Environment, education, economics must be right to lure advance manufacturers

If we agree that advanced manufacturing is “a family of activities that (a) depend on the use and coordination of information, automation, computation, software, sensing, and networking, and/or (b) make use of cutting edge materials and emerging capabilities enabled by the physical and biological sciences, for example nanotechnology, chemistry and biology” it seems obvious that North Carolina should be a hotbed for siting advanced manufacturing facilities. In fact, we are when you consider our existing industrial clusters that include biopharmaceutical manufacturing, aviation, materials and a rich assortment of support in research and information technology.

The overriding question is how can North Carolina lure more advanced manufacturers?

We need to consider the three Es: Environment, Education and Economics.

Environment must support manufacturers needs

The ecosystem consists of a site and its ability to accommodate the proposed facility’s requirements. Included in this traditional aspect of “site selection” are important infrastructure requirements such as the availability of needed energy and other utilities, and access to appropriate transportation facilities. In the United States these characteristics are typically easy to find or if needed, build. Advanced manufacturing facilities however, might have requirements that go above and beyond those needed for more traditional manufacturing facilities. That said, even the most challenging site requirements can be found in North Carolina’s state site inventory database and many of these are readily available.

At times when the ecosystem requirements are more complicated advanced manufacturing facility site selectors will express the need to have an in-place community of suppliers and service providers that can provide needed logistical support to an ongoing operation. In such cases specialized industrial suppliers and machine fabricators must be considered as important attributes of the proposed site.

Other often overlooked, but critical factors for such facilities include specialized local emergency response capabilities, community understanding and acceptance, political leadership, educational infrastructure and employee lifestyle considerations.

Different education for different employees

In the long term, education and training programs must span from “cradle-to-career” and be responsive to the skill demands of advanced manufacturing employers. These programs in cooperation with government partners should target: (a) separating military personnel and recent veterans, unemployed workers and employed workers needing to augment their skills in the near-term, (b) prospective workers who will soon enter the workforce and (c) K–12 students to proactively develop the next-generation of workers.

Another issue for truly advanced manufacturers is related to preparing students for careers in advanced manufacturing facilities and the need to supplement traditional academic education with the development of programs that provide “applied expertise.” Do the communities support new manufacturing pre-apprenticeship programs, have strong educational partnerships between colleges and local industry, and is conversation and collaboration between the academic community and industry such that students and existing workers can be quickly and efficiently integrated into the workforce?

Advanced manufacturing facilities require more highly skilled workers who are not only trained, but also better educated. They also require supervisory, management and technical personnel who in many cases need more advanced degrees to be able to effectively fulfill their roles.

Are the education and training institutions and their students fully aware of the requirements of the company and facility and the changing opportunities they offer?

Economic incentives show state’s commitment to growth

In the end, final decisions regarding the siting, construction, and operation of advanced manufacturing facilities will always be driven by economics. Land and development costs, construction costs and labor costs, as well as logistical issues are critical to the siting decision.

Plant costs: RTP vs. Silicon Valley

Incentives can often become a focal point in siting negotiations and appear overshadow more salient factors involved in the real “total cost of ownership and operations” which should be the basis of any siting decision. In other words, financial incentives become more critical when there is a requirement to make up deficits in other considerations that impact a final siting decision.

To be clear however, there is no doubt that a state’s or region’s ability to offer meaningful incentives when called for is critical to a meaningful economic development strategy. There needs to be a clear and well communicated focus on all factors that impact the total cost of ownership and operation of a facility, and even more critical an understanding of the primary reasoning behind any decision. Simply stated, “Why is company management looking for a site?”

Economic development incentives can be defined in two ways, those that go directly to the company in the form of cash incentives, tax breaks, equipment grants, etc., and community development incentives that provide value to the company by enhancing the community and ecosystem to the financial benefit of the company. These community development incentives involve improvements to transportation, energy, water and sewer, security, education and even cultural infrastructure improvements. Community development economic incentives remain in place independent of the facilities or companies fate and bolster the communities rating for the other “Es”, Environment and Education. The question that must be asked is, “Are the incentives providing for a long term and sustainable relationship between the company and the community?”

Examples of successful advanced manufacturing clusters where states or regions have fully realized the importance of developing the three “Es” include Research Triangle Park, Tech Valley (New York’s Capital Region), Austin Texas and others. The economic success of these regions is clearly related to their ability to leverage these positive strengths to the advantage of the both companies and the communities in which they locate.