Global Company Motives for Investing in the U.S.

Incentives are a common tool utilized by states and regions to leverage job creation and investment amount from business attraction projects. For certain companies/industries, incentives are critical to a project’s success; however, in others they play only a supporting role.  In a recent blog post from the International Trade Administration, (ITA),  they state that in regards to companies investing outside their home country via Foreign Direct Investment (FDI), “…financial incentives (including tax or funding incentives) have played a minor role in company location decisions over the last nine years and are decreasingly important.”

If incentives are not driving these FDI projects, what are the primary criteria used during the site selection process? Two of the top three are assets of the Buffalo Niagara region that we use to market Buffalo Niagara to the world – Proximity to Markets and Skilled Workforce Availability.

These two factors, plus the others listed in the report,  drove many of the 75 FDI projects BNE attracted to our region. The educated/skilled workforce and university system pumping out thousands of new workers every year, factored with the ability to reach over 125,000,000 people in a 10 hour drive, makes Buffalo Niagara an ideal location for FDI.

Click here to read the full ITA blog post.

Every month, BNE releases an e- newsletter, Access U.S., which provides information for Canadian businesses considering a U.S. business expansion. Below are the top three most popular articles published in Access U.S. since June 2012.

1. Collecting Receivables in the U.S. - July 2012

2. Part 2 – The Dos and Don’ts of Crossing the U.S. Border - September 2012

3. “Snowbird” Tax Info: Canadians Filing U.S. Tax Residency – April 2013

If you are interested in receiving our monthly e-newsletter, Access U.S., click here to sign up!

Click here to read more informational articles on cross border business.

Last month the U.S. Department of Commerce’s Bureau of Economic Analysis released advanced 2011 GDP data for 366 metropolitan areas across the nation.  At $45.88 billion, the Buffalo-Niagara Falls, NY MSA (Erie and Niagara counties) ranks as the 56^th largest metro economy in the country and the 3^rd largest metro economy in New York State.

The regional economy of Buffalo Niagara, which has increasingly diversified throughout much of the past two decades, has been on a growth trajectory for three consecutive years and experienced the second highest rate of metro GDP growth (1.4%) in New York State in 2011, and falls within the second quintile of growth nationwide . Major gains in the Professional and Business Services, Trade, and Leisure and Hospitality sectors helped fuel this tremendous economic expansion.

Those interested in learning more about Buffalo Niagara’s economy and labor pool can consult Buffalo Niagara Enterprise’s recently updated 2013 Buffalo Niagara Economic Guide.  The Economic Guide serves as a detailed overview of the region’s economy and provides data and information on demographics, workforce, education, and transportation (and more), for use by businesses, researchers, students and practitioners

Don’t hesitate to contact us if you have feedback or recommendations regarding how we can enhance and improve the information in the economic guide.

Steve Davis, Vice President of Tapecon

Headquartered here in Buffalo, NY, and in business since 1919, Tapecon is a highly technical and specialized printing and converting company. Through the years, Tapecon has positioned itself as an industry leader in niche markets with unique value propositions and technologies. It has achieved this through a mix of in-house services – driven by experienced and innovative employees -matched with manufacturing platforms that deliver superior products. Five generations of family ownership have proven to be nimble, open to change and invested in innovation.

Tapecon currently focuses on Medical/Medical Device, Industrial OEM, Electronics and Military/Aerospace markets. Long-term vendor and customer partnerships are paramount. Products include:  single-use medical diagnostics, printed electronics, custom converted functional parts & shields, product identification, and other printed markings. Tapecon’s services platform includes: in-house industrial & electronics engineering, commercialization services, validation services, graphic design, prototypes, and supply chain maximization. Their mix of competencies drive value for their customers.

Tapecon is ISO 9001:2008 & ISO 13485:2003 Registered, and cGMP Compliant.

Steve is a passionate advocate for operational continuous improvement, and has worked to create and sustain a progressive culture of change and innovation within Tapecon. He graduated from Clarkson University in 2001 with a Bachelors in Engineering and Management & MBA in International Business at St. Bonaventure University. In 2005 Steve returned to Buffalo to join Tapecon Inc. as a Manufacturing Engineer.  He was promoted to Director of Manufacturing in 2007 and again to his current role as Vice President in 2009.

I had the opportunity to ask Mr. Davis a few questions:

Graham Smith, BNE Research Director, at US Commercial European Roadshow

by Christopher Finn, Research Manager

National Branding & Investment (NBI) Expo in Eindhoven

Buffalo Niagara Enterprise has an aggressive travel schedule. As I type this blog post, two of BNE’s team members are in Germany attending Hannover Messe 2013, one of the world’s largest industrial technology trade shows. Each year BNE’s Business Development managers spend a significant portion of their time on the road, publicizing the assets of Buffalo Niagara. They attend trade shows, industry seminars, economic development summits; any event that will help us achieve our mission – attract investment to western New York. But how can dealing with hundreds of exhibitors and thousands of attendees be efficient? This is a resource intensive effort that requires careful planning to ensure a maximized return on investment.

The most critical piece of traveling is pre-event due diligence and planning. BNE’s research department analyzes vendor lists, targeting operations for email campaigns that inform the companies of our presence at the show, offering the opportunity for individual meetings. Our marketing department creates customized collateral for distribution, targeting the exact needs of the specific show. If appropriate we can partner with other strategic partners to provide a more robust message. This could include legal, accounting, or commercial real estate professionals, or if it is a Canadian event, attending with our Canadian consultant, Lee Meister. In Germany, we are lucky enough to work with the US Dept. of Commerce, who has created matchmaking sessions between groups like BNE and companies that have a desire to expand into the United States.

We also do not limit the travel to just the event. We take the opportunity to arrange for meetings with site selectors, corporate real estate professionals, or targeted companies. Making these connections, in their own offices, helps build the relationships that create opportunities for our region. As one of the top sources for BNE “Wins” come from these personal interactions, we diligently work to enhance these networks.

Over the next six weeks, we’ll have attended another 10 shows/events. Even though trade shows are just one tactic we employ to attract businesses to Buffalo Niagara, they are a critical one to keep our project pipeline full.

Guest Blog – Freed Maxick International

Are you a Canadian “snowbird” spending winters in the United States? You may not realize it, but you could be considered a U.S. tax resident. If this is the case, the basis on which tax residency is determined is through the IRS “Substantial Presence Test.”

For this purpose, you will be considered a U.S. tax resident if you meet the following requirements:

• Physically present in the United States at least 31 days in the current year, and
• 183 days during the 3 year period that includes the current year and the 2 years immediately before that.

If you fall into this category, don’t panic! There is potential relief available to Canadian citizens that are caught by this Substantial Presence Test:

• You are present in the U.S. for fewer than 183 days in the current year.
• You maintain a “tax home” in a foreign country during the year.
• You have a “closer connection” to the foreign country where your “tax home” is than to the U.S.

Are there exceptions to the rule?

There are exceptions to the substantial presence test. The following are a few examples:

• Days you are in the United States for less than 24 hours- when you are in transit between two places outside the United States.
• Days you are in the United States as a crew member of a foreign vessel.
• Days you can classify “exempt individual.”

The term “exempt individual” does not refer to someone exempt from U.S. taxes, but to anyone that claims exemption from counting days of presence in the United States. For example- a teacher or trainee temporarily in the United States under a “J” or “Q” visa, who substantially complies with the requirements of the visa. For a full list of exemptions and exceptions, please refer to the IRS substantial presence test.

What should you do next?

If you exclude days of presence in the United States because you fall under a special category, you must file Form 8840 (Closer Connection Statement) or Form 8843 (Statement of exempt individuals and individuals with a medical condition).

Freed Maxick International tax practice professionals can help you determine if you qualify as a U.S. tax resident, and assist you with Substantial Presence Test filings. We can navigate the IRS guidelines and minimize potential penalties. Contact us to connect with our experts.

The scale of investment is enormous, but just as impressive is vision of the larger, anchor projects. The redevelopment of the Inner Harbor and Canalside – undoubtedly the most anticipated and visible of these projects – will transform the land on the Buffalo River and around the First Niagara Center into a vibrant destination for residents and tourists to enjoy year-round. The 425 activities that were held in 2012 drew 500,000 visitors and in 2013 Canalside has a 70% increase in event programming already scheduled.

At last week’s breakfast meeting of the WNY Chapter of the NYS Commercial Association of Realtors, Thomas Dee, President of Erie Canal Harbor Development Corp. (ECHDC) provided further insight into the activity happening today and what is slated for the future. This project is past the tipping point, Canalside is no longer a plan but instead a reality with three significant projects already underway. The $30,000,000 renovation of the former Donovan Building into One Canalside featuring hotel/office/retail space, the groundbreaking for the Buffalo Sabres $170,000,000 HARBORcenter, and the reconstruction of the historically accurate canal system are merely the beginning. Just as tangible are the projects that will reconnect Canalside to Ohio St., the Buffalo River, and Outer Harbor.

Below you will find a link to download the presentation that outlines all the activity. The slides provide an impressive visual impact of how downtown Buffalo will look for future generations, but the context of Mr. Dee’s passion cannot be represented. If you have not been involved in the public meetings or seen the district in person recently, you are urged to get involved.

Please click this link to download the presentation. (There were some issues with the document opening with certain Adobe/Internet browser configurations. In order to access the highest quality document, please right-click on the link and select “Save Link (or Target) As…” to download the PDF).

Canadian manufacturers that consider expanding their operations into the U.S. often inquire about 1) the availability of skilled trade workers, and 2) the affordability of those workers.

The Buffalo Niagara region maintains a strong infrastructure of workforce development initiatives to fill the needs for not only production line workers but also the skilled trades. Collaboration between the private-sector, educational institutions, non-profit initiatives and manufacturing associations are leading these efforts. Read more here about resources, funding and initiatives accelerating the workforce development delivery system in the region.

Workforce Development Highlight – connecting industry to skilled workers

While experienced workers are important, companies want assurance that local colleges and universities are continuing to educate students in the skilled trades to backfill the current aging workforce with new talent. Buffalo Niagara has several state and community colleges providing high quality and low-cost education, training and certificate programs.

For example, in a recent visit to Alfred State’s SUNY College of Technology I received a tour of the campus and the various degree programs offered.  During our tour, Craig Clark, P.E., Dean of the School of Applied Technologies explained that Alfred State provides a project-based learning experience that is the cornerstone of their culture.  Students work on real-world problems; thus they learn how to think, not simply what to think. As a result, Alfred State has a 99% employment and transfer rate.

Students can enroll in both Associate degree programs (2 years) and Bachelor degree programs (4 year) at the school.  Everything from Business Administration, Architecture to Applied Science and Occupational Studies (degree programs).

• The Applied Sciences programs include: CAD/CAM, Electrical Engineering,  Electromechanical Engineering,  Mechanical Design Engineering, Mechanical Engineering
• Their Occupational Studies program includes:, Air Conditioning and Heating, Drafting/CAD, Machine Tool, Masonry, Welding

Workforce Affordability – maintaining competitiveness in a global market

It is also important for Canadian companies to understand what they will be expected to pay potential employees in Buffalo Niagara.  According to the Economic Research Institute (ERI), employees with the same job titles in Alfred’s Applied Sciences and Occupations Studies program can be expected to be paid the following salaries:

Canadian companies looking to expand to the U.S. can learn more on our website. To view of list of Canadian companies BNE has helped expand to the U.S., view our success stories.

Click here for more information on manufacturing opportunities in the Buffalo Niagara region.