The rankings ecosystem is getting crowded and, like everything else in 21st Century America, it appears to be dancing to the tune of reality TV. The competition is the show: there must be winners and losers. Don’t spoil the fun by drilling down into the minutiae of “weighted factors” that reveal the script behind the results. What counts is that your favorite business network or mainstream trade pub has declared Pleasantville the “best place” for something or other; there is no joy in Mudville, perennial also-rans.
The reality of economic development can’t be expressed in sound bite-sized morsels, and the progress of locations in meeting today’s challenges can’t always be measured in winners and losers. Sometimes it’s the nuances that reveal more: a location may have the lion’s share of an industry’s jobs, but if that industry’s new facilities are going elsewhere, then that location doesn’t have growth potential. A state may have the largest installed capacity of a certain type of renewable energy, but that state won’t meet its renewable energy portfolio standard’s goal if only 10 percent of its electricity is generated from renewables.
We’ve said it before, but it bears repeating: we’re aiming to give you more than a snapshot in time in Business Facilities’ 15th Annual Rankings Report. We do our best to configure BF’s rankings categories and criteria to measure the state of play: not just who’s on top, but also who’s moving up the ladder, how fast they’re moving and who has the best chance to succeed.
To put it more succinctly, BF’s rankings always are looking forward, anticipating tomorrow’s leaders from today’s results.
Business Facilities’ 15th Annual Rankings: State Rankings Report
TN TOPS IN BUSINESS CLIMATE
BF Editor in Chief Jack Rogers noted that the top three—and this year’s no. 4 in Best Business Climate, Texas—all have been perennial contenders for BF’s top honor, the State of the Year Award: Texas and Tennessee each have won the award three times since it was created in 2007; Virginia was the 2018 SOTY; Alabama won BF’s top award in 2017.
“An exceptional business climate is a prerequisite for our State of the Year honor,” Rogers said. “Tennessee always sets the bar high in meeting all of the priorities of businesses evaluating locations in the Volunteer State, whether it’s customized workforce training, prefertilized sites or lower industrial electricity costs.”
Gov. Bill Lee has cited TN’s business-friendly environment in several recent project announcements.
“The reputation of Tennessee’s business climate and skilled workforce has attracted countless world-class businesses to our state. Over the years, Tennessee has become the epicenter of the Southeast’s thriving automotive sector, and I’m proud Mitsubishi Motors will call Franklin its U.S. home and bring 200 high-quality jobs to Middle Tennessee,” Lee said, when Mitsubishi Motors North America officials announced the automaker will relocate its headquarters to Franklin, TN from Cypress, CA.
Mitsubishi Motors’ move represents an investment of $18 million in Williamson County. The company decided on the TN location after meeting with Gov. Lee during the governor’s trade mission to Japan.
Tennessee Economic and Community Development Commissioner Bob Rolfe also cited the state’s highly favorable business climate when he hailed Lightning Source LLC’s recent decision to establish its fifth U.S. facility in Jackson, TN.
La Vergne, TN-based Lightning Source, a provider of on-demand print and distribution services for books to the publishing industry, will invest about $22 million and create up to 150 jobs in Madison County over the next three years.
“Ingram Content Group, including Lightning Source, already has a deep presence in Tennessee, employing more than 2,000 residents across our state. This expansion in Jackson underscores the ripe environment for job creation and investment we’ve fostered here in Tennessee,” Rolfe said at the project announcement.
The TNECD website summarizes Tennessee’s approach to business climate with this credo: “We believe in high expectations, low debt and a pro-business regulatory environment. Tennessee is proud to be a right-to-work state with no personal income tax on wages. Our state and local tax burdens are among the lowest in the country, and our state budget operates with a healthy surplus rather than a deficit.”
North Carolina, Colorado and Virginia topped the chart in BF’s flagship Economic Growth Potential ranking. Rogers noted that all three states have established highly diversified growth strategies and staked a claim to leadership in high-tech hubs.
“Our leaders in Economic Growth Potential each have put down markers that they are prepared to compete in the hottest emerging growth sectors,” Rogers said, noting that VA and NC notched top-10 results in BF’s new Cybersecurity Growth Potential state ranking, while Virginia and North Carolina ranked first and fourth, respectively, in our Unmanned Aerial Systems state ranking. Nevada and Alabama rounded out the top five in Economic Growth Potential, followed by Utah, Florida, Louisiana, Missouri and Mississippi.
North Carolina has been laying out the welcome mat for businesses in a diverse group of industries, offering a growing talent pool of young skilled workers, an attractive quality of life and targeted incentives. This combination, among other factors, has lured some big players to the Tarheel State.
Lowe’s Companies Inc. announced last month that it has selected Charlotte, NC as the future home of its new $153 million global technology center, creating more than 1,900 net new jobs in the city. Set to open in late 2021, the 357,000-square-foot technology center will be located in a new 23-story tower, branded with Lowe’s, in the bustling neighborhood immediately south of uptown Charlotte.
The dedicated technology hub will help accelerate the Fortune 50 company’s technology transformation, serving as the epicenter for the team Lowe’s is hiring to help modernize its IT systems and build future retail experiences. The center will ultimately employ up to 2,000 associates.
“We’re excited to stand up our new global technology center here in North Carolina to continue to drive our company’s growth,” said Marvin R. Ellison, Lowe’s president and CEO. “Locating our new facility in the heart of Charlotte, the state’s largest metropolitan area, will enable Lowe’s to attract top technology talent and foster collaboration with our teams in our nearby Mooresville headquarters. This team will create technology solutions that will accelerate our commitment to becoming a best-in-class, omni-channel retailer and strengthen our associate and customer experiences.”
The Lowe’s project will be facilitated, in part, by a Job Development Investment Grant (JDIG) and a grant from the One North Carolina Fund. The JDIG was approved by the state’s Economic Investment Committee. Over the course of the grant’s 12-year term, the project will grow the state’s economy by an estimated $6.3 billion. Using a formula that takes into account the new tax revenues generated by the 1,612 new jobs, the JDIG agreement authorizes the potential reimbursement to the company of up to $54 million paid over 12 years. State payments only occur following performance verification by the departments of Commerce and Revenue that the company has met its incremental job creation and investment targets.
Because Lowe’s chose to expand in Mecklenburg County, classified by the state’s economic tier system as Tier 3, the company’s JDIG agreement also calls for moving as much as $18 million into the state’s Industrial Development Fund/Utility Account. The Utility Account helps rural communities finance necessary infrastructure upgrades to attract future business. Even when new jobs are created in a Tier 3 county such as Mecklenburg, the new tax revenue generated through JDIG grants helps more economically challenged communities elsewhere in the state.
TX, VA LEAD CYBER CONTENDERS
There are at least 15 high-tech job categories that come under the rubric of cybersecurity, including systems engineers, software developers, database architects, vulnerability analysts and positions that are known in the industry as “penetration testers.”
The burgeoning cybersecurity sector is now employing more than 900,000 people across the country, but the Bureau of Labor Statistics hasn’t created an NAISC category to aggregate these job numbers and give us a clear picture of which states are getting the lion’s share of them.
What we do know is that cybersecurity is the hottest growth sector by far, with the demand for skilled technicians growing exponentially each year and far exceeding the supply: the shortage of cyber workers may top 3 million by 2021. The states that have put the assets in place today to support a thriving cybersecurity industry—including STEM-oriented higher education programs with cyber-specific degrees and R&D facilities working in tandem with national security agencies, the U.S. military and business—will rule the cyber sector tomorrow.
So this year we’re introducing our Cybersecurity Growth Potential ranking, which is based on an across-the-board evaluation of each state’s cyber ecosystem, including higher ed resources, research labs and innovation centers, and partnerships with national security programs, as well as employment.
Texas is the top-ranked state in our new cyber growth potential standings, followed by Virginia, Louisiana, Maryland and Georgia in the top five.
San Antonio, TX is now billing itself as the “Cyber City”, and with good reason. San Antonio’s cybersecurity industry is mature and growing stronger. Alignment of education, industry and government within cybersecurity, and the ability to collaborate across these sectors, presents the city’s most significant opportunity for industry development.
What began in 1948 when the Air Force established its Security Service operations in San Antonio has grown into one of the nation’s leading cybersecurity hubs, with the highest concentration of cyber and intelligence professionals outside of the national capital region. Proximity to highly advanced DoD and military operations, including the Air Force Cyber Command and NSA Texas, paired with leading cyber education programs and a competitive cost of doing business puts San Antonio in a position that is hard to match.
“To further develop San Antonio’s cybersecurity dominance, we’re focused on talent development tailored to industry needs in the cybersecurity industry,” said Tom Long, Chief Development Officer of the San Antonio Economic Development Foundation. “It’s a strategy gaining attention and investment from cybersecurity operations large and small, as well as large corporations with significant internal cybersecurity hub operations.”
In higher education, San Antonio’s six NSA Centers of Excellence specialize in cybersecurity research and education and support a sustainable cybersecurity workforce pipeline. What’s more, the University of Texas at San Antonio boasts the nation’s top ranked cybersecurity undergraduate program and recently opened its National Security Collaboration Center (NSCC). The NSCC aims to build an environment where industry, government and academia can come together to solve issues surrounding cybersecurity, while advancing research, education and workforce development from San Antonio.
Louisiana, no. 3 in our cyber growth potential ranking, has established an impressive array of cybersecurity R&D and innovation assets.
In July 2018, the applied research center of Louisiana State University, Stephenson Technologies Corp., secured a $10 million Department of Defense contract to strengthen the cybersecurity of small businesses that work with manufacturers in Louisiana. The thinking of the Defense Department and LSU is that critical operations of Louisiana’s $50 billion manufacturing sector are most vulnerable at their weakest link, often the small business vendor who lacks cyber resources. “Whether we’re talking about the energy, chemical or maritime sectors, Louisiana plays a critical role in the nation’s economy,” said the state’s governor, John Bel Edwards. “What we do here has impact, and that’s why leading the country in cybersecurity is a priority. Through this major defense contract, our small businesses now have an ally in that fight, and we can provide real solutions to develop the cyber workforce of tomorrow.”
In 2017, Edwards created the Louisiana Cybersecurity Commission to bolster the state’s cyber safety and to position Louisiana as a national leader and preferred location for cyber business, education and research. A year later, he assumed co-chairmanship of the National Governors Association cybersecurity group.
In May, Gov. Edwards welcomed fellow governors and chief information security officers from nearly every state to Shreveport, LA, for the third cybersecurity summit held by the National Governors Association (NGA). NGA members and panelists wrestled with a broad array of challenges: keeping the electric grid safe; confronting cyber threats to public safety; navigating crisis communications during cyber events; the role artificial intelligence plays; supply chain impact; emergency management, the National Guard and cybersecurity; and election security.
The Cyber Innovation Center (CIC) anchors Louisiana’s 3,000-acre National Cyber Research Park in Shreveport-Bossier City, where General Dynamics operates an 800-employee Integrated Technology Center and where Louisiana Tech University and Bossier Parish Community College operate a STEM Building aimed at fast-tracking students for cybersecurity and other technology careers.
The U.S. Department of Homeland Security awarded a second five-year grant to the CIC in 2018, with an expected value of $21.5 million over the next five years. To date, the CIC has attracted over $34 million to develop classroom tools in Louisiana that have impacted over 15,000 teachers and 2.5 million elementary and secondary students in all 50 states and three U.S. territories. By 2023, with the new Homeland Security funding, the Louisiana center expects to broaden its cyber skills preparation to 10 million students and 50,000 teachers.
Louisiana Tech University, located 60 miles east of the National Cyber Research Park, created the nation’s first four-year degree in cyber engineering. Simultaneous with that advancement, the State of Louisiana invested $14 million in a 10-year higher education initiative lead by Louisiana Tech to provide a pipeline of talent for the General Dynamics Information Technology center in Bossier City.
CA STILL THE SOLAR KING, NC NO. 2
Solar energy continues to expand exponentially across the country. The U.S. installed 10.6 gigawatts (GW) of solar photovoltaic (PV) capacity in 2018 to reach 64.2 GW of total installed capacity, enough to power 12.3 million American homes. Total installed U.S. PV capacity is expected to more than double over the next five years.
California remains the Sun King by far (more than five times the installed solar power capacity of any other state). North Carolina solidifies its hold on 2nd place, while Texas surges into 5th, based on 2018 totals compiled by the Solar Energy Industry Association.
In our Solar Power Employment category, Florida has surged into 2nd place and Ohio has joined the top 10.
Since last year, Cypress Creek Renewables has asked the North Carolina Utilities Commission for solar farm certificates to facilitate 15 projects worth more than $1.8 billion.
“Cypress Creek has been at the forefront of developing transmission projects in North Carolina for some time and the increased activity in that area is a reflection of our continued interest,” Cypress Creek representative Jeff McKay said in a press release.
Cypress Creek currently has solar farms in operation or under construction in 15 states, including NY, TX, OR, MT, IN, GA, ID, SC and NC. As of the end of 2018, they have an operating portfolio of over 1 gigawatt, making them the fastest-growing developer of utility-scale solar farms in the United States.
Texas still rules the roost in Installed Wind Power Capacity, based on the latest wind power standings from the American Wind Association. Iowa, Oklahoma, California and Kansas fill out the top five, respectively.
Kansas also has seized the top spot in our ranking of the states with the highest percentage of electricity generated by wind power, followed by IA, OK, ND and SD, respectively, in the top five.
The Jayhawk State’s rise to the top tier of wind power leaders was achieved despite strenuous opposition from the uber-rich and politically connected Koch brothers. For the past five years, the Kochs—owners of Koch Industries, a $110-billion oil and gas behemoth based in Wichita, KS—mounted a well-financed effort to convince the Kansas Legislature to prevent Kansas from establishing a Renewable Energy Portfolio standard and to end subsidies for wind farms in the Sunflower State.
In 2014, the Kochs, their lobbying group Americans for Prosperity and other fossil fuel industry players worked to repeal Kansas’ renewable energy standard through the entire legislative session, and were defeated six times, including on the last day of the session.
OPPORTUNITY ZONES ARE HERE
Not since the federal Urban Renewal efforts of the 1970s has legislation passed by the U.S. Congress had the potential to spur economic development from coast to coast: we’re talking about the new federally designated Opportunity Zones that were created by the Tax Reform and Jobs Act that was enacted into law in December 2017.
The Opportunity Zones incentive established by Congress is designed to encourage long-term investments in low-income urban and rural communities nationwide by providing a tax incentive for investors to re-invest their unrealized capital gains into dedicated Opportunity Funds. The authors of the Opportunity Zones section of the tax reform bill, Sen. Cory Booker of NJ and Sen. Tim Scott of SC, designed the program to unleash a flood of private capital investment into the parts of the U.S. that need it the most.
Since the tax reform bill was enacted, the IRS has issued a series of guidelines relating to the operation of Qualified Opportunity Zones (QOZs) and Qualified Opportunity Funds (QOFs) that were created by the new federal law. Without getting into the minutiae of the tax law, suffice it to say that the IRS has gradually been clarifying what Congress meant when it linked the QOZ tax benefit to the duration of a taxpayer’s investment in a QOF.
Initial interpretations of the law gave investors the impression that they only had about 90 days to validate their QOF investments in order to have these investments covered by the new tax credits. New guidelines issued in April by the U.S. Treasury Dept. appear to extend that window for six months. The bottom line is that a lot of investors are waiting for the regulatory smoke to clear before they jump onboard Opportunity Zones, which means we probably won’t be able to measure the impact of this new federal program until next year.
However, we can rank the top states for Opportunity Zones based on the number of QOZs each state received out of the nationwide total of 8,764 federally designated Opportunity Zones announced by the Treasury Dept.
California, with 879 QOZs, received the lion’s share of designated Opportunity Zones, followed by Texas (628), New York (514), Florida (427), Illinois (327), Ohio (320), Pennsylvania (300), Michigan (288), Georgia (260) and North Carolina.
LED’S FASTSTART: DECADE-LONG GOLD STANDARD FOR TRAINING
Our 2019 State Rankings Report has produced an unprecedented milestone: for the 10th consecutive year, Louisiana Economic Development’s FastStart program is BF’s top-ranked Workforce Training initiative.
“LED’s FastStart has pioneered and validated just about every best practice for workforce training that you can think of,” BF Editor in Chief Jack Rogers said. “FastStart remains the gold standard for highly customized workforce development programs.”
One of the hallmarks of FastStart has been its adaptation of the latest technology to the needs of workforce development. “Ten years ago, they were the first to use iPads to train workers,” Rogers noted. “They’re always ahead of the curve.”
LED FastStart today is pushing the envelope with new innovative tools deploying artificial intelligence, augmented reality and applicant tracking systems, while continuing to help employers meet workforce goals more effectively than ever.
“We’re all about solutions,” said Paul Helton, LED FastStart executive director. “All our clients are expanding their workforce, yet each one of them faces unique challenges. Our goal is to solve those challenges with the smartest tool at our fingertips. Often, that means we create a new tool, and almost always it benefits other clients, too.”
For employers adding a minimum 15 manufacturing jobs or 50 service jobs, LED FastStart services come free. Since 2008, FastStart has delivered 463,000 training hours to over 29,000 employees linked to 233 projects.
LED FastStart also is upping its game in talent attraction, which increasingly is becoming a top priority of workforce development programs across the country. One recent success story is Australian company Syrah Resources. Located in the Mississippi River community of Vidalia, Louisiana, Syrah Resources is importing graphite from Mozambique and purifying it for battery anodes that will power electric cars.
To attract the right mix of technicians, mechanics and process operators, FastStart created a custom Syrah landing page; linked it to LouisianaJobConnection.com, FastStart’s innovative job matching portal; amplified job opportunities on social media channels; and connected all of that to a physical job fair.
Many employers using the LED FastStart job site don’t have an applicant tracking system or a dedicated, in-state HR department. Louisiana Job Connection provides a virtual version through a job description builder to attract candidates; filters to identify strong matches; and uses a tracking system to manage the process.
New features will help employers translate military classifications to civilian job skills and—when a particularly impressive résumé emerges—instantly identify the most similar résumés among hundreds of thousands on the site.