< Previous8 JANUARY 2019 SI T E S E L E C T IO Nwww.iamc.org2018-2019 IAMCBOARD OF DIRECTORSinsider January 2019ChairCharles WaltzBASF Corp.Vice ChairColleen CaravatiCorning Inc.TreasurerJennifer RothBimbo Bakeries USA, Inc.SecretaryScott CameronSonocoPast ChairMark EichkornPenskeJames Eckert Owens CorningDon HansenW. W. Grainger Inc.Deb Heffner, CEcDGreater Reading Economic PartnershipGregory Hitchin, CEcDCity of WaynesboroWilliam M. JenkinsThermo Fisher Scientific Inc.Linda LarsonAndersen Corp.Patricia J. Loveall, SIORKidder MathewsBill LuttrellWermer Enterprises Inc.Karen ShchukaPenske Truck Leasing Co., L.P.Ashley SnyderCresaExecutive DirectorJ. Tate Godfrey, CEcDIn this letter I’d like to highlight robust information sharing and research resources available to IAMC members.In 2009, a member with a large U.S.-based chemicals company suggested IAMC create a process for quickly communicating with the Corporate Active members about urgent, late-breaking corporate real estate (CRE) business issues. The member modeled the idea after a method her company used to quickly brief hundreds of middle managers about important news. The company called these sessions “flash calls,” and IAMC adopted the same name for conference calls dedicated to getting fast answers to Corporate Active members’ questions.Most professional associations support their members by providing technical, management and market information. But early in IAMC’s existence it was not obvious to its leaders how to approach this challenge. After all, the commercial real estate industry already published tons of data. But soon it became clear what the Corporate Actives needed was trusted advice and input from fellow CRE professionals. Often, they did not know whom to ask and who could be trusted. So, IAMC’s leaders set out a code of conduct emphasizing ethical standards and behavior. Over time, the Corporate Active membership has become a community whose members share information with a high degree of confidence.Flash Calls were IAMC’s first foray to help the Corporate Actives work better by sharing advice, ideas and methods. The next iteration in this process was a service we call IAMC Special Information Requests. These dispensed with the conference call that characterized the Flash Calls. IAMC staff emailed the questions to the Corporate Actives, tallied responses and forwarded these to the question originators along with the names of the respondents. This worked well, and demand for the service quickly expanded.Next, to simplify the process and reduce the time required to deliver responses, IAMC invested to enhance its online member-to-member service. The new capability, called Cornerstone, is an online digital discussion board that enables all members to seek information and provide their own input to others’ questions. The service is flexible, allowing a question poster to define the member group to which the question will go.Today, when members have specialized questions, we can offer them three tools: Flash Calls, Special Information Requests and Cornerstone. But Cornerstone gets the most use because it’s easy to use and the responses come fast. To access it, go to IAMC’s website and click the button at the top.And let’s not forget another way we share information: IAMC’s official publication Site Selection magazine, which has reached a notable milestone with this 65th anniversary issue. Congratulations to Site Selection on its impressive service to its market and longevity. The publication’s relationship with IAMC began in 2002, the year the organization was founded. The alliance has created positive value for both IAMC and Site Selection.Lastly, the Santa Barbara Forum is coming up May 4-8. Register now if you have not already done so. We’ll provide strong CRE professional development workshops and top-notch speakers, notably including Steve Forbes. I know you’ll enjoy the city and its surroundings. To register, go to www.iamc.org. Best regards,Charles WaltzChair, IAMC Board of DirectorsCornerstone Streamlines Member-to-Member Information SharingMark Your Calendar …Charles Waltz10 JANUARY 2019 SI T E S E L E C T IO NEditor’s Note: This article is excerpted from the Sept. 16, 2018, Philadelphia Professional Forum Business Impacts Interest Group session. The program was presented by Blaine Kelley, Senior Vice President, Advisory & Transaction Services, CBRE, and Richard Lawless, Director, Georgia Pacific Co.ContextBlaine Kelley provided a high-level overview of the supply chain and discussed how supply chain decisions affect real estate decisions. Richard Lawless reviewed Georgia Pacific’s different businesses and provided an overview of the supply chain for each business. Interest Group participants shared their observations about the intersection between supply chain and real estate, and offered observations about supply chain trends impacting real estate.Key TakeawaysCommon supply chain models are “make to stock” and “make to order.”The Council of Supply Chain Management Professionals (CSCMP) defines the common supply chain models as the Efficient Supply Chain and the Responsive Supply Chain.• Efficient Supply Chain. CBRE thinks of the efficient supply chain as one that “makes to stock.” This is the traditional supply chain model used by most industrial companies. In this model, products are made and sent through a distribution channel. Areas of focus are costs and network efficiency. • Responsive Supply Chain. These are supply chains for products that are “made to order.” They tend to be highly sophisticated, agile, flexible, and adept at customizing products. Boeing airplanes and Dell computers are made to order. In today’s e-commerce world, the general trend is toward more make-to-order supply chains where products are made and/or customized close to the customer. Among the Interest Group participants, most have make-to-stock supply chains, but every company’s supply chain is unique. Some have hybrids that combine make-to-stock and make-to-order. The general trend is that companies are moving closer to make-to-order, but doing so is hard and requires investment.Every supply chain must balance cost and service. In creating and operating their supply chain, companies face a tradeoff between cost and service. A low-cost position comes with lower service, and a high-service position means incurring higher costs. Companies must pick where on the parabola they want to be. (Many companies want to be high service and low cost, which is often not possible.)While the real estate group focuses a great deal on rent, in many industries rent is a small percentage of total supply chain costs. Other factors such as labor, transportation and inventory are more significant. Corporate Real Estate Implications of Common Supply Chain Models Philadelphia Professional Forum Business Impacts Interest Group session“Supply chain strategy defines the connection and combination of activities and functions throughout the value chain in order to fulfill the business value proposal to customers in a marketplace.” — Blaine Kelley, citing Michael Porter of Harvard Business School12 JANUARY 2019 SI T E S E L E C T IO NImportant questions to ask are: • What is the company’s strategy for the future? • What type of supply chain model is needed to support the future strategy? • Where is the company today on the parabola, and where does the company want to go? The answers to these questions will affect the real estate strategy.Georgia Pacific has different supply chains for its different businesses. Georgia Pacific’s business units and their supply chains are briefly described below: • Building products. Products include plywood, lumber, gypsum products, and chemicals. Most of these are made to stock. The company produces products in plants and immediately puts them on trucks or rail, with few warehouses.• Consumer products. This includes products such as paper plates, paper towels, bath tissue and various institutional paper goods. These are made to stock, and after they are produced are stored in 10 to 12 large distribution centers across the country. These products are stored close to customers, and the company keeps inventory on hand to provide high levels of service. • Packaging and cellulose. This includes packaging materials such as corrugated boxes as well as bleached board, which is often customized for customers with printed information and is a made-to-order supply chain. The customized products are produced in advance, are transported to a warehouse close to the customer, and are stored until needed by the customer. • Harmon Recycling. This business unit, which was acquired by GP, brings in waste paper, recycles it and acts as a broker. The company has labor-intensive facilities that take in paper, sort it, clean it, and ship it to end customers.Group Discussion The program participants offered comments on supply chain trends and the implications for real estate. • E-commerce is disrupting everything. Companies in many industries — particularly retail — want to be closer to the customer and want to be able to customize products at the last minute. The growth of e-commerce businesses, especially Amazon, is increasing demand for warehouse space across the country. • Companies with labor-intensive operations are looking into automation. Several companies have labor challenges that include finding enough labor to staff distribution centers, retaining employees and getting consistent performance. Automation can help address these issues. Corporate end users don’t see distribution centers going from 100 to zero employees, but could see them going from 100 to 50, supported by robotics and automation. • Have logistics determine location. One participant felt strongly that too often companies first make a location decision and then deal with logistical decisions. He suggested first doing a logistics analysis and using that analysis to drive location decisions. By using a logistics analysis, a company can draw a large circle on a map where a site can be located. Then other factors can be considered to determine the exact site.• Companies are thinking hard about lease versus own. Because capital costs are so low and because leasing is often a long-term commitment of 10 or 20 years, many companies are thinking seriously about owning. However, even with a low cost of capital there is still internal competition for capital, and owning distribution centers is not seen as an attractive use of capital. As one participant said, “No one wants to buy a warehouse.” • Tariffs caused the C-level to tap the brakes. Tariffs were extremely disruptive for many companies because they created uncertainty and delayed major decisions. • The desire to be close to the customer is causing companies to bring some manufacturing back to the United States. Some companies (particularly apparel companies) have had supply chains that involved sending raw materials to Asia, because the labor costs there were so low. Production would occur in Asia and the finished goods would be shipped back to the United States. But due to an increased desire for last-minute modifications, some production has been shifted back to the U.S. because the previous supply chain was taking too long.www.iamc.orgA Business Impacts Interest Group participant S I T E S E L E C T I O N JANUARY 2019 13The Industrial Technical Learning Center (InTech) at Cha ey College in Fontana, California, is the kind of place where individual dreams and company goals can both be realized. Launched in with a $ . -million TAACCCT [Trade Adjustment Assistance Community College and Career Training] grant, and with backing from companies and the region’s community colleges, the center is blazing new trails.“ e InTech partnership between California Steel and Cha ey College is an exemplary Apprenticeship model that aligns academic learning with hands-on, practical on-the-job learning,” says Gino DiCaro, vice president of communications for the California Manufacturers & Technology Association. “Employers and community colleges up and down the state can learn from this highly successful apprenticeship program.” ey can, and they should.“ e U.S manufacturing sector is advancing rapidly, and the pathways to developing and acquiring talent must change to keep pace,” DiCaro says. “Secondary education must re ect current employment needs by o ering a wider by ADAM BRUNSadam.br uns @ site s ele c tion.c omSan Bernardino County companies and institutions show the rest of the world how a regional approach works best for upskilling and growing the workforce.INVESTMENT PROFILE:SAN BERNARDINO COUNTY14 JANUARY 2019 SI T E S E L E C T IO Nvariety of training options for career choices, including apprenticeships that take the place of typical school programs for technical-style work.”Across-the-board buy-in is taking place in San Bernardino County in Southern California — with full support from the California Apprenticeship Initiative. e training option derives from innovation and necessity, considering the expected jobs growth. If the Inland Empire were a state, it would be the th largest by area and the th largest by population. Moreover, it’s a region projected to add , jobs between to — a -percent jump.A number of colleges and high schools in San Bernardino County are working through a system-wide agreement that will o er apprenticeship pathways in every local area and industry sector.“An apprenticeship is a highly e ective way for a business to get new talent into their company, teach applicable skills and techniques and further develop their existing employees,” says Stephanie Murillo, administrative supervisor, San Bernardino County Workforce Development Board, which runs three Americas Jobs Centers. “ is collaborative e ort combines resources and engages our regional business community to develop a workforce tailored to the needs of the county’s economy.” e Inland Empire/Desert Regional Consortium Strong Workforce Program Regional Plan draft, expected to be nalized in January , identi es six target sectors o ering the most promise for opportunity in coming years: advanced manufacturing; advanced transportation and logistics; energy, construction and utilities; health; ICT and digital media; and business and entrepreneurship.“While the concept of an apprentice has been around for some time, it is a model used historically by the building trades and military,” Murillo says. “Now it’s back in vogue as more companies, educators, policy makers and non-pro t groups come together to reduce the skills de cit.Expertise Begins With ListeningRod Hoover’s known the power of apprentices for some time. e human resources manager for California Steel Industries, Inc. (CSI) has worked Combined Growth of San Bernardino County Primary Clusters 2010-2017San Bernardino County Job Clusters14013513012512011511010510095902010 2011 2012 2013 2014 2015 2016 201736%Index (Base = 100)16%12%ManufacturingLogistics/WarehousingRest of EconomyLogistics/TransportationHealthcare60%14%6%9%10%SBCAUSAIf I were a company trying to get a foothold in California, even with low unemployment, there is a great talent pool out here.” — Rod Hoover, Human Resources Manager, California Steel Industries, Inc., on the quality of the workforce in San Bernardino CountyA number of colleges and high schools in If I were a company trying to get a foothold A number of colleges and high schools in at the location in Fontana since it was Kaiser Steel back in the early s, and will retire next year. “We’re one of the largest non-union steel manufacturing facilities in the country,” he says, “and part of my function is to keep it sta ed with quali ed people.”His work championing apprenticeship and certi cations will be part of his legacy to CSI and to the region.“We have developed over craft people since , and we have in training right now,” he says, noting that CSI’s capability to turn out a journey-level industrial maintenance specialist, electrician or mechanic in two years instead of the usual apprentice track of four to ve years can save a company up to $ ,. One big reason for that e ciency? e program — now certi ed by the state — is skills-based, not time-based. CSI is front and center in championing the program, but accounts for just a small portion of the , apprentices in the county who have graduated.“Companies nd apprentices learn quickly,” says Norco College Apprenticeship Director Charles Henkels. “In turn we can learn and respond more quickly to what industry needs because when someone’s an apprentice, they’re also a student in the community college providing us more feedback.”“We’re dialed in to the voice of the business,” says Sandra Sisco, director, economic development, for the TAACCCT Grant & InTech Learning Center at Cha ey College, noting the importance of two registered apprentice occupations in particular: industrial maintenance electrical technician and industrial maintenance mechanic. It’s not just manufacturers who need them.“Hospitals and logistics operations need those two occupations because they both have industrial equipment,” she says. “ at’s where the shortage in the workforce is, not just in California, but around the world. So we feel very blessed to be able to create this pipeline of skilled workers.” e response from employers has been enthusiastic. Nestle Waters is incorporating the industrial mechanic apprenticeship into its long-term sustainability plan for its San Bernardino County facility. General Atomics Aeronautical System’s (GA-ASI’s) Field Avionics Department in Adelanto has been working with the State of California Department of Apprenticeship Standards (DAS), Victor Valley College (VVC), and the Victor Valley College Foundation to create the GA-ASI Electronics Technician Apprenticeship program. e primary goal of the program is to produce Field Avionics Technicians a year to accommodate General Atomics’ business needs. e program will consist of hours of classroom training and , hours of On-the-Job (OJT) training. Classroom training will be delivered via contract education through VVC in the form of ve for-credit classes. GA-ASI is currently in the process of securing a facility at the Southern California Logistics Airport (SCLA) in Victorville for these classes through a partnership with the San Bernardino County Workforce Development Board (WDB) and Stirling Development. OJT training will take place between the facility at SCLA and GA-ASI’s Flight Operations Facilities in the high desert. A Pre-Apprenticeship program is also being assembled for individuals who are not initially selected but have demonstrated the potential for success in the program.Hoover says a recent meeting featured around more manufacturers wanting to get on board. ey’re part of a manufacturing cluster in the region that numbered around , rms a few years ago. ey employed , then, but that number has now grown to ,.Grow Your OwnCSI employs around , at its operation, with about active apprentices at any given time. “If I were a company trying to get a foothold in California, even with low unemployment, there is a great talent pool out here,” Hoover Apprenticeship is back in vogue as more companies, educators, policy makers and non-pro t groups come together to reduce the skills de cit.” — Stephanie Murillo, Administrative Supervisor, San Bernardino County Workforce Development Boardis front and center in championing the program, but accounts for just a small portion of the , Apprenticeship is back in vogue as more is front and center in championing the program, but accounts for just a small portion of the , S I T E S E L E C T I O N JANUARY 2019 1516 JANUARY 2019 SI T E S E L E C T IO Nsays. Typically, around apply for the slots at CSI, coming out of training programs or by word of mouth. e talent base is good for those growing warehouse operators too, even as automation grows. If a job is displaced by technology, “then the money is in the maintenance of that equipment,” Hoover says. “ ose are good-paying jobs, in demand well into the future.” Norco College, the host college for the National Center for Supply Chain Automation, has created a national template for a registered apprenticeship program.How good is the ultimate pay? At CSI, with shift di erentials, overtime and pro t sharing, electricians can make between $ , and $, “easily,” and mechanics anywhere from $ , up to $ ,, before bene ts, says Hoover. at level of pay still goes a long way in a region with a cost of living around percent that of Los Angeles.Creating Career PathwaysTraining through apprenticeships is just one aspect of the county’s commitment to support development of a strong workforce. Career pathway programs, designed to help students and young adults throughout San Bernardino County prepare for opportunities in growth industries, will receive a boost under an innovative new e ort. e San Bernardino County Career Pathways Compact is a framework for a formal pathways network that helps youth attain the knowledge, skills and experience required for productive, sustainable careers. Among the goals of the Compact is assuring that graduating high school students are able to enter their career eld, gain acceptance into college or a vocational program, or become a registered apprentice. Participating students are co-enrolled in community college and earn college credits when they graduate. is compact, which started with the San Bernardino Uni ed School District, San Bernardino Community College District and the WDB, will be scaled up to all school districts across the county and its community colleges, serving upwards of , high school students each year.“Many of these students are being exposed to career opportunities they never imagined possible, and in the process are receiving hands-on training and certi cation they can use to obtain employment. It’s a win for them and for businesses,” says Murillo.Career pathways are a pillar of WDB’s GenerationGo!, a work-based learning initiative. Recently, students from San Bernardino’s Cajon High School completed hours of clinical practice in a GenerationGo! pilot program with Arrowhead Regional Medical Center, learning about a variety of career opportunities while being further propelled along a valuable career path.With the buy-in of companies, institutions, students, parents and area leaders, these programs, along with the focus on re-engaging apprenticeship training, are making the county’s talent pool deeper.For companies looking to do business in San Bernardino County, these programs underscore the county’s commitment to collaborate with every business sector to provide for skilled talent now and into the future. This Investment Profile was prepared under the auspices of San Bernardino County government. Employers interested in San Bernardino County Workforce Development Board programs may call (800) 451-JOBS or visit www.sbcounty.gov/workforce. For more information, contact the county Economic Development Agency at 909-387-4700. On the web, go to www.sbcountyadvantage.com.INLAND EMPIREINLAND EMPIREINLAND EMPIREINLAND EMPIREMoreno Valley (RCCD)Los AngelesLos AngelesSan DiegoSan DiegoNorco (RCCD)Chaff eyPalo VerdeBarstowVictor ValleyCollege of the DesertCopper MountainMt. San JacintoSan Bernardino Valley (SBCCD)Crafton Hills (SBCCD)Riverside City (RCCD)The 12 community colleges in the Inland Empire/Desert region enrolled a combined 173,617 students in 2016-17.NEW YORK STATE IS BUILDING THE IDEAL BUSINESS ENVIRONMENTTHRIVING IN NEW YORK STATE HERE’S WHY BUSINESS IS STATEWIDE INVESTMENTS ■ $150 billion infrastructure investment across the state, building on the existing $100 billion infrastructure program ■ $5 billion Clean Energy Fund ■ Solar in New York State has increased more than 1,000% and leveraged $2.8 billion in private investment ■ $1.5 billion Upstate Revitalization Initiative ■ $755+ million in economic and community development funding in 2017With a world-class talent pool, infrastructure upgrades across the state, and business-friendly programs and incentives, New York is committed to helping businesses succeed today and tomorrow.NEW YORK STATE IS FUELING GROWTH AND INVESTING IN THE FUTURE A highly educated talent pool World-class infrastructure Business-friendly programs and incentives Largest public university system in the U.S. Rich diversity Unparalleled quality of lifePG. 4PG. 115.625 in.10.0 in.16.5 in.10.875 in.16.75 in.11.125 in..25 GUTTER.25 GUTTER0032_SS_SiteSelection-ESS11/30/18 10:21 AM MC 1 of 2 M. Schlachter N. Regan D. Whitlatch V. Roberts C. Kappesser MCresize900000012016153/018ESZ0028Site Selection Area DevelopmentVendor 12/4; Run 1/1/194C15.625 1016.5 10.87516.75 11.125InternalNext >