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How Your Community is (or isn't) Being Evaluated for Foreign Direct Investment
 

How Your Community is (or isn't) Being Evaluated for Foreign Direct Investment

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Atlas Advertising CEO Ben Wright and Investment Consulting Associates' Managing Director Douglas van den Berghe discuss trends and opportunities in Foreign Direct Investment (FDI) in the United ...

Atlas Advertising CEO Ben Wright and Investment Consulting Associates' Managing Director Douglas van den Berghe discuss trends and opportunities in Foreign Direct Investment (FDI) in the United States.

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    How Your Community is (or isn't) Being Evaluated for Foreign Direct Investment How Your Community is (or isn't) Being Evaluated for Foreign Direct Investment Presentation Transcript

    • How Your Community Is (Or Isn't) Being Evaluated for Foreign Direct Investment (FDI)
    • Your Hosts
      Ben Wright
      CEO, Atlas Advertising
      benw@atlas-advertising.com
      www.twitter.com/atlasad
      Douglas van den Berghe
      Managing Director
      Investment Consulting Associates
      douglas@ic-associates.com
      Guillermo Mazier
      Business Development,
      Atlas Advertising
      guillermom@atlas-advertising.com
      www.twitter.com/atlasad
    • About Atlas
      Atlas Advertising helps economic developers reach national and international prospect and site selection audiences. We deliver branding, website development, GIS mapping, research, social media, and creative services professionally and with a staff experienced in economic development. Unlike firms with little or no economic development experience, Atlas Advertising uses a proven mix of economic development marketing tactics that generate interest from site selection audiences.
      Atlas Advertising is led by a former economic development practitioner and has worked with 70+ different economic development clients in nearly 40 US states and six countries. Our approach and experience means that our campaigns generate an average of three to ten times the response of other campaigns.
      Featured clients:
      State of Ohio
      Nogales, Mexico
      City of San Francisco
      Greater Phoenix Economic Council
      Greater Omaha Economic Development Partnership
      Webster City, Iowa
    • About Investment Consulting Associates
      Investment Consulting Associates (ICA) is an independent adviser to companies optimizing their global supply chains and location portfolios. ICA also supports governments in building and enhancing their Foreign Direct Investment (FDI) and economic development strategies. Through our global partner network and multi-disciplinary approach we can assist our clients with an integrated package of service offerings.
      Our business philosophy is to utilize smart and efficient software solutions in providing dedicated and tailored consulting services. LocationSelector.com and ICAincentives.comare two of our flagship web based products for companies and governments assessing and benchmarking the competitiveness of global business locations and optimizing their incentive potential. This unique service offering differentiates Investment Consulting Associates from traditional management consulting firms who are active in the field of investment promotion and corporate site selection services.Many of our clients are ranked among the world’s 500 largest companies, but we also advise midsized businesses, nonprofit organizations, and government agencies. Our global track record supports our mission to become world leader in FDI advisory.
    • Download the slides, listen to the video, continue the dialogue
      Continue the Conversation:
      Follow us on Twitter: www.twitter.com/AtlasAd
      Tweet questions using hashtag #AskAtlas
      Join Next Gen Economic Development Marketers LinkedIn Group
      View and share the slides with your colleagues (available now):
      http://bit.ly/fQB6hC
      View and share the video with your colleagues (Will be posted later this week): http://bit.ly/fjc3Ex
    • Introducing the Atlas / ICA FDI Master Plan.
      Work with Atlas and ICA jointly to create your future FDI master plan. An FDI master plan includes:
      A road map for short, medium and long term FDI success for your community
      Best practices for servicing global business location decision makers
      An assessment of current strategy and target markets
      Recommendations for target investor countries/regions, based on your target industry profile
      Platform to benchmarking your community with other communities/countries around the world
      FDI marketing and communications plan
      Tips for partnering with regions or states
    • Audience Question:Have you worked on projects that are expansions or relocations of foreign owned companies this year?
    • Outline
      Why FDI should be an important part of your strategy today
      Challenges you face currently in FDI attraction
      Trends in FDI in the United States
      How foreign-owned companies evaluate communities today: Current case studies
      Q+A
    • Why FDI should be an important part of your strategy today
    • White House Touts Growing Foreign Direct Investment In The U.S.
      “At a time where we need to use every tool in our toolbox to continue to put Americans back to work and grow the economy here at home, promoting foreign direct investment is an important opportunity to accelerate our economic recovery,” President Obama said in a written statement.
      Labor Availability and Quality Peak in the United States
    • FDI is growing again, and projected to grow
      Source: UNCTAD FDI Database
    • Further the US is the global leader in inflows and outflows
    • Audience Question: What are your objectives for FDI in the coming year?
    • Challenges you face
    • The federal government plays a limited role in FDI promotion
    • Foreign owned companies know just a handful of US destinations
      • New York
      • San Francisco
      • Los Angeles
      • Dallas
      • Miami
    • There can be a significant language barrier for foreign owned companies
    • Comparing individual cities within countries can be difficult
    • Audience Question: What tactics have you found to be successful in overcoming these challenges in your community?
    • Trends in Foreign Direct Investment
    • Global FDI trends – regional differentiation
      20 Years ago – shift from Bi-Polar to Tri-Polar according first World Investment Report
      Currently – shift from Tri-Polar to Emerging Markets (EM)
      Role of European Union in world outward FDI stock decreased (from 85% in 1990 to 70% currently)
      Japan no longer qualifies as a Tri-Polar “pole” (at least 10% FDI global outflows)
      The Share of the top 20 EM’s in Global FDI Stock rose from 6% to approximately 15% between 1990 – 2010
      The position of the United States will be challenged by the EM’s, but there are also positive signs
    • Implications for the US
      US Competitiveness for FDI “Revival of the US Manufacturing Powerhouse”
      Repatriation and Re-shoring of US companies and business activities
      Market Seeking: Traditional markets EU still of importance
      Changing Target Markets – Increased importance of Emerging Markets especially for Greenfield investments
    • Anecdotal evidence – examples of re-shoring activities in the US
      Ford Motor Company and Wham-O (the makers of the Frisbee®) are cited as having already brought production back to the U.S.
      Germany-based Automaker Quaprotek USA invests $22 Million in a new Tennessee facility that brings over 120 jobs to the area.
      Presair, a manufacturer north of New York City, will return production of its switches from China by this Fall, 2011. The reasons included long lead times for product and the tying up of capital needed for expansion. While Presair will see its costs jump 8% with the move back to the U.S., its CEO Art Blumenthal believes those higher costs will evaporate with the rising costs of manufacturing in Asia.
      NCR plans to begin a second production shift, which will result in a total of 800 new (re-shored) jobs to Columbus, Georgia.
    • Volatile FDI trend pattern
    • Growing importance of EM countries for Greenfield investments in the US
      Source: Organization for International Investment 2011
    • Top countries by US Greenfield Investment Job Creation – and Industry Sector Analysis
      Source: Organization for International Investment 2011
    • Global FDI drivers and trends – a future forecast
      Resource seeking
      Market seeking
      Efficiency seeking
      Strategic-asset seeking
      Enhancing synergies (i.e. technology, marketing channels and management expertise
      Exploiting different factor endowments
      Supply chain optimization
      Raw materials,
      Energy sources
      following customers,
      suppliers or competitors abroad
      CRISIS
      1994
      $256 billion
      2007 record
      $1,833 billion
      2013
      $1,8 billion
      Relocation/
      Expansions/
      Offshore/sourcing
    • Audience Question: What country or countries are you most aggressively targeting?
    • How foreign owned companies evaluate locations: A recent case study
    • 1990 location selection process
      Site visits
      Journals
      Newspapers
      Brochures
      Trade Shows
      SIX MONTHS
      City
      City
      City
      City
      City
      City
      City
      City
      City
    • 2011 location selection process
      EIGHT WEEKS
      85% of initial search = Internet
      Detailed info
      Services
    • Cost comparison
      Location Screening,
      modeling &benchmarking
      Implementation
      Community Evaluations
      Strategic Assessment
      Phase 1
      Phase 2
      Phase 3
      Phase 4
      Phase 5
      Client
      • Input cost model
      • Define real estate objectives and accommodation needs
      • Resources for site visits
      • Define project and goals
      • Business requirements
      • Project assumptions
      Project definition & understanding of strategy
      Analysis and comparison
      of locations
      Comparison of costs
      Real estate support
      Site visits
      • Data gathering
      • Build model for location analysis
      • Present rankings of locations
      • Sensitivity analysis
      • Exploration of incentives
      Consultant
      • Prepare site visits
      • Prepare discussions with relevant governments and service providers
      • Incentive negotiations
      • Determine geographic scope
      • Selection of location factors
      • Weighting location criteria
      • Set up cost model
      • Cost differentials between locations
      • Real estate transaction and acquisition support
      Corporate investment routemap
      A New Generation in FDI Advisory
    • Phase 1
      Project details – Case Study company ABC
      Company “Bulk and Specialty” has taken over parts of company Y operation in US State I.
      Operations and machinery may have to be relocated (factory and warehouse).
      The company is exploring opportunities to set up a new manufacturing plant in other parts of the US, Mexico or possibly China. The machinery and equipment of the new acquired firm in US State I will be transported to the new location. The estimated investment is:
      • Land €3,000.000
      • Building €6,500.000
      • Machinery & equipment to be moved from an existing site €3.500.000
      • New machinery & equipment €2.500.000
      • Employees 50-75 (fte) with 2-3 shifts
      The main question company “Bulk and Specialty” is facing: Should we keep the operation in US State I, or is it worthwhile to relocate within the US, Mexico or even China
    • Case study: company ABC
      Phase 1
      Business drivers and challenges – Chemical Industry
      High impact of energy of and feedstock costs
      Limited growth potential in current US State I due to saturated markets and demographic impacts
      Migration of more and more customer-industries to low-cost countries
      Growing commoditization
      New competitors from Asia and Middle East: pressure on margins
      Increasing regulations
    • Scenario approach
      Phase 1
      Base case scenario: stay in US State I
      Supply chain effective scenario: Relocate to Mid-West
      Illinois – Missouri – Iowa - Ohio
      3. Labor cost effective scenario: Relocate to Mexico
      Mexico
      Overseas offshore scenario
      China
      A New Generation in FDI Advisory
    • Location factor groups
      Phase 2
      The following location factor groups were incorporated in the analysis:
      BUSINESS ENVIRONMENT FACTORS
      LABOR COSTS FACTORS
      LABOR AVAILABILITY
      LABOR PRODUCTIVITY
      ACCESSIBILITY FACTORS
      COUNTRY REPUTATION
      SUPPLY CHAIN MANAGEMENT
      REAL ESTATE FACTORS
      TAXATION & CUSTOMS
      GRANTS & INCENTIVES
      QUALITY OF LIFE
      ENVIRONMENTAL COSTS EVALUATION
      BUSINESS RISKS
      ELECTRICAL POWER
    • Benchmarking techniques – LocationSelector.com
    • Financial due diligence
      Phase 3
      Logistics
      Duties
      Tariffs
      Utilities
      Salaries
      Depreciation
      Local Taxes
    • Region / State Scoreboard Analyses
    • Realestate – Deal making
      Brownfield solutions
      Greenfield solutions
      Build to Suit on Industrial Parks
    • Integrated story: where corporates meet IPA’s
      Aftercare and PolicyAdvocacy
      Lead Generation and Targeting
      Cost comparison
      Location Screening,
      modeling & benchmarking
      Implementation
      Community Evaluations
      • Information & Sales Packs
      • Investment plans
      • Policies and incentives
      • Procedures requirements
      • Progress and achievements
      • Create awareness
      • Information provision
      • Assistance with contacts
      • One-stop-shop services
      • Assessment of manpower,,Infrastructure service needs
      • Follow-up
      Strategic Assessment
      • Advertizing and PR
      • Information & Marketing
      • Missions & Events
      • Company targeting
      • Company visits
      • Follow-up
      • Continued “account executive attention”
      • “Ombudsman” role and trouble-shooting function
      • Follow-up on manpower, infrastructure, service needs
      Phase 1
      Phase 2
      Phase 3
      Phase 4
      Phase 5
      Image Building
      Investor Servicing
    • The most frequently evaluated communities in the U.S. for FDI are…
    • Most frequent considered communities for FDI
      European / Asian companies tend to initially focus first on those metropolitan areas where they can find the following multipliers:
      Presence of local accountant and bank branches they already work with
      Similar expat communities - Metropolitan quality of life
      Presence of Universities where young foreign entrepreneurs study
      Flight Connectivity and Geographical proximity (East coast vs. West coast)
      Mental Map – Usual suspects
      European companies
      New York
      Chicago
      Boston
      Atlanta
      San Francisco
      Asian companies
      Los Angeles
      San Francisco
      Chicago
      New York
    • Most frequent considered communities for FDI
      Second tier metropolitan areas located in Central and Mid-West States are less frequent mentioned
      Kansas City
      Cincinnati
      St. Louis
      Memphis
      Minneapolis
      Yet, these cities offer in many different cases an excellent location proposition with cost and risk levels well balanced
    • Q + A
    • The Atlas / ICA FDI Master Plan.
      Work with Atlas and ICA jointly to create your future FDI master plan. An FDI master plan includes:
      A road map for short, medium and long term FDI success for your community
      Best practices for servicing global business location decision makers
      An assessment of current strategy and target markets
      Recommendations for target investor countries/regions, based on your target industry profile
      Benchmarking your community with other communities/countries around the world
      FDI marketing and communications plan
      Tips for partnering with regions or states
    • Coming to IEDC in Charlotte?
      To reserve your place, simply type “RSVP” into your chat box.
    • Contact Information
      Contact information:
      Gustav Mahlerplein 109 - 111
      Amsterdam, 1082 MS
      Contact: Douglas van den berghe
      t: +31 (0)207946081
      douglas@ic-associates.com
      www.ic-associates.com
      Contact information:
      2601 Blake Street, Suite 301
      Denver, CO 80205
      Contact: Ben Wright
      t: 303.292.3300 x 210
      benw@Atlas-Advertising.com
      www.Atlas-Advertising.com
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