tv National Governors Association Winter Meeting CSPAN February 21, 2016 10:00am-11:31am EST
caller: how are you doing? host: morning. caller: reason i called is because i think his family gave him the kiss of death by the last name bush. ist i wanted to say, too, they say that eight years of they need to get their facts doht and then they need to research on prescott bush. host: i want to get in pat, a michigan republican. your reaction to jeb bush getting out? caller: i was kind of happy that he got out. i think he lacked leadership ability, number one. i think it was a collar a few minutes ago that said he was low-energy and i agree with
that. we need a high energy leadership kind of guy. host: are you supporting donald trump? caller: very much so. host: let's hear from charlie in new york. go ahead, quickly. caller: good morning. bernie sanders is the best thing we have now. ralph nader is very concerned his followers may get because of the super delegates that are very conservative. i hope everyone will listen to what ralph nader has to say about bernie sanders. bernie sanders correctly pointed out her biggest problem is money in politics and here is donald trump, the billionaire, speaking in our political system right now. i can't talk, i can't say what donald trump has to say. the american people don't have the voice donald trump has and
that's a problem in our country. -- peoplederstand have to see the problem is money in our democracy, which is perverting it. and here is donald trump, the billionaire, perverting it even more. 1 -- host: jose in little rock. what was your thought when you heard the governor was suspending his campaign? caller: i think it's a good thing he did that. we are listening. it is a good thing. caller: i think the republicans the economic crisis we went into in our country and all the problems in the middle east caused by the bush administration. they don't talk about that.
if they called president obama a failure, it's because their number one priority was not to let them succeed. said andhat they have that is what they have been doing for eight years. host: paul in ohio, a republican. good morning. glad i am on. i've been a democrat all along, but now i am a republican and going for trump. the reason i'm going for trump money, hesing his own doesn't oh anybody anything, and he lives in the city and mixes with people. negroes, spanish people and what not. clinton is going around saying she is concerned about she probably-
lives in a gated community and somebody comes in with an old car they would drive them out. host: from twitter -- bush dropping out is another indication that the corporate party is out of favor. joel, an independent color. can you make it quick, we are about to take all of you to the national governors association in washington. mr. bush dropping out, he just did not seem comfortable and did not come across very well during the debate and the town halls. it's a shame because he had a couple of good ideas, particularly keeping a good eye on federal workers and the v.a.. debatenother republican
on thursday, cnn posting that one. let's bring you to the national governors association and their winter meeting. we are going to talk about how states attract foreign and domestic investment. this is live coverage here on c-span. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] morning. welcome to the nga winter meeting and to the session states tracking companies and investment, what the firm looks for. going to turn it over to our moderator. >> thank you and good morning and welcome to this panel, the national governors association on attracting companies and investment. what matters to firms. i'm a partner at mckinsey's public-sector practice and we have the privilege of working with governors and state leaders across the country on health
care, infrastructure, higher education, public safety pension and i.t.'s. i have the privilege of meeting our economic development practice, which means i work with governors and their economic development teams on jobs andt ambitious initiatives. the purpose of this morning's panel is quite simple -- states focused disproportionately on company attraction, retention and expansion. governors spend a lot of their time doing this. what actually matters to companies as they decide where to locate and where to invest? what should states do to ensure they arecompetitive -- as competitive as possible and attracting those companies? this discussion and debate is an age old one, but this is a conversation began a few months ago in october at the nga trilateral summit in colorado springs.
it was there that my colleague led a discussion with several governors, starting with a fairly provocative proposition. ,e stated the incentive is dead long live the incentive. the thinking behind that notion is a conversation we have been having based on some observations we've been seeing across the country. move away froma an overreliance on subsidies and incentives and attracting companies. instead, many states have been building more broad and deep -- economic ecosystems and their states. incentives have not gone away but they have been up -- and employed more strategically to support more sustainable growth and job growth. which brings us back to our big questions for this panel. what actually matters to companies when they are deciding to locate and what should states due to meet their needs or what
can states due to maximize the return on investment when they are trying to attract companies? to help answer these questions, we have a stellar set of panelists this morning. we have the senior director for governor affairs at magna international, the vice president for governor relations at calix usa, the manager for the international trade and investment office for the missouri department of economic ofelopment, the director global resource management group for the north dakota trade office, and last but not least, leslie alexander, international director for the tennessee department of economic and community development. i want to frame this discussion a little bit more. i'm a consultant and i can't help but some data on some powerpoint slides. i want to share with you some research we have done. surveyears ago, we did a
of over 2900 global executives. we asked the reasons why these executives and their companies were seeking new locations. number one reason was to reach new markets or customers, as you can see on this chart. no other answer came close, including seeking locations that had a lower cost profile. we also asked these executives what criteria they used to pick specific locations. wasmost important by far the size and growth potential of a local economy. that is what executives care about. half the executive also cared about two components like talent and the availability of an industry cluster, supply chain customers need to be nearby. rounding out the top five were infrastructure and local politics.
this is what matters to companies. what is not on this slide is 14% lack ofndents said the incentives were a reason they'd did not choose a location. it did not make the list. how are states providing the looking executives are for? one imperfect indicator is what statesmen their budgets on to promote economic competitiveness. we pulled together some state expenditure data from a number of sources, including the national association of state budget officers. states spend a lot of per capita on higher education and transportation, exactly what executives are looking for. far behind is how much they spend on census and research and development. where there is the largest growth in spending, are indeed
leads the pack. transportation is in second place and finally, you have incentives and higher education. it would seem we could conclude states are aligning their investments with what companies seem to be wanting. however, i would say these numbers show incentives are not good. they are growing in size. anecdotally, i would also say what we have seen is much more of a strategic deployment of incentives as a tool to build out the broader economic ecosystems that drive growth and that companies are attracted to. i would like to turn it over to my private sector colleagues to say a few words about what they are doing. first is the senior director for governor affairs at magna international. >> good morning, everybody. i'm glad to be here.
i'm the senior director of government affairs at magna international. before we start the conversation, i want to give you a couple of facts to create a little credibility about what we are going to talk about. i always come to washington dc and talk about magna. i think it's the largest company nobody knows anything about. we have 59 years of growth and iraq -- ranked as the largest automotive supplier in north america, the second largest in the world, the most diversified automotive supplier in the world and we supply every automaker in the world some kind of parts and some of what a do in the automobile sector. in global presence, we are 29 countries with 139,000 employees and 305 manufacturing plants around the world. more importantly, in the united states, we employ 21,000 people
and have 53 manufacturing plants outhe united states spread over 12 states including tennessee and missouri. we are happy to be there. is the 14 to 16 r&d centers we have, are expenditure in the united states last year was about $300 million in our total expenditure around the world. r&d is very important. our global capacities are engineering and services, product systems, different product systems and vehicle assembly. vehicles in austria, we assemble 200,000 vehicles a year for bmw, chrysler, and porsche. are variedmpetencies
and diversified. we are in metalforming, we have driver assistance products for safety, closures, mirrors, power trains, plastic interiors, seating and we do contract manufacturing and we are number one global in just about every sector except for seating, where we are number four. that is a little bit about magna. i will turn it over to jim. >> it is also a pleasure to be here this morning. i am jim fraser. atandle our relationships the federal, state and local level, so do you diversity of what i get to look at on a day-to-day basis varies dramatically. first, a shop -- a snapshot of tell us globally -- we are all over the world. you see a lot of growth over the past number of years and that is going to continue.
one of the things that hard to see on the bottom is we invest a tremendous amount of revenues back into r&d. company,very high-tech said the investment we put in is significant. we have a footprint of 3000 in the u.s. the interesting part is we've been here for over 100 years. only in 2000 in the name come into being through a series of mergers and, business ventures. though the footprint has been here for some time. i think we are on the leading edge of some real growth attentional in the u.s. the diversity of what we do is quite interesting. you can see the five business activities -- ground transportation, security, which goes into the cyber world, defense, aerospace and space. are very active and
in the u.s., our operations mirror each one of those. each one of those goes into a little more deaths, we're big on connectivity, staying connected, it is all about data and sharing and data protection as well. that's a big issue when it goes into the cyber world. you can see the diversity of who we are in what we do in the u.s. probably very similar for last year. good solid percentage of annual revenues. just a couple of quick thoughts when we look at how we are trying to grow in the u.s. and the factors that matter , i don't think anything is surprising on the factors he put in.
just here term but over the next five or 10 years, everything we do is driven by our strategy. where does it make sense for us to grow? have highlyorce, we skilled jobs, lot of engineering talent and having available workforce working through the state, we have an intensive internal training as well and that really matters to us. chain in to a supply the aerospace world where we are grouped together for aerospace companies, that is important to be part of that community. companies do,ther we want to be invested. engagement for us is very important and relationships with local economic development agencies, that all matters. we hope to grow and it's important to establish that
baseline first and grow into the opportunities as they come forward. it's a vitally important topic for all of us in the room and i'm pleased to be part of the discussion. >> thank you for that introduction. jim, thank you for the thoughts on what criteria matter for you. frank, can you say more about what magna looks at and what you look at in terms of what criteria pops out for you? that wef the things have to be cognizant of is the oem. , because weake sure sell to the oem, we are a consumer driven company. we have to with the equipment manufacturers are. at sometimes, it is very sticky because depending on the commodity or the party supply at that time to that vehicle, you
are required to be in two different circles of what we call just in time circle. if it is a really urgent seat, went such as a are required to be in a 25 mile circle, so you have to draw the circle around and we have to be inside that circle. a criticalt component that can be inventoried to a point of three days to a week, you have to be in a 125 mile circle of the plant. if not, the oem will charge a logistics penalty for not being inside that circle. at the state and we do a demographic study of where we want to be. within that circle and sometimes outside, we look at the state and do the demographics. the first thing we look at is the standard of living for our employees.
making sure we can get the talent we need and that we can get the workers we need and make sure that talent is educated to a point where we can bring them into the plant, train them and make sure they stay there. our turnover is less than 1% and we do that because we take good care of our employees. we look at the economic part of where we are going to be and look at how the state can help us mitigate the huge capital investment we have to make. when we invest in a plant, the lowest we do is $100 million. we have to be careful where we are with it. >> that makes a lot of sense. r&d in you talked about your business and use throughout some very large numbers.
on r&dwork with states and think about the r&d agenda for your company? >> we work closely with the states. on the automotive side, you have got to start working with states because of where the technology in the automotive business is going. autonomous vehicles, connected vehicles and you have to have test autonomous vehicles in most states and have some place to test them. some people look at the autonomous vehicle and say is that the driverless vehicle? they are not necessarily 100% driverless. a will move to them and we are probably 10 or 15 years away from driverless vehicles, but we if thehicles where
vehicle senses a vehicle close to you, it stops on its own. those systems are coming into play. there are many new technologies coming into play. the other thing that gets us is we have to be someplace where we can do this r&d because the federal government is requiring we go to 50 miles a gallon by 2025. both industry and department of energy have stated you are only going to get their three ways. number one is transmission. number two is light waiting the vehicles -- that's the only way you can get technology to get to 54 miles gallon, so r&d is very seertant because we can that technology going forward and we need to do it here in the united states. agree.
r&d is at the core of all we do. we opened that the media lab in boston and we have a team of five there, but their mandate is to work with all of our businesses to try to drive this innovation forward. how does r&d come into play here. we invest heavily in that relationship at the local level. it's very important. one aspect i will mention in addition is globally, we have relationships with universities. love to bring in the best and brightest from the universities to help us move our initiatives forward. in the u.s., that's very true as well. a lot of us are centered around where our current locations are, but where else do they have centers of excellence that we can create these relationships
that establishes a presence for us or interest in an area we might not have been focused on that can help grow the relationship as well? r&d is core to what we do. >> we've heard about regulatory relief for r&d. thealso mentioned importance of talent and relationships with universities. can you speak about the relationships you have with universities, particularly makingities and far as sure the talent has the skills you as a company need? >> we have a lot of relationships with universities but i think you have to go further. you have to get back into the high school and junior high school and start people off from that point and engage and articulate to them that this manufacturing industry is not bad anymore. it is not where you go in and
you come out with a greasy shirt. if you look at a body stamping plant, you have presses that are 12 stories high that we have to dig trenches to hold the press in the floor and you look at all of this body worked going around and i looked at chrysler a long time ago and i was in the spot welding crunk just -- the spot welding jungle where yours. welding vehicles coming down from the ceiling. that is not done by humans anymore. it's a million-square-foot plant where we pump out bodies, there are 1750 robots in that plant and all the people the do who worked there is controlled robots. you've got to have people who control the robots. you have to go back and create
programs for high school and even junior high. moving into the college area to expertisethis is the and core competencies they need to get into that and being an , a robotor operator operator is a good living and you can make a lot of money and live comfortably with the. createhat way and university programs where we do a lot of apprenticeship programs and bring in young people from college every year to work in all of our facilities. >> we do the same thing. side, wee university have those relationships where we sponsor robotics competitions and give the opportunity to work
with college students and further their projects. , we have an organization called the talus foundation, several years in the making. one of their primary focus areas is on stem education. there are examples of those in the u.s. we go and try to get them excited about science, technology and math. it is giving back to the community as well. if i had to characterize what we want the communities, we to be part of the communities and be involved. to the communities, we do a lot of charitable work, but we also do a lot locally that focuses on issues that matter to those communities. we think it is important not
only to be good citizens but that is where we live and work. talus.big area for >>, do quality of life factors matter to you as you think about the communities you choose? obviously, you will be investing as a large employer went forward, but even before you choose a community to move into, how much does quality of life matter and mark >> i think quality of life is very important. hope to life allen's we have for all of our employees, the opportunity is there. it is a partnership with the local community. the one thing i want to mention is incentives are still important and still matter in the biggest picture of what we look for when we invest or grow in an area. a lot of growth has come from locations where we currently
exist. that doesn't mean we won't be growing elsewhere, but it grows -- it goes back to the quality of life -- is it an area supportive of foreign direct investment? company, we bring in employees from all over the world and higher in the local communities. it has to be a community that is welcoming and a community that is receptive and supportive of that foreign direct investment. >> i agree. quality of life is very important. wen we do the demographics, look at what the cost of living because most employees we put into the facility come from the local area. but to expound upon the always come back
and talk about incentives in a way that i think is positive. the return on the investment that the state is going to get from what we put in their. and we are state large in the state and have 26 manufacturing plants. i will go back to 2009 when the automotive industry went down. since 2009, that state has granted us $26 million in incentives. if you go back from 2009 two isay, our capital investment $780 million. so i went back and said what are you really getting from this. , what the key parts people sometimes don't understand is what goods and services that come from putting that plan in that city or state goes for.
state, we in the same went back and looked at all the goods and services purchased by 29 plants in that one state from that state costs vendors. it was $1.6 billion in one year. abouty can talk incentives as far you want. understanding the intense capital investment, when you are investing a hundred million dollars, you are investing that within four years because it takes two years to put the building up and you have this start of production. giveaway.a corporate it's helping someone mitigate the capital expense plus get the employees in, plus get them trained and ready to go and also making sure the vendor base you
buy goods or services from our right there. >> i want to move on to our state colleagues. i'm going to put you on the hot seat. what are one or two top pieces of advice you give to state economic developers and their roles as folks try to attract your companies and your dollars? >> i think the biggest thing is to bring all facets of what you need for infrastructure together. make sure the state economic development people are there at the table, but also make sure the utilities are there. we may biggest problem have an sometimes face is that we like what we see and we are ready to go and we've find out utility doesn't have the electric power to that area and all of a sudden, you find out you have to build a substation. the advice i would bring is to
bring everybody together, come out with a plan and a program and let's not negotiate. this, i'm going to do this and that's the way it's going to be. >> similar to that, i think getting the highest levels of your state involved, working with local partners, when we see a team that has a lot of focus from top to bottom and looking to how do we help you come in and grow, we are looking short-term and longer-term. having that top level engagement which i have seen in so many great examples, that is very important. companies you the are talking to and understand where they are and whether it's potential may come from.
that little bit of homework comes in. we can really get into the substance of the meeting -- this is how we can work together and help you grow. developmentnomic agencies have an economic office as well. they come to our headquarters in usually, it gets sent back to us. understanding we have a u.s. presence that exists in working that level all the way through is helpful to make the discussions when we get a chance to meet, really productive. a common theme around doing your homework and being prepared and knowing the full range of the needs of companies is really important. i want to turned over to the manager for the international trade investment office for the missouri department of economics to give us a few comments. >> it is a measure to be here today.
oneou would allow me just thing -- i would like to thank not onlyy and his team for the extended relationship we convening thisr fantastic and informational, important panel. very well done and we appreciate your partnership about the year. i want to take this opportunity to familiarize those of you who may not be all too familiar with missouri. i am from missouri, even though there are some people from missouri as well. nonetheless, we are the show me state. the show me state throughout the years, people in missouri have been defined by their stalwart, non-flinching, mostly
conservative, usually incredulous character. we like to call that common sense. one of the things i want to talk approachout is how we for an direct investment, even a mistake investment expansions in the state and how important that is with regards to everything we do. it is that common sense that literally had us look inwards and put together a plan for the department moving forward. governor nixon was a huge proponent of that. he was very big on making sure we had a strategy and that we were following the strategy and making certain we were addressing all the needs that needed to be in dress -- needed to be addressed.
the items brought up by our two private sector panelists, on the slide here, you will see key economic indicators. i wanted to take an opportunity to tell you about some of the other key advantages we have that are not readily available or recognizable. are smack dab we in the middle of the united states. our location is key to the success of the state of missouri. it is location, location, location. if you look at missouri, one of the things you will find, within 600 miles of our state are 62% of all the manufacturing plants in our state. have anion to that, we interstate system that spans all
across the state, but we are fortunate, we have the scenic route 66 and hours. in addition, we have a rail system that is one of the largest in the country. 4000 miles of track, 17 freight railroads. 17 public river ports, both on the missouri and mississippi river. last but not least, two international airports. are looking to hit either one of the coasts in two days time, we have them covered. addition, one of the other believe thee truly state of missouri has is our large and prevent workforce. that has been talked about a lot today. we have literally placed a lot of resources in training and
education. it is critically important. we want to make sure workers in missouri do have those skill set and have the education and background and technical skills for the jobs of the future because that is where we are going. it is critically important in that regard. how vital itstand is we expend resources in that regard. jobs programs, our on-the-job training program, they are national models, so we are proud of that activity as well. , some other key thermation, our to clusters, advanced manufacturing is critically important. , the german right here
automotive sector is very important. i want to tell the governor one more time with regards to the first thing governor nixon did the first day on the job was an executive order to literally make certain the automotive industry he put together a task force that would address the issues that face the sector in 2008 and 2009. and thecause of that focus we placed on the automotive sector that has led to $1.7 billion worth of in two of the largest manufacturers and in addition, over 66 suppliers, including magna, as a matter of fact. the automotive industry, we led the resurgence in the state of missouri. manufacturer.
we are number two in a country with regard to truck production, so we are very proud of that with regards to that cluster. biosciences, hugely, hugely important. energy as well. with regards to these clusters, we have some of the most important corporate leaders in the world located in our state. 50make everything from f1 trucks to f-15 military aircraft. hallmark cards to chocolate. transformers to science technologies. we literally do it all. we have a diverse economy founded on manufacturing, founded on professional services and with regards to tourism and agriculture, not to belittle our agriculture sector, we are a
large agricultural state and the bag technologies are critically important to us. off, weround things have talked about talent and how important that is. we have realized that is very important in missouri. million ofers, 3 missouri's workers, just over half the population are highly educated with a degree of some sort. 140 degree, we have certifying institutions in the state. also with regards to that, the interesting thing is we were above the national martin. there's more educated people in the state of missouri than nationally.
that's another factor we are proud of and we want to make certain we continue in education to make sure we move the dial in that regard. state, we are a low-tech a low cost of living state. we have low energy costs as well, which is critically important. state.a very stable aaa bond ratings, one of only four states for over 50 years. we balance the budget and make certain our financial house is always in order and we make taking business in a responsible and commonsensical manner. it is knows price companies like others like kawasaki
called missouri home. i'm excited to be on the panel and toe this discussion look at ways we can address the business models and business needs of companies as we work with them to locate in the state. >> i would like to turn it over to donovan johnson, the director of the global resource management group in the north dakota office. the opportunity to be here and thank you for the invitation to represent the great state of north dakota. i'm with the north dakota trade office and we deal with the export related to issues and north dakota and we partner with the economic development finance through commerce, which is where we fall under foreign direct investment.
we take a team approach to what we try to achieve. north dakota is somewhat of a unique state. a little information on the state on where we are and what we do. we are considered a rural state, so we have some of the advantages and maybe disadvantages as it relates to how we operate and what we have as natural resources. one of the facts about north dakota is we are the geographical center of north america. so companies who want to be geographically centered, north dakota is it. there's plenty of place to expand, but how we approach for direct investment is we look at what our strengths are and sell into our strengths. be aow we are not going to
fit for everybody and that is ok. we are not looking for companies who want to get a five-year lease through the use of incentives and when it done, they decide they're going to leave and go somewhere else. when we talk about who we are and what we are, we talk about our strengths. ofant to highlight some those. our governor and his team have done a terrific job in leading our state as it relates to all the states in the country. we have economic strengths we and we want to surpass all states in gdp growth. we are the top economic performer in the nation since 2000. according to a 4 seven wall street, they ranked north dakota as the best state in the nation
for years running. we are a constitutionally balanced-budget state and we have funds set aside for future needs and generations. , we are here to plan for tomorrow. that is important to us. on the slide, it shows some important things we are involved in. one women own revenue businesses in the nation. we try to look at our strengths and say how are we going to approach companies or investors that want to come to north dakota based on who we are? what can we offer to investors coming into us? the idea oftioned having a highly skilled labor force. we have 21 public and private universities and technical schools in north dakota. in addition, they are able to
quickly adapt to the change in workplace. is coming in and they need something, we can talk about industries, the need for welders became huge. we did notof states, have as many welders as we should have got our schools were able to adapt and provide that skill. another example is one of our anversities developed engineering degree because of the need for energy in our state. and other example is the unmanned aircraft systems. need was significant to have individuals who were trained as so thetes to drones university developed a four-year program on unmanned aircraft system operations, the first one
in the nation. so we can't that to what the workforce might need and what is going on. we offer a person to person introduction and get to know you on all levels of government, whether it's their legislators all the way up to the governor's office. we are a small state. we will get to know you and you will get to know us. it is that simple. you can access the decision-makers. ,hat was brought up here before from the top on down and meeting with the correct individuals, we offer that. you walk around the state and it is on a first name basis. you run into people at a conference, that is just how we operate. it is a real advantage. economicday's development committee session, the chairman and ceo of under armour was here.
said the states need to have as a priority is an entrepreneurship environment. according to a recent university of nebraska study, north dakota is the number one entrepreneurship environment in the nation. to say it isthese important for states to identify -- identify what your strengths are and sell into those strengths. portmeone is looking for a on the ocean, north dakota is not going to be it. if someone is looking for an environment where temperatures freezing, north dakota is not going to be at. if someone is looking for quality of life and the ability enjoy four seasons and all the natural resources we have to
offer, north dakota has a lot to offer. it comes down to what you are looking for from that standpoint. we border and international market. if you or your company think that is important, we have a port coming into north dakota, portourth busiest highway in the nation. operation,ow cost of the highest corporate tax rate is 4.31%. we have been busy reducing taxes, not increasing them. we've done that to a significant degree. how do we attract fdi into the state? sessionof those at the they highlighted some things they felt were important
for states to address if they want to attract fdi into their state. i'm happy to say north dakota is halloween those examples. he must have read our notes. marketing campaign, we have aggressive marketing campaigns that target industries appropriate to where we are at an who we are. aerospace and aviation is huge, so we may have to do some talking from that standpoint. we start looking at overseas offices and contractors that assist us in identifying leads that might be moving in our direction. those are scenarios where north dakota is strong from an export market standpoint. markets. our export them into what we are
doing. it is so important to meet foreign delegates on a face to face basis and establish that level of trust and build that relationship. that is key when you are dealing with foreign investments coming in. we host dignitaries frequently and want to showcase -- not quite the show me state, but we want to showcase who north dakota is. we are consistently doing that and because of the size of our state, we have the opportunity to introduce them to the decision-makers. here is what is available, here is what can happen. withcourage partnerships companies for research and development because we can react . the universities and colleges can react to what needs to happen with them. we provide workforce development grants and training and that is
needed. we do that. we have numerous financial incentive programs available to assist and a very unique structure -- we have the bank of north dakota that can offer unique financial assistance, the only state owned bank in the nation. so we get to do some things that are unique to everyone else. if it doesn't fit a mold, we can go to the bank of north dakota and say how do we make this work for the benefit of the state? we look at all these things from that standpoint. as far as industry, agriculture is number one. advancedess, machinery, we have global headquarters as relates to agriculture and manufacturing, so that is key. energy is the second industry.
it is made up of oil, the second largest producing state in the nation. natural gas, biomass and wind power. we have a lot of opportunity for fossil fuels and the trend to more green energy available to us. to other areas that are really strong -- we have a lot of diversified industries, but technology is one of them. we have a strong biotechnology field and most of you would not realize that. literally interact all over the world on a global basis. i don't know if anybody knows microsoft's's campuses and north dakota. a very strong technological state. the unmanned aircraft systems
industry -- talk about an industry that is just starting off -- a lot of people refer to it as the wild west. a couple of years ago, the federal aviation administration selected six test sites across the u.s. to do some testing and research to develop rules and regulations to integrate unmanned aircraft vehicles into the manned airspace. north dakota is one of those sites -- one of those test sites. wem not hesitant to say leave this effort into the research and what is going on. attracts a significant amount of interest. we look at what our strengths are and sell into our strengths. in one of only six test sites in the nation, there's not a lot of competition that can come up against us. we have a u.s. air force base and north dakota that only flies
drones and we have the first private development on this air force base that is going to be used for commercial development. grumman and general atomics are coming in. in october of 2015, just a few months ago, did a mission to the resultcountries and as a , that was five months ago, we have a finnish company that has expanded into north dakota and we are hosting and the couple of weeks several other companies coming to north dakota and want to partner or locate in north dakota because you are looking at literally a multibillion dollar industry in the u.s. and north dakota is a gateway to that marketplace. .e have success stories
after their due diligence, they looked at north dakota and decided to locate their. part of that process has been that is one of the things we want to look at. likeve a limited budget everyone else. what can a company invest into the states and what can we invest into them? it is a partnership. angle-engine airplanes with parachute -- in case you look at it that way, they need some capital, so they ended up selling their company to a chinese company and got the capital and the chinese company is going to take an industry
introduce that aircraft into their general aviation market. company wantedan in shalevolved production in the u.s., came in and bought a company in north dakota. what we look at is who is a good fit for north dakota? long-lasting? all the positive things that come about. north dakota is fertile ground, to use and agricultural term. we are from the government and we are here to help you. thank you. >> thank you, donovan. leslie alexander, the international director for the tennessee department of economic community development will wrap us up here.
>> leslie alexander with the state of tennessee. i want to say thank you to our governor who is a big commissioner, randy boyd, developingasked with a stronger workforce. i am going to hold those two talks on the side and about a little bit about our strengths as a state. but also talk about the similarities. we are talking about the united states of america. one thing i love about the panel and my colleagues, yes, we are all landlocked. when you look at it from a logistics perspective, we
provide a unique perspective. we are not on the coast. we do not have a big port for someone to come into. we have unique attributes. tennessee has one of those attributes. we also happen to have memphis with have the most exports microsoft. we have some really unique attributes throughout the state, which is one of the things i see as similarities. onto some more specifics about tennessee, we are the volunteer state. that goes hand-in-hand with committing my colleagues about some of their attribute. are comeies between us along the ideas of industrial machinery, advanced manufacturing, i should say, at. -- we have also heard common theme of agriculture and a commerce.
when we look at what we drawn to the states, we have a lot of advanced manufacturing around medical devices, but also -- because of the logistics with federal express, fedex in memphis, we have some really strong attributes to the state. we continue the same of medical health care management. we have more hospital beds managed out of middle tennessee than anywhere else in the world. along with that, we draw in the and tier two -- the tier two and tier three parts of it. with thelook at it
hospital management components, you look at the fact that i.t. is everywhere in this world. we think of an autonomous vehicle -- that is what we talk about now. to move on to the east side of the state, we get more to agriculture. but we had that combination of manufacturing and health care management on the east side of the state. arealk about automotive, we happy to have 1200 plus people at a facility. have large headquarters with , we alson, nissan, gm have a strong relationship with the company said feet into that, and have some initiatives going on. when we look at the industries across the state, we can look at health care, advanced manufacturing, automotive -- we have aerospace as well.
the company from brazil has a manufacturing facility based in nashville, tennessee. along with those berries industries we have, something she may not think about as advanced manufacturing would be ceramics. have recently had a lot of tile making. that speaks to the unique attributes in tennessee. that is an overall picture of some of our clusters and things we work on there. we also work toward a development component, which i am very proud of. getting back to our governor and commissioner, we started a tennessee promise. any graduating high school student in tennessee is guaranteed a two-year education
in vocational/technical studies for free. if you graduate from high school the program called tennessee promise, there are people like myself, who are your mentors, and we hold her hand to make sure you get through. we do that with the guidance of the companies who have landed in our state. we recently worked with nissan to create a workforce program specifically. in general, we are consistently going out into the field and talking with our companies to see what needs they have. in a state like tennessee, there are a lot of them. we have a very role workforce. along with that comes with challenges. we have a huge broadband initiative going on. we have a huge role initiative -- rural initiative going on. in, theyanies come know their needs will be met. from a state like perspective, .here are a lot of challenges
in general, i think that tennessee, with over 10,000 jobs , and withst year 125,000 created from direct investment, we can find a lot of opportunities. what do we do internationally? we recently had an initiative going to israel. health some of our main care startups over there. talk with other health care startups on ways we could scale up and how we can bring opportunities with bilateral trade opportunities. investmentign direct as a full circle with trade where if you can show somebody that you can take their product back out, but also provide resources they need on the that is something we
can help you with a tennessee. we are the volunteer state and we are here to do for you in the international community what you asked us to do. we are quick to jump as well. think about us with our workforce 360 and the opportunities of students to get what they need as far as education that suits the workforce needs. and to add to that, we offer tricked -- we offer transitional support. communitiesn those need to transition from what they have been doing traditionally, we provide work is development as well. in closing, i have to mention entertainment. -- entertainment and whiskey. home to theud country music hall of fame and all things country music. tourism is huge for us. beautiful futile --
smoky mountain national park. we also have jack daniels. [laughter] i hope you all are fond of it and enjoy it when you have a chance. whiskey is one of our largest exports. canada, china, japan, and belgium are one of our top markets. we had that interesting factor -- we have an interesting factor. verye home to that and proud of that. they for letting us be here today. >> thank you very much, leslie. with all very much your comments. being your geographic location to infrastructure you felt out, to country music and jack daniels.
it doesn't get any better than that, right? i want to ask you about the process to attracting some of these companies. i would love for each of you to speak on how does your governor get involved? -- you spoke to how you involve legislators. it would be wonderful to hear about what you think about involving your executive and your legislative branch as well in the economic development game. john, thank you for that. the state of missouri, we have 13 foreign offices. that global network is managed i myself and my team on a daily basis. we work with our local staff to make sure that they are reaching out to various companies within that particular market that they are based in. generation is the main purpose of what that -- of what
that global offices. we work very closely with our sister agencies. the missouri partnership helps to do the marketing for the state of missouri, but also the project management. command, we hand them over to the project manager. we work in tandem together to make sure we are addressing the needs of the company. enough, those foreign offices are also in charge of governor's trade missions. the rn charge of international trade companies -- they are in charge of international trade shows. last year, we had 12 missouri companies in dubai. we were able to not only generate export sales, but we were also able to garner leads. these international shows -- we tend to focus on the ones that
are the industry leaders, or the top show in the sector. what happens is you have leading, corporate -- a leading, corporate presence. you have companies from all over the world that are probably very high within the sector. it helps for us to generate leads in that regard. your questionress with regards to the governor, you know, i have been doing this for a long time. i won't tell you how long exactly. but, i have worked for many, many governors. literally --n has the stamina this man has is just amazing. but he has helped us with some additional resources to be in a go after every deal
we possibly can. work with as many companies as we possibly can. make certain that we are bringing those projects home. i will tell the common sense approach. but the governor has led trade missions for us. he is going to various trade shows for us. he has just not stopped. i will give you a perfect example because frank is sitting here. governor nixon was in canada a couple of years ago and one of the first things we did was met with magnum. one of the reasons we did that was we knew that this was in the pipeline. we were working with the executives and the governor was in the position to close the deal for us. it was critical. astry to engage the governor often as we can in those types of situations. when we talk about the
legislature, then we get into some unique situations because every legislative leader represents a particular district in their state. so, sometimes the challenge that i see -- sometimes what happens is, the overall state needs,ments -- necessities are not always a priority of each of our legislative leaders. that is par for the course. they represent a certain district. the represent a certain community. it is very important that they focus on those needs first, and then maybe to the greater good of the state. i will say as far as missouri, when it comes to economic development, foreign direct investment, when it comes to specifically engaging with -- this is a have
--tament to the governor making sure the state is represented properly. the governor is a huge cheerleader for us and very important with regards to economic development. john: leslie, i asked you to get a few comments on this. the ceo of a state is there to close the deal. he is definitely at the table. i think of some recent wins we have had. -- they all came because the governor was there and he showed that was very important. we have the incentives. it is a return on investment. how can tennessee satisfy the needs of a company when they come to us? when the ceo makes a
close. on the legislative side, john, when you think of how the legislature supports the different ideas, i look at west tennessee. movement fore bettering our relationships with the continent of africa. if it wasn't for the legislatures from west tennessee promoting that, then we wouldn't have that continued relationship going with the trade missions in and out of tennessee with that regard. in east tennessee, we have the music again. our legislature have seen the benefits of those things and developing those attributes as far as expert goes. when you look at the foreign peace, we keys, -- were with our federal partners in developing opportunities. we work with the state. -- he
work with the state and international trade agencies. new ecosystems, business ecosystems, with your strengths and your certain clusters to limit this opportunity is back and fourth. jamie, do youd have any ideas that would work as well, or may not work as well. >> it is important when you're going to invest money in the state, you have a chance to meet and talk to the ceo of that state and give you an idea of how it is going to go. tois very important to talk legislators in the state, especially when it comes to what they are going to take a look at in the next session. for foreign
investment companies. we have a lot of states that, with potential laws, especially when it comes to how you report state income taxes. that are contrary to what you need to do to be a diverse to being aoppose single entity company. if you don't have that conversation, you find yourself down the road at a big mountain. >> establishing that relationship early with the governor, establishing that level of trust, is critical is making the relationship grow from there. john: donovan, you mentioned the situation you had with the bank of north dakota. has there been-- examples where you been able to deploy that in an innovative way? i would love to hear more on that. donovan: yes. it is very interesting, the only state in the nation that has its
own bank, but there are some intrictions and things that the baking world you can and an cannot do. is things that can be done -- the bank of north dakota works as a support system in the state. they are not a competing entity. that is one of the things a legislature make sure does not happen. the local bank is comfortable operating within north dakota. if the local bank cannot perform, provide, cannot meet , that is when the bank of north dakota can get involved. that can be through loans or guarantees. could be financial guarantees to the local lender. could be some kind of grant that might be available. the opportunity there to structure something that meets
the need of the company without having to go through a lot of different gyrations or hoops. small state, can get to the decision makers, does it make sense? them --st talking with there was another company from want to relocate -- 22 relocate to north dakota. they sold the business there and wanted to come to the u.s. to study business, so came to north dakota. they called me and said what do you know about this? men evolvepeople and with them, but here is what i know about them, you have to do your due diligence. because it is unique, the local lenders want willing to get a norway the startup from
and. the bank of north dakota steps says, we can make it happen. that gives us a real edge. john: i would love to hear from you, what works well -- what has not worked well with your relationship with companies? i would like for frank to comment on that on how they see it. any examples, or past experiences, or scars even whatd what worked well, or hasn't worked well in your dealings with companies? >> i will start. it is the workforce piece that is a challenge, especially in rural states. that is why we developed the workforce 360 program because we identified that we were losing companies. we were lending them, but then they were leaving because he could not get the right
employees to the plate. we now have an opportunity to talk with companies to get a program that suits their needs. the money might take four years to spend, two years to build the facility -- within two years, you can train your workforce up to man the facility. it is not unique to tennessee. it is to a lot of rural communities throughout the united states. john: have you found the participation in codirecting curriculum? leslie: absolutely. that is why we are focusing on the development piece. we are working with all of our technical colleges throughout tennessee and the southeast. it is a small border collaboration we have going on. canadian relationship
were we look at developing opportunities in the workforce to beat into the system. john: donovan, any thoughts on what works well? donovan: i think we all have our instances where it has not worked so well. we bury those may be a little bit, but hopefully learn from them. air our just want to dirty laundry. due diligence is a big part of it. it is one thing for a company to come to your state and you get all excited about the prospects of something happening, and it is exciting. however, what does it mean? is it going to be long-term, lasting, what is it going to cost us? how about the relationship with the local community and very as individuals make recommendations?
all of these things come into play. when you look at it, we definitely have positive experiences, no doubt about it. i think i mentioned earlier, in north dakota, we are not looking for somebody who was a five-year lease in real estate in north dakota. whore looking for somebody wants to be in north dakota and can simulate their business and people and be productive and effective. to do due diligence on both sides. exciting, that this lead, let's talk about it. then bring decision makers together and say it does not work, it does not make sense. >> i just want to add one thing to everything that leslie and donovan said, and i agree
wholeheartedly. a company like magnum comes in and hires the employees a higher. that is the greatest feeling in the world. someone has got a job. on the flipside of that though, what we see a lot of times is flags that gored up occasionally when a company comes to us and all they care about is an incentive package. of the throw it back private sector, that raises flags for any state. anyone that is in this line of business, even if it is a consultants, because quite frankly, it goes to what donovan had mentioned, it is that commitment. we don't want a company to come in, set up shop, then all of a sudden five years after the incentive program has expired, than that, all of a
sudden, leaves to go find a better incentive package. know, thatably, you is some of the battle scars we have encountered throughout the years with regards to this. john: it is about building out the ecosystem. >> absolutely. john: not just a one and done deal. >> i am going to tell you what does not work. [laughter] development professionals all the time. what does not work is long-term tax credits. they are terrible and they never get collected on. i don't know how anybody budgets for that 12, 20 years out. if you do the due diligence on a project, the project -- and the
reason for quote incentives is to mitigate the capital expenditure investment on the front end. do got a program that goes more than five years and somebody is asking for more than five years, you should probably run because they probably won't be around five years from now. it will sign the lease and begone. to mitigate costs. we try to get people trying to get ready to go and get ready to work. let's talk about having that is good for the community, good for the state, and good for us to mitigate the loss. we sometimes forget as companies, but when you talk about getting people to come there and having some kind of incentive to come there, you are still spending taxpayer money. those taxpayers are looking for a return on investment, number one. if you are going to be a good corporate citizen, you can't have a 30 year incentive plan. it just does not work.
the two just don't go hand in hand. you are looking to get a thenold for a project, and you are looking to grow. in 10 years.ow if you have a long-term incentive program for the state, the question is, how are you going to come back when the taxpayer say, you have a 20 year plan on the initial investment? we want to make it easier to manage from both sides and make it easier and make the corporation and the company look like a corporate citizens. add, one challenge i will the process takes time. we have an internal process that is market-driven. i wish that things were easy and we could almost board so easily, but sometimes that is not the case.
thaty take years to see come to fruition, but i think it is important. how do you enable these relationships? comments of the national governors association of making the discussion come together. it is an important conversation we need to continue and grow. the summit has been successful bringing global companies together to promote investment in the u.s. trade shows, great opportunities. there is also a group in washington called the organization or international investors. they support u.s. subsidiaries and global companies. they bring together companies like mine better trying to do the same thing. we are trying to grow and invest. very positive things that are happening and the focus is on foreign direct investment. john: wonderful.
i would love to open it up to the audience if there are any questions. in the remaining time, if anyone has a questioned, i would be very happy to entertain it. yes, please. >could use the microphone right there? >> my danish charlene from chattanooga -- my name is charlene. my question is related to china for the three economists. would you elaborate on the overall status of invest that from china. chinese investment -- are there any particular characteristics of chinese investment and what are you planning to do to reach out to attract more? referenced annson
aircraft. if you can add that on top of that, that would be great. >> thank you for the question. we have an office in china. we consider it a very strong marketplace for what comes out of north dakota. that is how that started. the exporting side into china and when you do that, there is a reciprocal agreement that develop. it is very strong that way. china is a huge market. no doubt about it. there are certain the opportunities available in north we had a regional office in north dakota. and china is a huge market to develop for investors coming into north dakota. they may come or may not be her own company in, but they will bring capital into north dakota to invest into existing companies. that is a very strong compont