Landing pads a long game in economic development

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By Marc Metcalf, business recruitment officer, Upstate SC Alliance

While working for a German automotive supplier several years ago, Per Blohm ventured to Detroit to explore the company’s options for establishing a North American production facility.

“As a small operation at the time, with a five-year turnover of $45-50 million, they weren’t interested in us,” Blohm shared in a presentation last month with Upstate SC Alliance investors.

Because the company did not meet traditional incentive requirements, its representatives had a hard time finding a community liaison to acquaint them with the business landscape.

Determined to make progress, Blohm called a neighbor who was employed with fellow automotive supplier ZF, which has Upstate facilities. The neighbor connected him with the Upstate SC Alliance.

“I got a tour, drove to different areas, and was introduced to the Upstate, and that was something I haven’t experienced in China, in India — I haven’t experienced it anywhere in the world except here in South Carolina,” Blohm said. “I called my boss and said, ‘You know, they really want us here. … And from the setup they have, this is the place to go.’”

Today, Blohm is the general manager USA of AWL-Techniek, a Netherlands-headquartered company that now employs 15 at its automated welding machinery production facility in Spartanburg.

The company began with a small sales office at the Spartanburg Community College Spark Center S.C., where it continued to operate while seeking and renovating a production facility. Future employment projections anticipate the company growing to 110 employees in about five years.

AWL-Techniek’s entry into our region — with a small presence, driven by a desire to connect with the Southeastern automotive supply chain — is an example of the cautious approach that companies increasingly are applying to business location and expansion decisions.

These projects, referred to as a mix of “landing pad” and “soft landing” projects, are seen as the future of economic development.

While traditional industrial development is seen as companies pledging millions in capital investment and hundreds of jobs, this approach works well with a company’s desire to test a market for viability, and grow gradually as it succeeds.

The idea of scaling a business slowly over time works well in a climate like ours where unemployment rates are hovering near record lows, and it presents a great deal of opportunity for middle-market and family-owned companies. In fact, from 2009-2014, middle market companies grew from 10 to 30 employees on average, resulting in 72 percent of new U.S. jobs.

From the business recruitment perspective, working these projects requires a different approach. The companies are often family-owned, tightly knit, and striving to mitigate risk. It’s a big decision for them to branch into new geographies, product lines, and even into hiring outsiders.

Many of the companies we’ve worked with are not using site consultants, which means that any connectivity we can add to statewide organizations and resources — such as the South Carolina Automotive Council, the Aerospace Council, SCBIO, and our private sector service partners — becomes their business incentive.

Such is the case for SMT Group, a Naperville, Ill.-headquartered global manufacturer of electromechanical subassemblies and components that opened a technical sales office at Clemson University’s International Center for Automotive Research this fall. The family-owned company values connections to our region’s business assets and intends to grow in our region.

Another recent example is vermon NDT. The Netherlands-based producer of ultrasonic equipment for nondestructive testing announced last month at the Oconee Economic Alliance’s Annual Meeting that it has established a 3,500-square-foot production operation within the Oconee Business Center in Walhalla.

Company representative Dana Todd spoke about the company’s three employees and its plans to ramp up and outgrow the space in about three years.

“The rent situation really reduces the risk for a foreign company,” Todd said.

The availability of flexible, low-rent space often by business incubators like Spartanburg Community College Center for Business & Entrepreneurial Development, NEXT, CU-ICAR, and the Oconee Business Center is a vital asset to bringing these businesses here.

The unbridled long-term growth potential of these companies, combined with our prepared business ecosystem, makes a strategic focus on these smaller projects a forward-thinking, business-friendly shift in economic development practice. The Landing Pad initiative is a tool both for our communities, as we position our region for future growth, and for the international and domestic businesses seeking a controlled market entry with mitigated risk.

The faster that we can get them ingrained in South Carolina’s business environment and make connections, the sooner they can land here, find a home, and grow.

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Formed in 2000, the Upstate South Carolina Alliance is a public/private regional economic development organization designed to market and promote the dynamic, commerce-rich, northwestern corner of South Carolina. Our mission is to position the Upstate to excel in the global economy through strategic marketing, collaboration, and thought leadership.

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