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…”

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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

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Life Sciences, Logistics and Advanced Manufacturing Emerge As “Hot” Industries in A Post-COVID World”

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Most Active Industries Post COVID-19

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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

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De-risking The Supply Chain: How COVID-19 Will Force A Shift In Global Distribution…”

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Impact On Global Supply Chain Strategies

0% 3%

16%

29%

52%

1 (noimpact)

2 3 4 5(majorimpact)

MEAN: 4.3

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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.”

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After The “Work From Home Experiment”…”

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Long Term Impact of Current Remote Workers

0%3%

19%

38% 34%

1 (noimpact)

2 3 4 5 (majorimpact)

MEAN: 4.0

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Site Visits During The “New Normal”

DIDI CALDWELL

Global Location Strategies

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Client involvement

earlier

Can include more sites farther into

process

Pre Covid-19

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⮚ 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

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⮚ Anticipate their questions

⮚ The Big 3 $

• Logistics

• Labor

• Energy

⮚ What are the risks?

• Schedule

• Cost

• Ability to operate

Rule #2: Think Like the Client

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⮚ 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

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Drones and VR/AR

Geospatial Platforms

Rule #4: Be a Tech Pro

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Virtual Meeting

Platforms

Site Visits IRL

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⮚ 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

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Opportunities in a RealignedGlobal Supply Chain

GREG BURKART

Duff & Phelps

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Reshoring: v 1.0 “Cost”

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Reshoring: v 2.0

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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

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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

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Policies, Programs and Yes, Incentives Needed to Win Projects

LARRY GIGERICH

Ginovus

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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

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• 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

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• 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

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• 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

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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