LOCATIONAL STRENGTHS AND WEAKNESSES for from 347 Girod St. Mandeville, LA 70448 (985) 626-9868 FAX: (985) 626-9869 firstname.lastname@example.org Technology Assessment•Strategic Planning•Organization Design•Site Selection June, 2009 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 TABLE OF CONTENTS COMPETITIVE BACKGROUND 3 INTRODUCTION 6 QUALITY OF LIFE 8 BUSINESS CLIMATE 13 MARKET ACCESS 18 WORKFORCE AND TRAINING 23 TRANSPORTATION 33 UTILITIES 39 REAL ESTATE 44 TECHNOLOGY RESOURCES AND STARTUP SUPPORT 49 NATURAL RESOURCES 55 SUMMARY 61 APPENDIX 62 Locational Strengths and Weaknesses for Acadiana Economic Development 2 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 COMPETITIVE BACKGROUND It is helpful to begin a strengths and weakness assessment by looking at previous growth in the region. Evaluating past growth in population, employment, and per capita income gives some understanding of the region’s overall competitive position. Adding an analysis of the growth and development of the region’s economic base over the last five years gives additional clues about those sectors of the regional economy that are declining and growing. This analysis is helpful in targeting industries that have some of the same locational requirements. Table 1. Population Trend Area 2002 2007 Pct. Chg. Acadiana 516,174 538,052 4% Baton Rouge 713,356 769,397 8% Houma 195,564 201,020 3% Houston 4,979,939 5,597,958 12% U.S. 287,726,647 301,290,332 5% The Acadiana region has grown much slower than Houston and Baton Rouge in terms of population since 2002 (Table 1). Population growth in Acadiana has been significantly below the growth rate in employment, suggesting that the region is experiencing a much tighter labor situation than in 2002. However, Acadiana’s employment growth is at a par with that of Baton Rouge, is slightly below that of Houston, but is significantly above that of the nation (Table 2). Table 2. Total Employment Trend Area 2002 2007 Pct. Chg. Acadiana 273,310 312,584 14% Baton Rouge 416,429 474,906 14% Houma 103,742 123,759 19% Houston 2,923,161 3,396,144 16% U.S. 166,633,100 180,943,800 9% Per capita income has grown rapidly in Acadiana partly because of the faster growth in jobs than population. However, Houma has been the leader among the four competitor regions in percentage gains in per capita income (Table 3). Locational Strengths and Weaknesses for Acadiana Economic Development 3 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Absolute change in per capita income in Houma exceeded Baton Rouge and Acadiana in 2007 for the first time. Houma is the only one of the communities that has matched Houston in terms of absolute per capita income growth. Table 3. Per Capita Income Trend Area 2002 2007 Pct. Chg. Change ($) Acadiana $ 23,709 $ 32,991 39% $ 9,282 Baton Rouge $ 25,973 $ 34,236 32% $ 8,263 Houma $ 24,344 $ 35,903 47% $ 11,559 Houston $ 34,517 $ 46,471 35% $ 11,954 U.S. $ 30,838 $ 38,615 25% $ 7,777 The economic base in the Acadiana region witnessed some significant changes since 2001 (Table 4). Specialty hospital and general merchandise stores have added about 2,500 jobs in the region since 2001, and the region now has a much larger share of national employment in these categories than in 2001. The region also witnessed a diversification of employment in pipeline transportation and added significant employment in seafood production and arts/sports promotion although the region did not add any new facilities in those industries. The region witnessed large losses of employment and a big decline in competitiveness in six of its traditional industries. Smaller employment losses with big competitive declines occurred in another seven industries. These competitive shifts in Acadiana’s traditional economic base are troublesome. Taimerica believes that the shifts have most likely been precipitated by a lack of skilled workforce in these industries. Fabricators, shipbuilders, and food manufacturers would probably have witnessed faster growth rates in Acadiana if their workforce needs had been met. Some of these general trends are more understandable in the context of this competitive assessment. Locational Strengths and Weaknesses for Acadiana Economic Development 4 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Table 4. Acadiana Economic Base Changes Since 2001 Estab Chg. Empl Trend Net Empl. Competitive Industry Sector 2001-06 2001-06 (%) Gain Shift* Big Employment Gains with Big Competitive Gains Specialty (except Psychiatric and Substance 2 2198% 989 17.4 Abuse) Hospitals Other General Merchandise Stores 6 358% 1653 3.3 Big Competitive Shifts with Small Employment Gains Other Pipeline Transportation 4 156% 14 2.3 Seafood Product Prep. and Pkg. 0 250% 90 3.7 Other Chemical Product and Prep. Mfg. -1 42% 57 1.5 Promoters of Performing Arts, Sports, and 0 110% 96 1.6 Similar Events TOTAL GAINS 2899 Big Employment Loss with Big Competitive Declines Inland Water Transportation 1 -49% -408 0.4 Other Fabricated Metal Product Mfg. 0 -69% -531 0.3 Cut and Sew Apparel Manufacturing 1 -79% -485 0.4 Other Support Services -8 -98% -814 0.0 Dairy Product Manufacturing 0 -100% -375 0.0 Veneer, Plywood, & Engr. Wood Prod. Mfg. 0 -100% -375 0.0 Smaller Employment Loss with Big Competitive Declines Oil and Gas Extraction -7 -24% -206 0.6 Ship and Boat Building 3 -37% -263 0.6 Other Food Manufacturing -1 -44% -212 0.5 Other Textile Product Mills 0 -54% -140 0.5 Petroleum and Coal Products Mfg. 1 -56% -230 0.4 Natural Gas Distribution -2 -64% -154 0.4 Other Nonmetallic Mineral Product Mfg. -2 -82% -116 0.2 Smaller Employment Loss with Moderate Competitive Decline Gambling Industries 6 -35% -140 0.6 Basic Chemical Manufacturing 1 -40% -120 0.7 Cement and Concrete Product Mfg.g 13 -31% -130 0.6 TOTAL LOSSES -4699 *LQ (Location Quotient) 2006 divided by LQ 2001. A competitive shift of 2.0 indicates region had grown twice the rate of the nation since 2001; a shift of 0.6 means the region has 60% of the national employment it had in 2001. NOTE: Only includes industries that are part of the economic base (those which have a LQ > 1.0) Locational Strengths and Weaknesses for Acadiana Economic Development 5 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 INTRODUCTION Taimerica has been retained by Acadiana Economic Development (AED, Team Acadiana) to conduct an assessment of the region from the perspective of a business investor and employer. The purposes of this assessment are to understand barriers that might limit the expansion of existing cluster industries or the growth and formation of new employment opportunities within the region over the next decade. The sources of information for this assessment are varied. They include surveys and interviews with local employers, selected government officials, utilities, real estate brokers, education representatives, and others. Taimerica also gathered statistical information and reviewed previous studies and available local data. Consultants completed on-site interviews with 15 of the region’s largest employers during April 2009. Companies selected for interview, upon the recommendation of AED partners, were those with recent hiring experience or that represented some of the largest employers or key cluster industries within the region. Interviewees were located in each of the parishes within the region and represent a geographic as well as statistical sample of opinions in the region. Interview questions were designed to collect opinion on the business climate and operating conditions within the region for companies that have a wide latitude in their geographic locations. Taimerica, in other words, was looking for opinions that would allow us to identify the types of company functions and industries that would be most responsive to investment in the region. The interviews were confidential and our team covered the same topics and questions used in site selection assignments. Companies completing the interviews had a combined employment of 5,700. Our methodology includes a comparison of Acadiana Parishes with other communities in Louisiana and Texas, specifically Baton Rouge, Houma, and Houston, that typically compete with the region’s parishes for business investment. The active economic development professionals in the region were the source of the competitor list. All of this input was combined with our past corporate siting/economic development experience. The information and knowledge gained from these sources will be incorporated into the target marketing process that is being undertaken to further the economic development of the region. Locational Strengths and Weaknesses for Acadiana Economic Development 6 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 The assessment involved all of the issues that business location consultants typically consider in a siting project. Among these factors are the following: Quality of Life Business Climate Market Access Workforce and Training Transportation Utilities Real Estate Technology Resources and Startup Support Natural Resources The following is a summary of what Taimerica believes to be the major strengths (assets) and weaknesses (liabilities and limitations) from an economic development perspective, based on our long-standing involvement in site selection and economic development. Locational Strengths and Weaknesses for Acadiana Economic Development 7 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 QUALITY OF LIFE SIGNIFICANCE As companies seek to recruit and retain more professionals and managers, the issue of housing cost and availability, community attractiveness, cultural-recreational assets, and the general cost of living become increasingly important. This location factor generally becomes most important in the analysis of final candidate communities for a new facility. While cost factors remain important in the location decisions of companies, quality of life plays an increasingly critical role. Executives want to live in desirable communities, and a good quality of life makes it easier to attract and retain the best employees. Company managers and executives interviewed by Taimerica mentioned that the quality of life for families in this region is an attraction. The following section lists the particular aspects of quality of life that investors evaluate in choosing locations. QUALITY OF LIFE Strengths Neutrals Weaknesses Recreation & Cultural Amenities K-12 Education Health Care Public Safety and Crime Rates Higher Education Cost of Living and Housing STRENGTHS Recreational and Cultural Amenities Acadiana is home to a unique culture of food, music, and joie de vivre. The region has numerous restaurants, music venues, festivals, several varieties of Mardi Gras festivities in Lafayette and the surrounding towns, parks, arts, theaters, and living history museums. Specific destinations include Avery Island (home to Tabasco), the Acadian Village, Jean Lafitte National Park Acadian Cultural Center, Evangeline State Park, Vermilionville, and the Heymann Performing Arts Center. The internationally renowned artist George Rodrigue is from Lafayette, and the Rodrigue Art Gallery and his blue dogs are common features in the area. The University of Louisiana – Lafayette provides sports entertainment with the Cajundome. Lafayette is the retail hub for Acadiana, with Locational Strengths and Weaknesses for Acadiana Economic Development 8 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 a mall with more than 120 stores, hundreds of boutiques, and many national retailers. Health Care Lafayette is a regional health care center for Acadiana with high quality health care services. Hospitals with referral specialists include the Louisiana State University Health Sciences Center (a teaching hospital with 150 beds), the Lafayette General Medical Center (301 beds), the largest full-service acute-care medical center in Acadiana, and Our Lady of Lourdes Regional Medical Center (263 beds). The Oil Center, once home to large and small oil companies and independent geologists and geophysicists, could now easily be called the Medical Center. Currently all five major medical facilities are in an expansion mode with a permitted value of over $200 million dollars. Acadiana has a bigger concentration of physicians, on a per capita basis, than the competitor communities we analyzed (Table 5), yet health care costs are 10 percent lower than in the competitor communities, which is an ideal situation. Health care costs are the central issue in determining the cost of health insurance premiums that employers pay. The index of costs for Acadiana suggests that the region has a productivity and cost advantage in employee benefits over the other four regions we analyzed. Health care was mentioned in employer interviews as a good situation in the region. Table 5. Comparative Health Care Measures in 2007 Physicians Health per 100,000 Cost Area population Index Acadiana Region 301.9 90 Baton Rouge MSA 288.8 97 Houma MSA 147.1 100 Houston MSA 269.7 105 Source: Best Places Locational Strengths and Weaknesses for Acadiana Economic Development 9 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Higher Education The Acadiana region is home to two institutions of higher learning, the four-year University of Louisiana at Lafayette (ULL) and Louisiana State University in Eunice. The South Louisiana Community College is also in the region. ULL, the second-largest university in the state, has an enrollment of over 17,000 students and areas of excellence that include Louisiana and Deep South Studies, Computing and Telecommunications, Cultural and Eco-Tourism, Environmental Sciences and Biodiversity, Health Informatics, and Cognitive Science. The university has a major graduate school and awards PhD degrees in eight departments. Other assets include a 600-acre renewable resources laboratory, a 48-acre primate research center, and the University Research Park housing a NASA Regional Application Center, a division of the National Oceanic and Atmospheric Administration, the National Wetlands Research Center, the Lafayette Economic Development Authority, and the Louisiana Immersive Technologies Enterprise (LITE). Cost of Living and Housing Cost of living has become an important issue in facility location. Companies needing to recruit nationally, especially companies located on the East or West Coasts of the U.S., often lose good job candidates because of differentials in cost of living. For this reason, companies now look closely at the cost of living as one factor in facility location. Housing is the single largest component in cost of living. The cost of housing in Acadiana is higher than in the competitor communities, yet below the average for the U.S. (Table 6). The overall cost of living is lower than in the competitor communities and 17 percent below the U.S. average. The food and utilities component of the cost of living index are much lower in Acadiana than in the balance of Louisiana communities and somewhat lower than in Houston. We rate cost of living and housing as strengths for Acadiana. Families moving to the region from the rest of the U.S. would see the cost of living as an attraction in the region. In addition, homes have maintained their value despite declines elsewhere in the nation, as illustrated in Table 6. Home values in November, 2008 in Acadiana were 98.8% of the value they had at the time of the peak in the national average home values. Locational Strengths and Weaknesses for Acadiana Economic Development 10 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Table 6. Comparative Cost of Living and Housing in 2007 Median Nov. 2008 Cost of Food Utilities Trans. Home Relative to Peak Area Living Index Index Index Price ($)* in Nat. Avg. Acadiana Region 83 92 87 100 130,675 98.8 Baton Rouge MSA 89 104 123 105 172,537 111.1 Houma MSA 86 104 114 103 n/a n/a Houston MSA 86 94 95 104 154,800 105.2 U.S. 100 100 100 100 n/a 100.0 Source: Best Places Notes: The Median Home Price is as of November, 2008. The Indexes are as of October, 2007. NEUTRALS K-12 Education The quality of local education is one of the most important quality-of-life factors evaluated in the business location process. Companies know that strong school systems make it easier to recruit and attract key management employees. They also contribute to improving the skills base of the local workforce. Corporate site selectors pay particular attention to the comments of local employers when evaluating the quality of public education. Acadiana public schools rank above the Baton Rouge and Houma schools with respect to ACT and LEAP scores and are comparable to Houston schools. Graduation rates in the region are above those in Baton Rouge and Houma but below U.S. and Houston rates (Table 7). The graduation rate shown for Acadiana is a weighted average across the seven parish region, but rates vary from school to school, from as low as 46 percent to as high as 89 percent. ACT scores of college bound students are good for Louisiana but below the average for the U.S. Acadiana schools do well on the LEAP test in match and communications, suggesting that students are better prepared on average for the workforce or higher education than their counterparts in Baton Rouge and Houma. These data represent students in the public school system. Acadiana is also home to significant educational resources provided by the Catholic Diocese, and generally site selectors won’t have ready access to these data. Locational Strengths and Weaknesses for Acadiana Economic Development 11 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Table 7. Comparative Education Measures in 2006-2007 LEAP/TAKS* No. Pct. Grad. 8th 8th H. S. College College Rate Comp. Grade Grade Area Grads Bound Bound (%)** ACT Math Comm. Acadiana Region 4,986 1,994 40.0 65.2 20.4 65 59 Baton Rouge MSA 5,477 2,125 38.8 60.6 19.5 57 55 Houma MSA 1,927 701 36.4 59.5 19.8 54 48 Houston MSA 54,433 n/a n/a 76.8 20.1 64 86 U.S. n/a n/a n/a 71.0 20.9 n/a n/a Sources: National Center of Education Statistics, Louisiana Dept. of Education, Houston ISD *Percent of students Passing (Texas TAKS) or meeting Basic and Above standards (Louisiana’s LEAP). **Graduation rates in are for Lafayette Parish, West Baton Rouge Parish, and Terrebonne Parish. We rate K-12 education as a neutral in Acadiana. Schools in Acadiana are comparable to those in oil centers like Houston but could be a serious issue for families relocating from areas such as Colorado, California, the East Coast of the U.S., Europe, or Asia. Public Safety and Crime Rates Acadiana exhibits violent crime rates comparable to their competitors and property crime rates somewhat higher than their competitors (Table 8). We rate crime rates as a neutral overall. Table 8. Comparative Crime Rates in 2007 (per 1,000 population) Violent Property Area Crime Crime Acadiana Region 11.3 62.3 Baton Rouge MSA 11.4 59.7 Houma MSA 10.4 49.7 Houston MSA 11.3 56.8 Source: FBI Uniform Crime Reporting Program, 2007 Locational Strengths and Weaknesses for Acadiana Economic Development 12 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 BUSINESS CLIMATE SIGNIFICANCE Business climate is one of the most important factors in business location decisions. As the differential in costs for labor and traditional inputs becomes smaller around the country, intangible factors, such as whether business sees local government as helpful, indifferent, or hostile, becomes even more important as a factor in location decisions. How business is treated on a day-by-day basis is the essence of business climate. Business climate has become more important than ever in business location decisions, and the strengths, weaknesses, and neutral factors in business climate are summarized here. BUSINESS CLIMATE Strengths Neutrals Weaknesses Lack of Unions Local & State Taxes Lack of Community Visions and Plans Labor-Management Relations Local Regulations & Permitting Community Health Worker’s Comp Costs and Tax Incentives Enforcement Government Cooperation with Business STRENGTHS Lack of Unions Business investors tend to avoid regions with a high concentration of unions, particularly if the region has a history of work stoppages. Acadiana has fewer unions than most Gulf Coast communities. Employers we interviewed had not experienced any work stoppages or organization attempts. Locational Strengths and Weaknesses for Acadiana Economic Development 13 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Labor-Management Relations Employers we interviewed enjoyed good relationships with their workers and felt that labor-management relations were good to very good. Problems with labor- management relations have not surfaced in the 200+ existing industry visits made using the Synchronist survey since 2005. Worker’s Comp Costs and Enforcement Most issues with worker’s compensation are a function of state regulation and statute. Companies we interviewed did not mention any issues with worker’s compensation costs or enforcement. The situation in Acadiana is better than we have found in other regions where we conducted similar projects. Government Cooperation with Business Companies we interviewed felt that governments in Acadiana were business friendly yet they did not always understand the needs of business in the region. NEUTRALS Local and State Taxes States and communities tax assets, inventories, sales, net income, and purchases of supplies, power, and consumables (other than raw materials) in different ways, making it difficult to accurately gauge tax bills in different jurisdictions. Business tax policies vary greatly between communities, and state taxes and incentives increasingly determine the winners in the ultimate round of location studies. Tax rates, particularly on buildings, equipment, and inventories, can be the most critical location factor in warehousing and distribution activities, but they have limited impact on office sector targets. In short, tax rates are an important issue in business climate that should be reviewed prior to targeting. The tax rates shown assume that companies are not receiving any tax incentives (Table 9). Locational Strengths and Weaknesses for Acadiana Economic Development 14 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Table 9. Comparative Tax Rates Effect. Parish Seat State Prop. Sales Tax Personal State Corp. Tax Rate Area (state + local, %) Income Tax (%) Income Tax (%) ($/$100 FMV) Acadiana Region 8.00 6.0 8.0 1.03 Baton Rouge MSA 9.00 6.0 8.0 1.02 Houma MSA 8.50 6.0 8.0 1.37 Houston MSA 8.25 0 5.0 2.39 U.S. 6.00 5.02 n/a n/a Source: Various Sources Sales taxes are lower in Acadiana than in the other competitor communities. Property taxes are comparable to rates in Baton Rouge and significantly below rates in Houma or Houston. State income taxes are equal to those in other Louisiana communities but significantly above those in Texas. Our overall assessment is that tax rates in Acadiana are a neutral, neither a locational advantage nor disadvantage. Local Regulations and Permitting Business and industry have many locational alternatives when deciding where to make their investment. Time is money. If a community places impediments to the development process, those investment dollars will be placed elsewhere. In addition, the community will gain a reputation as a difficult place to do business, further impeding other business opportunities. Most of the regulatory issues that affect business are at the state level. Businesses we surveyed and interviewed did not identify any specific problems with local regulations and permitting for utilities or zoning. Tax Incentives Various incentives are available at the Federal, state, and local level. These include Louisiana's Quality Jobs Program, which provides up to a six percent cash rebate of new eligible payroll, and the Enterprise Zone program, in which qualifying businesses are eligible for a one-time tax credit for $2,500. Other benefits include the Freeport Law, which permits most manufacturers to bring raw materials into the state without having to pay a tax on them until after they have been placed in the manufacturing process, and the Industry Assistance Program, which provides a preferential tax exemption to existing Louisiana manufacturers and suppliers. Additional tax exemptions could include the Locational Strengths and Weaknesses for Acadiana Economic Development 15 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 corporation franchise tax, state sales and use taxes on goods necessary for production, state sales and use taxes on machinery and equipment, or the corporation income tax. Local incentives include the Industrial Property Tax Exemption, which permits new and expanding manufacturing operations or expansions to be exempt from local property taxes on new construction or additions to existing buildings, or the purchase of permanently fixed equipment and machinery. Louisiana grants more generous property tax incentives than Texas communities. While the need to have incentives approved by the Board of Commerce and Industry in Louisiana is more cumbersome than the process in states like Oklahoma that make them automatic under statute, Louisiana’s system is more competitive than Texas’ in length and percentage of exemptions granted. The Quality Jobs program in Louisiana has not been duplicated in Texas, but Texas communities typically can provide cash incentives to companies from the 4(a) and 4(b) sales tax programs to compete with Quality Jobs. The Comptroller of the Currency in Texas reports than the sales tax corporations granted $105 million of direct cash incentives to companies in 2006 and an additional $90 million in 2007. Taimerica rates tax incentives as a competitive neutral in Acadiana. WEAKNESSES Lack of Community Visions and Plans Communities that lack planning and zoning frequently suffer from traffic congestion and shortages of basic utility services required to operate plants. Communities that ignore the need to plan for new growth often find that quality of life declines with growth and companies want to avoid being blamed for the traffic and land use battles that occur when they locate in unplanned jurisdictions. Without a legally adopted master land use plan in a community, companies face litigation and delay from neighbors who may try to block their plans for building facilities. Lack of zoning and planning can serve as “knock-out” factors in location decisions. Major corporations worldwide devote significant resources to long-range planning. Executives evaluating communities for facilities also see up-to-date community planning as a critical element in a progressive community. Locational Strengths and Weaknesses for Acadiana Economic Development 16 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Communities that lack long-range plans tend to under-invest in infrastructure and therefore create congestion or operational issues for business mangers. Long- range planning and zoning are now considered essential elements in desirable communities. The lack of community visions and plans was sometimes mentioned in our interviews as an issue for business expansion. Issues with transportation and infrastructure were mentioned frequently in Synchronist surveys conducted between 2005 and 2008 and these issues reflect a lack of community planning. We rate this issue as a weakness overall in Acadiana although the level of planning is better in some parishes than in others. Community Health The health of the workforce in a region is an important factor in the productivity of the regional workforce as well as in determining the cost of health insurance coverage for workers. The health picture in Acadiana is not as favorable as in Houma or Houston but is comparable to Baton Rouge. Parishes in Acadiana are typically in the bottom half of U.S. metros in terms of life expectancy improvement in the last 15 years (Table 10). Table 10. Health Indices in Acadiana and Competitor Communities Index (1=best, ACADIANA 4=worst*) Acadia 3 Evangeline 3 Iberia 3 Lafayette 4 St. Landry 1 St. Martin 2 BATON ROUGE Ascension 3 East Baton Rouge 3 Livingston 4 West Baton Rouge 3 HOUMA LaFourche 1 Terrebonne 2 HOUSTON Harris 1 *Parishes rated 4 typically have a declining or static life expectancy ** Based on increases in life expectancy over 15 years Locational Strengths and Weaknesses for Acadiana Economic Development 17 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 MARKET ACCESS SIGNIFICANCE Logistics costs are an important component of operating costs in plants that produce consumer products and bulky industrial materials such as plastic pipe and sheet. The majority of new manufacturing operations are located in the geographic center of their markets because of logistics considerations, and site consultants normally pinpoint the region of operations before looking at specific sites and cities. Manufacturing market access is measured with transportation cost models that estimate logistics costs for national, regional, and multi-state territories. These models are supplemented with comments and observations of area businesses. Market access also is important to the tourism industry, regional retailers and other consumer service companies, since access to customers is the primary consideration in the success of consumer-oriented business. Market access is cited by site consultants as being more important than ever, and the strengths and weaknesses identified by Taimerica related to business location are summarized here. A general overview of the situation follows. MARKET ACCESS Strengths Neutrals Weaknesses Access to Global Markets National Market Access Distribution Center Location STRENGTH Access to Global Markets Acadiana is located near the Port of Lake Charles, a deepwater port for export of agricultural and bulk products. Manufacturers in Acadiana also have access to global container shipping services at New Orleans and Houston. The shallow draft ports in the region offer companies an outlet for ocean shipping of heavy lift Locational Strengths and Weaknesses for Acadiana Economic Development 18 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 and oversize cargoes to Gulf of Mexico locations, Mexico, and South America via ocean barge. Access to global markets via water routes is a competitive advantage of Acadiana. The region also has access to global markets through air freight services. Stuller Settings in Lafayette is such a large volume air cargo shipper that it has opened up daily international service to global destinations for other manufacturing companies in Acadiana. WEAKNESSES National Market Access Distribution-sensitive companies with a single distribution or production center evaluate freight costs carefully. Acadiana, because of its location, has higher distribution costs to national markets than Chicago, Atlanta or Memphis (Map 1). The cost differential is about 30 percent when compared to Cincinnati, Ohio, the nation’s lowest cost distribution site. Some assembly industries, such as truck and autos, also look carefully at logistics costs in their site evaluations. Acadiana is not in a favorable position for recruiting these types of industries. Locational Strengths and Weaknesses for Acadiana Economic Development 19 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Map 1. National Distribution Costs Source: Taimerica Distribution Center Location As the U.S. economy globalizes, distribution centers are growing as a source of jobs because companies import more of their products and subassemblies, rather than make them in U.S. plants. Distribution centers typically locate near the intersection of North-South and East-West interstate highways. The population within the region they serve is an important location factor for regional distribution centers, which typically serve a radius of 200 to 250 miles. The distribution radius for Acadiana is limited by its location near the Gulf of Mexico and away from major population concentrations on the Gulf Coast (Map 2). While Acadiana can serve a larger population than Baton Rouge or Houma, it clearly has less potential for regional distribution than Houston (Chart 1). Locational Strengths and Weaknesses for Acadiana Economic Development 20 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Map 2. Population Within 250 Miles of Lafayette Source: Taimerica with Census data Chart 1. Population from Center of Each City Lafayette Baton Rouge 50 miles 100 Houma miles 150 miles Houston - 5,000,000 10,000,000 15,000,000 20,000,000 Source: Taimerica Locational Strengths and Weaknesses for Acadiana Economic Development 21 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 The population distribution within 250 miles of a community determines the cost of distribution from that location (Chart 2). In the case of Lafayette, the cost per customer is higher than for any of the competitor locations. This location factor is rated as a weakness for Acadiana. Chart 2. Distribution Cost Index Within 250 miles of Each City Lafayette Baton Rouge Houma Houston 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 Note: Customer Cost Index is the average cost of serving customers within 250 miles of each center. The index is based on the assumption that it costs $1.00 per customer to delivery for each 50 miles of distance from the distribution center. Source: Taimerica Locational Strengths and Weaknesses for Acadiana Economic Development 22 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 WORKFORCE AND TRAINING SIGNIFICANCE The mix of skills in manufacturing and offices has changed as U.S. companies become more capital intensive. Much of the unskilled work of yesterday is now done offshore, leaving just the skilled work in America’s factories and offices. The availability of skilled workers has become a critical factor in the location of factories, often exceeding the cost of labor as a screening variable. Office operations are attracted to locations with an abundance of workers with computer and administrative skills. Low turnover and absenteeism also are important factors for office and manufacturing operations as most companies operate without a redundancy of workers. Taimerica has identified the following strengths and weaknesses in its assessment of the regional workforce and training institutions in Acadiana. WORKFORCE AND TRAINING Strengths Neutrals Weaknesses Worker Productivity and Workforce Training Labor Relations College Educated Workforce Availability of Unskilled Workers Manufacturing Wages and Static Labor Pool Workforce Manufacturing Skills Educational Attainment Availability Office Sector Wages and Shortage of Skilled Labor Supply Manufacturing Workers STRENGTHS Worker Productivity and Labor Relations Labor productivity and labor/management relations are critical to all site location projects since labor continues to be the major cost element in most operations. The labor situation is one of the first things taken into consideration when Locational Strengths and Weaknesses for Acadiana Economic Development 23 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 companies and location consultants look at an area. Labor productivity is analyzed in several ways, including composition of the labor force, absenteeism and turnover rates, and employer comments. Employers we interviewed mentioned issues with recruiting unskilled workers, except in St. Landry Parish. Many employers have resorted to recruiting H-1B or H-2B visa workers from Mexico or Eastern Europe to fill positions. Productivity of the Acadiana workforces was judged as good, however. The stability of the workforce is assessed during AEDC’s Synchronist surveys, which is an objective measure of turnover. Stability has been rated as 3.88 on a 4 point scale in the last year versus a rating of 3.08 following Hurricane Katrina. The slowdown in the oil patch has apparently moderated labor force issues. The proportion of the applicant pool failing drug screening was generally estimated as five to ten percent by employers we interviewed versus rates estimated as high as 40 percent during previous rounds of Synchronist surveys. College Educated Workforce The Acadiana region is home to several institutions of higher learning, including the four-year institutions of the University of Louisiana at Lafayette and Louisiana State University in Eunice. Employers were happy with graduates they had recruited for entry level positions. The region has a larger pool of new graduates in computer and information sciences, engineering, and business, on a population adjusted basis, than Houston and Houma and is comparable to Baton Rouge in those fields (Table 15, Codes (rows) 11, 14, and 52). Manufacturing Wages and Workforce Labor costs are among the most critical cost factors in an industrial location decision. Labor is a major cost, typically accounting for 35 percent or more of operating costs in factories. As a result, labor costs are closely scrutinized in the site selection process. In terms of overall costs for manufacturing operations, Houma and Acadiana are slightly cheaper than Houston but ten percent cheaper than Baton Rouge. The larger union presence in Baton Rouge affects manufacturing wage rates there (Table 11). Locational Strengths and Weaknesses for Acadiana Economic Development 24 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Table 11. Comparison of Benchmark Wages in Manufacturing ($/year) Code OCC_TITLE Acadiana Baton Rouge Houma Houston 47-2111 Electricians 33,240 39,230 49,590 41,400 49-9041 Industrial mach. mechanics 33,710 46,640 47,140 44,530 51-4041 Machinists 36,180 41,300 32,000 33,630 51-9111 Packaging machine operators 20,120 21,040 n/a 24,110 53-3032 Truck drivers, heavy 30,980 32,940 28,400 34,800 53-7051 Industrial truck operators 25,600 26,920 31,270 26,330 53-7062 Laborers and material movers 19,980 20,910 20,390 21,140 Average 27,762 31,625 31,840 30,757 Percent of Lowest Cost 100% 114% 115% 111% Source: Compiled from BLS databases for May 2007 Manufacturing Skills Availability Acadiana has a larger pool of industrial skills than Houma but trails Baton Rouge and Houston in sheer size of the trained talent pool for manufacturing (Table 12). Manufacturing skills are more concentrated in the Acadiana talent pool than nationally but are less concentrated than in Houston or Houma. The breadth of talent (the percentage of national manufacturing occupations in the regional workforce) is narrower in Acadiana than in Baton Rouge or Houston and the high skill mix is lower than in Baton Rouge and Houston. These indices suggests that Acadiana is less favorable for specialized manufacturing needing to recruit large pools of talent outside of the metalworking trades than Houston but is competitive with Houma and Baton Rouge. Locational Strengths and Weaknesses for Acadiana Economic Development 25 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Table 12. Manufacturing Benchmark Occupations in Acadiana and Competitor Communities in 2007 with Taimerica Indices Code OCC_TITLE Acadiana Baton Rouge Houma Houston 47-2111 Electricians 700 2,550 440 14,830 49-9041 Industrial mach. mechanics 1,200 830 450 8,050 51-4041 Machinists 1,290 1,040 690 14,370 51-9111 Packaging machine operators 150 390 n/a 5,060 53-3032 Truck drivers, heavy 1,900 3,930 1,200 30,210 53-7051 Industrial truck operators 390 1,360 310 11,030 53-7062 Laborers and and material movers 3,050 7,720 4,060 41,900 TOTAL 8,680 17,820 7,150 125,450 Total Workforce 143,340 358,940 92,410 2,483,710 TMC High skills index 109% 229% 79% 210% Taimerica Concentration Index (All Manufacturing occupations as% of Labor 105% 81% 149% 116% Market) Taimerica Manufacturing Breadth Index (% of manufacturing occupations in U.S. workforce 35% 52% 28% 91% within regional workforce Taimerica Manufacturing Cost Index (cost of manufacturing labor in region as a percent of 123% 145% 122% 131% national average cost for the same skill sets) Office Sector Wages and Labor Supply Wages in offices typically account for a larger share of variable costs than in manufacturing. While many offices locate based on convenience to customers or markets, a growing share of offices in shared services, claims processing, and technical assistance are driven by cost considerations. Wages in Acadiana for benchmark positions assessed in office studies are comparable to those in Baton Rouge and Houma but below wages in Houston (Table 13). Table 13. Comparison of Office Benchmark Wages ($/year) Code OCC_TITLE Acadiana Baton Rouge Houma Houston 41-2031 Retail Salespersons 26,250 21,630 21,060 23,940 43-3071 Tellers 20,200 20,370 21,480 24,840 43-4051 Cust. Service Reps 25,100 24,740 24,930 29,960 43-4171 Receptionists and info. clerks 19,510 21,130 21,040 23,410 43-6014 Secretaries, ex legal, medical 24,060 25,400 23,630 27,380 43-9041 Ins. claims proc. clerks n/a 27,650 n/a 30,830 Avg ex claims proc. clerks 23,024 22,654 22,428 25,906 Percent of Lowest Cost 103% 101% 100% 116% Source: Compiled from BLS databases for May 2007 Locational Strengths and Weaknesses for Acadiana Economic Development 26 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 The size of the office workforce is smaller in Acadiana than in Baton Rouge and Houston for the benchmark positions but is comparable in concentration to Baton Rouge (with its large state government office workforce) and Houston. The breadth of skills is narrower than in Baton Rouge (which can be important in shared services projects) but is more moderate in terms of costs, on an apples-to- apples basis, than Houston and comparable to Baton Rouge and Houma. The concentration of high skill office jobs in Acadiana is comparable to those in the competitor regions (Table 14). Table 14. Office Benchmark Occupations in Acadiana and Competitor Communities in 2007 with Taimerica Indices Code OCC_TITLE Acadiana Baton Rouge Houma Houston 41-2031 Retail Salespersons 4,280 10,990 2,890 77,850 43-3071 Tellers 880 1,850 580 9,130 43-4051 Cust. Service Reps 2,310 6,200 960 49,510 43-4171 Receptionists and info. clerks 1,630 2,980 800 20,810 43-6014 Secretaries, ex legal, medical 3,120 5,980 1,830 45,280 43-9041 Ins. claims proc. clerks n/a 500 n/a 2,690 TOTAL 12,220 28,500 7,060 205,270 Total Workforce 143,340 358,940 92,410 2,483,710 TMC High Skills index 95% 99% 99% 99% Taimerica Office Concentration Index (All Office occupations as% of U.S. Labor 97% 94% 77% 106% Market) Taimerica Office Breadth Index (% of office occupations in U.S. workforce within regional 76% 90% 65% 99% workforce Taimerica Office Cost Index (cost of office labor in region as a percent of national 129% 124% 121% 155% average cost for the same skill sets) Overall the office workforce is a locational strength in Acadiana. WEAKNESSES Workforce Training The Louisiana Technical College system is responsible for providing trained workers for Louisiana business and industry while the state’s four year colleges generate the talent pool to fill management and technical positions. The number of students graduating with industrial craft skills, maintenance trades, and metalworking skills is smaller than in Baton Rouge and Houston (Table 15, Codes (rows) 46-48). On a population weighted basis, the ratios are lower in industrial Locational Strengths and Weaknesses for Acadiana Economic Development 27 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 crafts than in Baton Rouge and Houma but comparable in the other two categories. Employers that were interviewed mentioned frequently that they did not recruit entry-level workers from the technical college system. These responses came from employers throughout the region and were not concentrated in any single college jurisdiction. Several mentioned that they had tried in the past but that applicants lacked the entry-level skills that they needed or could not pass drug tests. The same issues have surfaced in AEDC’s Synchronist interviews. Locational Strengths and Weaknesses for Acadiana Economic Development 28 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Table 15. No. of Graduates by Program of Study in Acadiana and Competitor Communities in 2007 Houma Houston BR MSA MSA MSA Acadiana Post- Baton Post- Post- Region Acad. sec. Rouge sec. Houma sec. Houston Broad Post-sec. per 1 Grads, per 1 Grads, per 1 Grads, per 1 Programs of Grads, million all million all million all million Code Study all levels pop. levels pop. levels pop. levels pop. 10 Communications 6 11.2 22 28.6 0 0.0 155 27.7 Computer and 11 175 325.2 271 352.2 13 64.7 1007 179.9 Info Sciences 12 Cosmetology, etc 195 362.4 299 388.6 96 477.6 1646 294.0 13 Education 309 574.3 808 1050.2 134 666.6 1295 231.3 14 Engineering 166 308.5 567 736.9 0 0.0 803 143.4 Technology at 15 BS and AA 123 228.6 202 262.5 86 427.8 1282 229.0 Levels Foreign 16 13 24.2 78 101.4 1 5.0 179 32.0 Languages Family & 19 102 189.6 106 137.8 47 233.8 490 87.5 Consumer sci. 22 Law 20 37.2 363 471.8 11 54.7 1246 222.6 23 English 61 113.4 300 389.9 10 49.7 460 82.2 24 Liberal arts 366 680.2 641 833.1 96 477.6 4146 740.6 25 Library science 0 0.0 72 93.6 0 0.0 32 5.7 26 Biology 72 133.8 508 660.3 36 179.1 1146 204.7 27 Math & Statistics 20 37.2 95 123.5 10 49.7 332 59.3 Behavioral 30 2 3.7 43 55.9 0 0.0 924 165.1 sciences 31 recreation 0 0.0 0 0.0 0 0.0 313 55.9 38 Philosophy 7 13.0 34 44.2 0 0.0 95 17.0 39 Religion 0 0.0 0 0.0 0 0.0 307 54.8 40 Physical sci. 20 37.2 118 153.4 0 0.0 373 66.6 Physical Science 41 21 39.0 0 0.0 0 0.0 345 61.6 Technology 42 Psychology 53 98.5 344 447.1 38 189.0 1280 228.7 43 Corrections 97 180.3 140 182.0 25 124.4 979 174.9 Public 44 0 0.0 195 253.4 0 0.0 228 40.7 Administration 45 Social sciences 62 115.2 497 646.0 36 179.1 1144 204.4 46 Industrial Crafts 52 96.6 107 139.1 61 303.5 131 23.4 Elect. & Ind. 47 140 260.2 203 263.8 22 109.4 2100 375.1 Maintenance Metalworking 48 127 236.0 197 256.0 62 308.4 212 37.9 Trades Aviation & 49 55 102.2 214 278.1 1491 7417.2 315 56.3 Maritime Visual & Perf. 50 99 184.0 248 322.3 18 89.5 821 146.7 Arts Medicine & 51 1435 2667.0 1959 2546.1 644 3203.7 12537 2239.6 Health Care 52 Business 715 1328.9 1371 1781.9 283 1407.8 6927 1237.4 54 History 34 63.2 133 172.9 8 39.8 273 48.8 TOTAL 4547 8450.9 10135 13172.7 3228 16058.1 43523 7774.8 Source: Compiled by Taimerica from IPEDS database Locational Strengths and Weaknesses for Acadiana Economic Development 29 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Availability of Unskilled Workers Employers throughout the U.S. are finding it difficult to recruit unskilled, entry- level workers. Most of the supply of such workers is coming from a wave of recent immigrants to the U.S. Nearly every one of the 14 employers we interviewed mentioned that it was difficult to recruit unskilled workers that would show up consistently and punctually for work. The same issue has surfaced in AEDC’s Synchronist surveys since 2004, although availability of workers was rated 3.26 on a 4 point scale in the last year, versus a rating of 2.51 following Hurricane Katrina. Static Labor Pool As the baby boom generation begins to leave the workforce, many communities are facing a dwindling workforce. Taimerica calculated the expected change in labor force for the competitor regions over the next five years (Table 16). The number of retirees is estimated by multiplying the population in the 55 to 64 age cohort by the percentage in the labor force. Acadiana has about 61 percent of its population in this age range in the workforce, which is lower than in Houston (65.9 percent) but much higher than in Houma (52.2 percent) and Baton Rouge (55.5 percent). The calculations suggest that pool of workers entering the workforce during the next five years just about balances the number that are likely to retire. In other words, the labor pool, without significant foreign immigration, is likely to be static in Acadiana and the other regions of Louisiana. Having a static labor pool is an issue for relocation companies. Table 16. Population Entering and Leaving Labor Force, 2006-2007 No. of Grad. Entering Net H.S. College 2 yr labor force Retirees per impact Grads Bound College = (1) – (2) year to labor Area (1) (2) (3) +(3) 2007 to 2012 force Acadiana Region 4,986 1,994 473 3,465 3,010 455 Baton Rouge MSA 5,477 2,125 874 4,226 3,790 436 Houma MSA 1,927 701 230 1,456 760 696 Houston MSA 54,433 n/a 8,590 n/a n/a n/a Source: Various Sources. Locational Strengths and Weaknesses for Acadiana Economic Development 30 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Educational Attainment Over 70 percent of the jobs in the United States now require training beyond high school. Educational attainment of the regional labor force is an important site selection factor in today’s facility locations, particularly the proportion of workers with a college education. The Acadiana region has a smaller proportion of its workforce with a college degree than either Baton Rouge or Houston. On the other end of the education distribution, the proportion of workers in Acadiana without a high school diploma is higher than in Baton Rouge and Houston but slightly below the proportion in Houma (Chart 3). Educational attainment is a weakness for the region in recruiting more sophisticated manufacturing, office, and technology industries. Chart 3. Educational Attainment in 2005 Acadiana Bachelor's Degree or Higher Baton Rouge Associate Degree Some College Houma High School Diploma Houston < High School 0% 20% 40% 60% 80% 100% Source: Census Bureau Shortage of Skilled Manufacturing Workers The decline in unskilled and semi-skilled positions in manufacturing has shifted emphasis to trained craft workers in terms of site selection. All of the employers we interviewed mentioned that they have great difficulty recruiting skilled workers. This finding parallels the results of the Synchronist interviews since 2004. Acadiana employers are increasingly relying on H-1 B visa workers to fill Locational Strengths and Weaknesses for Acadiana Economic Development 31 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 blue-collar craft positions because the applicant pool in the region is inadequate to meet their needs. This is one of the reasons that employment growth in Acadiana has trailed Houston and Baton Rouge over the last decade and why the concentration of employment in oil field manufacturing and services in Acadiana, relative to the U.S. economy, has declined over the decade. The skill gaps that manufacturers list most frequently are welders (especially those with Coast Guard certifications), machinists, fitters, and electricians. Some of the companies interviewed for this project mentioned that they had opened facilities outside of the region in order to find more skilled workers. The acute shortage of skilled manufacturing workforce is a long-term economic development issue for Acadiana that will affect its future growth opportunities. Locational Strengths and Weaknesses for Acadiana Economic Development 32 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 TRANSPORTATION SIGNIFICANCE Transportation access is important to economic development for two reasons. First, it impacts a company’s ability to ship and receive goods in a timely and cost-effective manner. Second, it influences a company’s ability to attract and retain employees, since ease of commuting is directly related to highway access and air service. Location consultants find that many companies desire to be immediately adjacent to an interstate highway or a good four-lane highway, and rail access provides industry with low cost shipping. Air service is necessary for corporate, client and employee travel. With the logistics and distribution industries facing higher fuel prices, transportation networks and location are more important than ever. Taimerica has done a detailed assessment of strengths and weaknesses in terms of transportation access. TRANSPORTATION Strengths Neutrals Weaknesses Highway Access Rail Access Commercial Airline Service Water Transportation Air Freight Service Trucking Service STRENGTHS Highway Access Lafayette, the major city in Acadiana, is located at the intersection of I-10 and I-49 in south central Louisiana. The region has good highway access (Map 3). Locational Strengths and Weaknesses for Acadiana Economic Development 33 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Map 3. Acadiana Highway Access Water Transportation Globalization has stimulated investment in U.S. locations for heavy industries such as steel, nonferrous metals, and cement that have been dormant in location activity since the 1970s. Major ports in the Acadiana area or nearby with a significant impact include the Port of Greater Baton Rouge, located 50 miles east of Lafayette at the intersection of the Mississippi River and Intra-coastal Waterway; the Port of Lake Charles, located 70 miles west; and the Port of Iberia, located 20 miles to the south. Shallow draft ports in the area include the Port of West St. Mary located in Franklin, the Port of Vermilion located in Abbeville, and the Twin Parish Port in Delcambre (Map 4). Locational Strengths and Weaknesses for Acadiana Economic Development 34 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Map 4. Ports in Acadiana Source: Ports Association of Louisiana The region has an excellent port infrastructure that allows the export and import of bulk materials and all forms of manufactured products at competitive rates. The port infrastructure of the region is a locational strength for distribution as well as metal fabrication and shipbuilding. Air Freight Service Acadiana has access to several carriers including FedEx and UPS. The high volume of air freight and courier service generated by Stuller Settings in Lafayette generates significant advantages for the region in terms of air freight. FedEx and UPS offer daily freight service into Acadiana with service levels that exceed those of most communities of its size. Air courier and air freight service in Acadiana is equal to those in all of the competitor communities except Houston, which has significant dedicated air cargo carriers serving most of the major air cargo hubs worldwide. The Acadiana Regional Airport in New Iberia, with its 8,000 foot runways, can accommodate any size cargo plan in operation today. This infrastructure offers regional companies the opportunity to charter and load/unload air cargo flights without truck connections, whenever needed to serve large volume clients. Locational Strengths and Weaknesses for Acadiana Economic Development 35 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Trucking Service Lafayette is located at the intersection of I-10 and I-49 and is therefore a central location for major distribution centers and has access to several trucking carriers, including FedEx, UPS, SAIA Motor Freight, and Roadway. Employers that were interviewed mentioned that they get numerous quotes on truck load shipments and that rates are competitive. Trucking service is rated as a competitive advantage for the region. NEUTRAL Rail Access The Acadiana region is served by the Burlington Northern and Union Pacific railroads (Map 5). Local switching in many communities is handled by the AKDN – Acadiana railway, a short line carrier that connects to the Burlington Northern in Lafayette and the UP in Eunice and the Louisiana and Delta RR that interconnects with the BNSF at Lafayette and New Iberia. The short line carriers are owned by Gennessee & Wyoming, one of the largest short-line railroad holding companies in the U.S. Employers we interviewed were satisfied with switching on short lines. UP service, on the other hand, was rated as very poor by companies that had to rely on UP service. Industrial sites that are located on a short line track with an interconnection to the BNSF are in a much better position to serve rail served industry, in our opinion, than those located on the UP or on a shortline that interconnects with the UP. Locational Strengths and Weaknesses for Acadiana Economic Development 36 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Map 5. Rail Lines in Acadiana Source: Louisiana Dept. of Transportation WEAKNESS Commercial Airline Service Commercial air passenger service is available at two airports in Acadiana, the Lafayette Regional Airport, and the Acadiana Regional Airport in New Iberia. The Lafayette Regional Airport has three runways, the longest of which is 7,651 feet, and serves the region with daily flights to Houston, Atlanta, Memphis, and Dallas/Fort Worth on flights operated by American Eagle Airlines, Delta/Atlantic, Continental Express, and Northwest Airlink. The Acadiana Regional Airport has two runways, the longest of which is 8,002 feet and serves the region with daily flights to Atlanta and Houston on Delta/Atlantic and Continental Express. Poorer soil conditions at the Acadiana Regional Airport limit the aircraft that can fly in and out of New Iberia. Locational Strengths and Weaknesses for Acadiana Economic Development 37 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 The following table compares passenger service levels for the four competitor communities (Table 17). Acadiana has half of the daily departures and seats of Baton Rouge and just a fraction of the non-stop destinations and seats of Houston and Houma (which relies on New Orleans international for its service). Air service connections are an issue for corporate offices serving national and international markets. Table 17. Air Service Indicators in Acadiana and Competitor Communities in June 2008 Scheduled Non-stop monthly Scheduled No. passengers Region cities departures seats boarded Acadiana 4 548 24,557 19,358 Baton Rouge 5 908 50,243 38,222 Houma (MSY) 36 3,631 435,955 354,402 Houston 210 28,200 2,727,1018 2,264,313 Locational Strengths and Weaknesses for Acadiana Economic Development 38 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 UTILITIES SIGNIFICANCE For some companies, especially those with a process that uses heat, utility rates can be the deciding factor in their ultimate locations. Industrial power costs vary significantly from area to area because of differences in fuel selection and regulatory policies. The availability of adequate water supplies and sewage treatment capacity is particularly important to food processing and other water-using industries. Taimerica has identified strengths and weaknesses in its assessment of utility costs and availability in the region, which are summarized here. UTILITIES Strengths Neutrals Weaknesses Electric Cost and Reliability Wastewater Capacity Natural Gas Service and Rates Water Capacity Broadband Telecommunications STRENGTHS Electric Cost and Reliability Electricity providers in Acadiana include the municipal Lafayette Utilities System (LUS), Entergy, and Southwest Louisiana Electric Membership Corporation (SLEMCO). Published electric cost data is not available for Houston because the power market there is deregulated. Taimerica calculated an approximate price for industrial power of $92.243 per MWH in July 2008 for a project we completed in Corpus Christi in April. This rate was for a major customer that bought large volumes of power from transmission companies. Power costs were analyzed in Louisiana using rates published by the Edison Electric Institute for the same date. We are unable to calculate rates for Lafayette utilities and SLEMO because fuel Locational Strengths and Weaknesses for Acadiana Economic Development 39 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 charges for July 1, 2008 were unavailable online. While this might seem unfair, it is typical in site selection to do preliminary screening of communities using online information only and we employ this site selection practice in our strengths and weaknesses studies to alert community leaders to essential locational information that might not be available online. Rates for industrial loads are shown in Table 18. Table 18. Rates per MWH as of July 1, 2008 System/Region For 400 MWH load For 25,000 MWH load CLECO (Acadiana) $98.44 $86.03 Entergy Gulf States (Acadiana) $102.77 $90.72 Entergy LA (Houma MSA & Baton Rouge) $114.00 $108.68 The above rates do not include municipal systems or cooperatives, which typically provide cheaper rates than investor-owned utilities. Our assessment of rates, although imprecise, is that Acadiana parishes enjoy lower industrial power costs than found in Baton Rouge, Houston, or Houma. The reliability of electric service has become critical to process industries and most manufacturers. Even a short interruption in power can deprogram microprocessor based controls used in modern manufacturing equipment. The employers we interviewed mentioned that reliability in the region was good with the exception of outages due to major hurricanes. Electric rates are likely to change after the U.S. begins to regulate carbon emissions. Utilities with a high proportion of generation from coal are likely to raise rates faster than those with natural gas or nuclear generation. We believe that Louisiana utilities, which use more natural gas and nuclear fuels, will be favored when carbon trading begins. Natural Gas Service and Rates Natural gas providers in Acadiana include CenterPoint Energy Entex, Atmos Energy Louisiana, Carencro Gas, and the Cities of Rayne and Scott. Natural gas is an important input in process industries with large heat or power requirements. When the U.S. begins to cap or tax carbon emissions, natural gas Locational Strengths and Weaknesses for Acadiana Economic Development 40 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 will become a preferred fuel because it has a lower carbon output per unit of heat or power. Natural gas service will grow in importance in the future as a location requirement. Table 19. Industrial Natural Gas Rates in 2007 for Acadiana and Competitor Communities Avg. Cost Provider/region ($/MCF) Centerpoint Energy Entex/Acadiana 14.85 Atmos/Acadiana, Baton Rouge, Houma $6.82 Carencro Gas NA Rayne NA Scott NA Centerpoint/Houston $11.29 The rate data suggests that natural gas costs in Acadiana are an advantage over those in Houston and comparable to those in Baton Rouge and Houma for sites served by Atmos Energy. Broadband Telecommunications High-speed, broadband telecommunications capacity is the infrastructure of the New Economy. Businesses must have this capacity to be competitive and operate effectively. Providers of fiber optic communication service in Acadiana include BellSouth, Cox Cable TV, and the Lafayette Utilities System (LUS). Providers of Competitive Local Exchange Carriers (CLEC) include ANNOX, American MetroComm Corp., CapRock Communications, Coastal Communications, Cox Communications, Datacom, Digital Communication Technology, Eatel, ITC/DeltaComm, KMC Telecommunications, Level (3) Communications, Stratus, and U.S. Unwired. Companies we interviewed all had access to broadband service and did not have any service issues to report. While some of the rural areas of the region lack broadband service, it is widely available through the region. The development of the LUS Fiber system will offer businesses in Lafayette a competitive advantage in terms of broadband technology. The LUS Powered Network offers broadband service to businesses through 11 wholesalers that offer different rates and bandwidths matched to the needs of the business. With fiber to the premises available throughout Lafayette Parishes, businesses will have Locational Strengths and Weaknesses for Acadiana Economic Development 41 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 universal access to 150 MB/Sec transmission speeds which can serve the most robust data needs for servers and call centers. WEAKNESSES Wastewater Capacity Wastewater capacity is a critical resource for semiconductor manufacturing, food processing, and certain types of chemical plants. Taimerica uses online data on wastewater capacity for evaluating a community’s ability to handle a major food processing project. Based on the published data in Acadiana, only Lafayette and New Iberia have the capacity to handle a new load of one million gallons per day. For Lafayette, the ability is uncertain because of the mixture of stormwater and wastewater loads (Table 20). Wastewater capacity in Acadiana is rated as a weakness for economic development. Table 20. Municipal Wastewater Treatment Capacity (mgpd) Rated Average Daily Peak Surplus System Capacity Demand Demand Capacity City of Abbeville City of Crowley Lafayette Utilities System 25-30 incl 18.5 16.5 storm City of New Iberia (2 plants) 6.0 2.5 30.0 design 2.5 2.5 5.0 City of Opelousas Source: Various Water Capacity Lack of available water and sewer capacity can be immediate “knock out” factors for many companies during the site selection process. Water availability and sewer capacity is particularly important to such industries as food processing, chemical industries, chip manufacturing, electronics. Availability of excess water and sewer capacity are also an indicator of a community’s readiness for economic development. The scarcity of available data on water systems is a serious issue for site selection consultants trying to identify communities that could accommodate a large water using industry in Acadiana. The only system with the excess capacity to handle a Locational Strengths and Weaknesses for Acadiana Economic Development 42 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 one million gallon per day load is Lafayette, based on the data that we were able to collect during this project (Table 21). These kinds of utility data should be available online to facilitate industrial site screening by water using industries and their site selection consultants. Table 21. Larger Municipal Water Systems (mgpd) Rated Average Peak Storage Surplus System Capacity Capacity Demand Capacity Capacity City of Abbeville City of Crowley 2.47 3.22 Lafayette Utilities System 46.5 21.0 28.7 4.3 City of New Iberia City of Opelousas Source: Various Locational Strengths and Weaknesses for Acadiana Economic Development 43 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 REAL ESTATE SIGNIFICANCE Constructing and operating a manufacturing plant or office building is a major cost factor in most projects. Site selectors evaluate office and industrial lease costs and availability when selecting locations for plants and offices since the costs can vary substantially from area to area. Taimerica has identified and assessed the strengths and weaknesses of business real estate in the region. REAL ESTATE Strengths Neutrals Weaknesses Industrial Land Costs Construction Costs Supply of Industrial and Office Buildings Conference and Meeting Industrial and Business Parks Facilities Office and Flex Space STRENGTH Industrial Land Costs Developed industrial park land in Lafayette such as is found in the LEDA Industrial Park sells for $40,000 per acre, or $.92 per square foot. This compares to prices of $5.00 per square foot in Baton Rouge and $2.00 per square foot in Houston. Developed industrial park land is not available in the Houma MSA. The price of industrial sites in Acadiana is competitive with those in other competitor communities. Conference and Meeting Facilities Companies need meeting facilities for sales and marketing meetings, strategy sessions, off-site training, and occasional gatherings of customers or suppliers. Although such gatherings are too infrequent to warrant on-premise construction, Locational Strengths and Weaknesses for Acadiana Economic Development 44 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 businesses need convenient access to such facilities. Conference and convention facilities also attract visitors from outside the area. The region has a variety of hotels and conference centers that meet these needs. NEUTRAL Construction Costs Construction costs in Acadiana are comparable to costs in Baton Rouge, Houma, and Houston (Table 22). Construction costs are a neutral in terms of site selection. Table 22. Construction Cost Index Area Index Acadiana Region 81 Baton Rouge MSA 82 Houma MSA 82 Houston MSA 84 U.S. 100 Source: McGraw Hill Sweet’s Construction Costs Manual 2008 WEAKNESSES Supply of Industrial and Office Buildings Taimerica’s experience in corporate site selection reveals that 60 to 80 percent of office, warehouse, and manufacturing projects search for an existing building. If a community lacks available space, shell or turnkey speculative buildings are very important to the success of manufacturing, warehouse, and technology projects. Nationally, the most common size building sought after is in the 60,000 to 120,000 sq. ft. range. The inventory of vacant industrial buildings is extremely tight (Table 23). Only ten buildings in the entire region are available for sale or lease in the 40,000+ size range. Most of the inventory of vacant buildings are small footprint metal buildings favored by oil service firms that are typically unmarketable for other uses. St. Martin Parish has the 1 million square foot industrial building that was formerly used by Fruit of the Loom for distribution, half of which is available for occupancy. Locational Strengths and Weaknesses for Acadiana Economic Development 45 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 The region has several buildings that are air-conditioned and that could accommodate call centers or large offices (Fruit of the Loom at the airport in Vermillion Parish for example). Even so, the inventory of office space for professional service firms, shared service centers, claims processing centers or technical call centers is sparse at best throughout the region (Table 24). The inventory in Houma is comparable to that in Acadiana but Baton Rouge and Houston have bigger inventories of available industrial and office space for such projects. Table 23. Vacant Industrial Buildings in Acadiana No. of Buildings by Size (sq. ft.) 0 to 40 to 80 to Area 40k 80k 120k >120k Notes Acadia 1 1 Iberia 5 2 Jenerette Sugar Mill Lafayette 40 3 1 1 St. Landry 3 St. Martin 1 1 Int’l Trade Center Vermillion 2 1 Fruit of Loom Evangeline Table 24. Vacant Office Space in Acadiana (Number of Buildings by Size in sq. ft) 10 to Area 40k Acadia 1 Iberia 1 Lafayette 16 St. Landry 0 St. Martin 1 Vermillion 0 Evangeline 0 Industrial and Business Parks Business parks are a critical piece of community infrastructure for technology, industrial, or office projects. Since 90 percent of jobs in the next decade will be housed in offices, the supply of campus-type business parks is becoming more important for economic development than industrial park sites. The region has run out of inventory of prepared industrial, technology, and business parks. The inventory of developed vacant inventory for non-waterfront uses is under 100 acres (Table 25). Locational Strengths and Weaknesses for Acadiana Economic Development 46 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Table 25. Site Inventory by Parish in Acadiana Size & Vacancy in Acres Area Name Size Vacant Developed Notes Acadia Port District NA NA Waterfront uses only Ville Platte Ind. Yes City owned Evangeline Park Iberia Port of Iberia 4000 2000 Yes Waterfront uses only Lafayette Interstate IP 47 0 Yes LEDA owned industrial park Southpark 154 10 Yes LEDA owned industrial park LEDA IP 90 24 Yes LEDA owned industrial park Northpark Tech 128 36 Yes LEDA owned business park Center Duson IP 30 23 Yes Private owners; rail site Adjacent to Wal- 125 No Package wastewater treatment needed St. Landry Mart Owned by ED Authority. No water or West of 422 No sewer service with access through a 2 Opelousas lane road SMEDA Industrial 182 0 Yes SMEDA owned St. Martin Park Private park NA NA Yes I-10 east of Hwy 31 Vermillion NONE TOTAL Office and Flex Space About 90 percent of the new jobs in the U.S. economy will require office space. Office space comes in many varieties. Call centers prefer 40,000 to 60,000 square foot buildings on one floor with ample parking (six spaces per 1000 square feet). Professional offices require small blocks of space in high quality multi-story office buildings. Technology companies often prefer “funky” loft space in older downtown buildings with convenient parking nearby. A growing share of the “industrial” space in the U.S. market is configured as flex space, but flex space is still less than 25 percent of the total inventory in most markets. The Urban Land Institute defines flex space as one- or two-story buildings with clear heights of 12 to 14 feet for office space and 12 to 18 feet in warehouse areas that can be converted into two-level space. The office space is designed for office cabling. Telecommunications bandwidth is a critical location factor in spec space. Flex space has limited truck access and has a parking ratio of four to five spaces per 1000 square feet of building. The space offers curb appeal thru interesting building design, lots of glass on the front facade and the land is located in a campus style business park. Campus amenities include water features and Locational Strengths and Weaknesses for Acadiana Economic Development 47 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 intensive landscaping. Flex space is often configured for multi-tenant occupancy. This kind of space is ideal for light manufacturing, research and development, information technology, or office and showroom uses. A typical user will configure the space as 25 percent office and 75 percent warehouse space. The most recent data available on Class A rents showed a range of approximately $11.00 to $16.50 per square foot (average $13.77 per square foot) and a vacancy rate of five percent in Lafayette Parish. The inventory of available office and flex space is extremely tight in Acadiana. There are just three buildings outside of Lafayette Parish that could be configured to meet the needs of a call center or back office. Most of the office space in Lafayette is in multi-story buildings with limited parking. While these buildings are workable for professional services they have limited use for major office operations like a call center or fulfillment center. Locational Strengths and Weaknesses for Acadiana Economic Development 48 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 TECHNOLOGY AND START-UP SUPPORT SIGNIFICANCE In the New Economy, the generation and application of new technology will drive the creation of new businesses and jobs. The higher growth communities over the past decade have been those that have the resources critical for research and development, such as research labs or technical talent. Taimerica has identified the strengths and weaknesses of technology and start-up support in the region. TECHNOLOGY AND START-UP SUPPORT Strengths Neutrals Weaknesses Entrepreneurial Climate Research and Development Activity Technical Talent Pool and Training Capacity STRENGTHS Entrepreneurial Climate Entrepreneurship is a critical ingredient in the growth and development of U.S. communities. The proportion of jobs in young companies is one measure of the impact that entrepreneurial companies are having on a community (Chart 4). Acadiana is as dynamic a location, based on the data, as Houston. The roster of businesses Taimerica interviewed for this assignment is a testament to the entrepreneurial climate in the region: most of the region’s largest companies were started by local entrepreneurs who didn’t want to leave Acadiana. Locational Strengths and Weaknesses for Acadiana Economic Development 49 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Chart 4. Jobs by Age of Business Acadiana Baton Rouge 21 years or more 16 to 20 years 11 to 15 years Houma 6 to 10 years Under 5 years Houston 0% 20% 40% 60% 80% 100% 120% Source: Dun & Bradstreet MarketPlace Technical Talent Pool and Training Capacity Jobs in engineering and information technology require advanced skills, pay high wages, and offer great career prospects. The Information Technology (IT) sector of the U.S. economy added more than seven million jobs in the last decade, far more than any other economic activity. IT companies are attracted to communities with an abundance of programmers, systems analysts, and computer engineers. The economic development of the region will increasingly depend on its ability to augment the supply of locally trained IT workers. Graduate-level education has also become a critical factor in economic development. Companies expect entry-level engineers and info tech hires to pursue graduate training. While Acadiana has a small pool of IT professionals (Table 19), the region generates a significant pool of computer science and IT professionals. On a population-weighted basis, the region generates twice the number of IT graduates as Houston and is comparable to Baton Rouge (Table 15 in Workforce and Training). Acadiana has a bigger concentration of mechanical and petroleum engineers than found in the national workforce. The talent pool generated by academic institutions in the region is also significant. On a population-weighted basis, Acadiana generates twice as many engineers as Houston and is significantly Locational Strengths and Weaknesses for Acadiana Economic Development 50 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 better than Houma although not as strong as Baton Rouge (Table 15 in Workforce and Training). Technical talent is a locational advantage in the region. The breadth of technical talent is not as wide in Acadiana as in Houston or Baton Rouge but talent cost is significantly less than in Houston, on an occupation by occupation basis (Tables 26 and 27). The cost and availability of IT and engineering talent in Acadiana is a locational advantage for all but the largest projects. Table 26. Concentration of Technical Occupations in Acadiana Annual median wage Regional Occupation (SOC code) Empl. Acadiana U.S. Concen. Computer and Mathematical Occ. (15-0000) 1,170 46,410 69,070 0.34 Electrical Engineers (17-2071) 130 54,460 79,240 0.82 Mechanical Engineers (17-2141) 390 65,670 72,300 1.64 Petroleum Engineers (17-2171) 180 96,960 103,960 10.51 All Engineers Except Civil 390 50,435 75,770 1.88 Source: Calculated from BLS databases Table 27. Tech Benchmark Occupations in Acadiana and Competitor Communities in 2007 with Taimerica Indices Code OCC_TITLE Acadiana Baton Rouge Houma Houston 15-1021 Computer programmers 190 720 70 8,540 15-1031 Computer software engineers 90 250 n/a 8,330 15-1051 Computer systems analysts 120 470 40 10,740 17-0000 Arch. and engineering occupations 3,100 7,810 940 77,500 17-2071 Electrical engineers 130 300 n/a 4,370 TOTAL 3630 9550 1050 109480 Total Workforce 143,340 358,940 92,410 2,483,710 Concentration (% of Labor Market) 3% 3% 1% 4% TMC Tech Breadth index (% of national 35% 48% 19% 90% positions in regional labor market) TMC Tech Cost Index (Cost as % of national 78% 83% 77% 110% average) NOTE: These occupations represent 4.2% of the national workforce NEUTRALS Research and Development Activity Technology and innovation have been important drivers of national economic growth for a generation and recent work suggests that technology Locational Strengths and Weaknesses for Acadiana Economic Development 51 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 commercialization has been among the dominant drivers of regional economic growth. Technology business springs from the intellectual property base and talent pool of a region. An inventory of technology assets is the platform for understanding the technology potential of a region. Research conducted by Taimerica in 2003 and published in the Economic Development Quarterly, an international journal, demonstrated that manufacturing technologies can be classified into nine distinct categories based on the locational clustering of companies and research institutions that generate patents within these fields. Acadiana is far above the U.S. average in the mining field but trails the U.S. metro average in the other eight categories (Chart 5 and Table 28). Acadiana ranks third in the U.S. in the mining category on a per capita basis, which even exceeds Dallas, Houston, and Denver. The Acadiana region, at just 6 percent of the U.S. metro average, trails its metro counterparts significantly in terms of overall patent production however. Acadiana has an R&D base, but it is narrower than found in most metro areas in the U.S. Baton Rouge, by contrast has strength in inorganic chemistry, medicine, and organic chemistry. Chart 5. Acadiana Patents as Percent of U.S. by Technology Type 2003-08 600% 500% 400% 300% Acadiana 200% 100% 0% AL gs cs l g e l ry ry t ca ca en in os ist ni ist in T i ni in ed m tlo TO ro at em em ha M in M Co t o ec ec ta Fo Ch Ch El er M ic c nt ni an E ga n/ g Or or io In sh Fa Locational Strengths and Weaknesses for Acadiana Economic Development 52 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Table 28. Patents by Technology 2003-2008 Acadiana Patents Patents Rank per As % per Second per Metro Category No. 100k* US Top Metro 100k Highest 100k Average Coatings 369 0.6 4% Boston 294.6 Chicago 162.5 15.6 Electronics 429 3.4 1% Boston 9541 Chicago 2956 426.6 Fashion/Entertainment 229 6.9 10% Boston 1055 Chicago 795 70.2 Footloose 290 3.4 6% Boston 1199 Chicago 615 58.1 Inorganic Chemistry 276 5.9 7% Chicago 1908 Boston 858 89.6 Mechanical 277 7.6 11% Chicago 798 Boston 753 70.0 Medical 367 5.5 2% Boston 8052 Philadelphia 3070 264.9 Mining 3 24.8 502% Duncan, OK 1016 Pella, IA 64 4.9 Organic Chemistry 393 0.4 1% Boston 996 Philadelphia 755 43.7 TOTAL 222 58.5 6% Boston 23823 Chicago 7541 1044 *Patents per 100,000 population. Source: Compiled from Taimerica patent database Historic data demonstrate that the region has paralleled national trends in terms of generation of patents until 2005. The abrupt drop in patent awards since 2005 could be a statistical fluke but it is troublesome if it turns out to be a long-term trend (Chart 6). The percentage of patents held by individuals is slightly above the national average in Acadiana while the percentage held by academic institutions is slightly below the U.S. average (Table A-1 in the Appendix). Locational Strengths and Weaknesses for Acadiana Economic Development 53 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Chart 6. Patent Trends in the U.S. and Acadiana since 1990 100 180000 90 160000 80 140000 70 120000 60 100000 # patents 50 USA 80000 Acadiana 40 60000 30 40000 20 10 20000 0 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 NOTE: Acadiana patents shown on left axis and blue line while US patents are shown as green bars scaled to right axis The distribution of patents among the technology classes in Acadiana is similar to other metro areas in Louisiana but is much lower than in Houston, one of the nation’s major R&D centers in medicine, chemistry and mining (Table 29). Table 29. Patents by Technology Type from 2003-2008 per 100,000 Population Fashion/En Footloos Organi Coatings Elec. Inorg. Mech. Med. Mining TOTAL Area t e c Acadiana 0.6 3.4 6.9 3.4 5.9 7.6 5.5 24.8 0.4 58.5 Baton Rouge 0.4 4.9 4.3 3.4 19.3 5.5 11.0 1.9 11.4 62.2 Houma 0.5 2.5 4.5 5.0 4.5 9.1 0.5 18.6 0.0 45.3 Houston 1.8 36.4 9.3 10.5 20.0 11.6 19.9 41.3 14.4 165.2 Lake Charles 0.5 1.0 6.7 1.5 2.6 2.6 6.2 2.1 2.1 25.2 Shreveport 0.0 2.6 3.1 1.3 2.4 3.9 5.5 0.8 0.0 19.6 Locational Strengths and Weaknesses for Acadiana Economic Development 54 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 NATURAL RESOURCES SIGNIFICANCE The United States has an abundance of natural resources that are key assets for the location of businesses. Timber, minerals, and agricultural resources provide a significant share of U.S. manufacturing jobs that are not greatly affected by offshore competition. The Air Quality Index is based on annual data from the Environmental Protection Agency (EPA), which measures the levels of particulates, carbon monoxide, sulfur dioxide, and other pollutants, as well as the number of ozone alert days in a community. Higher values indicate better quality air. The Water Quality Index is also based on data from the EPA, which measures pollutants, sediments and toxic discharges, and higher values indicate a higher quality watershed. The situation in Acadiana is far better than the national average or the average in the competitor communities. NATURAL RESOURCES Strengths Neutrals Weaknesses Air and Water Quality Solar Resources Wind Resources Fiber and Biomass Resources STRENGTHS Air and Water Quality Parishes in Acadiana are within attainment for all pollutants regulated by the EPA. Attainment status is a major advantage for siting of heavy industries in the chemical and metals sectors. The Air Quality Index is based on annual data from the Environmental Protection Agency (EPA), which measures the levels of particulates, carbon monoxide, Locational Strengths and Weaknesses for Acadiana Economic Development 55 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 sulfur dioxide, and other pollutants, as well as the number of ozone alert days in a community (Table 30). Higher values indicate better quality air. Acadiana and Houma have the best air quality of the four competitors. Houston and Baton Rouge have severe restrictions on plant siting due to non-attainment and the air quality overall. The Water Quality Index is a measure of the quality of the area’s water supply as rated by the EPA. The EPA has a complex algorithm for measuring water quality that includes such variables as pollutants, sediments, and toxic discharges. Higher values indicate better quality water. Acadiana’s water quality is comparable to Baton Rouge and lower than Houma and Houston. Table 30. Environmental Quality Measures in 2007 Air Water Quality Quality Area Index Index Acadiana Region 40 10 Baton Rouge MSA 14 13 Houma MSA 41 40 Houston MSA 1 37 U.S. 48 55 Source: Best Places Fiber and Biomass Resources According to the USDA Forest Service, Acadiana has nearly 890,000 acres of land in fiber production. This represents 28 percent of the land area in the region. The federal government has active research in biomass to energy conversion. Experts believe that commercial production of ethanol from cellulosic biomass will be viable in the next five to ten years. Although counties in the region are outside of the major concentrations of available mass (Map 6), Acadiana parishes with sugar cane production will have a resource for the development of this industry (Map 7). Almost all of the parishes in the region have biomass volumes that are above the average for all U.S. counties. Sugarcane bagasse is likely to serve as one of the first raw materials for cellulosic ethanol production because it is collected in the sugar-making process and this lowers its cost as a biomass feedstock. Locational Strengths and Weaknesses for Acadiana Economic Development 56 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Map 6. Rural Biomass Resource Availability in 2025 Source: University of Tennessee, and Farrell, J. and Morris, D., Energy Reliant States: Homegrown Renewable Power, The New Rules Project, p. 6. Locational Strengths and Weaknesses for Acadiana Economic Development 57 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Map 7. Biomass Resources by Source in Acadiana Note: Size of circle indicates size of resource. Blue color is resource from crop residues, green is manure from animal husbandry; Forest, Primary, Secondary, and Urban are types of wood waste. WWTF is methane from wastewater treatment plants; SWG are dedicated energy crops. Source: Taimerica map from GIS databases maintained by the National Renewable Energy Lab NEUTRAL Solar Resources The amount of solar potential in a region is determined by its latitude and the amount of cloud cover. Counties in the far west have the highest potential. The peak figure is 6.6 kilowatt hours per day per square meter of panel. The lowest in the U.S. is 3.44 kilowatt hours per day per square meter. The average for the U.S. is 5.13 kwh. Most of Acadiana is at or below the national average in terms of solar potential (Map 8). Locational Strengths and Weaknesses for Acadiana Economic Development 58 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Map 8. Potential Electricity from Rooftop Solar Note: Numbers represent average kwh of electricity that can be generated per day per square meter of solar panel. Source: Taimerica map from GIS databases maintained by the National Renewable Energy Lab WEAKNESS Wind Resources Wind resources in Acadiana are weaker than those in the Western states (Map 9). None of the wind sites in Acadiana have the potential to generate above 300 watts per square meter, the cutoff point for commercial wind farms. Offshore wind sources are a future possibility but the resource potential is not currently well defined and offshore wind farms are far more capital-intensive than terrestrial plants. The region should further investigate its offshore wind potential to determine the likely potential. With the introduction of carbon trading in the domestic economy (anticipated by Taimerica to begin in 2010 or 2011), the economics of wind power will improve and future opportunities for wind power production might obtain commercial feasibility. Locational Strengths and Weaknesses for Acadiana Economic Development 59 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Map 9. Potential Electricity from Wind Note: Blue bars on map represent locations with the potential to generate 200-300 Watts of electricity per square meter at a 50 meter elevation. None of these sites exceeds 300 watts per square meter which is considered the minimum production for a commercial wind farm. Source: Taimerica map from GIS databases maintained by the National Renewable Energy Lab Locational Strengths and Weaknesses for Acadiana Economic Development 60 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 SUMMARY The report being prepared by Taimerica to evaluate diversification targets will take into consideration the locational strengths and weaknesses of Acadiana, and recommend those businesses and industries most likely to consider a location or expansion in the region. Acadiana has significant assets to promote. It has a favorable quality of life, a strong business climate, and a workforce with significant manufacturing and office skills. The ability to recruit college-educated workers locally, particularly in IT, engineering, and business, is also a significant asset. Broadband access, the entrepreneurial climate in the region, and the region’s fiber and biomass resources provide opportunities to diversify the economy away from oil and gas production. While the region has significant assets for business development, it also has some liabilities that limit its economic potential. The lack of a defined shared vision for community economic development and the lack of long-range community plans are issues with significant implications for business development. The geographic location is poor for national distribution as well as for assembly operations with high freight costs, such as automobiles. The shortage of workers, particularly in the skilled blue-collar trades, is a significant issue for business recruitment as well as for business retention. Taimerica believes that some of the diminishing of competitive advantage in the region since 2002 stems from a lack of available workers. Commercial air service is a locational issue for office functions serving a national or international market. Some of the biggest locational issues in Acadiana can be eliminated by community leaders. Training institutions can produce more employable workers whose skills are better matched to employer needs. Water and wastewater capacities can be augmented. And the region can increase its inventory of developed industrial and office parks and available buildings. Correcting these weaknesses will greatly improve the region’s ability to compete for new business while improving its success with the retention and expansion of its current employers. Locational Strengths and Weaknesses for Acadiana Economic Development 61 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 APPENDIX Locational Strengths and Weaknesses for Acadiana Economic Development 62 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Acadiana Patents by Assignee 2000-2008 TOTAL Assignee 2000-08 2000 2001 2002 2003 2004 2005 2006 2007 2008 ~Individually Owned Patent 333 50 55 41 38 36 58 2 26 27 FRANK'S CASING CREW & RENTAL TOOLS, INC. 30 3 3 5 6 2 4 1 4 2 BAKER HUGHES INCORPORATED 15 3 2 2 3 2 1 1 1 HALLIBURTON ENERGY SERVICES, INC. 13 2 2 4 1 1 1 1 1 FRANK'S INTERNATIONAL, INC. 10 2 2 1 2 1 2 VARCO I/P, INC. 10 3 2 2 2 1 WEATHERFORD/LAMB, INC. 8 1 1 3 1 2 BJ SERVICES CO 7 1 1 1 2 2 BOTTOM LINE INDUSTRIES, INC. 5 2 2 1 DEVIN INTERNATIONAL, INC. 5 1 1 2 1 TUBOSCOPE I/P INC. 5 3 1 1 ACCESS OIL TOOLS, INC. 4 3 1 DEL CORPORATION 4 1 2 1 LOUISIANA STATE UNIVERSITY 4 1 1 2 OLS CONSULTING SERVICES, INC. 4 2 2 SCHLUMBERGER TECHNOLOGY CORPORATION 4 1 1 1 1 TURBO-CHEM INTERNATIONAL, INC. 4 1 2 1 COASTAL TIMBERS, INC. 3 2 1 INTERNATIONAL PAPER CO. 3 1 1 1 LOUISIANA STATE UNIVERSITY 3 1 2 OSCA, INC. 3 3 PRIME DIRECTIONAL SYSTEMS, L.L.C. 3 3 SYNTRON, INC. 3 3 UNIVERSITY OF LOUISIANA AT LAFAYETTE 3 1 1 1 ADVANCE PRODUCTS AND SYSTEMS, INC. 2 1 1 BOYD'S BIT SERVICE, INC. 2 1 1 CORE LABORATORIES, INC. 2 1 1 DELMAR SYSTEMS, INC. 2 1 1 GEOSENSOR CORP. 2 2 GREAT LAKES CHEMICAL CORPORATION 2 1 1 NOBLE DRILLING SERVICES, INC. 2 1 1 OFFSHORE ENERGY SERVICES, INC. 2 1 1 QUANTUM DRILLING MOTORS, INC 2 2 Samson Rope Technologies 2 1 1 STRYKER CORPORATION 2 2 TEXCHEM GROUP INTERNATIONAL, L.L.C. 2 1 1 TOMAHAWK DOWNHOLE, LLC 2 1 1 TUBOSCOPE VETCO INTERNATIONAL INC. 2 2 UNION OIL COMPANY OF CALIFORNIA 2 1 1 VENTURE CHEMICALS, INC. 2 1 1 VETCO GRAY INC 2 1 1 WESTERN ATLAS INTERNATIONAL, INC. 2 2 ACADIA INDUSTRIES, INC. 1 1 AMBAR, INC. 1 1 BEGNEAUD MANUFACTURING, INC. 1 1 Burner Fire Control, Inc. 1 1 CAJUN CONSTRUCTORS, INC. 1 1 CLINE CHILDREN CLASS TRUST 1 1 COLUMBIA ENERGY GROUP 1 1 CONOCO, INC. 1 1 DRILLTEC PATENTS & TECHNOLOGIES CO., INC. 1 1 ENSCO INTERNATIONAL, INC. 1 1 F. A. Richard & Associates Inc. 1 1 FMC TECHNOLOGIES, INC. 1 1 Foret Plasma Labs, LLC 1 1 Gator Tail, L.L.C. 1 1 GINGER SCHOUEST 1 1 Locational Strengths and Weaknesses for Acadiana Economic Development 63 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 June, 2009 Acadiana Patents by Assignee 2000-2008 TOTAL Assignee 2000-08 2000 2001 2002 2003 2004 2005 2006 2007 2008 Grand Vent Power, LLC 1 1 GRINDING & SIZING CO., INC. 1 1 HERMAN J. SCHELLSTEDE & ASSOCIATES, INC. 1 1 IBERIA THREADING, INC. 1 1 INNOVATIVE DRILLING TECHNOLOGIES, LLC 1 1 IntegrCert, LLC 1 1 INTERTAPE POLYMER GROUP, INC. 1 1 LIPOGENICS, INC. 1 1 NOKIA CORPORATION 1 1 NORTEL NETWORKS LIMITED 1 1 NOVA TECHNOLOGY CORP., INC 1 1 OCS TECHNOLOGIES, LLC 1 1 ONCOLOGY AUTOMATION, INC. 1 1 ORBIX CORPORATION 1 1 P.E.T. International, Inc. 1 1 PATHFINDER ENERGY SERVICES, INC. 1 1 Petrotechnologies, Inc. 1 1 PHOENIX RESOURCE RECOVERY, INC. 1 1 PRODUCTION MANAGEMENT INDUSTRIES, INC. 1 1 RACATAC PRODUCTS, INC. 1 1 Reliagene Technologies Inc. 1 1 SATELLITE ACCESSORIES, LLC 1 1 SEA SANITIZER INTERNATION, L.L.C. 1 1 SHAW INDUSTRIES 1 1 SMITH INTERNATIONAL INC. 1 1 SOLOCO, L.L.C. 1 1 SPECIALTY RENTAL TOOL & SUPPLY CO., INC. 1 1 SUPERIOR ENERGY SERVICES, L.L.C. 1 1 SUPERIOR GRAPHITE CO. 1 1 SUPERIOR SERVICES, LLC 1 1 TECHNICAL INDUSTRIES, INC. 1 1 THOMAS TOOLS, INC. 1 1 THRU-TUBING TECHNOLOGY, INC. 1 1 TROJAN RENTAL AND SALES 1 1 Venoscope, LLC 1 1 VENTURA FOODS, LLC 1 1 VENTURE INNOVATIONS, INC. 1 1 WEATHERFORD US HOLDING, L.P. 1 1 TOTAL 575 91 80 72 69 61 80 21 50 51 Patents by Individuals 333 Percent of Acadiana patents by individuals(%) 58% Percent by individuals in US (%) 56% Patents by Academic Institutions 10 Percent of patents by Academic Institutions in Acadiana 2% Percent of patents by Academic Institutions in USA 3% Locational Strengths and Weaknesses for Acadiana Economic Development 64 TARGET INDUSTRIES FOR GROWTH AND DEVELOPMENT for from 347 Girod Street Mandeville, LA 70448 (985) 626-9868 FAX: (985) 626-9869 email@example.com Technology Assessment • Strategic Planning • Organization Design • Site Selection July, 2009 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 TABLE OF CONTENTS INTRODUCTION 3 THE TARGET INDUSTRY IDENTIFICATION PROCESS 4 GLOBAL TRENDS SHAPING THE SELECTION OF TARGET INDUSTRIES 5 OFFICE SECTOR TARGETS 8 TECHNOLOGY SECTOR TARGETS 9 MANUFACTURING SECTOR TARGETS 11 LONG-TERM TARGETS 16 FINAL RECOMMENDATIONS 22 APPENDIX 23 Target Industries for Growth and Development for Acadiana Economic Development 2 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 INTRODUCTION INTRODUCTION The economic recession that began in 2008 has demonstrated the importance of economic diversity. While economic development practitioners nationwide focused on strengthening their existing industry clusters as a means of stimulating job growth in the last decade, many regions are now interested in diversifying their regional industrial base. The economic landscape for diversification is changing rapidly for developers: technology is creating a growing share of the new jobs in the U.S. economy; alternative energy development is creating new opportunities in manufacturing; the increased cost of international shipping is pulling manufacturing back to the U.S. from Asia; producer and consumer services are creating over 94 percent of the new jobs in America; and a growing number of affluent retirees offers an unparalleled opportunity for nontraditional economic development. These trends are reinforcing the value of a systematic analysis of target industry opportunities within a region, built on an up-to-date understanding of trends and structural changes in the global economy. This report presents Taimerica’s findings about the target industry opportunities that provide the best opportunities for economic diversification in Acadiana over the next five years. A target industry analysis has proven to be an integral component of a successful economic development marketing program. Recruiting new firms into an area as well as helping to grow entrepreneurial firms from within are competitive and challenging tasks. But for every firm looking to relocate, expand, or find a new facility site, there are dozens or even hundreds of communities pursuing that prospect. In addition, communities often focus their economic development resources almost exclusively on business attraction, hoping to lure the big auto plant, or a trendy technology company. Economic developer organizations must now do more. Besides retaining existing business, successful communities must grow from within by nurturing those entrepreneurs likely to be creating new investment and jobs. Today’s start-ups may turn out to be tomorrow’s large companies. The decision to focus on a select few target industry groups does not preclude improvement and possibilities in other economic sectors. Rather, the priority targets are, or have the potential to become, drivers that take capital from outside the region and initiate activity that produces income and value for the Acadiana region. “Destiny is no matter of chance. It is a matter of choice.” William Jennings Bryan Target Industries for Growth and Development for Acadiana Economic Development 3 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 THE TARGET INDUSTRY IDENTIFICATION PROCESS The majority of target opportunities are identified by first looking at industry growth patterns in the national economy. These patterns, or industry trends, tend to drive the attraction and expansion opportunities at the regional and local level. Taimerica uses a sophisticated multi-step process to determine the national growth industries. Our system, called the Target Industry Identification Process (TIP), is basically an elimination process, eliminating those industries that do not meet the criteria for the marketing effort. Given the large number of industry sectors that exist, it is a much more efficient process to initially eliminate those that are unlikely prospects until the list has become whittled down to more likely candidates. The focus of a target industry analysis is on those sectors of the economy that generate jobs and investment, rather than on those responsive to growth, such as retail and customer service operations. Therefore, the general industry categories for Acadiana are: ∙ Manufacturing, with a particular emphasis on industries with skill requirements that match those in the Acadiana workforce ∙ Administrative offices ∙ Technology industries The following steps were taken to identify the national growth targets most appropriate for the region’s targeted marketing effort: 1. Ranked nearly 800 four-digit NAICS industries according to rate of change in employment and number of establishments using the time period from 2003 to 2007 (from both our D&B and Bureau of Labor Statistics databases). 2. Eliminated those industries that have been declining or static in the nation and in the three-state region (Louisiana, Arkansas, Texas) since 2003. 3. Narrowed the list of possibilities down to 24 industries for detailed analysis. 4. Eliminated industries that lacked sales and export growth in 2008 or that experienced employment declines or plant closures in 2007. A statistical overview of the target industries recommended by Taimerica is in Table A-1 and in the industry profiles in the Appendix. This mix of targets includes industries from the office, technology and manufacturing sectors. The final list of targets was prepared by eliminating those industries that, in the consultant’s judgment, were unlikely candidates for Acadiana based on other location factors. In some cases, the recommendations are based on a reversal in economic trends that are not yet apparent in readily available industry statistics. Some of the industries on the list, for instance, witnessed a decline in U.S. employment because of offshore competition from China Target Industries for Growth and Development for Acadiana Economic Development 4 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 earlier in the decade but are now returning to the U.S. because of increases in ocean freight costs, rising costs of production offshore, and a fall in the relative value of the U.S. dollar. This trend, entitled “reverse offshoring” by the business press, is discussed further in the trends section. A second trend shaping the target list for Acadiana is the rapid development of alternative fuels in the U.S., which is not yet established as a statistical trend. The alternative fuels industry has stimulated the demand for specialized industrial equipment used in the production of alternative fuels and the alternative energy industry. This is also discussed further in the trends section. A textual discussion of each of the target industries follows this section. The best target opportunities in a particular region occur in industries that need the specialized assets in the community. The following is a list of those assets for which Acadiana has significant competitive advantages: ∙ Industrial engineering skills ∙ Production and manufacturing skills ∙ Competitive manufacturing wages ∙ Strong work ethic and productivity ∙ Occupational training programs and facilities ∙ Rail service ∙ Water transportation ∙ Power reliability and costs ∙ Broadband telecommunications capacity ∙ Industrial land prices The final target industries favor regions, such as Acadiana, that have a relatively strong position in these location factors. GLOBAL TRENDS SHAPING THE SELECTION OF TARGET INDUSTRIES The global recession that began in mid-2008 has curtailed opportunities for industry recruitment in the next 12 months. Our consulting work in other regions of the U.S. demonstrates that opportunities are still alive in regions that offer a skilled manufacturing workforce and vacant space, however. Although the number of opportunities will remain meager while the global recession continues, a recovery will generate significant new projects that will gravitate to regions of the U.S. that have the infrastructure, workforce, and facilities needed to accommodate the industry’s location requirements. It is possible to predict which of those industries will be attracted to Acadiana based on economic trends prior to the recession. Target Industries for Growth and Development for Acadiana Economic Development 5 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 The U.S. economy has witnessed dramatic changes in the last decade from the rapid globalization of manufacturing. U.S. manufacturing lost nearly three million jobs and 46,000 facilities between 2001 and 2004 before stabilizing in 2005. The rapid increase in world crude oil prices, along with other macroeconomic trends since 2005, has led to a reversal of these trends in the last 18 months. These changes, because they are significant and long-term in nature, are leading to long-term shifts in the location preference of global companies. The repercussions of three of these location trends, 1) alternative energy production, 2) export-driven growth, and, 3) “reverse offshoring,” are so significant to industry targeting that they merit a more detailed discussion. Reverse Offshoring The benefits and economics of manufacturing overseas are not as positive today as they have been in the past. The rising cost of ocean transportation and the time involved is a key factor driving companies to consider moving their operations closer to U.S. consumers. Thomasville, for example, announced last year that the company is shifting some of its manufacturing operations from China back to North Carolina. DESA, a Kentucky company that makes residential and industrial heaters, moved production back to Bowling Green from China because the cost of ocean shipping jumped by 15 percent in 2007-08. Four northern California companies in early 2009 have reshored products from China to Wright Engineered Plastics in Santa Rosa, California. Steamship lines and railroads are faced with the same shock from volatility in fuel prices as U.S. consumers, from $50 to $145/barrel, then down again, over the last three years. These costs have to be passed on the manufacturing companies sourcing parts or products in Asia. The trends are long-term and are leading to a reversal of the prior trend of offshoring to Asia, particularly for bulky products that have a moderate labor content. The cost of ocean freight is not the only factor: the cost of doing business in places like China is also increasing. Wage inflation, port congestion, changing currency valuation, taxes, and import duties on goods from those locations into the U.S. are also cited as significant factors. Integrity Manufacturing, one of the fastest growing companies in Kentucky, has built its strategy on competitively manufacturing products once made in China. Even a desire to reduce the corporate carbon footprint was cited by IKEA as a factor in opening a manufacturing facility in Danville, Virginia, its first outside of Europe. Export-Driven Growth The Wall Street Journal recently reported on the resurgence of manufacturing in midwestern factory towns like Manitowoc, Wisconsin fueled by an export boom. The value of the U.S. dollar has declined by 40 percent relative to the value of the Euro over Target Industries for Growth and Development for Acadiana Economic Development 6 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 the last five years. Major declines have also occurred relative to the value of the Japanese Yen and the Chinese Yuan. The result is that U.S.-made products are cheaper relative to those produced in Europe, Japan, or other parts of Asia. Booms abroad in infrastructure and mining are creating a jump in the demand for construction and mining equipment, among other U.S. made industrial products. The result is a resurgence in U.S. manufacturing production, fueled by about $1 trillion in exports of U.S. manufactured goods in 2007. Caterpillar and Heinz are among the manufacturers that saw significant revenue and profit growth on the strength of their international markets. Most of the target sectors identified for Acadiana have doubled or tripled their volume of exports since 2004. Alternative Energy The tripling of world crude prices to their peak in 2008 is the result of surging demand in China and India coupled with peak production in Saudi Arabia and declining production in Africa, Mexico, Venezuela, and other major producing countries. Energy experts, including experts in the oil and gas companies, now recognize that the global appetite for energy cannot be met by fossil fuels alone. The production of alternative forms of energy, such as wind power, ethanol, biodiesel, and solar power, has jumped remarkably since 2005. Almost 10 percent of the U.S.'s new electric generating capacity since 2005 has been in renewable sources like wind power. Companies are investing billions of dollars in plants to gasify coal, to produce ethanol from cellulose, and to commercialize new technologies in renewable fuels. In July 2008 alone, eighteen U.S. facility and infrastructure projects totaling nearly $13.7 billion were announced, and billion-dollar announcements have continued despite the downturn in the global economy. These projects ranged from a $2 billion wind farm to generate 4000 MW of electricity in Texas and the necessary infrastructure to connect that electricity to the grid, to a Cargill plant expansion in Illinois to produce a soy-based replacement for polyurethane. Each of these projects requires pumps, compressors, tanks, pipelines, and process control instrumentation, among other items. This has stimulated the demand for equipment traditionally used in the refining and chemical process industries. These same industries are producing for both domestic and export markets, which makes accessibility to rail and barge service important in plant siting. Target Industries for Growth and Development for Acadiana Economic Development 7 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 OFFICE SECTOR TARGETS According to the Bureau of Labor Statistics, over 94 percent of national employment growth over the last decade was in service occupations, which includes office operations. This trend is expected to continue during the current decade. For that reason we present the office sector target first, as it is likely to offer the best targeting opportunities over the next five years. NAICS 5611 - Office Administrative Services Back offices consist of administrative units removed from corporate headquarters. The functional offices within this target may consist of any of the following: ∙ Data processing ∙ Claims processing ∙ Subscription processing ∙ Call centers ∙ Technology support ∙ Customer service ∙ Reservations ∙ Catalog fulfillment In general, the back office sector cannot be classified within a single NAICS code because it cuts across many classifications. Much of the recent activity in back offices has occurred in NAICS 5611, office administrative services. Back offices generated nearly 22,000 new jobs nationally in 2007 versus an overall decline in manufacturing employment. Forecasts suggest that the opportunity to attract office operations will continue in the future. The back office sector generated around 2,000 new facilities per year over the last half decade and this trend accelerated slightly in 2007. Office projects are labor intensive, generating an average employment of 63 persons per location. The Bureau of Labor Statistics estimates that employment will grow by 2.6 percent per year over the next decade in office activities, adding 500,000 jobs nationally. Industry call centers have accounted for a large share of new administrative offices over the last 15 years. Call center publications estimate that the sector nationally consists of 90 million square feet of office space and employs roughly 900,000 individuals. Although the industry operated near 100 percent of capacity during the 1990s, economic conditions between 2000 and 2007 drove work to offshore locations in India, the Philippines, the Caribbean, and Canada. As manpower costs represent half of operating Target Industries for Growth and Development for Acadiana Economic Development 8 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 costs, many telemarketing, help desk, and customer service centers have moved to offshore contract operations where companies can hire college-educated workers at a fraction of the cost for a high school-educated worker in the U.S. Estimates suggest that up to 100,000 jobs left the U.S. between 2000 and 2006. Recent announcements of technical support call centers in U.S. cities, rather than India, suggest that growth in call center offshoring has slowed considerably if not reversed. (Even the largest Indian companies have set up call centers in the U.S. to support the needs of high end technical companies.) Call centers and administrative offices look for leasable, vacant, air conditioned space with lots of employee parking. A quality talent pool of office workers at moderate costs is another location factor, plus broad-band internet access for network operations. Combined with the region’s office labor force that is sufficiently large and moderately priced, the Acadiana region has the resources needed to attract administrative offices. Real estate options in the region are presently limited for administrative offices and shared service centers, which typically use less space than call centers. Expanded office space is a critical requirement for Acadiana's competitive position with this target. Until the office inventory is expanded, this target will offer limited opportunities in the region. TECHNOLOGY SECTOR TARGETS NAICS 5191 and 5182 - Data Centers The proliferation of web-based software applications and cloud computing is creating a proliferation of new data centers. Cloud computing is a technology that allows multiple computers to chain together and operate as if they were a massive supercomputer with unlimited memory and processing power. Major providers of cloud computing, such as Yahoo, Google, Amazon, and Microsoft, are installing new data centers to support this growth. Data centers consume huge amounts of electricity and seek out locations with advantageous power rates. Many of the new facilities are located in the Pacific Northwest near hydroelectric power dams to reduce costs. Centers also need large amounts of cooling water at reasonable costs. Facilities are typically built in 35,000 to 50,000 square foot air-conditioned office buildings on large lots that provide a security buffer. The other infrastructure requirement is access to the fiber network. Rates on the SLEMCO system are competitive for large electrical loads. Land prices in Acadiana are also an advantage. Fiber infrastructure of bandwidth sufficient to support a data center is generally available throughout Acadiana. Data centers employ large numbers of IT professionals. The size and caliber of college IT programs is the most important HR issue in the location of data centers. Colleges that Target Industries for Growth and Development for Acadiana Economic Development 9 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 support the NSA’s Certification for Information Assurance certificate are a locational draw for large data centers (neither ULL nor LSU now offer the NSA certificate). Acadiana has the assets needed to support new data centers. The economic development team will have to demonstrate that the region offers sites that are not likely to become disabled during hurricanes, however. Data center security is a siting issue that favors Midwestern sites, but Louisiana leaders can demonstrate that all sites have some exposure to natural disasters. NAICS 5415 - Computer Systems Design Custom computer programming has been one of the fastest growth sectors in the national economy over the last decade. Forecasts suggest that the sector will continue to grow employment by four percent per year in the current decade, adding 570,000 jobs between now and 2016. Unlike semiconductors, growth in software development is not concentrated in just a few tech centers. The growth in this industry has been widespread and this diversity will continue. The software industry hires professional programmers and analysts. Most of the employees in this industry hold university degrees, which explains the high average salary of $87,900 per year, nearly triple the current average salary in the region. The presence of undergraduate and graduate IT programs at ULL and LSU Eunice are locational assets for attracting this industry. The scarcity of office space, especially in the downtown loft buildings favored by software startups, is a siting issue that Acadiana developers will have to address to attract this industry. The long-term viability of the region for software development can be enhanced through community development and educational improvements. Larger pools of graduate level degree programs in computer science will enhance Acadiana’s ability to attract and sustain computer design operations. Target Industries for Growth and Development for Acadiana Economic Development 10 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 MANUFACTURING SECTOR TARGETS NAICS 3119 – Other Food Manufacturing The processed food industry has grown rapidly in the last five years through the introduction of new products such as egg beaters and prepared omelets in sealed cartons. This industry sector includes the following categories that experienced growth from 2005 to 2006: Snack foods All other foods, such as: o Egg substitutes o Perishable prepared foods ∙ 311991 Box lunches (for sale off premises) manufacturing ∙ 311991 Egg noodles, fresh, manufacturing ∙ 311991 Food, prepared, perishable, packaged for individual resale ∙ 311991 Macaroni, fresh, manufacturing ∙ 311991 Noodles, fresh, manufacturing ∙ 311991 Pasta, fresh, manufacturing ∙ 311991 Pizzas, fresh, manufacturing ∙ 311991 Prepared meals, perishable, packaged for individual resale ∙ 311991 Salads, fresh or refrigerated, manufacturing ∙ 311991 Sandwiches, fresh (i.e., assembled and packaged for wholesale market), manufacture ∙ 311991 Tofu (i.e., bean curd) (except frozen desserts) manufacturing ∙ 311991 Vegetables, cut or peeled, fresh, manufacturing National forecasts suggest that employment in this NAICS 3119 industry category will grow by 0.2% per year during the decade. Three hundred new plants have located nationwide from 2003 to 2007, generating nearly 11,000 new jobs averaging $48,700 in annual pay. Shipments for 2007 were $74.7 billion, and total exports in 2009 are forecasted to be $5.9 billion, down five percent from 2008. There is significant variation between states in terms of average wages. The average wage in Texas is $1,380 per week but the average in Louisiana and Arkansas is between $700 and $800 per week. The newer and more automated the process, the higher the wage level. Based on the wastewater data collected in the Strengths-Weakness report, New Iberia and Lafayette have the wastewater capacity to service the food industry. We are uncertain of whether the balance of the major cities in the region have the capacity to compete for this industry because of a lack of published data on their water and wastewater capacities. Target Industries for Growth and Development for Acadiana Economic Development 11 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 NAICS 3312 – Steel Product Manufacturing (Purchased Steel) This industry consists of establishments primarily engaged in manufacturing iron and steel tube and pipe, drawing steel wire, and rolling or drawing shapes from purchased iron or steel. Approximately 1,060 establishments operated in this industry nationwide between 2003 and 2007. Industry-wide employment in 2007 totaled nearly 61,000 workers who received an average annual pay of approximately $54,000 per year. Employment in this industry defied the trend exhibited by most of manufacturing by growing slightly (.02%) since 2003. This industry shipped $20.4 billion of product in 2007, and expects to export $342 million in 2009 (annualized). The steel products industry is attracting unprecedented amounts of investment capital from Asia and Europe. Most of the leading investors in this sector, such as the Shenzen Steel Company which announced a $1 billion pipe project in Corpus Christi in 2008, are headquartered outside the U.S. Companies in this industry require a large number of welders and fitters and other machine tool trades. The lack of surplus availability of trained workers with these skills in Acadiana is the most significant barrier to the future location of this industry in the region. Rail and waterway sites are important siting requirements for companies in this industry. NAICS 3324 – Boiler, Tank and Shipping Container Manufacturing Metal tanks, boilers and similar containers are an important part of the chemical processing infrastructure. The industry is growing with growth in oil and gas production and refining capacity, as well as the construction of alternative energy plants. With the current shortage of capacity in U.S. refining, this industry is a good target for future growth for Acadiana. This industry shipped more than $31 billion of product in 2007. Exports in 2009, although declining slightly since their peak in 2008, are still expected to be slightly above 2007 at $2.8 billion. Employment growth since has averaged about six percent per year, which is above the average for all manufacturing, despite a decline in the number of establishments. These jobs pay an average weekly wage of $1,016. Among the region’s advantages for this industry is the presence of a large chemical processing industry. The Gulf Coast Industrial Market, which runs from Mobile to Corpus Christi, is one of the world’s largest markets for this type of fabrication, and operations in Acadiana can ship finished vessels by barge to refining and chemical construction sites. Target Industries for Growth and Development for Acadiana Economic Development 12 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 The production of synfuels, discussed in the alternative energy section, will stimulate the tank and heavy fabrication industry. Synfuels rely on a branch of chemistry called the Fischer Tropsch process. This process was developed in Germany during World War II to replace fuel refined from crude oil. The Fischer Tropsch process uses massive pressure vessels for gasification and liquefaction. Typical vessel sizes are 90 to 100 feet in diameter and 250 feet tall. Just a few fabrication yards in the world have the ability to fabricate these vessels, which are akin to ships in terms of their size and complexity of fabrication. Sites on the Intracoastal Waterway or with water access to the Gulf of Mexico have the logistics advantage of allowing barge transportation of sections to their erection sites. This type of fabrication also will create a demand for docks that can accommodate heavy lift project cargoes. All of these factors favor Acadiana for vessel design and fabrication. Companies in this industry require a large number of welders and fitters and other machine tool trades. The availability of trained workers with these skills in Acadiana is the most significant barrier to the future location of this industry in the region. NAICS 3329 – Other Fabricated Metal Product Manufacturing Oil prices that are still relatively high and recent increases in the rig count are continuing to drive an expansion in hydrocarbon exploration and production equipment. New gas technologies, such as drilling in shale formations, is driving the need for production rigs, pipelines, valves, compressors, and a host of specialized manufacturing products. Sales of valves have been brisk over the last five years and were continuing to grow in 2008. Shipments in this industry were approximately $60.5 billion in 2007, and employment in this industry grew by 2.4% between 2003 and 2007. These jobs pay an average wage of $970 weekly. Annualized exports for 2009 in this industry are expected to reach $17 billion. Because of a severe shortage of skilled blue collar workers in the major oil companies, investors are evaluating plant sites farther removed from Houston and Tulsa. The workforce skills and training facilities in Acadiana are assets of interest to investors in this industry. Companies in this industry require a large number of welders and fitters and machine tool trades. The availability of trained workers with these skills in Acadiana is the most significant barrier to the future location of this industry in the region. Target Industries for Growth and Development for Acadiana Economic Development 13 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 NAICS 3331 - Agriculture, Construction, and Mining Equipment Manufacturing A new focus on various agricultural sources of biomass for biofuels have driven recent growth in agricultural equipment. Total shipments in this industry now exceed $85 billion per year. Industry exports have more than doubled since 2004, and are expected to exceed $35 billion in 2009. This growth has in turn created a need for new plants and added to employees. During 2007 the industry added 17 new production plants and grew it’s payrolls by about 10,000 jobs. The average wage for these jobs is $1,165 per week. Acadiana’s port and rail facilities are important location assets for the industry. The industry has similar skill requirements to industries already present in the region but the shortage of trained welders, fitters, and machine tool trades is a significant issue for the future development of these industries in the region. NAICS 3336 - Turbine and Power Transmission Equipment Manufacturing A rapid growth in sales in this industry is being driven by the construction of alternative energy facilities. After years of declining sales and shrinking workforce, the sector is growing once again, with shipments in 2007 of $43.4 billion. Although the sector reduced the number of facilities, employment grew by approximately 1,700 workers nationally. Export sales, in addition to alternative fuels, are also driving the resurgence in this industry, and export sales in this sector are forecast to exceed $20 billion in 2009. The average wage in this industry is $1,225 per week, almost double the prevailing wage in Acadiana. The high prevailing wage is an indicator of the breadth and depth of skilled blue collar skills prevailing in this industry. Acadiana's rail and waterway infrastructure are competitive advantages for the development of this industry, as are the training programs at area technical colleges and the large mechanical engineering talent pool at ULL. The industry has similar skill requirements to industries already present in the region but the shortage of trained welders, fitters, and machine tool trades is a significant issue for the future development of these industries in the region. Target Industries for Growth and Development for Acadiana Economic Development 14 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 NAICS 3339 - Other General Purpose Machinery Manufacturing Products from this $5 billion industry are used in the chemical industry, steel mills, blast furnaces, energy-related extraction industries, pipelines and well-drilling, and general construction. The principal markets for this industry are companies and industries that are well represented in the Gulf Coast industrial market. Despite slow and often cyclical business, several of the industry's top producers have managed to turn a healthy profit, especially on newer technology and aftermarket parts. Some of the newer innovations going into the mid-2000s in this industry were solar-powered compressors, quieter and oil-less models, and high-efficiency designs. Portable air compressors, which have wheels and can be taken from site to site, have also proven one of the industry's fastest- growing lines, up to 90 percent of which were sold to equipment rental services. In 2007, over 6,700 establishments had a workforce of nearly 275,000 that received $54,871 in pay annually on average. Employment has grown nationwide by more than four percent since 2003, and grew by more than 2,800 in 2007 despite a decrease in the number of establishments. Historically, this industry has used a high proportion of skilled trades, about 30 percent of all production workers. Metal working craftsmen and machinists have been about three times more common in this industry than in manufacturing as a whole, while laborers were half as common. NAICS 3345 - Navigational, Measuring, and Control Instruments Manufacturing This industry includes firms that manufacture a wide variety of instrumentation, from lasers to ophthalmic instruments to global positioning devices to sonar fish finders to medical instruments. Although the outlook varies to some degree for the various types of instruments, it remains relatively stable overall for this industry. The industry niche that best matches the locational assets of Acadiana is control instruments, particularly for the chemical processing and refining industries. Approximately 7,300 establishments employed nearly 442,000 workers in 2007. The number of establishments has grown slightly since 2003 and this growth is likely to continue with new influx of capital investment in the energy, chemical and refining industries. Employees in this industry are well-paid with an average annual pay of $81,291. This industry shipped nearly $131 billion of product in 2007 and is expected to export approximately $36.6 billion in 2009. The key skill set in this industry is electronic assembly. Many of the technicians employed by instrument companies have associate degrees in electronics. The skill sets in the industry are changing. In general, instrumentation companies are hiring more Target Industries for Growth and Development for Acadiana Economic Development 15 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 engineers than in the past, particularly computer software engineers. Engineers are about a fourth of the workforce for the industry. LONG-TERM TARGETS NAICS 325193 - ALTERNATIVE FUELS The following alternative fuels targets are opportunities for the region in the next three to five years. Some, such as cellulosic ethanol, are still in the research and development stage but are nearing commercial production. The large amount of crop residue and bagasse in Acadiana is a resource for development of alternative fuels and for biorefinery products (chemical and plastic feedstocks made from organic materials rather than petroleum or coal). The following is our analysis of the opportunities for development of these industries in the Acadiana region beyond 2012. Cellulosic Ethanol The Department of Energy (DOE) has identified 18 cellulosic ethanol plants around the U.S. that are producing commercial grades at current prices. These plants have comparative advantages in energy or feedstock costs that make them commercially viable today. The cost of producing ethanol from cellulose has dropped by 60 percent since 2001 (see Figure 1). New enzymes and processing technologies led to the enhanced economics. The DOE target price of $1.31 per gallon looks likely between 2012 and 2015 based on current research in conversion technologies and enzymes. Cellulosic ethanol is likely to emerge as a mainstream commercial industry owing to worldwide research on the subject, coupled with the expectation of permanently higher oil prices. Venture capital is already flowing into the industry as California and East Coast venture firms recognize the tremendous opportunities stemming from this industry. A venture-backed, pilot-scale plant was just announced in Jennings, Louisiana by Massachusetts-based Celunol Corporation. Brazil is working diligently on lowering the costs of ethanol from sugar cane bagasse because of their immense inventory. The latest estimate by the USDA suggests that crop residues (including bagasse) can contribute 933 million tons of biomass per year for cellulosic ethanol and biorefining. The National Renewable Energy Lab has set a target of 2012 for demonstration of commercial viability. This goal is based on lowering the cost of ethanol derived from cellulose to $1.31 per gallon. NREL has set a production goal of 36 billion gallons per year, which is about five times the current production of corn ethanol. There are two primary conversion paths for conversion of cellulose into fuel and chemical feedstock (see Figure 2). Recent breakthroughts in research have lowered Target Industries for Growth and Development for Acadiana Economic Development 16 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 the cost of enzymes used in fermentation (one of the biggest production costs) by 95 percent. Natural gas is an important input in process industries with large heat or power requirements. When the U.S. begins to cap or tax carbon emissions, natural gas will become a preferred fuel because it has a lower carbon output per unit of heat or power. Natural gas service will grow in importance in the future as a location requirement for ethanol plants and this will favor Acadiana, as well as the rest of Louisiana. Figure 1. Cost of Ethanol Production 2000-2020 Target Industries for Growth and Development for Acadiana Economic Development 17 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 Figure 2. Conversion Routes Cellulosic ethanol plants that rely on fermentation technologies (the likely conversion path for most cellulosic ethanol) require large water and wastewater capacities for processing. The locations within Acadiana that can accommodate these future plants are currently constrained by utility capacity. Expansion of utility capacity must be combined with large acreage sites having rail and highway access to compete in the biomass ethanol industry. The region has an immediate play in this field, however, if it can capture federal research dollars for demonstration projects and pilot plants. These plants would need to be connected with university research but would not need the large footprint sites and large utility capacities of commercial scale plants. Biorefineries Cellulose from crop residue can be converted into syngas (a mixture of carbon monoxide and hydrogen) that can be synthesized into gasoline, fertilizer, and petrochemical feedstocks used in plastics production (polyethylene, polypropylene, and acrylonitrile). These feedstocks now are captured as byproducts of oil refining. Biorefineries are plants Target Industries for Growth and Development for Acadiana Economic Development 18 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 designed to produce fuel and petrochemical feedstocks from organic materials (see Figures 3 and 4). Technologies are available today that allow biorefineries to operate, but the industry lacks the efficiencies to compete with refining byproducts. The U.S. Department of Energy, through programs at the National Renewable Energy Lab, have research and development programs underway to solve some of the efficiency problems with biorefining (many are parallel to the problems in cellulosic ethanol production). Biorefineries will become commercial when the costs of gas cleanup and conditioning drops below current costs (see Figure 5). Research underway at NREL and in the private sector are expected to drop the total costs of production by about 35 percent by 2012- 2015. Biorefining should be commercially viable when production costs drop to that level. Biorefining will have similar site location requirements to cellulosic ethanol plants. Companies will look for large acreage tracts with good highway and rail access. As raw material assembly cost is a major issue, biorefineries need to be located in areas with significant potential for crop residues (see Figure 6). Figure 3. Biorefinery Inputs and Outputs Target Industries for Growth and Development for Acadiana Economic Development 19 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 Figure 4. Biorefinery Processes Figure 5. Biorefinery Cost Analysis Target Industries for Growth and Development for Acadiana Economic Development 20 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 Figure 6. Biomass Resources Target Industries for Growth and Development for Acadiana Economic Development 21 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 FINAL RECOMMENDATIONS A recap of the target industries recommended by Taimerica is in Table A-1 in the Appendix. This mix of targets includes industries from the office, technology and manufacturing sectors. These opportunities capitalize on global trends and resources readily available in the Acadiana Region, and would diversify Acadiana’s economy. As their prevailing wages are significantly higher than the average for Acadiana, all of these industries offer wages that would boost per capita incomes in the region. Many of these target industries require access to rail served sites (see Table A-2 in the Appendix). The portfolio of rail served sites with municipal utilities should be expanded to effectively market to these targets. Other targets (NAICS 3331, 3336, and 3345) have a high requirement for air freight service, which is a locational advantage for Acadiana communities. The limited supply of trained welders, fitters, and machine tool trades is a barrier to the attraction of the equipment manufacturing companies (NAICS 3312, 3324, 3329, 3331, and 3336). Economic development leaders should evaluate this issue in more detail and determine which training programs and incentives they can tailor to meet the training needs of companies in these targets. Taimerica will use these siting requirements in its evaluation of potential sites in the next phase of this project. The target list outlined in this report offers an opportunity to diversify the economy of the region while raising per capita incomes of its residents. The AEDC now has to tackle the hard work of crafting a marketing and site development strategy that enhances its competitive position for these target industries. Target Industries for Growth and Development for Acadiana Economic Development 22 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 APPENDIX Target Industries for Growth and Development for Acadiana Economic Development 23 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 July, 2009 Table A-1. Final Target Screening Matrix 2004-2009 2007 Three- Avg. 2007 2009 Exports Export No. of 2007 state (LA, Local Weekly Shipments (Annualized, Growth New New AR, TX) Pres- Wage Name NAICS ($B) in $B) (%) Plants Empl. Presence ence ($) Office Admin. Services 5611 NA NA NA 2,150 21,687 X X 1,404 5182, Data Centers NA NA NA 1,820 16,568 X X 1,503 5191 Computer Systems Design 5415 NA NA NA 6,222 64,616 X X 1,690 Other Food Mfg. 3119 74.7 5.9 46 83 2,749 X X 937 Steel Prod. Mfg. (Purch. Steel) 3312 20.4 0.3 -21 2 324 X 1,039 Boiler and Tank Mfg. 3324 31.2 2.8 75 -25 1,538 X X 1,016 Other Fab. Metal Prod. Mfg. 3329 69.5 17.0 33 -22 1,694 X X 970 Ag., Constr., Mining Machinery Mfg. 3331 85.6 35.9 65 17 10,030 X X 1,165 Engine, Turbine, Power Transmission 3336 43.4 20.7 32 -9 1,714 X 1,225 Equip. Mfg. Gen Purpose Machinery Mfg. 3339 86.1 28.6 20 -119 2,812 X X 1,055 Nav., Meas., Elec., Control Instr. Mfg. 3345 130.8 36.6 18 16 2,873 X 1,563 Med. Equip. and Supplies Mfg. 3391 75.7 23.9 59 -82 122 X X 1,100 Table A-2. Transportation Requirements for Acadiana Manufacturing Targets Rail% Water% Air% Rail Air Name NAICS Inputs Output Inputs Output Inputs Output Sites Freight Other Food Mfg. 3119 15% 16% 2% 1% 3% 0% X Steel Prod. Mfg. (Purch. Steel) 3312 24% 1% 3% 2% 2% 2% X Boiler and Tank Mfg. 3324 23% 1% 2% 0% 0 4% X Other Fab. Metal Prod. Mfg. 3329 18% 1% 2% 0% 0 4% X Ag., Constr., Mining Machinery Mfg. 3331 11% 0% 2% 0% 0 10% X Engine, Turbine, Power Transmission 3336 7% 3% 0% 0% 0 14% X Equip. Mfg. Gen Purpose Machinery Mfg. 3339 6% 0% 0% 0% 0 6% Nav., Meas., Elec., Control Instr. Mfg. 3345 4% 0% 0% 0% 0 26% X Alternative Energy (Basic organic NA 37% 38% 3% 0% 5% 8% X chemicals) All Manufacturing 18% 4% 1% 1% 4% 9% Target Industries for Growth and Development for Acadiana Economic Development 24 target industry: administrative office Services overview inDuStry characteriSticS • Back office and call center categories include naicS #5611. • average wage ($/year in 2007) $73,001 • typical plant employment (#) 10 • establishments under 5 years old 13,266 hiStoric Growth rateS (2003-2007) location FactorS • employment (%/yr) + 7% critical important • new Facilities (#/yr) +2,150 • access to clerical & professional • payroll based incentives workers at moderate wages • college students & single • Broadband telecomm mothers wanting stable office work inDuStry SupplierS • none JoBS in new FacilitieS from 2002-2006 Financial Services cuStomerS Source: D&B • hotels • insurance companies • credit card companies • Banks and Financial institutions • manufacturers of consumer goods and services reaSonS to tarGet acadiana’s Strengths... • Quality & cost of clerical labor pool • labor productivity ...and challenges • available office space target industry: Data centers overview inDuStry characteriSticS • Data processing, hosting, and other infomation services include • average wage ($/year in 2007) $78,150 naicS #5182 and #5191. • typical plant employment (#) 17 • establishments under 5 years old 6,542 hiStoric Growth rateS (2003-2007) location FactorS • employment (%/yr) + 5% critical important • new Facilities (#/yr) +1,820 • electrical rates • payroll- and investment-based • Broadband telecomm access incentives • it workforce • nSa certificate for information inDuStry SupplierS assurance • none JoBS in new FacilitieS from 2003-2008 Financial Services cuStomerS Source: D&B • all types of business and government reaSonS to tarGet acadiana’s Strengths... • electrical rates • telecomm infrastructure ...and challenges • hurricane risk • available office space Target industry: Computer Systems Design overview inDuSTry ChArACTeriSTiCS • Computer systems design and related services include nAiCS • Average wage ($/year in 2007) $87,903 #5415. • Typical plant employment (#) 8 • establishments under 5 years old 24,886 hiSToriC GrowTh rATeS (2003-2007) loCATion FACTorS • employment (%/yr) + 6% Critical important • new Facilities (#/yr) +6,222 • pool of iT talent • payroll based incentives • Broadband telecomm • Air service inDuSTry SupplierS • none JoBS in new from 2004-2009 Financial Services CuSTomerS Source: D&B • All types of business and government reASonS To TArGeT Acadiana’s Strengths... • pool of ull and lSu iT graduates • Source of local companies in software ...and Challenges • Available office space target industry: other Food Mfg. overview inDuStry characteriSticS • all other food manufacturing includes flavorings, seasonings, • average wage ($/year in 2007) $48,738 dressings, and spices and is comprised of naicS #3119. • typical plant employment (#) 47 • labor as % of Shipped value 9% hiStoric Growth rateS (2003-2007) location FactorS • employment (%/yr) +2% critical important • new Facilities (#/yr) +83 • interested agriculture growers • Skilled maintenance workforce • water and wastewater • incentives capacities inDuStry SupplierS • paperboard boxes • agricultural growers JoBS in new FacilitieS from 2003-2008 Financial Services cuStoMerS Source: D&B • Supermarket chains • Food wholesalers reaSonS to tarGet acadiana’s Strengths... • logistics infrastructure • proximity to customers ...and challenges • water and wastewater capacities target industry: Steel Product (Purchased Steel) Mfg. overview inDuStry characteriSticS • Steel product manufacturing from purchased steel includes • average wage ($/year in 2007) $54,021 naicS #3312. • typical plant employment (#) 58 • labor as % of Shipped value 10% hiStoric Growth rateS (2003-2007) location FactorS • employment (%/yr) + 1% critical important • new Facilities (#/yr) +2 • Supply of trained metal-working • rail-served sites skills inDuStry SuPPlierS • Steel wholesalers JoBS in new FacilitieS from 2003-2008 Financial Services cuStoMerS Source: D&B • export sales • Domestic dealers reaSonS to tarGet acadiana’s Strengths... • Mid-continent location • Skilled metalworking trades ...and challenges • rail-served sites target industry: Boiler, tank, Shipping container Mfg. overview inDuStry characteriSticS • Boiler, tank, and shipping container manufacturing includes • average wage ($/year in 2007) $52,811 naicS #3324. • typical plant employment (#) 50 • labor as % of Shipped value 14% hiStoric Growth rateS (2003-2007) location FactorS • employment (%/yr) +2% critical important • new Facilities (#/yr) -25 • proximity to industrial customers • incentives • rail service • Metalworking trades inDuStry SupplierS • Steel wholesalers JoBS in new FacilitieS from 2002-2006 cuStoMerS Financial Services Source: D&B • refineries • other chemical companies reaSonS to tarGet acadiana’s Strengths... • customers in the Gulf coast industrial market • water transportation ...and challenges • rail-served sites • pool of skilled metalworking trades target industry: other Fabricated Metal Product Mfg. overview inDuStry characteriSticS • other fabricated metal product manufacturing includes naicS • average wage ($/year in 2007) $50,431 #3329. • typical plant employment (#) 44 • labor as % of Shipped value 18% hiStoric Growth rateS (2003-2007) location FactorS • employment (%/yr) +1% critical important • new Facilities (#/yr) -22 • access to industrial customers • incentives • Skilled metalworkers inDuStry SuPPlierS • Parts fabricators and importers JoBS in new FacilitieS from 2003-2008 Financial Services cuStoMerS Source: D&B • industrial equipment wholesalers • oil and gas production companies • chemical manufacturers reaSonS to tarGet acadiana’s Strengths... • Proximity to industrial customers • workforce skills and training facilities ...and challenges • Pool of skilled metalworking trades target industry: agriculture, construction, Mining Machinery Mfg. overview inDuStry characteriSticS • agriculture, construction, and mining machinery manufacturing • average wage ($/year in 2007) $60,583 includes naicS #3331. • typical plant employment (#) 65 • labor as % of Shipped value 11% hiStoric Growth rateS (2003-2007) location FactorS • employment (%/yr) + 5% critical important • new Facilities (#/yr) +17 • Supply of trained metal-working • incentives skills • pool of mechanical engineers inDuStry SupplierS • Steel wholesalers JoBS in new FacilitieS from 2003-2008 Financial Services cuStoMerS Source: D&B • export sales • Domestic dealers reaSonS to tarGet acadiana’s Strengths... • Mid-continent location • Skilled metalworking trades ...and challenges • available buildings • pool of skilled metalworking trades target industry: turbine and Power transmission equipment Mfg. overview inDuStry characteriSticS • engine, turbine, and power transmission equipment • average wage ($/year in 2007) $63,697 manufacturing includes naicS #3336. • typical plant employment (#) 93 • labor as % of Shipped value 12% hiStoric Growth rateS (2003-2007) location FactorS • employment (%/yr) + 2% critical important • new Facilities (#/yr) -9 • Supply of trained metal-working • rail-served sites skills • training programs • Pool of mechanical engineers • vacant industrial buildings inDuStry SuPPlierS • casting, forging and die- cutting companies JoBS in new FacilitieS from 2003-2008 Financial Services Source: D&B cuStoMerS • export sales • Domestic dealers reaSonS to tarGet acadiana’s Strengths... • Mid-continent location • Skilled metalworking trades • Pool of mechanical engineers ...and challenges • available buildings • availability of metalworking trades target industry: other General Purpose Machinery Mfg. overview inDuStry characteriSticS • other general purpose machinery manufacturing includes naicS • average wage ($/year in 2007) $54,871 #3339. • typical plant employment (#) 41 • labor as % of Shipped value 17% hiStoric Growth rateS (2003-2007) location FactorS • employment (%/yr) +1% critical important • new Facilities (#/yr) - 119 • access to industrial customers • incentives • Skilled metalworkers • Pool of mechanical engineers inDuStry SuPPlierS • Parts fabricators and importers JoBS in new FacilitieS from 2002-2006 Financial Services cuStoMerS Source: D&B • industrialequipmentwholesalers • other manufacturers reaSonS to tarGet acadiana’s Strengths... • Proximity to industrial customers of the Gulf coast • workforce skills ...and challenges • vacant buildings target industry: navigational, Measuring, control instr. Mfg. overview inDuStry characteriSticS • navigational, measuring, and control instrument manufacturing • average wage ($/year in 2007) $81,291 includes naicS #3345. • typical plant employment (#) 60 • labor as % of Shipped value 22% hiStoric Growth rateS (2003-2007) location FactorS • employment (%/yr) +0% critical important • new Facilities (#/yr) - 82 • engineering and electronics • incentives workforce • proximity to industrial customers inDuStry SupplierS • parts importers • Machine shops and industrial JoBS in new FacilitieS from 2002-2006 Financial Services support Source: D&B cuStoMerS • process industries reaSonS to tarGet acadiana’s Strengths... • Quality & cost of engineering workforce • labor productivity ...and challenges • Small base of established instrument companies MARKETING STRATEGY AND PLAN for from 347 Girod Street Mandeville, LA 70448 (985) 626-9868 FAX: (985) 626-9869 firstname.lastname@example.org Technology Assessment • Strategic Planning • Organization Design • Site Selection September, 2009 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 TABLE OF CONTENTS INTRODUCTION 3 RECOMMENDATION TO IMPLEMENT TARGET MARKETING STRATEGIES 3 MARKETING BUDGET AND STAFFING REQUIREMENTS 9 CONCLUSIONS 9 Marketing Strategy and Plan for Acadiana Economic Development Council 2 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 INTRODUCTION This plan provides Taimerica’s analysis of the marketing tactics that are most likely to generate results for the target industries recommended for Acadiana Economic Development Council (AEDC). As you will see from the budget outline, the organization is unlikely to have the resources needed to effectively market to each of the target industries over the next five years. Information is therefore presented that will assist stakeholders in assigning priorities to the target campaigns. The suitability of individual targets varies among the parishes in Acadiana. For the AEDC to have a sustainable organization, it needs to develop a target marketing campaign that provides value to each of its member parishes. Identifying the ultimate target industries is a policy decision that is best left to stakeholders. Taimerica will assist stakeholders to reach a consensus on the ultimate target industries in the upcoming plan workshop. RECOMMENDATION TO IMPLEMENT TARGET MARKETING STRATEGIES Effective target industry campaigns involve more than selecting the appropriate media and message to reach prospect companies. Effective campaigns begin by redesigning the web and print approach that the EDO uses with target companies. For that reason, this plan begins with an outline of these essential steps. IMPLEMENTATION TASKS TO COMPLETE BEFORE LAUNCHING THE TARGET MARKETING CAMPAIGN AEDC should augment its market-research resources for target industry intelligence. AEDC staff should compile and maintain resource information for each target industry. This effort would include maintaining a database of associations for each target and developing systematic intelligence on industry trends. This can be accomplished by monitoring trade publications or purchasing industry data and reports from private sources, such as Hoover’s, Economy.com, or relevant trade associations. This can be a cooperative effort with other economic development organizations in the region such as SMEDA, CLECO, and Entergy. The relevant trade associations are: • National Association of Call Centers, • Information Technology Association of America, • Food Institute, • World Steel Association, Marketing Strategy and Plan for Acadiana Economic Development Council 3 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 • Steel Tank Institute, • Association of Equipment Manufacturers, and • International Association for Measuring and Control. Web site information and details on each trade association are shown in the Marketing Resources table at the end of this document. AEDC should redesign its website to provide specific content for its target industries AEDC should revise its web site to reflect the new strategic agenda of the region. This involves creating an economic development-focused site to facilitate the access of relevant information on an as-needed basis by outside prospects as well as by internal customers (new demographics meeting the IEDC Data Guidelines for “making the project short list”, news, maps, local and state incentives, ‘contact us’, building and sites, small business development with links to state and county offices, business resource links, links to regional allies, strategic action plan, etc.) Keep the site updated with news and information, on-line forms, etc. so visitors will want to or need to return. AEDC should develop and use a new promotional theme and logo for its targeted marketing campaign. These should highlight the unique assets of the region for business and industry, and should be used consistently throughout the promotional materials, letters, web site, business cards, etc. AEDC should develop web site content that addresses the advantages of the region for the final target industries. Examples of regional companies in this field should be covered. Media should include PDF versions of brochures and streaming video presentations. AEDC should develop marketing materials and a web site to use for direct mail campaigns, trade shows, and personal visits that features individual pages showing the advantages of operating in Acadiana for each of the final target industries. AEDC should revise its print materials to incorporate the locational concerns of the target industries. AEDC should create target industry fact sheets featuring data and information about the industry to convey why Acadiana is an advantage for a specific type of business operation. The strengths and weaknesses report can serve as a template for the information that should be included in each of the final industry fact sheets. AEDC should also update its general-purpose brochures including demographics, photos of Marketing Strategy and Plan for Acadiana Economic Development Council 4 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 buildings and sites, transportation access, and other assets of the county to reflect location requirements of companies in the targeted industries. AEDC should collaborate with other economic development groups to promote the community and region to the target industries AEDC should continue a systematic approach to networking with such agencies as: LED, SMEDA CLECO, industrial and commercial real estate brokers, site location consultants, and others as appropriate. AEDC should launch a program to generate favorable publicity among national media as well as within Acadiana AEDC should organize a media task force to develop stories and to gain national and regional press coverage about the region. The media task force can host business writers on familiarization (“FAM”) trips to the area to write feature stories about flagship businesses in the region AEDC should set up speaking engagements at local meetings of various civic organizations to educate people about the nature of the local economic development and marketing program and its progress and results. AEDC should publish a quarterly electronic newsletter reporting on local economic development activity, and prepare monthly reports of economic indicators for public release. Send to selected prospects, local firms, local community leaders, and state and other economic development allies. AEDC should collaborate with the Chambers of Commerce, economic development authorities, and LED to develop and implement a site consultants tour of the three- county region that highlights its locational assets. CHECKLISTS FOR ASSIGNING PRIORITIES TO THE TARGET INDUSTRIES AEDC stakeholders should assign priorities to the target list based on several factors: 1) Their attractiveness to the member parishes; 2) The number of potential projects; and 3) The cost of marketing to the particular target industry. Marketing Strategy and Plan for Acadiana Economic Development Council 5 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 The cost of a targeted marketing campaign typically varies with the number of companies in an industry. The following tables provide information for stakeholders to review in assigning priorities. Tables 1, 2, and 3 give a rank ordering of the target industries by number of new projects (a measure of the number of potential opportunities), average size facility (attractiveness to the member communities), and by the number of companies in the target industry (relative size of target for budgeting purposes) Table 1. Target Industries by Number of Potential Projects New Loc. 2003- Jobs/ Estab. In Name NAICS 2007 Project 2007 Office Admin. Services 5611 8599 10 40,893 5182, Data Centers 7294 32 396,057 5191 Other Food Mfg.(Specialty Food) 3119 335 47 3444 Boiler and Tank Mfg. 3324 94 85 782 Ag., Constr., Mining Machinery Mfg. 3331 68 590 3,543 Nav., Meas., Elec., Control Instr. Mfg. 3345 67 132 7,344 Steel Prod. Mfg. (Purch. Steel) 3312 10 17 1061 Engine, Turbine, Power Transmission Equip. Mfg. 3336 -35 92 1,085 Gen Purpose Machinery Mfg. 3339 -475 82 6,717 Other Fab. Metal Prod. Mfg. 3329 -819 60 7,344 Table 2. Target Industries by Average Facility Size New Loc. Jobs/ Estab. In Name NAICS 2003-07 Project 2007 Nav., Meas., Elec., Control Instr. Mfg. 3345 67 132 7,344 Engine, Turbine, Power Transmission Equip. Mfg. 3336 -35 92 1,085 Boiler and Tank Mfg. 3324 94 85 782 Gen Purpose Machinery Mfg. 3339 -475 82 6,717 Other Fab. Metal Prod. Mfg. 3329 -819 60 7,344 Other Food Mfg.(Specialty Food) 3119 335 47 3444 Steel Prod. Mfg. (Purch. Steel) 3312 10 17 1061 Office Admin. Services 5611 8599 10 40,893 Marketing Strategy and Plan for Acadiana Economic Development Council 6 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 Table 3. Target Industries by Industry Size New Loc. Jobs/ Estab. In Name NAICS 2003-07 Project 2007 Office Admin. Services 5611 8599 10 40,893 Nav., Meas., Elec., Control Instr. Mfg. 3345 67 132 7,344 Other Fab. Metal Prod. Mfg. 3329 -819 60 7,344 Gen Purpose Machinery Mfg. 3339 -475 82 6,717 Ag., Constr., Mining Machinery Mfg. 3331 68 590 3,543 Other Food Mfg.(Specialty Food) 3119 335 47 3444 Engine, Turbine, Power Transmission Equip. Mfg. 3336 -35 92 1,085 Steel Prod. Mfg. (Purch. Steel) 3312 10 17 1061 Boiler and Tank Mfg. 3324 94 85 782 EFFECTIVE MARKETING TACTICS FOR THE TARGET INDUSTRIES Taimerica analyzed industry characteristics and marketing resources to identify those tactics and media that are most likely to stimulate meaningful contact with companies needing plant sites. Trade associations and trade shows are typically the most effective methods of reaching prospect companies in the manufacturing sector. Direct mail campaigns and call trips to metro areas with major concentrations of target companies can also be effective marketing tactics, but it has become increasingly difficult to obtain the attention of corporate decision-makers with these approaches. Based on our personal experience, trade publications are usually the most expensive and least effective method of generating contacts in manufacturing, but they are the most effective means of building a regional brand within the target industry. In the office administrative services target, effective trade publications are not available. Several trade publications are available in the data center and software industry, although the costs are high because of high circulation figures. CIO magazine, for instance, is widely read among top executives in the IT sector but the cost of a full page black and white ad is $27,000 for a single insertion. CIO offers the option of online advertising which typically is lower in cost but which might not reach the same number of contacts. Based on the Taimerica analysis, a series of marketing tactics are recommended for AEDC that should provide the most cost effective marketing to the recommended target industries. Marketing Strategy and Plan for Acadiana Economic Development Council 7 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 AEDC should participate in some office, IT, and manufacturing trade shows AEDC should attend appropriate trade shows in selected target industries to learn more about the marketing opportunities within that industry and to develop prospect leads. Focus on setting up meetings with prospects at the trade show prior to attending rather than trying to "collar" people at the show. Continue to work with LED as appropriate. Develop a plan to follow-up with contacts made. Details on the specific trade shows are shown in the Marketing Resources Table at the end of this plan. AEDC should decide which of the shows justify the expense of exhibition. AEDC should organize call trips to metro areas with major concentrations of target industries AEDC should schedule call trips to metropolitan New York, New Jersey, Chicago, Houston, Omaha, and Atlanta for back office/call center and IT, focusing particularly on site consultants in these sectors, if stakeholders choose this as one of the final target industries. AEDC should arrange call trips over a 24-month cycle to the metro areas with the most target companies. The list of these cities typically would include some of these regions: New York, Los Angeles, Chicago, Detroit, Houston, Tulsa, New York/Philadelphia. AEDC should, based on inquiries and on the geographic concentrations of the growth firms in the target industries, schedule a series of prospect development missions. These missions can be coordinated with industry activities such as regional trade shows. AEDC should launch appropriate e-mail and call campaigns in some of the target industries AEDC should identify growth firms in the final target industries, considering firms as small as 20 employees (250 or more for back office/call centers from the list furnished by Taimerica). Target industries that are best suited for direct mail include data centers, specialty food, all of the metal products (includes tanks, steel products, other fabricated metals), all of the machinery targets and specialty foods. Marketing Strategy and Plan for Acadiana Economic Development Council 8 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 MARKETING BUDGET AND STAFFING REQUIREMENTS A “straw-man” budget is shown in Table 4. The budget is not precisely defined but is meant to give stakeholders a rough idea of the relative cost of the different marketing tactics. The actual budget for the marketing campaign will depend on the target industries selected. The budget does not include hiring any additional staff at AEDC. Most of the immediate activities can be accomplished by engaging advertising agencies and marketing consultants familiar with web site and print materials. The call trips, trade shows, and other marketing activities listed in Table 5 should be doable with one or two staff people working in marketing activities. The market research activities should be doable with a single full-time research person. CONCLUSIONS This report gives AEDC stakeholders some data for setting marketing and budget priorities. The ultimate marketing plan will reflect stakeholder views about the value of the individual target industries and the size of the target marketing budget that AEDC can raise. The results of the upcoming marketing workshop should give stakeholders a clear consensus of the appropriate tactics and targets to incorporate into the organization’s strategic plan. Marketing Strategy and Plan for Acadiana Economic Development Council 9 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 Table 4. Estimated Marketing Budget Estimated Activity Expenses Market Research Maintain industry lists and databases (associations and subscriptions) $2,000 Website Redesign Revise to reflect new strategy (lump-sum) $5,000 Develop new promotional theme (lump-sum) $2,000 Develop marketing pdfs (desktop publishing- 5 @ $1000) $5,000 Revise Print Materials Produce target industry fact sheets (desktop- 5 @$500) $2,500 Produce/ update general purpose brochure $6,000 Produce marketing flyers for sites and buildings (4 @ $750) $3,000 Collaboration with Other ED Organizations Networking with allies - National Publicity Organize media task force - Local speaking engagements - Electronic newsletters (contracted vendor annual fee) $5,000 Site consultants regional tours ($5000 share of regional cost) $5,000 Industry Trade Shows (representative examples) -Int'l Expo for Power Transmission (annually- registration + travel) $2,000 -ASME Turbo Expo (annually- registration + travel) $2,000 -Wind Power (annually- booth + travel) $5,000 Call Trips Admin. Offices call trips -New York $5,000 -Omaha $2,000 -Chicago $3,500 -Atlanta $1,000 Manufacturing call trips -New York $5,000 -Los Angeles $5,000 -Chicago $5,000 -Detroit $2,500 -Houston $2,500 -Tulsa $2,000 -Philadelphia $2,000 Prospect development missions $10,000 Email and Call Campaigns Target company email and call lists $7,500 First Year Materials/ Web Costs $25,500 Costs/ target industry (trade show + 2 call trips + email campaign) $16,500 Marketing Strategy and Plan for Acadiana Economic Development Council 10 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 Table 5. Marketing Resources for Acadiana Target Industries New Loc. 2003- Jobs/ Estab. Name NAICS 2007 Project In 2007 Trade Association Trade Show Trade Publication Nat. Assn. of Call Centers 2010 Outsourcing World Summit In Queue Office Admin. http://www.nationalcallcenters.org/news.html Lake Buena Vista, FL 5611 8599 10 40,893 http://www.nationalcallcente Services Intl. Assn. of Outsourcing Pros http://www.outsourcingprofession rs.org/pubs/in_queue.html http://www.outsourcingprofessional.org/ al.org/content/23/154/1099/ 396,05 CIO www.cio.com, 140,000 Data Centers and 5182, 7294 32 7 Information Technology Association of America ITEC regional shows circulation, online, print ads Computer Systems 5191, 25103 8 170,72 www.itaa.org www.goitec.com www.infoworld.com online Design 5415 4 rates Specialty Food News Other Food Mfg Summer and Winter Fancy Food www.specialtyfood.com 3119 335 47 3444 Food Institute www.foodinstitute.com (Specialty Food) Shows www.specialtyfood.com Food Institute Daily, online ads $900 Worldsteel-43 Annual Conf. 2009 Steel Prod. Mfg. 3312 10 17 1061 World Steel Association http://www.worldsteel.org/?actio (Purch. Steel) n=eventsdetail&latest=1&id=85 Fall Pressure Vessel Conf. http://www.steeltank.com/Educat Tank Talk Boiler and Tank Steel Tank Institute/SPFA ionEvents/CalendarofSeminarsCert http://list.steeltank.com 3324 94 85 782 Mfg. www.steeltank.com ificationCourses/tabid/106/ctl/Det Industrial Product News ail/mid/501/EventID/56/Default.as www.ipnews.com px Worldsteel-43 Annual Conf. 2009 Other Fab. Metal 3329 -819 -95 60,947 World Steel Association http://www.worldsteel.org/?actio Prod. Mfg. n=eventsdetail&latest=1&id=85 Ag., Constr., Mining Assoc. of Equipment Manufacturers ASME Turbo Expo 2009 3331 68 590 3,543 None Mach. Mfg. www.aem.org www.asmeconference.org Engine, Turbine, Assoc. of Equipment Manufacturers Power Transmission 3336 -35 93 1,085 None www.aem.org Equip. Mfg. Gen Purpose Assoc. of Equipment Manufacturers 3339 -475 82 6,717 Machinery Mfg. www.aem.org Nav., Meas., Elec., Int’l. Society for Measuring and Control In Tech 3345 67 132 7,344 Electronic Distribution Show Control Instr. Mfg. www.isa.org www.isa.org Marketing Strategy and Plan for Acadiana Economic Development Council 11 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 Table 5. Marketing Resources for Acadiana Target Industries (con’t) New Jobs Loc. / Long-Term 2003- Proj Estab. In NAICS Target 2007 ect 2007 Trade Association Trade Show Trade Publication Biofuels Conferences National Biodiesel Board http://www.biofuelsconferen http://www.biodiesel.org/ ces.com/ Biodiesel Magazine Alternative http://www.biodieselmagazine.c 325193 151 21 241 Energy Renewable Fuels Association National Ethanol Conference om/ http://www.ethanolrfa.org/ http://www.nationalethanolc onference.com/ Marketing Strategy and Plan for Acadiana Economic Development Council 12 SITE EVALUATION for from 347 Girod Street Mandeville, LA 70448 (985) 626-9868 FAX: (985) 626-9869 email@example.com Technology Assessment • Strategic Planning • Organization Design • Site Selection September, 2009 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 TABLE OF CONTENTS INTRODUCTION 3 FACTORS THAT DRIVE SITE SELECTION DECISIONS 3 THE LED SITE SCREENING CRITERIA 4 THE SITE CERTIFICATION PROGRAM RECOMMENDED TO LED 6 SITES IN ACADIANA REVIEWED FOR CERTIFICATION 7 THE SITE EVALUATION MATRIX 8 PARISH BY PARISH EVALUATION OF SUBMITTED SITES 12 CONCLUSIONS 23 Site Evaluation for Acadiana Economic Development 2 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 INTRODUCTION Selecting a location for a company is one of the most critical choices made by business owners and site consultants. Companies search for locations that offer cost savings, a skilled workforce, a strategic location with good transportation accessibility, a favorable business climate, a desirable quality of life, and other competitive advantages. The competition among cities, regions, and countries of the world to attract and retain businesses, jobs, and investment is intense. Companies interested in new facilities or expansions are no longer limited by local or national geography. Rather, due to sophisticated telecommunications systems and growing worldwide connectivity, they can choose from a wide range of global locations that have in place competitive marketing strategies, incentives, and programs that promote and facilitate investment. FACTORS THAT DRIVE SITE SELECTION DECISIONS An examination of any site’s assets and an assessment of its strengths, weaknesses, and overall suitability for industrial uses requires a benchmark for comparison. In our experience working with clients on site selection issues, the benchmark is not an abstract ideal; rather it is based on definite preferences that reflect the requirements of the proposed project. Site selection is not an academic exercise with unlimited time and budgets. Rather, it is driven by a number of practical needs and the strategies that flow from these. Typical overarching drivers are: Time - Site decisions nearly always occur in a “fast track” environment, and projects are usually manned by corporate staff that are overworked and often lack previous site selection experience to draw from. Risk – Decision-makers are risk averse. The perception of risk is not limited to a few specific factors; it is pervasive and cuts across many factors (labor force, schedule, nonrecurring and recurring costs, environmental, operating climate, etc.). With little time to adequately assess risk, most decision-makers will elect to avoid “apparently risky” sites if there are available alternatives. Resources - Site selectors within a company must compete with other demands for limited corporate manpower and financial support. The resources available to conduct site selection studies are limited and sometimes inadequate to the task. These factors cause the site selection process to be driven by practical concerns. It is less about finding the perfect site than it is about finding a site that works for the project. It is a compromise. Little time will be spent examining a candidate site or community in Site Evaluation for Acadiana Economic Development 3 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 detail unless it first passes muster on very basic site selection criteria. This means the so- called “site selection” program is, in reality, a search for fatal flaws. Once such a flaw is identified, the community/site is excluded from further consideration. Site “selection” only occurs in the final stages of the program, when a short list of suitable candidates is being evaluated. THE LED SITE SCREENING CRITERIA Taimerica developed recommendations for site certification screening criteria for Louisiana Economic Development in June 2008. Draft guidelines for site review and certification were presented by Brian Chapman of LED to the economic development community at the LIDEA Real Estate Development Course on June 30, 2009. This review of Acadiana sites is based on the LED checklist, supplemented where appropriate by our original recommendations, which were based on the Oregon Site Certification program. The Industrial Site Certification program administered by the Oregon Economic and Community Development Department certifies three types of sites: Manufacturing, Office, and Distribution. Based on our review, Taimerica believes this program is Best Practice for several reasons: - Ten regulatory departments in the state are involved in advance review and in the permitting process, and must sign off in separate letters on each site prior to certification; - Definite delivery dates are required for all utilities and infrastructure (180 days from site purchase); - Site visitation, site review, and certification by an independent third-party consultant adds credibility; - Certification itself via letter from the Governor’s office confers authority; - Adequate and effective promotion gives added exposure to certified sites; - Notebook of all site data, maps, schematics with a compilation of sign-off letters and certification documents, assures site consultants and prospects of the diligence of the site preparation. This assertion is supported by the following three facts, each of which is a direct result of this program: - A larger inventory of prepared sites is available in Oregon; - Communities continue to add sites for certification beyond the initial launch; - Site consultants can identify specific successful projects that were a direct result of the shortened development-to-construction time for certified sites. Site Evaluation for Acadiana Economic Development 4 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 The Louisiana Certification program includes nine screening criteria, shown below, which are a subset of those we recommended in June 2008: 1. 10 acres or more of the site above the 100-year flood plain; 2. A set price per acre for the site that is quoted in writing; 3. Legal instrument demonstrating control of the property (fee simple ownership by EDO or option with private landowner); 4. Industrial use permitted by zoning ordinance; 5. A minimum of 50,000 gallons/day of potable water can be available to site boundaries within 180 days of purchase by a prospect company; 6. A minimum of 50,000 gallons/day of sanitary sewer capacity can be available to site within 180 days of purchase by a prospect company; 7. Documentation that three-phase electrical power is available to the site; 8. Documentation that a Phase I Environmental Audit has been completed on the site; 9. Documentation that the highway providing access to the site is capable of supporting 83,400 lbs. gross weight trucks. Requirements #5, #6, and #9 need further definition. A series of documents need to be developed to demonstrate to a site consultant that the water and sewer volume cited in #5 and #6 can be delivered to the site within 180 days. We have outlined these steps in our screening matrix for cases where municipal capacity is not available adjacent to the site currently. For criteria #9, we would assume that the gross weight criteria covers the entire transportation route from interstate highway to property and not just the highway at the site. Bridge limits could in fact reduce the truck-carrying capacity of a highway serving the site and should be included as a screening criteria. Site Evaluation for Acadiana Economic Development 5 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 THE SITE CERTIFICATION PROGRAM RECOMMENDED TO LED The site certification process that Taimerica recommended for LED is as follows: applicants will complete the LED Site Certification Cover Sheet and Checklist and provide the data and the documentation requested. This information, from site owners, local and state government sources and other agencies, will form a complete picture of the site’s readiness for a business or industrial prospect. After LED receives the application package, an independent site consultant will review all site applications quarterly to certify that sites meet siting timetables, thereby ensuring high and consistent standards of site quality, and compliance with all criteria as detailed in the Checklist (see Figure 1). Our conversations with LED suggest that most of the flow chart will be enacted when the program is announced. Figure 1. Site Certification Process Flow Chart Owner Local Government Applicant LED Certified Site or EDO State Government Site Consultant Studies and Other Site Evaluation for Acadiana Economic Development 6 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 SITES IN ACADIANA REVIEWED FOR CERTIFICATION Taimerica examined 11 sites submitted by the EDOs in each of six parishes in the region for the suitability for state certification (see Map 1). We evaluated each of the nine screening criteria released by LED on June 30 th, 2009. Where the LED screening criteria lacked specificity, we outlined the documentation that would likely be required by an outside consultant to demonstrate that critical infrastructure could be delivered to the site within 180 days. Map 1. Acadiana Site Location Map Site Evaluation for Acadiana Economic Development 7 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 THE SITE EVALUATION MATRIX The site screening factors have been organized into eight categories (see the three-page Site Evaluation Matrix at the end of this section). All of the factors for each site are organized into one of three classifications, shown on the top row of each page: In Place; Needed for Certification; or Not Available. For some factors, such as site control, the EDO might have several options for certification, such as ownership or the option to purchase. One option might be marked Not Available while the other is marked Needed for Certification. For those items marked as Needed for Certification, the paperwork documenting the status has not yet been developed or was not available for review by Taimerica. Without proper documentation, the site will not be certifiable. In cases of utilities, a series of documents are required to demonstrate that all of the elements are in place to meet the 180-day timetable for delivery of services. If all of the steps in the category are not marked as In Place, it is unlikely that the site can be certified. The checklist of items under each of the utility categories is intended to serve as a checklist of items that are needed prior to submitting the certification application to LED. Knock-out factors for certification will be discussed in the next section. An item marked Not Available is not necessarily a knock-out factor for certification if another option within the category is deliverable within 180 days. The only sites in Acadiana that appear ready for certification “as-is” are the Northpark site in Lafayette Parish and the Breaux Bridge site in St. Martin Parish. Seven additional sites look certifiable under the LED draft guidelines. Only the Airport site in Acadia Parish and the Hwy 167 site in Vermillion Parish appear to have fatal flaws for certification. For the Airport site, the lack of municipal water and sewer service and highway load limits will eliminate it from certification. The Hwy 167 site in Vermillion does not have access to 50,000 gallons per day of wastewater treatment capacity. This is a definite knock-out factor. Unless the private owner is willing to provide sewer service and has all of the requisite permits in place, this site is unlikely to meet minimum certification standards. Site Evaluation for Acadiana Economic Development 8 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 Acadiana EDC Site Evaluation Matrix In Place Needed for Certification Not Available Acadia Iberia Lafayette St. Landry St. Martin Vermillion Off W Breaux Airport Duson Airport Airport Northpark Broussard Wal-Mart Opelousas Bridge Off US 90 Hwy 167 C Property is EDO owned and for sale o or lease? n EDO has an option to purchase t Letter from owner lists price and r sale terms o Price is set in writing in signed letter l by owner P No zoning ordinance in place e Site is now zoned for industry Zoning good for heavy industry r Other Local/parish permits needed m for development? i t Local/parish permits obtainable within 180 days of purchase? s F Flood plain elevation set by FEMA? l At least 10 acres of site above 100 o year flood plain? o Portions of site can be raised above d flood elevation? L i Structures now on site? m Easements and right of ways on site i identified on plat? t Restrictive covenants on use? s Liens or other encumbrances? Site Evaluation for Acadiana Economic Development 9 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 Acadiana EDC Site Evaluation Matrix In Place Needed for Certification Not Available Acadia Iberia Lafayette St. Landry St. Martin Vermillion Off W Breaux Airport Duson Airport Airport Northpark Broussard Wal-Mart Opelousas Bridge Off US 90 Hwy 167 C Public service currently available at W site? o a Provider has issued letter offering n t capacity (50,000 gpd) t e Public service can be extended r r within 180 days? o End of closest line identified on l map? S e Permits for all ROWs in hand? Provider has issued letter offering r capacity (50,000 gpd) v Design/engineering is i complete(plans in hand)? c Financing plan is complete and in e writing? Public service currently available at S site? e Provider has issued letter offering w capacity (50,000 gpd) e Public service can be extended r within 180 days? End of closest line identified on S map? e Permits for all ROWs in hand? Provider has issued letter offering r capacity (50,000 gpd) v Design/engineering is i complete(plans in hand)? c Financing plan is complete and in e writing? Site Evaluation for Acadiana Economic Development 10 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 Acadiana EDC Site Evaluation Matrix In Place Needed for Certification Not Available Acadia Iberia Lafayette St. Landry St. Martin Vermillion Off W Breaux Airport Duson Airport Airport Northpark Broussard Wal-Mart Opelousas Bridge Off US 90 Hwy 167 C Location of nearest substation o identified on map? P n 3-phase service now available at o t site? w r e Provider has issued letter commiting o r to 3-phase service within 180 days? l Phase I Environmental Audit is complete? O Site accessible via state or federal t highway? h Highway owner at site has issued e letter indicating road will support r 83,400 lb gross weight? In Place Needed for certification Not available Site Evaluation for Acadiana Economic Development 11 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 PARISH BY PARISH EVALUATION OF SUBMITTED SITES The following is a recap of the ratings site by site for each of the Team Acadiana Parishes. Acadia Parish Two sites were evaluated in Acadia Parish: 1). An airport site owned by the Police Jury; and an Interchange site on I-10 at Duson. Airport Site The Acadia Parish Police Jury owns 610 acres (+/-) south of US 90 about two miles southeast of Esterwood (see Map 2). The site is rural and is surrounded by active farms. It is ten miles from the nearest I-10 interchange and lies over one mile from US 90. Trucks have to cross a pontoon bridge to access the site, which is a knock-out factor for manufacturers needing truck access. The site is remote from municipal utilities, which is another knock-out factor in terms of its use as an industrial site. We believe that the cost to extend utilities to the site make it a higher cost option to develop than parcels that are closer to municipal utilities. Map 2. Airport Site in Acadia Parish Site Evaluation for Acadiana Economic Development 12 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 Duson Site About 40 acres of land is available north of I-10 at the LA 95 interchange of I-10 (see Map 3). The site is adjacent to a casino and convenience station and is owned by a private owner. It has direct access to I-10. The site is certifiable if municipal water and sewer service can be provided within 180 days. The owner must also provide a set option price to the EDO in order to meet the LED screening criteria. Map 3. Duson Site in Acadia Parish Site Evaluation for Acadiana Economic Development 13 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 Iberia Parish Two sites were evaluated in Iberia Parish on or adjacent to the Acadiana Regional Airport (see Map 4). The Acadiana Regional Airport has some unique locational assets, such as 8,000 foot runways and a seaplane landing runway, which suggest that aerospace- related uses are most appropriate for the airport-owned properties. Map 4. Airport Sites in Iberia Parish On-Airport Site The Airport Authority owns approximately 200 acres of land west of the main runway that has been reserved for industrial development in the FAA-approved master plan. The airport owns the right-of-way for extending utility services to the site. Site access to US 90 (which will become I-49 in the future) is via LA 3013, which would need to be Site Evaluation for Acadiana Economic Development 14 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 upgraded to accommodate 83,000 lb gross loads. The site should be certifiable if utility extensions and highway issues are addressed. The airport authority is outside the domain of the Parish zoning code so it can unilaterally allow industrial uses, subject to FAA height and smoke requirements. Off-Airport Site The IDF has identified a site adjacent to US 90 that is for-sale by a farmer. The site is visible from US 90. A small water line (3”) fronts LA 3212, which forms the northwestern boundary of the site. The site is ideal for a corporate business park because of its adjacency to US 90. The IDF can obtain certification for this site if better highway access to US 90 and a plan is developed for providing water and sewer service to the site. The site will need to be rezoned for industry under the Parish’s new ordinance. Site Evaluation for Acadiana Economic Development 15 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 Lafayette Parish Northpark LEDA owns approximately 30 acres of undeveloped property south of its successful Northpark business park south of Mouton Road (see Map 5). Some of the property lies within the flood zone and cannot be developed. The remaining 20 acres are adjacent to the LEDA park, which has full utility services in place. The utility lines are across the street from the undeveloped site and could be extended to the property limits without right-of-way permits. The site is properly zoned for industrial uses. This site is ready for certification subject to documentation on the availability of utility capacities and prices and demonstration that a Phase I Environmental Audit has been completed. Map 5. Northpark Site in Lafayette Parish Site Evaluation for Acadiana Economic Development 16 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 Broussard A private landowner in Lafayette Parish has a 118 acre rail served site for sale on US 90 near Broussard (see Map 6). The site has been examined by an engineer who confirms that it lies above the 100 year flood plain. The site has 0.75 miles of frontage on the railroad mainline which is an important asset, especially for alternative energy projects. Highway access for heavy trucks is available via US 90. The site lacks municipal water and sewer service currently. The site should be certifiable once the owner can demonstrate that adequate water and wastewater capacity is available to meet certification minimums, and that a price has been set in writing with LEDA having an option to purchase at that price. Map 6. Broussard Site in Lafayette Parish Site Evaluation for Acadiana Economic Development 17 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 St. Landry Parish Two sites were evaluated in St. Landry Parish that are owned by the Economic and Industrial Development District. Wal-Mart Property The District owns 115 acres adjacent to the Wal-Mart distribution center on LA 744 (see Map 7). The Wal-Mart operation has District-owned water and sewer utilities that are operated by the City of Opelousas. The site should be certifiable once the District can demonstrate that adequate water and sewer capacity is available to meet certification minimums. The site is within a half-mile of the I-49 interchange, which makes it a prime location for distribution and manufacturing operations. Map 7. Wal-Mart Site in St. Landry Parish Site Evaluation for Acadiana Economic Development 18 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 W. Opelousas Property The District owns 422 acres off of LA 3043 West of Opelousas and about one mile west of the Opelousas airport (see Map 8). The site is on an active rail line. Municipal water is available at the site through a 3” line, which is unlikely to provide the volume needed for certification or for providing fire protection pressures. The site lacks municipal sewer service and the nearest sewer line appears to be at least three miles from the site. Another disadvantage of the property is its distance from the interstate highway. Truck traffic would have to travel over five miles to the nearest interchange and trucks must pass through downtown over a narrow two-lane road to reach the site. Highway 3043 is not likely to meet the gross load limits of a certified site. The site’s advantage is its frontage on the railroad. If this site is going to become certified, the District will need to have plans developed to improve road access and to deliver industrial water and sewer service within 180 days. Map 8. W. Opelousas Site in St. Landry Parish Site Evaluation for Acadiana Economic Development 19 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 St. Martin Parish Two sites were evaluated in St. Martin Parish for their ability to achieve state certification. Breaux Bridge The Police Jury in St. Martin Parish has developed a business park adjacent to I-10 at Breaux Bridge (see Map 9). The property has all utilities and streets in place. It is within .35 miles of the interchange. Although most of the sites are too small to serve large manufacturing plants, the property has seven sites of three to four acres that could accommodate smaller industrial or manufacturing operations. The site has excellent visibility on I-10 and could serve as a good office building location. This site is readily certifiable provided that the owner sets a firm price in writing and gives the EDO an option to purchase at that price. Map 9. Breaux Bridge Site in St. Martin Parish Site Evaluation for Acadiana Economic Development 20 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 Off U.S. 90 Site A private owner is developing a 160 acre industrial park on the St. Martin-Iberia Parish line (see Map 10). A subdivision plat has been filed to divide the property into a series of small commercial lots that are designed to match the needs of oil service firms. The property is due east of a successful SLEMCO industrial park. The site is about 0.5 miles east of US 90, which will become I-49 in the future. Direct access is available in a northbound direction from US 90 but trucks on the southbound side of US 90 must travel about three miles south to the nearest traffic signal, where they can make a u-turn to return to the property. Map 10. US 90 Site in St. Martin Parish The site is unlikely to achieve certification unless the owner can demonstrate that they will provide water and sewer capacities needed by industrial customers. The lot sizes and street layouts, as subdivided, are too small to allow clients with a five- to ten-acre need to assemble a site with the proper site depth. While this property will serve oil Site Evaluation for Acadiana Economic Development 21 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 service companies, it is unlikely to be effectively marketed, as platted, to industrial customers. Vermillion Parish One site was evaluated in Vermillion Parish, located on US 167 approximately 3.5 miles North of Abbeville (see Map 11). The site is about 32 acres and has been subdivided into a series of one-acre lots. The property has streets and municipal water but lacks sewer service. The small lot sizes limit the properties’ marketability for industrial clients who typically want to buy five- to ten-acre parcels or more. The property is owned by a private developer. Without an engineering and financing plan to provide sewer capacity, the site is unlikely to be certifiable under the LED program. Map 11. US 167 Site in Vermilion Parish Site Evaluation for Acadiana Economic Development 22 Taimerica Management Company | 347 Girod Street | Mandeville LA 70448 September, 2009 CONCLUSIONS This site review suggests that Acadiana has limited industrial and business sites that are ready for immediate occupancy for expanding or new businesses to the region. Only two of the six parishes can currently meet the LED certification requirement of having a site ready within 180 days of purchase. Other sites are potentially available to meet the needs of target industries for Acadiana but local EDOs will have to undertake engineering and planning studies to get these site ready for certification. The lack of public wastewater capacity is a pervasive issue for site certification, since a site owner must demonstrate in writing the ability to provide 50,000 gallons per day of capacity within 180 days of site purchase. Our strengths and weaknesses assessment suggests that many of the public systems in the region lack this level of available capacity. While site development is not a core function of the AEDC, it is nevertheless important to the group’s success. It is an organizational issue that should be discussed in the upcoming stakeholder’s workshop. Site Evaluation for Acadiana Economic Development 23 REGIONAL MARKETING STRATEGIC PLAN for from 347 Girod St. Mandeville, LA 70448 (985) 626-9868 FAX: (985) 626-9869 firstname.lastname@example.org Technology Assessment•Strategic Planning•Organization Design•Site Selection May, 2010 Regional Marketing Strategic Plan for Acadiana Economic Development May, 2010 TABLE OF CONTENTS INTRODUCTION 3 THE MISSION FOR AEDC 4 BUSINESS RETENTION AND EXPANSION 5 MARKETING AND PROMOTION 7 WORKFORCE RECRUITMENT 12 ORGANIZATIONAL ISSUES 14 BUDGET AND STAFFING 15 CONCLUSIONS 19 APPENDIX 20 Taimerica Management Company | P. O. Box 977 | Mandeville LA 70470 | 985.626.9868 2 Regional Marketing Strategic Plan for Acadiana Economic Development May, 2010 INTRODUCTION INTRODUCTION A solid economic development marketing initiative by Acadiana Economic Development (AEDC) would be a major step toward diversifying and sustaining Acadiana’s economy. Diversification would benefit both the region and the state as a whole by attracting and retaining companies in high-growth industries. Such companies would serve as economic drivers regionally and statewide. The more varied and vibrant business environment they would create would also make the region a more desirable place to attract an expanded talent pool. A sustainable and diversified economy doesn’t occur by chance. The region must have what business needs to succeed and grow. However, the region must also actively market itself as a business location if it is to achieve these desired results. Competition for businesses nationwide and globally is fierce. Localities, regions, and states are aggressively marketing themselves to businesses in order to increase business vitality and grow their economies. No matter how desirable Acadiana might be as a business location, it cannot attract businesses unless it mounts an effective marketing campaign. Marketing to business is complex. It can often be difficult to determine what the most effective tactics and strategies are. However, there are many lessons to be learned from research and experience on how to reach out, follow up, and measure success. Focusing on developing a well conceived plan with reasonable goals and outcomes, allocating appropriate resources, and establishing a management structure are elements that will lead to success, assuming that the product—the location being promoted—is solid, as Acadiana certainly is. AEDC is a complex organization. Under its Tier I grant with LED, it has a contractual obligation to perform 90 business retention visits during 2010 and the number could be increased or decreased in the future. The number of industry visits in 2010 will require almost 100 percent of a full-time AEDC staffer. Visits made by the Acadiana Executive Director or by local EDOs can count against this number but AEDC is ultimately responsible to LED for 90 visits in the Acadiana parishes. Staff time by AEDC can be reduced below 100% by teaming with local EDOs but our recommendation as E.D. consultants is to have a Memorandum of Understanding executed with each of the partner EDOs and with the Regional Director that identifies the specific number of industry calls that each organization will complete. The Tier I contract also specifies other activities that AEDC must complete during the contract. These activities supersede other marketing functions or duties that the board set for the organization because this contract encompasses nearly all of the organization’s budget. The board of AEDC recognizes that the budget requires the organization to focus its marketing and promotion activities on just a few of the targets identified in the target industry study. By extension, this limits the marketing and promotion activities that the organization will launch. Based on priorities set by the board and stakeholders in the Taimerica Management Company | P. O. Box 977 | Mandeville LA 70470 | 985.626.9868 3 Regional Marketing Strategic Plan for Acadiana Economic Development May, 2010 September 16, workshop, the priority targets industries are: Administrative offices; Data centers; and Navigation and Control Instruments. The operational plan presented in this document assumes that AEDC will limit its marketing and promotion activities to just these three industries. Louisiana Economic Development has launched a state targeting study based on the Blue Ocean concept. Blue Ocean is intended to identify long-range targets for Louisiana. The targets identified in this study are for immediate marketing and promotion. The AEDC board might want to revise its list of target industries once the Blue Ocean study is completed. THE MISSION FOR AEDC The following mission for AEDC was crafted from input collected at a board and stakeholder workshop on September 16, 2009: The Acadiana Economic Development Council (AEDC) is a collaborative initiative of seven parishes in the Acadiana region. AEDC’s mission as a regional economic development and marketing organization is to promote the Acadiana region for new and expanded business investment and to help ensure the growth of its skilled workforce. In addition, AEDC coordinates prospect and site consultant visits to the region, provides technical assistance to its local economic development partners as needed, and provides additional research capacity for effective marketing to the targeted industries. Finally, AEDC is the lead organization in Acadiana for the Business Retention and Expansion program, which includes business visitations. This mission revises the current mission statement that AEDC is operating under. It encompasses the activities that the organization must accomplish under its Tier I grant with LED while adding activities and functions that the board and stakeholders felt were critical to the sustainability of AEDC over time. A series of four goals were developed subsequent to the board/stakeholder workshop and a review of current programs with the AEDC staff on September 17. While the board’s preference was to focus AEDC in marketing and regional promotion activities, the organization is also bound to perform a defined set of activities, such as business visits, under its Tier I contract with Louisiana Economic Development. The following four goals represent a summation of both board directed and contract directed activities. Taimerica Management Company | P. O. Box 977 | Mandeville LA 70470 | 985.626.9868 4 Regional Marketing Strategic Plan for Acadiana Economic Development May, 2010 BUSINESS RETENTION AND EXPANSION (BR&E) Goal #1: The existing businesses and industries in Acadiana are visited regularly, and local business climate issues impacting these firms are resolved expeditiously. The following set of action steps are needed to fulfill Goal #1: 1.1. AEDC continuously maintains a comprehensive list of all business and industries in the region. 1.2. AEDC will continue to use LED’s Synchronist license to compile information on the business retention and expansion situation in Acadiana. Synchronist data will be analyzed quarterly to identify important issues of concern to regional employers. 1.3. AEDC will be the primary agency handling the Acadiana Business Retention program, making the number of annual visits required by the LED contract. 1.4. AEDC will either hire a full-time Business Retention Coordinator or execute a Memorandum of Understanding with each of its local EDO partners that insures that the number of annual visits required in the LED contract is completed. 1.5. AEDC shall develop and collect specific measurable performance outcomes from all businesses receiving assistance, which should include at a minimum: a. Names of businesses assisted; b. Number of jobs saved and corresponding wage rates; c. Summary of strategies used to assist and the outcomes for each strategy; d. Measured increases in productivity; and e. If applicable, verified higher post-training wages of participating employees. 1.6. AEDC will develop a data base of business needs and challenges, based on input from its Synchronist surveys, matched to specific available assistance. AEDC will develop specific actionable items to address the needs and challenges of each business and will coordinate a community engagement process of addressing all indicated needs and challenges. 1.7. AEDC should identify and promote business retention incentives to regional firms. 1.8. AEDC, when applicable, will identify those economic driver businesses that are managed by an out-of-state headquarters. In these cases an ongoing visitation schedule will be developed so that the site manager and AEDC and its appropriate local partners can visit the company headquarters on a periodic basis to determine the needs and challenges of senior management Taimerica Management Company | P. O. Box 977 | Mandeville LA 70470 | 985.626.9868 5 as it pertains to their Acadiana operations. AEDC will develop and host quarterly business roundtable discussions to facilitate this process. 1.9. AEDC, working with its partners, facilitates connections between local employers and available business resources. 1.10. AEDC, working with local Chambers of Commerce and its partners, conducts an annual regional business appreciation award program. 1.11. AEDC, working with LED, will develop and host a semi-annual Regional Industry Roundtable for key leaders from targeted regional industry clusters where they can discuss common problems and opportunities. 1.12. AEDC, working with local colleges, will survey business owners to gauge the value of developing a web-based “discussion center” for manufacturers to exchange information on current concerns/issues. 1.13. AEDC will partner with the LA Workforce Commission and ASHRAM as appropriate to conduct an annual wage and/or benefit survey for the local manufacturing, office and technology communities. 1.14. AEDC will make a concerted effort to build a network of business contacts and leads from existing businesses to serve as marketing possibilities. OUTCOME: In the next five years, none of the existing economic base companies in Acadiana on the AEDC call list will relocate to other regions of the US. MARKETING AND PROMOTION Goal #2: The marketing and promotional efforts of the AEDC have resulted in attracting new and diverse business investment and the creation of higher wage employment. This diversity builds on the mix of existing manufacturing operations, and expands the outreach to business and professional firms and office operations. The following set of action steps are needed to fulfill Goal #2. The actions have been grouped under a series of four marketing objectives: Regional Brand Development and Image Promotion; Targeted Marketing; Web and Print Materials; Business Intelligence and Capacity Building. 2.1 Regional Brand Development and Image Promotion 2.1.1. AEDC will identify, using modified Synchronist interviews and a web based survey, the image of the community as held by local residents and businesses. This task could be aided with the assistance of a national consultant such as Development Counsellors International (DCI). 2.1.2. AEDC will identify, with the assistance of a consultant such ad DCI, the perception of the community’s image as held by prospective investors. 2.1.3. AEDC, working with its partners, will develop and agree on a brand theme for the region and will hire a public relations agency to “refine” this brand and any associated graphics and logos. This brand might focus around the “Cajun” theme. Branding a community helps a target audience understand what the region represents. Effective marketing begins with a clever brand identity that considers the “needs” of a target audience. By establishing a strong brand that differentiates Acadiana from competing areas, the region increases it ability to retain and attract businesses, create better jobs, and continue to grow its quality of life attributes. A brand identity is a word in the mind of the target audience that links to particular emotions and expectations to the community. 2.1.4. AEDC will build awareness of Acadiana’s new brand both inside and outside the region by developing sales presentations that incorporate the new brand and marketing message and that “sell” Acadiana to targeted regions and target industries. The actual media campaign and message should be developed with an outside consultant such as those mentioned in 2.1.2 and 2.1.3. AEDC cannot expect to achieve a nationally recognized brand name like Coca-Cola or Lexus but can be successful building a niche brand in strategic regions and among executives in targeted industries. The marketing and promotion plan should incorporate the niche strategy for branding. 2.1.5. This branding may also lead to the developing of an appropriate logo. The identity, brand, and logo should highlight the unique assets of the region for business and industry, and should be used consistently throughout the promotional materials, letters, web site, business cards, etc. 2.1.6. AEDC will engage a top-notch public relations firm such as DCI to generate positive publicity about Acadiana outside the region. This could include targeting such publications as Money Magazine, The Wall Street Journal, trade journals relevant to the target industries, and other industry and business publications. 2.1.7. Consideration should be given to advertising in 1 or 2 industry publications once there is a commitment from the editor that they will publish a one-page story on Acadiana. The list of appropriate publications is listed in the Marketing Plan developed for this project. 2.1.8. Working with a local marketing firm, AEDC should strengthen its relationship with local media. An excellent way to develop a closer relationship is to have a staff person assigned to attend meetings of the public relations and media association in Lafayette. These contacts are typically the source of leads for success stories on local businesses to use in national marketing and public relations activities. 2.1.9. AEDC will take the necessary steps to create a new and more positive image for the region that will include: a. Soliciting testimonials and utilizing local companies in regional marketing and recruitment efforts. b. Reviewing, updating, and improving as necessary the promotional materials that highlight the key locational advantages of Acadiana, particularly with respect to transportation, technology resources, quality of life, skilled labor supply, etc. Most of the needed data is current because it was gathered for this project. Staff might periodically hire development consultants to update this information. c. Working closely with the State and regional agencies to develop stories and to gain national and regional press coverage about the region. d. Working closely with the State and regional agencies to host business writers on familiarization (“FAM”) trips to the area to write feature stories about economic-related activities in the region. e. Making presentations about the community’s brand and image to local government officials and community groups, and appear on local cable and in the newspaper. 2.1.10. AEDC should sponsor an annual forecast event in Lafayette that discusses Acadiana’s economic future. Invite supporting economic development organizations, elected officials, and local business leaders. 2.1.11. AEDC should attend, sponsor, and/or speak at three to five industry association meetings and conferences a year within Acadiana. 2.2 Targeted Marketing 2.2.1. AEDC will revise its web site to reflect the new strategic agenda. Taimerica has included a list of web sites to review in the appendix to this report. This activity involves creating an economic development-focused site to facilitate the access of relevant information on an as-needed basis by outside prospects as well as by internal customers (new demographics meeting the IEDC Data Guidelines for “making the project short list”, news, maps, local and state incentives, ‘contact us’, building and sites, small business development with links to state and county offices, business resource links, links to regional allies, strategic action plan, etc.). The site should be kept updated with news and information, on-line forms, etc. so visitors will want or need to return. 2.2.2. AEDC should write several press releases to promote its marketing plan and the launch of AEDC’s revamped Web site. 2.2.3. Local businesses such a regional banks and utilities should be asked to include links to AEDC’s Web site on the press releases discussed in 2.2.2. 2.2.4. AEDC will identify a list of firms in the identified clusters for the purpose of promoting Acadiana as a location for their facilities. This identification of growth firms in the target industries should consider firms as small as 20 employees (250 or more for back office/call centers). 2.2.5. AEDC should identify target industry associations and events, one of which might be international. AEDC will attend at least two industry trade shows or conferences annually, preferably with LED, that are related to the key target industries. (Note: the focus on going to these trade shows is to learn more about the outreach opportunities to that industry and to develop prospect leads. Focus on setting up meetings with prospects at the trade show prior to attending rather than trying to "collar" people at the show. Continue to work with other allies as appropriate. Develop a plan to follow-up with contacts made.) 2.2.6. AEDC should participate in international trade shows in Europe organized by LED that are oriented toward its targeted manufacturing industries. 2.2.7. AEDC will work with local tourism agencies and lodging to place these materials so that they are readily accessible to tourists and visitors. Many location decisions have been initiated by a tourism visit to an area. 2.2.8. AEDC should maintain a “kiosk” or advertising space in the Lafayette Regional Airport and promote Acadiana as a business location, and place promotional flyers at this advertising space. 2.2.9. AEDC should develop positive long-term relationships with site consultants and corporate decision-makers. This might include the following: a. Make periodic visits to site consultants in their offices; b. Meet with consultants at roundtables and trade shows; c. Have consultants visit Acadiana for special events. Begin by developing a comprehensive list of all regional outings and events and determining which events to build sales-marketing activities that would have an “appeal” to targeted business decision-makers/site location consultants. Subsequently, AEDC will work with the tourism promotion agencies in the State and region to encourage and support "high profile" local festivals (e.g., Festival Internationale) or events to attract business visitors and attention to the region, and invite prospects and site consultants who have been contacted previously. 2.2.10. AEDC should organize and implement collaborative economic development initiatives including joint marketing collateral and marketing trips. AEDC and its partners should make two or three marketing mission trips a year visiting key prospects. 2.3 Web and Print Materials 2.3.1. Working with ULL, AEDC should create informative print or online marketing materials showcasing ULL’s research and training programs specific to each target industry. AEDC should include these materials in correspondence with economic development prospects. 2.3.2. AEDC should conduct regular educational seminars with area partners on targeted industries. 2.3.3. AEDC will create promotional materials in hard copy to provide as a tailored response to inquiries in the targeted industries and in electronic form for responding to emails and to place on the web site. This could include the creation of target industry fact sheets featuring data and information about the industry to convey why Acadiana is an advantage for a specific type of business operation. The strengths and weaknesses report can serve as a template for the information that should be included in each of the target industry fact sheets. 2.3.4. AEDC should maintain a list of Acadiana sites on LED’s GIS-based Internet database. New Internet technologies now allow anyone to access maps through a normal web-browser, and this approach is becoming a new standard in economic development marketing. 2.3.5. AEDC will develop collateral materials to be used in marketing the region. These materials should be developed as pdf-online files. These should be particularly designed to address each target audience. 2.3.6. AEDC will work with local tourism agencies and lodging to place these materials so that they are readily accessible to tourists and visitors. Many location decisions have been initiated by a tourism visit to an area. 2.3.7. AEDC should develop and distribute a fold-up map of Acadiana that highlights the main transportation features, the location of major industrial and commercial areas, the location of larger industrial sites and parks, and the location of major employers. A good example of this type of map is the Shreveport metro map issued by the Shreveport Chamber of Commerce. 2.4 Business Intelligence and Capacity Building 2.4.1. Throughout the United States, prospect companies and site selection consultants are increasingly turning to regional EDOs for assembling project and site information on particular regions. This has become the norm throughout the rest of the United States. Acadiana must begin a transition to this new protocol to remain viable as a location for new business. AEDC will establish a standard prospect handling protocol within the region. As the regional entity for Acadiana’s economic development efforts, AEDC must be the central clearinghouse for client/prospect interaction with all economic development teams in Acadiana, including responding to Requests for Information. This awareness will allow AEDC to facilitate meetings between client/prospects and partnering organizations based on identified need or opportunity. For example, when in contact with a prospect, AEDC will identify the prospect’s needs (e.g., permitting assistance, financial assistance, or research) and will then schedule meetings between the prospect and the respective organization(s) that can address the needs. Conversely, partnering organizations will notify AEDC of their contact with prospects first, allowing AEDC to manage information flowing to and from the prospect. This not only ensures that all available Acadiana assets are offered to the prospect, but also that a single message is conveyed by the region. Other regional organizations we have worked with, such as the NE Indiana Partnership, have developed written guidelines that been well received by both communities and prospect companies. We recommend that you contact them to request a copy of their guidelines (www.chooseneindiana.com). 2.4.2. AEDC should collaborate with Lafayette Entertainment Initiative to promote Acadiana for film production. 2.4.3. Efforts should be made to connect the areas technical colleges and universities with AEDC by designating a university liaison. ULL should identify an economic development liaison to be the point person for interacting with clients, attending marketing missions, and conveying ED efforts and accomplishments back to the university. The liaison should be invited to attend marketing trips to other regions. Representatives from ULL should be invited to participate in meetings with potential prospects when appropriate. 2.4.4. AEDC staff must develop subject matter expertise in Acadiana’s target industries. To more effectively communicate with Acadiana’s target industries, AEDC staff must develop expertise in the trends, issues, and characteristics that affect each sector. Having staff with detailed knowledge of the target industries will increase AEDC’s ability to craft messages that address the respective industries’ needs. This might include assigning a member of the AEDC staff to track and distribute target industry news, and to maintain a print or online file of target industry news. 2.4.5. AEDC will compile and maintain resource information for each target industry sector. This would include maintaining a database of associations for each industry sector as well as following industry trends. This can be accomplished by monitoring trade publications or purchasing industry data and reports from private sources, such as Hoover’s, Economy.com, or relevant trade associations. Web site information and details on each trade association are shown in the Outreach Resources table in the Marketing Plan. 2.4.6. AEDC will work with its partners to develop a Knowledge Management and communication system for sharing information on business recruitment leads and prospects. This can also be used for the BR&E program. An interactive and enhance website can provide the portal for this system. This needs to be a consistent and structured process, rather than an ad hoc effort. BR&E surveys can also be mined for prospect leads. OUTCOME: At least 35 percent of the new jobs created in the next five years will be in the focused target industries. WORKFORCE RECRUITMENT Goal #3: Acadiana will attract and retain skilled and professional workers to provide a foundation for a growing knowledge-based economy. The following series of strategic actions will allow AEDC to achieve Goal #3: 3.1. AEDC, working with its development allies and key companies in the region, should initiate focus groups and interviews aimed at understanding student and young professionals’ opinions about living in the region. This market research is an important tool in defining the talent recruitment campaign. Leaders in this type of effort have been Richmond, VA and Orlando, FL. 3.2. AEDC should incorporate the recruitment of skilled workers and professionals as part of the branding of Acadiana and subsequent promotional activities. 3.3. AEDC should identify through ULL and other data sources skilled workers and professionals who are alumni of the university, and target them for a promotional campaign to reacquaint them with the advantages of living and working in Acadiana. The promotional campaign should investigate advertising in alumni magazines and newsletters, as well as via links to alumni association web sites. 3.4. AEDC should identify successful entrepreneurs to consider relocating to Acadiana to take advantage of its quality of life, higher education facilities, and skilled workers. Internet research tools are available to allow AEDC to identify the educational background of entrepreneurs. 3.5. AEDC should develop success stories of skilled workers and professionals who have returned or relocated to Acadiana to be used in the marketing campaign. The State of Wyoming has had one of the best programs for talent recruitment and should be consulted for more information. 3.6 AEDC should consider talent recruitment advertising and the identification of talent with regional roots using subscriptions and reports from Monster.com. Monster.com has databases with over 80 million resumes from throughout the world. They are able to identify individuals that have graduated from local high schools and colleges that desire to return to the area. They also can profile the skills and experience of these individuals and have tools available for establishing email or phone contacts with such workers. We recommend that AEDC investigate using Monster.Com as part of its talent recruitment effort (DISCLOSURE: Taimerica Management Company has a contractual relationship with Monster.Com). We offer this specific recommendation because we are unaware of any other company that can provide this kind of data and targeted promotion. 3.7. AEDC should create an attractive online relocation packet to be sent to potential skilled workers and professionals who might be attracted to Acadiana. A good example of this can be found at http://www.desmoinesmetro.com/pdfs/freerelo.pdf, and another example is the Greater Des Moines Partnership workforce attraction video (http://www.desmoinesmetro.com/about/our-work-platforms/index.asp). 3.8. AEDC should expand recruitment capabilities through an enhanced online job brokering system, new social media marketing (e.g., Facebook), and unique and innovative messaging. 3.9. AEDC and its allies should create a young professionals’ networking group to provide a platform for this demographic to share ideas, learn from one another, establish business and client relationships, and advance in their careers. 3.10. AEDC and its allies should establish a mentor program and invite retired executives to speak and coach young professionals. 3.11. AEDC should incorporate talent recruitment into its public relations program (Action #2.1.6) to make young professionals aware of job opportunities in Acadiana. News stories about the job opportunities in Houston were successful at bringing young people there during the oil boom of the 1980s. Similar publicity has helped the State of Wyoming recruit professional workers from Michigan during this decade. OUTCOME: In five years, economic base companies in Acadiana companies will find qualified applicants to fill 100% of their vacant skilled and professional jobs. ORGANIZATIONAL ISSUES Goal #4: AEDC is the “clearinghouse” for economic development initiatives in Acadiana. The following set of action steps are needed to fulfill Goal #4. 4.1. AEDC will maintain a communication network among all the Acadiana economic development organizations. 4.2. Efforts should be made to ensure that AEDC is linked to the LED’s economic development efforts including its Web sites, recruitment events, collateral development, and public relations activities. 4.3. AEDC should promote the Acadiana economic development Web site as the primary source of information to target industries. 4.4. AEDC should periodically determine what technical assistance that it could provide to its local EDO partners. Examples of such services include industrial site identification, certified site evaluation services, or prospect simulation visits by E.D. consultants. 4.5. AEDC and its partners should secure appropriate funding for implementing the plan. This should include a private sector initiative. Our recommendation is to develop a fundraising committee that can identify regional banks, utilities, major retailers and large employers who need to recruit workers in the national labor market. The committee should develop a list of suspect companies, put together a sales brochure that outlines the mission and development strategy for AEDC. The committee members can then make calls on these companies to request that they become members of AEDC. As an alternative, AEDC could hire one of the national economic development fundraising firms such as NCDS. 4.6. AEDC, working with its partners, should establish and agree upon evaluation metrics for measuring success. These numbers should be calculated at least twice a year to assess whether marketing efforts are effective and the new brand identity is better recognized and received at a local, regional, state, and national level. 4.7. AEDC should work with member groups to develop certified sites throughout Acadiana. Services that will expedite the development of certified sites are engineering and design studies to estimate infrastructure development costs and layouts that meet target industry needs. OUTCOME: In the next five years, AEDC will have budget resources and internal business processes that match best practice regional EDOs. BUDGET AND STAFFING The Tier I contract with LED identifies specific activities that AEDC must accomplish, most of which are supplemental to the priority activities identified by the stakeholders in the September 16 workshop. As the Tier I grant represents nearly 100 percent of the organization’s budget, the Tier I activities must be incorporated into an operational plan. The current budget is just sufficient to accomplish the Tier I objectives. Table 1 presents the incremental budget required to accomplish the four goals, and related objectives, identified by stakeholders. The budget encompasses the targeted marketing activities outlined in the Marketing Plan produced in September 2009 for the three focus targets. We estimate that a first year incremental budget of $339,000 is needed to launch the program. The budget in the following years drops to $257,500. This budget assumes that one additional staff person will be hired to handle the BRE activities outlined in Goal #1. It is impossible in our view, based on 70 years of E.D. management experience, to accomplish the BRE visitation/analysis/problem resolution activities without a dedicated staff person. We have provided a budget estimate for this staff position based on our recent work with best practice organizations-- all of which have a dedicated staff for BRE functions. A Memorandum of Understanding with local EDOs to conduct specific retention visits could reduce the staff time that AEDC must spend on business retention, but we have not found this practice effective in our research on best practice EDOs. The funds in the budget assigned for dedicated staff could be spent on other activities once a MOU is in place and AEDC is certain that it can fulfill its contract obligations to LED without a dedicated staff for BRE. In the meantime, however, we believe it is prudent to budget for a dedicated BRE staff person. A detailed budget for 2010 and for later years is shown in Table 1. Many of the strategic actions in Goals #1-4 do not require line-item budgets and therefore are not listed in Table 1. Some of the new activities proposed in the BRE program (Goal #1) require additional funds. The majority of the new budget resources are dedicated to Marketing and Promotion (Goal #2). A big part of Goal #2 is to build a regional brand and image. We have assumed that AEDC will hire a national public relations firm to gauge the current perception of the region’s image by outside investors (Action #2.1.2) as well as work with national media to place favorable stories in the trade press, as well as in general business publications (Action #2.1.6). A significant amount of the resources in Goals #2-3 are dedicated to web site enhancements or to prepare new marketing materials. These activities are programmed for 2010, the first year of the operational plan. These activities require an estimated $81,500 of budget in the first year of the plan. The costs of identifying and attracting skilled workers (Goal #3) could expand as this program unfolds. We have estimated that a modest budget is needed to test a promotional campaign in a few test markets with a large population of ULL alumni. The level of print or online promotion could expand beyond these estimates if the test campaign is deemed successful. A big budget item in Goal #3 is for a relocation section to the AEDC web site (Action #3.6). This is an important activity that should be launched as soon as the basic market research is completed. It is the critical path in terms of Goal #3. Many of the activities in Goal #4 consist of enhancements to internal business processes or to enhanced stakeholder services discussed in the board/stakeholder workshop. Table 1. Estimated Additional Budget Goal/ Budget Estimate Task# Goal #1: BRE Year 1 Later Years Notes Business Retention and Expansion Promote business retention Pdf brochure 1.8 $ 1,000 incentives to regional firms. printed as needed Conducts annual regional business Lunch and meeting 1.11 $ 5,000 $ 5,000 appreciation awards. costs Host a semi-annual Regional Lunch and meeting 1.12 $ 2,000 $ 2,000 Industry Roundtable. costs Develop a web-based “discussion Web programming 1.14 $ 2,500 $ 2,500 center” for manufacturers. costs Conduct an annual wage/benefit Conducted by an 1.15 $ 5,000 $ 5,000 survey for mfg./tech. HR consulting firm GOAL #1 TOTAL $ 15,500 $ 14,500 Table 1. Estimated Additional Budget – con’t Goal/ Budget Estimate Task# Goal #2: Marketing & Promotion Year 1 Later Years Notes Regional Branding & Image Promotion Identify the image of the community as Hire market research 2.1.1. $ 5,000 held by local residents. consultant Identify the perception of the Hire market research 2.1.2. $ 15,000 community’s image by investors. consultant Develop a brand for the region and hire Local marketing & PR 2.1.3. $ 15,000 a PR firm to refine. firm Local marketing & PR 2.1.5. Develop an appropriate logo. $ 1,000 firm Engage a top-notch public relations National firm @ 2.1.6. $ 100,000 $ 100,000 firm. $8k/month Estimated from CIO 2.1.7. Advertise in 1-2 industry publications. $ 20,000 $ 20,000 ad rates Strengthen its relationship with local Marketing firm 2.1.8. $ 6,000 $ 6,000 media. contract @ $500/mo Host an annual forecast event in Venue/food& 2.1.10. $ 5,000 $ 5,000 Lafayette. beverage costs Attend three to five industry Those listed in 2.1.11. $ 6,000 $ 6,000 association meetings per year. marketing plan Objective Total $ 173,000 $ 137,000 Targeted Marketing Revise its web site to reflect the new 2.2.1. $ 5,000 $ - strategic agenda. From marketing plan Participate in international trade shows Estimate for travel 2.2.6. $ 10,000 $ 10,000 organized by LED. and lodging Maintain ad space in the Lafayette Estimate @ 2.2.9. $ 6,000 $ 6,000 Regional Airport $500/month Develop positive long-term 2.2.10. $ 5,000 $ 5,000 relationships with site consultants. From marketing plan Objective Total $ 26,000 $ 21,000 Web & Print Materials Create marketing materials showcasing 2.3.1. ULL’s research and training programs $ 6,000 $ - Lump sum estimate for target industries. Create hardcopy promotional materials 2.3.3. $ 6,000 $ - Lump sum estimate in targeted industries. Develop materials to be used in 2.3.6. $ 2,500 $ - Lump sum estimate marketing the region online. 2.3.8. Distribute a map of Acadiana. $ 7,500 $ - Lump sum estimate Objective Total $ 22,000 $ - Business Intelligence & Capacity Building Develop a Knowledge Management & 2.4.6. $ 2,500 $ - communication system. Objective Total $ 2,500 $ - GOAL #2 TOTAL $ 223,500 $ 158,000 Goal/ Budget Estimate Task# Goal #3: Workforce Recruitment Year 1 Later Years Notes Attract & Retain Skilled & Professional Workers Identify skilled workers and professionals who are ULL and 3.3. $ 5,000 $ 5,000 local alumni, and target them for promotional campaign. Create an attractive online 3.6. $ 5,000 $ - relocation packet. GOAL #3 TOTAL $ 10,000 $ 5,000 Clearinghouse Determine technical assistance 4.4. $ 5,000 $ 5,000 Contingency fund provided to local EDOs. Hire engineering Develop certified sites throughout 4.7. $ 10,000 $ - firm to develop Acadiana. costs GOAL #4 TOTAL $ 15,000 $ 5,000 TOTAL FOR OPERATIONS $ 264,000 $ 182,500 ADDITIONAL STAFFING COSTS (Salaries+Benefits@25% + add. $ 75,000 $ 75,000 overhead @25%) TOTAL NEW BUDGET $ 339,000 $ 257,500 CONCLUSIONS The success of this plan depends on two things: 1) Doing the right things—professionally; and 2) Having a means of tracking results so that the AEDC can check and adjust its tactics as markets change and as its staff gains more familiarity with the effectiveness of the various marketing tools geared to each of the target industries. The tracking system that is adopted by AEDC can be as simple as a series of scheduled meetings where staff recap the effectiveness of each of the marketing activities soon after they have had time to collect leads and evaluate the opportunities identified by each of the events or activities. More sophisticated databases can also be developed for tracking results. Some of the most useful tools consist of Customer Relationship Management (CRM) software suites, such as Act!. Microsoft also has developed CRM templates for use in Access databases. Online tools are also available on a subscription basis such as SalesForce CRM (see www.salesforce.com). Each of these off-the-shelf software tools has a series of built-in analytical tools that can used to track results. We recommend that AEDC investigate off-the-shelf CRM software and select a solution that best fits its needs. Our recent work with best practices regional EDOs demonstrates the importance of strategic planning. Organizations that adopt sound goals, identify critical action steps, and set out effective outcome measures to evaluate their effectiveness, are effective at diversifying their regional economies. This operational plan, if implemented, will give AEDC a road map for implementing such a strategy. APPENDIX List of Appendices (In Order) Factors that Influence Closures Effective BRE Programs Regional Branding Examples of Best Practice ED Web Sites Examples of Fold-Out Maps Best Practices in Talent Recruitment Monster.com Case Studies Article: Attracting the Best and Brightest Article: Seven Virtues of Effective EDOs Best Practices Executive Summary FACTORS THAT INFLUENCE CLOSURES • Failure to pay bills, i.e., utilities; • Small lay-offs (not tied to seasonal conditions); • Increase in Unemployment Insurances filings; • Lack of hiring activity/new hires; • Changes in leadership (plant manager, human resources or owner/ownership); • Rumors that originate with current employees; • A large number of current employees beginning job search; • Lack of capital investment in plant or equipment; • Moving equipment out of business; • Decreasing involvement in community activities; • Expiring union contracts; • Contacting lending institutions for operating capital; • Natural disasters; • Economic issues with larger companies who may have sub- contracted with businesses in the region; and • Economic changes in specific industries. EFFECTIVE BRE PROGRAMS All best practice local EDOs have effective BRE programs in place. Not all regional organizations have a BRE program, however, as discussed in the Best Practices study reproduced earlier in this appendix. Two regional organizations with effective BRE programs are shown below. Characteristics of these programs are: 1). Dedicated staff for BRE; 2). Written procedures for conducting the visits and follow-up that included appropriate roles for the local EDOs and the regional EDO; 3). Use of BRE software for analyzing, sharing and disseminating knowledge gained through the programs; 4). Effective procedure for solving business problems encountered through visits. Northeast Indiana Regional Partnership www.chooseindiana.com Baton Rouge Area Chamber of Commerce www.brac.org REGIONAL BRANDING The following three organizations have regional branding programs in place that are widely regarded as examples of the best offered by regional EDOs. Richmond in particular has been quite effective at branding itself in Western Europe and Asia. Characteristics of these brands are that they are built on reality and therefore are believable and credible. Charlotte Partnership Charlotte, NC www.charlotteusa.com The Greater Richmond Partnership Richmond, VA www.grpva.com Hampton Roads Partnership Norfolk, VA www.hrp.org EXAMPLES OF BEST PRACTICE ED WEB SITES Hagerstown and Washington County EDC, MD http://www.hagerstownedc.org/ NE Indiana Regional Partnership http://www.chooseneindiana.com/ City of Cincinnati http://www.choosecincy.com/ These best practice websites have several desirable characteristics in common, in response to site selectors’ request for “data, ease of navigation, and speedy download time”: • Site selector resources, including data and site information, are all clearly identified and available from the home page • Data available is consistent with the topic areas needed by site selectors and defined in the IEDC guidelines (see http://www.iedconline.org/?p=data_standards) • Navigation of the website is designed with a central home page and Site selector resources specifically aggregated and available together • Banners with consistent menus for all pages allow users can navigate easily from one page of the website to another with one click • Footer menus on the bottom of each page provide an additional option for easily navigating • Location map on the home page • Additional map resources aggregated in a “map room” or map page In addition, the City of Cincinnati website allows the additional benefit of allowing site selectors to choose which data items they wish and create a customized data package online. EXAMPLES OF FOLD-OUT MAPS The two best examples of community maps that show business parks and industrial sites are by the Shreveport and Oklahoma City Chambers of Commerce. These maps are not available online but can be purchased. Contact the respective chambers for more information: www.shreveportchamber.org www.okcchamber.com BEST PRACTICES IN TALENT RECRUITMENT Some communities with tight labor supplies, such as in North Dakota and Wyoming, are trying to attract professional talent. Others such as Reno, NV are interested in attracting young professionals and having to compete with directly with talent meccas like San Francisco. No matter which strategy is involved, the tactics are much the same. The article “Attracting the Best and Brightest” and survey by Iain Watt at DCI gives a good overview of what the best practice communities are doing with talent recruitment. More information is available from the websites of the organizations mentioned in this article: Edawn Reno, NV www.edawn.org Wyoming Business Council Cheyenne, WY www.wyomingbusiness.org North Dakota Dept. of Commerce Fargo, ND www.commerce.nd.gov. MONSTER.COM CASE STUDIES NOTE: Taimerica Management Company has an alliance with Monster.com to introduce their labor market and talent pool intelligence products into the economic development marketplace. Any subscription or analysis purchased from Monster.com by AEDC will have a financial benefit to Taimerica. We are offering this information to AEDC at its request and because an alternative source of such labor market intelligence or marketing services does not exist. We want the AEDC board to be aware of the business relationship between our two companies. Monster.com is the world’s largest global career company. It matches job seekers with employers in over 51 countries worldwide. It has databases of more than 80 million resumes including those of college students, recent and imminent military retirees, and general job seekers -- most of whom are currently working and therefore don’t show up in government databases. (Unlike the data produced by the Labor department, the majority of resumes at Monster.com are of people now employed but wanting to change jobs.) The products of most value to AEDC are Monster Realtime Labor Intelligence Research and Monster Advertising and Outreach. Several case studies that clarify these products are discussed below: Case Study #1: Monster Realtime Labor Intelligence Research Acadiana wants to identify computer programmers and systems analysts with school or family ties to the region. Using its databases and proprietary search engines, Monster can identify individuals in its database that graduated from area high schools or colleges with degrees in computer science as well as those with job titles that are associated with IT and computer science. It can then identify metro areas with the largest concentrations of these skills and can actually provide counts to AEDC for marketing and promotion campaigns. The search can be further refined to only identify individuals that have expressed an interest or willingness to relocate to Louisiana. Case Study #2: Monster Advertising and Outreach Acadiana wants to reach the job candidates identified in Example #1 with an appeal to consider returning home to work. AEDC can purchase banner and pop-up adds on the Monster site that only appear when one of the identified individuals accesses the job boards. These banner ads can be linked to a “Come Home” campaign. Case Study #3: Fast Web Lead Generation to Graduating Seniors at Regional Colleges Acadiana wants to contact students graduating from regional universities to urge them to remain in Acadiana after graduation. AEDC purchases targeted recruitment messages that pop up when students at regional colleges access Monster’s Fast Web site. Students are given an option of learning more about opportunities in Acadiana. Monster provides a list of these qualified leads to AEDC and its partners for more in-depth marketing. These are three examples of products that can help AEDC in its mission of enhancing the business climate of Acadiana. Additional information about the Monster.com services can be obtained by calling Charlotte Batson or Ed Bee.
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