A Sponsored Article by Webster Global Site Selectors. “Remember—incentives do not make a better location, rather, they make a better deal.”
This is the fourth of a four-part article series to provide information about the specificity of the Site Selection Process. These articles include an overview of the Site Selection industry; workforce-related issues during a site selection process; understanding the critical real estate search during the expansion or relocation process; and finally, understanding the role of state and local incentives in finalizing the Site Selection search.
The Site Selection analysis evaluates many different variables during the location quotient, meaning the most optimized locality for the client. We have discussed the overall process and the role of a Site Selector. We then looked at different labor shed availability in various parts of the county which then lead to the importance of the real estate transaction for Contact Call Centers and BPOs to find the most efficient and effective building to make their process functional. Finally, the last focal point, which is not the last variable, but a very important variable that should be reviewed during the Site Selection Process is the State and Local incentives that need to be evaluated while conducting the search for a new expansion or relocation. Remember—incentives do not make a better location, rather, they make a better deal. In most cases, when the C-suite decision maker is looking to make a decision on the next optimal location for their operation, incentives play an important role in the decision making process.
The BPO and Contact Call Center industry continues to substantially increase employment creation throughout North America and the world. The industry is creating approximately 475,000 jobs per year throughout the world, according to a 2007 study published by Cornell University on “The Global Call Center Report: International Perspectives on Management and Employment.” States and communities recognize this and are willing to create policies to enhance these projects to locate in their area, with assistance of government help.
What Are Incentives?
I always like to discuss incentives from the lens of someone purchasing a car. I am sure all of you have had to conduct this process at least once in your lifetime. Yes, you go to many different car dealers, or maybe you know two dealers in the same area. Yes, they have the same automobile you are interested in and yes, the cost of that automobile is the same at both locations. What does the consumer do? Do they look at customer satisfaction? Do they look at customer loyalty? Have you bought a car from the same dealership over the years? Or does the buyer leverage the transaction by getting one of dealers to throw in the floor mats, allowing the buyer to feel like they “got a great deal”?
Many communities and states recognize that corporations in the contact call center industry have choices. Choices that include adding employment in the location they are looking to locate to.
Why a Native American Location?
Many communities are afraid of the “if they build it, they will come” mentality. With a proactive and economic-driven tribal council of the Confederated Tribes of the Umatilla Nation outside of Pendleton, OR, they decided to just “do that.” Build a speculative building to house some sort of private business to enhance employment within their area. How did they do that? They set up a special company called Cayuse which would house a BPO for the area. The Tribe was then able to get low-term financing to build a brand-new 30,000-square-foot facility to house a BPO/Contact Call Center, and was also able to leverage a State grant close to $250,000 to help in the building materials for the building. With this proactive incentive-driven approach, Cayuse, LLC, was able to entice a lower lease rate to their confidential contractors, which reduced overall operational costs for Cayuse and their clients.
Hop-Town, (Hopkinsville, KY): Revitalizes Regional Mall with Location of Tele-Tech
Economic Development Professionals knew that with the loss of a major retailer, Goodies, filing bankruptcy, the local mall would lose economic activity and sales tax base with the major retailer leaving the community. Creation and creativity to market the building and offset or rebate the local payroll tax assisted Tele-Tech’s overall operation costs by a substantial amount and enhanced Hopkinsville’s ability to create 700 new jobs, allowing for diversification, not only at the regional mall, but also within the local economy.
Rust Belt: Regaining New Ideas and Community Creativity
After touring a community during a familiarization tour a couple of months ago, I discovered the proactiveness of the Warren/Youngstown, OH, area. Home to Youngstown State College and a plethora of dilapidated old steel manufacturing facilities, the community is on the move to clean up the image and community. After leveraging dollars at the Federal level to get some of these properties cleaned up under the Brownfield Clean-Up Program. Many corporate citizens have left the community, leaving existing office buildings that were not contaminated because of their function or operations. Yes, Youngstown has a few buildings they own and can actually negotiate a very reasonable rate to the contact call center or BPO. What an opportunity to reduce the overhead costs to the BPO or contact call center company and enhance the C-suite decision maker’s ability to look like the most brilliant individual, saving the stock holders millions of dollars on the lease rate.
Other incentives or costs reduced by the State of Ohio for the industry, include Job Training Tax Credits, allowing a company to offset those taxes for a predetermined amount of time. Ultimately, this reduces costs and creates jobs and wealth for a community that was hit hard by the exodus of another industry, Coal Shale.
Finding the Optimal Location
These are great deals, but how do you find them? The job of a Site Selection Consultant is to find the overall best location for that decision to be made. Incentives should not drive the overall deal, but they make a nice icing on the cake for the overall cost of the Site Selection Process and add a benefit to the BPO/Call Center Client to find the optimal location for their next expansion or relocation.
If you would like further information on the Site Selection process, please review our website at www.globalsiteselectors.com .
About Webster Global Site Selectors
Paige Webster started his new firm September 2013 and is excited to run his own consulting firm. Paige has worked with many projects across many industry sectors including: aerospace, call centers, bio-tech companies, geo-thermal, wind and solar, warehouse/distribution, office projects, data centers, corporate centers and the retail sector. Paige has been working in site selection and economic development for over twenty years.
Paige has had extensive site selection experience as he was the Western Regional Real Estate Manager for Aaron Rents. Paige was able to facilitate and expand the major retail expansion for Aaron Rents in the Western United States.
Paige has also created a Site Selection Conference called Site Link Forum ( www.sitelinkforum.com ), where Economic Developers and Site Selectors trade ideas and information. Site Link will be held in Biloxi, MS; Klamath Falls, OR; Lynchburg, VA and Kentucky in 2016.
Paige has had experience in the Economic Development arena too. He was the former Economic Development Director for the Greater Yuma Economic Development Corporation. Paige’s experience includes working with back office, warehouse/distribution, bio tech, software development companies and food processing companies for the Yuma area. Paige did extensive work in cross border economic development and was a member of the Border Trade Alliance (BTA) and worked closely with the Arizona Governor’s Office on cross border issues in Mexico. Paige was on the Workforce Development Board and was also a Board Member of the Arizona Association of Economic Development (AAED). Paige has also received the CEcD designation during his career in Economic Development.
Paige also worked for the Arizona Department of Commerce as the Northern Arizona Representative, assisting companies to expand or relocate to the State of Arizona with projects related to injection molding, warehouse/distribution, back office, agro-business, bio-tech, high tech, aviation.
Paige has a B.S. in Regional Development from the University of Arizona and an MBA in Global Management from the University of Phoenix.
Paige resides in Phoenix, AZ. He has two children and loves to play golf, hunts, skis and scuba dives.