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Economic Development Week Live Twitter Video

Recently, Global Location Strategies hosted a live Twitter video featuring Founding Principal Didi Caldwell and Director of Strategic Development Susan Donkers. The video was a culmination of our celebration of Economic Development Week where we shared a number of case studies that serve as best practices of ED solutions to common, yet complex, challenges.

The 34-minute video resides on our Twitter page here, but you may also read the transcript, which follows in its entirety. A PDF is also provided for convenient download.

We hope you find our advice helpful, and if you believe GLS may be able to help your community tackle other complex issues, give us a call 864.281.5897 or contact tessfay@globallocationstrategies.com and let’s discuss.


Economic Development Q&A
Live Twitter Broadcast Transcript

Susan Donkers:   Hello, I'm Susan Donkers, Director of Strategic Development at Global Location Strategies, and I'm thrilled to be here today to serve as the moderator of today's broadcast. It's the culmination of our week long celebration of Economic Development Week.

All week we've been recognizing economic developers, the impact makers who work tirelessly in their communities to create positive economic change for today, for tomorrow, and for the generations to come. Each day of the week, we have shared community case studies, the best practices designed to provide solutions for those of you out there looking to create this economic change.

We've also solicited for your most challenging questions, and today, GLS Founding Principal Didi Caldwell is here to answer them. Didi is one of the world's most authoritative site selection, and incentive negotiation experts. She specializes in capital, and labor intensive industrial projects. For 21 years, Didi has personally conducted location advisory services in more than 30 countries, and nets an excess of 40 billion.

She was the first female chairperson of the Site Selectors Guild and is one of the few female site selection experts that specialize in industrial projects. So with that, let me turn it over to Didi to say a few words.

Didi Caldwell:    Thank you very much Susan, and hello everyone. Thank you so much for joining in today, and I'd like to take this opportunity to reach out and thank all of the economic development professionals that I work with on a daily basis. Without your tireless devotion and passion for this industry, we could not be successful. So, this is a really important week for us to recognize all the impact that you are making, and to send out a special thanks for all you do.

Susan Donkers:    So with that, let's jump into it. Our first question is from Ashley Willis. She is the Executive Director of the Pike County Economic Development Corporation in Petersburg, Indiana, my home state. So her question is this: What can rural communities do to be competitive with urban areas? And before you answer, Didi, let me say that this is something near and dear to all of our hearts. Indiana, and the state where we're located, South Carolina, are full of rural communities. We work with rural communities across our country and the globe, and it's a topic we're passionate about.

Didi Caldwell:    Hi, Ashley. Thank you so much for your question. So, I get this question a lot, and I actually have a presentation that I've developed titled “Eight Strategies for Rural Economic Development,” and I'm going to touch on just a couple of them. The first is that I think that you can take advantage of diseconomies of scale.

One of the things that we're seeing, particularly in high cost locations like the Bay Area of San Francisco, is that many companies want to move out in order to get lower costs, but you're not just competing with high cost locations in California, you may also be competing with higher costs locations within your own state.

Typically, in rural areas land is more affordable, labor prices can be lower because of the cost of living, and there is an availability of expansive land. Finding large greenfield sites in more urban areas is difficult, so that's something rural areas have to take advantage of. What rural areas can be lacking in, however, is workforce and utility infrastructure.

So, making sure that you have very good sites that have been defined and fully characterized, that you understand what the utility requirements are, and how long it's going take you to get those utilities to that site, and to the greatest extent possible, go ahead and invest in those improvements. Then, you must really define your workforce and understand what niche capabilities you have.

I was just a lunch with NESA, which is Northeastern South Carolina – Florence and the surrounding counties – and they were saying that they have one of the largest metalworking capabilities per capita in the entire country. This is something I didn't know, and although they do not have a huge workforce, this is something that they can definitely leverage to their advantage. It’s also something that's going to stick in my mind when I'm talking to my clients.

Something else that I think is very important for rural communities is to invest in broadband infrastructure. In my mind, 5G and broadband infrastructure is to the 21st century what electricity was to the 20th century. If you think about the TVA being formed in 1933 to bring electrification to the Tennessee Valley and spur economic development, I feel like 5G is a similar type of initiative.

I don't know if that's going to happen at the federal level, or if that's going to happen with utilities or at the state or the local level, but I think this is one of the things that rural areas definitely have to invest in, in order to be competitive. As we move more into automation, the internet of things and autonomous vehicles, there's many, many things that are going to depend on broadband and 5G infrastructure.

Susan Donkers:    So, just a follow up question on that. When characterizing the workforce and identifying the unique characteristics of that workforce in a rural location, let's say it's been characterized. What's the next step of how to apply that? Is it all about communicating it or is there a next step of how to pass those skills to the next generation?

Didi Caldwell:    Yes, you really need to think about your entire talent pipeline. So, there's long-, medium-, and short-range planning for your workforce. In the short term, you can certainly take advantage of the skills that you have present in the workplace today, but you can also retrain those folks.

That has limitations just based on numbers, and the ability to retrain existing employees. From a medium-range standpoint, you can really attract talent to your region. Roanoke, Virginia is one of those examples where they have a website and an infrastructure that's dedicated to attracting workforce to their region. If you don't have a workforce attraction strategy, then you need to stop what you're doing right now and start thinking about how you're going to do that.

And then the long term, and this is really something that is very important, is thinking about how you grow your workforce from the ground up. You've got a community with children right now that are entering kindergarten, and in about 13 to 15 to 17 years, depending on what kind of higher education they undertake, they're going to be entering the workforce.

I really believe that the communities that start now will make a wish come true. If you wait 17 years you will probably look back and say, 'Oh, I wish we'd started that workforce development pipeline 17 years ago'. Start doing it right now and you can make that wish come true today.

Susan Donkers:    So, let's jump into the next question, which is also about workforce. This comes from Paul Cuenin. He's with the Greenwood Partnership Alliance here in South Carolina, and his question is about defining the labor shed for a project. ‘How do you define the labor shed, and then how do you decide what the right size population is in order for the project considering that location to make the cut, and go forward to the next round?’

Didi Caldwell:    I'm going to give the famous answer that many site selection consultants give, and that is, ‘it depends’. I know people love that answer, so let me explain a little bit. One of the thresholds that I use when I'm looking at a project is the ratio of capital investment to jobs. If there is more than $1 million being invested per job created, then I consider that to be a capital-intensive project.

On the other hand, if there’s less than $1 million invested per job created, it’s a labor-intensive project. A good example is Van Hool, a Belgian bus maker that recently announced its first North American manufacturing facility in Morristown, Tennessee. They invested $47 million and created 600 jobs, so that's very labor intensive. Their project had very different drivers from a capital-intensive project. Generally, for capital intensive projects I'm going to look for the site that has the infrastructure, and the capacities to serve that project, because I'm usually going to have very heavy industrial needs.

If it's labor intensive, then I'm going to first look for the community that has a sizeable workforce with the specific skills needed. Then we'll look and see if we can find a site in those communities that will meet our needs from a workforce standpoint. So, I’ll begin my answer to the question with a caveat of “it really depends,” but let's assume that it's labor intensive.

It's not just about the size of the population. A lot of times, it's about a concentration of a set of specific skills. We subscribe to JobsEQ from Chmura, and this is actually a very integral part of what we do when evaluating communities. For a large capital-intensive project, we're going to look at both the quantity of population in workforce that you have, but also those specific skills.

So, if I go back to Van Hool for just a minute, we were looking for communities that had a minimum size population of about 50,000, and a roughly 100,000 workforce draw within a 30- to 45-minute boundary. This was to satisfy 600 jobs. We also wanted a high concentration of welders, so we were looking at location quotients that were at least two, which means that they had twice the concentration of welders in that community as you would normally find as an average for the whole United States.

We build an occupation profile for the project where we have every job with their occupation code listed, and the number of people in that occupation code, and we use the forecasting tool on JobsEQ to determine what will be the availability of those jobs in the near future based on unemployment with those skills, based on the number of people that will be exiting that industry, the number of people that will be coming in, and what will be the job change. If we see something that's less than 50 potential candidates per job opening, then that raises a red flag for us.

Now, if that happens to be for the plant manager, and we only need one plant manager, we are going to be recruiting from a national audience. But if it’s something that's very integral to what we're doing – in this case very highly skilled welding – then less than 50 potential candidates per job opening will give us cause for concern.

I have to say that when we were doing the Van Hool project, there was not a single location that we weren't considering that had at least 50 potential candidates per job opening for welders, and that just goes to show that that's a very difficult skillset to find, so we had to lower our expectations there.

Susan Donkers:    You know what, as I'm listening to this, questions one and two are really related, and I think you can correlate it to the medical field. Twenty years ago, if there's a problem, such as cancer, then you can just make some baseline assumptions and just blast the cancer with the drugs you have in your arsenal. With the improvements made in customized medicine, you can get a lot more targeted on the exact issue and treat just that.

If you apply that to a community, there are data that now exists to find your strengths and then exploit them. Just double down on those occupation skill sets that are there, and be the best at that, and trust that the site selectors out there are going to find you, it's about a lot more than population.

Didi Caldwell:    Yes, that's one of the big changes. When I started doing this 21 years ago, we had very limited data, and the ability to analyze that data was also limited. So, it wasn't that workforce characteristics were necessarily less important, it's just our ability to dissect the workforce in many different slices and try to figure out which one had a better workforce makeup than another community was much more challenging than it is today. If you couple that with a tight labor market, it means that workforce is one of the things that we spend the most time on.

It’s certainly one of the critical components, but it's not the only critical component. If you don't have a site, then it doesn't matter how good your workforce is. Conversely, if you have a great site, but you don't have an investment ready workforce, then you're not going to win those projects either.

Susan Donkers:    [GLS Vice President] John Longshore posted on social media this week, saying, 'I'm a site selector. If you don't have a site, I can't select.'

Didi Caldwell:    Right. That's right.

Susan Donkers:    Which is pretty witty. Our next question comes is about site readiness. The question is, “What's the difference between site certification and site ratings, and what's the better option for communities to pursue?”

Didi Caldwell:    Well, this is a question that the Site Selectors Guild is actually going to address with our site readiness round table that we're holding in Atlanta in June. Jim Kupferer, John Sisson, and I worked on the very first site certification program in New York in 1998, which was called Build Now New York. That was actually a matching grant program where they were trying to advance their sites in particular industries, and it was very successful.

That then led to a project in Pennsylvania. Mark Sweeney and Jeannette Goldsmith were very involved in that when they were both a part of Fluor. After that, it became a cottage industry. By that I mean it exploded, and some state utilities and rail companies have adopted their own certification programs, while other have opted for more site readiness type programs.

The difference in my mind is that site certification is a yes or no answer. You are either certified, or you are not. Site readiness, to me, is more of a journey, and I think that the market is moving more towards the journey-type approach, because you want to recognize communities wherever they are on their site readiness journey. For many of the sites that we consider, if we only considered sites that were certified, then we would not have much to look at.

A lot of times we have to make exceptions. Because our projects often are heavy industrial, it may take two or three years before a site is ready to build by the time you include permitting, and construction, environmental issues. I mean, three years is not an unusual timeframe. If you can't get water there, it's going to take you 12 months to install a waterline, and that fits within our timeframe.

It doesn't mean that we don't consider it a risk, but it's not an eliminator like it would be for projects that have a very short timeframes to ramp up. So, what I would really like to see is that we establish a national standard. One that everybody knows what it means, and one that doesn’t make it an either/or question.

Perhaps it's something that's modeled after LEED with the Green Building Council where you can earn certain levels – gold, silver, platinum, what have you – and so that it will be very transparent on how to achieve those levels.

So, if I'm a site selector and I have two sites that have been submitted to me, one is gold and one is silver, I can say, 'Okay, this one appears to be a bit more ready', but then I can also peel back the onion, and say, 'Okay, why did this one get more points than the other one?' And are those things that are really critical in the decision timeframe on the decision makeup of my clients? That’s what I'm lobbying for.

Susan Donkers:    Yeah. You know, we've been working on some site readiness projects on behalf of clients, and what I see is there's something for everyone. So, there's always another step in the journey that can be undertaken. It's very difficult to fund the entire journey in one fiscal year.

The national standard makes a lot of sense from those of us that are practitioners in the industry, so that we can compare apples to apples, and then when we're working with civil engineers, and architects, and environmental experts, we're all utilizing the same language.

My point of view comes from the early 2000's when I was working in Washington D.C. with the U.S. Green Building Council as one of the first hundred people that achieved LEED accreditation. We implemented the common language and pilot projects, and now look where that has gone.

So, at this point in time there's probably not a better option, because at the end of the day, the activities of getting a site ready are the same. The question is where are you at on that activity list at this particular point in time?

Didi Caldwell:    We also work with Duke Energy on their site readiness program, as do other consultants. I think they have a very good program of meeting communities wherever they are at that site readiness journey. Their mission, which I think is quite successful, is to advance those communities in both sites along that site readiness journey so that they are more likely to attract investment.

Susan Donkers:    Our next question is about foreign direct investment, and how to attract global investment. So currently, there is a shift in the supply chain in Southeast Asia. I'll just read the question verbatim. How might United States communities take advantage of the supply chain shifts that are currently underway in Southeast Asia?

Didi Caldwell:    So, I think it's worth talking about for just a second why those shifts are taking place. I believe one of the things is that the cost calculus has changed. China, and other areas have become more expensive, particularly as it relates to labor, and the United States has become more competitive, particularly as it relates to energy.

So, starting with the shale oil find, there was a lot of natural gas that went along with the extraction of oil. Once we got the infrastructure in place to start directing that shale gas, it was almost free, which I remember when gas was $13 in MCF, and now we're somewhere in the threes, so now it’s practically free. So, that cost calculus has definitely made United States more expensive. And then today we’re dealing with the rising tariffs change from 10% to 25% on $200 billion worth of Chinese goods. So, that adds another level of cost for importers into the United States from China.

We also have a few other things going on. We have demographic issues. So much of the world has an inverted population pyramid, which means that labor supply is becoming ever increasingly hard to come by. The prime examples of this are Japan, Germany, and Russia, but also in China where they had the one child policy for so long. They've definitely had a big issue with this, and then there's the last thing, which is really about geopolitical and natural disaster risk.

So, if you have a very long and gangly supply chain, you are exposed to risk of regional conflicts. We definitely saw it in Japan with Fukushima that interrupted supply chains for both automotive and aviation. When you start to factor all of these things in, we really see a flight-to-safety.

There was an article that came out recently that said something like 90% of Chinese firms were considering changing their supply chains to adjust for these new realities.

All you have to do is look at our business. Two out of every three of our projects last year were a foreign direct investment into the United States, and I don't see that trend changing any time soon, it's only increasing. So, how do you as economic developers take advantage of that? Well, one of the things is always reach out to the site selection consultants.

Make sure that they know what your value proposition is, what you have to offer. And if there's a consultant that works in a particular niche that you're really targeting, like me, for instance, who deals with heavy industrial and general manufacturing projects, make sure you target your message to me. Don't come and talk to me about call centers because I am probably never going to represent that type of project.

I also believe SelectUSA has been great. As a lone community it's kind of hard to get on people’s radar screen there, but I think it really works well if you go with your state or you go as a region. It’s certainly a place where hundreds of people come. Investors that are looking at investing in the United States.

Susan Donkers:    And with SelectUSA there are spinoff events.

Didi Caldwell:    Right.

Susan Donkers:    Reaching out to SelectUSA and inviting them to come to your community or region is possible throughout the year.

Didi Caldwell:    And then there's two more. One is leveraging organizations that represent certain countries. For example, the German-American Chamber, or even the consulates that are located in several different cities. You can reach out to them. Often, they have information about who might be looking. Finally, the last way to attract FDI is to look in your own backyard.

If you already have a Japanese company operating in your region, they oftentimes can be your best ambassador. So really developing that relationship with existing businesses and making sure they have the tools and the knowledge to help represent you in attracting new investment is a smart move.

Susan Donkers:    Yesterday, we published a case study about asset matchmaking. You know, I think sometimes, because we're living in the United States, and there's so much business inside of our country, if you're not specifically thinking about the rest of the globe, it can be easy for it to be put on the back burner.

But because so much foreign direct investment is interested in United States, I think it's really useful to benchmark your location to where else in the world is just like you, and then what are they manufacturing there?

Didi Caldwell:    Sure, yeah.

Susan Donkers:    Because then you might have a case study, or a sister city, or at least some color commentary around how we can be just like them. How can Savannah be like Rotterdam? How can Chicago be like Hamburg?

Didi Caldwell:    Yes, and I encourage communities all the time to be very targeted in their target industries, which sounds redundant, but I see a lot of communities say that their targeted industry is aviation and aerospace. Does that mean that you're going to assemble jet airplanes? Does it mean that you're going to make the seats? Does it mean that you're going to make the turbines, or are you going to make the carbon fiber that makes up the fuselage, or are you going to do the maintenance repair operations? I'm pretty sure that there isn't a community that would be the optimal location to do all of those things. So, you really need to break it down, and figure out what is your competitive advantage, and that's what we do for our clients all the time is determine where they will have the competitive advantage.

So, asset matchmaking is like site selection in reverse. It's saying, 'If I were to market this site in this community with this workforce to industry, what would be the optimal one?' And then I can benchmark myself against likely competitors, and present the business case to those potential investors, and I think that's an extremely powerful message.

Susan Donkers:    Break down the supply chain of the industry, and determine the match that way.

Didi Caldwell:    Right, exactly.

Susan Donkers:    So, let's say you have limited resources. There's great ideas, there's paths forward, but if you have a limited budget in this fiscal year, what's the best use of funds to get ready for business investment, and what's the best way to get on the site selector’s radar screen?

Susan Donkers:    So, two separate questions.

Didi Caldwell:    Yes. So, I think there's several ways. One of them is that our door is always open. We're in Greenville, South Carolina, and I think we spent 300 hours last year with economic developers when they came to our office. Sometimes we get breakfast, sometimes we have lunch, sometimes they just come to the office and talk to us about what's going on in their community. Obviously, this is all unpaid time, but it's an investment in our ability to represent these communities.

So, that's the number one way, and if you plan your trip well, you can hit areas that have a high concentration of site selectors like Chicago, or the Carolinas and Atlanta, or Dallas, and you can touch a lot of different people, and you can also coordinate that with company visits.

The second way is to go to some of the conferences, including the Site Selectors Guild, which has an annual conference and a Fall Forum. There are other organizations there that have site selection consultants that come to them. So, I think those are great ways, and FAM tours are always great.

I realize that FAM tours sometimes can be expensive to put on, but if you take a regional approach, then you can pool your resources. This kind of gets back to the rural issue that sometimes small communities don't have a professional economic developer, but two or three counties can get together and hire one person to support them.

That's absolutely critical in being able to work the projects when they come into the door. So, you can take a similar approach for either a FAM tour, or an advisory forum.
The Site Selectors Guild offers advisory forums where four to eight consultants come into the region for a couple of days to tour the assets, look at the product, look at the workforce development programs, talk to investors, experience a little bit of the quality of life there, and then give feedback to the community on what they've seen, where they feel like the community ranks, and what they can potentially do to improve their value proposition.

Susan Donkers:    Can a community email us an Excel spreadsheet of their sites that are ready to go?

Didi Caldwell:    Yes, they can. Although we do not currently have an active program to catalog those sites, we do have a place in our heart, and in our file system in our technology pipeline that is focused on industrial sites. By this I mean large sites over one hundred acres. We especially want to know about them if they have large utility capacities. If they are rail served, even better.

Those are things that we definitely want to know about. So, I would say stay tuned, because I think we're going to be rolling out something in the future where we will invite communities to send us a limited information – sort of an ‘RFI Light,’ so that we can have it available when clients come calling.

The databases that exist currently are wonderful for your do-it-yourselfers, and I think it's really good for the states and communities to make sure that they're keeping track of these sites, although they don't necessarily have all of the information that we need in order to be able to really filter and identify sites for a specific project.
Susan Donkers:    I agree. Our last question is if you have limited resources, what's the best way to allocate those funds to get your site ready?

Didi Caldwell:    Well, I think you have to start with a long-term plan, and you may not be able to bite off everything right away. I would say that the minimum thing you need to do is to take control of the site. You may want to get an option for the site for the time period that you're doing due diligence.

A lot of times, owners will be very flexible with that, and you can get those options at low or no cost, but the one thing you want to avoid is spending a lot of money doing due diligence, and then losing the ability to control the site. The next thing I would say is start with some of the basics.

Do a phase one environmental, do a wetlands delineation, do an archeological/cultural endangered species study. These are things that are not terribly expensive, but really go a long way in terms of how we look at sites and avoiding risk. If you don't have these bare minimums covered, then it's hard for us to act with any confidence, but once you achieve it, you can move forward.

Let’s say, for example, you need to extend a gas line three miles. You may not have the money to extend a gas line right now, but you can acquire the right-of-way, you can do the engineering studies, you can do the permitting, or at least get the applications ready to go. You can determine where the funding is going to come from, and you can determine how long it's going to take.

So, if we come and look at your site and you've done everything except for actually building the infrastructure, it makes us feel a lot better about how much energy and focus have you put in this, and the likelihood that you can deliver.

Susan Donkers:    So, that's a wrap. Believe it or not, we're out of time on our first live Twitter broadcast, and it also means we've officially reached the end of our week-long celebration of Economic Development Week. Thank you to everyone who tuned in and took the time to ask questions and thank you most of all to the economic development professionals out there. You are the ones making the impact in your communities.

On behalf of the team at Global Locations Strategies, we're really honored to have the opportunity to work with you to create that positive change for multiple generations. We’re always open to answering questions and helping you think through your challenges, so please feel free to contact us any time. Our contact information is at globallocationstrategies[dot]com.

You'll find inspirational case studies there, as well as potential solutions that you can apply to your community. Thank you to all and have a wonderful weekend.



Category: Blog