Atlas & ica fdi webinar7sept11 [alleen lezen]

How Your Community Is (Or Isn't) Being Evaluated

1

(Or Isn't) Being Evaluated for Foreign Direct Investment (FDI)

Your Hosts

2

Ben WrightCEO, Atlas Advertising

[email protected]

www.twitter.com/atlasad

Douglas van den BergheManaging Director

Investment Consulting Associates

[email protected]

Guillermo MazierBusiness Development,

Atlas Advertising

[email protected]/atlasad

About Atlas

Atlas Advertising helps economic developers reach national and international prospect and site selection audiences. We deliver branding, website development, GIS mapping, research, social media, and creative services professionally and with a staff experienced in economic development. Unlike firms with little or no economic development experience, Atlas Advertising uses a proven mix of economic development marketing tactics that generate interest from site selection audiences.

Atlas Advertising is led by a former economic development practitioner and has worked with 70+ different economic development clients in nearly 40 US states and six countries.

3

with 70+ different economic development clients in nearly 40 US states and six countries. Our approach and experience means that our campaigns generate an average of three to ten times the response of other campaigns.

Featured clients:

– State of Ohio

– Nogales, Mexico

– City of San Francisco

– Greater Phoenix Economic Council

– Greater Omaha Economic Development Partnership

– Webster City, Iowa

About Investment Consulting Associates

Investment Consulting Associates (ICA) is an independent adviser to companies optimizing their global supply chains and location portfolios. ICA also supports governments in building and enhancing their Foreign Direct Investment (FDI) and economic development strategies. Through our global partner network and multi-disciplinary approach we can assist our clients with an integrated package of service offerings.

Our business philosophy is to utilize smart and efficient software solutions in providing dedicated and tailored consulting services. LocationSelector.com and

4

providing dedicated and tailored consulting services. LocationSelector.com and ICAincentives.com are two of our flagship web based products for companies and governments assessing and benchmarking the competitiveness of global business locations and optimizing their incentive potential. This unique service offering differentiates Investment Consulting Associates from traditional management consulting firms who are active in the field of investment promotion and corporate site selection services.

Many of our clients are ranked among the world’s 500 largest companies, but we also advise midsized businesses, nonprofit organizations, and government agencies. Our global track record supports our mission to become world leader in FDI advisory.

Download the slides, listen to

the video, continue the dialogue

• Continue the Conversation:

– Follow us on Twitter: www.twitter.com/AtlasAd

– Tweet questions using hashtag #AskAtlas

– Join Next Gen Economic Development Marketers

LinkedIn Group

5

LinkedIn Group

• View and share the slides with your colleagues

(available now):

http://bit.ly/fQB6hC

• View and share the video with your colleagues (Will

be posted later this week): http://bit.ly/fjc3Ex

Introducing the Atlas / ICA

FDI Master Plan.

Work with Atlas and ICA jointly to create your future

FDI master plan. An FDI master plan includes:– A road map for short, medium and long term FDI success for your

community

– Best practices for servicing global business location decision makers

6

– An assessment of current strategy and target markets

– Recommendations for target investor countries/regions, based on your target industry profile

– Platform to benchmarking your community with other communities/countries around the world

– FDI marketing and communications plan

– Tips for partnering with regions or states

Audience Question:

Have you worked on projects that

7

Have you worked on projects that

are expansions or relocations of

foreign owned companies this

year?

Outline

1. Why FDI should be an important part of your strategy today

2. Challenges you face currently in FDI attraction

3. Trends in FDI in the United States

8

3. Trends in FDI in the United States

4. How foreign-owned companies evaluate communities today: Current case studies

5. Q+A

Why FDI should be an important part of

9

Why FDI should be an important part of

your strategy today

White House Touts Growing Foreign Direct

10

Growing Foreign Direct Investment In The U.S.“At a time where we need to use every tool in our toolbox to continue to put Americans back to work and grow the economy here at home, promoting foreign direct investment is an important opportunity to accelerate our economic recovery,” President Obama said in a written statement.

Labor Availability and Quality Peak in the United States

FDI is growing again, and

projected to grow

11

Source: UNCTAD FDI Database

Further the US is the global leader in inflows and outflows

12

Audience Question:

What are your objectives for FDI

13

What are your objectives for FDI

in the coming year?

Challenges you face

14

Challenges you face

The federal government plays a

limited role in FDI promotion

15

Foreign owned companies know just a handful of US destinations

• New York

• San Francisco

• Los Angeles

• Dallas

16

• Dallas

• Miami

There can be a significant language barrier for foreign owned companies

17

Comparing individual cities within countries can be difficult

18

Audience Question:

What tactics have you found to be

19

What tactics have you found to be

successful in overcoming these

challenges in your community?

Trends in Foreign Direct Investment

20

Trends in Foreign Direct Investment

Global FDI trends – regional differentiation

• 20 Years ago – shift from Bi-Polar to Tri-Polar according

first World Investment Report

• Currently – shift from Tri-Polar to Emerging Markets (EM)

• Role of European Union in world outward FDI stock

decreased (from 85% in 1990 to 70% currently)

21

decreased (from 85% in 1990 to 70% currently)

• Japan no longer qualifies as a Tri-Polar “pole” (at least 10%

FDI global outflows)

• The Share of the top 20 EM’s in Global FDI Stock rose from

6% to approximately 15% between 1990 – 2010

• The position of the United States will be challenged by

the EM’s, but there are also positive signs

Implications for the US

• US Competitiveness for FDI “Revival of the US

Manufacturing Powerhouse”

• Repatriation and Re-shoring of US companies and

business activities

22

business activities

• Market Seeking: Traditional markets EU still of

importance

• Changing Target Markets – Increased importance of

Emerging Markets especially for Greenfield

investments

Anecdotal evidence – examples of re-shoring activities in the US

• Ford Motor Company and Wham-O (the makers of the Frisbee®) are

cited as having already brought production back to the U.S.

• Germany-based Automaker Quaprotek USA invests $22 Million in a

new Tennessee facility that brings over 120 jobs to the area.

• Presair, a manufacturer north of New York City, will return production

23

• Presair, a manufacturer north of New York City, will return production

of its switches from China by this Fall, 2011. The reasons included long

lead times for product and the tying up of capital needed for expansion.

While Presair will see its costs jump 8% with the move back to the

U.S., its CEO Art Blumenthal believes those higher costs will

evaporate with the rising costs of manufacturing in Asia.

• NCR plans to begin a second production shift, which will result in a

total of 800 new (re-shored) jobs to Columbus, Georgia.

Volatile FDI trend pattern

24

Growing importance of EM countries for Greenfield investments in the US

25

Source: Organization for International Investment 2011

Top countries by US Greenfield Investment Job Creation – and Industry Sector Analysis

26

Source: Organization for International Investment 2011

Global FDI drivers and trends – a future forecast

Exploiting different factor endowments

Supply chain optimization

Market seeking Resource seeking Efficiency seeking Strategic-asset seeking

Enhancing synergies (i.e.

technology, marketing channels and

management expertise

Raw materials,Energy sources

following customers,suppliers or competitors abroad

27

1994

$256 billion2007 record

$1,833 billion

Relocation/

Expansions/

Offshore/sourcing CRISISCRISIS2013

$1,8 billion

Audience Question:

What country or countries are you

28

What country or countries are you

most aggressively targeting?

How foreign owned companies evaluate

29

How foreign owned companies evaluate

locations: A recent case study

Site visitsJournals

NewspapersBrochures

Trade Shows

City

City

1990 location selection process

SIX MONTHS

City

30

City

City

City

City

City

CityCity

2011 location selection process

85% of initial search = Internet

EIGHT WEEKS

Detailed info

31

Services

Corporate investment routemap

Implementation

Client

• Input cost model

Phase 2Phase 1 Phase 3 Phase 4 Phase 5• Resources for

site visits• Define real estate

objectives and accommodation needs

• Define project and goals• Business requirements

• Project assumptions

Strategic Assessment Location Screening, modeling & benchmarking

Cost comparison Community Evaluations

32

Consultant

• Prepare site visits• Prepare discussions

with relevant governments and service providers

• Incentive negotiations• Real estate transaction and

acquisition support

Real estate supportSite visitsProject definition & understanding of

strategy

Comparison of costsAnalysis and comparison of locations

• Set up cost model• Cost differentials

between locations

• Determine geographic scope

• Selection of location factors

• Weighting location criteria

• Data gathering• Build model for location

analysis• Present rankings of

locations• Sensitivity analysis• Exploration of

incentives

A New Generation in FDI Advisory

Project details – Case Study

company ABC

• Company “Bulk and Specialty” has taken over parts of company Y operation in

US State I.

• Operations and machinery may have to be relocated (factory and warehouse).

• The company is exploring opportunities to set up a new manufacturing plant in

other parts of the US, Mexico or possibly China. The machinery and equipment

of the new acquired firm in US State I will be transported to the new location.

The estimated investment is:

Phase 1

33

The estimated investment is:

– Land €3,000.000

– Building €6,500.000

– Machinery & equipment to be moved from an existing site €3.500.000

– New machinery & equipment €2.500.000

– Employees 50-75 (fte) with 2-3 shifts

• The main question company “Bulk and Specialty” is facing: Should we keep the

operation in US State I, or is it worthwhile to relocate within the US, Mexico or

even China

Case study: company ABC

Business drivers and challenges – Chemical Industry

• High impact of energy of and feedstock costs

• Limited growth potential in current US State I due to

saturated markets and demographic impacts

Phase 1

34

saturated markets and demographic impacts

• Migration of more and more customer-industries to low-cost

countries

• Growing commoditization

• New competitors from Asia and Middle East: pressure on

margins

• Increasing regulations

Scenario approach

1. Base case scenario: stay in US State I

2. Supply chain effective scenario: Relocate to Mid-West

Illinois – Missouri – Iowa - Ohio

3. Labor cost effective scenario: Relocate to Mexico

Phase 1

35

3. Labor cost effective scenario: Relocate to Mexico

Mexico

4. Overseas offshore scenario

China

A New Generation in FDI Advisory

Location factor groups

BUSINESS ENVIRONMENT

FACTORS

LABOR COSTS FACTORS

REAL ESTATE FACTORS

TAXATION & CUSTOMS

GRANTS & INCENTIVES

The following location factor groups were incorporated in the analysis:

Phase 2

36

LABOR AVAILABILITY

LABOR PRODUCTIVITY

ACCESSIBILITY FACTORS

COUNTRY REPUTATION

SUPPLY CHAIN MANAGEMENT

GRANTS & INCENTIVES

QUALITY OF LIFE

ENVIRONMENTAL COSTS

EVALUATION

BUSINESS RISKS

ELECTRICAL POWER

Benchmarking techniques –LocationSelector.com

37

Financial due diligence

(All Amounts in € 000's)

CountryRegion Location A Location B Location C Location D Location E L ocation F

Markup 23.564.146 23.469.997 23.467.757 23.783.983 23.788.567 23.288.296 Cost of Sales

Raw Materials 18.000.000 18.000.000 18.000.000 18.000.000 18.000.000 18.000.000 Chemical Duties/Tariffs 304.000 304.000 304.000 304.000 304.000 190.000 Material Transportation 2.400.000 2.400.000 2.400.000 2.700.000 2.700.000 2.300.000 Electricity 72.120 72.120 72.120 84.360 84.360 93.600 Salaries & Wages 244.710 173.546 171.853 163.066 166.531 189.000 Payroll Tax & Employee Benefits 63.624 45.122 44.682 42.397 43.298 49.140

Depreciation Expense 1.357.590 1.357.590 1.357.590 1.357.590 1.357.590 1.357.590 Total Cost of Sales 22.442.044 22.352.378 22.350.245 22.651.412 22.655.778 22.179.330

Phase 3

Logistics

Duties

Tariffs

Utilities

38

Gross Margin 1.122.102 1.117.619 1.117.512 1.132.571 1.132.789 1.108.966 Taxes 269.305 268.229 268.203 271.817 271.869 266.152

Net Income 852.798 849.390 849.309 860.754 860.920 842.815

Total Expenses (Incl. Taxes) 22.711.348 22.620.606 2 2.618.447 22.923.229 22.927.648 22.445.482 (All Amounts in €000's)

CountryMetric Location A Location B Location C Location D Location E L ocation FNet Present Value 2.933 2.920 2.920 2.964 2.965 2.895

Rank 3 4 5 2 1 6

Internal Rate of Return 19,4% 19,4% 19,4% 19,5% 19,5% 19, 3%Rank 3 4 5 2 1 6

Total P&L Expenses 22.711 22.621 22.618 22.923 22.928 22. 445Rank 4 3 2 5 6 1

Total Net Income 853 849 849 861 861 843Rank 3 4 5 2 1 6

Utilities

Salaries

Depreciation

Local Taxes

Region / State Scoreboard Analyses

39

Real estate – Deal making

Brownfield solutions

40

Greenfield solutions

Build to Suit on Industrial Parks

Integrated story: where corporates meet IPA’s

Phase 1

Implementation

Phase 2 Phase 3 Phase 4 Phase 5

Strategic AssessmentLocation Screening,

modeling & benchmarking

Cost comparison Community Evaluations

41

• Information & Sales Packs• Investment plans• Policies and incentives• Procedures requirements• Progress and achievements• Create awareness

Image Building

• Advertizing and PR• Information & Marketing• Missions & Events• Company targeting• Company visits• Follow-up

Lead Generation and Targeting • Information provision

• Assistance with contacts• One-stop-shop services• Assessment of manpower,,

Infrastructure service needs• Follow-up

Investor Servicing

• Continued “account executive attention”

• “Ombudsman” role and trouble-shooting function

• Follow-up on manpower, infrastructure, service needs

Aftercare and Policy Advocacy

The most frequently evaluated

42

The most frequently evaluated

communities in the U.S. for FDI are…

Most frequent considered communities for FDI

European / Asian companies tend to initially focus first on those metropolitan areas where they can find the following multipliers:

• Presence of local accountant and bank branches they already work with

• Similar expat communities - Metropolitan quality of life

• Presence of Universities where young foreign entrepreneurs study

• Flight Connectivity and Geographical proximity (East coast vs. West coast)

43

• Flight Connectivity and Geographical proximity (East coast vs. West coast)

• Mental Map – Usual suspects

European companies

New York

Chicago

Boston

Atlanta

San Francisco

Asian companies

Los Angeles

San Francisco

Chicago

New York

Most frequent considered communities for FDI

• Second tier metropolitan areas located in Central and Mid-

West States are less frequent mentioned

– Kansas City

– Cincinnati

– St. Louis

44

– St. Louis

– Memphis

– Minneapolis

• Yet, these cities offer in many different cases an excellent

location proposition with cost and risk levels well balanced

Q + A

45

Q + A

The Atlas / ICA FDI

Master Plan.

Work with Atlas and ICA jointly to create your future

FDI master plan. An FDI master plan includes:– A road map for short, medium and long term FDI success for your

community

– Best practices for servicing global business location decision makers

46

– An assessment of current strategy and target markets

– Recommendations for target investor countries/regions, based on your target industry profile

– Benchmarking your community with other communities/countries around the world

– FDI marketing and communications plan

– Tips for partnering with regions or states

Coming to IEDC

in Charlotte?

To reserve your

47

To reserve your

place, simply type

“RSVP” into your

chat box.

Contact Information

Contact information:

Gustav Mahlerplein 109 - 111

Contact information:

2601 Blake Street, Suite 301

48

Amsterdam, 1082 MS

Contact: Douglas van den berghe

t: +31 (0)207946081

[email protected]

www.ic-associates.com

Denver, CO 80205

Contact: Ben Wright

t: 303.292.3300 x 210

[email protected]

www.Atlas-Advertising.com

LinkedIn Profile | LinkedIn Group | Twitter | Blog | Slidespace