TIP Strategies is a privately held Austin-based economic development consulting firm committed to providing quality solutions for public and private‑sector clients.
This blog is dedicated to exploring new data and trends in economic development.
By: Jeff Marcel, Senior Partner, TIP Strategies
At TIP, we stay abreast of the practical work it takes to grow local economies, and we explore and rethink targeted approaches to economic development work. In this blog, I’ll share with you some of the things I learned about developing industry clusters.
As the former president and CEO of the Economic Development Council of Seattle and King County, it was my job to figure out how the organization could influence businesses’ decisions to come, stay, and invest in the Seattle region. The targeted industry cluster approach we established has yielded benefits to the Seattle region by increasing jobs and investment and by building an appreciation and understanding about what drives the local economy.
During the ten years I led the EDC’s economic development efforts, we established multiple cluster strategies targeting aerospace, clean technology, maritime, financial services, interactive media, life science, medical devices, and fashion and apparel industries. Frankly, the traditional economic development incentive tools in Washington State didn’t compare well with the competition, so we experimented with various industry cluster development programs out of necessity. We discovered valuable approaches to working with and within industries to encourage their growth.
Lesson 1: Run data to find industry clusters without assuming anything beforehand.
Alan Mulally, the former head of Boeing Commercial Airplanes and current CEO of Ford, famously said, “The data will set you free.” Assuming the industry cluster data you compile is accurate and current, you’ll be able to look at reality squarely. Data may reveal facts you weren’t aware of and can provide a sense of trends in growth or contraction. Examining the Financial Services industry cluster in the state of Washington is a perfect example of this. After the global financial crisis of 2008, the Seattle region lost one of its most iconic corporations, Washington Mutual, also known as WAMU. This was a sizeable loss, and many interpreted it as the end of the financial services industry in the state. The EDC ran the numbers and found that, although 3,400 jobs were lost at the WAMU headquarters, the industry across the state still accounted for 130,000 jobs in 2010, with 8,200 establishments in the accounting, banking, investment services, and insurance sectors. This information was not only a surprise to economic developers but to local industry as well.
Lesson 2: Speak the language your target audience appreciates: the language of data.
But this data isn’t just an educational opportunity for the practitioner. It is incumbent on the economic developer to educate the rest of the community about the importance of industry clusters to the local economy. This is doubly true for educating policy makers who may move forward with decision making without a full sense of what drives the local economy. The data should also be used to educate business decision makers and industry leaders. A spreadsheet that lists company names, operations, employee count, revenue, and associated business costs means more than a glossy community-marketing brochure. An example of this work is the analysis the EDC conducted on the interactive media-video game software development industry in the state of Washington starting in 2007. We compiled a list of over 150 companies in the industry, mapped their locations, and conducted an economic impact analysis quantifying annual revenue growth for 2006 at $4.2 billion. We also calculated the number of jobs at over 15,000 and provided a breakdown of occupations serving the industry and their wage rates. This data quickly spread across the internet and advanced the region’s reputation as a significant center for the industry. Business leaders in the area have utilized the information in their decision making process, and the effort has been responsible for bringing new companies and talent to the community. Additionally, local political leaders understand the industry is a real economic powerhouse for the region and needs to be prized.
Lesson 3: Know the sectors or niches in the industry cluster you are targeting for growth; they are not all the same and may have different needs and drivers of success.
The industry cluster approach is a targeted way to get the most out of your resources—you can’t be everything to everyone, so figure out what you have or what you want, and go after it full force. But don’t stop at the industry level: specify which sectors within the industry are present. We often hear communities proclaim a desire to grow their clean technology industry. While “clean technology” is an industry cluster, it encompasses many sectors including alternative fuels, wind energy, electric grid efficiency, natural gas, solar energy, energy storage technologies, recycling technologies, energy efficiency technologies for buildings, and much more. Digging deeper into what exists in your community and refining your targets is essential, because the regulatory environment, technologies, skills sets, and business models can be very different for each sector. At the EDC, one of the first industry clusters we targeted was the clean technology industry. We thought it fit with our community’s technological expertise and our culture of environmental stewardship. We hadn’t compiled or studied the data sufficiently to know which sectors existed, but we knew the major companies involved and were keenly aware of our community’s commitment to being “green.” Through painstaking outreach, we found one of our unique strengths. We learned there were an estimated 8,800 jobs in the state of Washington in fields related to energy efficiencies for buildings, including architecture and design, construction and engineering, and software development. That niche of expertise and concentration in the clean technology cluster has provided direction for the EDC’s efforts and allows the organization to articulate who the community is and what it offers.
Lesson 4: Know what makes your community uniquely suited for the industry beyond the numbers.
After analyzing data and industry research, you might still find ways to differentiate your community from others with a concentration in the same space. Data analysis and industry research deepen your understanding of your community, however, there is more to a community than is apparent from general data. Qualitative differentiators may be difficult to identify, but they are worth seeking; they may include a cultural quality or an environment that arises from major participants in an industry. An example of this is Seattle’s global health sector within its life science industry cluster. Like other life science hubs, Seattle has well educated people, numerous research institutions, clinical hospitals, a world-class research university, a few hundred life science companies, a robust entrepreneurial community, and outstanding philanthropic foundations. What sets Seattle’s global health community apart from Boston, the Bay Area, or Geneva is the willingness of scientists in the Seattle region to work together across institutions. The culture is collaborative rather than cutthroat. This collaboration has led to new discoveries and the identification of efficiencies and has created an alternative environment attractive to many researchers. The spirit of collaboration is something that doesn’t usually appear in general data, but it is a real differentiator and a part of the Seattle region’s sales pitch. The only way to discover this kind of quality is to work with and get to know the local industry and appreciate its context in the overall industry cluster. What makes your community uniquely suited for the industry category you are targeting? Having available land in a business park doesn’t always strike a chord of interest with companies, but sharing something special about your community’s connection with their industry often does. A differentiator might be a company or entrepreneur whose star is rising, an industry giant, a research and development center, or university or technical college that has a special program.
All of these lessons point to the importance of economic development practitioners having a thorough understanding of the industry clusters within their communities and what makes their offering unique. The garden-variety approach of promoting greenfield real estate options, general tax incentives applicable to all companies, low cost of living, and low business costs may not be enough.
Ten ways to establish and understand your value proposition to an industry cluster and project the value of the industry cluster to others:
- Find a volunteer or hire a local part-time expert (e.g. a retired executive) with knowledge and credibility to lead the development of an industry cluster program.
- Join an industry association and be present at industry functions, locally and outside the community.
- Understand the needs of the local industry, then identify ways to meet those needs.
- Be a connector. Industry leaders are busy running successful businesses. As someone who spends time meeting with many companies and leaders within an industry, you may see opportunities of which they are unaware. Put that entrepreneurial drive into action, and be a business development resource for those companies.
- Educate elected officials and policy leaders about industry clusters and possible issues and conditions that have implications and impacts to their success. Take the opportunity to present an unbiased view given the practitioner’s vantage point.
- Spend your marketing dollars wisely, and target media resources seen as credible and established in the specific industry. Create a communications plan, and stick to it. Don’t let the inevitable “immediate special advertising” opportunity distract you from your established plan.
- Build industry cluster expertise. Don’t just assign a sector to someone. If your potential assignee isn’t familiar with an industry, make sure he/she at least has an interest, then invest in education to build his/her level of expertise. Or, hire someone who already has expertise and an established network and credibility—think retired Baby Boomers. Utilize this expertise to generate attention for your economic development goals by having that individual be a resource for local media. Have him/her submit industry-related articles, white papers, and editorials, and seek out speaking engagements at industry events as well as community forums.
- Consider hosting a state-of-the-industry annual event or other industry networking events. Provide a forum to showcase industry leaders, and present economic data about the sector or new opportunities or challenges that will impact the future of the industry.
- Partner with industry associations on economic development work, marketing efforts, and industry events, and host inbound and outbound industry delegations. Industry associations know the industry intimately and have a vested interest in its success, so they often make an ideal partner for economic development work.
- Lastly, identify other markets that have a concentration in the target industry, and collaborate with them. Find ways to encourage businesses and educational institutions to partner together, encourage industry financing opportunities, and encourage trade within the industry between both markets. When you establish these kinds of relationships, business development opportunities can expand exponentially. The key is to identify how both communities can benefit from a reciprocal agreement. Your partners will begin to look for opportunities for you just as they are in search of opportunities for themselves.
I welcome the opportunity to discuss industry cluster development programs with you and learn about the economic development efforts and target industry cluster work in your community. Please feel free to contact me at firstname.lastname@example.org.
TIP Strategies, Inc.
Office And Administrative Support Occupations Make Up Nearly 16 Percent Of U.S. Employment, May 2013
In May 2013, office and administrative support was the largest occupational group, making up nearly 16 percent of total U.S. employment. The next largest groups were sales and related occupations and food preparation and serving related occupations, which made up about 11 and 9 percent, respectively. Seven of the 10 largest occupations were in one of these three groups.
Click here for interactive version
The smallest occupational groups included legal occupations and life, physical, and social science occupations, each making up less than 1 percent of total employment in May 2013.
The highest-paying occupational groups were management, legal, computer and mathematical, and architecture and engineering occupations. Most detailed occupations in these groups were also high paying. For example, all 19 computer and mathematical occupations had average wages above the U.S. all-occupations mean of $46,440, ranging from $50,450 for computer user support specialists to $109,260 for computer and information research scientists.
The lowest-paying occupational groups were food preparation and serving related; farming, fishing, and forestry; personal care and service; building and grounds cleaning and maintenance; and healthcare support occupations. Annual mean wages for these groups ranged from $21,580 for food preparation and serving related occupations to $28,300 for healthcare support occupations. With few exceptions, the detailed occupations in these groups had below-average wages. For example, occupational therapy assistants and physical therapy assistants were the only healthcare support occupations with mean wages above the U.S. all-occupations mean.
Among 665,850 employed persons in the District of Columbia in May 2013, there were about 3,370 political scientists—accounting for 50.6 out of every 10,000 jobs in the District of Columbia. In all of the United States there were 5,570 political scientists employed out of a total of 132,588,810 employed people—meaning less than 1 (0.42) out of every 10,000 jobs in America were political scientists. The ratio that compares the concentration of employment in a defined area (in this case, the District of Columbia) to that of a larger area (the United States) is referred to by the Bureau of Labor Statistics as the “location quotient.”
Click here for interactive version
The location quotient of political scientists in the District of Columbia is 50.6 divided by 0.42 (the location quotient of political scientists in the United States), which equals about 120.5—indicating there are about 120.5 times as many political scientists per 10,000 total employed people in the District of Columbia as in the United States as a whole.
These data are from the Occupational Employment Statistics program. To learn more, see, “Occupational Employment and Wages — May 2013″ (HTML) (PDF), news release USDL-14-0528.
By: Rob Sentz
Click here to see the interactive map
Which industries are the top drivers of job growth for each of the 100 largest U.S. markets? Which metros have added the most jobs post-recession? Which metros have the biggest concentration of jobs in healthcare, technology, construction, manufacturing, energy and other top fields?
The U.S. economy is composed of hundreds of industries that are spread across thousands of counties, and the interactions of these industries are huge engines for job formation and economic prosperity.
CareerBuilder and EMSI have teamed up to create a powerful interactive map that applies big data to visualize the enormous size, scope and diversity of the U.S. economy. The map uses EMSI’s rich labor market database of over 90 national and state employment resources to identify key industries that are driving job growth for the 100 most populous U.S. metros. 1
Viewers can click on each metro and the map reveals 10 of the most important detailed industries for that location, based on number of 2013 jobs, job growth since 2010 and job concentration. From well-known economic forces (e.g., finance in New York City and aerospace products and parts manufacturing in Seattle) to emerging sectors (e.g., motor vehicle body and trailer manufacturing in Nashville and data processing and hosting in San Antonio), the map provides comprehensive – and often surprising – insights.
Viewers can also click on an industry menu to see a list of metros where a specific industry is a major economic driver.
“Since 2010, the national workforce has grown four percent, but more than 40 large metros have eclipsed the national growth rate,” said Matt Ferguson, CEO of CareerBuilder. “These are metros with a strong concentration of computer systems design, software publishing and data processing and hosting firms. These are metros benefiting from the resurgence in U.S. manufacturing, and the nation’s need to find new energy sources and expand healthcare services.”
In a separate study of the same 100 metros, CareerBuilder and EMSI discovered which metros have added the most jobs per capita post-recession:
1. Salt Lake City, UT – added over 62,000 jobs since 2010, up 9% (534 new jobs per 10,000 people)
Originally a farming community, Salt Lake City has grown into an industrial center for the state. Industries that have experienced strong job growth in this metro include electronic shopping and mail order houses (up 43%), software publishing (up 28%), specialized freight trucking (up 23%) and credit intermediation (up 22%).
2. Grand Rapids-Wyoming, MI – added over 39,000 jobs since 2010, up 10% (513 new jobs per 10,000 people)
This manufacturing heavyweight has benefited from the rebound of production jobs after the recession. The metro saw job increases in various manufacturing segments such as plastics product (up 35%), motor vehicle parts (up 33%), metalworking machinery (up 30%) and office furniture (up 12%). Hospitals also accounted for an upswing in jobs (up 16%).
3. San Jose-Sunnyvale-Santa Clara, CA – added over 91,000 jobs since 2010, up 10% (498 new jobs per 10,000 people)
It’s no surprise that software publishing (up 30%), computer systems design (up 19%), data processing and hosting (up 16%), computer manufacturing (up 12%) and scientific research (up 9%) are big contributors to employment for this Silicon Valley metro.
4. Austin-Round Rock- San Marcos, TX – added over 90,000 jobs since 2010, up 11% (488 new jobs per 10,000 people)
Austin has made a name for itself as a technology and business hub, fueling job growth in management, scientific and consulting services (up 35%), computer systems design (up 35%), data processing and hosting (up 35%) and semiconductor manufacturing (up 17%).
5. Houston-Sugar Land-Baytown, TX – added over 281,000 jobs since 2010, up 10% (451 new jobs per 10,000 people)
Energy-rich Houston continues to see job growth in utility system construction (specifically, oil and gas pipeline, up 45%), mining support (up 38%), metal and mineral (except petroleum) wholesalers (up 31%), oil and gas extraction (up 25%), and architectural and engineering services (21%).
6. Nashville-Davidson-Murfreesboro-Franklin, TN – added over 71,000 jobs since 2010, up 9% (432 new jobs per 10,000 people)
A popular music center, Nashville saw a 25% increase in jobs for independent artists, writers and performers. The metro also saw notable jumps in jobs for motor vehicle manufacturing (up 61%), accounting services (up 37%), general freight trucking (up 17%) and specialty hospitals (up 15%).
7. Provo-Orem, UT – added over 24,000 jobs since 2010, up 12% (427 new jobs per 10,000 people)
The mid-sized Utah metro is well concentrated in a number of fast-growing tech industries: software publishing (up 51%), computer systems design (up 30%) and semiconductor manufacturing (up 14%).
8. Dallas-Fort Worth-Arlington, TX – added over 267,000 jobs since 2010, up 9% (400 new jobs per 10,000 people)
Part of the Silicon Prairie, Dallas saw a boost in jobs in computer systems design (up 32%) and communications equipment manufacturing (up 18%). Other key growth areas include oil and gas extraction (up 27%), office administration (up 22%) and credit intermediation (up 13%).
9. Bakersfield-Delano, CA – added 33,000 jobs since 2010, up 11% (394 new jobs per 10,000 people)
Growth in this metro has been fueled by agriculture-related industries such as crop production (up 14%) and dairy product manufacturing (up 11%). Bakersfield has also benefited from an upswing in utility system construction (specifically, oil and gas pipeline), an industry that has more than doubled in employment since 2010 and is nearly seven times as concentrated in Bakersfield than the national average.
10. Charlotte-Gastonia-Rock Hill, NC-SC – added over 70,000 jobs, up 8% (381 new jobs per 10,000 people)
In addition to spectator sports (up 37%), this metro also experienced growth in tech-related industries such as telecommunication carriers (up 31%), management, scientific and consulting services (up 22%), scheduled air transportation (up 17%) and data processing and hosting (up 14%).
Meanwhile, the poorest-performing labor markets are in Scranton–Wilkes-Barre and Albuquerque, both of which have roughly the same number of workers today as they did in 2010. Ten other metros, headlined by Providence, Dayton, and Syracuse, have only grown 1 percent.
The map also reveals pockets of the U.S. where key industries are clustered among the largest cities:
Oil and gas extraction is a major driver of high-wage job growth in Texas, Oklahoma and the surrounding region. It’s also becoming a driver of job growth in Denver.
General freight trucking is concentrated in the Mid-Atlantic and Southeast (Nashville, Memphis, Jacksonville, etc.), where transportation routes are plentiful and huge population centers are in close range.
Software publishing has a big presence in Silicon Valley, but is also growing in major markets such as Seattle, Boston, Atlanta and Denver.
General medical and surgical hospitals are driving jobs in Columbus, Chicago, Baltimore, Boston, Rochester and St. Louis, among others.
Highway, street and bridge construction has seen an uptick in jobs in Baton Rouge, Oklahoma City and San Antonio as cities rebuild after natural disasters and address other public concerns.
CareerBuilder and EMSI are national leaders in providing labor market data and tools to dig deeper and better understand national and local economies.
1 EMSI data is collected from more than 90 federal and state sources, such as the U.S. Bureau of Labor Statistics, the U.S. Census Bureau, and state labor departments. EMSI removes suppressions often found in publicly available data and includes proprietors, creating a complete picture of the workforce.
Economic Modeling Specialists Intl., a CareerBuilder company, turns labor market data into useful information that helps organizations understand the connection between economies, people, and work. Using sound economic principles and good data, we build user-friendly services that help educational institutions, workforce planners, and regional developers build a better workforce and improve the economic conditions in their regions. For more information, visit www.economicmodeling.com.
CareerBuilder is the global leader in human capital solutions, helping companies target and attract great talent. Its online career site, CareerBuilder.com®, is the largest in the United States with more than 24 million unique visitors, 1 million jobs and 50 million resumes. CareerBuilder works with the world’s top employers, providing resources for everything from employment branding and talent and compensation intelligence to recruitment solutions. More than 10,000 websites, including 140 newspapers and broadband portals such as MSN and AOL, feature CareerBuilder’s proprietary job search technology on their career sites. Owned by Gannett Co., Inc. (NYSE:GCI), Tribune Company and The McClatchy Company (NYSE:MNI), CareerBuilder and its subsidiaries operate in the United States, Europe, South America, Canada and Asia. For more information, visit www.careerbuilder.com.
By: Caroline Alexander, Senior Consultant, TIP Strategies
Over the past 6 months, TIP Strategies has helped the Greater Houston Partnership (GHP) facilitate their Regional Workforce Development Task Force and develop a strategic action plan.
The Greater Houston region is on the brink of unprecedented growth. With almost $20 billion in investment in new plants and facilities announced, the next 5 years are slated for rapid expansion. Employers, however, are concerned that the region does not have the talent it needs to fuel this expansion. Further complicating the labor market is the aging of the workforce and the pending wave of retirements.
In response to these concerns, the Greater Houston Partnership convened the Regional Workforce Development Task Force (RWDTF). The task force is composed of 104 members representing 79 organizations, including large employers, workforce and economic development, education, and social services. The task force met six times over the course of last half of 2013 with the intention of formulating an action plan to address the challenges over the next five years. The initiative focused in on the middle skills segment of the job market.
The RWDTF identified 4 gaps in the workforce development system that must be addressed in order to create the pipeline of talent required to meet the needs of the region’s employers. The gaps are:
Potential workers are not aware of the opportunities in the middle skills segment or hold inaccurate perceptions of the jobs.
BASIC SKILLS & EMPLOYABILITY
Many potential workers lack some of the most basic hard and soft skills needed for any middle skills job.
The landscape of programs and organizations with a focus on workforce is broad and varied, but also fragmented.
The lack of accurate, reliable data creates a disconnect between demand and supply.
The strategic action plan takes a sector-based approach to create a more demand-driven workforce system. The strategies are structured around addressing the identified gaps. The plan will be finalized at the end of February and GHP is already on the road to implementation. Stay tuned for more news as GHP hires a director of workforce development and launches its first sector council.
In the below article for Area Development, Beth Mattson-Teig cites announcements by Yokohama, IBM, UBS and others as the latest examples of diversified expansion in the South. Congratulations to TIP client Clarksville, Tennessee, for being selected by Hankook for its $800 million manufacturing facility.
By: Beth Mattson-Teig
Via: Area Development Online
A highly skilled work force and good transportation infrastructure are also drawing aerospace and other high-tech companies.
Automotive Shines Spotlight on Region
Automotive continues to be a powerful engine for growth across much of the South. Yet the region is firing on all cylinders, with expansion occurring across a variety of sectors ranging from aerospace and advanced manufacturing to data centers and technology.
As more of the old line industries that dominated the region, such as textiles, moved off shore, the resurgence in automotive manufacturing is one of the key industries that has fueled economic growth throughout the region. “That has continued, albeit in different volumes and different project types,” says Eric Stavriotis, a senior vice president at CBRE in Chicago.
Eight of the top automakers, ranging from Ford to Hyundai, all have major manufacturing facilities in the South, namely in the states of Alabama, Kentucky, Mississippi, and Tennessee. Those major auto manufacturing hubs continue to fuel growth among major OEMs and suppliers. For example, Korean tire manufacturer Hankook Tire Co. announced in October that it would invest $800 million in a state-of-the-art manufacturing facility in Clarksville, Tenn., that will create 1,800 new jobs. The company is expected to break ground on the new plant by the end of 2014 and begin tire production by 2016.
That announcement comes on the heels of another announcement earlier this spring that Tokyo-based Yokohama Tire Corp. will locate a commercial truck tire plant in West Point, Miss. The company plans to invest $300 million in the initial project that will create 500 new jobs, with potential future expansion that could bring total employment at the plant up to 2,000 jobs. Automotive has helped to shine a spotlight on the region for other industries and emphasized area strengths such as the employment base and transportation infrastructure. In addition, companies also have had the chance to see how the states have put together incentive packages and worked with companies on expansion and relocation projects, says Stavriotis. “Those types of investments do become a catalyst for other industries downstream,” he says.
Targeting Advanced Manufacturing
Automotive — along with a broader focus on advanced manufacturing jobs — continues to be a top focus for the region, including industries such as aerospace, metals, and chemicals. Notably, aerospace is a thriving niche, and Alabama, Mississippi, and Louisiana are all members of the Aerospace Alliance. Those three states join with Florida to promote the region as an aerospace corridor. Those states are home to major manufacturing and testing operations, as well as NASA facilities.
For example, France-based Eurocopter announced in September that it would start work on expanding its plant in Columbus, Miss., to serve as a final assembly and test site for its AS350 helicopters, the top-selling civil helicopter in the U.S. market. The plant is expected to be ready for assembly operations by Q4 2014.
“We are targeting aerospace, and we are working across state borders to promote the region, and we are finding success in winning some of those projects,” says Adam Murray, a target market specialist for the Tennessee Valley Authority Economic Development.
The entire site selection process is getting more nuanced and more case-by-case depending on a particular business and its unique requirements. “If you were to draw a gross generalization around manufacturing, the Southeast continues to win more than its fair share of projects because of the pro-business environment and lower overall operating costs and high incentives structure that [these states] have set up,” says Stavriotis.
In addition to the myriad of tax credits and financial assistance packages available to today’s businesses throughout the South, there is a distinct emphasis on providing resources to support worker training and development. Louisiana is certainly recognized for its efforts in this area with its FastStart program, which is a customized employee recruiting, screening, and training service that is available to eligible companies at no cost.
Another notable initiative to further expand advanced manufacturing in the region is an effort being led by the University of Alabama-Huntsville to land one of 15 regional Institutes for Manufacturing Innovation (IMIs) that are proposed by the Obama administration. President Obama has proposed the National Network for Manufacturing Innovation (NNMI) to promote advances and growth in the industry, and he is proposing funding the network with a one-time $1 billion investment.
The University of Alabama-Huntsville is specifically focusing on creating an institute that would promote digital manufacturing and design innovation. If that effort is successful, it could help to establish the area as not only a manufacturing hub, but also an R&D hub for digital manufacturing and design, notes Murray. “That is one example of how we are working across state borders to promote advanced manufacturing,” says Murray.
Pursuing High-Tech Jobs
States throughout the South are continuing to court advanced manufacturing businesses, but there also is a concentrated effort to diversify that business base and attract more higher-paying jobs in industries such as technology.
Louisiana has been very aggressive in pursuing technology, software development, e-commerce, and media companies. Those efforts have paid off with the major coup of landing IBM. The firm selected Baton Rouge as the home of its new IBM Services Center. The $55 million project, which includes an office building and residential tower, broke ground in September, with completion set for mid-2015. The new facility is expected to create 800 new direct jobs by the end of 2016.
Most people don’t consider Baton Rouge to be a hotbed for technology but, clearly, the state put some significant resources behind the project, says Stavriotis. Those resources extend beyond assistance related to constructing the facility to focus on developing the educated work force that IBM will need: the state of Louisiana will provide $14 million over 10 years to expand higher-education programs designed primarily to increase the number of annual computer science graduates. At least 65 percent of those funds will be provided for expansion of the Computer Science Division of the School of Electrical Engineering and Computer Science at Louisiana State University.
Basically, the state has said that if we can get IBM to show up, it will build that technology cluster around them, notes Stavriotis. “That takes a lot of time and resources, and it is pretty impressive that the state could package something like that, and that IBM would be willing to take them up on that offer,” he adds.
Data Centers & E-Commerce
Another target industry for the Southern States is data centers. The South is emerging as a strong player in this market because the fiber and IT infrastructure is getting built to give companies the connectivity and speed that is very important to the data center industry. In addition, companies are becoming more comfortable with the existing work force.
“We have had quite a few success stories, both in the Valley and the South in general, of companies that have come and tested the market and been successful,” says Spencer Sessions, a target market specialist for TVA Economic Development. For example, UBS announced in August that the company would establish a new shared services center in Nashville that will represent a $36.5 million investment and create 1,000 new jobs over the next five years. The new UBS Nashville business solutions center will offer expanded business services in support of UBS’ wealth management and investment banking divisions. UBS currently provides operations support in Nashville through over 200 employees, in addition to its full service Wealth Management office.
To further entice large data center projects to locate in Alabama, the state passed new legislation last year that enhances its existing sales, use, and property tax abatements available to qualifying projects. Both Louisiana and Mississippi also offer incentives specific to data center projects.
The South also continues to garner attention for distribution and e-commerce. For companies that are looking to fulfill a major distribution or warehouse component, Louisville and Memphis automatically jump to the top of the short list because of their ability to get product to their end destinations very quickly. Louisville is a major distribution hub for UPS, while Memphis is a key hub for FedEx. The UPS Worldport Louisville is the largest automated package handling facility in the world. It can handle up to 3.6 million packages per day, and more than 140 companies have located in Kentucky just to be close to the UPS hub.