Area Development Q3 Issue 2024

Prepare for a Wave of PFA Litigation

Cold Calculations for Food Processors

Where’s the Water for Semiconductors?

AREADEVELOPMENT Page 84

SITE

AND

FACILITY

Page 60

Page 26

Q3/2024

PLANNING

Space Focused

Supply Chains

Are Evolving

Page 72

14th Annual

Site Consultants Survey

Page 32

S P E C I A L R E P O R T:

Automotive Site Selection Outlook Page 63 w w w. a re a d e v e l o p m e n t . c o m

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Balanced.

Personalized.

Growth.

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Contents | Volume 59 Number 3 | Q3/2024 COVER STORY

Reaching for the Stars

page 72

Companies like SpaceX and Blue Origin are leading a boom in America’s space industry.

The supply chain that helps them reach orbit has been expanding out of Florida and Texas.

FEATURES PAGE 16

PAGE 26

PAGE 60

Green Jobs Boom in 2023: Is the IRA a Leading Factor?

Semiconductors’ fragile relationship with water may be tested

Cold Storage: The Next Big Thing in Industrial Real Estate

It’s still too early to tell how much of an impact the funds allocated from the Biden administration’s signature legislation have made, but the early signs are promising.

The United States is pushing to become a leader once again in semiconductor production with huge investments. Money’s not a problem, but water might be.

A recent spike in construction of temperature-controlled facilities is only scratching the surface of what’s on the horizon. But building these projects can be complex.

PAGE 20

Permitted Power Capacity Foreshadows Health of Regional Economies

It’s no secret that the United States doesn’t have enough power to go around, though it might be shocking to learn just how few new energy projects are in the pipeline.

PAGE 84 PAGE 32

Top States for Doing Business

Area Development’s annual ranking of the best states for site selectors, as ranked by our panel of expert consultants, has a few surprises in store, and some familiar results.

What the Latest EPA PFAS Rule Means for Site Due Diligence

A tidal wave of forever chemicals lawsuits is coming, and site selectors must proceed with caution with socalled reopeners.

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., 30 Jericho Executive Plaza­– Ste 400W Jericho, NY 11753. Periodicals postage paid at Jericho, NY, and additional offices. Single copies, $20. Yearly subscription U.S. & Canada, $75; foreign, $95.

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

8/21/24 4:03 PM

“One of the basic rules of the universe is that nothing is perfect. Perfection simply doesn’t exist… Without imperfection, neither you nor I would exist.”

— Stephen Hawking (1942-2018),

famous theoretical physicist, cosmologist, and author.

SPECIAL REPORTS

Automotive Site Selection Outlook 63 Guest Editorial: Electric Cars and Economic Development 64 The Challenge of Securing Sufficient Electrical Power for Battery Cell Plants 67 Can the UAW Make Substantial Inroads in the Southern States?

70 The Cost of Labor and Workforce Skills Necessary for an Electrified Auto Industry

Aerospace & Space Trends 74 Emerging Markets for Aerospace Production 76 Moonshot: How a Dynamic Space Production Facility Took Off

Location Canada 78 Canada Pushes Its Hydrogen Energy Edge 82 FDI in Canada: Grace Under Pressure

DEPARTMENTS 4 Editor’s Note Pardon our dust. We’re making some changes.

6 In Focus Data driven site selection rules

8 Frontline Quantum campus takes shape in Chicago

10 First Person Scott Kuppermann answers questions about food processing trends

12 Around the Horn Let’s talk about rail service with a trio of experts in supply chain

94 Ad Index 95 Last Word Time to audit your real estate portfolio?

Meet our guest editor Dennis Cuneo helped Area Development arrange coverage of the automotive industry for its annual Auto/Aero special section.

Dennis is the owner of DC Strategic Advisors and the former Senior Vice President for Toyota Motor North America. He has served on over 20 fiduciary boards, including two Fortune 500 companies, a regional federal reserve bank, a stock exchange, a major league stadium authority, an automotive think tank, a civil rights museum, and several universities, one of which he chaired.

He held gubernatorial appointments in California, Kentucky and Mississippi. Making him the perfect choice for this assignment.

Printed in the USA. Copyright 2024 Area Development® magazine. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recordings, or any information storage or retrieval system, without permission.

Area Development® magazine does not assume and hereby disclaims any liability to any person or company for any loss or damage caused by errors or omissions in the material herein, regardless of causation. The views and opinions in the articles herein are not those of the publishers, unless indicated.

The publishers do not warrant, either expressly or by implication, the factual accuracy of the articles herein, or of any views or opinions offered by the authors of said articles.

POSTMASTER: Send address changes to Area Development, Circulation Department, 30 Jericho Executive Plaza­– Ste 400W Jericho, NY 11753. Subscribers requesting address changes must provide both old and new addresses. © Copyright 2024 by Area Development® magazine. ISSN: 1048-6534. Printed in the U.S.A. Area Development® is a registered trademark of Halcyon Business Publications, Inc.

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Editor’s Note | Q3/2024

Nice to meet you, dear reader. Call me Andy.

I joined Area Development Magazine this year as its fourth-ever editor and will be attempting to fill the shoes of the inimitable Gerri Gambale, which is no easy task. She held this position for nearly three decades! I am truly excited for the opportunity to steer the coverage of corporate site selection and facility planning during such an incredibly exciting time, for economic development and America’s manufacturing sector.

Me and the rest of the Area Development team have been busy the past few months making changes to the look of our publication.

We hope you’ll notice the updates, which include clean, modern lines and vibrant imagery.

Shout out to our superbly talented designer, Victoria Corish, who has brought an artist’s vision to these pages. You’ll see her fingerprints on every page.

One thing that isn’t changing is our commitment to smart, nuanced coverage of site selection and facility planning.

In this issue — which I’ve dubbed the planes, trains, and automobiles edition — we bring you a stellar lineup of thought leaders.

To begin with, our esteemed guest editor

Dennis Cuneo leaned on his years of experience and deep network of automotive executives to bring together comprehensive coverage of America’s automotive sector. Tom Taylor adds his expertise on aerospace and defense.

Mike Chmura from Chmura Analytics looks at growth in US green jobs. We have a robust discussion on rail infrastructure with Joe Dunlap, JC Renshaw, and Matt Powers. From up north, Gabriel Dion and Marc Beauchamp offer insights into Canadian investments. Scott Kuppermann discusses the current state of food processing, and Courtland Robinson looks at America’s energy project pipeline. Oh, and let’s not forget the annual Area Development ranking of the Top States for Doing Business, which is based on surveys with Americas leading site selection consultants. Have fun reading!

Andy Greiner Editor

2024 EDITORIAL ADVISORY BOARD

Scott Kupperman Founder

KUPPERMAN LOCATION SOLUTIONS

Eric Stavriotis

Courtney Dunbar

Site Selection & Economic Development Leader BURNS & MCDONNELL

Vice Chairman, Advisory & Transaction Services

Stephen Gray

Brian Corde

Bradley Migdal

CBRE

Managing Partner ATLAS INSIGHT

President & CEO GRAY, INC.

Executive Managing Director, Business Incentives Practice

Chris Schwinden Partner

SITE SELECTION GROUP

Chris Volney

Managing Director, Americas Consulting CBRE

Matthew R. Powers Partner

CUSHMAN & WAKEFIELD, INC.

ONPACE PARTNERS

Executive Managing Director, Business Incentives Practice

Brian Gallagher

Scott J. Ziance

Alexandra Segers

Marc Beauchamp

TOCHI ADVISORS

SCI GLOBAL

Dennis Cuneo

David Hickey

Amy Gerber

CUSHMAN & WAKEFIELD

General Manager

Former Senior Vice President, Toyota Motor North America, Owner

Vice President, Corporate Development GRAYCOR

President

Managing Director

Partner and Economic Incentives Practice Leader

VORYS, SATER, SEYMOUR AND PEASE LLP

Chris Chmura, Ph.D.

Senior Manager, Location Analysis and Incentives MAXIS ADVISORS

Courtland Robinson

Director of Business Development BRASFIELD & GORRIE

Dianne Jones

Managing Director, Business and Economic Incentives JLL

Joe Dunlap

Chief Supply Chain Officer LEGACY INVESTING

CEO & Founder

CHMURA ECONOMICS & ANALYTICS

Alan Reeves

HICKEY & ASSOCIATES

Senior Managing Director

Publisher Dennis J. Shea dshea@areadevelopment.com

Editor Andy Greiner editor@areadevelopment.com

Production Manager Jessica Whitebook jessica@areadevelopment.com

Sydney Russell, Publisher 1965-1986

Staff and Contributing Editors Mark Crawford Dan Emerson Steve Kaelble Mark Schantz

Web Designer Carmela Emerson

Circulation/Subscriptions circ@areadevelopment.com

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

DC STRATEGIC ADVISORS

Lauren Berry

NEWMARK

AREA DEVELOPMENT

Events / Business Development Director Matthew Shea (ext. 231) mshea@areadevelopment.com Media / Accounts Director Justin Shea (ext. 220) jshea@areadevelopment.com

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Print Designer Victoria Corish

Halcyon Business Publications, Inc. President Dennis J. Shea Correspondence to: Area Development Magazine 30 Jericho Executive Plaza­ Suite 400 W Jericho, NY 11753 Phone: 516.338.0900 Toll Free: 800.735.2732 Fax: 516.338.0100

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

8/23/24 11:10 AM

BUILD CONNECTIONS TO GO FURTHER.

NORTHEAST ALABAMA REGIONAL MEGASITE / GADSDEN, AL / 2,208 ACRES / RAIL SERVED / POWER INFRASTRUCTURE / INTERSTATE ADJACENT / SUSTAINABLE SHIPPING

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VIEW SITES

In Focus

The Role of Data-Driven Site Selection in Modern Manufacturing Why it’s crucial to leverage data and analytics to make informed and strategic site selection decisions

By Doug Heinz Manager, Site Selection & Incentives Advisory at Kroll

T

he landscape of site selection is evolving. Historically, site selection was driven largely by relationships and subjective assessments. However, the advent of data-driven methodologies is transforming how companies identify and evaluate potential locations. This shift towards objective, data-driven site selection is crucial for manufacturing executives seeking to make informed decisions that maximize operational efficiency and profitability.

The Scoring Matrix: A Tool for Objectivity

One of the most significant advancements in data-driven site selection is the development of scoring matrices. These matrices allow companies to evaluate potential sites based on a wide range of criteria, ensuring a comprehensive and objective assessment.

The scoring matrix developed by Kroll evaluates criteria at the county level, including property tax, sales and use tax, income tax, land costs, and payroll expenses.

By analyzing these factors, companies can ensure that they are considering all relevant aspects of a potential site, rather than relying solely on existing relationships or anecdotal evidence.

Benefits of DataDriven Selection

Adopting a data-driven approach to site selection offers several key benefits. First, it helps avoid the pitfalls of overlooked communities and counties. Traditional methods often rely on existing relationships, which can result in potentially excellent sites being ignored simply because they are not on the radar of key decision-makers. By using a scoring matrix, companies can objectively 6 AREA DEVELOPMENT

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evaluate all potential sites, ensuring that no stone is left unturned.

Second, data-driven site selection enables companies to make informed decisions based on comprehensive data.

This approach reduces the risk of unforeseen costs or challenges that can arise from subjective assessments. For example, a site that appears attractive based on relationships might have hidden costs or regulatory challenges that become apparent only through a detailed, data-driven analysis.

Case Studies

Several case studies illustrate the benefits of data-driven site selection. For instance, Kroll’s use of their scoring matrix helped identify a rural community that was well suited for a large company’s relocation project. Despite its rural location, the community’s strong collegiate presence and cohesive local leadership made it an ideal site that might have been overlooked using traditional methods.

Another example is the site selection for a petroleum company. By leveraging data on existing pipelines and operations, Kroll was able to identify the optimal site

for a carbon capture project, demonstrating the power of data-driven selection in making informed decisions.

Takeaway

Data-driven site selection represents a significant advancement in the way manufacturing executives can identify and evaluate potential locations. By utilizing tools like scoring matrices, companies can ensure a comprehensive and objective assessment of all potential sites. This approach not only helps avoid overlooked communities but also reduces the risk of unforeseen costs and challenges, ultimately leading to more informed and profitable site selection decisions. Manufacturing executives are encouraged to adopt data-driven methodologies to stay competitive in an increasingly complex site selection landscape.

This article is part of the Site Selection Playbook series, providing strategic insights and practical advice for manufacturing executives. Published by Area Development Magazine, the series aims to guide businesses through the complexities of site selection to ensure successful project outcomes.

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

8/21/24 4:04 PM

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Frontline

From Steel to Silicon: Chicago’s South Works Site to Host Largest U.S. Quantum Computing Hub The $2.2 million project will transform the former industrial site into a cuttingedge quantum computing facility, advancing Chicago’s role in the tech industry.

By Dan Emerson,

Area Development Staff Editor

C

hicago’s South Works site once housed the bustling heart of America’s steel industry, but soon it will be home to the future of computing, as PsiQuantum partners with Illinois to build the nation’s largest quantum computing facility on the shores of Lake Michigan.

The 128-acre Illinois Quantum & Microelectronics Park campus, anchored by PsiQuantum, will house a quantum computer containing up to 1 million quantum bits, or qubits, within the next decade, officials said.

Currently, the largest quantum computers have around 1,000 qubits.

The project, now in the early planning stage, will be the initial phase of a broader 400-acre master plan for the site. New York-based commercial real estate firm Related Group and industrial developer CRG will co-develop IQMP for anchor tenant PsiQuantum, a leader in quantum computing, using a combination of private financing and funds granted by the state.

Chicago-based Lamar Johnson Collaborative (LJC) will be the lead designer, with Clayco as the general contractor for the facility.

Landowner U.S. Steel completed an EPA-supervised remediation after the plant closed in 1992. However, several subsequent efforts to redevelop the site at 8080 S. Lakeshore Drive never came to fruition.

One of those proposals was an estimated $4 billion mixed-use project announced in

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2004, with developer McCaffrey partnering with U.S. Steel. The partnership dissolved in 2016 without building anything.

Also in 2016, an Irish developer terminated its agreement to buy the 440-acre parcel and build about 20,000 new homes due to the unknown cost of remediation.

Tim O’Connell, vice president of marketing for CRG, noted that “significant remediation of the site was conducted under prior ownership in the 1990s. As a result of those efforts, a No Further Remediation notice was issued by the Illinois Environmental Protection Agency in 1997 and subsequently reconfirmed, indicating the site met the agency’s requirements for both residential and commercial uses,” O’Connell told Area Development.

Last August, the state of Illinois announced a preliminary $2.2 million grant from the Illinois Department of Commerce and Economic Opportunity toward

“We’ve seen people waking up to the fact that small quantum systems are not going to be useful. You have to build a big system.”

—Pete Shadbolt

environmental remediation of the South Works property, part of a series of state investments in underutilized properties and former industrial sites that are good candidates for redevelopment.

Clayco’s chief growth officer and Chicagoland president, Michael Fassnacht, said the partnership with PsiQuantum represents “a tremendous opportunity for the city of Chicago.” He said it will be a “cornerstone” for advancing the relatively new science of quantum computing.

One of the appealing qualities of the South Works site is its sheer size, officials said, along with its proximity to a quantum computing center at the University of Chicago.

Pete Shadbolt, PsiQuantum’s cofounder and chief scientific officer, told MIT Technology Review, “Just in the last few years, we’ve seen people waking up to the fact that small (quantum computing) systems are not going to be useful.” To correct the errors that inevitably occur in the complex quantum computing process, “you have to build a big system with about a million qubits,” he said.

Quantum computers can perform a wide range of tasks, from drug discovery to cryptography, at unprecedented speeds. A number of companies are working to develop the systems using different methods. Both Google and IBM, for example, make the qubits out of superconducting material. IonQ makes qubits by trapping ions using electromagnetic fields. PsiQuantum is building qubits from photons.

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

8/20/24 3:27 PM

MOVE MORE WITH GREATER EFFICIENCY.

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©2024 Norfolk Southern Corporation. All Rights Reserved.

Around the Horn

Riding the Rails A Discussion About the Cost, Sustainability, and Innovation in Rail Infrastructure for Modern Supply Chains

W

e conducted a fascinating discussion with JC Renshaw, Senior Supply Chain Consultant in Savills, Joe Dunlap, Chief Supply Chain Officer at Legacy Investing and Matt Powers, Lead for Site Selection and Supply Chain Strategy Solutions for OnPace Partners, about the current state of rail infrastructure for site selectors. This conversation has been edited for style and space.

Area Development: How does access to rail infrastructure influence the overall cost-effectiveness and efficiency of the supply chain?

Matt Powers: For retail, rail is crucial for transporting materials like lumber for companies such as Home Depot and Lowe’s. While not typically used for e-commerce, regional distribution can benefit from rail. Rising fuel prices make rail an attractive option even for retailers, offering a future-proof solution amidst driver shortages and fuel costs.

Joe Dunlap: Certain goods, especially in e-commerce, are not suitable for rail due to incompatibility with LTL shipping. Rail is often cheaper per mile but not always applicable. It’s important to understand that rail’s cost advantages apply primarily to specific types of freight, not all.

Area Development: What about the environmental and sustainability benefits of rail?

JC Renshaw: Rail has a smaller carbon footprint compared to road transport. Companies tracking carbon usage and aiming to meet sustainability goals find rail advantageous. Using rail addresses carbon footprint reduction and helps overcome transportation capacity issues related to labor shortages.

Joe Dunlap: Electrification of rail is a possibility in the future, enhancing its sustainability benefits. However, even without electrification, rail is more sustainable than trucking due to its lower fuel consumption and emissions.

Matt Powers: Rail reduces noise pollution and traffic, which is significant for communities near distribution centers. Using rail can help companies avoid public relations issues associated with increased truck traffic.

Does rail help mitigate delivery delays?

JC Renshaw: Rail reliability varies. Single-railroad routes are generally dependable, but switching between multiple railroads can cause delays. Traffic jams are less of an issue with rail, but capacity issues and chassis availability can still create backups.

Joe Dunlap: For distances over 400 miles, rail can be effective, but switching between railroads over longer distances can introduce delays. Consistent coast-tocoast routes, like LA to the Northeast, tend to be more reliable and cost-effective.

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

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Around the Horn

Matt Powers: Sophisticated supply chain users can better plan and utilize rail. Smaller users often rely on trucking due to a lack of scale and knowledge. Understanding the nuances of rail transport is crucial for mitigating delays and optimizing logistics.

Q: Are there any recent innovations or trends in rail that our readers should know about?

JC Renshaw: Longer trains are a trend, though they face resistance due to increased wait times at crossings. Development of electric and hydrogen-powered trains is ongoing, though diesel remains dominant. These innovations promise greater sustainability and efficiency in the long run.

Joe Dunlap: The use of IoT and smart sensors for predictive maintenance is increasing.

Digital twins are being used to predict and plan maintenance to minimize disruptions. While autonomous trains may not be imminent, automation to prevent accidents is likely to grow.

Matt Powers: Automation and AI are emerging within the industry, making fleet maintenance more automated. Despite perceptions, the rail industry is keeping up with technological advancements. The use of data mining and AI is helping to improve efficiency and safety.

Q: How important is it to collaborate with rail service providers when selecting a site?

JC Renshaw: For volume users, it’s crucial to ensure capacity and infrastructure. Railroads compete for large projects like gigafactories, offering infrastructure and pricing incentives. Effective collaboration with rail providers is essential to secure the necessary capacity and infrastructure.

Joe Dunlap: Understanding which rail lines can have spurs cut into them is vital. Some lines, called expressways, don’t allow for this, affecting site feasibility. Site selectors must work closely with rail providers to determine which locations can accommodate rail spurs.

Matt Powers: Short-line railroads are generally more flexible. Building relationships with both major and short-line providers is important for successful site selection. Developers are increasingly proactive in identifying sites near rail to secure future advantages.

Q: What should an executive in charge of facility planning consider about rail?

JC Renshaw: One pro is cost and risk mitigation compared to other transportation modes. Rail can be more costeffective and less vulnerable to driver shortages. A con is potential delays due to switching yards and changes between railroads. Understanding specific rail route limitations, such as stacking capabilities, is crucial for optimizing logistics.

Joe Dunlap: Flexibility with multiple rail carriers is crucial. A site with dual rail service offers alternatives if one line faces issues. This redundancy can prevent disruptions and provide cost-effective alternatives.

To read a ful l, unedited transcript of this conversation and to listen to the audio, visit AreaDevelop ment.com.

Matt Powers: The pro is the increasing availability of rail-served sites, as developers anticipate demand. The con is the limited and finite nature of these sites. Competition for prime rail-served locations will intensify, making it essential to secure these advantages early.

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First Person

Scott Scott Owner, Kupperman Location Solutions (KLS)

Kupperman

Kupperm Area Development interviewed Scott Kupperman about factors affecting food processing site selection, including cost pressures, geographic preferences, financial considerations, automation, labor shortages, and sustainability.

Area Development: Scott, can you start by sharing any industry trends you are seeing that affect food processing related site selection?

Scott Kupperman: As has been the case, companies in this industry must be responsive to consumer demands. These demands are pretty volatile, but typically relate in some manner to cost, convenience, and purchaser benefits of the product. It seems that lately, consumers have been focused on value in a climate of rising prices at points of retail.

Area Development: What are some of the cost pressures which have driven up prices ?

Scott Kupperman: Cost of transportation, fuel, certainly labor, cost to occupy, build or modify a building. All those have continued to go up steadily, and to maintain margins, they have to pass those costs on and do anything they can to remain profitable but still be deemed a product of interest and a good value for the people out there who they’re selling it to.

Area Development: How does this impact site selection?

Scott Kupperman: F&B companies fear large cost fluctuations. They want to be in a location where the cost to occupy and operate, are both predictable and ideally more competitive than other locations 14 AREA DEVELOPMENT

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where competition and local factors drive up acquisition and operating costs.

Area Development: Are these concerns affecting the industry’s structure?

Scott Kupperman: I think regardless of what product they’re making, or what subsector of the industry they’re in, companies worry about margins and cost, and that’s affecting where you want to look, and in many cases, decisions that relate to consolidation. Do we consider closing this facility that has become a high-cost and/or unpredictable place to operate, and either adding on to another facility that we feel is better positioned, or maybe opening a new one.

Area Development: Consolidation seems like a big trend how is that impacting site selection?

Scott Kupperman: Larger companies, like Nestlé, Hershey, and PepsiCo, are optimizing their brand portfolios.

They’re acquiring companies with synergies and divesting brands that don’t fit growth strategies. Possibly leading to recently

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

8/20/24 3:29 PM

constructed or renovated buildings becoming available in high-cost locations.

Area Development: Can you give an example?

Scott Kupperman: Hershey, for example, has become a big player in popcorn and salty snacks. They’ve invested a lot of money in products and operators that they feel they have expertise and synergy to build up that specific portfolio. They’ve also focused on ways to modify production lines in as little as a week, in order to meet consumer demand. That ability to innovate is crucial.

Area Development: What are the impacts of this buying and selling?

Scott Kupperman: There’s a lot of buying and selling and strategizing out there, which in some cases impacts recently constructed or renovated food buildings becoming available. I think it’s tending to happen in higher-cost locations, which is kind of a double-edged sword. You get a new building available, but lies in a higher cost location.

You therefore need to evaluate the value proposition carefully for a specific need and client use.

man Area Development: What about smaller companies?

Scott Kupperman: There’s an influx of emerging companies creating innovative products, often moving production from third-party manufacturers to their own facilities to grow market share. Others are looking to put a second facility into their manufacturing network, and take a leap from, say, the West Coast and try to find a location to be closer to population and product growth in other areas of the country.

Area Development: Are there international factors at play as well?

Scott Kupperman: FDI is landing in the US, by companies from Europe or Asia or elsewhere , and are getting some real sales traction here in the US. And they come to the logical conclusion that says we can’t make this product overseas and continue to ship it here. We’ve got to start making it somewhere in the US, because of supply chain, quality control and speed to market, and because our grocery chains and distributors are pressuring us to have production here.

Area Development: Are there particular geographic areas seeing more growth?

Scott Kupperman: The Mid-Atlantic and Southeast regions are popular, largely due to lower costs and demographic trends.

These areas offer affordable real estate compared to higher-cost metro areas and have growing, diverse populations, making them attractive for ethnic and foreign product distribution.

Area Development: How are financial aspects influencing site selection decisions?

Scott Kupperman: Smaller companies are very conservative about capital deployment, and have been waiting for construction costs and interest rates to stabilize. However, many are realizing that 3 percent debt isn’t coming back and it’s going to stay around 5 or 6 percent, and current construction costs are likely here to stay.

This conversation has been edited for space.

Find a full version of the conversation online at Area Development.com.

THIS IS WHAT OPPORTUNITY LOOKS LIKE. Flint and Genesee is where innovation and drive come together.

Where a strategic location, strong workforce pipeline, and access to resources provides unmatched potential. This opportunity is real.

It’s rare. And it could be yours.

What’s next? That’s up to you.

Learn more at DevelopFlintandGenesee.org

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8/20/24 3:30 PM

Workforce

GREEN JOBS BOOM IN 2023:

Is the IRA a Leading Factor?

Is the IRA driving a surge in green jobs, or is it part of a broader clean energy movement?

By Mike Chmura Economist, Chmura Economics & Analytics.

T

he potential for new, good-paying jobs from investing in a clean energy ecosystem has long been highlighted by proponents of expanding clean energy in America. John Kerry, President Biden’s former Envoy for Climate, famously predicted the energy transition would be the “new industrial revolution.”

While clean energy production and related industries steadily grew in the United States over the past decade, the growth was far from a “new industrial revolution.” Green jobs in the energy sector underperformed the growth of the wider economy in all but two of the last ten years – those being during the COVID lockdowns, and now as of 2023. As of the end of 2023, clean energy jobs grew year over year by 4.7%, compared to 1.8% employment growth for the overall economy. The figure below shows jobs directly involved in clean energy production and transmission/distribution. Other “green” jobs like battery manufacturing for electric vehicles also grew over the past few years.

Where is the growth?

Using Chmura’s JobsEQ software to dig into these trends, we notice distinct differences between geographies, with a unique mix of states leading the way. Two New England states (Rhode Island and Massachusetts) place in the top 5. These states recently expanded solar and wind projects with the new Vineyard Offshore Wind project beginning construction in late 2021, and the solar market (especially in Massachusetts) continuing its steady growth. Also taking advantage of the fast-growing solar market are southwestern states such as Nevada, Arizona, Colorado, and Texas— all of which made the top 10 for 2023 clean energy job growth. Interestingly, West Virginia was the number 7 state for clean energy growth in 2023, although most of this job growth seems to be concentrated in clean energy support functions rather than in generation.

Breaking this out further by MSA, Table 2 shows the top 10 MSAs for cumulative green energy job growth

Year over year employment change

5,0%

2,3%

-0,5%

-3,3%

-6,0%

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total Employmment

Clean Energy Sector Employment

Figure 1: Clean Energy Employment Growth Overtakes National Average in 2023. Source: JobsEQ, Chmura

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Rank

State

2023 Employment Growth

1

Nevada

18.64%

2

Arizona

16.20%

3

Rholde Island

14.70%

4

Florida

11.89%

5

Massachusetts

10.75%

6

Texas

9.16% 8.02%

7

West Virginia

8

Idaho

7.67%

9

Minnesota

6.52%

10

Colorado

6.48%

Table 1: Top 10 States for Clean Energy Employment Growth (2023). Source: JobsEQ, Chmura

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

8/21/24 12:57 PM

There’s

no better place

to do business than the

Bluegrass State

1 1 # 2 # 5 # 6 # #

In air cargo by weight In automotive production per capita

In aerospace-related exports

In percentage of workers employed by international companies Manufacturing by percentage of workforce

@cedkygov

ced.ky.gov

Workforce

Amount invested in new cleanenergy projects announced since IRA passage.”

in 2023. Houston, TX led the way in total job creation, with a net gain of 1,202 clean energy jobs in 2023.

Tucson, AZ also had an explosive growth year for clean energy jobs – more than doubling their total. Other large metropolitan areas, like New York and Chicago, round out the top 10, joining Florida, California, Arizona, and Texas metros.

We also see that, within these metropolitan areas, business leaders and researchers credit the IRA with some of these job increases. For example, in their 2023 report, Climate Power found 13 clean energy projects that advanced after the IRA passage in Arizona, with many business leaders crediting the IRA for spurring the investment. Among these projects, LG Energy Solutions resumed plans for its previously paused Arizona gigafactory, the American Battery Foundation announced a $1.2 billion investment for a new gigafactory in Tucson, and after the passage of the IRA, Longroad Energy finally completed financing for a solar generation project.

Similar stories are seen in other states and cities across the country. In Houston, TX (top MSA for clean energy job growth in 2023), SEG Solar and PV Hardware announced new solar projects to meet the demand driven by the IRA. SEG Solar specifically mentioned that they would be looking to create even more jobs using savings from the IRA tax credits.

Overall, since the passage of the IRA, Climate Power finds that more than $278 billion in new clean-energy related projects were announced nation-wide.

What is contributing to the growth?

While this “boom” in the green energy economy is welcome news, it is intriguing to question what is fueling this growth and if it is sustainable. On August 16, 2022, President Biden signed into law the Inflation Reduction Act (IRA), which among other features, provided $369 billion in direct grants and tax credits for green and sustainable energy initiatives. These include clean energy production and electric vehicle tax credits all the way down to rebates for new and efficient personal appliances.

On top of the surface-level benefits, the President promised these tax credits would “create thousands of good-paying jobs.”

A year after the IRA’s integration into official U.S. federal regulation, we are already seeing above-average job growth in the green energy sector. Green energy jobs also pay much more than other industries, with the annual wages for green energy jobs averaging almost twice as much as the national average ($130,441 versus $70,183).

Other government incentives for green energy include initiatives like the Bipartisan Infrastructure Law (BIL).

IRA

Do we have the IRA and other federal incentive programs provided through legislation like the BIL to thank for all this recent growth? Well, given other key drivers in 18 AREA DEVELOPMENT

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the clean energy space are not improving, perhaps the IRA is driving a large portion of the boost. Those in the energy industry often cite the decreasing cost of green energy and the increase in Environmental, Social, and Governance (ESG) as promising developments for the proliferation of zero-carbon energy. However, as discussed below, improvements in these metrics have stagnated at best.

Cost of Electricity

For economic feasibility, cost is king, and the cost difference between separate energy technologies is typically measured by the Levelized Cost of Electricity (LCOE). Simply put, LCOE is the average cost to produce one MWh of electricity using a specific technology. The lower the LCOE, the cheaper it is to produce electricity.

Over the past decade, core green energy production methods have significantly decreased in price (see figure 2). This decrease includes large-scale solar and wind, which on average has been cheaper to use than natural gas since at least 2016.

However, these cost decreases have stagnated recently, with LCOE estimates indicating increases in price for 2023. While low LCOE for green energy is helpful to industry prospects, it is likely not the core driver of the recent employment surge as costs have stagnated recently.

ESG Investing

As for ESG investing, trends here also fail to paint a clear picture for its positive impact on green energy employment.

While ESG investing increased 14-fold from 2018 to 2021 in the United States, a down-market year in 2022 decreased the assets under management of ESG funds by 29%. Yet, in that same year, green energy employment grew contrary to what we would expect if ESG investing was a primary factor. While ESG assets under management likely increased along with the overall market in 2023, it is still unlikely this investing trend is a primary driving growth factor.

Conclusion and Look Ahead

Ultimately, very few changes in the economy can be attributed to one simple causal factor. Of the three factors discussed above (IRA, LCOE decreases, ESG investment), however, only one is trending in a direction which can explain the increase in green jobs – that being the IRA. In reality, it is likely a combination of a solid economic baseline (aided by low LCOE and a willingness in corporate America to expand green operations) along with the extra financial and regulatory boost which the IRA has provided that is driving the recent above-average employment growth in green energy clusters.

One must question if this employment growth is sustainable. While the majority of IRA funds allocated to green energy have yet to be distributed, it may still be too early to definitively declare the IRA a success for the green energy sector. Nonetheless, the early signs are quite promising. for free site information, visit us online at www.areadevelopment.com

8/21/24 12:59 PM

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Energy

Permitted Power Capacity Foreshadows Health of Regional Economies Diverse energy projects are addressing unique resource and climate considerations, with solar and wind power leading the charge in the transformation of America’s energy landscape.

By Courtland Robinson Director of Business Development at Brasfield & Gorrie

T

he U.S. electric grid, a trusted engine for economic sovereignty and growth, is struggling to keep pace with the demands of a modern economy. Sputtering along on today’s 1.3 million megawatts (MW) of generation, booming industries plead for the supplementary generation commanded by computational power, superior process design, and electrification. A growing currency in the 21st century economy, investors track the proliferation of new generation across the country – construction projects bound to incite investment and expansion into these contending regions .

Going Vertical with New Electric Power

Some help is on the way. At the moment, 132,000 MW of new generation capacity projects are either permitted or under construction, according to the American Public Power Association’s 2024 Generation Capacity Update.

Projects that could generate an additional 335,000 MW are pending review.

Compelled to reduce carbon emissions and emboldened by advances in distributed energy resources, this new wave of energy projects doesn’t look like its 20th-century counterparts. Much of the new generation capacity under development is for solar energy (51%), followed by wind (33%) and natural gas (7%).

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Where are these new projects going? Roughly 75 percent of all capacity either permitted or under construction is going to just four of the six regional authorities, stretching from the Nevada sagebrush, down to the grasslands of Texas, and east to the salty Atlantic coastlines.

Western Electricity Coordinating Council (WECC)

The largest of six regional entities given authority by the North American Electric Reliability Corporation and the Federal Energy Regulatory Commission, WECC has the largest share of plants under construction. However, WECC only holds 13 percent of all U.S. permitted generation.

Proposed Permitted Under Construction Pending Application 2023 Generation

Montana, Nebraska, New Mexico, South Dakota, Texas, Wyoming, Mexico Arizona, California, Colorado, Idaho, Nevada, Oregon, Utah, Washington Canadian provinces of British Columbia and Alberta.

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8/20/24 3:36 PM

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8/14/24 10:48 AM

Southeastern Electric Reliability Corporation (SERC)

Covering portions or the entirety of these sixteen states on either side of the Mississippi River, SERC has a quarter of all U.S. plants under construction and the second-largest share of permitted plants.

Proposed Permitted Under Construction Pending Application 2023 Generation

Florida, Georgia, Alabama, Mississippi, Louisiana, Texas, Oklahoma, Arkansas, Missouri, Iowa, Illinois, Kentucky, Tennessee, Virginia, North Carolina, and South Carolina

ERCOT (Texas)

Both SERC and WECC make up most of the capacity under construction in the U.S., but vast amounts of capacity are also planned in ERCOT (Texas), which manages 90% of the state’s electric load. Nearly half of all permitted projects fall within ERCOT, a nod to future capacity hunters that Texas is loading up for the energy arms race.

Proposed Permitted Under Construction Pending Application 2023 Generation

Reliability First Corporation (RFC)

Serving the Mid-Atlantic and Great Lakes within the eastern interconnection, RFC held 23% of all 2023 U.S. Generation. Yet it comes in fourth at 15% of new capacity under construction and only 13% of all permitted plants.

Proposed Permitted Under Construction Pending Application 2023 Generation

Delaware, New Jersey, Pennsylvania, Maryland, Virginia, Illinois, Wisconsin, Indiana, Ohio, Michigan, Kentucky, West Virginia, Tennessee, District of Columbia.

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The Resounding Answer for Future Capacity: An All the Above Strategy!

A relic term still recited despite its pervasiveness across the grid, alternative energy is dominating new energy construction projects. Tribute to the pace of adoption, today 66% of plants permitted or under construction are using solar energy technology. The U.S. Energy Information Administration anticipates that solar and battery storage will make up 81% of new U.S. electric-generating capacity this year. Faster and cheaper to deploy, and insulated from the volatility of traditional fuel sources, solar capacity has skyrocketed in most areas. However, the generating capabilities of today’s solar, wind, and battery storage solutions are a mere taste of what data hungry enterprises desire.

Natural gas is the largest source of U.S. generation capacity today (44%) and makes up a significant share of the capacity added over the last decade. While many utilities around the country have signaled an interim dependence upon new gas-fired generation to bridge power deficits, including those associated with coal retirements, these solutions are not as imminent as some would hope, as natural gas generation makes up only 9.5% of all capacity under construction. Even so, discounting the role of natural gas in the context of swelling energy demand would prove myopic.

A pillar of the U.S. grid system and trustworthy dispatchable resource under today’s demanding conditions, natural gasfired power generation might soon have its second act.

Don’t call it a comeback – nuclear has been powering roughly 20% of the U.S. economy for decades, and the pros and cons of a nuclear renaissance have been debated for years. That said, there are signs of progress. In June 2024, TerraPower broke ground on the construction of the Natrium Reactor demonstration project, a Bill Gates and GE-Hitachi technology venture claiming the first advanced reactor project to move from design into construction. The project features a 345-500 MW sodiumcooled fast reactor with a molten salt-based energy storage system. Alas, only non-nuclear construction has commenced, the rest pending application approval.

While similar advanced nuclear pronouncements can be found across the U.S., zero U.S. nuclear reactors are under construction today and none have both approvals and funding in place. To further place this in context, there are sixty reactors under construction in sixteen countries around the world. China has twenty-six reactors under construction, while India has seven, Russia four, and the U.K. two.

While many other fuel types are being evaluated in an attempt to wrestle with the pressures of digitization, few energy solutions offer regional planning organizations the requisite deployment and scalability means to overcome both high-voltage transmission constraints and federal approvals in a timely manner

of new generation capacity is either permitted or under construction in the United States.

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8/20/24 3:37 PM

We searched for a place that was well connected, bursting with innovation, and aligned with our mission of creating a greener future. Maryland won, hands down.

Brendan Jones President and CEO Blink

Get going: business.maryland.gov/sites

MIDDLESEX COUNTY

ATTRACTS HIGH-TECHNOLOGY INVESTMENTS

M

iddlesex County, NJ, boasts a legacy of innovation, from Thomas Edison’s Menlo Park Laboratory and his 300+ patents to Johnson & Johnson’s global headquarters since 1886.

Modern pioneers like Sampled and GenScript Biotech continue this tradition. With robust infrastructure, cutting edge technology, a skilled workforce, a pro-business climate, and comprehensive supply chain support, Middlesex County nurtures a vibrant, diverse economy and thriving business community.

Middlesex County is a top global R&D center, ranking in the top 1% for university-based spending in engineering, geosciences, life sciences, computer science, and physical sciences. Home to Rutgers and Princeton universities, the county’s robust academic foundation supports a thriving life sciences corridor along Route 1, attracting companies like Bristol-Myers Squibb, Novo Nordisk, and Genmab.

Talent drives Middlesex County’s economic development. Workforce-training partnerships with employers build a robust talent pipeline to support growing industries. For example, the RWJBarnabas Health Workforce Partnership offers unique educational pathways for Middlesex College and Middlesex County Magnet Schools students. Leveraging this strong foundation, Middlesex County fosters a favorable business climate and serves as an incubator for innovation.

Top Growth Industries

Life sciences. Middlesex County’s life sciences industry is bolstered by significant investments, including the new $25 million Jack & Sheryl Morris Cancer Center—New Jersey’s first freestanding cancer hospital opening in late 2024. The county’s biopharmaceutical sector ranks in the top 1% nationwide, at24 AREA DEVELOPMENT

Middlesex County.indd 24

By Mark Crawford tracting over $2 billion in private equity and venture capital investment since 2022.

Food technology. Middlesex County’s vibrant food science industry, encompassing R&D, manufacturing, and distribution, ranks in the top 4% of U.S. counties for food processing. It excels in the flavor, fragrance, and extract markets with a modernized supply chain, employing over three times the national average of food scientists and technologists.

“Middlesex County is at the forefront of technological innovation and economic growth” Sho Islam

Autonomous technologies. Middlesex County boasts a high concentration of experts in automation, robotics, AI, and machine learning. To harness this expertise, the county launched DataCity, an urban living lab for smart mobility. In partnership with Rutgers University and the NJ Department of Transportation, DataCity tests autonomous vehicles and advanced navigational software in real-world environments.

Steady Capital Investment

The Office of Business Engagement within Middlesex County’s Department of Economic Development plays a pivotal role in supporting the county’s business retention, expansion, and attraction efforts. In December 2023, Nokia Bell Labs announced its plan to occupy a high-tech, custom laboratory at HELIX 2, an advanced research facility under construction in New Brunswick. “New Jersey has long been home to cutting-edge innovation,” states Nokia Bell Labs. “Nokia Bell Labs is affirming its commitment to the East Coast and New Jersey and upholding our longstanding tradition of groundbreaking research and development in the region.”

“Middlesex County is at the forefront of technological innovation and economic growth,” said Sho Islam, director of the county’s Office of Business Engagement. “Our commitment to fostering a business-friendly environment and supporting industries that drive the future is unwavering.

Middlesex County is more than a location— it’s a community where innovation meets opportunity.”

Middlesex County’s Office of Business Engagement assists businesses with relocation to this growing region.

Contact biz@co.middlesex.nj.us or visit www.discovermiddlesex.com/biz for more information.

This article was written for Middlesex County’s Department of Economic Development which sponsored and approved this post.

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8/22/24 3:28 PM

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Water Availability

Semiconductors’ fragile relationship with water may be tested Exploring the water dilemma in semiconductor manufacturing: how the industry’s growth is increasing demand for a scarce resource and the innovative strategies companies are adopting to manage their water use in water-stressed regions.

By Catherine Tymkiw

26 AREA DEVELOPMENT

Article - Semiconductors.indd 26

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

8/22/24 8:43 AM

S

emiconductor manufacturing is having a moment, and with good reason. The global semiconductor market is forecast to top $1 trillion by 2030, compared with a mere $600 billion just three years ago, according to McKinsey & Company. And the United States wants a big chunk of that.

The U.S. CHIPS and Science Act—signed into law in 2022 and aimed at reviving America’s domestic manufacturing sector—has so far resulted in $29 billion worth of deals with eight manufacturers for projects across 11 states. Add the $450 billion of private investments for 80 projects across 25 states inspired by the CHIPS Act, and the United States is well on its way to reclaiming its position as a leader in semiconductor manufacturing.

“America invented these chips, but over time, we went from producing 40% of the world’s capacity to just over 10%, and none of the most advanced chips,” President Biden has repeatedly stated.

That’s about to change. The billions of dollars companies and investors are pouring into this industry is expected to lead to a 203 percent surge in U.S. fabricating capacity by 2032, according to a new report from by the Semiconductor Industry Association (SIA) and the Boston Consulting Group (BCG) entitled Emerging Resilience in the Semiconductor Supply Chain. On top of that, advanced chip production in the United States is forecast to jump 28% by 2032, compared with 0% in 2022.

That will undoubtedly create thousands of new jobs and boost the economy.

But semiconductor manufacturing is a thirsty business—using millions of gallons of water per day—and many of these projects to build or expand facilities are in water-stressed regions in states like Arizona and Texas.

To put it in perspective, one person uses around 80 gallons of water per day, on average. A fabrication plant can use up to 10 million gallons of water per day, depending on the size of the plant and type of chip being produced. That’s nearly equivalent to the water needs of a small city like Santa Clara, California, which has a population of 126,215.

Chipmakers around the world are already consuming as much water as Hong Kong, a city with a population of 7.5 million, according to analysts at S&P Global Ratings.

Advanced chips power everything from the latest iPhone to electric vehicles, medical devices, high performance computing (HPC), and devices powered

by Artificial Intelligence (AI). As technology continues to become more sophisticated, demand for more advanced

chips will grow, which, in turn, will lead to an increase in water demand.

Just last year, more than one trillion semiconductors were sold around the world, according to the SIA. And that figure is expected to continue to grow. Having a steady water supply to meet that demand will remain top of mind.

“We view water scarcity as a risk in the coming decade for the tech hardware industry, particularly the water-intensive semiconductor subsector,” the S&P analysts wrote.

That’s because advanced chip production uses ultrapure water (UPW)—highly refined fresh water—to clean and purify wafers. These wafers will typically go through a several-step process and UPW is used each time so the more advanced they become, the more processing they need.

Water is also used to cool machines and for general use.

Taiwan Semiconductor Manufacturing Company (TSMC), which makes 90 percent of the world’s advanced chips, reported that the annual capacity for its manufacturing facilities and its subsidiaries exceeded 16 million 12-inch equivalent wafers in 2023.

“The semiconductor sector is on track to increase water consumption by a mid to high-single-digit percent each year, driven by capacity expansion and the demands of advancing process technology,” according to S&P analysts.

According to TSMC’s 2022 Sustainability Report, the manufacturer used approximately 35 billion gallons (132.1 million metric tons) of UPW throughout its global operations in 2022, marking a 21 percent increase from 2021.

TSMC also said it continued to implement four major water saving measures throughout its operations in 2022: reducing facility system water consumption, increasing the wastewater recycling of facilities, improving the water production rate of the system, and decreasing water discharge loss from the system.

Still, the renewed resurgence of water intensive semiconductor manufacturing in the United States begs the question: Where will the water come from?

Take Arizona, for example. Two of the largest manufacturers—TSMC and Intel—are growing their footprints in and around Phoenix, a city that’s not considered a water oasis. But the advantage, say city officials, is that “desert cities know that drought is a constant threat and plan accordingly.” It’s that type of planning that has helped Phoenix make it through every drought without any major water restrictions.

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8/22/24 8:44 AM

Water Availability

Manufacturers and local municipalities continue to work closely together to address the anticipated increase in water demand and infrastructure needs.

In 2020, TSMC signed a $12 billion agreement to build its first U.S. fabrication plant in Phoenix. In exchange, the city committed to spending $205 million in infrastructure improvements to support the project, comprising three miles of full arterial streets including streets, curb, gutter, sidewalk, streetlights and landscaping, new regional public water infrastructure improvements, and new public wastewater infrastructure improvements.

More recently TSMC announced it was building two more fabs and modernizing existing facilities in Arizona, helped by a $6.6 billion investment under the CHIPS Act.

facilities in New Mexico, expand R&D in Oregon and built two new fab plants in Ohio.

Intel has already started work on its two new fab plants in Chandler, having poured more than 430,000 cubic yards of concrete—enough to fill 132 Olympic-size pools, according to its latest Corporate Sustainability Report. It takes about three years to complete construction on a new plant, according to an Intel fact sheet, so these won’t be coming online for a few years.

But between TSMC and Intel, the demand for water will grow, not only for the fab plants, but also for the surrounding communities. In Arizona alone, that means a lot of water being sucked up from areas already

“The semiconductor sector is on track to increase water consumption by a mid to high-single-digit percent each year, driven by capacity expansion and the demands of advancing process technology.”

The first fab, which is expected to start production in 2025, will leverage 4nm technology and produce 20,000 wafers per month. The second fab, expected to start production in 2028, will produce the most advanced 2nm technology alongside 3nm technology. The third, most recently announced fab, is slated to produce chips using 2nm or even more advanced processes by the end of the decade.

In total, TSMC is investing $65 billion in Phoenix, making it the largest foreign direct investment in Arizona, and the largest foreign direct investment in a greenfield project in the United States.

“By increasing our capacity for leading-edge technology in Arizona, we will enable our customers to unleash innovations across mobile, AI and HPC applications for all industry sectors,” TSMC stated.

Meanwhile, Intel has been in the state since 1979, with four fabs operating and two more on the way. The chipmaker has committed $32 billion to build those new fabs, as well as modernize an existing one in Chandler (near Phoenix), where it will produce advanced logic chips used in a number of different U.S. industries, including automotive, medical device and aerospace. Intel will receive up to $8.5 billion under the CHIPS Act to help fund the Arizona projects, as well as modernize packaging 28 AREA DEVELOPMENT

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considered highly water stressed, according to World Resources Institute’s Aqueduct Water Risk Atlas.

“We work very closely with local officials in all the communities in which we operate, including the City of Phoenix Water Department,” said a TSMC spokesperson.

The company is focusing on recycling and reclamation at its Arizona site with roughly 65 percent of the water at the first fab plant coming from its in-house recycling systems at startup. The recycled water will be used in air scrubbers and cooling tower systems.

On the reclamation side, TSMC is working toward 90 percent water reclamation by building an advanced water treatment facility to achieve ‘near zero liquid discharge.’ “This means the fabs will be capable of reusing nearly every drop of water back into the facility,” said the spokesperson.

The company says it is always looking for ways to be more efficient about its water usage, which includes wastewater and byproduct treatment. The spokesperson noted that TSMC has invested considerable effort into building a comprehensive wastewater treatment system, a water reclamation system, and a waste material recycling system to reduce water consumption, decrease wastewater discharge and increase overall water efficiency. for free site information, visit us online at www.areadevelopment.com

8/22/24 8:44 AM

Furthermore, as part of its effort to reduce total water usage, TSMC’s discharged water is graded by purity, said the spokesperson with the cleanest being reused in the manufacturing process. The second grade will be used in other ways such as cooling-tower water.

And finally, wastewater that cannot be recycled will be discharged to treatment facilities for final wastewater treatment. The spokesperson also noted that all tap water used at TSMC is completely reclaimed every day through layers of recycling, and that each drop of water is used an average of 3.5 times.

Meanwhile, Intel has a goal to achieve net positive water by 2030. Net positive is defined as water returned through water management practices plus water restored to local watersheds for more than 100% of its freshwater consumption.

To meet this goal, the chipmaker is taking a threepronged approach: reducing its water footprint through innovative conservation projects, treating water to reuse within its operations, and working with local communities to restore water to watersheds.

In Arizona, Intel has created 21 water restoration projects that are already achieving net positive water. The chipmaker has also restored 1.7 billion gallons of water and treated more than 14.5 million gallons of water per day at its 12-acre on-site water reclamation facility and the Ocotillo Brine Reduction Facility, a partnership with the city of Chandler.

The Arizona Department of Water Resources has already been investing in water conservation and reuse. In fact, Arizona has already stored nearly 3 trillion gallons of water in underground aquifers should it face a water crunch.

That’s enough to supply the city of Phoenix for 30 years.

Phoenix, where TSMC is building its plants and not too far from Intel’s Chandler location, is also located near five water sources, including the Colorado River, Verde River, and Salt River. The Colorado River, which starts in Colorado and runs 1,400 miles to the Gulf of California, supplies the state with roughly 36 percent of its water. It should be noted that the Colorado River is also one of the most closely managed and regulated, as well as one of the most water stressed river basins in the world, according to the Water Resources Institute.

However, these are widely known issues and, much like your stock portfolio, Arizona’s state agencies have taken a diversified approach to water management. In addition to the Colorado River, Arizonians get water supply from groundwater (41 percent), in-state rivers (18 percent), and reclamation (5 percent).

Earlier this year, the Phoenix City Council announced plans to reopen and expand the Cave Creek Water Reclamation Plant, which was shuttered in 2009 due to an economic slowdown. The plant, which is expected to be operational by the end of 2026, could eventually produce 6.7 million gallons of potable water a day—enough to supply 25,000 households a year.

“Phoenix takes seriously the need to secure our water future and continues to bring new solutions to the table to do so,” said Phoenix Mayor Kate Gallego.

Ohio is another state attracting attention from chipmakers. Intel is investing more than $28 billion to build two new fab plants at a site just outside of Columbus that will produce advanced chips. The Ohio mega site, known as Ohio One, is in the city of New Albany and will span 1,000 acres—enough to accommodate eight plants.

So, where will the water for these new fabs come from? Intel says New Albany will supply the water, which originates from the Hoover Reservoir along Big Walnut Creek. Intel will treat the water onsite at its own water system that will have the capacity to process millions of gallons of water daily and create UPW that will be used to process the wafers as part of the chipmaking process.

Intel plans to take that water, after it’s been used in the manufacturing process and treat it for reuse in multiple ways at its mega site before treating it again to meet approved water quality standards and discharged into the sanitary sewer system, where it will be treated at the Columbus city wastewater treatment plant.

Intel has firmly stated that there will not be any direct wastewater discharges from its manufacturing facilities. The only permissible discharge will be stormwater and even that will be diverted first into retention basins that are designed to manage runoff by storing stormwater and releasing it on a gradual basis to prevent flooding and erosion.

The chipmaker is also investing in a water restoration project near Dillon Lake, located in the Licking River watershed near the chipmaker’s Ohio One campus.

The project will convert roughly 90 acres of cropland into a wetland and floodplain treatment plain that will reconnect the lake to the Licking River, reduce sediment and nutrient loading to Dillon Lake. Ultimately, Intel’s

A TSMC fab.

Courtesy TSMC.

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8/22/24 8:44 AM

Water Availability

that’s the amount of ultrapure water (UPW) used throughout Taiwan Semiconductor Manufacturing Company’s global operations in 2022, marking a 21 percent increase from the previous year.

share of this project is expected to restore about 27 million gallons of water annually.

“More than 10 years ago, we began to explore how we could better understand and reduce our water footprint.

Five years ago, we set a public goal to restore 100 percent of our consumption and became the first tech company to set a companywide water restoration goal,” said Todd Brady, Intel chief sustainability officer and vice president of Global Public Affairs, in a statement.

According to its most recent Corporate Responsibility Report, Intel said it conserved approximately 10.2 billion gallons of water last year in all of its operations and through community collaborations, as well as enabling the restoration of 3.1 billion gallons of water through watershed restoration projects. The chipmaker said it maintained net positive water in the United States and India in 2023 and reached net positive water in Costa Rica and Mexico.

Meanwhile, Samsung, which was awarded $6.4 billion under the CHIPS Act, has plans to build leading edge logic, R&D and advanced packaging fabs in Taylor, Texas, as well as expand its current-generation and maturenode facility in Austin, where Samsung Semiconductor has been operating two fab plants since 1996. With the additional funding, Samsung plans to invest more than $40 billion in the region.

Samsung Semiconductor Chief Executive Kye Hyun Kyung said in a statement that the chipmaker is committed to implementing sustainable water resource management technologies, pledging to boost water recycling rates and purifying discharged water.

“Our water strategy is focused on conserving water in our operations, collaborating with our community and creating programs to proactively prevent pollution and expertly manage wastewater discharge,” said Michele Glaze, Director of Communications, Samsung Austin Semiconductor, adding that the new fab being built in Taylor will have a minimal impact on the environment.

“The primary water for Taylor will be groundwater that should not tax the existing surface water sources that municipalities use.”

Glaze said that the city of Taylor will supply the domestic water, which is used for daily personal use such as drinking, food prep and flushing toilets, while private utility firm Epcor will supply the industrial water, which will be used for washing, cooling, processing, and fabricating. In other words, Epcor will be supplying most of the water needed for processing Samsung’s wafers.

It’s not clear how much water Epcor will be supplying but it’s been widely reported that it will come via pipeline from the Carrizo-Wilcox Aquifer in Milam County. The aquifer is the third most important groundwater resource in Texas, according to a report from Texas A&M AgriLife, which also noted that the aquifer’s water table has dropped more than 150 feet over the past several decades as recharge rates appear to have slowed, possibly due to changes in land use that may have created unfavorable conditions.

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“The target is to reclaim or reuse 75 percent of the process water within the fabrication facility, with the balance purified and returned to the environment to help sustain the natural water cycle and support the local ecosystem,” Epcor said in a statement.

What about climate change? That’s a wild card that semiconductor manufacturers and the regions in which they are growing are already contending with and will continue to do so well into the future.

“Climate change is testing chipmakers,” noted the S&P analysts, adding that it is already “raising the rate of extreme weather, the frequency of drought, and the volatility of precipitation, limiting chipmakers’ ability to manage production stability.”

As semiconductor processing technology advances, there will be greater demand for water, and particularly UPW. It brings us back to the central question around where will the water come from?

“Water is a critical input to the chipmaking industry.

Yet continued access to the resource may increasingly become challenging if droughts and water shortages are more frequent” wrote the S&P analysts.

The Colorado River is a notable example of the unpredictability of the effects of climate change. While the river basin is among the most water stressed in the world, it’s future may not be as dire as some may have thought.

The river supports the water needs of seven states— Arizona, California, Colorado, Nevada, New Mexico, Utah, and Wyoming—and Mexico. The Colorado is also among the most tightly regulated and managed, with a system of dams, reservoirs, and pumps in the lower basin designed to capture and store and supply water.

However, warming temperatures created multidecade drought conditions and raised concerns about more reductions in water flow, according to researchers at the Pacific Institute, a global water think tank.

“The combination of a crippling drought that began 24 years ago, the historic over-allocation of the river’s declining runoff, and climate change have exacerbated a structural deficit—where more water leaves the system than enters it,” wrote Pacific Institute researchers Dr. Christine Curtis, Cora Snyder, and Michael Cohen in a report entitled Pathways and Barriers to Corporate Water Stewardship in the Colorado River Basin.

As state agencies, policymakers and corporations continue to work on water mitigation plans, researchers at the Cooperative Institute for Research in Environmental Sciences (CIRES) at the University of Colorado Boulder suggest there may be less of an issue than previously thought when it comes to precipitation, which feeds into the river flow.

Using various climate modeling and working alongside analysts at other institutions, the CIRES researchers, who published their findings in the May 1, 2024, issue of the Journal of Climate, noted that “precipitation falling in the river’s headwaters region for free site information, visit us online at www.areadevelopment.com

8/22/24 8:44 AM

is likely to be more abundant than during the prior two decades.”

According to their research, which included analyzing data back as far as 1895, precipitation in the headwater region, which provides 85 percent of the water that flows through the Colorado River, should remain high enough to help offset the negative impact of rising temperatures due to climate change.

It’s not just Mother Nature who has a role to play in mitigating water stress.

“Despite the brief reprieve provided by last winter’s exceptional snowpack, we still need all hands on deck, from everyone who depends on Colorado River water, to lean in and help get the system into balance,” noted Curtis, Snyder, and Cohen.

Semiconductor manufacturers are being proactive to ensure they are helping and not hindering the environment in which they operate.

“We found that corporations are pursuing multiple pathways to address water stress, including funding onthe-ground water projects, improving water management in their owned and operated facilities, using their brand to raise awareness about water challenges, and developing innovative products and services,” said Curtis, Snyder, and Cohen. The Pacific Institute researchers held 20 interviews with corporate and non-corporate stakeholders as part of their research.

TSMC, for example, is no stranger to nature’s twists and turns. In 2021, just as the U.S. federal government declared a shortage at the Colorado River for the first time ever, due to drought conditions, Taiwan experienced its worst drought in half a century. TSMC managed to keep its Taiwan operations running without disruption, thanks to having a detailed response plan in place designed to handle water shortages at different stages.

“Increasing TSMC’s resilience against natural events—such as drought—is a regular focus,” said the company spokesperson, noting that TSMC was the first semiconductor manufacturer to receive the highest

certification, known as the Platinum certification, from the Alliance for Water Stewardship (AWS) for its commitment to and implementation of sustainable water management.

AWS, a global membership organization comprising businesses, nonprofits, and the public sector, promotes “the use of water that is socially equitable, environmentally sustainable and economically beneficial.” Achieving an AWS standard signals a company’s commitment to sustainable water management.

Intel was the second to earn Platinum certification from AWS for its Ocotillo, Arizona Campus in Chandler.

“With our proactive efforts, we seek to mitigate climate and water impacts,” Intel stated in its Corporate Responsibility report.

Those efforts include nine projects along the Colorado River, four along the Verde River basin and seven others that feed into Arizona. In all, these projects are expected to restore nearly 2.2 billion gallons of water per year to the state, once fully implemented.

Even with all this planning, the relationship between semiconductor manufacturers and water supply remains a fragile one. Apart from Intel’s Ohio facility, the remaining six planned across the United States are situated in watersheds classified as at high- or extremely high risk of water stress, according to an analysis by Josh Lepawsky, a geography professor at Memorial University of Newfoundland and Labrador.

On the bright side, companies like Intel and TSMC “are making impressive progress in water use reduction techniques,” writes Lepawksy. Still, that may not be enough to combat the effects of climate change.

“No matter how dramatic those ductions are, they cannot create a situation in which the water needed for semiconductor manufacturing is simultaneously accessible to other water users,” Lepawsky notes, adding that without a steady, and stable, supply of large amounts of water, there will be no semiconductors and without semiconductors there will be no electronics. Stay tuned.

LEFT: A TSMC worker handles microchip wafers.

Courtesy TSMC. RIGHT: A TSMC worker looks through a microscope.

Courtesy TSMC.

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8/22/24 8:45 AM

TopforStates

Doing Business in 2024

A Continued Legacy of Excellence

By Andy Greiner Editor, Area Development

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

8/21/24 4:07 PM

Certain states just have the right ingredients for attracting and nurturing business growth. The 2024 Top States for Doing Business rankings are in, and guess what? The Southern states are shining bright once again.

The Top States for Doing Business know a thing or two about creating an attractive business environment.

The top states closely manage their taxes and incentive programs, keep their labor force fresh, trained and accessible and maintain infrastructure like energy and water. They’re also responsive to business needs and to changes in climate.

Area Development’s Top States for Doing Business results are derived from a detailed survey

of expert consultants, and shed light on what makes a state a great place for businesses to thrive. We surveyed smart individuals across a range of 14 key questions, including overall cost of business, to tax incentives, availability of energy and water, climate resilience, workforce and site readiness.

Join us as we celebrate the states that are leading the way and analyze why they are making such a big difference in the business world.

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Top States for Doing Business 2024 For the eleventh consecutive year, Georgia claims the top spot, a testament to its robust pro-business environment. The Peach State›s consistent performance across various categories makes it a perennial favorite for businesses looking to expand or relocate.

Georgia›s ability to sustain its leadership position speaks volumes about its strategic investments in 1. infrastructure, education, Georgia and policy frameworks that 2.

South Carolina foster business growth and economic resilience.

3.

A key factor in Tennessee Georgia’s sustained success 4. is its nationally acclaimed North Carolina workforce development 5. program, Georgia Quick Indiana Start. Offered through the Technical College 6.

System of Georgia, Ohio Quick Start provides 7. customized training Texas for new and expanding 8. businesses, particularly Alabama in manufacturing, 9. biotechnology, and Virginia information technology.

10.

This program has been Michigan pivotal in attracting companies that require tech11.

Louisiana savvy workers with specific skills, bolstering the state’s 12. competitive labor market​.

Arkansas Georgia’s logistics and 13. infrastructure capabilities are Kentucky another major contributor 14. to its top ranking. The state Arizona is home to the world’s

Top States for Doing Business 2024

15.

Mississippi 34 AREA DEVELOPMENT

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busiest airport, Hartsfield-Jackson Atlanta International Airport, and the fastestgrowing container port in the nation, the Port of Savannah. These assets, combined with a robust road and rail network, enable efficient movement of people and goods across the state and globally. This strategic advantage supports a wide range of industries and enhances Georgia’s appeal as a prime business location​.

Additionally, Georgia’s favorable cost of doing business, characterized by competitive tax rates and incentives, makes it an attractive destination for companies. The state’s business-friendly policies, coupled with its commitment to OVERALL COST maintaining a low OF DOING operational cost BUSINESS environment, create an 1. ideal climate for business Indiana growth and investment​.

2.

Overall Cost of Doing Business

Tennessee

The overall cost of doing business is a critical factor for companies when choosing a location. States that offer a favorable cost environment, including low taxes, affordable labor, and competitive utility rates, are highly attractive to businesses.

Tennessee ranks first in the overall cost of doing business, thanks to its low tax burden, right-towork status, and reasonable utility costs. The state’s fiscal responsibility

Alabama

3.

4.

Georgia 5.

North Carolina 6.

South Carolina 7.

Texas 8.

Ohio 8.

Arkansas 10.

Mississippi

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8/21/24 4:08 PM

SMART GROWTH. GREATER HEIGHTS. ENDLESS OPPORTUNITY.

Being recognized as the Top State for Business for 11 years is no accident.

Learn why Georgia’s investments in infrastructure, workforce training, and renewable energy, and much more are just the start of what “partnership” means here.

Scan the QR code to learn how we can help your business.

Hyundai Motor Group Metaplant America’s (HMGMA) new manufacturing plant in Georgia.

Top States for Doing Business 2024 and business-friendly policies create an environment where companies can thrive with lower operational expenses. Tennessee’s commitment to maintaining a low cost ACCESS TO of doing business makes QUALIFIED it an attractive destinaLABOR tion for a wide range of industries. Tennessee has 1. made significant strides North Carolina in enhancing its business 2. environment through Texas recent policy changes.

3.

The Tennessee Works Georgia Tax Act, effective July 1, 4.

2024, includes several tax Indiana reforms aimed at reduc5. ing the tax burden on South Carolina businesses. Key changes 5. include transitioning Ohio to a single sales factor apportionment method, 7. which benefits busiTennessee nesses with significant 8. out-of-state sales, and Arizona the introduction of a 9. $50,000 standard excise

New York 10.

Alabama

Today, site-seeking companies want to have the greatest inventory of real estate, workforce, infrastructure and incentives during their searches. These are demands that Texas delivers well on given its massive size, diversity and its links to the global marketplace via DFW, The Port of Houston, its new stock exchange (TXSE) coming to Dallas and its links to the space industry via NASA operations in Houston and Elon Musk’s SpaceX in Cameron County.

tax deduction​.

Additionally, Tennessee has expanded its property tax exemptions and increased the carryforward period for tax credits, further reducing the cost of doing business in the state. These changes, combined with the state’s commitment to maintaining low utility costs and a favorable regulatory environment, reinforce Tennessee’s position as a top state for business.

Access to Qualified Labor Attracting and retaining skilled labor is a cornerstone of any state’s economic success.

In 2024, North Carolina leads the pack in this critical category, offering a rich talent pool and exceptional educational institutions. The state’s commitment to workforce development is exemplified by its numerous educational initiatives and a strong network of universities and community colleges.

Georgia, Texas, and Indiana also rank highly in this category, benefiting from strong educational systems and attractive living conditions that draw talented individuals. Georgia’s workforce initiatives,

Texas’ rail and highway linkages to Mexico are also creating new, near-shoring logistics opportunities, especially along the SH 130 Corridor, a national model for “intelligent infrastructure” which links Austin and San Antonio. The Corridor, home to trophy employers like Tesla, Samsung, Toyota, Dell and others, is monitored by drones and equipped with high-speed broadband to minimize accidents and maximize traffic flow and to accommodate

autonomous and hydrogen and EV powered vehicles.

Texas’ tech sector is distinguished by two new federal tech hub designations: The Texoma Semiconductor Hub lead by SMU and the Gulf Coast Hydrogen Hub lead by The University of Houston. UT Austin houses one of the nation’s top-ranked quantum computing programs and Texas A&M RELLIS and the Cyber Command Center at Joint Base San Antonio are both homes to leading cybersecurity centers.

John Boyd, Jr., Principal, The Boyd Company, Inc. 36 AREA DEVELOPMENT

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

8/21/24 4:09 PM

Top Talent.

Top Companies.

Arizona tops the list.

In Arizona, you’ll find the perfect balance of business opportunity and high-quality lifestyle that makes it a top state to live and work. Businesses benefit from pro-innovation policies and business stability. Residents enjoy a reasonable cost of living compared to other major metros and beautiful scenery, all while taxes remain low for everyone. With a highly skilled talent pool and a commitment to future-forward industries like semiconductors, electric and automated vehicles, and battery manufacturing, we’re maximizing our potential for generations to come.

azcommerce.com

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PREMIER EDUCATION AND TRAINING FILLS A TALENTED WORKFORCE PIPELINE THAT’S READY TO MEET INDUSTRY DEMANDS.

L O G I C L E A D S T O NORTH CAROLINA

LET’S DO BUSINESS

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Top States for Doing Business 2024 such as the Georgia Quick Start program, provide businesses with access to a welleducated and skilled labor pool, ready to meet the demands of today’s competitive market. Texas, with its vast educational system and workforce development programs, AVAILABILITY ensures that businesses can OF SITES find the talent they need.

1.

South Carolina 2.

Availability of Sites

Finding the right site for a new project can be a 2. daunting task, but South Tennessee Carolina makes it easier 4. with its well-established North Carolina LocateSC program. This 4. initiative ensures that Indiana businesses can find ready4. to-develop sites quickly, Ohio with all the necessary due diligence completed in 7. advance. South Carolina’s Georgia strategic investments in 8. site readiness have paid off, Alabama making it a top destina8. tion for businesses looking Virginia to expand.

8.

Tennessee and Texas Illinois follow closely in this category, with comprehensive site-readiness programs that reduce the time and cost associated with new projects. Tennessee’s Certified Sites program offers a roster of pre-vetted sites, while Texas’s extensive land resources and robust infrastructure make it an ideal location for businesses in various industries.

Texas

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Business Incentives Programs Business incentives play a crucial role in reducing startup and operational costs, and Georgia tops this category with a range of attractive incentives. The state offers tax credits for job creation, research and development, and investment in economically distressed areas. Additionally, Georgia provides sales tax exemptions for manufacturers and other businesses, further enhancing its appeal.

South Carolina, which ties with Georgia for the top spot, offers perforBUSINESS mance-based tax incentives INCENTIVES that reward companies for PROGRAMS job creation and invest1. ment. Tennessee follows South Carolina closely, providing a variety 1. of grants and tax credits to Georgia support business growth 3. and development.

Indiana

Climate Risk and Resilience

3.

Ohio

5.

Managing climate risks and Alabama ensuring resilience is becoming increasingly impor6. tant for businesses. Indiana Tennessee leads this category, thanks 7. to its proactive measures in North Carolina mitigating climate risks and 8. ensuring business contiArkansas nuity. Indiana has made 9. significant strides in climate Virginia resilience through its Resilience Cohort program, 9.

Kentucky which helps local governments assess and address their climate risks. The program, facilitated by Indiana University’s Environmental Resilience Institute (ERI), for free site information, visit us online at www.areadevelopment.com

8/21/24 4:09 PM

Top States for Doing Business 2024 connects local governments to experts and resources, guiding them through climate vulnerability assessments and resilience planning. This initiative has enabled Indiana to enCLIMATE RISK hance its infrastructure to AND cope with extreme weather RESILIENCE events such as flooding and 1. heatwaves, making it a reliIndiana able choice for businesses 2. concerned about climate Ohio resilience​ 3.

In 2024, Indiana Michigan released its first comprehensive climate action 4. plan, which includes Wisconsin measures to expand re4. newable energy, improve Colorado energy efficiency in build6. ings, and adopt electric Tennessee vehicles. The plan aims 6. to make the state more North Carolina sustainable and resil6. ient, although advocates Virginia believe there is potential for even more ambitious 6. targets​. Michigan scores Kentucky highly in climate resil6. ience due to its abundant Arizona freshwater resources and proactive water management policies. The state has focused on ensuring long-term water availability for businesses, which is crucial as water scarcity becomes a more pressing issue globally. Michigan’s commitment to sustainable water management includes significant investments in water infrastructure and policies aimed at protecting its vast freshwater resources from pollution and overuse.

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Cooperative & Responsive State/Local Government A cooperative and responsive government can make a significant difference in the ease of doing business. South Carolina leads in this category, known for its business-friendly policies and efficient governmental support for business initiatives. The state’s Coordinating Council for Economic Development works to streamline processes and provide support to businesses.

Tennessee and Georgia follow closely, reflecting their commitment to fostering a supportive business environment. Tennessee’s Economic and Community Development team COOPERATIVE and Georgia’s Department & RESPONSIVE of Economic Development STATE / LOCAL provide valuable assistance GOVERNMENT to businesses, helping them 1. navigate regulatory proSouth Carolina cesses and access resources.

2.

Corporate Tax Structure

Tennessee

A favorable corporate tax structure can significantly impact a state’s attractiveness to businesses. Texas excels in this category, thanks to its absence of state income tax and competitive corporate tax rates. The state’s businessfriendly tax environment makes it an attractive destination for companies of all sizes. North Carolina and Tennessee also offer competitive tax structures that enhance their appeal. North Carolina’s low

Georgia

3.

4.

Indiana 5.

Ohio 5.

North Carolina 7.

Kentucky 8.

Michigan 8.

Virginia 8.

Arizona

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Top States for Doing Business 2024 corporate tax rate and tax incentives for job creation and investment make it an attractive destination for businesses. Tennessee’s competitive tax structure also supports business growth, with no state CORPORATE income tax on wages and TAX salaries and low corporate STRUCTURE tax rates, as mentioned in 1. the Overall Cost of Doing Texas Business analysis. The state 2. offers various tax incentives Tennessee to encourage business in2. vestment, including credits North Carolina for job creation and R&D 4. activities.

Florida 5.

Nevada 6.

Favorable Property Tax Environment

A favorable property tax environment can signifi6. cantly influence a state’s South Dakota attractiveness to busi8. nesses. States that offer Indiana lower property taxes and 8. beneficial policies can Wyoming provide substantial savings for companies, making 10.

Missouri them more competitive and financially viable.

Alabama stands out in this category, offering some of the most favorable property tax rates in the country.

Recently, Alabama implemented a significant policy change with the passage of House Bill 73 (HB73), which caps annual property tax assessment increases at 7% after reappraisals. This legislative move, signed into law by Governor Kay Ivey, aims to provide greater predictability and stability in property tax expenses for busi-

Georgia

44 AREA DEVELOPMENT

Top States.indd 44

nesses. The cap helps protect businesses from sudden spikes in property taxes, making long-term planning more feasible and secure​.

Tennessee also excels in providing a favorable property tax environment. The state’s low property tax rates complement its already attractive tax structure, which includes no state income tax on wages and salaries.

Tennessee’s property tax incentives, such as abatements for new investments and redevelopment projects, further enhance its appeal.

These incentives help reduce the initial costs of setting up operations and encourage longterm investments in the state. The state’s commitment to maintaining these favorable conditions FAVORABLE continues to attract a diverse PROPERTY TAX range of businesses.

ENVIRONMENT

Favorable Regulatory Environment South Carolina leads the way with a regulatory environment that is both business-friendly and efficient, significantly contributing to its top ranking. The state has implemented streamlined processes designed to minimize bureaucratic hurdles and expedite business operations One standout initiative is the “Rapid Response” program, which prioritizes permit approvals for highimpact projects, ensuring that businesses can get up and running quickly. Additionally, South Carolina

1.

Alabama 2.

Tennessee 2.

North Carolina 4.

Ohio 5.

Georgia 5.

South Carolina 5.

Indiana 8.

Nevada 9.

Louisiana 9.

Arizona

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8/21/24 4:10 PM

GREATER PHOENIX A game changer for business growth and development

Companies that relocate here are scoring big wins with reliable power, diverse water resources and a robust dark fiber network. Add SRP to your lineup and reap the rewards of partnering with a true team player.

Learn more at PowerToGrowPhx.com.

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8/15/24 4:15 PM

Heats Up in Virginia Virginia Talent Accelerator Program

Serves Up Workforce Training for Tyson Foods

A $93 million investment in workforce training through the Virginia Talent Accelerator Program and Danville Community College sealed the deal for Tyson Foods’ new plant, driving economic growth and job creation in Southern Virginia.

W

hen Tyson Foods assessed locations to build the industry’s most advanced chicken nugget production plant, company leadership prioritized finding a community that had the workforce infrastructure to support the facility. They found that and more in Southern Virginia. Thanks to a $93 million investment featuring a workforce training partnership with Danville Community College (DCC), the Danville-Pittsylvania County community stood out among the locations under consideration.

The customized support offered by the Virginia Talent Accelerator Program helped seal the deal for Danville. Tyson could not only leverage DCC’s robust mechatronics training infrastructure, but also the Talent Accelerator’s comprehensive recruiting and training support. That service is a major reason why Area Development has ranked the Virginia Talent Accelerator Program as the No. 2 State Workforce Development program in the country for the last three years.

Recognizing the need to scale up the supply of mechatronics talent — among the 400 new hires, Tyson would require more than 60 maintenance technicians at full production — the Talent Accelerator team saw an opportunity to train area residents at DCC for Tyson’s higher-paying maintenance roles while the plant was still being built. The last piece of the puzzle: spreading the news about this unique opportunity.

The Talent Accelerator designed a website and promotional campaign to get the word out — not only about the opportunity to earn more as a

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maintenance technician, but also to give everyone interested in any Tyson job, from production to professional, a means to register their interest.

But that was just the beginning of the specialized recruiting efforts the Talent Accelerator team organized for Tyson. The team designed and deployed everything from Google ads to radio ads as part of a hyper-focused recruiting campaign to increase the talent pool shortly before hiring began.

The Talent Accelerator’s instructional design and video teams created a comprehensive series of eLearning modules fully customized to Tyson’s unique processes, equipment, and procedures, along with leadership training for team leaders, supervisors, and managers.

“There were so many resources offered that just really met all of our needs,” said Nancy Frank, the plant’s manager.

In addition to Tyson, companies as diverse as GSK (now Haleon), Rocket Lab, and the LEGO Group have benefited from the Talent Accelerator’s world-class training and recruitment solutions. DCC and the Virginia Community College System are key partners — every manufacturing project that comes through the program is structured as a partnership with the nearest Virginia community college In all, the program has helped secure nearly 13,000 jobs since commencing operations in 2020. Through initiatives like the Virginia Talent Accelerator Program, VEDP and Virginia provide companies with assistance throughout the life cycle of a site selection project to help deliver on the full potential of a new or expanded facility.

This article was paid for and written by the Virginia Economic Development Partnership and approved by Area Development.

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

8/22/24 11:32 AM

AMERICA’S TOP STATE FOR BUSINESS

Top States for Doing Business 2024 offers a comprehensive online portal that simplifies regulatory compliance and application processes.

These efforts not only reduce the time and costs FAVORABLE associated with regulatory REGULATORY adherence but also create ENVIRONMENT a welcoming atmosphere 1. for business growth and South Carolina investment.

2.

Georgia 3.

Alabama 3.

Texas 5.

Tennessee 6.

Indiana 6.

Mississippi 8.

Louisiana 8.

Arkansas 10.

North Carolina

Energy Availability & Costs Reliable and affordable energy is a critical factor for many businesses, and Tennessee and Georgia lead the way in this category. Tennessee’s abundant hydropower resources contribute to lower energy costs, making it an attractive destination for energy-intensive industries. Georgia Power’s diverse energy mix and competitive rates provide

Whether you are a site selector or a corporate decision maker, several key characteristics come to mind when you think of Area Development’s 2024 Top States for Doing Business.

Things such as the predictability of the regulatory and permitting process, the availability of developable real estate sites, the presence of skilled talent, the stability of the tax climate, the intentional investment in quality of place and infrastructure, and last, but not least, the cooperation

businesses with reliable and cost-effective energy solutions.

South Carolina, North Carolina, and Louisiana also rank highly, benefiting from competitive industrial electricity rates and robust energy infrastructure.

Logistics & Infrastructure Efficient logistics and robust infrastructure are essential for businesses involved in manufacturing and distribution. Texas maintains its top position in this category, thanks to its extensive transportation networks, including road, rail, and port infrastructure. The state’s strategic location and robust logistics capabilities support a wide range of industries. Texas has committed significant investments to its infrastructure, including a $142 billion plan for new roadway projects over the next decade, enhancing its already extensive network of public roads, state highways, and freight railways.

The Port of Houston, a major gateway for containerized cargo, and the Port of Corpus Christi, a significant hub for energy-related exports, are critical components of Texas’ logistics infrastructure. Additionally, Texas boasts the largest inland port

and responsiveness of economic development officials.

No state is perfect, and every place has key things that they can be working on to improve their location.

The key takeaway from the states appearing at or near the top of the list is that even though they all have flaws, they are leveraging their assets through storytelling, investing in themselves, proactively addressing their weaknesses, taking both a short and long-term view of their priorities and

have talented economic development leaders focused on growing the economies of their state.

In summary, these locations have a demonstrated track record of success, positioned themselves well for the future and are laser focused on accomplishing their economic development goals. Elected officials and economic development professionals cannot afford to be complacent, must continue to innovate and not try to be all things to all people.

Larry Gigerich Executive Managing Director, Ginovus 48 AREA DEVELOPMENT

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

8/21/24 4:11 PM

“ Arkansas has a low cost of living, great people and great talent to build a business.”

Carter Malloy, CEO – AcreTrader, Fayetteville

To learn more about how inspiring businesses are leading the way to a strong economy, visit ArkansasEDC.com/ whyarkansas

Arkansas Economic Development Commission

Top States for Doing Business 2024 along the U.S.-Mexico border, the Port of Laredo, which underscores its pivotal role in international trade​.

The state’s robust infraENERGY structure not only facilitates AVAILABILITY domestic distribution but & COSTS also positions Texas as a 1. central hub for global trade, Tennessee with access to key markets 2. in North America and Georgia beyond.

3.

Texas’ logistics indusSouth Carolina try is further bolstered by its vibrant third4. party logistics (3PL) North Carolina market, which offers 4. comprehensive services Louisiana including transportation, 6. warehousing, inventory Texas management, and value6. added services. The state’s Alabama emphasis on technological advancements in logistics, 6.

Iowa such as automation, data analytics, and supply chain 9. visibility tools, enhances Indiana operational efficiency and 9. reduces costs, making Washington Texas a leader in logistics and infrastructure.

Overall, Texas’ strategic investments in its transportation networks, combined with its central location and advanced logistics capabilities, make it a top choice for businesses seeking efficient and reliable logistics solutions. The state’s commitment to maintaining and expanding its infrastructure ensures that it remains a competitive and attractive destination for industries reliant on robust logistics networks.

Georgia and Ohio are also strong contenders, with strategic locations and

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well-developed transportation networks.

Georgia’s Port of Savannah and HartsfieldJackson Atlanta International Airport provide businesses with unparalleled access to domestic and international markets, while Ohio’s robust transportation network ensures seamless connectivity to major markets.

Workforce Training Programs Effective workforce training programs are crucial for ensuring that businesses have access to skilled labor, which can significantly impact their productivity and competitiveness. States that excel in this category have invested heavily in customized training programs that meet the specific needs of businesses and industries. Leading the charge LOGISTICS & in workforce training is INFRASTRUCTURE Georgia, thanks to its 1. highly acclaimed Georgia Texas Quick Start program. This 2. initiative offers free, cusGeorgia tomized training for new 3. and expanding businesses, Indiana tailoring programs to meet the specific needs of the 3.

Ohio companies. Quick Start has been a game-changer 5. for Georgia, helping over a South Carolina million employees de6. velop the skills required Tennessee for various industries, from 7. manufacturing to informaVirginia tion technology.

8.

Virginia follows closely North Carolina with its comprehensive workforce training initia8. tives, including the FastIllinois Forward program and the 10.

Virginia Talent Accelerator Missouri for free site information, visit us online at www.areadevelopment.com

8/21/24 4:12 PM

GEORGIA

ENERGY

CITIES Greater than

40%

of New Announcements & Expansions of Georgia Department of Economic Development’s projects are located in our Georgia Energy Cities.

The 8th most populous state in the country

#1 Workforce Training Program in the nation

80% of U.S. markets within a 2-hour flight

WE VALUE CONNECTIONS Electric Cities of Georgia (ECG) and the Gas Authority are collaborating as GA’s Energy Cities for economic development. Businesses seeking to locate in Georgia can quickly get access to available properties, community leaders, electric and gas resources, and more, all through one connection.

Discover the benefits of locating your business in Georgia. Visit www.LocationGeorgia.com today to learn more.

Top States for Doing Business 2024 Program. These programs provide shortterm training courses that align with the needs of high-demand industries, ensuring that businesses have access to a pipeline of qualified workers. Virginia’s commitment to workforce development makes it a top contender in this category.

Alabama’s AIDT (Alabama Industrial Development Training) program is another standout, offering extensive services ranging from recruitment and screening to customized training and leadership development.

AIDT’s focus on continuous improvement and innovation in training has made it a valuable asset for businesses in Alabama, helping to attract new investments and support existing industries.

Tennessee’s workforce training efforts are highlighted by its Drive to 55 initiative, which aims to equip 55% of Tennesseans with a college degree or certificate by 2025. The Tennessee Promise and Tennessee Reconnect programs provide tuition-free community and technical college education to high school graduates and adults, respectively.

These initiatives ensure a steady supply of skilled workers to meet the demands of businesses in the state.

Site Readiness Programs Site readiness programs are essential for reducing the time and cost associated with site selection and development. States that excel in this category offer pre-vetted sites

HANCOCK COUNTY The Fastest Growing County in Indiana

Located in Central Indiana, about 20 miles east of Indianapolis, Hancock County’s diverse local economy helped make it the fastest growing county in the state in 2023. And it’s easy to see why—with development-ready sites, a labor shed of over 2 million people within an hour drive, and thousands of new housing units planned.

Hancock County also offers over 10 million square feet of available industrial space, and businesses can reach over 114 million people within a day’s truck drive, as well as nearly 80% of the U.S. population within 24 hours.

To learn more about opportunities in Hancock County, visit hancockedc.com

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

8/21/24 4:12 PM

In an economy that is evolving more rapidly than ever, fundamentals continue to underpin the best locations for business.

Responsiveness

The willingness of public leaders and experts to eagerly undertake resultsoriented actions to advance private sector development opportunities is the lynchpin. Public leadership that embraces creativity and problem solving is the root of economic development success. This is where it all starts, and the states at the top of this year’s list epitomize the necessary mindset.

Real Estate

Locations avoiding complacency and working aggressively with the private sector to supply the sites and buildings demanded by leading industries continue to lead the pack. Additionally, the successful management of evolving urban cores is strongly connected to regional success. Urban cores will never be the same; communities that are successfully visioning and executing new strategies for urban economies ultimately boost not only their own neighborhoods but their entire region.

Infrastructure

Electricity and water are—finally— having their moment. While many of us have always recognized the critical role of these two essentials, their importance has finally hit the mainstream. As project demands for electricity and water are hitting all-time highs, the country is grappling with systemic constraints on both fronts. There is no silver bullet; however, states that are embracing and quickly deploying new technologies are enjoying the economic fruits of both the infrastructure development itself and the investment and jobs that will flock to it.

Jacob Everett, Founder of Corsa Strategies.

ALABAMA RANKED #8 BEST STATE FOR DOING BUSINESS Doing Business in Alabama: #1 Favorable Property Tax #3 Overall Cost of Doing Business #3 Workforce Training Programs #3 Favorable Regulatory Environment #5 Business Incentives Programs #6 Energy Availability & Costs #6 Site Readiness Programs #8 Availability of Sites

Learn more about doing business in Mobile, AL

PHOTO COURTESY OF AIRBUS

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Top States for Doing Business 2024

Workforce Training Programs 1.

Georgia 2.

Virginia 3.

Louisiana 3.

Alabama 5.

South Carolina 6.

North Carolina 7.

Tennessee 8.

Indiana 8.

Arizona 10.

Michigan

Utilities

that are ready for immediate development, making them highly attractive to businesses looking to expand or relocate.

Tennessee leads in site readiness with its comprehensive Certified Sites program. This initiative offers a range of pre-vetted sites across the state, from small parcels to large industrial megasites. The rigorous certification process ensures that these sites are ready for development, with all necessary due diligence completed. This reduces the time and cost for businesses, making Tennessee a top destination for new projects.

South Carolina’s LocateSC program is another top performer, offering a vast inventory of ready-todevelop sites. The program’s

Georgia Power deserves commendation for consistently communicating about their short-term and long-term power capabilities. Their proactive approach ensures transparency and reliability for consumers.

Meanwhile, the Tennessee Valley Authority (TVA) stands out by incentivizing projects through performance-based grants. This forwardthinking strategy encourages innovation and efficiency in the energy sector.

success is due to the state’s proactive approach in identifying and preparing sites for industrial use. The Palmetto Sites program further enhances the state’s attractiveness by providing detailed site assessments and ensuring that sites meet the stringent requirements of potential investors.

Ohio’s JobsOhio Site Inventory Program ( JOSIP) is a key player in site readiness, offering a wide range of cer tified sites that are ready for immediate development. The program’s focus on reducing development timelines and costs has made Ohio a preferred location for businesses looking to expand quickly.

The state’s strategic investments in site readiness have paid off, attracting numerous high-profile projects.

Kentucky’s Build-Ready program provides a streamlined path to development with pre-vetted sites that meet rigorous standards.

The program’s emphasis on infrastructure and site preparation ensures that businesses can hit the ground running. Kentucky’s proactive approach to site readiness has made it a competitive choice for businesses seeking

Workforce

Ivy Tech Community College in Indiana and Kirkwood Community College in Iowa exemplify effective workforce development programs.

These institutions prioritize curriculum flexibility and foster strong partnerships with local companies.

By equipping their students with skills aligned to industry needs, they contribute significantly to regional economic growth.

Trends

With persistently high office vacancy rates nationwide, a noteworthy trend emerges: the conversion of office buildings into industrial spaces. Particularly in proximity to airports, ports, and existing industrial zones, repurposing these properties optimizes their utility. It’s a smart move that aligns with market demands and maximizes property value. While not exclusive to any one state, Texas has locally incentivized several projects by offering grants to offset some conversion costs like debris removal.

Alex Baker Senior Manager, Location Analysis and Incentives at Maxis Advisors 54 AREA DEVELOPMENT

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

8/21/24 4:13 PM

A Top Utility.

A Winning Partnership.

At Georgia Power, our team is committed to the state we call home.

Over the past 10 years alone, we’ve supported our state partners in bringing over 207,000 jobs to Georgia.

Our team of economic development experts in recruitment, engineering, research and workforce development are here to provide you with the custom tools, resources, and data needed to make informed and impactful decisions.

Discover how our collaborative approach is generating opportunities and powering prosperity at SelectGeorgia.com.

SelectGeorgia.com ©2024 Georgia Power. All rights reserved.

SITE READINESS PROGRAMS 1.

Tennessee

efficient and cost-effective development options.

Water Availability

Access to reliable water resources is critical for many South Carolina industries, particularly 2. those in manufacturing, Ohio agriculture, and technolo4. gy sectors. Michigan ranks Georgia highly in this category, 5. owing to its abundant North Carolina freshwater resources and proactive water manage6. ment policies. The state’s Alabama “MI Clean Water Plan” 6. and recent investments in Michigan water infrastructure have 8. significantly bolstered its Indiana water availability. These 8. initiatives include upgradMississippi ing aging infrastructure, removing lead service 8.

Kentucky lines, and implementing advanced water treatment technologies. Michigan’s comprehensive approach ensures longterm water security for businesses, making it an attractive location for water-dependent industries.

Ohio also excels in water availability, with extensive freshwater resources from Lake Erie and the Ohio River. The state has invested in modernizing its water infrastructure and improving water management practices. Programs such as the Ohio BUILDS initiative focus on enhancing water quality and ensuring sustainable water supplies for industrial and commercial use. These efforts provide a reliable water source for businesses, reducing 2.

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risks associated with water scarcity.

Recognizing Excellence in Specific Categories While the overall rankings highlight the best states for doing business, it’s important to recognize the states that excel in specific categories. These states may not have topped the overall list but have demonstrated exceptional performance in areas critical to business success.

Minnesota excels in climate resilience and renewable energy production, Minnesota offers a stable and sustainable environment for businesses. The state’s proactive climate policies and investments in infrastructure make it an ideal location for companies WATER prioritizing sustainability.

AVAILABILITY Known for its abun1. dant water resources and Michigan proactive water manage2. ment policies, New York Wisconsin provides businesses with a reliable and sustainable 3. water supply. The state’s Ohio investments in water infra4. structure and its strategic Tennessee location along the Great 4.

Lakes ensure that busiNew York nesses have access to the 6. water they need for their Illinois operations.

7.

Illinois benefits from South Carolina its location along the Great Lakes and the Mississippi 7.

River, providing businesses Minnesota with ample water resources.

7.

The state’s comprehensive Louisiana water management poli7. cies ensure the sustainable Washington use of water, making it an for free site information, visit us online at www.areadevelopment.com

8/22/24 3:18 PM

Top States for Doing Business 2024 ideal location for water-intensive industries.

Illinois’s investments in water infrastructure, including treatment facilities and distribution networks, ensure that businesses have access to clean and reliable water.

The Badger State’s strategic focus on sustainability and climate resilience makes Wisconsin an attractive destination for businesses. The state’s robust renewable energy sector, supported by policies that encourage the use of clean energy, provides businesses with reliable and sustainable energy sources. Wisconsin’s investments in infrastructure to manage climate risks, such as flood control and stormwater management systems, enhance its appeal.

Demonstrating strong performance in climate resilience and innovation, Arizona has positioned itself as a hub for high-tech industries. The state’s focus on building a business-friendly environment through tax reforms and infrastructure investments has yielded positive results. Arizona’s proactive measures in managing climate risks and its investments in renewable energy make it a resilient and attractive location for businesses.

Methodology for 2024 Top States for Doing Business Our 2024 Top States for Doing Business rankings reflect the results of our recent survey asking leading consultants to industry to give us their top state picks in 14 categories that impact companies’ location and facility plans. The states in each category were ranked based on their number of mentions in the particular category, and total mentions in all 14 categories — weighted by the diversity of categories in which a state was mentioned — were calculated to rank the states overall.

The diverse strengths of these states highlight the importance of evaluating multiple factors when choosing a business location.

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8/22/24 3:18 PM

Top States for Doing Business 2024

Final Thoughts The diverse strengths of these states highlight the importance of evaluating multiple factors when choosing a business location.

While overall rankings provide a snapshot of the top states for doing business, focusing on specific categories can reveal additional opportunities that align with a company’s unique needs and priorities.

As businesses seek locations that offer stability, resources, and a supportive environment, the states highlighted in the 2024 Top States for Doing Business survey provide valuable insights. These states have demonstrated their ability to create optimal conditions for growth and innovation, ensuring that businesses can thrive in an ever-evolving economic landscape.

Whether you are a business leader planning your next expansion, an entrepreneur seeking the best location for your startup, or a policymaker aiming to enhance your state’s business climate, the insights from this year’s rankings offer a comprehensive guide to the best environments for doing business in 2024.

The Area Development Top States for Doing Business survey always factors in the most important topics for clients looking for a new manufacturing location or expanding current plants. It reflects how U.S. States sell themselves to potential new investments. For example comparison to former years water availability, power reliability and the share of renewable energy resources are becoming much more important for companies. Clients are much more cautious now about their ecological footprint.

Whether you are a business leader planning your next expansion, [or] an entrepreneur seeking the best location for your startup, ... the insights from this year’s rankings offer a comprehensive guide

Also topics such as quality of life, including the local school system, housing availability, cost of living, crime rate, fast-track permitting processes, shopping options, access to hospitals/doctors, airport connections, right to work laws all weigh into an analysis of a site location and if a State ranks high for being “business friendly”. For foreign clients CFIUS – Committee on Foreign Investment in the United States is getting more important. The last years that was not a topic at all, but nowadays many States

are requesting a review for specific FDI. Which will influence the regulatory environment ranking.

Attracting talent at all levels, State worker training programs and infrastructure/rail access are still major topics for all clients.

Incentives are getting less important as site availability is currently rare and limits the selection . But States can always score with new and innovative incentives, such as for example a 3-5 year tax exemption for expatriate workers.

Alexandra Segers, Dipl.-Ing., M.Sc. General Manager, Tochi Advisors LLC. 58 AREA DEVELOPMENT

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

8/21/24 4:14 PM

YOU’D BE SURPRISED HOW GREEN IT IS HERE. As a major energy center, Odessa, Texas, understands manufacturing. And we’re using that knowledge to accelerate renewable energy manufacturing. We offer just what the industry requires — an abundance of sun, wind and land — not to mention an abundance of possibilities for your business. ONLY ODESSA only-odessa.com

Scan to learn more

Food Processing

Cold Storage The Next Big Thing in Industrial Real Estate

Cold storage is emerging as a vital part of industrial real estate, driven by food safety, diversified supply chains, and the rise of online grocery shopping

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

I

f you’re in the food manufacturing business, you’ve probably been hearing a lot about cold storage over the last few years. It’s not just a trend. Cold storage is rapidly becoming a critical component of the industrial real estate landscape. The pandemic has only accelerated this shift, highlighting the essential role of temperaturecontrolled facilities in our supply chains.

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Market Trends and Statistics

Let’s kick things off with some numbers. In Q3 2023, we saw a whopping 6.5 million square feet of cold storage space under construction. That’s massive for a niche sector!

But here’s the kicker: even with all that development, cold storage still makes up only 1.7% of the entire industrial market. Translation? There’s a whole lot of room for growth. for free site information, visit us online at www.areadevelopment.com

8/20/24 3:40 PM

WE

live for FORWARD MOMENTUM POWERFUL VISION RELENTLESS INNOVATION DETERMINATION BREAKTHROUGH TECH SMARTER SOLUTIONS REVOLUTIONIZED INDUSTRIES GLOBAL IMPACT BETTER TOMORROWS

Discovering a new carbon-based battery material launched Dr. Carol Hirschmugl from the lab to entrepreneurship. From her founding of COnovate to her ultimate goal of revolutionizing the industry, we’ve been behind her all the way. Choose Wisconsin, and we’ll help transform your strategic visions into game-changing achievements. Let’s look forward together.

wedc.org

Food Processing

Drivers of Cold Storage Demand

So, what’s fueling this demand? First off, food safety has taken center stage. Companies need facilities closer to production to ensure their products remain fresh and safe. Then there’s the diversification of supply chains.

Remember the early days of the pandemic when grocery shelves were empty? Manufacturers are now hedging their bets, ensuring they have robust, diversified supply chains to prevent that kind of disruption again.

And let’s not forget the e-commerce boom. Online grocery shopping has exploded, and guess what? All that produce, dairy, and meat needs a place to chill before it hits your doorstep.

Typical Cold Storage Facility Characteristics square feet of cold storage space under construction in Q3 2023.

Now, let’s talk about what these facilities actually look like. Cold storage facilities typically range from 175,000 to 300,000 square feet. Some are highly automated, boasting state-of-the-art systems, while others stick to more traditional setups. It’s a mix and match, depending on the company’s needs.

Location is everything. These facilities need to be close to major transportation hubs—highways, railways, ports—you name it. And power? They’re not energy hogs like some might think, but they do require a consistent and affordable power supply. After all, keeping things cold 24/7 isn’t cheap.

“Cold storage is rapidly becoming a critical component of the industrial real estate landscape.”

Challenges in Cold Storage Development

Developing cold storage isn’t a walk in the park. The costs can be sky-high, especially with the specialized refrigeration and insulation systems needed. Zoning and planning regulations can also throw a wrench in the works. High-bay facilities, which maximize vertical space, often face height restrictions that can slow down or even halt development.

Take a project we had in the Southeast. Everything was lined up perfectly—location, logistics, demand—but the electric rate in the given location was significantly 62 AREA DEVELOPMENT

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higher than in other locations. It made the project financially unviable in that market. That’s a prime example of how crucial it is to secure a manageable power supply early in the process.

Success Stories and Notable Projects

But it’s not all doom and gloom. There are plenty of success stories out there. Agile Cold Storage made a $46 million investment in Pearl River, Louisiana, creating 100 new jobs. This wasn’t just a win for the company but also a huge boost for the local economy. Another great example is a 245,000-square-foot port-centric temperature-controlled facility in Suffolk, Virginia.

These projects highlight the importance of publicprivate partnerships and leveraging incentives. Local governments are starting to see the value in attracting cold storage investments and are offering attractive incentive packages to get these projects off the ground.

Future Outlook and Opportunities

Looking ahead, the future of cold storage in industrial real estate is bright. We’re starting to see growth in secondary markets as developers hunt for new opportunities. Innovations in cold storage technology are also on the horizon, promising more efficient insulation and refrigeration systems that could lower operating costs and make these facilities even more attractive investments.

Cold storage isn’t just a niche market; it’s a strategic investment that can enhance your supply chain’s efficiency and resilience.

Practical Advice for Executives

So, what should you do if you’re considering diving into the cold storage pool? Here are a few tips: Evaluate Potential Sites Carefully: Look for locations with easy access to major transportation routes and a reliable power supply.

Partner with Experienced Developers: Cold storage is a specialized field. Working with developers who have a track record in this area can save you a lot of headaches.

Leverage Public Incentives: Many local governments offer incentives for cold storage projects. Do your homework and see what’s available.

Integrate Cold Storage into Existing Supply Chains: For manufacturing entities, think about how these facilities can complement your current operations. The goal is to enhance efficiency, not create logistical nightmares.

Cold storage is quickly becoming a cornerstone of the industrial real estate market. The demand is there, the technology is advancing, and the opportunities for growth are abundant. It’s not just about keeping things cold; it’s about keeping your business on the cutting edge. for free site information, visit us online at www.areadevelopment.com

8/20/24 3:41 PM

Automotive

The Electrification of the Auto Industry and the Impact on Economic Developers

By Dennis Cuneo Former Senior Vice President, Toyota Motor North America. Owner DC Strategic Advisors.

T

he auto industry is transitioning from internal combustion engines to electrified powertrains, and this has profound implications for economic developers.

Globally, 14 million battery electric vehicles (EV’s) were sold last year. The International Energy Agency forecasts that number will increase to 65 million by 2035 under current government policies, accounting for half of all vehicle sales. A record 1.2 million EV’s were sold in the U.S. last year, and the combined sales of hybrid, plug-in hybrid and EV’s rose to 16.2% of the total market. Several automakers have announced plans to phase out of internal combustion engines over the next 2 decades, and governmental policy around the world is pushing automakers to decarbonize their fleets.

As a result, we have witnessed an unprecedented wave of new investment by the auto industry as it transitions to electrified vehicles. In the past 4 years, companies have announced $160 billion in EV-related investments and 130,000 direct EV-related jobs. New battery plants, which range in cost from $1 to $14 billion, make up the bulk of this new investment. While battery investment has been spread over a dozen States, much of it is taking place in the Southeastern States. This follows the trend of past 3 decades where non-unionized automakers have built many plants in right-to-work Southeastern States.

The Inflation Reduction Act, which provides significant tax incentives for battery production and EV sales, has accelerated EV-related investment over the past couple of years, but EV sales growth in the U.S. has recently slowed. Some automakers have pared back their EV-related investment, waiting for consumer demand to catch up. Others have stepped up their plans to produce EV’s.

Government policy, both in the U.S. and around the globe, will play a significant role in the pace of EV adoption.

This series of articles will focus on three major issues faced by automakers as they seek sites for new EV-related facilities.

1.

2.

3.

The increasing difficulty of securing sufficient electrical power for power-hungry battery cell plants.

The cost of labor and workforce skills necessary for the transition to an electrified auto industry.

Whether a resurgent UAW can make substantial inroads in the Southern States.

Visit AreaDevelopment.com for a special installment to this series written by former Ambassador John Ralkolta Jr., Chairman, Walbridge and former U.S. Ambassador to the United Arab Emirates that looks at the potential impact that a Republican and Democratic president would have on the auto industry.

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8/20/24 3:42 PM

Automotive

The Challenge of Securing Power generators and grid Sufficient operators are investing more capital than Electrical Power originally forecasted, the supply chain for Battery disrupting with spiking equipment prices and extended Cell Plants delivery times. Revised

By Greg Burkart Principal, Site Selection Services, Walbridge

A

key variable in finding a suitable site for an electric vehicle battery plant is the availability of electric power. A battery cell factory may require more than 200 megawatts of electricity, enough to power a small city. As noted in a recent Washington Post article, AI and the boom in clean tech manufacturing are pushing America’s power grid to the brink.

The rapid growth of electric demand is complicating the job of economic developers. What was once considered a nearly limitless commodity has become a scarce and valuable resource. According to a recent study from Grid Strategies, power generators and grid operators surprised the industry by forecasting short-term growth almost double the previous estimate from 2.5% to 4.7% within the next five years. A perfect storm is brewing as the United States faces growing energy demand from multiple industries at the same time, 64 AREA DEVELOPMENT

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forecasts show a significant increase in capital expenditures, causing delays and cancellations. while simultaneously hampering the creation and distribution of new electrons to the grid.

The overwhelming majority of this growth is driven by huge investments in data centers for machine learning, AI, manufacturing, and transportation sectors. Through 2028, hyperscale data centers and their co-location counterparts have announced new investments exceeding $150 billion. With these investments, data centers will grow from 2.5% of the US electric demand to 7.5% by 2030. Concurrently, the manufacturing sector, spurred by reshoring, supply chain derisking, and federal incentives, has announced over $500 billion of new projects since 2021, with energy-intensive semiconductors and battery cell plants making up much of that investment.

Meeting the short-term forecasts will be a challenge for the industry. While data centers and manufacturing facilities, such as battery cell plants, require 24 to 30 months to build, new power plants require 48+ months to site, permit, and construct. New transmission lines take even longer, requiring a decade or more to obtain regulatory approvals and acquire rights-of-way. The mismatch in construction times is exacerbated by the phase-out of fossil fuel-fired electric generation.

In the short term, the economic development profession will be impacted in profound ways, adding complexity and uncertainty to their project pipelines. for free site information, visit us online at www.areadevelopment.com

8/21/24 12:44 PM

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Automotive

Increasing Project Budgets and Timelines

Power generators and grid operators, as they invest more capital than originally forecasted, are disrupting the supply chain.

Equipment prices and delivery times are spiking. In September 2022, investor-owned electric utilities (IOUs) were planning to invest approximately $482 billion over the next three years.

Less than a year later, IOUs revised their forecasts, increasing capital expenditures to $502.9 billion through 2025. The revised forecasts cascaded through the supply chain, with prices for large transformers increasing 60% to 70% since 2020 and lead times ranging from 80 to 210 weeks. With budgets and timelines under pressure, delays and cancellations are increasing.

Emerging Bring-Your-Own-Energy (BYOE)

Residential, industrial, and commercial consumers are planning more BYOE projects. In its 2022 Annual Energy Outlook, USEIA predicted that onsite electricity generation will double, reaching

site selectors have expanded their RFIs, gathering reams of data relating to reliability, capacity, generation mix, rights-of-way, and availability of equipment and skilled trades. Risk assessments require gigabytes of data.

As an example, production labor is only one component of a labor analysis. Today, site selectors are spending as much time analyzing the availability, cost, and work stoppages associated with skilled trades required to install electrical equipment. According to the U.S. Bureau of Labor Statistics’ National Employment Matrix, construction employment has added 2.1 million jobs over the last decade (a CAGR of 3.2%) compared to 900,000 new manufacturing jobs. And the pressure on future construction employment continues.

According to BLS’s Job Openings and Labor Turnover Survey ( JOLTS), nearly 450,000 construction jobs were open in December 2023. Even if a project manager can purchase critical electrical equipment, a community must have sufficient trades to install the equipment in a reasonable time.

“Even if a project manager can purchase critical electrical equipment, a community must have sufficient trades to install the equipment in a reasonable time.” approximately 8% of the total US electrical generation by 2050.

BYOE, while holding out the promise of uninterrupted power and reducing dependency on an already-overburdened grid, adds complexity to a project and its planning. Companies must evaluate a myriad of additional factors such as energy demand, available fuel choices, energy storage, long-term fuel contracting (and its associated hedges), entitlements, regulatory requirements and permits, and integration with the grid for energy export. BYOE is not for beginners.

Expanding Due Diligence

To mitigate risks, site selectors have expanded their due diligence around energy. Historically, site selection professionals focused their attention primarily on availability and cost. In recent years, 66 AREA DEVELOPMENT

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With the shortage of labor and the superheating of the electric industry, economic developers need to prioritize getting their sites “power ready.” To win projects and keep projects on track, economic developers must coordinate plans with their utility partners that address the following questions with reliable data: 1) how much power is available; 2) what is the timeline for delivering that power; 3) how long will the power be available; 4) how do we prioritize our current sites and allocate our resources given the power and equipment constraints? In the short term, communities that catch up to the pace of industry’s unprecedented investment will thrive in the long term.

For a checklist of data points to have ready for an RFI and items to coordinate with community and utility stakeholders, you can download our guide. for free site information, visit us online at www.areadevelopment.com

8/21/24 12:45 PM

Automotive

Can the UAW Make Substantial Inroads in the Southern States?

S

outhern automotive states have become a hub for the auto industry’s latest investments, particularly in electric vehicles (EVs). Since 2018, over $110 billion in EVrelated investments have been announced, with about half of that investment going to Southern states, which are mostly right-to-work, with union-free workplaces. The lack of a strong union presence has been a strong recruiting tool for Southern economic developers.

The United Auto Workers (UAW ), once a dominant force in American labor, has faced a steep decline in membership, dropping from a peak of 1.5 million in 1979 to just 383,000 by 2022. Now, the union is eyeing the Southern automotive states for potential expansion. These states, with over 455,000 employed in the automotive industry and producing more than 4.7 million vehicles in 2019, represent a lucrative target.

However, the potential spread of the UAW

Southern states’ preference for right-to-work laws and their culture of self-reliance contribute to a deeprooted resistance to unionization.

Many workers do not share the UAW’s political agenda.

By Greg Canfield Managing Director of Economic Development at Burr & Forman, LLP, Former Secretary of Commerce, Alabama

into this region is fraught with significant challenges and negative implications for the industry and its workers.

The UAW makes many promises to lure workers’ support during its election campaigns. However, the promises advanced by UAW leaders do not necessarily equate to guaranteed job security for its members. In fact, CBS in September of last year, reported that 65 Big 3 plants, all UAW represented, were shuttered in the last 20 years. This trend raises concerns about the long-term viability of UAW-represented jobs. Cumbersome, lengthy and rigid UAWnegotiated contracts often reduce flexibility and efficiency, rendering unionized plants less competitive. Such a decline often prompts manufacturers to relocate production or place new investments into non-union states or even other countries, especially during periods of declining sales or recessions.

Recent developments underscore these risks. After negotiating new contracts

The number of employees in the automotive industry in Southern states.

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Automotive between the UAW and the Detroit 3 automakers, Stellantis recently announced plans to locate new EV production in Mexico, bypassing the United States entirely. Ford’s CEO, Jim Farley, has said the company will have to think carefully about where it is assembling future vehicles. Moves like this could signal a growing trend among the Detroit 3 to seek more favorable production environments outside the U.S., potentially jeopardizing jobs in UAWrepresented plants.

The UAW ’s track record in the South is mixed. Workers at the Volkswagen plant in Chattanooga chose to have the UAW represent them, marking a significant victory for the union. However, the future of UAW success in the South remains uncertain.

A solid majority of the workforce at the Mercedes-Benz plant in Alabama recently rejected UAW representation, reflecting ongoing skepticism about the union’s benefits.

The resistance to unionization in the South is deeply rooted and, in some regions, borne of painful experience. For example, in Alabama heavily unionized industries that once thrived have shed tens of thousands of jobs. Steel, paper, rubber, and textile manufacturing have been hit hard, and many Alabamians saw firsthand that unions don’t save jobs. Southern states also have long favored right-to-work laws, which allow workers to opt out of joining a union or paying union dues even if they are covered by union-negotiated contracts.

Additionally, there is a strong culture of pride in self-performance and self-

The United Auto Workers (UAW) has faced a steep decline in membership, dropping from a peak of 1.5 million in 1979 to just 383,000 by 2022.

determination in the South, making it difficult for the UAW message to take root. Finally, many Southern workers do not share the UAW’s political agenda.

Despite the UAW ’s obvious headwinds, it is important to remember that most Southern workers have never been exposed directly to unionization, and therefore have no firsthand knowledge of its many disadvantages. Employers are well advised to educate their management and their employees on the basics of unions and union organizing. It is precisely an employee’s lack of knowledge about unions that could make him or her vulnerable to a union organizer’s approach.

While the UAW seeks to expand its influence into the Southern automotive states, the potential negative impacts cannot be overlooked. Economic developers in the South have successfully recruited billions of new investment because of the lack of union representation in their regions. The mixed results of UAW organizing efforts in the South, coupled with the region’s historical resistance to unionization, suggest a challenging path ahead for the union. As the automotive industry continues to evolve, particularly with the shift towards EVs, the decisions made today will shape the future of work and economic stability in the Southern automotive states. The UAW’s ability to navigate these complexities will determine whether it can successfully expand its footprint or if the South will remain a bastion of non-union labor in the American automotive industry.

Greg Canfield serves as Managing Director of Economic Development at Burr & Forman. In this role, he works closely with the firm’s Economic Development Team, which includes lawyers across five states. The team handles economic development matters regarding site selection, incentive negotiation & implementation, choice of entity & tax structure, construction, real estate, environmental permitting, contraction negotiations, and government relations.

Prior to joining Burr, Greg served for twelve years as Secretary of Commerce for the State of Alabama. During Greg’s service he secured more than $70 billion in new investments, creating 180,000 jobs; launched Commerce’s successful rural development strategy; and led trade missions to 30 countries. His efforts resulted in recognition in the Alabama Automotive Manufacturers’ Association Hall of Fame and the Southern Automotive Manufacturers’ Alliance Hall of Fame.

Greg also served as a State Representative for the State of Alabama from 2006-2011. During his tenure, he served on the House Leadership Team and as Chairman of the House Committee on Commerce and Small Business.

Greg attended the University of Alabama and the University of Alabama at Birmingham where he earned his B.S. in Finance. Greg has been married to his wife Denise since 1983, and they are the parents of Rachel Canfield Young and John Canfield.

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8/21/24 12:49 PM

Automotive

The Cost of Labor and Workforce Skills Necessary for the Transition to an Electrified Auto Industry Why executives must prioritize workforce skills for the electric vehicle transition

By Raymond Perez Area Development Staff Editor

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abor costs and workforce skill shortages are a growing concern for automotive OEM’s and their suppliers. While the availability of a skilled workforce has always been part of the site selection calculus, it is now a top consideration in any automotive site selection decision. As noted in a study by the Center for Automotive Research, as the auto industry transitions to hybrid and electric vehicle, the U.S. faces a serious challenge in developing a skilled workforce to meet the anticipated demand in electric vehicle battery production.

If you can’t get the staff in the quantities you’ll need or if they lack the skill and expertise for your operations,

then it is quite likely the new operations will struggle to maintain profitability.

The assessment of the labor pool is much more than simply reviewing unemployment rates. For example, companies evaluating different site alternatives must consider current skill levels as well as training resources for emerging technologies which may be essential to future competitiveness. While there may be very specific workforce needs for your new operations, your company should at a minimum consider the following five factors when choosing between several alternatives for a new location.

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5 Workforce Factors to Consider Education Levels Most locales can provide detailed information on education levels in the proposed hiring area. This typically includes high school graduation rates and the number of college graduates and higher degreed individuals. If your operations will require specific technical skills, you should confirm the available number of workers with those skills and certifications.

It is also essential to gain an understanding of the number of high schools, technical schools, and four-year colleges within a 60-mile radius and the number of graduates each produces on an annual basis. These schools will likely be the source for your future workforce in years to come.

Educational Resources Future training and education resources may be just as important as current educational levels. You should evaluate the type of training available at vocational schools, local community colleges and four-year institutions. Close coordination with local educational institutions can result in training courses designed around the equipment and processes utilized by your organization in your everyday operations.

Four-year colleges are a key source for graduates to support advanced production needs such as process engineers and data analytics engineers. For example, as the auto industry transitions

to hybrid and electric vehicles, companies will need more electrical engineers and related expertise to meet future production requirements. Colleges that put more resources into such programs may provide a strategic advantage to employers seeking to hire their graduates.

Some states also offer extensive training support (including funding for training programs and dedicated training centers) as an incentive to locate in the area. These targeted, employer specific incentives can reduce the costs associated with hiring and training workers and can reduce start-up timelines significantly.

Demographic data Most labor data is maintained by occupation. For example, the Bureau of Labor Statistics publishes a great deal of useful data by occupation and geographic area. To maximize the value of this information, your company should have a clear understanding of the types of jobs your facility will utilize, the standard occupational names for those jobs and the anticipated pay rates for each job title.

If possible, the analysis should include local occupations and unionization levels as rates of the applicable labor force (e.g., number per 10,000 of labor force). This will make it easier to make apples-

to-apples comparisons when considering several alternatives. It is also important to look at trends over time, not just at a single point.

There may be a sufficient level of workers for your current needs, but a downward trend may indicate there might not be an adequate workforce five or ten years in the future.

You should confirm that the drive times and public transportation options for the demographic data provided are realistic. Reasonable commute times vary by region of the country which can impact the actual available labor pool for your proposed operation.

Regulatory Environment Each state may have unique labor & employment laws and regulatory agencies that enforce the laws. These can include such areas as safety, workers’ compensation, anti-discrimination, and unemployment. It is not uncommon for the states to enforce their laws differently from

state to state which can have a significant impact on the operations.

An in-depth understanding of the court systems, judiciary, regulatory officials, and procedures can help new companies avoid missteps and support smooth long-term operations.

Workforce Competition Companies will also need to have a thorough understand of the current and likely future competition for the available workforce.

If an existing employer is in a similar line of business or has similar business processes (e.g., IT or accounting), it will likely be a longterm competitor resulting in wage pressures for skilled workers.

In addition, it is important to be well informed about publicly available information regarding future employment demands in the area. Planned closings or expansions of local employers can significantly impact the future market for trained workers.

Conclusion

The site selection process involves assessments of multiple variables and their impact your company’s unique competitive position and long-term priorities. External factors and new technologies are almost impossible to predict, but the need for a qualified workforce to meet those challenges will never change.

Raymond Perez is Of Counsel in the firm’s Columbus and Washington DC offices and Chair of the Corporate Compliance and Governance Practice Group as well as Co-Chair of the Workplace Investigations Practice Group. He focuses his practice on advising employers on workplace investigations, developing and implementing compliance and ethics programs, and diversity, equity and inclusion initiatives. In addition, he works with clients when negotiating incentive packages as an integral part of the site selection process. Ray supports evaluating site priorities and negotiating local incentives to address tax, infrastructure, worker selection, and training needs. Prior to joining Fisher Phillips, Ray worked for nearly 30 years at American Honda in various legal and operational roles including General Counsel for southeast manufacturing operations and as North American Chief Audit Executive.

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Aerospace & Space

R E AC H I N G F O R T H E S TA R S :

Space Industry Creating Opportunities Across the Country Opportunities Expand Nationwide, Creating a New Era of Economic and Job Growth Across the U.S.

By Steve Kaelble Area Development Staff Editor

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tephen Levine, executive managing director in the Industrial and Logistics Services division at the real estate firm Newmark, recalls the 1960s TV series “I Dream of Jeannie.”

He mentions it when describing Florida’s Space Coast, where Major Nelson and Major Healey experienced their televised antics involving a genie named Jeannie.

It’s fitting that those fictional astronauts lived there, as Florida has long been a historical epicenter of the space program. Levine notes that the Space Coast has come a long way since the days depicted in “I Dream of Jeannie” or “The Right Stuff ” or “Apollo 13.”

“Things are happening pretty dramatically and quickly,” he says.

Last year, the Kennedy Space Center and Cape Canaveral Space Force Station set a new launch record with 72 orbital missions. By the end of this year, the launch pace is expected to ramp up to as many as two a week, according to Orlando Sentinel tallies.

Commercial space activity is taking off like a rocket. The bulk of the Space Coast launches involve SpaceX, founded by Elon Musk. Other significant players include United Launch Alliance—a joint venture of Boeing and Lockheed Martin—and Jeff Bezos’ Blue Origin.

What was once the province of NASA is now a booming business of sending rockets into space—sometimes carrying humans, but most often satellites. The latest State of the Satellite Industry Report from the Satellite Industry Association pegs the global space economy as a $400 billion business, with about 70% linked to satellites.

Nearly 10,000 satellites orbit the Earth, placed there by many governmental and commercial entities. Many are part of Musk’s Starlink satellite internet constellation, with more destined for orbit soon as part of Amazon’s Project Kuiper broadband internet project.

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those components needs to be close to the end result, creating a supply chain path.”

The Economic Development Commission of Florida’s Space Coast claims it has seen manufacturing job growth two to three times the national rate and one of the biggest concentrations in hightech gross domestic product. Tech-focused industrial developments are joined by stellar residential growth and nearly two dozen new hotels in the works. “An area once deemed a sleepy beach town has exploded with growth,” Levine says.

The business development space race is far from just a Florida phenomenon. Michael Mineiro, senior counsel with the legal and advisory firm Akin, notes that the space business is touching economies nationwide.

The space industry originally developed in places chosen for their proximity to warm weather and good transportation.

“We have to be very careful about doing things too far north because if it gets too cold it affects our technology. Access to ports is crucial because things we need to move around are big and heavy,” Mineiro explains.

“Space is an extension of aviation,” he adds. “Most of the modern aviation industry in the 1950s was predicated on World War II manufacturing.”

Beyond Florida, aerospace activities grew in places like California, Texas, and Alabama. Colorado, despite colder weather, boasted proximity to strategic defense operations, which had a space component.

Where space businesses develop depends on how they fit into the big picture. The ultimate end goal is launch, and the most traditional locations have been Cape Canaveral in Florida and the Vandenberg military base in California. “But in the last 15 years, we’ve seen the opening of other space launch facilities, and privately for free site information, visit us online at www.areadevelopment.com

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Blue Origin’s New Shepherd Rocket lifts off from a launch pad in West Texas.

Courtesy: Blue Origin.

licensed spaceports for public and private use, as well as airports collocating with spaceports,” Mineiro says.

Spaceport America, located in southern New Mexico, bills itself as the world’s first purpose-built commercial spaceport. The Mojave Air and Space Port in California started as a rural airport in the 1930s but added a spaceflight license 20 years ago. Blue Origin and SpaceX have developed their own private spaceports, including in Texas. The Federal Aviation Administration lists about 20 spaceports, with facilities licensed for vertical launches in states including Alaska, Georgia, and Virginia.

70% - Portion of the space economy linked to satellites Commercial activity around launch sites is significant, with many players building launch vehicles and supporting supply chains elsewhere and performing final integration and assembly near the launch sites.

Other space-related industries focus on ground equipment, remote sensing equipment, in-orbit manufacturing, commercial services to the moon, and commercial habitats for private astronauts.

The commercial space race is driving supplier growth nationwide.

Opportunities are expanding beyond those making space-qualified hardware. “The supplier base is extremely diverse, now also pulling from nontraditional aerospace suppliers,” Mineiro says.

This growth is creating a need for both highly technical expertise and an increasing number of blue-collar space-related workers. “Just 20 to 25 years ago, building something that goes into space was very artisanal. Now, the automation of space production is one reason why space is getting more affordable, bringing in demand for blue-collar workers to work at scale,” Mineiro says.

Levine echoes that sentiment, noting that there’s a need for executives, midlevel employees, and worker bees.

“The supplier base is extremely diverse, now also pulling from nontraditional aerospace suppliers.” — M i c h a e l M i n e i r o Space Advisors, a consulting firm, notes in a blog post analyzing space-related development opportunities that several places are “primed to lead the industry.” Traditionally dominant states like Texas, Florida, California, and Virginia are joined by tech-savvy Massachusetts, aviation-experienced Washington, and equatorial Puerto Rico. Additionally, Oklahoma, Mississippi, Indiana, Alaska, Alabama, Wyoming, Iowa, New Jersey, Illinois, and Oregon offer skilled technical workers, inexpensive land, favorable tax rates, and low-cost transportation connections.

Ultimately, space is increasingly big business with opportunities everywhere. As Levine sees in Florida, the impact of the space business is tremendous. “There is really big positive momentum in and around this geography, solely attributable to the rise of this industry.”

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Aerospace & Space

A E RO S PAC E I S G ROW I N G U P I N S U P R I S I N G P L AC E S

How Federal funding is fueling a strategic expansion

By Thomas Taylor Managing Director, JLL Aerospace and Defense Lead

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ederal funding for the A&D sector has increased substantially, driven by the need to modernize military systems and address new geopolitical threats. Key trends include: A shift from legacy markets is evident, with traditional hubs like Seattle and Los Angeles seeing less growth in federal funding compared to emerging markets such as Dallas. JLL Research has shown that in some instances, increases in federal funding are outpacing available talent in growing markets. This diversification of funding is spreading across commercial aviation, defense, and the commercialization of space, creating diverse opportunities for A&D firms.

pool to accommodate the level of growth. Florida, with its historical connection to space exploration and strong educational institutions like Embry-Riddle Aeronautical University, is also fostering growth in the aerospace sector. Florida’s business-friendly environment and investment in the talent pipeline are significant drivers of this growth.

Other emerging markets are also becoming attractive alternatives to traditional A&D centers. Regions with lower costs of living, favorable regulatory environments, and access to talent are increasingly seen as viable options. Firms are looking at all factors to gain a competitive advantage.

Rise of New A&D Hubs

Strategic Considerations for Expansion

Dallas has become a significant A&D hub, driven by substantial federal contracts awarded to companies like Lockheed Martin.

However, the city faces challenges in building a sufficient talent

Choosing the right location can be a significant differentiator for A&D firms. This involves evaluating factors such as facility cost, regulatory environments, and the ability to attract talent. Organiza-

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The increase in federal funding for the aerospace and defense sector in the last year. tions must also have a strategy for modernizing and strategically maintaining facilities to drive efficiencies and cost savings necessary to compete effectively in this market.

Developing strategies to attract and retain skilled workers is crucial for success in emerging markets. This includes offering competitive compensation, creating attractive workplaces, and fostering professional development. Addressing supply chain challenges by forming strategic partnerships and optimizing facility locations can help mitigate disruptions and improve efficiency. Supply chain issues are a significant concern, affecting both commercial and DoD sectors.

Opportunities and Risks

Case Study: Federal Funding Impact in Dallas

Conclusion

The significant increase in federal funding for A&D activities in Dallas illustrates how strategic federal investments can rapidly increase the demand for specialized talent in a region. In cases like this, we see growth outpacing available talent, driving the need to recruit from other markets and invest in local talent development. This example highlights the importance of proactively creating a talent pipeline in all regions looking to capitalize on the forecasted growth in the A&D industry.

Emerging markets offer lower operating costs, potential tax incentives, and access to untapped talent pools, making them attractive for A&D firms looking to expand. Organizations are looking at how they can be more competitive, including investing in lowercost markets.

However, rapid growth in new markets can lead to challenges in scaling operations, maintaining quality, and managing supply chains. Companies must navigate these risks to fully leverage the benefits of emerging markets.

The A&D industry is at a pivotal point, with federal funding shifts creating new opportunities in emerging markets. Organizations that strategically navigate real estate choices, talent acquisition, and supply chain management will be well-positioned to capitalize on this dynamic environment. Companies that are not looking at all angles may not be as competitive as their peers. By understanding and adapting to these trends, A&D firms can achieve sustainable growth and maintain their competitive edge.

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Aerospace & Space

MOONSHOT:

How a Dynamic Production Facility for a Private Space Manufacturer Took Off The Texas building highlights how collaboration and visionary facility design are reshaping the future of space exploration.

By Area Development Research Desk

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trip to the moon begins on Earth, and building the tools to get to outer space requires the right facilities. Recently, Intuitive Machines worked with NASA to build the Odysseus NOVA-C lander, which became the first U.S.-led moon mission in 50 years and the first commercially built lander to touch down on the South Pole of the moon. Burns & McDonnell partnered with Intuitive Machines to develop a headquarters and testing facility for its lunar missions.

This ambitious project, located at Houston’s spaceport, highlights how innovative design and strategic planning can propel the space exploration industry forward.

Vision Meets Reality

The project began with a clear objective: to create a home base for Intuitive Machines that could support their current operations and accommodate future growth.Traditional facility designs were deemed inadequate for the dynamic needs of Intuitive Machines, a company known for its entrepreneurial spirit and dedication to tackling complex problems.

“From the outset, we knew that traditional facilities wouldn’t fully meet Intuitive Machines’ ambitions,” said Brittney Swartz, managing operations director for the aerospace and industrial business practice at Burns & McDonnell. “They needed a space that could evolve with their innovative projects.”

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Central to the facility is the flame range, a unique testing environment designed to advance the development of Intuitive Machines’ cryogenic engines for lunar missions. This on-site testing capability eliminates the need for time-consuming trips to remote sites, significantly enhancing efficiency and productivity.

The design process was a testament to the power of collaboration, according to Swartz. Frequent discussions between teams from Intuitive Machines and Burns & McDonnell ensured the facility met the diverse requirements of various departments and laboratories.

“Flexibility was essential to this project,” Swartz explained. “We had to make sure the facility could adapt to future technological advancements and equipment needs. Proactive communication became a keystone because we never knew what they might need next.”

This adaptability extends beyond the physical structure.

The partnership was marked by regular meetings and ongoing dialogue, which facilitated rapid decision-making and alignment of objectives. This level of collaboration was crucial in a project where requirements could evolve quickly.

Strategic Site Selection

Choosing the right location was another critical aspect of the project. With the help of the site selection team at Burns &

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McDonnell, Intuitive Machines evaluated several potential sites before settling on Houston. The city’s developing spaceport and rich aerospace heritage made it an ideal choice, supporting local talent and helping to bolster Houston’s role in space exploration.

“They are a Houston-based company, and the city’s spaceport offered the perfect environment to attract local talent and build a strong footprint in the aerospace industry,” Swartz said.

Navigating Supply Chain Challenges

As a company that was essentially a startup only two years ago, Intuitive Machines faced typical challenges in securing raw materials and components. However, strategic planning for flexibility and scalability helped mitigate supply chain disruptions.

Intuitive Machines’ approach to supply chain management offers valuable insights for other companies in the aerospace sector. By planning for future needs and building flexibility into their operations, they maintained a steady flow of materials and components critical to their success.

A New Era in Space Exploration

The successful creation of the lunar production and operations center marks a significant milestone for Intuitive Machines and signals a new era in space exploration. This project exemplifies how the commercial space industry can shape the future of space exploration through innovation, collaboration, and strategic planning.

“From the outset, we knew that traditional facilities wouldn’t fully meet Intuitive Machines’ ambitions.”

Reflecting on the project, Swartz said, “It’s an exciting time for space exploration. Our partnership with Intuitive Machines has reshaped the future of this industry, demonstrating the critical role of visionary facility design in pioneering new frontiers.”

As new technologies and trajectories emerge, the collaboration between Burns & McDonnell and Intuitive Machines serves as a model for executives in the aerospace and space industry, highlighting the importance of strategic design and partnership in driving innovation and discovery.

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Location Canada

HYDROGEN INDUSTRY IN CANADA:

A Global Leader in the Clean Energy Revolution Canada sees big things on the horizon for this renewable energy source

By Marc Beauchamp President, SCI Global

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n the global race to achieve net-zero emissions, hydrogen has emerged as a pivotal player. As a versatile and clean energy carrier, hydrogen holds the potential to revolutionize various sectors, from transportation to industry. Canada, with its abundant natural resources and commitment to sustainability, is positioning itself as a leader in the hydrogen industry. With worldwide demand for hydrogen increasing, the global market could reach over $1.9 trillion by 2050. Each region of Canada can utilize its unique resources to produce and deploy hydrogen domestically as well as to supply a growing export market.

Several major hydrogen production facilities operate in Canada. For instance, Air Products operates one of the world’s largest hydrogen production facilities in Alberta, utilizing SMR and CCS technologies.

Additionally, companies like Hydrogenics (now part of Cummins) are advancing electrolysis technology, with several projects underway across the country. In February, Charbone finalized arrangements with the city of Sorel-Tracy in the province of Quebec to move forward on next steps towards site construction of a green hydrogen facility.

Hydrogen Production in Canada

Hydrogen Applications in Canada

Hydrogen can be produced through several methods, the most common being steam methane reforming (SMR) and electrolysis. In Canada, SMR is predominantly used, leveraging the country’s rich natural gas reserves.

However, this method generates significant carbon emissions. To mitigate this, Canada is increasingly investing in blue hydrogen, which combines SMR with carbon capture and storage (CCS) technologies to reduce the environmental impact.

Electrolysis, which splits water into hydrogen and oxygen using electricity, is another promising method, especially when powered by renewable energy sources.

Canada’s vast hydroelectric capacity makes it an ideal candidate for green hydrogen production, which uses renewable electricity and emits zero greenhouse gases.

Hydrogen’s versatility allows it to be used in various applications, making it a cornerstone of Canada’s clean energy strategy. In the transportation sector, hydrogen fuel cell vehicles (FCVs) are gaining traction. These vehicles, which emit only water vapor, offer a clean alternative to traditional internal combustion engine vehicles. Several cities, including Vancouver and Montreal, are integrating hydrogen-powered buses into their public transit systems, showcasing the technology’s viability.

In the industrial sector, hydrogen is used in refining and chemical production processes. Companies like Shell Canada are exploring the use of hydrogen to decarbonize their operations. Moreover, hydrogen can serve as a critical component in energy storage and grid balancing. By converting surplus renewable energy into

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Location Canada hydrogen, it can be stored and later reconverted into electricity, helping to stabilize the grid and ensure a reliable energy supply.

Government Policies and Initiatives

The Canadian government has recognized the strategic importance of hydrogen and has implemented several policies and initiatives to support its development. In December 2020, Canada released its Hydrogen Strategy, outlining a plan to establish the country as a global leader in hydrogen by 2050. The strategy sets ambitious goals, including scaling up production, creating jobs, and reducing greenhouse gas emissions.

Provincial governments are also playing a crucial role. For instance, Alberta’s Hydrogen Roadmap aims to leverage the province’s existing natural gas infrastructure to become a leader in blue hydrogen

However, these challenges also present opportunities.

Technological advancements, economies of scale, and increased investment can drive down costs and improve the efficiency of hydrogen production and utilization.

Moreover, the global push for decarbonization opens up vast market opportunities for Canadian hydrogen, both domestically and internationally.

Environmentally, hydrogen offers significant benefits, including reduced greenhouse gas emissions and improved air quality. Societally, the hydrogen industry can create numerous jobs, stimulate economic growth, and enhance energy security.

Future Prospects

Looking ahead, the future of the hydrogen industry will require governments to continue establishing an environment that is attractive for hydrogen producers and suppliers.

Several projects are still in development. For example, the Alberta Carbon Trunk Line project aims to capture and store

“Technological advancements, economies of scale, and increased investment can drive down costs and improve the efficiency of hydrogen production and utilization.” production. British Columbia, on the other hand, is focusing on green hydrogen, capitalizing on its renewable energy resources. These provincial initiatives are complemented by various support programs, including funding for research and development, tax incentives, and grants for hydrogen projects.

Challenges and Opportunities

Despite the promising prospects, the hydrogen industry in Canada faces several challenges. Technologically, the high production costs of green hydrogen and the need for extensive infrastructure development pose significant hurdles. Economically, market acceptance and competition with other energy sources remain critical issues.

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carbon emissions from hydrogen production, significantly reducing its carbon footprint. Similarly, the Western Green Hydrogen Initiative is exploring the potential of green hydrogen in Western Canada.

Technology maturity and innovation will be key to the long-term success of the clean hydrogen economy.

Advances in electrolyzer and fuel cell technology and efficiency will drive costs down and move the industry forward. Governments will have to allow for hydrogen to take an increasing part of the energy mix and market. For Daniel Charette, COO at Charbone Hydrogen Corp., the future of clean hydrogen will require coordinated policies across all levels of government that would allow sustainable long-term market penetration.

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Perspective from a Site Selector

From a site selector’s perspective, Canada presents an attractive proposition for hydrogen-related investments.

Several factors make Canada a favorable destination for establishing hydrogen production and application facilities: 1. Abundant Natural Resources: Canada’s vast natural gas reserves and renewable energy resources provide a reliable and cost-effective feedstock for hydrogen production.

2. Strong Government Support: Federal and provincial governments offer substantial incentives, funding, and policy support, reducing the financial risks for investors.

3. Strategic Location: Canada’s geographic proximity to major markets like the United States, combined with its well-developed transportation infrastructure, facilitates easy export of hydrogen and hydrogenrelated products.

4. Skilled Workforce: Canada boasts a highly skilled workforce with expertise in engineering, technology, and energy sectors, essential for advancing hydrogen technologies.

5. Innovation and Research: Canada’s robust research and development ecosystem, supported by leading universities and research institutions, drives innovation in hydrogen technologies.

6. Environmental Commitment: Canada’s strong environmental regulations and commitment to reducing greenhouse gas emissions align with the goals of sustainability-focused investors.

These factors, combined with Canada’s stable political and economic environment, make it an ideal location for hydrogen projects. Site selectors can leverage these advantages to attract investments and establish Canada as a hub for the global hydrogen economy.

The hydrogen industry in Canada is poised for significant growth and development. With strong government support, substantial investments, and a commitment to sustainability, Canada is in a good position to remain a top player in the industry. While challenges remain, the opportunities for economic, environmental, and societal benefits make this industry a focus for the year to come. As the world transitions to a cleaner energy future, hydrogen will undoubtedly play an important role, and Canada is at the forefront of this transition. From the perspective of a site selector, Canada offers a competitive environment for hydrogen investments if the energy availability remains.

The potential value of the global hydrogen market by 2050.

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Location Canada

Foreign Direct Investment in Canada

Grace Under Pressure

Foreign Direct Investment in Canada faces new challenges and opportunities as the country navigates economic shifts and evolving investment strategies in key sectors like electric vehicles, clean energy and advanced manufacturing.

By Gabriel Dion Managing Director, Global Strategy at Newmark

F

oreign Direct Investment (FDI) inflows to the G20 economies, the 20 major economies representing about 85 percent of global GPD, were down by 34 percent between 2022 and 2023. During the same period, however, FDI in Canada increased by 8.7 percent, reaching $50 billion from a prior year’s total of $46 billion. Canada climbed to the third top destination for FDI inflows in 2023, after only the United States and Brazil (OECD, 2023 FDI in Figures, April 2024), partly due to the drop in FDI inflows into countries like China.

Canada has traditionally been known for its stable political climate and robust economic environment, making it an attractive destination for foreign investors, ranking in the top three in Kearny’s FDI Confidence Index for the last five years. While this sentiment largely holds true today, the country is facing challenges that could cause concern for future economic prospects. Urgent actions are needed by the political class, the business community and the general public to remain a prime FDI destination.

Positive Signs for Canada’s FDI Outlook

Advanced Manufacturing: The advanced manufacturing sector in Canada saw the highest increase in FDI in 2023, particularly in food, paper, and transportation equipment manufacturing. This sector remains a critical employment and export pillar of the Canadian economy, driving significant foreign investment​(fDi Insights)​.

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EV Sector: The EV sector has seen substantial growth in the Ontario and Quebec provinces. These regions are positioning themselves as key players in the EV supply chain, crucial for the future of the automotive industry and Canada’s transition to green energy​(Invest in Canada)​. EV growth includes new greenfield projects and the conversion of legacy facilities for new EV platforms and programs.

Projects in this industry are also starting to trickle into the Atlantic provinces, attracting the attention of companies considering establishing new operations there.

Clean Energy: Long known for its oil and gas industry, Alberta is also home to clean energy initiatives. The province’s focus on hydrogen production and carbon sequestration aligns with global trends toward sustainable energy and decarbonization. A notable FDI project related to this field is in Edmonton, where the first global full-scale carbon capture and storage facility in the cement industry is under development at the Heidelberg Materials plant. On the other side of the country, projects such as green hydrogen production at the Port of Belledune in New Brunswick also highlight the national push towards clean technology​ (fDi Insights, Heidelberg Materials)​.

Factors Driving FDI in Canada

Political and Economic Stability: Canada’s reputation as “boringly stable” politically and economically is a notable draw for investors looking for a safe bet. for free site information, visit us online at www.areadevelopment.com

8/20/24 4:00 PM

Immigration Policies: Canada has been successful in attracting skilled labor through its flexible immigration system, which is crucial for supporting FDI. Despite a growing sentiment in the population to reduce immigration levels that spiked rapidly upward following a pause during the pandemic, immigration remains a key driver of the country’s economic growth​ (Invest in Canada)​.

Importantly, no major political party in power in Canada has opposed immigration in their rhetoric, though program and headcount adjustments are an ongoing topic of debate.

Trade Agreements: Canada is the only G7 economy – the seven largest advanced economies in the world – with comprehensive free trade access to all G7 and European Union countries, with its 15 trade agreements covering roughly 60 percent of the world’s GDP. These agreements facilitate investment flows and offer strategic advantages for companies looking to invest in Canada​ (Invest in Canada)​.

Areas to Keep on the Radar

Economic Performance: Canada’s economy is expected to underperform the global average, with high household debt and slowing economic growth (CEIC Data), which will impact FDI targeting domestic consumption​.

Productivity and Innovation: At 0.7 percent, Canada’s productivity growth between 2013 and 2022 was below the G7 average of 0.9 percent, which is already a concern compared to the previous two decades of 1.6 percent productivity gains (Fraser Institute). Since 2019, Canada’s productivity has declined (-0.15 percent), placing it fifth among the G7 countries. For comparison, the U.S. has experienced 6.1 percent productivity growth during the same period (RBC).

Housing and Cost of Living: The average home price in Canada is 20 percent higher than in the US, despite having a median income 10 percent lower than in the U.S. The rapid rise of housing costs has affected

all communities across Canada, from urban areas to suburban, rural and very remote communities. It’s a concern for all households, as well as the companies that must manage salary expectations. (Yahoo Finance, Chaudry Law) Site Readiness and Permitting: The quality and readiness of sites can vary dramatically and be a deciding factor when selecting between provinces, states, and countries. Canadian economic development organizations need a portfolio of development-ready sites with comprehensive, clear information about qualities and challenges​ (fDi Insights)​. Newmark has advised the Province of Ontario in selecting municipalities to support industrial site readiness, which has led to billions of dollars in new FDI. Labor Shortages: While flexible immigration policies help, there’s still a need for more skilled workers in various sectors, which is accentuated by an aging population. Companies need assurances that they can find the talent they need to succeed​(Home | White & Case LLP)​. Ontario’s newly announced $190M investment in a Skills Development Fund is one example of the government attempting to tackle labor shortages, as is Quebec’s 2023 program that will direct similar amounts of money to training in the construction trades.

Takeaways

Canada’s FDI landscape is undergoing significant changes, with both challenges and opportunities on the horizon. While the country continues to attract substantial investment in key sectors such as EVs and clean energy, recent global trends indicate a growing concern among investors about the broader economic environment.

To continue to drive economic growth and maintain its position as a prime destination for FDI, Canada must enhance site readiness, ensure a skilled labor force, address housing shortages and foster a more attractive policy environment for diverse investments.

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Project Planning

What the Latest EPA PFAS Rule Means for Site Due Diligence The new rule brings wide-ranging impacts for property owners and operators.

By Robin L. Main Partner, Hinckley Allen

O

n April 19, the Environmental Protection Agency (EPA) finalized a rule listing perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS) as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as Superfund. The new rule clears the way for environmental investigations to determine if PFAS are in soil, groundwater, and elsewhere and, if so, the nature and extent of them, opening a significant area in Superfund liability and likely beyond.

So, what does this mean for those charged with corporate site selection and relocation? Here’s what to know about its wide-ranging impacts, including on due diligence considerations in real estate transactions.

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What are PFAS?

PFAS are human-made chemicals that have been used in industry and consumer products for decades, showing up in everyday items like non-stick cookware, cosmetics, and water-repellent clothing, as well as in industrial products like firefighting foam.

Because PFAS are slow to degrade (some forms can take over 1,000 years), their prevalence in the environment is significant, including in our water, air, food, and soil. There is increasing scientific evidence that exposure to certain levels of PFAS may be harmful to humans and the environment and could lead to adverse reproductive effects, increased risks of cancer, and a weakened immune system. for free site information, visit us online at www.areadevelopment.com

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The New PFAS Rule’s Impacts

The consequences of PFAS being listed as hazardous substances at the federal level are far reaching. When the new rule goes into effect 60 days after publication in the Federal Register, it will surely trigger state “mini Superfunds” to follow suit and include PFAS on their lists of hazardous substances. It will also cause other regulatory schemes like those under the Hazardous Material Transportation Act and the Resource Recovery and Conservation Act to regulate PFAS. Practically, the new rule will affect “re-openers” under many, if not most, sites, potentially upsetting the balance in what was thought to be closure on a site. It will also impact the scope of due diligence in real estate and corporate transactions, forcing the parties to try to define if an issue exists and, if so, how to monetize it for a deal.

For example, when a company is seeking to acquire a new location, good due diligence must include an evaluation as part of the Phase 1 environmental site assessment of whether there are PFAS impacts at or associated with the location. If PFAS are present, the next step is to determine if and how they are regulated, whether there is existing technology to remediate the PFAS, and whether costs of the cleanup can be estimated.

Informed decision-making about PFAS will be critical and must include a healthy dose of practicality, otherwise transactions will come to a halt.

The consequences of PFAS being listed as hazardous substances at the federal level are far reaching.

This is yet another era in environmental regulation that has seen PFAS-related regulations on drinking water at both the federal and state level. Dozens of state attorneys general are pursuing litigation against PFAS manufacturers for allegedly contaminating water supplies and other natural resources. Staying up to date about PFAS and how they are being handled at the federal and state levels is crucial for companies as they move forward with deals.

Robin L. Main is a partner in the Litigation group, co-chair of the Environmental and Energy group, and serves on the Executive Committee at Hinckley Allen. She is a seasoned environmental and energy attorney with over 40 years of experience.

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Statement of Ownership, Management and Circulation. Publication Title: Area Development. Publication Number: 345-510. Filing Date: 10/1/2024. Issue Frequency: 4x. Number of issues published annually: 4. Annual Subscription Price: $75. Complete mailing address of known office of publication: 30 Jericho Executive Plaza, Suite 400W, Jericho, NY 11753. Contact person: Dennis J. Shea. Telephone: (516) 3380900. Publisher name: Dennis J. Shea. Editor name: Andy Greiner. 30 Jericho Executive Plaza, Suite 400W, Jericho, NY 11753. Owner: Halcyon Business Publications, Inc. 30 Jericho Executive Plaza, Suite 400W, Jericho, NY 11753. Stockholders owning or holding 1% or more of total stock: President Dennis J. Shea and Secretary Randi S. Shea. 30 Jericho Executive Plaza, Suite 400W, Jericho, NY 11753. Known bondholders, mortgagees and other security holders owning or holding 1% or more of total amount of bonds, mortgages, or other securities: None. Publication title: Area Development. Issue date for circulation data below: Q2 2024. Extent and nature of circulation: corporate real estate executives. Average number of copies of each issue during preceding 12 months: Total number of copies: 42,125. Legitimate paid/requested distribution: Outside country paid/requested mail subscriptions stated on PS 3541: 20,984. In-county paid/requested mail subscriptions stated on PS 3541: 0. Sales through dealers and carriers, street vendors, counter sales, and other paid/requested distribution outside USPS: 0. Requested copies distributed by other mail classes through USPS: 0. Total paid/requested circulation: 20,984.

Non-requested distribution: Outside county non-requested copies stated on PS 3541: 20,398. In-county non-requested copies stated on PS 3541: 0. Non-requested copies distributed through USPS by other classes of mail: 0. Non-requested copies distributed outside the mail: 288 office copies. Total non-requested distribution: 20,685. Total distribution: 41,669. Copies not distributed: 456. Total: 42,125. Percent paid/requested circulation: 50.36%. Number of copies of single issue published nearest to filing date: Total number of copies: 42,093. Legitimate paid/requested distribution: Outside county paid/requested mail subscriptions stated on PS 3541: 21,046. In-county paid/requested mail subscriptions stated on PS 3541: 0. Sales through dealers and carriers, street vendors, counter sales, and other paid/requested distribution outside USPS: 0. Requested copies distributed by other mail classes: 0. Total paid/requested circulation: 21,046. Non-requested distribution: Outside county non-requested copies stated on PS 3541: 20,322. In-county non-requested copies stated on PS 3541: 0. Non-requested copies distributed through USPS by other classes of mail: 0. Non-requested copies distributed outside the mail: 250 office copies. Total non-requested distribution: 20,572. Total distribution: 41,618. Copies not distributed: 475. Total: 42,093. Percent paid/requested circulation: 50.57%. Publication of Statement of Ownership for a requester publication is required and will be printed in the Q3 2024 issue of this publication. I certify that all information furnished on this form is true and complete: Dennis J. Shea, Publisher.

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8/22/24 3:21 PM

Last Word

The Critical Role of Real Estate in Site Selection Projects Real estate decisions influence supply chain efficiency and operational costs. Proximity to suppliers, customers, and transportation hubs can minimize transit times and freight costs.

By Devin Hillsdon-Smith Director, Integrated Site Selection – Industrial at Cushman & Wakefield

S

electing the right location for corporate expansion or relocation is crucial, impacting everything from operational efficiency to long-term success. Real estate plays a pivotal role in this process, influencing economic, logistical, and competitive advantages. It’s essential for corporate decision-makers to grasp the complexities of real estate to make strategic, well-informed choices.

Economic Impact and Cost Considerations

Real estate has a significant impact on the financial feasibility of a new site. Factors like property costs (whether purchasing or leasing), property taxes, and utility expenses all play a role. Decision-makers must weigh these costs against potential benefits. For example, while rural areas might offer lower property prices, they could come with higher transportation costs or limited access to skilled labor.

Local government incentives, such as tax breaks and grants, can make a location more financially attractive. It’s crucial to conduct thorough research to identify and negotiate these incentives, aligning them with the company’s long-term goals. Effective negotiation can lead to substantial cost savings and better financial performance.

Logistical Considerations and Supply Chain Efficiency

Real estate decisions have major logistical implications. Being close to suppliers, customers, and transportation hubs (like highways, railroads, ports, and airports) can enhance supply chain efficiency and reduce operational costs. A strategically located site can minimize transit times, lower freight costs, and ensure timely delivery of goods and services.

For example, a distribution center near major transportation routes can serve a larger customer base more efficiently. Similarly, manufacturing plants close to raw material suppliers can reduce transportation costs and streamline production timelines. Real estate choices should consider these logistical factors to optimize the supply chain.

Site Developability

Site developability is a key factor in real estate selection. This involves evaluating a location’s suitability for development, considering aspects like topography, soil conditions, and existing structures or environmental constraints. Sites requiring significant grading, excavation, or remediation can lead to higher development costs and longer project timelines.

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Decision-makers need to conduct thorough site assessments, including geological surveys and environmental impact studies, to understand the potential challenges and costs of development. This due diligence ensures the chosen site is viable for the intended use and can be developed within budget and time constraints.

Access to necessary infrastructure, such as utilities (water, electricity, gas, sewage) and transportation links, is also vital. Sites with existing infrastructure can lower development costs and speed up project timelines. Conversely, locations needing substantial infrastructure investments can increase overall project expenses and complexity.

Regulatory Environment and Compliance

The regulatory environment of a potential site is another critical factor. Zoning laws, environmental regulations, building codes, and other legal requirements must be carefully considered. These regulations can affect the feasibility and cost of projects.

Corporate decision-makers must ensure the chosen site aligns with the intended use and meets regulatory requirements without incurring prohibitive costs. Early engagement with local authorities and legal experts can help identify regulatory hurdles and develop effective strategies to address them.

Sustainability and Environmental Considerations

Sustainability is becoming increasingly important in corporate real estate decisions. Companies are under pressure to adopt environmentally responsible practices, and the choice of location can significantly influence these efforts. Factors to consider include access to renewable energy sources, energy-efficient building designs, and green transportation options.

Choosing a site that supports sustainability goals can enhance a company’s reputation, meet regulatory requirements, and appeal to environmentally conscious consumers and investors.

Sustainable real estate practices can also lead to long-term cost savings through reduced energy consumption and lower operational expenses.

Real estate is a fundamental aspect of the site selection process that influences economic, logistical, workforce, regulatory, and sustainability factors. Corporate decision-makers must thoroughly evaluate these elements to make informed decisions that support long-term growth and competitive advantage.

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