By Katlin Swisher, Ph.D.
Foreign investment is an important and growing sector of the Mountain State economy, and today it benefits from investments from 30 countries representing 136 companies that employ approximately 30,000 West Virginians. The West Virginia Development Office’s (WVDO) International Division works to ensure the state receives consideration when investors are reviewing location options because international companies that invest in the U.S. are typically good corporate citizens that offer quality jobs with competitive wages and benefits.
“Whether we are marketing West Virginia to domestic or international companies, we know from both firsthand experience and several studies that West Virginia offers a profitable location for companies in specific industries,” says Steve Spence, director of the international division. “We directly contact quality companies in our target sectors and schedule face-to-face meetings, work in partnership with industry associations to meet their member companies, exhibit in trade shows, request referrals from existing investors, organize seminars and use direct mail, social media, content marketing and other methods to tell the West Virginia story to potential investors.”
These target sectors are profitable industries that include aerospace, automotive, building materials, chemicals and metalworking. The WVDO’s Business and Industrial Development Division has had success in attracting companies in the information technology sector in particular, including INFOR and Resolver in Charleston, Leidos in Morgantown and Sparksoft in Fairmont.
According to Spence, West Virginia is an attractive location for international investment because the cost of doing business is low and the availability of a local skilled workforce is high.
“Companies select locations where they are confident they can be profitable in terms of operating costs like taxes, wages and utilities as well as transportation costs to reach their customers and suppliers,” he says. “A skilled workforce is always a consideration too. Companies need to know they can hire locally and that there are schools, universities, community and technical colleges, training facilities and other resources that ensure a steady pipeline of talent to meet their long-term needs.”
As part of the West Virginia Invests grant program that covers the basic tuition expenses for in-demand community and technical college degrees, the WVDO partners with state schools to develop curricula to help train the workforce and meet companies’ needs.
“The development office approves that curriculum and
believes it is valuable for creating employable students,” says Spence. “We are constantly working with both existing companies and the ones we’re hoping to bring here on what types of certifications and knowledge employees need to have.”
While West Virginia’s workforce and business climate are attractive, the state falls short in some areas critical for international investment. The state’s terrain, in particular, can be a challenge to sell.
“One of the biggest factors in securing a project is offering an adequately developed site or industrial building that meets the client’s needs,” says Spence. “We have a limited number of larger sites, and the terrain of West Virginia makes it difficult to offer such sites throughout the state.”
The state has worked hard to improve its business climate over Spence’s 40-year career, especially in terms of revamping policies related to taxes and workers’ compensation.
“The privatization of workers’ compensation, lowering of business taxes and other improvements have placed West Virginia in position to compete,” he says. “We need to continue to improve our tax structure. The Tax Foundation, a bipartisan nonprofit, ranks us 23rd in the total cost of business taxes. That ranking is better than our border states, but we should continue to evaluate our competitive position and consider reforms such as addressing our tax structure as it relates to property tax on equipment and inventory.”
Starting a business is not the only way international investment can occur in West Virginia. Global companies can purchase
existing domestic businesses too.
“We have many examples of this across several different industries,” says Spence. “A typical international investment project involves a foreign company that has established a market in the U.S. for its products and determines the need to manufacture or assemble its products in this country. Typically, these companies establish a manufacturing facility or distribution center, but some expand in the U.S. market through a joint venture project or acquisition of an existing company.”
To cultivate opportunities, Spence’s team of seven works to find investment projects and reach the decision makers within those companies. Once those relationships are established, they work with companies on site selection, loan programs, labor force recruitment, employee training programs, tax credits and tourism development.
“For each project, we establish one point of contact—someone who works to fully understand the client’s needs and coordinates all the state’s support, as well as the company’s visits to West Virginia and any other activities,” he says. “Site or building selection is the first step in most projects. We learn about the company’s requirements and review our site and building database to find the best options statewide that may meet their needs. As the project develops, we prepare a proposal outlining the company’s commitment for job creation and investment and detailing our offer of loans, training programs, tax credits and other support.”
The WVDO also organizes several programs to help increase investment, including its Export Promotion Program, International Trade Exhibition Program, West Virginia Trade Show Pavilions Program and Market Finder Reimbursement Program.
“We offer an annual schedule of trade shows, trade missions and other opportunities that enable a West Virginia company to meet with end users, potential agents or distributors capable of representing the company in that market,” says Spence. “These programs assist our existing companies in expanding their export sales. Increased exports can be a strong factor in a company’s long-term growth and can assist the company in maintaining sales levels during a downturn in the U.S. economy.”
Identifying international business opportunities isn’t just about promoting the state as a prime location for international investment, though. Spence’s team also assists West Virginia companies in expanding their exports, and in 2018, the state’s exports were valued at $8.1 billion.
“A company with an exportable product or service has almost unlimited opportunities to find new customers around the world if they make exports one of their priorities,” he says.
Above all, the WVDO is committed to customer service when engaging with potential investors, and this attention to detail has allowed it to be successful despite the COVID-19 pandemic.
“We win projects by offering a location that meets the criteria the client specifies,” says Spence. “Our staff knows the information must be delivered thoroughly, accurately and promptly to meet the client’s needs, and they are accustomed to being available at nontraditional hours and working remotely. We have heard from investors that they appreciate the personal attention and support West Virginia offers their company even for small projects. In some cases, the investor contacted competing states and found that some did not respond or did so by sending a brochure or referring the company to their website. We give the same level of service and attention to small and large projects. As we look forward to the next months and years, we will continue to evaluate our target sectors and markets and adjust our activities accordingly.”
Exporting in a Global Market
By Samantha Cart
The importance of exporting for businesses has perhaps never been more obvious than it is in 2020. In the wake of a global pandemic and subsequent economic decline, businesses engaged in the global marketplace are often in better shape to weather the storm. Industrial Bolting Technologies, Legacy Truck Centers and Nippon Tungsten USA, Inc. have worked with the International Division of the West Virginia Development Office to export their goods and services to international markets, diversifying their portfolios and increasing their bottom lines.
“I decided to expand into international business when we were going through the recession in 2007. I didn’t want to be caught with 100 percent of my business in one location anymore. We’re currently doing 70 percent of our business in the U.S. and 30 percent overseas, but our goal is to get to 50/50. We recently set up a new distributor in Pakistan. Before that, we were already doing business in about 30 other countries.”
Mike McCown, President,
Industrial Bolting Technologies
“We have been working with the international division of the West Virginia Development Office for almost 10 years, and they have helped us with our international sales. We’ve done business in more than 116 countries around the world. We wanted to diversify the company from just our local market in the Ohio Valley. If there is an economic issue in any one part of the world, we have customers in other regions that may be doing better. Some West Virginia companies may be hesitant to sell internationally because it is different, but there is so much to be gained by going global.”
Chad Remp, Director for International Sales & E-commerce, Legacy Truck Centers
“Nippon Tungsten is part of the international markets in Canada, Mexico and Japan. Exporting has benefitted us by expanding our business/service to North and South America. It has also caused a synergy effect with other affiliated companies on the global business stage in Japan, China, Thailand, Brazil and Italy. Nippon Tungsten opened a facility in Brazil in October 2019 to cover the South American market. We have been expanding that network, and it is now one of our strengths.”
Hideki Watanabe, President, Nippon Tungsten USA, Inc. & Kenji Nakahara, Ph.D., Director and Senior General Manager in Machinery Parts Business Department, Nippon Tungsten Co., Ltd.
