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Doing Deals In The COVID-19 Environment
MODERATOR: Rick Weddle
PANELISTS: Jay Garner, Didi Caldwell, Greg Burkart, Larry Gigerich
June 3, 2020
JAY GARNER
Garner Economics LLC
Chair, Site Selectors Guild
2
RICK WEDDLE
President & CEO,
Site Selectors Guild
3
In the past three years alone, Guild members facilitated the announced creation of approximately 165,000 jobs and $90 billion in announced capital investment.”
4
Today’s Agenda
• COVID-19 Guild Member Survey Overview• Jay Garner, Garner Economics LLC
• Site Visits During the “New Normal”• Didi Caldwell, Global Location Strategies
•Opportunities in a Realigned Global Supply Chain• Greg Burkart, Duff & Phelps
• Policies, Programs and Yes, Incentives Needed to Win Projects• Larry Gigerich, Ginovus
•Q&A with Our Panelists
5
Summary of Guild Member Survey on COVID-19
JAY GARNER
Garner Economics LLC
Chair, Site Selectors Guild
7
We should absolutely avoid social distancing - at least in the literal sense of the word. Physical distancing is all-required. Maintaining social contacts in these troublesome times is critical to strengthening interpersonal links and trust.”
8
We are busy! And are still counting on our EDO friends to assist us with our project inquiries currently when we reach out. We will all cut each other some slack and give grace…”
9
Current Environment
0%
0%
3%
45%
52%
Companies are cancelling siteselection projects
Companies are consolidatingfacilities rather than expanding…
Other
Companies are moving forwardwith site selection projects
Companies are pausing siteselection projects
10
Predicted Return of Activity
11
Life Sciences, Logistics and Advanced Manufacturing Emerge As “Hot” Industries in A Post-COVID World”
12
Most Active Industries Post COVID-19
13
Most Active Functions Post COVID-19
6%
9%
9%
13%
16%
69%
69%
Other
Headquarters
Technical Support
R & D
Back office/ support operations (i.e.…
Production
Warehousing
14
Recommended Priorities for EDOs
15* “Other” responses include workforce retention/connecting unemployed workers to jobs; revisiting target industries; communication on new initiatives and restoring international suppliers
2.9
3.7
3.8
4.7
5.0
Business attraction (focusing oncompany expansion and new business…
Product improvement (investing inimprovements that will make your…
Workforce development/Talentattraction (building a skilled…
Other*
Business retention (helping yourexisting companies weather the storm)
What Do Site Selectors Want to Hear?
• 31% - Updates on Market Conditions (i.e., announcements/closures)
• 27% - New Approaches/Resources to Support Major Employers
during COVID-19
• 19% - Updates on Incentives (i.e. changes in compliance, new etc.)
• 15% - Information on Sites, Buildings and Infrastructure
• 15% - Training (re-skilling) and Labor Force Information
16
De-risking The Supply Chain: How COVID-19 Will Force A Shift In Global Distribution…”
17
Impact On Global Supply Chain Strategies
0% 3%
16%
29%
52%
1 (noimpact)
2 3 4 5(majorimpact)
MEAN: 4.3
18
Impact On Global Supply Chain Strategies
“Companies have been focused for decades on lowest cost scenarios; growth in China and SE Asia is a great example. Now, the quest for lowest cost will become more balanced with reduction in risk.”
“The trend toward regionalization of supply chains was well underway before COVID-19…it will now accelerate. So will China plus 1 or 2 and reshoring to North America. Companies will carry more safety stock and extend their supplier networks.”
19
After The “Work From Home Experiment”…”
20
Long Term Impact of Current Remote Workers
0%3%
19%
38% 34%
1 (noimpact)
2 3 4 5 (majorimpact)
MEAN: 4.0
21
Site Visits During The “New Normal”
DIDI CALDWELL
Global Location Strategies
23
Client involvement
earlier
Can include more sites farther into
process
Pre Covid-19
24
⮚ GLS started using virtual site visits in 2012
More cost efficient
Significantly faster
Can achieve 80% of goals as in-person
visits
Virtual Site Visits
25https://www.youtube.com/watch?v=8mNd_ey0DPQ
Can achieve about 80% of what we can do on the ground
Rule #1: Align Your Team
26
⮚ Anticipate their questions
⮚ The Big 3 $
• Logistics
• Labor
• Energy
⮚ What are the risks?
• Schedule
• Cost
• Ability to operate
Rule #2: Think Like the Client
27
⮚ In a way that’s meaningful to them
⮚ Start big
⮚ Follow the agenda and have a seamless way to move from topic to topic
Rule #3: Tell Your Story
28
Drones and VR/AR
Geospatial Platforms
Rule #4: Be a Tech Pro
29
Virtual Meeting
Platforms
Site Visits IRL
30
⮚ Be prepared to accommodate a new normal
⮚ Invest in enhanced geospatial capabilities
⮚ Drone videos for sites
⮚ Communications devices for multiple vehicles and/or socially distanced site visits
⮚ Pursue virtual reality opportunities
⮚ Create custom logo facemasks for your clients
Reallocate Funds Now
31
Opportunities in a RealignedGlobal Supply Chain
GREG BURKART
Duff & Phelps
33
Reshoring: v 1.0 “Cost”
34
Reshoring: v 2.0
35
Reshoring v 2.0 “Opportunities”
IndustryN
A
Cost (low labor, high
logistics, rank 0-2)
Level of Automation (0-
2)
Innovation / IP
Rank (0-2)
Product Quality /
Safety Rank (0-2)
Essential Business
Rank (0-2)Total
Other transportation equipmento
t1 2 2 2 2 1.8
Navigational, measuring,
electromedical, and control
instruments
1 2 2 2 2 1.8
Basic chemicals 2 1 1 2 2 1.6Semiconductor and other electronic
components0 2 2 2 2 1.6
Medical equipment and supplies 0 2 2 2 2 1.6
Communications equipment 1 2 2 1 2 1.6
Aerospace products and parts 1 1 2 2 2 1.6Automobiles, bodies, trailers, and
parts
3
3
6
1 2 2 2 1 1.6
36
Reshoring v 2.0 “Tipping Points”
Industry
N
A
I
Cost (low labor, high
logistics, rank 0-2)
Level of Automation (0-
2)
Innovation / IP
Rank (0-2)
Product Quality /
Safety Rank (0-2)
Essential Business
Rank (0-2)Total
Petroleum and coal products 2 2 0 1 2 1.4Electrical equipment, appliances,
and components1 1 2 1 2 1.4
Soap, cleaning compound, and toilet
preparation2 0 1 2 2 1.4
Machinery 1 1 2 1 2 1.4
Pharmaceuticals and medicines 1 0 2 2 2 1.4
Food 1 0 1 2 2 1.2
Pesticide, fertilizer, and ag chemicals 2 1 0 1 2 1.2
Primary metals 2 2 0 0 2 1.2
Plastics and rubber products 2 0 1 1 2 1.2
Paint, coating and adhesives3
22 1 1 1 1 1.2
Beverage and tobacco products 2 0 0 2 1 1.0
37
Policies, Programs and Yes, Incentives Needed to Win Projects
LARRY GIGERICH
Ginovus
39
A Framework for Flattening the Curve as shared by the Brookings Institute
The need to simultaneously flatten the pandemic, recession, and financial distress curves
Policymakers should be guided by three general principles:
POLICIES
⮚ Do not be bound by convention.• Governments across the world have to do what it takes, fast, and in a coordinated
way. It is important for the policies to be multidimensional and bold.
⮚ Pay special attention to sequencing.• Governments need to move swiftly in this regard, but should also remain cognizant of
the fiscal and economic realities, leaving as much fiscal space as possible for the next phase.
⮚ Distinguish between the terms of the trade-offs.• But over the medium to long term, there is no trade-off between the aggressiveness of
health interventions and economic activity.
40https://www.brookings.edu/blog/future-development/2020/04/20/a-policy-framework-for-mitigating-the-economic-impact-of-covid-19/
PROGRAMS
41
• The economic fallout of COVID-19 and likely recession will cause policy
makers to develop ways to both support existing businesses and attract new
companies to their areas
• Key areas of focus should be; access to capital, job training, infrastructure and
entrepreneurial development
• Declining local and state tax revenues, and the need to provide economic
development incentives to support projects will be a source of friction in
some locations
• Economic development organizations need to implement short and long-term
strategies to be successful
INCENTIVES
42
• Incentives that offset project and/or operating costs will continue to be
important for companies moving forward with site selection projects
• Accountability and transparency for incentive programs will be even more
important in a challenging economic environment
• Re-negotiation of existing public-private partnerships may be necessary in
response to current economic conditions that will adversely impact
business over the next few years
• Open and honest feedback during the incentive negotiation process will
be even more important as time moves forward
KEY TAKEAWAYS
43
• The locations that are prepared to move forward quickly and competently
will be best positioned for short and long-term success
• Economic development professionals and governmental officials will need
to strongly advocate the importance of investing in job training,
infrastructure, access to capital and other strategic areas when pressured
to cut funding in response to short-term declines in tax revenue
• Do not try to be all things to all people – focus on your existing businesses
and leverageable assets to drive economic growth
• Bold and aggressive leadership is needed more now than ever
44
Doing Deals In The COVID-19 Environment
MODERATOR: Rick Weddle
PANELISTS: Jay Garner, Didi Caldwell, Greg Burkart, Larry Gigerich
June 3, 2020
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