Hilton Jacksonville Riverfront Hotel

Jacksonville, FL

July 17 – 20, 2005

2005 Community & Economic Development Conference

American Public Power Association

Corporate

PUBLISHEDDECEMBER 2004

19th Annual

1st Annual

To read the full corporate survey go to: www.AreaDevelopment.com/FrameCorpSurvey.html

Consultants

&

Survey

Survey

SITE AND FACILITY PLANNING

AREA DEVELOPMENT

Corporate19th Annual

Survey

Results

Corporate Titles 2004 2003 2002

Chairman, President, Partner, CEO or Owner 35% 30% 28%

V.P., Treasurer, Secretary, or Other Corporate Officer

30% 42% 39%

Real Estate Mgr./Dir.; Facility Mgr./Dir.; Development Mgr./Dir.; V.P. Real Estate

23% 19% 25%

Corporate Manager 12% 9% 8%

Corporate respondent’s level of involvement in company’s location decision:

2004* 2003 2002

Final decision 50% 38% 45%

Preliminary decision 31% 31% 18%

Information Gathering 38% 30% 31%*Percentage is more than 100% due to multiple answers to question.

RESPONDENT DEMOGRAPHICS

2004

Manufacturing 74%

Warehousing/Distribution 10%

Financial Services 1%

Information Technology 3%

Professional Services 6%

Other 6%

CURRENT OPERATIONS OF RESPONDENT COMPANIES

Number of domestic facilities currently operated:

2004 2003 2002

1 25% 25% 24%

2 15% 22% 13%

3 11% 11% 11%

4 8% 4% 8%

5 OR MORE 41% 38% 44%

Number of foreign facilities currently operated worldwide:

2004 2003 2002

1 24% 22% 25%

2 11% 12% 12%

3 6% 15% 4%

4 4% 2% 2%

5 OR MORE 56% 49% 57%

FACILITY LOCATIONS

2004 2003 2002 2001

Increased number of facilities by

3 or more

10% 3% 14% 13%

Increased number of facilities by

2 or fewer

19% 13% 15% 17%

Number of facilities not changed 55% 67% 56% 52%

Decreased number of facilities by

3 or more

6% 11% 7% 8%

Decreased number of facilities by

2 or fewer

11% 6% 8% 10%

ANNUAL FACILITIES ACTIVITY

SITE SELECTION FACTORS

RANKING 2004 2003 2002 2001

1 Labor costs 96.4 89.7 89.9 91.5

2 Highway accessibility 90.2 88.9 86.6 87.9

3 Availability of skilled labor 89.1 89.0 90.9 91.6

4 State and local incentives 87.5 92.7 88.0 81.4

5 Energy availability and costs 85.8 80.8 80.9 86.4

6 Corporate tax rate 84.4 85.1 84.6 79.0

7 Occupancy or construction costs 83.6 86.3 82.4 82.3

8 Tax exemptions 83.3 86.2 88.2 82.7

9 Availability of telecommunications services 82.3 77.9 76.1 83.3

10T Environmental regulations 80.7 72.9 76.7 78.8

10T Availability of high-speed Internet access 80.7 N/A N/A N/A*All figures are the combined total percentages of the “very important” and “important” rating responses.

COMBINED RATINGS*OF 2004 FACTORS

Four Year Comparison

SITE SELECTION FACTORS

RANKING 2004 2003 2002 2001

11 Cost of land 76.6 77.3 74.0 77.3

12 Availability of land 75.7 78.1 75.2 79.7

13 Low union profile 75.5 71.6 69.4 78.0

14 Proximity to major markets 72.7 80.0 83.7 80.2

15 Right-to-work state 69.5 60.8 58.0 67.6

16 Raw materials availability 64.9 55.8 56.0 64.6

17 Availability of long-term financing 63.0 57.5 60.0 48.7

18 Proximity to suppliers 62.4 58.5 61.8 67.1

19 Availability of unskilled labor 59.4 55.8 55.1 59.5

20 Accessibility to major airport 53.8 53.1 54.0 55.4*All figures are the combined total percentages of the “very important” and “important” rating

responses.

CONTINUED –

Four Year Comparison

COMBINED RATINGS*OF 2004 FACTORS

2004 2003 2002 2001

1 year 25% 13% 18% 20%

2 years 17% 15% 16% 15%

3 years 12% 9% 13% 10%

4 years plus 6% 5% 5% 5%

No plans 40% 58% 48% 51%

GROWTH PROSPECTS

Table 1

Companies expecting to open new facilities within:

2004 2003 2002 2001

1 41% 49% 41% 44%

2 28% 25% 22% 20%

3 10% 9% 16% 13%

4 6% 6% 3% 4%

5 or more 15% 11% 18% 18%

Of companies with plans, number of new facilities they will open within the next five years:

GROWTH PROSPECTS

Table 2

2004 2003 2002 2001 2000 1999

New England 7% 7% 8% 8% 7% 5%

Middle Atlantic 12% 8% 10% 7% 10% 9%

South Atlantic 11% 8% 4% 10% 10% 11%

Mid-South 10% 12% 10% 9% 9% 11%

South 10% 9% 11% 11% 13% 12%

Midwest 10% 13% 13% 16% 14% 18%

Plains 5% 8% 6% 7% 8% 6%

Mountain 6% 5% 6% 6% 3% 4%

Southwest 10% 11% 11% 12% 12% 10%

West 14% 14% 15% 11% 12% 11%

P.R. / U.S. V.I. 5% 5% 5% 4% 3% 3%

(Percent of total projects)

DOMESTIC LOCATION TRENDS6 YEAR COMPARISON

2004 2003 2002 2001 2000 1999

Mexico 14% 10% 20% 21% 22% 28%

Caribbean 3% NR 2% 2% 4% 2%

Canada 10% 7% 13% 7% 9% 13%

South America 7% 5% 4% 12% 7% 9%

Western Europe 10% 20% 15% 16% 18% 18%

Eastern Europe 12% 7% 13% 12% 11% 3%

Middle East 4% NR 4% 2% 4% 3%

Africa 1% 2% 3% 2% 2% 2%

Asia 27% 44% 21% 21% 16% 16%

Australia 8% 2% 4% 5% 2% N/A

(Percent of total projects)

GLOBAL LOCATION TRENDS 6 YEAR COMPARISON

2004 2003 2002

YES 64% 66% 68%

NO 36% 34% 32%

2004 2003 2002

More important in your decision than other factors

28% 15% 22%

Less important than other factors 29% 38% 34%

Equally important 42% 47% 44%

AVAILABLE BUILDING FACTOR

Are available buildings at the area under consideration a factor in your location decision?

When choosing a location, would an available building be:

INTERNET USAGE

2004 2003 2002 2001 2000

Regularly 75% 72% 62% 53% 61%

Occasionally 23% 25% 35% 42% 35%

Never 2% 3% 3% 5% 4%

How often do you use the Internet to obtain business information?

USING CONSULTANTS

2004 2003 2002 2001 2000

Yes 50% 48% 47% 40% 48%

No 50% 51% 53% 60% 52%

Does your company use outside consultants when site selecting?

1st AnnualConsultantsSurvey

Results

General Manufacturing 63%

Warehousing/Distribution 17%

Computers & Peripheral Products 5%

Electrical Equipment & Components 5%

Information Technology 5%

Financial Services/Insurance 7%

Other 8%

CLIENT OPERATIONSConsultants Survey Response

Types of companies for which you have recently worked on a location or expansion project.

LOCATION PROJECTSConsultants Survey Response

Number of companies employing consultants for their location projects over the past year has:

Increased 41%

Decreased 14%

Remained the same 45%

LOCATION PROJECTSConsultants Survey Response

Of the clients who ask you to do a location search:

Most have already gathered preliminary data 32%

Most have already narrowed down the geographic area in which they wish to locate

58%

Most have already chosen several “finalist”communities 3%

Expect consultant to narrow the location search for them 22%

EMPLOYMENT NUMBERSConsultants Survey Response

In terms of their employment numbers, those companies utilizing consultants are:

Small (20 – 99 employees) 19%

Mid –Size (100 – 499 employees) 37%

Large (500 – 999 employees) 46%

Very Large (1,000 or more employees) 22%

NEW FACILITIESSide by Side Comparison of Survey Responses

Clients who expect to open new facilities plan to do so within:

Corporate Responses

Consultants Responses

1 year 41% 40%

2 years 28% 40%

3 years 20% 15%

4 years or more 11% 5%

NEW FACILITIESSide by Side Comparison of Survey Responses

The number of facilities these companies plan to open is usually:

Corporate Responses

Consultants Responses

One 41% 64%

Two 28% 26%

Three 10% 4%

Four 6% N/A

Five or more 15% 6%

NEW FACILITIESConsultants Survey Response

Most companies are choosing to establish new facilities:

In close proximity to existing ones 14%

Within the same general geographic region 39%

In varied regions of the country 46%

The foreign location projects you have worked on were slated for which of the following regions? (as a percent of total projects)

Corporate Responses

Consultants Responses

Canada 10% 23%

Caribbean 3% 3%

Mexico 14% 25%

Central America N/A 2%

South America 7% 3%

Western Europe 10% 16%

Eastern Europe 12% 7%

Middle East 4% 2%

Africa 1% 2%

Asia 27% 18%

FOREIGN LOCATION PROJECTSSide by Side Comparison of Survey Responses

Rank each of the following cost factors as to its importance to your clients:

Consultants Responses

Labor 1

Energy 2

Transportation 3

Compliance with government regulations 4

Workers’ compensation 5

Healthcare 6

Housing 7

COST FACTORSConsultants Survey Response

What is the relative importance of incentives to clients when making location decision?

Have always been of great importance 36%

Are more important now than in the past 58%

Are less important now than in the past 6%

INCENTIVES FACTORSConsultants Survey Response

Which types of incentives are most important/valuable to your clients?

Tax credits 37%

Tax exemptions 61%

Grants 34%

Loans 12%

Loan Guarantees 10%

Bonds 7%

Other 10%

INCENTIVES FACTORSConsultants Survey Response

AVAILABLE BUILING FACTORSSide by Side Comparison of Survey Responses

When choosing a location, would an immediately available building be:

Corporate Responses

Consultants Responses

More important to your client’s decision than other factors

28% 29%

Less important than other factors

29% 27%

Equally important 42% 45%

“It is pleasant to see that state and local incentives declined in importance. Executives recognize that incentives should not be the primary driver for site selection decisions.

[Incentives] cannot overcome a fundamental mismatch between a company’s needs and the characteristics of a state and community; they can only be a marginal improvement to an already sound locational fit.”

By Lynn M. Bruce, Chairperson,

Business Facility Planning Consultants, LLC (BFPC)

Norcross, GA

CONSULTANT’S ANALYSIS

“Area Development’s Corporate Survey mirrors the mix of Austin’s location strategy consulting projects, and therefore provides insights into the future of our business.

In this year’s survey there is confirmation of recent trends in Austin’s location selection projects. We see companies implementing a wider range of location strategies including expansion of existing facilities, development of new facilities, consolidation of operations, and outsourcing. Projects today are often an amalgam that involves some aspect of all these strategy alternatives.”

By Don Schjeldahl, Vice President and Director,

Facilities Location Group, The Austin Company

Cleveland, OH

CONSULTANT’S ANALYSIS

“Reasons cited for increasing the number of facilities and for the decline in the number of facilities are not mutually exclusive.

1) We see companies in a rapid growth mode, that consolidate operations in order to gain efficiencies system wide.

2) Conversely, there are companies, threatened with loss of business, that are forced to increase their number of facilities in order to meet more demanding service expectations. This is particularly true for suppliers to mass-market retailers.”

By Don Schjeldahl, Vice President and Director,

Facilities Location Group, The Austin Company

Cleveland, OH

CONSULTANT’S ANALYSIS

“In the past, incentives were never a deal breaker, but that trend is reversing for the larger projects that tend to create significant new jobs and have larger capital investments.

As the U.S. work force continues to shift to a service-based economy, many states are revamping their incentive programs to attract service-related projects. While the capital investments for the service projects ten to be lower, they oftentimes create significant new jobs with higher wages than the traditional manufacturing jobs.”

By Dean J. Uminski, Partner,

Crowe Chizek and Company, LLC

South Bend, IN

CONSULTANT’S ANALYSIS

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AREA DEVELOPMENTSITE AND FACILITY PLANNING

Area Development and FastFacility

thank you for your invitation and

attention to this presentation.

To read the full corporate survey go to: www.AreaDevelopment.com/FrameCorpSurvey.html