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Are Your Incentive Programs Outdated?

States compete for the jobs of 2020 with the tools of 2005 (or 1995)

As companies continue to incorporate advanced technologies, digital infrastructure and new ways of working, their footprint and location needs are in constant flux. With every business cycle, new entrants emerge that seek to disrupt and displace industry icons previously thought to be unassailable.

These disruptions are placing an increasing premium on each company’s ability to attract STEM talent in droves – not an easy mandate in many locations. As companies explore alternatives to their current footprint through site selection, they consider each geographically variable aspect of cost, operating conditions and risk.

Ultimately, as they narrow the field to a short number, companies and site selection consultants explore how state and local location incentives might offset start-up and operating costs – and in many cases, we find that they are disappointed with programs that do not meet their needs.

Incentives programs have a useful life. Many were designed decades ago, are seldomly updated and are geared to attract projects that bear no resemblance to current and future deployments. Today’s STEM deployment projects, including IT and R&D centers, care about attracting technical talent locally, nationally and internationally – yet few incentive programs facilitate this in a meaningful way.

Data center projects have changed so rapidly that only a handful of EDOs have refreshed their incentives offerings to address key decision drivers such as hardware replacement cost, utility rates and property/sales taxes.

Many tax credit programs have job creation minimums that make them obsolete for capital intensive “factories of the future” – the $100M+, 80-100-job advanced manufacturing projects that have become more common.

Incentives play a critical role in the location decision process, but to be effective they must meaningfully address the needs of business. States and communities that take the time to realign their incentives programs to support their strategic objectives  have a distinct advantage over those locations that are struggling to attract jobs and investment with the tools of yesteryear.