Workforce and Incentives
A Midwest manufacturing firm was beginning plans for expansion of their manufacturing operations, they began by focusing on a specific geographic area, in this case the southeastern United States, from which they began assessing various regions and real estate options.
A Midwest manufacturing firm was beginning plans for expansion of their manufacturing operations, they began by focusing on a specific geographic area, in this case the southeastern United States, from which they began assessing various regions and real estate options. After several months, they identified key regions with suitable real estate options, proximity to customers and suppliers as well as a population density that would support the hiring and retention of a workforce. At this point, many companies simply make a real estate decision, hoping labor will be available. However, without further due diligence can often prove the value of the workforce and uncover financial incentive programs. This organization chose not to leave these aspects to chance and performed the due diligence.
We looked beyond readily-available unemployment data and labor statistics to discover which region truly offered the best available labor force. And which would provide the best labor at wage rates most competitive to the business. To determine this, we had each region provide job-specific analysis, meaning unemployment, current employment and competitive wage rates for each specific job category. We assessed both complementary and competing industry and had a private meeting with other plant managers already in the region to gain their assessment of available labor, competitive wage rates and a real world assessment of the region. This helped the company not only determine which region would afford them the best workforce, but also adjusted their proposed pay scale, reducing proposed payroll by several hundred thousand each year. Rather than hoping labor will be available, they are now confident they have chosen the best market with the best available workforce and have confidence their refined pay scale will be competitive in the marketplace.
A quick and early internal analysis concluded available “incentives” would most likely not apply based on required wage rates to be paid by the company. We did not accept this premise. We dug deeper and were able to determine the company would qualify for a statewide average wage rates (vs a higher regional rate) as they are in a ‘targeted industry’ cluster the state is trying to recruit. It is important to note that each project is unique, and simply reading an incentive application online rarely gives an accurate picture. Factoring in job creation and cap ex, facility improvements and industry sector tells a more complete story – and often results in qualifying for incentives and/or a more robust package.
The company is making a decision to enter the market not only selecting the best available real estate option, but also with confidence on the availability of a reliable workforce. Assessing labor rates and availability, by position, coupled with direct feedback from other operators in the market will save the company $500,000+, per year, on payroll. The company will qualify for over $600,000 of tax credits and over $100,000 of job creation-related grants and training dollars.