entergy teamwork arkansas annual luncheon february 9, 2005 automotive site selection process

Entergy Teamwork ArkansasAnnualLuncheonFebruary 9, 2005

Automotive Site Selection Process

Entergy Teamwork ArkansasAnnualLuncheonFebruary 9, 2005

Automotive Site Selection ProcessPresented by Dr. Buzz Canup

Canup & Associates, Inc.

Presented by Dr. Buzz Canup

Canup & Associates, Inc.

PHASE I: MACRO ANALYSIS

PHASE 0: PRE-PROJECT

ANALYSIS

PHASE II: MICRO ANALYSIS

PHASE III: FINALNEGOTIATIONS

Location and Site Selection A SYSTEMATIC AND PROVEN PROCESS

EVERY ECONOMIC

DEVELOPMENT PROJECT IS

DRIVEN BY A “NEED!”

THE “NEED” ESTABLISHES

PROJECT CRITERIA

TWO TYPES OF PROJECT CRITERIA

“MUSTS”

AND

“WANTS”

“Must” Criteria

Criteria

1. Property Size

2. Rail Available

3. Airport - 1 hour

4. Water Available

5. Gas Available

Yes

Yes

No

No

Yes

• Are absolute for success• Can not be compromised

Go/No Go

Screen

Alternative

Eliminated

“WANT” CRITERIA•IMPORTANT!!! BUT NOT ABSOLUTE

•Willing to concede in one area to gain in another

Criteria

1. Labor Size

2. Operating Cost

3. Logistics Cost

4. Incentives

5. Competitor

Locations10 9 8 7 6 5 4 3 2 1

Most LeastImportant Important

Typical “Musts” for Assembly Plants

• Labor

• Competitor Location Avoidance

• Transportation

• Site & Infrastructure

• Air Quality Status

Typical “Wants” for Assembly Plants

• Recruitment & Training

• Acceptable Recurring Costs

• Acceptable Investment Costs

• Risk Minimization

• Competitive Incentives

The Cold Hard FactsAbout Site Location

Searches• DEFINE

• DELINEATE

•DISCRIMINATE

• Eliminate

Evaluating MEGA Project Sites

What Is the Objective?

Eliminate?

Define How to Make it Work?

Spend Whatever It Takes?

SITE CONSULTANT’S JOB:

FIGURE OUT WHY A SITE WILL NOT WORK

ECONOMIC DEVELOPER’S JOB:

FIGURE OUT HOW TO MAKE THE SITE WORK

Typical Site Factors

• Size, Configuration & Control

• Environmental & Geotechnical Conditions

• Utilities, Zoning & Neighboring Land Use

• Ingress & Egress

NISSAN & MISSISSIPPI

AN EXAMPLE

OF A

MEGA PROJECT SUCCESS STORY

NISSANNISSAN

$930 M Investment$930 M Investment

4,000 Jobs4,000 Jobs

1.5 M Sqft Facility1.5 M Sqft Facility

250,000 Vehicles/Year250,000 Vehicles/Year

MISSISSIPPIMISSISSIPPI

$295 M Investment$295 M Investment

InfrastructureInfrastructure

Pad Ready SitePad Ready Site

Custom IncentivesCustom Incentives

The CommitmentsThe CommitmentsPhase I Announcement Phase I Announcement November 9, 2000November 9, 2000

The CommitmentsThe CommitmentsPhase II-A AnnouncementPhase II-A AnnouncementJune 24, 2002June 24, 2002

NISSANNISSAN

$500 M Investment$500 M Investment

1,300 Jobs1,300 Jobs

1.0 M Sqft Addition1.0 M Sqft Addition

150,000 Vehicles/Year150,000 Vehicles/Year

MISSISSIPPIMISSISSIPPI

$68.5 M Investment$68.5 M Investment

Infrastructure UpgradesInfrastructure Upgrades

Site Development GrantSite Development Grant

Extended IncentivesExtended Incentives

Total CommitmentsTotal CommitmentsPhase I & II-APhase I & II-A

NISSANNISSAN$1.43 Billion Investment$1.43 Billion Investment

5,300 Jobs5,300 Jobs

2.5 M Sqft Facilities2.5 M Sqft Facilities

400,000 Vehicles/Year400,000 Vehicles/Year

MISSISSIPPIMISSISSIPPI$363.5 M State Investment$363.5 M State Investment

$ 24.6 M Federal Highway Funds$ 24.6 M Federal Highway Funds

$ 17.0 M Federal Highway Funds$ 17.0 M Federal Highway Funds

$ 20.0$ 20.0 M County Investment M County Investment

$415.1 M Total$415.1 M Total

Mississippi Investments by CategoryMississippi Investments by Category

Category Phase I Phase II-B TotalsCategory Phase I Phase II-B Totals

Site & R-O-W AcquisitionSite & R-O-W Acquisition $40.0 $40.0 $0.0 $0.0 $40.0$40.0

Site DevelopmentSite Development $40.0 $40.0 $15.0 $15.0 $55.0$55.0

Roads & HighwaysRoads & Highways $30.0 $30.0 $2.0 $2.0 $32.0$32.0

Water, Sewer, Gas Pre-treatment Water, Sewer, Gas Pre-treatment $42.0 $42.0 $18.0 $18.0 $60.0$60.0

Transportation Cost Off-setTransportation Cost Off-set $28.0 $28.0 $10.0 $10.0 $38.0$38.0

Recruit & TrainingRecruit & Training $80.0 $80.0 $23.5 $23.5 $103.5$103.5

University – CAVSUniversity – CAVS $28.0 $28.0 $0.0 $0.0 $28.0$28.0

Advertising & MarketingAdvertising & Marketing $5.0$5.0 $0.0 $0.0 $5.0$5.0

Administration & MiscellaneousAdministration & Miscellaneous $2.0 $2.0 $0.0 $0.0 $2.0$2.0

TotalsTotals $295.0 $295.0 $68.5 $68.5 $363.5$363.5

Federal Highway FundsFederal Highway Funds $24.6 $24.6 $17.0 $17.0 $41.6$41.6

County BondsCounty Bonds $20.0 $20.0 $0.0 $0.0 $20.0$20.0 Grand TotalsGrand Totals $339.6 $339.6 $85.5 $85.5 $415.1$415.1

IMPACT OF NISSAN ON MISSISSIPPI2001 - 2025

C umul ati ve A dj us ted (Futur e V al ue) P ayout vs . T ax C ol l ec ti ons

$ -

$ 200, 000, 000

$ 400, 000, 000

$ 600, 000, 000

$ 800, 000, 000

$ 1 , 000, 000, 000

$ 1 , 200, 000, 000

2001 2004 2007 201 0 201 3 201 6 201 9 2022 2025

ADJ USTED ACCUMUL. PAYOUT COLLECTED TAXES

Break-Even Point

2007

NISSAN PHASE IBREAK EVEN

A break-even point during 2007…when revenues of the projectexceed cost to the State

A break-even point during 2007…when revenues of the projectexceed cost to the State

$$

TOTAL TAXES TO MISSISSIPPI

2005 $ 63,390,040

2010 $258,971,506

2020 $727,629,412

By 2025, a total of nearly $1 billion in quantifiable taxes will have been contributed to the state treasury by Nissan Phase I.

NISSAN PHASE IREVENUES

Questions&

Answers

Questions&

Answers