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Communities attracting jobs and company investment are doing it online

  • More than 90 percent of investment decision-making by corporations is taking place online.
  • Companies such as IBM and Siemens spend billions on expansion and base decisions on factors, including a community's skilled workforce and education resources.
  • Kentucky's effort to market itself online has led to $8 billion in investment in the past two years, including a 125 percent increase in investment to rural areas.

States have long competed using tax and financial incentives to attract domestic and international companies to build American communities and jobs. However, while incentives may still ultimately seal the deal, online searches are driving corporate investment decisions.

More than 90 percent of investment decisions are now made online, before a company ever reaches out to a community, according to Oklahoma University's Economic Development Institute. Using digital tools, companies can more easily search, filter and compare communities efficiently, eliminating ambiguity and cutting days or weeks out of their research process.

Siemens' Charlotte Energy Hub is one of the locations within its apprenticeship program.
Siemens' Charlotte Energy Hub is one of the locations within its apprenticeship program.

"Data is the new oil," claimed Mani Iyer, CEO of India auto manufacturing giant Mahindra at the recent SelectUSA Investment Summit. "We must explore and refine it," he said at the conference, hosted through a program of the Department of Commerce that focuses on foreign direct investment.

One of the biggest challenges in the site-selection process is researching which communities will best meet a company's requirements, now and into the future. In selecting locations for their expansions or relocations, companies examine a plethora of factors, including workforce, taxes, utility rates, transportation, logistics, supply chain and quality of life.

"Undeniably, ensuring the availability of a skilled workforce is the most important requirement for today's companies," said Frank Cuevas, vice president of real estate strategy and operations for IBM. The IBM executive often looks for a strong university pipeline to ensure the long-term viability of the communities he considers for the tech giant.

With the rapid rise in emerging technologies like automation and robotics, some workers are being displaced while at the same time a critical shortage of skilled technology workers is developing nationally. The workers whose jobs are displaced through automation need to be re-skilled to fill the upsurge in tech jobs required to keep pace with industry advances. Technical schools, community colleges and universities producing graduates with STEM and computer science degrees are increasingly sought out by corporations seeking strategic locations. Higher ed institutions that also offer partnership opportunities around R&D are especially in demand. But the money isn't just going to the coastal Ivies.

Siemens, one of the largest industrial manufacturing companies in the world, spends $1 billion a year on R&D and values its partnerships with U.S. community colleges, CEO Judith Marks said at the SelectUSA Investment Summit, where she spoke to an audience of more than 1,000 overseas companies exploring opening new or additional locations in the United States.

"Undeniably, ensuring the availability of a skilled workforce is the most important requirement for today's companies." -Frank Cuevas, vice president of real estate strategy and operations for IBM

To help ensure a skilled workforce to meet its companies' needs, Siemens also has recently expanded apprenticeship programs from four states to eight. The company also provides software design grants to community colleges in states such as Iowa, Connecticut and Massachusetts.

Industries, education and workforce are the most searched items on our platform, designed specifically for corporate site-selection research and economic development. More than 600 communities actively market themselves online to companies around the world that are using "location intelligence" as they consider investment and expansion in the United States.

States are adopting technology at every step of the way in making a better pitch to employers. Kentucky's Touchstone Energy Cooperatives have adopted sophisticated digital online tools to showcase available properties. Layering community data with the latest drone technology and CAD software, they enable companies to envision what their projects would look like from the comfort of their office or home. The results have been unprecedented, bringing more than $8 billion in new investment to the state over the past two years, including a 125 percent increase in new investment to their rural, eastern Kentucky communities.

Even in coal country, renewable energy is a selling point

Availability of sustainable power also is a major factor for companies choosing where to invest, and they pay close attention to which states produce enough capacity to reliably power their communities.

"It's important to many companies that at least a portion of their power comes from sustainable sources," said Brad Thomas, associate manager of economic development for East Kentucky Power Cooperative. EKPC is building a $40 million, 8.5-megawatt solar field to help meet the demand rural Kentucky communities are experiencing.

Adopting policies to streamline the regulatory and permitting processes that enable companies to attain speed to market also helps states better compete in today's global marketplace, winning projects and jobs that might otherwise be sent off to Mexico, India or other emerging economies.

Incentives may get all the attention in the media when a company's move is finally announced, but behind the scenes, location decisions are being driven by comprehensive data analyses as corporate teams craft long-term plans for their companies' futures.

By Calandra Cruickshank, founder and CEO of StateBook International, which provides online location intelligence data used by corporations in making expansion and investment plans.

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