Reshoring: Why It’s Not Easy

October 12, 2014

By: Mark Muro and Siddharth Kulkarni
Via: Brookings

A lot has happened since the United States was a colossus of industry. Regional economic ecosystems matter, yet much has been lost over 30 years in the way of local know-how, worker skills and supply chain capacity. One result is that a number of high-profile reshorings have either been difficult (GE’s return to Appliance Park in Louisville) or unsuccessful (Google and Flextronics’ effort to assemble the MotoX smartphone in Fort Worth). In these cases the erosion of the local knowledge, skills and supplier base has greatly complicated the scale-up of returning firms.

Yet that is a qualitative assessment. Can we make the point in sharper terms? In fact we can, using data from a forthcoming analysis of the geography of America’s R&D- and STEM worker-intensive “advanced industries,” which range from aerospace and automotive manufacturing to software and other high-tech services. Check out these maps:

Large U.S. Metropolitan Areas with Over 10 Percent of Total Employment in Advanced Industries


1980



2013

Source: Brookings Analysis of Moody’s Data



These maps, while not a perfect depiction of the condition of regional advanced industry ecosystems, provide an indication, and it’s not encouraging.

In 1980, 59 of the country’s 100 largest metropolitan areas had at least 10 percent of their workforce in innovative, technical advanced industries. By 2013, only 23 major metros contained such sizable concentrations of advanced industry activity. Granted, technological change and productivity increases explain some of this reduced intensity, but that’s not the full story. Other countries that have been the recipients of U.S. offshoring have grown employment in these sectors substantially. All of which suggest that the American advanced industry platform has thinned out substantially and inordinately, so that less than half as many large metro areas have the density of advanced industry activity that they had in 1980. That means that on balance many fewer U.S. metropolitan areas now have the dense supplier bases and deep pools of technically relevant workers necessary to support new advanced industry growth.

That’s a problem. In an era when clustered capabilities matter as much as labor or energy costs, the United States has a lot of work to do to rebuild its network of regional industrial ecosystems. Whether it can manage that will determine a lot about how the reshoring opportunities plays out, metro area by metro area.

Allentown Bets Big To Shed Its Former Image

September 12, 2014

By: Tommy Andres, Interview by Kai Ryssdal
Via: Marketplace


Downtown Allentown, Pennsylvania, was once home to the most popular department store in the nation.

“Hess’s here did $190 million worth of retail sales in 1970,” says the city’s mayor Ed Pawlowski. “Think about that. They were the highest grossing retailer in the country, and they were here in Allentown. We were the major retail hub for the entire region.”

A city’s troubled past

There’s a good chance the first thing that pops into your head when you think about Allentown is the song Billy Joel wrote about it. It’s a song about the coal and steel industries drying up and the city bleeding out.

But most folks in Allentown will tell you that song isn’t even about their city. It’s about neighboring Bethlehem, where there was a massive steel mill. If an autopsy was performed on Allentown, globalization and deindustrialization would just be footnotes.

The real cause of death would be the mall.

“When the malls got built, it sucked everything out like a giant vacuum,” Mayor Pawlowski says. Retail left downtown and people moved to the suburbs in hoards. “This city was like any other Rust Belt city in the Northeast and Midwest. Our economy was in the tank, we weren’t seeing growth and we weren’t seeing development. In fact, we would probably end up as the next Detroit, in bankruptcy.”

But in a span of only five years, that has all changed, the mayor says.

“We went from a multimillion-dollar deficit to a multimillion-dollar surplus. We’re seeing 4,000 new jobs come into the urban core and a billion dollars of new development,” he said. “We’re now the fastest growing city in the commonwealth of Pennsylvania, and we haven’t raised property taxes in nine years.”

Allentown’s story of revitalization starts in 2008, when the gates of a brand new $50 million baseball stadium opened. Despite the city’s financial struggles and decades-long economic decline, Allentown has remained the third largest city in Pennsylvania, and because it’s less than 90 miles from the major media markets of Philadelphia and New York, Allentown city officials were able to lure in the Phillies minor league baseball team with some financial incentives.

Lee Butz is the president of Alvin H. Butz, Inc., a construction company named after his grandfather. The company built Coca-Cola Park, home of the team now named the Lehigh Valley IronPigs. The Butz family operated out of Allentown for generations, but when downtown drained, they left too.

“In 1972 we moved from Allentown to the suburbs,” Butz says. “At that time, it seemed like not that important of a move. It was convenient and closer to our homes. But the problem was, almost everyone was moving out of the center city and in a couple of decades it became so severe that many people thought Allentown would never survive.”

But when the city got the IronPigs, Butz says there was a shift in mentality. Suddenly a town that had gotten used to losing felt what it was like to win. “There were a lot of people who said the Lehigh Valley will never support minor league baseball,” Butz says. “Not only did the people support it, it has been the best attended minor league ballpark in the country for several years.”

Butz says the success of the IronPigs proved that Allentown could be a viable market, and it drew him back to downtown. Just after the stadium went up, his company built a new office in the city and moved in.

“We came back because the community has been so good to us. We just felt, what’s the best way we can pay the community back? Let’s go to downtown Allentown and see if it makes a difference, see whether a lot of people will follow us downtown.”

The first several years were rough. “We thought maybe we’d made a terrible mistake,” Butz says. “We occupied two floors of our six story building and we hardly had any other tenants. We thought, oh, gosh, we can’t make this work. But then along came the NIZ. It changed everything.”

The turning point

The NIZ is the whimsical shorthand folks in Allentown use for a plan called the Neighborhood Improvement Zone. The plan is the brainchild of Pennsylvania state senator Pat Browne. It gives developers who chose to build in downtown Allentown a special incentive.

“Any taxes they generate as a result of their operations in Allentown can be used by the developer to offset the costs of that investment,” Browne says.

The general concept of using state tax incentives and incremental financing is not new. Browne says the American railroads were built on the model back in the 1860s.

The NIZ is the whimsical shorthand folks in Allentown use for a plan called the Neighborhood Improvement Zone. The plan is the brainchild of Pennsylvania state senator Pat Browne. It gives developers who chose to build in downtown Allentown a special incentive.

“Any taxes they generate as a result of their operations in Allentown can be used by the developer to offset the costs of that investment,” Browne says.

The general concept of using state tax incentives and incremental financing is not new. Browne says the American railroads were built on the model back in the 1860s.

What makes the NIZ unique is the word “any.” “We’ve never been able to pull together an incentive that uses the entire state tax portfolio,” Browne says.

Here’s how it works: If a building is built in the NIZ, the developer can get back the sales tax on any purchase made in that building for 30 years. That developer can also collect state income tax from any employee who works in that building. Even the corporate tax on businesses can be tapped. The state and city oversee the distribution, and if the kickbacks exceed what the developer spent on the building, the rest of the money goes to the state.

The NIZ went into effect in 2012, and swept up around $14 million for developers that first year.

J.B. Reilly is one of those developers. He grew up in Allentown, then made his fortune in the suburban sprawl that led to Allentown’s demise. Now, he has come back to invest in downtown. “Not only did we see a financial opportunity,” he says, “We saw a community development opportunity.”

When it was commissioned for $50 million, Coca-Cola Park felt like a risky bet. But Reilly has raised the stakes immensely, putting down nearly a billion dollars on another sport: hockey. Reilly’s company, The City Center Management Company, is building the new home of the Philadelphia Flyers’ minor league team, the Phantoms. His hope is that it will become the heart of a new city.

“There’s a million square feet of development in the arena block between the hotel, the office retail, the arena itself and around 900 parking spaces,” Reilly says.

Reilly says Coca-Cola Park may have helped the city’s outlook and image, but it didn’t do much to spur growth. “It ended up being built on the fringes of Allentown and really didn’t have a benefit to downtown.” Reilly is confident the new PPL Center hockey arena downtown will be different because it’s more than just an arena. The stadium is encapsulated by the new offices of the region’s largest employer, the Lehigh Valley Health Network. It also houses a membership gym and a brand new Marriott Renaissance hotel.

“We really had to approach this differently,” Reilly says. “We had to look at this as a kind of master-planned opportunity to redevelop an urban area and really started thinking about this as creating a place.”

The NIZ allows Reilly to charge cheaper rent, which has been attractive to prospective tenants. Reilly’s office is across the street in a new building called Two City Center, which is also the new headquarters of National Penn Bank, the first bank to call Allentown home in four decades. A new upscale restaurant called The Hamilton — one that never could have survived in the area five years ago — opened on the ground floor in July.

“There will be 3,000 more people working here [in September] than there were a year ago,” Reilly says. “And for a city like Allentown, that’s just extraordinary. Some may say it’s an expensive project, and there’s a lot of state subsidy in it. And there is, but what’s it worth to turn around the third largest city in the state of Pennsylvania?”

Still a tough road

In the shadows of all that new development, just four blocks up 7th Street, is the neighborhood where Julio Guridy grew up. Guridy was born in the Dominican Republic and was among the first of several waves of immigrants to move to Allentown almost four decades ago.

Allentown is now nearly 50 percent Hispanic and Latino. Most of those residents are from Puerto Rico or the Dominican Republic, and most moved from New York and New Jersey, not because of job prospects, but to escape rising costs of living.

“The big influx came about ten years ago,”Guridy says. “It’s still a fairly new community. Many of them transferred from some other place with a Section 8 voucher. Some of them transferred with a welfare check.”

Allentown’s population never stopped growing. As suburban sprawl drew the locals away, immigrants moved into downtown. Many are first generation and don’t speak much English. The result is a poverty rate in Allentown that is nearly ten times the national average.

So how will the NIZ help this burgeoning portion of the city?

“That’s the multimillion-dollar question,” Guridy says.

The residents on Guridy’s old street have all seen the new development and most have heard about the NIZ. And most believe it will bring in more people and more foot traffic. Zack Alali is from Syria and moved to Allentown from New York in the wake of September 11. He says the city knows what it’s doing when it comes to big business.

“You think they’re going to spend $200 million on nothing? They’re not stupid,” he says.

But Alali also believes the city is ignoring small business owners in favor of the big developers, and says the feeling that he is an underdog is palpable.

“I applied for a loading zone in front of my shop. It took them three years to approve it,” he says. “The arena people changed the collection of the trash for the whole city in one week. So that tells you everything.”

Edis Farmin moved to Allentown from New York a decade ago. She owns a building and runs a salon in it called Dominican Beauty, just up the road from Alali’s store. She says the development that’s going on at the end of her street is for other people, not for her. She’s also upset because today she got a letter saying her taxes are going up. They aren’t city taxes — they’re state and county taxes — but she sees the new development and can’t help but link the two.

“That’s not fair,” she says. “They want Hispanic people to go back to New York. That’s all they want.”

Guridy says he’s not surprised at the mixed response from the changing neighborhood. “I think there has to be an opportunity for all,” he says. “And I think that opportunity is open. I think the issue is, are we as a Hispanic community and a small business community prepared to take on those projects? It’s going to be difficult at the beginning. It’s not impossible.”

Mayor Pawlowski says his city will never be able to build away all of its problems, but he’s happy with the city’s success so far. “Before, we were dealing with not being able to get anyone to invest in the city of Allentown,” he says. “It was a place where no one wanted to be. Now we’re dealing with the issue of maybe we’re gentrifying our community too fast. I’d rather have that problem. That’s a problem I can deal with and we can address.”

The mayor says that because of the NIZ, his city has pushed forward 20 years in two. “For years, I was like Sisyphus, just pushing that boulder up the hill. And every time we seemed to be getting to the top, it would roll back down. I think the boulder is now over the top of the hill.”

Allentown as a trend-setter?

It’s too early to gauge success in Allentown. The city is only two years into a 30-year plan. But whether six square blocks of development can ripple through a city of 18 square miles doesn’t seem to matter to Allentown’s neighbors. The cities of Lancaster and Bethlehem each have their own state-funded development plans in the works. They call theirs “The City Revitalization & Improvement Zone,” or CRIZ.

If all goes according to plan, Allentown’s change in tune will debut on Sept. 12, when The Eagles open up the city’s brand new hockey arena with a sold-out concert. Sen. Pat Browne says he’s got tickets, but he’s more interested in the show outside.

“Leading up to the event, I’m not going to spend my time in the arena,” Browne says. “I’m going to spend my time outside looking at the waves of people coming downtown and seeing something I haven’t seen in 30 years. And it’s going to feel real good.”

A Practitioner’s Perspective On Understanding And Developing Industry Clusters

August 14, 2014

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:

  1. 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.

  2. Join an industry association and be present at industry functions, locally and outside the community.

  3. Understand the needs of the local industry, then identify ways to meet those needs.

  4. 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.

  5. 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.

  6. 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.

  7. 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.

  8. 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.

  9. 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.

  10. 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 jeff@tipstrategies.com.

Jeff Marcell
Senior Partner
TIP Strategies, Inc.

Honda Is Designing Houses, Because Cars And Homes Will All Be Part Of The Smart Grid

May 1, 2014

By: Ben Schiller
Via: Co.Exist


In the future, auto companies won’t just build cars. They’ll build cars that are part of the energy infrastructure, providing back up storage for the solar panels on your roof, and reinforcing the wider electricity grid. They could even play a role in developing smart homes and technologies.

You can see as much from a prototype smart home recently opened by Honda in California. It features an enormous 9.5-kilowatt solar array, a 10-kilowatt-hour home battery unit to store excess power, Honda’s home energy management system to control the whole thing, and, of course, its electric vehicle in the garage. Designed to be energy-efficient anyway, the house produces more power than it consumes, which means its owner could actually make money from the power company.


Honda isn’t the only car-maker getting into the whole sustainable lifestyle thing. Ford also built a show-home incorporating its cars and a range of green features. And Tesla is now selling batteries for home use as well as for use in its vehicles. But this house, which Honda developed with a lot of help from the University of California, Davis, might be the most impressive. See its video here.

Based on passive design principles, the house is naturally cooler in summer and warmer in winter. There’s geothermal pump system out back that reduces the cost of heating and air-conditioning. The concrete in the foundation is about half as carbon-intensive as standard, because engineers substituted the mix with pozzolan ash.

All in all, the house uses half the energy of a similar-sized abode in the area, Honda says. It is three times more water-efficient than a typical American home. And it saves 11 tons of CO2 a year, compared to an average dwelling and vehicle. It’s also designed to make its occupants feel good: Davis’s lighting research group installed LEDs throughout to match their circadian rhythms. Really.

Of course, it’s going to be some time before we see something like this in every subdivision in America. But, when we do, you can be sure auto-makers will want part of the action. If they’re not actually building the smart house, they could be selling some of the components that make it possible.

It’s Not About Incentives: Toyota’s Texas Move Is A Corporate-Culture Gambit

April 30, 2014

By: Dale Buss
Via: Forbes

Texas promised Toyota $40 million, or about $10,000 for each of the 4,000 jobs expected as the company moves its North American headquarters to North Texas from Southern California over the next three years. That’s more than the state’s Texas Enterprise Fund spent last year for each of 1,700 Chevron jobs in Houston and 3,600 Apple jobs in Austin.

But the incentives were relative chump change in the overall calculus that led to Toyota’s announcement of the move (MOVE -0.6%) this week. Far more important were the plans for corporate consolidation of the company’s diverse functions in the United States, as a major component of the cultural change hatched by North American CEO Jim Lentz over the last couple of years — and his determination that such deep transformation couldn’t be accomplished in California.

“I wanted to get sales, manufacturing and corporate operations in one location to be more efficient, and to put more resources against engineering and design,” Lentz told Automotive News. “If I can have supply and demand sitting next to each other, with information in real time, and collaborating with each other, that makes us a stronger player.”

Indeed, Toyota has been a heavily “siloed” company for a long time. Top executives have been discussing for years the need to remedy that problem as the U.S. market became both more important to Toyota, and more competitive. The 2010 safety-recall fiasco and 2011 earthquake and tsunami scrambled planning for that eventuality.

But when Toyota CEO Akio Toyoda appointed the company’s American veteran, Lentz, to a new position as North American CEO in 2013, this became one of his top priorities, sources said. And Lentz determined early on that Toyota couldn’t do what it needed to do on this score in either Southern California or in Northern Kentucky, near Cincinnati, where North American manufacturing operations were headquartered.

So the massive Toyota operation came into economic-development play. Denver, Atlanta and Charlotte, N.C., reportedly were finalists in addition to the Dallas-Ft. Worth area, out of 100 cities initially considered.

There’s a lot for any state to like in landing Toyota’s headquarters. The average salaries for the 4,000 jobs in Plano will be in the six figures, sources said, far more than manufacturing wages — meaning that Toyota’s Texas employees will have plenty of income to spread around.

That’s not to mention the obvious prestige of landing Japan’s largest automaker and the knock-on benefits to Texas of continuing to emerge as a new geographic powerhouse as the U.S. auto industry restructures. There are existing Toyota and General Motors truck plants in the state.

Texas also is the main gateway to the United States and Canada for a quickly growing automotive-manufacturing industry in Mexico, where the increasingly favorable labor-cost picture versus China is attracting car makers from all over the world. Mexico has broken ground on a handful of new auto plants in the last several years.

One more thing: Texas remains the reputed frontrunner for landing the giant Tesla “gigafactory” that promises to be a multi-billion-dollar boon for whichever of four states — also including Nevada, New Mexico and Arizona — manages to land Elon Musk’s dream fabrication and research facility.

So, sure, Texas wasn’t going to be caught offering Toyota nothing. But the financial incentives were only a sweetener. By contrast, in 2005 Tennessee offered state and local incentives totaling about $182 million to Nissan when it established its new North American headquarters there, involving white-collar jobs mostly similar to those that Toyota is bringing to Texas, according to the Center for Automotive Research in Ann Arbor, Mich. That came out to about $140,000 in incentives for each of the 1,300 jobs Nissan promised.

In the recent controversy over the United Auto Workers’ attempts to unionize the Volkswagen plant in Tennessee, it became public that state and local officials were offering the company about $300 million in new incentives if VW would add another assembly line at the plant to build a new SUV in addition to the Passat sedan now built there. With about 2,000 employees expected to be added to do that work, such incentives would work out to about $150,000 per promised worker.

For Toyota, the $40 million in state incentives presumably isn’t the whole of what Texas offered; Plano’s city council is scheduled to vote soon on its package of additional incentives, presumably including property-tax abatement related to the site of Toyota’s planned campus there. But Toyota likely could have gotten more in financial incentives from other cities.

It isn’t surprising to some corporate-location consultants, in fact, that Toyota might have left a lot on the table in financial incentives. “Many companies from Asia tend to be a little bit more careful on the incentive side in terms of how they’re viewed when they go into an area,” said Larry Gigerich, managing director of Ginovus, an Indianapolis-based consultant. “Culturally, they’re often very focused on making sure they don’t look like they’re taking every dollar available, and on doing things to help their new community as well.”

So from the start, cash wasn’t the main game for Toyota in deciding to leave southern California, or deciding to land in Texas.

The appeal of setting up a new shop in the logistical heart of North America and much closer to all of Toyota’s manufacturing operations was obviously a huge lure.

So was the chance for lower corporate operating costs across the board. “The business climate in Texas is very good overall, but particularly for large corporations,” Gigerich said. “That’s a tremendous positive. There will be enormous savings for Toyota right off the bat.”

It also helped the case for Texas that the costs of living will be much lower for Toyota managers in North Texas than in Southern California, that they’ll be able to afford bigger houses, that they won’t have to pay state income taxes — and that there’s a local NFL team to root for.

But from the beginning and in the end, Toyota’s Texas decision was mainly about the company’s goals for competing better long-term in the U.S. market. And for that, only vistas as big as Texas would do.

Office And Administrative Support Occupations Make Up Nearly 16 Percent Of U.S. Employment, May 2013

April 11, 2014

Via: U.S. Bureau of Labor Statistics

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.”


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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.