KPMG recently released the results of its 2010 Competitive Alternatives study. We asked Hartley Powell to comment on major trends tracked by the study. BF: Do the 2010 results show an improvement or a decline in overall U.S. competitiveness? HP: My assessment is that the United States is holding its own in terms of cost-competitiveness relative to other industrialized nations. While the ranking of the United States in 2010 is somewhat lower than in 2008, this is due mainly to the shift in emphasis for the 2010 edition, which bases the comparison on the major cities within each country rather than one with a broader base of larger and smaller cities. Over the last few years, U.S. companies have achieved massive structural changes that have lowered the cost of production. BF: What is the biggest factor currently impacting U.S. competitiveness? HP: Productivity growth has clearly been a key factor in spurring U.S. competitiveness in the global economy. Despite the impact of the recent financial crisis and increased competition from fast-growing economies, such as those in China and India, the U.S. economy has demonstrated its resiliency during the recent recession, and strong productivity performance has been an important contributor to that success. This improved productivity supports solid competitiveness for the U.S. for the near and longer term. BF: We were surprised to see Mexico get the top ranking for R&D cost-competitiveness. Is the skill-level there comparable to the United States and Europe? HP: R&D includes a wide range of activities, from scientific research to prototype manufacturing. Many companies have developed and expanded these types of operations in Mexico for many years, so it would be safe to assume that their needs are being met. BF: The study lists increased electricity rates as a cost trend in the U.S. Will this be a temporary disadvantage as more alternative energy comes online? HP: A number of industry studies are projecting strong growth in U.S. electricity demand over the next several years, leading to continued upward pressure on U.S. electricity rates. Clearly, electricity prices vary significantly across different regions of the United States. Renewable energy mandates can increase the cost of power since renewables are generally more expensive than traditional sources of energy. While future demand may be met from alternative or renewable sources, we still do not anticipate a decline in rates. BF: The study indicates that labor costs have the biggest impact on cost competitiveness. Can a location mitigate that impact if it has an available pool of skilled workers within proximity […]
From the Desk of the Editor in Chief Several times a year, Business Facilities strives to tell you who is at the top of the heap in the never-ending competition between locations. In most cases, those who reach the highest get the most attention. This month, we turn that focus upside down. Our cover story identifies the leading low-cost manufacturing centers. When it comes to the cost of doing business, nobody wants to come out on the high end. We want to give special thanks to our friends at KPMG, who gave us an early look at their 2010 Competitive Alternatives analysis, which forms the heart of our cover feature. KPMG’s survey is issued every two years and it is without a doubt the most comprehensive cost analysis undertaken. The scope of the 2010 report requires a deep breath just to recite: KPMG examined 112 cities in 10 countries and compared 26 cost components as they applied to 17 business sectors over a 10-year planning horizon. Some of the results are surprising; all are informative. Mexico continues to be a low-cost leader, primarily due to inexpensive labor; Canada fared well, in part due to currency fluctuations in its favor. Japan got clobbered by the rising yen, and the U.S. slipped a bit because the analysis formula gave greater weight to the largest cities. To come out on top in this heated competition, you have to hit bottom. Congratulations to all of the low-cost manufacturing centers. Keep up—or, rather, down—the good work!
Jupiter Group, a Danish maker of wind turbine components, has agreed to build a plant in Junction City. The plant will have 120 jobs and $2.4 million in capital investment. The new plant, in two adjacent buildings, will total 41,000 square feet. The plant will start producing components by Aug. 1. The company makes composite nacelle covers and spinners, as well as wooden kit structures for wind turbine blades. The company is also a substantial provider of interior and exterior parts, floors and toilet cabins for the train industry. Jupiter received incentives from the Kansas Department of Commerce and the Junction City-Geary County Economic Development Commission. The Danish firm will open the facility with 15 to 30 employees and will add more employees over the next few years.
The nation’s largest health-care technology trade group has agreed to lease 25,000 square feet or more in a proposed Nashville Medical Trade Center downtown, giving a major boost to the project’s credibility. The 28,000-member Healthcare Information and Management Systems Society plans to use its space, part of an eventual 15-story medical trade center, as a showroom to demonstrate high- tech clinical systems and other products. “Right now, if you look at health-care information technology, that’s really the sweet spot of growth in the health-care industry,” said Bill Winsor, chief executive officer of Market Center Management, the Dallas developer of the planned $250-million building. The lease gives the Nashville Medical Trade Center—to be built in and atop the existing Nashville Convention Center— a solid starting point, Sean Jackson, an industry analyst at Avondale Partners LLC in Nashville, told the Tennessean.com. With 490 corporate members, including Microsoft and Google, Healthcare Information (based in Chicago) is the largest association of its kind focused exclusively on information technology for health care. Signing a major new tenant may give the proposed Nashville center an edge in a three-way race with two other medical trade centers in the planning stages for New York and Cleveland. Such centers showcase a variety of medical products from hospital beds and imaging equipment to computer software. Market Center Management is negotiating a master lease with Nashville officials to take over the current convention center space after the new Music City Center convention hall gets built. The developer wants to expand the 22-year-old convention center to about 1.5 million square feet by adding 12 new floors above the current building. Plans call for the medical trade center to open in early 2013.
Interior Secretary Ken Salazar has approved the first U.S. offshore wind farm, giving the green light to the controversial Cape Wind project, which will place 130 huge wind turbines in the waters of Nantucket Sound. Proposed nine years ago, Cape Wind has been a controversial subject in Massachusetts, stirring opposition from prominent residents of Cape Cod. Opponents included the late Sen. Edward Kennedy, who loved to sail the waters that will now be dotted with 400-foot-tall wind turbines. Kennedy led the fight against Cape Wind until he succumbed to cancer last year. In announcing his approval of the first U.S. offshore wind farm, Salazar called Cape Wind the start of a “new energy frontier.” “The United States is leading a clean energy revolution that is reshaping our future,” Salazar told reporters in Boston. “Cape Wind is an opening of a new chapter in that future, and we are all part of that history.” “Cape Wind will be the nation’s first offshore wind farm, supplying clean power to homes and businesses in Massachusetts, plus creating good jobs here in America,” Salazar added. “This will be the first of many projects up and down the Atlantic coast.” MA Gov. Deval Patrick praised the federal government’s decision. “Thank you for this decision,” said Gov. Patrick said. “With this project, Massachusetts will lead the nation. This day has been a long time coming.” Seventeen state and federal agencies weighed in on Cape Wind, reviewing everything from its impact on shipping, aviation and fisheries. Salazar visited the Cape earlier this year and pledged to make a final decision by the end of April. While the decision on issuing a federal permit was still pending last month, Boston-based Cape Wind signed an agreement to buy 130 wind turbines for the project from Siemens Energy Inc. Siemens concurrently announced it will open an office in Boston for U.S. offshore wind projects. Asked why Cape Wind made the agreement before the federal government’s permitting decision, spokesman Mark Rodgers told Boston.com: “We’ve been working hard for the last year to make our selection, and now that we’ve made it, we thought, why wait?’’ Siemens Energy’s parent company, Siemens AG, based in Munich, has a U.S. headquarters in Orlando, Fla. The company’s U.S. Wind Power division has grown from one employee in December 2004 to more than 1,000 employees today. Gov. Patrick hailed the agreement with Siemens. “The opening of a local Siemens offshore wind energy office is another significant step forward for the clean energy industry we have growing in […]
VA Gov. Bob McDonnell announced today that Northrop Grumman Corp. has officially selecting Northern Virginia over Maryland and Washington, D.C., for its headquarters site, a move that will create 300 jobs. “The foremost priority of our administration is creating new jobs and getting our economy back on track. Today’s announcement that Northrop Grumman, a Fortune 100 company, is moving to Virginia is a major step forward in this effort,” McDonnell said. Northrop Grumman is a defense giant with 120,000 employees in aerospace, shipbuilding and technical services to government and commercial customers worldwide. In a close contest since the company announced in January that it was moving its headquarters from Los Angeles, Loudoun County, MD was briefly considered as was Washington D.C., and other counties in Maryland. After a four-month search, Falls Church, Arlington and Alexandria reportedly are the remaining contenders for the headquarters facility. All of the sites under consideration would place the corporation close to the Pentagon. “Virginia, Maryland and the District put forward compelling, competitive offers,” said Wes Bush, chief executive officer and president of Northrop Grumman. “Our final decision was driven largely by facility considerations, proximity to our customers, and overall economics.” Gov. McDonnell told WTOP radio that Virginia will give Northrop Grumman about $14 million in grants and cash incentives.
A German company plans to build a wind energy plant and bring 215 new jobs to Gainesville, GA. ZF Group, an automotive industry supplier, said the plant will make wind turbine gearboxes for systems that convert wind energy into electricity. The company will invest $90 million in the project. The news from ZF Group was the third job-creation announcement in the Atlanta area in the past week. On Thursday, an Arkansas frozen baked goods maker, De Wafelbakkers, said it will take over an abandoned bakery in Henry County and hire 242 workers over the next three years to make waffles, pancakes and French toast. A day earlier, word came that General Electric will create 400 new jobs in Cobb County when it opens its futuristic Smart Grid Center of Excellence this year. As for the wind energy plant, it will be built in the Gainesville Business Park, near an existing ZF facility that makes axle drives and transmissions for passenger vehicles and heavy construction equipment. That facility has been in operation about 20 years, state officials said. “There is a heightened global focus on renewable energy production, and we believe there is an opportunity to leverage our automotive driveline and chassis technology leadership in this exciting and growing alternative energy sector,” ZF executive Elizabeth Umberson said in a statement. Construction is scheduled to begin immediately, with the plant to open in February 2011. Production is set to start January 2012. The company will receive economic incentives for the project including tax credits, as well as free, customized employee training assistance from the Quick Start program, state officials said.
The St. Joe Company has launched VentureCrossings Enterprise Centre at West Bay, Florida. VentureCrossings, one of the nation’s largest, most unique office, retail, hotel and industrial developments, encompasses the first 1,000 acres to be developed by St. Joe within the 75,000-acre West Bay Sector Plan adjacent to the Northwest Florida Beaches International Airport opening in May. The new Northwest Florida Beaches International Airport is the first international airport built in the United States in the last 15 years, replacing the existing Panama City – Bay County International Airport. St. Joe donated 4,000 acres within its West Bay Sector Plan for the construction of the new airport. VentureCrossings includes approximately 100 acres designated for retail, office and hotel uses, approximately 300 acres for light industrial uses, and approximately 600 acres for manufacturing, distribution and logistics companies seeking “through the fence” access to the new airport’s 10,000-foot runway. Within VentureCrossings, St. Joe is developing an approximately 50,000 square foot Class A multi-tenant office building with construction beginning later this year. The Company is relocating its corporate headquarters, currently in Jacksonville, Florida, to this multi-tenant building by the summer of 2011. The new offices will provide St. Joe with a location central to its numerous residential communities and commercial properties, as well as its lands slated for new business and development opportunities in the region. “VentureCrossings is an unparalleled greenfield site and a unique multi-modal opportunity for expanding businesses interested in air, land and sea access,” said Kevin Johnson, St. Joe’s Vice President of Economic Development. “Because of our region’s strong military presence and transportation assets, West Bay is an ideal growth area for industries including aerospace, defense, renewable energy and logistics services.” Northwest Florida already has seven military installations and research institutions, including Tyndall and Eglin Air Force Bases. The region is also home to over 1,900 aerospace and defense businesses, in addition to a well-trained workforce that includes military personnel, veterans and retirees. St. Joe has engaged CB Richard Ellis Group, Inc., the world’s largest commercial real estate services firm, to help attract VentureCrossings’ first retail, office and industrial occupants for this prime development location. “VentureCrossings is an exceptional location for companies requiring large capacity and room for expansion with proximity to the new international airport, the deepwater port at Port Panama City, rail and highway connections, and an attractive quality of life,” said Robert McFarlane, Senior Vice President, CB Richard Ellis Global Corporate Services. “We believe VentureCrossings will attract companies seeking to benefit from the ‘blank canvas’ this major new […]
Throughout the economic downturn that plagued the nation during the past two years, North Dakota has been immune to the catastrophic loss of jobs afflicting the rest of the U.S. This can be explained in one word: Oil. The explosive growth of the oil-drilling industry in the Peace Garden State (yes, that’s its official nickname) has given it the lowest unemployment rate in the country. While population centers like California and Michigan still are grappling with double-digit joblessness, North Dakota’s unemployment level has not exceeded 4 percent. However, according to a front-page report this week in The New York Times, the robust employment news in the northern Plains has been accompanied by an unexpected down side. The Times reports that laid-off workers from states across the country who have flocked to North Dakota have had little trouble getting hired—but they have been having a difficult time finding a place to live. Joey Scott drove from Montana in his pickup truck to Williston, ND. He found work in the oil fields a few weeks ago—but he is spending his nights sleeping in the truck in a Wal-Mart parking lot. “It’s hard to know where this might end,” Williston Mayor E. Ward Koesler told the Times. “It’s the one thing that sometimes wakes me up in the morning and doesn’t let me go to sleep.” Mayor Koesler has been asking the state for emergency housing aid for Williston after watching his town’s population grow to 15,000 from 12,000 in a fortnight. We’ve got a better idea. When the economic collapse hit bottom, Elkhart, Indiana was cited as a symbol of the national malaise because it had one of the highest unemployment rates in the U.S. The Indiana town got a special visit from President Obama, who gave the workers at one of its manufacturing plants a pep talk. The facility the 44th president visited makes huge RVs—as in recreational vehicles, the kind that are big enough to live in. So here’s a helpful suggestion: If President Obama isn’t too busy rounding up loose nukes and reining in Wall Street fat cats, perhaps he could scoop up some federal stimulus bucks and arrange to purchase a fleet of Elkhart’s finest RVs and send them up to Mayor Koesler. More jobs for Elkhart. More beds for Williston. Problem solved. Pleasant dreams, mayor.
The South Carolina Department of Commerce and Chester County have announced that Kinro Inc., a subsidiary of Drew Industries Incorporated (NYSE: DW) will locate its new manufacturing plant in Chester County. The $978,300 investment is expected to create 125 new jobs. “We are thrilled to move forward with our new facility in Chester County. Our market share has increased, and this new plant will help us meet growing demand from our customers. Chester County has provided us with an excellent pre-existing facility, and the positive business environment and available labor force make the area a great fit for us. We appreciate the support we have received from state and local officials,” said Jason Lippert, Kinro’s president and CEO. The company will manufacture entry doors and windows for manufactured homes and other industries. Kinro is locating its new operation in the former Philips Products plant in Chester. “As businesses prepare for the economic recovery, many companies continue to see the many benefits of investing in South Carolina. In fact, Drew Industries’ decision to locate its new plant in Chester County is another indication that our business-friendly climate and skilled workforce are working to attract new investment and create opportunities for South Carolinians in both our rural and urban communities. We welcome Drew Industries to our state’s business community and wish them success in their endeavors here,” said Joe Taylor, Secretary of Commerce. “We wish to thank Drew Industries for their vote of confidence in Chester County with the location of their door and window manufacturing operation here. We are confident that Drew Industries has found an excellent environment for growth here and a workforce that is ready, able and willing to go to work to make them successful! We continue to be focused on creating new and better paying job opportunities for the citizens of Chester County,” said County Supervisor R. Carlisle Roddey. “Drew Industries’ commitment to create 125 new jobs in Chester County is just what the doctor ordered. Chester has a wonderful team working to bring industry to the county and I feel this is the tip of the iceberg. I hope, and I believe, more is to come,” said state Sen. Creighton Coleman. The company expects to begin hiring for the positions now and continue hiring over the next 12 months. Anyone interested in job opportunities with the company should contact the Chester Workforce Center at 803-377-8147. Drew, through its wholly-owned subsidiaries, Kinro and Lippert Components, supplies a broad array of components for RVs and manufactured homes, including windows, doors, […]