1. For all site selection projects, the four primary considerations in choosing a site are:
i. The availability of sites and buildings,
ii. Workforce quality and availability,
iii. Ongoing costs (including tax and incentive implications), and
iv. The overall quality of life and risk characteristics of the region.
2. For an advanced manufacturing project, the overall considerations also include these four areas. But what is different is the emphasis on certain areas within these primary considerations.
3. Here are a few areas that economic development agencies should consider when positioning their region for advanced manufacturers.
SITE AND BUILDINGS
1. In recent years, there has been significant effort to certify sites, but not buildings, for economic development purposes. This effort is effective in shortening the timeline for plant start-up.
2. However, a building designed for advanced manufacturing normally requires construction to higher standards than is seen for spec buildings. Keep in mind, too, that recently vacated buildings normally are not cost-effective renovation candidates for advanced manufacturing needs.
3. Characteristics of an advanced manufacturing building would be one with clear spans to house a clean room, thick slabs and solid foundations for precision machinery, are thermally robust for temperature maintenance and have significant telecommunications infrastructure to manage the needs of big data.
4. For economic developers, it’s a good practice to stratify which buildings in your entire portfolio can fit the needs for advanced manufacturers and which ones may not, and the cost of building modifications, if feasible, to bring the buildings to a higher standard.
WORKFORCE AND EDUCATION
1. Advanced manufacturing companies need advanced skills to operate successfully. In order to provide these additional needed skills, the commitment to education should be evident from K-12 to post-graduate support.
2. Characteristics of an advanced manufacturing workforce educational system would include local and private school aggregate performance against national rankings. Normally this includes the emphasis of STEM programs in several grade schools in the area, in addition to existing regional high schools that are either dedicated to a science and math curriculum and/or have a technical and/or college-bound component in their existing curriculum.
3. For many of the high schools, dual enrollment is important. However, the history and volume of dual enrollees is the key. For cities, this should be measured in thousands, rather than hundreds, of students.
4. To attract the entire workforce for a project, it is important that the region (normally provided via the state) has a program to recruit, screen and train workers via a dedicated team specifically designed for that purpose. The training includes development of job-specific skills e-manuals in addition to training videos specifically for the needs of the project.
5. The birthplace of advanced manufacturing companies, in many instances, comes from university research. Areas that can combine university research with incubator support for start-ups that can commercialize the university’s efforts are key. They are effectively able to build the ecosystem for advanced manufacturing from the ground up, therefore creating a distinct advantage for the region.
TAX, LAWS AND INCENTIVES IN THE US
1. In the US acccording to the tax foundation, corporate income taxes are levied in 44 states, with five states whose corporate tax rates are lower than 5 percent. However, 18 states have a single factor apportionment formula, which can greatly reduce the tax burden for products shipped out of state. In addition, there are 33 states that have R&D or advanced manufacturing specific tax credits, and some of those can be monetized and sold in cases where there is no income tax burden for the manufacturer.
2. Tort reform legislation is designed to limit the liability of manufacturers. Over half of the U.S. have passed some type of legislation designed to limit liabilities for various industries, including manufacturing and medical. For states that have tort reform for manufacturing, choosing to locate in one of those states can limit the company’s future exposure to lawsuits.
3. Advanced manufacturing companies, due to the higher amount of automation, have the potential of creating an inherently safer work environment than traditional manufacturers. If this is the case, policy makers and industry can work together, expanding the number of job classifications to reflect this situation, to ultimately reduce workmen’s compensation costs.
4. In addition, local economic development zones can be created to support advanced manufacturers in myriad ways by reducing taxes paid, or re-directing a portion of property taxes paid to support infrastructure development in the particular zone. Several states have also passed mega-project legislation, giving them the power to design, fund and close a deal without having to initiate a special legislative session.
5. Regions that can offer a combination of any or all of these areas better position themselves to attract advanced manufacturers. That is, however, assuming that the overall region and state are in sound fiscal health to be able to maintain these offers once committed.
QUALITY OF LIFE/REDUCTION OF RISK
1. People want to work in areas where they enjoy living, and advanced manufacturers are normally drawn to communities that enjoy a higher quality of life. In addition, the decision-makers want to take all actions necessary to reduce their overall risk given the innate complications of siting a new facility.
2. One of the ways to reduce this risk is via project startup support. The new project will have a designated project manager, and most likely someone that is not from the area. When this is the case, it is important for the region (built into the project offer) to designate an ombudsman to help the project manager communicate through all levels of state and local government. A well-defined project plan utilizes an ombudsman that has manufacturing industry experience and has hopefully performed start-ups.
3. However, the project will evolve past an ombudsman, and even the ombudsman will need local and state support. In these instances, it is important that the local economic development function is regional in nature.
4. By having this organizational structure in place, the efforts and needs of the region are coordinated not only for a particular project, but also for the workers that may likely be traveling into the area during their work commute, in addition to coordinating initiatives identified above and others based on agreed regional priority.
Source:
https://www.tradeandindustrydev.com/industry/manufacturing/creating-environment-attract-advanced-16244
