Job Creation: Art or Science?

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Job Creation: Art or Science?. June 6, 2013 43 rd Annual Alabama County Government Institute Presentation Auburn, Alabama. Alabama Department of Commerce. The Alabama Department of Commerce. Created: 1969 Secretary of Commerce:Greg Canfield Employees: 32 - PowerPoint PPT Presentation

TRANSCRIPT

Team Alabama April 23, 2013

Job Creation:Art or Science?June 6, 2013 43rd Annual Alabama County Government Institute PresentationAuburn, Alabama

Alabama Department of Commerce1 Created: 1969 Secretary of Commerce:Greg CanfieldEmployees: 32

Mission: To coordinate economic development resources leading to quality job creation throughout Alabama.

Organizational Components: Business RecruitmentAIDTInternational TradeSmall Business AdvocacyFilm Office

Budget Source: General Fund

The Alabama Department of CommerceDrive Economic Development in the State of AlabamaAlabama Department of CommercesGoalFundamentals of Economic DevelopmentEconomic Development is

The increase in the standard of living of the states population;

Its scope includes the process and policies by which the state improves the economic, political, and social well-being of its people;

Or, another definition is. JOBS!

State Economic ActivityWhat are some factors within economies that might influence the economic development process?Political FactorsTechnological FactorsEconomic FactorsSocialFactorsPEST AnalysisPublic PolicyInternational ConflictsMonetary CrisisNatural DisastersInternational TradeConsumer ConfidenceOthers

Influencing FactorsFundamentals of Economic DevelopmentUncertainty is the enemy of capital investment.*

*Area Development, Uncertainty: The New Normal for Site Selection and Facility Investment, Mark Sweeney, January 2012Fundamentals of Economic Developmentready 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 RecruitmentBusiness RetentionCommercial / RetailTourismFilmGovernmentOthersWhat is our concept of competition, and

Why Select the USA?Worlds Largest EconomyCompetitive Business and Investment ClimateCommanding Consumer MarketVast Internal markets = Economies of ScaleCenter of Research and InnovationWorlds Top UniversitiesThe Global Leader in Information TechnologyProtector of Intellectual PropertyHighly Educated and Productive Workforce

Source: Published on SelectUSA (http://selectusa.commerce.gov)

Business AdvantagesTeam AlabamaWorkforce Availability and TrainingRight-To-Work StateCompetitive Taxes and IncentivesReadily Available Products-Buildings and SitesHeart of the Southeastern Transportation NetworkOne-Stop Shop for Environmental PermittingProven Record of Investment and Trade Successes

A Decade of Alabamas Announced Job CreationSource: EDPAJob Creation CategoriesExpansionDirectConsolidationRe-StartJoint VentureCo-LocationBusiness ArrangementNewDomesticInternationalStart-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 ProfileCorporate Survey Site Selection FactorsSource: 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 OpportunitiesCorporate Survey Quality of Life Factors

Gulf Shores, AlabamaSource: Area Development magazine, 26th Annual Corporate Survey, published Winter 2012.Competitive Site SelectionScreening ProcessSite DecisionCandidate LocationsDefine Search Region Center-of-Market Analysis

Cost Modeling / IncentivesRegional ScreeningProject Criteria

RFP & Proposal Screening

Risk AnalysisSite Visits / Comparative AssessmentSource: McCallum Sweeney Consulting, Courtesy of Ms. Jeanette Goldsmith

Job Creation Due Diligence ExamplesEMSI Workforce AnalysisTax Incentive AnalysisRevenue Evaluation (Local & State)Benefit/Cost AnalysisAIDT (Training) ValuationTransportation/Logistics Sensitivity AnalysisIncentive Evaluation/Net Present ValuesCost ModelingRisk MitigationOthers

Typically, what are Alabamas 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 incentives42%2. Cash grants33%3. Other financial incentives21%4. Working training incentives 9%5. Other incentives23%Which Factors have you Evaluated in Recent Location or Expansion Projects that you Discovered to be Most Deficient?1. Labor Availability26%2. Incentive closing funds40%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?

511 Existing Buildings*479 Industrial Sites/Property* 39 Favored Geographic Areas** 28 Approved Enterprise Zones*** 28 Speculative Buildings* 40 AdvantageSite Designations** Source: Economic Development Partnership of Alabama, April 18, 2013** Source: Alabama Department of Revenue *** Source: Alabama Department of Economic & Community Affairs

IDSite1Jackson County Industrial Park2MG Industrial Park3Rogersville Business Park4South Dallas Godwin Site5Airport Industrial Park Site6Florence-Lauderdale IP Site 7Coop Dist of Winston County8Jefferson Metropolitan Park MC9NE Opelika Ind. Park Site10Yancey Parker IP Phase II11Conners Island Business Park12Interstate Business Park13Fayette Industrial Park #214Troy Industrial Park South15Shoals Research Airpark Site16Jasper Industrial Park17Chambers Co IP South Site18Monroeville IP East Site19Jefferson Metropolitan Park LS20Virginia Station Phase 1IDSite21Auburn Technology Park West22Interstate Industrial Park23Tallassee Corporate Park24Hamilton I-22 Industrial Park 25Guin I 22 Industrial Site26Lamar County Industrial Park27Childersburg Industrial Park28Baldwin EMC Site29Houston County Distribution Pk30Shelby West Corporate Park31Capital Park at Westport32Breeding Industrial Park South33Westervelt Calera Megasite34Geneva County Industrial Park 35Schuman Property Cullman 36Foley Beach Express Ind Park37Mallard Fox West Ind. Complex38Morgan Center Business Park39SouthPoint Business Pk Lot 1240Elm Industrial ParkAdvantageSitesAdvantageSite SuccessesCompanyAnnouncedCityCountyCapital InvestmentJobsAdvantageSitePOSCO America CorporationNov. 2009McCallaJefferson $ 17,000,000 60 Jefferson Metropolitan Park MCTVA Nuclear April 2010HollywoodJackson N.A. 50 Jackson County Industrial ParkHyundai Electric Systems Alabama Inc.July 2010MontgomeryMontgomery $ 90,000,000 1,000 Interstate Industrial ParkGE AviationNov. 2010AuburnLee $ 50,000,000 400 Auburn Technology Park WestPharmaviteSept. 2011OpelikaLee $ 74,000,000 280 NE Opelika Industrial Park SiteARKAL AutomotiveNov. 2011AuburnLee $ 7,200,000 25 Auburn Technology Park WestSiO2 Medical ProductsMarch 2012AuburnLee $ 90,000,000 300 Auburn Technology Park WestG&B GlobalMay 2012McCallaJefferson $ 4,800,000 75 Jefferson Metropolitan Park MCBrown-Forman CooperageJune 2012TrinityLawrence $ 55,000,000 200 Mallard Fox West Industrial ComplexRAPA (Rausch & Pausch LP) December 2012AuburnLee $ 18,000,000 105 Auburn Technology Park WestREHAUJanuary 2013CullmanCullman $ 119,000,000 250 Schuman PropertyTOTAL $ 525,000,000 2,745 Alabamas AdvantageSite Program has been recognized by Southern Business & Development Magazine as one of the countrys top 10 site programs.AdvantageSite Raising the Bar

20082009 Designations

2008-2012 Designations2013 In the Pipeline36What are Alabamas Targeted Markets?

Alabamas Targeted Market Sectors

Alabamas Targeted Market Sectors

US Auto Sales Trends

250,000300,000350,000340,000350,000300,000Expanding ProductionAirbus Business Opportunities

What some key attributes a community must possess for successful economic development?

FinancingPlanOrganizationDirectionStaffControlProduct Key Attributes:

Economic Development is a Journey . . .

not a destination!