By the BF Staff
From the July/August 2017 Issue
Success in economic development traditionally has been measured by adding up the annual tally of new facilities, new jobs, capital investments and similar benchmarks that set the pecking order of locations vying for sustainable prosperity. But the relentless advance of technology—which seems to be accelerating at warp speed—creates new prerequisites for progress that must be factored into our rankings equations and adjusted in real time as best practices adapt to the highly specific needs of emerging growth sectors.
The real action may be taking place in venues that are not readily accessible and the forward process may not be easy to quantify. In today’s ultra-competitive market, the battle for future economic supremacy is being waged in classrooms and tech labs as well as across factory floors, often on virtual terrain you can’t explore on foot, like cyberspace.
Every year, we do our best to make sure Business Facilities’ Rankings Report isn’t simply a static snapshot of a linear race. We adjust our criteria and create new categories to make our rankings the most relevant indicators you can find in our multi-dimensional and rapidly evolving industry. As always, there are a few essentials that never change: our rankings are comprehensive and credible, the fairest assessment we can muster to give you a panoramic view of who’s ahead of the curve and ready to meet the challenges looming around the next corner. And so, without further ado, here are the best of the best.
CYBERSECURITY: A TOP GROWTH SECTOR
In the next few years, the emerging cybersecurity sector is expected to create more than a million new jobs in the U.S. Louisiana, Utah and Michigan, are the top-ranked states, respectively, in our new Cybersecurity Growth Potential category. Each is making maximum use of its higher education resources to meet the growing demand for high-tech workers with cyber skills that have been specified by government backed initiatives to rapidly expand and improve U.S. cyber defense capabilities.
Louisiana has established a leadership position by leveraging its impressive tech-oriented universities in cooperation with U.S. military assets based in the Pelican State.
Already up and running is the $107-million Cyber Innovation Center (CIC), which will anchor the 3,000-acre National Cyber Research Park (NCRP) in Shreveport-Bossier City. The Cyber Innovation Center received funding from the U.S. Department of Defense and the Department of Homeland Security, which wanted a leading cybersecurity research hub near the U.S. Air Force’s Global Strike Command headquarters.
In an exclusive interview with BF, Gov. John Bel Edwards recently detailed the burgeoning cybersecurity activities in Louisiana.
“The National Cyber Research Park is adjacent to Barksdale Air Force Base, which is home to a four-star nuclear command, so cyber is a natural fit in that area,” Edwards told BF.
With full access to Louisiana’s university system and a location in proximity to some critical military installations, the NCRP will exponentially expand Louisiana’s already impressive head start in establishing a fully integrated national hub for cybersecurity.
“We have all of the state’s universities, especially those along the I-20 corridor and Louisiana Tech, really working very closely with the Cyber Innovation Center in Bossier City,” Edwards said.
Louisiana Tech University recently launched the nation’s first four-year bachelor’s degree program in Cyber Engineering, a program developed in partnership with the CIC and Air Force Research Labs. In a recent Snapshots interview with BF, CIC Executive Director Craig Spohn said the Cyber Engineering discipline is part of an “integrated approach” between the national security apparatus and higher education to train cyber engineers.
“It’s computer science and electrical engineering with a national security underpinning,” Spohn said. “The CIC partners with Louisiana Tech University in advancing research by connecting federal agencies with investigators who are conducting a variety of relevant cyber research [projects]. Louisiana Tech University is a Center of Academic Excellence for the National Security Agency.”
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In addition to cyber engineering and information assurance, Spohn said relevant research topics include cyber policy and strategy, electronics shielding, data analytics and multi-sensor data fusion, micro- and nanotechnology, underground infrastructure and advanced communications. Skills critical to cybersecurity range from an understanding of software and hardware, along with networking and programming, and an understanding of the problem in the context of policy, law and ethics.
Gov. Edwards told BF that Louisiana’s push to develop a cybersecurity workforce isn’t limited to its universities. “There’s some really exciting research in cybersecurity going on in our universities, but we’re also pushing to stimulate interest in the cyber world among our high school and middle school students,” he said.
The NCRP already is spurring the development of a high-tech hub that is attracting new players to Louisiana’s data center sector. Last fall, Gov. Edwards dedicated the CRSA Integrated Technology Center in Bossier City, a data center operation that created 800 new high-tech jobs.
As cybersecurity moves to the top of U.S. national security concerns, the potential for growth in the emerging cybersecurity sector seems unlimited. [In an interview last fall, Louisiana Economic Development Secretary Don Pierson estimated that the cybersecurity industry eventually will create more than 1 million jobs in the U.S.]
Gov. Edwards told BF cybersecurity was a prime topic of discussion at this month’s National Governors Association meeting in Washington. “We spent an awful lot of time talking about cybersecurity and cyber research, and how this is critically important not just for defense but also for private enterprise,” Edwards said.
As a state with a significant number of military installations, Louisiana is applying as well as developing new cybersecurity measures. “We go through exercises where we simulate cyber attacks, sometimes as stand-alones and sometimes in conjunction with a natural disaster,” Edwards said.
“I’ve sat through three secret briefings with the FBI on cybersecurity. It is chilling what is going on out there and what the capabilities are. The bad guys are very creative people. It’s something we have to prepare for,” he added.
Edwards said the U.S. Department of Defense (DOD) is planning to invest heavily in cybersecurity. Louisiana’s National Guard is in the running to lead cybersecurity teams in Baton Rouge and Bossier City, he said, and the state may be designated to host a DOD headquarters for cybersecurity.
Early in this decade, Utah landed the crown jewel of the U.S. cybersecurity program, the National Security Agency’s Utah Data Center (also known as the Intelligence Community Comprehensive National Cybersecurity Initiative Data Center).
The NSA’s $1.5-billion Utah center, located at Camp Williams near Bluffdale, UT (between Utah Lake and Great Salt Lake) and completed in May 2014, is a data storage facility for the U.S. intelligence community that is designed to store data estimated to be on the order of exabytes or larger.
The Utah Data Center is designed to support the government’s Comprehensive National Cybersecurity Initiative (CNCI). The facility’s precise mission is classified, but it is believed to be capable of sifting through nearly all of the electronic communications moving through cyberspace. The NSA leads operations at the facility as the executive agent for the Director of National Intelligence.
Michigan’s Cybersecurity Initiative is a comprehensive state-level approach to cyber, improving the state’s defenses and fostering rapidly growing cyber talent and business environments. Michigan’s focus has been based on finding innovative solutions to prevent and respond to cyber threats with a focus on building a strong “cyber ecosystem” of partners in both the public and private sectors.
Michigan is developing a robust cybersecurity community focused on connecting the interests of the cyber, automotive, defense and aerospace industries. Key Department of Defense R&D and procurement facilities are located in Michigan to support developing dual-use technologies that have both commercial automotive and military applications. The Michigan Cyber Range (MCR), powered by Merit, offers a virtual, unclassified platform for cyber exercises, product testing and digital forensics. Merit’s Regional Cybersecurity Education Collaboration offers training to expand the pool of available cybersecurity workers in Michigan (and beyond).
OFFSHORING (THE GOOD KIND)
Since the Great Recession, we’ve used up a lot of ink (and pixels) talking about offshoring, usually in the context of U.S. manufacturing jobs lost to China and a bevy of lower-wage developing nations. So we’re pleased to report that there’s a much more positive kind of offshoring that’s poised to become a job-creating juggernaut, especially in the United States.
The BF Blog has been keeping an eye on the development of the U.S. offshore wind energy sector for almost a decade. Until 2015, all we could talk about was unrealized potential and stillborn projects. Then Rhode Island successfully launched Deep Water Wind off Block Island, a small wind farm consisting of five offshore turbines located three miles off the coast of Block Island and connected to the mainland by an underwater cable. Deep Water Wind became the first commercially operating offshore wind farm in the coastal waters of the United States.
Today, it appears that the offshore wind energy industry finally is poised for a huge breakthrough. Several mega-projects are in the works on the East and West coasts of the U.S. So in the 2017 Rankings Report, we’re introducing our new Offshore Wind Energy Leaders state ranking, a category that will grow in importance as this new alternative energy sector blossoms in the coming years.
The potential for offshore wind power is enormous. According to the National Offshore Wind Energy Strategy report, jointly issued last fall by the U.S. Departments of Interior and Energy, “accessible” offshore wind power has the potential to generate more than 2,000 gigawatts of power, which is equivalent to 7,200 terawatt-hours per year of electricity—enough to double the total electric power the U.S. generated in 2015.
“Coastal states have increased their demand for renewable energy deployment through renewable portfolio standards and other mandates. Many legacy fossil fuel, nuclear and renewable generators are set to retire because of age, cost or as part of the move toward lower-carbon sources of electricity,” the national strategy report states.
The report notes that land-based wind energy generation in the United States has increased nearly 60 percent and utility-scale solar generation increased more than 1,300 percent since 2011, but most of this renewable generation is located far from coastal load centers, and long-distance transmission infrastructure has not kept pace with this rapid deployment. At the same time, the offshore wind market has matured rapidly in Europe, and costs are now falling.
“These trends suggest that offshore wind has the opportunity to play a substantial role as a source of domestic, large-scale, affordable electricity for the nation,” the national strategy report says.
The Interior Dept. already has issued more than a dozen commercial leases for offshore wind development that could generate more than 15 GW of capacity; the strategy report says the installation of 86 GW of capacity by 2050 is feasible, which would cover about 14 percent of the projected demand for new electricity generation in the coastal U.S. and Great Lakes states.
As the cost of new offshore projects begins its downward descent to a competitive level with other forms of power generation (the cost of offshore-generated electricity is expected to dip below $100/megawatt-hour by 2025), and opposition from beachfront residents, tourism agencies (and, on the Gulf Coast, the offshore oil business) is overcome by the dynamic push for alternative energy, coastal states are beginning to move forward with projects for offshore wind turbine farms.
The joint national strategy report from Interior and Energy also spells out the benefits of a robust offshore wind-energy sector for the U.S, including a 1.8-percent reduction in cumulative greenhouse gas emissions—equivalent to approximately 1.6 billion metric tons of carbon dioxide—which could save $50 billion in avoided global damages; and a five percent reduction in water consumption by the electric power sector. Offshore wind could drive significant reductions in electricity price volatility associated with fossil fuel costs.
But here’s the government projection that gets our undivided attention: Increased economic development, employment and revenue for the U.S. Treasury. Deployment of offshore wind farms could support $440 million in annual lease payments into the U.S. Treasury and approximately $680 million in annual property tax payments, as well as support approximately 160,000 gross jobs in coastal regions and around the country.
COLORADO: ROCKY MOUNTAIN HIGH
Colorado has reached an unprecedented summit in our annual state rankings, and it’s not because of the altitude (or an uplifting side effect of the burgeoning weed industry) in the Rocky Mountain State. For the first time, CO is the top-ranked state in our flagship Economic Growth Potential category. [Colorado also took the top slot in our Employment Leaders category; as of April, CO had the lowest unemployment rate in the nation—2.3 percent.]
Venture capital has been flowing into Colorado this year, with tech and healthcare startups attracting a significant share of new investment dollars, according to a recent report in the Denver Post.
Colorado companies saw an investment rebound in the first quarter of 2017 as local firms raised more money in one quarter than they did in the first half of last year, according to the MoneyTree Report from PricewaterhouseCoopers LLP and CB Insights.
A total of 43 companies in the state raised $344.5 million during the first quarter of 2017. The state hasn’t seen that quarterly amount raised from venture capitalists since the second quarter of 2015.
Colorado’s first-quarter 2017 funding ranked fourth nationally for the number of deals and the amount raised. The positive investment news in CO bucked the national trend. Nationwide, venture capital deals declined to 1,104 deals and $13.86 billion in the first quarter, compared to $15.68 billion invested in 1,301 companies a year ago.
The Denver area was one of the few regions nationwide that saw an uptick in funding. Cherwell Software, based in Colorado Springs, led the pack with a $50 million raise in February that is intended to help the IT service management company expand.
Other large deals included miRagen Therapeutics, a Boulder biopharmaceutical company that raised $40.7 million; Boom Technology, which attracted $33 million to develop a supersonic jet at the Centennial Airport; and ProtectWise, a Denver cybersecurity firm that collected $25 million from investors.
Revenue generated by Colorado’s legal marijuana industry, meanwhile, keeps growing exponentially, with current estimates pegging the overall economic impact of the weed business in CO at $2.4 billion.
Recent monthly revenue figures indicate the state is on track to exceed last year’s massive sales totals for medical and recreational weed. Retail stores sold more than $125 million in product statewide in April, The Cannabist calculates based on state revenue numbers. Through the first four months of 2017, the state has collected over $76 million in taxes and fees on almost half a billion dollars in sales. Raw-dollar sales totals for marijuana are up about 27 percent despite falling prices.
The Rocky Mountain State also is gearing up to be a top-tier leader in the emerging growth sector of cybersecurity, with Colorado Springs becoming a major cyber hub.
Personal finance website GoodCall.com analyzed data from 221 cities when it named Colorado Springs a top 20 city for cybersecurity, highlighting Colorado Springs’ excellent cybersecurity job prospects and desirable lifestyle.
Factors cited as attractions to cybersecurity professionals include: a large military and government presence (there are six military installations in a 65-mile radius around Colorado Springs); the National Cybersecurity Center; the Catalyst Campus; academic institutions active in cyber education and industry partnerships; cross-sector collaboration; broad political support for cybersecurity development; innovative local companies; workforce development efforts and low cost of living.
WORKFORCE TRAINING: GOLD STANDARD
Last month, President Trump hosted state economic development leaders at the White House to kick off a new federal apprenticeship initiative. Trump signed an executive order to roughly double the funding, to $200 million in the U.S., for apprenticeship grants. The president said he wants to create 4.5 million new apprenticeships over the next five years, which would be almost 10 times the total that exist now.
It was fitting that among those standing behind the president in the Cabinet Room as he signed the apprenticeship order was Louisiana Economic Development Secretary Don Pierson. This year, we have once again named Louisiana’s FastStart as the top-ranked program in the nation in our Workforce Training Leaders category.
Since its inception in 2008, FastStart has trained nearly 26,000 individual workers in Louisiana and delivered almost 400,000 hours of training in sectors ranging from manufacturing and software development to distribution and customer contact centers for 175 companies.
“We talked a lot about earn while you learn,” Pierson told CNBC of the Cabinet Room discussion, where he shared some of his state’s success. “Less debt and more skill-set is sort of the concept. About six million technical jobs are available in manufacturing and other fields that [the U.S.] just [doesn’t] have the workforce to supply. The low-paying, low-skilled jobs are essentially being eliminated. Now somebody who keeps a plant running is more likely to carry an iPad than a toolbox.”
Louisiana’s apprenticeship model uses public funds for the training as part of a performance-based incentive package that ensures companies produce the agreed-upon capital investment and job creation targets in order to be eligible. FastStart also forms project-specific public-private partnerships with two-year and four-year colleges to provide curricula and training services that support employer growth at client companies. In addition to 35 high schools in Louisiana offering certification for manufacturing for the first time this past school year, a new, six-month “Operator Apprenticeship” program at the community and technical colleges combine three days in the classroom with two days in on-the-job training at three companies in the state so far.
As part of LED’s support for the GE Digital Technology Center in New Orleans, FastStart helped design and implement SWEAP, the Software Engineering Apprenticeship Program, in which computer science majors at the University of New Orleans and other area universities are employed at GE during their junior and senior years. SWEAP boasts a 91 percent conversion rate to full-time employment at GE upon graduation, with 24 SWEAP graduates hired so far.
“One of the things we’re hearing is kind of a departure from the traditional training method,” FastStart executive director Paul Helton told CNBC. “Companies nowadays don’t have that leisure where they can spend three, four weeks training someone, so we’re developing a lot more information-on-demand [like videos for special tasks] and really utilizing mobile devices, trying to do more on-the-job training that is a lot more effective and gets people out to the floor much more quickly.”
In the Shreveport area, the state’s $22-million Center for Advanced Manufacturing and Engineering Technology at Bossier Parish Community College attracted German steel manufacturer Benteler to build a high-tech seamless steel pipe mill. The center provides hands-on training for pipe fabricators, engineers, distribution and logistics personnel and management. In southwest Louisiana, the state built a $20-million training facility at SOWELA Technical Community College. The facility, which trains chemists, engineers, lab technicians, environmental and safety professionals and management, was a major factor in why Sasol, a South African chemical and energy giant, chose Louisiana for its $11-billion petrochemical complex. With FastStart’s help, the company has hired more than 500 full-time workers so far.
TEXAS: STATE RANKINGS POWERHOUSE
In what has become a very positive habit for the Lone Star State, Texas achieved the best overall performance in our 2017 State Rankings Report.
TX notched top-10 rankings in 17 of our state rankings categories, including five first-place results in Best Business Climate, Best Infrastructure, Installed Wind Power Capacity Leaders, Wind Power Installations (2016) and Exports Leaders.
Based on International Trade Agency (U.S. Commerce Dept.) stats for 2016, Texas, with a whopping $232.6 billion in exports, continues its dominance of the leaderboard in our Exports Leaders category (the Lone Star State has led the nation in exports for about 15 years), far outpacing no. 2 California ($163.6 billion). The only change in the top 10 pecking order from last year is Michigan ($54.5 billion) nipping Florida ($52 billion) to grab sixth place.
U.S. wind power continues to grow at an exponential pace, with more than 8,200 megawatts installed in 2016 and the total installed wind capacity reaching more than 82,000 MW at the end of the year, more than doubling the wind power the U.S. had in 2010. Wind energy accounted for 41 percent of the power capacity additions nationwide in 2016, with the number of installed turbines now topping 52,000.
An estimated $143 billion has been invested in wind power in the U.S. during the past 10 years; the wind power industry now employs more than 100,000 workers. American wind power is on track to provide 10 percent of our electricity by 2020.
Texas continues to rule our Installed Wind Power Capacity Leaders ranking, based on American Wind Energy Association and U.S. Energy Information Agency statistics. The Lone Star State, which built a $7-billion wind-power electricity grid in West Texas, now has more than 20,000 MW of installed wind capacity, nearly three times as much as second-place Iowa. Oklahoma makes an impressive surge into third place, overtaking California, while Kansas nips Illinois to grab fifth place.
Texas also tops the chart in Wind Power Installations (2016), with 1,790 MW in new wind projects. OK kept pace with 1,192 MW, while KS (615 MW) and ND (603 MW) put down markers that they’re aiming for the top tier of wind giants.
CALIFORNIA IS STILL THE SUN KING
The U.S. installed 2,044 megawatts (MW) of solar PV in Q1 2017 to reach 44.7 gigawatts (GW) of total installed capacity, enough to power 8.7 million American homes. Growth in Q1 was driven by a fourth-straight quarter of more than 1 GW growth in the utility-scale sector; analysts project that the industry will nearly triple over the next five years, surpassing 100 GW nationwide. As installations grow, prices continue to fall to new lows, with utility-scale system prices dropping below the $1 per watt barrier for the first time, according to GTM Research and the Solar Energy Industries Association’s (SEIA) latest U.S. Solar Market Insight Report.
Nearly 260,000 Americans work in solar—more than double the number in 2012—at more than 9,000 companies in every U.S. state.
The cost to install solar has dropped by more than 70 percent since 2010, leading the industry to expand into new markets and deploy thousands of systems nationwide. The biggest cost-decline opportunity in the solar industry exists in soft costs, including labor, supply chain and overhead considerations. The U.S. Department of Energy is leading the charge on reducing soft costs, and SEIA and The Solar Foundation are working with cities and counties to streamline permitting processes and reduce local barriers to going solar.
In 2016, solar power accounted for 39 percent of new installations for all new electric generating capacity, topping all other technologies for the first time. Solar power’s increasing competitiveness against other technologies has allowed it to quickly increase its share of total U.S. electrical generation—from just 0.1 percent in 2010 to 1.4 percent today. By 2020, solar is poised to surpass 3 percent of total generation, a share that is expected to hit 5 percent by 2022.
California continues to dominate our Installed Solar Power Capacity Leaders category, with more than 18,296 MW, based on 2016 totals compiled by SEIA. But we’ve had some significant movement in the rest of the top 10, compared to last year’s results for this category. North Carolina (3,016 MW) overtakes Arizona (2,982 MW) as No. 2; Utah and Georgia surge into the top 10 at sixth and eighth, respectively.
The surge by Utah and Georgia also is reflected in our Solar Power Installation Leaders (2016) ranking, with UT adding 1,241 MW and GA adding 1,023 MW.
Not surprisingly, the Golden State tops the chart in our new Solar Power Employment Leaders ranking with more than 100,000 solar energy jobs, seven times greater than no. 2 MA (14,582). Sixth-place NY (8,135) and eighth-place NJ (6,056) continue to expand their impressive commitments to solar energy.
FOREIGN DIRECT INVESTMENT MAGNETS
FDI into North America decreased by 19 percent in 2016, with a total capital investment of $56.5 billion, according to fDi Intelligence, the premier source for global FDI statistics. Despite the dip in capital investment numbers, project numbers increased in North America by 4 percent, to 1813.
Capital investment into the U.S. in 2016 dropped by 22 percent; but the number of projects increased by 3 percent. The U.S. remained the top destination country in the region, attracting 87 percent of FDI projects coming into North America, FDI into Canada by number of projects increased from 217 in 2015 to 242 in 2016. Total capital investment into Canada also increased by 4 percent.
New York and California share the top honors in the Top 10 States/Provinces for FDI (Capital Investment) category, each with $5.8 billion and a 10 percent share of the North American market, a surge for CA from last year’s fifth-place position in this category. Ontario, with $4.5 billion in investments, leapfrog’s last year’s no. 2, Texas. Illinois and Michigan break into the top 10. FL and PA tie for 8th, each with $1.7 billion in investments.
The pecking order for the top five in Top 10 States/Provinces for FDI (Projects) remains unchanged from last year’s results, with California again grabbing the top ranking with 246 projects, outpacing no. 2 NY (185 projects). Massachusetts surges into sixth place, up from ninth last year, and Michigan joins the top 10 at no. 7.
Recent major FDI projects in the U.S. have included:
- SMIUSA, a subsidiary of China-based Shanghai Municipal Investment (a provider of urban infrastructure services) is constructing a $3-billion residential and commercial complex in New York.
- Continental is constructing a new $1.45-billion tire plant in Clinton, MS. The Clinton facility will be the company’s largest North American manufacturing plant, creating 2,500 jobs.
- Lotte Chemical, a subsidiary of South Korea-based Lotte Group, is building a $1.1-billion monoethylene glycol processing plant in Lake Charles, LA.
- Samsung Austin Semiconductor, a subsidiary of South Korea-based Samsung, is in the midst of a $1-billion expansion of its semiconductor fabrication complex in Austin, TX. The expansion will enhance current System LSI production to meet increased demand for advanced system-on-chip products.
MI, KY, OH ARE TOPS IN AUTOMOTIVE
For this year’s Automotive Manufacturing Strength ranking, we gave extra weight to combined automotive assembly and auto parts employment as well as annual production figures. We’ve also evaluated new facilities, long-term investments and growth potential.
Michigan, our automotive king, is riding a wave of major new investment commitments from the industry giants.
Ford announced in March it will be spending $1.2 billion to upgrade and expand its capacity in Michigan. The Dearborn, MI-based automaker said the moves will “strengthen its leadership in trucks and SUVs and support the company’s expansion to an auto and mobility company.”
Ford’s MI projects include an $850-million Michigan Assembly Plant upgrade to support the return of Ford Ranger and Bronco models; a $150-million investment that will create 130 jobs at Romeo Engine, expanding capacity for engine components; a $200-million investment for an advanced data center in Michigan to support Ford’s plans to transform itself into a “mobility” company; and a $700-million expansion of its Flat Rock Assembly plant, adding 700 jobs as it converts that facility to produce electric and autonomous vehicles.
Kentucky, which snared second-place in our automotive category, recently hailed an announcement from Toyota Motor Manufacturing that it will invest $1.33 billion to overhaul its Georgetown, KY plant (Toyota’s largest auto assembly plant in the world).
Toyota currently employs more than 8,000 workers in the Bluegrass State. The focus of what Toyota is calling the Reborn project at Georgetown will be on increasing the manufacturing flexibility of the plant.
Ohio, Indiana and Alabama filled out the top five, respectively, in our automotive strength category.
Fukai Toyotetsu Indiana Corporation (FTIC), an automotive supplier, recently announced it will invest $56.9 million to expand its operations in Jamestown, IN, creating up to 103 new jobs by 2020.
The company, a Japan-based joint venture between Fukai Mfg. Co., Ltd. (Fukai) and Toyotetsu, will double its current 125,000-square-foot facility to 250,000 square feet.
The new facility, which will house one new blank/progressive press and two transfer presses, will allow the company to nearly double production of stamping and welding body structural automotive parts for Subaru of Indiana Automotive, Inc (SIA).
DATA CENTER HUBS ARE SURGING
As we detail in our Data Center Industry Focus, the expansion of supply—as measured by server capacity—is racing to meet the burgeoning demand for more centralized services in the form of “hyperscale” data centers and hybrid cloud solutions in hub markets. The bottom line is that regional mega-hubs are mushrooming across the country, with the leaders in the server-capacity race getting bigger and bigger.
Our Data Center Hubs metro ranking is based on the amount of megawatts multi-tenant data centers used in 2016 (a.k.a. “net absorption”), as measured by JLL’s 2017 Data Center Outlook, the industry’s most comprehensive survey of data center activity. It’s no surprise that established markets like Northern Virginia and Silicon Valley top the chart, respectively.
But if you want to get a fix on where the most impressive movement is happening in this super-hot growth sector, check out the heavyweight action in No. 3 Chicago (56 MW in net absorption) and No. 4 Dallas-Fort Worth (36 MW), and keep an eye on rising stars like Atlanta, which breaks into the top 10 in ninth place.
According to JLL’s report, industrial demand is surging in suburban Chicago (including Franklin Park and Elk Grove), with a major push for hyperscale cloud deployments (which has comprised 86 percent of total data center leasing in the Windy City metro for the past two years). JLL predicts that greater cost-efficiency and more advanced service will lure users from established data centers in the city limits to new, campus-style facilities in the suburbs.
In the past year, the Dallas-Fort Worth metro has made it clear it’s aiming for the top of the data center hub leaderboard. Facebook has doubled down on its commitment to the AllianceTexas Business Park in Fort Worth, acquiring an additional 50 acres for the expansion of its $1-billion campus. Other recent project activity includes: new facilities are under construction for RagingWire, T5 and Digital Realty; Skybox and Stream are developing facilities known in the industry as “powered shells” in Plano, TX; Softlayer, an IBM subsidiary, also is expanding its services in the Dallas-Fort Worth area, and industry players Equinix and CyrusOne are developing new market expansion projects.
In Metro Atlanta, Equinix has acquired a major portfolio of Verizon’s co-location data centers, including sites in Atlanta and Norcross. Telx is adding capacity at its Atlanta data center. JLL predicts that Atlanta’s net absorption (6.5 MW at the end of 2016) rapidly will expand this year as new-to-market providers increasingly look to the Georgia capital as they make their data center site selection decisions.
SMALL METROS MAKE BIG PUSH FOR FDI
Our friends at the fDi Intelligence division of The Financial Times are the most comprehensive source available for up-to-date information on foreign direct investment trends. This year, they added a sixth category to their annual American Cities of the Future evaluation: FDI strategy. Our FDI Strategy (Small Cities) category is based on fDi’s assessment of strategies for promoting foreign direct investment in 74 small metros in North America.
Kingston, Ontario, the top-ranked small metro for FDI strategy, uses its language skills (including a multi-lingual website for the Kingston Economic Development Corp.) to maximum advantage. Kingston has attracted more than $179.6 million of investment from Chinese and Portuguese investors. KEDC staffers are studying languages in an effort to better access investors in non-Anglophone markets.
Kingston also is upgrading infrastructure to increase its appeal as a destination for FDI. The city airport is in the midst of an expansion project, a new ferry to Amherst Island is going into service and the local rail station is being upgraded. Kingston also has established incentives aimed at foreign investors, including a new seed-funding program aimed at employers with a minimum of 10 new workers.
Lexington, KY, which made the top 10 in seventh place, has been successful in leveraging its relationships with local businesses into new investments, including FDI. One example is the Lexington-based biotech company Allylix. This company, founded in 2002, develops terpene products and their derivatives for the flavor and fragrance, food ingredient, pharmaceutical, agricultural, and biofuels markets. In 2014, Allylix was acquired by Swiss-based Evolva.
Another is Coldstream Laboratories, a specialty pharmaceutical contract manufacturer that spun out from the University of Kentucky. In January 2015, Coldstream Laboratories was acquired by India-based Piramal Enterprises.
Commerce Lexington recently partnered with the Kentucky Cabinet for Economic Development on an expansion project for Piramal. The company announced in February of 2016 that they would invest $10 million and add 40 new jobs to the Lexington operation.
STARTUP SCENE IS HOPPIN’ IN MIAMI
If the first thing that comes to mind when you think of Miami, FL is landmark pastel-colored tropical hotels, super-energized nightlife and drinks with umbrellas in them, think again. Miami tops the list on our Top Cities for Startups category, which looks at the rate of new entrepreneurs and startup density, among other factors.
Today’s Miami is teeming with vision-tech talent and innovation. Thousands of technology entrepreneurs are flocking to the South Florida tech epicenter in Miami; venture capital injected hundreds of millions of dollars of seed money into Miami startups in 2016.
Tech giants like Google, Facebook, Twitter and Uber, as well as new small players, are deploying Miami as a base to extend their reach into the lucrative Latin American and Caribbean markets.
Miami offers attractive tax incentives (a 5.5 percent corporate tax among them), as well as a reasonable cost of living relative to other tech hubs (and abundant sunshine).
A growing healthcare innovation ecosystem is firmly taking root in the most southerly major city in the continental U.S. The region’s recent spike in health tech startups is turbocharged by an established hub of healthcare-focused institutions, enterprises and resources. Miami is home to eight hospitals, three research universities and a bevy of large legacy healthcare companies.
Startupbootcamp Miami is one of the more prominent health tech accelerators catalyzing healthcare innovation in the area. The U.S. chapter of Europe’s largest accelerator aims to bring 10 health tech startups a year to Miami over the next three years.
Other similar accelerators on the edge of Miami’s digital health sector surge are Silicon Valley’s 500 Startups, Chicago-based Healthbox and TechStars partner PowerMoves, the latter of which focuses on increasing the number of startups created by African Americans and minorities. Accelerators like these that strategically set up shop in Miami connect healthtech solopreneurs and startups with various business lifelines, such as mentorship, pitching and access to venture capital.
Miami is holding its own in attracting health tech innovators over better-known tech hotspots like New York and San Francisco, in large part due to its culturally diverse and aging populations.
St. Louis, Cleveland and San Antonio were the top-ranked cities, respectively, in our new Startup Growth Leaders category, which ranks the cities with the largest-percentage increase in startup activities over the past year.
JOBS ARE GROWING IN ORLANDO, FL
Our metro Employment Leaders ranking is based on the highest annual percentage of nonfarm job increases per metro area, as measured by the Bureau of Labor Statistics (as of April 2017, which were compared to April 2016 numbers).
Orlando, FL, the top-ranked metro in this critical job-creation metric, is adding more than 1,000 jobs per week across a broad base of industries, according to payroll employment data released earlier this year by the Florida Department of Economic Opportunity. The professional and business services industry, which includes legal, accounting, computer systems design, management and administrative services had the largest net gain with 13,200 new jobs in January, outpacing the region’s leisure and hospitality industry. Construction employment grew the fastest with 10.4 year-over-year percentage change. Only the information industry, which largely covers media-related industries, recorded a contraction in the previous 12 months (from January 2016 to January 2017).
Florida businesses created 262,200 new jobs in the 12 months ending January 2017 and 54,600 of those jobs were in Orlando. With only 11 percent of Florida’s population, the Orlando metro is adding more than 20 percent of the state’s new jobs. One out of every three leisure and hospitality jobs created in Florida was in Orlando.
Huntsville, AL is the top-ranked metro in our Aerospace/Defense Leaders category, based on BLS employment statistics per metro area for aerospace engineers. By 2020, Boeing hopes to have added 400 more jobs and invested $70 million to grow its operations in Huntsville, according to Made in Alabama.
Boeing’s Ground-based Midcourse Defense initiative is one of the company’s major projects in Alabama. Boeing has been operating in the state since 1962 in support of U.S. space programs. Today, 2,700 Alabama employees provide technological developments to both the commercial and defense sectors.
“Boeing is investing in the future of Alabama as a center of innovation, continuing to bring highly-skilled jobs and growth to the region,” says Ken Tucker, director of State and Local Government Operations for Boeing in Alabama.
Recent developments involve missile defense programs for the U.S. military. Boeing’s Ground-based Midcourse Defense system recently met with success, and the company plans to expand its 28,000-square-foot Patriot Advanced Capability-3 Missile Seeker facility, providing enhanced production capabilities by the end of the year.
“Boeing’s continued growth in Alabama is a testament to the company’s strategic vision, as well as the skillful execution by its workforce in the state,” says Greg Canfield, secretary of the Alabama Department of Commerce.
According to Made in Alabama, a recent economic impact study claims Boeing contributes more than $2 billion to the state’s economy every year, supports almost 8,400 direct and indirect jobs, distributed $264 million in annual payroll, spent $749 million in Alabama and contributed nearly $1.7 million to non-profit organizations.
AUSTIN RULES IN GROWTH POTENTIAL
Austin, TX, with one of the most dynamic and diverse metro economies in the nation, has been a perennial top-tier finisher in our flagship metro Economic Growth Potential ranking. This year, the Texas capital snared the top prize, with Charlotte, NC and Denver, CO notching respectable second and third-place showings (Colorado is No. 1 in our state ranking for Economic Growth Potential).
Samsung Austin Semiconductor announced last fall that it plans to invest another $1 billion in its Austin chip manufacturing facility (known as a semiconductor fabrication plant), adding as many as 500 engineering and manufacturing jobs.
South Korea-based Samsung has had operations in Austin since 1997—their investments at the facility now total more than $13 billion—and it currently employs 3,000 people in Austin. The investment will help Samsung increase the capacity of its Northeast Austin manufacturing plant, where it makes chips that are used to help power mobile phones, tablets and other electronic devices.
The investment comes on the heels of about $4 billion Samsung spent in 2010 to upgrade the plant so that it could make more “system on chip” products instead of memory chips (the company no longer makes memory chips in Austin). The new $1-billion investment includes buying new manufacturing equipment and construction costs.
Samsung also has a research and development center in Austin where it employs about 300 people. The company recently leased additional office space in Austin to make room for additional chip designers.
Austin’s semiconductor industry accounts for about 10,000 to 15,000 jobs. NXP Semiconductors is another chip company that still does manufacturing in Austin. Most of the other Austin semiconductor companies, such as Cirrus Logic, Silicon Labs and Advanced Micro Devices, have gone “fabless,” outsourcing the manufacturing work and focusing on design.
Apple recently moved thousands of employees into a campus that is bigger than any other that the tech giant currently has. The iPhone maker moved into a massive 1.1-million-square-foot campus in north Austin, as well as another smaller 216,000-square-foot campus in southwest Austin. In total, Apple now has more than 6,000 employees in the Texas capital.
Apple’s presence in Austin, which dates back to 1992, has fluctuated over time. But in recent years, the city has become a major hub for the company as it expanded outside its Silicon Valley base. In 2010, Apple announced plans to add to its then 100-person team in Austin by making it a base for microchip design. Those engineers have since played a major role in developing the company’s “A” series processors as well as other components for the iPhone to the iPad. Today, Apple has more than 500 workers in its Austin engineering operations, a number that will double when the facility expands to full capacity.
Austin also is home to a Mac Pro manufacturing facility, where the company’s high-end desktop is constructed.
Apple’s massive 1.1-million-square-foot campus in Austin is home to a customer service center, human resources functions and its online store. The availability of a highly skilled workforce was a critical factor in the company’s decision to put the new campus in Austin. Apple also is receiving financial incentives for the project: according to newspaper reports, the city, county and state have agreed to give the company $35 million in long-term tax breaks, in addition to $10.5 million in tax incentives Apple already has received.
Charlotte, NC continues to expand as a rising financial and insurance hub. Insurance giant AXA recently announced it will add 550 jobs to its University-area offices to create the largest of its U.S. operations. When the expansion is complete more than 1,000 jobs will be based on the AXA Charlotte campus.
New York-based AXA will keep its U.S. headquarters in the Northeast. AXA will bring IT, finance, legal, accounting, customer service, human resources and other jobs to the University location. The expansion represents a roughly $18 million investment. The state approved AXA for a Job Development Investment Grant that could be valued at close to $12 million. Information from the state shows the average salary for the jobs is close to $110,000. That means the payroll will exceed $60 million. That compares to an average annual salary in Mecklenburg County at close to $63,000 per year.
We’ve augmented our metro growth potential ranking this year with a new category: Economic Growth Potential (Population Less Than 300k). The top five metros, respectively, are Salt Lake City, Mobile, Charleston, Shreveport and Jersey City, NJ. [When we were evaluating metros for this rankings category, we were surprised to learn that Jersey City is poised to surpass Newark as New Jersey’s largest city by population.]
Salt Lake City, UT is primed to become a leading U.S. cybersecurity hub. The metro already has a thriving set of diverse growth sectors, including digital media, and it offers a bounty of skilled workers to lure other tech players. With the nation’s largest demographic of people under the age of 30 and a robust set of higher education resources geared to developing graduates that are ready to fill 21st century jobs, the greater Salt Lake City area is poised for steady growth for years to come.
Biomerics, a leading medical device manufacturer for the cardiovascular market, recently announced it will relocate to a new corporate headquarters in Salt Lake City. The 230,000-square-foot facility will be located in the International Center west of the Salt Lake City International Airport and will include corporate offices, engineering offices, research and development labs and cleanroom manufacturing.
“The team has done an excellent job designing a facility that reflects the vision and growth expectations of the company,” stated Travis Sessions, Chief Executive Officer of Biomerics. “This investment will support the next phase of the company’s growth strategy and will expand our device design, development and manufacturing capabilities.”
The headquarters is engineered to accommodate up to 600 employees and will include a full range of manufacturing technologies, including implantable material polymerization, molding, extrusion, coating and catheter assembly.
Biomerics expects to invest $38.5 million in the expansion over the next eight years and to add over 380 new jobs. The Utah Governor’s Office of Economic Development (GOED) provided up to $3 million in tax incentives for the investment. The location selection process, building design and construction are being managed by Wasatch Commercial Management, Utah’s leading commercial real estate development and management company.
In May, the multinational French biotechnology company bioMérieux took the next step forward in a partnership with Utah-based diagnostic equipment manufacturer BioFire with the opening of a new manufacturing facility in Salt Lake City. The companies celebrated the opening of the Alain Mérieux Center for Molecular Diagnostics in the University of Utah Research Park, where researchers and manufacturers can work more closely to develop faster and more-reliable diagnostic equipment.
“The first thing we looked for in the acquisition was a strong connection between the scientists at the University of Utah and the entrepreneur,” said Alain Mérieux, founder of bioMérieux.
The bioMérieux company, founded in 1963, traces its roots back through the Mérieux family to 1897 when Marcel Mérieux studied with the founder of microbiology, Louis Pasteur. BioMérieux is now working in 150 countries through 42 subsidiary companies.
The new building, a roughly $100-million investment by bioMérieux, has 285,000 square feet of space and includes power features that meet the silver standard for sustainability by the Leadership in Energy and Environmental Design.
BioFire, which started out as a small firm known as Idaho Technology, moved to Salt Lake City in 1999 for better proximity to the University of Utah’s medical students and research assets. The company has had large-scale success within the United States, but has had modest international sales. The partnership with bioMérieux is aimed at expanding international sales.
Mérieux said the new facility could accommodate the growth for BioFire’s manufacturing for the next five to 10 years. He also said that the new facility demonstrates bioMérieux’s confidence in BioFire. After bioMérieux’s 2014 acquisition of BioFire, the company hoped to diversify its diagnostic capabilities with a technology that can turn a six-week long diagnostic process into a simplified hour-long test.
The shifting landscape in the global financial services industry is mirrored within the United States, as several regional financial centers have staked a claim to top-tier status as well. Two of these success stories are on the East Coast, in Jersey City and Charlotte.
Announcements of the relocation or expansion of a major financial services player to Jersey City have come on a regular basis since the beginning of this decade. JC has been the beneficiary of an influx of major financial players, including Fidelity Investments, which moved from lower Manhattan, and Bank of Tokyo-Mitsubishi UFJ Ltd., which extended its lease until 2029 in the financial center at Harborside Financial Center in Jersey City. The Japanese bank’s decision to extend its occupation of 137,076 square feet at Harborside no doubt was prompted in part by the realization dozens of major financial players have been lining up for prime locations near the Jersey City waterfront.
The original 3.1 million square feet available at Harborside Financial Center was nearly filled to capacity, even during the Great Recession. The Tokyo-Mitsubishi bank leases space in the 725,600-square-foot Harborside Plaza office tower at Harborside Financial Center.
Concerned about the high cost of space (particularly in Manhattan), banks began shifting their data operations to new office towers on the Jersey City waterfront about 25 years ago. Fidelity also indicated its relocation decision was motivated by a desire to reduce costs; it followed in the footsteps of its competitors, including Charles Schwab & Co. and TD Ameritrade, which also set up shop in Jersey City.
The crown jewel of Jersey City’s burgeoning skyline is a 781-foot Cesar Pelli-designed tower, the tallest in NJ, built in in the early 2000s by Goldman Sachs. Goldman Sachs originally intended to be the tower’s sole occupant, moving its traders over from Manhattan, but the investment bank changed its mind soon after the building was completed and began leasing out space to other occupants. They found a bevy of eager takers, including New York Life, which took three floors in the waterfront tower, bringing the 1.4-million-square-foot building close to full occupancy.
Last summer, World Business Lenders, lured from New York by a $17 million tax credit, cut the ribbon on its new headquarters in Downtown Jersey City with local, state and federal elected officials looking on.
GLOBAL RACE TO RIDE THE WIND
The decade-long neck-and-neck race between China and the U.S. in our annual Renewable Energy Investment Leaders ranking (based on the UN’s Environmental Economy Division) appears to be fading into a distant memory.
In 2016, the PRC increased it’s wide lead at the top of the chart, investing $78.3 billion compared to $46.4 billion for the U.S. and $24 billion for the U.K. Analysts warn that the Trump Administration’s policy of expanding America’s fossil-fuel industry may enable China to dominate the global renewables industry, which currently accounts for more than 300,000 U.S. jobs. But here’s a silver lining: in the U.S., a majority of governors, mayors and business leaders are emphatically confirming commitments to accelerate the conversion to clean energy.
China dominates our global Installed Wind Power Capacity chart with more than 168,000 megawatts, but the U.S. (82,000 megawatts) rapidly is expanding its wind capacity and may soon challenge the PRC for the crown. India, in fourth place with 28,700 MW, has put down a marker that it’s aiming for the top tier.
As we detailed in our state rankings section, the potential for offshore wind power in the coastal waters of the United States is enormous. But the U.S. is just getting started in offshore wind energy, and it’ll need a giant leap forward to catch up with rest of the world. The U.S. isn’t even close to making the top 10 in our new rankings category, for global offshore wind power capacity leaders.
Offshore wind power capacity, globally totaling 14,384 megawatts in 2016, has doubled in the past three years and will continue to grow exponentially. The U.K. (5,156) and Germany (4,100) ranked first and second, respectively, have established solid leadership positions, but China (1,627) is coming on strong. The top five is filled out by India and Spain. [While we usually refrain from editorializing in our Rankings Report, it’s worth noting the irony presented by India’s impressive progress in alternative energy, since the inducements India received in the Paris Climate Change accord to lower its carbon emissions were cited by the U.S. as one of the reasons America pulled out of the Paris agreement. While China and India have used coal-fired power plants to expand their GDPs, the world’s two most-populous nations have walked the walk and are racing for global leadership in the conversion to clean energy.
Among the developed industrialized nations, Germany has put down a marker that it’s aiming for the top of the global leaderboard by adding 813 MW of new offshore turbine capacity in 2016; China, with 592 MW of new installations in 2016, made it clear it has no intention of slowing down in the offshore sector; the Netherlands also signaled its intention to break into the top 10 in global installed capacity with 691 MW of new offshore rigs in 2016.
However, the current global leader (the UK) appears to have slacked off, with just 56 MW of new capacity last year (at this point, we can’t say whether impending Brexit negotiations that will include the establishment of a new boundary in the international waters between the UK and Europe is having a negative impact on new offshore projects in Great Britain). There’s good news in the 2016 offshore installation numbers for the U.S. and South Korea, which made the top five for new coastal turbine projects, both installing 30 MW of capacity.