My first exposure to Jerry Szatan, founder and principle of Szatan & Associates was in a LinkedIn Group. I was impressed by Jerry’s practical approach to economic development. I researched his consulting practice and found that Jerry is in a unique position of providing services to both companies looking for a site and communities looking to be seen by companies as a viable location for site selection. I was confident this hands-on opportunity to constantly see both sides of the process and how the “game” has evolved would mean Jerry would have some unique insights to share. From the interview below, I am confident you will conclude my instinct was correct.
You started Szatan & Associates in 1998. Since that time, you’ve had an opportunity to work with a wide range of Companies seeking to make a capital investment, and economic development organizations looking to attract capital. As you reflect on your experience, what insight would you offer to economic development professionals to help them do an even better job of meeting the needs of your clients, and making your job a little easier?
One seemingly obvious, but sometimes neglected, piece of advice is to be responsive; to answer the questions that I have about the community on behalf of my clients and to meet my deadlines. My deadlines are not random and I do not give false ones. They are set based on the client’s timetable, and timetables generally have become shorter over my career. Related to this, do not be afraid to ask questions. I’m surprised when ED reps ask me if I mind questions. Of course not. I’m happy to clarify anything that appears vague because it helps the EDO and ultimately when the EDO provides better information, it helps my client and me.
I have found that many economic development professionals do not fully understand the way companies evaluate the financial implications of selecting one site versus another. In addition to incentive packages, what do your clients tend to consider in determining the NPV of making an investment in a location?
The NPV should include all major financial items relevant to the decision including labor, real estate, utilities, transportation, state and local taxes and other items relevant to the company. I tell my clients that there is nothing special about a dollar of incentives; it is exactly equal to a dollar of labor, or a dollar of real estate, and so on; and they should add up all the dollars.
What are some of the emotional (non cash based) considerations the CEOs of your client companies have to assess when comparing locations?
That varies. Sometimes people have opinions about the image of a community, which may or may not be accurate and may cause them to eliminate it from even initial consideration, or they may specifically include it. When evaluating communites, we typically cannot completely measure everything we would like to measure, labor quality for example, and judgement has to be involved. At the end, among finalist communities, personal history and preferences can come into play. One client was a former military officer whose had been posted in a community that was a finalist for his company’s new customer service center. He hated his experience as an officer in that community. Someone else might have had a positive experience. If my search has started out with a large number of communities, by the time it’s narrowed to 3-4 finalist communities for visits, those communities should be practically tied on everything we can measure. If client subjective factors tip the decision at this stage, I think that is okay.
Many communities are surprised when a local employer decides to either relocate or expand their business elsewhere. What should economic development professionals consider doing to increase the loyalty of local companies and reduce the risk of losing them?
Retention is job one for most economic development groups. It’s important to develop relationships with major employers and identify if there are steps the community can take to improve local operating conditions that would benefit the employer; maybe enhancing training programs if there are skill issues, or enhancing infrastructure in some form. Listening and following up is important; not over promising also is important. One sometimes frustrating point to keep in mind is that relocation and consolidation decisions are often driven at higher, corporate levels, perhaps markets and strategy are changing, and local company management is not aware until late in the process. Still creating an environment where the local manager can make the facility as competitive as it can be is a good goal.