Fox File #43 "Do Incentives Matter?"
The Fox Files is a weekly message from EDCUtah President & CEO Theresa Foxley.
I’m quite often asked if incentives really matter in corporate site selection. Of course, if you know me at all you’re going to expect me to answer “yes” to that question. After all, I left a career in corporate law to run the state’s flagship incentive program. And they are an important complement in any site selection to talent availability, infrastructure, and access to markets.
For those of you operating businesses, it’s no surprise that the top criteria in HQ site selection today is workforce. Check out this recent article from our friends at JLL on “5 Key Factors Influencing Headquarters Decisions.” http://bit.ly/2s8Orhc You’ll note that two of the five criteria relate to workforce. That’s consistent with our site selector research, showing that three of the top five site selection criteria are related to talent. It’s further consistent with what we’ve all learned from the Amazon HQ2 process, both in public statements by and private conversations with the company. This change is reflective of our economy, where more and more business functions have been automated.
Despite workforce/talent becoming the primary factor in site selection, incentives still matter for a whole host of reasons, not the least of which is that Utah operates in a competitive landscape. It’s true that we have an excellent workforce: our state boasts a young, well-educated, and highly productive demographic profile. But without an incentive program to induce corporate growth and expansion, Utah’s toolbox would be insufficient as compared to other states. Other states and regions compete on these same factors and they also offer incentives. The difference between some incentives programs and ours is that unlike other states, Utah doesn’t appropriate money or put other taxpayers or the state budget at risk. And a majority of incentives have actually been awarded to companies that already had a Utah presence — this means we’re ensuring that Utah success stories remain such.
My hat goes off to our leaders in public policy within the private sector, the legislature and the Governor’s Office who are dialoguing around the most productive ways to take the state’s existing well-run and well-thought-out post-performance incentives programs to promote incentive utilization to solve some of those important workforce and infrastructure challenges.