washington university - political economy - oct 2010

Positioning Missouri for

New Business Investment

Presented to:

Washington University – St. Louis

Political Economy of Multinational Enterprises

October 5, 2010

Christopher Chung, Chief Executive Officer

Missouri 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 attributes

Raise awareness and visibility of Missouri as a

place to do business

Build relationships with decision-makers and

decision-influencers

Generate investment leads (i.e. Get Missouri

“on the list”)

Work with state, local, and private-sector

partners to win the deal for Missouri

Provide feedback for “product development”

About the Partnership

• Rationale:

Need for consistency in marketing efforts

Need for continuity in sales relationships

Engagement of private-sector resources

Effectiveness 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 business

Growth of business start-ups

Recruitment/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.”

Advertising

Earned media

Digital (web, social media, SEO)

Thought leadership

Our Marketing Strategy

The “Air Campaign”

• Key elements include:

Focus on relevant industry assets

Peer-to-peer testimony involving successful

Missouri businesses

Highlighting 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, Fa

st

Company, Inc., Mo

ney, and Business

Week (March 2010)

Missouri “Real

Story” ad in

Atlanta market

editions of Forbes, Fortune, Fa

st

Company, Inc., Mo

ney, and Business

Week (April 2010)

Missouri “Real

Story” ad in

Atlanta market

editions of Forbes, Fortune, Fa

st

Company, Inc., Mo

ney, and Business

Week (May 2010)

Missouri “Real

Story” ad in

Chicago market

editions of Forbes, Fortune, Fa

st

Company, Inc., Mo

ney, and Business

Week (September 2010)

“Welcome to

Missouri” ad

(featuring Unisys) in

Washington D.C. market editions of

Forbes, Fortune, Fast

Company, Inc., Mon

ey, 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 sponsorships

Trade show exhibitions

Consultant 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 effort

Win 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 process

Finalist 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 awareness

Raising the visibility of Missouri and its

economic development potential

Shaping a positive perception of Missouri as

a place to do business

Identifying unique assets to market

• Product development

Investments in education and infrastructure

Business 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?

0

50000

100000

150000

200000

250000

300000

350000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

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 Chung

Chief Executive Officer

Missouri Partnership

Office – 314.725.0949

Cell – 573.808.0089

Chris@MissouriPartnership.com