Project Update: Temple (TX) Economic Development Corporation, Target Industry Study and Target Marketing Plan

May 3, 2012

The city of Temple, Texas, is strategically located along the Interstate 35 corridor between Austin and the Dallas/Fort Worth Metroplex. In addition, it is adjacent to Fort Hood, one of the largest active duty armored posts in the US. In 2011 the Killeen-Temple-Fort Hood MSA was ranked among top five best-performing metro areas in the nation, according to the Milken Institute, which ranks metropolitan areas by how well they are creating and sustaining jobs and economic growth.

The Temple EDC wished to position the city to continue this trend through a better targeted business recruitment program. With this in mind, TIP was hired to define the top five industry categories best suited for Temple, taking into account the community’s and region’s existing assets. Additionally TIP was to provide extensive research on each target, as well as a marketing and implementation plan.

The selection of target sectors is traditionally bound to an assessment of only a few determinant factors, such as access to an available workforce, industrial sites, and incentives. Our target industry recommendations are not based solely on these issues, but also on conversations with the area’s business leaders to better understand potential opportunities and challenges that might not be readily identifiable through secondary data sources alone.

Laborshed Analysis: Employees by Zip Code
Source: TIP Strategies

To define the study area for the target industry analysis, we established the actual laborshed of the City of Temple by collecting employee zip code information from the city’s major employers. We obtained data from 11 employers on 17,958 employees or 10% of the Temple Metropolitan Statistical Area’s (MSA) non-military workforce. Employers represented various sectors including healthcare, distribution, back office, education, and manufacturing.

Using tools such as a laborshed analysis, economic base analysis, location quotients, and a shift-share analysis, a quantitative analysis was conducted to identify potential target industry sectors. The list was then filtered further using specific criteria, including location, growth, size, image, and infrastructure. The resulting list includes both existing industry clusters and aspirational targets. Each industry sector was profiled and specific niches are noted. These niches show the greatest potential for growth, pay higher than average earnings, and are sufficiently large to warrant an investment of TEDC’s resources for business recruitment. In addition, they play to Temple’s strengths and fit with Temple’s site availability.

The TEDC adopted the plan in early 2012. With the tools provided by TIP, the TEDC has augmented its marketing program, enhanced its industry research, and re-focused its business recruitment efforts.

The Texas-Mexico Automotive Supercluster (TMASC) Turns Three

March 22, 2012

Opportunity grows in the region

New TMASC report in development
On November 19, 2008, Bexar County Economic Development held its inaugural Texas-Mexico Automotive SuperCluster (TMASC) Conference in San Antonio, Texas. Bexar County created TMASC that year to leverage the changing geography of automotive assembly and automotive markets in North America. TMASC would capitalize on changes in the industrial landscape by building upon the region’s numerous global vehicle and heavy equipment manufacturers, hundreds of Tier 1 original equipment suppliers, and world-class innovative assets. This first look at the region was facilitated by an excellent benchmark study conducted by TIP Strategies, Inc.

Late last year we engaged TIP Strategies to take a look at the region again and create an updated report. The finalization of that report is currently underway. Meanwhile, here’s a snapshot of the TMASC region as we saw it three years ago.

TMASC, circa 2008
Heading into 2009, the TMASC region was home to the final assembly plants of nine global manufacturers. These plants employed more than 18,000 workers and were capable of producing almost 900,000 units per year. The region also had over 200 Tier 1 supplier plants, which employed over 133,000 workers.

TMASC, circa 2011
As of the end of last year, the TMASC Region was home to seven automotive assembly plants and parts plants, employing over 17,000 workers and capable of producing over 800,000 units. The region also contained six commercial and military vehicle manufacturing plants.

Over the last few years, TMASC’s scope has broadened to reflect the region’s additional heavy equipment and commercial vehicle manufacturing activity as well. Heavy equipment manufacturers in the region include Caterpillar, John Deere, and Manitou, which together have seven plants in the region. There are also two specialty vehicle manufacturers: Skyline, which manufactures recreational vehicles, and Frazerbilt, which manufactures emergency response vehicles.

Growth hasn’t come in the form of new plants only. In 2010, Toyota invested $100 million to add a Tacoma production line at its plant in San Antonio. Moreover, yesterday GM announced its continued expansion in the region with a new $200 million metal stamping facility at their plant in Arlington. The new operation will create 180 jobs and save GM an estimated $40 million each year is logistics costs.

Regional roll out coming later this quarter
Once the new TMASC report is finalized, we will be sharing it via the TMASC website, as well as through special presentations to selected TMASC partners throughout the region. We look forward to providing an updated vision of the region to our TMASC communities and stakeholders this quarter, and to exploring new collaborations like we did last week with the Capital Area Economic Development District committee of the Capital Area Council of Governments (CAPCOG). To schedule a presentation, please contact us. We are excited about the many opportunities 2012 will give us to increase advanced manufacturing assets and activities in the region.

Where China Invests: Not Much in U.S.

February 11, 2012

via The Washington Post

A sliver of China’s foreign investments, totaling more than $68 billion in 2010, came to the United States, a trend the Obama administration hopes to change. Read related article.

Source: China Commerce Ministry. The Washington Post. Published on February 10, 2012, 8:28 p.m.

Rules Stretched as Green Cards Go to Investors

December 18, 2011

By Patrick McGeehan and Kirk Semple

Affluent foreigners are rushing to take advantage of a federal immigration program that offers them the chance to obtain a green card in return for investing in construction projects in the United States. With credit tight, the program has unexpectedly turned into a mainstay for the financing of these projects in New York, California, Texas and other states.

The number of foreign applicants, each of whom must invest at least $500,000 in a project, has nearly quadrupled in the last two years, to more than 3,800 in the 2011 fiscal year, officials said. Demand has grown so fast that the Obama administration, which is championing the program, is seeking to streamline the application process.

Still, some critics of the program have described it as an improper use of the immigration system to spur economic development — a cash-for-visas scheme. And an examination of the program by The New York Times suggests that in New York, developers and state officials are stretching the rules to qualify projects for this foreign financing.

These developers are often relying on gerrymandering techniques to create development zones that are supposedly in areas of high unemployment — and thus eligible for special concessions — but actually are in prosperous ones, according to federal and state records.

One of the more prominent projects is a 34-story glass tower in Manhattan that is to cost $750 million, one-fifth of which is to come from foreign investors seeking green cards. Called the International Gem Tower, it is rising near Fifth Avenue in the diamond district of Manhattan, one of the wealthiest areas in the country.

Yet through the selective use of census statistics, state officials have classified the area as one plagued by high unemployment, the federal and state records show. As a result, the developer has increased the project’s chances of attracting foreigners who will accept little, if any, return on their investment in the project if it means they can secure American visas for their families.

A senior federal immigration official, Alejandro Mayorkas, acknowledged in an interview on Friday that the program might need more scrutiny. Mr. Mayorkas and other federal officials said they were concerned that some of the maps that New York and other states were approving might not adhere to the spirit and intent of the regulations.

The Times’s review of the program in New York indicates that several other major projects are also based on questionable maps.

For example, the Battery Maritime Building, at the foot of Manhattan near Wall Street, has been classified as being located in an area that needs help attracting jobs. That designation is the result of a development zone whose outlines resemble a gerrymandered political district, project documents show.

The zone snakes up through the Lower East Side, skirting the wealthy enclaves of Battery Park City and TriBeCa, and then jumps across the East River to annex the Farragut Houses project in Vinegar Hill, Brooklyn.

In fact, the small census tract that contains the Farragut Houses has become a go-to area for developers seeking to use the visa program: its unemployed residents have been counted toward three projects already.

The giant Atlantic Yards project in Brooklyn, which abuts well-heeled brownstone neighborhoods, has also qualified for the special concessions using a gerrymandered high-unemployment district: the crescent-shaped zone swings more than two miles to the northeast to include poor sections of Crown Heights and Bedford-Stuyvesant. A local blogger and critic of Atlantic Yards, Norman Oder, has referred to the map as “the Bed-Stuy Boomerang.”

Since 2008, developers have raised or have planned to raise close to $1 billion on these projects in New York City, according to federal and state records. Almost all of that money would come in increments of $500,000 — much of it from residents of China — and pour into wealthy areas.

In interviews, New York State economic-development officials praised the program but were reluctant to accept responsibility for administering it. Indeed, some state officials who certified projects for the program acknowledged that they did not know what was being built. They said they were following guidance from federal regulators.

“This program serves as a valuable tool to support job-creating projects that will put areas of high unemployment on a continued path to economic recovery and growth,” said Austin Shafran, a spokesman for Empire State Development, the state agency that oversees the program in New York.

Urged on by federal and state officials, investors in faraway places like Shanghai and Seoul along with American developers have been flocking to the program, which was created by Congress during the recession of 1990.

Under the program, known as EB-5, investors receive a visa that provides residency for two years and can be converted into a permanent green card if the holders can show the investment produced at least 10 jobs, even if the project has not been completed.

With the surge in EB-5 projects, many lawyers and consultants, in the United States and overseas, are getting involved. In China alone, more than 500 agents are jockeying to connect wealthy Chinese people to American developers, experts said.

Investors throng EB-5 conferences. Many, successful in their own countries, said they wanted to secure American residency for their children. But the competition has given rise to unsavory practices, EB-5 lawyers and consultants said, like agents who falsely promise guaranteed returns.

The minimum investment in the program was set at $1 million and has not changed in more than 20 years. But if the project is in a rural area or a place where the unemployment rate is 50 percent above the national average, the threshold for investing is $500,000, not $1 million.

By creating development zones that are ruled eligible for $500,000 investments, urban developers are at an advantage in luring contributions.

The zone drawn up for the Gem Tower consists of two census tracts in Midtown Manhattan. According to census figures, the tract that contains the project had an unemployment rate of zero for the last five years.

But the State Labor Department calculated that there were enough unemployed people in an adjoining census tract — one that includes Times Square — to justify calling the small zone an area of high unemployment.

Lela Goren, director general of Extell New York Regional Center, which is helping to raise the EB-5 investments for the Gem Tower, said she could not explain how the tower’s zone qualified as needy. “It qualifies, whatever the numbers, and it got approved,” Ms. Goren said.

The consultants arranging the EB-5 financing for the Battery Maritime and Atlantic Yards projects declined to comment.

Officials in other states expressed dismay over how New York developers were using the program. They said New York was unfairly siphoning off investments from less-developed areas.

“A lot of projects are in areas that are head-scratchers,” said James Candido, an official with Vermont’s Department of Economic Development.

Other states have sometimes not allowed such questionable development zones. California told a developer to relocate a manufacturing plant for a surgical-products company from a more prosperous part of San Jose to a poorer one, said Brook J. Taylor, a spokesman for the Governor’s Office of Business and Economic Development in California.

Federal regulators said states determined whether projects were located in areas of “greatest need.”

“The question is, are the state authorities adhering to the spirit of the law?” said Mr. Mayorkas, the federal immigration official who is the director of United States Citizenship and Immigration Services. “Where is the project being developed, and where are the jobs being created? Are the people from the areas of high unemployment being employed? Because that’s really the purpose. If they’re not being hired from those areas, then the question is justified.”

Mr. Mayorkas, whose staff has been scrambling to keep up with the boom in the program, said in the interview on Friday that he was concerned about allegations of gerrymandering.

If some project designations were not achieving “legislative intent,” he said, “then I think that is something that we need to consider as the laws are reviewed.”

Data Visualization: The Atlas of Economic Complexity

November 28, 2011

Harvard has released an interesting new index of “economic complexity” which is the productive knowledge of the economy, based on analysis of its output composition.

… the Economic Complexity Index (ECI) is based on the number and the complexity of the products that a country exports with comparative advantage. Empirically, countries that do well in this index, given their income level, tend to achieve higher levels of economic growth. The ability to successfully export new products is a reflection of the fact that the country has acquired new productive knowledge that will then open up further opportunities for progress.

The index is then used to make detailed growth projections, and identify export opportunities on a country-by-country basis. There are also interactive versions of most of these visualizations that you can explore and filter.

Download PDFs:
Full version

Part 1: Why, What & How & Rankings

Part 2: Country Pages

Interactive Visualizations


Data Visualization: China Global Investment Tracker

October 27, 2011

via The Heritage Foundation
China’s investment overseas is increasingly important to the United States and the international community. The China Global Investment Tracker created by The Heritage Foundation is the only publicly available, comprehensive dataset of large Chinese investments and contracts worldwide beyond Treasury bonds. Details are available on well over 400 attempted transactions — failed and successful — over $100 million in all industries, including energy, mining, transportation and banking.

Download the data set here.

Chinese investment and business contracts now span the globe. There is a clear effort to diversify across countries and regions but the Western Hemisphere has become especially prominent.

China’s investment total could be higher. Over $160 billion in proposed spending has been rejected by foreign or Chinese regulators or has failed due to mistakes by Chinese firms. However, there are also clear signs that Chinese firms are learning to be better investors.

Chinese Outward Investment: More Opportunity Than Danger

Chinese investment is not taking the world by storm financially, nor will it do so in the near future. It does not pose a major threat to the U.S., either in terms of the purchase of American assets or the expansion of Chinese influence around the globe. At home, American policy concerning Chinese investment should be more transparent. Overseas, the best reply to expanding Chinese commercial influence is to expand American commercial influence—for instance, through free trade agreements. These steps will help create more economic opportunities in the U.S., enhance America’s global position, and pose no threat to national security.

Where China Invests, And Why It Matters

The PRC has hundreds of billions of dollars available for investment and a desire to lock up resources; the U.S. has several trillion already invested and a bigger, more multi-dimensional economy. Concerns about increased Chinese investment and business activity should be addressed by expanding American activity, from investment in Ivory Coast to trade with Taiwan.

China’s Investment Overseas in 2010

The dominant feature of Chinese outward investment in 2010 was a rush to South America, particularly Brazil. Overall investment grew only modestly. The energy and power sectors continued to be the most attractive for Chinese enterprises. Troubled or failed investments – a huge problem in 2009 – were much less prominent in 2010. An obvious implication for American policy is to expand trade and investment ties to South America and around the world.