The Southeastern states have been getting a lot of press lately for securing major projects from manufacturers around the globe. Many foreign automakers with U.S. production have a least one major facility in the area, along with countless suppliers, and small-to-medium enterprises across all industries.
Alabama recently announced that Airbus would be building its first American production plant near Mobile, which will employ 1,000 people. In light of those successes, Manufacturing.net got on the phone with Bill Cronin, the Vice President of Econ Development for Invest Atlanta, an economic development firm for the major metropolitan area, to discuss why the Southeast has been so successful as of late, and what else they have to offer.
M.net: What kinds of relationships do you have with manufacturers in the area?
Cronin: The manufacturers that we’re already working with are most likely going to be in one of our industrial parks. Most of them, when they’re working with us, are looking for ways they can remove obstacles that prevent them from operating as efficiently as they can, which can be something as easy as permitting — to make sure the government acts at the speed of business, and not at the speed of government. But now, we’re also taking them to find additional markets through export trade missions, and helping them grow.
It’s not just advocacy — these are tools that manufacturers can use. I think the most important thing we bring to the table is being able to sit with them and get an understanding of their business, not just from a physical sense of what they want their projects to look like, but also how they’re impacted financially. We want to find ways to mitigate the spikes on their balance sheets.
That’s why the Southeast has been doing so well in attracting manufacturers — we’re very conscious of the cost environment. It’s not just low cost of living and low cost of production. It equates to not only profitability of the company, but also buying power for the employees of those companies.
M.net: What are some of the incentives that Invest Atlanta offers?
Cronin: If you create at least two new jobs over the lowest wage in the state, you get up to $3,500 in tax credits per job, up to five years. Those are statutory. The incentives that we work with are generally discretionary or statutory incentives, and most of them are going to be performance-based. It’s not just a free cash deal.
We don’t come with a pre-prescribed, off-the-shelf, canned package of incentives. What we found is much more useful to a company is to find what their needs are, even if they’re things that are not typically associated with government. We want to know all of the different inputs that are required to make a project successful — that way we can find other ways to offset costs, or even use our existing networks to prescribe a solution.
You hear nightmare stories about how a manufacturer met with their local economic development organization and they didn’t get to use any of the credits because they didn’t pay taxes that year. We want to make sure the program we’re proposing is useful. That’s the way a manufacturer would want to do business, and that’s the way economic developers should be doing business. Unfortunately, a lot of them just show up with whatever they have on the shelf, and it’s “take it or leave it” — not a lot of creativity, not a lot of real understanding of what the needs of the company are.
M.net: Speaking of those “nightmare” stories — have you had trouble with manufacturers being nervous about getting involved in the “red tape” of a economic development authority?
Cronin: You hear that occasionally. I think times have changed drastically. Companies that survived the last four years are willing to be much more creative in the ways they finance their deals and with whom they partner. When the commercial banks, for all intents and purposes, quit lending money and providing money to manufacturers, it put companies in a position where they had to look elsewhere. Government became a much more viable option.
I think companies, over time, have learned to come to government and economic development agencies further down the road, when they have their ducks in a row. Usually, they’re pretty well educated, so that by the time they get to us, they know what they’re asking for. The times have changed, and we are seeing a lot more willingness for people to work with economic development organizations or government. From my perspective, if we’re giving a company the ability to create lots and lots of profits, then reporting or sending a letter or two about where they’re at with their job creation — it’s the least they can do.
M.net: What is it about the Southeast, or Georgia in particular, that attracts manufacturers from around the globe?
Cronin: First of all, a low cost of doing business is going to be one of the main things, if you’re looking at it from a fiscal standpoint. You’ve got a growing workforce here that’s highly skilled and highly trained.
Those skillsets and that “creative class” reside here in downtownAtlanta. Manufacturers can tap into that R&D community and grow their business. I think that manufacturing, because it’s become much more innovative and more technical, is going to be looking for that “creative class.” If you want to tap into that, you have to find the pockets where they are. Quality of life does make a bigger difference for most manufacturers, especially when they need to retain talent, because talent has become that much more important.
You’ve also got geography.Atlantais right smack in the middle of the fastest-growing consumer market in theUnited States. If you’re manufacturing something that is geared toward the consumer market, right away you’re in your customer base, and you’re able to save on that post-production cost. We’ve found that the supply chain is now a very critical part of the average business cycle.
In my opinion, the best companies are those that ask these questions first when they’re making the decision to relocate. Those are the companies that really understand what it’s going to take to make them successful. A box is a box is a box. You can buy a building in a piece of land anywhere in theUnited States, for all intents and purposes, but it’s the workforce that makes a difference — especially when it relates to direct foreign investment.
M.net: How can a manufacturer get involved with economic development authority?
First of all, they shouldn’t be afraid to reach out to economic development organizations. One of the things they can do to ensure a mutual benefit in a relationship like that is to talk about suppliers and customers. The economic development agency is going to be anxious to try and get your suppliers near to you. As a manufacturer, of course, you’re going to save a lot of money by having anything — especially anything that has heavy transportation costs — near to you.
For most economic development organizations, their measures are generally going to be jobs and capital investment. And it may also be the company wants to expand, and they know they’re going to expand with 2-3 jobs a year for 10 years, so the economic development organization in that area is going to be really interested. It may sound small compared to some of these major manufacturing outfits, but when they’re counting jobs as their metrics, you better believe that those projects that are 10, 15 or 30 jobs are very important to the cities or the economic development organizations.
M.net: Where is the relationship between your agency and the area manufacturers going to change in the next few years?
Competitiveness is going to be the major issue in this 21st Century economy. Everyone is in a jobs crisis in the United States. Competitiveness is not just going to be for communities, cities, states, or nations, but just like it is with business. I see that businesses and communities need to start working together from that competitiveness aspect. What was always true for the private sector will now become that much more obvious for the government and municipalities sector — that they are not out there in a vacuum creating jobs and creating capital investment. They are competing in a 21st Century world economy.
To get more information about the incentives that Invest Atlanta can offer to manufacturers, visit www.investatlanta.com.
