What we're seeing is that the main drivers [include] labor, of course. Labor is always a driver and has always been a driver. But I would say in the last five years, because of the workforce difficulties in North America, it's becoming even more of a challenge and a driving factor for the process. Supply chain has also been more at the forefront of our process and our projects. We know that companies use supply chain to be more competitive, so that has been changing over the last five to 10 years. In the past, companies would more so rely on making sure that they understand the cost of their supply chain. Now they really want to be efficient in their supply, to really compete and be competitive with their competitors… in North America or around the world.
Technology is a big driver of a new supply chain alignment, so they use software to make sure that they understand and control the cost of their supply. [What some companies] would do is smaller investment projects in different communities in their country. So that way they could be controlling the product and controlling the supply at the same time. So that's another new thing that we've been seing from our clients.
I would say that the U.S. has a more integrated supply chain, that makes it easier for our clients when they're considering the U.S. They know that they will find a good part of their supply chain. They know that they would also need to rely on suppliers outside of the U.S. But that's the main difference with the U.S. and other countries like Canada. We do have in Canada an interesting supply chain. But we know that investors in Canada will have to rely on a good part of suppliers coming from the U.S.
Global Investment In – and Within – North America
Looking at the numbers, general interest will be coming out of Germany, [and] Japan has always been a big investor in North America. You look at other Asian countries. China has also been looking more and more into North America, certainly into the U.S. If you look at Canada, European investments are a big driver of FDI in Canada. If you look just at the U.S., it relies back on Germany… Canada is also a big investor in the U.S. Many people forget, but it's a big investor. And Asian countries are always on the rise because their economy is growing and they're getting more sophisticated, and they're expanding around the world to service their markets.
Well investments from Canada are typically investments that are looking for expansion. It's typically the first step into an international presence, [and companies tend] to look into the U.S., because the U.S. is such an interesting and a big market, that's typically where they're Canadian investor will look first. Also, because Canadian investors are comfortable with the U.S. They have a sense of knowledge on the U.S. They're comfortable with the United States. So it makes business sense to be in the U.S., and also they know that they can rely on a good workforce, a good market and a good supply chain, which are all key factors for an investor.
I think about 75% to 80% of investors will make their first decision based on information coming from the internet, and that was maybe [at] 20% maybe 10 years ago. Marc Beauchamp, President and CEO, CAI Global Group [With Canadian companies looking at international investments,] we sit down and try and understand their business strategy behind their international expansion. So they typically tell us that the U.S. is their first good step, but we always try and give them a broader view of their opportunities. So we look at the U.S. because they want to look at the U.S., but we also encourage them to look internationally and we try and give them options outside the U.S. if we think that it's interesting for the project.
Data and Incentives’ Roles in Site Selection
It's been interesting how data has been playing a role in site selection more and more. In the past, we used to rely on the information that was provided by economic developers to the company or to the site selector. More and more now, the information is available online in different ways, so we are able to use the data to do initial research. We will evaluate communities and locations without having to move forward or ask for any information, which is a big game changer in the industry. I think about 75% to 80% of investors will make their first decision based on information coming from the internet, and that was maybe [at] 20% maybe 10 years ago. So we know that communities have to use the internet in different ways to provide the data, but also to make sure that they keep getting on the radar of the investor. And what we're seeing for the future in terms of data is that the data will not only give us a picture of the community as of today, but we will be able to use the data to predict how the community, region or the state will evolve in terms of business for the next five, 10 or 15 years.
I think incentives is always a sensitive topic. Certainly for our clients, incentives are very useful. They help make a good decision even better, and we use incentives to really communicate to the communities, the good will or the intent of the company, the level of risk that they're willing to take with the community, and at the same time how the community is willing to take a certain level of risk and support the investment project. So for many of my clients, it's more of a message from the community that says, “We have faith in your company and your project and we want to be a partner in the risk that you will be taking in investing in our community.”
Identifying – and Training – Key Workforce Populations
We have one company that was in the advanced manufacturing industry. They were looking into the U.S. and of course workforce was a big issue, a big challenge and a driving factor for the final decision. And it was interesting how, with the economic developers and our client, we were able to identify transferrable skills. So with the help of local agencies, they were able to identify, a workforce that we wouldn't originally look at, but because of they had skills that could be transferrable to our client’s needs, in the end it would make sense to be in that community because the client was comfortable that they could be able to attract that workforce to work for his company.
There was a mix of solutions. The state was able to get involved and the local community and local colleges got involved and offered to train and to give additional training. And the company also offered to kind of open its doors to make sure that the local officials and colleges understood exactly what they needed in terms of training and qualifications. So it was a mutual effort, in the end, to be able to secure the right workforce for them.