8th Annual Site Selection Consultants Survey Results
Since less than 50 percent of those responding to our 2011 Corporate Survey say they utilize the services
of consultants in the site and facility planning process, we would expect the consultants' responses to differ from those of our corporate executive respondents. Let's find out to what extent they do.
Area Development Special Presentation (Winter 2012)
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Chart P: Consultants reasons for relocating a foreign facility back to the U.S.
More than 60 percent of the responding consultants say high energy costs are affecting their clients facility operations and/or supply/distribution network decisions (Slideshow, Chart AA), and about 70 percent say sustainable development is more important to their clients now than in the past (Slideshow, Chart BB). Three quarters of the respondents to our 2011 Consultants Survey say their clients are making energy-saving modifications to their existing facilities, and 40 percent of the respondents say their clients are seeking LEED certification for new or existing facilities, as well as recycling or re-using waste products (Slideshow, Chart CC).
Unfortunately, more than half of the responding consultants say communities are not offering specific "green" incentives. On the other hand, three quarters say their clients are not encountering "green performance" requirements as a stipulation for receiving incentives (charts DD and EE).
The respondents to our 2011 Consultants Survey also rate the tax-related factors high in importance. However, state and local incentives shows the largest decrease in the ratings from the 2010 Consultants Survey (8.5 percentage points), dropping from the first place spot in 2010 to seventh place in 2011. This seems strange since one of the consultants' primary responsibilities is to compare and negotiate for incentives on behalf of their clients. In fact, about half of the responding consultants say incentives are more important to their clients now than in the past (Slideshow, Chart FF). Forty-two percent of the responding consultants also say their clients consider tax incentives the most important type (Slideshow, Chart GG).
In line with that thinking, the consultants rank tax exemptions ninth among the site selection factors, considered "very important" or "important" by 86.9 percent of the respondents. In response to a related question, a quarter of the respondents to our 2011 Consultants Survey say their clients have had to repay incentives monies because investment and/or job creation obligations were not met (Slideshow, Chart HH).
Another tax-related factor - corporate tax rate - slipped down to 11th place in the 2011 Consultants Survey rankings, but is still considered "very important" or "important" by 85 percent of the respondents. The respondents to our 2011 Corporate Survey ranked corporate tax rate much higher among the factors; it's fourth on the corporate respondents' list, although its importance rating (86 percent) is in line with the consultants' rating. If we look back at what the consultants say with regard to the reasons behind their clients' relocation plans, only 16 percent cite high taxes; 41 percent of the Corporate Survey respondents cite high taxes as the reason behind a planned move.
Rounding out the consultants' top-10 list of site selection factors are occupancy and construction costs, ranked eighth with an 87.1 percent importance rating, and expedited or fast-track permitting, ranked 10th with an 86.4 percent importance rating. The consultants are cognizant of the need for speed when getting through the permitting process.
Some factors took an unexpected dive in the 2011 Consultants Survey rankings. It's odd that the consultants responding in 2011 consider the environmental regulations factor less important than those responding in 2010. This factor dropped 7.2 percentage points in importance and six places from 11th place in 2010 to 17th for 2011 with a 79 percent importance rating.
And while the 2011 Corporate Survey respondents considered availability of long-term financing more important than those responding in 2010, the respondents to the 2011 Consultants Survey rated this factor as less important than the consultants taking the 2010 survey. Availability of long-term financing shows the largest decrease in importance (9 percentage points), ranking 21st with a 63 percent importance rating. The railroad service factor shows the second-largest decrease in the importance ratings (8.6 percentage points). Nonetheless, both these factors maintain their relative placement in the Consultants Survey rankings.
We also asked the consultants if their clients consider whether there are businesses performing similar activities to theirs in the area of search. Eighty-six percent say they do, and 81 percent say this factor is very or somewhat important (Slideshow, Chart II).
How Important Is Quality-of-Life?
The respondents to the 2011 Consultants Survey also rated the quality-of-life factors, which we rank separately from the other site selection factors. Based on their ratings, none of the quality-of-life factors would rank among the top-10 site selection factors.
Unlike the respondents to the 2011 Corporate Survey, the responding consultants do not say low crime rate is the most important quality-of-life factor. It is in the number-two spot with a 76.6 importance rating, and is edged out for first place by ratings of public schools, considered "very important" or "important" by 76.8 percent of the responding consultants - an 11.6 percent increase over the 2010 consultants' ratings. Again, the need to fill the nation's "skills gap" has put the focus on education.
Oddly enough, two quality-of-life factors that increased in importance according to the responding consultants are cultural opportunities (up 12.9 percentage points) and recreational opportunities (up 8.5 percentage points). The fact that the responding consultants count many more knowledge-worker firms among their clients (e.g., data- and computer-related, financial services, etc.) than represented by the Corporate Survey respondents may have something to do with the consultants' heightened focus on these quality-of-life issues.
Where Do the Consultants Get Their Information?
Three quarters of the respondents to the 2011 Consultants Survey rely on magazines like Area Development for their site selection information, as well as on economic data aggregators, including online resources. Half also say they use other financial publications as well as maintain their own site selection database. And nearly all (92 percent) use the Internet as a site and facility planning resource. When doing say, 84 percent of the responding consultants say they are seeking data on specific locations; three quarters are looking for contact information for economic development agencies; and 65 percent are perusing listings of available sites and buildings.
About a third of those responding to our 2011 Consultants Survey say that they go online looking for this information daily, with another third seeking this information several times a week - far more often than the 2011 Corporate Survey respondents who are not involved in location decisions on a daily basis. However, like the respondents to the 2011 Corporate Survey, 81 percent of the responding consultants say that between one and five locations usually make their clients' "short list," with 92 percent visiting the same number before making their final location decision. Eighty-five percent of the consultants also say their clients generally make a location decision within three months to one year of initial point of contact.
(Answers to these questions are illustrated in the accompanying Consultants' Information Sources chart.)