20 Fantus INDUSTRY OVERVIEW: The metal products industry produces products ranging from tractors to pipe fittings. The greatest opportunities are in suppliers and customers of farm and garden equipment and machinery. Primary Nebraska target industry opportunities: • Farm and garden equipment and machinery (SIC 352/NAICS 3331) • Fabricated metal products (SIC 349/NAICS 3329) • Metal stamping & bending (SIC 346/NAICS 3321) INDUSTRY STATISTICS: • Growth is projected to average 1.5%-2.0% annually over the next decade • Average hourly wage in the industry is between $14-$17 NEBRASKA CHARACTERISTICS: • Number of establishments: 130 • Statewide employment: 9,500+/- EMPLOYMENT CONCENTRATION Industry Overview Industry Overview -- -- Metal Products Metal Products INDUSTRY TRENDS: • Globalization is widespread in the farm machinery equipment industry, particularly in the shipping of parts and components. • The major customers for farm machinery equipment are large, global agribusinesses and independent contractors that provide agricultural services. • Seventy-five percent of farm machinery equipment sales are projected to come from developing countries in Latin America, Asia, and Eastern Europe by 2005. • Many general components manufacturers have merged as a way to reduce costs as they face increasing competition from imports with the result that the percentage of small to medium-size manufacturers has decreased. • Export to global markets is a remedy many small and medium-size manufacturers are using to mitigate the erosion of their domestic markets by a slow-growing domestic manufacturing base and the strength of overseas imports into the U.S. KEY INDUSTRY CHALLENGES: • Most farm machinery equipment sales in mature markets are replacement sales, not sales of new machines. The increase in total acreage on the average farm without a corresponding increase in total farmland has led to fewer farms, and thus fewer equipment sales. • The general components industry in the U.S. is dependent on the growth of the U.S. manufacturing base, with the strength of the automobile industry as the most important factor. INDUSTRY TRENDS AFFECTING NEBRASKA: • New Holland NV acquired Case Corporation to create a $12 billion competitor that can rival Deere & Co., the world’s largest farm machinery manufacturer. • Caterpillar Claas is scheduled to open a 350,000 SF combine manufacturing plant in Nebraska that is expected to employ 500 workers by 2005. • In the general components industry, fastener and screw machine product manufacturers are often physically proximate to their major customers to facilitate just-in-time delivery of goods. • The screw machine products and industrial fastener industries are concentrated in Midwestern manufacturing centers (i.e., Illinois, Indiana, Michigan, Ohio and Wisconsin) and in California, Connecticut, New York and Pennsylvania. SYNERGIES VALUE GROWTH Existing Busi nesses Suppliers (exist ing or target opportuni ty) Customers Rese arch/Support Location Image Infrastructure Lab or Industry Expansion Concentration Opportuni ty (void) ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü EXISTING SYNERGIES KNOWLEDGE-BASED A G R I B U S I N E S S F I N A N C I A L S E R V I C E S M E T A L P R O D U C T S B I O T E C H N O L O G Y E L E C T R O N I C S M F G . 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Transcript
20 Fantus
INDUSTRY OVERVIEW: The metal products industry produces products ranging from tractors to pipe fittings. The greatest opportunities are in suppliers and customers of farm and garden equipment and machinery.Primary Nebraska target industry opportunities: • Farm and garden equipment and machinery (SIC 352/NAICS 3331)• Fabricated metal products (SIC 349/NAICS 3329)• Metal stamping & bending (SIC 346/NAICS 3321)
INDUSTRY STATISTICS:• Growth is projected to average 1.5%-2.0%
annually over the next decade • Average hourly wage in the industry is between
$14-$17
NEBRASKA CHARACTERISTICS:• Number of establishments: 130• Statewide employment: 9,500+/-
EMPLOYMENT CONCENTRATION
Industry OverviewIndustry Overview----Metal ProductsMetal Products
INDUSTRY TRENDS:
• Globalization is widespread in the farm machinery equipment industry, particularly in the shipping of parts and components.
• The major customers for farm machinery equipment are large, global agribusinesses and independent contractors that provide agricultural services.
• Seventy-five percent of farm machinery equipment sales are projected to come from developing countries in Latin America, Asia, and Eastern Europe by 2005.
• Many general components manufacturers have merged as a way to reduce costs as they face increasing competition from imports with the result that the percentage of small to medium-size manufacturers has decreased.
• Export to global markets is a remedy many small and medium-size manufacturers are using to mitigate the erosion of their domestic markets by a slow-growing domestic manufacturing base and the strength of overseas imports into the U.S.
KEY INDUSTRY CHALLENGES:
• Most farm machinery equipment sales in mature markets are replacement sales, not sales of new machines. The increase in total acreage on the average farm without a corresponding increase in total farmland has led to fewer farms, and thus fewer equipment sales.
• The general components industry in the U.S. is dependent on the growth of the U.S. manufacturing base, with the strength of the automobile industry as the most important factor.
INDUSTRY TRENDS AFFECTING NEBRASKA:• New Holland NV acquired Case Corporation to create a $12 billion competitor that can rival
Deere & Co., the world’s largest farm machinery manufacturer.• Caterpillar Claas is scheduled to open a 350,000 SF combine manufacturing plant in
Nebraska that is expected to employ 500 workers by 2005.• In the general components industry, fastener and screw machine product manufacturers are
often physically proximate to their major customers to facilitate just-in-time delivery of goods.
• The screw machine products and industrial fastener industries are concentrated in Midwestern manufacturing centers (i.e., Illinois, Indiana, Michigan, Ohio and Wisconsin) and in California, Connecticut, New York and Pennsylvania.
Industry TargetIndustry Target----Farm Machinery & EquipmentFarm Machinery & Equipment
NEBRASKA FIT
INDUSTRIAL/I-80REGIONS: ProductionFacilities
INDUSTRY OVERVIEW: Farm Machinery & Equipment--SIC 352/NAICS 3331Particular target SICs 3523• Encompasses the major manufacturing sector which produces farm machinery and
equipment, including wheel tractors.REASON SELECTED: Strong industry base.
CURRENT NEBRASKA EMPLOYMENT: 89 establishments; 7,047 employees
REPRESENTATIVE SITING CRITERIA:Critical• Semi-skilled labor force• Supplier and customer base• Raw materials (steel, tires)• Stamping operations
Important• Quality of life• Access to major markets (road &
rail)
INDUSTRY INPUTS, OUTPUTS AND OPPORTUNITIES
PRIMARY INDUSTRYINPUTS
• Wholesale trade• Blast furnaces & steel
mills• Farm machinery &
equipment• Internal combustion
engines• Iron & steel foundries
INDUSTRYOUTPUTS
• Private fixed investment
• Exports• Farm machinery &
equipment• Feed grains
NEBRASKA OPPORTUNITIES
• Build off of existing related industry
• Image
• Center of U.S. market
• Supplier market
INDUSTRY METRICS:
BENEFIT TO NEBRASKA
54
76
103
106
020406080
100120Growth
Payroll
Value-Added
Investment
US Average
NE Ideal
Farm Machinery& Equipment
Average Wage Level $14.67Payroll as a % of National Average 103%Typical Establishment Size 47Electric Usage as a % of Inputs 1.5%Annual Industry Growth Potential 1998-2008 2.5%Annual Employment Growth Potential 1998-2008 -8.6%Value Added as a % of National Average 106%Capital Investment as a % National Average 54%
EXISTING SYNERGIES KNOWLEDGE-BASED
AGRIBUSINESS FINANCIAL SERVICES
METAL PRODUCTS BIOTECHNOLOGY ELECTRONICS MFG.
SOFTWARE DEV.
METROREGIONS:
Large scale production, engineering and
development centers
22 Fantus
Rural MetropolitanI-80 Industry
80
INDUSTRY OVERVIEW: Fabricated Metals--SIC 349/NAICS 3329Particular target SICs 3491, 3492• Encompasses production of industrial and fluid power valves and hose fittings.
REASON SELECTED: Opportunities for suppliers to existing industries.
CURRENT NEBRASKA EMPLOYMENT: 34 establishments, 2,261 employees
Industry TargetsIndustry Targets----Fabricated MetalsFabricated Metals
I-80/RURAL REGIONS:
Smaller producerssupplying larger,
regional assemblers
NEBRASKA FIT
INDUSTRIALREGION:
Larger, laborintensive production
REPRESENTATIVE SITING CRITERIA:Critical• Semi-skilled labor• Utilities (electricity)• Raw materials• Metal working/welding market proximity
Average Wage Level $15.02Payroll as a % of National Average 106%Typical Establishment Size 86Electric Usage as a % of Inputs 2.2%Annual Industry Growth Potential 1998-2008 3.1%Annual Employment Growth Potential 1998-2008 2.6%Value Added as a % of National Average 92.0%Capital Investment as a % National Average 61.0%
EXISTING SYNERGIES KNOWLEDGE-BASED
AGRIBUSINESS FINANCIAL SERVICES
METAL PRODUCTS BIOTECHNOLOGY ELECTRONICS MFG.
SOFTWARE DEV.
23 Fantus
Rural MetropolitanI-80 Industry
80
Industry TargetsIndustry Targets----Metal Stamping & BendingMetal Stamping & BendingINDUSTRY OVERVIEW: Metal Stamping & Bending--SIC 346/NAICS Particular target SICs 3469• Encompasses establishments engaged in manufacturing metal stampings and spun
products.REASON SELECTED: Opportunities for suppliers to existing industries.
CURRENT NEBRASKA EMPLOYMENT: 7 establishments, 244 employees
Important• Real and M&E property taxes• Labor costs
INDUSTRY INPUTS, OUTPUTS AND OPPORTUNITIES
PRIMARY INDUSTRYINPUTS
• Blast furnaces & steel mills
• Wholesale trade• Aluminum rolling &
drawing• Repair & maintenance• Primary nonferrous
metals• Electric services
INDUSTRYOUTPUTS
• Personal consumption expenditures
• Refrigeration & heating equipment
• Turbines & turbine generator sets
• Electronic components• Motors & generators• Communication
equipment
NEBRASKA OPPORTUNITIES
• Primary opportunity to add value and build off of existing related industry
• Highly regarded vocational training program
INDUSTRY METRICS:
I-80/RURAL REGIONS:
Smaller producerssupplying larger,
regional assemblers
NEBRASKA FIT
INDUSTRIALREGION:
Larger, labor intensive production BENEFIT TO NEBRASKA
66
42
58970
20406080
100120Growth
Payroll
Value-Added
Investment
US Average
NE Ideal
Metal Stampings
• Tool & die makers
Average Wage Level $13.81Payroll as a % of National Average 97%Typical Establishment Size 44Electric Usage as a % of Inputs 2.0%Annual Industry Growth Potential 1998-2008 1.4%Annual Employment Growth Potential 1998-2008 -2.7%Value Added as a % of National Average 66%Capital Investment as a % National Average 58%
EXISTING SYNERGIES KNOWLEDGE-BASED
AGRIBUSINESS FINANCIAL SERVICES
METAL PRODUCTS BIOTECHNOLOGY ELECTRONICS MFG.
SOFTWARE DEV.
24 Fantus
Tasks• Develop a proactive marketing strategy.• Build off of the strong technical training program at Milford to provide training programs which educate youth
for job opportunities.• Build strategically placed speculative buildings; companies in this industry often require quick solutions.• Designate sites for the metals industry targets (i.e., zoning, prepare electric supply, road access to sites, pre-
permit, etc.).• Consider tax abatements because these facilities tend to have high investments (M&E in particular).• Develop training opportunities:
– Enhance and expand technical education system.– Develop team skills for manufacturing.– Collaborate with the university on advanced manufacturing processes (i.e., robotics) that help to attract
companies into the area.
Timing• Farm machinery and equipment—Nebraska needs to capture its share of facilities now due to rapid
consolidation in the industry.• Focus on linkage marketing efforts (companies in the industry assist with marketing efforts for their suppliers
and customers).• Opportunities in attracting these industries is likely to peak in the next two to four years.
Industry TargetsIndustry Targets----Call to ActionCall to ActionEXISTING SYNERGIES KNOWLEDGE-BASED
AGRIBUSINESS FINANCIAL SERVICES
METAL PRODUCTS BIOTECHNOLOGY ELECTRONICS MFG.
SOFTWARE DEV.
25 Fantus
Industry TargetsIndustry Targets——KnowledgeKnowledge--Based Based
• Traditionally, Nebraska’s economic base has been built on agriculture and related manufacturing industries as well as the insurance industry. In moving forward, Nebraska should focus its resources on positioning Nebraska as a player in the ‘knowledge-based’ economy. Building a ‘knowledge-based’ sector is in many ways more challenging than building on existing synergies. The changing economic tide throughout the country is being driven by entrepreneurial ventures focused in the technology and internet/communications realm. Nebraska must take active steps to develop such a culture, including developing a statewide venture capital network.
• Nebraska should proactively attract and develop these target industries.
• The specific ‘knowledge-based’ industries that Nebraska should concentrate on are:
– Biotechnology—concentrate on the transition of Agribusiness to the 21st century, specifically pharmaceutical preparations (animal pharmaceuticals in particular) and research and development operations affiliated with the existing agriculture industry base such as food processing, crop engineering, and animal health.
– Electronics Manufacturing—focus on industrial and analytical instruments, telecommunications equipment and electronics components manufacturing.
– Software Development—focus on attracting and developing small- to medium- sized software development companies that enhance productivity and spur innovations throughout the economy.
INDUSTRY STATISTICS:• Annual growth is projected to average 3.3% in
pharmaceuticals and 6.7% in research • Average hourly wage in pharmaceuticals is $17.84
and $20.00+ in research
NEBRASKA CHARACTERISTICS:• Number of establishments: 25 • Statewide employment: 2,500
Industry OverviewIndustry Overview----BiotechnologyBiotechnology
INDUSTRY OVERVIEW: The biotechnology industry employs approximately 300,000 workers whose roles include research and development, testing, manufacturing and marketing of pharmaceutical products derived primarily from either animal or plant products. The greatest opportunities are in veterinary pharmaceuticals and research and development.
Primary Nebraska target industry opportunities: • Pharmaceutical Preparations (particularly pharmaceuticals for animals) − (SIC 283/NAICS 32541) • Research & Development − (SIC 873/NAICS 54171)
INDUSTRY TRENDS AFFECTING NEBRASKA:• Pharmaceutical employment and production facilities are centered in the northeastern U.S.• 50% of the positions in the biotechnology industry are in production occupations (e.g., less
skilled operator, fabricator, etc.).• Veterinary pharmaceuticals sales approached $1.6 billion industry in 1995, however, this
represents a small percentage of the larger pharmaceutical preparations market.• The biotechnology industry is not impacted by general economic conditions given that
demand for pharmaceutical products is driven by the health of the general public, which has remained fairly constant. Further, many patients are reimbursed through their health plans for the cost of pharmaceuticals and, as a result, are not price sensitive. However, the market for specific sub-sectors of the pharmaceutical market (e.g., flu remedies) are often seasonal.
• Most biotechnology firms are small.• Biotechnology firms are usually funded by venture capitalists. Nationally, the industry
raised $1.18 billion from private firms in 1999.
KEY INDUSTRY CHALLENGES:• Pricing of pharmaceutical products will continue to be pressured by managed care
organizations and the U.S. government, especially if a Medicare prescription drug program is enacted.
• Biotechnology companies must manage relationships with federal oversight agencies, notably the Food and Drug Administration, given the extensive regulatory environment in which they operate.
• Bioethics may be a concern as new technologies advance genetically altered food.
INDUSTRY TRENDS:• The industry is expected to grow at an annually compounded rate of 8 – 10% in the next
five years.• Wages in the industry are projected to increase by 11% through 2008, faster than most
other manufacturing industries.• The over-65 population is the largest consumer of pharmaceuticals, with a rate three times
as large as younger patients.• The “Superdrug” industry is a sub-sector of the biotechnology/pharmaceuticals industry
that concentrates on performing research. Once a marketable discovery is achieved, the company licenses the technology to a larger firm with the marketing and production capabilities to take it to market or enters into a partnership with a larger firm.
• R&D expenditures represent approximately 20% of total industry revenue. However, R&D spending for veterinary products was only 4%, the same as the average R&D outlay by the average U.S. manufacturer.
• The biotechnology industry has grown rapidly, doubling in size from 1993 to 1999 (to $20 billion in revenues)
SYNERGIES VALUE GROWTHEx
istin
g Bu
sines
ses
Supp
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(exis
ting
or
targ
et o
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stom
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Rese
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/Sup
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Infra
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Labo
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Indu
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Expa
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Conc
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Oppo
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ty (v
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EMPLOYMENT CONCENTRATION
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EXISTING SYNERGIES KNOWLEDGE-BASED
AGRIBUSINESS FINANCIAL SERVICES
METAL PRODUCTS BIOTECHNOLOGY ELECTRONICS MFG.
SOFTWARE DEV.
27 Fantus
Rural MetropolitanI-80 Industry
80
Industry TargetIndustry Target----Pharmaceutical PreparationsPharmaceutical Preparations
METRO REGION: Testing and R&D
Facilities
NEBRASKA FIT
INDUSTRIALREGION: ProductionFacilities
INDUSTRY OVERVIEW: Pharmaceutical preparations--SIC 283/NAICS Particular target SICs 2833, 2834• Encompasses pharmaceutical preparations, including veterinary pharmaceuticals.REASON SELECTED: Growing industry, opportunities to further support existing
industries with high value products. CURRENT NEBRASKA EMPLOYMENT: 17 establishments; 2,000 employees
REPRESENTATIVE SITING CRITERIA:Critical• Access to raw materials• Access to potential markets• Synergies with universities
Important• Image of community• Access to quality labor force
• Build on synergies created through presence of raw materials
INDUSTRY METRICS:
BENEFIT TO NEBRASKA
1 0 0
2 9 6
4 2 3
1 4 80
100
200
300
400
500Gro w t h
P a yro ll
V a lue - A d d e d
Inve s t me nt
US Average
NE Ideal
Pharmaceuticals
Average Wage Level $21.00Payroll as a % of National Average 148%Typical Establishment Size 116Electric Usage as a % of Inputs 1.5%Annual Industry Growth Potential 1998-2008 3.3%Annual Employment Growth Potential 1998-2008 10.7%Value Added as a % of National Average 296%Capital Investment as a % National Average 423%
I-80RURALREGIONS:
Opportunistic tie-into existing businesses
EXISTING SYNERGIES KNOWLEDGE-BASED
AGRIBUSINESS FINANCIAL SERVICES
METAL PRODUCTS BIOTECHNOLOGY ELECTRONICS MFG.
SOFTWARE DEV.
28 Fantus
Rural MetropolitanI-80 Industry
80
INDUSTRY OVERVIEW: Commercial Physical and Biological Research--SIC 873/ NAICS 54171
Particular target SICs 8731, 8733, 8734• Encompasses companies engaged in commercial physical and biological research including
animal health and veterinary research, agricultural and environmental biotechnology.REASON SELECTED: Growing industry, opportunities to further support existing
industries with high value products, links with university research programs. CURRENT NEBRASKA EMPLOYMENT: 8 establishments; 500 employees
Industry TargetsIndustry Targets----Research & DevelopmentResearch & Development
NEBRASKANEBRASKARegions METRO REGION:
Testing and R&D Facilities
NEBRASKA FIT
REPRESENTATIVE SITING CRITERIA:Critical• Access to venture capital funding• Proximity to university resources• Skilled labor force• Synergies with users of the research
Important• Proximity to pharmaceutical partner
organizations
INDUSTRY INPUTS, OUTPUTS AND OPPORTUNITIES
PRIMARY INDUSTRYINPUTS
• Raw materials • Venture capital funding
INDUSTRYOUTPUTS
• New technologies• Higher productivity
and revenues for farmers
• Product sales
NEBRASKA OPPORTUNITIES
• Build off of existing related industry
• Agriculture and food processing
• Capitalize on new products being developed
• Genetic engineering of crops including pesticides/ herbicides, genetically altered foods and environmental controls
INDUSTRY METRICS:
BENEFIT TO NEBRASKARelated Applications of Biotechnology Research
Agriculture• New plant varieties for new or improved
foods• Safer pest control, such as biopesticides
and pathogen-resistant crops• Plant disease diagnostics• Improved livestock for food production• Veterinary disease diagnostics,
therapeutics, and vaccines• Animal and plant “factories” to produce
pharmaceuticals and chemicals
Food Processing• Microbial starter cultures, enzymes, and
vitamins• Food contamination test kits• High performance and healthier cooking
oils• Nutritionally enhanced foods• Food enzymes to use in food processing• Fermentation procedures
Average Wage Level $22.00Payroll as a % of National Average 155%Typical Establishment Size 118Annual Industry Growth Potential 1998-2008 6.7%Annual Employment Growth Potential 1998-2008 3.4%
RURAL REGION: Testing Stations
EXISTING SYNERGIES KNOWLEDGE-BASED
AGRIBUSINESS FINANCIAL SERVICES
METAL PRODUCTS BIOTECHNOLOGY ELECTRONICS MFG.
SOFTWARE DEV.
29 Fantus
Tasks• Conduct meetings with existing firms with the intent to develop a linkage-marketing program.
– Develop a detailed targeted marketing strategy that builds on existing businesses and relationships between companies and universities.
• Continue to promote Nebraska’s image in the industry through strategically-placed advertising.– Develop fact-based marketing material to highlight Nebraska’s advantages.– Explore direct mail opportunities.– Attend industry specific trade shows and expositions.
• Assess and develop the necessary skill base to match the human resource needs of the targeted industries.– Offer training programs to enhance the skill base of technicians.– Encourage more interaction between the universities and businesses to develop training/apprenticeship
programs relevant to businesses needs.
Timing• Create and implement a long-term image campaign. • Implement linkage-marketing strategy immediately.
Industry TargetsIndustry Targets----Call to ActionCall to ActionEXISTING SYNERGIES KNOWLEDGE-BASED
AGRIBUSINESS FINANCIAL SERVICES
METAL PRODUCTS BIOTECHNOLOGY ELECTRONICS MFG.
SOFTWARE DEV.
30 Fantus
INDUSTRY OVERVIEW: The electronic equipment industry produces products ranging from semiconductors to televisions. The greatest opportunities lie in the companies producing and supplying computer, semiconductor, and telecommunication manufacturers.Primary Nebraska target industry opportunities: • Industrial and Analytical Instrument Production (SIC 382/NAICS 3345)• Telecommunications Equipment Production (SIC 366/NAICS 3342)• Electronic Components Production (SIC 367/NAICS 335)
INDUSTRY STATISTICS:• Growth is projected to average 5% per year with
some sectors projecting up to 15% growth annually.
• Average hourly wage in the industry is $13.71.
INDUSTRY TRENDS:• Demand for electronic products has been and should remain strong. As the virtual office
becomes commonplace, the demand for electronic devices will increase. The industry is expanding globally, with the telecommunications equipment market, in particular, becoming increasingly global in nature.
• Future of electronics will be driven by individual desires to connect to the Internet from home. The continuing worldwide trend toward privatization, liberalization, and competition in telecommunications services markets will sustain the demand for equipment and help erode market access barriers.
• Many electronics manufacturers are influenced by trends in the computer industry. For instance, the convergence of telephony and computers is influencing companies to facilitate the integration of voice and data communications for users of desktop computers.
• Rapid technological change and intense competition make research and development efforts key to future success in the industry.
• The growing demand for telecommunications equipment is being driven by expansion of wireless networks, preparation for meeting demand for wireless data transmission, unmet demand for telecommunications services in developing countries, and Internet growth.
INDUSTRY TRENDS AFFECTING NEBRASKA:
• Companies producing components, intermediate, and finished goods tend to locate near each other because close proximity allows better access to innovations.
• Investors are willing to back these companies because of the large paybacks.• Most companies in the industry are small. The history of innovation in the industry fosters a
culture of start-up firms, but employment tends to be concentrated in large establishments. • Rapid pace of innovation in electronics technology makes for a constant demand for
increasingly faster products which puts a greater emphasis on R&D than is typical in most manufacturing industries.
• Total employment increases slowly while overall growth is strong, indicating increasing employee productivity.
NEBRASKA CHARACTERISTICS:• Number of establishments: 52• Statewide employment: 10,000+/-
KEY INDUSTRY CHALLENGES:• Although demand is projected to remain strong, US suppliers will continue to face
competition from foreign-owned companies.• Analysts agree that there is surplus capacity in certain sectors, such as central office
switching equipment, and predict that consolidation in that sector is inevitable.• Shorter product cycles mean only the biggest players in the industry can remain innovative
while making a profit.• The pressure to be first to market with new products drives industry profits down for
standard “commodity” products.
EMPLOYMENT CONCENTRATION
Industry OverviewIndustry Overview----Electronics ManufacturingElectronics Manufacturing
Industry TargetIndustry Target----Industrial & Analytical InstrumentsIndustrial & Analytical Instruments
METRO REGION: Testing and R&D
Facilities
NEBRASKA FIT
INDUSTRIALREGION: ProductionFacilities
INDUSTRY OVERVIEW: Industrial and Analytical Instruments--SIC 382/NAICS 3345Particular target SICs 3825, 3826, 3827, 3829• Encompasses three major manufacturing sectors: Producers of laboratory instruments and
apparatus; measuring and controlling instruments; and electrical test and measuring instruments-manufacturers of a diverse range of technically advanced products.
REASON SELECTED: Growing industry; opportunities to further support existing industries with high value products; and presence of local testing facilities.
CURRENT NEBRASKA EMPLOYMENT: 15 establishments; 2,000 employees
REPRESENTATIVE SITING CRITERIA:Critical• Skilled labor force• University proximity• Infrastructure
Important• Quality of life• Air access to major markets• Testing facilities• Engineering talent
• Existing related industries can become suppliers
• University interaction
INDUSTRY METRICS:
BENEFIT TO NEBRASKA
7 3 1 2 5
1 4 5
1 0 9
0
50
1 00
1 50
Growth
Payroll
Value Added
Investment
US Average
NE Ideal
Instruments
Average Wage Level $14.59Payroll as a % of National Average 125%Typical Establishment Size 55Electric Usage as a % of Inputs 1.70%Annual Industry Growth Potential 1998-2008 4.8%Annual Employment Growth Potential 1998-2008 4.0%Value Added as a % of National Average 109%Capital Investment as a % National Average 73%
I-80/RURALREGIONS:
Sub-assembly ProductionFacilities
EXISTING SYNERGIES KNOWLEDGE-BASED
AGRIBUSINESS FINANCIAL SERVICES
METAL PRODUCTS BIOTECHNOLOGY ELECTRONICS MFG.
SOFTWARE DEV.
32 Fantus
Rural MetropolitanI-80 Industry
80
INDUSTRY OVERVIEW: Telecommunications Equipment--SIC 366/NAICS 3345Particular target SICs 3661, 3663, 3669• Encompasses manufacturers engaged in the production of network equipment, customer
Important• Proximity to colleges and universities• Air cargo• Cost of electricity• Real and M&E property taxes
INDUSTRY INPUTS, OUTPUTS AND OPPORTUNITIES
PRIMARY INDUSTRYINPUTS
• Electronic components• Semiconductors &
related devices• Wholesale trade• Communications
equipment• Miscellaneous plastics
products
INDUSTRYOUTPUTS
• Gross private fixed investment
• Exports• Personal consumption
expenditures• Federal government,
national defense spending
• Federal government, national defense investment
NEBRASKA OPPORTUNITIES
• Existing related industries can become suppliers
• Testing facilities
• University interaction
INDUSTRY METRICS:
BENEFIT TO NEBRASKA
142
101 130
245
0
50
100
150
200
250Gro wth
P a yro ll
Va lue -A dde d
Inv e s tm e nt
US AverageNE IdealTeleco m Equipment
Average Wage Level 18.56$ Payroll as a % of National Average 130%Typical Establishment Size 109Electric Usage as a % of Inputs 1.2%Annual Industry Growth Potential 1998-2008 8.1%Annual Employment Growth Potential 1998-2008 21%Value Added as a % of National Average 142%Capital Investment as a % National Average 101%
EXISTING SYNERGIES KNOWLEDGE-BASED
AGRIBUSINESS FINANCIAL SERVICES
METAL PRODUCTS BIOTECHNOLOGY ELECTRONICS MFG.
SOFTWARE DEV.
33 Fantus
Rural MetropolitanI-80 Industry
80
Industry TargetsIndustry Targets----Electronic ComponentsElectronic ComponentsINDUSTRY OVERVIEW: Electronic Equipment--SIC 367/NAICS 335Particular target SICs 3675, 3676, 3678, 3679• Encompasses manufacturing of electronic components and accessories, including
electronic capacitors, resistors, connectors, and other electronic components. REASON SELECTED: Growing market, high value-added, synergies with universities,
testing equipment and an opportunistic play. CURRENT NEBRASKA EMPLOYMENT: 22 establishments; 5,094 employees
NEBRASKA FIT
INDUSTRIALREGION:
Larger and/or more complicated components
REPRESENTATIVE SITING CRITERIA:Critical• Cost of electricity• Timing• Semi-skilled labor force availability
Important• Cost of electricity• Engineering talent• Taxes (particularly property taxes)
related devices• Planting & polishing• Miscellaneous plastics
products
INDUSTRYOUTPUTS
• Electronic components
• Electronic computers• Exports • Communication
equipment• Telephone &
telegraph apparatus
NEBRASKA OPPORTUNITIES
• Build on existing critical mass
• High value-added product therefore less freight cost sensitive
INDUSTRY METRICS:
BENEFIT TO NEBRASKA
330
69
87 890
50
100
150
200
250
300
350
Growth
Payroll
Value-Added
Investment
US Ave rageNE IdealElec tro nic Co mpo nents
Average Wage Level 12.67$ Payroll as a % of National Average 89%Typical Establishment Size 104Electric Usage as a % of Inputs 2%Annual Industry Growth Potential 1998-2008 10.9%Annual Employment Growth Potential 1998-2008 2.2%Value Added as a % of National Average 69%Capital Investment as a % National Average 87%
I-80/ruralREGIONS: Related Parts
Production
EXISTING SYNERGIES KNOWLEDGE-BASED
AGRIBUSINESS FINANCIAL SERVICES
METAL PRODUCTS BIOTECHNOLOGY ELECTRONICS MFG.
SOFTWARE DEV.
34 Fantus
Tasks• Establish a national image within the technology industry that Nebraska is an attractive destination for
manufacturers and less costly than the ‘coasts.’– Attend industry trade shows/expositions--broaden image in the industry.– Target suppliers/customers through “linkage” marketing (have Nebraska company representatives
participate in marketing to their suppliers and customers).– Actively market to specific, high-potential companies.– Build speculative buildings because these industries act quickly and are attracted to existing buildings.
• Build a connection with the university engineering school and testing facility.• Create incentive programs to entice these companies to the state.
– Target specific entrepreneurial incentive programs, examine their best practices, and create incubators.– Relieve start-up costs (including property taxes) since many firms’ decisions will be cost driven.
• Demonstrate high productivity of workers to show cost effectiveness of location.
Timing• Develop five-year marketing program to enhance the state image as a technology center.• Broaden speculative building program in the immediate future.• Develop technology parks with covenants (related to appearance) to help attract companies to the area.
Industry TargetsIndustry Targets----Call to ActionCall to ActionEXISTING SYNERGIES KNOWLEDGE-BASED
AGRIBUSINESS FINANCIAL SERVICES
METAL PRODUCTS BIOTECHNOLOGY ELECTRONICS MFG.
SOFTWARE DEV.
35 Fantus
INDUSTRY OVERVIEW: The software development industry includes organizations that provide consulting and programming services, create and publish packaged software for resale and develop Web-related technologies and capabilities. The greatest opportunities for Nebraska are in computer programming services and prepackaged software.
Primary Nebraska target industry opportunities: • Computer Software Development − SIC 737/NAICS 514/5415
INDUSTRY STATISTICS:• Annual growth is projected to average 10.3%• Average hourly wage is $23.26
INDUSTRY TRENDS:• Strong growth is projected in all segments of the software industry through the next
decade.• U.S. online B2B e-commerce will total more than $1 trillion by 2003.• Sales of software products rose to over $140 billion annually by the end of the past decade.• With the passing of Y2K, business spending on information technology is expected to
increase through 2000.• Corporate intranets are increasing in popularity as a cost effective mechanism for
communicating with employees, as well as reducing costs by allowing employees to perform regular tasks (e.g., benefits election, expense reimbursement, etc.) more easily, and leveraging the organization’s intellectual capital.
• New technologies have created opportunities for greater efficiencies, new and larger markets, and better understanding of customers.
• The industry is characterized by growing consolidation of firms to increase production capabilities and expand market reach.
INDUSTRY TRENDS AFFECTING NEBRASKA:• The expansion of computer networks and increasing bandwidth are allowing organizations to
source their operations across larger geographic distances, as well as allowing personnel to work remotely or telecommute.
• The labor market for computer professionals is extremely tight with predictions by the Commerce Department that the U.S. will need up to 1.3 million new employees skilled in technology by 2006. This lack of technical talent has resulted in requests from industry to increase the number of work visas granted by the U.S. for foreign talent.
• Wages increase at an annual average rate of 8%.• The software industry is projected to have the fastest wage and salary growth for 1998-2008.• The industry is characterized by many small start-ups that provide rapid innovation.
Therefore venture capital is an essential source of equity and is important for the competitive strength of the industry.
NEBRASKA CHARACTERISTICS:• Number of establishments: 496• Statewide employment: 16,437
KEY INDUSTRY CHALLENGES:• The tight labor market has placed significant pressure on wages, resulting in annual 5% to
10% increases in salaries for IT professionals.• Software piracy is one of the most significant challenges facing the industry, representing
more than $11 billion in lost revenue. Though the U.S. intellectual property rights regime is strong, the legal environment in many countries is weak and unenforceable, leading some prepackaged software providers to avoid shipping products to certain markets.
• The lack of a predictable legal environment governing internet transactions causes uncertainty in the industry.
EMPLOYMENT CONCENTRATION
Industry OverviewIndustry Overview——Software DevelopmentSoftware Development
SYNERGIES VALUE GROWTHEx
istin
g Bu
sines
ses
Supp
liers
(exis
ting
or
targ
et o
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tuni
ty)Cu
stom
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Rese
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/Sup
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Infra
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Expa
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EXISTING SYNERGIES KNOWLEDGE-BASED
AGRIBUSINESS FINANCIAL SERVICES
METAL PRODUCTS BIOTECHNOLOGY ELECTRONICS MFG. SOFTWARE DEV.
Industry TargetIndustry Target----Computer Software DevelopmentComputer Software Development
METRO REGION: Programming operations, high
end technical support
NEBRASKA FIT
I-80 REGION: Technical related
customer service centers
INDUSTRY OVERVIEW: Computer Software Development--SIC 737/NAICS 514, 5145Particular target SICs 7371, 7372• Encompasses companies that design and publish packaged software programs for systems
infrastructure, application packages, and software development tools; and develop Internet and e-commerce technologies.
REASON SELECTED: Build upon universities and existing operations; opportunities exist to further support established industries with high-value products.
CURRENT NEBRASKA EMPLOYMENT: 496 establishments; 16,437 employees
REPRESENTATIVE SITING CRITERIA:Critical• Skilled labor force• University proximity• Venture capital, support network
Important• Quality of life• Air access to major markets• Image
INDUSTRY INPUTS, OUTPUTS AND OPPORTUNITIES
PRIMARY INDUSTRYINPUTS
• Venture capital funding• Innovation, creativity• Demand for new
technologies• University research
efforts • Professional services
(i.e., legal, advertising)
INDUSTRYOUTPUTS
• New product development
• Efficiencies• Improved image of
the area
NEBRASKA OPPORTUNITIES
• Build off of existing related industry
• Foster entrepreneurial environment
• Create job opportunities to retain youth
INDUSTRY METRICS:Average Wage Level $33.13Payroll as a % of National Average 200%Typical Establishment Size 20Annual Industry Growth Potential 1998-2008 10.3%Annual Employment Growth Potential 1998-2008 8.1%Research & Development Investment as a % of National Average 157%
RURAL REGION: Customer support
BENEFIT TO NEBRASKA
0
100
200
300
400
500Industry Grow th
Payroll
Employment Grow th
R&D Investment
US Average
NE Ideal
Softw are
EXISTING SYNERGIES KNOWLEDGE-BASED
AGRIBUSINESS FINANCIAL SERVICES
METAL PRODUCTS BIOTECHNOLOGY ELECTRONICS MFG.
SOFTWARE DEV.
INDUSTRIALREGION:
Back-office operations
37 Fantus
Tasks• Assess and develop the necessary skill base through training and education to match the human resource needs
of the targeted industries; these skills can be used in all industries.• Beat the drum loudly about the educational focus in this area. Let people know the state is manufacturing a key
resource in the education for this industry.• Create immediate and long-term opportunities through the development of business incubators.• Actively develop a venture capital network.• Encourage venture capital investments in local start-ups.• Deliver broader telecommunications services throughout the business centers of the state.• Develop image of Nebraska as second tier industry center through a target-marketing campaign (First tier—Bay
Area, Boston, Austin).• Strengthen ties between local universities and business (a/a, FDR, Gallup).• Create a local support network of businesses supporting this industry (i.e., business executives, attorneys,
accountants, advertising executives, etc.).• Create image as lower cost U.S. alternative.
Timing• Develop plan to market key educational infrastructure (immediate).• External marketing effort (on-going).
Industry TargetsIndustry Targets----Call to ActionCall to ActionEXISTING SYNERGIES KNOWLEDGE-BASED
AGRIBUSINESS FINANCIAL SERVICES
METAL PRODUCTS BIOTECHNOLOGY ELECTRONICS MFG.
SOFTWARE DEV.
38 Fantus
39 Fantus
SourcesSources
• U. S. Trade & Outlook, 2000• Relocator, August, 2000• Occupational Outlook Handbook, 2000-01• Manufacturing USA, 1998• Monthly Labor Review, April 2000• Standard & Poors Industry Surveys, 2000• Encyclopedia of Emerging Industries, 2000• County Business Patterns, 1998• Venture Capital Quarterly Report, Deloitte & Touche Growth Company Services, 2nd Quarter, 2000• Cybernation 2000, American Electronics Association, 2000• Cyberstates Update 2000, American Electronics Association, 2000• Statistics of Income, Internal Revenue Service, 1999• Current Population Reports, U.S. Census Data, U.S. Department of Commerce, 2000• “Population Projections for States by Age, Sex, Race, and Hispanic Origin: 1995-2025,” U.S. Bureau of Census, Population Division, 2000• National Industry Occupation Employment Matrix, Bureau of Labor Statistics, 2000• Employment and Output by Industry 1998-2008, Bureau of Labor Statistics, 2000• Industry Outlook Growth Reports, Integra Information Reports, 2000• Industry Reports, Hoover’s Company Information, 2000• Instrument Business Outlook, 2000• “Local Area Unemployment Statistics,” Bureau of Labor Statistics, 2000• Encyclopedia of American Industries, 2000• Responsive Database Services, OneSource Information Services, Inc., 2000;
• Medical Marketing & Media, 2000• Bank Technology News, 2000• Chemical Market Reporter, 2000• Best’s Review Managing the Enterprise Supplement, 2000• Web Finance, 2000
• U. S. Industry Profiles, 1999• Snapshots International, Industry Reports, 2000• Biotechnology Industry Organization, 1999 (website)
40 Fantus
Research Materials ProvidedResearch Materials Provided
• NDED marketing materials
• NDED demographic materials (some hard copy, some off of web site)
• NDED Data Book
• Past Studies:
• Industrial Opportunities in Nebraska, Arthur D. Little, Inc. , 1982
• Nebraska’s Business Climate and Attractiveness for Industry, Arthur D. Little, Inc., 1982
• New Seeds for Nebraska: Strategies for Building the Next Economy, SRI International, 1988
• New Seeds for Nebraska: Moving the Agenda Ahead, SRI International, 1988
• Targeted Industries for Nebraska, Division of Research, Department of Economic Development, 1988
• Nebraska: Leading the Great Plains into the New Economy, SRI International, 1990
• Legislative Reports, Nebraska Chamber of Commerce & Industry, 1995-1999
• Building the Foundations of Workforce Development, A Community Guidebook, 2000
• Economic development marketing materials from visited communities
• Demographic materials from visited communities
RESEARCH MATERIALS RECEIVED FROM THE STATE INCLUDE:
