With one week to go until SELECTUSA 2023, Maryland is poised to host an impressive assembly of distinguished industry leaders and entrepreneurs from around the world. The goal of the week; an intensive exploration of the US market and strategic engagements with economic development agencies from across the 50 states and beyond.
Last year – with the pandemic behind us – there was genuine excitement as entrepreneurs, whose expansion plans that had been in suspended animation for two years, finally got to bring their expansion plans closer to reality.
And these investors came prepared. I saw multiple spreadsheets, benchmarking matrices, and other comparative tools being whipped out by prospective investors when engaging with economic developers. These investors wanted to know everything from a state’s incentive and support programs to their inclusion and diversity initiatives and their plans for environmental sustainability and energy mix. And they were entering that data in real time allowing for immediate comparisons.
The I(nvestor) in IRA
This year, one question we can expect from new investors is ‘what are the benefits of the Inflation Reduction Act and what does that mean for me’?
While the IRA is a landmark piece of domestic legislation, its impact has made headlines around the world, capturing the attention of entrepreneurs in future focused industries such as EV, renewable and sustainable tech, mobility, building and construction, hydrogen applications and a range of innovative niches that are on the rise.
Now, almost a year old, there are two primary implications of this legislation:
- Market implications – The US Department of Energy’s Loan Program Office will receive roughly $12 billion to expand its existing loan authority by tenfold and create a new loan program capped at $250 billion to upgrade, repurpose, or replace energy infrastructure creating multiple new business opportunities within the US for international companies.
For example, German heavy industry firms saw their exports to the United States increase by more than 40% in September 2022 compared to the previous year.
- Sectoral implications – IRA provides incentives for private investment. The majority of the $394 billion in energy and climate funding is in the form of tax credits. Corporations are the biggest recipient. These are designed to catalyze private investment in clean energy, transport, smart cities and manufacturing. Likewise, $43 billion in IRA tax credits aim to lower emissions by making EVs, energy-efficient appliances, rooftop solar panels, geothermal heating, and home batteries more affordable. These are sectors which many European companies have a competitive advantage in due to programs launched in the European Union during the previous decade
So, for US economic developers, incorporating some of the key benefits of the IRA into their state level pitches could be a winning strategy when engaging with new prospects – especially those with European passports.
While each state has a range of support services and incentive packages, marrying your existing tool kit to the IRA will set you aside from the competition. Some universal approaches include:
Highlight your state’s infrastructure investment: The Act includes provisions aimed at investing in infrastructure projects, including transportation, broadband, and energy. As an economic developer, you can leverage these provisions by referencing your state’s existing infrastructure advantages – as well as new projects – will assure any new investor that they are investing in a forward planning location.
Promote your workforce development programs: The IRA includes a range of programs designed to support workforce development and training initiatives. Leveraging these provisions by promoting your workforce development programs and how they address potential skills gaps and labor shortages that could otherwise hinder European companies seeking to expand.
Use the Act to showcase your commitment to sustainability: ESG themes were an ever-present feature at SELECT USA 2022. The IRA includes provisions aimed at investing in clean energy and reducing greenhouse gas emissions. As an economic developer, you can leverage these provisions by highlighting your state’s commitment to sustainability and how it can benefit European companies seeking to expand into a region.
Emphasize your innovation ecosystem: The Act includes provisions aimed at investing in research and development – particularly in emerging technologies such as artificial intelligence and quantum computing. As an economic developer, you can highlight your state’s relevant innovation clusters, making your state an attractive destination for European companies seeking to access cutting-edge research and innovation hubs and talent.
Leverage your state’s existing relationships with European companies: With an eye on aftercare and retention, you can leverage your existing relationships by highlighting the benefits of the Inflation Reduction Act and how it can support additional growth and expansion. This can also lead to referrals and recommendations from other European companies who may be interested in expansion.
See you at Select!
At OCO Global, we are well-placed to support agencies and companies looking to understand the implications of the Inflation Reduction Act, build a strong value proposition, or get connected to potential investors.
With a track record of supporting international trade and investment, and offices across both the US we have unique insights and connections that will make sure your offer ends up in front of decision makers.
Want to learn more about OCO Global’s services in the USA or internationally, please contact our US Director, Ian Hunter firstname.lastname@example.org