What State Makes Sense for Your Expansion?
September 4, 2015
What State Makes Sense for Your Expansion?
Unlike other global markets, the US economy is growing. And it is powered by a massive technology boom. In fact, a recent CBI survey indicates the strongest export channel for UK goods and services is the USA.
In contrast to other export locations, the US is comprised of 50 distinct markets, each with its own traits, audiences and key benefits for expanding businesses. Because of this ever-growing, increasingly diverse marketplace, UK companies poised to expand are bound to find a wealth of opportunity, regardless of market or vertical.
This how-to guide is a “living document,” which will be regularly updated with new information about the markets listed below, and burgeoning new US business hotspots. We encourage you to bookmark this guide and check for new, up-and-coming markets often.
The Commonwealth of Massachusetts has the highest level (and fastest growth rate) among Leading Technology States (LTS) in federal expenditures, and has the highest level of funding from the National Institute of Health per dollar of GDP than any other LTS.
Perhaps for these reasons, the UK is Massachusetts’ No.1 European trading partner.
Massachusetts fosters its unique business environment focused on innovation, with a Gross State Product of $466 billion, ranked 9th in the US. Furthermore, its economy recovered from nationwide economic downturn faster than any other state, with more jobs added every month.
The commonwealth is a leader in sectors such as clean energy, biotechnology, telecommunications, photonics, medical devices, advanced materials, pharmaceuticals, information technology, and nanotechnology.
Indeed, Massachusetts should be a key target for expanding UK companies, for several reasons, including:
The state boasts a transportation network of more than 34,000 miles of roads and highways, with nearly half the US population located within a 12-hour drive. Massachusetts has over 1,200 miles of rail lines, served by nine rail stations. Direct rail-to-port access makes intermodal transportation a predominant feature of its statewide transportation.
For companies looking in the region, there are airports throughout. Massachusetts is just a one hour flight from 40% of the US market, and 67% of the Canadian market. Direct flights between the UK and Boston’s Logan Airport make business travel convenient.
Additionally, there are six deep-water seaports (Boston, Fall River, Gloucester, New Bedford, Salem, and Plymouth) located one day closer to Europe than other major US ports.
Innovation and Education
Massachusetts is home to one of the most highly-educated workforces in the nation. With 122 colleges and universities, the commonwealth has the highest concentration of educational institutions in the US.
Supporting this innovation is an extensive group of local suppliers that give businesses a strong support network, and a state government that fosters and protects a unique business environment focused on innovation.
Massachusetts offers many tax incentives, financing solutions, competitive grants, loans, and guidance to companies and businesses seeking to invest, expand, or relocate in the state. These include broad-based and sector-specific grants, awards and incentives offered in collaboration with agencies such as:
- Massachusetts Office of Business Development
- Massachusetts Life Sciences Center
- Massachusetts Clean Energy Center
- Massachusetts Technology Collaborative.
Massachusetts is the top LTS in venture capital investment per capita. Angel investment nearly doubled between 2009 and 2011, from an estimated $27 to $51 million to $50 to $100 million.
Massachusetts is a leader in renewable energy. State and federal regulatory initiatives, together with the support of academic research, and assistance and funding from venture capitalists and bankers, have helped to place Massachusetts’s energy and environmental policy on the global map.
Massachusetts is also leading the way in developing new technologies in these fields, including wind and biomass energy.
Manufacturing and Technology
Massachusetts is a key center for mass-produced goods such as paper products, machinery, machine tools, chemicals, metals, composite materials, textiles, and footwear. It also maintains a strong presence in financial services and insurance, marine science technology, and defense technology.
Despite an initially unassuming presence, Utah has become a significant player in attracting new and expanding business, both domestically and abroad.
Since 2007, Utah was able to increase the number of businesses that sell goods abroad from less than 1% to just under 4%, mostly during a recession. Additionally, an estimated 20% of jobs in Utah are export-related, with state tripling since 2007.
All of this has occurred in a state with approximately 3 million residents, accounting for less than 1% of the US population. In turn, Salt Lake City was named on a recent international ranking of the top 25 cities for global trade, and as one of the 15 best new cities for business by Fortune.
A Diverse Economy
Utah is credited with having one of the most diverse economies in the nation. With manufacturing, tech firms, mining and energy, and hospitality, the state offers considerable diversity and scope for new market penetration.
This has risen as a result of a statewide initiative to cultivate new business and expand its international presence by bringing in industry leading companies like Adobe, Goldman-Sachs, OOCL, Procter & Gamble, Boeing, ATK, and eBay.
Utah’s international presence is strong. Exports from Utah totaled $16.1 billion in 2013, and businesses have customers in over 195 countries. International trade—both export and import—supports more than 350,000 Utah jobs.
A Wealth of Resources
Utah has resources available to companies interested in growing internationally. The International Trade and Diplomacy Office employs trade representatives available to provide advice and connections to companies looking to export and investors looking to find safe and productive places to put their capital.
Other resources Utah provides for international expansion include:
- Federal and university-supported Small Business Development Centers
- 14 state-supported Business Resource Centers
- World Trade Center Utah
- Utah District Export Council
- State Trade and Export Program (STEP) for new firms just beginning export
It is important to Utah to keep home grown companies in the state while also recruiting new companies. To this end Utah offers a highly successful post-performance refundable tax credits—economic development tax increment financing (EDTIF) incentives—to both companies that want to expand and those that would like to relocate to the state.
Companies such as Boeing, Procter & Gamble, Merit Medical, Edwards Lifesciences, Adobe, Oracle, and IM Flash are a few of the notable companies that have received incentives to expand into Utah.
The incentives Utah offers are not its lead recruiting card; Utah’s energy and real estate costs are low, its young workforce continues to grow, and the state’s quality of life is highly regarded.
A Burgeoning Investment Culture
The University of Utah is a one of the top universities in the nation in creating successful entrepreneurs. This focus on entrepreneurship has bred success, and provides a pipeline for potential investment.
Realizing the potential Utah holds, many have sought investment opportunities available in the state. To quickly and efficiently serve the needs of these individuals, the Governor’s Office of Economic Development has created a registry for investors and companies looking to partner with each other.
Yet another benefit of investing in Utah is that financing is readily available. Utah is home to one of the largest banking centers in the country in terms of assets and deposits. It also has the country’s largest concentration of Industrial Loan Corporations (ILC), which are financial institutions in the US that lend money and may be owned by non-financial institutions.
BMW bank; GE Capital are among the more than 20 banks headquartered in Utah. Additionally, several international financing firms have major offices in the state, including Goldman Sachs, Zions Bank, and Wells Fargo.
As the eighth largest economy in the world, California remains a global economic leader and is a national leader in job creation. With a gross state product over $2.2 trillion, the state recently surpassed the Russian and Italian national economies.
This growth is showing no signs of slowing. Economists predict that by mid-2015, California could be the 6th largest economy in the world as the state closes in on the UK and France.
Job Growth and Creation
Since 2008, California has added more private sector jobs than any other state—over 1.4 million in total. This is because:
- The state is home to more venture capital, patents, tourism, Fortune 500 companies, agriculture, biotech, and manufacturing output than any other state
- Job growth has been led by strong gains in construction, trade and transport, retail, agriculture, bio and IT
- The manufacturing industry has added jobs for three straight years. This is the first time the state has had consecutive years of manufacturing job gains in over a decade.
Leaders of Industry
Where other states have one or two main economic sectors, California has several—all of which lead the nation in their respective categories. California is first in high-tech, biotech, agriculture, entertainment, manufacturing, tourism and more.
In trade, California merchandise exports grew to $165 billion in 2013—a record export high for the state. California is the No.1 state for tourism—one that boasted over 200 million visitors in 2013, with direct travel spending of more than $109 billion.
The state is a leader in innovation and supports creativity with a superior educational system. With 2.4 million students enrolled in 446 public and private colleges and universities producing over 200,000 college graduates every year, California possesses the nation’s highest concentration of engineers, scientists, mathematicians, and skilled technicians.
High-tech exports total $46 billion, ranked first nationwide, accounting for nearly 29% of the state’s annual exports.
California is a global leader in renewable energy policy, Gov. Brown enacted the nation’s most aggressive renewable energy goal in the US—33 % of the state’s electricity will come from renewable sources by 2020, probably even earlier.
Improved Fiscal Outlook
In a landmark for the state, California ended 10 years of budget deficits as state government signed its fourth consecutive balanced budget, which included a billion dollar surplus.
As a result, ratings service Fitch changed the state’s outlook from “stable” to “positive.” In June 2015 Moody’s upgraded their ratings for California’s Economic Recovery Bonds. And the Standard & Poor’s rating raised California’s credit rating in January for the first time since 2006.
Key Business Incentives
California’s governor recently enacted a new Economic Development Initiative that brought together business leaders, labor interests, and legislators in agreement. This has created a more flexible, more competitive set of economic development tools that include:
- Sales and Use Tax Exemption for Manufacturing, Biotech, and R&D equipment
- Hiring Credits and “CA Competes” Tax Credit designed to incentivize companies to locate or expand in CA
- $780 million in financial allocations from the Office of Business and Economic Development for companies looking to expand in California
Texas is a leading global destination for Foreign Direct Investment thanks to leadership in several key industries and a thriving economy. The state houses more than 1,400 ongoing operations by foreign corporations.
Additionally, 475 foreign companies announced more than 600 separate business openings or expansions in Texas. When these projects are complete, they will generate around 59,000 jobs and $43 billion in combined capital investment.
From energy and petroleum to space innovation and automotive manufacturing, Texas is a land of opportunity across many industries. Toyota, Occidental Petroleum, and Apple are just a few of the major companies that have benefited from the state’s award-winning business climate, booming economy, and leadership.
Oil and Energy
Texas is home to 33 energy-related companies on the Fortune 1000, including ExxonMobil, Phillips 66, Valero, and BP. Houston; “The Energy Capital of the World” houses more than 5,000 energy-related firms and accounts for 40%+ of the nation’s base petrochemical capacity.
Top chemical companies like Dow Chemical, Celanese, BASF, and LyondellBasell are operating in Texas. In addition, Saudi Refining, Inc. and Shell Oil Company combined efforts in 2012, making the state’s Motiva Port Arthur Refinery the largest in the US.
This industry boom has also attracted multiple market leaders, including ExxonMobil, ConocoPhillips, Marathon Oil, and Baker Hughes.
In early 2014, Toyota Motor North America announced plans to consolidate its three separate headquarters of manufacturing, sales, and marketing /corporate operations to a new facility in Plano.
California-based Toyota Financial Services separately announced plans to move to Plano as well, and in addition, two Toyota suppliers filed plans to invest a combined total of more than $21 million toward building new manufacturing facilities at Toyota’s San Antonio plant.
Aerospace and Aviation
Texas’s aerospace innovation is expanding, with a $2.3 million TEF award having been presented to Space Exploration Technologies (SpaceX), which designs and manufactures advanced rockets and space capsules. This will bring the company’s commercial rocket launch facility to the Brownsville region.
Contingent upon final approvals and required permits, this facility will create 300 new jobs, drive $85 million in capital investment into the local economy, and serve as the nation’s first commercial rocket launch facility.
Innovative biotechnology companies continue to relocate and expand in Texas. In early 2014, German-based prosthetics firm, Ottobock, announced plans to relocate its North American headquarters to Austin.
Also in 2014, California-based specialty pharmaceuticals giant, Allergan, a Fortune 500 company, celebrated 25 years of manufacturing in Waco with its third major expansion.
IT and Computer Advancement
Two of the best-known high-tech companies in the world, Apple and Facebook, have expanded their major operations in Texas.
- Facebook doubled its Austin facility’s size in 2011
- Apple announced a $304 million investment toward a campus in Austin that will create more than 3,600 jobs.
- Google selected Austin as the third US city to receive its ultra-high speed fiber network
Most recently, in 2014, TEF awards were extended to Fortune 500 Company Oracle, as well as Dropbox and Websense, all companies expanding into, or relocating, to Texas.
Expanding companies are more actively choosing the Commonwealth of Virginia due to a pro-business environment defined by top-tier transportation and utility infrastructures, a strong education system, growing workforce, a research-based higher education network, and an ideal location in the nation’s Mid-Atlantic region.
These elements provide a solid foundation for growth and make the Commonwealth a great place for enterprise.
With a strategic location adjacent to Washington, DC, and easy access to population centers along the entire east coast, Virginia represents a booming region for growth.
More than 700 internationally owned companies operate in Virginia. UK-affiliated companies such as BAE Systems North America, Rolls-Royce, Ferguson Enterprises, and Serco take advantage of Virginia’s business environment and resources required in order to succeed in today’s competitive environment.
Site location searches are made easy through our two European offices in the UK and Germany.
Low Cost of Entry
Virginia boasts competitive, stable operating costs, and a low 6% corporate income tax—one of the lowest in the nation—that has not increased since 1972.
The Commonwealth also offers a variety of performance-based business incentives, including tax credits, exemptions and grants.
A Hub of US Business
The benefits of Virginia’s east coast location are enhanced by its transportation infrastructure—six major interstate highways, more than 3,500 miles of railway, and airports and seaports connecting Virginia business with the global economy. More than 40% of the US population lives within a day’s drive, and 55% lives within 750 miles.
Virginia is home to two major international gateways that ease international transport of people and product:
- The Port of Virginia, the US’ only east coast location capable of handling Post-Panamax size container ships as first and last Port of Call
- Washington Dulles International Airport, a primary gateway to the UK
Advanced manufacturing remains a solid component of the Virginia economy, driving technology, productivity, and innovation across all its industry sectors. The energy, biomass, automotive, food and beverage, and aerospace industries represent robust business clusters in the Commonwealth.
With the highest concentration of technology workers in the country, Virginia has become a world-class center for emerging internet technology, cyber security, software development, fiber-optics, and advanced communications companies.
Training and Education
Virginia is among the most educated states in the country, with more than 500,000 students enrolled in 90 in-state institutions of higher education. Virginia’s education system also hosts 23 community colleges with transferrable programs across the state that partner with companies to offer customized workforce training programs.
As a result, Virginia’s higher education system is the 11th largest in the nation. A tradition of lifelong education means that Virginia’s workforce is consistently prepared for changing technologies.
North Carolina is widely recognized for one of the best business climates in the United States. Featuring the 10th largest population in the US, and an east coast location ideal for growing a company’s market, North Carolina is becoming more recognized as a hot bed for growing businesses, domestic and abroad.
Global firms have noted North Carolina’s advantages, driving the state to rank 10th in America for employment supported by foreign direct investment (FDI) and 7th in manufacturing.
Global leaders such as Alcatel, Bosch Siemens Home Appliances, Credit Suisse, Daimler, Freightliner, GlaxoSmithKline, Novartis Crop Protection, Novo Nordisk Pharmaceuticals Industries, Siemens, and Volvo all thrive in North Carolina. North Carolina offers foreign-owned companies a variety of advantages.
Connection to Key US and Global Markets
North Carolina’s central east coast location and extensive transportation infrastructure put the state within a 700-mile radius of more than 170 million US consumers and provides global connections via deep water ports and international flights.
High-speed Internet access is available throughout the state, and many other significant technology infrastructure investments provide advanced, reliable voice, data, and video communications and networking options.
With an expanding and diverse population, North Carolina’s high-quality labor force meets the needs of today’s advanced manufacturing and knowledge-based industries.
North Carolina can help optimize your workforce, providing customized recruiting, screening and training services, and lifelong learning opportunities through a coordinated network of state agencies.
New talent for North Carolina companies is developed through outstanding educational assets—beginning with high-performing state community college and public university systems, plus excellent private institutions.
Ease of Entry
Construction costs, electric rates, overall taxes, and cost of living are all below the national average, providing an economical business climate.
North Carolina’s progressive leadership has had the vision to make strategic investments in education, infrastructure, and technology—and to emphasize sound fiscal policy through a constitutionally mandated balanced budget, and affordable tax rates.
North Carolina offers eligible companies a number of state and local programs designed to lower costs and increase global competitiveness. Companies that meet certain requirements can take advantage of tax credits and other incentives including sales and use tax discounts, exemptions and refunds, discretionary programs, and other cost-saving programs.
Additionally, the North Carolina Department of Commerce provides personalized consulting and support to assist companies in their location research and decision making.