From the New Orleans Times-Picayune :

Thursday, January 27, 2005

Workers key to luring businesses
Executives rank work force issues as most important

By Ed Anderson
Capital bureau

BATON ROUGE -- Skilled workers and a trained work force are key factors that business executives look for when deciding where to open or expand their operations, according to a survey of about 1,000 out-of-state corporate officials released Wednesday by Louisiana State University researchers.

The $79,000 Louisiana Business Image Survey was conducted by LSU's Public Policy Research Lab for Gov. Kathleen Blanco; the state Department of Economic Development; and the Committee of 100, a nonpartisan statewide organization of businesses.

The survey said that that work force factors outrank tax rates and state and local incentives as factors that can lure a plant or office to a state or city.

Of 26 factors to be considered in selecting a location for a business, the survey showed that 77.7 percent of the nation's business executives ranked labor productivity as important, while availability of skilled labor was second at 76.1 percent and labor costs were third at 69.6 percent. Traditional business hooks, such as corporate taxes, tax exemptions and state and local incentives, fell to the middle or lower end of the list of factors considered by executives when making location decisions.

When the executives were asked to evaluate Louisiana as a place to do business, the state's top-cited asset was energy costs. Construction costs and labor productivity were considered to be the state's second- and third-strongest assets. The availability of a skilled labor force and labor costs, two factors executives said they strongly valued when making location decisions, were ranked eighth and 21st respectively in Louisiana.

The survey also showed that executives give Louisiana poor scores for public education, a factor they usually weight heavily when deciding where to locate. The study was conducted by Dek Terrell, an associate professor of economics at LSU and co-chairman of the lab; and Kirby Goidel, an LSU professor in the Manship School of Mass Communications and co-chairman of the lab.

It was conducted between October 2004 and January and was made public Wednesday by Goidel and Terrell at a meeting of Baton Rouge's largest and oldest Rotary Club. The survey contains an error factor of plus or minus 3.2 percentage points.

The survey was paid for by the Committee of 100. Blanco Communications Director Bob Mann, who also addressed the Rotary Club, said it is a "benchmark survey" that will help the state adjust its pitches to business executives.

He said Blanco is very "receptive" to the findings and already has started working on ways to make the state's work force more marketable.

Although 1,067 executives were polled, 122 said they had "no intention of opening new facilities or relocating existing operations or knew too little about Louisiana to complete the survey."

"The overwhelming finding that emerges is the importance of work force issues in location decisions," the study said. "The availability of skilled labor, labor productivity and labor costs all rate as the most important considerations in business location decisions . . . Work force considerations are followed by (factors dealing with) proximity to major markets, public safety and access to transportation via highways, railroads and airports."

The study said that "considerably further down on the list" are factors such as corporate taxes and state and local incentives.

"If a company is looking to open a new facility and is down to four or five sites, that is when the tax incentives are important," Goidel said. "You have to do it to be in the ballgame, because it has become an expected part of doing business."

"We have to compete based on the quality of our work force," Terrell said. "After that, then tax incentives become important."

The study indicated that "personal outreach for state and local officials," such as telephone calls to a CEO, is "relatively unimportant when compared to other factors such as work force and proximity to major markets."

But the study said that such personal outreach "is important in communicating a pro-business climate."

When researchers asked the business executives what the state can do to lure more facilities, the most common response from 29.6 percent of the executives was they did not know. In second place was improve public schools, something 14.1 percent of all participants cited. Of those surveyed, 13.8 percent suggested that the state clean up its image of corruption and 13.1 percent suggested that it cut taxes.

Terrell said that because many executives did not know enough about the state to evaluate it on the 26 factors, "we have a real opportunity to shape the state's image" to a national business audience.

The full report can be viewed at www.survey.lsu.edu.
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Ed Anderson can be reached at eanderson@timespicayune.com or (225) 342-5810.