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| Economic development agencies
throughout the United States (and the world) compete to attract new capital
investment projects each year.
How many project deals of significant size are actually
happening in the USA each year? It's a simple question, but not so
easily answered. |
This updates our April 2006
analysis of
investment project trends by state. Download our
April
2006 newsletter (.pdf - 4 pages with other graphs) which summarized that former market
research and analysis. The source
of this data is explained below, along with other sources. |
| Intuitively, there are obviously
many thousands of commercial real estate transactions in the USA each year -
or else there wouldn't be so many CRE firms and brokers nationwide.
The vast majority of their work, however, doesn't involve selection of new
business locations by clients. It involves local services in the
places where they already do business. In 15+ years
of work in this specialty, we have not yet found a very reliable source of
new project data for the USA, much less the rest of the world. The
available consultant research is private or costly to obtain.
This page therefore cannot reliably answer the above
question, but it is intended to share useful market insights from some of
the many sources we know as an independent "concierge
service" for project plans. The key point is that thousands of
development agencies are demonstrably competing for a relatively small
number of "mobile" project deals. |
Past research has suggested that
perhaps 80% of the new job creation in any region is tied directly to the
retention and expansion of existing businesses in the area, such as through
growth in existing facilities or through purely local relocation (larger
building) or expansion on site. For example, new
manufacturing sites are often planned to have room for at least 50%
expansion in the future at the same location because it is very costly and
disruptive to move such operations - even locally.
In this context, only a small share of the total projects
each year are likely to be "mobile" - meaning that they have many location
alternatives and are for new operations rather than on-site expansion or
local moves. Some new projects are also tied very closely to key
suppliers or clients, which may limit their actual mobility beyond choices
in a small region. These may all be highly valuable deals for any
community to "win". |
| The chart
below shows the mix of capital investment projects for corporate facilities
(new or expansion projects) in the USA from 1994 - 2006. It excludes
many very small projects, but includes some of them because they meet at
least one of the three criteria. For example, a project may involve a
deal for 20,000 sq. ft. of space without creating 50 new jobs, and those
jobs may be planned but not actually happen soon. Similarly, even a
relatively small project for perhaps 5 - 10 people can readily involve a
capital investment commitment of $1 million or more. The simple number
of projects therefore doesn't differentiate between huge and very
competitive "mega-projects" and those which are really quite small. |
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| It is hard to
know how comprehensive and reliable the data behind the reported totals as
charted above my be, because only subscribers to their research database
would have access to the information about individual project announcements
which add up to these totals. Since the same methodology has been
followed for many years, however, it should still be a useful indicator of
changes over time in total project activity levels.
Do the math. All the states (and thousands of cities and
counties within them) may be competing for only a few thousand projects per
year. Some of these projects are very valuable to communities and are
very competitive, but many are small or don't consider location
alternatives. |
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| Our analysis
of visit patterns among our US state and regional economic development
directories, as well as global directories, may also be an interesting
indicator of which locations are "hot" for future project plans.
This is obviously not a very reliable indicator, since
anybody can visit our open directories for any reason, but some fairly
consistent patterns have emerged in recent years which seem to parallel what
we have observed in project announcements and through our networks of many
contacts.
Our analysis of the CEO Survey research by the Business
Roundtable may also be a useful indicator of future US investment project
activity. This research focuses on the CEOs of roughly 100 large US
companies. |
Analysis of
Directory Visits by
State |
Analysis of
US Regional
Directory Visits
Global Analysis of Regional Directory Visits |
|
Analysis of Business Roundtable
CEO Survey 2002-2007 Results |
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Data Source: Site Selection magazine, April 2007
and prior years Conway Data has maintained a "new
plants database" for many years which is the source of the data used by Site
Selection magazine each April for their "Governor's Cup" award to the state
which reports the most projects for the preceding year.
Since they have followed a consistent process for tracking
project announcements for many years, this is a potentially useful "macro"
perspective on the US market for capital investment projects, but is subject
to some distortions because of the way that states have reported data in the
past. Analysis of the state totals or specific projects behind the
above national totals reveals some anomalies, but for lack of a better data
source of this nature it is a generally useful market perspective. |
Relationship Disclosure We have
no affiliation with Site Selection magazine, which is published by Conway
Data. Global Direct Investment Solutions performs US advertising sales
work for fDi magazine, by the Financial Times group, but fDi has no
involvement at all in the above market analysis work.
We also have no affiliation with the other suggested
sources of historical market data, analysis, or future projections.
Our reference to these sources is not an endorsement of
their work by us, nor vice versa. This information is just shared to
make it easier for the people we reach to find such information, and share
our own perspective on this market on the basis of many sources of
information, including our own direct contact with 1000+ investors during
15+ years. |
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Other Sources: Project Announcements and Trend
Analysis Plant Location International (IBM-PLI),
for which Bruce Donnelly worked in the past (Biographic
profile) when it was the global site selection consulting practice of
PricewaterhouseCoopers, maintains a database of major project announcements
worldwide (GILD - Global Investment Location Database).
The data itself is not openly published or for sale, but
is gathered from many sources and then used as the basis for their own
market analysis reports to support their PR and marketing of their
consulting services, as in the case of their presentations at IEDC and BIO. |
Recent Investment Trend Analysis
Sept 18, 2007 - IBM Plant
Location International released new research during a presentation
sponsored by fDi magazine at the IEDC conference in Phoenix about 20%
growth in new jobs created worldwide by foreign direct investment
projects during 2006.
Press release IEDC
presentation information including IBM-PLI speaker bios, website
links, and a
.pdf copy of their
presentation.
Similar research for the life sciences sector has been
presented at BIO. |
| OCO
Consulting (
www.ococonsulting.com ) is a small European consulting firm which
tracks project announcements as a subscription service, primarily for
reference by investment promotion agencies (IPAs) to guide their targeting
strategies for business attraction work. This also promotes their
research services to help identify potential investors for clients, and
supports the promotion of their other consulting services for IPAs and
economic development. |
September 17, 2007 -
The Business Roundtable has released the results of their quarterly CEO
Survey of roughly 100 of their 160 member firms. This reflects
the CEO expectations for sales, capital investment, and employment
levels at their firms over the next six months, as well as US GDP
planning assumptions. Our graphs show
the CEO Survey trends since 2002. |
| Oxford
Intelligence is another European research service which tracks project
announcements for various clients, including publishers and others who help
them to promote their research services to IPAs. |
September 17, 2007 - Oxford Intelligence was also a speaker at the
IEDC presentation sponsored by fDi magazine.
IEDC
presentation information - where their presentation can be
downloaded (.pdf) |
| Industrial
Information Resources (
www.Industrialinfo.com ), based in Houston, specializes in research
about the capital investment project plans of various process industries as
a subscription service to potential suppliers (engineering and construction
services, process machinery, etc.). Their prior focus on US projects
has now become more global. |
June 5, 2007 - The JP Morgan
Global PMI Report on Manufacturing and Services reported global
expansion at a faster rate.
J.P. Morgan Chase & Co. produces this global market research with
NTC Economics,
ISM, and
IFPSM. |
| LoopNet
( www.LoopNet.com ) is a leading
provider of commercial real estate listings online whose services are used
by many of the top CRE networks. Their services to such firms now
include reference data about past deals. The CRE firms often publish
local market reports which can now be found easily through our new
Search: Global CRE
tool. Although their data includes thousands of
property transactions which may not be very relevant to investment promotion
efforts by economic development agencies, such as changes of ownership or
lease renewals and local office moves, or transactions in the hospitality,
retail, or healthcare sectors, it is potentially a very useful source of CRE
data. |
The Milken Institute (
www.milkeninstitute.org ) publishes some market research related to
economic development trends, but generally not at the level of individual
project tracking. Their focus is more typically at the level of
development strategy, rather than competition for projects.
The World Economic Forum (
www.weforum.org ) also attracts some
interesting research reports related to economic development issues
worldwide, but generally focuses at the policy and strategy level rather
than detailed market analysis about business investment project flows. |
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