Ginovus, LLC

Logistics/Distribution Projects on the Rise

admin — Mon, 20 Feb 2012 23:28:24 +0000

By Leslie Wagner
Director of Project Management and Development, Ginovus LLC

From the Area Development Online website

In the coming decades, businesses and communities seeking to remain competitive in the logistics arena will need to continuously innovate in order to adapt to the changing environment.

By formal definition, logistics is…“that part of the supply chain process that plans, implements, and controls the efficient flow and storage of goods, services, and related information from the point of origin to the point of consumption in order to meet customer requirements” — and it’s BIG business today.

Logistics, as a business concept, evolved in the 1950s due to the increasing complexity of supplying businesses with materials and shipping out products in an increasingly globalized supply chain. This led to a call for experts referred to as supply chain logisticians, people who focus on “having the right items, in the right quantity, at the right time, at the right place, in the right condition to the right customer.”

There are three primary types of logistics that comprise the industry: inbound, outbound, and reverse. Inbound logistics concentrates on purchasing and arranging inbound movement of materials, parts, and/or finished goods from suppliers to manufacturing or assembly plants, warehouses, or retail stores. Outbound logistics is the process related to the storage or movement of the final products, and the related information flows from the end of the production line to the end user. And, as one might expect, a portion of what goes out typically comes back creating the need for reverse logistics, which is the process of handling products that are returned.

In the United States alone, according to recent reports, logistics is a $250 billion per year industry. The growth and progress of this industry can be attributed to many things, most notably, improved road systems, the rise of the Western economy, and what seems to be an insatiable appetite of the American people for the consumption of goods.

Logistics is estimated to account for 8.7 percent of the total U.S. GDP and is continuing to grow, not just in services provided and outsourced, but also in terms of volume. The industry’s third-party logistics (3PL) provider element accounts for more than $78 billion and is estimated to be growing at a rate of 15 percent to 20 percent per year principally because of the intrinsic benefits, such as the reduced need for personnel, reduced transportation/distribution costs, potential for improved customer service, improved cycle time, and the ability to free up needed capital to deploy in other more strategic core business areas.

Change as a Constant
With all of this growth and progress, there is change. Change is a given in the world of business; the only variable is the rate at which change will occur. Of the top 50 Fortune 500 companies listed in 1991, only 15 remain as of 2011. Changes in the U.S. economy have heightened the importance of goods distribution as an economic engine. With the decline in manufacturing jobs, the result has been a raised profile of the goods distribution industry as a resource of well-paying industrial jobs that may not require postsecondary degrees.

The Bureau of Labor Statistics projects a 4.2 percent increase in wholesale trade employment, and 9.8 percent in transportation and warehousing employment by 2018. These projections — along with expanding geographical boundaries and the rate at which 3PLs are anticipated to grow — all point to a favorable future in logistics/distribution projects. The strongest growth is anticipated within the mixed freight, pharmaceutical products, commodities, electronics, and other electrical equipment categories.

The value of U.S. imports and exports have more than doubled since 1989 and are now more than $3 trillion. In addition to the changing economy, recent studies indicate that 95 percent of the U.S. CEOs believe they should have some form of logistics strategy, and nearly 50 percent of the nation’s CEOs are incorporating supply chain planning into their overall business strategies.

Newer, More Modern Facilities
During the 1990s construction of logistics buildings increased. In fact, demand for warehouse and distribution space has steadily increased during the past three decades, and commodity shipment trends indicate that space demand is likely to continue to grow.

A recent report produced for the National Association of Industrial and Office Properties (NAIOP) projects the need for some 700 million square feet of new space to be built between now and 2018. In addition to new facility needs, there is also a significant need to replace older obsolete facilities, which averaged 300 million square feet between the years 1990 and 2003. If this trend continues, we might anticipate that 3.5 billion to 4 billion square feet of warehouse and logistics space will be built by 2020. The end of the recession has allowed companies to focus on expansion and deployment of new, more sophisticated technologies, which correlate to a rise in logistics and distribution projects.

Real estate inventory and employment related to logistics buildings have also shifted in design, with the result being more square footage per worker today than in the past. Today’s centers are modern and efficient and are the heart of logistics in providing control, efficiency, and velocity for goods moving through the system. Elements of warehouse and distribution centers continue to evolve and to accelerate through several trends, such as the general trend toward outsourcing to 3PLs, the unprecedented growth of e-commerce, and the importance of the partnership aspect of the manufacturer/marketer and logistics provider relationship.

4PLs and Other Trends
Outsourcing provides the ability to leverage another’s strengths, which may free-up internal distribution infrastructure and resources. Outsourcing may be directed to 3PL providers; however, there is an emerging trend in 4PLs; whereas the 3PL provider targets a specific function, the 4PL provider targets the management of an entire process to include transportation, customer relations, billing, and human resources.

Because of the forces shaping supply chains, changes in warehousing and distribution will continue. Competition will continue to pressure operations to be more efficient while catering to more demanding customers. The key is that the industry is always changing, and an outside provider may be more nimble, allowing a company that has traditionally handled distribution to better control expenses and utilize internal resources.

Other trends impacting growth in the industry and decisions of where to locate warehouse/distribution/logistics facilities include reductions in transportation costs. These reductions have enhanced productivity, opened new markets, and altered trading patterns. This, in turn, has led to just-in-time logistics planning that seeks to minimize inventories and storage, create incentives for more horizontal integration of supply and distribution networks, and spur development of new distribution hubs.

The distinction between distribution and production has become increasingly blurred with value-added services such as parts, production, assembly, and customer service all integrated under the same distribution center roof. Other considerations include centralization vs. regionalization, government regulations, security, technology, business management, and further business drivers such as energy and work force quality/availability, real estate, land and building, price/availability, business tax structure, and opportunities for economic development incentives.

Creative Incentives
Changes in the industry have provided an opportunity for some regions to capitalize on new business opportunities that, in turn, have led to job creation and significant capital investment. Other regions tied to more traditional supply chains have and will continue to suffer.In various regions around the country, creative economic development incentive tools and strategies are being deployed to capitalize on market potential. The effective use of federal, state, and local incentive options by companies helps to reduce overall initial project expansion/location costs in addition to long-term operating costs. Those organizations that are highly focused on improving the bottom line will take strategic advantage of available tools either on their own or in partnership with a professional site selection and economic development advisory services firm.

Some examples of effective incentive tools that states and communities have utilized to attract and retain the distribution/logistics sector include:

Sales tax recapture agreements: Through a restructure of business operations, a company can source all sales through one location vs. multiple locations. As an inducement for the company to change its business operations, an agreement may be structured in which the company and community share in the percentage increase over the original base sales tax amount for an agreed upon period of time.
Personal and/or real property tax reductions: In exchange for creating jobs and making capital investment, the company may receive a partial exemption/abatement/reduction of property tax liability over an agreed upon time. This is an effective tool in most areas of the country with respect to real property tax assessment, and in some locations where both real and personal property taxes are levied.
Forgivable loans: In exchange for a certain level of job creation and capital investment, a community may provide an upfront “loan” for building improvements and/or purchase of machinery and equipment. As the job and investment commitments are met, the loan is “forgiven” over some period of time, often in annual increments.
Tax increment financing: This is an exceptional tool whereby incremental increases in assessed value are captured and utilized for land acquisition, building purchase, facility improvements, and/or needed infrastructure to support a project.
Training assistance: Many federal, state, and local programs are available to help companies offset training costs associated with new and incumbent work forces. As a general rule, the primary objective of training assistance programs is to provide transferable skills that will aid the employee in developing lifelong skills needed in the workplace.
Tax credits: Credits to offset a variety of business taxes may be offered in support of a business’ commitment to make capital investment and create jobs over a specified period of time. The reduction of tax liability can be very meaningful to companies as they make investments in growth. Some tax credits may be refundable, meaning that if the value of the credit exceeds the amount of tax liability, the difference is refunded to the company in the form of cash.

Need for Continued Innovation
The above represents a sampling of potential economic incentive opportunities that may be available to support the growth of the logistics industry. In today’s logistics field, it is critical for leaders to have a solid overall strategy so that they know what to do, why they are doing it, and how to get it done. Those companies that are flexible and agile are most likely the ones to prosper in the long term. Of critical importance is the building and maintenance of a dynamic portfolio of activities and resources. Leaders should also ensure a balanced organization — one that encompasses strong metrics, fosters a creative environment, and has focus, flexibility, and agility to balance existing activities with new opportunities.

Over the past several decades the logistics sector has evolved from being simply one aspect of a larger business process to a viable and thriving industry in its own right. This change has been reflected in changes in federal, state, and local policies as well. In the past, economic incentive resources and discretionary spending have been geared predominantly toward manufacturing operations. Now, many state and local governments have designed creative new approaches to compete for new business investment in the logistics sector, with some communities actively promoting themselves as logistics hubs.

What has not changed is an environment marked by fierce competition for new investment. While it is difficult to predict what changes will occur in the logistics sector in the coming decades, one constant will be the need for continued innovation from businesses and communities seeking to remain competitive in this arena.

Forbes Magazine’s Rankings of Best States For Business and Careers

admin — Thu, 19 Jan 2012 15:11:38 +0000

Forbes magazine recently completed an analysis of the 50 states to determine the best locations for business and careers. The top 10 ranged from smaller states such as Nebraska and North Dakota to larger ones, such as Texas and North Carolina. The rankings provide insight into why some states fare well, while others struggle.

The analysis looked at several key factors to determine the rankings. Please find below a summary of the key criteria evaluated to develop the list of best states for business and careers.

1. Business costs
2. Labor supply
3. Regulatory environment
4. Economic climate
5. Growth prospects
6. Quality of Life

Based upon these factors, analysts dissected detailed data for the United States to rank the states in each category and, also, determine an aggregate score for each country. As an example, a state could score highly in some categories, but not do as well in others. Of the 50 states, only one – Utah, scored in the Top 15 for all six categories used for the rankings. This explains why Utah is ranked as the top state in the country. Please find below a list of the Top 10 states in the rankings and the three categories that they ranked the highest in as a location.

1. Utah: #5 in labor supply, #8 in regulatory environment and #10 in business costs.

2. Virginia: #2 in labor supply, #2 in regulatory environment and #4 in quality of life.

3. North Carolina: #1 in regulatory environment, #2 in business costs and #3 in labor supply.

4. North Dakota: #2 in economic climate, #4 in business costs and #11 for growth prospects.

5. Colorado: #1 in labor supply, #8 in growth prospects and #10 in quality of life.

6. Texas: #1 in economic climate, #1 in growth prospects and #4 in regulatory environment.

7. Washington: #5 in growth prospects, #6 in labor supply and #7 in economic climate.

8. Nebraska: #3 in business costs, #6 in economic climate and #12 in quality of life.

9. Oregon: #8 in growth prospects, #10 in labor supply and #15 in business costs.

10. Iowa: #8 in business costs, #11 in regulatory environment and #11 in quality of life.

Please find below a list of the 10 states that ranked the lowest in the survey and the three categories that they ranked the lowest in as a location.

41. Illinois: #42 in growth prospects, #38 in business costs and #31 in labor supply.

42. Alaska: #46 in quality of life, #41 in regulatory environment and #36 in labor supply.

43. West Virginia: #49 in labor supply, #49 in regulatory environment and #38 in quality of life.

44. New Jersey: #48 in business costs, #39 in regulatory environment and #36 in economic climate.

45. Vermont: #47 in regulatory environment, #44 in growth prospects and #43 in business costs.

46. Mississippi: #47 in quality of life, #46 in growth prospects and #46 in labor supply.

47. Michigan: #48 in labor supply, #48 in economic climate and #43 in growth prospects.

48. Rhode Island: #50 in regulatory environment, #49 in economic climate and #40 in business costs.

49. Hawaii: #49 in business costs, #47 in growth prospects and #46 in regulatory environment.

50. Maine: #50 in growth prospects, #45 in regulatory environment and #44 in business costs.

As with all rankings, it is very important to remember that different locations have strengths and weaknesses for different types of companies. The best states for business and careers will not be the best location for all industry sectors and people. Any company considering the location of a new facility or expansion of an existing operation, must consider the key factors that impact their company and project. While rankings are helpful in providing information and identifying trends, they do not spell huge success or failure on their own. The old expression of “peeling back the onion” is very true when it comes to site selection for companies.

Leading Site Selection Consultants analyze the Top States for Doing Business in 2011

admin — Tue, 03 Jan 2012 14:58:11 +0000

From Area Development Magazine Online, January 3, 2012.

For the second year in a row, Area Development has conducted a survey of a select group of highly respected location consultants who work with a nationwide client base. We asked the consultants to name their top-5 state choices in 12 site selection categories. Here are the top overall states:

States were ranked in each of the 12 site selection categories based on the number of times they were named as a “top-5″ choice by the responding consultants. Next, a top-5 state’s ranking in each of the 12 categories was assigned a weight in accordance with its position in these individual categories. Based on these total weighted scores, Texas is far and away the consultants’ #1 choice for doing business, followed by Georgia, Alabama, and South Carolina (with weighted scores only a point apart), and finally Indiana in the #5 spot. Taking the #6–#10 rankings based on weighted scores are Louisiana, North Carolina, Tennessee, Mississippi, and — surprisingly — California, in that order.

2011 Top States for Doing Business

1 – TEXAS
2 – GEORGIA
3 – ALABAMA
4 – SOUTH CAROLINA
5 – INDIANA
6 – LOUISIANA
7 – NORTH CAROLINA
8 – TENNESSEE
9 – MISSISSIPPI
10 – CALIFORNIA

Larry Gigerich, Managing Director
Ginovus

When evaluating overall business environment, it is no surprise to see Texas come out on top. The combination of a very appealing corporate and individual tax structure teamed with excellent transportation infrastructure and a large deal-closing incentive fund has resulted in tremendous growth throughout the state. In particular, the life sciences and information technology industries continue to build momentum in different areas of the state.

Indiana, ranked fifth in overall business environment, has continued to rise in the rankings during the past several years. The state is leading the Midwest in economic recovery. Changes to its tax structure and incentive programs, along with outstanding transportation infrastructure, have attracted many companies to the state. Despite the current economic conditions, Indiana’s automotive sector has remained strong due to the presence of Chrysler, GM, Honda, and Toyota.

Leslie Wagner honored with Donna M. Hovey Award

admin — Fri, 09 Dec 2011 21:47:02 +0000

Indianapolis based Ginovus is pleased to announce that Director of Project Management and Development, Leslie Wagner, has been awarded the annual Donna M. Hovey Award by IndyCREW.

The Donna M. Hovey award is presented annually to honor the IndyCREW member that has best exemplified Vision, Dedication to maintaining and improving the organization, and Enthusiasm for the commercial real estate profession.

Leslie is an active member of IndyCREW, chairing the Leadership Development Board and will be taking the reigns as President-Elect for 2012.

About Ginovus LLC

Ginovus is a leading provider of national site selection, location modeling, and economic development incentive procurement & management services to private sector, educational, and not-for-profit organizations throughout North America. Ginovus is headquartered in Indianapolis, Indiana. For more information, please visit www.GINOVUS.com.

About IndyCREW

CREW Network was founded in 1989 to support the achievements and provide networking opportunities for women in commercial real estate. CREW Network boasts over 8,000 members from all disciplines of real estate and in 74 markets in North America.

IndyCREW promotes professional development, focusing on business and leadership development, and industry research and career outreach for over 150 local members.

Wagner & Frazier Graduate University of Oklahoma’s Economic Development Institute

admin — Fri, 09 Dec 2011 21:43:57 +0000

Indianapolis based Ginvous announced that its Director of Project Management and Development, Leslie Wagner, and Senior Manager of Compliance, B. Gerald Frazier, have graduated from the University of Oklahoma’s Economic Development Institute (OU/EDI).

Wagner and Frazier each completed over 117 hours of instruction with course work from more than 50 seminars, workshops, and discussion groups. They attended three sessions, each one week long, providing upper-level education for economic development professionals. The program is accredited by the International Economic Development Council.

About Ginovus LLC

About OU/EDI

Business Retention and Expansion, Real Estate, and Finance are the three core areas that OU/EDI classes concentrate on. There is, also, emphasis in Marketing, Strategic Planning, Entrepreneurship, and Managing Economic Development Organizations. OU/EDI has had over 3500 graduates since its start in 1962.

Forbes Magazine’s Rankings of Best Countries for Business

admin — Wed, 07 Dec 2011 14:24:55 +0000

By Larry Gigierich

From the Inside Indiana Business website

Forbes magazine recently completed an analysis of over 100 countries to determine the best ones in the world for business.

The Top 10 countries in the rankings ranged from 4.3 to 313.2 million in population and between $27,700 to $62,100 in per capita GDP. The rankings provide insight into why some countries fare well, while others struggle.

The analysis looked at several key factors to determine the rankings. Please find below a summary of the key criteria evaluated to develop the list of best countries for business.

1. GDP growth
2. Trade freedom
3. Monetary freedom
4. Property rights
5. Innovation
6. Technology
7. Red tape
8. Investor protection
9. GDP per capita
10. Trade balance
11. Population
12. Public debt as a percentage of GDP
13. Corruption
14. Personal freedom
15. Tax burden
16. Market performance

Based upon these factors, analysts crunched numbers for 134 different developed countries to determine an aggregate score for each country. As an example, a country state could perform well in some of the scoring, but do poorly in other areas – resulting in their ranking being lower than expected. Please find below a list of the Top 10 countries in the rankings and a couple of statistics regarding each location.

1. Canada: 3.1% GDP growth and $39,400 per capita GDP.
2. New Zealand: 1.5% GDP growth and $27,700 per capital GDP.
3. Hong Kong: 6.8% GDP growth and $45,900 per capital GDP.
4. Ireland: 1.0% GDP decline and $37,300 per capital GDP.
5. Denmark: 2.1% GDP growth and $36,600 per capital GDP.
6. Singapore: 14.5% GDP growth and $27,700 per capital GDP.
7. Sweden: 5.5% GDP growth and $27,700 per capital GDP.
8. Norway: 0.4% GDP growth and $27,700 per capital GDP.
9. United Kingdom: 1.3% GDP growth and $27,700 per capital GDP.
10. United States: 2.8% GDP growth and $27,700 per capital GDP.

In taking a look at the 16 factors used to compile the rankings, it is interesting to see how the United States scored in each area. Please find below the summary of the United States position in the world.

1. GDP growth: 2.8%
2. Trade freedom: 36th
3. Monetary freedom: 50th
4. Property rights: 18th
5. Innovation: 6th
6. Technology: 20th
7. Red tape: 8th
8. Investor protection: 5th
9. GDP per capita: $47,200
10. Trade balance: -3.2%
11. Population: 313.2 Million
12. Public debt as a percentage of GDP: 62.3%
13. Corruption: 21st
14. Personal freedom: 1st
15. Tax burden: 45th
16. Market performance: 19th

As with all rankings, it is very important to remember that different countries may offer strengths and weaknesses for different industries. The best countries for business will not be the best location for all industry sectors. Like any process, a business needs to dig deeper in the areas that greatly impact their ability to be successful, whether they are a young, fast growing or large company in a mature industry. Rankings are helpful in identifying trends and opportunities, but they are not the “end all, be all” for businesses trying to determine where to operate and grow.

Angie’s List Prices Initial Public Offering

admin — Wed, 16 Nov 2011 14:38:54 +0000

From the Angie’s List Website.

INDIANAPOLIS, Nov. 16, 2011 (GLOBE NEWSWIRE) — Angie’s List, Inc. (“Angie’s List”) today announced the pricing of its initial public offering of 8,793,408 shares of its common stock at a price to the public of $13.00 per share. Angie’s List is offering 6,250,000 shares of common stock and certain selling stockholders are offering an aggregate of 2,543,408 shares of common stock. In addition, Angie’s List has granted the underwriters a 30-day option to purchase up to an additional 1,319,011 shares of common stock to cover over-allotments, if any. Angie’s List will not receive any proceeds from shares of common stock to be sold by the selling stockholders. The offering is expected to close on November 22, 2011, subject to certain customary closing conditions. The shares of common stock will trade on the Nasdaq Global Market under the symbol “ANGI.”

BofA Merrill Lynch is the bookrunning manager of the offering. Allen & Company LLC, Stifel, Nicolaus & Company, Incorporated, RBC Capital Markets, LLC, Janney Montgomery Scott LLC, Oppenheimer & Co. Inc., ThinkEquity LLC and CODE Advisors LLC are acting as co-managers.

The offering is being made only by means of a prospectus. Copies of the prospectus relating to the offering may be obtained from BofA Merrill Lynch, 4 World Financial Center, New York, NY 10080, Attn: Prospectus Department, or by email at dg.prospectus_requests@baml.com.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Angie’s List

Angie’s List collects consumer reviews on local contractors and doctors in more than 550 service categories. More than one million paying households in the United States rely upon Angie’s List to help them make the best hiring decisions. Members get unlimited access to local ratings via Internet or phone, exclusive discounts, the Angie’s List Magazine and help from the Angie’s List complaint resolution service.

Trends in the Plastics Industry Impacting Site Selection Decisions

admin — Mon, 14 Nov 2011 14:51:39 +0000

By: Larry Gigerich

From Trade and Industry Development Magazine

For an industry that didn’t even exist 100 years ago, plastics continue to grow rapidly and the industry is in constant evolution. The plastic resin product is derived from fossil fuels, petroleum and natural gas, and the production of plastics from resin to end product utilizes a great deal of energy. The limitations and price fluctuations of this energy source, teamed with the fact that plastic is generally a poor decomposer, creates many challenges for the industry.

The volatility of the feed stock along with social and ecological demands to reduce waste in our environment, are two of the driving factors in the trends being seen. The “greening” of the plastics industry, recycling and bioplastics, are ways in which the industry is trying to battle both the market swings that affect their feed stock and energy prices and the waste problem. These industry segments have positioned companies with a need to ensure that solid decisions are made with regards to expansion and relocation projects. Plastics companies must have access to the best information and implement sound processes to ensure that they make the best decisions moving forward.

There are several key site selection criteria that are used by any industry analyzing potential locations for facilities. As Ginovus completes location modeling for companies utilizing plastic as a raw material, the following factors play a key role in site selection decisions:

Energy Costs. The high energy usage from the equipment used in all levels of plastics manufacturing results in the need for close examination of utility costs in potential facility locations.
Transportation Costs. The need for superior road and rail infrastructure, to transport raw materials from suppliers and finished product to customers, is of high importance to plastics companies.
Property Taxes. Heavy machinery and large facilities make property tax liabilities a forerunner in site selection.
Labor Force. An adaptable and trainable labor pool is critical for plastics manufacturers, as technology and products tend to change rapidly over time.
Economic Development Incentives. Due to the capital intensive nature of the plastics industry, economic development incentives that can reduce project and operating costs can have a profound impact on site selection decisions.

When we look at the plastics industry, specialized companies tend to “cluster” around one another to leverage raw materials, workforce and other key factors impacting operations. For many years, the Midwest and Southeast have had been leaders in different sectors of the plastics industry, but plastics companies operate all over the United States.

Proximity to customers, along with energy costs, labor pool, tax environment and economic development incentives were all high priority factors when Ginovus had the opportunity to work with nationally recognized plastics manufacturer, NylonCraft Inc. NylonCraft, a plastic injection molding company with locations in Indiana and Michigan, is a manufacturer of plastic components for the automobile industry. The products, such as dashboards, bumpers and consoles, need to be at their customers’ doorsteps under the “just in time” model. However, “just in time” requirements from the automobile industry are not the only factors contributing to the location decisions of plastics companies.

As the automobile industry changes the design of vehicles every few years, manufacturers, such as NylonCraft, need to re-tool and upgrade technology frequently. A few years ago, NylonCraft needed to invest a large amount of money in new equipment and decide which manufacturing facility to use to accommodate the needs of large automotive industry customers. Keeping in mind that proximity to these customers was very important, Ginovus examined Indiana, Michigan and Ohio as potential locations for the project.

Due to the use of energy intensive equipment, Ginovus conducted in depth research on utility costs, evaluated the quality of rail and highway infrastructure, studied labor costs, and examined transportation costs of raw materials and finished products for each potential location. Because of the capital intensive nature of the project, tax structure and economic development incentives were also critical site selection factors for the company. Armed with this location modeling information, NylonCraft could make an informed decision regarding the best site for the project. Ultimately, NylonCraft selected an existing facility in Mishawaka, Indiana.

The impact of high energy costs and proximity of solid transportation infrastructure are also strong determining factors for the trending segments of the plastics industry, including that of recycling and bioplastics.

Recycling

Recycling is, by far, the fastest growing trend in the plastics industry. In 1960, plastics accounted for 1 percent of our waste stream; in 2010, plastics accounted for over 12 percent and we are growing our consumption of plastics by over 5 percent annually. Over 352 million pounds of plastics are generated via our grocery stores alone and in 2010, 2.5 billion pounds of plastic bottles were recycled, according to the Association of Postconsumer Plastic Recyclers (APR) and the American Chemical Council (ACC). Considering it takes one plastic bottle over 1000 years to breakdown, it’s no surprise that plastic recycling is on the forefront of many industry minds.

While looking at location modeling and site selection for recycling facilities, the proximity to natural resource feed stock is not as large of a concern as access to plastic recycling processing centers for raw materials. The proximity to the processing facilities, along with good transportation infrastructure and affordable energy costs has a large impact on long-term operating expenses.

Bioplastics

While still in its infancy, as compared to traditional feed stock, bioplastic raw materials are developed from renewable resources such as plant materials (e.g. vegetable oil, corn starch, potato starch, etc.), rather than traditional fossil fuel based plastics. Plastics made wholly or partially from organic raw materials are considered bioplastics. To create this feed stock, corn (or another plant-based starch) is introduced to microorganisms in a fermentation process that results in a polymer. The polymer is then made into the resin or pellets to be used in the traditional plastics manufacturing process.

Bioplastics is still an emerging trend in reducing the use of natural resources. Only five years ago, it was an idea in a university laboratory and now this industry segment is a viable aspect of plastics that can lead to more friendly manufacturing and recycling of plastic products. Any price shift in oil or gas creates an impact in feed stock (the oil, gas and chemicals needed to produce plastic resin and pellets). Many manufacturers experience market compression when oil and gas prices increase. There is often a lag between the prices a company pays for feedstock and the profit margin of the product it produces. The demand for plastics around the world is directly increasing the prices of feed stock. The ability to create bioplastics is one way in which the plastics industry is looking to manage risks and operate in a more environmentally friendly manner.

While working with one of the leaders in the bioplastics industry, Ginovus has had first hand experience in site selection issues impacting where these types of operations locate. Using a genetically modified corn (GMO) that is produced in the United States, this overseas manufacturer wanted to examine the costs and savings involved in opening a manufacturing facility closer to the suppliers of these raw materials.

Previously, the company was utilizing feed stock from the United States, shipping it overseas to manufacture, and then sending finished product back to customers in North America. This created a long supply chain and added significant transportation costs. Ginovus examined sites in the Midwest and East Coast to determine the best location for the company’s new facility. Ultimately, the internationally based company put the project on hold as it was determining how the economic downturn in the United States would impact its business model.

While the plastics industry has grown tremendously over the last 100 years, their cluster location habits have retained some consistencies. The growth in recycling and the emerging bioplastics segment provides for exciting future opportunities in the industry. These changes will continue to impact site selection decisions as time moves forward. The conservation of the environment and reduction in fossil fuel use continues to be on the forefront of many industries and the plastics industry will likely continue to be an innovative leader in this arena.

Area Development Magazine’s Rankings of Top States for Doing Business

admin — Thu, 10 Nov 2011 16:09:07 +0000

By:Larry Gigerich – Managing Director, Ginovus

From the Inside Indiana Business website.

I recently had the opportunity to participate in Area Development magazine’s annual survey of site selection consultants to rank the top states for doing business in the United States. This annual survey always provides a good benchmark of states and the positioning for economic development.

The survey sought feedback in 12 key categories that impact site selection projects for companies. Please find below a summary of the key criteria evaluated by the site selectors participating in the interview.

1. Overall cost of doing business
2. Economic development incentive programs
3. Business friendliness
4. Corporate tax environment
5. Labor availability
6. Labor costs
7. Workforce development programs
8. Rail and highway infrastructure accessibility
9. Certified sites and shovel-ready programs
10. Competitive utility rates
11. Access to global markets
12. Leading in the economic recovery

Based upon these factors, site selection consultants ranked their top states in each category. The combination of results produced the overall rankings of the states. As an example, a state could excel in some categories, but fall short in others – resulting in their ranking being pulled down lower. Please find below a list of the Top 10 states and a couple of key reasons why they were scored so high.

1. Texas: Outstanding tax environment aggressive tort reform, and a large deal closing incentive program.
2. Georgia: Excellent labor availability outstanding workforce development programs, and the implementation of single sales factor.
3. Alabama: Aggressive incentive programs, affordable labor costs, and good workforce development programs.
4. South Carolina: Excellent tax climate good regulatory environment, and strong certified and shovel-ready sites programs.
5. Indiana: Outstanding rail and highway infrastructure access significant reduction in corporate income tax rates, and strong economic recovery underway.
6. Louisiana: Aggressive incentive programs affordable labor costs, and strong economic recovery underway.
7. North Carolina: Very good certified and shovel-ready sites program good rail and highway infrastructure access, and good labor climate.
8. Tennessee: Outstanding infrastructure, excellent certified and shovel-ready sites program, and very low utility rates.
9. Mississippi: Very affordable labor costs, low cost of doing business, and low corporate tax rates.
10. California: Outstanding access to global markets, very good rail and highway infrastructure access, and good quality workforce.

As with all site selection projects, it is very important to remember that site selectors and their clients need to evaluate several key factors when considering the best potential locations for a facility. Rankings are helpful in identifying the states that may have a “leg up” on competition because they are doing many things the right way and/or have geographic advantages. However, just because a state ranks very highly, does not mean it is the perfect fit for every project. However, those states will usually get a “look” for the project by the site selection consultant.

Internet Sales Tax Collection

admin — Mon, 31 Oct 2011 15:16:56 +0000

By Leslie Wagner, Director of Project Management and Development

From Ginovus In-Site October 2011

The current debate over Internet sales tax collection recently impacted our project management team, as they worked to negotiate a sales tax recapture agreement for the benefit of one of our clients. While six states, Alaska, California, Connecticut, Illinois, North Carolina and Rhode Island, have enacted legislation requiring out of state internet and catalogue retailers to collect state sales tax, the debate, initiated several years ago, continues to be hot in most areas of the country.

Should an out-of-state company be required to collect state sales tax on remote sales, if the company operates in-state resident “affiliates” (such as a distribution center that does not originate sales)?

As with any debate, there are compelling arguments from each side. Proponents of legislation requiring out of state retailers to collect sales tax have pointed to benefits, including greater fairness to brick & mortar businesses and the potential to increase state tax revenue, which in today’s economic environment is desperately needed. Many groups, however, question the underlying assumptions of these positions.

One argument addresses the inherent difficulty in accurately estimating how much tax revenue is actually foregone by failing to collect sales tax on e-commerce. By example, supporters of legislation in both California and Indiana have indicated that an additional $200M in annual sales tax revenue could be generated if sales tax was collected on e-commerce and catalogue sales. The fact that two (2) states, whose economies vary so greatly, could assign the same economic impact to such a policy reflects the difficulty in accurately estimating the potential revenue. Interestingly, Rhode Island, who enacted an Internet sales tax collection law in 2009, reported that no additional revenue had been collected within the first six months after passage of the legislation and is currently considering repeal.

Opponents of legislation, mandating the collection of sales tax from out of state retailers, point to the administrative obstacles of such a policy. There are currently at least 8,000 separate jurisdictions imposing sales tax, and that number is increasing. Most observers agree that requiring businesses to track sales tax collections across such a large number of jurisdictions would create a significant cost burden. The cost of compliance and tracking the applicable jurisdictions could hamper efficiency and negate some of the cost savings consumers often associate with Internet commerce.

The issue may ultimately be addressed at the federal level. Recently proposed federal legislation, referred to as the Main Fairness Act, would allow states, provided they meet certain conditions, to require large internet and mail order retailers to collect state and local sales taxes. The proposed legislation would allow states to require remote retailers to collect and remit state sales taxes provided that the state has subscribed to the Streamlined Sales and Use Tax Agreement. To date, 24 states have adopted legislation implementing the Streamlined Sales & Use Tax Agreements authorized under Federal law.

There is, undoubtedly, more to come on this important debate from both those that support and those that oppose this method of taxation. Internet sales will continue to grow as consumers, e-commerce, and brick and mortar businesses lean more on quick access to goods and services. Equally, state and local governments will continue to look for new revenue sources. Whether one is looking from a business or personal consumer prospective, internet sales tax collection could impact everyone.