This month’s story is from Memphis, IN where I attended the annual meeting of the Southern Economic Development Council on August 3-5 at the famous Peabody Hotel.
In my work, I attend many conferences. However, this one was outstanding both in terms of pre-conference organization and also the conference itself. Normally, I find a few sessions of interest, but at this conference I attended every session they offered and was glad that I did.
What I would like to share with you is my takeaways from these sessions.
1) Haley Barbour, former Governor of the State of Mississippi was the keynote speaker. He emphasized the importance of engagement at the highest level when recruiting business, especially direct foreign investment.
2) The next session was a panel of speakers representing three railroads: Norfolk Southern, CSX, and BNSF. Each railroad is pursuing a slightly different strategy relative to intermodal. BNSF is doing land acquisition, and 80% of the cost of transportation is determined by the site selected. Location decision-making has become data-driven using supply chain analytics. One take away from this session was the volume of truck traffic that can be removed from the road by the use of rail transportation.
When it comes to site selection on the railroad, I was intrigued by efforts to protect the integrity of the network when adding freight movements and passenger trains to the system. The panelist said they are seeing fewer projects, but the ones that are taking place are bigger, such as chemical plants.
My big take away was that railroads are a delicate network of interactive movements of goods. Any disruption of the network can have dramatic effects.
3) The role of water transportation, including ports as gateways to the world and the inland water systems as feeders to the ports, was discussed by the next panel. For the movement of bulk materials, our inland waterways play a vital role. The trend is toward bigger ships with 3,000 TEUs moving to 8,000 TEU ships requiring port depths of 52 ft.
4) The next panel spoke on opportunities for jobs and investment growth. Sharon Younger and J. Mac Holiday spoke of the quality of place and the importance of the social openness and aesthetics. They spoke of economic development as a team sport. The Metropolitan Revolution was a key point as the talent pool moves into the core city taking businesses with it. The application of an economic impact analysis was discussed as it relates to funding of the economic development effort. The increasing role of foundations as a source of funds was also discussed as it related to increasing labor force participation rates and providing equal access to employment opportunities.
5) The session entitled Global Marketplace at your Doorstep discussed ways to attract Foreign Investment. The panel included the Deputy Consul of Japan, Consulate General of Canada and the Consulate General of Germany. My take away from this session was that firms are motivated to locate in the U.S. for several reasons, including: 1. Need for a U.S. presence; 2. Limit impact of currency fluctuations; 3. Lower energy costs; 4. Lower labor cost; and 5. Relative U.S. political stability and rule of law. One interesting idea that came out of this session was the need to install foreign language signs in our airports.
6) For me, the most intriguing session was the Global Supply Chain presented by Robert Carter, Co-Chief Executive Officer, and Chief Information Officer of FedEx Corporate Services. He spoke of the importance of connections and how commerce is about connecting marketplaces. He described how the value of connections has played a role throughout history such as in the development of Venice and the Silk Road. Connecting products to markets. He described two networks – the information about shipments and the shipments themselves. His term was “bits over atoms” in which transparency is created into the physical network using information about the shipment.
A new service FedEx is offering is putting sensors in packages to measure light, heat, moisture, and location. For example, the sensor would send an alert if it sensed light, indicating the package had been opened. He discussed the recently acquired company, Waze, whose app is used to out-smart traffic by monitoring the GPS in cell phones and social media.
7) The site selection consultant panel reiterated the workforce scarcity issues many locations are facing, the need for fully prepared sites, and the importance of being a good listener to the needs of the client rather than promoting the area. The importance of being prepared was mentioned by several speakers. The panel said that you may have one hour to tell your story so it’s important to be prepared. Lastly, the panel member said that communities should invest in finding ways to reduce the workforce required by companies in order to compete effectively with Mexico where labor is $4.50 per hour. For those industries where labor costs are 20% or more, the U.S., and southern states in particular, will find it hard to compete with Mexico as was depicted by the fact that three major auto assembly plants selected to locate in Mexico over the Southern U.S.
I thoroughly enjoyed my time at these sessions. Again, hats off to the local planning committee and SEDC for an outstanding conference.