News

JAXUSA: How Deals Are Done

Right out of gate, one of the consultants stated that the primary trend among his clients was consolidation, a big word in Jacksonville.

“How do you rationalize a footprint that makes sense?” said Jim Eskew, vice president of JLL in Washington, D.C.

It’s a word that applies to what could be one of the biggest projects the city has seen in some time — Deutsche Bank’s expected decision about where to develop a major office campus to accommodate both front-office and back-office operations.

While Deutsche Bank wasn’t identified at the JAXUSA Partnership’s “By The Shore Site Selection Showcase” panel discussion, it fit the description of the top industry trend.

Site consultants advise clients — companies looking for office locations, manufacturers seeking production property, retailers reviewing for distribution centers, data centers needing secure areas, logistics companies focusing on warehouse and trucking facilities.

They identify sites, deal with real estate executives and chambers of commerce, work on incentives packages and provide other assistance.

The nine site consultants spent almost two hours at Epping Forest Yacht & Country Club with about 100 Jacksonville city, chamber and business leaders to discuss economic-development trends.

JAXUSA Partnership President Jerry Mallot, also executive vice president of JAX Chamber, moderated the discussion and posed most of the questions. Among the highlights:

What are the trends in economic development?

Along with consolidation:

• Fuel prices. Companies want to locate distribution centers closer to consumers to cut back on fuel costs.

• Nearshoring. Manufacturing costs have risen in Asia, China and Mexico and companies are moving production back to the United States.

• Cost concerns. Companies in Tier 1 markets are looking at locating in Tier 2 markets. “Jacksonville is well positioned to be able to grow, especially in financial services,” said Kathy Mussio, managing partner with Atlas Insight LLC of Bucks County, Pa.

• Speed-to-consumers. Amazon.com’s expanding network of fulfillment centers to meet one- and two-day delivery schedules is an example.

What is the trend in consolidation versus expansion?

• Expansions have increased the past 18 months, but consolidation reigned from 2008-12 during the recession and early years of the recovery.

• The model of shared services has broadened to almost every industry. Shared services are the centralized back-office work used by multiple divisions of the same company. The trend has broadened from the financial services industry to other areas, such as law firms and hospital groups. “Those are the types of projects looking to find a market,” said Joe Lacy, managing director of Biggins Lacy Shapiro & Co. of New York, N.Y.

Which site location factors have the most influence?

• Workforce availability, quality and sustainability; location; speed-to-market capability; business “friendliness” of a community; infrastructure, including transportation; and incentives. “In many cases they are a tie-breaker, but without the workforce, all the incentives the world won’t matter,” said Dennis Burnside, managing partner of Mohr Partners of Cleveland.

What was your image of Northeast Florida before you arrived and has it changed?

• The military presence, the spouses and the military personnel who remain in the area after retirement are “one of your greatest assets,” Mussio said.

• The infrastructure with the interstate highway system, the port and Cecil Commerce Center are important for logistics.

• Governments that work together are critical. “What is nice to see is the cooperation of the political structure,” said Michael Mullis, vice president of J.M. Mullis Inc. of Memphis, Tenn.

• Uncertainty about the workforce and IT can be factors.

Are area and Florida incentives and the tax structure competitive?

• Tax incentives come into play at the end of the decision, making costs more competitive and providing a company the sense it is valued.

• Timing is a dealmaker or breaker. “If our client is ready to decide in two weeks and approvals take six weeks, they might not be able to hold up the lease,” Lacy said.

How can Jacksonville’s efforts help the area stand out in the crowd?

• Minimize internal competition within a region.

• Focus on a single point of contact, maintain an effective website with the needed statistical information and return calls quickly with concise facts.

What is a marketing tactic that caught your eye?

• A Midwest community offered $1 million to the first company that came to the location. “We might not adopt that,” Mallot quipped.

• A Utah economic-development agency sent cards each time it completed a significant project. “Our clients always want to know what’s happening in a market,” Lacy said.

• There’s also a not-to-do list: Don’t blast general chamber news to site consultants’ email accounts and send promotional items like ink pens.

• Brief visits twice a year to “tell us something new and different” can be helpful, Burnside said.

• Weekend and quick availability for tours and meetings can make an impression. “The more accommodating you can be, the more it resonates with us and the client,” Mullis said.

Are there government best practices?

• Speed and creativity in doing deals make a difference.

What are the trends with headquarters relocations?

• Mergers and acquisitions lead to headquarters decisions.

• The “much ballyhooed” millennial generation that doesn’t want to drive cars and does want to live Downtown isn’t bankable. “That’s all bunk,” said Chris Lloyd, senior vice president of McGuireWoods Consulting of Richmond, Va. When millennials reach the age of 27 and start raising families, they “will move to the suburbs and will flock to markets with good schools,” he said.

What is your recommendation to improve Northeast Florida’s competitiveness?

• Incumbent worker training is critical. Terry Hansen, principal of Hickey & Associates of Washington, D.C., said 75 percent of the workforce in 2024 has graduated already. “Who is going to train these workers?” he asked. “Is there a tool to continually upgrade workers?”

• Site and building availability is an issue. “Having product available of all types, a good stock of available buildings,” said John Sisson, principal of Global Location Strategies of Greenville, S.C.

• Education, from K-12 to college to research universities.

What can a location do to win a deal?

• Do homework on the project. Know the company and what it needs.

• Make the client feel welcome. “Clients want to feel the community will work with them,” Sission said.

• Make sure everyone in the community is an ambassador. Lloyd said representatives ranging from the cab driver to the hotel clerk to the wait staff at restaurants can influence perceptions. “You’d be surprised how many decisions are made on a few seconds” of interaction, he said.

What are the obstacles that cross Northeast Florida from the list?

• Keep watch on power rates.

• Building and site availability.

What are the best practices you’ve seen from other economic development organizations?

• Regionalism. “Your regional approach is a testament that you’re doing something right,” said Minah Hall, managing director of True Partners Consulting of Chicago. JAXUSA comprises the seven counties of Baker, Clay, Duval, Flagler, Nassau, Putnam and St. Johns counties. Hall said she had occasions in other areas of meeting with three separate government organizations on one deal “because none would meet together.”

• Consistency. “Make sure the stories you tell are consistent,” said Hansen, who said he’s had a deal killed because one organization disagreed with what another said.

What is a balanced assessment of an area?

Sisson said an area’s economic development organization needs to be a cheerleader, and “it’s up to us to make sure we’re getting the story.” Lloyd said he doesn’t mind the pom-poms, “but we want brains behind it.” Hall said site consultants can “hear through the noise.”

By Karen Brune Mathis, Daily Record

http://jaxdailyrecord.com/showstory.php?Story_id=542656