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U.S. Cleantech Industry Grows, Green Jobs Expand into New Markets

Manufacturers in the U.S. clean-energy industry, which is expected to grow rapidly, are looking for new markets, low costs, and top talent. Which locations can satisfy those needs?

Olaf Babinet, Senior Manager, Global Expansion Optimization Group, Deloitte Consulting  and Dustin Gellman, Senior Consultant, Global Expansion Optimization Group, Deloitte (Apr/May 10)
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While the case for market entry was clear, choosing the right location required a comprehensive site evaluation process. After several months of search, Indar executives ultimately chose Milwaukee, Wisconsin, for its electric motors and generators manufacturing plant - in close proximity to the U.S. wind corridor states. As noted by Milwaukee's Commissioner of City Development Rocky Marcoux, "Projected operating costs were very comparable to other manufacturing states, and Indar liked our work-force environment, our government's willingness to cooperate, and what they saw in our modernizing, industrial city".

While customer proximity and logistics play a strong role in clean-energy site selection decisions, other variables come into play for the solar and wind industries. Figure 4 summarizes some of the key drivers, based on Deloitte experience and a recent NREL study.

Taxes and Incentives
What are state and local governments doing to attract investment? To understand perspectives of state and local communities on attracting clean manufacturing jobs, Deloitte recently interviewed a number of economic development officials from state and local organizations across the nation. Nearly all respondents emphasized low-cost and high-quality labor as their perceived competitive advantage, and downplayed the relative importance of quality of life and community support. Noted one Midwest-based economic developer, "If you strip away the clean moniker, these companies are we've played up our traditional manufacturing pedigree and concentration of firms and jobs in the industrial sector."

Most survey participants noted that aggressive, targeted incentives - for product manufacturers and customers alike - were essential to lure large projects.

According to Bruce Laird with the Oregon Business Development Department, "Persistence pays. Targeted marketing, incentives, and policies, combined with aggressive execution and follow-up, will eventually produce results. Oregon recently won eight solar projects, including two from Sanyo and SolarWorld for a combined $600 million."

Deloitte's recent client experience indicates that communities with demand-side incentives and sustainability initiatives have been particularly adept at attracting European-based companies, most notably from Germany, Spain, and France - where direct grants schemes to manufacturing companies are strictly limited by the European Commission. We expect local and state production and consumption incentives - such as manufacturing grants, tax credits, feed-in tariffs, rebates, and creative financing - to play a key role in location decisions, provided that the candidate locations fulfill other essential manufacturing requirements. Figure 5 highlights states that have implemented mandates (or goals) for clean energy, as well as state-sponsored grant programs.

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You mention that communities that develop targeted, proactive strategies should fare well in attracting cleantech. Can you provide an example of a city or community strategy?
A few communities immediately spring to mind. Austin, TX is near of the list for a few reasons... More
- Olaf Babinet, Senior Manager, Global Expansion Optimization Group, Deloitte Consulting
Of the various ways to lure new cleantech business in, what seems to work best when it comes to incentives - grants, tax credits, feed-in tariffs, rebates, other creative financing?
At a national level, Feed-in-Tariffs (FiT) have proven to work in other countries, such as Germany, Spain, and Japan. At a State and local level, "cash is king"... More
- Olaf Babinet, Senior Manager, Global Expansion Optimization Group, Deloitte Consulting
As cleantech is an emerging industry, business and skills are still being defined. From which labor pool should cleantech companies draw when hiring, i.e., is there some field of expertise that lends itself to being a cleantech expert with some additional training and education?
A natural labor pool is from the semiconductor cluster especially at engineer level for solar wafer and solar cells manufacturing plants. More
- Olaf Babinet, Senior Manager, Global Expansion Optimization Group, Deloitte Consulting