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Job Creation: Art or Science?. June 6, 2013 43 rd Annual Alabama County Government Institute Presentation Auburn, Alabama. Alabama Department of Commerce. The Alabama Department of Commerce. Created: 1969 Secretary of Commerce: Greg Canfield Employees: 32

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Job creation art or science

Job Creation:Art or Science?

June 6, 2013

43rd Annual Alabama County Government Institute Presentation

Auburn, Alabama

Alabama Department of Commerce


The alabama department of commerce
The Alabama Department of Commerce

Created: 1969

Secretary of Commerce: Greg Canfield

Employees: 32

Mission: “To coordinate economic development resources leading to quality job creation throughout Alabama.”

Organizational Components:

Business Recruitment

AIDT

International Trade

Small Business Advocacy

Film Office

Budget Source: General Fund


Alabama department of commerce s goal
Alabama Department of Commerce’sGoal

Drive Economic Development in the

State of Alabama


Fundamentals of economic development
Fundamentals of Economic Development

Economic Development is …

  • The increase in the standard of living of the state’s population;

  • It’s scope includes the process and policies by which the state improves the economic, political, and social well-being of its people;

  • Or, another definition is……….

JOBS!



What are some factors within economies that might influence the economic development process?

PEST Analysis

Political Factors

Economic Factors

Social

Factors

Technological Factors


Influencing factors
Influencing Factors the economic development process?

  • Public Policy

  • International Conflicts

  • Monetary Crisis

  • Natural Disasters

  • International Trade

  • Consumer Confidence

  • Others…


Fundamentals of economic development1
Fundamentals of the economic development process?Economic Development

“Uncertainty is the enemy of capital investment.”*

*Area Development, “Uncertainty: The New Normal for Site Selection and Facility Investment”, Mark Sweeney, January 2012


Fundamentals of economic development2
Fundamentals of the economic development process?Economic Development

““…ready communities with reduced risk profiles will win the day.”*

*Area Development, “Uncertainty: The New Normal for Site Selection and Facility Investment”, Mark Sweeney, January 2012


Areas of economic development
Areas of Economic Development the economic development process?

  • Industrial Recruitment

  • Business Retention

  • Commercial / Retail

  • Tourism

  • Film

  • Government

  • Others


What is our concept of competition, the economic development process?

and……


Why select the usa
Why Select the the economic development process?USA?

World’s Largest Economy

Competitive Business and Investment Climate

Commanding Consumer Market

Vast Internal markets = Economies of Scale

Center of Research and Innovation

World’s Top Universities

The Global Leader in Information Technology

Protector of Intellectual Property

Highly Educated and Productive Workforce

Source: Published on SelectUSA (http://selectusa.commerce.gov)


Business advantages
Business Advantages the economic development process?

  • Team Alabama

  • Workforce Availability and Training

  • Right-To-Work State

  • Competitive Taxes and Incentives

  • Readily Available Products-Buildings and Sites

  • Heart of the Southeastern Transportation Network

  • One-Stop Shop for Environmental Permitting

  • Proven Record of Investment and Trade Successes


A decade of alabama s announced job creation
A Decade of Alabama’s Announced Job Creation the economic development process?

Source: EDPA


Job creation categories
Job Creation Categories the economic development process?

  • Expansion

    • Direct

    • Consolidation

    • Re-Start

    • Joint Venture

    • Co-Location

    • Business Arrangement

  • New

    • Domestic

    • International

    • Start-Up



  • 1. Highway corporations?Accessibility

    2. Labor Costs

    2T. Availability of Skilled Labor

    4. Corporate Tax Rate

    5. Occupancy or Construction Costs

    5T. State and Local Incentives

    7. Energy Availability and Costs

    8. Tax Exemptions

    9. Proximity to Major Markets

    10. Low Union Profile

    Corporate Survey Site Selection Factors

    Source: Area Development magazine, 26th Annual Corporate Survey, published Winter 2012.


    1 corporations?. Low Crime Rate

    2. Healthcare Facilities

    2T. Housing Availability

    4. Housing Costs

    5. Ratings of Public Schools

    6. Colleges and Universities in Area

    7. Climate

    8. Recreational Opportunities

    9. Cultural Opportunities

    Corporate Survey Quality of Life Factors

    Gulf Shores, Alabama

    Source: Area Development magazine, 26th Annual Corporate Survey, published Winter 2012.


    Competitive site selection screening process
    Competitive Site Selection corporations?Screening Process

    Candidate Locations

    Define Search Region

    • Center-of-Market Analysis

    Regional Screening

    Project Criteria

    RFP & Proposal Screening

    Site Visits / Comparative Assessment

    Cost Modeling / Incentives

    Risk Analysis

    Site Decision

    Source: McCallum Sweeney Consulting, Courtesy of Ms. Jeanette Goldsmith


    Job creation due diligence examples
    Job Creation corporations?Due Diligence Examples

    • EMSI Workforce Analysis

    • Tax Incentive Analysis

    • Revenue Evaluation (Local & State)

    • Benefit/Cost Analysis

    • AIDT (Training) Valuation

    • Transportation/Logistics Sensitivity Analysis

    • Incentive Evaluation/Net Present Values

    • Cost Modeling

    • Risk Mitigation

    • Others



    Incentives
    Incentives incentives?

    Taxes

    - Sales and Use Tax Abatements

    - Property Tax Abatements and Exemptions

    - Income Tax Credits and Deductions

    - Inventory Tax Exemption

    - Enterprise Zone Credit/Exemption

    - Full Employment Act of 2011

    Training

    - Alabama Industrial Development Training

    - ADECA Workforce Development Division

    - Alabama Technology Network (ATN)


    Incentives1
    Incentives incentives?

    Infrastructure

    - Industrial Access Road & Bridge

    - Economic Development Grant

    - Community Development Block Grant

    - USDA Rural Development

    - Appalachian Regional Commission

    - Economic Development Administration

    Environmental Permitting

    - One Stop Environmental Permitting


    Incentives2
    Incentives incentives?

    Financing

    - AlabamaSAVES

    - CAPCO

    - Alabama NMTC

    - ED Revolving Loan Programs

    - TVA Economic Development Loan Fund

    - Community Development Block Float Loan Program

    - Industrial Revenue Bonds (IRBs)

    - USDA Rural Development


    What is the incentives?view from Site Selection Consultants?


    Relative Importance of Incentives to Clients incentives?when making Location Decisions:

    1. Have always been of great importance 40%

    2. Are more important now than in the past 45%

    3. Are less important now than in the past 15%

    Which Types of Incentives do Clients Consider Most Important when Deciding on a Location?

    1. Tax incentives 42%

    2. Cash grants 33%

    3. Other financial incentives 21%

    4. Working training incentives 9%

    5. Other incentives 23%

    Source: Consultants Site Guide, Area Development magazine, Winter 2012, www.consultantssiteguide.com.


    Which Factors have you Evaluated in Recent Location or Expansion Projects that you Discovered to be Most Deficient?

    1. Labor Availability 26%

    2. Incentive closing funds 40%

    3. Advanced ICT service 2%

    4. Pre-qualified sites 32%

    5. Other 10%

    Source: Consultants Site Guide, Area Development magazine, Winter 2012, www.consultantssiteguide.com.


    How are site locations Expansion Projects that you Discovered to be Most Deficient?determined, and……..

    ……..what is your probability?


    What are the Expansion Projects that you Discovered to be Most Deficient?properties we can promote in Alabama?

    • 511 Existing Buildings*

    • 479 Industrial Sites/Property*

    • 39 Favored Geographic Areas**

    • 28 Approved Enterprise Zones***

    • 28 Speculative Buildings*

    • 40 AdvantageSite Designations*

    * Source: Economic Development Partnership of Alabama, April 18, 2013

    ** Source: Alabama Department of Revenue

    *** Source: Alabama Department of Economic & Community Affairs


    AdvantageSites Expansion Projects that you Discovered to be Most Deficient?


    Advantagesite successes
    AdvantageSite Successes Expansion Projects that you Discovered to be Most Deficient?

    Alabama’s AdvantageSite Program has been recognized by Southern Business & Development Magazine as one of the country’s top 10 site programs.


    Advantagesite raising the bar
    AdvantageSite – Raising the Bar Expansion Projects that you Discovered to be Most Deficient?

    2008-2012 Designations

    2008–2009 Designations

    2013 In the Pipeline


    What are alabama s targeted markets
    What are Alabama’s Targeted Markets? Expansion Projects that you Discovered to be Most Deficient?


    Alabama s targeted market sectors
    Alabama’s Targeted Market Sectors Expansion Projects that you Discovered to be Most Deficient?


    Alabama s targeted market sectors1
    Alabama’s Targeted Market Sectors Expansion Projects that you Discovered to be Most Deficient?


    Us auto sales trends
    US Auto Sales Trends Expansion Projects that you Discovered to be Most Deficient?


    Expanding production
    Expanding Production Expansion Projects that you Discovered to be Most Deficient?

    300,000

    350,000

    340,000

    250,000

    300,000

    350,000


    Airbus business opportunities
    Airbus Business Opportunities Expansion Projects that you Discovered to be Most Deficient?


    What some key attributes a community must possess for successful economic development
    What some Expansion Projects that you Discovered to be Most Deficient?key attributes a community must possess for successful economic development?


    Key Attributes: Expansion Projects that you Discovered to be Most Deficient?

    • Financing

    • Plan

    • Organization

    • Direction

    • Staff

    • Control

    • Product


    Economic Development is a Journey . . . Expansion Projects that you Discovered to be Most Deficient?

    not a destination!


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