What Are Their New Facility Plans?
About one-fifth of the respondents to our 2008 Corporate Survey said they expect to open new facilities within one year, while 35 percent have plans for new facilities opening in the next two to three years. Last year, a similar percentage of survey respondents had one-year new facility plans, but only 25 percent had two- to three-year plans. However, only 38 percent of the 2008 respondents said they have no plans for new facilities - far fewer than the 49 percent reporting no new facility plans last year (Figure 10). These responses don't seem to reflect current economic conditions, and one wonders if the responses would have been different if the survey had been conducted closer to year's end.
Of those planning new facilities, about half (46 percent) plan to open only one facility, and about a quarter (26 percent) said they would open just two (Figure 11) - similar percentages to those reported by 2007's survey respondents. Nearly half of the new domestic facilities (48 percent) will be manufacturing operations, and more than a quarter (27 percent) are planned warehouse/distribution facilities (Figure 12). Additionally, 90 percent of the respondents reported that, all told, they would create fewer than 500 jobs at these new domestic facilities; just 22 percent will create between 100 and 499 jobs (Figure 13).
Fourteen percent of the new domestic facilities are planned for the South (Alabama, Florida, Georgia, Louisiana, and Mississippi), with the Midwest (Illinois, Indiana, Michigan, Ohio, and Wisconsin) and Southwest (Arizona, New Mexico, Oklahoma, and Texas) each garnering 13 percent of the new planned domestic projects. The South Atlantic region (North Carolina, South Carolina, Virginia, and West Virginia) follows, accounting for 12 percent of these projected facilities. Interestingly, last year only 9 percent of the planned projects reported by the Corporate Survey respondents were slated for the Southwest. Also, plans for the Middle Atlantic region (Delaware, Maryland, New Jersey, New York, and Pennsylvania) have tapered off, with only 7 percent of the new domestic facilities slated for this region - down from 12 percent reported by last year's respondents (Figure 14).
Nearly half (44 percent) of the planned new foreign facilities will be manufacturing operations, and a quarter are slated to house warehouse/distribution centers (Figure 15). It also appears that more jobs are expected to be created at the new foreign facilities than the domestic ones - 12 percent of the respondents will be creating 500 jobs or more in total at new foreign facilities, and 31 percent will be creating 100-499 jobs at these facilities (Figure 16).
As for the location of new foreign facilities, 13 percent are planned for Canada, nearly double the percentage planned for Canada by last year's Corporate Survey respondents. Ten percent of these new foreign facilities will be established in Eastern Europe - with just 6 percent slated for this region last year. There's a slight decline for the traditional picks of Western Europe (with just 9 percent of the new foreign facilities planned for this region, down 2 percent from last year), and for Asia, which was expected to garner 42 percent of the new foreign facilities last year, but will only get 38 percent of the 2008 Corporate Survey respondents' new foreign facilities (Figure 17).
Significantly, when it comes to the new facilities planned for Asia, 44 percent will go to China - down from 54 percent last year. India is holding its own - accounting for a quarter of the new foreign projects slated by the Corporate Survey respondents (Figure 18). Let's hope the recent tragic events in Mumbai do not cause this nation to lose its appeal to foreign investors.
Of those planning new foreign facilities, 40 percent or more of the Corporate Survey respondents expect to encounter legal and regulatory problems, as well as a shortage of skilled labor. More than a quarter of the respondents also expect to find the infrastructure (both utility and transportation) lacking and to run into social/cultural barriers (Figure 19).
Do They Have Expansion and Relocation Plans?
When asked about their expansion plans at their current location, more than half of the 2008 Corporate Survey respondents said they had no plans (similar to last year's results). Just 16 percent said they planned to expand in one year, and 33 percent had longer-range expansion plans (Figure 20). Unfortunately, more than two-thirds of these expansions will create fewer than 50 jobs in total (Figure 21).
About three quarters of the respondents also have no plans to relocate a domestic facility. Of those with relocation plans, only 8 percent expect to make the move within one year (Figure 22). These results are remarkably similar to those reported in 2007.
More than half of those respondents with relocation plans cite the need to lower operating and occupancy costs (up from 33 percent last year), and more than a third need to be closer to suppliers and/or markets served (up from just 12 percent in 2007) (Figure 23). The escalating costs of fuel over the months preceding the survey mailing are no doubt reflected in this response.
Interestingly, 96 percent of the Corporate Survey respondents with relocation plans said they did not plan to relocate a domestic facility overseas or an overseas facility back to the United States (Figure 24).