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Budget Activity: BSD A163 – Economic Development Purpose: Activity: BSD A163 – Economic Development Purpose: Provide contracting, fund management and loan repayment services in BSD Priority of Government: Improve the economic vitality of businesses and individuals

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slide1

Budget Activity: BSD A163 – Economic DevelopmentPurpose: Activity: BSD A163 – Economic DevelopmentPurpose: Provide contracting, fund management and loan repayment services in BSD Priority of Government: Improve the economic vitality of businesses and individuals

  • Agency Priority: Competitiveness
  • Summary Analysis:
  • Jobs Created and Retained
  • FY12 Compared to FY11: In fiscal year 2012 the number of jobs created and retained, as well as the number of businesses recruited, retained or expanded has dropped significantly. This is largely due to a lag in the economy, and partly due to Commerce’s recent transition to Salesforce reporting system. It will take some time to get the ADOs all familiar with this new tool.
  • The numbers of jobs created and retained have experienced an unprecedented decrease which can be explained by the lack of large projects. The ADOs have been working mostly with start ups and small projects this year. 
  • Note: The number of businesses recruited, retained or expanded include start-ups.

1

slide2

Extended Summary Analysis:

  • FY12 Results
  • The ADOs reported 4,931 jobs created and retained in FY12.  With assistance, 192 companies were recruited, retained or expanded, 101 businesses started, and $298 million of private investment was leveraged. The main drivers are:
    • Clark County - Frito Lay’s Vancouver plant was in danger of closing due to the expiration of a water credit agreement between the company and the City of Vancouver, aging equipment and rolling global PepsiCo layoffs. A local consortium was formed and the Columbia River EDC contacted the Dept. of Commerce to request Workforce Investment Act (WIA) Funds for worker training. $150K in WIA funds were awarded. As a direct result of the WIA funds being invested the parent company invested $15M in equipment and they were not affected by the last round of global PepsiCo layoffs. 502 jobs were successfully retained.
    • Cowlitz County – In the Fall of 2009 Cameron Family Glass shut down operations in Kalama, laying off nearly 100 employees. In March of 2010 Bennu Glass LLC purchased the assets from a foreclosure auction. Bennu Glass manufactures glass containers and will serve the vibrant wine industry up and down the West Coast including Canada. This project was a $65M investment and created 90 jobs.
    • Whatcom County - Heath Tecna in Whatcom County added an additional 120 jobs bringing their total employment to 836.
    • Spokane County - SCAFCO Corporation is a Spokane company with over 50 years of manufacturing experience, several sites nationally, and a world wide reputation. SCAFCO began manufacturing steel culvert in 1954 and expanded in 1961 with manufacturing grain storage systems and then steel framing products in 1994. SCAFCO Grain Storage Division manufactures and designs complete systems for grain storage and handling. Over 25% of their product is exported. Greater Spokane Inc helped Scafco take advantage of the CEZ incentive for this $9.4M expansion for grain bins production. The expansion included 22 new jobs.
  • Commerce is still seeing an increase in CERB applications, as well as requests for the Governor’s Strategic Reserve funding and Workforce Investment Act funds. This could lead to more successful projects within the next few months.
  • FY11 Results
  • The ADOs reported 5,913 jobs created and retained in FY2011.  With assistance, 283 companies were recruited, retained or expanded, 165 business started, and $576 million of private investment was leveraged. As expected, figures for FY11 remained relatively flat compared to FY10. However, some successes were reported in Grays Harbor (Cosmo Specialty Fibers restart of the former Weyerhaeuser Pulp Mill, expansion of the Ag Processing facility), in Cowlitz (Bennu Glass reopened the idle wine bottle manufacturing facility), in Kittitas (Valley Wind Power Project), in Pierce (Versacold Storage Center ), and in Spokane (recruitment of Caterpillar Logistics Services, Inc.). Also, the Governor’s Workforce Investment Act (WIA) Training support for Heath Tecna (HT) resulted in an additional 250 workers with another 150 planned in July – December 2011.  

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slide3

FY11 Results (continued)

The number of cases for recruitment and regional staff has sharply decreased in FY11. Budget restrictions have affected staff’s ability to generate leads, driving the number of cases down. The instability of the current economy is also slowing companies’ expansion. A lot of the current projects are on standby, with companies waiting to see what the economy will do in the next months/year to come. The lack of financial aid and competition from other states has been a deal breaker for a lot of projects.

Most companies across the country and in WA still encounter challenges gaining access to capital. In Washington, lending restrictions continue to impede business creation and job growth. A third of the state’s chartered banks are under some form of federal scrutiny, limiting business growth. This has thwarted growth for the small to middle-market, non-publicly traded entities and has slowed our recovery. 

FY10 Results

The ADOs reported 6,644 jobs created or retained, 310 companies recruited, retained or expanded, and just over $1 billion of private investment was leveraged. Most of the investment leveraged ($600 million) was from the final phase of the REC Silicon business expansion in Grant County. Large job creation figures in Clark, Whatcom, Island, Cowlitz, and Snohomish Counties were driven by large scale retention cases. 

The economic climate continued to dampen performance outcomes as companies retrenched and held off on expansion or relocation opportunities. Company retentions drove the vast majority of the jobs created. The large retention projects occurred in: Whatcom (Intelco); Island (Nichols Brothers); Clark (US Army Reserve Barracks); and Snohomish (Esterline/Korry). With the economy reflecting limited recovery, figures for FY11 are expected to remain relatively flat.

Additionally, Commerce oversaw a reduced amount of capital funding sources (CERB) for the ADOs to leverage. The ADOs saw a slight uptick in projects from FY09, which was a very slow year for project development.  Projects in FY10,  from a historical comparative basis, tended to be small in scale and generally needed longer lead times because many had difficulty finding financing. Commerce’s federally funded loan programs transitioned to the Local Government unit.

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Budget Activity: BSD A163 – Economic DevelopmentPurpose: Provide contracting, fund management and loan repayment services in BSDPriority of Government: Improve the economic vitality of businesses and individuals

  • Agency Priority: Competitiveness
  • Analysis:
  • The number of jobs created and retained picked up this quarter. ADOs assisted in the retention of 642 jobs, representing 45% of the total jobs, and created 771new jobs. Among the creation of new jobs, 30 came from newly recruited companies, 147 came from start ups and 594 from expansion of existing companies.
  • Several large projects which have been in the works for several months came to fruition this quarter.

Note: 1,500 per quarter target extended thru FY12

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slide5

Budget Activity: BSD A163 – Economic DevelopmentPurpose: Provide contracting, fund management and loan repayment services in BSD Priority of Government: Improve the economic vitality of businesses and individuals

  • Agency Priority: Competitiveness
  • Analysis:
  • The private capital investment picked up in Q4. We are finally seeing investment from several WIA projects.
  • Project highlight
  • Spokane county:
    • Expansion- 3 projects, over $13M.
  • Kittitas County
    • Start-up - International hay exporting company, $3M.
    • Recruitment – Out of state grocery chain, $3.5M.
    • Clark County:
    • Retention - Frito Lay, $15M.
    • Cowlitz County:
    • Start-up - Bennu Glass, $65M.
  • Many smaller projects make up the remaining investment.

In Millions

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slide6

Fiscal Year 2012 Q1 – Q4 Statewide Economic Development Results

124

530

572

9

0

1

3

$557k

715

0

3

2

$100M

64

5

$26.4M

1

4

0

0

14

1

18

0

0

47k

3

1

11

4

6

0

3

0

$20k

1

$6.7M

231K

$5.3M

$1.2M

$15.8M

256

24

1,437

$75k

0

$1.9M

0

5

0

0

44

San Juan

۩5

۩0

Whatcom

PendOreille

Okanogan

$2.7M

660k

Ferry

Island

۩4

۩51

$2M

67

Skagit

1.3M

13

Stevens

17

75

$672k

3

16

$1.2M

94

۩5

Snohomish

Clallam

۩1

0

0

1

۩0

1 0

Clallam

۩1

۩0

175

Douglas

۩3

۩0

Kitsap

Douglas

1175K

Jefferson

۩5

$6k

150k

Spokane

Lincoln

Chelan

Jefferson

۩1

17

9

7

$70k

King

0

۩2

Mason

12

۩0

6

2

GraysHarbor

۩0

۩0

۩0

Grant

Kittitas

$59.7M

Adams

۩0

Whitman

$1.3M

100

۩0

Pierce

0

0

2

221

۩7

۩0

222

0

۩0

۩0

0

۩4

۩

0

Thurston

3

0

Pacific

۩0

$0

Franklin

۩5

0

Lewis

0

48

$4.2M

0

Yakima

6

۩1

32

Benton

Asotin

$65M

۩0

Cowlitz

0

Skamania

0

۩0

Wahkiakum

۩0

17

0 0

0

860K

۩0

2

84

Klickitat

۩1

۩0

WallaWalla

0 0

0

3

Columbia

Garfield

1

۩4

0

Clark

۩0

2

۩1

۩0

8

۩0

Local Associate Development Organization (ADO) Performance

State Economic Development Programs Results

Companies recruited, retained and expanded - 192

Completed 100% of contract goals

Completed 50 to 79% of contract goals

Private investment leveraged - $298M

Completed less than 50% of contract goals

Completed 80 – 99% of contract goals

Jobs created (including start-ups), retained & expanded – 4,931

۩

Small business start-ups –101

*Note: numbers are statewide totals

The ADO’s are accountable for annual performance. This chart

reflects ADO performance pro-rated against their annual goals

slide7

Budget Activity: BSD A163 – Economic DevelopmentPurpose: Provide contracting, fund management and loan repayment services in BSD Priority of Government: Improve the economic vitality of businesses and individuals

  • Agency Priority: Competitiveness
  • Analysis:
  • The number of leads generated remains well above target this quarter. With the economy picking up, staff is getting more inquiries. Requests are usually coming via email or phone calls but also as referral from partners and other organizations/entities.
  • Staff has also been participating in more proactive lead generation through ability to travel and attend conferences and events.
  • Leads can take anywhere from a few months to a few years to convert to a case/project. A project then needs to be cultivated, won, and worked at the local level before we see job and investment impact.
  • NOTE:
  • A lead is defined as a company with whom BSD has made contact and has expressed interest in locating in WA and/or doing business in WA. The conversion of a lead to a case is a function of the level of resources/assistance requested/expended. A lead does not always convert to a case, and a case does not always start as a lead.

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slide8

Budget Activity: BSD A163 – Economic DevelopmentPurpose: Provide contracting, fund management and loan repayment services in BSD Priority of Government: Improve the economic vitality of businesses and individuals

  • Agency Priority: Competitiveness
  • Analysis:
  • Business Development staff has been working on 15 new cases since the beginning of Q3FY12. The number of active cases is up to 66, almost a %16 increase compared to last quarter.
  • Staff is actively working on 28 recruitment projects that could potentially create more than 11,000 jobs and bring a minimum of $1.5B investment in the State.
  • Expansion projects represent at least 800 jobs and $504M investment. Retention could save more than 200 jobs and $60M worth of investment.
  • About 28% of the new cases are in the clean tech industry. The second biggest industry is general manufacturing(11%). Food processing and agriculture follow with 8% of all active cases.
  • The increase in projects continues to be motivated by the WIA money. We currently have 13 projects committed representing 2,180 jobs and $1.42M investment. We are working on reviewing 5 requests that will complete the $1.8M funds.
  • NOTE:
  • Cases are defined as a request for assistance to BSD Staff centered around a specific site location request and/or connection with state funds/resources. A case is when BSD staff is actively facilitating a project.

8

slide9

Budget Activity: A-167 Economic Development Business Loan ProgramsPurpose: Provide “gap” financing for business startups and expansionsPriority of Government:Improve the economic vitality of businesses and communities

Agency Priority:Create and retain jobs primarily in rural communities

  • Analysis:
  • With two forest product loans funded in the first three quarters of FY12, an estimated 44 jobs are projected to be created or retained.
  • New loans from 2007-2011 generated or retained an additional 824 jobs. An estimated 6,487 jobs were created and retained from 1986 to 2006 as a result of financing provided by the Business Loan Programs.
  • Costs per job for each loan fund (historical):
  • Rural Washington Loan Fund = $7,200
  • CDBG Float Loans = $23,100
  • Coastal Revolving Loan Fund (RLF) = $5,500
  • Forest Products RLF = $10,000
  • HUD Section 108 = $30,100
  • Jobs are projected by the applicant and counted at the time of loan disbursement.

9

slide10

Budget Activity: A-167 Economic Development Business Loan ProgramsPurpose: Provide “gap” financing for business startups and expansionsPriority of Government:Improve the economic vitality of businesses and communities

Agency Priority:Create and retain jobs primarily in rural communities

  • Analysis:
  • In Q4 of FY12, there were no new business loans made and a moratorium on new loans was enacted 7/1/2012.
  • Delinquent and non-performing loans comprise the majority of the portfolio.

10

slide11

Budget Activity: BSD A171 – Global Trade and Investment Services

  • Purpose: Diversify the state’s economy by increasing the sales of Washington products in overseas markets Priority of Government: Improve the economic vitality of business and individuals
  • Agency Priority: Competitiveness
  • Analysis:
  • Commerce assisted export sales in FY12 were $78.2 M, which supports 423 jobs.* This exceeded the annual WEI goal of $60 million.
  • Additional support has come from the SBA State Trade & Export Promotion (STEP) program, with an award to Washington State of $1.6 M in late September 2011, for small business assistance.
  • Governor’s Trade Mission to Ireland and UK in July is expected to generate several million dollars of new export sales over the next three years.
  • * This figure was arrived at using the U.S. Dept. of Commerce jobs multiplier of $185,000 in export sales equaling one job.

Export Sales Generated by Commerce and WSDA Clients

  • FY11 includes all four quarters of data for Commerce, but only six months for WSDA.
  • FY12 lists partial results from Commerce, as FY12 is still in progress. No data from WSDA.
  • Action Plan

11

slide12

Extended Analysis:

  • Washington STEP Grant ProposalThe Small Business Administration (SBA) State Trade Promotion Grant Program (STEP) is a new federal grant designed to help small and disadvantaged businesses increase exports. SBA announced awards in late September 2011. In the first year of the program Washington State received the third largest grant award at $1.6M. Commerce has submitted its proposal for the second grant year and expects an award of $1.4M for the STEP Program Year Two.
  • CERB Export Promotion Funding:
  • The Washington Community Economic Revitalization Board (CERB) awarded $3M in grants to six projects, in September 2010. Through the grants, the CERB board aims to increase the number of Washington businesses exporting to 10,500 by 2015. These grants are given through the state export initiative, which is designed to open additional export opportunities for Washington businesses and create jobs. The Governor identified the CERB Export Assistance funds as one component of the statewide strategy to achieve the several goals over the next five years.
  • Collaborate with WSDA on programs and training funded by CERB export grants.
    • Website www.waexports.com launched to provide information on grantee’s programs and upcoming activities.

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slide13

Extended Summary Analysis (cont.):

  • Export Working GroupThe Washington Export Working Group is jointly chaired by the Directors of the Department of Commerce and the Department of Agriculture, and includes key agencies and stakeholders involved in deliverables under the Washington State Export Initiative. The group meets on a quarterly basis in order to exchange information and provide cross-agency updates on the Export Initiative. The Working Group prepared a progress review of the Export Initiative’s first year, for Governor Chris Gregoire.
  • Washington Export Initiative (WEI):
  • In June 2010, Governor Gregoire launched the Washington Export Initiative in support of President Obama’s National Export Initiative. New goals under the Washington Export Initiative for the Washington State Department of Commerce and the Washington State Department of Agriculture to achieve by 2015:
    • Assist by 5,000 companies (Commerce: 4,000)
    • Deliver $600M in directly assisted export sales (Commerce: $300 M)
    • Increase the number of Washington businesses exporting to 10,500
  • WEI Results Achieved by Commerce FY11 & 12
    • Assisted 1090 Companies (CERB Grantees assisted an additional 1642 companies)
    • Achieved $225.7M in assisted export sales
    • Assisted 117 new to export companies (CERB Grantees assisted an additional 890 new to export companies)
  • Commerce is on track to meet the WEI goals, which is helping the states economic recovery by providing export driven jobs and export revenue to help offset slow markets in the US as a result of the recession. The state should continue its support for small businesses to increase exports as a result of these positive outcomes.
slide14

Budget Activity: BSD A171 – Global Trade and Investment Services

  • Purpose: Diversify the state’s economy by increasing the sales of Washington products in overseas markets Priority of Government:Improve the economic vitality of business and individuals
  • Agency Priority: Competitiveness
  • Analysis:
  • Commerce had 309 new requests for assistance in FY12 Q4.
  • A vacant Life Sciences business development position was filled in June 2012.
  • The STEP export voucher program generated a large amount of interest among small businesses, as did Governor’s Mission to the UK and Ireland.
  • STEP Grant / Marketing Outreach / Social Media: Increased membership to 146 on the new Commerce LinkedIn group, “Export Washington Network” to promote exporting among local companies.
  • Action Plan

14

slide15

Budget Activity: BSD A171 – Global Trade and Investment Services

  • Purpose: Diversify the state’s economy by increasing the sales of Washington products in overseas markets Priority of Government: Improve the economic vitality of business and individuals
  • Agency Priority: Competitiveness
  • Analysis:
  • Over $31M in export sales were reported in FY12 Q4 by clients as a result of Commerce assistance.
  • Export sales of over $25M for the previous six months were reported by the Export Finance Assistance Center of Washington in FY12 Q4.
  • Business matchmaking, foreign customs documentation , trade finance, and trade shows generated the largest return of sales results for FY12 Q4.
  • Total export assisted sales for FY 2012 were over $78M for the international trade program.
  • Company-reported sales results vary widely from quarter to quarter, and we rely on voluntary reporting by companies for our numbers.

Million

Note: Export sales generated with Commerce assistance, as reported by companies.

9/11/12 FY12 Q2 and Q3 data changes:

Q2: Data migration issue resulted in $2.58 million error. Error fixed

Q3: $3.5 million was already counted in Q1. Error fixed

  • Action Plan

15

slide17

Budget Activity: BSD A163 – Economic DevelopmentPurpose: Market Washington State as a premier business location to increase business recruitment, retention and expansion, specifically within leading industry sectors to promote job growth.Priority of Government: Improve the economic vitality of businesses and individuals

  • Agency Priority: Competitiveness
  • Analysis:
  • The ChooseWashington.com site had 17,831 visits with 39,959 pages viewed with 2.24 pages read per visit and an average of 2.37 minutes, indicating the content is still holding the interest to business and public.
  • The site attracts new and global visitors at 69.64% new visits and viewers in over 56 different languages reaching the international business market. Returning visitors comprise 30.30% of all visits which is a slight increase from last quarter.
  • The site is succeeding in attracting business /public worldwide with the U.S. leading at 16,547 visitors, 69.12% new, reading 2.25 pages per visit and spending 2.37 minutes; followed by Canada at 221 visitors with 77.38% new, reading 1.97 pages averaging 1:44 minutes. Visitors from India follow at (98) , South Korea (88) and U.K. (81).
  • The site has experienced a lack of resources, but has continued to hold steady in the ratings by focusing on the content of the site and continually updating.

Note: Targets increase FY12 Q1

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