Mobile capital investment and business incentives

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The 2016 US Investment Monitor report released this month by Ernst & Young analyzes mobile capital investments from the past year and offers several interesting findings.  Mobile capital investments include headquarters, data and call centers, manufacturing facilities, distribution centers and research facilities.

One takeaway is that high levels of capital investment are not often accompanied by high levels of job creation. A related point is dominance of the chemical industry in the capital investment tallies. Finally, there are few truly big projects, with the majority making capital investments under $9 million and projecting fewer than 50 total jobs. 

The report also found:

  • 5,400 announced projects in 2015 involved $166 billion of expected capital investment and over 402,000 new and retained jobs.
  • The top 20 projects accounted for 42% of the total announced capital investment. Nine of the top 20  were related to chemical manufacturing or liquefied natural gas.
  • 30% of all announced investment was in Texas and Louisiana, driven by the chemical and natural gas industries.
  • While the top 20 projects dominate the investment category, 92% of the project announcements involved capital investment under $50 million.

Regarding jobs:

  • The top 20 projects by job creation accounted for approximately 11% of total jobs announced.
  • 66% of announced projects were expected to create or retain less than 50 jobs. Only 7% of project announcements involved 250 or more jobs.
  • The top sectors generating or retaining jobs were durable goods manufacturing (including motor vehicles and parts) and financial and professional services.
  • Texas and Tennessee were the top states by announced new or retained jobs.

Incentives come into play for all types of projects, including office, tech, manufacturing, and headquarters facilities. Here are a few examples from the report:

  • Louisiana offered incentives to Formosa Petrochemical for its investment in a planned ethylene manufacturing facility
  • Nevada’s tax incentives and assistance with on-site infrastructure attracted Faraday Future, an electric vehicle startup backed by Chinese investors
  • Utah provided a tax credit rebate to Vivint Solar, a renewable energy company
  • New York state’s incentives have helped attract tech companies, especially in the state’s Tech Valley
  • In Texas, Liberty Mutual received a cash grant and tax abatements for its office complex in Plano. In California, Lending Club Corporation obtained a tax credit for an office investment in San Francisco.
  • In Tennessee, city and county tax incentives were provided to Chemical Vapor Metal Refining for a new global headquarters campus, including office, research and industrial facilities.

The report also reminds us that business incentives are just one of the factors companies making mobile capital investments consider in their location decisions.

“Awareness of industry trends, workforce development levels, and the availability of state and local tax incentives can help businesses choose where to locate their mobile capital investments.”

You can download the full report from EY.com

 

 

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