By Debi Durham, Director, Iowa Economic Development Authority and Iowa Finance Authority
While experts around the world speculate about the direction of the global economy, we choose to focus on the facts here in the state of Iowa. And thanks to our low cost of doing business, business-friendly regulatory environment and diverse mix of industries, the facts show that Iowa’s economy remains steady and stable as we head into 2020. As a result, Iowa continues to be a great place to operate in the U.S. – and a great place to grow – for homegrown and international corporations alike.
Don’t just take it from me. A steering committee of economic developers annually interview businesses in Iowa to keep our pulse on trends and needs. The resulting report is called Iowa’s Business Expansion and Strategic Trends (BEST) and in 2018, 726 companies from across the state were interviewed.
My biggest takeaway from the BEST report is that we are doing a lot of things right in Iowa. First and foremost, many of the businesses offering the primary products and services Iowa is known for are growing – 62 percent to be exact. An additional 5.8 percent reported an “emerging” primary product or service. These are clear and factual indications that we’re not slowing down.
Why is this happening? In Iowa, you’ll find an unwavering dedication to innovation, a strong commitment to collaboration and a keen understanding of the value of relationships. State and local officials engage with business leaders to understand the business headwinds and opportunities in our key industries so we can help enable their future success.
Moreover, we have plenty of room for businesses to grow and a high-quality, efficient workforce that is primed to help companies across industries innovate and excel. These strengths and unique attributes have led many global businesses – BASF, Bayer, Barilla and DSM to name a few – to set up shop here in America’s Heartland, where we treat them like our own.
Iowa placed a strong focus on wind energy before it became trendy. It started with forward-thinking policy, was augmented by Iowa’s business-friendly approach and has succeeded due to an all-in, collective effort. In 2018, Iowa generated 34 percent of its electricity from wind. It’s a major reason why companies like Google, Facebook and Microsoft have chosen Iowa for energy-intensive facilities. Bottom line, if low-cost, reliable, renewable energy is important to your company, Iowa is the location for your next expansion.
Most recently, various types of energy storage have been analyzed. Energy storage is appealing for a variety of reasons, including cost savings, resiliency potential and grid stability. The state has developed a plan that outlines the first steps towards better understanding this new technology and how to best utilize energy storage in Iowa. By preparing now, Iowa will maintain its national role as an energy leader and be poised to capture the potential economic benefits that accompany energy storage.
According to the BEST report, Iowa’s biggest growth area is in the biosciences, with nearly 83 percent of companies interviewed reporting products and services that are increasing in demand. Of these companies, 26 have introduced new products in the last five years and 27 anticipate new products coming in the next two years.
This is not surprising. Iowa’s Governor has prioritized advancing Iowa’s bioscience industry, so much so, that the state has an economic development roadmap focused on some key aspects of the sector: vaccines and immunotherapies, precision and digital agriculture, biobased and medical devices. This strategy leverages our ample natural resources and attractive incentives, such as America’s first Renewable Chemicals Production Tax Credit, which went into effect in 2016.
Participating companies can receive up to $1 million annually in tax benefits for producing renewable chemicals in Iowa. Specifically, the program incentivizes the production of 30 high-value chemicals derived from biomass feedstocks. The U.S. Department of Agriculture has called Iowa’s tax credit the “strongest” incentive package for the global bio-based chemical industry.
The BEST report also revealed the following:
- The information services, digital media and technology cluster trails right behind the biosciences, with 77 percent of companies interviewed reporting they have growing or emerging offerings. In fact, 36 of these companies have introduced new products in the last five years, while 35 others plan to introduce a new product or service in the next two years.
- The agriculture and food production sector also reported sustained growth. This cluster, representing Iowa’s agrarian heritage, had 81 companies participating in the survey. Of those companies, nearly 76 percent reported growing or emerging products or services – 64 introducing products in the last five years and 61 planning to do so in the next two years.
While these industry clusters represent the highest reported product growth, companies in a variety of industries are booming across Iowa. The state’s diverse industrial landscape also includes thriving companies in the areas of transportation, insurance and finance; advanced manufacturing, health services, avionics and communications electronics, renewable energy and more.
Said simply: Whatever your business may be, we likely have an ecosystem in place for you in Iowa.
Room to Grow
As business booms, expansion is inevitable. More than half of the companies interviewed for the BEST report plan to expand in the next three years, representing nearly $2 billion in investment and an estimated 4,424 new jobs.
Fortunately, there’s plenty of room in Iowa, both for growing companies to expand and new companies to plant their flags. If your company is considering building a facility in Iowa, our Certified Sites program makes the site-selection process as simple as possible. All due diligence has been performed on sites certified by the program, including environmental assessments, archaeological and historical investigations, soil sampling, title searches, infrastructure planning and more. In other words, Certified Sites take the guesswork out of the development processing, allowing companies to move toward construction – and ultimately, operation – more quickly.
Our transportation and utilities infrastructure also provide for an easy transition and cost-efficient workflow. Major interstates and highways, more than 3,800 miles of railway tracks, 60 river barge terminals and international airports all serve businesses in Iowa, allowing them to transport goods in and
out of the state efficiently. On top of that, the state’s industrial electricity rates are seven percent lower than the national average.
A World-Class Workforce
As encouraging as these economic vital signs may be, our people – who blend intensive training with an even more intense, innate work ethic – are the driving force behind our success. Wherever you look across the state, you’ll find a talent pool tailor-made to help your business.
In recent years, we’ve increased our focus on technical trade skills in our community colleges— where curriculum aligns with the needs of business. For example, programs such as Iowa’s Industrial New Jobs Training Program, which is administered by the state’s 15 community colleges, helps ensure the workforce is equipped to meet the advanced manufacturing industry’s evolving needs.
The program provides training funds financed through bonds sold by the colleges. Businesses divert 1.5 percent to three percent of withholding taxes generated by the new positions to retire the bonds. This means the training comes at essentially no cost to businesses, since withholding taxes would otherwise go to the state. Furthermore, participating businesses may be eligible for up to 50 percent reimbursement of the reward amount for on-the-job training and a corporate tax credit if they increase their employment in Iowa by at least 10 percent.
In addition to the Industrial New Jobs Training Program, we see companies throughout the state emphasizing skills development for their employees. In fact, more than 90 percent of the companies interviewed for the BEST report stated their investment in workforce training was increasing or stable.
While on-the-job training is vital, we understand that workforce development doesn’t just start there — access to a pipeline of well-prepared talent is a key consideration for every business. That’s why we’ve ramped up our STEM (science, technology, engineering, math) education across the state and have streamlined collaboration between business and educational leaders. And in our research-focused universities, the next generation of biomedical engineers, data analysts and other innovators are gaining the knowledge to compete in the global economy.
Please visit https://www.iowaeconomicdevelopment.com for more information about how Iowa can benefit you.