positioning missouri for new business investment
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Positioning Missouri for New Business Investment
Presented to:Washington University – St. Louis
Political Economy of Multinational EnterprisesOctober 5, 2010
Christopher Chung, Chief Executive OfficerMissouri Partnership
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Discussion Topics
What is the Missouri Partnership?
How do we market Missouri for new business investment?
How do companies approach the investment decision process?
What are our challenges?
“Lightning Round”
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About the Partnership
• Mission: To promote Missouri for new business investment, with the goal of recruiting new industry and jobs to the state
• Public-private, non-profit corporation supported jointly by the Missouri Department of Economic Development and the Hawthorn Foundation
• 12-member Board of Directors drawn from various industries across the state
• 10-member staff focused on business recruitment (sales) and marketing
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About the Partnership
• Key objectives:Deliver the “message” about Missouri’s
positive business attributesRaise awareness and visibility of Missouri as
a place to do businessBuild relationships with decision-makers and
decision-influencersGenerate investment leads (i.e. Get Missouri
“on the list”)Work with state, local, and private-sector
partners to win the deal for MissouriProvide feedback for “product development”
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About the Partnership
• Rationale:Need for consistency in marketing effortsNeed for continuity in sales relationshipsEngagement of private-sector resourcesEffectiveness of public-private partnership
model Enterprise Florida Economic Development Corp. of Utah Ohio Business Development Coalition Econ. Dev. Partnership of Alabama
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About the Partnership
• Economic development is:Retention and expansion of existing
businessGrowth of business start-upsRecruitment/attraction of new businesses
• Our role is to:Market Missouri with the goal of new
business recruitment
“Get Missouri in the game, and then win the game.”
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Our Marketing Strategy
The “Air Campaign”• Goal #1: Raise the image of Missouri as a
business location• Goal #2: Shape a positive perception of
Missouri as a place to do business• Achieved through:
Branding – “Real People. Real Opportunity.”AdvertisingEarned mediaDigital (web, social media, SEO)Thought leadership
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Our Marketing Strategy
The “Air Campaign”• Key elements include:
Focus on relevant industry assetsPeer-to-peer testimony involving successful
Missouri businessesHighlighting improvements to the state’s
business climate, positive rankings or acknowledgments for Missouri, and recent business recruitment successes
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Missouri “Business or Pleasure?” ad in Southwest Airlines’ in-flight Spirit magazine (April 2010)
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Missouri “Business or Pleasure?” ad in Southwest Airlines’ in-flight Spirit magazine (May 2010)
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Missouri “Business or Pleasure?” ad in Southwest Airlines’ in-flight Spirit magazine (June 2010)
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Missouri “Business or Pleasure?” ad in Southwest Airlines’ in-flight Spirit magazine (September 2010)
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Missouri “Real Story” ad in Chicago market editions of Forbes, Fortune, Fast Company, Inc., Money, and Business Week (March 2010)
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Missouri “Real Story” ad in Atlanta market editions of Forbes, Fortune, Fast Company, Inc., Money, and Business Week (April 2010)
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Missouri “Real Story” ad in Atlanta market editions of Forbes, Fortune, Fast Company, Inc., Money, and Business Week (May 2010)
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Missouri “Real Story” ad in Chicago market editions of Forbes, Fortune, Fast Company, Inc., Money, and Business Week (September 2010)
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“Welcome to Missouri” ad (featuring Unisys) in Washington D.C. market editions of Forbes, Fortune, Fast Company, Inc., Money, and Business Week (September 2010)
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Missouri “Real Renewal” advertorial supplement in North American Clean Energy (March 2010)
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Missouri back-office advertorial supplement in Business Facilities (May 2010)
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Missouri “Real Story” ad in Next Generation Pharma (February 2010)
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Our Marketing Strategy
The “Ground Campaign”• Goal #1: Develop and manage
relationships with decision-makers and decision-influencers
• Goal #2: Initiate face-to-face conversations regarding potential expansion/relocation plans
• Achieved through:Conference sponsorshipsTrade show exhibitionsConsultant outreach and hospitality events
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Our Marketing Strategy
The “Ground Campaign”• Key elements include:
Focus on corporate real estate directors, site location consultants, international trade commissioners, and other decision influencers
Cooperative approach with partner organizations
Consistent use of Missouri business brand
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Missouri trade show exhibition booth at Paris Air Show (2009)
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Missouri trade show exhibition booth at China Overseas Investment Fair (2009)
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Missouri exhibition pavilion at WINDPOWER 2010 in Dallas
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Governor Nixon with the Missouri team at WINDPOWER 2010 in Dallas
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The Investment Decision
• The investment decision process:Win the right to compete
Achieved through marketing effortWin the competition
Achieved through recruitment/sales effort
Win the repeat competition Achieved through retention/expansion
effort
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The Investment Decision
• Top 10 factors in investment decision: Cost of labor (1st) Highway accessibility (2nd) Tax exemptions (3rd) Energy availability and costs(4th) Corporate tax rate (5th) Availability of skilled labor (6th) Occupancy and construction costs (7th) State and local incentives (8th) Availability of internet/telecom (9th) Inbound/outbound shipping costs (10th)
Source: Area Development 2009-10 Corporate Survey
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The Investment Decision
• Other relevant factors in investment decision: Low union profile (11th) Availability of land (T-12th) Availability of buildings (T-12th) Right-to-work state (14th) Proximity to major markets (15th) “Fast-track” permitting (16th) Environmental regulations (17th) Availability of financing (18th) Proximity to suppliers (19th) Employee training programs (20th)
Source: Area Development 2009-10 Corporate Survey
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The Investment Decision
• Other relevant factors in investment decision:Raw materials availability (21st)Availability of unskilled labor (22nd)Accessibility to major airport (23rd)Proximity to technical university (24th)Railroad service (25th)Waterway/ocean port access (26th)
Source: Area Development 2009-10 Corporate Survey
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The Investment Decision
• What we can control…Highway accessibility (2nd)Tax exemptions (3rd)Energy availability and costs (4th)Corporate tax rate (5th)\Availability of skilled labor (6th)State and local incentives (8th)Availability of internet/telecom (9th)
These competitiveness factors can be influenced by state and local public policy decisions.
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The Investment Decision
• And what we can’t…Cost of labor (1st)Occupancy/construction costs (7th) Inbound/outbound shipping costs (10th)
These competitiveness factors are unlikely to be influenced by state and local public policy decisions.
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The Investment Decision
• Factors cited when Missouri is eliminated from consideration for new investment projects: Insufficient real estate “product” Uncompetitive incentive package Total business costs Less-than-ideal interstate access Generation mix for local utility provider
What about Missouri’s right-to-work status?
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A Word on Incentives
“Incentives make a good site better. They don’t make a bad site, good.”
- Anonymous
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A Word on Incentives
• Typically a tie-breaker late in the decision-making processFinalist options are similar in other location
factors (e.g. workforce, logistics costs, etc.)Company becomes increasingly price-
sensitive Incentives are one of the few cost variables
within control of the state and local government
Incentives negotiation and consulting services as a fast-growing specialization
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A Word on Incentives
• Incentives remain an integral part of a state’s competitive toolbox even after “reform” Ohio example
Comprehensive business tax reform in 2005
Five job-creation tax credits remain in place
Texas example
No personal income tax
Frequently rated one of the “best” states for business
Still maintains a $300 million “deal-closing” fund
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A Word on Incentives
• How does Missouri stack up? Job creation tax credits are well-received
(due to ability to sell, transfer, or have refunded)
Training programs are an overall positive
Limited availability for infrastructure and site development funding
Limited access to capital for fixed-asset investment (and early-stage companies)
No “deal-closing fund”
No industry-focused incentive programs
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Our Challenges
• Product awarenessRaising the visibility of Missouri and its
economic development potentialShaping a positive perception of Missouri as
a place to do business Identifying unique assets to market
• Product development Investments in education and infrastructureBusiness climate improvements (e.g.
incentive toolbox, regulatory process)Targeting growth industries that complement
Missouri’s natural strengths and advantages
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“Lightning Round” / Q&A
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What are Missouri’s targeted industry sectors?
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U.S. Wind Energy Resource Map
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Blades
Nacelle
Tower
Wind turbine in Northwest Missouri
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U.S. Solar Energy Resource Map
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U.S. Biomass Resource Map
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What recent successes has Missouri seen in recruiting new business investment?
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IBM executive Tim Shaughnessy at the company’s announcement ceremony in Columbia for “Project Tiger” (May 2010)
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Unisys executives join the Governor and Mayor of St. Louis at the company’s announcement ceremony in St. Louis for “Project Remote” (June 2010)
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What states and countries does Missouri compete most
frequently with?
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Overall Rankings (1st = Best State for Business)Source: CNBC “Top States for Business” 2009
Nebraska
Kansas
OklahomaArkansas
Tennessee
Kentucky
IllinoisIowa
Missouri
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From the 2009 China Overseas Investment Fair in Beijing
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What is the Missouri Partnership’s interaction with elected officials, and how important are those officials in recruiting new
business investment?
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What policies have the most impact in helping a state
attract new business investment?
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What policies have the least impact in helping a state
attract new business investment?
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What about China?
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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080
50000
100000
150000
200000
250000
300000
350000
Foreign-Direct Investment in the U.S., 1998-2008 (in $USD 000s)
Source: InvestAmerica.gov, courtesy of U.S. BEA
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Outbound FDI Flows from China
Source: Organization for Economic Cooperation & Development, 2008
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What career choices or options should interested
students pursue?
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Further links of interest:www.iedconline.com
(“Job Center”)
www.showme.org(“Job Openings”)
www.ildevelopmentcouncil.org
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Christopher ChungChief Executive Officer
Missouri Partnership
Office – 314.725.0949Cell – 573.808.0089