maine international trade presentation
DESCRIPTION
Presentation to Maine International Trade Conference, June 3, 2010. Why and how to pursue international business attraction.TRANSCRIPT
Foreign Direct Investment SeminarThe International Location Selection
MAINE TRADE DAY 2010
June 3, 2010
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OPPO
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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
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OVERV
Why look to International Business?
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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
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OVERV
Corporate Reasons for Going Global
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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
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OVERV
What are the Benefits of International Business?
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VIEWEconomic Growth
B tt J bBetter Jobs
General Prosperity
International Partnerships and Security
Innovation
© 2010, CWS Consulting Group LLC
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DYN
AHow is Global Business Changing?
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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.
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DYN
AOld Worldview
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MICS
MEME
© 2010, CWS Consulting Group LLC
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DYN
ANew Worldview
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MICS
© 2010, CWS Consulting Group LLC
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DYN
ANew Realities in Global Economic Competition
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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
THE LOCATION STRATEGY PROCESS
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INTRO
What is Site Selection?
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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
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LOCA
TWhat are Companies Looking For?
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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
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LOCA
TWhat are Companies Looking For?
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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
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LOCA
TWhat are Companies Looking For?
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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
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Pool.
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LOCA
TWhat are Companies Looking For?
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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
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LOCA
TWhat are Companies Looking For?
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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
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LOCA
TWhat are Companies Looking For?
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TIONPRIO
R
Partners, Customers and Vendors
• Are the right networks in place?
RITIES
© 2010, CWS Consulting Group LLC
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LOCA
TWhat are Companies Looking For?
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TIONPRIO
R
Transportation and Access
• Can we move our people, goods, and ideas? RITIES
© 2010, CWS Consulting Group LLC
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LOCA
TWhat are Companies Looking For?
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TIONPRIO
R
Utilities and Other Infrastructure
• Availability RITIES• Redundancy
• Capacity
l• Resiliency
• Cost
© 2010, CWS Consulting Group LLC
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LOCA
TWhat are Companies Looking For?
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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
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LOCA
TWhat are Companies Looking For?
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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
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LOCA
TWhat are Companies Looking For?
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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
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LOCA
TWhat are Companies Looking For?
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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
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THEE
The Location Process allo s companies to define their b siness needs and then narro the list
A Business‐Based Process
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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!
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BUSIN
Fi t U d t d d d fi th d( )
Understanding the Core Drivers
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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
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THEE
Front‐Loading the Process
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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
HOW IS THE WORLD CHANGING?
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INNOV
The Global Innovation Chain
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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
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INNOV
Using Innovation to your Advantage
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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
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ENERG
The Coming Fuel Crunch
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GY
Relative Increase in Fuel Costs(Indexed to 1996)
??
SOURCES: Energy Information Administration, Bureau of Labor Statistics
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ENERG
Implication for Business Location?
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GYANDSUUPPLY
CHAIIN
© 2010, CWS Consulting Group LLC
Source: LogicNet Users Symposium 2009, David Simchi Levi
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ENERG
Implication for Business Location?
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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?
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REG
URegulation and the “Home Market”
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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
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SUSTA
Wh t i t i bilit ?
Sustainability Pressures
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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
WHAT ARE THE OPPORTUNITIES FOR MAINE?
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OPPO
The Size of the Market
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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
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OPPO
Key Industries
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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
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OPPO
Current International Activity
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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
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Industrial Equipment
• Wood and Related Products
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OPPO
Strengths and Weaknesses
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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
INVESTOR TARGETING – A PROACTIVE APPROACH
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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
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INVES
Reverse Engineering
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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
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BESTFirst Steps
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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
Chris SteelePhone: (617) 314-6527Email: [email protected]
THANK YOU VERY MUCH