7th Annual Consultants Survey
Surveyed consultants still selected labor costs as the top site selection factor.
Geraldine Gambale, Editor, Area Development Magazine (Winter 2011)
Surveyed consultants say their clients are responding to the recession by finding new ways to optimize the layouts and space of their existing facilities. See the slideshow for all charts.
In order to gain a broader perspective of industry executives' facility plans and priorities, we once again asked the consultants who serve industry to tell us about their clients' site selection needs and what the future holds for these clients. As previously stated, only half of the respondents to our 2010 Corporate Survey claim to use outside consultants when site selecting. Therefore, we would expect the results of our 2010 Consultants Survey to differ somewhat from the results of our 2010 Corporate Survey. The following analysis points to the differences and similarities in the responses of the two groups.
Although many of the 110 individuals responding to our Consultants Survey say they have worked with clients in varied manufacturing sectors, no more than 30 percent of the respondents have worked with any one particular industry. However, nearly half of the respondents have worked on projects in the logistics and distribution/warehouse sector, nearly a fifth with clients in the financial services industries, and 11 percent with those in the renewable energy sector (Slideshow, Chart A), so we could expect their responses to be skewed to the needs of those particular facility clients. Of note, the financial services sector is only represented by 3 percent of the Corporate Survey respondents and the renewable energy sector by a mere 1 percent of the corporate respondents.
Nearly 40 percent of those responding to our Consultants Survey say they work primarily with mid-size (100-499 employees) firms (Slideshow, Chart B). A third of our Corporate Survey respondents say their firms employ 100 to 499 workers; therefore, once again, we note that this will come to bear on the similarities and differences in the results of our two surveys.
The responding consultants claim they primarily perform location studies/comparative analyses (30 percent) and incentives comparisons and negotiations (25 percent) for their clients. Interestingly, more than a quarter also say they make the final site selection decision (Slideshow, Chart C). Nevertheless, about a quarter also say that most of the clients who ask them to perform a location search have already gathered preliminary site data, and nearly 40 percent have narrowed down the geographic area in which they wish to locate before calling in the consultants (Slideshow, Chart D).
Although those responding to our Corporate Survey note the effects of the Great Recession on their plans, the responding consultants appear to feel even more strongly about the recession's effects on their clients' plans: 40 percent or more say their clients have put new facility plans on hold, closed or consolidated facilities, deferred capital spending, and are seeking ways to optimize current facilities and layouts (Slideshow, Chart E).
The respondents to our Consultants Survey did tend to agree with those responding to our Corporate Survey when commenting on when they expect the economy to improve (Slideshow, Chart F) - 44 percent of the consultants said by 2012 (similar to the 48 percent of the corporate respondents who made that claim), and 38 percent of the consultants said by 2013 (as compared with 37 percent of the corporate respondents who felt that way).
Clients' New Facility Plans
Only 38 percent of those responding to our 2010 Corporate Survey say they have plans for new facilities within the next year or two; 43 percent of the corporate respondents actually said they had no new facility plans. However, 80 percent of those responding to our Consultants Survey say their clients have one- to two-year new facility plans (Slideshow, Chart G), up from 75 percent who made that claim in 2009. Needless to say, those without plans are not calling on the consultants so their responses only reflect those clients with plans; they also reflect the fact that their clients do not engage them until they are further along in the location process.
Additionally, nearly three quarters of the respondents to our Consultants Survey say their clients are only planning one new facility (Slideshow, Chart H); about half of the Corporate Survey respondents who are planning new facilities over the next five years claim to be planning two or more.