washington university - political economy - oct 2010
TRANSCRIPT
Positioning Missouri for
New Business Investment
Presented to:
Washington University – St. Louis
Political Economy of Multinational Enterprises
October 5, 2010
Christopher Chung, Chief Executive Officer
Missouri Partnership
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”
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
About the Partnership
• Key objectives:
Deliver the “message” about Missouri’s
positive business attributes
Raise awareness and visibility of Missouri as a
place to do business
Build relationships with decision-makers and
decision-influencers
Generate investment leads (i.e. Get Missouri
“on the list”)
Work with state, local, and private-sector
partners to win the deal for Missouri
Provide feedback for “product development”
About the Partnership
• Rationale:
Need for consistency in marketing efforts
Need for continuity in sales relationships
Engagement of private-sector resources
Effectiveness of public-private partnership
model
Enterprise Florida
Economic Development Corp. of Utah
Ohio Business Development Coalition
Econ. Dev. Partnership of Alabama
About the Partnership
• Economic development is:
Retention and expansion of existing business
Growth of business start-ups
Recruitment/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.”
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.”
Advertising
Earned media
Digital (web, social media, SEO)
Thought leadership
Our Marketing Strategy
The “Air Campaign”
• Key elements include:
Focus on relevant industry assets
Peer-to-peer testimony involving successful
Missouri businesses
Highlighting improvements to the state’s
business climate, positive rankings or
acknowledgments for Missouri, and recent
business recruitment successes
Missouri “Business or
Pleasure?” ad in
Southwest Airlines’ in-
flight Spirit magazine (April 2010)
Missouri “Business or
Pleasure?” ad in
Southwest Airlines’ in-
flight Spirit magazine (May 2010)
Missouri “Business or
Pleasure?” ad in
Southwest Airlines’ in-
flight Spirit magazine (June 2010)
Missouri “Business or
Pleasure?” ad in
Southwest Airlines’ in-
flight Spirit magazine (September 2010)
Missouri “Real
Story” ad in
Chicago market
editions of Forbes, Fortune, Fa
st
Company, Inc., Mo
ney, and Business
Week (March 2010)
Missouri “Real
Story” ad in
Atlanta market
editions of Forbes, Fortune, Fa
st
Company, Inc., Mo
ney, and Business
Week (April 2010)
Missouri “Real
Story” ad in
Atlanta market
editions of Forbes, Fortune, Fa
st
Company, Inc., Mo
ney, and Business
Week (May 2010)
Missouri “Real
Story” ad in
Chicago market
editions of Forbes, Fortune, Fa
st
Company, Inc., Mo
ney, and Business
Week (September 2010)
“Welcome to
Missouri” ad
(featuring Unisys) in
Washington D.C. market editions of
Forbes, Fortune, Fast
Company, Inc., Mon
ey, and Business
Week (September 2010)
Missouri “Real
Renewal”
advertorial
supplement in North American
Clean Energy
(March 2010)
Missouri back-office
advertorial
supplement in Business
Facilities (May 2010)
Missouri “Real Story”
ad in Next Generation
Pharma (February
2010)
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 sponsorships
Trade show exhibitions
Consultant outreach and hospitality events
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
Missouri trade show exhibition
booth at Paris Air Show (2009)
Missouri trade show exhibition
booth at China Overseas Investment Fair (2009)
Missouri exhibition pavilion at
WINDPOWER 2010 in Dallas
Governor Nixon with the Missouri
team at WINDPOWER 2010 in Dallas
The Investment Decision
• The investment decision process:
Win the right to compete
Achieved through marketing effort
Win the competition
Achieved through recruitment/sales effort
Win the repeat competition
Achieved through retention/expansion
effort
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
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
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
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.
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.
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?
A Word on Incentives
“Incentives make a good site better. They don’t make a bad site, good.”
- Anonymous
A Word on Incentives
• Typically a tie-breaker late in the
decision-making process
Finalist 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
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
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
Our Challenges
• Product awareness
Raising the visibility of Missouri and its
economic development potential
Shaping a positive perception of Missouri as
a place to do business
Identifying unique assets to market
• Product development
Investments in education and infrastructure
Business climate improvements (e.g.
incentive toolbox, regulatory process)
Targeting growth industries that complement
Missouri’s natural strengths and advantages
“Lightning Round” / Q&A
What are Missouri’s targeted
industry sectors?
U.S. Wind Energy Resource Map
Blades
Nacelle
Tower
Wind turbine in Northwest Missouri
U.S. Solar Energy Resource Map
U.S. Biomass Resource Map
What recent successes has
Missouri seen in recruiting new
business investment?
IBM executive Tim
Shaughnessy at the
company’s announcement
ceremony in Columbia for
“Project Tiger” (May 2010)
Unisys executives join the Governor and
Mayor of St. Louis at the company’s
announcement ceremony in St. Louis for
“Project Remote” (June 2010)
What states and countries
does Missouri compete most
frequently with?
Overall Rankings (1st = Best State for Business)Source: CNBC “Top States for Business” 2009
Nebraska
Kansas
OklahomaArkansas
Tennessee
Kentucky
IllinoisIowa
Missouri
From the 2009 China Overseas Investment Fair in Beijing
What is the Missouri
Partnership’s interaction with
elected officials, and how
important are those officials
in recruiting new business
investment?
What policies have the most
impact in helping a state
attract new business
investment?
What policies have the least
impact in helping a state
attract new business
investment?
What about China?
0
50000
100000
150000
200000
250000
300000
350000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Foreign-Direct Investment in the U.S., 1998-2008 (in $USD 000s)
Source: InvestAmerica.gov, courtesy of U.S. BEA
Outbound FDI Flows from China
Source: Organization for Economic Cooperation & Development, 2008
What career choices or
options should interested
students pursue?
Further links of interest:
www.iedconline.com
(“Job Center”)
www.showme.org
(“Job Openings”)
www.ildevelopmentcouncil.org
Christopher Chung
Chief Executive Officer
Missouri Partnership
Office – 314.725.0949
Cell – 573.808.0089