edabc data presentation

EDABC WESTERN ECONOMIC DEVELOPMENT COURSE

The Numbers and the Story Top Ten Site Selection Data Standards

28-31 October, 2012

© 2012, CWS Consulting Group LLC 1 © 2012, CWS Consulting Group LLC

CWS Consulting Group and Investment Consulting Associates Coming together as one global team

Locations in: • North America • Latin America • Europe • Asia

Services: • Corporate Location Selection • Incentives Negotiation • Investment Advisory • Economic Development

Real estate is a strategic asset. Each and every new location decision carries cost, workforce, and other implications. We provide our clients with the insight needed to quickly build solutions which are flexible enough to evolve with the company’s changing needs.

ABOUT US


INTRODUCTION

Why Data Matters

Which Pieces of Information are Most Important

How do we Make Them Available

A New Generation in FDI Advisory


HOW ARE SITE LOCATION DECISIONS MADE

Highly rigorous and completely objective process

Consultants always have all of the pertinent information on all options

The most qualified location is always the one chosen



HOW ARE LOCATION DECISIONS MADE

Understand location “problem” and define success criteria. Examine Context of the location decision

Identify communities that meet the basic thresholds (the must-have items on the list above)

Evaluate the remaining ones based on the remaining tradeoffs

Visit the communities themselves to evaluate remaining factors and begin negotiations


© 2012, CWS Consulting Group LLC

Strategic Location With Access to: Markets, materials and partners Resources/Business Environment: • Operating costs and incentives • Sites/buildings, labor/skills, training,

utilities (cost/capacity), etc. • Does the community embrace us?

Feasibility (Cost/Risk) Analysis

LOCATION DECISION PROCESS


• Combinations are important - No one factor drives the whole decision

• Importance for one opportunity may differ greatly from others

Companies balance the relative importance of a combination of factors when making location decisions

Location Strategy

Business Goals

Workforce/Talent

Business Environ-

ment

Logistics and Access

All-In Costs

Infrastruc-ture and Utilities

Internal and

External Partners

Intangi-bles/

Values

LOCATION DECISION PROCESS

© 2012, CWS Consulting Group LLC 7

Final

Negotiations

and

Location

Selection

Planning and

Strategy

Cost

Modeling

Field Validation

Preferred and Alternate

Location(s)

Location

Screening

Initial

Screening

Def ined Strategy

and Evaluation Criteria

Universe of

Location Candidates

Short-List of

Location Candidates

LOCATION DECISIONS PROCESS

Consultative Data-Driven Qualitative & Quantitative

Data- and Model-Driven Interactive with Communities


HOW DOES A LOCATION MODEL WORK

Translates priorities and data into a relative weighting and ranking of options

Highly data driven

Difficulty comes when comparing data across different systems, or when data is incomplete


Lack of data = Unknowns = Risk


SAMPLE MODEL



SAMPLE MODEL


Population and Demographics 5.0%

Employment Levels 10.0%

Industry-Specific Employment 10.0%

Occupation-Specific Employment (per 1000) 10.0%

Occupation-Specific Salaries (Annual Mean

2010) 30.0%

Education 10.0%

Transportation and Market Access 10.0%

Tax Regime 2.5%

Climate and Natural Hazards 2.5%

Crime 3.0%

Quality of Life 7.0%

100.0%

5.0%

10.0%

10.0%

10.0%

30.0%

10.0%

10.0%

2.5%

2.5% 3.0%

7.0%

Population andDemographics

Employment Levels

Industry-SpecificEmployment

Occupation-SpecificEmployment (per 1000)

Occupation-SpecificSalaries (Annual Mean2010)Education

Transportation and MarketAccess

Tax Regime

Climate and NaturalHazards

Crime

Quality of Life


WHAT’S THE MOST IMPORTANT THING IN A LOCATION DECISION? Workforce

Infrastructure

Access

Clusters/Networks

Cost

Regulatory Framework

Tax/Incentives


© 2012, CWS Consulting Group LLC 12

SO WHAT INFORMATION SHOULD WE HAVE…

…On our website

…Ready when we receive a prospect call



TOP TEN SITE SELECTION QUESTIONS (AND THE DATA BEHIND THEM)

1. Is The Talent There

2. Can I get There From Here

3. Who Else is Like Me, and Who Can I Work With?

4. Are My People Going to Want to Be There

5. How Much Will It Cost?

6. Can I Operate A……

7. Is there a Place for My Stuff

8. What do Your Finances Look Like?

9. Are There Programs to Help Me

10. Who Is Going to Help Me



Specific Labor Availability

• Demographic cohorts

• Specific job titles

• University Programs

Culture

Generally Accepted Practices

DEMOGRAPHICS BY AGE COHORT LABOR FORCE AND EMPLOYMENT TRENDS OCCUPATION AND INDUSTRY SURVEY EDUCATIONAL INSTITUTIONS AND PROGRAMMES REGULATORY ENVIRONMENT, UNIONIZATION

1. IS THE TALENT THERE



IS THE TALENT THERE


Business Unit Productive Employee Base

Turnover

Retirement

Number Currently Employed Talent In Talent Out

Growth or Contraction

Scre

en

1st

Inte

rvie

w

2n

d In

terv

iew

Off

er E

xten

de

d

GR

EATE

R

LAB

OR

MA

RK

ET


Ability to Access Key Markets or Customers

Interaction with Transportation Network

2. CAN I GET THERE FROM HERE


ROADWAY CONNECTIONS RAIL NETWORK, FACILITIES, AND CONNECTIONS SEA AND AIRPORTS PASSENGER AND FREIGHT FACILITIES


3. WHO ELSE IS LIKE ME


Source: Cluster Mapping Project, Harvard Business School

The presence of peers in the area indicates existing talent, opportunities for teaming, likely suppliers, vendors, etc

LIST OF TOP EMPLOYERS BY INDUSTRY RECENT OPENINGS/CLOSINGS CONTACT INFORMATION


AND, WHO CAN I WORK WITH?


Likewise, companies need to know that vendor/service support exists

EMPLOYMENT BY INDUSTRY LIST OF TOP EMPLOYERS BY INDUSTRY RECENT OPENINGS/CLOSINGS CONTACT INFORMATION


4. ARE MY PEOPLE GOING TO WANT TO BE THERE


Quality of Life means different things to different people

Typically most important when:

Recruiting specialized talent

Relocating an existing staff

HOUSING COST (BY TYPE) COST OF LIVING ????


5. HOW MUCH WILL IT COST?


WAGE AND BENEFITS COSTS BY OCCUPATION REAL ESTATE COSTS UTILITIES COSTS

All other tradeoffs will eventually be considered against financial gain/loss

SUMMARY COMPARISON Assumed profit = $40 Million

NOTE: Change profit on "Tax

Costs" tab

All $(000) Year

1 2 3 4 5 6 7 8 9 10

Total Costs

Base Case $ 172,304 $ 73,322 $ 74,933 $ 76,581 $ 78,265 $ 79,986 $ 81,747 $ 83,546 $ 85,386 $ 87,266

Location A $ 194,618 $ 69,600 $ 71,196 $ 73,101 $ 74,966 $ 76,867 $ 83,337 $ 85,312 $ 87,325 $ 89,578

Location B $ 195,307 $ 76,175 $ 77,811 $ 79,483 $ 80,215 $ 82,921 $ 84,703 $ 86,524 $ 89,359 $ 91,260

Location C $ 191,467 $ 74,982 $ 76,648 $ 78,351 $ 80,092 $ 82,122 $ 83,941 $ 85,801 $ 87,702 $ 89,645

Location D $ 195,870 $ 79,489 $ 81,261 $ 83,072 $ 84,924 $ 87,068 $ 89,004 $ 90,983 $ 93,006 $ 95,074

Location E $ 188,565 $ 70,615 $ 72,214 $ 73,849 $ 75,519 $ 77,825 $ 79,569 $ 84,089 $ 85,910 $ 87,771

Location F $ 188,746 $ 72,745 $ 74,396 $ 76,084 $ 78,660 $ 80,425 $ 82,230 $ 84,076 $ 85,964 $ 87,894

Location G $ 195,770 $ 78,664 $ 80,344 $ 82,061 $ 83,816 $ 84,609 $ 86,441 $ 88,314 $ 90,228 $ 92,184

NPV % of Lowest Rank

Base Case $ 702,604 100% 1

Location A $ 714,471 102% 3

Location B $ 744,822 106% 6

Location C $ 734,363 105% 5

Location D $ 771,847 110% 8

Location E $ 706,743 101% 2

Location F $ 718,964 102% 4

Location G $ 759,483 108% 7


6. CAN I OPERATE A…. (UTILITIES AND CAPACITY)


Draw, rate, and resiliency all may come into play depending on specific business needs

ELECTRIC, GAS, WATER, SEWER RATES TELECOMM CAPACITIES CAPACITY FIGURES NETWORK MAPS


7. MUNICIPAL FINANCES (AKA TAXES)


Typically play a somewhat smaller role, but some can be very important to some forms of business

Examples include inventory, telecomm, sales/use…

TAX RATES (AND BASIS) BY TYPE EXPLANATION OF EXEMPT PROPERTY/ACTIVITIES


8. ARE THERE PROGRAMS TO HELP ME


• Incentive: Any policy or program which endeavors to modify the behavior of companies making hiring or investment decisions (see also “Inducement”)

• Automatic – Granted once thresholds are met

• As-of-Right – Granted if applied for and thresholds are met

• Discretionary – May be granted if applied for, but agency may decide for or against granting

• Negotiable – Typically highly flexible and at the full discretion of the granting agency

• Note: Typically does not include a community’s natural or economic advantages

GRANT AND CREDIT PROGRAMS TRAINING PROGRAMS REBATE PROGRAMS FINANCING PROGRAMS


• Scientific Research and Experimental Development (SR&ED) Investment Tax Credits (ITCs)

• Incentives for Machinery and Equipment Investment

• Film Production Tax Credits

• Interactive Digital Media Tax Credit

• Eligible Business Corporation and Venture Capital Corporation tax credits

• International Business Activity Program

• BC Hydro Powersmart / Power Tech

BC INCENTIVE CATALOG


9. IS THERE A PLACE FOR MY STUFF


Real estate may or may not play a critical role in early stages

Basic information on availability and cost is very useful

More detailed “site finder” services can occasionally make a difference

AVERAGE RENTAL COST (BY AREA, BY TYPE) AVERAGE PURCHASE COST (BY AREA, BY TYPE) CONSTRUCTION COSTS


10. WHO IS GOING TO HELP ME


THE NAME, DIRECT PHONE NUMBER, AND EMAIL ADDRESS OF A RESPONSIBLE PERSON

When the time comes, there is NO substitute for a real person!


THE COMMUNITY WEBSITE


First opportunity (and occasionally only) to engage site selector, and independent companies

MUST be easy to find, easy to navigate, and relatively complete

Remember, it’s easier to drop a location option than to try to find data that isn’t there


THE IEDC STANDARD

Have you ever wondered what a site selection consultant looks for in determining what communities to recommend to their client?

The answer is accurate information in a format that can provide an apples-to-apples comparison of communities.


http://www.iedconline.org/?p=data_standards

http://www.iedconline.org/?p=data_standards


THE IEDC STANDARD


Was developed through significant interplay with real site selectors on questionnaires from actual projects

Some of the data is now available through standardized sources – leverage these

Do not be daunted by the size – Even having the first five sheets done makes a difference!


THANK YOU

Christopher Steele [email protected] [email protected] Telephone: 617-314-6527

www.cwsgrp.com www.ic-associates.com

mailto:[email protected]




http://www.cwsgrp.com/

http://www.ic-associates.com/



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