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Voice of the Practitioner

[EDOs] are not good at going after the leads we bring them. They don’t go after them in a serious way….They need to be more proactive to get better results….There is always some flexibility in business location. So even if the business case is slightly worse, you can be successful [if you pursue the lead well]….This can be a big differentiator – the individuality determinant. It’s not that common for a business to make a (purely) numerical decision. Companies want someone…who wants to work with them. Relationships matter.
Overseas Representative / Consultant

 

While business decisions are data driven, businesses from certain cultures value taking their time to get to know a community, even after they have committed to investing. They cultivate relationships — sometimes over years — before moving forward. This builds trust and ensures that local partners live up to the commitments made during the wooing process. 

A primary difference between foreign prospects versus domestic is that domestic attraction decisions are more likely to be based on the results of purely analytical decision making, while foreign investments rely much more on helping the investor to feel comfortable and welcomed.  Establishing a trust relationship is at the heart of this process.

This means that the prospect is looking for information not only about whether the area makes sense economically, but also culturally. Thus, the kinds of information that foreign prospects seek are often subjective and unique to their experience. It is rarely a “data exercise” because quantitative data sources have typically already been mined.

For communities, research supporting the prospect development process may be focused more on unearthing unique knowledge about your community that is designed to help the prospect connect with your community and to demonstrate that your community is “culturally attuned” to the firm’s needs. For instance, providing responses to information that has already been translated into the prospect’s language conveys a feeling that a community is serious in its foreign attraction efforts.

This type of support must be evident early in the process as initial interactions, however small, can shape a prospect’s perception of a community.

Potential Activities

  • Conduct due diligence on prospects
  • Develop a procedure responding to ‘requests for information’ from prospects (including providing customized data on the local economy and labor force)
  • Conduct preliminary prospect research (based on secondary sources) to identify their needs and to assess their likelihood to invest
  • Provide prospect-specific data on the local economy, the labor force, site options, etc.
  • Coordinate communication with the prospect’s representatives, including coordinating on-site visits
  • Review available incentives to determine best “package” (including non-financial and financial support) to offer the firm to encourage a positive decision about investing
  • Develop a time-limited ‘proposal’ based on the prospect’s decision timeline addressing identified prospect needs and perceived community weaknesses
  • Conduct appropriate follow-up with the prospect
  • Coordinate favorable prospect decision announcements

Examples

Columbus, Ohio

Columbus2020 makes available searchable economic dashboards that enables users to easily access a wide range of information about the region.

Greensburg, Indiana

“In 2006, in what has been referred to as an ‘unexplainable’ turn of events, Honda turned down more lucrative incentives in both Ohio and Wisconsin, instead opting to build its new $550 million automotive plant… in the small town of Greensburg, Indiana …Indiana won out largely due to the sheer enthusiasm exhibited by Greensburg residents. The community engaged in an ambitious letter-writing campaign targeting members of the Honda Board of Directors and sent a photo portraying 100 Greensburg residents gathered in formation of a giant letter H…A top executive with Honda North America [explained] the unprecedented decision: ‘It’s the first time we’ve ever seen this kind of display from an American community.’” (Kelley, Coner & Lyles, 2013, p. 8)

Madison County, Indiana

“I’ll tell you what else makes a huge difference. I’ve got business cards in 5 languages. Our marketing material too is in multiple languages. I can’t tell you how impressed companies are that you made that effort. It’s not that big of a deal but you’ve gone through the effort of making sure that the translation is correct, and so on. We try to provide as much information as possible in their language.” –  Rob Sparks, Executive Director of the Corporation for Economic Development (Madison County, Indiana)

Great Falls, Montana

Great Falls, Montana was recruiting a specialty steel fabrication firm based in Montreal that was looking for an additional location in the western U.S. After listening closely to their needs, the EDO leadership determined that workforce concerns were paramount. When they subsequently visited the company facility in Montreal, the EDO leadership took the unusual step of bringing the superintendent of schools and high school and community college welding instructors with them. The welding instructors spent time walking the plant floor with the foreman, talking about the programs offered in their schools, demonstrating their competence. Soon thereafter, the foreman gave a thumbs up to the company CEO, and eventually, the company decided to invest in Great Falls. (Source: Interview with Brett Doney, Great Falls, Montana)

Chattanooga, Tennessee

Chattanooga faced stiff competition to host the new Volkswagen auto assembly plant. Even though experts didn’t expect a mid-sized city with a remediated brownfield site to be of interest to VW, Chattanooga beat out 300 other locations (p. 16) on the basis of strong public-private collaboration and an innovative marketing strategy. Chattanooga marketed the region as aligned with VW’s values and brand as stewards of the environment. Subsequently, having VW as an anchor investor helped to attract auto suppliers and other foreign-owned enterprises as well.

Atlanta, Georgia

To help FOE assimilate to the Atlanta metro area, the city’s EDO created an online guide, Launch ATL Global Gateway (p. 12) that houses industry and community contacts, workforce development resources, K-12 and higher education information and international community connections. The portal also provides a guide to investing in metro Atlanta, from incorporation through finding an office to hiring the right talent.

Resources

SelectUSA Services for EDOs

This website lists services available to help economic development organizations “…develop, focus, or enhance FDI attraction plans by providing information through the lens of global business.”

Faces of Chinese Investment in the United States, U.S. Chamber of Commerce, 2013.

This publication makes the case for the benefits of two-way trade from China and the U.S. Among other useful items, it contains descriptions of 16 China-based company investments in the U.S.

 

Voice of the Practitioner

Interestingly for U.S. companies that are doing site selection, it more often becomes a “data pull” exercise — ranking, modeling — and a little discussion about business risk, regulatory risk, financial risk. However, when you cross international boundaries, there is more of a consideration of risk, and more qualitative consulting — even becomes more like group therapy and less about data …
Chris Steele, COO & President North America, Investment Consulting Associates (global management consultants)