Winning Toyota: The Critical Role of a Regional Workforce ProgramPresented to the Roundtable in the High Desert

October 18, 2007

By Bill FredrickWadley-Donovan GrowthTech

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In February of this year, the Tupelo area of Northern Mississippi won Toyota’s 8th North American assembly plant.

Contributing factors were numerous, and many individuals and agencies contributed significantly to the victory.

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Today we will look at the very important role one of those factors played in the final decision….

…..a regional workforce database and the system that delivered its customized information to Toyota’s corporate decision-makers and site selectors.

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The Project 8th Toyota assembly plant in North America

– Announced: February 26, 2007– Product: Highlander SUV– Production starts: 2010– Direct jobs: 2,000– Capital investment: $1.3 billion – Activities: stamping, body weld, plastics,

paint and assembly– Annual vehicle production: 150,000 – Average wage: $20/hr after 3 years

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The Project The location

– Blue Springs, MS–10 miles NE of Tupelo– 1,700-acre Certified TVA Mega-Site

“Wellspring Project” The competition

– Originally 25 sites– Narrowed to approximately five semi-finalist sites– Three in the greater Memphis area: Blue Springs/

Tupelo; Marion, AR; Brownsville, TN– All three locations have certified large industrial sites– Blue Springs site selected as the winner

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The Location Drivers Suitable sites Specific utility, infrastructure and transportation

needs Favorable operating environment and costs Incentives?

– MS gave less than it did four years ago to Nissan ($296 M vs. $363 M)

Sufficient skilled and experienced labor as the final and most important location factor

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The Importance of Labor

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“The primary reason Toyota selected Tupelo was the quality of the workforce and the leadership in this community.”

Governor Haley BarbourProject announcement February 26, 2007

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“…. this great Toyota project gives us a spectacular way to replace those good furniture jobs with superior, better paying jobs in the auto industry. This situation was also key to why Toyota knew such a strong workforce will be available to it and its suppliers.”

Governor Haley BarbourProject announcement February 26, 2007

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“What I observed were people who are educated, ethical and friendly with a strong work ethic – a perfect match for Toyota.”

Ray Tanguay, EVP Toyota Project announcementFebruary 26, 2007

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How Did the Three Locations Become Finalists? Each provided a certified large industrial site They demonstrated availability of all necessary

utility, infrastructure, transportation and other operating requirements

A tremendous effort by well-coordinated, hard working and dedicated team players (state, local, regional, utilities, educators)

Strong organizational infrastructure and support structure in each area

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What made a key decision-making and deciding difference?

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Tupelo couldTupelo could

PROVEPROVEit had the labor force it had the labor force

needed by Toyota.needed by Toyota.

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Proving the Labor Force Case

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Background The Memphis Regional Economic Development

Council (REDC) created– Council of local EDOs– Greater Memphis region– 52-county region within three states– Divided into 8 sub-regions of aggregated counties– Diverse area: demographically, economically

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Background

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Background The Memphis Regional Economic Development

Council (REDC) created– Primary missions: develop regional economic

development synergies, provide cost sharing for resource development; and cooperative, effective, efficient, and coordinated marketing

– “Coopetition” among members– Created the basics (workforce assessment and

extensive database development, target industry identification) in July 2006

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Background Workforce assessment inputs (WDG/Younger Assoc.)

– Employer survey– Household survey – Employer and key-influencer interviews– Focus groups– Secondary data

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Background Employer survey data

– Mail/Internet– Employers with 20+ employees– 3,483 sent, 374 completed (10.4% stratified

return)– Employer background data– Employee quality measurements– Availability by occupation– Educator/employer interface– Commute distance– Other

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Background Household survey

– Face to face; not by telephone– Working age residents 18-70 year olds– 3,600 completed surveys– Stratified, statistically valid sample, +/- 5% MOE, 95%

confidence level – Extrapolated to entire population– Full demographic characteristics– Employment status– Occupations, skills, experience– Training desire– Geo-coded– Residential and work locations

Combined survey data into a unified database delivery system (WDG/YA)

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The Unified Labor Force Database Delivery System An on-line data delivery system

– Full access to all of the survey data

– Fully accessible by all REDC members in their offices

– A powerful tool

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The Unified Labor Force Database Delivery System Combined all of the employer and household survey

data into one relational database– Employee characteristics (e.g. demographic data,

employment status, availability for employment or training, goals and desires, commute patterns, occupation and training)

– Employer experiences (e.g. labor availability by occupation, labor quality assessments, wages/salaries, experience with educators, industry and functions performed, number of shifts, union status, labor demand)

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The Unified Labor Force Database Delivery System Extensive customized cross-tabulation possible by

the user Able to retrieve information on a county, multiple

county, regional, or sub-regional basis; also in 25, 50, 75, 100 mile radii from any given address

Side-by-side location comparison capability Easy 24/7 data access

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The Unified Labor Force Database Delivery System

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How the DDS Helped Toyota’s Site Selection Toyota site consultants approached EDO’s for each

of three Memphis regional locations– Fall 2006

– Through state representatives

– Also worked with TVA (TN, MS), Entergy (AR)

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How the DDS Helped Toyota’s Site Selection

Marion, ARMarion, AR

Brownsville, TNBrownsville, TN

Tupelo, MSTupelo, MS

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How the DDS Helped Toyota’s Site Selection Toyota requested specific area data Region’s EDOs quickly provided initially requested

labor data to Toyota using DDS Consultants impressed with speed and depth of

provided data Brownsville eliminated for various reasons

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How the DDS Helped Toyota’s Site Selection Toyota requested detailed customized cross-tabulated

data and radii information for two remaining sites– First 65-mile radius from sites, then cluster of counties– Available skill sets (number)– Manufacturing experienced labor (number)– Number of residents with skilled or trades

manufacturing experience– Women and minorities with manufacturing experience

or skill sets (number)– Residents wanting to work in manufacturing (number)– The under-employed not a factor

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How the DDS Helped Toyota’s Site Selection Toyota fascinated with data available

through the DDS Toyota given own system password; continued to dig

into labor information on own at Japan and U.S. HQs for Marion and Tupelo sites

Toyota consultants conferred regularly with EDOs, working as a team (YA involved).

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How the DDS Helped Toyota’s Site Selection Other sites did not have this depth of data. It enabled Toyota to conduct detailed on-going data

mining. It allowed MS to confirm its claims of a strong and

sizable available manufacturing workforce from the declining furniture industry.

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The Value of a Regional Labor Database System It provided the data at the desired detail and speed. The depth of the data and systems delivery

capabilities held Toyota’s interest in the region’s sites.

It was a big factor in keeping Toyota’s focus on the region

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The Value of a Regional Labor Database System It set the region apart from the competition. Workforce problems are expected wherever it goes:

DDS provided Toyota with an upfront comfort level on their understanding of the workforce.– Reduced risk– Allowed Toyota to know problems now, avoiding

future unpleasant surprises

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Lessons Learned Regional coopetition allowed for development of

– A project-winning, regional workforce database

– A flexible delivery system that quickly answered complex client questions in the client’s office

– An affordable resource

– A resource for comparative and detailed intra-region evaluation by site selectors

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Lessons Learned Workforce is the number-one deciding locational issue

overlying sites, infrastructure, incentives, utilities, operating costs, market access.

Current, complete primary labor data makes the difference.– A key factor: needed from the supply and demand

sides of the labor equation– Supplementary up-to-date secondary data needed

(IEDC standards)

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Lessons Learned It is critical and advantageous to have labor (and other)

data presented or made available as needed by the prospect.

Flexibility of data delivery and customized manipulation is important.

On-line data availability for comparative analysis gives the competitive edge.

505 Morris Avenue, Suite 102Springfield, NJ 07081Tel: 973-379-7700Fax: 973-379-7771www.wadley-donovan.com/workforce

E-mail: workforce@wadley-donovan.com