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Foreign Direct Investment Seminar The International Location Selection MAINE TRADE DAY 2010 June 3, 2010

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Presentation to Maine International Trade Conference, June 3, 2010. Why and how to pursue international business attraction.

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Page 1: Maine International Trade Presentation

Foreign Direct Investment SeminarThe International Location Selection

MAINE  TRADE  DAY  2010

June 3, 2010

Page 2: Maine International Trade Presentation

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Second level

OPPO

Third level

Fourth level

Fifth level

RTUNITIES• Why Pursue International Business

ININTERN

• The Location Selection Process

• Key Changes NATIO

NALB

• Opportunities for Maine

• A Suggested Strategy  BUSIN

ESS

© 2010, CWS Consulting Group LLC

Page 3: Maine International Trade Presentation

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Second level

OVERV

Why look to International Business?

Third level

Fourth level

Fifth level

VIEWThe Lessons of Zheng He

• 1405‐1433:  Zheng He leads seven voyages fromleads seven voyages from China, possibly as far as the Cape of Good Hope

Sp rred ne economic• Spurred new economic and political relationships throughout Indian ocean

• Hai jin banned ocean‐going exploration and trading.

• Prevented the rise of any self‐sufficient economies along the coast.  y gReversed much of the economic and technological growth of the previous period

© 2010, CWS Consulting Group LLC

Page 4: Maine International Trade Presentation

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Second level

OVERV

Corporate Reasons for Going Global

Third level

Fourth level

Fifth level

VIEW• New markets for goods, new customers

• New markets for labor,New markets for labor,

• Possible improvements to logistics, 

• Possibility of lower costs,

• Favorable business environments,environments,

• Matching regulatory oversight to market opportunityopportunity

© 2010, CWS Consulting Group LLC

Page 5: Maine International Trade Presentation

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Second level

OVERV

What are the Benefits of International Business? 

Third level

Fourth level

Fifth level

VIEWEconomic Growth

B tt J bBetter Jobs

General Prosperity

International Partnerships and Security

Innovation

© 2010, CWS Consulting Group LLC

Page 6: Maine International Trade Presentation

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Second level

DYN

AHow is Global Business Changing?

Third level

Fourth level

Fifth level

MICSGlobalization (or 

globalisation): 

“A i b hi h

Economic Globalization:The integration of national economies into the international 

“An ongoing process by which regional economies, societies and cultures have become 

economy through: • Trade, • Foreign direct investment, 

l flintegrated through globe‐spanning networks of exchange ”

• Capital flows, • Migration, • and the spread of Technology. 

exchange.  True Globalization is driven by a combination of :• EconomicEconomic, • Technological, • Socio‐cultural, • Political and 

© 2010, CWS Consulting Group LLC

• Biological factors.

Page 7: Maine International Trade Presentation

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Second level

DYN

AOld Worldview

Third level

Fourth level

Fifth level

MICS

MEME

© 2010, CWS Consulting Group LLC

Page 8: Maine International Trade Presentation

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Second level

DYN

ANew Worldview

Third level

Fourth level

Fifth level

MICS

© 2010, CWS Consulting Group LLC

Page 9: Maine International Trade Presentation

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Second level

DYN

ANew Realities in Global Economic Competition

Third level

Fourth level

Fifth level

MICS• Corporate, MNC realities 

(less cost reduction more value add)

• Do you understand who your competition is?  Are you Global or are 

• Understanding the nature of business “flow” in the context of investment

you National?  

• What is your future sectoral base? (ascontext of investment  

• Partnership rather than object.  Partnering with 

sectoral base? (as opposed to current activity base)

j gyour investor‐base

• The relevance of innovation f h

• What is your true value to this base?

in terms of growth

© 2010, CWS Consulting Group LLC

Page 10: Maine International Trade Presentation

THE  LOCATION  STRATEGY  PROCESS

Page 11: Maine International Trade Presentation

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Second level

INTRO

What is Site Selection?

Third level

Fourth level

Fifth level

ODUCTIO

NT

Are we selecting a site,….

TOLO

CATI

….Or a home for a business

ONSTRA

TEEGY

How Do Companies (or Consultants) 

M k L ti D i i ?Make Location Decisions?

© 2010, CWS Consulting Group LLC

Page 12: Maine International Trade Presentation

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Second level

LOCA

TWhat are Companies Looking For?

Third level

Fourth level

Fifth level

TIONPRIO

R

Labor Skills, Talent

Labor and Operating Costs

• All play some role

• Specific importance d d th

RITIES

p g

Partners, Customers and Vendors

depends on the use

Utilities and Other Infrastructure

Transportation and Access

Real Estate and Facilities

Business Environment, Taxation, and Incentives

Quality of Life

© 2010, CWS Consulting Group LLC

Page 13: Maine International Trade Presentation

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Second level

LOCA

TWhat are Companies Looking For?

Third level

Fourth level

Fifth level

TIONPRIO

R

Labor Skills, Talent

RITIES

• Financial services• High‐tech• Pharmaceuticals• AerospaceAerospace• Automotive• Medical devices• Specialty Chemicals

Gl b l L i i• Global Logistics

Do We Have It?  Can We Get It?  Can We Develop It?

© 2010, CWS Consulting Group LLC

Page 14: Maine International Trade Presentation

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Second level

LOCA

TWhat are Companies Looking For?

Third level

Fourth level

Fifth level

TIONPRIO

R

Labor Skills, Talent

Do We Have It? Can We Get It? Can We Develop It? RITIES

Do We Have It?  Can We Get It?  Can We Develop It?

• Demographics and age cohorts

• Educational characteristics• Educational characteristics

• Training programs and credits

• Community College system

• Universities and specific research programs

• Quality of Life and Cost of Living

Talent can drive innovation and be a potent business attractor.  Education and recruiting must be in place to develop a sustainable Talent 

Pool

© 2010, CWS Consulting Group LLC

Pool.

Page 15: Maine International Trade Presentation

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Second level

LOCA

TWhat are Companies Looking For?

Third level

Fourth level

Fifth level

TIONPRIO

R

Labor Skills, Talent

Entrepreneurial Talent RITIES• Does the community have  the means for attracting ideas as well as people?

© 2010, CWS Consulting Group LLC

Page 16: Maine International Trade Presentation

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Second level

LOCA

TWhat are Companies Looking For?

Third level

Fourth level

Fifth level

TIONPRIO

R

Labor and Operating Costs

• Salaries benefits and efficiency for specific occupations RITIES

Salaries, benefits, and efficiency for specific occupations

• Technology and telecommunications costs

• Logistics and transportation costs

U ili i• Utilities costs

• Real estate rent/purchase and operating costs

• Currency risk

• =TOTAL START‐UP and RUN‐RATE COST

© 2010, CWS Consulting Group LLC

Page 17: Maine International Trade Presentation

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Second level

LOCA

TWhat are Companies Looking For?

Third level

Fourth level

Fifth level

TIONPRIO

R

Partners, Customers and Vendors

• Are the right networks in place?

RITIES

© 2010, CWS Consulting Group LLC

Page 18: Maine International Trade Presentation

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Second level

LOCA

TWhat are Companies Looking For?

Third level

Fourth level

Fifth level

TIONPRIO

R

Transportation and Access

• Can we move our people, goods, and ideas? RITIES

© 2010, CWS Consulting Group LLC

Page 19: Maine International Trade Presentation

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Second level

LOCA

TWhat are Companies Looking For?

Third level

Fourth level

Fifth level

TIONPRIO

R

Utilities and Other Infrastructure

• Availability RITIES• Redundancy

• Capacity

l• Resiliency

• Cost

© 2010, CWS Consulting Group LLC

Page 20: Maine International Trade Presentation

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Second level

LOCA

TWhat are Companies Looking For?

Third level

Fourth level

Fifth level

TIONPRIO

R

Real Estate and Facilities

• Importance depends on industry  RITIES

and use

• Does the right kind of facility exist in the right place at theexist in the right place at the right price?

• Can I build the right facility in the right place at the right place on schedule?

© 2010, CWS Consulting Group LLC

Page 21: Maine International Trade Presentation

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Second level

LOCA

TWhat are Companies Looking For?

Third level

Fourth level

Fifth level

TIONPRIO

R

Business Environment, Taxation, and Incentives

• Does the federal, state and local government  RITIES

understand my business?

• Is there a defined process for getting the permits I need?

• (Especially if I am from overseas) is there someone who can help step me through the process?

• How responsive (or proactive) is the government?

• When will I know if I can move forward (or not)?

• Is taxation fair for my activities in this jurisdiction?

© 2010, CWS Consulting Group LLC

Page 22: Maine International Trade Presentation

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Second level

LOCA

TWhat are Companies Looking For?

Third level

Fourth level

Fifth level

TIONPRIO

R

Business Environment, Taxation, and Incentives

INCENTIVES CANNOT MAKE A BAD LOCATION INTO A GOOD ONE RITIES

INCENTIVES CANNOT MAKE A BAD LOCATION INTO A GOOD ONE.

But they can help seal a deal and forge a partnership

Tax concessions or exemptions

Loans and loan guarantees

Utility rate reductions Service fee reduction or exemptions

Employee tax credits Wage subsidies Land subsidies or grants

Infrastructure grants  Enterprise Zones Foreign Trade Zones (FTZ)

Cash grants Employee training grants Property tax abatements

Tax Increment Financing (TIF) Inventory tax reduction Expedited permitting and 

© 2010, CWS Consulting Group LLC

p y p p gapprovals

Page 23: Maine International Trade Presentation

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Second level

LOCA

TWhat are Companies Looking For?

Third level

Fourth level

Fifth level

TIONPRIO

R

Quality of Life

• What is Quality of Life? Culture RITIES• Will my people want to come here and work here?

l

Culture

Amenities

Recreation• Can I recruit new people to 

this location?Arts

Education

Housing

Community

© 2010, CWS Consulting Group LLC

Page 24: Maine International Trade Presentation

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Second level

THEE

The Location Process allo s companies to define their b siness needs and then narro the list

A Business‐Based Process

Third level

Fourth level

Fifth level

EVA

LUATIO

The Location Process allows companies to define their business needs and  then narrow the list of candidates based upon best‐fit.  A business‐based methodology matches companies to locations that will meet their needs for the long‐term.  

NPRO

CESSFinal LocationField Analysis S

Business Needs Assessment

Location Screening

Final Location Selection and Incentives Negotiations

Financial Modeling Executed 

SolutionSolution

NOTE C it b bl t f j t til Fi ld A l i !NOTE C it b bl t f j t til Fi ld A l i !

© 2010, CWS Consulting Group LLC

NOTE:  Community probably not aware of project until Field Analysis!NOTE:  Community probably not aware of project until Field Analysis!

Page 25: Maine International Trade Presentation

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Second level

BUSIN

Fi t U d t d d d fi th d( )

Understanding the Core Drivers

Third level

Fourth level

Fifth level

NESS

NEED

S

• Catalog of operations at each location in the current configuration

P i it t k t li t (i t l d t l)

First: Understand and define the need(s)

SASSESSM

• Proximity to key partners or clients (internal and external)

• Key labor requirements and recruitability

• Facility requirements MEN

T• Competitive factors

• Market factors

• Regulatory concernsLocationGoalsRegulatory concerns

• Infrastructure requirements

• Business continuity factors

T iti l i l t ti i t

Goals

• Transitional or implementation requirements

• Real or perceived barriers to change

• Govt’ assistance required (or issues to be avoided)

© 2010, CWS Consulting Group LLC

• Other key location criteria

Page 26: Maine International Trade Presentation

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Second level

THEE

Front‐Loading the Process

Third level

Fourth level

Fifth level

EVA

LUATIO

Challenge:  How can Communities enter the process earlier, and stay in the running longer?   N

PRO

CESSS

Business Needs

Location Screening

Final Location Selection and Incentives 

Field Analysis

Needs Assessment

ScreeningNegotiations

Financial Modeling Executed 

S l iSolution

© 2010, CWS Consulting Group LLC

Page 27: Maine International Trade Presentation

HOW  IS  THE  WORLD  CHANGING?

Page 28: Maine International Trade Presentation

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Second level

INNOV

The Global Innovation Chain

Third level

Fourth level

Fifth level

VATIO

NInnovation, not Cost

• Manage the stream and flow of k l d d hknowledge and research 

• Bring new products to new markets

• What is your position in that flow of development?

• Strategic, multi‐focused approach

• Interfacing Clusters = Mutual Innovation 

• Develops sub‐sectors for support or spin‐off

• Adding value to industry location

© 2010, CWS Consulting Group LLC

Adding value to industry, location and economy at large

Page 29: Maine International Trade Presentation

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Second level

INNOV

Using Innovation to your Advantage

Third level

Fourth level

Fifth level• How do Innovation Cycles work?

Wh i i l i i

VATIO

N

• What is your regional innovation cycle?

• Avoid innovation “trends” versus true “cycles”

• Use these as unfolding points of contribution for economiccontribution for economic development (targeted investment)

• Build on this for business• Build on this for business attraction/Development

© 2010, CWS Consulting Group LLC

Page 30: Maine International Trade Presentation

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Second level

ENERG

The Coming Fuel Crunch

Third level

Fourth level

Fifth level

GY

Relative Increase in Fuel Costs(Indexed to 1996)

??

SOURCES:  Energy Information Administration, Bureau of Labor Statistics

© 2010, CWS Consulting Group LLC

Page 31: Maine International Trade Presentation

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Second level

ENERG

Implication for Business Location?

Third level

Fourth level

Fifth level

GYANDSUUPPLY

CHAIIN

© 2010, CWS Consulting Group LLC

Source: LogicNet Users Symposium 2009, David Simchi Levi

Page 32: Maine International Trade Presentation

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Second level

ENERG

Implication for Business Location?

Third level

Fourth level

Fifth level

GYANDLO

• Will manufacturing redistribute?  If so, how?

OCA

TIONIM

• What impacts will this have on globalization (or re‐regionalization)? M

PACTS

• Which green technologies are best prepared to take over?

• Will your community participate in developing these technologies, applying g pp y gthem smarter, or in adapting your other strengths?

© 2010, CWS Consulting Group LLC

Page 33: Maine International Trade Presentation

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Second level

REG

URegulation and the “Home Market”

Third level

Fourth level

Fifth level

LATO

RYPR

• Regulation impacts the ability to penetrate a market

RESSURES

• Access (proximity) to the regulatory agency can help ease the process

• Additionally, “home market” pressures can favor domestically produced goodsproduced goods

© 2010, CWS Consulting Group LLC

Page 34: Maine International Trade Presentation

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Second level

SUSTA

Wh t i t i bilit ?

Sustainability Pressures

Third level

Fourth level

Fifth level

AINABILITY

What is sustainability?

• Environmentally sustainable – Ensures that degradation and consumption of land use, carbon 

i t t h d b di ti duse, energy is net matched by remediation and reclamation

• Economically sustainable – Creates an ongoing, self‐t l i l f ti it ti iti ROI fcatalyzing cycle of activity generating positive ROI for 

the community and business.

• Culturally sustainable – Preserves the cultural and hi t i l f th it hilhistorical resources of the community while accommodating and supporting growth and progress

• Workforce and talent sustainable – Provides a bi‐di ti l l ti hi b t l b d b idirectional relationship between labor and business by which critical talents are supplied to companies to ensure success and where opportunities are created for a broad range of occupations and talent

© 2010, CWS Consulting Group LLC

created for a broad range of occupations and talent

Page 35: Maine International Trade Presentation

WHAT  ARE  THE  OPPORTUNITIES  FOR  MAINE?

Page 36: Maine International Trade Presentation

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Second level

OPPO

The Size of the Market

Third level

Fourth level

Fifth level

RTUNITIES

• 4,600 businesses made over $189 billion in capital investment in the US  FO

RM

AIN

between December 2007‐September 2009

• 438 000 new jobs over 22

NE• 438,000 new jobs over 22 

months

• Roughly 1/5 to 1/4 of these g y / /project were led by non‐US companies 

© 2010, CWS Consulting Group LLC

Page 37: Maine International Trade Presentation

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Second level

OPPO

Key Industries

Third level

Fourth level

Fifth level

RTUNITIES

• Educational Services

• Energy (coal gasification, petroleum refining) FO

RM

AIN

petroleum refining)

• Metalworking Machinery

• Electrical Equipment

NE• Electrical Equipment

• Industrial Machinery

R bl E ( i d l• Renewable Energy (wind, solar, biomass)

• SemiconductorsSemiconductors 

• Life Sciences

• Food production and

© 2010, CWS Consulting Group LLC

Food production and manufacturing

Page 38: Maine International Trade Presentation

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Second level

OPPO

Current International Activity

Third level

Fourth level

Fifth level

RTUNITIES

• Maine companies already export goods of at least $100,000 to 99 countries

• Request for trade assistance to MITC FORM

AIN

• Request for trade assistance to MITC are up 18%

• Most are for exports and new market  NEp

development

• Existing International corporate base i l dincludes:

• Financial Services

• Composites/Advanced Materials• Composites/Advanced Materials

• Semiconductors

• Industrial Equipment

© 2010, CWS Consulting Group LLC

Industrial Equipment

• Wood and Related Products

Page 39: Maine International Trade Presentation

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Second level

OPPO

Strengths and Weaknesses

Third level

Fourth level

Fifth level

RTUNITIES

Strengths

• Relatively low‐cost US location

Weaknesses

• International Air connections FO

RM

AIN

• Regional proximity to large consumption centers in US and Canada

connections

• Linkages between transportation modes N

E

• Existing international companies and relationships

p

• Broadband capacity and access

• Outreach activities to key international markets

l b

• Perception as remote

• Perceptions of weather and l k• Talent base natural risk

© 2010, CWS Consulting Group LLC

Page 40: Maine International Trade Presentation

INVESTOR  TARGETING  – A  PROACTIVE  APPROACH

Page 41: Maine International Trade Presentation

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Second level

INVES

Putting Things Together

Third level

Fourth level

Fifth levelHow do we match

TMEN

TATHow do we match 

community strengths and goals to the needs of b i ?

TTRACTIO

N

business? STRA

TEGYY

© 2010, CWS Consulting Group LLC

Page 42: Maine International Trade Presentation

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Second level

INVES

Reverse Engineering

Third level

Fourth level

Fifth level

Understand the link between community attributes and business needs

Investment  Market Analysis Final Investment 

TMEN

TATIndustry Targeting

Strategy Assessment

Attraction Plan

• Determine investor  goals and resources

• Determine key 

• Collect published and proprietary data on key criteria

• Construct weighting and ranking model

• Complete remediation plan as required

• Develop incentive

TTRACTIO

N

• Determine existing industry base

• Understand key dynamics for 

stakeholders• Catalog site characteristics

• Determine market and catalog regional tt ib t

and ranking model to test development candidates under prime and alternative scenarios

• Combine screening 

Develop incentive plan if required

• Develop key marketing targets and customized message and tactics for each

STRA

TEGY

selected industries• Examine availability 

of key inputs• Look for key vendors 

and partners• Determine existingattributes

• Examine existing regional and local economic base

• Establish initial strategic parameters

gresults with other knowledge to understand market dynamics

• Identify initial target i d did

• Develop deal structure(s)

Y• Determine existing reality and perception of benefits and obstacles in the site and regionstrategic parameters industry candidates

Investment Attraction Plan

g

© 2010, CWS Consulting Group LLC

Page 43: Maine International Trade Presentation

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Second level

BESTFirst Steps

Third level

Fourth level

Fifth level

PRA

CTICES

• Understand Your Communities

• Organize and Prepare

S

• Engage the Current Corporate Base

• Build Real Connections

• Build Regional Strength

• Build Relationships Between Government, Business, Education, d E i D l tand Economic Development

• Develop a Coherent External Image Supporting Economic DevelopmentDevelopment

• Actively Reach Out

• Be Creative

© 2010, CWS Consulting Group LLC

Be Creative

Page 44: Maine International Trade Presentation

Chris SteelePhone: (617) 314-6527Email: [email protected]

THANK YOU VERY MUCH