Job Creation:Art or Science?
June 6, 2013 43rd Annual Alabama County
Government Institute PresentationAuburn, Alabama
Alabama Department of Commerce
Created: 1969 Secretary of Commerce: Greg Canfield
Employees: 32
Mission: “To coordinate economic development resources leading to quality job creation throughout
Alabama.”
Organizational Components: Business Recruitment
AIDTInternational Trade
Small Business AdvocacyFilm Office
Budget Source: General Fund
The Alabama Department of Commerce
Drive Economic Development in the State of Alabama
Alabama Department of Commerce’sGoal
Fundamentals of Economic Development
Economic Development is …
1. The increase in the standard of living of the state’s population;
2. It’s scope includes the process and policies by which the state improves the economic, political, and social well-being of its people;
3. Or, another definition is………. JOBS!
State Economic Activity
What are some factors within economies that might influence the economic development process?
Political Factors
Technological Factors
Economic Factors
SocialFactors
PEST Analysis
• Public Policy• International Conflicts• Monetary Crisis• Natural Disasters• International Trade• Consumer Confidence• Others…
Influencing Factors
Fundamentals of Economic Development
“Uncertainty is the enemy of capital investment.”*
*Area Development, “Uncertainty: The New Normal for Site Selection and Facility Investment”, Mark Sweeney, January 2012
Fundamentals of Economic Development
““…ready communities with reduced risk profiles will win the day.”*
*Area Development, “Uncertainty: The New Normal for Site Selection and Facility Investment”, Mark Sweeney, January 2012
Areas of Economic Development
– Industrial Recruitment
– Business Retention– Commercial / Retail– Tourism– Film– Government– Others
What is our concept of competition, and……
Why Select the USA?World’s Largest EconomyCompetitive Business and Investment
ClimateCommanding Consumer MarketVast Internal markets = Economies of
ScaleCenter of Research and InnovationWorld’s Top UniversitiesThe Global Leader in Information
TechnologyProtector of Intellectual PropertyHighly Educated and Productive
Workforce
Source: Published on SelectUSA (http://selectusa.commerce.gov)
Business Advantages• Team Alabama• Workforce Availability and Training• Right-To-Work State• Competitive Taxes and Incentives• Readily Available Products-Buildings and
Sites• Heart of the Southeastern Transportation
Network• One-Stop Shop for Environmental Permitting• Proven Record of Investment and Trade
Successes
A Decade of Alabama’s Announced
Job Creation
Source: EDPA
Job Creation Categories• Expansion
–Direct–Consolidation–Re-Start–Joint Venture–Co-Location–Business Arrangement
• New–Domestic–International–Start-Up
What are the top site selection factors, as cited by corporations?
1. Highway Accessibility 2. Labor Costs
2T. Availability of Skilled Labor 4. Corporate Tax Rate 5. Occupancy or Construction Costs
5T. State and Local Incentives 7. Energy Availability and Costs 8. Tax Exemptions 9. Proximity to Major Markets10. Low Union Profile
Corporate Survey Site Selection Factors
Source: Area Development magazine, 26th Annual Corporate Survey, published Winter 2012.
1. Low Crime Rate2. Healthcare Facilities2T. Housing Availability4. Housing Costs5. Ratings of Public Schools 6. Colleges and Universities in
Area7. Climate8. Recreational Opportunities9. Cultural Opportunities
Corporate Survey Quality of Life Factors
Gulf Shores, Alabama
Source: Area Development magazine, 26th Annual Corporate Survey, published Winter 2012.
Competitive Site Selection
Screening Process
Site Decision
Candidate Locations
Define Search Region Center-of-Market Analysis
Cost Modeling / Incentives
Regional ScreeningProject CriteriaRFP & Proposal Screening
Risk Analysis
Site Visits / Comparative Assessment
Source: McCallum Sweeney Consulting, Courtesy of Ms. Jeanette Goldsmith
Job Creation Due Diligence Examples
• EMSI Workforce Analysis• Tax Incentive Analysis• Revenue Evaluation (Local & State)• Benefit/Cost Analysis• AIDT (Training) Valuation• Transportation/Logistics Sensitivity Analysis• Incentive Evaluation/Net Present Values• Cost Modeling• Risk Mitigation• Others
Typically, what are Alabama’s economic development incentives?
IncentivesTaxes
- Sales and Use Tax Abatements- Property Tax Abatements and Exemptions- Income Tax Credits and Deductions- Inventory Tax Exemption- Enterprise Zone Credit/Exemption- Full Employment Act of 2011
Training- Alabama Industrial Development Training- ADECA Workforce Development Division- Alabama Technology Network (ATN)
IncentivesInfrastructure
- Industrial Access Road & Bridge- Economic Development Grant- Community Development Block Grant- USDA Rural Development- Appalachian Regional Commission- Economic Development Administration
Environmental Permitting- One Stop Environmental Permitting
IncentivesFinancing
- AlabamaSAVES- CAPCO
- Alabama NMTC - ED Revolving Loan Programs- TVA Economic Development Loan Fund- Community Development Block Float Loan Program- Industrial Revenue Bonds (IRBs)- USDA Rural Development
What is the view from Site Selection Consultants?
Relative Importance of Incentives to Clients when making Location Decisions:
1. Have always been of great importance 40%2. Are more important now than in the past 45%3. Are less important now than in the past 15%
Source: Consultants Site Guide, Area Development magazine, Winter 2012, www.consultantssiteguide.com.
Which Types of Incentives do Clients Consider Most Important when Deciding on a Location?
1. Tax incentives 42%2. Cash grants 33%3. Other financial incentives 21%4. Working training incentives 9%5. Other incentives 23%
Which Factors have you Evaluated in Recent Location or Expansion Projects that you Discovered to be Most Deficient?
1. Labor Availability 26%2. Incentive closing funds 40%3. Advanced ICT service 2%4. Pre-qualified sites 32%5. Other 10%
Source: Consultants Site Guide, Area Development magazine, Winter 2012, www.consultantssiteguide.com.
How are site locations determined, and……..
……..what is your probability?
What are the properties we can promote in Alabama?
1. 511 Existing Buildings*2. 479 Industrial Sites/Property*3. 39 Favored Geographic
Areas**4. 28 Approved Enterprise
Zones***5. 28 Speculative Buildings*6. 40 AdvantageSite
Designations*
* Source: Economic Development Partnership of Alabama, April 18, 2013** Source: Alabama Department of Revenue *** Source: Alabama Department of Economic & Community Affairs
ID Site1 Jackson County Industrial Park2 MG Industrial Park3 Rogersville Business Park4 South Dallas Godwin Site5 Airport Industrial Park Site6 Florence-Lauderdale IP Site 7 Coop Dist of Winston County8 Jefferson Metropolitan Park MC9 NE Opelika Ind. Park Site
10 Yancey Parker IP Phase II11 Conners Island Business Park12 Interstate Business Park13 Fayette Industrial Park #214 Troy Industrial Park South15 Shoals Research Airpark Site16 Jasper Industrial Park17 Chambers Co IP South Site18 Monroeville IP East Site19 Jefferson Metropolitan Park LS20 Virginia Station Phase 1
ID Site21 Auburn Technology Park West22 Interstate Industrial Park23 Tallassee Corporate Park24 Hamilton I-22 Industrial Park 25 Guin I 22 Industrial Site26 Lamar County Industrial Park27 Childersburg Industrial Park28 Baldwin EMC Site29 Houston County Distribution Pk30 Shelby West Corporate Park31 Capital Park at Westport32 Breeding Industrial Park South33 Westervelt Calera Megasite34 Geneva County Industrial Park 35 Schuman Property Cullman 36 Foley Beach Express Ind Park37 Mallard Fox West Ind. Complex38 Morgan Center Business Park39 SouthPoint Business Pk Lot 1240 Elm Industrial Park
AdvantageSites
AdvantageSite SuccessesCompany Announced City County Capital Investment Jobs AdvantageSite
POSCO America Corporation Nov. 2009 McCalla Jefferson $ 17,000,000 60 Jefferson Metropolitan Park MCTVA Nuclear April 2010 Hollywood Jackson N.A. 50 Jackson County Industrial ParkHyundai Electric Systems Alabama Inc. July 2010 Montgomery Montgomery $ 90,000,000 1,000 Interstate Industrial ParkGE Aviation Nov. 2010 Auburn Lee $ 50,000,000 400 Auburn Technology Park WestPharmavite Sept. 2011 Opelika Lee $ 74,000,000 280 NE Opelika Industrial Park SiteARKAL Automotive Nov. 2011 Auburn Lee $ 7,200,000 25 Auburn Technology Park WestSiO2 Medical Products March 2012 Auburn Lee $ 90,000,000 300 Auburn Technology Park WestG&B Global May 2012 McCalla Jefferson $ 4,800,000 75 Jefferson Metropolitan Park MC
Brown-Forman Cooperage June 2012 Trinity Lawrence $ 55,000,000 200 Mallard Fox West Industrial Complex
RAPA (Rausch & Pausch LP) December 2012 Auburn Lee $ 18,000,000 105 Auburn Technology Park West
REHAU January 2013 Cullman Cullman $ 119,000,000 250 Schuman Property
TOTAL $ 525,000,000 2,745
Alabama’s AdvantageSite Program has been recognized by Southern Business & Development Magazine as one of the country’s top 10 site programs.
AdvantageSite – Raising the Bar
2008–2009 Designations2008-2012 Designations
2013 In the Pipeline
What are Alabama’s Targeted Markets?
Alabama’s Targeted Market Sectors
Alabama’s Targeted Market Sectors
US Auto Sales Trends
250,000
300,000 350,000
340,000
350,000
300,000
Expanding Production
Airbus Business Opportunities
What some key attributes a community must possess for successful economic development?
– Financing– Plan– Organizatio
n– Direction– Staff– Control– Product
Key Attributes:
Economic Development is a Journey . . .
not a destination!