Las Vegas targeting by QOMAGZ6

VIEWS: 5 PAGES: 45

									           Targeting Analysis
                 Prepared for:
Las Vegas-San Miguel Economic Development Corp.

                 Prepared by
 New Mexico Economic Development Partnership
                  May 2010


                                               1
What is Targeting?
 Targeting is a well recognized as the best approach
  toward successful economic development marketing.
 The purpose of this portion analysis is to identify good
  prospects using a proven targeting technique. Labor and
  industrial park needs of target-type companies can than
  be examined.
 Consultants utilize a unique methodology designed to
  identify target industries. It includes the following steps:
 Understanding what companies need when searching for
  a new location..




                                                             2
How to Target?
 Reviewing locations and expansions in the region in
  order to identify the most active industries.
 Assessing the economic development strength and
  weaknesses of a community in order to gain a general
  understanding, which active industries would fit best and
  which would not.
 Examining major companies’ supply chain and if those
  industries match the area’s strengths.
 Selecting those active industries, which best match, the
  strengths of your region, as the best target industries.




                                                              3
Methodologies
 Consultants maintain a database of actual industrial and
  office site locations/expansions[1]. For this analysis we
  looked at regional activity that occurred in 2008.
 This database assists us in predicting growth trends and
  we utilize this data for selecting the best initial
  communities for our site location clients. The
  methodology is sound and proven for the following
  reasons:
 Locations/expansions are driven by recent market
  conditions and these conditions will generally continue
  into the near future.

    [1] We used Conway Data information which tracts locations
    and expansions.



                                                                 4
How do Companies Select Locations

Companies (and site selection consultants) select
locations/expansions with the best business climates. This may
     mean, for example,
    a good labor climate,
    good market proximity,
    good transportation,
    the availability of incentives,
    and all positive business conditions.
This will result in clustering; a concentration of like
companies due to favorable business conditions.



                                                                 5
    Why is Clustering Important?
   Clustering is a “green light” for other similar
    companies to take a look. But they will only locate if
    the good business conditions remain.
   For example, they may find the labor market for
    select skills depleted due to too much
    location/expansion activity.
   This is why we conduct careful fieldwork interviews
    with local companies for our site location clients, in
    order to help them to thoroughly understand the
    local business conditions.




                                                       6
Clustering Methodology
 This methodology is also sound for economic
  development targeting. It will assist you in understanding
  location patterns and to identify the most active, fastest
  growing company types.
 First, consultants screen the location/expansion data to
  identify which industries (by NAICS Code)
  located/expanded the most facilities in the four corners'
  states in 2008. They are defined as growth industries.
  The following graph identifies the most active industries.




                                                               7
               Most Active Targets in Region
               2007-2008

  Warehouse/Distribution                                                                             15
   Call Center/Software/IT                                                                  13
          Food/Beverage                                                     9
    Compuer/Electronics                                                 8
       Chem/Pharma/Bio                                          6
     Industrial Machinery                               5
               Fab Metals                           4
                Misc. Mfg.                          4
           Primary Metals                           4
Transportation Equipment                    3
                    Paper            2
                  Plastics           2

                             0   2              4           6       8       10       12         14    16
                                         source: Conway Data, 4th quarter 07 - 3rd quarter 08

                                                                                                           8
              Background

 New Mexico Partnership spent two days in
  community interviewing.
 Approximately 20 interviews conducted.
 Partnership accessed past reports and
  data available.
 Partnership also involved in two site
  selections in Las Vegas.
 Has familiarity with community
 Over 40 years professional ED experience.
   Labor Availability: San Miguel County


     Skilled                                       5.57

 Semiskilled                                                    7.63

   Unskilled                                                      8.38

Management                                         5.88

  Technical                                        5.86

    Clerical                                                           9

               0    2            4             6            8              10
                   Index: 1= very poor; 5= avg.; 10 = excellent
             Labor Availability:
         Las Vegas vs. Lea County
                                                      6.42
     Skilled
                                              5.57
                                                                      8.33
 Semiskilled                                                   7.63

   Unskilled                                                                 9.08
                                                                      8.38
                                            5.25
Management                                          5.88
                                                           7
  Technical
                                                 5.86
                                                                      8.5
    Clerical                                                                 9

               0   2             4              6              8                 10
                   Index: 1= very poor; 5 = avg.; 10 = excellent

                   Las Vegas         Lea County
Labor Characteristics: San Miguel County


        Turnover                                                                      8.5
     Absenteeism                                                          7.4
         Attitudes                                                    6.9
       Trainability                                                            7.6
      Basic Skills                                                              7.9
 Communications                                                     6.7
    Alcohol/Drugs                                                         7.4
Labor Productivity                                                                 8.1
        Accuracy                                                                   8.1
                      0   2                 4               6                  8            10
                              Index: 1 = very poor; 5 = avg.; 10 = excellent
                        Labor Characteristics:
                      Las Vegas vs. Lea County
                                                                          7.93
         Turnover                                                             8.5
                                                                       7.6
     Absenteeism                                                     7.4
         Attitudes                                                         8.13
                                                                  6.9
       Trainability                                                           8.53
                                                                      7.6
      Basic Skills                                                         8
                                                                         7.9
 Communications                                                          7.73
                                                                6.7
    Alcohol/Drugs                                                          8
                                                                     7.4      8.47
Labor Productivity                                                        8.1
                                                                           8.13
        Accuracy                                                           8.1
                      0    2              4              6               8           10

                               Las Vegas      Lea County
                           Index: 1= very poor; 5= avg.; 10 =excellent
   Quality of Services: San Miguel County


              Water                          3.09
              Sewer                                                5.82
             Electric                                                                7.82
Telecommunications                                                        6.64
              Police                                                          7.27
                Fire                                                                   8.18
         Permitting                                                        6.82
                 Rail                                   4
            Highway                                                    6.09
         Air Service                                3.75
       Taxes: Local                                                       6.55
 Government: Local                                          4.45
                        0   1   2        3          4         5    6      7       8         9
                                Index: 1 = very poor; 5= avg.; 10 = excellent
               Quality of Services:
            Las Vegas vs. Lea County
            Water                                                                8.55
                                     3.09
            Sewer                                                                8.55
                                                          5.82
                                                                               8.27
           Electric
                                                                           7.82
Telecommunications                                                            8.15
                                                                 6.64
            Police                                                                    9.29
                                                                        7.27
                                                                                        9.64
              Fire                                                             8.18
                      0    2                4             6                8            10

                             Las Vegas          Lea County
                          Index: 1= very poor; 5= avg.; 10= excellent
       Quality of Services:
    Las Vegas vs. Lea County
                                                                   7
       Permitting
                                                                 6.82
              Rail                                                          8
                                            4
         Highway                                                      7.36
                                                        6.09

       Air Service                                     5.13
                                        3.75
     Taxes: Local                                                       7.6
                                                               6.55
                                                                              8.2
Government: Local                               4.45

                     0     2            4                6              8           10

                            Las Vegas           Lea County
                         Index: 1= very poor; 5= avg.; 10= excellent
                Quality of Life Factors:
                 San Miguel County

          Public Schools                                  5.33
        Medical Services                                                  6.75
                Housing                    2.92
               Day Care                                 4.67
                  Zoning                     3.25
Community Beautification                            4
              Recreation                                           5.92
       Cultural Facilities                                                 7

                             0     2            4              6                 8   10
                                 Index: 1 =very poor; 5 = avg.; 10 = excellent
                 Quality of Life:
            Las Vegas vs. Lea County

          Public Schools                                                              7.38
                                                                 5.33
                                                                          5.77
        Medical Services                                                         6.75
                Housing                                   4
                                              2.92        4.21
               Day Care                                      4.67
                  Zoning                                       4.82
                                                3.25
                                                                            6.36
Community Beautification                                  4    4.92
              Recreation                                              5.92
                                                              4.67
       Cultural Facilities                                                        7

                             0        2               4               6                 8    10


                                          Las Vegas       Lea County
                                 Index; 1= very poor; 5= avg.; 10 = excellent
Needs: Warehouse/Distribution


    Access to market/transportation/freight costs
    Access to intermodal freight terminals and ports growing in
     importance
    Labor costs/availability
    key positions: material handlers, forklift drivers; truck drivers
    Electric power (costs/reliability)
    Access to Interstate highways (within 10 miles[1] of
     interchange)
    Large sites (50 to 250 acres) or large buildings (40,000
     square foot plus)
    Rail service for select operations
    Incentives
    Infrastructure
    Training
    Good labor/management relations.
 
     [1] This mileage requirement has gone down from 20 miles due to
     increased fuel costs.                                             19
             Warehousing and Distribution:
                 Las Vegas Potential
 Strengths                                   Weaknesses
1.   on I-25, many possible sites            1.   Lack of infrastructure at potential
2.   Access to ABQ and Denver markets             sites
3.   Access to rail and possible increased   2.   ED organization does not have
     freight.                                     sites under control
4.   Available labor force for warehousing   3.   Apparent concern over sewer at
     positions                                    northern end of I-25.
5.   Excellent training programs and         4.   Water issues throughout city
     incentives                              5.   Some unionization potential
Back Office/Call Centers/IT
   Labor availability
   key positions: customer service representatives (CSR), help
    desk reps, telemarketers, industry experts
   Labor quality (turnover, absenteeism, etc.)
   Labor costs
   Telecommunications
   Education/Training (and incentives)
   Existing leased Class A/B buildings with ample parking
    and/or improved commercial sites
   IT tech support
   Commercial air service
   Good access to corporate headquarters/related
   Corporate income tax
   Electric power (reliability & cost)
   Day care availability and affordability

                                                              21
 Labor Costs are Closely Tied to Back
          Office Locations
       5%              4%
                                 1%
                                       0%

18%




                                                                   72%


      Labor                 Fringe Benefits   Amortized Building
                                                                         22
      Property Taxes        Corporate Taxes   Electric Power
           Back Office Operations:
           Las Vegas Potential
 Strengths                                   Weaknesses
                                             1.   concern in the city that industry
1.   Previous experiences with call               is too footloose.
     center-labor force trained
                                             2.   Previous bad experiences
2.   Definite labor pool advantage           3.   Labor quality questions (deeper
3.   Excellent training and incentives and        analysis needed, along with
     access to community college for              more focused resident survey)
     specialized training.                   4.   No close flight service
4.   Some available properties for lease     5.   Labor costs could be influenced
5.   Access to university and college             by government worker wages
     resources                               6.   Questions on bi-lingual capacity
                                                  and capabilities
                                             7.   Lack of affordable day care
Food Processing and Related
   Available labor skills
   key positions: machine operators (cutting, blending & PLC[1]); food
    technicians, maintenance mechanics and warehouse workers)
   Labor costs
   Access to markets & raw materials/transportation costs
   Good water and sanitary sewer capacities
   Electric power costs/reliability
   Fully improved industrial sites/specialized buildings (may require rail service)
   Incentives
   Equipment tax exemptions (large capital investment)
   Infrastructure
   Training
   Good highway access
   Good labor/management relations.

    [1] PLC – Programmable Logic Control




                                                                                       24
Freight Costs are Critical in Determining Food
            Processing Locations


    11%            4%   3%     1%
                                                          43%




     38%

  Wages                 Freight              Fringe Benefits
  Electric Power        Amortized Building   Taxes

                                                                25
                    Food Processing:
                   Las Vegas Potential
 Strengths                               Weaknesses
1.   Excellent incentives and training   1.   Lack of labor skills needed for
     programs.                                food processing. (PLC,etc)
2.   Good highway access                 2.   Lack of planned industrial sites
3.   Abundant labor force for lower      3.   Lack of water and sewer
     skilled jobs.                            capacity
4.   Access to university and college    4.   Unionization potential
     that can tailor programs            5.   Questions on raw materials,
                                              natural resources (35,000
                                              head of cattle)
Ethanol/Biomass Criteria
   Local grain supply and basis (grain
    represents 65%-70% of total operating exp.)
   Highway access
   Rail access to isolated industrial site (70 acre
    minimum)
   Utility infrastructure (natural gas pipeline,
    electricity, water)
   Labor costs and availability
   Rural, remote, lower wage areas.
   Financing and/or creative incentives based on
    capital
   Misc. feedlots, etc.

                                                  27
                  Ethanol/Biomass:
                 Las Vegas Potential
 Strengths                           Weaknesses
1.   Highways and rail access        1.   Apparent lack of water
2.   Reasonable labor costs               capacity
3.   Cattle and feedlots proximity   2.   No planned large industrial
4.   Reasonable electric power            sites
     costs.                          3.   State permitting and
5.   Close proximity to West Coast        regulatory environment
     (biggest demand).               4.   Apparent lack of capital
6.   Rail availability                    and creative financing
                                          (compared to Midwest)
Industrial Machinery Criteria

     Available labor - machining skills & quality (key positions:
      machinist, maintenance mechanic, machine operator (CNC)
      and warehouse workers)
     Labor costs
     Access to markets/transportation costs
     Interstate highway access
     Electric power (reliability & costs)
     Improved sites and/or existing buildings (minimum of 20,000
      square feet)
     Rail access
     Available training (and incentives)
     Good access to supplier
     Good labor/management relations




                                                                 29
                    Industrial Machinery
                    Las Vegas Potential
                                 Weaknesses
 Strengths
                                1. Lack of skilled labor
1. Access to interstate
                                   availability
2. Excellent incentives
                                2. No skill training locally
3. Labor cost (for unskilled)
                                3. No cluster of machining
4. Reasonable electric costs       activity
                                4. Little access to customer base
                                   (ie. Juarez) (OEMs).
                                5. Lack of improved industrial
                                   sites
                                6. Water and sewer issues
                      Wind Turbines:
(turbine housing unit with gearbox, generator and transformer
               components) & blade assembly


          Access to market - wind farms
          Available labor (up to 1000 jobs) - machining and
           electronics skills & quality
          Rail (more than one provider preferred)
          Sites (up to 200 acres)/available industrial buildings
           (up to 500,000 sq.ft.)
          Free of earthquake or flood zones
          Training – college offering mechanical and electrical
           engineering degrees; plus machining and electronics
          Incentives and positive state/local policies.
          Near or must have access to customers and suppliers




                                                                    31
              Wind Turbines and Blades:
                 Las Vegas Potential
 Strengths                            Weaknesses
1. Rail access                        1. No apparent skills in
2. Potential proximity to wind farms     machining, welding and
3. Good incentives and state policies
                                         fabricating.
                                      2. Lack of planned, improved
4. University offering math and
   science degrees (not engineering)     sites.
                                      3. No proximity to customers
                                         and suppliers
                                      4. Questionable quality in labor
                                         force.
                                      5. Some unionization potential
Example: Johnson Plate and Tower
       Santa Teresa, NM
 Will build wind towers, close proximity to Juarez where
  turbines are built
 Dona Ana Community College doing welding certification:
  Johnson P&T on advisory board.
 OJT at El Paso site for those needing training
       32 welders
       12 blasters
       15 fitters
       35 helpers
       12 inspectors
       16 machine operators
       12 painters
        Solar PV Modules
(as opposed to ingots, cells, wafers)
 Proximity to high end research or universities
 Highly skilled talent (can be from semiconductor
    industry)
   Strong financial incentives (cash)
   Access to venture capital
   Good electric power reliability and rates
   Close to market where there are solar power
    plants or farms
   “Market will change as solar modules become
    more of a commodity. Industry will look to
    reduce costs” (land, buildings, taxes, permitting,
    etc.)…Don Schjeldahl, VP, Austin Consulting
           Solar Manufacturing

 Strengths                                 Weaknesses
1. Some potential proximity to solar    1.   Not close to lab or
   power plants.                             university-based research
2. Good electric power and rates        2.   No highly skilled talent
3. Good state incentives for solar      3.   No access to venture
4. State has strong solar industry base      capital
                                       4.    Lack of planned industrial
                                             sites
                                       5.    Universe of companies is
                                             small, competition is very
                                             significant
Electronics (Including Assembly)

     Labor skill availability and quality (key positions:
      assemblers, electronic technicians, testers,
      maintenance mechanics)
     Labor costs
     Education/training with incentives
     Electric power
     Supplier network
     Proximity to markets/good highway access
     Fully improved industrial parks
     Building costs
     Corporate taxes




                                                             36
      Annual Operating Costs Breakdown of an
Electronics Plant Without Material Costs and Freight
             6%       4%           5%

      16%




                                                                  61%
            8%


            Wages                       Amortized Building
            Fringe Benefits             State and Federal Taxes
            Local Taxes and Fees        Electric Power
                                                                        37
                        Electronics:
                    Las Vegas Potential
 Strengths
                                        Weaknesses
1. Large available labor pool
                                       1. Lack of fully improved
2. Proximity to markets, such as          industrial sites.
   Mexico and CA
                                       2. Lack of skill base in
3. Good highway access                    electronics assembly
4. Good training and state incentive   3. Questionable labor
   programs                               quality
5. Decent corporate income tax rates   4. Industry has been
                                          moving to Mexico and
                                          China (ie. Foxconn)
                                       5. Some unionization
                                          potential
       Film and Digital Media

 Highly trained film production crews
 Ability to utilize film studio
 Cost reductions and major financial incentives.
 Excellent aesthetics, background or scenery
 Ability to attract extras
 Temporary housing/extended stay hotels
 Institutions of higher learning that have digital
  media or film training
 Relatively good flights to LA or Burbank




                                                      39
                 Film and Digital Media:
                  Las Vegas Potential
 Strengths                               Weaknesses
1. Access to film crews in Santa Fe      1. some “push back” locally,
   and expertise at Highlands.              not full support.
2. Good aesthetics and some good         2. Some lack of extended
   settings.                                stay rooms
3. Ability to attract extras             3. No coordination, filming is
4. Through Santa Fe, direct flights to      not seen as an economic
   Los Angeles.                             development program
5. Excellent incentive program
   through state
6. Access to studios in Santa Fe and
   Albuquerque
Aircraft Related
     Labor skills in the area (A&P mechanics, structural
      assemblers, welders, electronic assemblers, sheet
      metal assemblers, vinyl assemblers and flight line
      mechanics)
     Hanger space (for lease) and access to runways

     Central to markets

     Good commercial air service

     10,000 foot runways

     Favorable tax policies/abatement
      programs/incentives (e.g. no personal property tax
      on aircraft)
     Good labor-management relations.
        Overview: Back Office Industry

 “Back Office” describes administrative functions that can be done at off-
   site company locations or outsourced to contract firms. Services include
   inbound customer call centers, outbound telemarketing centers, and
   administrative service centers (such as managing billing and human
   resources functions). With the expansion of information technology,
   “data centers” can now be included in “back office” as they frequently
   serve an administrative internal purpose and can be located anywhere.
   Banking, insurance, retailers, government, and credit agencies all have
   strong back office components.

 The Back Office industry, is large, employing around 6-7.5 million
   workers in the U.S. today. However, it is difficult to estimate this with
   accuracy because often back office workers are categorized within other
   occupations. Of all back office support sectors, data centers typically
   have the lowest employment.




                                                                         42
Overview: Back Office Industry

  Industry growth closely tracks that of the US economy. The
   trend has been to locate back office functions in countries
   like India and many companies have cut back office
   functions to save money. Software and hardware
   applications have also automated jobs and reduced
   employment. The future of the back office sector is good.
   The Bureau of Labor Statistics estimates that the industry
   will grow at a pace 2-3 times the rest of the economy. One
   reason for a positive forecast is the return of many off-
   shored back office jobs to the US.
  The return will be due to several reasons but some of it is
   because of consumer frustrations and American/Canadian
   loyalty, pressures from government and efficiencies.
  Outsourcing should continue but with less frequency and
   mostly at the lower end. Also, a new trend has emerged
   where the back office function is being completed from a
   3rd bedroom or home. (ie. Verety in Roswell and Silver City)


                                                              43
      Overview: Films and Digital Media


 The US motion picture production and distribution industry includes
  about 11,000 companies with combined annual revenue of $33 billion.
 The industry is highly concentrated: the 50 largest companies account
  for about 80 percent of industry revenue. Most companies are small
  and privately held. Most of the industry, including many independent
  firms, engages in both production and distribution; about 500 firms are
  solely distributors.
 Consumer spending drives demand. The profitability of individual
  companies depends on creativity, marketing, and distribution.
 Small companies can compete successfully by creating marketable
  movies, often for niche audiences, on low budgets. Although production
  work is labor-intensive, the value of the product results in high average
  annual industry revenue of $300,000 per employee.


                                                                        44
Questions


New Mexico Economic
Development Partnership

								
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