positioning missouri for new business investment

Positioning Missouri for New Business Investment

Presented to:Washington University – St. Louis

Political Economy of Multinational EnterprisesOctober 5, 2010

Christopher Chung, Chief Executive OfficerMissouri Partnership

Discussion Topics

What is the Missouri Partnership?

How do we market Missouri for new business investment?

How do companies approach the investment decision process?

What are our challenges?

“Lightning Round”

About the Partnership

• Mission: To promote Missouri for new business investment, with the goal of recruiting new industry and jobs to the state

• Public-private, non-profit corporation supported jointly by the Missouri Department of Economic Development and the Hawthorn Foundation

• 12-member Board of Directors drawn from various industries across the state

• 10-member staff focused on business recruitment (sales) and marketing

About the Partnership

• Key objectives:Deliver the “message” about Missouri’s

positive business attributesRaise awareness and visibility of Missouri as

a place to do businessBuild relationships with decision-makers and

decision-influencersGenerate investment leads (i.e. Get Missouri

“on the list”)Work with state, local, and private-sector

partners to win the deal for MissouriProvide feedback for “product development”

About the Partnership

• Rationale:Need for consistency in marketing effortsNeed for continuity in sales relationshipsEngagement of private-sector resourcesEffectiveness of public-private partnership

model Enterprise Florida Economic Development Corp. of Utah Ohio Business Development Coalition Econ. Dev. Partnership of Alabama

About the Partnership

• Economic development is:Retention and expansion of existing

businessGrowth of business start-upsRecruitment/attraction of new businesses

• Our role is to:Market Missouri with the goal of new

business recruitment

“Get Missouri in the game, and then win the game.”

Our Marketing Strategy

The “Air Campaign”• Goal #1: Raise the image of Missouri as a

business location• Goal #2: Shape a positive perception of

Missouri as a place to do business• Achieved through:

Branding – “Real People. Real Opportunity.”AdvertisingEarned mediaDigital (web, social media, SEO)Thought leadership

Our Marketing Strategy

The “Air Campaign”• Key elements include:

Focus on relevant industry assetsPeer-to-peer testimony involving successful

Missouri businessesHighlighting improvements to the state’s

business climate, positive rankings or acknowledgments for Missouri, and recent business recruitment successes

Missouri “Business or Pleasure?” ad in Southwest Airlines’ in-flight Spirit magazine (April 2010)

Missouri “Business or Pleasure?” ad in Southwest Airlines’ in-flight Spirit magazine (May 2010)

Missouri “Business or Pleasure?” ad in Southwest Airlines’ in-flight Spirit magazine (June 2010)

Missouri “Business or Pleasure?” ad in Southwest Airlines’ in-flight Spirit magazine (September 2010)

Missouri “Real Story” ad in Chicago market editions of Forbes, Fortune, Fast Company, Inc., Money, and Business Week (March 2010)

Missouri “Real Story” ad in Atlanta market editions of Forbes, Fortune, Fast Company, Inc., Money, and Business Week (April 2010)

Missouri “Real Story” ad in Atlanta market editions of Forbes, Fortune, Fast Company, Inc., Money, and Business Week (May 2010)

Missouri “Real Story” ad in Chicago market editions of Forbes, Fortune, Fast Company, Inc., Money, and Business Week (September 2010)

“Welcome to Missouri” ad (featuring Unisys) in Washington D.C. market editions of Forbes, Fortune, Fast Company, Inc., Money, and Business Week (September 2010)

Missouri “Real Renewal” advertorial supplement in North American Clean Energy (March 2010)

Missouri back-office advertorial supplement in Business Facilities (May 2010)

Missouri “Real Story” ad in Next Generation Pharma (February 2010)

Our Marketing Strategy

The “Ground Campaign”• Goal #1: Develop and manage

relationships with decision-makers and decision-influencers

• Goal #2: Initiate face-to-face conversations regarding potential expansion/relocation plans

• Achieved through:Conference sponsorshipsTrade show exhibitionsConsultant outreach and hospitality events

Our Marketing Strategy

The “Ground Campaign”• Key elements include:

Focus on corporate real estate directors, site location consultants, international trade commissioners, and other decision influencers

Cooperative approach with partner organizations

Consistent use of Missouri business brand

Missouri trade show exhibition booth at Paris Air Show (2009)

Missouri trade show exhibition booth at China Overseas Investment Fair (2009)

Missouri exhibition pavilion at WINDPOWER 2010 in Dallas

Governor Nixon with the Missouri team at WINDPOWER 2010 in Dallas

The Investment Decision

• The investment decision process:Win the right to compete

Achieved through marketing effortWin the competition

Achieved through recruitment/sales effort

Win the repeat competition Achieved through retention/expansion

effort

The Investment Decision

• Top 10 factors in investment decision: Cost of labor (1st) Highway accessibility (2nd) Tax exemptions (3rd) Energy availability and costs(4th) Corporate tax rate (5th) Availability of skilled labor (6th) Occupancy and construction costs (7th) State and local incentives (8th) Availability of internet/telecom (9th) Inbound/outbound shipping costs (10th)

Source: Area Development 2009-10 Corporate Survey

The Investment Decision

• Other relevant factors in investment decision: Low union profile (11th) Availability of land (T-12th) Availability of buildings (T-12th) Right-to-work state (14th) Proximity to major markets (15th) “Fast-track” permitting (16th) Environmental regulations (17th) Availability of financing (18th) Proximity to suppliers (19th) Employee training programs (20th)

Source: Area Development 2009-10 Corporate Survey

The Investment Decision

• Other relevant factors in investment decision:Raw materials availability (21st)Availability of unskilled labor (22nd)Accessibility to major airport (23rd)Proximity to technical university (24th)Railroad service (25th)Waterway/ocean port access (26th)

Source: Area Development 2009-10 Corporate Survey

The Investment Decision

• What we can control…Highway accessibility (2nd)Tax exemptions (3rd)Energy availability and costs (4th)Corporate tax rate (5th)\Availability of skilled labor (6th)State and local incentives (8th)Availability of internet/telecom (9th)

These competitiveness factors can be influenced by state and local public policy decisions.

The Investment Decision

• And what we can’t…Cost of labor (1st)Occupancy/construction costs (7th) Inbound/outbound shipping costs (10th)

These competitiveness factors are unlikely to be influenced by state and local public policy decisions.

The Investment Decision

• Factors cited when Missouri is eliminated from consideration for new investment projects: Insufficient real estate “product” Uncompetitive incentive package Total business costs Less-than-ideal interstate access Generation mix for local utility provider

What about Missouri’s right-to-work status?

A Word on Incentives

“Incentives make a good site better. They don’t make a bad site, good.”

- Anonymous

A Word on Incentives

• Typically a tie-breaker late in the decision-making processFinalist options are similar in other location

factors (e.g. workforce, logistics costs, etc.)Company becomes increasingly price-

sensitive Incentives are one of the few cost variables

within control of the state and local government

Incentives negotiation and consulting services as a fast-growing specialization

A Word on Incentives

• Incentives remain an integral part of a state’s competitive toolbox even after “reform” Ohio example

Comprehensive business tax reform in 2005

Five job-creation tax credits remain in place

Texas example

No personal income tax

Frequently rated one of the “best” states for business

Still maintains a $300 million “deal-closing” fund

A Word on Incentives

• How does Missouri stack up? Job creation tax credits are well-received

(due to ability to sell, transfer, or have refunded)

Training programs are an overall positive

Limited availability for infrastructure and site development funding

Limited access to capital for fixed-asset investment (and early-stage companies)

No “deal-closing fund”

No industry-focused incentive programs

Our Challenges

• Product awarenessRaising the visibility of Missouri and its

economic development potentialShaping a positive perception of Missouri as

a place to do business Identifying unique assets to market

• Product development Investments in education and infrastructureBusiness climate improvements (e.g.

incentive toolbox, regulatory process)Targeting growth industries that complement

Missouri’s natural strengths and advantages

“Lightning Round” / Q&A

What are Missouri’s targeted industry sectors?

U.S. Wind Energy Resource Map

Blades

Nacelle

Tower

Wind turbine in Northwest Missouri

U.S. Solar Energy Resource Map

U.S. Biomass Resource Map

What recent successes has Missouri seen in recruiting new business investment?

IBM executive Tim Shaughnessy at the company’s announcement ceremony in Columbia for “Project Tiger” (May 2010)

Unisys executives join the Governor and Mayor of St. Louis at the company’s announcement ceremony in St. Louis for “Project Remote” (June 2010)

What states and countries does Missouri compete most

frequently with?

Overall Rankings (1st = Best State for Business)Source: CNBC “Top States for Business” 2009

Nebraska

Kansas

OklahomaArkansas

Tennessee

Kentucky

IllinoisIowa

Missouri

From the 2009 China Overseas Investment Fair in Beijing

What is the Missouri Partnership’s interaction with elected officials, and how important are those officials in recruiting new

business investment?

What policies have the most impact in helping a state

attract new business investment?

What policies have the least impact in helping a state

attract new business investment?

What about China?

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080

50000

100000

150000

200000

250000

300000

350000

Foreign-Direct Investment in the U.S., 1998-2008 (in $USD 000s)

Source: InvestAmerica.gov, courtesy of U.S. BEA

Outbound FDI Flows from China

Source: Organization for Economic Cooperation & Development, 2008

What career choices or options should interested

students pursue?

Further links of interest:www.iedconline.com

(“Job Center”)

www.showme.org(“Job Openings”)

www.ildevelopmentcouncil.org

Christopher ChungChief Executive Officer

Missouri Partnership

Office – 314.725.0949Cell – 573.808.0089

Chris@MissouriPartnership.com