|
Manufacturers interested in more than incentives
By Dan McCue
Staff Writer
Gathered around the podium for the recent announcement of SKF Aero Bearing’s decision to expand its North Charleston operations, the easygoing banter among the principles revolved mainly around golf and restaurants.
It was a moment to bask in the glow of an announcement that heralded the expected creation of about 100 new jobs this year.
But that moment, and others like it, belies the fact that encouraging manufacturers to relocate or expand their operations in the region is a changing and challenging endeavor.
“There’s no question the pace of corporate site selection efforts and the way they go about it has changed dramatically,” said David Ginn, president and CEO of the Charleston Regional Development Alliance.
“What used to take one to three years to bring to fruition now takes only three to six months—an amazingly short amount of time given the magnitude of the investment involved, and the primary reason is the Internet,” Ginn said. “Now 80 percent of a company’s site selection process, the basic research regarding a region’s resources and economy, is all done by surfing the Web.
“As a result, we won’t even learn that a company is interested in Charleston until they’re deep into the elimination process,” he said. “From that point on, we’ve got to sell, sell, sell the three county region we serve or we’re going to lose out.”
Internet effect
To say that a business considering relocation, consolidation or expansion can find out much of what they need to know with a click of a mouse is an understatement.
Google the phrase “economic incentives and business relocation,” and one is rewarded with 3.35 million hits for Web sites advertising the incentives and enticements of cities ranging from New York to Austin, Texas, to Scottsdale, Ariz.
The carrots being offered include everything from a “business-friendly climate” to monetary incentives and grants, to tax breaks.
“What that means is before you do anything else, you better have a real world-class presence on the Web,” Ginn said. “What that means is that what you put out there better be meaningful, informative, visually appealing and easy to navigate.”
It also means that once a manufacturer has made contact with the alliance, the courtship has advanced past the dating stage, and it is time for the detail work to begin.
“By the time we’re having discussions, more often than not, what they want is a simple answer: ‘How can you meet my specific needs?’” Ginn said. “By our having discussions at all, they’re already telling us we’re on the short list. Now it’s all about staying in the game and realizing that once the company is down to its last two or three choices, it’s all about explaining, while the other location is good, why Charleston is that much better.”
Cluster growth
In the case of SKF Aero Bearings, a global leader in bearings and anti-friction solutions for aerospace, automotive and manufacturing processes, the decision to invest an additional $6.5 million for expansion was directly related to the alliance’s efforts to create an aviation/aerospace cluster in Charleston County.
“Without question, the alliance’s work to create an aviation cluster is extremely important to our long-term strategy in this region,” said Kaj Thoren, president of the SKF Aero and Steel Division. “The more people you can bring here, the more aerospace and aviation-related investment who you can bring here, the more successful we will be as a company.”
In the case of Kontane Logistics, the Huntersville, N.C., logistics provider that opened a warehouse and distribution center in the Charleston region last year, the decision was driven by the region’s infrastructure, the airport and the Port of Charleston.
Much the same could be said of DaimlerChrysler, which has also cited the hands-on involvement of state and local officials as being critical to its decision to build its Sprinter van here.
“In each of those cases, it was a question of listening to what each company’s individual needs were and matching it to the market,” Ginn said. “Remember, they’re not picking a place; they’re eliminating potential locations.”
Leadership and planning
“Then, beyond logistics—infrastructure, available workforce and the like—you differentiate yourself, as the DaimlerChrysler situation bore out, through the passion of your leadership,” Ginn said.
That’s when you begin to talk about tax breaks, perhaps, or other incentives, which are generally performance-based and mandate that the manufacturer give as well as take, “through job creation and future investment,” he explained.
But economists note that incentives often aren’t the determining factor in an employer’s decision to relocate or expand. Employers place more emphasis on the quality of a state’s or city’s labor pool, its education system and its proximity to the markets where they sell their products.
Thoren said SKF first began looking at the Charleston region as a possible location for its operations in 1999. At the time, it was one of five locations that were actively competing for its investment.
Among the factors he cited as important to its decision to open its original service center here were Charleston’s climate, business-friendly attitude, a labor pool with familiarity of the industries it serves and the aerospace cluster.
Most of those amenities are the direct result of local municipalities, chambers of commerce and other business groups agreeing to work together to stay ahead of the curve, Ginn said.
“You can’t just wait for companies to call and say, ‘If you come here, we’ll do a road project.’ You have to identify things that can be improved upon and work on them now, not tomorrow,” he explained. “One thing that’s been critical to our getting manufacturers to come here is our local leaders considering these companies’ potential needs when they do their long range planning.
“Now why would they do that?” Ginn said, posing his own question. “Because, again, we’re vying for new businesses in an increasingly competitive and fast-paced environment. When it comes to any business sector, manufacturing or otherwise, you don’t want to just wait and deal with any company that comes along.”
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.
|
E-Mail This Article
Printer-Friendly Version