Friday, March 02, 2012

The Yin and Yang of Site Selection

So I have not been paying sufficient attention to my own news roll there on the right.  I admit the site selection section has kind of migrated down pretty far.  A press release from the governor's office highlights something I should have caught that Site Selection Magazine has listed Pennsylvania (#3 among states to be specific) as among the most competitive in attracting new businesses.  Pittsburgh is literally number 3 in their ranking of metros just out as well.  We won't mention that the magazine had Ohio #1 and most of the article was about them and not us.  On a Cleveburgh note I will point out that the president of the Cleveland Fed siad yesterday that Northeast Ohio is doing pretty well of late economically.  So maybe it isn't a state thing at all.. maybe Cleveburgh is pulling up the competitiveness of both states?   Just musing is all, but you could make the case that is what the magazine rankings are showing. 

Yet there was also this item in the news of late: Pennsylvania companies carry heaviest tax burden, which goes into just how bad some perceive Pennsylvania's competitive climate. 

So which is it?  Is Pennsylvania doing great at attracting businesses or is it literally the worst? It's like we're Sybil as a state.   I guess if I wanted to try and find some consistency between the two it would mean that Pennsylvania is great at attracting new investment but then is absolute worst at keeping them 10 years on.  Of course that isn't true; it would even be a bit pathological and if I were to guess it is more the opposite.. Likely neither extremes are true.  The whole question of regional competitiveness is just a tad more complex than the media would ever lead you believe. Even taxes and tax incidence is a far more complex subject than a few state-wide averages would have you thinking.. then there are factors like workforce, supplier networks, market demand, regulatory climate and maybe a dozen other things that all just begin to go into the mix.  But if you really want to try and measure it then let's all go do a shift-share analysis!  Some other day maybe.

You know..   I keep this blog up in part to archive my own thoughts and looking back I see Site Selection has showed us love in the past. So is this all evidence Pittsburgh has reached some 'tipping point' or is it all evidence of a long progression based on past trends..  the economic mesofact? (as JimR will also point out)


Anonymous Anonymous said...

My gut reaction is that "business-friendly" and all the other code words might signal a great environment for corporations, but bad news for workers, other than the opportunity to fill crummy jobs, as illustrated in this recent Mother Jones article

Here's another state economic measurement, for the little guy ... percentage of workers who are union affiliated. In that horse race, Ohio comes in 17th, PA 15th, and lil' ol' Texas 47th.

Perhaps that's what Site Selection means by "re-engineered approach to business development with a
return-on-investment focus".

Friday, March 02, 2012 9:06:00 AM  
Anonymous BrianTH said...

I believe various studies have concluded that local and state business tax rates have very little effect on site-selection. The main reasons include that other factors tend to dominate, that higher taxes may be correlated with relevant higher services, and that the kinds of corporations looking at multiple jurisdictions for possible sites tend to be pretty sophisticated at tax minimization.

Friday, March 02, 2012 10:09:00 AM  
Anonymous Jack@Site Selection said...

I too am surprised that Pittsburgh is sitting at the #3 spot, although I'm not sure how much longer it will remain there.

Wednesday, March 28, 2012 7:26:00 PM  

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