Area Development Q3 Issue 2022

NEW INDUSTRIAL P19 ECOSYSTEM

SUPPLY CHAIN P21 MIX AND MATCH

EXPLOSIVE GROWTH P30 IN LIFE SCIENCES

AREADEVELOPMENT SITE

AND

FACILITY

PLANNING

Q3/2022

Embrace P26

13th Annual

TOP STATES Doing Business 2022 SITE CONSULTANTS SURVEY W W W . A R E A D E V E L O P M E N T. C O M

CoverQ32022.indd 1

8/31/22 12:57 PM

Being near the nation’s capital, we have the ability to bring people from all over the globe into our headquarters. Having access to that diverse talent is absolutely critical for our success.

NAZZIC KEENE Chief Executive Officer

See the advantages Virginia can offer your business at vedp.org

Volume 57 | Number 3 Q3/2022

26

CONTENTS Cover Story

Embrace Wide Open Available land, lower costs, and the desire to co-locate with suppliers and customers draw companies to rural locations, but satisfying infrastructure needs and access to talent shouldn’t be overlooked.

features

16 Gaining Community Approval for Your Next Big-Box Project

30 Explosive Growth of Life Sciences Sector Comes with Challenges

Partnerships with local economic developers and other community stakeholders are key to a company getting approval to site a big-box distribution center.

Although opportunities abound, companies in the life sciences sector are also facing numerous challenges — from accessing skilled labor to deciding whether to build out or retrofit existing space.

21 Supply Chain Mix and Match

19 The New Industrial Ecosystem Resiliency in manufacturing, warehousing, and distribution requires a robust, data-driven approach to understanding the financial and operational influences across the new and ever-evolving industrial ecosystem.

Global trade imbalances have been created by systems designed prepandemic to handle JIT manufacturing that were not adaptable to sourcing and moving goods.

62 Utilizing Data Analytics to Reduce Risk and Costs, Increase Opportunities

An efficient site selection process can make the difference between a fundable and a failed project.

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.

2

AREA DEVELOPMENT

TOCQ3.2022.indd 2

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

8/31/22 12:59 PM

we

live for ribbon cuttings lasting partnerships prime locations ambitious vision expansive opportunity global teamwork growing together thoughtful investment

Wisconsin lives to help all sorts of companies find their version of success. That includes yours.

From site selection through construction, opening and expansion, we provide support to ensure your vision becomes reality. After all, your success may inspire other companies to relocate or expand here, too. That’s how we look forward.

InWisconsin.com

WE0422b_WELIVE_WEDC1085.indd 1

8/18/22 1:17 PM

CONTENTS

“

The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislatures.

Warren Buffett (1951–

),

”

chairman and CEO of Berkshire Hathaway

84 A Look at IPD From the Inside Out

departments

6 Editor’s Note

ompanies Look to Locations That C Have All Their Ducks in a Row

8 In Focus

“Golden Age” of Spec Development

10 Front Line

U.S. Seeks to Manufacture Critical

A culture of teamwork and collaboration paves the way for the execution of integrated project delivery, which helps to cut costs and time while offering other advantages.

Rare Earth Materials

12 Front Line

Unionization Efforts Trending Upward

14 First Person

R obin van Puyenbroeck, Executive Director of Business Development, World Trade Centers Association (WTCA)

32

87 Ad Index/Web Directory 88 Last Word

special report

D ecision-Making Dynamics in an Uncertain World

13th Annual

TOP STATES Doing Business

2022 SITE CONSULTANTS SURVEY

The “Top States” report looks at some of the places ripe for successfully growing and doing business based on the views of our expert panel of site consultants.

exclusive online content

• Front Line: Is Reshoring Production the Answer to Supply Chain Woes?

• A Fast Track to Filling the Workforce Pipeline

66 location

canada

•N avigating The Change: Business Location and Economic Development in Canada • “Friend-Shoring” to “Next-Dooring” •C hallenges & Opportunities in Canadian Life Sciences and Health Technology (LSHT) Industry

• Using Robust Project Controls to Enhance Project Management

• Mississippi’s Shovel-Ready Sites Are Open for Business • Ontario: Coming Back Strong

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 2022 by Area Development® magazine. ISSN: 1048-6534. Printed in the U.S.A. Area Development® is a registered trademark of Halcyon Business Publications, Inc.

4

AREA DEVELOPMENT

TOCQ3.2022.indd 4

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

8/29/22 4:23 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 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

22-ACA-1345 Top Talent R01.indd 1

8/22/22 1:04 PM

Q3/2022

EDITORS NOTE Companies Look to Locations That Have All Their Ducks in a Row Despite the fact that economic analysts are now discussing whether high inflation and low unemployment are predictors of a recession on the way, 2021 and the first half of 2022 have seen a record number of mega projects. Needless to say, those mega projects need mega sites, which are found in wide open rural spaces, as noted in our cover story this month.

www.areadevelopment.com

2022 Editorial Advisory Board Josh Bays, Principal site selection group

Marc Beauchamp President & CEO cai global group

H. Robert Boehringer III, Managing Director Global Location and Expansion Services

According to David Hickey, site advisor at Hickey & Associates, rural areas of the country offer available land and labor at lower costs, although having the infrastructure in place (power, water, roads, rails, etc.) can sometimes present a challenge. Nonetheless, the Southeast States have done a good job in having all the elements in place to attract projects to rural areas, he says.

Hickey’s opinion is borne out by other consultants whose experience as location consultants has made them highly regarded in the field. According to our most recent survey of site consultants (see the results in this issue), 8 of the 10 Top States for Doing Business in 2022 are in the South. Of the top 10, all but two are also atop the rankings for their overall cost of doing business. And 7 of the top 10 for site-readiness — i.e., infrastructure, permitting, etc. in place — are also in the South.

Among the other important assets of the Top States for Doing Business are their workforce development programs. With today’s shortages of qualified candidates in advanced manufacturing and other knowledge industries, these programs are more important than ever.

A state’s logistical and infrastructure assets also help to land it among the Top States for Doing Business, as companies look to supply chain diversification to counter risk. Supply chain challenges have been well documented, as consumers pivoted from in-person to e-commerce shopping during and post-pandemic.

kpmg

Brian Corde Managing Partner atlas insight

Kate Crowley Principal baker tilly capital

Dennis Cuneo Owner

dc strategic advisors

Courtney Dunbar Site Selection & Economic Development Leader burns & mcdonnell Amy Gerber Executive Managing Director Business Incentives Practice cushman & wakefield Stephen Gray CEO gray

David Hickey Managing Director hickey & associates

Anthony Johnson President Industrial Business Unit clayco

Scott Kupperman Founder

kupperman location solutions

Bradley Migdal Executive Managing Director Business Incentives Practice

cushman & wakefield

Daniel Oney Managing Director

newmark

An understanding of a company’s supply chain and logistics network, as well as labor needs, utility rates, and impact of state and local tax can be better understood through the use of data analytics, which promotes efficiency in the site selection process. With manufacturing still expected to expand in 2022 powered by demand, according to the Institute for Supply Management, this is good advice to follow for companies of all sizes that are in expansion mode.

Matthew R. Powers Managing Director

Industrial Real Estate & EVP Retail/E-Commerce

jll

Carolyn Salzer Director Americas Head of Logistics & Industrial Research cushman & wakefield Chris Schwinden Senior Vice President site selection group

Eric Stavriotis Senior Vice President Advisory & Transaction Services cbre

Steven Tozier US-East Region Credit & Incentives Leader

Editor

ey

Chris Volney Senior Director Americas Consulting/Labor Analytics

AREA DEVELOPMENT Publisher Dennis J. Shea dshea@areadevelopment.com

Editor Geraldine Gambale editor@areadevelopment.com

Production Manager Jessica Whitebook jessica@areadevelopment.com

Sydney Russell, Publisher 1965-1986

Staff and Contributing Editors Mark Crawford John McCurry Dan Emerson Mark Schantz Steve Kaelble Karen Thuermer

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

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

6

AREA DEVELOPMENT

EditNoteMastheadQ32022.indd 6

Art & Design Patricia Zedalis

Digital Media Manager Justin Shea (ext. 220) jshea@areadevelopment.com

Circulation/Subscriptions circ@areadevelopment.com

Web Designer Carmela Emerson

Halcyon Business Publications, Inc.

cbre

President Dennis J. Shea

Dan White Director Government Consulting

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

& Fiscal Policy Research

moody’s analytics

Joshua Wright Vice President

Economic & Workforce Development

emsi

Scott J. Ziance Partner vorys

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

8/29/22 4:24 PM

TAKE YOUR BUSINESS TO A BETTER PLACE — TAKE IT TO

CONNECTICUT Successful companies pick the best location for their business, but transformative companies pick the best location for their people.

LEARN MORE AT ADVANCECT.ORG

IN FOCUS “Golden Age” of Spec Development The e-commerce revolution and its related supply chain challenges have created a surge in spec development of industrial and logistics space.

BY JOSH WHEELER, Senior Vice President,

STONEMONT FINANCIAL GROUP Wheeler has developed approximately $500 million of projects in major markets across the U.S.

From coast to coast, demand for new warehouse and distribution space is hitting record-breaking levels.

According to a recent report from Cushman & Wakefield,1 the U.S. industrial construction pipeline topped 600 million square feet for the first time ever in Q1 2022, with nearly 95 percent of that tally classified as warehouse/distribution product.

Net absorption hit a staggering 108 million square feet in Q1, with 10 different markets posting more than five million square feet of new leasing activity from January to March.

Yet despite those eyepopping numbers, demand

8

AREA DEVELOPMENT

InFocusGoldenAge.indd 8

is still running significantly ahead of supply as industrial vacancy rates hit a new all-time low (3.3 percent).

This vacancy rate along with absorption is creating a speculative development boom like no one has ever seen. Speculative builds, which are simply facilities that are developed and constructed without a signed lease in place, now account for three out of every four warehouse/ distribution center projects nationally. Developers are willing to take on more risk given the market demand

the shutdowns these habits became more permanent.

The e-commerce revolution has been the primary driver of spec development, as consumers have now become accustomed to the ease and convenience of online shopping for a variety of goods. A report from FTI Consulting indicates that online will comprise one-third of all retail sales by 2030,2 with many companies now pivoting accordingly.

Recent supply chain challenges have also been a key driver of the spec development surge. With many products and goods being held up at coastal ports and overseas, companies and third-party logistics providers need to thread the needle by setting up shop in areas that allow them to work around those challenges and optimize their delivery

DEMAND IS STILL RUNNING SIGNIFICANTLY AHEAD OF SUPPLY AS INDUSTRIAL VACANCY RATES HIT A NEW ALL-TIME LOW (3.3 PERCENT). and with many projects pre-leasing months before the end of construction due to the supply-demand imbalance.

What’s Driving the Spec Boom?

The pandemic has altered consumer habits and during the height of

strategies. Having a movein ready logistics warehouse that has modern technology and is in close proximity to major airports, highways, and rail routes provides an immediate competitive advantage. That’s why industrial port markets and other primary markets, like Atlanta, Chicago and Dallas, are growing the fastest, with nearly 60 million square feet of new product under construction in DFW alone.

However, emerging markets with strong logistics networks like Central Florida, Savannah, Austin, and Nashville are also capturing more demand.

The intense competition

for available land in several markets means companies will need to become more comfortable pushing out to the periphery. Construction cost increases will inevitably be passed on to end-users through the form of higher rents. That means many corporate real estate decision-makers will need to be creative and adjust supply chain networks to these periphery locations where rents are slightly cheaper and 75–80 percent of the population can still be reached.

Who’s Investing?

In addition to traditional development firms, pension funds, institutional investors, publicly traded REITs, and private wealth are all pouring into spec development.

With rising rents and record high absorption, major financial institutions have shown a healthy appetite for industrial and logistics space across both gateway and secondary markets.

Speculative development for major warehouse and distribution projects will continue to command market share for the foreseeable future given the state of the current environment. Many businesses simply don’t have time to wait and need new facilities yesterday. Savvy e-commerce providers and distributors who need a leg up in this ultra-competitive environment can capitalize by partnering with entities that specialize in spec and build-to-suit development and logistics solutions tailored for each organization, allowing users to focus on their core business activities.

1

https://www.cushmanwakefield.com/en/ united-states/insights/us-marketbeats/usindustrial-marketbeat 2 https://us.fashionnetwork.com/news/Athird-of-total-retail-sales-will-be-online-by2030-says-report,971621.html

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

8/25/22 1:16 PM

Every business needs balance.

#

1

Most Improved State for Business (CNBC)

#1

Technology & Science Workforce (Milken Institute)

4 of the TOP 10

most culturally diverse cities in the U.S. (WalletHub)

Maryland. See what’s here.

And why your company should be too.

A highly-educated workforce. Ground-breaking innovation hubs in life sciences, cybersecurity and aerospace.

And, a quality of life that makes employees feel right at home. See why businesses are starting up or relocating here, here!

Open.maryland.gov/siteselection

FRONT LINE

Efforts to Address the Shortage

U.S. Seeks to Manufacture Critical Rare Earth Materials Reducing the nation’s dependence on foreign imports of rare earth materials is critical to the production of energy-efficient as well as other high-tech products.

BY KAREN E. THUERMER

The United States is facing a critical shortage of product made from rare earth materials that are essential in manufacturing important components for more than 200 products, including high-tech consumer products such as cellular telephones, computer hard drives, electric and hybrid vehicles, flatscreen monitors and televisions, and significant defense applications such as electronic displays, guidance systems, lasers, and radar and sonar systems.

According to the Emerging Information and Technology Conference (EITC),1 the largest uses of rare earth materials are in the manufacturing of permanent magnets used in wind turbines, the drive trains of hybrid and electric vehicles, and energyefficient applications.

These currently account for 29 percent of total global demand.

But today, China, from

10

AREA DEVELOPMENT

FrontlineU.S.Seeks.indd 10

whom the U.S. imports some 80 percent of rare earth product,2 monopolizes nearly all the production of these metals and is retaining much for its own defense and EV auto

Efforts are under way in the United States to address this problem.

In June, Energy Capital Economic Development (ECED) announced the opening of the Wyoming Innovation Center (WyIC), a 5,500-square-foot coal commercialization facility in Gillette, Wyoming. WyIC’s first tenant is the National Energy Technology Laboratory (NETL).3 “When we first envisioned our project, we did not conceive rare earth as being a part of this,” reveals Phil Christopherson, CEO of ECED. “NETL has a rare earth component extracting from coal flash.”

As more projects materialize, WyIC can be scaled up to accommodate them. “We have created the space to create pilot plants. We have seven

USA RARE EARTH IS POSITIONED TO BE COST-COMPETITIVE AND BECOME A LEADING DOMESTIC SUPPLIER OF CRITICAL RAW MATERIALS. industry.

Complicating matters, U.S.-China trade disputes have caused prices for these metals to skyrocket.

Threats from China to curb exports have left the U.S. scrambling for alternative supplies.

“It’s creating wild gyrations in the supply chain,” says Thayer Smith, president of USA Rare Earth (USARE). “This is a supply chain, national security, and commerce story. Demand for rare earth products is expected to grow 300 percent over the next seven years.”

test pads with power and water,” explains Christopherson.

USA Rare Earth is developing the first fully integrated U.S.-based rare earth metal and sintered neo-magnet manufacturing facility. The $100 million facility, announced in June, is being located in Stillwater, Oklahoma. It will source material from USARE’s Round Top Heavy Rare Earth, Lithium and Critical Minerals Project in Hudspeth County, Texas.

USARE will utilize technology to convert rare earth oxides into metals, magnets, and

other specialty materials.

The company plans to have the necessary operating permits for all metal, flake, and magnet operations in 2022, with initial production to commence in 2023.

Smith explains that USARE is positioned to be cost-competitive and become a leading domestic supplier of critical raw materials. He notes that the U.S. government had originally learned how to separate rare earths into individual products in the 1980s, but then outsourced the practice in the 1990s.

“By the 90s, China had decided to focus on this and began acquiring businesses doing exactly that,” he says.

“The reality is, we need a full industry to be built in the United States,” he remarks. “There are a handful of people doing parts and pieces that we are doing. There is a lot of R&D. Our approach is to use tried-and-true opportunities. We are also doing this in an environmentally friendly way.”

Smith emphasizes a big boost in starting this facility was the support USA Rare Earth received from the state of Oklahoma in terms of incentives and helping the company set up a tax increment finance (TIF) district. Another benefit is Oklahoma’s research institutions and workforce, and the project’s close proximity to Oklahoma State University, which, he says, is vital.

1

http://eitc.org/research-opportunities/ new-materials-technology-and-applications/emerging-semiconductor-andelectronics-technologies/the-future-ofsemiconductor-technology/semicomductor-materials/rare-earth-metals-andsemiconductor 2 https://www.cnbc.com/2021/04/17/thenew-us-plan-to-rival-chinas-dominancein-rare-earth-metals.html 3 https://industrytoday.com/wyominginnovation-center-officially-opens/

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

8/25/22 1:17 PM

EXPERIENCE THE STATE KNOWN FOR ITS PRO-BUSINESS CLIMATE AND SKILLED CRAFTSMEN THAT CONTINUE TO ATTRACT THE WORLD'S MOST NOTABLE BRANDS.

FRONT LINE Unionization Efforts Trending Upward According to the experts, respecting and listening to employees’ concerns is key to keeping unionizing efforts at bay.

to 10 to 21 days. The shorter window makes it “almost impossible” to educate employees on issues before a union vote. Employees having the ability to sign ballot cards online and use of mailin ballots can also work in unions’ favor, Weissman says.

Building Trust

BY DAN EMERSON

Across the United States and across industries, the unionization of workers has been declining for decades.1 However, U.S. employers took notice earlier this year when about 2,600 Amazon warehouse workers in Staten Island, N.Y., voted to start a union.

In light of another widely reported trend — employees’ new, post-pandemic bargaining power — does this mark the beginning of a new era in labor relations?

HR pundits say, “Stay tuned.”

“The Sweet Spot” According to Mary Weissman, an officer and consultant with The Weissman Group, a Dayton, Ohiobased labor relations consulting firm, “There has been a significant uptick in unionization efforts in all sectors.”

In recent decades, midsized companies in the 50 to 300 employee category have been “the sweet spot”

12

AREA DEVELOPMENT

FrontlineUnionization.indd 12

for union’s organizing activities, “because those employees are most likely to give (union organizers) a return on their investment,” Weissman notes. Organizers have largely avoided larger distribution centers with 500-plus employees, because those

Though employers have various groups of people with whom they need to have relationships, the “magic formula” for employers is to treat each of these separate groups of individuals — with variations depending on the audience — as partners in the business, according to Weissman. She explains that “the best way to keep people connected to the company is to create a sense of ownership so that ‘I get to decide a lot about my job.’

“Employee satisfaction is built in trust. If employees trust their employer, they don’t

IN RECENT DECADES, MID-SIZED COMPANIES IN THE 50 TO 300 EMPLOYEE CATEGORY HAVE BEEN “THE SWEET SPOT” FOR UNION’S ORGANIZING ACTIVITIES. are harder to organize and tend to have more varied employee viewpoints, she says. However, with changes in National Labor Relations Board rules making it easier to organize, there has been much more organizing activity within larger organizations, especially in the warehousedistribution center space, Weissman says.

One NLRB change has reduced the time employers have to respond to a union petition to organize and the union election, from 42 days

need anybody else. You build trust and respect by never calling people names, and never using demeaning, inappropriate language. Your employee interactions should be conducted the same way you would like an employer to interact with and treat your spouse or your child,” Weissman says.

She also advises trying to give employees as much control over their work lives as is reasonable. When possible, “tell them ‘why’ so they can understand the whole

picture. Tell them what they need to do, show them how be clear about your expectations. Let them take control of their work.”

Employees Have Choices With today’s tight labor market, the advice could be more important than ever.

“Employees have choices now. Even when they don’t, they are more productive and committed and you need fewer employees when you treat them with respect,” Weissman notes.

How does an employer stay in touch with what workers are thinking and feeling?

It’s easy to say and hard to do, Weissman says, but “the number one thing is talking to your employees and making sure your supervisors talk to them.” These talks should be scheduled to occur regularly, she advises. For a supervisor with 12 employees under (him or her), it’s reasonable to have one-on-one sessions three times a month.

In an interview with Forbes.com,2 labor relations expert Jason Greer, president of St. Louis-based Greer Consulting, put his finger on what could be the over-arching factor in keeping employees content and productive: “People will work for money, but they will die for respect,” says Greer. “You might have employees saying they want a union, but what they are really saying is, ‘I want executives to recognize I’m a human being and not just someone who shows up to make you all richer.’”

1

https://www.cnbc.com/2021/02/05/ union-enrollment-declined-for-decadesbut-union-workers-still-earn-more.html 2 https://www.forbes.com/sites/ laurendebter/2022/04/13/ union-victory-at-amazon-pushescorporate-america-to-be-nicer-toemployees/?sh=1eb0537062d6

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

8/25/22 1:18 PM

T:8"

DA N I E L L E B R OW N Chief Information Officer, Whirlpool Corporation

T:10.875"

“ MICHIGAN I S A STAT E FO R INNOVATO R S BECAU S E T HE WOR L D I S O P E N TO YO U HE R E .”

Dreaming. Innovating. Growing. It's how Michigan talent is making an impact on the world in key industries. From tech to mobility to advanced manufacturing, there's a different kind of hustle here.

Expand your business in Michigan and get access to support, camaraderie and new opportunities.

Make the move at michiganbusiness.org/pure-opportunity

1

16624_MEDC_ADQ4_Dani_8x10.875.indd

Saved at

8-9-2022 12:57 PM

Job info Job Client Media Type Live Trim Bleed Pubs

from

by

C02CG479MD6T

Approvals 16624 MEDC Print 7" x 10" 8" x 10.875" 8.25" x 11.375" None

Printed At

Eric Whitaker / studio360

Fonts & Images Art Director Copywriter Account Mgr Studio Artist Proofreader

C Weinkauf E Whitaker None

Fonts Minion Pro (Regular), Gotham (Black, Book, Bold) Images 21MED0026.tif (RGB; 538 ppi; 55.69%)

Notes None

Inks Cyan,

Magenta,

Yellow,

Black

None

FIRST PERSON

Speaking of supply chains — any thoughts on what it will take to get them back to normal? van Puyenbroeck: To rebalance things, we must get to a situation where more people are willing to work for the pay offered. The Fed is trying to address dealing with a recessionary environment. There is a staggering number of jobs remaining unfilled. According to Forbes, 2.1 million jobs critical to the supply chain manufacturing industry will remain unfilled by 2030. And that’s just in the U.S. This is not a gap that is easily closed. Rebalancing supply and demand, possibly through a recession, may partially take care of that. It’s also essential that we stay on top of COVID-19 because we are certainly not out of the woods yet. We cannot let our guard down. If there is another significant wave of infection, with more people sick and in isolation, it could be the final straw.

ROBIN VAN PUYENBROECK, EXECUTIVE DIRECTOR OF BUSINESS DEVELOPMENT WORLD TRADE CENTERS ASSOCIATION (WTCA)

What are the top lessons that companies have learned from the COVID-19 pandemic? van Puyenbroeck: I would say the top lesson is that insecurity is always around the corner. There is no such thing as a status quo anymore. Whereas companies used to embrace long-term planning, I believe that now being nimble and flexible is critical. You can still plan six months ahead, but based on what parameters? Who knows what the world will look like in six months? That is what we learned beginning with the COVID-19 pandemic, and now plenty of other factors and variables have been added to the mix, such as conflict, sky-high inflation, and trade barriers, all leading to incredible supply chain issues. The unknown stares at us every day. That is the world we live in.

The lesson is that not only companies, but everyone in their personal lives, must be able to adapt quickly to new situations.

14

AREA DEVELOPMENT

FirstPersonRobinVanPuyenbroeck.indd 14

As we emerge from the pandemic, what are the top challenges that U.S. companies face regarding global trade and investment? van Puyenbroeck: Sadly, there are many challenges now; one is that we see trade being used more often as a political tool. There are sanctions and a variety of trade barriers entering the economic spectrum that companies now need to learn to work with. Tariffs and protectionism impact the free flow of trade, goods, and people. And there are, of course, the many components to current supply chain issues that we are all too familiar with: a shortage of raw materials and finished products alike, workforce employment-related issues, supplier dependencies and mismatches — it’s a long list throughout the supply/logistics chain. I mentioned rising inflation at double digits in many countries.

There is a tremendous struggle for talent where finding people to do the work is one part of the challenge; the bigger challenge is retention.

Keeping your employees relies on many factors, from COVID-related absenteeism to the fact that many do not want to work for the pay offered.

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

8/25/22 1:19 PM

And if all this wasn’t enough, we have serious conflicts rising worldwide, in addition to climate challenges that are not going away, leading to serious migration issues — migration from conflict and migration from extreme climate changes, causing hunger.

crisis; we are in the middle of what looks like a perfect storm. Insanity would be to continue doing the same things and expect different results.

We all need to learn from these last years. Enormous flexibility is indispensable, and we must always expect the unexpected.

What are some solutions for these pressing challenges to global trade and investment?

How do you see global trade and investment performing in the next few years?

van Puyenbroeck: Companies realize they need a higher level of diversification in, and control of, their supply chain to mitigate risk, to spread risk. We certainly need more investment in people, ensuring people have skills for available jobs. We also need to rethink supply chains.

Just-in-time delivery was the mantra for the past decades, with products arriving exactly when and where you needed them. Now, however, the idea of holding a higher inventory is not sounding so bad. There is a very different cost vs. benefit equation now.

van Puyenbroeck: There is much to consider: conflict around the world, climate challenges, mass migration, food insecurity and hunger problems, rising inflation, and polarized elections around the world. How we navigate these challenges will determine our future. I do see global trade fairly stable, but not at the growth rates we have experienced. Our ability to solve problems is being challenged at many levels. Where the trade flows, where investments are being made will be determined exactly by how we navigate through the storm.

There is not just one solution. Rethinking diversification is part of the solution. Rebalancing supply and demand is another. Monetary policies and how central banks will handle inflation will, of course, have a major impact on recalibrating the supply-and-demand question over time.

What do companies need to invest in to stay competitive on the global stage? van Puyenbroeck: It is a difficult question because it is so broad; I would narrow it down to investing in people and technology. They are not mutually exclusive. You must ensure that people are trained and have skills for the available jobs and for the jobs of the future. The current mismatch between labor and the skills required is enormous. Additionally, investment in technology to solve problems is essential, but from a policy perspective, we must ensure that technological progress does not leave people behind.

How should companies prepare for the next global crisis? van Puyenbroeck: We are not out of the global

THE ASSIGNMENT Area Development’s editor recently asked Robin van Puyenbroeck, executive director of business development for the WTCA, about trends in global trade and investment, top challenges, supply chain woes, and how to prepare for the next global crisis.

Headquartered in New York City, the World Trade Centers Association (WTCA) is an international trade association that facilitates and promotes international trade and development. The association serves as an international ecosystem that provides global connections, iconic properties, and integrated trade services. The WTCA has 300+ WTC licensees around the world in almost 100 countries — participants include free trade zones, airports, logistical hubs, universities, conference and exhibition centers, and organizations that focus on economic development. The vast majority of business members/tenants of these World Trade Centers are small- to medium-sized businesses.

AREA DEVELOPMENT | Q3 2022

FirstPersonRobinVanPuyenbroeck.indd 15

15

8/25/22 1:20 PM

>

WAREHOUSE/DISTRIBUTION

Gaining Community Approval for Your Next Big-Box Project Partnerships with local economic developers and other community stakeholders are key to a company getting approval to site a big-box distribution center.

By Benton C. Blaine, Vice President; and Joseph Beasley, Assistant Vice President; Infrastructure and Economic Development, McGuireWoods Consulting LLC

I

t’s no secret companies are finding it more difficult to locate big-box distribution centers at desired strategic areas and sites.

Elongated planning and zoning permitting review timelines, political pressure from elected officials and citizens criticizing the quality of jobs and increased traffic, and restrictive ordinances and technical standards targeting distribution facilities are all challenges that companies face.

Local governments push back on the location of big-box distribution centers in their communities for a number of reasons. Limited land availability within a community’s tax boundaries — specifically limited industrially zoned land — puts pressure on local governments to create restrictions against distribution projects in an effort to attract projects with larger taxable investments and a greater number of higher paying jobs.

According to Cushman & Wakefield’s Industrial Marketbeat reports,1 329.9 million square feet of industrial property was under construction in the fourth quarter of 2019, making leaps to 656.5 million square feet in the second quarter of 2022. As industrial development activity increases, local leaders feel greater pressure to be more selective in what uses are permitted, much less incentivized.

16

AREA DEVELOPMENT

GainingCommunity.indd 16

General Contractor

Location Consultant

Architect

Freight Forwarders

Thos e in gplaying BIG- etting ta role Local appr BOX PR he Economic oved OJEC incl T Development ude Agency State/ Regional Elected Economic Officials Developers

Opposing residents may exert political pressures on governing boards, especially at public hearings for a rezoning or incentive award, by voicing criticisms against heavy truck traffic, industrial building aesthetics, and environmental impacts. Local decision-makers, in turn, may lack an understanding of how companies may mitigate these criticisms and the positive impacts that a distribution project will have on the community in terms of tax base, jobs, and the faster delivery of products

to industries and consumers within the region. Local leaders may feel a need to preserve the limited labor remaining in a community for perceived bigger and better projects in the future.

Pressure may also come from well-connected and established residents to preserve the existing character of the community by calling for the denial of any rezoning or imposing restrictive ordinances and standards that stunt important job-creating industrial development in the community.

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

8/25/22 1:21 PM

Steps to Understand and Mitigate Risk There is no magic wand or silver bullet to mitigate the risk that a company faces against these criticisms and pressures. However, there are steps that a company may take to first understand the risk associated with a site, effectively navigate these challenges, and secure a strategic location for its project.

Upfront data collection and due diligence will save a company significant time and resources before jumping in too deep. First, a company should consider meeting with a site selection and government relations consultant.

Such consultants have extensive experience navigating the challenges described above and negotiating infrastructure and economic development incentive agreements on a company’s behalf. They can anticipate and prepare for challenges that a company will face because they’ve walked other companies through the same process.

Consultants and a company’s allies involved in the process can commit to nondisclosure agreements to secure a company’s confidentiality. Confidentiality is important for protecting a company’s strategic decisions from competitors, preserving negotiating leverage on land/building costs, and is imperative in controlling a company’s narrative when introducing a project to a community.

Next, the company should identify and meet with an architect and general contractor. It’s helpful to identify a reputable architect or general contractor that has, or can acquire, local knowledge where the project is targeted.

Familiarity with a local government’s development standards, permit review, approval processes, and key decision-makers will all help a company achieve approvals for its project site. Professionals with this local knowledge are allies that can help a company penetrate the market.

The company should determine what local freight forwarders are already established in the community and engage with them. They’re already operating and managing logistics in the market and can provide insight on current market conditions in the area. Consider proceeding in stages, but if a company struggles with this step, it’s again a good idea to consider leaning on the team you’ve built who are familiar with this kind of legwork. Again, this kind of upfront data is important in deciding whether or not the location is worth continued attention, analysis, and resources.

Engaging Economic Developers and Elected Officials If a company has a specific state or region in mind for the project site, then it may engage a state or

regional economic development agency. If a company has already zeroed in on a specific community, then it may opt to engage a more local economic development agency that can introduce it to the community’s priorities, concerns, and pitfalls, as well as guide it in proposing solutions. A community profile presentation by a local economic developer provides a good background for the company, but also allows the company to better understand the community’s identity and what it is proud of. This is important for future relationship building.

A local economic developer will also typically be an advocate for the project and introduce the company to important local elected officials, planning and zoning administrators, regulators, and other decision-makers.

A company can secure greater confidentiality and avoid public records by meeting in person or via conference call with an economic developer and using a project code name in written communications. It is a best practice to assume that every email sent has the potential to be used in a story aimed at changing the narrative of the project.

These introductions and meetings can begin before a specific site has been identified or after a target site is selected. Local governments are incentivized to encourage new industrial development in their communities to broaden their tax base and lower the tax burden on voting residents. They’re often eager to point a company’s project team to sites that are considered more development-ready (e.g., sites already zoned appropriately, located in a business park with similar industries, have necessary utilities in place, and are less likely to face public opposition). An economic developer can provide an overview of a community’s available labor and workforce. If there’s a labor gap, then an economic developer may be able to make connections with a local community college system that can develop certifications and curriculum to prepare a ready workforce for the company (e.g., Certified Logistics Technician curriculum).

Beyond bringing together the most basic local government staff (i.e., from planning and zoning as well as utility providers), a trusted local economic developer can help a project team dive deeper into a local government’s site and building plan review process and serve as an advocate throughout. Some local governments have a development review committee that comprises all local government departments involved in site and building plan review and approval — planning and zoning, fire, engineering, water resources, etc. — that may provide feedback on preliminary concepts, sketches, and plans before requiring any type of formal plan submittal. This will allow a company’s project to get in front of major hurdles and obstacles that can further AREA DEVELOPMENT | Q3 2022

GainingCommunity.indd 17

17

8/25/22 1:22 PM

delay the plan review process and will save the design team time and money on more developed plans.

The company’s project team should also identify elected officials when a community is targeted and consider building relationships and educating them on the need and benefits of the project. Like the economic developer and other allies, elected officials can help steer a project to a site that is more development-ready, warn against potential pitfalls, and explore solutions. They can also exert pressure over local city and county management to ensure local government staff provide timely and appropriate responses to questions and concerns.

Making the Benefits Known Ultimately, education is the most powerful tool that a company’s project team can wield. When all of the actors discussed above understand the role a company’s project will play in benefiting the local economy and quality of life, they will be more eager to find solutions to regulatory hurdles, influence public sentiment, and expedite the entire review process. Identify and share relevant and latest studies that justify the demand for distribution. Be able to explain the negative impacts that a lack of distribution has on a community’s ability to receive products and attract other industries and development. Develop an investment analysis that shows the additional tax revenue the project will create for the

community. Close relationships with allies in the community can help a company be prepared for tough questions such as those about heavy traffic. Many state and local agencies that govern roads will require a traffic impact analysis during the plan review process, which will determine any required roadway improvements.

A company’s project team that has invested in relationships with and educated local government officials will have a team of problem-solving allies who are ready to find creative solutions to site and plan review challenges. For example, if a prime greenfield site faces too much political pressures against a distribution project, officials may be able to help the company identify a site that has surface-level issues — such as wetlands — that can be mitigated and overcome and may also involve less political pressures.

If limited remaining land is precious to a community, decision-makers may be open to exploring ordinance changes to reduce setbacks and allow taller buildings to maximize a smaller site and minimize amount of land in a community used for distribution. Companies that engage economic developers and exercise key tactics to educate stakeholders and build consensus within the community will be on a clearer path to securing a desired and strategic site. n 1

https://www.cushmanwakefield.com/en/united-states/insights/us-marketbeats/ us-industrial-marketbeat

Emsi Burning Glass is now

LIGHTAST.IO

Learn more.

18

AREA DEVELOPMENT

GainingCommunity.indd 18

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

8/25/22 1:22 PM

>

LOGISTICS/CRE

The New Industrial Ecosystem Resiliency in manufacturing, warehousing, and distribution requires a robust, data-driven approach to understanding the financial and operational influences across the new and ever-evolving industrial ecosystem.

By Amy Fobes, Managing Director, Location Economics, Savills

F

ar beyond ports, hubs, and transportation networks, the new industrial ecosystem requires a cross-section of executive decision-makers to take a proactive data-driven stance on location strategies and logistics planning. Shifts across complex, geopolitical and socio-economic systems are happening too quickly, and the costs are too high not to rely on a data-driven approach to meeting the common industrial sector challenges that include the following:

•

Highly competitive site selection due to low inventory of available space and soaring real estate costs Sharp increases in costs of supplies, inventory stocking, transportation, and energy Intense pressure on supply chain logistics to meet accelerated e-commerce demands Global supply chain bottlenecks impacting hyperlocal markets and communities as corporations strive to deliver on the promise of same-day or just-intime offerings Ongoing shifts in where people live, are willing to work, and at what pay rate

• • • •

industrial executives and demands for data from five years ago to today have transformed radically. An awareness of the new industrial ecosystem and the ability to leverage multifaceted, robust location data are now critical core competencies of the most successful industrial executive strategies and tactical playbooks.

Establishing a competitive edge and maintaining resiliency during these turbulent times and well into the future is a data imperative.

Navigating the Unknown The foundational and more traditional components of industrial analytics from the last few decades — such as measuring logistics, tracking freight costs, financial structuring of real estate assets, and continuous management of portfolios for optimization — remain important to driving operational efficiencies. In today’s world, successful executives need a firm grasp on the data that reflects what has changed, how to quantify change, how to mitigate risk going forward, and how to leverage data to make location decisions with confidence. Most importantly, what are the data and analytical workflows required to navigate the new industrial ecosystem?

As the economy shifts rapidly, the pressures on

• • What is the new industrial ecosystem?

The new industrial ecosystem is the result of accelerated demands and unexpected stressors placed upon supply chain networks due to dramatic changes in consumer behaviors combined with population migration, community expansions and contractions, shifting energy costs, and corporate desires to strive toward and achieve ESG metrics.

While office occupancy rates were plummeting throughout the pandemic, demand for industrial real estate soared. The boom in the industrial sector was fraught with challenges, frustrations, and outright fear for every decision-maker as inventory for industrial land and buildings was rapidly acquired. A new industrial ecosystem emerged from the pandemic that reflects a AREA DEVELOPMENT | Q3 2022

TheNewIndustrial.indd 19

19

8/25/22 1:24 PM

“

convergence of socioeconomic indicators new consumer demands and purchasing that until now were disparate or loosely behaviors were and remain daunting. coupled from market to market.

One of the biggest bellwethers of change may be in household-level Where are the workers?

A new industrial conversations about the industrial sector.

As office occupancy rates declined Both inside and outside of businesses, through new workforce and workplace ecosystem emerged our day-to-day life banter about ‘”supply offerings, corporations accelerated shifts from the pandemic that chain issues” has become commonplace. across their real estate portfolios to reflects a convergence Traditionally, unless you worked in capitalize on population migrations and logistics, no one made mention, let alone compete for talent in Tier 2 markets. Shifts of socioeconomic worried about supply chain logistics. in populations and businesses impacted indicators that until Yet today, most consumers have direct wage rates, residential home values, and experience with or emotional reactions competition for talent. now were disparate or to logistical bottlenecks coursing To gain a competitive edge, global loosely coupled from through the economics of day-to-day life. leading companies increased wages and Concerns and fears of scarcity that spiked offered sustainable benefits across every market to market. through the initial lockdowns of the vertical industry, especially the industrial pandemic are continuing to reverberate sector. For cash-positive companies, they and, at times, are having significant household-level increased wages and benefits to compete for, attract, consequences across markets, regions, and countries. and retain labor to remain operational while other An increase in e-commerce demand and pressure on companies have struggled to recognize the changes in same-day delivery services has placed an ongoing the marketplace and respond effectively. burden on logistical networks and the development of new warehouse and fulfillment centers.

According to Digital Commerce 360, “When digital E nvironmental, social, and governance moves revenue in 2021 is compared with 2019, online spending to the forefront soared by 50.5 percent. Although last year’s e-commerce Commercial real estate investors, developers, and landscape initially appears far less impressive than occupiers are beginning to recognize the strategic its 2020 counterpart, the fact that online merchants value, cost savings, and need to address governmental maintained gains — and even grew — is noteworthy.”1 mandates that require the adoption and compliance of environmental, social, and governance (ESG) initiatives.

The data shows that 40 percent of greenhouse gas emissions come from buildings, an 11 percent increase The rising cost of living in productivity occurs due to improved indoor air quality, The rising cost of living across every aspect of dayand 25 percent of companies tie executive pay to achieving to-day life has been unsustainable for many people ESG metrics. As such, sustainable operations, financial across densely populated markets for years leading up success, and growth within the new industrial ecosystem to the pandemic. Migrations of populations from more require a strategic lens into energy analytics along with costly Tier 1 cities have been carrying important labor health and wellness metrics for workplace success. and talent pools to new markets, spiking growth in unexpected communities across the country.

These population migrations have created new Responsive Strategies and Informed Tactics demands for the industrial sector at the zip code and Recognizing the new industrial ecosystem as a neighborhood level as new customer service areas with complex and interdependent geosocial economic driver high consumer and e-commerce demands emerged. that encompasses consumer, labor, and energy analysis Population migrations were already shifting before the can inform investors, developers, owners, and occupiers pandemic but accelerated throughout the pandemic as on the data needed to navigate the unknown. Building people sought to take advantage of remote and hybrid data workflows to support and incite collaboration working models by moving to more desirable live/work/ across executive decision-makers from multiple lines of play lifestyle destinations or to less costly markets to business has become a critical core competency for the maximize their purchasing power. most successful industrial organizations spanning global Lower interest rates incited a residential buying frenzy firms to up-and-coming startups. with 40 percent of new home purchases occurring in the Organizations that leverage data and implement first half of 2021 and leaving large service gaps across analytical workflows are those that are best equipped to distribution networks in newly booming communities and respond to the new industrial ecosystem as it continues neighborhoods. From ordering essential household goods to evolve. n to acquiring supplies for fixing or remodeling homes, 1 https://www.digitalcommerce360.com/article/us-ecommerce-sales/ the pressures felt across the industrial sector to meet

••

••

••

20

AREA DEVELOPMENT

TheNewIndustrial.indd 20

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

8/25/22 1:24 PM

>

LOGISTICS

Supply Chain Mix and Match Global trade imbalances have been created by systems designed pre-pandemic to handle JIT manufacturing that were not adaptable to sourcing and moving goods.

By Derek Cutler, Chief Economist; and Chris Steele, President & CEO; EBP-US

I

magine, if you will, that you are a logistics manager for a major manufacturer in December of 2019. The economy has been growing at unprecedented speed, and you are doing everything in your power to ensure that raw materials are getting to where they need to go. You’ve been speaking with each of your suppliers to better understand what’s happening in their production cycles so that you can get your parts to your assembly lines as quickly as possible.

Cost is king, and time is money. You’ve done everything you can to remove all waste from the system, and everything is humming along the way that it should.

But you’re starting to see some interesting news stories about this unusual flu that you had never heard of before, which is being seen in a part of China. Clearly, it won’t have any implication for you, right?

Roots of the Problem So, let’s back up slightly, and remind ourselves of just how flat the world has become in the past four decades or so. Manufacturers worked hard over that time to both produce goods in the lowest-cost locations and reduce waste and minimize the need for large warehouses full of inventory in favor

of more nimble supply chains that deliver just what is necessary.

This shift from centralized, scaledriven production minimized the need for warehouse inventory, meaning firms only maintained enough safety stock to overcome minor delays. Over time, manufacturers came to rely on a continuous flow of goods and money, with constant communication between sections in a supply chain.

This worked well under typical circumstances. However, problems began when the systems designed to handle this “just-in-time” (JIT) manufacturing lacked the necessary adaptability in sourcing and moving goods to address the cascading

Container Imbalance Index CAx | Year on Year

1

Values

0.75

0.5

0.25

0

1 2 3 4

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52

Source: container-xchange

2020

2021

2022

AREA DEVELOPMENT | Q3 2022

SupplyChain.indd 21

21

8/25/22 1:26 PM

St. Charles County, Missouri where major companies bet big—and win.

4 major interstates 6 class-one railroads 10 minutes from the airport Metro St. Louis/ St. Charles County

Easy access to the northernmost ice-free port on the Mississippi

Welcome to Missouri's Fastest-Growing County

With a unique combination of competitive operating costs, a growing population, and logistical advantages, St. Charles County, Missouri, offers the ideal location for your company.

An Unbeatable Location Located just 20 minutes from downtown St. Louis, St. Charles County, Missouri, is one of the most cost-effective locations in the US for organizations seeking to fully globalize their trade. Our central location and sophisticated transportation infrastructure allow your product to be anywhere in the US - including major coastal ports - in a matter of days.

A Deep Talent Pool As the fastest-growing county in Missouri for over 30 years, St. Charles County has a deep talent pool to meet your workforce demands, adding approximately 5,000 new residents each year. What's more, our location within the St. Louis metro area provides access to an additional workforce population of over 1 million.

Amazon Triples Workforce In 2019, Amazon opened its first Missouri fulfillment center in St. Charles County and announced plans to hire 1,500 workers. Less than three years later, the e-commerce giant was the County's largest employer with over 6,100 employees at its state-of-the-art facility along the Highway 370 Logistics Corridor.

Area Development Q3 2022.indd 1

General Motors Invests $1.5 Billion St. Charles County is home to the largest private investment in Missouri history, GM’s $1.5 billion re-investment in their Wentzville Assembly Plant. The plant, which is one of GM's most productive, manufactures the Chevy Colorado, the GMC Canyon, and two full-size vans. $300 Million Semiconductor Investment MEMC, a St. Charles County-based subsidiary of GlobalFoundries Inc., produces silicon wafers, a critical component of computer chips used in industries ranging from telecommunications to automotive and aerospace. MEMC's parent company is helping alleviate the global chip shortage by investing up to $300 million to expand production capabilities at its St. Charles County facility. $125 Million Investment in Wine Country The Hoffmann Family of Companies is investing $125 million to transform Missouri Wine Country in St. Charles County into a national wine destination on par with Napa Valley, with attractions including trolley rides and riverboat cruises. Upcoming construction projects include two hotels, a 500-seat amphitheater, and a golf course.

7/15/2022 4:07:02 PM

From available sites and buildings, to business-friendly local governments and an award-winning quality of life, you'll find it all in St. Charles County, Missouri.

Connect: Scott J. Drachnik, President & CEO EDC of St. Charles County sdrachnik@edcscc.com | (636) 229-5281

edcscc.com #AllInStCharlesCounty

ACCREDITED ECONOMIC DEVELOPMENT ORGANIZATION International Economic Development Council

Area Development Q3 2022.indd 2

7/15/2022 4:07:04 PM

M anufacturers worked hard

[over

the last

series of imbalances that started to Addressing the Problem fo u r d e c a d e s ] affect global trade.

But what does this mean for our At the outset of COVID, Hillebrand “flat-earth” global economy? Are we to b ot h (freight forwarder) wrote, “countries looking at an end or at least a slowdown implemented lockdowns, halting of a globalized economy? produce goods economic movements and production…

Probably not. As much as we may i n t h e lo w e s t [leading to] carriers [reducing] the wish to have production capacity number of vessels out at sea.”1 (and manufacturing jobs) come back c o s t lo c at i o n s to North America, the simple truth These effects lowered import and remains that for the short and medium export volumes and also led to empty and reduce term it is easier and less costly to containers being stranded and not create inventory than it is to re-create returned to their points of origin. wa s t e a n d the infrastructure, capital investment, This became a significant problem and workforce needed for substantial for Asian traders, who couldn’t retrieve minimize the manufacturing. And this hypothetical empty containers from North America. rebuilding certainly cannot be done on Then Asia, as the first hit by the n e e d fo r l a r g e the same cost basis as in other globally pandemic, was also the first to recover, wa r e h o u s e s competitive locations. creating a further complication. While However, there are circumstances China resumed exports earlier than the full of that will keep forms of JIT as a preferred rest of the world, other nations were strategy for manufacturing. Professor (and still are) dealing with restrictions, i n v e n to r y .

Yossi Sheffi of the MIT School for a reduced workforce, and minimal Transportation and Logistics points production. out3 that JIT systems have preserved The results are extremely visible in the reporting of trade patterns. For flexibility for manufacturers and given example, the accompanying graphic is them the ability to react to shortages by a measure of the container imbalance quickly altering their supply chains and for the current year, and two years prior to avoid the historical problems of being for reference.2 Values greater than 0.5 tied to a large, pre-negotiated inventory of goods in the face of sudden shifts in demand. indicate an imbalance between inbound and outbound In addition, near-shoring and reshoring, which containers (causing an accumulation of unmovable reduce the distance between links in a supply chain, containers). are also discussed as a potential solution, along with There has been a huge influx of imports to the U.S. re-evaluating safety inventory stock levels. Each of as the pattern of consumer demand pivoted from local these reactions can serve to alter the pattern of trade spending to retail and e-commerce shopping requiring costs being expressed: reducing distance-related deliveries. This makes sense if you remember that costs, altering the geography and concentration of families were required to quarantine, frightened to be partners to increase resilience, or increasing software in closed environments of stores and restaurants, and integration to enable smoother planning and reaction eventually changed their behaviors to embrace the to changes in conditions. convenience of home deliveries. Without enough workers U.S. Transportation Secretary Pete Buttigieg has in warehouses and trucks to efficiently move those announced a novel pilot data exchange program called goods, delays ensued, and containers were left taking up “Freight Logistics Optimization Works” (FLOW), which space in ports and warehouses. will involve stakeholders from all facets of goods This confluence of events resulted in an overall movement from transportation to port operation to shortage of containers — combined with more ships warehousing. This public-sector effort is centered waiting offshore to unload cargo due to insufficient port around providing more continuous streaming of goods space — and then, in turn, led to even fewer vessels movement data to allow for real-time intelligence as a and containers available, cascading to reduce overall cost-saving and performance-enhancing mechanism. capacity. This shortage of capacity has resulted in This approach has already been taken up by reports that the cost of shipping a container from China individual companies in their pursuit of supply-chain to the West Coast has exploded to as much as 400 resilience. Toyota has spent the past several years percent–600 percent over historical values (or more). digging their way multiple levels into their supply chains

24

AREA DEVELOPMENT

SupplyChain.indd 24

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

8/31/22 1:02 PM

to better understand not only their OEM and Tier 1 suppliers’ logistics, but even the logistics of Tier 2 and 3 suppliers, to better understand their risk and attempt to diversify supplier options.

There will be obstacles along the way. Broader adoption of mass data-sharing platforms such as FLOW will be slow and rife with pitfalls, especially given the sensitive nature of the data involved and the driving fear by firms of misuse for competitive gains. Many businesses will likely seek to privately invest in their own supply chains and not work in a broader integrated process, despite the benefits of scale participation. In this sense, development of new technologies and approaches may be more sporadic and occur at an individual firm level.

What Can We Do Now? Responsible government agencies should and will look for ways they can assist in both reducing regulatory barriers and nurturing the development of new approaches — such as creating best practices in goods movement as well as protecting each company’s proprietary data.

FLOW may be an important first step toward trying to create a more adaptive and resilient future — but federal action as a data sharing coordinator is not the only way that the public sector can look toward futureproofing resilience issues.

The ability to look at vulnerabilities stemming from logistics operations both domestic and foreign, from a planning context, is of direct relevance to public agencies. The U.S. is a data-rich environment that allows companies to synthesize novel lines of thought for identifying, valuing, and managing risk. The ability to identify at-risk regional economies and industry — and then assess their relative risks from disruptions at border ports and along goods movement routes — can enable more informed prioritization of investments and identification of supporting strategies. These models can support more informed discussions with local business leaders and further help in planning for a more resilient future.

In the end, the more valuable outcomes that may result from this crisis are more likely to come in the form of technology and supply-chain diversification than to result in a wholesale change in where products are made. However, creatively addressing these problems will allow for a truly global economy to move to its next and more resilient stage. n

WANT SERIOUS CONTENT? Get More from Area Development. areadevelopment.com The #1 site selection website

The #1 site selection newsletter

Weekly news & updates

twitter.com/ areadevelopment Join our growing list of followers

Real time content delivery

areadevelopment.com/RSS

Stay in touch with the latest news, case studies, white papers and the industry’s most insightful site selection content and current contacts.

1

https://www.hillebrand.com/media/publication/where-are-all-the-containers-theglobal-shortage-explained https://www.container-xchange.com/features/cax/ 3 https://www.wsj.com/articles/commentary-pandemic-shortages-haventshattered-the-case-for-just-in-time-supply-chains-11643547604 2

AREA DEVELOPMENT | Q3 2022

SupplyChain.indd 25

25

8/25/22 1:27 PM

>

COVER STORY

Available land, lower costs, and the desire to co-locate with suppliers and customers draw companies to rural locations, but satisfying infrastructure needs and access to talent shouldn’t be overlooked.

Visitors to Montana

know the state’s nickname of “Big Sky Country” is well deserved.

The state’s rural setting and wide open spaces, aside from being scenic, factored into the recent decisionmaking process of an international industrial company. The result was an economic development plum for the state.

Hyundai chose Bozeman as the location for its New Horizons Studio, a research, development, and lab center focused on the evolution of ultimate mobility vehicles (UMV), which can travel over terrains challenging for conventional ground vehicles. The facility is being developed at Montana State University’s Innovation Campus.

John Suh, a vice president with Hyundai Motor Group, will head New Horizons Studio. He says the search for New Horizon’s home was handled in-house, noting he was familiar with Montana as a vacation attraction but had not previously thought of it from a business viewpoint.

Rife with Resources Suh says Hyundai’s project is about developing alternative mobility via the addition of robotics to a car design. Montana, he believes, offers a great set-

26

AREA DEVELOPMENT

MajorProjectsEmbrace.indd 26

By John McCurry

ting for testing of the vehicles and a great potential future market in areas such as mining and energy exploration.

“That leads us to look at areas with a wide range of natural resources, whether it is agricultural, ranch land, or forest,” he says. “There are a lot of places in Montana where such a vehicle could add

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

8/25/22 1:41 PM

value. It is important to be close to our potential customer and close to the scenarios where our vehicle can provide value.”

Hyundai also wanted a place rife with talent, where the company could “ease into position as the premier employer” for engineering talent. Hyundai’s project will serve to keep talent at home, Suh says.

Hyundai also wanted a place rife with talent, where the company could “ease into position as the premier employer.”

“There aren’t many companies like us in Montana. In Bozeman, there is a great school, Montana State University, producing a lot of engineering talent, but in many cases, there have been limited local career opportunities for their graduates.”

Hyundai considered other locations but kept coming back to Montana’s distinctiveness and the

AREA DEVELOPMENT | Q3 2022

MajorProjectsEmbrace.indd 27

27

8/25/22 1:41 PM

Hyundai will develop Ultimate Mobility Vehicles (UMVs), including the concept vehicle Hyundai Elevate, at its New Horizons Studio in Bozeman, Montana.

potential for the company to be a unique employer in the region. Asked if Hyundai might eventually locate a UMV manufacturing facility in Montana, Suh notes design and manufacturing of vehicles usually occur in two different places. “But I do believe in Montana we will find the market and customer base that will make sense to also do our manufacturing here. But that decision has not been made yet,” he notes.

The Lure of Rural Settings Hyundai’s need for rugged terrain for vehicle testing makes it somewhat of an anomaly, but in general, site consultants say many of the qualities that lure companies to rural settings are the same as urban locations. At the top of the list are land, labor, and educational opportunities.

Courtney Dunbar, director of site selection at global construction and engineering firm Burns & McDonnell, says decisions to locate in rural areas are typically the product of a proactive, rather than a reactive, approach. That makes it less consultant-driven.

“More likely, it would be where there was an anchor industrial type, or an agrarian company, that may be located in an area that might be considered rural population-wise, but where there is a cluster of need up or down line. You’re either supplying to it, or you’re taking supply from it, to feed whatever is being manufactured or created in the operation that may site there,” she explains.

For example, Dunbar says, a location with a major food processor in a rural area may have packaging companies that may also wish to co-locate. Or it could be machining or smaller companies that deal with an equipment repair that may want to co-locate.

Associates, notes the biggest challenge for manufacturers is securing suitable land. Rural America offers availability and cost advantages. Land and labor costs trend lower in rural areas.

“There can be a big opportunity in the lower cost of power and the access to power,” Hickey says. “However, at times, agricultural areas can have issues with available infrastructure and the amount of power transmission and conductivity can present a challenge.”

The Southeast continues to win big projects in lower populated areas. Hickey cited Tennessee, Georgia, the Carolinas, and Virginia as having done well in recent years in terms of bringing together state and local resources to attract projects.

“They are finding ways to find and develop the infrastructure to ultimately make these projects a reality,” Hickey says. “The infrastructure is a key issue. The industry wants to know what sites are ready today. What is it going to take to make it come together? They want to know what availability or challenges exist in order to access local power, water supply, and wastewater management, and what access is available to roads, rail lines, or ports.”

Quick Site Plans Hickey and Dunbar say with projects moving so quickly today, site developers must plan two to three years ahead, to make sure sites are ready when needed.

“In a lot of instances, rural locations don’t have ready or prepared sites,” Dunbar says. “You have to be in a position where you can at least show that you prepare a site quickly.

It demands diligence to get them to a shovel-ready perspective, versus a pre-built industrial park scenario, which can

Clustered Together “A lot of it has to do with the cluster,” Dunbar says. “It’s driven by the existing industry more than it would be by just randomly siting something on its own.”

Site advisor David Hickey, managing director at Hickey &

28

AREA DEVELOPMENT

MajorProjectsEmbrace.indd 28

This illustration shows the 400,000-square-foot addition to Schwan’s footprint in Salina, Kansas.

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

8/29/22 2:54 PM

be very difficult for rural areas.

“If I have something in the cluster that already exists, what is needed in the up and down line? Do I have raw product in my backyard that can be used to attract industry that can utilize that raw product? Logistics matter too in that equation. You must make sure your workforce somehow is higher in volume or skill level or both, to compete for certain industries.”

Rural sites offer more opportunities and often attract much larger projects, says James Chavez, president and CEO of the S.C. Power Team, the economic development arm of South Carolina’s 20 electric cooperatives.

“Especially in the last year, projects have gotten so big in scale,” Chavez says. “Most metro areas are now built out to the point that they cannot accommodate that kind of footprint. They are beginning to look at second-tier rural communities for sites.”

Development of rural sites presents a few challenges.

First, developers must prepare a site for today’s fast-moving projects, Chavez adds. “If you don’t already have control of the property, if you’ve not engineered or acquired a right of way for whatever infrastructure will be required, you just can’t keep up with project timelines.”

Highlight the Workforce Assets The second challenge, which is the same for all communities, is providing a workforce. Chavez says being able to articulate workforce assets to companies is essential.

“Just because you are small does not mean you do not have a large-draw area, the ability to pull people in from a large radius,” Chavez says. “It’s essential to be able to know what skill sets those people have, and to be ready to communicate a proper and compelling workforce story. Knowing what your existing employers are going to say about their workforce is super-important. Any potential employer looking at a new area is going to want to talk to other employers to get a feel for the market.”

One of South Carolina’s biggest rural projects in recent years is Samsung’s sprawling complex in Newberry, about 40 miles northwest of Columbia. The Newberry site, which manufactures washing machines, recently passed the fiveyear mark. Initially operating in a vacant building formerly occupied by Caterpillar, Samsung has since expanded its footprint to 1.5 million square feet.

Samsung has invested about $500 million and created 1,600 jobs at its Newberry campus. Tom Komaromi, general counsel at Samsung Electronics Home Appliances America, says the company has also made progress with localization of its supply chain, bringing four major suppliers to the area.

The sprawling Samsung campus in Newberry, S.C., has steadily expanded over the past five years.

Komaromi says Samsung ultimately chose Newberry for reasons including “an incredible workforce, a robust energy and transportation infrastructure, and local officials who are business ready and have a track record of success with international companies.”

Samsung’s site selection process took several months.

“We developed an extremely aggressive timeline,” Komaromi says. “Just six months after our initial announcement, we opened the doors in Newberry and produced our first residential washing machine in the United States. Since that day, we are running two production lines with multiple shifts and have produced over four million washing machines.”

Taking a Holistic View An ongoing rural success story is Schwan’s Company’s growth over the decades in Salina, Kansas. Schwan’s acquired the Tony’s pizza brand in Salina in 1970. The facility has since grown from 18,000 square feet to 550,000 square feet, including a distribution center that was added in 2006.

An expansion currently under way will add another 400,000 square feet to the complex. The company believes the facility will be the largest pizza plant in the world.

“We have been able to develop some great relationships through the years in Salina at the community, state, and federal levels,” says Schwan’s spokesman Chuck Blomberg.

“Generally speaking, you would typically find that operating in a rural area can be less expensive due to a lower cost of living, but this isn’t the only factor for us in choosing a location. We have facilities in both rural and more urban areas. We tend to look at a project holistically in how a specific location might benefit our business and the community.”

With that in mind, Hyundai’s Suh advises companies considering rural areas to examine the ingredients needed to make a successful business: “Look for a source of talent, such as technical schools or universities. Look at your market and gain knowledge of the customer, and educate them about you as well,” he concludes. n

AREA DEVELOPMENT | Q3 2022

MajorProjectsEmbrace.indd 29

29

8/25/22 1:44 PM

>

LIFE SCIENCES

Explosive Growth of Life Sciences Sector Comes with Challenges Although opportunities abound, companies in the life sciences sector are also facing numerous challenges — from accessing skilled labor to deciding whether to build out or retrofit existing space.

By Deb Boucher, Vice Chair, and Jason D’Orlando, Senior Managing Director, Project and Development Services; Cushman & Wakefield

industry will weather the challenges of 2022 and emerge with continued success — safely bringing novel treatments, devices, and cures to the population at scale.

From a commercial real estate and development perspective, the most exciting part is that demand is going to continue, especially in markets that are mature, like Boston, San Francisco, and New York City. At the same time, new markets are quickly gaining traction and attracting new investments as some tenants are finding the established markets too pricey or lacking their required space.

Accessing Skilled Labor

L

ife sciences has become much more than a niche sector on the outskirts of commercial real estate — and, like other accelerating sectors in real estate, it is experiencing growing pains. Demand for space is being driven by promising new technologies and medical advancements moving from research to everyday miracles. And while the pandemic has certainly put pressure on the health system and life sciences industries, it has also accelerated growth (and funding) for promising discoveries.

Since around 2010, thanks to a surge in new products and technology, as well as an influx of capital from both public and private investors, the life sciences sector has seen significant growth. The last two years have seen tremendous expansion with $70 billion of private equity (PE) capital and public National Institutes of Health (NIH) funding pouring into life sciences-related companies in North America in 2020 — and a record $78 billion in 2021.

Building off the successful use of mRNA technology to produce effective and commercially viable vaccines, the life sciences industry is rushing to apply the lessons learned to other conditions like cystic fibrosis, cancer, and HIV. And while the life sciences industry is not immune to the volatility the public markets have experienced in 2022, we expect the life sciences

30

AREA DEVELOPMENT

ExplosiveGrowth.indd 30

This rapid expansion and high demand have led to some complex calculus when determining where to locate; whether to develop new or lease (or potentially refit) existing space. Each option presents both challenges and opportunities for the developer and/or tenant.

In mature markets, access to a robust labor force is most important for occupiers. Leading universities are the source of this labor for both incubators and more mature companies, giving them access and proximity to readily available skilled employees. A well-educated labor pool is a key ingredient for growth and is often one of the first requirements for tenants looking at a market. The old chant of

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

8/26/22 11:41 AM

We expect the life sciences industry will weather the challenges of 2022 and emerge with continued success.

“location, location, location” can easily be replaced by “talent, talent, talent” for the life sciences sector.

Occasionally that ready pipeline of skilled labor can’t offset the higher costs, low availability of space, and fierce competition for talent found in the mature markets. It can often be hard for an emerging life sciences company to compete on that playing field with consumerfacing brands whose products are in your medicine cabinet — or in your arm.

Some of these companies are now looking to tertiary markets to improve cost and, in turn, draw the workforce to them — or incentivizing postsecondary institutions to beef up their life sciences programs to meet the growing need. This is, of course, encouraged and enabled by eager economic development corporations. Salt Lake City, Denver, Austin, and Dallas are in this category, putting a greater focus on attracting life sciences sector companies, with assurances the talent will be there when they need it.

Receiving Funding Another often overlooked factor in location selection is funding. Mature markets have a significant advantage over tertiary markets in terms of dollars invested in the sector — and the more funding the market receives, the more capital available to expand the sector.

One indicator for a market moving up in the ranks is when it starts receiving more venture capital (VC) dollars to fund research in the markets. The NIH funding increases in some tertiary markets, but the lion’s share goes to the same top-tier institutions year after year.

Once we see that shift starting to move into tertiary markets, then we know more research will be funded, more companies can enter later-stage development, and the pressure will be on for more real estate development.

Right now, the top 10 markets that receive NIH funding are those more mature markets.

The money does a lot: It funds research, which means hiring staff, hopefully opening an office, or building out laboratory space. It can also lead to mistakes, as brilliant scientists and researchers are tasked with complex business decisions that are outside their

area of expertise — and in secondary and tertiary markets, this can be compounded by developers and landlords inexperienced with the life sciences sector and its unique needs.

Imagine the Ivy League professor receiving VC funding and needing to ramp up clinical manufacturing but with no understanding of development, site selection, real estate, or project development. This is a frequent scenario playing out in real time as medical advances continue at a breakneck pace.

An Ongoing Process The most common pitfall when emerging companies start an expansion process is thinking of their potential space as a static financial decision — “one and done.” Instead, life sciences companies should think of their real estate as a part of the scientific (and commercial) program — an ongoing and mapped out process that will support their research, development, and/or commercialization in a sustainable and effective way. Tenants should be asking, “What is the business case” and “How should I prepare to hit my operational goals?” From that basic starting point, and with the right advisors, the rest (from location selection and ceiling height to specialty plumbing and electrical) can start to fall into place.

It may seem elementary, but it is something the life sciences sector has struggled to do.

Of course, all of this is made more challenging by the inevitable pressure to “get to market” and start providing a return for investors. All industries have investor pressure; however, human therapeutics that require FDA approval are particularly challenging because of the lead time to discover, develop, and commercialize an approved product.

That pressure can lead to shortcuts in the project development that can end up costing time and money over the course of a project. That Ivy League professor with cash in hand might be tempted to look at converted space to meet the growing company’s needs, but that comes with its own set of challenges versus a ground-up development.

Continued on page 64 AREA DEVELOPMENT | Q3 2022

ExplosiveGrowth.indd 31

31

8/26/22 11:41 AM

13th Annual

TOP STATES Doing Business 2022 SITE CONSULTANTS SURVEY

By Steve Kaelble

Top 20 States

B

usiness has certainly been booming this past year, certainly more than many people expected on the heels of a major pandemic. As the economy has rebounded dramatically, countless fast-growing companies have been seeking locations where they can grow.

Area Development’s latest “Top States for Doing Business” feature looks at some of the places you’re most likely to find those locations ripe for growing and doing business successfully, as per the surveyed panel of experts — consultants who have spent many years collectively in the work of economic development and location selection.

They’ve learned through experience which states are the standouts in various important factors for doing business, from costs to taxes and incentives to training to a welcoming and hassle-free government.

32

AREA DEVELOPMENT

TopStates2022Q3.indd 32

1. Georgia 2. Tennessee 3. South Carolina 4. Texas 5. North Carolina 6. Alabama 7. Virginia 8. Ohio 9. Indiana 10. Mississippi

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

8/26/22 10:44 AM

METHODOLOGY Our 2022 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 13 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 13 categories were calculated to rank the top 20 states overall.

11. Florida 12. Louisiana 13. Arizona 14. Michigan 15. New York 16T. California 16T. Illinois 18. Kentucky 19T. Oklahoma 19T. Utah

Once again, Georgia is atop the overall list, a spot it has held for nine years in a row. As you read on to find out more about how states rank in various attributes of doing business, you’ll find Georgia atop many of those lists, too.

But all of our “Top States” have plenty to boast about, and plenty of experience making success happen. Indeed, the top 10 list this year is pretty similar to what it was last year, with an exception or two. It’s heavy on Southern States (plus Ohio and Indiana), all places where local and state leaders have lots of experience making business success happen.

That said, before we dive into the lists, we’ll reiterate that this year’s “Top States” rankings reflect the collective views of our expert panel. It’s highly useful information to consider when embarking on a location selection, but it’s also important to

AREA DEVELOPMENT | Q3 2022

TopStates2022Q3.indd 33

33

8/26/22 10:45 AM

“

OF THE 10 STATES THAT LEAD OUR

OVERALL LIST OF “TOP STATES FOR DOING BUSINESS,” ALL BUT TWO ARE ALSO ATOP THE RANKINGS FOR THEIR OVERALL COST OF DOING BUSINESS.

Overall Cost of Doing Business

1 2 3 4 5 6 7T 7T 9T 9T 9T

Georgia Tennessee South Carolina Alabama North Carolina Texas Indiana Mississippi Arizona Florida Ohio

Business Incentives Programs

1 2 3 4 5 6 7 8T 8T 10T 10T 10T

Georgia South Carolina Tennessee Ohio Alabama Indiana Virginia Mississippi North Carolina Kentucky Louisiana Texas

note that your project and your company are unique. For very valid reasons that are all your own, the site you pick may be in a location that’s not on any of these lists. In other words, our “Top States” have a lot to boast about and have tremendous attributes.

But every state can point to economic development projects for which that state clearly has precisely the right characteristics.

The top state for your needs is totally up to you.

OVERALL COST OF DOING BUSINESS

Some say that money isn’t everything, and they are right, of course. If overall cost of doing business was the only consideration in choosing a location, we wouldn’t have a dozen other categories to examine. But it’s worth noting that of the 10 states that lead our overall list of “Top States for Doing Business,” all but two are also atop the rankings for their overall cost of doing business.

Georgia, in fact, is the cost leader yet again, the third year in a row. Tennessee moves up to the second slot, and South Carolina rises to third. It’s probably not surprising that the list of business cost winners is made up of largely the same players from one year to the next, albeit with some shuffling of the order.

There are many factors that create a low overall cost of doing

34

AREA DEVELOPMENT

TopStates2022Q3.indd 34

business, and some of our other “Top States” categories reflect those factors. Low taxes enter into the big picture, as do generous incentives. Energy is a big cost factor for many projects, along with availability of real estate.

Take #1 Georgia as an example.

The state lowered its corporate tax rate a few years ago, and even before that, the rate had not gone up for at least half a century. Georgia also is generous with tax credits and exemptions, plus a talent pool that’s supported by highly regarded training and development programs.

Tennessee, meanwhile, boasts the lowest state and local taxes paid per capita, and there is no personal income tax. Business costs are helped by its right-towork status, too. South Carolina also touts being a right-to-work state, industrial power rates that are significantly below the national average, and a workforce and education system that helps companies connect with well-qualified but affordable people.

Alabama (ranked fourth in this category) boasts a competitive cost structure, generous tax incentives, and low power costs.

And, North Carolina (ranked fifth for its overall cost of doing business) is proud of taxes that are among the lowest in the nation, along with low utility rates and other cost benefits.

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

8/26/22 10:46 AM

13th Annual

TOP STATES Doing Business

2022 SITE CONSULTANTS SURVEY

Access to Capital & Funding

1 2 3 4T 4T 6 7 8T 8T 10T 10T

California Texas New York Massachusetts Virginia Illinois Georgia Michigan North Carolina Colorado Tennessee

Competitive Labor Market

1 2T 2T 4 5 6T 6T 8T 8T 10

36

Georgia Texas Tennessee North Carolina South Carolina Arizona Michigan Ohio Virginia Alabama

AREA DEVELOPMENT

TopStates2022Q3.indd 36

BUSINESS INCENTIVE PROGRAMS

Our panel of experts swapped the top two places on the comparison of business incentive programs.

Last year the top two were South Carolina and Georgia, while this year it’s Georgia and then South Carolina. Suffice it to say that both are winners.

And it’s also worth noting this is a list that’s dominated by Southern States. The only states on this list that are north of the Mason-Dixon Line are Ohio (ranked fourth in this category) — with wide-ranging incentives that include microloans and enterprise zone credits along with boosts for job creation and meat processing — and sixth-place Indiana, with a dozen categories of incentives that range from R&D and payroll tax benefits to incentives for moving headquarters and operating data centers.

Georgia’s top-rated list of incentives includes a job tax credit rewarding new job creation to the tune of as much as $4,000 per job per year for five years. The state aimed to fight COVID-19 and ramp up its presence in manufacture of personal protective equipment with a PPE manufacturing tax credit.

Meanwhile, there are generous sales and use tax exemptions for manufacturers, distribution centers, and data centers, among other perks.

South Carolina has a big menu of incentives, too. Start with the jobs tax credit — it’s targeted to be especially generous in areas of highest need and, in those areas, can be worth as much as $25,000 per new job created. There are credits for R&D, for corporate headquarters, for investment in economic impact zones, and various ways to lower property taxes.

Third-place in this category, Tennessee also targets extragenerous incentives to areas deemed “at-risk” or “distressed” by the Appalachian Regional Commission. Its long list of other incentives includes an infrastructure program, a job training assistance program, and an economic development fund that can help out with all kinds of costs, such as retrofitting buildings, acquiring real estate, and relocating equipment.

ACCESS TO CAPITAL AND FUNDING

Where does a large share of business innovation take place in America? California, the place where venture capital flows like running water. It’s no surprise that California tops our list this year for access to capital and funding, just as it did a year earlier.

Indeed, according to research from Statista,1 there was about $158 billion in venture capital investment in California in 2021, far ahead of any other state. Next was New York at about $50 billion, Massachusetts at $36 billion, and Texas at $9 billion.

Of course, venture capital is just one source of funding for business growth. Many states have been quite creative in launching funding options. For example, small businesses that are having trouble getting financing in California can tap into the California Capital Access Program for Small Business.

Meanwhile, Texas is second on our capital and funding list this year, and that’s where the nation’s largest deal-closing fund helps plug gaps and make big investments happen. The Texas Enterprise Fund can be the final tool for winning projects when there’s just one site in the state competing, and when there’s a viable out-of-state option still on the table.

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

8/26/22 10:46 AM

MORE THAN SHOVEL READY

GOLD SHOVEL READY KENTUCKY HAS BUILD-READY

Kentucky has set a new, higher standard. With our certified Build-Ready sites, we have drastically shortened the time needed to plan and begin construction. With a Build-Ready site, a company is guaranteed that: • A building pad is ready • Zoning is in place • Environmental issues have been resolved • Infrastructure plans are set • Construction costs and timetables have been estimated • Funding plans have been developed, with sale and lease options • Building renderings are available

BUILD READY https://cedky.com/r/gold_shovel @cedkygov

“

ONE TWIST THIS YEAR, COMPARED TO LAST, IS THAT A COUPLE OF STATES MAKE OUR TOP

10 FOR THEIR COMPETITIVE LABOR MARKETS WITHOUT BEING RIGHT-TO-WORK STATES.

Workforce Development Programs 1 2 3 4T 4T 6 7 8T 8T 8T

Georgia Virginia South Carolina Alabama Louisiana Tennessee North Carolina Michigan Ohio Texas

Energy Availability & Costs

1T 1T 3T 3T 5 6T 6T 8T 8T 8T 8T 8T 8T

38

Georgia Tennessee Alabama North Carolina Mississippi Louisiana South Carolina Iowa New York Ohio Oklahoma Texas Washington

AREA DEVELOPMENT

TopStates2022Q3.indd 38

Third on the list is New York, and there’s a fourth-place tie between Massachusetts and Virginia. As mentioned above, New York and Massachusetts are big winners in the venture capital business, and New York also happens to be one of the world’s most prominent financial capitals. Massachusetts also has such options as the Massachusetts Growth Capital Corp., which connects businesses with alternative funding and other resources. Virginia has its own menu of capital options, and recently added a Small Business Resiliency Fund program aimed at expanding access to capital and technical assistance to small businesses impacted by the pandemic.

COMPETITIVE LABOR MARKET

Georgia remains at the top of the list when it comes to competitive labor availability. Texas and Tennessee tie for second place in this category, followed by the Carolinas. These are all states that fall in the lower half nationally in terms of median annual wages, which certainly makes sense for maintaining a competitive labor market. They also are states that do well in terms of attracting highly qualified workers, and they have good programs for filling in gaps when it comes to training and education.

One twist this year, compared to last, is that a couple of states make our top 10 without being right-to-work states (last year, all

of the states listed as being tops in competitive labor were right-towork states). And, a couple of the states on the list have a median income a bit higher up the list.

As we stated earlier, money isn’t everything, and for some projects, there clearly are competitive labor attributes more important than dollars.

WORKFORCE DEVELOPMENT PROGRAMS

Just to reiterate, wages are only one consideration when you’re trying to fill out an employee roster with highly qualified individuals who are ready to do the job. That is especially true in this age of labor shortages — companies in many industries are having trouble hiring all the talent they need. That just makes workforce development programs all the more vital as a location factor.

This is such an important topic right now that we’ll go into a bit more detail in an accompanying sidebar article. But if you’ve been actively involved in picking locations and hiring workers in recent years, you won’t be surprised by the states on our list for the best workforce development programs. These states are highly regarded as superstars in helping companies get up and running with the right people on the job.

Topping the list yet again is Georgia. That owes a lot to the existence of the Georgia Quick

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

8/26/22 10:46 AM

FAST TRACK YOUR PROJECTS From concept to completion, we’re ready to help put your projects on the fast track to the finish line. We will work with you every step of the way by providing current workforce analysis, utility expertise, Project-Ready® sites and strong connections to community and state partners to help you navigate the region. To accelerate your projects, visit mississippipowerED.com.

Mississippi ranks in the top 10 for overall cost of doing business Cost of living 10% lower than the national average Exceptional and skilled talent pool Strategic central location in the US

mississippipowerED.com

Logistics & Infrastructure

1 2 3T 3T 5 6 7 8 9 10

Georgia Virginia Ohio Texas Indiana South Carolina Tennessee Illinois North Carolina Florida

Start program, part of the Technical College System of Georgia. It’s an amazing resource for customized, free training services for qualified companies that are growing or adding technology. Virginia (ranked second in this category) also has highly regarded programs, including FastForward, the Virginia Economic Development Partnership’s Virginia Talent Accelerator Program, and Virginia Career Works.

South Carolina fares well on this list, too, with a variety of skills training initiatives placing it third in this category. There are programs specifically for people who have certain challenges to gainful employment, as well as customized training programs

for businesses, registered apprenticeships, incumbent worker training, and an on-the-job training program that offers wage and salary reimbursement to help cover training costs.

ENERGY AVAILABILITY AND COSTS

As is the case year after year, our experts rate Georgia and Tennessee as best for energy availability and costs — this year they’re tied for first place. The rest of the top five is different, though.

Alabama and North Carolina are tied in third place, and Mississippi moves up to fifth place in this category.

One big factor behind the

2022 TOP STATES COMMENTARY Georgia’s Logistics & Infrastructure Attributes Contribute to Its No. 1 Ranking Its logistical strengths and supply-chain technology leadership are among the reasons consultants ranked Georgia as the No. 1 state for doing business.

No surprise to me that Georgia takes the top spot here.

Georgia is a major, global player in the logistics sector due to its multimodal strengths in aviation, deepwater ports, rail, over-the-road highway network — not to mention the state being a popular landing spot for the reshoring of manufacturing back to the U.S. UPS — a longtime Boyd logistics client and one of the largest private-sector employers in Georgia — has its headquarters in Atlanta having relocated it from Greenwich, Conn., in 1991.

Historically, Atlanta has been known as the logistics hub of the South due to its many early rail lines. We like to say that the UPS head office move to Atlanta made the city’s logistics hub moniker “official.”

Elsewhere in the state, warehousing is especially hot in the Savannah area on the strength of the deepwater port there, the port’s impressive growth in recent years, and relative lack of congestion vis-à-vis ports like LA, Long Beach, and New York/New Jersey. The state’s relatively new inland Appalachian Regional Port in Murray County has been well-received and provides another important gateway to global markets.

Atlanta has also grown into a major global center for supplychain technology due to its large cluster of corporate headquarters that help develop and manage leading-edge supply-chain technologies. Today, the logistics sector has grown into being Atlanta’s single-largest employer with over a quarter million jobs. Atlanta is also home to top-level research at the world’s largest logistics-related research and education enterprise: the Georgia Tech Supply Chain & Logistics Institute.

By John Boyd, Jr., Principal, The Boyd Company

40

AREA DEVELOPMENT

TopStates2022Q3.indd 40

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

8/26/22 10:47 AM

Tennessee advantage is the Tennessee Valley Authority, which got its start in the 1930s as a federally owned utility and is now a public power wholesaler.

Customers of the 153 local power providers that TVA serves enjoy rates that are lower than 70 percent of the nation.

Georgia Power, with flexible rate and usage programs that help with affordability, has a forwardthinking approach to ensuring energy needs continue to be met in the long haul. Its latest Integrated Resource Plan has earned official state approval, setting forth a strategy to transform energy sources, make the grid more resilient, double renewable

and solar capacity, focus on energy storage, and create energy efficiency programs.

Available Real Estate

LOGISTICS AND INFRASTRUCTURE

1 2T 2T 4 5 6 7T 7T 9 10T 10T 10T

There's yet another list with Georgia at the top this year. It’s an easy bet, given the state’s prime location for serving the booming Southeast, its deepwater ports for reaching the world by sea, and the super-busy but ultra-efficient airport in Atlanta. An infrastructure study by a Harvard researcher says Georgia’s logistics hub is the nation’s fourth-largest.2 Virginia also has an appealing location on the central East Coast, and significant

Georgia South Carolina Texas Tennessee Ohio North Carolina Alabama Indiana Michigan California Florida Illinois

THIS IS WHAT OPPORTUNITY LOOKS LIKE. It may be hard to recognize because real opportunity is rare—but this is where sparks light fires that change the world. Where resilience and drive come together to design the future. What lies ahead? That’s up to you.

Michigan is designated a

Make your move at DevelopFlintandGenesee.org.

AREA DEVELOPMENT | Q3 2022

TopStates2022Q3.indd 41

41

8/31/22 1:04 PM

THERE’ S AREASON EVERYONE’ S MOVI NG TO MI AMI . . . #1

Regi oni n NorthAmeri ca f orInvestment

# 1 Marketf orWomen

160+ Languages

Entrepreneurs,Doi ng Busi nessi nLati n Ameri ca&Heal thy Li f est yl e

1, 400 Mul ti nati onal s 55% Forei gnBorn

Hometo6.

2mi l l i onresi dents,aworkforce3.

1mi l l i onstrong,hundredsof gl oball eadersacrosskeyi ndustri es,andafuture-forwardi nnovati vebusi ness communi ty.Mi amii sri chwi thdi versetal entandi ncredi bl equal i tyofl i fe.

TheMi ami -DadeBeaconCounci li sthe county’ soffi ci aleconomi cdevel opment partnershi p,attracti nghi gh-val uejobs andi nvestmentsthatshapethe communi ty’ seconomi cfuture.

Fosteri ngentrepreneurs,adi versetal ent pi pel i ne,andaposi ti vebusi nesscl i mate, MDBCi sdri vi ngl ong-term economi c prosperi tyandi ncl usi vegrowthfor Mi ami ’ sbusi nessesandresi dents.

Formorei nformati ononexpandi ngyourbusi nessi n Mi ami -DadeCounty,vi si thttp://BeIn. Mi ami .

FUTURE FORWARD

Di v er s eanddet er mi ned,Mi ami ’ st ec hec os y s t em hast r ans f or medt heMagi cCi t yi nt oI nnov at i onCi t y .

Cooperative & Responsive State Government 1 2T 2T 4 5 6 7 8T 8T 8T 8T 8T 8T

Georgia North Carolina Tennessee South Carolina Ohio Virginia Louisiana Alabama Arizona Arkansas Michigan Mississippi Texas

infrastructure advantages — enough to land it in second place in this category this year. It’s on the way to having the deepest and widest port on the East Coast, has more than 32,000 miles of railway, lots of destinations available by air, and the region’s second-densest interstate system.

Ohio comes in third, tied with last year’s top-rated Texas. Ohio has the nation’s fourth-largest system of interstate highways, nine commercial ports on Lake Erie, plus terminals along the Ohio River. It has more railyards and intermodal terminals than almost any other state. Texas, meanwhile, boasts more public roads and freight railway miles than any other state,

busy airports, and nearly a dozen deepwater ports.

Indiana, ranked fifth for logistics and infrastructure this year, recently took CNBC’s top honors for infrastructure.3 That study looked at volume of goods transported, freight capacity, road conditions, broadband, and a host of other factors.

AVAILABLE REAL ESTATE

This has been a tricky time in the world of real estate — ask anyone who has tried to buy a home lately, and industrial real estate can be a conundrum, too. It basically goes without saying that regardless of all the other important factors, your location selection amounts to

2022 TOP STATES COMMENTARY Education, Training, and Quality of Life Reflected in State Rankings It’s not surprising that states ranking in the top five spots have strong educational and workforce training systems as well as high quality of life.

We all know that data is important to any site consultant, but reliable data is vital. One of the reasons that Area Development’s rankings are so dependable is that they rely on consultants’ reporting, not on state representatives.

thought it should have been top three. The workforce is overflowing in Texas with skilled and diversified labor. Also, Texas has a high quality of life, which attracts so many new residents and businesses. [I believe] the reason Texas is not in the top 1 or 2 (even with all the new businesses the state has attracted) is low ratings for healthcare and inclusion [ranking near the very bottom in the CNBC report].

While looking at the overall rankings, I am surprised that Virginia did not make top five [based on] the strength of Virginia’s public education and the fact that Virginia was the top-ranked state for business by CNBC in 2021 (third in 2022).1 But the cost of living in many parts of the state has made it harder to attract and retain workers.

Lastly, I’m impressed by the continued growth of South Carolina. Their high-quality work force is strengthened through state workforce training systems like readySC. The state provides strong incentives programs along with a friendly business environment, which makes it a force to be reckoned with on the East Coast.

1

Being a Texan, I love to see my home state in top five but

https://www.cnbc.com/2022/07/13/americas-top-states-for-business-2022the-full-rankings.html

By Jeff Pappas, Managing Director, Mohr Partners, Inc.

44

AREA DEVELOPMENT

TopStates2022Q3.indd 44

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

8/26/22 10:48 AM

2022 Top States Workforce Development Programs THIS IS CERTAINLY THE AGE OF shortages. As we’ve progressed through the pandemic, we’ve faced shortages of toilet paper and disinfectant wipes, then computer chips and bicycles and used cars, then baby formula. Ask any hiring manager — we’re also experiencing shortages of qualified candidates in many fields.

That makes workforce development programs more important than ever. You can choose a location that is right in every other way, but if you can’t hire enough trained, well-qualified employees, you’ll get nowhere. Our panel of location selection experts have told us which states are best at finding solutions.

What you’ll find in many of these states are highly responsive, customized training programs with a mission of having the right people in place from Day 1. There may also be a recruitment component, to help companies attract workers and prescreen to identify the best ones to put through training. These programs are often connected with technical college systems, and they have a strong track record of helping companies succeed. Here are just a few examples from the top five states on the list:

• The Quick Start program in Georgia offers job-specific training along with various kinds of education to enable continuous

46

AREA DEVELOPMENT

TopStates2022Q3.indd 46

improvement, efficiency, waste reduction, and team-building.

Among this program’s latest developments is the Georgia Advanced Manufacturing Training Center, a 50,000-square-foot, well-equipped facility with computer labs and equipment to help workers become more proficient in such areas as mechatronics, control systems, automation, robotics, and networked wireless systems.

• The Virginia Talent Accelerator Program has similar offerings and is a collaboration between the Virginia Economic Development Partnership and the Virginia Community College System. It handles both training and recruitment, also customized to the needs of each company requesting help. Training is hands-on, some instructor-led, some through simulations and videos, and companies walk away with not just great new hires but ownership of any customized, company-specific materials that were created.

• South Carolina adds some interesting twists to the workforce development picture. Like other states, it has customized training programs (readySC) and other initiatives supporting on-thejob training, but it adds in some focused efforts targeting important subject matter — cybersecurity, for example. The state’s Department of Employment and Workforce and its Manufacturing Extension Program have created training to

help manufacturers improve their cybersecurity and avoid hacker nightmares. The department also has a cybersecurity internship program aimed at developing skills that participants can then take to Virginia companies needing to add IT security expertise.

• Alabama excels at the workforce development game through such programs as AIDT, with customized technical training offered for free to employers and trainees alike. The program recruits and screens candidates, develops training, and delivers it through classrooms as well as more than three dozen mobile training units.

It was the nation’s first state workforce training organization to earn ISO certification of its quality management.

• Louisiana employers (and potential employees) benefit from the similarly highly regarded LED FastStart program from Louisiana Economic Development.

The program examines companies’ immediate needs, as well as long-term workforce plans, and responds with customized programs that fill both the now and later requirements. The training is customized and comprehensive, but that’s only part of the picture.

Before putting candidates through training, you’ve got to find the candidates. LED FastStart offers valuable recruitment and pre-hire evaluation services that feed potential employees into the training.

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

8/26/22 10:49 AM

CR E AT I N G HOP E AND OP P O RT UNI T Y FOR G EN ERAT I O N S OF G EORG I A N S

For the ninth straight year, Georgia is named the Top State for business.

Our record-breaking investment and job creation success ensures hope and opportunity is available to generations of Georgians.

WE

BUSINESS Georgia.org

“

IT BASICALLY GOES WITHOUT SAYING THAT REGARDLESS OF ALL THE OTHER

IMPORTANT FACTORS, YOUR LOCATION SELECTION AMOUNTS TO NOTHING UNTIL YOU LOCATE REAL ESTATE.

Corporate Tax Structure

1 2 3 4 5 6T 6T 8T 8T 8T

Texas Tennessee Florida North Carolina Nevada Georgia South Dakota Alabama Indiana Utah

Site-Readiness Programs

1 2 3 4T 4T 6 7T 7T 9 10

48

Tennessee Georgia South Carolina North Carolina Ohio Virginia Indiana Texas New York Alabama

AREA DEVELOPMENT

TopStates2022Q3.indd 48

nothing until you locate real estate.

Georgia tops the list for available real estate again this year. In a second-place tie are South Carolina and Texas (the Lone Star State was in a tie with Georgia for first last year). Tennessee and Ohio are ranked next in this category.

What’s even better than a great piece of real estate? One that doesn’t need tons of attention to get it ready for development or occupation. Check the sitereadiness section and you’ll see that some of the same states known for available real estate are also talented at delivering sites that can be developed and occupied quickly.

COOPERATIVE AND RESPONSIVE STATE GOVERNMENT

The various arms of state government can either make or break a location decision. This measure is a bit of an amalgam of various characteristics, some fairly easy to quantify, some that boil down to a more subjectively experienced, welcoming vibe. Other lists here get more specific about such things as the tax and regulatory environment, incentives and training assistance — this one rates the overall feel of the state

government reception, and how responsive and cooperative state representatives tend to be.

At the top of this list is Georgia once again. It was at the top last time around, too. Observers chalk it up to multiple strengths, starting with fiscal health. The state budget is always balanced, and the debt-per-capita measure is among the nation’s lowest. Among other things, the Georgia Department of Economic Development is helpful in researching locations and connecting with resources.

Second last year was Tennessee, and it’s there again, tied this year with North Carolina in this category. Tennessee likes to tout its fiscal responsibility, too, with a disciplined budget that has room for positive investments in such things as workforce and education. North Carolina is proud of its legal and regulatory environment that’s committed to not getting in the way, along with low taxes and business costs, plus an embrace of diversity and inclusion. South Carolina makes the top five, too, along with Ohio.

CORPORATE TAX STRUCTURE

The Lone Star State takes pride in its low business operating costs, and one of the elements of that involves its corporate tax structure.

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

8/26/22 10:49 AM

13th Annual

TOP STATES Doing Business

2022 SITE CONSULTANTS SURVEY

There’s no corporate income tax in Texas, no personal income tax, and an overall tax burden that’s among the nation’s lowest. Our panel of experts says it’s the best, ranking Texas in first place in this category as they did last year.

Tennessee also gets high marks for low taxes — said to be the lowest state and local taxes paid

per capita. As in Texas, there’s no personal income tax on wages and salaries. The state is second on our corporate tax structure list this year. And the story in thirdranked Florida is also about the taxes that don’t exist, such as a state-level property tax, as well as corporate income taxes on certain kinds of corporations.

Florida is another high-ranking

2022 TOP STATES COMMENTARY Responsiveness to Projects Big — and Small — Lands a Core Group of States on Top States that embrace site-readiness initiatives and understand workforce training are among those considered top states for doing business.

Disruptions caused by COVID-19 continue to reverberate across manufacturing and retail supply chains, now further exacerbated by instability concerns throughout Europe and the rest of the world from the war in Ukraine. Inflation and the efforts to curb it through interest rate increases are further dampening the anticipated “post COVID” exuberance of FDI into the U.S. from small and medium-sized companies.

From an economic development and site selection perspective, these last 12 months have been the year of the mega project, led primarily by the automotive industry’s shift from internal combustion engines to electric vehicles. Countless $1B+ battery or advanced manufacturing projects have landed and announced or are currently searching for sites to call home.

It’s really amazing to see. To be competitive, states and local governments are enhancing their arsenals of incentive dollars as well as updating their programs to better capture changing trends in advanced manufacturing. They are also working desperately to uncover and develop new mega sites to ensure that these scarce locations are ready for prime time.

Unfortunately, the volume and allure of the big fish have led some jurisdictions to be less responsive (and less

aggressive) with smaller projects or, in worst-case scenarios, they are neglecting their most important business sector of all — existing industry. Moreover, despite being flush with COVID-cash, some states have been slow to develop longterm strategies for workforce development or infrastructure investment, which will ultimately hinder their ability to provide good “economic soil conditions” for decades to come.

In reviewing this year’s rankings, it is no surprise that Georgia continues to be at the top of most of the categories, including Top State for Doing Business for the ninth consecutive year.

Peach State governors, commissioners, local EDOs, and allies have been rowing in the same direction (in cadence) for quite some time. Eight of the states rounding out this year’s top nine positions have ranked in the top 10 for the last three years running. Note that Ohio has been on a steady climb in the rankings these last few cycles, and Michigan has rejoined the top 10 in several subcategories.

The states that embrace site-readiness initiatives and that really understand workforce training are consistently ranked in the top five in these respective categories. In light of the nationwide shortage of labor and the dearth of available industrial buildings and sites, jurisdictions whose programs are not as strong should take a lesson from these best practices.

By W. Ford Graham, JD/IMBA, SVP Infrastructure & Economic Development, McGuireWoods Consulting LLC

50

AREA DEVELOPMENT

TopStates2022Q3.indd 50

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

8/26/22 10:49 AM

ready

The 446-acre I-59 South Industrial Site in Jones County is primed for heavy industrial growth. Strategically located near Hwy. 11, Interstate 59 and Norfolk Southern Railroad’s main line, it offers companies efficient access to consumers. Nearby amenities include the Jones County Junior College Advanced Training Center, University of Southern Mississippi and the Mississippi Polymer Institute. All utilities are run to the site, and all due diligence has been completed, ensuring the site is shovel-ready for its next occupant.

To learn more, please contact EDA of Jones County President and CEO Ross Tucker at (601) 649-3031.

SEE WHERE MIGHTY MISSISSIPPI CAN TAKE YOU. Visit MISSISSIPPI.ORG/sites to browse more sites 22-0390-area-development-full-page-site-selection.indd 1

8/24/22 12:56 PM

Favorable Regulatory Environment

all the difference between winning and coming up short.

state on the Tax Foundation’s measure of state business tax climate.4

SITE-READINESS PROGRAMS

It’s a fast-moving world, and the winners are often the ones that are able to move the fastest. Locating available real estate is step #1 but finding a site for a warehouse or manufacturing plant that is ready to roll — with infrastructure well on the way and approvals just about worked out already — can make

Tennessee is really good at sitereadiness, so good that it lands atop this list year in and out, it seems. The state lists Certified Sites in every direction, from 1,855 acres along Interstate 24 in middle Tennessee to 840 acres near Clarksville to some smaller sites near Oak Ridge.

Georgia is quite good at this

1 2 3T 3T 5 6 7 8 9T 9T 10T 10T

South Carolina Georgia Alabama Tennessee North Carolina Indiana Texas Florida Arizona Virginia Louisiana Mississippi

2022 TOP STATES COMMENTARY Site Selection – When You Are Good, You Win! The states that consistently rank as “top states” understand what companies are looking for in a location and have a plan that responds to the economy of the future.

In a year — or should I say era — of mega-projects, I have wondered if these states will be able to sustain the victories, or will the wins put these states in the middle of the pack?

Since the beginning of the pandemic, the states have really worked hard to adapt to the new normal. Looking at the rankings and looking at the mega-projects announced over the past year, the two go hand-in-hand.

statewide strategy that met the market’s needs.

So how does a state move up on the list? They start by listening to the market and understanding what companies are looking for in a location. If you look at all the states that have continuously been in the top for the past five years, they have spent a considerable amount of time and effort listening to the market. Economic development is no longer just recruiting and retaining companies. It is about being forward-looking to not only develop and grow the economy of the now, but to have a plan that responds to the economy of the future.

The rankings have shown that the leaders in economic development pre-pandemic have not changed during the pandemic or even in what I should say is the new normal.

The fraternity of Georgia, Alabama, North Carolina, South Carolina, Tennessee, Texas, Ohio, and Indiana have sustained and battled through the black swan event. However, the one member that is on the list now three years in a row is Virginia. Virginia moved up the rankings by developing a

For these states to continue or for new leaders to emerge, they need to understand what is needed. What do companies need, what do residents of the state need, and how can a particular state stand out? The first thing to remember is that economic development is a team sport! The states that win play hard as a team! However, the one thing all these states in the top 10 have in common is that they listen and find a way to get to yes and try to avoid saying no.

By Bradley Migdal, Executive Managing Director, Cushman & Wakefield

52

AREA DEVELOPMENT

TopStates2022Q3.indd 52

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

8/26/22 10:50 AM

WORKFORCE AND LOGISTICS MEET IN THE

ROANOKE REGION O F

V I R G I N I A

From “How do we make it?” to “How do we ship it?”, the Roanoke Region of Virginia connects you with the highquality talent and central location to help your business succeed.

CONTACT ME TO LEARN MORE

JOHN HULL | john@roanoke.org | 540.343.2012

www.roanoke.org

13th Annual

TOP STATES Doing Business

2022 SITE CONSULTANTS SURVEY

Speed of Project Permitting

1 2T 2T 4 5T 5T 7T 7T 7T 10

Alabama Georgia South Carolina Tennessee Mississippi Texas Arizona Indiana Louisiana Virginia

“

FINDING A SITE FOR A WAREHOUSE OR MANUFACTURING PLANT THAT IS READY

TO ROLL — WITH INFRASTRUCTURE WELL ON THE WAY AND APPROVALS JUST ABOUT WORKED OUT ALREADY — CAN MAKE ALL THE DIFFERENCE BETWEEN WINNING AND COMING UP SHORT.

business, too, landing once again in second place. It has a program called GRAD — Georgia Ready for Accelerated Development — featuring sites that have graduated through all of the zoning, environmental assessment, utility work, and other steps needed to get them ready. A third party evaluates site readiness and they go through a board approval process to be accepted into the program.

The rest of the top five is pretty much the same as last year, just a bit shuffled. South Carolina’s site-readiness efforts land the state third on the list, and North Carolina and Ohio tie for fourth this year.

FAVORABLE REGULATORY ENVIRONMENT

Regulation of some kind is inevitable in a structured and ordered society, but from a business perspective, the regulatory environment needs to be as hassle-free as possible. The South as a whole does pretty well in this regard, and South Carolina leads the way again this year.

Georgia moves up to second place in this category this year, and tied for third are Alabama and Tennessee. Among the states on this list, just two don’t fall in

54

AREA DEVELOPMENT

TopStates2022Q3.indd 54

the traditional South: sixth-place Indiana and ninth-place Arizona (tied with Virginia).

SPEED OF PROJECT PERMITTING

This is an important subset of the overall regulatory environment, and it also ties into the site readiness that’s explored elsewhere in these rankings. Simply put, permitting is often not simple.

In some jurisdictions and situations, it can be a slow and painful process (and in some places pandemic staffing issues have made it even worse).

Seeing as how this is a part of the regulatory environment, it’s not surprising that most of the same states listed in the previous section are also on this list of speediest places for project permitting.

They’re all Southern States with the exception of Arizona and Indiana. And just like last year, the top three are Alabama, and Georgia and South Carolina (tied this year). n

1

https://www.statista.com/statistics/424167/venturecapital-investments-usa-by-state/ https://www.locationgeorgia.com/advantages/logistics/ 3 https://www.indystar.com/story/news/local/transportation/2022/08/01/cnbc-ranked-indiana-number-1-incountry-for-infrastructure-huh/65385710007/ 4 https://taxfoundation.org/2022-state-business-taxclimate-index/ 2

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

8/26/22 10:50 AM

Covington County, Alabama, USA

Targeted Industries MANUFACTURING AUTOMOTIVE AEROSPACE METAL MANUFACTURING AGRIBUSINESS & FOOD PRODUCTION

FORESTRY PRODUCTS REMOTE WORKER/ TECH ENTREPRENEUR

DISTRIBUTION

SPONSORS

ALABAMA

FLORIDA

ALABAMA DEPARTMENT OF COMMERCE The Alabama Department of Commerce is the state’s lead economic development agency. In addition to business development activities, Commerce promotes exporting and international opportunities for Alabama companies, assists small businesses, and positions the state for film productions.

Commerce is home to the state’s primary workforce development program, AIDT.

HAINES CITY ECONOMIC DEVELOPMENT COUNCIL Haines City is known as the “Heart of Florida” and is located where Lake, Orange, Osceola, and Polk counties collide. Offering no personal income tax, no payroll tax, a low 5.5. percent corporate tax rate, and access to capital is a great reason to bring your business to the Heart of Florida.

Greg Canfield, Secretary Alabama Department of Commerce 401 Adams Ave. P.O. Box 304106 Montgomery, AL 36130-4106 800-248-0033 contact@madeinalabama.com madeinalabama.com COVINGTON COUNTY ECONOMIC DEVELOPMENT COMMISSION Covington County, AL, is creating and maintaining jobs in industry and retail and generating wealth in our community. The county is uniquely positioned in Southeast Alabama to provide easy access to major markets throughout the U.S. Speed to market is unsurpassed with permitting within days not months. Southeast Alabama — The perfect climate for business!

Rick Clifton, President & CEO Covington County Economic Development Commission 21754 Bill Benton Lane Andalusia, AL 36421 334-222-7040 Cell: 334-488-5757 rick.clifton@covingtoncountyedc.com w w w. c o v i n g t o n c o u n t y e d c . c o m

ARIZONA ARIZONA COMMERCE AUTHORITY The Arizona Commerce Authority (ACA) is the state’s leading economic development organization with a streamlined mission to grow and strengthen Arizona’s economy. The ACA uses a three-pronged approach to advance the overall economy: attract, expand, create — attract out-of-state companies to establish operations in Arizona; work with existing companies to expand their business in Arizona and beyond; and help entrepreneurs create new Arizona businesses in targeted industries.

Sandra Watson, President & CEO Arizona Commerce Authority 100 N. 7th Ave., Suite 400 Phoenix, AZ 85007 602-845-1200 w w w. a z c o m m e r c e . c o m

CONNECTICUT ADVANCECT AdvanceCT is a private nonprofit economic development organization that drives job creation, new capital investment, and overall economic competitiveness in Connecticut through business attraction, retention, and expansion, in close cooperation with state, regional, and local partners.

John Bourdeaux, President, Head of Business Development AdvanceCT 470 James St., Suite 9, New Haven, CT 06513 jbourdeaux@advancect.org A d v a n c e C T. o r g

56

AREA DEVELOPMENT

TopStates2022Q3.indd 56

Barbara Peck, Executive Assistant Haines City Economic Development Council P. O. Box 3845 Haines City, FL 33845 863-422-2525 w w w. H a i n e s C i t y E D C . c o m MIAMI-DADE BEACON COUNCIL Miami-Dade Beacon Council is the official economic development partnership for the country’s 6th-largest metro and fastest-growing tech hub: Miami-Dade County. MDBC markets Miami’s advantages as a world-class business destination, attracting and retaining companies that create high-value jobs and invest in Miami-Dade, driving long-term economic prosperity and inclusive growth for our businesses and residents.

James Kohnstamm, Executive Vice President, Economic Development Miami-Dade Beacon Council 80 SW 8th St., Suite 2400 Miami, FL 33130 305-579-1300 info@beaconcouncil.com h t t p s : / / l i n k t r. e e / b e a c o n c o u n c i l h t t p s : / / w w w. b e a c o n c o u n c i l . c o m

GEORGIA GEORGIA DEPARTMENT OF ECONOMIC DEVELOPMENT How do you build a top state for business? You start with a prime geographic location with global access, the world’s busiest airport and fastest growing seaport, and a well-educated and trained workforce — all of this supported by state leadership focused on a partnership approach to ensure your success. Now more than ever, business wants what Georgia has.

Georgia Department of Economic Development 75 Fifth St NW, Suite 1200 Atlanta, GA 30308 404-962-4000 Georgia.org GEORGIA PORTS Georgia’s ports provide greater scheduling flexibility and market reach with direct links to I-95 and I-16, and on-terminal rail. The Savannah market features a deep inventory of industrial sites and parks, while the state of Georgia offers a business-friendly tax structure and targeted workforce training.

Stacy Watson, Director of Economic & Industrial Development Georgia Ports Authority P.O. Box 2406 Savanah, GA 31402 912-964-3879 swatson@gaports.com w w w. g a p o r t s . c o m

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

8/29/22 3:15 PM

KENTUCKY

LOUISIANA

KENTUCKY CABINET FOR ECONOMIC DEVELOPMENT From single-employee startups to century-old brands, Team Kentucky helps businesses of all sizes select, grow, and succeed in Kentucky. With experts in Europe, Asia, and throughout the Bluegrass, Team Kentucky responds quickly, builds longterm relationships, assists with workforce training, and assures companies get the resources they need for success.

LOUISIANA ECONOMIC DEVELOPMENT Louisiana Economic Development is responsible for strengthening the state’s business environment and creating a more vibrant Louisiana economy. In 2021, LED attracted 64 new economic development projects representing over 18,100 new direct and indirect jobs, 9,700 retained jobs, and more than $20.5 billion in new capital investment. LED cultivates jobs and economic opportunity for the people of Louisiana and promotes business opportunity for employers of all sizes.

Kristina Slattery, Commissioner, Business Development Kentucky Cabinet for Economic Development 300 West Broadway Frankfort, KY 40601 800-626-2930 502-564-7670 K r i s t i n a . S l a t t e r y @ k y. g o v C E D . k y. g o v

LOUISIANA ECONOMIC DEVELOPMENT 617 North 3rd Street Baton Rouge, LA 70802 225-342-3000 To l l F r e e : 8 0 0 - 4 5 0 - 8 1 1 5 OpportunityLouisiana.com

POWERING

GROWTH

With resources like low-cost, reliable power, creative incentive packages and a wide-ranging property portfolio, Santee Cooper helps South Carolina shatter the standard for business growth.

In fact, since 1988, Santee Cooper has worked with the state’s electric cooperatives and other economic development entities to generate more than $17.2 billion in capital investment and helped bring more than 85,000 new jobs to our state. It’s how we’re driving Brighter Tomorrows, Today.

POWERING

SOUTH CAROLINA

www.poweringSC.com

AREA DEVELOPMENT | Q3 2022

TopStates2022Q3.indd 57

57

8/31/22 1:06 PM

SPONSORS

MICHIGAN

MISSISSIPPI

FLINT & GENESEE ECONOMIC ALLIANCE The Flint & Genesee Economic Alliance, located in Genesee County, Michigan, is invested in your success, ready to connect you to the resources, partnerships, and incentives your business needs to thrive. Our dedicated team will work with you every step of the way toward reaching your goals.

MISSISSIPPI DEVELOPMENT AUTHORITY The Mississippi Development Authority is the state’s lead economic and community development agency, with approximately 300 employees providing services to businesses and communities throughout the state.

MDA works to recruit new business to Mississippi and retain and expand existing industry and business. The agency also promotes tourism throughout the state.

Tyler Rossmaessler, Executive Director Flint & Genesee Economic Alliance 519 S. Saginaw St., Suite 200 Flint, MI 48502 810-600-1404 info@flintandgenesee.org developflintandgenesee.org

The Heart of Florida Haines City Within Your Reach www.hainescityedc.com

58

AREA DEVELOPMENT

TopStates2022Q3.indd 58

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

8/31/22 1:06 PM

Laura Hipp, Deputy Executive Director Mississippi Development Authority 501 N. West Street Jackson, MS, 39201 P.O. Box 849 Jackson, MS, 39205 601-359-3449 or 1-800-360-3323 lhipp@mississippi.org mississippi.org MISSISSIPPI POWER Mississippi Power is a one-stop resource for your project needs. We have the market experience, established contacts, knowledge of available sites, and can assist with making the right connections to make the process seamless.

Mississippi Power Economic Development 2992 W. Beach Blvd.

Gulfport, MS 39501 1-800-528-5196 mpcecodev@southernco.com mississippipowerED.com

OHIO JOBSOHIO JobsOhio is the state’s economic development organization charged with driving job creation and capital investment in Ohio through business attraction, retention, and expansion efforts. JobsOhio collaborates with public and private partners across Ohio to address the needs of growing businesses and support them with the resources necessary to succeed.

Andrew Deye, VP, Strategy JobsOhio 41 S High St. #1500 Columbus, OH 43215 855-874-2530 JobsOhio.com

SOUTH CAROLINA SANTEE COOPER Santee Cooper supports South Carolina’s business community by providing low-cost, safe, reliable and sustainable power, along with sites and incentives, all designed to improve your bottom line. In addition to residential and commercial customers, Santee Cooper powers 27 large industrial customers, Charleston Air Force Base, and municipalities and electric cooperatives across the state.

Bill McCall, Economic Development Specialist Santee Cooper One Riverwood Drive Moncks Corner, SC 29461 843-761-8000 ext. 5381 w m c c a l l @ S a n t e e C o o p e r. c o m w w w. P o w e r i n g S C . c o m

ACCELERATING GLOBAL COMMERCE

gaports.com

AREA DEVELOPMENT | Q3 2022

TopStates2022Q3.indd 59

59

8/26/22 12:46 PM

SPONSORS

Who we are.

What we do.

Print Media Area Development Magazine

The industry’s most respected magazine since 1965

Online Media Area Development.com & Newsletters

The leading website for corporate site and facility planning

Face to Face

Consultants Forums

The industry’s leading best practices conference events for economic developers

Let us work with you.

Add to your marketing success.

Area Development Magazine 400 Post Ave., Westbury, NY 11590 516-338-0900 Fax: 516-338-0100

TENNESSEE TENNESSEE DEPARTMENT OF ECONOMIC AND COMMUNITY DEVELOPMENT It’s no accident that some of the biggest and most respected brands in the world have chosen to call Tennessee home.

We provide companies a central location with unparalleled infrastructure, a highly qualified workforce backed by gamechanging education reform, a low tax burden, and a collaborative environment with a business-friendly administration.

Allen Borden, Deputy Commissioner, Business, Community and Rural Development Tennessee Department of Economic and Community Development Tennessee Tower, 27th Floor 312 Rosa L. Parks Ave. Nashville, TN 37243 allen.borden@tn.gov https://TNECD.com

TEXAS LUBBOCK ECONOMIC DEVELOPMENT ALLIANCE A highly skilled workforce, connection to national and international markets, and affordable cost of living make Lubbock the ideal location to grow. We understand the challenges in choosing a new location; our team approaches each situation with a solution-driven mentality to ensure the decision-making process is as seamless as possible.

David Rushing, Director of Business Recruitment Lubbock Economic Development Alliance 1500 Broadway, Suite 600 Lubbock, TX 79401 800-687-5330 David.Rushing@LubbockEDA.org lubbockeda.org

VIRGINIA ROANOKE REGIONAL PARTNERSHIP From how to make it to how to ship it, the Roanoke Region of Virginia has the answers. Surrounded by 25 colleges and universities as well as easy access to most of the U.S. population, we will connect you with the talent and logistics to help your business succeed.

John Hull, Executive Director Roanoke Regional Partnership 540-343-2012 john@roanoke.org w w w. r o a n o k e . o r g VIRGINIA ECONOMIC DEVELOPMENT PARTNERSHIP Virginia continues to raise the bar when it comes to talent development. Programs such as the Virginia Talent Accelerator Program and the Tech Talent Investment Program make sure Virginians are prepared for the jobs of today and the future.

Jason El Koubi, President and CEO Virginia Economic Development Partnership 901 East Cary Street Richmond, VA 23219 804-545-5600 info@vedp.org w w w. v e d p . o r g

www.areadevelopment.com

60

AREA DEVELOPMENT

TopStates2022Q3.indd 60

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

8/26/22 12:47 PM

Virginia’s diversity of talent promotes a culture of innovation and is a key contributor to our success, and we love that.

SANJAY MEHROTRA President and CEO Micron Technology

vedp.org

>

SITE SELECTION

Utilizing Data Analytics to Reduce Risk and Costs, Increase Opportunities An efficient site selection process can make the difference between a fundable and a failed project.

By Thane Hutcheson, Director, Real Estate Advisory; and Chris Urchell, Consulting Manager; Baker Tilly

S

electing the right location for a new endeavor can be an overwhelming and resource-consuming experience for any sized organization. The information available is abundant, but if the data isn’t used and interpreted correctly, you may end up making a riskier decision than necessary.

Would it be a surprise to find that annual operating costs related to a manufacturing site’s supply chain, labor, and utilities might vary by as much as $5 million or more between U.S. geographies for a $150 million facility? For many businesses, that is the difference between a fundable and a failed project.

Establishing a sequential (and sometimes iterative) framework to conduct an efficient site selection process informed by data is critical to reducing risk and selecting a location that leads to a successful project. Key metrics to understand are a company’s supply chain and logistics network, labor needs,

STEPS FOR UTILIZING DATA ANALYTICS Define the Project

• Site and facility size • Support required, i.e., labor, infrastructure, etc.

• Regulatory compliance • Design aspects

Identify the Market

• Drive-time distances from suppliers, customers • Area from which to draw labor • Qualitative considerations, e.g., quality of life, higher education, etc.

• Cost of labor

Perform a Business Impact Review • I dentify up to five CBSAs •A ggregate and summarize data gathered •U tilize a visual tool to compare data across CBSAs

Identify the Site

• Present viable project to each prospective community • Perform due diligence around zoning, permitting, etc.

• Assess and assign costs to all capital and operating aspects • I dentify the preferred site and a backup site • Navigate financing, construction, commissioning

62

AREA DEVELOPMENT

Utilizing DataAnalytics.indd 62

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

8/26/22 11:44 AM

utility rates, and state and local tax impact. Focusing on quantifiable aspects up front will not only keep the process on a defined schedule but also serve as a defensible decision-making trail rather than a “gut feel” approach that increases risk exposure and sometimes even internal conflict.

Project Definition By far the most integral stage of the process that will facilitate holding a specific project pre-development timeline is project definition. Involving all necessary stakeholders to develop an agreed upon outline for site and facility design needs is essential.

The following questions must be answered before anything else in the process can happen, even if they include ranges of values supported by subject matter experts:

hat facility size is required at what stages of •• W

project development to meet a company’s long-term planning needs?

• • What minimum and maximum sized site is required to support initial stage development, yet also allow for future expansion?

• • Will distribution center support need to be considered in the selection process?

• • What is the labor support required at these stages?

• • What utility loadings support this development at these stages?

• • What regulatory aspects of the business must be considered that may affect site selection?

What facility or site design aspects could impact site options — building height, noise levels, truck or rail access and frequency?

Other factors may be defined that are more subjective in nature, such as access to cultural centers, higher quality of living ratings, proximity to relatable industry hubs, or even potential project partner or higher education institution collaboration opportunities. This geographic narrowing exercise then allows for moving into the next step, which focuses on the operational cost impact of key criteria.

Business Impact Review The goal of the business impact review stage is to narrow the search from a starting point of up to 30 down to no more than five Core-Based Statistical Areas (CBSAs) before site identification can begin.

The key factors include reviewing a company’s supply chain and logistics network, labor needs, and utility rates. These three pillars are often the most impactful cost criteria with the largest potential cost differential from a geographic perspective. Each is quantifiable and can be assessed across larger groupings of areas using available data sets either from internal company sources or external agencies — Bureau of Labor Statistics, Energy Information Administration, or industry-specific organizations.

Check with industry experts to understand what tools have already been developed that aggregate and summarize this information into useful prediction analysis that can be efficiently customized to your project, rather than spending time to develop your own. Not only will this analysis be useful in relative geography comparison, but it can be used as absolute value information to feed a financial model often required in assessing project viability. The result of the combination of data sets is a dynamic, visual tool (Tableau, Power BI, ArcGIS) that compares across CBSAs to allow for decision-makers to narrow choices to a handful of areas before the next stage, site identification.

Market Identification

Site Identification

With limited information it can be overwhelming to understand where to even begin. The initial analytical stage in the process is focused on significantly reducing potential geographic areas to consider for the project. It is often easier to think about where the project should not go as compared to where the project should go.

GIS data layers and tools can be utilized in mapping drive-time distances from key airports or other transportation access points, proximity to key suppliers, customers, and/or distribution centers — or even access to certain sized qualified labor pools. While the analysis is often highly quantitative in nature, it does not necessarily need to calculate cost impact during this initial filtering effort.

In too many instances, companies progress directly into this last stage of site identification with little analytic backing to support why and how certain geographies were selected. This often leads to a lengthy and challenging process where project leads jump from one city to the next focusing on subjective criteria with no organized method of reaching final site selection.

The market identification and business impact review process described above provides the confidence in presenting a viable project to each potential community, enlisting their support in identifying qualifying sites, and moving into the site-specific due diligence process in vetting the best options available. Working with AREA DEVELOPMENT | Q3 2022

Utilizing DataAnalytics.indd 63

63

8/26/22 11:45 AM

local economic development organizations (EDOs), the utility providers, the municipal operational and political leaders, and your engineering support team is essential to successfully finding the best option in the narrowed geographies.

Once a handful of prospective sites are identified in each geography of interest, due diligence efforts will commence around permitting, ordinance compliance, zoning, utility capacity and rates, land or facility control agreements, community support, worker training, geotechnical or environmental considerations, site access, and all aspects affecting construction cost and timeline.

While this level of detail requires numerous parties and their subject expertise, there are analytical tools available that catalog and assess many of these site risk factors via past engineering efforts and/or publicly available land information databases. Assessing and assigning cost implications to all capital and operating aspects of these criteria by common sizing into a net present

value analysis will help in making an objective decision around a preferred site.

Once you have completed this process and identified at least one preferred site — ideally with a backup site where your team is running due diligence simultaneously if project budget allows for it — working toward the project’s financial close will be the final step. Federal, state, and local incentives are typically available to assist in filling financial “gaps.” If you do not have internal capacity and experience in aligning these funding mechanisms, then third-party assistance is recommended in order to efficiently and effectively navigate through the complicated process.

All too often significant time and effort is invested into site selection without a parallel strategy for project finance. In order to cross the finish line, you will need to make sure you have the people, process, and tools in place to complete a project through permitting, finance, construction, and commissioning. n

Explosive Growth of Life Sciences Sector Comes with Challenges – Continued from page 31 Large pharmaceutical and biotechnology companies have enough existing product revenue and a deep enough future product pipeline to purpose-build an owned facility for manufacturing and, oftentimes, R&D as well. However, younger, early-stage, pre-revenue companies do not have the luxury of this option. Due to size of facility, time to design/construct/commission, and due to financial drivers, these younger companies nearly always lease (vs. own) space.

Given the historically low availability of speculatively built life science space, the competition to quickly land a prime space (that it will programmatically and physically meet the needs of the science and business plan) immediately after closing Series A funding must feel, to both university professor and seasoned CEO, like balancing a chair on their chin while spinning plates on sticks while riding a unicycle!

Prioritizing Tradeoffs Developers have taken note of the low, speculatively built, life sciences supply in the past few years (fueled, in part, by the fact that activity in office real estate largely ground to a halt in mid-2020). Conversions — large and small scale — are popping up all over the country. But these aren’t as simple or straightforward as they might seem. Typically, the biggest advantage of a conversion space is speed to market. However, it is unlikely that it will “check all the boxes” for every type of life sciences tenant. The compromise is availability over functionality. This is also why it is so important for occupiers to incorporate the real estate activity into the

64

AREA DEVELOPMENT

Utilizing DataAnalytics.indd 64

business and science planning — because during the search process, the decision-making team will likely be faced with prioritizing tradeoffs.

For developers or owner/occupiers setting out on this path, they should be aware that, in many cases, the interior space will need to be completely redesigned and often the operating mechanics of the building will need to be completely replaced (even if the “old stuff” was brand new). This can increase the risk profile of the redevelopment, especially if they’re building the space for a speculative, non-credit occupier. Ultimately though, it should provide tenants occupancy faster than a newbuild, particularly if a new-build requires entitlement changes or significant site work. That said, even if it’s a longer process, it’s usually easier to start from ground up in most cases.

In Sum There are tremendous opportunities right now for smart investors and companies in the life sciences sector — especially when companies are strategic and open to big ideas. Medical advancements and the dollars chasing those successes mean higher demand for space and more competition for talent. This is pushing development into emerging markets — adding a multitude of development paths, from established, high-cost localities to newer, low-cost but less established markets — with both new build and retrofit opportunities. Ultimately smart, advance planning will win the day over rushed decisions and a lack of preparation in this highly exacting industry sector. n

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

8/26/22 11:45 AM

We’re committed to Economic Development and a clean energy future in New York State.

Our grant programs have provided over $100 million in assistance, helping to create or retain 50,000 jobs in New York communities.

Learn how our programs can benefit your business.

Visit www.shovelready.com

location

canada

66

AREA DEVELOPMENT

NavigatingTheChange.indd 66

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

8/26/22 1:03 PM

By Julia Stefanishina, Associate Partner, Infrastructure Advisory Services; EY Canada and Elizabeth Pringle, Associate Partner, Business Tax Incentives; EY Canada

NAVIGATING THE CHANGE: BUSINESS LOCATION AND ECONOMIC DEVELOPMENT IN CANADA De-globalization, supply chain disruptions, an evolving tax landscape, tight labor markets, and the continued rise of ESG are among the issues manufacturers are facing.

O

rganizations have faced many challenges over the last two years that have impacted them in various ways, including how business location decisions are made. Disrupting trends include supply chain challenges, COVID restrictions, currency volatility, political tensions and instability, ESG (environmental, social, and governance) legislation changes, and many others that are making manufacturers rethink the locations of their production and distribution facilities.

At EY, we support clients globally in site selection decisions, and we’re witnessing trends previously seen in Europe and Asia now impacting the Canadian market.

Key issues most manufacturers across various sectors face this year include:

• Economic security (de-globalization): The 2020s

will look different than the past three decades, which saw the rise of globalization. We expect the post-pandemic political climate will see countries looking to ensure capacity is available at home.

Today we’re seeing rising oil and gas prices and anticipate continued shortages of critical materials.

Countries and companies are increasingly focusing on becoming more self-sustainable. As such, there is a need for land availability to accommodate these facilities — a situation that offers Canadian jurisdictions a unique opportunity to compete.

We already see early results of the increase in competition. Canadian jurisdictions at all levels are ramping up their capabilities in attracting foreign direct investment and economic development.

Just 5 to 10 years back, economic development departments in municipalities and provincial ministries were fairly small and mostly focused on

AREA DEVELOPMENT | Q3 2022

NavigatingTheChange.indd 67

67

8/26/22 1:03 PM

”

We expect the post-pandemic political climate will see countries looking to ensure capacity is available at home.

marketing activities. Today there is a clear evolution of economic development departments. Organizations are targeting to better understand investors’ needs and the competitive market and are collaborating with investors for smooth and seamless localization experiences.

Invest Ontario is a great example of the evolving role economic development agencies will play in Canada.

Ontario is already a top-tier destination for investment and strategic business growth. The new agency will drive greater economic growth, support strategic domestic firms, and attract business from around the world. Invest Ontario is focusing on three strategic sectors where the province has a global competitive advantage — advanced manufacturing, life sciences, and technology — all while moving at the speed of business. Similar organizations are already established in other provinces — including Québec, British Columbia, and Alberta — as well as in some regions and municipalities.

• Supply chain disruptions: Supply chain issues daunted North American producers over the last two years. To mitigate the risk of future supply chain concerns from overseas locations, organizations are looking to reshore/near-shore some services in North America to secure a more consistent supply closer to home.

Warehouse and industrial supply are at record lows as companies increase their inventory holdings. More companies are now considering decentralized and regional strategies to be more responsive to future supply chain shocks. Specific actions result in expanding companies’ footprints by buying or leasing additional

land for storage facilities or potential production expansion. We’re witnessing similar activities across different sectors, including agricultural, food production, battery supply, and others.

• Tax and incentives trends: The tax landscape keeps evolving. As government incentives and spending from the pandemic wind down, companies will need to consider how these changes — along with changes in tax legislation, the deductibility of certain expenditures, and taxes on greenhouse gas emissions — will impact how they are investing in their businesses.

Corporate tax rates, as well as the availability of tax incentives to encourage investment in different regions and in new, efficient, and clean technology will impact where and how companies will invest in their facilities.

Low- or zero-interest loan incentives and cash grants, in particular, will play an increasingly important role in improving cash flow and business growth given the increased cost of borrowing.

At the federal level, several measures have been introduced to encourage investment in clean technology, particularly in the manufacturing space, to help the government meet its clean-energy objectives. Some recent examples include:

•A mendments to the clean energy equipment capital cost allowance classes;

• T he introduction of an investment tax credit for carbon capture, utilization, and storage;

• T he proposed introduction of a new Critical Mineral Exploration tax credit for materials used for the production of batteries and permanent magnets in zero-emission vehicles; and

Continued on page 72

68

AREA DEVELOPMENT

NavigatingTheChange.indd 68

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

8/26/22 1:04 PM

Industry is at a Crossroads.

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

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

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

(519) 539 2382 x2115 information@cityofwoodstock.ca

www.cometothecrossroads.com

The Power of Location

St. Albert is gaining ground to become Canada’s next transportation, logistics, and warehousing hub with access to markets within days, if not hours, with substantial transportation routes via highway, rail, air, and sea.

As companies seek to find a location that will achieve the right mix of size, price, accessibility, and time to market, having an optimal logistics location is paramount to cultivating a corporate competitive advantage. Highway access, proximity to all modes of transportation networks, and a qualified work force are also factors that can affect location decisions.

Industrial development is on the rise in the Edmonton, Alberta Region, with the City of St. Albert seeing remarkable growth in distribution and warehousing as a result, evidenced by the growth seen year over year.

With a record number of industrial projects under way in the region, it has increased the demand for strategically located industrial space with optimal logistical access.

Transportation routes via St. Albert is highway, rail, air, and sea quickly gaining are game-changers for ground to become logistics companies, with Canada’s next St. Albert being more accessible than you imagined. transportation, logistics, and warehousing hub. Strategically located at the convergence of the Trans-Canada and CANAMEX Trade Corridor, with immediate access to the Edmonton primary ring road and within five kilometers of CN Rail’s primary intermodal terminal, St. Albert is well positioned for companies seeking access to North America and beyond.

Don’t let this mid-sized city fool you — it has seen explosive sector expansion with over 1.4 million square feet of new warehousing built and absorbed in the last four years, with nearly half a million more currently being constructed, and a 600+ acre light industrial business park slated to be ready for development in 2024, which borders a major transportation route.

70

AREA DEVELOPMENT

NavigatingTheChange.indd 70

Access to Market Time is money, with access to markets required within days, if not hours. Transportation routes via highway, rail, air, and sea are game-changers for logistics companies, with St. Albert being more accessible than you ever imagined.

Class 1 Rail Access: Two CN Main Lines run through two key St. Albert Industrial Business Districts.

Convenient Terminal Access: The CN Edmonton Intermodal Terminal is less than 5 KM away, the CN Walker Yard is less than 7 KM, and the Autoport is less than 30 KM away.

Air Access: The Edmonton International Airport (YEG) is 45 KM from St. Albert.

Port Access: The Port of Metro Vancouver is a 12-hour drive, and the Port of Prince Rupert is within one day’s drive — and the closest port to Asia at 58 hours of sailing time.

Cultivating Business There’s a reason why thousands of businesses choose to locate in Alberta every year. The City of St. Albert enhances business opportunities by supplementing the Province’s low tax rates with additional savings, offering no machinery or equipment tax. The Business Development team goes above and beyond, providing valuable concierge service, helping to guide businesses and developers through multi-layered municipal processes and expediting permitting timelines.

As global companies look to expand while reducing expenses and increasing their bottom line, St. Albert should be on your radar for your next logistics opportunity.

•

LEARN MORE AT: STALBERT.CA/INVEST for free site information, visit us online at www.areadevelopment.com

8/26/22 1:04 PM

British Columbia

EXPLOSIVE LOGISTICS GROWTH

Port of Prince Rupert

ALBERTA

Saskatchewan

CN Rail Line

St. Albert Edmonton Edmonton Int’l Airport

Saskatoon Calgary

Port of Metro Vancouver

Vancouver

CANAMEX Corridor

Trans Canada Highway

Regina

Convenient access to markets via highway, rail, air, and sea.

Logistics & distribution growth

Over 1.4 million square feet of new warehousing absorbed in the last four years with close to another half million currently being constructed.

/invest

Access to markets within days

Navigating the Change: Business Location and Economic Development in Canada – Continued from page 68

TIPS FOR A CANADIAN LOCATION SEARCH IF YOU OR YOUR BUSINESS PARTNERS ARE CONSIDERING CANADA AS A POTENTIAL JURISDICTION FOR DOING BUSINESS, CONSIDER THESE HELPFUL TIPS:

Culture of doing business — be aware.

Canada’s business culture is open and built on trust and long-lasting business relationships.

At the same time, it may be different from other jurisdictions, so it’s critical to understand nuances before diving into negotiations. Different provinces, regions, and municipalities may have differing approaches and processes as well as priorities and KPIs, and your entry point, negotiation process, permits applications, and level of support may differ by jurisdiction.

Levels of government and support — get your project sponsor.

Canada has three levels of government, and depending on your sector, the size of your investment, or your desired location, you may be dealing with one or more levels. Though generally all jurisdictions

72

AREA DEVELOPMENT

NavigatingTheChange.indd 72

are welcoming new investors, their approaches and maturity levels may differ. A critical success factor — especially for large-scale investments — is to secure a project sponsor at the early stages to provide the necessary support throughout the project.

Incentives are important but consider other criteria.

Canadian jurisdictions are substantially different from the U.S. in land availability and costs, road density, labor availability and cost, supplier networks, and other factors.

Therefore, comparing jurisdictions just by tax incentives may mislead your decision-makers.

To make a well-informed decision, you should engage in a multicriteria analysis.

Private vs. public land — ask for the full picture.

Sometimes investors

may not get the full picture on available land plots due to competing interests of brokers who may be trying to offer what is available on their list first. Holistic analysis of the availability of both private and public land and getting unbiased advice on the options may help you get a better deal.

Your local partners — define who will support you in Canada. As a large investor, you most likely would have preferred partners — including contractors, suppliers, and a logistic services provider — and some of them may not be available and may not be operating at full capacity or may not meet your cost/quality expectations in Canada.

It is worth checking what alternatives may be in the local market and consider that in the multi-criteria model for a better-informed decision.

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

8/26/22 1:17 PM

Thompson

”

More companies are now considering decentralized and regional strategies to be more responsive to future supply chain shocks.

• T he introduction of the Clean Fuels Fund and the Low Carbon Economy Fund

At the provincial level, we observe continued competition for capital through incentives. Some examples include an extension to the enhanced rate for the Québec Investment and Innovation Tax Credit (C3i), along with tax credits to encourage investment in manufacturing and processing, which are available in Saskatchewan, Manitoba, and the Atlantic provinces.

In addition to tax credits, provinces continue to introduce discretionary incentives designed to encourage investment in areas such as clean technology and infrastructure to increase capacity for food production.

• Tight labor market: All companies are currently adapting to changing workforce expectations. In Canada, employment growth continues to outpace population growth, and we’re currently experiencing the lowest unemployment rate since data became available in 1976. The United States is experiencing similar recordbreaking low unemployment rates, creating strong competition for talent.

A very tight labor market, in addition to rapidly rising inflation rates, may result in challenges in hiring skilled labor and increased compensation expectations. Much of the workforce will also expect to have continued access to hybrid work environments for the long term.

These changing expectations will continue to impact businesses’ site selection process.

Another challenge resulting from the labor shortage is the cost and timing required for construction of a production or storage facility and the availability of contractors. This recently became a criterion that manufacturers consider as one of the key risks when

74

AREA DEVELOPMENT

NavigatingTheChange.indd 74

making their investment decisions.

• Continued rise of ESG: Across industries, ESG continues to gain prominence and should play an increasingly important role in organizations’ site selection process. Reshoring, for example, provides companies with the opportunity to reduce their supply chain and positively impact ESG ratings.

In Canada, the government has set a target for 100 percent of light-duty cars and passenger truck sales to be zero emission by 2035. This target and changing consumer demands have stimulated the advancement of the electronic mobility sector, resulting in increasing demand for manufacturing spaces. This is just one example of how the rapid growth in the development and adoption of green technologies will make up a larger piece of the site selection market.

To meet these targets, the government continues to introduce incentives, such as the temporary reduction to the corporate income tax rate for qualifying zeroemission manufacturers, which would include companies that manufacture battery or fuel cell technology.

IN SUM As a result of these trends, North American manufacturers are rethinking their location criteria, reversing decades of globalization through repatriation back to the Americas. The vast majority are considering the U.S., but Canadian jurisdictions can also compete thanks to a lower cost base together with skilled labor and no language barrier. Therefore, we expect to see growing interest from various manufacturers — both those repatriating to North America and those expanding internationally — in entering the Canadian market or expanding their current facilities in the country.

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

8/26/22 1:18 PM

Looking to expand your business in one of North America’s fastestgrowing, dynamic communities?

With easy access to a variety of markets by land, sea, rail and air, generous and flexible incentive programs, and world-class research and post-secondary institutions, Niagara is positioned for your businesses success.

Connect with us to begin your Niagara journey.

INSPIRE. INVEST. GROW. niagaracanada.com niagararegion.ca

location canada “FRIEND-SHORING” TO “NEXT-DOORING”

Courtesy Windsor-Detroit Bridge Authority

Canada holds a strategic position as a critical investment destination in a new era of global supply chains and sourcing.

Canada has invested heavily in Canada-U.S. infrastructure, including the planned Gordie Howe International Bridge.

U.S.

Treasury Secretary Janet Yellen and the Deputy Prime Minister of Canada and Minister of Finance Chrystia Freeland convened on June 20, 2022, where the pair championed a new era of “friend-shoring” as a way to transform global supply chains in the post-pandemic world. In contrast to the predominant current purchasing strategy that attempts to meet quality standards at the lowest cost possible, “friend-shoring” (aka “ally-shoring”), according to Secretary Yellen, “is the idea that countries that espouse a common set of values about international trade [and] conduct in the global economy should trade and get the benefits of trade so we have multiple sources of supply and are not reliant excessively on

BY Dan Ujczo, Senior Counsel, Thompson Hine LLP

76

AREA DEVELOPMENT

FriendShoring.indd 76

sourcing critical goods from countries where especially we have geopolitical concerns.”

The U.S. is pursuing this policy in practice. For example, the recent Inflation Reduction Act of 2022 (IRA) signed by President Biden provides preferential tax treatment for electric vehicles and renewable energy (e.g., solar, wind, and hydrogen) produced in North America and restricts using critical minerals or key components from designated countries such as China and Russia. This follows a series of executive and legislative actions ranging from the Section 301 (China) and Section 232 (steel and aluminum) tariffs imposed under the prior U.S. administration; new trade agreements such as the United States-Mexico-Canada Agreement (USMCA) that include stricter content requirements and labor enforcement measures; the Build America, Buy America Act (BABA) as part of the bipartisan infrastructure package; and the Uyghur Forced Labor Prevention Act (UFLPA) that entered into force in summer 2022, among others. These transformative U.S. actions, coupled with Canada’s longstanding trade, talent, and transportation investments, strategically position Canada as the ideal “next door” friendly shore for global investment and sourcing.

STRATEGIC ADVANTAGES Canada has five strategic advantages for companies seeking to navigate “friend-shoring.”

1. Existing Trade, Talent and Transportation Advantages — It is important to recognize that Canada stands on its own as a strong economic competitiveness destination. In a world transformed by natural resources and energy shocks caused by the

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

8/29/22 3:05 PM

pandemic and conflicts, Canada provides stability as the world’s 5th-largest agricultural commodities exporter, the 4th-largest aluminum producer, the 3rd-largest oil exporter, the 2nd-largest uranium producer, and the largest source of key fertilizer products such as potash and peat.

Against the backdrop of these advantages, Canada has a strong commitment to clean and reliable energy.

Canada obtains 66.6 percent of its electricity (81.6 percent from non-GHG emitting sources) and 18.9 percent of its energy supply from renewable sources — compared to the world’s 13.4 percent average. Canada is also the world’s third-largest producer of hydroelectricity.

These natural resource and energy advantages have made Canada a global hub for advanced manufacturing, with 700 automotive parts suppliers located in Ontario alone, with more than 500 suppliers in the highly skilled area of tooling, dies, and molds. Quebec is the 3rd-

largest aerospace cluster in the world, with Airbus’s A220 being manufactured in the province.

These superclusters of advanced manufacturing result in a vibrant economy of innovators located countrywide.

Canada has one of the world’s most educated and experienced workforces, with more technologycredentialed workers in the Toronto-Kitchener-WaterlooOttawa region than Silicon Valley, Austin, and Boston combined. Montreal has attracted more than 250 of the world’s leading researchers in artificial intelligence (AI) and AI innovators span from the St. Lawrence River in Quebec to the Pacific shore in British Columbia.

Canada’s successes are the result of long ranging planning at the federal, provincial, and municipal levels to make Canada one of the Group of Seven’s (G7) most competitive economies. For example, Canada is the only country with preferential trade deals with all other G7 members, thereby facilitating exports, foreign direct

From micro to mega-sites, we have the industrial land and agri-inputs you need to be successful. econdev@camrose.ca or 780.672.4426

camrose.ca/ecdev Where opportunity begins

AREA DEVELOPMENT | Q3 2022

FriendShoring.indd 77

77

8/26/22 10:22 AM

Canada to add necessary supply and resiliency, with Quebec securing the first mRNA vaccine manufacturing facility outside of the U.S.

3. The Talent Advantage — Canada’s successes across multiple sectors largely result from the country’s investments in talent. Canada’s educational investment, and resilient sourcing opportunities. Canada institutions, working with industry associations and also has implemented multi-decade infrastructure individual companies, are designing curricular and skills improvements including developing critical ports and certification programs to ensure that the country’s talent gateways to the Asia-Pacific via Prince Rupert and to remains best-in-class with transferrable and portable the Atlantic via the St. Lawrence Seaway and Halifax. skills. Beyond having one of the world’s most educated Canada meanwhile has invested heavily in Canadapopulations with best-in-class educational institutions, U.S. infrastructure including the planned Gordie Howe Canada has one of the most successful immigration International Bridge in Detroit-Windsor, that, along with programs in the world. the existing strong Canada attracts talent infrastructure assets from across the globe, in that region such Transformative U.S. actions… and immigration as the Ambassador strategically position Canada officials can safely and Bridge and down the Great Lakes to as the ideal “next door” friendly securely process visas highly skilled and Buffalo-Niagara, shore for global investment and for in-demand workers in provide companies sourcing. thirty (30) days or less. invested in Canada This provides a vibrant with multiple access talent pool to address points to global and the needs of many in-demand areas for companies and continental transportation networks. provides a virtuous cycle of talent.

”

2. Investments in the Innovation Economy — Canada’s past investments have made

it the present “friend-shoring” destination of choice.

For example, Canada is the only country in the western hemisphere that has all of the critical minerals required to manufacture EV batteries. Ontario, Quebec, and Saskatchewan, in partnership with the federal government and First Nations, native and indigenous communities, are devoting significant financial, talent and social incentives to sustainably develop these areas.

The private sector is responding. Automakers currently have invested more than $25 billion in Canada’s automotive manufacturing and research corridors for development and deployment of EVs. Ontario leads the way for the number of connected and autonomous vehicle (C/AV) projects supported by multiple levels of government, and British Columbia, Quebec, and Alberta are global leaders in advanced air mobility (AAM) projects. Canada, meanwhile, is the innovator in hydrogen fuel cell development as more than half of the world’s fuel cell developed buses use Canadian designed and manufactured hydrogen R&D. Furthermore, in the wake of the pandemic, leading pharmaceutical manufacturers are investing heavily in

78

AREA DEVELOPMENT

FriendShoring.indd 78

4. Navigating the Neighbor — Canada has deployed a “Team Canada” approach across all levels of government, the private sector, and civil society to address the transformative and arguably protectionist impulses of the U.S. For instance, the original USMCA text required 50 percent of all automotive components to be sourced in North America, and the initial EV proposal in the IRA only included incentives for U.S.made automobiles. “Team Canada,” working with allies in the U.S., was able to address these issues to have more balanced automotive rules of origin in the USMCA and a North American content requirement in the IRA. Perhaps more than any other country in the world, Canada has assisted the U.S. with developing and deploying “friend shoring” in policy and practice. As a result, Canada enjoys preferential access to the U.S. in ways that potentially are the envy of other localities across the globe.

5. “Next-dooring” — The coming months will witness the first strains on “friend shoring” whether through a continued inflationary environment, labor shortages, critical supply chain issues, and important policy and

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

8/26/22 10:23 AM

political decisions to be made on issues ranging from Ukraine-Russia, China tariffs, full implementation of the USMCA in the post-pandemic period, forced labor bans, and worker-centric trade policies. There will be a pressing need to adapt “friend shoring” to supply chain constraints and costing realities. The answer to these solutions will be “next door” for the U.S. and Canada as companies operating in these countries will seek to minimize risk and uncertainty through the competitive advantages in each country.

For example, sourcing of critical minerals from Canada will support the advanced manufacturing and renewable energy needs of the continental supply chains rather than risk the policy and practical uncertainty of overseas sourcing. As the need to address talent gaps grows in the U.S., companies will be looking more to Canada. This will not come with ease. Understanding the

location canada intersections of USMCA, IRA, BABA, UFLPA, and other “friend-shoring” policies and the underlying politics, will assist companies in developing “next-dooring” projects and people.

Canada and the U.S. have enjoyed several centuries of inextricably intertwined economic prosperity that has benefited their citizens and the world at large. There are no two countries more strategically positioned to benefit and lead the era of “friend shoring” — and it starts with “next dooring.”

BRAMPTON AUTOMOTIVE SECTOR Stellantis Brampton Assembly Plant part of a 3.6 million investment for the production of Electric Vehicles

Home to leading automotive parts companies like Almag, Magna, Martinrea, ABC Technologies and many others.

The auto industry now directly employs more than 125,000 people, with another 400,000 people employed in aftermarket and dealership services.

FASTEST GROWING

Home to CN – The Largest Intermodal Railway Terminal in Canada

14,000

Over 90 per cent of the cars made in Brampton are exported with the vast majority going to the U.S.

BIG CITY IN CANADA WITH

NEW RESIDENTS PER YEAR

PART OF THE 2 ND LARGEST AUTOMOTIVE CLUSTER IN NORTH AMERICA Young, Diverse Workforce with 234 Cultures speaking 115 Languages

9th Largest City in Canada with a population close to 700,000

Adjacent to Canada’s Largest Airport – Toronto Pearson

To learn about the opportunities in Brampton’s Automotive Sector, contact: Andrea Williams, Sector Manager Advanced Manufacturing 905.874.3577 | andrea.williams@brampton.ca

AREA DEVELOPMENT | Q3 2022

FriendShoring.indd 79

79

8/26/22 10:23 AM

location

canada CHALLENGES & OPPORTUNITIES IN THE CANADIAN LIFE SCIENCES AND HEALTH TECHNOLOGY (LSHT) INDUSTRY The government’s strategy to ensure the growth of its life sciences sector, along with the country’s high-quality talent and low operational costs among other advantages, makes Canada the place to invest in the LSHT sector.

Collaborate

Lay the Foundation

Grow the business

Building public capacity

Enable

Figure 1: Canada’s Five Pillars to Increase Biomanufacturing Capacity

T

he past two years of pandemic caused by COVID-19 and the slowdown of economic trade have exposed some of Canada’s structural weaknesses across domestic and international supply chains in many sectors, especially the health sector. Issues such as Canada’s incapacity to manufacture its own drug supply, personal protective equipment, ventilators, or testing materials were brought to light and forced the government to react in order to ensure that Canada is well-positioned to respond to future health emergencies.

Never has the importance of a resilient and innovative biomanufacturing and life sciences sector been more evident.

CANADA’S PLAN TO STRENGTHEN DOMESTIC CAPACITY Having understood the importance of promoting the long-term sustainable growth of Canada’s life sciences and health technology (LSHT) sector, the government had the initiative to undertake decisive actions to ensure access to critical vaccines, therapeutics, and other life-saving medicines by developing a comprehensive strategy to re-build a strong and resilient domestic biomanufacturing and life sciences sector. Some $2.2 billion from the 2021 budget was dedicated toward implementing the strategy, which consists of five pillars:

By Marc Beauchamp, President & CEO, CAI Global

80

AREA DEVELOPMENT

ChallengesAndOpportunities.indd 80

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

8/31/22 1:08 PM

Capex-USD m

1,200

75,000

900

50,000

600

25,000

300

Projects

•

100,000

1. Strong and coordinated governance: Integrate decision-making and priority-setting to support Canada’s pandemic preparedness, rapidly understand and respond to health threats, build a pipeline of skilled research and talent.

•

2. Laying a solid foundation by strengthening research systems and the talent pipeline: Offer expanded research and innovation capacity at Canada’s universities and in the life-science ecosystems they support.

•

3. Growing businesses by doubling down on existing and emerging areas of strength: Fund new investments to address the remaining critical gaps in domestic capabilities through the Strategic Innovation Fund (SIF), with $1 billion committed over seven years.

•

4. Building public capacity: Expand key public assets to support pandemic preparedness.

•

5. Enabling innovation by ensuring worldclass regulation: Ensure Canada has a best-inclass regulatory system, world-class expertise, and infrastructure for clinical trials through sustained improvements of Canada’s regulatory system and the creation of a new Clinical Trial Fund (CTF).

From an investor’s perspective, this type of commitment from the government implies more incentives and public investment through allocated funds to revitalize the sector, which could be an attracting factor for businesses considering Canada

0

2018

2019 Jobs

2020 Projects

2021

2022

0

Capex (USD m)

Figure 2: Summary of projects, jobs created, and capex (US$) in the Canadian LSHT sector (2018-2022)

as a potential location.

LSHT — GLOBAL FDI OUTLOOK The life sciences and health technology (LSHT) sector peaked in 2019 with 1,142 registered foreign direct investments worldwide for an estimated US$24 billion in invested capital. Certain specific investment trends have increased within the pandemic context as COVID-19 acted as an “adjuvant,” especially in the fields of biotechnologies and medical technologies.

The other sectors that make up the cluster, pharma and research services, have also experienced some upheaval but to a lesser extent. By the end of 2021, LSHT was back to its 2018 level, both in terms of the number of projects (around 950) and the level of investment (US$30 billion).

Since 2018, investments have been directed mainly to the United States with 748 projects, Germany with 339 projects, the United Kingdom with 305 projects, China with 200 projects, and France with 179 projects.

Canada, meanwhile, has attracted 66 investment projects with US$3.5 billion in investments and 6,766 jobs created. Examples of such projects were Resilience Biotechnologie — $400 million investment in 2021 to increase its manufacturing and fill-finish capacity for a number of vaccines and therapeutics;

AREA DEVELOPMENT | Q3 2022

ChallengesAndOpportunities.indd 81

81

8/26/22 10:19 AM

Sanofi’s commitment in 2021 to build a new vaccine facility in Toronto; and Moderna’s announcement of a new biomanufacturing facility for its mRNA vaccine production.

OPPORTUNITIES IN LSHT IN CANADA

”

Moderna’s announcement in April 2022 of its intention to build a new biomanufacturing production facility together with a research center, representing its first mRNA vaccine manufacturing outside of the U.S., was a major indicator of the industry’s potential in Canada. Having one of the world’s leading biotech companies investing within Canada illustrates the attractiveness of the country and demonstrates an acceleration in the sector, with companies generating more projects driven by such investment. During the press conference, Moderna CEO Stéphane Bancel mentioned the importance of having trained workers and a skilled workforce. By investing in cities such as Montreal, foreign businesses can take advantage of a welcoming, interconnected ecosystem that is built on a commitment to cooperation among industry, academia, and research institutions.1 Canada has one of the world’s best-educated talent pools and is also home to a large pool of highly skilled life sciences professionals with a broad range of expertise. InvestCanada states that with 59.4 percent of Canadians aged 25–64 having graduated from tertiary educational institutions, Canada ranks as the most highly educated country in the world. Of those graduates, over 4.8 million hold a degree from a STEM or healthcare program, making Canada a prime destination for life sciences companies.2 The country is also in a positive trend — in 2018, Canada counted close to 125,000 STEM graduates, a 51 percent increase compared to 2010.3 Overall, Canada’s labor force contains more than 2.8 million STEM graduates.

Canada offers an innovative environment for life sciences companies, especially through the provinces of Québec and Ontario, and the Québec City - Windsor corridor represents a hotspot of

82

AREA DEVELOPMENT

ChallengesAndOpportunities.indd 82

Never has the importance of a resilient and innovative biomanufacturing and life sciences sector been more evident.

innovation, talent, collaboration, and industry clusters — all a signature of what Canada has to offer global investors in life sciences. In fact, this corridor is the second-largest life sciences cluster in North America, representing some 1,100 organizations and 490 graduate and undergraduate programs in biological and biomedicine sciences. The diversity of those activities is significant: from Montreal’s AI expertise leading healthcare innovation to Toronto’s large concentration of hospitals, research institutes, business incubators, and venture capital organizations, every stop along the corridor has unique characteristics and a speciality to round out Canadian expertise in life sciences, and their agglomeration creates a collaborative ecosystem that is varied and dynamic.4

THE CHALLENGE OF DOMESTIC DRUG PRODUCTION Canada is still facing important challenges in the pharmaceutical industry as 70 percent of all finished prescription drugs in Canada and 90 percent of all components used in drugs manufactured domestically originate from abroad.5 Over the last 20 years, most of Canada’s pharmaceutical industry has shut down in favor of offshore manufacturers in India and China.6 Unfortunately, a gap in homegrown drug manufacturing means that Canadians are at the mercy of the global supply chain when it comes to ensuring they have access to the drugs they need. Promoting the “Made in Canada” label is not as easy as it sounds, as Canada’s share of global pharmaceutical consumption is just 2 percent, compared to 44 percent in the United States, meaning that filling all of Canada’s drug needs from within wouldn’t make much sense from an economic perspective.7 Canada needs to work at filing holes in its drug supply system by bringing together world-leading laboratories and existing drug manufacturers, and such initiatives are starting to rise across the country.

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

8/26/22 10:19 AM

SPONSORS ALBERTA

City of Camrose Camrose Economic Development supports investors success in the Camrose market. With available land and labor, high-yield local crops, plus no provincial sales tax, M&E tax, or payroll tax, and among the lowest corporate income taxes in Canada, the stage is set for agri-manufacturing investments in Camrose, Alberta.

For example, the Canadian Critical Drug Initiative aims to provide some solutions to Canada’s international drug dependency by transforming Alberta into a powerhouse in the development of life-saving therapies.8 API, an industry-led Edmonton nonprofit, is partnering with the University of Alberta’s Li Ka Shing Applied Virology Institute to help Canada gain a critical lifeline in the production of small-molecule drugs (e.g., ibuprofen and propofol), which represent the majority of drugs administered in the country. This type of project would be a critical component of the government strategy presented above, as its proposed 40,000-square-foot facility in Edmonton will be able to produce 70 million vials annually of a wide range of small-molecule drugs.

IN SUM The COVID-19 pandemic reinforced not only the importance of domestic capacity to develop and produce vaccines and therapeutics, but also significant breakthroughs in health science and technology. As a response, the strategy put in place by the Canadian government aims to ensure the growth of a strong, competitive domestic life sciences sector with cutting-edge biomanufacturing capabilities and, at the same time, prepare for future pandemics or other health emergencies. Added to this federal strategy are world-class universities and renowned researchers, high-quality talent, low operational costs, and a great quality of life making Canada the place to invest in LSHT. 1

www.montrealinternational.com/en/news/moderna-coming-to-quebec-a-turningpoint-for-the-life-sciences-sector/ www.investcanada.ca/industries/life-sciences 3 www.cmec.ca/Publications/Lists/Publications/Attachments/420/STEM_BHASE_ graduates_report_Final_EN.pdf 4 www.investcanada.ca/blog/life-sciences-ontario-and-quebec-corridor-collaboration 5 https://ottawacitizen.com/business/shockproofing-canada-pharmaceuticals-area-global-game-and-team-spirit-is-in-trouble/wcm/4e9fef9f-3a42-4b33-92078ecead3561ef/ 6 www.nortonrosefulbright.com/en/knowledge/publications/267cfb99/made-in-canadathe-challenges-of-increasing-domestic-production-of-pharmaceuticals#25 7 www.investcanada.ca/blog/life-sciences-ontario-and-quebec-corridor-collaboration 8 www.ualberta.ca/folio/2021/11/u-of-a-industry-partnership-poised-to-close-canadasdrug-supply-gaps.html 2

Patricia MacQuarrie General Manager, Community Development City of Camrose 5204 50 Ave. Camrose, AB T4V 0S8 Canada Office: 780-678-3025 Cell: 780-878-8273 econdev@camrose.ca www.camrose.ca/econdev City of St. Albert The City of St. Albert is a midsized city that brings tremendous opportunities for the logistics industry with accessibility to market through all modes of transportation. Close to half a million square feet of warehousing is currently being constructed with an additional 600+ acres of light industrial slated to be online in 2024.

Patricia Nicol Economic Development Officer City of St. Albert 29 Sir Winston Churchill Avenue St. Albert, Alberta, Canada 780-459-1724 pnicol@stalbert.ca www.stalbert.ca/invest

MANITOBA

Centreport Canada Rail Park The CentrePort Canada Rail Park is 665 acres of rail serviced industrial land located within Manitoba, Canada, with access to three major rail carriers (CP, CN, and BNSF). Centrally located in North America, at the hub of international trading corridors, with tri-modal access to rail, truck, and air transportation.

Chris Reiter, Project Manager CentrePort Canada Rail Park 250-388-9924 creiter@centreportrailpark.com centreportcanadarailpark.com/

ONTARIO

City of Brampton Economic Development Office Brampton’s Economic Development Office provides support through business retention and expansion with a

focus on targeting high growth sector and attracting new business through foreign direct investment strategies. In addition to supporting our business we are committed to attracting, developing, and retaining new jobs and talent.

Andrea Williams Sector Manager, Advanced Manufacturing City of Brampton Economic Development Office 2 Wellington St. W. Brampton, ON Canada L6Y 4R2 Andrea.williams@brampton.ca Investbrampton.ca City of Woodstock Woodstock, Ontario, is located in the heart of southern Ontario at the crossroads of superhighways 401 and 403. With easy access to six Canada-USA border crossings, Woodstock enjoys the best ground transportation system in the province. With our relaxed and affordable lifestyle, you will see why your business belongs at the Crossroads!

Len Magyar, Development Commissioner City of Woodstock 500 Dundas Street P. O. Box 1539 Woodstock, ON N4S 0A7 Canada 519-539-2382 x 2112 Cell: 519-532-3686 lmagyar@cityofwoodstock.ca www.cometothecrossroads.com www.cityofwoodstock.ca Niagara Economic Development Niagara Economic Development is the hub for all investment throughout the Niagara Region.

The rapid economic expansion of the cities within Niagara are due to our strategic advantages and booming key sectors in manufacturing, agri-business, tourism, and many emerging sectors. Niagara Economic Development provides businesses with our vast and committed networks of trade experts, research hubs, business incubators, and networking organizations. Niagara is always ready to welcome families and businesses to the region.

George Spezza Director, Economic Development Niagara Economic Development 1-800-263-7215 George.Spezza@niagararegion.ca info@niagaracanada.ca niagaracanada.com

AREA DEVELOPMENT | Q3 2022

ChallengesAndOpportunities.indd 83

83

8/26/22 10:20 AM

>

CONSTRUCTION/PROJECT PLANNING

A Look at IPD From the Inside Out A culture of teamwork and collaboration paves the way for the execution of integrated project delivery, which helps to cut costs and time while offering other advantages.

By Lauren Collier, Department Manager, VDC Global Initiatives; and Senior Associate, SSOE Group

I

ntegrated Project Delivery (IPD) is a project delivery strategy that focuses on transparency and collaboration, forming a cohesive team, and implementing methods to enhance efficiency and generate desired project outcomes. This isn’t just about a new contract relationship between design and construct — the owner is a key stakeholder.

The culture of collaboration in IPD makes the most of all the project participants’ experience and insights and optimizes effective communication to mitigate risk and reduce changes late in the game. This approach saves time and money, reduces waste, and incentivizes participation through shared goals that unite the team. Here are insights:

Advantages The advantages of using IPD for new projects are found in a few key areas. Cost savings is one, and agility

84

AREA DEVELOPMENT

ALookAtIPD.indd 84

in planning and execution is another. The objective is to get all the members of the project team and adjacent players to work together before and during the design phase to ensure all parties are on the same page, thus ensuring fewer changes due to miscommunication later.

Technology is an enabler with IPD as it increases flexibility and efficiency. The team relies on BIM or the 3D environment and the ability to quickly adapt as the project develops through stages in the virtual world. By contrast, in non-IPD projects, contractors will model the design just to coordinate for construction assurance, essentially performing BIM twice. They may even do their own laser scanning if the design team did not capture the most up-to-date view of existing conditions in the case of a brownfield example for constructability review.

Experienced teams frontload BIM execution planning for BIM and other model uses like laser scanning so it is available to all parties early, thereby eliminating the rework that would be necessary if the team waited to validate conditions downstream.

Continuous cost estimating is another aspect of IPD that increases efficiency. Accurate cost estimating strengthens the predictability of the schedule and reduces the likelihood of cost overruns. Fewer surprises mean fewer delays and change orders. Greater predictability of cost and accuracy of other measures reduces risk as well, resulting in tighter project execution. Due diligence in research during the planning phase results in a reliable cost estimate.

Cost estimators are better at forecasting the “what” of a design than the “how,” so even their generally accurate predictions benefit significantly from the added insight of the technology and data made available by IPD. The forecasting of IPD allows teams to compress fabrication and installation by assigning more accurate timelines to these tasks, making more time available for the design phase.

In today’s competitive market, owners expect each

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

8/26/22 11:47 AM

Technology is an enabler

new project to cost less and have more features. Added to this hefty challenge is an increasing scarcity of skilled labor in the construction industry as improvements in safety and compensation have driven less credentialed jobseekers into manufacturing.

Design teams are asked to do more with less and have had to get creative about the way they work, streamlining the process wherever they can. Innovation with project technology becomes vital to existing as well as new business.

made at the same time and pieced together into a final assembly. The key to success in this process is the sophisticated logistical considerations and fully integrated supply chain.

The lessons learned in manufacturing can be translated into a construction environment where they are just as effective.

A collaborative culture is a big part of the IPD model. With a larger group and more active participation, leaders running the process must be willing to facilitate a larger team. Additionally, the team must understand the requirements for participation in this type of effort.

Because of the extra billable hours team members spend participating in design meetings, IPD appears at first to have a higher cost of implementation than other approaches. In the past, fee structures did not cover such costs, however, this upfront investment creates a motivation for the client to participate early, with the promise of reward downstream.

All parties are compensated for their raw cost to participate, costs are tracked, and the budget is adjusted accordingly. By being proactive with early collaboration, the team avoids unnecessary costs downstream. The owner’s engagement is more robust, and, as a result, they are more familiar with the project and can provide more useful input throughout the project. Their input is richer, more detailed, and less likely to change during construction.

Because scope is an area where many projects run into issues, the more effective IPD approach requires that the team examine scope factors thoroughly before a design is released. The team needs enough information to effectively hand off the design to the construction team.

The hope is to avoid early commitment to an unrealistic schedule simply to check a box and move the process forward. IPD allows the project team to better adapt to the reality that owners don’t always have an adequately detailed scope when they launch the project. The scope then changes as the owner’s process requirements become more firmly established, creating challenges for the team in accommodating the shifting scope. True IPD practice allows the team to adapt to scope changes

WITH IPD AS IT INCREASES FLEXIBILITY AND EFFICIENCY.

Key Considerations Before transitioning to an IPD project delivery model, project teams and stakeholders can consider several key issues to optimize success. All parties — owner, design firm, and construction contractor — must make a formal commitment to be closely involved in planning the project and sharing risks associate with cost, schedule, constructability, usability, and maintainability. Most often this is with an IPD or IFOA (Integrated Form of Agreement) contract to solidify the arrangement. The challenge we see in the marketplace is working with owners who are used to Design Bid Build or Design Build delivery methods to make a procurement shift.

These are all issues the project team must address early in the process and solve as a group, owners included. The biggest source of cost overruns and delays in a construction project is when new input arrives very late in the design phase or even after the design is complete. A team that is committed to prioritizing effective communication and collaborative effort can avoid costly late-stage changes.

When communication is good, teams can run multiple processes in tandem, replacing sequential delivery phases with concurrent processes. In a sequential process, like early auto assembly lines, the product begins from reels of aluminum and a single component and arrives at its eventual finished state, one step at a time, as it moves along the line. With the advent of modern technologies and delivery methods, this approach can branch out.

Today’s construction model looks more like a modern manufacturing approach, where subassemblies are

AREA DEVELOPMENT | Q3 2022

ALookAtIPD.indd 85

85

8/26/22 11:48 AM

with minimal conflict than typically arises with the negotiation of change orders midstream.

One of the new elements that is causing some growing pains for project execution in construction is the advent of prefabricated and modular options. These offer huge advantages in terms of cost, safety, and less time spent in the field, but incorporating them into the project plan can be somewhat challenging when teams don’t have much experience with these methods.

Time saved with prefabricated/modular designs, however, can make up for schedule shortcomings elsewhere. Prefabrication has improved the efficiency of construction sequencing, with sequential steps that can be performed in parallel for each individual module. For projects that have more time-consuming overhead work, much of that can be performed at benchtop level in the shop, rather than in the field, where access is more difficult and dangerous. As these methods become more commonplace, they will enhance the speed of construction and the quality of the final product, with many established precedents for their use in IPD projects.

Hybrid IPD as a Bridge Solution For teams and stakeholders that are learning how to incorporate some IPD elements in their projects but haven’t fully made the transition, a hybrid IPD project may be an appropriate bridge solution. A hybrid IPD serves where project stakeholders are not inclined to offer full transparency or desire cost constraints from the start of the project. Lean principles are a driver for this hybrid IPD, and savvy design teams see this as Lean Project Delivery — essentially various levels of IPD typically not including a formalized contractual relationship between owner, designer, and constructor.

Later, in the midstream project phases, the early-phase cost can be rolled into the total project cost. Incentives and Key Performance Indicators (KPIs) are then based on coming in below that number for the final project budget.

Other incentives can be developed for beating the defined schedule. Shared incentives and aligned goals inherently foster a culture of teamwork and collaboration that paves the way for full IPD project execution in the future, allowing teams and clients to reap the full benefit of this integrated, streamlined project delivery approach. n

Site and Facility Planning E-mail Newsletter This Week

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

The Insider

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

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

www.areadevelopment.com/newsletter

86

AREA DEVELOPMENT

ALookAtIPD.indd 86

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

8/26/22 11:49 AM

ADINDEXWEBDIRECTORY Advertiser

Page

ALABAMA

Alabama Department of Commerce

35

Covington County Economic Development Commission

AdvanceCT

5

42, 43

59

swatson@gaports.com www.GAPorts.com

EMSI/Lightcast

Louisiana Economic Development

www.OpportunityLouisiana.com

39

22, 23

NV Energy

NEW YORK

JobsOhio

C3

C2, 1

WISCONSIN

Wisconsin Economic Development Corporation

3

InWisconsin.com www.WEDC.org

65

City of Camrose

77

70, 71

pnicol@stalbert.ca www.stalbert.ca/invest

Centreport Canada Rail Park/ Focus Equities

73

creiter@centreportrailpark.com www.CentrePortCanadaRailPark.com C4

ONTARIO

City of Brampton Economic Development Office 57

79

Andrea.williams@brampton.ca Investbrampton.ca City of Woodstock

69

lmagyar@cityofwoodstock.ca www.cometothecrossroads.com www.CityofWoodstock.ca

TENNESSEE

Tennessee Department of Economic & Community Development

ALBERTA

MANITOBA

wmccall@SanteeCooper.com www.PoweringSC.com

allen.borden@tn.gov www.TNecd.com

53

john@roanoke.org www.Roanoke.org

City of St. Albert

JobsOhio.com

Santee Cooper

45

VIRGINIA

econdev@camrose.ca www.camrose.ca/econdev

www.NVenergy.com

SOUTH CAROLINA

18

49

CANADA

OHIO 37

www.EconomicModeling.com

LOUISIANA

51

lhipp@mississippi.org www.Mississippi.org

www.ShovelReady.com

Kristina.Slattery@ky.gov CED.ky.gov www.ThinkKentucky.com

IDAHO

Mississippi Development Authority

National Grid

KENTUCKY

Lubbock Economic Development Alliance

info@vedp.org www.VEDP.org

NEVADA 47

TEXAS

Virginia Economic Development Partnership

sdrachnik@edcscc.com www.EDCscc.com

www.Georgia.org

Kentucky Cabinet for Economic Development

13

www.MichiganBusiness.org/ Pure-Opportunity

Economic Development Council of St. Charles County

Page

Roanoke Regional Partnership

MISSOURI

GEORGIA

Georgia Ports Authority

41

info@flintandgenesee.org www.DevelopFlintAndGenesee.com

58

https://linktr.ee/beaconcouncil www.BeconCouncil.com

Georgia Department of Economic Development

Flint & Genesee Group

mpcecodev@southernco.com www.MississippiPowerED.com

www.HainesCityEDC.com

Advertiser

David.Rushing@LubbockEDA.org www.LubbockEDA.org

Mississippi Power

FLORIDA

Miami-Dade Beacon Council

9

MISSISSIPPI 7

jbourdeaux@advancect.org www.AdvanceCT.org

Haines City Economic Development Council

Maryland Marketing Partnership

Michigan Economic Development Corporation

www.AZCommerce.com

CONNECTICUT

MARYLAND

MICHIGAN 55

rick.clifton@covingtoncountyedc.com www.CovingtonCountyEDC.com

Arizona Commerce Authority

Page

Open.Maryland.gov/siteselection

contact@madeinalabama.com www.MadeInAlabama.com

ARIZONA

Advertiser

11

Niagara Economic Development

75

George.Spezza@niagararegion.ca info@niagaracanada.ca www.NiagaraCanada.com niagararegion.ca

Statement of Ownership, Management and Circulation. Publication Title: Area Development. Publication Number: 345-510. Filing Date: 10/1/2022. 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) 338-0900. Publisher name: Dennis J. Shea. Editor name: Geraldine Gambale. 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 2022. Extent and nature of circulation: corporate real estate executives. Average number of copies of each issue during preceding 12 months: Total number of copies: 42,534. Legitimate paid/requested distribution: Outside country paid/requested mail subscriptions stated on PS 3541: 21,160. 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: 21,160.

Non-requested distribution: Outside county non-requested copies stated on PS 3541: 20,576. 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: 331 office copies. Total non-requested distribution: 20,907. Total distribution: 42,067. Copies not distributed: 467. Total: 42,534. Percent paid/requested circulation: 50.3%. Number of copies of single issue published nearest to filing date: Total number of copies: 42,265. Legitimate paid/requested distribution: Outside county paid/requested mail subscriptions stated on PS 3541: 21,223 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: 21,223 Nonrequested distribution: Outside county non-requested copies stated on PS 3541: 20,707. 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: 323 office copies. Total non-requested distribution: 21,030. Total distribution: 42,353. Copies not distributed: 12. Total: 42,265. Percent paid/requested circulation: 50.2%. Publication of Statement of Ownership for a requester publication is required and will be printed in the Q3 2022 issue of this publication. I certify that all information furnished on this form is true and complete: Dennis J. Shea, Publisher.

AREA DEVELOPMENT | Q3 2022

AdIndexQ3.2022.indd 87

87

8/31/22 1:10 PM

Data points are shifting, and location decision-making must change to be evidence-based in approach.

Last

WORD

Long-term planning is admirable, but short-term incremental gains may be more prudent in the near-term economy.

Bob Hess, Vice Chairman and Practice Leader - Global Consulting, Newmark Global Corporate Services

In a hot and poorly ventilated room somewhere in Central and Eastern Europe, two sides of the table gather to discuss what could be a seismic giga-factory investment. On one side is a Fortune 100 enterprise, transforming its business model with new electric vehicle (EV) production processes and plants, considering multiple countries and sites. Opposite, representing a strategically located country, are a plethora of public-sector leaders from the ministries of finance and economy, several investment attraction representatives, and additional state and local entities, all nervously focused on pitching for the project. The meeting begins with good intentions, yet 20 minutes in the leader of the private enterprise interrupts and says (I paraphrase), “We cannot proceed with our location decision-making program unless we come away with great confidence in your ability to execute. You must convince us in a time of great uncertainty that this potential investment and private-public partnership will succeed.

Can we begin to solve complex problems together, with great speed and creativity? Show me over the next two days that you earn the right to be our partner, and we will do the same.”

The words in this statement are powerful indicators of what is happening up and down the value chain of many companies in today’s tumultuous business environment. Business despises uncertainty, as it breeds lack of confidence and unnecessary probability modeling that will be flawed or ill-informed by misleading data and analytics.

LastWord.indd 1

DECISIONMAKING DYNAMICS IN AN UNCERTAIN WORLD BUSINESS DESPISES UNCERTAINTY

Take, for example, another recent case study: A confidential company hired a prominent consulting firm in Europe to evaluate several location options for a lithium-ion battery plant across six countries, spanning from Sweden to Bulgaria. The firm reported its results to the company’s board of directors and was fired on the spot.

Why? A board member had traveled to one of the candidate countries and invested time discussing the market’s cost profiles with a potential joint-venture partner. The consulting firm, in parallel, reported back using industry standard desktop data, surely good enough given a tight timeframe and the difficulties of setting up fieldwork.

Wrong! The delta of data presented vs. that already floating around the board was nearly 50 percent. Lack of custom corroboration and intense

due diligence set the stage here for failure. Both parties also fell short of discussing ways to address together the current volatility in the supply chain to make their decision-making more certain, if not at least bell-curved in its predictive results and scenarios planned.

Decision-making

must

change

drastically in these uncertain times to be more collaborative, multidisciplinary, and creative in approach; data driven, yes, but also “ground-truthed.” Probability of results must be swiftly discussed as the shelf-life of any element, whether financial, operational, or physical, is radically short now. And where one party in a deal is wildly confident and the other extremely unpredictable, consider doing or not doing a deal based on who develops the most effective due diligence work streams and teams, reporting back on what the best optionality is for the project or task at hand, with transparent pros, cons, and tradeoffs: the gold standard of sound decision-making.

Back inside the room, the two days concluded, with the enterprise leader saying: “We must have an extraordinary can-do attitude, comprehensive information, and an array of scenarios for our top management to effectively consider. They must see clarity in every option and how the timeline for this investment can be achieved in an accelerated way, not the normal approach. Let’s keep working together to minimize risk, create stability in what could be, create opportunity, and find a partner that wants and needs us, and vice versa. Will you make the shortlist?”

8/29/22 2:53 PM

COUNT ON IT. • • • • •

RELIABLE SERVICE. LOW RATES. RENEWABLE ENERGY. ENVIRONMENTAL PROTECTION. INVESTMENT IN OUR COMMUNITY.

At NV Energy, our economic development experts work strategically to facilitate business location and expansion within Nevada. The dedicated team can assist with energy pricing and renewable tariffs, site visits, and all the critical data needed to make an informed decision for business investment in Nevada. Our team will help you manage every step of the site location decision process.

Learn more at nvenergy.com/econdev YOU CAN COUNT ON US.

Area Development Forum ad_2022-05.indd 1

5/5/2022 10:26:47 AM

We’re Investing Today for Your Prosperous Future Ohio’s strong business climate and resilient workforce create an environment primed for prosperity. Whether you’re expanding an enterprise or an entrepreneur at launch, JobsOhio will propel you towards the next stage of growth — and get you there faster.

Discover why Ohio consistently ranks in the top 10 states to do business.