medc fundamentals of economic development - apr 2010

The Rules of AttractionMarketing for New Business

Presented to:Missouri Economic Development Council

“Fundamentals of Economic Development”

Presented by:Christopher Chung

The Missouri PartnershipApril 7, 2010

Presentation Topics Introduction to the Missouri Partnership How we market our “product” How we recruit new business

investment Questions and answers

About the Presenter 10+ years of state-level economic

development experience in Ohio (including projects, policy, and people)

Service in both Democratic and Republican administrations during time in Ohio

Relationship and deal management experience with major site selection clients

Introduction to theMissouri Partnership

An Overview of the State’sInvestment Promotion and

Business Recruitment Group


Mission To promote Missouri as a destination for new

business investment To recruit new employers and jobs to Missouri

Structure Public-private non-profit corporation

Governance 12-member Board of Directors from statewide

Size 10 employees – Sales, Marketing, and Admin


Why was it created? What are its key objectives? Who else uses this approach? Why is this important?


Why was it created? Effectiveness of public-private partnership

model Engagement of private-sector resources Needed consistency in marketing efforts Needed continuity in sales relationships


What are our key objectives? Deliver the “message” about Missouri’s

positive business attributes Raise awareness and visibility of Missouri and

its advantages as a place to do business Generate investment leads (i.e. “Get Missouri

on the list”) Close investment deals


Who else uses this approach? Florida – Enterprise Florida Alabama – Econ. Dev. Partnership of Alabama Utah – Econ. Dev. Corporation of Utah Ohio – Ohio Business Development Coalition

Marketing forNew Business Investment

An Overview of Marketing for Business Recruitment

Defining Economic Development

Three principal components of economic development and job creation Retention and expansion of existing industry Entrepreneurial development, technology

commercialization, and small business growth New business recruitment

The Missouri Partnership was formed to address the area of new business recruitment


Significance of new business recruitment Generates net new job creation and capital

investment (versus intra-state relocation of existing businesses)

Provides new market opportunities for local suppliers of goods and services

Attracts new residents and income base

Success depends heavily on perception and external marketing efforts, similar to winning new “customers”


Key Stages in the Investment Decision Missouri must win the right to compete

Achieved through marketing/relationships Missouri must win the competition

Achieved through recruitment effort Missouri must win the repeat competition

Achieved through retention/expansion effort


Our Marketing Strategy “Air Campaign”

Build a positive image of Missouri for business Shape perception of Missouri business climate

“Ground Campaign” Develop and manage relationships with

decision-makers and decision-influencers Initiate face-to-face conversation about plans

Ultimate goal is to generate qualified investment leads


“Air Campaign” Tactics Advertising Earned media Digital (web, social media, e-news

releases, search-engine optimization) Thought-leadership activities


Elements of “Air Campaign” Messaging Features new Missouri brand Focused on relevant industry assets Relies on success stories and corporate

testimonials Highlights improvements to business

climate and positive acknowledgments/rankings for Missouri


“Ground Campaign” Tactics Conference sponsorships Tradeshow exhibition presences Decision-maker outreach (e.g. site

selection consultants)


Tradeshow Exhibition Efforts (2010) CoreNet Global Biotechnology Industry Organization

(BIO) Solar Power International WINDPOWER Expo AFCOM Data Center World


Decision-Maker Outreach Efforts (2010) Consultant outreach events

Chicago Greenville, SC New York / New Jersey Los Angeles Cleveland

International trade commissioners and consular offices


Our Marketing Partners Missouri Department of Economic

Development Hawthorn Foundation Local and regional economic

development groups Private industry in Missouri (e.g. utility

companies, construction firms)

Long-Term 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

Product Development Targeting growth industries that complement

Missouri’s advantages

Business climate improvements

Marketing toTargeted Industries

Building a Business Case for Missouri in the Wind Energy

Sector

Missouri Opportunities

Blades

Nacelle

Tower

Wind turbine in Northwest Missouri

Wind Energy Components Major components of a wind turbine

Nacelle (the motor) 100 tons 8,000 separate components (e.g. gearboxes,

bearings) Tower

300 feet in height Fabricated metal construction

Blades 150 to 200 feet in length Fiberglass or composite (e.g. carbon fiber)

construction

Wind Energy Components

Defining characteristics Expensive to transport (weight of products) Difficult to transport (dimensions of products) Traditionally manufactured in Europe (esp.

Denmark, Spain, and Germany) Will require new base of U.S. suppliers and

maintenance workers Forecasted growth in demand (despite current

oversupply)

Missouri Opportunities

Keys to Success

Product Awareness

Establishing Missouri’s presence at key industry events

Delivering the “Why Missouri” message

Product Development

Strong market for wind energy

Attractive operating conditions

Incentives

Working withNew Business Investment

An Overview of Business Recruitment Deals

Site Selection in a Nutshell

1. Company identifies need for additional capacity and initiates search for new facility location

2. Company contacts state/local development groups

3. Development groups submit site location proposals to the company

4. Company visits sites and develops short list of favorites

5. Company negotiates incentives and selects a final site

What’s Important?Top Factors in Corporate Location

Decisions

1. Cost of labor (2nd in ‘08)2. Highway accessibility (1st in ‘08)3. Tax exemptions (4th in ’08)4. Energy availability/cost (5th in ’08)5. Corporate tax rate (8th in ‘08)

Source: Area Development, March 2010

What’s Important?Top Factors in Corporate Location

Decisions

6. Availability of skilled labor (6th in ‘08)7. Occupancy/construction costs (3rd in

‘08)8. State and local incentives (8th in ‘08)9. Availability of internet (21st in ‘08)10. Freight costs (not ranked in ’08)


What’s Important?Other Factors in Location Decisions

14. Right-to-work state17. Environmental regulations23. Accessibility to major airport25. Railroad service26. Waterway/port accessibility


Who is Involved?

Stakeholders in the process – The “Buy Side”

The Client Where do the leads come from?

Marketing events Tradeshows Relationships / referrals “Cold Calls”

Company versus Consultant

Who is Involved?

Stakeholders in the process – The “Sell Side”

Missouri Partnership Missouri DED Regional economic development groups Local economic development groups Utility companies Private industry in Missouri

Role of Missouri Partnership

Responding to business recruitment leads

Identifying optimal community locations for the project Proximity to complementary industries and

educational assets Geographical advantages, including

supplier and market access Site and building availability Business and labor climate suitability Operating cost management


Responding to business recruitment leads Performing targeted, location-specific

research Area demographics Regional industry makeup Workforce availability and accessibility Ongoing financial concerns, including energy

costs and taxes


Responding to business recruitment leads

Packaging state and local economic incentive programs and detailing their impact on up-front capital expenditures and long-term operating costs Facility financing Infrastructure assistance Workforce training Tax abatements and credits

Staying in the Game

Follow-up visits to the community Inspect the proposed site or building

Help the client envision the potential Interview local employers about the area

workforce (e.g. work ethic, productivity, wage schedule) Respect the confidentiality of the conversation Select the right employers to tell the story

Staying in the Game

Follow-up visits to the community Meet with local government officials

(“dog and pony time”) Emphasize the pro-business attitude in the

community Maximize the tangible benefits to the client Minimize grandstanding

Staying in the Game

Follow-up visits to the community Look for additional reasons to narrow

the field of competition (site selection as a “process of elimination”) Sell the strong points of the community

Transportation accessibility Price (especially if the site/building is publicly

owned) Legacy workforce (if there is a recently

downsized operation)

Staying in the Game

Follow-up visits to the community Identify other potential concerns about

the specific site or community Anticipate and mitigate these with

adequate preparation Infrastructure development plans and costs Environmental and geotechnical studies “Blind” job recruitment ads Natural disaster statistics

Staying in the Game

Follow-up visits to the community Negotiate and finalize a competitive

package of state and local incentives Be ready to give a “best and final” offer

that is responsible to the community but that also factors in the competitive reality of the deal

Potential Pitfalls in the Process

Where Things Can Go Wrong Information failures

Quality of information Confidentiality

Relationship failures Trust between client and state/local

community Trust between regional and local groups Trust between state and local communities

The Role of Incentives

“Incentives make a good site better.

They don’t make a bad site good.”

- Anonymous


How important are they? Consistently ranked among Top 10

location factors in Area Development annual survey of corporate executives 2005: 4th

2006: 4th

2007: 8th

2008: 7th 2009: 8th


Why do they matter? One of the few factors within the control

of state and local governments Can assist with multiple facets of new

operation “Develop the site” “Build the building” “Find the workers” “Keep the costs low”


What do companies want? Cash is king BUT…

Most businesses want to maintain a strong relationship with the community and state

Incentives won’t compensate for a flawed business case

There are responsible policy options for state and local governments


How does Missouri fare? Positive reputation for Quality Jobs Act Well-known and well-used New Jobs

Training program Competitive disadvantage against states

with “deal-closing” or contingency funds Texas: $290 million Arkansas: $40 million Ohio: $30 million Virginia: $20 million

The Rules of Attraction1. Consistently provide quality information

in a timely manner2. Build a personal connection and earn

the trust of the client3. Understand the client’s needs and how

your community offers the best solution4. Harness the power of peer-to-peer

testimony5. Recognize that everyone and everything

in your community is being evaluated

Site Selection is Like Courtship

RFPs = Personal ads Trinkets from the local chamber =

Flowers and chocolates Site tours and employer interviews =

Going on dates and meeting the family

Just as in courtship, persistence is key.

Questions?

Thank You!

Christopher ChungPresident and CEOThe Missouri Partnership+1.314.725.0949 (O)+1.573.808.0089 (M)[email protected]

mailto:[email protected]

medc fundamentals of economic development - apr 2010

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