COMMENTARY:
One of my roles is that of an industrial recruiter paid to recruit value-added production plants and distribution centers for clients. Over the years, I have spoken to many community representatives and developers about recruiting businesses that are part of a global supply chain. These types of businesses tend to hire a lot of employees, invest millions of dollars in their facilities, and create an economic development multiplier effect in their communities. Additionally, recruiting a company that has worldwide recognition adds prestige to a community, and helps with the case of attracting more businesses of this type. After all, if a community is attractive enough for a global company such as German-headquartered ThyssenKrupp, whose products are all over the world, it should be attractive to other similar global companies.
I tell community leaders and economic developers that the first step in recruiting global companies is to take an inventory of their local assets and deficits. This inventory will also reveal local elements that will determine what kind of prospects and industries you can go after. If a community has good access to interstate highways, it might be attractive for major distribution centers. If a community does not have an abundance of water, then it should stay away from industries that are big water users. If a company has a limited labor force, then companies that have highly automated production/distribution processes could be targeted.
When I started my career, three factors tended to interest global companies in search of new space for their operations. If a company wanted to lease space, it needed to have the availability of leasable industrial space, and a competitive lease price of that space. If a company wanted to build its own facility, the main factor was the availability of industrial-zoned land and its price. For both of these types of businesses, another major factor was the incentives that the community and/or state would throw into a deal to recruit a business. These incentives could include tax abatement on the company’s real and personal property, tax deductions on equipment, grants for certain levels of job creation, and incentives for creating jobs with higher salaries.
During the past 20 years, the availability of trained and a trainable workforce became a factor that in many cases was more important than available space, land, and their price. Even if a community does not have a lot of technically trained workers for industrial operations, most companies can do in-house training or work in partnership with a local community college to train workers. The key is being able to recruit workers out of high school that do not want to pursue secondary education, and other workers who want to earn higher salaries and benefits.
While the above factors still play a role in a company’s decision to locate in a particular community, they have begun to be superseded by another factor – infrastructure, particularly electrical infrastructure.
Twenty-five years ago, I was part of a development firm that built industrial space and recruited businesses to occupy our space. Our typical building was between 80,000 sf to 120,000 sf. The largest building we built was 220,000 sf, which I thought was gigantic in those days. Today in the Borderplex region (El Paso, Texas-Juarez, Mexico-Santa Teresa, New Mexico), companies are seeking space averaging more than 250,000 sf. Economies of scale, as well as increased automation in production processes, are leading to larger operations, which result in the need for more electrical power. This need is followed by water/wastewater availability. I always say that you have to keep infrastructure ahead of development. The day you can’t flush your toilets is the day your recruiting efforts stop
Also important in today’s world of recruiting global concerns is how inviting and cooperative local governments will be. Local governments play a major role in a company’s decision to locate in a particular community, because they control the permitting and inspections process on industrial projects. A local government that makes its processes clear and streamlined is going to be popular with businesses seeking new locations. If the process is opaque and cumbersome, it will have the opposite effect. These factors will play a major role in a community's reputation for industrial prospects, which can spread quickly for better or worse.
As the global economy and the population base grows, companies will have to expand their footprint to serve their markets. Communities can benefit from the demand for new production/distribution locations if they approach the recruitment process logically and with some insight.
Jerry Pacheco is the president of the Border Industrial Association.
Jerry Pacheco's opinions are his own and do not necessarily reflect the views of KRWG Public Media or NMSU.