Economic Development

Report – Regional Advanced Manufacturing Strategy Holds Promise for American South

The Southern Governors’ Association released a report that says collaborative implementation of a regional advanced manufacturing strategy in the American South could help the region in realizing its economic potential.

Advanced Manufacturing in the American South

Advanced Manufacturing in the American South (photo – mapi.net)

The SGA had commissioned the Manufacturers Alliance for Productivity and Innovation (MAPI) to do an economic analysis of a regional approach for supporting advanced manufacturing.

MAPI’s senior economist Cliff Waldman and co-authors Matthew N. Murray and Howard H. Baker Jr. undertook a study of seven states (Tennessee, the Carolinas, Arkansas, Alabama, Georgia and Kentucky) as a representative sample of the 16 states and two territories that are included in the SGA membership.

The report they produced, titled “Advanced Manufacturing in the American South: An Economic Analysis Supporting Regional Development” includes the following key findings:-

- A cluster strategy is suggested as the appropriate framework for nurturing the evolution of the American South’s advanced manufacturing sector;

- Investments for developing science and technical education are suggested to help the region overcome labor force gaps and innovation deficits;

- Advanced manufacturing has to be considered in the larger context of regional economic development needs such as infrastructure, R&D, and technology adoption.

- The success of the American South in promoting a low-cost strategy of economic and manufacturing advancement must be supplemented by investments to incentivize, value-added in the production process, an element of business competitiveness.

Waldman said that if the Southern states seriously considered implementing these recommendations, they would find that acting together as a region would generate far greater benefits to each state’s individual economy than if they acted alone.

The report was released by Kentucky Governor and 2013 SGA Chairman Steve Beshear during a series of weekend meetings of the Southern governors with state and federal officials, industry leaders, educators and researchers on the policy aspects of manufacturing.

Gov. Beshear said that for years, the states in the American South had competed against each other. He said that this is now a new era where the southern states are not only competing with each other and other states in the U.S., but also with the rest of the world.

He said they can compete better if the region comes together on advanced manufacturing and presents a united front, and the MAPI report could be used a tool to begin this process.

In addition to releasing the report, Gov. Beshear also announced a $400,613 grant provided to the SGA by the Atlanta office of the U.S. Economic Development Administration (EDA). This grant will be used by the SGA to establish the “Advanced Manufacturing in the American South Partnership.”

The aforementioned partnership will be a collaborative effort between educational institutions and public and private sector leaders for developing regional strategies to support manufacturing job creation and innovation.

Read the full MAPI report on advanced manufacturing in the American South – Download (pdf)

Zappos Opens New Corporate Campus in Downtown Las Vegas

Zappos officially became a corporate presence in Downtown Las Vegas, Nevada with the grand opening of its new campus built on what was formerly the City Hall.

Zappos opening in Downtown Las Vegas

Zappos opening in Downtown Las Vegas (photo – City of Las Vegas)

Zappos moved in the first lot of 200 employees from its existing headquarters in Henderson, NV.

The online retailer, which is now an Amazon company after having been acquired for $1.2 billion in 2009, had committed to relocating 1,200 employees to the new campus.

They actually plan to relocate around 1,400 Zappos employees over the next 40 days. The new space has been built to house 2,000 employees.

The Resort Gaming Group (RGG) purchased the City Hall and surrounding property from the City of Las Vegas and rebuilt the space after entering into a lease agreement with Zappos.com, Inc.

The extensive $40 million renovation and redesign will allow the 40-year old building to seek LEED Gold certification from the U.S. Green Building Council for sustainable design features and green construction initiatives.

The relocation of Zappos with its 1,400 employees is expected to have an impact of more than $336.6 million. A report by RCG Economics on the economic impact of the project estimated that the Zappos’ headquarters would bring $126.3 million in employee wages and benefits.

Also, it changes the property status from a tax-exempt value of $33 million to $64.5 million which is non-exempted. This means the City of Las Vegas will be collecting approximately $395,900 in additional annual property taxes. Not to mention the property purchase price of $18 million it received from RGG.

The proceeds from the sale and the new taxes generated are being used by the City to finance the cost of a new City Hall, which is adding to the momentum of a downtown revitalization plan for creating thousands of jobs and attracting billions in private investment to Downtown Las Vegas and Nevada.

The Zappos relocation is the core component of the Downtown Project, funded largely through a $350 million commitment by Zappos CEO Tony Hsieh.

The project is aimed at transforming Downtown Las Vegas with a $200 million investment in real estate, along with $50 million each for small businesses and education, plus another $50 million for tech startups through the VegasTech Fund.

Conditional Veto Advances New Jersey Economic Opportunity Act

Gov. Chris Christie issued a conditional veto of the New Jersey Economic Opportunity Act of 2013 (AB 3680), and sent it back to the state legislature with recommendations for modifications.

NJ comeback

NJ comeback (photo – state.nj.us)

The bill revamps the state’s incentive programs available for economic development.

If it becomes law, AB 3680 will consolidate and expand the Grow New Jersey (“GrowNJ”) and Economic Redevelopment and Growth (“ERG”) tax incentive programs.

It also phases out three existing programs, including the Business Employment Incentive, Business Retention and Relocation Assistance Grant, and the Urban Transit Hub Tax Credit programs.

For 2012, the five existing programs together had awarded or spent $1 billion. It is estimated that New Jersey will be able to provide more incentives once this bill is passed as compared to previous years.

One of the critical amendments included in the bill is a provision that will help New Jersey retain automobile manufacturers such as Subaru which have their U.S. headquarters in the state.

The bill redefines what New Jersey considers to be a mega-project eligible for additional corporate tax credits. The language used in the bill is very specific, and says a mega-project also means a project “in a priority area housing the United States headquarters and related facilities of an automobile manufacturer…”

It is restricted to NJ-based automobile manufacturers that have made a $20 million investment and have more than 250 full-time employees, or have more than 1,000 full-time employees.

Subaru, which is headquartered in Cherry Hill, NJ, has been looking around at other locations including Philadelphia, Pennsylvania. Apart from Subaru, the bill will also benefit other large automotive industry manufacturers such as Montvale-based Mercedes-Benz, Woodcliff Lake-based BMW and Rockleigh-based Volvo that have their U.S. or North American headquarters in New Jersey.

AB 3680 had been sent to the Governor’s desk after being approved by the NJ Assembly back in May 20, 2013, and then by the NJ Senate on Aug 19, 2013.

The Governor’s veto in this case is actually a sign of progress. Legislators knew and expected Gov. Christie to veto the bill because they had been unable to sort out a few key issues in negotiations, and left it to the Governor to remove the disputed items from the bill.

One of the vetoed items is a requirement that businesses getting tax breaks must offer prevailing wages for construction projects. Another item vetoed was a tax credit for hospital redevelopment projects.

The NJ Assembly is meeting today to concur with the required changes, and the Senate is expected to consider it later this week. Once the legislature approves the modified bill and sends it back to the Governor, it will be signed into law.

Gov. Christie issued a statement saying that by modernizing and improving economic development programs, New Jersey was sending a powerful message to the private sector that the state was open for business. He said he looked forward to swiftly signing the bill into law.

Colorado Kicks Off Advanced Industries Accelerator Grants Program

The Colorado Office of Economic Development and International Trade (OEDIT) announced that it is now accepting applications for the first round of grants for the Advanced Industries Accelerator Programs.

The advanced industries in Colorado that will receive funding and support under the AI Accelerator Programs are advanced manufacturing; energy and natural resources including clean tech; biosciences; electronics; technology and information; and infrastructure engineering.

Colorado Advanced Industries Accelerator Grants Program

Colorado Advanced Industries Accelerator Grants Program (photo – advancecolorado.com)

Together, these industries account for:-

- 30 percent of Colorado’s sales tax revenue;

- 520,300 high-paying jobs and hundreds of thousands of ancillary jobs; and

- 35 percent of the state’s exports.

The AI Accelerator Programs, housed under OEDIT, were created this year through legislation (HB 13-1001 and HB 13-1193) approved by the Colorado Legislature.

To support these industries through various growth stages from proof-of-concept to exports, the AI Accelerator Programs include four different types of grants and two global business programs.

Proof-of-Concept Grant – These grants, capped at a maximum of $150,000, are available for applied research projects at Colorado research institutions.

Early-Stage Capital & Retention Grant – These grants, capped at a maximum of $250,000, are intended for companies that are headquartered in Colorado or have at least half their employees located within the state. In order to be eligible, the company must have less than $10 million in annual revenues and must have raised less than $20 million from investors.

Infrastructure Funding – These grants are capped at $500,000, and preference will be given to projects that accelerate economic growth across multiple industries; originate from non-profit research institutions; and focus on development programs that address the AI workforce skills needed for facilitating commercialization of products.

Export Grant Program – This is a maximum grant of $15,000 for businesses that are either new to exporting or expanding into new markets. The grants may be used to fund activities such as export regulation compliance, international certifications, producing international marketing materials, and attending international trade shows.

Ken Lund, executive director of OEDIT, said these grants will help Colorado’s advanced industries convert ideas into jobs, enable the state to retain and grow companies they had helped create, and would build a foundation that helps companies succeed.

Apart from the grant funding opportunities, OEDIT is also offering two global business programs. One of these programs provides participants with access to a global network of consultants who will connect AIs in Colorado to global opportunities, help them understand country regulations, gain local knowledge, and open doors to export success.

The second one is an export training program under which OEDIT will provide training to help Colorado businesses learn the fundamentals of international marketing and exporting specifically related to advanced industries.

To find out more or apply for one of these AI Accelerator Programs, visit advancecolorado.com.

U.S. DOT Announces $474M TIGER Grants for 52 Projects in 37 States

The U.S. Department of Transportation has announced their 2013 list of Transportation Investment Generating Economic Recovery (TIGER) grant recipients. This year’s list includes 52 transportation projects in 37 states that will receive a combined $474 million in TIGER grants.

TIGER Grants

TIGER Grants (photo – dot.gov)

TIGER is a competitive grant program, and one of the few federal funding sources for large multi-modal projects that find it hard to qualify for any other federal funding opportunities.

TIGER grants enable recipients to leverage additional investments from the state and local governments, private investors, transit agencies and metropolitan planning organizations.

The 52 projects that have been awarded $474 million in 2013 have raised a combined $1.8 billion.

The demand for TIGER grants far exceeds the allocations. DOT selected the 52 projects out of 585 applications sent in from all over the country asking for a combined $9 billion.

This year’s biggest TIGER grant of $20 million was awarded to the Kansas City Downtown Streetcar Project. This is a $100 million plan for a two-mile streetcar that started off with no local funding and a TIGER grant application that was rejected last year.

Then they established a downtown transportation district, got voters to approve a property tax to fulfill the local funding component requirement, and started putting in place a $73 million bond issue to raise the remaining funds. As luck would have it, a lawsuit delayed the bond issue, and now the city’s debt won’t be so high because the TIGER grant covers 20 percent of the project cost.

U.S. Senator for Missouri Claire McCaskill said this was fantastic news for businesses and families in Kansas City, as the streetcar project would encourage construction, housing and business development, which means more jobs for the region.

Kansas City Mayor Sly James said it was a huge step forward in Kansas City’s continued renaissance.

Another TIGER grant recipient was Capital Metro in Austin, Texas, which was awarded $11.3 million for adding MetroRail capacity, increasing the speed at which trains operate, and for state-of-good- repair projects.

U.S. Transportation Secretary Anthony Foxx said these TIGER projects offer the best argument to be made for transportation infrastructure investments.

Foxx said projects such as Austin’s efforts for improving passenger and freight rail network ensure that future generations will have a strong transportation system. He added that these projects repair existing infrastructure, connect people to new opportunities and jobs, and contribute towards the nation’s economic growth.

The $474 million allocated this year is the fifth round of TIGER grants. In these five years, the TIGER program has handed out a total of $3.6 billion in support of 270 projects across all 50 states, the District of Columbia and Puerto Rico.

You can see the full list of 2013 TIGER grant recipients on DOT.gov.

Michigan Creates New Automotive Industry Office

Michigan has created a new Automotive Industry Office within the Michigan Economic Development Corp (MEDC).

Michigan Auto Industry

Michigan Auto Industry (photo – michiganbusiness.org)

The Automotive Industry Office will be headed up by Nigel J. Francis, who has been named as automotive adviser.

The office and Francis will provide support and collaborate with the state’s business attraction specialists and assist in the effort to define Michigan as a global center for the automotive industry.

Francis has almost three decades of experience as an executive in the global automotive industry. He has previously worked as CTO and COO for Trexa LLC, and before that as an executive vice president at the now defunct startup Bright Automotive where he led the development of hybrid and all EV programs.

His most recent position was with Tata Technologies in Troy and Novi, MI, where he led program management and advanced engineering of new vehicles for the emerging and European markets.

Michigan Gov. Rick Snyder said that Nigel Francis would provide leadership and expertise that will be instrumental for implementation of a strategic plan for driving the state’s automotive industry forward.

Francis himself said that it was a privilege and an honor to serve in this role, especially since Michigan’s automotive industry was now regaining its global competitiveness.

He said he was passionate about stimulating jobs and business in the auto industry, and looked forward to working together with academia and the automotive community for ensuring growth in Michigan’s share of the global automotive business.

MEDC President and CEO Michael A. Finney said that as the state develops strategies for growing business, they recognize the need to have a way for reaching senior automotive industry executives. Finney said it was critical to bring on someone such as Nigel Francis who has large corporate and entrepreneurial experience, as well as industry specific and global cultural awareness.

Michigan has an estimated 21 percent share of the projected 2013 U.S. vehicle production volume of 15.3 million.  New vehicle spending in the U.S. has ballooned 48 percent ($500 billion) since 2009, and Michigan’s automotive employment has followed suit, growing by 31 percent in the same period.

The Big Three – GM, Ford and Chrysler, have all posted double-digit growth in their July 2013 sales as compared to July 2012. Between January and May 2013, auto companies in Michigan have made announcements of $760 million in new investments and created 6,000 jobs.

Michigan’s supplier network includes 61 out of the top 100 auto suppliers in North America, and the state gets 70 percent of the auto industry’s research and development spending.

2013 Top Utilities for Economic Development

The September issue of Site Selection magazine includes their annual list of the top utilities for economic development for 2013.

Utilities and economic development

Utilities and economic development (Photo – Duke Energy)

Listed alphabetically, the utilities that made the cut this year are:-

Alabama Power, Birmingham, AL

American Electric Power, Columbus, OH

CenterPoint Energy, Houston, TX

Duke Energy, Charlotte, NC

Entergy, New Orleans, LA

FirstEnergy, Akron, OH

Florida Power & Light, Juno Beach, FL

Georgia Power, Atlanta, GA

LG&E/KU Energy (PPL), Louisville, KY

Tennessee Valley Authority, Nashville, TN

Apart from the utility’s own facility investments and job creating infrastructure, other factors taken into account by the magazine to rate utilities include:-

- Corporate end-user activity in the past year in the utility’s service area;

- Innovative programs and incentives for businesses;

- Website tools and data; and

- Renewable energy and energy efficiency programs.

Adam Bruns, managing editor of Site Selection, said this year’s top utilities know how to help communities, projects and companies hit their growth milestones, and added that they all know it takes much more than special rates to get there.

Charlotte, North Carolina-based Duke Energy’s economic development team and its collaboration with local and state partners is credited with delivering more than $3.6 billion in capital investments and 13,000 new jobs in 2012 across its six-state service area.

Stu Heishman, Duke Energy’s vice president of economic and business development, said their merger with Progress Energy last year created what is now the largest investor-owned electric utility in the U.S.

Heishman said they have aggressively formed an enterprise-wide strategy around economic development, with a focus on proactive business development and site readiness.

TVA, another perennial utility on the list, found itself named as a top utility by Site Selection for the eighth successive year.

The magazine credits TVA’s work in fiscal year 2012 with local power companies and its state, regional and community partners across its seven-state service area for helping create and retain more than 48,000 jobs and leverage capital investment worth $5.9 billion.

John Bradley, TVA senior vice president of Economic Development, said it was an honor to receive this prestigious award which recognizes their economic development team’s high performance and dedication to making the Tennessee Valley Authority region a more prosperous and better place to live and work.

For more details about what each of these utilities did in terms of economic development last year to merit mention, read the article on siteselection.com.   

Economy on the Rebound: How Economic Development Helps Us All

Media outlets and politicians talk about economic growth as if it’s the Holy Grail, but most of us are left wondering how macroeconomic factors influence our daily lives. The short answer is that personal economic successes (jobs, savings, good credit) are usually the result of some greater economic development. A small business owner wouldn’t survive without the housing development down the street. A student from a low-income family couldn’t go to college without money from the successful nonprofit. Major economic development trickles down to affect almost every dollar we spend.

When you hear about economic development initiatives in your community, take heart. The positive impact has a snowball effect.

More Jobs

Perhaps the most important consequence of economic development is a boost to employment. When new businesses open in your area, so do new job opportunities. Small businesses are particularly effective engines for this growth. Sba.gov reports that small businesses are responsible for two out of every three new jobs in the U.S. each year. More employment means more money flowing into the the community. Economic growth builds on itself.

CNN reported on one of many studies that found that unemployment correlates with depression. The more hope people have as they apply for jobs online and in person, the better of community morale will be.

Fewer Taxes

Economic growth also means fewer burdens on taxpayers to keep things in order. As unemployment falls, fewer depend on welfare to make ends meet. If no one was unemployed, we could get rid of temporary welfare benefits altogether and reduce the tax rate. Low taxes mean more money to buy products, start business ventures and invest. When more people have more money, things get better economically.

More Progress

Tech start-up Melon wanted to bring its EEG headband to the masses, but didn’t have the funds to do so. Enter Kickstarter.com, a crowdfunding platform that helped Melon raise more than $200,000. Melon expects to release its focus-boosting accessory later this year. It’s a prime example of one of the greatest benefits of economic development: progress. As fresh businesses sprout, they build on what’s been done and create the world of tomorrow. It’s not just in the technology industry either. New businesses are coming up with creative ways to produce food, build roads, teach kids and save lives.

More Hope

If we’ve learned anything from the recent recession, it’s that economic vitality is one of the biggest contributors to our morale. Economic development, whether it’s new businesses or decreased unemployment, offers a communal hope that things are getting better. It’s the reason we celebrate when we see even the smallest positive financial news. Most of us have struggled at one point in our lives, so we can relate to the stress of financial struggles. Economic development is a sign that better days are on the way.

IEDC Brings ‘A State That Works’ Message to Times Square

The Indiana Economic Development Corporation (IEDC) has brought its “A State That Works” marketing campaign to New York through a giant screen in Times Square, where it can be seen by 1.5 million people every day for the rest of the year.

IEDC ads in Times Squar

IEDC ads in Times Square (photo – astatethatworks.com)

IEDC’s two 15-second ads can be seen twice an hour on the 26-foot x 20-foot CBS Super Screen at 42nd St. between 7th and 8th Avenues.

The two advertisements are complimentary. One is called “A State of Innovators and Makers,” and says Indiana is a state of thinkers, innovators and makers, followed by a slogan that says “We’re not only a workforce, but a force that works.”

The other one is called “Crossroads of What’s Next,” and simply says that Indiana is “At the Crossroads of What’s Possible…And What’s Next.”

Indiana Secretary of Commerce Victor Smith said that the IEDC was aiming to increase brand awareness by maximizing marketing opportunities for catching corporate decision makers’ attention in states such as New York.

Smith’s statement also included plenty of analogies comparing Indiana to Broadway and the bright lights of Times Square. He said Indiana was taking center stage and the state’s business climate shines brighter than any Broadway marquee.

Then there was the bit about Indiana’s low-tax environment glowing vividly with a triple-A credit rating, America’s best skilled workforce and all the ingredients needed for growing a world-class business.

Smith said that the more than 1.5 million visitors in New York City who pass through the intersection every day would have the opportunity to discover for themselves the many advantages of doing business in Indiana.

There’s also a social element to it, because the IEDC is encouraging Indiana residents visiting New York to have their pictures taken in front of the CBS Super Screen when the IEDC ads are running and post the photos to the campaign’s Facebook page or on Twitter using the hashtag #AStateThatWorks.

The creatives for the ad campaign were developed using in-house talent and local vendors in Indiana.

The marketing campaign and website (astatethatworks.com) for it was first launched by IEDC earlier this year, targeting audiences in California, Illinois, Massachusetts, New Jersey and New York through search engines and print and digital publications. They also put up signage at Indianapolis International Airport and bus shelters.

At that time, Smith had explained that as Indiana separates itself from the competition, it was important to communicate to corporate decision makers around the world all the reasons the state’s pro-growth climate works for companies’ success and growth.

New York Announces Partnerships for Statewide P-TECH Program

New York State announced the 16 winners of a competition held to choose public-private partnerships that will help expand the Pathways in Technology Early College High School (P-TECH) Program on a statewide level.

P-TECH

P-TECH (photo – ptechnyc.org)

The 16 NYS P-TECH partnerships will help prepare nearly 6,000 high school students for high-skill jobs in the manufacturing, technology and healthcare sectors.

P-TECH is an initiative developed by IBM and the City University of New York (CUNY), in partnership with the City of New York.

The idea was to pair each P-TECH student with an IBM mentor and provide a high-school diploma and an associate in applied science degree from CUNY-City Tech. The education, including tuition, books and other fees, would be entirely free for students and parents.

P-TECH NYC was launched on September 8, 2011 with 104 students. It has since gained both students and fame, even getting a mention from President Obama in his 2013 State of the Union address for the way the program enhances American competitiveness and prepares students for a 21st century economy.

The P-TECH “playbook” has been replicated in four schools in Chicago, Illinois. IBM is the industry partner for the Sarah E. Goode STEM Academy, while Cisco, Motorola and Verizon have teamed up with one school each.

However, New York was the first state to announce earlier this year that P-TECH would be expanded as a statewide program, offered in at least one school in each of the state’s ten economic development regions.

New York Gov. Andrew M. Cuomo said they were making sure that students are better prepared for life after their graduation by linking skills taught in the classroom with the requirements of 21st century employers. He said the public-private partnerships are a model for success for both students and employers, and for the state’s regional economies.

The NYS P-TECH partnerships will provide students with a high-school diploma, an associate degree and the chance to be first in line for jobs with the participating industry partner.

For example, the public-private partnership in New York City will prepare students for an IT career. The partnership includes CUNY and the New York City Department of Education, with SAP as the industry partner.

Mohawk Valley’s public-private partnership will prepare students for a manufacturing career. The partnership includes a regional K-12 consortium, Fulton-Montgomery Community College for higher education, and 16 regional companies as industry partners.

The Southern Tier partnership is going to prepare students for careers in both manufacturing and health-tech. The partnership consists of a K-12 regional consortium led by Binghamton City School District, with Broome Community College for higher education.

Southern Tier industry partners include Architect & Land Surveyors, P.C.; Bothar Construction; Delta Engineers; Lockheed Martin MS2; Our Lady of Lourdes Memorial Hospital, Inc.; Rockwell-Collins; and United Health Services Hospitals, Inc.

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