmsted Square 2 broke ground to build County, and the state of on the overwhelming success Minnesota. of One Discovery Square. The The DMC initiative is guided 125,000-square-foot building will by a robust development plan, be the first in Rochester designed which was adopted in 2015 to for wired certification, a comchart the course for development mercial real estate rating that over a 20-year period. Five years ensures a building is optimized into the plan, the model is workDowntown view of Rochester, Minn., from with superior tech capabiliing, with targets achieved for the entrance of One Discovery Square ties for tomorrow’s connectivity investments, tax revenues, and needs. Breaking ground on a new employment. building during a pandemic proves the strength of the One of DMC’s priorities is development within DiscovRochester market, and specifically, the Discovery Square ery Square, a 16-block, live, work and play sub-district, sub-district. which serves as a unique entrepreneurial environment for While the COVID-19 pandemic has created a great businesses of all sizes. Vibrant, agile startups bring their deal of uncertainty, it also has highlighted the fact that energy to Discovery Square, while some of the largest U.S.- based infrastructure for large-scale bio-therapy and best-respected companies from around the world manufacturing is inadequate. Venture capital groups are bring deep expertise to the community. The combination raising money to invest in this type of infrastructure. of innovation and expertise join forces in an ecosystem Mayo Clinic, a leader in the science of the coronavirus, designed to encourage and equip entrepreneurs. As an has underscored its preeminence in the field, which example, technology companies are moving into Discovcontributes to it being an attractive partner. Discovery ery Square and diversifying the economy while adding Square in Rochester, Minnesota, is an ideal place for valuable high-technology jobs to the market. these partnerships to thrive. n One Discovery Square, a life science hub, opened in

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11/19/20 2:48 PM

Redevelopment of Space for Booming Life Sciences Firms As life sciences firms look to ramp up production, many are considering redevelopment of sites formerly put to other uses.

By Jeff Janicek, Vice President, Skender

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s the race for a vaccine or widely available changing rooms to keep parasites from escaping the treatment for COVID-19 kicks into high gear, lab for biology researchers; and more specialized temmany life sciences firms are looking to ramp up perature and humidity controls to keep samples safe for their production capacity — for this and future public pharmaceutical scientists. health crises. With this anticipated growth in production But labs aren’t the only part of life sciences workvolume comes the need for more lab space. But when space — researchers spend a surprising amount of time looking for space to expand, life sciences firms may at their desks or in conference rooms. Some developers need to look beyond space specifically built for life think that the only focus should be the lab — which is sciences and identify sites that have been redeveloped certainly important — but savvy developers know the into lab space. office space is just as much of a priority for researchers.

Developers are taking note that some markets that Life sciences firms should look for development and conhave the assets of a life science cluster — such as struction teams that know how to balance lab and office proximity to large medical and university campuses space to bring to life a full workplace. and quality-of-life benefits for a growing workforce — Choosing the Site haven’t yet actualized into Sourcing the site itself is a cluster, and they have an another challenge — not all opportunity to seize the existing buildings and spaces moment. Such developers convert well to lab space, are building new offices and and some should be passed research facilities and conover all together. For exverting old structures into ample, chemistry labs can’t labs. Economic development be built out in upper floors commissions also have the of a high-rise because they opportunity to partner with don’t have the vertical access developers to help bring the shaft requirements to handle pieces together to draw life the volume of chemicals. But Skender recently completed the build-out for Exicure’s lab and office spaces at 2430 N. Halsted in Chicago, sciences companies and crethere are a number of sites which was redeveloped from a medical research ate these new clusters. that are promising: buildings facility. that were healthcare facilities and former cold storage An Eye to Distinct warehouses often have the infrastructure to be retrofitRequirements ted into lab spaces, including piping systems, low ceilWhen looking for the right space, life sciences firms ings, and thick walls. should partner with developers, designers, and a conThe need for research has been emphasized by the struction team that will redevelop the space with an COVID-19 pandemic, but it’s always been there, and it eye to the nuances and distinct requirements of labs, will only become more essential into the future. And gosuch as ceiling height, mechanical and HVAC systems, ing into expansion mode during a recession isn’t easy. and space for lab equipment. Since each type of lab While redeveloping old space for lab purposes isn’t nec— chemistry, biology, pharmacological, etc. — looks essarily cheaper than building new, it can be faster — different and requires unique equipment, a first-time especially when time is of the essence. n lab developer that goes with a one-size-fits-all approach probably won’t appease its lab tenants.

Specific improvements for different lab users could JEFF JANICEK has 30 years of construction experience include more fume hoods and sinks for chemical labs; and currently leads Skender’s healthcare and lab sciences construction teams, based in Chicago. extra room for negative air pressure chambers and AREA DEVELOPMENT | Q4 2020

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SITE SELECTION

Developing and Executing a Site Selection Game Plan After an internal assessment of the company, the location team should focus on key success variables, appropriately weighted, and consult with needed subject matter experts.

By Taylor Gravois, Principal; and Ron Crum, Practice Leader - Industrial Site Selection; CSRS, Inc.

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efore setting sail on your site selection voyage across the country or the globe in search of your project’s perfect location, it is imperative to first take an internal assessment of the current operations, needs, and industry trends influencing the project. Taking the time to perform a thorough internal assessment of the project and company will lead to new discoveries that will ultimately guide the site selection game plan to success. Challenging and rethinking some of the institutional wisdom will allow new and innovative ideas to surface, enabling the company to consider sites or regions they had initially thought were not a good fit.

Know Your Industry — and Company On the operational side, some expenses traditionally viewed as fixed costs may have more variation than you realize based on site location. For instance, utility costs vary significantly across the nation. The best rates can be negotiated directly with utility providers based on customer consumption, i.e., the more you consume, the better long-term rates you can negotiate.

Another big variable on the expense side of the ledger is labor.

While skilled labor availability and wages vary greatly across the na-

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Key Variables by Industry Type Manufacturing and Assembly •G eographic access to skilled workforce •H igher education institutions producing a steady flow of specialized workers •P roximity to raw materials and other key inputs •M ature network of vital suppliers •O ptimum location for outgoing products either to key ports (exports) or the ultimate consumers

Refining and Petrochemical Manufacturing •A ccess to massive quantities of processing water •S upply of raw material feedstock (crude, natural gas, y-grade gases, etc.)

•L arge site, relatively removed from residential populations •A ccess to intrastate pipelines, deep draft dock, barge dock, and rail for outgoing products

tion and the world, having access to a skilled and ready workforce at affordable wages is a key driver for success.

Even more important than understanding operational costs of a new project is understanding what the project needs to deliver within the competitive context of the industry.

Perhaps the new project intends to replace an existing facility that has become too small or has tech-

Warehousing and Distribution •C entrally located within a wellconnected transportation network

(roads, rail, airports)

•A ccess to labor at competitive rates •P roximity to end customer, particularly for last-mile facilities

nologically outdated equipment.

Maybe regional demographics have changed, and you need to relocate an existing facility in order to tap into a less expensive, younger, or more skilled workforce. All of these factors represent what you need to accomplish with your site search in order to be more competitive or perhaps just stay alive in the industry.

Finally, understanding the market trends and how they can influence

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

11/23/20 9:37 AM

the success of your new facility is vital. Are you are competing in a declining market? (Can you imagine having the newest and best buggy-axle factory around the time when the automobile was invented?) If the market is declining, can you expect the new facility to maintain profitability or even be relevant? If not, perhaps just retooling your existing facility will bring a greater ROI. Is the market growing and expansion of capacity required to keep up with demand? How much extra capacity can the market absorb? Are your competitors planning facilities as well? Will the company over build the demand?

All these factors will play a tremendous part in guiding your site selection decision. Prime developmentready sites that are suitable candidates for an array of industries are everywhere, and EDOs spend vast amounts of time, money, and energy promoting the sites in their region. You must look beyond the site itself.

Match your project needs to the site that can minimize costs and maximize results by leveraging company needs to what the site/region has to offer. Spending the

time to identify and manage key project variables will unlock the hidden potential of the best site, which is essential in executing a winning site selection game plan.

Focus on Key Success Variables Now that you have completed an exhaustive internal assessment of the company and project, key success themes have likely solidified through the course of the exercise. Identifying, defining, and measuring these key variables will point to site attributes that can maximize results.

Key success variables are not the same for any given project. It would be foolish to think that any site, even if certified and promoted heavily by an EDO, will be suitable for your project. Success lies in understanding which regions and sites match best with your immediate project needs and align with long-term company objectives. Key variables that ultimately make or break a project are sometimes not glaringly obvious and vary widely by industry and project type. Some of the key variables

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by industry type are listed in the accompanying chart.

Bring in the Right Subject Matter Experts No one person or even firm is likely an expert on every topic you define as a key variable. Bringing in the best subject matter expert (SME) in each key area will ensure you find the best site. Some companies are reluctant to do this as they view it as inflating the cost of what they deem is a trivial exercise. While it may cost more in the short term to bring in experts from outside your company or particular department, the cost of bringing in the right SMEs can pay dividends in returns over the lifespan of a successfully located project. Adding a few key skill players on your site selection team will position your project for success. Some key skill players who can help to execute your site selection game plan may include: • Workforce and training consultant — A good workforce consultant can analyze the supply of required workers and long-term regional trends to ensure the talent pool

“

Weight Rating Criteria Finalist sites should all be able to realistically host the project, but the difference in sites will be the cost to develop and operate. At this stage of the process, developing a detailed proforma for each site can shine a light on each site’s advantages and disadvantages. More importantly, site attributes that will maximize project success typically become obvious.

During this stage, the slightest details are sometimes overlooked on sites. Applying a weighting factor can help amplify the key variables. For example, a weighting factor of 10 on a key variable such as feedstock supply versus a weighting factor for a financial incentive can help identify the best petrochemical site, as the availability and cost of a key feedstock is a primary driver for petrochemical

Even more important than understanding operational costs of a new project is understanding what the project needs to deliver within the competitive context of the industry.

can meet the project’s current and future demand. Workforce consultants can also collaborate with local higher education institutions to design and align workforce training programs to meet the specific needs of the project workforce.

• Refining and petrochemical engineer — An in-depth knowledge of engineering is key for refining/petrochemical projects. Typically, siting these types of projects boils down to a handful of sites that have key features, such as massive amount of process water, bodies of water able to assimilate industrial process wastewater, and access to abundant, competitively priced feedstock.

• Logistics expert — Logistics usually plays a big role in siting a successful warehousing and distribution project. Logistics costs generally drive these projects to lowcost areas. Incentives can also play a significant role in siting a warehouse or distribution center. Typically, communities with existing infrastructure, or communities that can offer incentives to offset required infrastructure, are successful in attracting these project types.

Match Sites That Maximize Project Key Success Variables Now that your team is in place, use them to your maximum advantage. The site selection SME team should begin their search wide, not to miss any potential site. The list of sites can be continually narrowed by aligning key project criteria to each site and eliminating

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sites that do not match. This iterative process should produce a handful of finalist sites where a more quantitative analysis can take place.

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manufacturing. Sometimes the cost of the feedstock over the life of the facility (typically 40 years) can swing by billions of dollars! No incentive offered by an EDO can ever make up that difference. Your SME team should build this type of quantitative analysis into you game plan to quickly eliminate sites and regions that are not a good fit.

Be Wary of Incentives Hiding Fundamental Site Weaknesses Executing a well-designed site selection game plan should result in a handful of sites for final analysis. In order to avoid misrepresenting the true long-term competitiveness of each finalist site, incentives should not be factored in at this point. Sometimes incentives sunset after 10 or 15 years and can be misleading when considering the long-term competitiveness of the site. After one or two sites emerge as the clear leaders, incentives may be applied to demonstrate with which site to begin negotiations in earnest. Tailoring the incentives to mitigate site weaknesses or shift infrastructure cost off of the project’s balance sheet are ways to make a finalist site the winning site.

The most successful site searches result in a site with the best physical attributes for the project and a community that understands and rises to the challenges to mitigate the site’s weaknesses. Now that you have found your company’s project site, we will explore delivering the project on the site in a subsequent article. n for free site information, visit us online at www.areadevelopment.com

11/23/20 9:39 AM

SELECT SITES DIRECTORY 2021

ALABAMA Amy Sturdivant, Director of Business Recruitment HudsonAlpha Institute for Biotechnology 601 Genome Way Huntsville, AL 35806 256-327-9591 asturdivant@hudsonalpha.org hudsonalpha.org/innovate

FLORIDA

Jeff Taylor, Commissioner, Business Development Kentucky Cabinet for Economic Development Old Capitol Annex 300 W. Broadway Frankfort, KY 40601 1-800-626-2930 Jeff.taylor@ky.gov Selectkentucky.com

MARYLAND

Tim Vanderhoof, Senior Vice President, Business Development Enterprise Florida, Inc. 800 N. Magnolia Ave., Suite 1100 Orlando, FL 32803 407-956-5600 tvanderhoof@EnterpriseFlorida.com www.floridathefutureishere.com

Jayson Knott, Senior Director, Office of Business Development Maryland Department of Commerce World Trade Center Bldg.

401 E. Pratt St. Baltimore, MD 21202 410-767-6978 jayson.knott@maryland.gov Open.Maryland.gov

GEORGIA

MISSISSIPPI

Georgia Department of Economic Development 75 Fifth St NW, Suite 1200 Atlanta, Georgia 30308 404-962-4000 Georgia.org

KENTUCKY Gina Greathouse, Executive Vice President Commerce Lexington Inc. 330 East Main Street, Suite 205 Lexington, KY 40507 859-226-1623 ggreathouse@commercelexington. com www.locateinlexington.com

Bill Cork, Chief Economic Development Officer Mississippi Development Authority 501 N. West Street P.O. Box 849 Jackson, MS, 39205 601-359-3593 or 1-800-360-3323 bcork@mississippi.org mississippi.org

MISSOURI Kristie Davis, Director Missouri One Start P.O. Box 478 301 W. High Street Jefferson City, MO 65102 573-526-9239 MissouriOneStart.com

SOUTH CAROLINA Bill McCall, Economic Development Specialist Santee Cooper One Riverwood Drive Moncks Corner, SC 29461 843-761-8000 ext. 5381 wmccall@SanteeCooper.com www.PoweringSC.com

TEXAS Carolyn Rowley, Director, Recruitment & Innovation Lubbock Economic Development Alliance [LEDA] 1500 Broadway, 6th Floor Lubbock, TX 79401 806-723-8246 carolyn.rowley@lubbockeda.org lubbockeda.org Kelly Violette, CEcD Executive Director Tomball Economic Development Corporation 29201 Quinn Rd., Suite B Tomball, TX 77375 281-401-4086 kviolette@tomballtxedc.org www.tomballtxedc.org

CANADA Len Magyar, Development Commissioner City of Woodstock 500 Dundas Street, P. O. Box 1539 Woodstock, ON N4S 0A7 Canada 519-539-2382 x 2112 Cell: 519-532-3686 lmagyar@cityofwoodstock.ca www.cometothecrossroads.com www.cityofwoodstock.ca

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ADINDEXWEBDIRECTORY Advertiser

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ALABAMA

MARYLAND

HudsonAlpha Institute for Biotechnology asturdivant@hudsonalpha.org www.hudsonalpha.org

Maryland Department of Commerce jayson.knott@maryland.gov Open.Maryland.gov

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TENNESSEE 5

MISSISSIPPI FLORIDA Enterprise Florida, Inc. tvanderhoof@EnterpriseFlorida.com www.EnterpriseFlorida.com

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MISSOURI

Georgia Department of Economic Development www.Georgia.org

Missouri One Start MissouriOneStart.com

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NEW YORK IDAHO Emsi 51 www.EconomicModeling.com

National Grid www.ShovelReady.com

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NEVADA KENTUCKY Commerce Lexington 27 ggreathouse@commercelexington.com www.LocateInLexington.com Kentucky Cabinet for Economic Development Jeff.taylor@ky.gov Selectkentucky.com CED.ky.gov

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Tennessee Department of Economic & Community Development www.TNecd.com

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TEXAS

Mississippi Development Authority bcork@mississippi.org mississippi.org

GEORGIA

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NV Energy www.NVenergy.com

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Lubbock Economic Development Alliance carolyn.rowley@lubbockeda.org www.Lubbockeda.org

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Tomball Economic Development Corporation 69 kviolette@tomballtxedc.org www.TomballTXedc.org

CANADA City of Woodstock lmagyar@cityofwoodstock.ca www.cometothecrossroads.com www.cityofwoodstock.ca

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SOUTH CAROLINA Santee Cooper Economic Development wmccall@SanteeCooper.com www.PoweringSC.com

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Site and Facility Planning E-mail Newsletter This Week Area Development editors aggregate the most industry-relevant site and facility planning features and commentary from the best sources around the web. Also included is a roundup of the most important news items from the Area Development Online News Desk.

The Insider Exclusive online content including the latest industry-wide studies and research as well as features from Area Development magazine focusing on all aspects of site and facility planning.

Delivering What the Others Don’t For more information or to sign up, go to

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