That. We need a high Energy Leadership kind of guy. Host are you supporting donald trump . Caller very much so. Host lets hear from charlie in new york. Go ahead, quickly. Caller good morning. Bernie sanders is the best thing we have now. Ralph nader is very concerned his followers may get because of the super delegates that are very conservative. I hope everyone will listen to what ralph nader has to say about bernie sanders. Bernie sanders correctly pointed out her biggest problem is money in politics and here is donald trump, the billionaire, speaking in our political system right now. I cant talk, i cant say what donald trump has to say. The American People dont have the voice donald trump has and thats a problem in our country. Peoplederstand have to see the problem is money in our democracy, which is perverting it. And here is donald trump, the billionaire, perverting it even more. 1 host jose in little rock. What was your thought when you heard the governor was suspending his campaign . Caller i think its a good thing he did that. We are listening. It is a good thing. Caller i think the republicans the economic crisis we went into in our country and all the problems in the middle east caused by the bush administration. They dont talk about that. If they called president obama a failure, its because their number one priority was not to let them succeed. Said andhat they have that is what they have been doing for eight years. Host paul in ohio, a republican. Good morning. Glad i am on. Ive been a democrat all along, but now i am a republican and going for trump. The reason im going for trump money, hesing his own doesnt oh anybody anything, and he lives in the city and mixes with people. Negroes, spanish people and what not. Clinton is going around saying she is concerned about she probably lives in a gated community and somebody comes in with an old car they would drive them out. Host from twitter bush dropping out is another indication that the Corporate Party is out of favor. Joel, an independent color. Can you make it quick, we are about to take all of you to the National Governors association in washington. Mr. Bush dropping out, he just did not seem comfortable and did not come across very well during the debate and the town halls. Its a shame because he had a couple of good ideas, particularly keeping a good eye on federal workers and the v. A. Debatenother republican on thursday, cnn posting that one. Lets bring you to the National Governors association and their winter meeting. We are going to talk about how states attract foreign and domestic investment. This is live coverage here on cspan. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] morning. Welcome to the nga winter meeting and to the session states tracking companies and investment, what the firm looks for. Going to turn it over to our moderator. Thank you and good morning and welcome to this panel, the National Governors association on attracting companies and investment. What matters to firms. Im a partner at mckinseys publicsector practice and we have the privilege of working with governors and state leaders across the country on health care, infrastructure, Higher Education, Public Safety pension and i. T. s. I have the privilege of meeting our Economic Development practice, which means i work with governors and their Economic Development teams on jobs andt ambitious initiatives. The purpose of this mornings panel is quite simple states focused disproportionately on company attraction, retention and expansion. Governors spend a lot of their time doing this. What actually matters to companies as they decide where to locate and where to invest . What should states do to ensure they arecompetitive as competitive as possible and attracting those companies . This discussion and debate is an age old one, but this is a conversation began a few months ago in october at the nga trilateral summit in colorado springs. It was there that my colleague led a discussion with several governors, starting with a fairly provocative proposition. ,e stated the incentive is dead long live the incentive. The thinking behind that notion is a conversation we have been having based on some observations weve been seeing across the country. Move away froma an overreliance on subsidies and incentives and attracting companies. Instead, many states have been building more broad and deep economic ecosystems and their states. Incentives have not gone away but they have been up and employed more strategically to support more Sustainable Growth and job growth. Which brings us back to our Big Questions for this panel. What actually matters to companies when they are deciding to locate and what should states due to meet their needs or what can states due to maximize the return on investment when they are trying to attract companies . To help answer these questions, we have a stellar set of panelists this morning. We have the senior director for Governor Affairs at magna international, the Vice President for governor relations at calix usa, the manager for the International Trade and Investment Office for the Missouri Department of economic ofelopment, the director Global ResourceManagement Group for the north Dakota Trade Office, and last but not least, leslie alexander, International Director for the Tennessee Department of economic and community development. I want to frame this discussion a little bit more. Im a consultant and i cant help but some data on some powerpoint slides. I want to share with you some research we have done. Surveyears ago, we did a of over 2900 global executives. We asked the reasons why these executives and their companies were seeking new locations. Number one reason was to reach new markets or customers, as you can see on this chart. No other answer came close, including seeking locations that had a lower cost profile. We also asked these executives what criteria they used to pick specific locations. Wasmost important by far the size and Growth Potential of a local economy. That is what executives care about. Half the executive also cared about two components like talent and the availability of an industry cluster, supply chain customers need to be nearby. Rounding out the top five were infrastructure and local politics. This is what matters to companies. What is not on this slide is 14 lack ofndents said the incentives were a reason theyd did not choose a location. It did not make the list. How are states providing the looking executives are for . One imperfect indicator is what statesmen their budgets on to promote economic competitiveness. We pulled together some state expenditure data from a number of sources, including the National Association of state budget officers. States spend a lot of per capita on Higher Education and transportation, exactly what executives are looking for. Far behind is how much they spend on census and research and development. Where there is the largest growth in spending, are indeed leads the pack. Transportation is in second place and finally, you have incentives and Higher Education. It would seem we could conclude states are aligning their investments with what companies seem to be wanting. However, i would say these numbers show incentives are not good. They are growing in size. Anecdotally, i would also say what we have seen is much more of a strategic deployment of incentives as a tool to build out the broader economic ecosystems that drive growth and that companies are attracted to. I would like to turn it over to my private sector colleagues to say a few words about what they are doing. First is the senior director for Governor Affairs at magna international. Good morning, everybody. Im glad to be here. Im the senior director of Government Affairs at magna international. Before we start the conversation, i want to give you a couple of facts to create a little credibility about what we are going to talk about. I always come to washington dc and talk about magna. I think its the Largest Company nobody knows anything about. We have 59 years of growth and iraq ranked as the largest automotive supplier in north america, the second largest in the world, the most diversified automotive supplier in the world and we supply every automaker in the world some kind of parts and some of what a do in the automobile sector. In global presence, we are 29 countries with 139,000 employees and 305 manufacturing plants around the world. More importantly, in the United States, we employ 21,000 people and have 53 manufacturing plants outhe United States spread over 12 states including tennessee and missouri. We are happy to be there. Is the 14 to 16 r d centers we have, are expenditure in the United States last year was about 300 million in our total expenditure around the world. R d is very important. Our global capacities are engineering and services, product systems, different product systems and vehicle assembly. Vehicles in austria, we assemble 200,000 vehicles a year for bmw, chrysler, and porsche. Are variedmpetencies and diversified. We are in metalforming, we have driver assistance products for safety, closures, mirrors, power trains, plastic interiors, seating and we do Contract Manufacturing and we are number one global in just about every sector except for seating, where we are number four. That is a little bit about magna. I will turn it over to jim. It is also a pleasure to be here this morning. I am jim fraser. Atandle our relationships the federal, state and local level, so do you diversity of what i get to look at on a daytoday basis varies dramatically. First, a shop a snapshot of tell us globally we are all over the world. You see a lot of growth over the past number of years and that is going to continue. One of the things that hard to see on the bottom is we invest a tremendous amount of revenues back into r d. Company,very hightech said the investment we put in is significant. We have a footprint of 3000 in the u. S. The interesting part is weve been here for over 100 years. Only in 2000 in the name come into being through a series of mergers and, business ventures. Though the footprint has been here for some time. I think we are on the leading edge of some real growth attentional in the u. S. The diversity of what we do is quite interesting. You can see the five Business Activities ground transportation, security, which goes into the cyber world, defense, aerospace and space. Are very active and in the u. S. , our operations mirror each one of those. Each one of those goes into a little more deaths, were big on connectivity, staying connected, it is all about data and sharing and Data Protection as well. Thats a big issue when it goes into the cyber world. You can see the diversity of who we are in what we do in the u. S. Probably very similar for last year. Good solid percentage of annual revenues. Just a couple of quick thoughts when we look at how we are trying to grow in the u. S. And the factors that matter , i dont think anything is surprising on the factors he put in. Just here term but over the next five or 10 years, everything we do is driven by our strategy. Where does it make sense for us to grow . Have highlyorce, we skilled jobs, lot of engineering talent and having available workforce working through the state, we have an intensive internal training as well and that really matters to us. Chain in to a supply the Aerospace World where we are grouped together for aerospace companies, that is important to be part of that community. Companies do,ther we want to be invested. Engagement for us is very important and relationships with local Economic Development agencies, that all matters. We hope to grow and its important to establish that baseline first and grow into the opportunities as they come forward. Its a vitally important topic for all of us in the room and im pleased to be part of the discussion. Thank you for that introduction. Jim, thank you for the thoughts on what criteria matter for you. Frank, can you say more about what magna looks at and what you look at in terms of what criteria pops out for you . That wef the things have to be cognizant of is the oem. , because weake sure sell to the oem, we are a consumer driven company. We have to with the equipment manufacturers are. At sometimes, it is very sticky because depending on the commodity or the party supply at that time to that vehicle, you are required to be in two different circles of what we call just in time circle. If it is a really urgent seat, went such as a are required to be in a 25 mile circle, so you have to draw the circle around and we have to be inside that circle. A criticalt component that can be inventoried to a point of three days to a week, you have to be in a 125 mile circle of the plant. If not, the oem will charge a logistics penalty for not being inside that circle. At the state and we do a demographic study of where we want to be. Within that circle and sometimes outside, we look at the state and do the demographics. The first thing we look at is the standard of living for our employees. Making sure we can get the talent we need and that we can get the workers we need and make sure that talent is educated to a point where we can bring them into the plant, train them and make sure they stay there. Our turnover is less than 1 and we do that because we take good care of our employees. We look at the economic part of where we are going to be and look at how the state can help us mitigate the huge Capital Investment we have to make. When we invest in a plant, the lowest we do is 100 million. We have to be careful where we are with it. That makes a lot of sense. R d in you talked about your business and use throughout some very large numbers. On r dwork with states and think about the r d agenda for your company . We work closely with the states. On the automotive side, you have got to start working with states because of where the technology in the automotive business is going. Autonomous vehicles, connected vehicles and you have to have test Autonomous Vehicles in most states and have some place to test them. Some people look at the Autonomous Vehicle and say is that the driverless vehicle . They are not necessarily 100 driverless. A will move to them and we are probably 10 or 15 years away from driverless vehicles, but we if thehicles where vehicle senses a vehicle close to you, it stops on its own. Those systems are coming into play. There are many new technologies coming into play. The other thing that gets us is we have to be someplace where we can do this r d because the federal government is requiring we go to 50 miles a gallon by 2025. Both industry and department of energy have stated you are only going to get their three ways. Number one is transmission. Number two is light waiting the vehicles thats the only way you can get technology to get to 54 miles gallon, so r d is very seertant because we can that Technology Going forward and we need to do it here in the United States. Agree. R d is at the core of all we do. We opened that the media lab in boston and we have a team of five there, but their mandate is to work with all of our businesses to try to drive this innovation forward. How does r d come into play here. We invest heavily in that relationship at the local level. Its very important. One aspect i will mention in addition is globally, we have relationships with universities. Love to bring in the best and brightest from the universities to help us move our initiatives forward. In the u. S. , thats very true as well. A lot of us are centered around where our current locations are, but where else do they have centers of excellence that we can create these relationships that establishes a presence for us or interest in an area we might not have been focused on that can help grow the relationship as well . R d is core to what we do. Weve heard about regulatory relief for r d. Thealso mentioned importance of talent and relationships with universities. Can you speak about the relationships you have with universities, particularly makingities and far as sure the talent has the skills you as a company need . We have a lot of relationships with universities but i think you have to go further. You have to get back into the high school and Junior High School and start people off from that point and engage and articulate to them that this Manufacturing Industry is not bad anymore. It is not where you go in and you come out with a greasy shirt. If you look at a body stamping plant, you have presses that are 12 stories high that we have to dig trenches to hold the press in the floor and you look at all of this body worked going around and i looked at chrysler a long time ago and i was in the spot welding crunk just the spot welding jungle where yours. Welding vehicles coming down from the ceiling. That is not done by humans anymore. Its a millionsquarefoot plant where we pump out bodies, there are 1750 robots in that plant and all the people the do who worked there is controlled robots. Youve got to have people who control the robots. You have to go back and create programs for high sch