MBRG Political Report Vol 2 Page 2

How are those decisions made?

The first piece of advice I can give you is forget the best cities list, or any list that you see published. It's marketing hype but it's not factual hype. Each business is unique, making its own decisions on what's important to it individually. What you need to think about is zones of opportunities, places that are best for a particular industry or business, or a function of the business. So segmentation - identifying a market niche and then catering to it - becomes very important. What Maryland is number one for is the issue, not where it sits on a list.

CEOs sometimes view location as fixed. But in the relocation business we say no. Businesses that look at their location as variable often have a five to 10 percent improvement in productivity by finding the right location in which to do business. Fifteen years ago the decision was pretty much cost only; issues like labor costs, utility, freight and taxes were the main factors driving the decision. Today, there is more balance between performance related and cost-related criteria. In performance-related decisions, issues like the skills base, access to markets, quality of life, and the image of the area are very critical.

The relocation decision-making process is fairly straight forward. They pick and screen a search area, define the site requirements, and do the detailed analysis. That usually involves business climate, labor market, infrastructure and the quality of life issues. Then they try to get down to two to four site locations. Next comes field work, tours, and active discussion with the community The UPS decision came down to Dallas, Baltimore and Atlanta. Atlanta won out because it knows how to put together a program to take a major organization through the decisionmaking process once they get to the community.

And then finally the site selection itself. Is there a site available? Is it a reasonable site? Can it do what needs to be done for the community? So it's a fairly programmatic step once the decision is made. One that can be learned, can be marketed to and can be dealt with just like any other business deal.

What do business customers need from the states they choose to call home? Let me explore the details in four areas for you.

A responsive business climate. I break it down into four main areas. (a) Personal and business taxes the balance between the two, the consistency of those taxes, and the general appeal of the tax structure to the target market. For example, if the state targets the retirement community as a population to be nurtured, that sets up a different tax structure than if it were to go after entrepreneurs. (b) Regulatory issues - which become a negative factor. The intrusiveness and the inability to execute decisions drives businessmen crazy and pushes them out of an area more than any other factor. Regulations are high on the list of factors that are driving the mass exodus from California, despite its high quality of living. (c) Labor laws - including workmen's compensation and the way the labor laws attract or repel certain industries, business and government cooperation. And, (d) the ability for businessmen to feel they have a voice that is heard.

An effective infrastructure. Things we all rely on for our business, whether it's a service business or a manufacturing one. Transportation is number one. Power generation and telecommunications are becoming very vital, especially if you're in the teleselling business or the telemarketing business. Technology and its availability. Financing, sites, and building availability are factors in infrastructure. The latter two can become a detriment or an asset to an area depending on the mixture. Some states actually build infrastructures around attracting certain industries. North Carolina is working on a program called the Global Transpark where they're making investments in a particular type of development that will attract certain multi-modal companies into their area.

Labor market. The availability of trained people, access to education, and competitive salaries and benefits for that industry.

Finally, quality of life. Crime control, cost of living, social programs for the needy, clean environment, recreation are all quality of life factors to be considered.

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