Winning Toyota: The Critical Role of a Regional Workforce Program

1. Winning Toyota:The Critical Role of a Regional Workforce Program Presented to the Roundtable in the High Desert October 18, 2007 By Bill Fredrick Wadley-Donovan GrowthTech

2. In February of this year, the Tupelo area of Northern Mississippi won Toyota’s 8th North American assembly plant. Contributing factors were numerous, and many individuals and agencies contributed significantly to the victory.

3. Today we will look at the very important role one of those factors played in the final decision…. …..a regional workforce database and the system that delivered its customized information to Toyota’s corporate decision-makers and site selectors.

4. The Project • 8th Toyota assembly plant in North America • Announced: February 26, 2007 • Product: Highlander SUV • Production starts: 2010 • Direct jobs: 2,000 • Capital investment: $1.3 billion • Activities: stamping, body weld, plastics, paint and assembly • Annual vehicle production: 150,000 • Average wage: $20/hr after 3 years

5. The Project • The location • Blue Springs, MS–10 miles NE of Tupelo • 1,700-acre Certified TVA Mega-Site “Wellspring Project” • The competition • Originally 25 sites • Narrowed to approximately five semi-finalist sites • Three in the greater Memphis area: Blue Springs/Tupelo; Marion, AR; Brownsville, TN • All three locations have certified large industrial sites • Blue Springs site selected as the winner

6. The Location Drivers • Suitable sites • Specific utility, infrastructure and transportation needs • Favorable operating environment and costs • Incentives? • MS gave less than it did four years ago to Nissan ($296 M vs. $363 M) • Sufficient skilled and experienced labor as the final and most important location factor

7. The Importance of Labor

8. “The primary reason Toyota selected Tupelo was the quality of the workforce and the leadership in this community.” Governor Haley BarbourProject announcement February 26, 2007

9. “…. this great Toyota project gives us a spectacular way to replace those good furniture jobs with superior, better paying jobs in the auto industry. This situation was also key to why Toyota knew such a strong workforce will be available to it and its suppliers.” Governor Haley BarbourProject announcement February 26, 2007

10. “What I observed were people who are educated, ethical and friendly with a strong work ethic – a perfect match for Toyota.” Ray Tanguay, EVP Toyota Project announcementFebruary 26, 2007

11. How Did the Three Locations Become Finalists? • Each provided a certified large industrial site • They demonstrated availability of all necessary utility, infrastructure, transportation and other operating requirements • A tremendous effort by well-coordinated, hard working and dedicated team players (state, local, regional, utilities, educators) • Strong organizational infrastructure and support structure in each area

12. What made a key decision-making and deciding difference?

13. Tupelo could PROVEit had the labor force needed by Toyota.

14. Proving the Labor Force Case

15. Background • The Memphis Regional Economic Development Council (REDC) created • Council of local EDOs • Greater Memphis region • 52-county region within three states • Divided into 8 sub-regions of aggregated counties • Diverse area: demographically, economically

16. Background

17. Background • The Memphis Regional Economic Development Council (REDC) created • Primary missions: develop regional economic development synergies, provide cost sharing for resource development; and cooperative, effective, efficient, and coordinated marketing • “Coopetition” among members • Created the basics (workforce assessment and extensive database development, target industry identification) in July 2006

18. Background • Workforce assessment inputs (WDG/Younger Assoc.) • Employer survey • Household survey • Employer and key-influencer interviews • Focus groups • Secondary data

19. Background • Employer survey data • Mail/Internet • Employers with 20+ employees • 3,483 sent, 374 completed (10.4% stratified return) • Employer background data • Employee quality measurements • Availability by occupation • Educator/employer interface • Commute distance • Other

20. Background • Household survey • Face to face; not by telephone • Working age residents 18-70 year olds • 3,600 completed surveys • Stratified, statistically valid sample, +/- 5% MOE, 95% confidence level • Extrapolated to entire population • Full demographic characteristics • Employment status • Occupations, skills, experience • Training desire • Geo-coded • Residential and work locations • Combined survey data into a unified database delivery system (WDG/YA)

21. The Unified Labor Force Database Delivery System • An on-line data delivery system • Full access to all of the survey data • Fully accessible by all REDC members in their offices • A powerful tool

22. The Unified Labor Force Database Delivery System • Combined all of the employer and household survey data into one relational database • Employee characteristics (e.g. demographic data, employment status, availability for employment or training, goals and desires, commute patterns, occupation and training) • Employer experiences (e.g. labor availability by occupation, labor quality assessments, wages/salaries, experience with educators, industry and functions performed, number of shifts, union status, labor demand)

23. The Unified Labor Force Database Delivery System • Extensive customized cross-tabulation possible by the user • Able to retrieve information on a county, multiple county, regional, or sub-regional basis; also in 25, 50, 75, 100 mile radii from any given address • Side-by-side location comparison capability • Easy 24/7 data access

24. The Unified Labor Force Database Delivery System

32. How the DDS Helped Toyota’s Site Selection • Toyota site consultants approached EDO’s for each of three Memphis regional locations • Fall 2006 • Through state representatives • Also worked with TVA (TN, MS), Entergy (AR)

33. Brownsville, TN Marion, AR Tupelo, MS How the DDS Helped Toyota’s Site Selection

34. How the DDS Helped Toyota’s Site Selection • Toyota requested specific area data • Region’s EDOs quickly provided initially requested labor data to Toyota using DDS • Consultants impressed with speed and depth of provided data • Brownsville eliminated for various reasons

35. How the DDS Helped Toyota’s Site Selection • Toyota requested detailed customized cross-tabulated data and radii information for two remaining sites • First 65-mile radius from sites, then cluster of counties • Available skill sets (number) • Manufacturing experienced labor (number) • Number of residents with skilled or trades manufacturing experience • Women and minorities with manufacturing experience or skill sets (number) • Residents wanting to work in manufacturing (number) • The under-employed not a factor

36. How the DDS Helped Toyota’s Site Selection • Toyota fascinated with data available through the DDS • Toyota given own system password; continued to dig into labor information on own at Japan and U.S. HQs for Marion and Tupelo sites • Toyota consultants conferred regularly with EDOs, working as a team (YA involved).

37. How the DDS Helped Toyota’s Site Selection • Other sites did not have this depth of data. • It enabled Toyota to conduct detailed on-going data mining. • It allowed MS to confirm its claims of a strong and sizable available manufacturing workforce from the declining furniture industry.

38. The Value of a Regional Labor Database System • It provided the data at the desired detail and speed. • The depth of the data and systems delivery capabilities held Toyota’s interest in the region’s sites. • It was a big factor in keeping Toyota’s focus on the region

39. The Value of a Regional Labor Database System • It set the region apart from the competition. • Workforce problems are expected wherever it goes: DDS provided Toyota with an upfront comfort level on their understanding of the workforce. • Reduced risk • Allowed Toyota to know problems now, avoiding future unpleasant surprises

40. Lessons Learned • Regional coopetition allowed for development of • A project-winning, regional workforce database • A flexible delivery system that quickly answered complex client questions in the client’s office • An affordable resource • A resource for comparative and detailed intra-region evaluation by site selectors

41. Lessons Learned • Workforce is the number-one deciding locational issue overlying sites, infrastructure, incentives, utilities, operating costs, market access. • Current, complete primary labor data makes the difference. • A key factor: needed from the supply and demand sides of the labor equation • Supplementary up-to-date secondary data needed (IEDC standards)

42. Lessons Learned • It is critical and advantageous to have labor (and other) data presented or made available as needed by the prospect. • Flexibility of data delivery and customized manipulation is important. • On-line data availability for comparative analysis gives the competitive edge.

43. 505 Morris Avenue, Suite 102 Springfield, NJ 07081 Tel: 973-379-7700 Fax: 973-379-7771 www.wadley-donovan.com/workforce E-mail: workforce@wadley-donovan.com