COMMENTARY ON NEWS AND TRENDS FROM THOMAS & HUTTON

WHEN OPPORTUNITY KNOCKS, BE READY

More and more manufacturers from the Midwest, the West Coast, and western European countries are descending upon the Southeast.  One of the most prominent examples in the past year is Boeing’s opening of its second assembly line for its 787 jetliner in Charleston, South Carolina, expanding beyond its longtime manufacturing base in Washington state to take advantage of a variety of competitive advantages.

But while this trend is encouraging, the competition to attract business to the area is nonetheless fierce.  The aggressiveness and creativity economic development agencies and county governments are putting forth to lure manufacturers seemingly has no limits.

Just two years ago, having a certified site and permits for utilities was good enough.  Today it takes that and a whole lot more for manufacturers to willingly relocate to the region.  “Manufacturers want to know what infrastructure you already have in place and what incentives you are willing to give,” says Mitchell Bohannon, President and CEO of Thomas & Hutton.  “You have to have it all in order— for example, if your web site isn’t up to par, there’s a possibility you could get eliminated from contention without even knowing it.” Ralph Forbes, a Vice President and Regional Director with Thomas & Hutton, adds “You need a site that is in a pad-ready state to even get in the game.  Once you’re there, it boils down to incentives.   Are you going to give the prospect the land for free or are you going to grade the site for them and provide them with tax abatements?”  Forbes says manufacturers will be searching for information and you’d better be ready with the right answers.  Here are just a few examples of what they are looking for:

Site costs—“Manufacturers are always worried about cost,” says, C. Chance Raehn, Thomas & Hutton’s Industrial Group Leader.  “If they have $50 million budgeted, they don’t want surprises that take them to $70 million overnight.”  Raehn says you must know how a manufacturer’s needs will impact the costs to properly prepare a site.  “Does the manufacturer need deep foundations for their equipment or the heavy product they will produce?  Will a shallow foundation do or will it be a combination of both?  Is the water table going to be a factor? If so, how difficult and expensive will it be to develop a site that can accommodate a 70- to 80-foot deep foundation or 30- to 40-foot pits?  Are you in a flood plain or hurricane inundation zone and how will that affect costs?   You need to get all of this information as quickly as possible.  If they have three or four questions you can’t answer, they will probably scratch you off the list.”

Logistics network details “You need to be knowledgeable about what the manufacturer might be shipping,” says Kevin Shoemake, a Vice President and Charleston Regional Director at Thomas & Hutton.  “If they are producing large, heavy items or carrying product a long distance, they will likely need access to rail.  If they are shipping parts or finished products, they’ll want access to a roadway network.  How close are you to highways?  Do you have four-lane roadways?  Are there any railroad crossings that could delay shipments?” 

Special soil conditions.  “Besides insitu soils, there may be other issues you need to be aware of, such as seismic considerations that can impact the type of foundation you have to install,” says Raehn.  “If you are in an earthquake zone, you need to know how that will impact your site and the soil conditions you have.” 

Utilities availability.  Forbes asks, “While water and sewer is usually accessible, is gas and large power supply available?  In rural areas this can be more of a challenge.  In newer parks where roads have yet to be built, are the water and sewer plans already designed and permitted to serve the property?  Is the water system adequate to serve the required fire flows needed or will we need to put in pumps or ground storage tanks?”

Educational Infrastructure. “Workforce education and availability are huge factors.” says Forbes.  “How well-educated is the workforce?  Can they be trained to work at the manufacturer’s facility?  States in the Southeast are setting up programs in technical schools that can be tailored to meet the specific needs of manufacturers.  Higher education is also coming into play.  Take Mitsubishi, for example.  Recently, they located in Savannah—and a big reason was because the Savannah Branch of Georgia Tech was able to offer graduate-level degrees for their engineers.”

The competition to lure manufacturing business to the Southeast is only getting more intense.  The basic question you will be asked is, “What can you give us?”  If you want to win, the answer has to be “Whatever it takes.”

We’d like to hear from you!  Please share your feedback, impressions, and experience with us at info@thomasandhutton.com.

Competition for business in the Southeast is at an all-time high.  Whether it’s favorable tax treatment, low operations costs, or pad-ready sites, the region appears to be putting its best foot forward to win.   Education and training is a particularly competitive arena, and for good reason— industry is placing a great deal of value on it.  Below is a snapshot of education and training programs in Georgia and the Carolinas— and how those programs are working to attract and keep business. 

Georgia – Quick Start

Georgia’s Quick Start program has trained over 700,000 individuals for over 500 companies.  Quick Start is available for any business adding 15 or more jobs.  The program delivers training in classrooms, mobile labs, or directly on the plant floor and also administers an ongoing program for professional development.

“We wouldn’t be where we are today without the support we’ve gotten from the Quick Start team,” says Larry Brown, Human Resources Manager at Mitsubishi Power Systems Americas, Inc. (MPSA).  MPSA is in the process of building a new plant on a 119-acre site near Savannah that will undertake fully integrated manufacturing, from welding assembly to processing and coating.  The extremely aggressive ramp-up of the project prompted  Quick Start to design, develop, and implement a training program for Mitsubishi’s first production welders that mirrors the processes used on the job— all within a three-week time frame.  “The Savannah Area is extremely fortunate to have a jewel so professional, skilled, and supportive of companies as they come in,” Brown says.

South Carolina – readySC

readySC works with 16 colleges spread over 27 campuses to partner with incoming and existing businesses.  The program teams with a company’s subject matter experts to determine the exact training needed to support that particular business.  The training is flexible and can include hands-on simulation, computer-based virtual recreations, hand-held video, one-on-one mentoring, and traditional classroom training.

“We needed to implement the readySC training program to help us get our new hires productive in a very fast time frame, and it did 100% of that,” says Sandra Hewett, Human Resources Manager for Lexington Medical Corp.  For almost 26 years, the company has manufactured rubber components for the medical and automotive industries.  “readySC helped develop a training program according to Lexington’s manufacturing needs, including hands-on simulations with scenarios and situations like those in the plant, so that the employees knew exactly what to expect,” she adds.  “The employees came in with about two to three weeks’ worth of training that put them almost running the job from day one.  readySC even did the applicant screenings and set up applicant interviews— they took all the work out of it."

North Carolina – Workforce Development Training Center

North Carolina has formed an education network across the state that works to lower the cost of recruiting, screening, and training of employees.  Some of the network members include the North Carolina Department of Commerce, local workforce development boards, the North Carolina Community College System, the North Carolina Employment Security Commission (ESC), and a variety of other related public and private organizations.  Their mission is to provide high-quality, affordable, easily accessible training, and professional development services for the state’s workforce development system.
 
Recent industry growth in North Carolina includes Caterpillar’s construction of a new facility for the machining, assembly, testing, and painting of axle assemblies for large mining machines.  According to Hans Haefeli, Vice President of Caterpillar’s Advanced Components & Systems Division, “This location will improve our supply chain efficiency and, as a result, allows us to better serve our customers more effectively while reducing operating costs.”  Commenting on the Caterpillar opening, North Carolina Governor Beverly Perdue stressed the importance of North Carolina’s custom training programs in convincing globally competitive companies to do business in the state.

The Southeast aggressively markets its advantages to lure business to the region, and the good news is that it’s working.  But supply still outweighs demand and will continue to do so until the economy rights itself.  In the meantime, fully leverage your state’s advantages and make sure your site is ready to go— and you’ll get your fair share of business.