The document summarizes a presentation on the importance of workforce in site selection. It discusses how both companies and communities prioritize workforce retention and recruitment when making location decisions. It also outlines trends impacting the workforce like automation, artificial intelligence, and the gig economy. Additionally, it provides data on the labor forces in various states across metrics like costs, education levels, and population changes to help evaluate different locations.

1. KAED Fall Conference
The Importance of Workforce in Site Selection
November 9, 2017
Bowling Green, KY

2. Introduction
1

3. Duff & Phelps 3
Duff & Phelps Business Units

4. Duff & Phelps Global Footprint
Duff & Phelps 4

5. Workforce Considerations
2

6. Defense and Offense
• Prioritization
– Workforce has been, and continues to be, an important driver of site selection and business
incentives
– Both companies and communities focus and spend on retention/recruitment
• Retention
– Who you currently employ
– Education and training
– Upward mobility/advancement
• Attraction
– Who you would like to employ
– Partnerships
– Recruitment
– Marketing
• Corporate Workforce Strategies
– Expansion
– Relocation
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7. Great Recession Impact
• Banking and homeowner foreclosure crisis
• Historically unprecedented jobs losses in manufacturing sector
• High unemployment and underemployment
• Candidates leaving the workforce and failing to report in jobseeker statistics
• Companies holding cash and reducing or eliminating capital investments
• Lower seed, angel and venture capital funding
• Lower patent activity
• Increased income inequality
• Political instability/upheaval
• Undocumented and documented immigration reduced
• General financial and social anxiety
• Systemic stress on social services
Duff & Phelps 7

8. Great Recession Recovery
• Capital flowing to reasonable projects
• Unemployment returned to healthy levels
• Stock market indexes at all-time highs
• Fed considering an increase in interest rates
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9. Trends
• Automation/Roboticization of Industry
– US domestic and foreign tax/regulatory policy has contributed to automation and offshoring
– Manufacturing is retooling and automating at higher rates of adoption
– Asia and Europe are leading the charge into robotics
– Service sector, including professional ranks, is automating
• Artificial Intelligence
– IOT is enabling AI at every level of business and trade
– Big data is huge and growing due to security and business needs
– Consumer demand is increasing the pace of AI
• Edwin Budding, 1830, Thrupp, England
• Gig Economy
• Democratization of Education
Duff & Phelps 9

10. Site Selection
3

11. Major Industries in Kentucky
• Bourbon
• Equestrian Events
• Sporting Goods
• Automotive
• Aerospace
• Primary Metals
• Food & Beverage
• Logistics/Distribution
• Manufacturing
• Chemicals
• Plastics & Rubber
• Healthcare
Duff & Phelps 11

12. Executive Summary
• The general site selection process is a process of elimination.
• The general site selection process varies by industry because companies in different industry
segments have different priorities and cost structures.
• During the site selection process, it is important to start with an understanding of a client’s
financial goals and to select performance criteria (and data sources) to assess progress toward
those goals.
• The results of a site selection project are best conveyed in a cross-state comparison where
incentives are netted against their underlying operating costs or capital investments.
Duff & Phelps 12

13. Goals
• Accessing new markets
• Lowering costs
• Increasing skills of workers
• Changing or broadening company culture
• Protecting intellectual property
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14. Multidisciplinary Exercise
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Treasury/
Real Estate
Tax/
Legal
Product
Groups Rep
Gov’t
Relations
Global
Sourcing
Communi-
cations
Incentives
Specialist
IT
Human
Resources
Strategic
Planning
CapEx Job Projections Business Change
Finance Leadership Team
Typical Cross Functional Team

15. Criteria
Duff & Phelps 15
Ranking Critical Site Selection Drivers
HQ-Back Office Manufacturing Distribution
Labor Availability Labor Availability Logistics
Labor Cost Labor Cost Labor Availability
Real Estate Availability Logistics Labor Cost
Incentives Business Climate Real Estate Availability
Business Climate Real Estate Availability Business Climate
Disaster Recovery Regulatory Environment Incentives
Accessibility Utilities & Infrastructure
Incentives
Source: Site Selection Group, IPT Credits & Incentives Symposium (September 2013)

16. Data
• Labor
– Affordability
– Availability
– Skills
– Unionization
• Utilities
– Water/Sewer
– Electric
– Natural Gas
• Taxes
• Construction Costs
• Subjective Criteria
Duff & Phelps 16

17. Process of Elimination
Duff & Phelps 17
International
Domestic (US)
Top 10 States
Top 3
States
Incentives
#1 State
Site Selection Process

18. International – Criteria & Data Sources
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International
Factors:
• Labor Environment
• Social Environment
• Public Sector Environment
Data Sources:
• Multi-National Indices
• Multi-National Databases
Site Selection Process

19. Domestic – Criteria & Data Sources
Duff & Phelps 19
Domestic (US)
Site Selection Process
Factors:
• Labor Costs
• Availability of Skilled Labor
• Availability of Business Services
• Occupancy & Construction Costs
• Energy Availability & Costs
• Corporate Tax Rate
• Tax Exemptions
• Union Profile
Data Sources:
• National Indices
• National Databases

20. Cost Model – Net of Incentives
Duff & Phelps 20
Top 3
States
Site Selection Process
Costs:
• Site
• M&E
• Labor
• Utilities
• Logistics
• Taxes
Less: Incentives
#1 State

21. Workforce
4

22. Private Sector Employment
Duff & Phelps 22
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
KY MS AL LA NC FL GA SC TN VA TX
Private Sector Employment

23. Population
Duff & Phelps 23
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
KY MS AL LA NC FL GA SC TN VA TX
Population (2015)

24. Population Growth
Duff & Phelps 24
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
KY MS AL LA NC FL GA SC TN VA TX
Population Growth 2010-2015
Series1 Series2

25. Population Growth – Millennials
Duff & Phelps 25
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
KY MS AL LA NC FL GA SC TN VA TX
Population Growth 18-34 yrs (2010-2014)

26. Earnings vs. Cost of Living
Duff & Phelps 26
0%
20%
40%
60%
80%
100%
120%
KY MS AL LA NC FL GA SC TN VA TX
Earnings vs. Cost of Living
Mean Earnings (vs. National Earnings) Cost of Living

27. Labor Costs
Duff & Phelps 27
0 20000 40000 60000 80000 100000 120000 140000 160000
KY
MS
AL
LA
NC
FL
GA
SC
TN
VA
TX
Labor Costs
Management Prof & Tech Finance Information Manufacturing All Occupations3

28. Labor Costs – All Occupations
Duff & Phelps 28
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
KY MS AL LA NC FL GA SC TN VA TX
Labor Costs
All Ocupations

29. Labor Costs – Manufacturing
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$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
KY MS AL LA NC FL GA SC TN VA TX
Labor Costs
Manufacturing

30. Labor Costs – Information Tech
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$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
KY MS AL LA NC FL GA SC TN VA TX
Labor Costs
Info Tech

31. Labor Costs – Financial Services
Duff & Phelps 31
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
KY MS AL LA NC FL GA SC TN VA TX
Labor Costs
Finance

32. Labor Costs – Professional & Technical
Duff & Phelps 32
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
KY MS AL LA NC FL GA SC TN VA TX
Labor Costs
Prof & Tech

33. Labor Costs – Management
Duff & Phelps 33
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
KY MS AL LA NC FL GA SC TN VA TX
Labor Costs
Management

34. Education Attainment
Duff & Phelps 34
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%
KY
MS
AL
LA
NC
FL
GA
SC
TN
VA
TX
Education Attainment (25 (+) years
Graduate Degree Bachelor Degree Some College (includes Assoc Degree) High School Less than High School

35. Education Attainment – Less than HS
Duff & Phelps 35
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
KY MS AL LA NC FL GA SC TN VA TX
Education Attainment
Less Than HS

36. Education Attainment – High School
Duff & Phelps 36
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
KY MS AL LA NC FL GA SC TN VA TX
Education Attainment
High School

37. Education Attainment – Some College
Duff & Phelps 37
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
KY MS AL LA NC FL GA SC TN VA TX
Education Attainment
Some College

38. Education Attainment – Bachelor Degree
Duff & Phelps 38
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
KY MS AL LA NC FL GA SC TN VA TX
Education Attainment
Bachelor Degree

39. Education Attainment – Graduate Degree
Duff & Phelps 39
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
KY MS AL LA NC FL GA SC TN VA TX
Education Attainment
Graduate Degree

40. Client Deliverables
6

41. Cost Model
What is it going to cost to hire an employee in your community?
• Hourly wage or salary
• Overtime and bonuses
• Payroll/employment taxes
• Heath and retirement benefits
• Recruitment costs
• Training costs
Duff & Phelps 41

42. Opportunity Assessment
• All incentives
– Property tax abatement/rebate
– Sales tax rebate
– Income tax credits
– Deeded land
– Low-no interest loans
• Workforce Incentives
– Tax credits
– Cash grants
– Training assistance
– In-state tuition waiver
Duff & Phelps 42

43. SWOT Analysis
Duff & Phelps 43
Physical Infrastructure
• Air & ground transportation
• Ports & waterways
• Fiber optics
• Energy utilities
Education/Industry
• Schools, colleges, universities
• Entrepreneurism
• Business incubation
• Critical mass
Labor
• Right to work
• Shortages/surpluses
• Underemployment
• Base/plant closure
Financial/Economic
• Bond rating
• Debt
• Budget
• Tax rates/base

44. Solutions
Gaps & Fixes
7

45. Homework
• Review publicly available data for your community
– Bureau of Labor Statistics
– American Fact Finder
– US Census
• Ask three questions:
– Is the data available?
– Is the data accurate?
– Is the data current?
• Review community websites
– Economic development
– Workforce development
– Chamber
• If there are gaps:
– Perform a workforce analysis with publicly available data
– Perform an analysis with private data
– Research and publish your own data
– Create recruiting, retention and training programs to build your workforce
Duff & Phelps 45

46. Partners
• K-12 Education
– Achievement and proficiency
– Paths to productivity, entrepreneurship, innovation
• Higher Education
– Four year colleges and universities
– Community and career colleges
– Vocational/trade schools
• Workforce Improvement Boards
• Chambers of Commerce
• Community Nonprofits
• Industry/Trade Associations
Duff & Phelps 46

47. Public Data
• Public and private sources of information
– Bureau of Labor Statistics
– State Workforce Commission
– Regional Workforce Improvement Board
– School boards
– Community colleges
– Universities
– Chambers of commerce
– National job search sites
• Triangulate publicly available data and illustrate workforce and talent development pipeline
from K-12 to postgraduate degree education
Duff & Phelps 47

48. Action
• Work with nationally recognized economic development consulting firms on:
– Analyzing your industry and labor market trends
– Performing supply chain analyses
– Commissioning target market studies
• Create a talent pipeline
– 3 to 10 years deep
– Work backward from graduates to K-12
• Advocate for STEM education
• Lobby for continuing education and retraining funding
• Assist local, state and federal elected officials with proposed legislative changes
• Find Your Millennials!
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49. Thank You
Duff & Phelps 49
Tony Schum
Vice President, Site Selection & Incentives Advisory
T +1 512 671 5509
M +1 512 296 7342
Duff & Phelps, LLC
919 Congress Avenue
Suite 1450
Austin, TX 78701
tony.schum@duffandphelps.com
www.duffandphelps.com