© Copyright IBM Corporation 2008 IBM Global Business Services Plant Location International MKT1:...

© Copyright IBM Corporation 2008

IBM Global Business ServicesPlant Location International

MKT1: Improving private sector land access

Site Availability -Perspective from the investor

Roel SpeeIBM – Plant Location InternationalWashington D.C., 9 March 2009

WWW.IBM.COM/GBS/PLI2

IBM – Plant Location International


Content

Role of Site Availability in Location Decision Making

Key Concerns of Companies related to Site Availability

Role of Sites in Economic Development

Practical tips for site marketing




1. Define Project Drivers and SpecificationsCreate Longlist


2. Analyze Long-list of Candidate Locations Identify Shortlist


4. Site Search & NegotiationsSelect Preferred Sites and

Start Negotiations


Start Negotiations

5. Implementation5. Implementation

3. Evaluate Short-listed Locations Select Preferred Location


De-select less attractive locations:- In theory: many location options- High level, quick analysis- Based on desk research- Focus on key cost & quality drivers- Confidential- High level business case

Select best location solution:- Detailed analysis of many factors- Forward looking- Field work to understand dynamics and identify pitfalls

- Assess implementation risks- Interviews and negotiations- Full business case- Few locations only (short list)

Typical steps in location selection process




Strategic drivers for location choice

- Access to new market, Optimize cost efficiency, Access to Resources,

Consolidation of operations, etc

Strategy has impact on location requirements and their relative importance

The most critical requirements determine the initial longlist of locations

- Examples: Market/client proximity, Cost levels, Stability, Safety, …

Site availability in most cases is not a critical factor for country/region

selection, but becomes very important towards the final decision making

Strategic investment drivers and location criteria




In international location selection processes, location factors vary throughout the process

Macro

Stability/riskMarket

Workforce/SkillsInfrastructure

Costs

SitesIncentives

Quality of Life

Micro






Start Negotiations


Start Negotiations




Macro

Countries

Regions

Sites

Micro




However: need for exceptional sites can turn site availability into critical factor, and impact scope of location assessment

Macro

SitesStability/risk

Market

SitesWorkforce/Skills

InfrastructureCosts

SitesIncentives

Quality of Life

Micro

1. Define Project Drivers and Specifications

Create Longlist of Sites

1. Define Project Drivers and Specifications

Create Longlist of Sites

2. Analyze Long-list of Candidate SitesIdentify Shortlist of Sites

2. Analyze Long-list of Candidate SitesIdentify Shortlist of Sites

4. NegotiationsFinal Decision

4. NegotiationsFinal Decision


3. Evaluate Short-listed Sites Select Preferred Site

3. Evaluate Short-listed Sites Select Preferred Site

Macro

Sites

Sites

Micro




Key concerns for investors when evaluating sites (1)

OwnershipMany different owners creates uncertainty about availability and timing for an investorProtection of ownership is a key concern

Zoning Incorrect or incomplete zoning creates uncertainty

Timing / availabilityLand has to be ‘shovel ready’

PollutionLand has to be pollution freeDon’t expect investors (your clients) to clean the land




Key concerns for investors when evaluating sites (2)

Transport access to the landFrom major transport routes to the local plot

Utility connectionsLack of proper connections can cause huge delays, and extra investment costs

Permits required: for construction, discharges (environmental), etc.Complexity and bureaucracy are to be avoided

Time taken for procedures ‘Speed of implementation’ can be a decisive factor (see next page)

NOTE: Speed will become very important when investment picks up in near future




Duration of getting construction permits

Median duration (days) that local experts indicate is necessary to deal with construction permits

Source : World Bank Doing Business, 2009

34 4084 93 100 107 128 144

243336 350

411

601

704

1179

1426

South

Kore

a

United S

tate

s

Tunisi

a

Swazila

nd

Kenya

Mau

ritius

Ethiopia

United K

ingdom

Romania

China

Niger

ia

Brazil

Leso

tho

Russia

Haiti

Zimba

bwe

Best practice




Best practice countries in registering and protecting property

Botswana

Brazil

Bulgaria

Burkina Faso

Canada

China

Denmark

India

Malaysia

Morocco

Singapore

South Africa

Spain United States

Zambia

Angola

Bangladesh

Belgium

Czech Republic

Ethiopia

Germany

Hungary

J apan

KenyaMexico

Netherlands

Nigeria

Philippines

Poland

Russian Federation

Senegal

Sweden

Tanzania

Uganda

Ukraine

UAE

United Kingdom

Vietnam

0

1

2

3

4

5

6

7

8

9

10

0 1 2 3 4 5 6 7 8 9 10

Registering Property - Score 0-10

Pro

tect

ion

of P

rope

rty

Rig

hts

- S

core

0-1

0

The Registering Property component is a combined PLI Score using data on the number of days and the number of procedures it takes to register property, taken from the World Bank’s Doing Business 2009. The Protection of Property Rights scores are taken from the Fraser Institute’s Economic Freedom Index.




Site availability is one of many factors impacting attractiveness of location

Tailored site development strategies can steer economic development in

preferred directions, by focusing on:

- Targeted sectors: tailoring sites to specific sectoral needs (for example: logistics,

heavy industry, etc)

- Targeted regions within your country: stimulating job creation in regions where

need is highest

Site development must be aligned with overall economic development

strategy

Land is a ‘Must Have’, but land alone does not win investment projects

Role of land in economic development




Attractiveness of business environments is determined by many factors considered by corporate executives

Regulatoryframework

WorkforceInfrastructure

Real estate

Naturaldisaster

Knowledge & innovation

Taxation

Incentives

Businesscosts Living

environment

Business Environment

Attractiveness




Example of improvement of competitive position as result of short term real estate improvement actions

As is Improved site access and availability

Electronics

Belgrade

Bucharest

Nis

Skopje

Zagreb

Novi Sad

3,50

3,70

3,90

4,10

4,30

4,50

4,70

4,90

5,10

5,30

5,50

65758595105115125135

Operating cost index (average = 100)

Qu

alit

ativ

e sc

ore

Electronics

Belgrade

Bucharest

Nis

Skopje

Zagreb

Novi Sad

3,50

3,70

3,90

4,10

4,30

4,50

4,70

4,90

5,10

5,30

5,50

65758595105115125135145

Operating cost index (average = 100)

Qu

alit

ativ

e sc

ore

Relative cost-quality attractiveness of Serbian locations for electronics industry, before and after recommended improvement of site availability and accessibility




Some final practical tips for marketing sites to investors

Use maps to show geography and accessibility: before, during and after site visit

Use logical business routes when bringing investors to sites (know where the site is!!!)

Don’t propose/show sites which are clearly not available yet

Show all individual important features; present site from different viewpoints

Give the investor time to absorb impressions

Be prepared to explain activities of neighbour companies

Be very careful with offering brownfield sites. Don’t expect investors to solve your environmental problems!



Plant Location International (PLI)

Global Location Strategies

A service of IBM Global Business Services

Web-site: www.ibm.com/gbs/pli

Roel SpeeGlobal Leader Phone: +32 475 915 832Office: +32 2 416 59 28E-mail: [email protected]

Contact Details



Annex

Introduction toIBM – Plant Location International

9 March 2009




PLI is a global leader in Global Location Strategies, supporting two groups of clients

1. Corporate Executives• Support with location strategies: where should we operate our business units?

Defining global footprints, screening countries/regions, local site selection, incentives negotiations

• Across all industries• Covering all relevant business functions: manufacturing, distribution, R&D, HQs, shared

services, contact centers, data centers, etc IBM-PLI is a global market leading dedicated corporate location consultant!

2. Economic Development Organizations (frequently Public Sector)

• Support with efforts to attract and retain business

Improvement of business environment

Inward investment strategies

• Based on our unique insight in the investor’s perspective

• Services do not include investment attraction (conflict of interest)!

IBM-PLI is unique in advising EDOs on the basis of its unrivalled corporate experience!




Brief history

1960 Plant Location International (PLI) founded as independent consulting firm in Brussels, Belgium. Focus on location advisory services

1989 PLI fully acquired by Price Waterhouse, becomes PW-PLI

1996 US-team established to serve Americas marketBrussels based PLI serves as key practice for EMEA and Asia-Pacific

1998 Price Waterhouse merges with Coopers & Lybrand: PwC-PLI

2002 PwC Consulting acquired by IBM:

IBM Global Business Services becomes new home of IBM-PLI

2006 Global operating model agreed with IBM global management:

PLI transforms into virtual globally integrated operation

2009 PLI: Global team of 25 dedicated location consultants, supported by network of thousands of industry experts and local strategy consultants around the world




Global resources of Plant Location International

Americas Asia-PacificEMEA

Center for EconomicDevelopment Research

Global PLI hub

Dedicated PLI resources

Research back office

Local PLI coordinators




Plant Location International Example of services to corporate clients

Strategic location planning: strategic advice on which geographic areas provide opportunities for locating or consolidating various business functions in alignment with the overall business strategy

Definition of key location criteria: helping corporate executives define and prioritize the key criteria for assessing locations for specific business functions.

Screening of multiple location options: assessing and ranking locations on key cost and quality criteria to quickly identify the most interesting candidate locations for investment.

Review and validation of preferred location options: validation or second opinion of a preferred location to assess its suitability based on specific project parameters.

Site or facility search: researching and validating available sites and buildings meeting the client’s project specifications once a preferred country/region has been identified.

Consolidation of existing sites: projections and assessment of location impact of consolidation scenarios; assisting with determining best site for future consolidation.

Disposal of obsolete sites and facilities: defining and implementing an approach to identify target groups of companies, develop marketing materials, research possible new users.

Advice on financial support: analysis of financial incentives available to corporations in countries around the world: amounts, conditions, application, etc.

Monitoring business environments: constant screening of dynamics in areas of interest such as to provide early advice on upcoming opportunities and threats.

Strategy workshops: workshops to optimize company’s own location strategy efforts based on latest insight in market trends and location dynamics, as well as data sources and evaluation techniques.




Examples of corporate clients for location advisory services* Multiple assignments, only most recent names used

Coca ColaCompaq Computer*Concert (AT&T/BT)Corning*Daikin*DHL*DelphiDeutsche Bank*DiageoDisneyDow Chemical*Dresdner BankDSMDu PontDuty Free Shoppers*Eastman ChemicalEaton Eli LillyEMCEnergizerEngelhardEricssonEscoExxonMobil*FMCFokker AESPFord Motor*Franklin MintGAPGATXGeneral Electric*General InstrumentsGeneral Motors*

Gillette*GlaxoSmithKline*Goodyear/Dunlop*GuardianHaagen-DazsHeinz*HenkelHerculesHertzHewlett-Packard*HitachiHoechstHolcim*HoogovensHSBCIBM*ICIICON*IdemitsuIFFInbevIndspecIngersoll RandIntelInternational PaperJames Hardie*John Deere*Johnson & Johnson*JP MorganChase*JVCKBCKelloggKimberly Clark*

Knauf InsulationKodak*Kohler*KoneKraft FoodsLA GearLevel 3Levi StraussLittle TikesLloydsLufthansaMaster FoodsMattel*Medtronic*Merck*MeritorMicrosoftMitsubishiMobil PlasticsMonsanto*MotorolaNashuaNational Instruments*National SemiconductorNECNestlé*Netscape*Nike*NissanNKT CablesNorske SkogNortelNovartis*

ABN-AMRO*AGFA*AlcanAlza*American ExpressAmgenAnheuser-BuschAstraZeneca*Avaya*Aventis*Avery DennisonAvis*AvnetBATBaxter*Bayer*Becton Dickinson*BekaertBF Goodrich*BiogenBMWBOC InternationalBose*Boston Scientific*BP Amoco*Bristol Myers Squibb*BrunswickCadbury SchweppesCampbell Foods*CaterpillarChiquitaCitibank*Claire’s

NuonOrica Mining*Owens OllinoisParamountPepsico*Phillip Morris*Philips*Procter & Gamble*PricewaterhouseCoopers*Prudential InvestmentQuintilesRadnorRalston PurinaRaychemReader’s DigestReckitt & ColmanReuters*Rohm & HaasRothmansRubbermaidSabenaSamsung*SAS AirlinesSaville SystemsScheringScott PaperShell*Shire PharmaceuticalsSiemens*Sigma CoatingsSKFSmiths FoodSocieté Général

Sony*Standard Chartered Bank*StorkSun ElectricSun MicrosystemsSwissairTandemTDKTechnicolorTeliaTelxonTetra Pak*Texas InstrumentsToshibaToyota*TPG GroupUBMUnilever*Union CarbideUnited TechnologiesUPM-KymmeneVaillantVisteonVolvoWarner LambertWellmanWestvacoWhirlpoolWL GoreWoolworthWordPerfectXeroxXircom




Plant Location International Example of services to economic development organizations Competitive location benchmarking analysis - provide detailed tailor made analysis of the attractiveness of

regions/countries as investment locations relative to key competitors, covering a range of sectors and business functions, and based on typical investor’s requirements

Investment trend analysis - provide comprehensive investment trend analysis for countries and regions across the world using IBM’s Global Investment Locations Database (GILD) - a unique database that records investment project announcements around the world on an ongoing basis

Investment promotion strategies - define the objectives for inward investment promotion, setting out priorities and targets for sector/business functions

Economic impact analysis - analyze impact of policies and initiatives on the attractiveness of specific locations to investors, coupled with broader economic impact assessments for investments

Marketing strategies and tools - develop marketing tools and initiatives based on investor needs, including the unique IBM-PLI Location Benchmarking Tool to validate your location’s proposition and market this to prospective investors using their own location selection criteria and techniques

Analysis and advice on Economic Development Organization (EDO) effectiveness - analyze and provide advice on structure, organization and operations of EDOs, based on international best practices

Training – train economic development staff on the corporate location decision process, how to undertake investment promotion activities and initiatives, and deal with investors

Strategy workshops – conduct workshops to review investment promotion strategies and provide advice on trends and upcoming changes

Location Intelligence On Demand – deliver ongoing support services, providing prompt responses to urgent requests for market or location intelligence




Examples inward investment & economic development clients * Multiple assignmentsAlbania Foreign Investment Promotion CenterAntilles Government of CuraçaoAustralia Invest Australia*

City and Port of BrisbaneDSRD New South Wales°*Invest Victoria*

Austria Austrian Business Agency*Vienna International Airport

Azerbadjan Port of BakuBelgium Brussels Airport

Flanders Foreign Investment Office*Office for Foreign Investm. Wallonia*Port of Antwerp*

Canada Invdustry CanadaInvest Canada/DFAIT*Montreal InternationalProvince of QuebecToronto

Cape Verde PromexCaribbean Carribean Inward Investment OfficeChina Xi’an Pharma Park, ShaanxiCosta Rica CINDE*Czech Rep. CzechInvest*Denmark Copenhagen Capacity*

Invest in Denmark*Djibouti Government of DjiboutiEstonia Port of TallinnEthiopia EIA Ethiopian Investment AuthorityFrance Ile de la Réunion

Ile de France, ParisInvest in France/Datar*Nord-Pas de Calais Developpement*Port of Le Havre*

Germany Frankfurt AirportHWF HamburgIIC (former East German States)*Nordrhein Westfalen*Saxony Economic Development Corp*

Spain PromoMadrid*Suriname Government of SurinameSweden ISA Invest in Sweden Agency*Switzerland Canton of SchaffhausenTanzania Tanzania Investment CentreThailand Industrial Authority Esate of ThailandTunisia Government of TunisiaTrinidad Tobago Port Authority of Trinidad & TobagoUAE Jebel Ali Port Authority, DubaiUK:- England Advantage West Midlands*

Creative SheffieldEast Midlands Development Agency*MIDAS Manchester*North West Development Agency*UK Trade & Investment*

- Scotland Edinburgh IFCScottish Development International*

- Northern Ireland Invest Northern Ireland*- Wales Welsh Development Agency*USA Commonwealth of Pennsylvania*

Greater Jamaica, NYGreater Phoenix Economic Council*Maryland DBED*Michigan EDCNew York StateResearch Triangle Park, NC*State of FloridaState of IndianaState of LouisianaTexasWorkforce CommissionToledo, OH

International Asian Development Bank*organisations COMESA

European Commission*FIAS/World Bank/MIGA*OECD*UNCTAD*WAIPA*

Ghana Ghana Investment PromotionGuadeloupe Port of GuadeloupeHong Kong ITC Hong KongHungary ITD Hungary*India Government of Gujarat SEZ

Positra SEZ Ireland Enterprise Ireland*

IDA Ireland*Israel Israeli FEPZItaly PROMOS Milan

Sviluppo Italia*Kuwait KuwaitLuxembourg Ministry of TransportMalaysia Port KlangMexico Industrial Port Development BoardMorocco Government of MoroccoNamibia Namibia Investment CentreNetherlands Airport Amsterdam-Schiphol*

Airport Maastricht-AachenNetherlands Foreign Investm.Agency*Ports of Amsterdam and Rotterdam

New Zealand Auckland City CouncilInvestment New Zealand

Philippines CagayanPoland Industrial Development Agency

PAIZ Polish Inward Investment Agency*Special Economic Zones (various)

Portugal AIP Regio NorteEmbassy of Portugal/ICEP*

Puerto Rico Instituto de FomentoRussia Moscow

St. PetersburgSaudi Arabia APEC

General Investment AuthoritySingapore Ministry of Finance

PSA Port of Singapore Authority*Singapore Econ. Development Board*

South Africa COEGA*Trade and Investment South Africa




Tools and Techniques GILD – Global Investment Locations Database

Monitors investment project announcements globally on a daily basis

Includes ‘greenfield’ projects & major expansions

Data on each project includes company, sector, sub-sector, activity, origin, location, jobs, sites, incentives, markets being served etc.

Allows trend analysis by activity and (sub-)sector and competitive analysis by location (country, region, community)

Indicates where peer companies have decided to set up similar facilities

Job creationSpecialization by function, 2006

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Global

India

China

Israe

l

Philipp

ines

Viet N

am

Other

R&D

Services

Production

India29%

China23%

Viet Nam23%

Malaysia8%

Thailand2%

Other6%Philippines

1%

Pakistan4%

Singapore4%

Share of estimated production jobs in Asia, 2006GILD is a unique investment

tracking database developed by Plant Location International:

IBM Global Location Trends reports




IBM-PLI’s Location Benchmarking Tool: a powerful marketing tool (web based and pc based) convincing investors of a location’s unique advantages

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