canadian fdi forum - area development
TRANSCRIPT
Canadian FDI Forum Opening Remarks for the 1st Edition
Gregg Wassmansdorf
Senior Managing Director, Consulting
(416) 998-8848
October 31, 2016
October 2016 | 1
Speaker
Gregg
Wassmansdorf
U.S. and Canadian citizen
Senior Managing Director, Consulting, NGKF
17 years in Management Consulting
Real Estate Portfolio Strategy
Corporate Location Strategy
Economic Incentives
October 2016 | 2
1. Introduction to Foreign Direct Investment (“FDI”)
2. The Canadian FDI Context
3. A Site Selectors Perspective
Objectives
October 2016 | 3
Congratulations!
October 2016 | 4
Geography is (not) Dead
2005: Thomas Friedman
Globalization levels playing field
Geography becomes less relevant
“Flatteners” bring the world together
“Innovate with no need to emigrate”
2005: Richard Florida
Globalization is uneven & unequal
Benefits & costs are geography-specific
Culture, education, innovation, wealth,
competitiveness are highly localized
October 2016 | 5
Geography is (not) Dead
“We’ve all been trained to believe in this ancient adage that geography
is destiny. I argue in fact connectivity is destiny.”
October 2016 | 6
Foreign Direct Investment | Key Themes
Notes: Figures are inclusive of all FDI flows. Percentage changes are 2014 to 2015.
Source: “Global Investment Trends 2015, Key Messages,” UNCTAD, 2016.
FDI is increasingly complex and ubiquitous
October 2016 | 7
FDI Inflows | Global by Group of Economies
Notes: Billions of dollars. Trend line is approximate.
Source: UNCTAD “World Investment Report 2015”, via conversableeconomist.blogspot.ca/2015/09/snapshots-of-foreign-direct-investment.html
FDI growth, volatility, and rising share toward developing economies is the norm
October 2016 | 8
FDI Outflows | Developing Economies in Context
Notes: Values in billions of dollars. Shares are in percentages.
Source: UNCTAD “World Investment Report 2015”, via conversableeconomist.blogspot.ca/2015/09/snapshots-of-foreign-direct-investment.html
Developing economies increasingly ‘senders’, not just ‘receivers’
October 2016 | 9
Canada Inward FDI
Notes:
Source: Conference Board of Canada via www.conferenceboard.ca/hcp/hot-topics/inwardfdi.aspx
Long-range trend capturing global FDI is negative . . .
October 2016 | 10
Canada Inward FDI
Notes:
Source: Conference Board of Canada via www.conferenceboard.ca/hcp/hot-topics/inwardfdi.aspx
Canada still gets “more than it’s fair share” of FDI (barely)
October 2016 | 11
Canada Inward FDI
Notes: Refers to “greenfield” investment only (not deb/ or equity flows and not M&A activity).
Source: “Canada Inward FDI - fDi Report, January 2013 to September 2016.” fDi Markets.
200 – 450 opportunities annually
October 2016 | 12
Canada Inward FDI
Notes: Refers to “greenfield” investment only (not deb/ or equity flows and not M&A activity).
Source: “Canada Inward FDI - fDi Report, January 2013 to September 2016.” fDi Markets.
Volatility stems from corporate planning, currency fluctuations, policy changes, etc.
October 2016 | 13
Canada Inward FDI
Source: “Canada Inward FDI - fDi Report, January 2013 to September 2016.” fDi Markets.
Top 3 metros capture 36 - 50% of investment, jobs, and projects; 953 other cities received FDI
October 2016 | 14
Canada Inward FDI
Source: “Canada Inward FDI - fDi Report, January 2013 to September 2016.” fDi Markets.
Which industries and business activities are most appealing?
Jobs Created CapEx (US $ MM)
Top 10 Business Activities Projects Total Average Total Average
Retail 693 96,640 139 $25,820 $37
Manufacturing 663 92,363 139 $70,379 $106
Customer Contact Centre 124 32,194 259 $534 $4
Logistics, Distribution & Transp. 239 26,133 109 $9,393 $39
Design, Development & Testing 220 25,103 114 $27,417 $125
Sales, Marketing & Support 736 23,875 32 $7,317 $10
Business Services 579 18,090 31 $5,431 $9
Headquarters 144 16,806 116 $2,677 $19
Research & Development 75 9,101 121 $3,689 $49
ICT & Internet Infrastructure 89 6,033 67 $11,159 $125
October 2016 | 15
Why Canada?
World Economies by PPP (2000-2014),
growth proportional by area:
China $18.10 trillion | Canada $1.6 trillion.
What’s compelling about the world’s 11th largest economy?
October 2016 | 16
Why Canada?
Business Environment of the G-7 Countries,
Rank for Forecast Period 2015-2019
7th
6th
5th
4th
3rd
2nd
1st
Canada U.S. Germany U.K. France Japan Italy
Rank
Source: The Economist Intelligence Unit, August 2015
October 2016 | 17
Why Canada?
Foreign Direct Investment Confidence
Source: AT Kearney 2015.
October 2016 | 18
Source: OECD
Canada’s Relative “Openness” to Inward FDI
Is Canada standing in the way of its own success?
October 2016 | 19
Canada Inward FDI
Notes: Refers to “greenfield” investment only (not deb/ or equity flows and not M&A activity).
Source: “Canada Inward FDI - fDi Report, January 2013 to September 2016.” fDi Markets.
Which factors are within your sphere of influence?
October 2016 | 20
Canada Inward FDI
Source: Area Development “Corporate Executive Survey 2014”
“CEO Survey” . . . Primary reasons for moving / relocating facilities (North America):
Source: Area Development “Corporate Executive Survey 2014”
Proximity to Suppliers 74%
Labor Availability 61%
High Taxes 52%
Labor Costs 48%
Excessive Government Regulations 44%
Poor Infrastructure 9%
Quality of Life Concerns 9%
Healthcare Costs 4%
October 2016 | 21
Project Site
Existing New
Ownership
Local
Foreign
Source: Wassmansdorf 2016
Local Economic Development Context for FDI
Home-Grown Expansion
(“BRE”)
“FDI”
Inbound
Greenfield
“FDI”
Expansion
Mandate
What’s your
strategy for
each?
How will you
prioritize?
October 2016 | 22
Why Canada?
Globe & Mail.
February 5, 2013.
October 2016 | 23
The Competition Never Stops
October 27, 2016 | Mike Pare | Times Free Press
Germany is second in direct foreign investment in Tennessee behind
Japan, and the state's top economic developers will seek even more
business in a new mission next week to Europe's biggest economy.
Gov. Bill Haslam will lead the effort, starting Monday with four days
of meetings with German executives who already operate in
Tennessee and pitching the state's advantages to other companies
interested in setting up shop in the Southeast.
Some 103 German-owned companies have invested nearly $5.3
billion in Tennessee and employ almost 14,000 people, according to
the state.
Tennessee ranked No. 1 nationally for job creation resulting from
all foreign direct investment in 2015, according to IBM-PLI's 2016
Global Location Trends report. Tennesseans," Haslam said in a
statement.
Tennessee seeking more business from Germany
October 2016 | 24
The Competition Never Stops
Source: DLA Piper and KPMG.
October 2016 | 25
Growth & New Market Access
“Triggers” for Corporate Location Change
What is the
Canadian value
proposition to
satisfy the “drivers”
of each corporate
change event?
What is your
provincial or metro
solution?
+
$$ $
l l
l
l
l
l
l
l l
l Inefficiency
Rising Costs
Changing Business Climate
Industry Attraction / Clustering
October 2016 | 26
Key Themes Affecting Business & FDI Location Strategy
Overall business
competitiveness &
quality of life
October 2016 | 27
Key Themes Affecting Business & FDI Location Strategy
Business-friendly,
supportive environment
Government at the speed of business
Reasonable & predictable regulation
Lower taxes (with/without incentives)
Alignment between governments,
ministries, and department
Economic development that “get’s it!”
“Open for Business”
October 2016 | 28
Key Themes Affecting Business & FDI Location Strategy
Affordable costs of doing business
and cost of living.
o
o
o
October 2016 | 29
Key Themes Affecting Business & FDI Location Strategy
Sizeable, well-skilled
workforce
Cost
Quality
Reliability
Productivity
Trained / Trainable
“Sustainability” /
Education “Pipeline”
October 2016 | 30
Key Themes Affecting Business & FDI Location Strategy
Education & training
Variety of high quality training
& academic institutions providing
a wide array of needed skills
and talent.
o Trades
o Diplomas
o Degrees
o International (Re)certifications
o “Centers of Excellence”
Percentage of Individuals Aged 25-64 Having Attained Post-
Secondary Education - Top 10 OECD Countries
53.0
47.0 47.044.0 43.0 42.0 41.0 41.0 41.0 40.0 40.0
0
10
20
30
40
50
60
CanadaIsr
ael
Japan
USA
S. Korea UK
Ireland
Luxembourg
Finland
Norway
Australia
%
Source: OECD, Education at a Glance, Interim Report, January 2015
October 2016 | 31
Key Themes Affecting Business & FDI Location Strategy
Economic “clusters” of
business activity & innovation
October 2016 | 32
Key Themes Affecting Business & FDI Location Strategy
Energy abundance
& competitiveness
Supply
Cost
Reliability
Generation Mix
Partnership
October 2016 | 33
Key Themes Affecting Business & FDI Location Strategy
Transportation & supply chain
infrastructure
Excellent transportation and supply chain
infrastructure & connectivity.
o Air – Passenger
o Air – Freight
o Seaport
o Rail
o Highway
o Multi-Modal
Supply chains are more dispersed and more complex.
Source: Parag Khanna. Connectography (2016).
United Arab Emirates (2012):
Khalifa Port Receives Post Panamax STS Container Cranes
October 2016 | 34
Key Themes Affecting Business & FDI Location Strategy
Market access & growth
Domestic consumer & B2B
market growth
Export expansion
Reduced costs through the
global value chain
October 2016 | 35
Key Themes Affecting Business & FDI Location Strategy
Wide variety of serviced, available
buildings and sites.
Robust commercial real estate sector
Public investment in infrastructure
Planning, Zoning, Building & Council aligned
Creative options:
o Public ownership
o “Certified Sites”
and “Shovel Ready” Programs
October 2016 | 36
Key Themes Affecting Business & FDI Location Strategy
Minimal natural and human risks.
38 countries rated “Very High Risk” by Aon
October 2016 | 37
Key Themes Affecting Business & FDI Location Strategy
Quality of place & Standard of living
October 2016 | 38
Weaknesses to Probe, Challenge & Improve
Economic incentives
Government at the speed of business
Labour market regulations and skills gaps
Local taxes on real property and development charges
Energy costs are rising and vary greatly
Openness to foreign direct investment
Innovation & productivity
We must “Sell” and “Facilitate” better
October 2016 | 39
Key Themes Affecting Business & FDI Location Strategy
Economic development excellence
Canadian economic development is getting better . . . and must keep going!
Professional staff
Business, technical, and sales knowledge
Political leadership that supports investment
“One window” approach
“Public – Utility – Private – Academic” collaboration
Ongoing “BRE” support for local and global growth
October 2016 | 40
Our Aspirational Message to the World