1. How can Human Resources impact Corporate Site Selection? Oliver Lawford Product Manager, EMSI

2. Goals 1. Give you a framework to understand human capital issues within site selection process 2. Begin to show you how to apply strategic human capital data to influence site selections decisions. 2

3. Why is this important? Reason One New site selection or relocation are vital to business strategy. -Technological Advances -Human Capital Requirements -New Products or Services -New Markets -New Distribution channels or suppliers 3

4. Why is this important? Reason Two Site Selection decisions are expensive, complicated, time consuming and hard to correct. 4

5. Why is this important? Reason Three In general, the most important site selection criteria are human capital issues. Availability of skilled labor (1 st ) Cost of labor (3 rd ) 5

6. "With organizations now focused on...entering new geographic markets, human resources must arm its business leadership with the labor market essentials. The right information can position a company in geographic locations where they can improve their odds of success." 6

7. How does this affect HR? This is a perfect opportunity for HR and Talent Acquisition to have a significant impact on business outcomes. Not just focused on operation efficiency. 7

8. Site Selection Process 8

9. Process Phase Zero Be aware of the overarching business strategy over the next five years. 9

10. Process Phase One Determine which criteria your business cares about and how much. These might include: ─ Workforce Requirements ─ Land Requirements ─ Customer Proximity ─ Utility Costs ─ Cost of Living ─ Communications and Infrastructure 10

11. Process Phase Two Choose a particular location that best meets business needs. Keep 1-2 backup locations available. Consult real estate advisory services, or real estate databases Solicit information from communities regarding incentives (type, value and duration) 11

12. Process Phase Three Negotiation and final selection. Brinksmanship! 12

13. Business Criteria 13

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15. Business Criteria What does a company like Tesla care about when building a Gigafactory? 1.Transport 2.Services 3.Finance 4.Workforce 5.Other 15

16. Transport Environment Proximity to road and rail is a high priority in order to transport batteries back to California for final assembly Proximity to water (medium) Commute times (medium) Proximity to major airport (low) 16

17. Services Environment Utility requirements are a high priority considering the size of the factory (5-10 million square feet; largest battery factory in the world) Land requirements (medium high) Telecommunications (medium) 17

18. Financial Environment Incentives Taxes Cost of living Construction costs The importance of incentives are often hard to quantify before a decision is made. Some companies are clear as to there importance, like Tesla. 18

19. Other Quality of living (medium high) Proximity to training/schools (medium) Competitor proximity (low) Customer proximity (low) 19

20. Workforce Availability and cost of labor (high) Workforce Demographics (diversity) Labor Unionization (cost issue) 20

21. So where did Tesla go? 21

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23. Motivating factors $1.25 billion incentive package with the state of Nevada (10 th biggest in US history) Quality of living (proximity to Lake Tahoe, mountains etc.) Growing technology presence (Microsoft, Apple, Intuit, Ashima) Zero Corporate Income Tax 23

24. 24 ?

25. Let’s apply some data 25

26. Simple Process Industries Staffing Patterns Individual Occupations 26

27. Industries By focusing on your industry (or closely aligned industries) you are able to identify the existing workforce with closely matched skills and experience. What is Tesla’s industry? 27

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29. Tesla’s Industry If Tesla moved to recruit existing workers in their industry they should have moved to somewhere like… Missouri (7.81) or Kansas (7.77) or Kentucky (3.94) 29

30. Other Industries Other closely aligned industries present compatible talent pools. Tesla could recruit from industries like Motor Vehicle Electrical and Electronic Equipment Manufacturers. Those jobs are predominantly in the Midwest or Southeast. 30

31. Simple Framework Industries Staffing Patterns Individual Occupations 31

32. Staffing Patterns 32 Using Staffing patterns we can identify the jobs which drive a particular industry. Then we can identify whether they exist in other industries.

33. Staffing Patterns Machine Setters, Material Movers, Team Assemblers, Maintenance Workers, General Managers, Electrical Equipment Assemblers, Inspectors, Machinists, Electrical Engineers, Customer Service Representatives, Industrial Engineers, Cutting/Punching Machine Setters, Shipping Clerks 33

34. Top 10 Jobs (CA) 34

35. Top 10 Jobs (TX) 35

36. Top 10 Jobs (AZ) 36

37. Top 10 Jobs (NM) 37

38. Top 10 Jobs (NV) 38

39. Simple Framework Industries Staffing Patterns Individual Occupations 39

40. Industrial Engineers 668 Industrial Engineers 67% below Average 8.5% projected growth $76,000/annum 40

41. Mechanical Engineers 580 Mechanical Engineers 75% below national average 9.8% projected growth $73,000/annum 41

42. So what are Tesla going to do? 42

43. Migration Patterns Tesla must leverage its proximity to other key states and attract workers with a propensity to migrate. 43

44. Migration – All Jobs Net gain in total jobs through migration (+5000) Greatest in-migration for all jobs from California, Arizona, Texas, Washington, Utah, Florida and Colorado. 44

45. Migration – Engineering Greatest in-migration for engineering jobs from California, Washington, Arizona, Texas, Colorado, Georgia and Hawaii. Overall net loss in engineering jobs Focus on retention 45

46. Thanks and Questions 46