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© Copyright IBM Corporation 2008
IBM Global Business ServicesPlant Location International
MKT1: Improving private sector land access
Site Availability -Perspective from the investor
Roel SpeeIBM – Plant Location InternationalWashington D.C., 9 March 2009
WWW.IBM.COM/GBS/PLI2
IBM – Plant Location International
© Copyright IBM Corporation 2008
Content
Role of Site Availability in Location Decision Making
Key Concerns of Companies related to Site Availability
Role of Sites in Economic Development
Practical tips for site marketing
WWW.IBM.COM/GBS/PLI3
IBM – Plant Location International
© Copyright IBM Corporation 2008
1. Define Project Drivers and SpecificationsCreate Longlist
1. Define Project Drivers and SpecificationsCreate Longlist
2. Analyze Long-list of Candidate Locations Identify Shortlist
2. Analyze Long-list of Candidate Locations Identify Shortlist
4. Site Search & NegotiationsSelect Preferred Sites and
Start Negotiations
4. Site Search & NegotiationsSelect Preferred Sites and
Start Negotiations
5. Implementation5. Implementation
3. Evaluate Short-listed Locations Select Preferred Location
3. Evaluate Short-listed Locations Select Preferred Location
De-select less attractive locations:- In theory: many location options- High level, quick analysis- Based on desk research- Focus on key cost & quality drivers- Confidential- High level business case
Select best location solution:- Detailed analysis of many factors- Forward looking- Field work to understand dynamics and identify pitfalls
- Assess implementation risks- Interviews and negotiations- Full business case- Few locations only (short list)
Typical steps in location selection process
WWW.IBM.COM/GBS/PLI4
IBM – Plant Location International
© Copyright IBM Corporation 2008
Strategic drivers for location choice
- Access to new market, Optimize cost efficiency, Access to Resources,
Consolidation of operations, etc
Strategy has impact on location requirements and their relative importance
The most critical requirements determine the initial longlist of locations
- Examples: Market/client proximity, Cost levels, Stability, Safety, …
Site availability in most cases is not a critical factor for country/region
selection, but becomes very important towards the final decision making
Strategic investment drivers and location criteria
WWW.IBM.COM/GBS/PLI5
IBM – Plant Location International
© Copyright IBM Corporation 2008
In international location selection processes, location factors vary throughout the process
Macro
Stability/riskMarket
Workforce/SkillsInfrastructure
Costs
SitesIncentives
Quality of Life
Micro
1. Define Project Drivers and SpecificationsCreate Longlist
1. Define Project Drivers and SpecificationsCreate Longlist
2. Analyze Long-list of Candidate Locations Identify Shortlist
2. Analyze Long-list of Candidate Locations Identify Shortlist
4. Site Search & NegotiationsSelect Preferred Sites and
Start Negotiations
4. Site Search & NegotiationsSelect Preferred Sites and
Start Negotiations
5. Implementation5. Implementation
3. Evaluate Short-listed Locations Select Preferred Location
3. Evaluate Short-listed Locations Select Preferred Location
Macro
Countries
Regions
Sites
Micro
WWW.IBM.COM/GBS/PLI6
IBM – Plant Location International
© Copyright IBM Corporation 2008
However: need for exceptional sites can turn site availability into critical factor, and impact scope of location assessment
Macro
SitesStability/risk
Market
SitesWorkforce/Skills
InfrastructureCosts
SitesIncentives
Quality of Life
Micro
1. Define Project Drivers and Specifications
Create Longlist of Sites
1. Define Project Drivers and Specifications
Create Longlist of Sites
2. Analyze Long-list of Candidate SitesIdentify Shortlist of Sites
2. Analyze Long-list of Candidate SitesIdentify Shortlist of Sites
4. NegotiationsFinal Decision
4. NegotiationsFinal Decision
5. Implementation5. Implementation
3. Evaluate Short-listed Sites Select Preferred Site
3. Evaluate Short-listed Sites Select Preferred Site
Macro
Sites
Sites
Micro
WWW.IBM.COM/GBS/PLI7
IBM – Plant Location International
© Copyright IBM Corporation 2008
Key concerns for investors when evaluating sites (1)
OwnershipMany different owners creates uncertainty about availability and timing for an investorProtection of ownership is a key concern
Zoning Incorrect or incomplete zoning creates uncertainty
Timing / availabilityLand has to be ‘shovel ready’
PollutionLand has to be pollution freeDon’t expect investors (your clients) to clean the land
WWW.IBM.COM/GBS/PLI8
IBM – Plant Location International
© Copyright IBM Corporation 2008
Key concerns for investors when evaluating sites (2)
Transport access to the landFrom major transport routes to the local plot
Utility connectionsLack of proper connections can cause huge delays, and extra investment costs
Permits required: for construction, discharges (environmental), etc.Complexity and bureaucracy are to be avoided
Time taken for procedures ‘Speed of implementation’ can be a decisive factor (see next page)
NOTE: Speed will become very important when investment picks up in near future
WWW.IBM.COM/GBS/PLI9
IBM – Plant Location International
© Copyright IBM Corporation 2008
Duration of getting construction permits
Median duration (days) that local experts indicate is necessary to deal with construction permits
Source : World Bank Doing Business, 2009
34 4084 93 100 107 128 144
243336 350
411
601
704
1179
1426
South
Kore
a
United S
tate
s
Tunisi
a
Swazila
nd
Kenya
Mau
ritius
Ethiopia
United K
ingdom
Romania
China
Niger
ia
Brazil
Leso
tho
Russia
Haiti
Zimba
bwe
Best practice
WWW.IBM.COM/GBS/PLI10
IBM – Plant Location International
© Copyright IBM Corporation 2008
Best practice countries in registering and protecting property
Botswana
Brazil
Bulgaria
Burkina Faso
Canada
China
Denmark
India
Malaysia
Morocco
Singapore
South Africa
Spain United States
Zambia
Angola
Bangladesh
Belgium
Czech Republic
Ethiopia
Germany
Hungary
J apan
KenyaMexico
Netherlands
Nigeria
Philippines
Poland
Russian Federation
Senegal
Sweden
Tanzania
Uganda
Ukraine
UAE
United Kingdom
Vietnam
0
1
2
3
4
5
6
7
8
9
10
0 1 2 3 4 5 6 7 8 9 10
Registering Property - Score 0-10
Pro
tect
ion
of P
rope
rty
Rig
hts
- S
core
0-1
0
The Registering Property component is a combined PLI Score using data on the number of days and the number of procedures it takes to register property, taken from the World Bank’s Doing Business 2009. The Protection of Property Rights scores are taken from the Fraser Institute’s Economic Freedom Index.
WWW.IBM.COM/GBS/PLI11
IBM – Plant Location International
© Copyright IBM Corporation 2008
Site availability is one of many factors impacting attractiveness of location
Tailored site development strategies can steer economic development in
preferred directions, by focusing on:
- Targeted sectors: tailoring sites to specific sectoral needs (for example: logistics,
heavy industry, etc)
- Targeted regions within your country: stimulating job creation in regions where
need is highest
Site development must be aligned with overall economic development
strategy
Land is a ‘Must Have’, but land alone does not win investment projects
Role of land in economic development
WWW.IBM.COM/GBS/PLI12
IBM – Plant Location International
© Copyright IBM Corporation 2008
Attractiveness of business environments is determined by many factors considered by corporate executives
Regulatoryframework
WorkforceInfrastructure
Real estate
Naturaldisaster
Knowledge & innovation
Taxation
Incentives
Businesscosts Living
environment
Business Environment
Attractiveness
WWW.IBM.COM/GBS/PLI13
IBM – Plant Location International
© Copyright IBM Corporation 2008
Example of improvement of competitive position as result of short term real estate improvement actions
As is Improved site access and availability
Electronics
Belgrade
Bucharest
Nis
Skopje
Zagreb
Novi Sad
3,50
3,70
3,90
4,10
4,30
4,50
4,70
4,90
5,10
5,30
5,50
65758595105115125135
Operating cost index (average = 100)
Qu
alit
ativ
e sc
ore
Electronics
Belgrade
Bucharest
Nis
Skopje
Zagreb
Novi Sad
3,50
3,70
3,90
4,10
4,30
4,50
4,70
4,90
5,10
5,30
5,50
65758595105115125135145
Operating cost index (average = 100)
Qu
alit
ativ
e sc
ore
Relative cost-quality attractiveness of Serbian locations for electronics industry, before and after recommended improvement of site availability and accessibility
WWW.IBM.COM/GBS/PLI14
IBM – Plant Location International
© Copyright IBM Corporation 2008
Some final practical tips for marketing sites to investors
Use maps to show geography and accessibility: before, during and after site visit
Use logical business routes when bringing investors to sites (know where the site is!!!)
Don’t propose/show sites which are clearly not available yet
Show all individual important features; present site from different viewpoints
Give the investor time to absorb impressions
Be prepared to explain activities of neighbour companies
Be very careful with offering brownfield sites. Don’t expect investors to solve your environmental problems!
© Copyright IBM Corporation 2008
IBM Global Business ServicesPlant Location International
Plant Location International (PLI)
Global Location Strategies
A service of IBM Global Business Services
Web-site: www.ibm.com/gbs/pli
Roel SpeeGlobal Leader Phone: +32 475 915 832Office: +32 2 416 59 28E-mail: [email protected]
Contact Details
© Copyright IBM Corporation 2008
IBM Global Business ServicesPlant Location International
Annex
Introduction toIBM – Plant Location International
9 March 2009
WWW.IBM.COM/GBS/PLI17
IBM – Plant Location International
© Copyright IBM Corporation 2008
PLI is a global leader in Global Location Strategies, supporting two groups of clients
1. Corporate Executives• Support with location strategies: where should we operate our business units?
Defining global footprints, screening countries/regions, local site selection, incentives negotiations
• Across all industries• Covering all relevant business functions: manufacturing, distribution, R&D, HQs, shared
services, contact centers, data centers, etc IBM-PLI is a global market leading dedicated corporate location consultant!
2. Economic Development Organizations (frequently Public Sector)
• Support with efforts to attract and retain business
Improvement of business environment
Inward investment strategies
• Based on our unique insight in the investor’s perspective
• Services do not include investment attraction (conflict of interest)!
IBM-PLI is unique in advising EDOs on the basis of its unrivalled corporate experience!
WWW.IBM.COM/GBS/PLI18
IBM – Plant Location International
© Copyright IBM Corporation 2008
Brief history
1960 Plant Location International (PLI) founded as independent consulting firm in Brussels, Belgium. Focus on location advisory services
1989 PLI fully acquired by Price Waterhouse, becomes PW-PLI
1996 US-team established to serve Americas marketBrussels based PLI serves as key practice for EMEA and Asia-Pacific
1998 Price Waterhouse merges with Coopers & Lybrand: PwC-PLI
2002 PwC Consulting acquired by IBM:
IBM Global Business Services becomes new home of IBM-PLI
2006 Global operating model agreed with IBM global management:
PLI transforms into virtual globally integrated operation
2009 PLI: Global team of 25 dedicated location consultants, supported by network of thousands of industry experts and local strategy consultants around the world
WWW.IBM.COM/GBS/PLI19
IBM – Plant Location International
© Copyright IBM Corporation 2008
Global resources of Plant Location International
Americas Asia-PacificEMEA
Center for EconomicDevelopment Research
Global PLI hub
Dedicated PLI resources
Research back office
Local PLI coordinators
WWW.IBM.COM/GBS/PLI20
IBM – Plant Location International
© Copyright IBM Corporation 2008
Plant Location International Example of services to corporate clients
Strategic location planning: strategic advice on which geographic areas provide opportunities for locating or consolidating various business functions in alignment with the overall business strategy
Definition of key location criteria: helping corporate executives define and prioritize the key criteria for assessing locations for specific business functions.
Screening of multiple location options: assessing and ranking locations on key cost and quality criteria to quickly identify the most interesting candidate locations for investment.
Review and validation of preferred location options: validation or second opinion of a preferred location to assess its suitability based on specific project parameters.
Site or facility search: researching and validating available sites and buildings meeting the client’s project specifications once a preferred country/region has been identified.
Consolidation of existing sites: projections and assessment of location impact of consolidation scenarios; assisting with determining best site for future consolidation.
Disposal of obsolete sites and facilities: defining and implementing an approach to identify target groups of companies, develop marketing materials, research possible new users.
Advice on financial support: analysis of financial incentives available to corporations in countries around the world: amounts, conditions, application, etc.
Monitoring business environments: constant screening of dynamics in areas of interest such as to provide early advice on upcoming opportunities and threats.
Strategy workshops: workshops to optimize company’s own location strategy efforts based on latest insight in market trends and location dynamics, as well as data sources and evaluation techniques.
WWW.IBM.COM/GBS/PLI21
IBM – Plant Location International
© Copyright IBM Corporation 2008
Examples of corporate clients for location advisory services* Multiple assignments, only most recent names used
Coca ColaCompaq Computer*Concert (AT&T/BT)Corning*Daikin*DHL*DelphiDeutsche Bank*DiageoDisneyDow Chemical*Dresdner BankDSMDu PontDuty Free Shoppers*Eastman ChemicalEaton Eli LillyEMCEnergizerEngelhardEricssonEscoExxonMobil*FMCFokker AESPFord Motor*Franklin MintGAPGATXGeneral Electric*General InstrumentsGeneral Motors*
Gillette*GlaxoSmithKline*Goodyear/Dunlop*GuardianHaagen-DazsHeinz*HenkelHerculesHertzHewlett-Packard*HitachiHoechstHolcim*HoogovensHSBCIBM*ICIICON*IdemitsuIFFInbevIndspecIngersoll RandIntelInternational PaperJames Hardie*John Deere*Johnson & Johnson*JP MorganChase*JVCKBCKelloggKimberly Clark*
Knauf InsulationKodak*Kohler*KoneKraft FoodsLA GearLevel 3Levi StraussLittle TikesLloydsLufthansaMaster FoodsMattel*Medtronic*Merck*MeritorMicrosoftMitsubishiMobil PlasticsMonsanto*MotorolaNashuaNational Instruments*National SemiconductorNECNestlé*Netscape*Nike*NissanNKT CablesNorske SkogNortelNovartis*
ABN-AMRO*AGFA*AlcanAlza*American ExpressAmgenAnheuser-BuschAstraZeneca*Avaya*Aventis*Avery DennisonAvis*AvnetBATBaxter*Bayer*Becton Dickinson*BekaertBF Goodrich*BiogenBMWBOC InternationalBose*Boston Scientific*BP Amoco*Bristol Myers Squibb*BrunswickCadbury SchweppesCampbell Foods*CaterpillarChiquitaCitibank*Claire’s
NuonOrica Mining*Owens OllinoisParamountPepsico*Phillip Morris*Philips*Procter & Gamble*PricewaterhouseCoopers*Prudential InvestmentQuintilesRadnorRalston PurinaRaychemReader’s DigestReckitt & ColmanReuters*Rohm & HaasRothmansRubbermaidSabenaSamsung*SAS AirlinesSaville SystemsScheringScott PaperShell*Shire PharmaceuticalsSiemens*Sigma CoatingsSKFSmiths FoodSocieté Général
Sony*Standard Chartered Bank*StorkSun ElectricSun MicrosystemsSwissairTandemTDKTechnicolorTeliaTelxonTetra Pak*Texas InstrumentsToshibaToyota*TPG GroupUBMUnilever*Union CarbideUnited TechnologiesUPM-KymmeneVaillantVisteonVolvoWarner LambertWellmanWestvacoWhirlpoolWL GoreWoolworthWordPerfectXeroxXircom
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IBM – Plant Location International
© Copyright IBM Corporation 2008
Plant Location International Example of services to economic development organizations Competitive location benchmarking analysis - provide detailed tailor made analysis of the attractiveness of
regions/countries as investment locations relative to key competitors, covering a range of sectors and business functions, and based on typical investor’s requirements
Investment trend analysis - provide comprehensive investment trend analysis for countries and regions across the world using IBM’s Global Investment Locations Database (GILD) - a unique database that records investment project announcements around the world on an ongoing basis
Investment promotion strategies - define the objectives for inward investment promotion, setting out priorities and targets for sector/business functions
Economic impact analysis - analyze impact of policies and initiatives on the attractiveness of specific locations to investors, coupled with broader economic impact assessments for investments
Marketing strategies and tools - develop marketing tools and initiatives based on investor needs, including the unique IBM-PLI Location Benchmarking Tool to validate your location’s proposition and market this to prospective investors using their own location selection criteria and techniques
Analysis and advice on Economic Development Organization (EDO) effectiveness - analyze and provide advice on structure, organization and operations of EDOs, based on international best practices
Training – train economic development staff on the corporate location decision process, how to undertake investment promotion activities and initiatives, and deal with investors
Strategy workshops – conduct workshops to review investment promotion strategies and provide advice on trends and upcoming changes
Location Intelligence On Demand – deliver ongoing support services, providing prompt responses to urgent requests for market or location intelligence
WWW.IBM.COM/GBS/PLI23
IBM – Plant Location International
© Copyright IBM Corporation 2008
Examples inward investment & economic development clients * Multiple assignmentsAlbania Foreign Investment Promotion CenterAntilles Government of CuraçaoAustralia Invest Australia*
City and Port of BrisbaneDSRD New South Wales°*Invest Victoria*
Austria Austrian Business Agency*Vienna International Airport
Azerbadjan Port of BakuBelgium Brussels Airport
Flanders Foreign Investment Office*Office for Foreign Investm. Wallonia*Port of Antwerp*
Canada Invdustry CanadaInvest Canada/DFAIT*Montreal InternationalProvince of QuebecToronto
Cape Verde PromexCaribbean Carribean Inward Investment OfficeChina Xi’an Pharma Park, ShaanxiCosta Rica CINDE*Czech Rep. CzechInvest*Denmark Copenhagen Capacity*
Invest in Denmark*Djibouti Government of DjiboutiEstonia Port of TallinnEthiopia EIA Ethiopian Investment AuthorityFrance Ile de la Réunion
Ile de France, ParisInvest in France/Datar*Nord-Pas de Calais Developpement*Port of Le Havre*
Germany Frankfurt AirportHWF HamburgIIC (former East German States)*Nordrhein Westfalen*Saxony Economic Development Corp*
Spain PromoMadrid*Suriname Government of SurinameSweden ISA Invest in Sweden Agency*Switzerland Canton of SchaffhausenTanzania Tanzania Investment CentreThailand Industrial Authority Esate of ThailandTunisia Government of TunisiaTrinidad Tobago Port Authority of Trinidad & TobagoUAE Jebel Ali Port Authority, DubaiUK:- England Advantage West Midlands*
Creative SheffieldEast Midlands Development Agency*MIDAS Manchester*North West Development Agency*UK Trade & Investment*
- Scotland Edinburgh IFCScottish Development International*
- Northern Ireland Invest Northern Ireland*- Wales Welsh Development Agency*USA Commonwealth of Pennsylvania*
Greater Jamaica, NYGreater Phoenix Economic Council*Maryland DBED*Michigan EDCNew York StateResearch Triangle Park, NC*State of FloridaState of IndianaState of LouisianaTexasWorkforce CommissionToledo, OH
International Asian Development Bank*organisations COMESA
European Commission*FIAS/World Bank/MIGA*OECD*UNCTAD*WAIPA*
Ghana Ghana Investment PromotionGuadeloupe Port of GuadeloupeHong Kong ITC Hong KongHungary ITD Hungary*India Government of Gujarat SEZ
Positra SEZ Ireland Enterprise Ireland*
IDA Ireland*Israel Israeli FEPZItaly PROMOS Milan
Sviluppo Italia*Kuwait KuwaitLuxembourg Ministry of TransportMalaysia Port KlangMexico Industrial Port Development BoardMorocco Government of MoroccoNamibia Namibia Investment CentreNetherlands Airport Amsterdam-Schiphol*
Airport Maastricht-AachenNetherlands Foreign Investm.Agency*Ports of Amsterdam and Rotterdam
New Zealand Auckland City CouncilInvestment New Zealand
Philippines CagayanPoland Industrial Development Agency
PAIZ Polish Inward Investment Agency*Special Economic Zones (various)
Portugal AIP Regio NorteEmbassy of Portugal/ICEP*
Puerto Rico Instituto de FomentoRussia Moscow
St. PetersburgSaudi Arabia APEC
General Investment AuthoritySingapore Ministry of Finance
PSA Port of Singapore Authority*Singapore Econ. Development Board*
South Africa COEGA*Trade and Investment South Africa
WWW.IBM.COM/GBS/PLI24
IBM – Plant Location International
© Copyright IBM Corporation 2008
Tools and Techniques GILD – Global Investment Locations Database
Monitors investment project announcements globally on a daily basis
Includes ‘greenfield’ projects & major expansions
Data on each project includes company, sector, sub-sector, activity, origin, location, jobs, sites, incentives, markets being served etc.
Allows trend analysis by activity and (sub-)sector and competitive analysis by location (country, region, community)
Indicates where peer companies have decided to set up similar facilities
Job creationSpecialization by function, 2006
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Global
India
China
Israe
l
Philipp
ines
Viet N
am
Other
R&D
Services
Production
India29%
China23%
Viet Nam23%
Malaysia8%
Thailand2%
Other6%Philippines
1%
Pakistan4%
Singapore4%
Share of estimated production jobs in Asia, 2006GILD is a unique investment
tracking database developed by Plant Location International:
IBM Global Location Trends reports
WWW.IBM.COM/GBS/PLI25
IBM – Plant Location International
© Copyright IBM Corporation 2008
IBM-PLI’s Location Benchmarking Tool: a powerful marketing tool (web based and pc based) convincing investors of a location’s unique advantages