Posted by Tom Clark August 24, 2010
This week, nine of the nation's most prominent corporate site selection consultants will visit the Metro Denver region for our annual Site Selection Conference. The Metro Denver EDC and its economic development partners will host this important group. The site selectors are coming here to learn more about our region for their clients and to share with us the changing trends in corporate location decisions. During their stay they will be briefed by industry experts on the region's innovation clusters, have breakfast with Denver Mayor John Hickenlooper and Douglas County Commissioner Jill Repella, and enjoy a dinner with Governor Bill Ritter.
They will hear the business case from industry leaders Thomas Cycyota, president of AlloSource; Joe Potter, vice president and CFO of United Launch Alliance; Andrew Fowler, executive vice president of Renewable Energy Systems (RES) Americas Inc.; and Hugh Westermeyer, senior vice president of Charles Schwab Investor Services.
They'll also make on-site visits to Ball Aerospace, Comcast, the Vestas nacelles manufacturing center in Brighton, and the Fitzsimons Life Science District and the adjacent Anschutz Medical Campus.
They'll finish the week with a horseback ride to Beano's Cabin in Beaver Creek for Saturday's dinner, courtesy of Vail Associates. It's a fact-packed visit for them. For us, on Friday morning, we get a chance to ask the questions that matter to our growth opportunities: How are we doing? What can we do better?
Professional site selectors are a unique group of companies retained by corporations to assist them in their expansion plans. A typical site selector will work 6-10 projects per year. For an economic development organization like the Metro Denver EDC, they are a valuable upstream marketing opportunity.
Are these types of events successful? Yes. The site consultant who brought ConocoPhillips global training and R&D center to Louisville was a guest several years ago. Two of our guests are actively working on projects with us already.
Is the event memorable? Yes. When we sent an e-newsletter to our site selector contacts last week announcing the event, a guest from our original site selection event in 1986 responded, "Ah...sweet memories." Just try to beat that!
Tags: Gov. Ritter, Industries, Real Estate Market, Relocation
Posted by Tom Clark August 10, 2010
On Saturday, the Denver Post, based on reports from local businesses, noted that the recent elimination of certain tax exemptions by the Colorado General Assembly are having no adverse impacts on local companies.
Most of these exemptions were eliminated as of July 1 of this year. These tax increases are less than 60 days old. Expecting companies to have assessed the impacts on their day-to-day business costs within the first 60 days is a stretch at best. The Post's story could lead one to conclude that there is little or no relationship between taxes and job growth. Let's give ourselves a little more time to assess the impact caused by these increased costs before we draw any conclusion.
The Sunday Post did a credible job reporting the ongoing job losses in manufacturing. Since the end of World War II, Colorado's share of manufacturing jobs as a percentage of the state economy has, like the rest of the states, shrunk. But in the 1990s, the memory storage device industry, semiconductors, and communication equipment manufacturers were actually hiring people. Boulder County companies manufactured more memory storage devices than Silicon Valley, for example. Many companies, including Apple and Intel, came to the Front Range to join the likes of Hewlett Packard, NCR, and others.
As cost pressures increased and Asian markets offered huge savings in labor costs, local plant managers were pushed harder and harder by their customers and their own company executives to keep costs low. Manufacturing companies were competing against the higher paying dot.com jobs that were also growing rapidly during this same time period. Labor prices went up quickly.
What is often missing in the debate surrounding job loss is a look at taxes and their impact on job growth. Not just taxes in a general sense, but the types of taxes employed by government. The types of taxes have very different impacts on job growth and retention.
For example, property taxes on Colorado commercial properties are three times higher than taxes on similarly-valued residential property. Yes, that old 28-year-old Gallagher Amendment continues to push jobs and investment away from Colorado. The state tax code's impact on manufacturing growth was not discussed in the article. It should have been. A tax that is three times as much compared to other properties merits a paragraph in this discussion.
Pity the poor plant manager of Intel in Colorado Springs about a decade ago. His plant, worth nearly $1 billion, was competing not only against other semiconductor companies, but also internally for any new line of business. One cold Saturday morning, the manager painstakingly walked 100 Colorado business and civic leaders through his own internal competition with other Intel plants for a new line of business. There was no doubt how the Business Personal Property Tax and the Gallagher Amendment made it impossible for him to compete even within his own company, much less globally. The plant closed and thousands of jobs went with it.
Taxes do matter. Tax policy drives investment decisions. Every conversation about job growth and loss must include a portion devoted to Colorado's tax structure.
Tags: Taxes
Posted by Tom Clark July 26, 2010
The Mountain West states have always been big exporters of resources - gold, silver, oil, gas, and other minerals. But in recent years, Colorado's technology investments have dropped. In the report Export West: How Intermountain West Metros Can Lead National Export Growth and Boost Competitiveness, the Brookings Institution notes that Colorado has had a significant drop off in exports, despite our continued reputation as an innovation center.
What gives here? Haven't we got all these new energy companies here? Aren't they getting into the export game? The answer is, "Yes." But other elements of a changing global economy have hurt U.S. and Colorado exports particularly. In 2003, the Metro Denver EDC identified information technology - hardware (storage devices in particular) as one of our innovation clusters. Along with the General Assembly and Governor Owens, we helped craft changes in state tax policy that were aimed at encouraging this cluster.
Did you know that, at its peak, Boulder County manufactured more computer storage devices than all of Silicon Valley? You bet.
If you make "high value-added" stuff, and, if it doesn't weigh too much so that the freight costs to export it are not too high, you can prosper in Colorado. Storage devices prospered with the likes of IBM, Storage Tech, Exabyte, McData and others. A week's worth of production could be sent out in a suitcase.
But in seven short years, this industry, besieged by competitors in cheaper labor markets, has dropped from a driver of our economy to a place where our focus on it is more towards retaining these companies than helping them expand.
Another innovation cluster for our region is the aerospace industry, and its complimentary industry - defense. It felt a different assault on its exports: September 11, 2001.
As the nation reeled through a period of fear, anger, and bewilderment, one major change in U.S. trade policy provided a major hit to the defense and aerospace industries. Colorado has felt this impact acutely. It is called International Traffic in Arms Regulations (ITAR). Suddenly, technology exports from the aerospace industry to established, long-standing customers were either curtailed or reduced by the Feds. The impact is still being felt today. And while the over-reaction of ITAR appears on its way to some resolution, foreign competitors have taken away a huge market share from the U.S. and Colorado in the meantime.
We see the impact of these two industries' export drops in freight at DIA. The air cargo business at DIA has been declining for several years.
Let's see how our new energy industries impact our exports in the next three years. A strong exporting state, according to Brookings, has higher salaries in not just the exporting companies, but throughout its economy. That would be pretty good news for any state. And a stronger balance of payments wouldn't hurt either.
Tags: Economic Development
Posted by Tom Clark July 16, 2010
Good news is hard to find these days, even for Metro Denver. But the last 10 days have given us renewed confidence in Metro Denver's economic rebound. Consider this:
- CNBC ranks Colorado third-best for business for the second year-in-a-row.
- Vestas Technology R&D Americas, Inc. announced a 47,675-square-foot lease in Louisville for its new engineering and product development division, initially employing 75 to 125 people. Congratulations to Mayor Chuck Sisk and our partners along the Northwest Corridor for this great addition to our cleantech cluster. We estimate the company's existing capital investment in Colorado at $1billion.
- DaVita closed on land for its corporate headquarters in the Platte Valley next to Millennium Bridge. The healthcare giant promises to not only be a great corporate citizen but is intent on having a positive impact on its new home town. Its 14-story building for 400+ employees is kick-starting the Denver Union Station development—a key component of the entire FasTracks effort. Congratulations to our partners with the City of Denver, particularly Mayor Hickenlooper, and the Denver Office of Economic Development.
- Vestas announces more hiring in its blades and nacelles plants in Windsor and Brighton. After a swoon in the sales of turbines last year, Vestas' investments in Windsor and Brighton appear to be hitting the sweet spot in new business. This past week the company issued media releases indicating a new round of hiring. Our partner in Weld County, Larry Burkhardt, was featured on local television stations. Congratulations to Windsor, Brighton, and Weld County for their successes in these massive capital projects.
- TriZetto Group, Inc., a Newport Beach healthcare software company, announced it will move its corporate headquarters to Greenwood Village. Its new CEO Trace Devanny announced the move shortly after his appointment. The Southeast Business Partnership brought a portion of the company to Greenwood Village back in 2007. The corporate move now brings the number of new corporate headquarters moving the Metro Denver in the past seven years to 44.
- And finally, the agreement between Denver Transit Partners and RTD for construction and operation of the East Corridor to DIA and Gold Line to Arvada and Westminster was completed. This will commence the four-year-construction of this important portion of the FasTracks system. Groundbreaking is scheduled for the end of this month. Congratulations to Phil Washington, the RTD Board and team, and Kim Day and her staff at DIA.
In a time where confidence in the local market is crucial, these events are giving us some optimism that an overall lift in the economy will commence in 2011. As we look forward to the completion of several big projects, such as ConocoPhillips' R&D facility in Louisville and DaVita's HQs in 2012, and the commencement of the East Corridor construction, 2011 through 2014 are looking very strong.
Tags: Cleantech, Economy, Relocation
Posted by Tom Clark July 13, 2010
Having a bad day? Consider this for legacy air carriers in Europe. The Passenger Facility Charge (PIF) for some airlines is higher than the fares they charge with their al a carte ticket strategy. Emirates Airline is spending billions of dollars on thirty new mega-airplanes, the Airbus A-380, capable of carrying over 500+ passengers with fuel efficiencies make it seem like a Prius in the sky. Top it off with the worst April in history thanks to a small eruption on your island neighbor that closed almost every airport in northern Europe.
A few weeks ago, we continued our semi-annual meetings with European air carriers--keeping them apprised of our economy, promising them success if they expand their presence here and checking on the health of their industry in Europe. What we found is recovering markets and encouraging signs of profitability. Even SAS, the Scandinavian carrier, often written off as fit only for acquisition or merger, is seeing an improving financial picture. We remain on the list for future expansions by Lufthansa, but the massive expansion of the Frankfurt Airport is consuming their planners' time as they work to deploy the recently-received A-380s to more densely populated markets. Reinstating the Munich flight is not in their near-range plans.
European carriers continue to watch United Arab Emirates and its carrier, Emirates Airline. Our recent talks with UAE economic officials indicate that their expanding airline is profitable and not subsidized by oil revenues. European aviation experts disagree. They see a strategy similar to the one Japanese car makers used in the 1960s and 70s: Sell below cost. Build market share. Raise prices. With the recent multi-billion dollar purchase of A-380s by Emirates, it doesn't much matter. The new reality in Europe is the present reality in the U.S.--tough competition where price matters, and quality service becomes a bonus but not a necessity.
The big surprise in all our conversations with airport and airline officials remains, "Denver has a huge advantage with its six runways, none of which intersect." No matter how many times airline or airport staff see the runway configuration there is inevitably that head-shaking, air exhaling, envying vocalization of awe. We have a very special airport and the entire industry knows what if offers for our future.
Tags: DIA, Transportation
Posted by Tom Clark June 28, 2010
Standing at the entrance of Intersolar in Munich last week left one simple impression. We were in the presence of the next great thing - solar power is here to stay. Seth Portner, from the Governor's Energy Office observed that five years ago Intersolar's trade show could have been held in the Seawell Ballroom. This year it occupied virtually all the space in the Munich Exhibition Center - formerly its airport, but now refitted into an extraordinary exhibition venue. It reminded me of the start of the semiconductor revolution in the 1970s and the Dot.com revolution brought about by the Internet. Electric...in so many ways.
Like so many new industries that are just hitting their stride, excess optimism is inevitable. Company booths were opulent and often over-staffed with eager, intense employees earnestly hawking their companies' products and services. Many were manufacturers - from glass, to solar panels and roof structures, to IT equipment to operate devices. Eventually it will be far more service providers who will make the money, but today, it's the product pioneers. Unlike the U.S., Europeans are driven by the prospect of climate change more than an interest in profitability. Electricity prices can get as high as 52 cents per kilowatt hour in Germany. As the industry matures, we will see the market assert itself, bringing efficiencies into the industry and not some of the demagoguery that penalizes economic growth for undocumented environmental benefits.
Some industry watchers opine that solar has a better chance of being the nation's primary alternative energy source. It produces energy during the time of day when demand is heaviest. It has built-in infrastructure for installation - most of America's commercial rooftops are potential sites. Solar's ability to combine with energy-storing elements such as water (and ultimately batteries) or in off-grid applications, like thin film, makes it a more flexible source than wind. Its environmental impacts are more predicable than biofuels.
But standing before my 200th solar panel (we are preparing a new metric for growth in solar energy called, "Solar Panels per 100,000 square feet at InterSolar") I was once again filled with awe of those who risk everything to take their dream to the market, to bring jobs and tax income to their communities, and despite what at this moment seem insurmountable odds, succeed beyond even their own imaginings.
Tags: Cleantech
Posted by Tom Clark June 23, 2010
In my 35 years in economic development I have never attended a trade show and come home with more than four "live" projects - and that was when I was representing an entire state. That all changed last week when the Metro Denver EDC, the Colorado Office of Economic Development and International Trade, and a host of our regional partners descended on the American Wind Energy Association's annual conference and trade show in Dallas. This North American gathering for the industry generated 20, yes, 20 live projects! Colorado was on everyone's list and, coupled with the best "giveaway" of the entire event (propeller ball caps and beanies), we had people lined up at our booth to talk about why they needed to be in Colorado.
Projects range from sales offices to R&D to manufacturing. We are enjoying a unique position in this segment due to our 30 percent renewable portfolio standard and our recent changes in the state income tax law and a more competitive incentive package.
The Metro Denver EDC used the venue to launch our global Colorado Cleantech marketing initiative. Prior to the event we brought reporters from Europe as well as Danish wind company suppliers to Metro Denver as part of the tee-up for the launch. We followed this up with a European launch in Munich at InterSolar, Europe's annual gathering of the solar industry. Our people in Europe told us that getting the appointments with European companies was easy. Colorado is now a well-known region thanks to REpower, SMA, Vestas, Siemens, Hexcel, and Bach locating major facilities here.
A recent commentary in Der Taggesspiegel by Christoph von Marschall, a U.S.-based reporter for the newspaper, speaks of the difference in Germany's approach to cleantech versus Colorado's. Germany's approach is much more top-down with a focus on climate change. Colorado is much more focused on the economy opportunity that cleantech offers for the state and the companies within the sector. He asserts that this focus on job creation and innovation will play well in the minds of European companies. Government subsidies in Germany have driven the cost of a kilowatt hour to 26 cents. By contrast, a kilowatt hour in Colorado that is generated from alternative sources costs about 10 cents per kilowatt hour.
Tags: Cleantech
June 8, 2010
In the economic development world, nearly every state is touting itself for cleantech job growth. We felt it was time for Colorado to stake its claim as North America’s Cleantech Hub and did this very successfully with our national Colorado Cleantech launch May 24-26 at AWEA’s WindPower 2010 Conference & Exhibition in Dallas.
And this week I'm with fellow Colorado economic developers in Munich at the Intersolar show to tout the state’s growth in solar technology. We’ll later travel to Copenhagen for meetings with Danish firms that might be eyeing expansion in the United States. While in Europe, we’ll visit with international media too.
What makes Colorado's cleantech position stronger than other states?
- We've created demand for cleantech with Gov. Ritter’s recent signing of a 30 percent Renewable Energy Standard
- We're home to the National Renewable Energy Laboratory, the DOE's lead energy efficiency and renewable R&D center
- The world's leading cleantech firms, including Vestas and SMA Solar Technology, have made Colorado the focus of their North American expansion activity
- We have an international airport that is one of the world's newest, busiest, and most efficient
Having a thriving international airport with major expansion plans is vital to our growth in cleantech. Representatives from DIA have also joined this trip to meet with major European carriers. Our goal is to make Metro Denver even more accessible to the world by adding more daily, nonstop flights.
And finally, what distinguishes Colorado from say Texas or Iowa is "intellectual capital." Our residents have the nation's second-highest rate of bachelor's degrees or higher behind Massachusetts (home to MIT). Colorado is the acknowledged center for research and development--or brainpower--in cleantech.
You could say that "great ideas come out of thin air" in Colorado, but we already did in our tagline!
For more details, see www.CleantechHub.org.
Tags: Cleantech
Posted by Tom Clark April 19, 2010
Start with an industry cluster where the U.S. has world dominance – zero competitors. Add in the prospect of a commercial enterprise that offers gigantic returns to investors and the economy, but with lots of competitors. Throw in an empty bank account, with little or no money to spend. What do you get? A real "cluster" – America's space program.
That’s where Colorado found itself last week. The Obama administration was preparing to shut down the nation’s ambitious planetary exploration program – Constellation. Part of the Constellation program involves the development of spacecraft and booster vehicles to replace the Space Shuttle and send astronauts to the Moon and to Mars as well. Orion is designed to be the crew compartment for the Constellation program. The President, with massive looming federal deficits, sought to concentrate federal funding in commercializing space at the expense of exploration.
In Colorado, with the nation’s third-largest space economy, and Metro Denver, with the No. 1 concentration of space employment, the President’s choice pitted our local aerospace companies against one another. Lockheed Martin was the prime contractor for Orion, while companies such as United Launch Alliance and Sierra Nevada anticipated significantly increased revenues from commercialization.
We argued that this was a false choice – commercialization vs. exploration. Much of this country’s technological innovation has come from space exploration. To abandon it means ceding the field to up-and-comers like India or China. This is like declaring defeat and leaving the field. Yet, the commercialization of space, crowded by the likes of Japan, Inc., Russia, Inc. and France, Inc. offers huge commercial applications that also benefit the world market. Did you know that the initial satellite photos of Katrina came from the Nigerian Space agency with equipment made in Britain? For us to compete for near-term market share and long-term economic primacy in space we must have a commitment to a commercialization policy and further exploration.
The Obama administration played a little bit of Solomon, splitting the baby if you will. It is clearly leaning toward commercialization. Today, Orion has been re-missioned as a return vehicle from the Space Station and will not be landing on the moon. While the President reiterated his support for exploration he set no timetable for going to Mars. But that’s a discussion for another day.
A note of thanks to the Colorado Congressional delegation for its support to keep 1,000 aerospace jobs and positioning Colorado as a worthy competitor in commercial space.
Tags: Industries
Posted by Tom Clark April 8, 2010
And can you guess where this 1953 photo was taken?
Opening Day at Coors Field. Is there a better place to be? Hope springs eternal for every fan on this wonderful national rite. This spring chill is still in the air, but the sun portends summer’s idyll.
In 1977, when I was working in Chicago, one of my staff came into my office and shamefacedly admitted he had done the unforgiveable. Though he was a professional real estate executive for one of the region’s dominant supermarket chains, he had made an entirely emotional purchase. He bought a three-story walk-up...at Wrigley Field...and even worse...he had paid $40,000 for it! What an idiot! The neighborhood was a decaying mess. For God sakes, there were hot dog wrappers still blowing around the place in November! I was always glad that they played only daytime ball there. I wouldn’t have dared to go into the neighborhood after dark.
He sold it five years later for $1.2 million. I’m still working. He’s retired.
What we didn’t see that day in Chicago was the beginning of an urban renaissance – the return to the center city by young, pioneering professionals. In some places that renewal would be led by our national pastime’s playing fields.
LoDo was already undergoing a nascent rebirth when Major League Baseball chose Metro Denver for expansion. Dana Crawford, some guy name John Hickenlooper and a host of passionate urban pioneers were already developing condos and shops in the area. But Coors Field was the accelerant.
Not everyone thought it was a good idea to place a stadium where there were serious environment issues and no parking. But Minneapolis had proven with the Humphrey Dome that people would find their own way to the park without a sea of asphalt for their cars. Camden Yards in Baltimore had proven that people would come to see baseball in a neighborhood that wasn’t all that great.
But one urban pioneer wasn’t all that hot about Coors’ location. He owned a brew pub nearby and worried that while his business would see a big sales spike in the summer, he’d face very tough times after the season ended. Like all of us, the Mayor got one of Coors’ many unanticipated surprises. Fans that had walked through LoDo on their way to Coors’ became enchanted with the area’s clubs and shops. They returned to his pub and other businesses in the fall and winter, further boosting his sales. The Platte Valley became a residential neighborhood, boosting Downtown Denver into a 24/7 destination. And with the whole world watching the Democratic National Convention, LoDo became the darling of the media. As we’ve said before, "Downtowns are the retail window of a region’s health."
The rest is history. The right location, a beautifully designed ballpark and a contender for a team. It’s going to be a great summer. Thanks, Coors Field. You made a dream possible.
Can you tell me the approximate address of this 1953 Denver Bears game? And name the field?
Tags: Economic Development