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By Business Facilities Staff
From the July/August 2012 issue
This year’s Rankings Report is the most comprehensive package we’ve produced to date. For our eighth annual report, we’ve created nearly 50 categories in which we evaluate the leading states, metros and international players. As always, our results are skewed towards growth potential; we tried to avoid a frozen snapshot of last year’s cold statistics—we want you to know who deserves the “up” arrow, and which locations will be home to tomorrow’s growth.
While we always take special care to make sure our rankings are a forward-looking analysis, we aren’t immune to the reality that everyone wants to know the same thing about today’s sputtering economy: Where are the jobs? So, in several of our more statistics-oriented categories, this year we have given extra credit for positive industry-specific employment numbers.
A good example of this is our annual Biotechnology Strength ranking. We’ve broken the overall biotech ranking into several categories in this year’s report, including Biotechnology Strength/Employment. There are many up-and-comers who have established a foothold in the burgeoning biotech sector, but we felt it was time to give the traditional powerhouses their due as perennial job-creators.
It seems like everyone is getting into the rankings game these days. We welcome the competition and especially the proliferation of rankings-oriented data sources in nearly every industrial sector. This has enabled us to track everything from Most Business Start-Ups to Most Wind Projects Under Construction. We will continue to refine our categories and methodology to give you the most useful information relating to your specific areas of interest. For example, this year we supplemented our traditional Best Education Climate ranking with a scorecard of the states that emerged out front in the fierce competition for federal Race to the Top education funding.
As this issue went to press, we observed with interest a nasty spat between a location that wasn’t pleased with it’s low standing in a state business ranking and the national media outlet that produced this ranking. This kerfuffle reinforced our annual decision to limit our results to the top 10 (or top five) locations in each category.
Our primary goal in this report (and every annual rankings evaluation) is to throw our spotlight on the Best of the Best. We think everyone has better things to do than to argue over who placed 40th or 41st. And so, without further ado, here is our 8th Annual Rankings Report.
Texas Rules The Roost In Best Business Climate
A perennial frontrunner for our annual Best Business Climate designation, Texas has been ranked first or second in this flagship category for each of the past five years. In our 2012 report, the Lone Star State has reclaimed the top spot in our most important business benchmark.
In addition to this year’s first-place finish, Texas also was our top-ranked state for Best Business Climate in 2009 and 2010.
“Texas has doubled down on its business-friendly tradition. The Lone Star State has been able to match and then exceed pre-Recession employment levels faster than any state in the nation,” said Business Facilities Editor in Chief, Jack Rogers.
A surging population in Texas has yielded a cost-effective workforce that is being deployed in an increasingly diversified industrial base.
“Texas has laid out the welcome mat for a variety of high-tech growth sectors, including semiconductors, biotechnology and alternative energy,” Rogers noted. “When you factor in a resurgent oil and gas industry and new manufacturing, you get an economic powerhouse that can compete against all comers.”
In addition to growing high-tech businesses, Texas has been aggressive in courting traditional manufacturers. A recent success was equipment giant Caterpillar’s decision to move its hydraulics and engine manufacturing to the state.
Texas edged out Utah, last year’s top-ranked state for Best Business Climate. With mega-incentives for big-ticket projects and low business taxes, Utah has succeeded in convincing tech giants including Adobe and eBay to put major operations in the Beehive State.
Rounding out the top five in Best Business Climate are Virginia, which is luring major government contractors to relocate their headquarters to the state (Northrop made the move, and VA is courting Lockheed); Florida, where Gov. Rick Scott has eliminated hundreds of regulations he says are impeding business expansions and new facilities in the Sunshine State; and Louisiana, which has married an unrivaled workforce training program with a bevy of new incentives that are spurring hot new growth sectors, including digital media.
Our Best Business Climate ranking evaluates an amalgamation of our key rankings results (including education climate, workforce training/availability, cost of labor, infrastructure, utility costs, credit rating and business tax climate). We give extra credit to states that have enacted and executed business-friendly policies, including new incentives, an improved business tax climate, and expanded workforce training initiatives. We also factor in the recent success of economic development efforts geared to bring in new industry segments and facilities.
Louisiana has surged to the top of this year’s Economic Growth Potential ranking, edging out last year’s number one, Virginia.
“With a diverse and well-executed economic development strategy, a workforce training program that sets the standard for the nation and a full menu of innovative incentives, Louisiana is marching forward on a path to prosperity,” Rogers said.
Louisiana moved into the top slot in BF’s coveted Economic Growth Potential ranking after finishing a close second in 2011. The Bayou State also moved into fifth place in our Best Business Climate ranking, up from seventh last year.
“Business climate and growth potential go hand in hand,” Rogers said. “Louisiana has made it clear to businesses looking to expand, relocate or establish new facilities that it is well prepared to meet their needs.”
Louisiana has buttressed its traditional industries, including natural gas and steel production, with an aggressive strategy that has successfully established new growth sectors in the state, including a red-hot digital media industry which boasts cutting-edge studios in New Orleans, Baton Rouge and Shreveport.
Virginia maintained its leadership in our Economic Growth Potential category with a second-place finish. As the Commonwealth continues to rack up an impressive tally of corporate headquarters relocations, Virginia also has established itself as a high-tech hub with its new Commonwealth Center for Advanced Manufacturing, anchored by jet-engine maker Rolls Royce.
Moving into third place in our Economic Growth Potential ranking is oil-rich North Dakota, which is racing to maximize the expanding bonanza from development of the Bakken oilfield. The burgeoning Bakken production has made North Dakota a national job-growth leader. North Dakota also topped our Employment Leaders and Credit Quality categories.
In our evaluation of Economic Growth Potential, we consider the state’s business climate, availability of skilled workers, incentives and education climate, among other criteria. We also evaluate the state’s economic development strategy, giving extra credit for diversity of new growth sectors and coordination between business, higher education and government agencies. The potential of primary industries to generate secondary relocations/new facilities and indirect jobs also is considered.
Tennessee Makes It Three In A Row As Automotive King
For an unprecedented third consecutive year, Tennessee has been named the top-ranked state for Automotive Manufacturing Strength in our 2012 rankings.
“Fueled by a national revival in the auto sector, Tennessee’s assembly lines and supplier networks continue to get bigger and better,” Rogers said.
“VW is ramping up production at its new plant in Chattanooga, Nissan is rolling out the all-electric Leaf in Smyrna and General Motors has given a new mission to the former Saturn plant in Spring Hill. The Volunteer State is putting the pedal to the metal as our undisputed automotive king,” he added.
Tennessee was followed in our annual automotive sector assessment by Kentucky, which surged from last year’s fourth place finish to the no. 2 slot in this highly competitive category.
“Kentucky’s long-term deal with Ford—which is investing more than $1 billion in its Louisville facilities —has cemented a century-long relationship that stretches back to the Model T,” Rogers noted. “When you factor in the ongoing expansion of Toyota’s huge assembly complex in Georgetown, GM’s commitment to build next-generation Corvettes in Kentucky and a new advanced battery tech center, you have the makings of a 21st century automotive powerhouse.”
Kentucky’s renewed partnership with Ford was the Gold Award winner of BF’s 2011 Economic Development Deal of the Year competition.
Rounding out the top five in BF’s Automotive Manufacturing Strength ranking are South Carolina, home to BMW’s North American manufacturing hub; Georgia, which rapidly is developing a supplier network to support Kia’s new plant in West Point, GA; and a resurgent Michigan, which has supplemented the boost it got from the federal auto bailout with a burgeoning effort to produce lithium batteries and all-electric vehicles.
Business Facilities’ Automotive Manufacturing Strength ranking places a heavy emphasis on growth potential as well as current production statistics. Labor and utility costs, workforce availability and the size of regional supplier networks are factored into the ranking, as is a state’s commitment to the development of advanced automotive technologies. Long-term plans by major automakers to ramp up production and assemble new vehicles at specific locations also are part of the growth potential assessment.
Rogers noted that this year’s automotive rankings reflect an impressive across-the-board revival in the U.S. automotive industry.
“The obituaries that were written for the U.S. auto industry were premature. This recovery is being led by manufacturing that is now globally competitive on a cost-effective basis —and the manufacturing surge is strongest in our revived automotive sector, which is hitting on all cylinders,” Rogers said.
“The United States has risen from the canvas and reclaimed its automotive heavyweight championship. When you factor in the demand from emerging overseas markets in Asia and South America, the U.S. is poised to dominate once again wherever the rubber meets the road,” he added.
Louisiana Marches In As Digital Media Leader
With innovative incentives and Oscar-worthy talent, Louisiana is the top-ranked state in our new Digital Media Leaders category.
“Louisiana’s rich culture in creativity, film, music and television has been a natural fit for the development of an emerging digital media and technology industry,” Rogers said.
“The activity in this red-hot growth sector is statewide, with new studios and projects emerging on what seems like a monthly basis in digital media hubs including New Orleans, Baton Rouge and Shreveport,” he added.
The digital media surge in Louisiana has drawn major players who already boast a bounty of impressive awards, including two Academy Awards at this year’s Oscars. The gold statuettes went to Moonbot Studios in Shreveport for its animated short subject, The Fantastic Flying Books of Mr. Morris Lessmore, and Pixomondo, whose work on the film Hugo won the Oscar for Best Visual Effects. Pixomondo announced earlier this year it is investing $1.2 million to open shop in Baton Rouge’s Celtic Media Centre.
Louisiana edged out another emerging digital media powerhouse, Utah, and outpaced perennial media centers New York and California to take the top ranking in BF’s Digital Media Leaders category.
Louisiana’s digital media industry is one of the fastest-growing in the nation. The state has almost 19,000 skilled software developers and more than 100,000 professionals with a skill-set conducive to digital media or software development. In addition, its information sector, including software publishing and telecommunications, has experienced the second-fastest growth rate in the country since June 2009.
Rogers noted that New Orleans’ robust comeback from the Hurricane Katrina disaster has been driven by an aggressive economic development strategy focused on new growth sectors. “New Orleans is undergoing an economic renaissance—and digital media is playing an integral role,” he said.
Companies drawn to Louisiana include Firebrand Games, a critically acclaimed video game development company currently working on titles for the Nintendo DS and Wii. New Orleans has attracted GE Capital’s new technology office, adding hundreds of jobs to the local workforce. GE chose New Orleans after a site selection process that scrutinized hundreds of locations.
Known as the “Creative Capital of the South,” Baton Rouge has attracted development studios such as Electronic Arts, Crawfish Games, Nerjyzed Entertainment and BitRaider MMO.
Our Digital Media Leaders ranking is calculated based upon an evaluation of available incentives, recent project activity, cluster growth potential and initiatives/job creation in digital animation, video games, graphics and film sectors.
California, Washington, Texas Soar In Aerospace
For the past few years, we have issued a Metro ranking for our annual evaluation of aerospace/defense manufacturing leaders. However, recent developments have made it difficult to get an accurate fix on the metro pecking order in this critical employment sector, as jobs continue to shift between aerospace hubs in Wichita, Charleston, Seattle and Oklahoma City. Therefore, in our 2012 report we have refocused this category as a state ranking.
An in-depth analysis prepared by Deloitte and commissioned by the Aerospace Industries Association (AIA), released in March, contains a treasure trove of data providing a clear picture of which states are dominating the aerospace/defense sector. Deloitte’s findings are derived from publicly available national- and state-level data from sources such as the Bureau of Labor Statistics (BLS), National Census Bureau, Bureau of Economic Analysis (BEA) and company financial filings with the Securities and Exchange Commission (SEC).
Southern California, Washington’s Puget Sound and the Dallas/Ft. Worth area continue to be the nation’s leading regional aerospace/defense hubs, so it comes as no surprise that California, Washington and Texas are our top three states in this category, respectively, with Washington and the Lone Star State nearly tied for second.
More than 162,000 workers are directly employed in the aerospace/defense industries in the Golden State. Washington, with 93,925 workings in this sector, edges out Texas’s total of 87,871. Florida and Arizona round out the top five.
According to the Deloitte report, Washington actually has higher employment in aerospace products and parts manufacturing than its giant neighbor to the south, but California leads in several other subsectors. The survey also reveals that Pennsylvania leads in military land vehicle manufacturing, while Texas produces the most artillery ammo.
Deloitte estimates that the U.S. aerospace and defense industry directly employed 1.05 million workers in 2010. These workers received $84.2 billion in wages and paid $15.4 billion in Federal individual income taxes, and $1.9 billion in state individual income taxes. The U.S. government employs an estimated 845,198 aerospace and defense skilled workers at armed forces maintenance and repair depots, the National Aeronautics and Space Administration, the Federal Aviation Administration and other defense agencies including Defense Advanced Research Projects Agency (DARPA) and civilians working at the Department of Defense.
Deloitte found the industry has an estimated indirect and induced employment of 2.36 jobs for every 1 directly employed. The industry also has a large contribution to the U.S. economy, responsible for fully 2.23 percent of GDP and 7.0 percent of exports in 2010. With direct, indirect and induced employment of 3.53 million jobs spread over the entire U.S., as well as contributing an estimated $37.8 billion in tax collections benefiting local communities, state treasury coffers and the federal government, this industry is central to the U.S. economy and our largest net exporter, contributing $89.6 billion to U.S. exports, with a large portion made up of commercial aircraft bound for foreign carriers.
LA’s Faststart, Georgia’s Quick Start Tops In Training
As in 2011, innovative programs in Louisiana and Georgia are the cream of the crop among Workforce Training Leaders in our 2012 State Rankings Report. Workforce training programs in Louisiana and Georgia again finished first and second, respectively, in this category, which has grown in importance as the need for skilled workers has become an urgent priority across the U.S.
“Louisiana’s FastStart continues to be the gold standard for workforce training programs, which increasingly are an essential element in successful economic development projects,” Rogers said. “Businesses relocating to Louisiana can be certain they will have strong support from the state in acquiring and training skilled workers.”
Rounding out the top five in our Workforce Training Leaders category are Florida, New Mexico and North Carolina.
To date, FastStart has completed nearly 70 major projects for expanding companies in Louisiana. The projects touch a variety of sectors, from agribusiness to digital media software development and corporate headquarters expansions. Often, the program becomes the key reason why companies choose to expand or relocate in Louisiana rather than another state or nation.
FastStart, which is run by Louisiana Economic Development (LED), was launched in 2008 to help attract and develop workers for new projects. One of its first successes was helping convince Gardner Denver Inc. to not close its Thomas Products Division plant in Louisiana, but rather to expand it by moving production from Wisconsin.
LED FastStart became the key factor in convincing Gardner Denver to keep its Louisiana plant open, retaining 70 jobs and adding 200 new positions.
As part of a strategic incentive package, FastStart hosted job fairs and open houses in Monroe to build interest in the new jobs, and the FastStart team traveled to Wisconsin, where they performed key business analysis—defining behavior and competency requirements for the new jobs—and documented essential steps needed for a seamless transition from Wisconsin to Louisiana.
Caterpillar, Baxter International, Outdoor Network LLC, NCR, Kia Motors and ZF Industries all have identified Georgia’s Quick Start program as a key reason for choosing to locate their facilities in the state.
Quick Start provides intensive, specified training to give companies the skilled employees they need to open quickly and run efficiently. These services come at no cost to qualified new companies or those adding new jobs or technology. The basic rule is that manufacturers can receive Quick Start benefits if they create at least 15 jobs over a 12-month period.
California, NJ, PA Are Biotech Behemoths
As previously indicated, we decided to break out Biotechnology Strength ranking into Employment, Specialization and Emerging Biotech Hubs categories.
California—the “birthplace of biotech” and home to nearly a third of the industry—dominates the employment ranking, followed by perennial pharmaceuticals powerhouse New Jersey.
New Jersey recently increased its research and development tax credit program from 50 percent to 100 percent, providing technology companies additional yield on their investments in NJ. Gov. Chris Christie was named BIO’s Governor of the Year at this year’s international BIO convention in Boston.
“Despite increasing competition from emerging high-tech hubs across the nation, New Jersey has maintained its long-time status as a biotechnology powerhouse and set in place a diversified strategy that will ensure continued growth in this critical sector moving forward,” Rogers said.
“The Garden State has supplemented its traditional leadership in pharmaceuticals with strong specialized employment across nearly all biotech sub sectors. A biotech ‘brain belt’ in the middle of the state offers an unmatched pool of skilled workers. This talent-packed workforce, along with generous R&D incentives, will keep New Jersey in the top tier for years to come.”
Since 2010, New Jersey has assisted nearly 100 life sciences companies, including 30 as retention or expansion projects. In addition to creating and supporting over 8,000 jobs, these retention and expansion projects will inject an estimated $507 million of private investment into NJ’s economy.
New Jersey’s life sciences sector employs more than 122,000 people, which is nearly four percent of the state’s private sector employment as of the third quarter of 2011. In 2010, New Jersey’s life sciences employers paid more than $14 billion in wages, or 8.1 percent of the state’s total private sector wages. The average annual wage was $114,757, which was 106 percent higher than the state’s total private sector average annual wage of $55,736 (NJ also is one of our top-ranked states in Per Capita Income). Pharmaceutical companies comprised 43.8 percent of New Jersey’s life science establishments in 2010. Biotechnology companies account for 34.6 percent and medical device companies account for 21.6 percent.
The top five in our Biotechnology Strength—Employment category is rounded out by Pennsylvania, Illinois and Texas, respectively.
Every two years, the BIO/Battelle report provides us with a repository of rich data that we use to develop our biotech rankings. The Specialization Leaders ranking in our 2012 report is drawn from BIO/Battelle’s finding that New Jersey and Indiana stand alone as the only states with specialized employment clusters in four of the five biotech sub sectors tracked by the industry report.
As always, we also have kept our eyes peeled for tomorrow’s biotech leaders. Our Emerging Biotech Hubs categories include a bevy of states that have made a strategic investment in developing biotech as a critical growth sector. This year’s leaders among the emerging players are Utah, Virginia, Arizona, Iowa and Kansas.
2012 Alternative Energy Industry Leader: Iowa
Every year, we continue to recalibrate our flagship Alternative Energy Leaders category to factor in a diverse range of state initiatives and the increased availability of reliable data tracking the growth across all renewable sectors, including wind, solar, bioenergy and hydropower.
Our top-ranked state in alt energy for 2012 is Iowa, which has established itself as the nation’s wind power manufacturing hub with a cluster of global leaders in the production of wind-turbine components.
Iowa ranked number two in the nation in our Installed Wind Power Capacity (4,419 megawatts) and Wind Power as a Percentage of Overall Energy (18.8 percent) categories. The Hawkeye State also was the top-ranked state in our Biofuels Leaders—Ethanol category.
Iowa became one of the first states in the nation to adopt a renewable energy standard in 1983, and since then the wind power industry in Iowa has generated almost $5 billion in investment, including the 440 MW Rolling Hills Wind Farm in the southwestern part of the state.
The Environmental Law and Policy Center’s (ELPC) analysis shows 80 companies that are part of the Iowa wind industry supply chain, including seven international wind turbine manufacturers. Iowa’s wind industry supports more than 2,300 manufacturing jobs.
Several factors have helped Iowa become a leading wind energy generator and component manufacturer, including, business development resources and tax incentives. Iowa has made a significant commitment to developing and retaining renewable energy jobs through the Office of Energy Independence and its $100-million Iowa Power Fund, which is designed to encourage research and development and innovation. The Iowa Values Fund also is a funding source for projects focused on job creation or retention in the state.
Iowa has been aggressive in offering tax credits to encourage development in the alternative energy sector, including the New Jobs Tax Credit, the High Quality Jobs Program and Investor Tax credits.
Perhaps the most critical factor enabling the successful establishment of a burgeoning wind energy manufacturing cluster is Iowa’s excellent multimodal transportation system. As the wind energy sector developed in the U.S. during the past few years, turbine makers quickly realized they needed to produce the huge components for turbine installations (some of which can stand as high as 400 feet) close to the U.S. wind corridor, which runs across Iowa.
Iowa’s central location and transportation infrastructure make it a primary location for manufacturers to ship and receive wind components. The Iowa Department of Transportation works closely with the Iowa Department of Economic Development to attract wind energy manufacturers by streamlining permitting, overcoming transportation constraints and making staff available to discuss freight movements and logistics.
Global leaders in wind turbine manufacturing who have established facilities in Iowa include Vestas (Ventura, IA), Acciona (West Branch, IA) and Siemens (Fort Madison, IA).
Rounding out the top five in our flagship Alternative Energy Industry Leaders category are Arizona, Texas, Oregon and California.
California still rules the roost in Installed Solar Power Capacity. Hardly a week goes by without another announcement from the Golden State of a vast new solar farm project. Most of these mega-projects have been situated in the Mojave Desert not far from Los Angeles.
Google is funding BrightSource Energy’s solar farm in the Mojave Desert, which employs an Ivanpah Solar Electric Generating System to produce solar energy by utilizing fields of heliostats to concentrate the sun’s rays. The concentrated rays are directed towards the top of a tower where a receiver converts the rays into steam that powers a traditional turbine and generator to make electricity.
The Ivanpah Power Tower will reach approximately 450 feet tall and will use 173,000 heliostats, each with two mirrors. By the time the plant is up and running in 2013, it will be producing 392 MW of solar energy.
While most people would expect California to be synonymous with solar power, our second-place ranking for Installed Solar Power Capacity may raise a few eyebrows among those who haven’t been closely tracking the race to the top in solar energy generation. Thanks to a forward-thinking state program that started incentivizing solar panel installations years ago, the Garden State has earned its top tier status in this category. New Jersey’s installations don’t rival the scale of the mega-farms in the western deserts, but with nine million residents in one of our most densely populated states, smaller installations add up to a large bundle of megawatts.
“When people think of installed solar power generation capacity, sun-drenched places like California, Arizona and New Mexico come to mind. This makes New Jersey’s achievement as a national leader in solar power installation—second only to California—even more impressive,” Rogers said.
“With strong state support for solar power and a forward-thinking program embraced by its largest utilities, New Jersey has proven that numerous smaller-scale solar installations with direct access to the existing power grid can match the huge desert solar farms out West, megawatt per megawatt. In solar power, it’s only the size of your imagination that counts. New Jersey dared to think big on solar when it wasn’t popular to do so, and now it’s a solar energy giant,” he added.
BF’s ‘Recovery Index’
In this year’s rankings report we’ve gone out of our way to supplement our traditional business rankings (including Best Business Climate, Economic Growth Potential and Best Business Tax Climate) with several categories that we are loosely calling the Business Facilities Recovery Index. These include Credit Quality, Most Business Start-Ups and Jobs Growth Leaders.
Not surprising, North Dakota is by far the nation’s jobs growth leader on a percentage basis (6.61 percent), while Arizona emerged as the state with the most business start-ups.
Business Facilities is pleased to congratulate all of the top-ranked states in our 2012 Rankings Report for a job well done.
The compilation of our annual Metro Rankings always is a challenge because at last count there were nearly 350 Metropolitan Statistical Areas in the U.S. Adding to the complexity, many MSAs are not restricted to the borders of cities and towns but also encompass the surrounding region Additionally, economic development programs often are promoted on a regional basis. Our preference when doing the Metro Rankings is to structure them as much as possible to permit the results to showcase individual locations. We’ve done our best to adhere to that standard.
Cincinnati has Lowest Cost of Doing Business
Cincinnati’s low costs for facility leasing, transportation and property taxes contributed significantly to its ranking as the least-costly location to do business in the United States among the 27 largest metro areas (all with populations exceeding 2 million), according to a study by KPMG LLP, the audit, tax and advisory firm.
Atlanta was the second most cost-competitive location in the large-cities category, followed by Orlando, Tampa and Dallas-Fort Worth, which ranked third, fourth and fifth respectively. Other locations that performed well were Baltimore, St. Louis and Cleveland.
In our 2012 Metro Rankings Report, Cincinnati also was ranked ninth in Economic Growth Potential (less than 450,000 employment), seventh in Best Quality of Life and sixth among the Top 10 Manufacturing Cities.
KPMG’s Competitive Alternatives study provides a thorough biennial comparison of more than two dozen large metropolitan area business locations in the United States, offering a comprehensive guide for companies considering sites for their business operations. The KPMG study is particularly valuable for its measurement of significant factors that contribute to business operating costs and which often vary by location, including costs associated with taxes, labor, facilities, transportation and utilities.
KPMG’s 2012 Competitive Alternatives study measured 26 significant cost components in each market, including labor, taxes, real estate and utilities, as they apply to 19 industries over a 10-year analysis horizon. Information is also provided on a variety of non-cost components. The study enables companies to perform a “quick scan” of locations to determine which markets can offer an advantageous business environment.
The KPMG study reveals that Cincinnati had a cost index of 95.9, representing business costs 4.1 percent below the U.S. national baseline of 100.0. Cincinnati was followed closely by Atlanta at 96.2, Orlando at 96.3, Tampa at 96.4 and Dallas-Fort Worth at 96.5.
Atlanta’s ranking was driven by a very favorable effective income tax rate and competitive business operating costs in such areas as transportation, employee benefits, natural gas and factory leasing. Orlando benefited from very competitive costs for salaries and wages, and employee benefit plans. Tampa had the lowest labor costs of all the large U.S. cities, along with low downtown office leasing costs. Dallas-Fort Worth had particularly strong cost advantages for utilities and facilities, which contributed to the location’s ranking for lowest overall business operating costs among the large U.S. cities examined in the KPMG study.
Baltimore ranked sixth in the study with a cost index of 97.0, benefiting from the lowest suburban office lease costs among large cities and low property-based taxes. St. Louis and Cleveland followed Baltimore, both with a cost index of 97.1. St. Louis’ low costs for factory leasing and electricity contributed significantly to its ranking, while Cleveland benefited from low office lease costs.
KPMG’s baseline cost index (U.S. = 100.0) is defined as the average of business costs in the four largest U.S. metropolitan areas: New York, Los Angeles, Chicago and Dallas-Fort Worth.
Midland TX, Knoxville TN are Growth Centers
It is no wonder that expert after expert has recognized Midland,TX as having exceptional assets, the kind of assets that promote sustainable growth when other parts of the country are struggling with challenges. Midland, TX ranked second in our Economic Growth Potential (less than 450,000 employment) category.
Midland has amassed distinctions in recent years that include being ranked number one in both Inc.com’s list in overall and small cities categories and on the Milken Institute/Greenstreet Real Estate Partners’ “Best Performing Cities Index.”
Midland offers a retail trading zone population in excess of 350,000; rail service, a major interstate and two airports including Midland International Airport (MAF). The city also boasts the La Entrada Al Pacifico—a West Texas Trade Corridor between Mexico, Canada and the United States.
A well-educated workforce is essential in a competitive global environment, and workers must be able to update and expand their knowledge as new technology and ways of working evolve. Post-secondary and higher education resources are readily available in the Midland area to serve the community.
The University of Texas of the Permian Basin with an enrollment of 3,600 students offers bachelor’s and graduate degrees in business and technical areas, with an emphasis on segments that serve the Permian Basin oil and gas industry. Midland College, a level-two, comprehensive community college offers more than 50 fields of study, including programs in nursing, paralegal studies, aviation maintenance technology, aerospace manufacturing, oil and gas and wind-related technology. And, the Midland College Advanced Technology Center (ATC), a partnership of Midland College and Midland Independent School District, is designed to deliver technical workforce education programs, enabling residents to acquire technical skills and certifications.
Other workforce development resources in the Midland area include the Petroleum Professional Development Center, the Center for Energy and Economic Diversification, Texas Tech University Health Science Center, Workforce Solutions of Midland and MakeMidlandHome.com—an interactive website created to partner Midland Employers with Job Seekers by providing useful information.
Commercial service daily to eight major hubs, border entry with United States Customs, easy access to Interstate 20, plentiful land and buildings along with business jet and a corporate airport with easy access to the Central Business District means there is room for aggressive expansion in a strong market ready for new opportunities. Midland has a business park with acres of shovel-ready sites, some adjacent to runways for aviation-related industries, and numerous available sites for energy clusters, business and professional services, healthcare facilities, transportation and aviation, among other target industries in Midland.
Midland’s Central Business District (CDB) has over five million square feet of multi-tenant office space. Under the leadership of the MDC, the Downtown Midland Management District and Tax Increment Finance District Boards are aggressive in both the revitalization efforts of the CBD and bridging public-private partnerships.
Knoxville, TN earned our no. 10 ranking for Economic Growth Potential (less than 450,000 employment) and was eighth in our ranking of the Fastest Growing Cities.
“Our 2012 Metro Rankings results show that growth is synonymous with Knoxville,” Business
Facilities Editor in Chief Jack Rogers said. “Few cities can match the combination of assets the Tennessee city brings to the Knoxville-Oak Ridge Innovation Valley. Knoxville has all of the attributes that will enable it to be a growth center for years to come,” Rogers added. “With an influx of skilled workers and a world-class research infrastructure, we expect Knoxville to continue its upward climb in our key Metro Rankings categories.”
When it became clear that a huge portion of the federal stimulus effort was earmarked for research and development of alternative-energy and energy efficiency-related projects, the Knoxville, TN area was ready. It declared itself the Knoxville-Oak Ridge Innovation Valley, bringing researchers from Oak Ridge National Laboratory (ORNL) and the University of Tennessee/Knoxville together in ambitious effort to establish the region as a primary alternative energy hub.
Improved LED lights, high tech air filtration systems and lighter, stronger and easier-to-ship materials—all developed locally—are fueling a promising, and increasingly green, future for the Knoxville-Oak Ridge Innovation Valley.
Entrepreneurs and local companies in the Innovation Valley economic development region are working closely with researchers at ORNL, the Department of Energy’s Y-12 facility in Oak Ridge and the University of Tennessee/Knoxville.
Technology transfer also is at work locally at Industrial Ceramic Solutions, which produces ceramic fiber filters for industrial and diesel exhaust applications. The company, headed by former Oak Ridge materials research scientist Dick Nixdorf, is developing high-performance reinforcement fibers to improve durability of combustion chamber liners in coal-fired power plants. Nixdorf’s company also works with bon nanotubes, which could improve fuel cells and lithium. The underlying technology developed was a joint effort by ORNL and Y-12.
The synergies between research and the region’s economy are perhaps best symbolized by the ORNL lab director’s chairmanship of the Knoxville-Oak Ridge Innovation Valley economic development partnership and by such events as the Technology Resource Showcase, which has connected local researchers and their innovative technologies with local companies.
“I believe in the adage, ‘companies innovate or they die’,” said Jesse Smith, technical director for the Innovation Valley partnership. “We ask companies, why would you want to be anywhere else? What better way that to tap into DOE’s largest energy materials lab and the innovative products coming out of Y-12 and the many collaborative efforts with a major university?”
Also fueling growth in the area is increased demand for centrifuges produced at a site in Oak Ridge shared by USEC Inc. and its manufacturing partner, Babcock & Wilcox Co. Toshiba Corp. and Babcock & Wilcox Investment Co., an affiliate of Babcock & Wilcox Co., have signed a definitive long-term agreement to a three-phased investment of $200 million in USEC.
Charlotte NC: Rising Quickly
Charlotte, NC earned the top ranking in our Fastest Growing Cities category. It seems like a week doesn’t go by without some major economic development news out of the Charlotte, NC region. A skilled workforce and aggressive state programs to support relocations and new facilities are reaping a whirlwind of job-creating activity in this part of the Tarheel State. For example, tire giant Michelin North America invested $11.3 million to expand its aviation tire operations in Norwood, NC.
Center City is the central employment district for Charlotte, with businesses that range from design firms and retail shops in Historic South End to the government centers and financial, insurance, real estate, engineering and legal services companies that populate the growing skyline of Uptown Charlotte.
More than $6 billion in investment is anticipated by the end of the decade for this vibrant district, which already employs 70,000 workers in Uptown and South End. The Center is being transformed into a thriving urban neighborhood and national destination. There are four major office towers under construction, mid- and high-rise condos as well as transit-oriented development with condos and apartments are popping up along the LYNX Blue Line. There also is a growing list of tourism assets, including the Wachovia Cultural Campus and the extremely popular NASCAR Hall of Fame.
Directly across from the Charlotte Convention Center and NASCAR Hall of Fame, stretching nearly down to Duke Energy’s new office tower, sits what may be the largest piece of prime, undeveloped land in the heart of a major Eastern U.S. city.
More than 14 acres of land, now covered with neatly manicured lawns, is available adjacent to Charlotte’s thriving hub. The land has been divided into five parcels for development: a 3.68-acre parcel adjacent to a light-rail station and gateway, across from the convention center; 3.75 acres at south gateway, across from the NASCAR museum; a 2.68 parcel with easy access to highway and exiting traffic; 1.8 acres south of I-277; and 2.28 acres with street connections to nearby residential areas, retail and greenway.
All of the available parcels have Uptown Mixed Use District zoning and unlimited floor area ratio (FAR). Unlimited FAR and building height means there’s basically no limit on the size of buildings that may be constructed on the site. The land currently is all city owned.
The city is actively soliciting proposals from retail, office and residential buyer/developers, who in turn would secure tenants for their developments. A deal was reached last year for a 250-unit apartment tower on one of the parcels.
Developers of these prime parcels will get close assess to the inner belt loop of Charlotte’s interstate highways, while being within walking distance of the Queen City’s cultural gems and business heart. The parcels are three blocks from the Levine Cultural Campus, which includes three museums and a performance hall.
Center City is a thriving and diverse urban neighborhood with more than 13,000 residents. Its neighborhoods boast gleaming, high-rise condos, stately turn-of-the-century Victorian homes, apartments, town homes and houses for singles and growing families. More than 25-million visitors come to Center City to visit 120 restaurants and 50 nightspots, the Carolina Panthers at Bank of America Stadium and Charlotte Bobcats at the Time Warner Cable Arena as well as cultural venues including the Blumenthal Performing Arts Center, Discovery Place and ImaginOn, and the Mint Museum of Craft and Design.
Indianapolis: Crossroads of the U.S.
In our 2012 Metro Rankings Report, Indianapolis made the top 10 in three categories: Economic Growth Potential (employment greater than 450,000), Logistics Leaders (Air Cargo Hubs) and Top 10 Manufacturing Cities.
Indianapolis used to be the quintessential Rust Belt city. Now it’s at the center of a statewide boom in the life-sciences sector and rapidly is establishing itself as one of the Midwest’s leading transportation hubs.
A rapidly growing life sciences industry has a $44-billion total impact on Indiana’s economy, according to a comprehensive report released by BioCrossroads. The report, based on data gathered by the Indiana Business Resource Center at the Indiana University Kelley School of Business, illustrates a decade of substantial growth and measurable progress across a wide range of nationally significant indicators.
For example, the report noted that in 2009, Indiana’s life sciences exports totaled $7.4 billion, ranking the third highest in the U. S., behind only California and Texas. The state has the third-highest life sciences employment concentration nationally and has seen a 21 percent increase in life sciences employment, adding more than 8,800 new jobs to the industry since 2002. More than 50,000 workers at 825 companies comprise four life sciences sub-sectors: medical devices and equipment; drugs and pharmaceuticals; research, testing and medical laboratories; and agricultural feedstock and chemicals.
Indiana’s health information technology sector contributes an additional 2,500 workers and 72 companies. The report also highlights the progress of Indiana’s life sciences companies in discovering and commercializing thousands of new products over the past decade. There were 2,226 U.S. Food and Drug Administration filings between 2005 and 2010—the Hoosier state had the ninth highest number of 510(k) applications with 1,821, and the 11th highest number of Premarket Approval applications with 405.
“There are three key components to having a thriving innovation cluster: the sector must be based on real assets, must draw substantial corporate and philanthropic investment and must be sustained by the investments of others who care about it,” said David Johnson, president and CEO of BioCrossroads, based in Indianapolis.
“Indiana has all of those elements working together. Compared to other states and regions, we have a significant competitive advantage because of our focus on cultivating a skilled workforce, engaged university and academic institutions, strong philanthropic support, novel public-private partnerships, access to capital and a positive business climate.”
Indianapolis, which is home to big names in the field such as Eli Lilly & Co. and health insurer WellPoint Inc., is leading the transformation. Corporations like these have added the lion’s share of the state’s new life-sciences jobs. Now, they’re helping smaller companies get off the ground, too—by spinning off new businesses as well as by backing independent start-ups. Eli Lilly, for instance, has contributed roughly $60 million to seed and venture funds that are supporting entrepreneurs.
Memphis, TN: Global Logistics Hub
Memphis, TN scored an impressive double play in this year’s rankings by grabbing the top slot in both our Metro and Global Logistics Leaders (Air Cargo Hubs) rankings.
The FedEx hub was placed in Memphis because of the city’s central location, the availability of the workforce, a strong relationship with the local airport authorities and generous economic incentive programs.These qualities have fueled major FedEx expansions in the Memphis area, including a facility in Collierville, TN.
The Memphis region has a variety of headquartered companies primarily located in the Metro area. In addition to FedEx and AutoZone, (two Fortune 500 headquarters) are Dunavant Enterprises and International Paper, two recognized Forbes “private 500” companies. Additionally, Sparks is the largest commodity trader in the world, Morgan Keegan is one of the largest investment bankers, Belz Enterprises is one of the nation’s leading development companies, The Kemmons Wilson Companies (founder of Holiday Inn) also is a major privately held company located in Memphis.
The University of Tennessee Health Science Center (UTHSC), St. Jude Children’s Research Hospital and the region’s medical centers provide the necessary research and training to build and support economic activity in the bio-med health sciences field. Together, these institutions enable business incubation and startups to be facilitated. An example is the TriStar incubator, a private research facility created by UTHSC.
Memphis bills itself as “America’s Aerotropolis,” a moniker it has trademarked as the leading aerotropolis in North America.
“In many communities the idea of the aerotropolis is aspirational, but in Memphis it’s reality,” says Arnold Perl, chairman of the Memphis-Shelby County Airport Authority Board.
“Since Memphis was first identified as the closest thing to an aerotropolis in North America by Dr. [John] Kasarda in an article in Fast Company magazine in 2006, the aerotropolis infrastructure has deepened and it has become much more integrated into our community’s strategic planning, ”The federal government has now recognized that the aerotropolis is a job incubator and has put aerotropolis language into both the Federal Aviation Reauthorization Act as well as the Highway Reauthorization bill. In the past year, a HUD grant was provided to Memphis to enable creation of the first formal master plan for the aerotropolis. That plan will provide greater alignment and a sense of purpose for where we are headed.”
The Memphis aerotropolis is now recognized as a global “airport city.” But Memphis is not resting on its laurels. Instead, regional economic developers have come together to make significant improvements to the airport’s entire transportation infrastructure.
“If we listed some of the improvements we made in the past few years, we’ve spent about $65 billion on transportation projects,” says Dexter Muller, senior VP of Community Development for the Greater Memphis Chamber (GMC). “We have four workgroups that work on the aerotropolis initiative here: transportation and access; master planning and redevelopment; gateways and beautification; and marketing and branding. Every year we try to move projects in those areas forward.”
Some of the forward progress that was made over the last 18 months includes:
- Access to $56 million in funding to complete an outer loop in the next two years to facilitate freight movement by truck
- Completing an environmental impact study to build “The Southern Gateway,” an intermodal bridge across the Mississippi river with lanes for trucks and passengers and also rail
- Approval to complete building the highway 78 corridor that will connect Memphis to Interstate 22, which will connect it with Birmingham, AL. “The highway 78 corridor is one of our highest priorities,” says Muller, “We’ve got approx. 60 to 75 billion square feet of industrial space around that corridor and it’s right near where the Burlington Northern Railroad has just built their new intermodal yard that will triple the capacity that they have here. So that’s kind of ground zero for our industrial development. So everything’s been approved around it and we are ready to go for right-of-way acquisition on it.”
- Completion of a new interchange modification study from the state transportation department. Memphis now has a final design that’s been accepted by the Federal Highway Administration
- Completion of a landscape master plan; for the first phase, the Memphis City Council appropriated $1.2 million to plant about 2,000 trees as part of their gateway beautification plan. “We also had a consulting firm work on a gateway design plan for the eight entrances into the airport city area.
We’ve looked at each one of those to see what treatment we should have for them, so when you come into the area you know you’ve entered it. The marketing end of this is important to us [in order to communicate] our branding to everyone, because we want people to know this is our air city, this is our aerotropolis,” says Muller.
Memphis signed a memorandum of understanding with another leading aerotropolis, Charles De Gaulle Airport [and the Invest in Paris agency] in France to do joint marketing to ensure that when they have companies in Europe who want to do business in the U.S., Memphis is their point of contact.