medc fundamentals of economic development - apr 2010
DESCRIPTION
An overview of how Missouri markets itself for new business investment and corporate site selection projects - As presented to the Missouri Economic Development Council\'s "Fundamentals of Economic Development" course seriesTRANSCRIPT
The Rules of AttractionMarketing for New Business
Presented to:Missouri Economic Development Council
“Fundamentals of Economic Development”
Presented by:Christopher Chung
The Missouri PartnershipApril 7, 2010
Presentation Topics Introduction to the Missouri Partnership How we market our “product” How we recruit new business
investment Questions and answers
About the Presenter 10+ years of state-level economic
development experience in Ohio (including projects, policy, and people)
Service in both Democratic and Republican administrations during time in Ohio
Relationship and deal management experience with major site selection clients
Introduction to theMissouri Partnership
An Overview of the State’sInvestment Promotion and
Business Recruitment Group
Introduction to theMissouri Partnership
Mission To promote Missouri as a destination for new
business investment To recruit new employers and jobs to Missouri
Structure Public-private non-profit corporation
Governance 12-member Board of Directors from statewide
Size 10 employees – Sales, Marketing, and Admin
Introduction to theMissouri Partnership
Why was it created? What are its key objectives? Who else uses this approach? Why is this important?
Introduction to theMissouri Partnership
Why was it created? Effectiveness of public-private partnership
model Engagement of private-sector resources Needed consistency in marketing efforts Needed continuity in sales relationships
Introduction to theMissouri Partnership
What are our key objectives? Deliver the “message” about Missouri’s
positive business attributes Raise awareness and visibility of Missouri and
its advantages as a place to do business Generate investment leads (i.e. “Get Missouri
on the list”) Close investment deals
Introduction to theMissouri Partnership
Who else uses this approach? Florida – Enterprise Florida Alabama – Econ. Dev. Partnership of Alabama Utah – Econ. Dev. Corporation of Utah Ohio – Ohio Business Development Coalition
Marketing forNew Business Investment
An Overview of Marketing for Business Recruitment
Defining Economic Development
Three principal components of economic development and job creation Retention and expansion of existing industry Entrepreneurial development, technology
commercialization, and small business growth New business recruitment
The Missouri Partnership was formed to address the area of new business recruitment
Marketing forNew Business Investment
Significance of new business recruitment Generates net new job creation and capital
investment (versus intra-state relocation of existing businesses)
Provides new market opportunities for local suppliers of goods and services
Attracts new residents and income base
Success depends heavily on perception and external marketing efforts, similar to winning new “customers”
Marketing forNew Business Investment
Key Stages in the Investment Decision Missouri must win the right to compete
Achieved through marketing/relationships Missouri must win the competition
Achieved through recruitment effort Missouri must win the repeat competition
Achieved through retention/expansion effort
Marketing forNew Business Investment
Our Marketing Strategy “Air Campaign”
Build a positive image of Missouri for business Shape perception of Missouri business climate
“Ground Campaign” Develop and manage relationships with
decision-makers and decision-influencers Initiate face-to-face conversation about plans
Ultimate goal is to generate qualified investment leads
Marketing forNew Business Investment
“Air Campaign” Tactics Advertising Earned media Digital (web, social media, e-news
releases, search-engine optimization) Thought-leadership activities
Marketing forNew Business Investment
Elements of “Air Campaign” Messaging Features new Missouri brand Focused on relevant industry assets Relies on success stories and corporate
testimonials Highlights improvements to business
climate and positive acknowledgments/rankings for Missouri
Marketing forNew Business Investment
“Ground Campaign” Tactics Conference sponsorships Tradeshow exhibition presences Decision-maker outreach (e.g. site
selection consultants)
Marketing forNew Business Investment
Tradeshow Exhibition Efforts (2010) CoreNet Global Biotechnology Industry Organization
(BIO) Solar Power International WINDPOWER Expo AFCOM Data Center World
Marketing forNew Business Investment
Decision-Maker Outreach Efforts (2010) Consultant outreach events
Chicago Greenville, SC New York / New Jersey Los Angeles Cleveland
International trade commissioners and consular offices
Marketing forNew Business Investment
Our Marketing Partners Missouri Department of Economic
Development Hawthorn Foundation Local and regional economic
development groups Private industry in Missouri (e.g. utility
companies, construction firms)
Long-Term 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
Product Development Targeting growth industries that complement
Missouri’s advantages
Business climate improvements
Marketing toTargeted Industries
Building a Business Case for Missouri in the Wind Energy
Sector
Missouri Opportunities
Blades
Nacelle
Tower
Wind turbine in Northwest Missouri
Wind Energy Components Major components of a wind turbine
Nacelle (the motor) 100 tons 8,000 separate components (e.g. gearboxes,
bearings) Tower
300 feet in height Fabricated metal construction
Blades 150 to 200 feet in length Fiberglass or composite (e.g. carbon fiber)
construction
Wind Energy Components
Defining characteristics Expensive to transport (weight of products) Difficult to transport (dimensions of products) Traditionally manufactured in Europe (esp.
Denmark, Spain, and Germany) Will require new base of U.S. suppliers and
maintenance workers Forecasted growth in demand (despite current
oversupply)
Missouri Opportunities
Keys to Success
Product Awareness
Establishing Missouri’s presence at key industry events
Delivering the “Why Missouri” message
Product Development
Strong market for wind energy
Attractive operating conditions
Incentives
Working withNew Business Investment
An Overview of Business Recruitment Deals
Site Selection in a Nutshell
1. Company identifies need for additional capacity and initiates search for new facility location
2. Company contacts state/local development groups
3. Development groups submit site location proposals to the company
4. Company visits sites and develops short list of favorites
5. Company negotiates incentives and selects a final site
What’s Important?Top Factors in Corporate Location
Decisions
1. Cost of labor (2nd in ‘08)2. Highway accessibility (1st in ‘08)3. Tax exemptions (4th in ’08)4. Energy availability/cost (5th in ’08)5. Corporate tax rate (8th in ‘08)
Source: Area Development, March 2010
What’s Important?Top Factors in Corporate Location
Decisions
6. Availability of skilled labor (6th in ‘08)7. Occupancy/construction costs (3rd in
‘08)8. State and local incentives (8th in ‘08)9. Availability of internet (21st in ‘08)10. Freight costs (not ranked in ’08)
Source: Area Development, March 2010
What’s Important?Other Factors in Location Decisions
14. Right-to-work state17. Environmental regulations23. Accessibility to major airport25. Railroad service26. Waterway/port accessibility
Source: Area Development, March 2010
Who is Involved?
Stakeholders in the process – The “Buy Side”
The Client Where do the leads come from?
Marketing events Tradeshows Relationships / referrals “Cold Calls”
Company versus Consultant
Who is Involved?
Stakeholders in the process – The “Sell Side”
Missouri Partnership Missouri DED Regional economic development groups Local economic development groups Utility companies Private industry in Missouri
Role of Missouri Partnership
Responding to business recruitment leads
Identifying optimal community locations for the project Proximity to complementary industries and
educational assets Geographical advantages, including
supplier and market access Site and building availability Business and labor climate suitability Operating cost management
Role of Missouri Partnership
Responding to business recruitment leads Performing targeted, location-specific
research Area demographics Regional industry makeup Workforce availability and accessibility Ongoing financial concerns, including energy
costs and taxes
Role of Missouri Partnership
Responding to business recruitment leads
Packaging state and local economic incentive programs and detailing their impact on up-front capital expenditures and long-term operating costs Facility financing Infrastructure assistance Workforce training Tax abatements and credits
Staying in the Game
Follow-up visits to the community Inspect the proposed site or building
Help the client envision the potential Interview local employers about the area
workforce (e.g. work ethic, productivity, wage schedule) Respect the confidentiality of the conversation Select the right employers to tell the story
Staying in the Game
Follow-up visits to the community Meet with local government officials
(“dog and pony time”) Emphasize the pro-business attitude in the
community Maximize the tangible benefits to the client Minimize grandstanding
Staying in the Game
Follow-up visits to the community Look for additional reasons to narrow
the field of competition (site selection as a “process of elimination”) Sell the strong points of the community
Transportation accessibility Price (especially if the site/building is publicly
owned) Legacy workforce (if there is a recently
downsized operation)
Staying in the Game
Follow-up visits to the community Identify other potential concerns about
the specific site or community Anticipate and mitigate these with
adequate preparation Infrastructure development plans and costs Environmental and geotechnical studies “Blind” job recruitment ads Natural disaster statistics
Staying in the Game
Follow-up visits to the community Negotiate and finalize a competitive
package of state and local incentives Be ready to give a “best and final” offer
that is responsible to the community but that also factors in the competitive reality of the deal
Potential Pitfalls in the Process
Where Things Can Go Wrong Information failures
Quality of information Confidentiality
Relationship failures Trust between client and state/local
community Trust between regional and local groups Trust between state and local communities
The Role of Incentives
“Incentives make a good site better.
They don’t make a bad site good.”
- Anonymous
The Role of Incentives
How important are they? Consistently ranked among Top 10
location factors in Area Development annual survey of corporate executives 2005: 4th
2006: 4th
2007: 8th
2008: 7th 2009: 8th
The Role of Incentives
Why do they matter? One of the few factors within the control
of state and local governments Can assist with multiple facets of new
operation “Develop the site” “Build the building” “Find the workers” “Keep the costs low”
The Role of Incentives
What do companies want? Cash is king BUT…
Most businesses want to maintain a strong relationship with the community and state
Incentives won’t compensate for a flawed business case
There are responsible policy options for state and local governments
The Role of Incentives
How does Missouri fare? Positive reputation for Quality Jobs Act Well-known and well-used New Jobs
Training program Competitive disadvantage against states
with “deal-closing” or contingency funds Texas: $290 million Arkansas: $40 million Ohio: $30 million Virginia: $20 million
The Rules of Attraction1. Consistently provide quality information
in a timely manner2. Build a personal connection and earn
the trust of the client3. Understand the client’s needs and how
your community offers the best solution4. Harness the power of peer-to-peer
testimony5. Recognize that everyone and everything
in your community is being evaluated
Site Selection is Like Courtship
RFPs = Personal ads Trinkets from the local chamber =
Flowers and chocolates Site tours and employer interviews =
Going on dates and meeting the family
Just as in courtship, persistence is key.
Questions?
Thank You!
Christopher ChungPresident and CEOThe Missouri Partnership+1.314.725.0949 (O)+1.573.808.0089 (M)[email protected]