Corporate Survey Analysis by Will Hearn
William N. Hearn, Senior Vice President, Strategic Consulting, CBRE (Dec/Jan 08)
When I walked into my second graduate-level statistics course back in the 1980s, the professor addressed us with a certain degree of seriousness and stated, "Statistics is the art of manipulating numbers to tell the story we need them to." There are numerous story lines in the 2007 Corporate Survey - all worthy of more in-depth review.the data, and the interpretation of the data, is in the eye of the beholder. A couple of overall observations:
• In 2006, 83 percent of the survey respondents were manufacturers, while this year 71 percent of the respondents are manufacturers (a real swing, reporting error, or change in respondent composition?).
• In 2006, 65 percent of respondents reported that their number of facilities had not changed within the past 12 months - with 25 percent increasing their number of facilities. In 2007, 53 percent reported no change - with 35 percent adding facilities within the past 12 months (a noticeable shift).
• While the numbers do not tell the whole story, perhaps more telling is the number of planned new domestic facilities (as a percentage of total projects). The chart below summaries the regional site trends revealed by the 2007 survey data.
To be sure, it is hard to compare year to year, but as companies work hard to meet quarterly performance expectations, there have been some significant manufacturing projects located in the South over the past 12 months. This increase in activity may be firms seeking alternative locations where there is more scheduling certainty and less competition for resources.
From a global perspective Asia remains hot, consistent with our experience in electronics and other advanced technologies, and there is an apparent shift in the attractiveness of Eastern Europe for international investment (down 7 percent). On the other hand, Germany has seen a significant boost in manufacturing investment as a result of aggressive incentives directed at both photovoltaic manufacturers and those selling solar power into the grid.
Leaving aside the obvious jump in the availability of skilled labor factor (which is a significant driver), I would note that a few significant categories have increased in importance - notably environmental regulations. In 2007, we have seen a greater emphasis on environmental regulations as expressed by "time required to obtain air permits," while helping our clients define full potential to emit and how this translates into the project schedule, costs, and start of production. One key measure we are beginning to track is a community's experience in "average time to rule on air permits" by type as a location indicator. It is surprising how difficult this information is to obtain, but I would encourage economic development organizations to begin to look at it and determine if it is a differentiator.
We also note an up-tick (+~7 percent) in firms' interest in energy availability and costs. We anticipate that the next few years will be even more telling for this factor as utilities struggle with raw material costs, capacity, technology, and pending carbon gas regulations. Stay tuned on how this factor impacts the corporate location perspective over the next decade.