The President’s Pen is a weekly blog written by Jonathan Smith, New Vision’s President and CEO about local economic development projects and initiatives. It also covers economic trends, workforce issues, business climate policies, and manufacturing news.
I just got back from a conference featuring corporate site location consultants from across the country. The event allowed us to meet face to face with eight of these important partners and learn more about trends influencing where businesses locate new facilities. The folllowing are quick excerpts from presentations and discussions I had with these key stakeholders.
Matt Sjuzah works for Deloitte Touche. He posited that companies went offshore to access markets - it was not just about reducing costs. A lot of the lower end jobs that left America will not be coming back - they are getting permanently displaced. Technological advances will lead to jobs in automation in the US. The assembly lines will be robotic in the future. Factories will move towards 24/7 as they continue to invest in technology. His views mirror another site selector Dean Barber, who I profiled in another blog last year.
Sjuzah believes 3D printing and rapid prototyping are also driving big advances. With ongoing changes on the production floor, the workforce of tomorrow needs foundation skills like material management, executive decision making, entrepreneurship, technology incubation, and process management. It is less about traditional production - it is ownership/management of the process.
Vickie Horton works for SC&H Group, a site selection based in Maryland. The first thing her company does for clients is review their assumptions regarding real estate: do they really need to expand and build a new facility. During this early phase they align the company's core goals with the potential need for a new facility. Depending on corporate culture and ability to find consensus this process can take days or months.
Companies generally know their critical location factors before they even start the community search. Her firm starts by looking at regions... Mostly without any contact with ED organizations. After honing in on narrower options requests for information (RFI) are sent to states asking for details on specifics regions and cities.
Horton is seeing more clients wanting greenfield facilities - she emphasized to make sure your sites are ready! Educating your area is the key to being ready. Vickie also said that every community has a bad part of town. Make sure it isn't a secret your site selection consultant discovers. Same goes for challenging community issues.
Horton said that when you get corporate visitors ask questions! What functionally do the company execs have? Understand the critical location factors - develop a relevant product. Be prepared, honest and willing to honor commitments.
Jennifer Fitzgerald is an associate with Duff and Phelps. She emphasized that economic developers must know their community cold: What is your story? your focus? the region's desirables and undesirables? Being a guide to local processes, workforce resources, existing companies, infrastructure and geography is where economic development organizations add value. Companies want to work with confident communities who know who they are and how to operate.
Mike Mullis owns his own site selection firm, JM Mullis. He has 20 associates in four countries and they closed on 50 deals last year representing over $3 billion in private investment
Mullis is seeing a lot more activity for site selectors as companies need site selection know how and want to minimize risk.
The first step in his process centers on logistics. It is perhaps the most critical location factor today. Education runs a close second as a site selection factor and it's an Achilles heel for America and a lot of communities. Mike is now analyzing skill set transferability in communities (ex. Textile to composites). Mike does his own labor analysis and then interviews local companies as part of his due dilagence.
Planned review and permitting processes are as important as the site itself. We are looking for acceleration rather than cutting corners. In this respect the quality of local government is key. They should provide critical services and still have an orientation towards growth and economic development. We look for evidence of favorable image both physically and politically.
Paul Van Devender works for Mohr Partners and specializes in warehouse distribution center (DC) projects. In most parts of the country existing buildings are too antiquated for today's distribution facilities. DCs need high ceilings, good lighting, lots of turnaround space and good flow logistics through the structure. Devender indicated there is not a lot of new product coming to market. As a result vacancy rates are dropping.
Betty McIntosh works for Cushman and Wakefield and focuses on Incentive trends and practices. She said companies are rebounding and investing in facilities as the economy improves. There is a lot of pent up demand as uncertainty drops. Hot sectors include automotive, aerospace, technology, logistics, and data centers. In terms of incentives some states are now offering transferable tax credits that can be sold to other companies, other states provide tax credits against multiple taxes. There is a trend towards increased flexibility/discretion on incentives. McIntosh suggested that there could be more IT related and sustainability/green incentives in the future.
Betty also said that Incentives draw to the top of priorities as location alternatives are narrowed to the final 2-3 contenders.
Bruce Hoch is with DCG Corplan and he talked about the plastics industry and site selection. The plastics industry is the 3rd largest industry in the US. It employs nearly 900,000 workers - has 340+ Billion in annual shipments - and has 18,500 facilities.
Reshoring is happening in plastics as wages rise in China. Companies have also discovered significant hidden costs related to offshore production. Expect increased usage of bio plastics based on vegetable oils, corn, etc. in response to green/sustainability trends. New technologies are driving possibilities. Carbon Fiber Reinforced polymers have potential in the auto industry.
A couple of these consultants have projects that will be considering the Yakima County over the next year so it was good to plant seeds with these people about our receptivity and readiness towards new industry. See the research we maintain for site selectors. Read more about site selectors.