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Inward Investment Guides

27th Annual Survey of Corporate Executives: Changing Site Selection Priorities

Although the survey results show no dramatic upswings in new facility or expansion plans, there are noted changes in site selection priorities – perhaps as a result of the lackluster economic recovery.

Area Development Magazine Special Presentation (Q1 / Winter 2013)
(page 2 of 3)

Figure 1 - Current Operations of Respondents (1 of 44)

Figure 1 - Current operations of respondents:

Forty percent of the respondents are with manufacturing companies, 9 percent represent logistics/distribution/warehousing establishments, and 10 percent are with construction and engineering enterprises.


Next: Figure 2 - Respondent's Title:

Figure 2 - Respondent's Title (2 of 44)

FIGURE 2 - Respondent's title:

Importantly, 40 percent of the survey respondents are also the head of their companies, i.e., president, CEO, owner, etc. And another fifth are financial or other corporate officers.


Next: Figure 3 - Primary Role in Company's Location Decisions

Figure 3 - Primary Role in Company's Location Decisions (3 of 44)

FIGURE 3 - Primary role in company's location decisions:

Nearly half of the respondents say they are responsible for their companies' final location decisions, and another 38 percent make the preliminary recommendations.


Next: Figure 4 - Number of Facilities Currently Operated:

Figure 4 - Number of Facilities Currently Operated (4 of 44)

Figure 4 - Number of Facilities Currently Operated:

About a third of the respondents to the 27th Annual Corporate Survey say they operate just one domestic facility, and only slightly more than a third operate five or more domestic facilities. However, more than half of the respondents say they operate 5 or more foreign facilities, with another 29 percent claiming to operate just one foreign facility.


Next: Figure 5 - Number of Employees Worldwide

Figure 5 - Number of Employees Worldwide (5 of 44)

Figure 5 - Number of Employees Worldwide

Nearly 30 percent of the Corporate Survey respondents say their firms employ 1,000 or more people worldwide. A quarter are mid-sized in terms of employment, with 100-499 workers, and about a fifth of the respondents say their work forces are comprised of fewer than 20 individuals.


Next: Figure 6 - Change in the Number of Facilities During the Past 12 Months

Figure 6 - Change in the Number of Facilities During the Past 12 Months (6 of 44)

Figure 5 - Change in the number of facilities during the
past 12 months

Nearly 30 percent of the respondents to the 27th Annual Corporate Survey say they have increased their number of facilities over the past year, while 10 percent say they have decreased their number of facilities, and 60 percent of the respondents have not changed their number of facilities at all - results that are remarkably consistent with the year prior's Corporate Survey.


Next: Figure 7 - Primary Reasons for those Increasing their Number of Facilities

Figure 7 - Primary Reasons for those Increasing their Number of Facilities (7 of 44)

Figure 7 - Primary reasons for those increasing their
number of facilities

Nearly half of the respondents who say they have increased their number of facilities needed to increase production in response to increased sales, and nearly a third needed better access to markets.


Next: Figure 8 - Primary Reasons for those Decreasing their number of Facilities

Figure 8 - Primary Reasons for those Decreasing their number of Facilities (8 of 44)

Figure 8 - Primary Reasons for those Decreasing their
number of Facilities

More than half of those decreasing their number of facilities over the past year say they needed to lower operating and/or labor costs - with only 16 percent saying the shuttering of facilities was due to a decrease in product sales.


Next: Figure 9 - Expect the Economy to Improve Significantly By

Figure 9 - Expect the Economy to Improve Significantly By (9 of 44)

Figure 9 - Expect the Economy to Improve Significantly By

Almost half of the respondents to our 27th Annual Corporate Survey do not expect the U.S. economy to improve until 2015 or 2016.


Next: Figure 10 - Effects of the Sluggish Recovery on Facility Plans

Figure 10 - Effects of the Sluggish Recovery on Facility Plans (10 of 44)

Figure 10 - Effects of the Sluggish Recovery on Facility Plans:

The Corporate Survey respondents also say the sluggish economic recovery has caused their firms to put new facilities and expansion plans on hold (23 percent) and reduce their current employment (13 percent) or defer hiring additional workers (18 percent).


Next: Figure 11 - Expect to Open New Facilities Within

Figure 11 - Expect to Open New Facilities Within (11 of 44)

Figure 11 - Expect to Open New Facilities Within:

Another 13 percent have longer-range new facilities plans, and nearly half have no new facilities plans at all.


Next: Figure 12 - Of Those with New Facilities Plans, Number to be Opened within the Next Five Years

Figure 12 - Of Those with New Facilities Plans, Number to be Opened within the Next Five Years (12 of 44)

Figure 12 - Of Those with New Facilities Plans, Number
to be Opened within the Next Five Years:

Of those with new facilities plans, remarkably, a fifth expect to open five or more facilities. However, another 39 percent expect to open just one new facility, and a quarter of the respondents expect to open two.


Next: Figure 13 - Location of New Domestic Facilities (as a percentage of total number to be opened)

Figure 13 - Location of New Domestic Facilities (as a percentage of total number to be opened) (13 of 44)

Figure 13 - Location of New Domestic Facilities
(as a percentage of total number to be opened):

The South Atlantic region (North Carolina, South Carolina, Virginia, and West Virginia) and the Midwest (Illinois, Indiana, Michigan, Ohio, and Wisconsin) will each receive 13 percent of the respondents' planned new facilities, closely followed by the Southwest (Arizona, New Mexico, Oklahoma, and Texas) with 12 percent and the Mid-Atlantic States (Delaware, Maryland, New Jersey, New York, and Pennsylvania) with 11 percent.


Next: Figure 14 - Types of New Domestic Facilities (as a percentage of total number to be opened)

Figure 14 - Types of New Domestic Facilities (as a percentage of total number to be opened) (14 of 44)

Figure 14 - Types of New Domestic Facilities
(as a percentage of total number to be opened):

More than a quarter of the new domestic facilities planned by the current Corporate Survey respondents will house manufacturing operations, and another 25 percent will be warehouse/distribution centers.


Next: Figure 15 - Number of New Jobs to be Created at New Domestic Facilities

Figure 15 - Number of New Jobs to be Created at New Domestic Facilities (15 of 44)

Figure 15 - Number of New Jobs to be Created at New
Domestic Facilities:

Unfortunately, three quarters of the respondents say their planned new facilities will create fewer than 100 new jobs, with only about a fifth of the respondents saying the facilities will create between 100 and 499 jobs.


Next: Figure 16 - Amount to be Invested in New Domestic Facilities

Figure 16 - Amount to be Invested in New Domestic Facilities (16 of 44)

Figure 16 - Amount to be Invested in New Domestic Facilities:

Additionally, about 60 percent of the Corporate Survey respondents say the planned new facilities will represent less than $10 million in investment; just 28 percent say they represent between $10 million and $50 million in investment.


Next: Figure 17 - Location of New Foreign Facilities (as a percentage of total number to be opened)

Figure 17 - Location of New Foreign Facilities (as a percentage of total number to be opened) (17 of 44)

Figure 17 - Location of New Foreign Facilities
(as a percentage of total number to be opened):

This year's Corporate Survey respondents appear to have as much interest in South America as in Canada and Western Europe - historically our readers' top two outward FDI choices. The survey respondents plan 12 percent of their new foreign facilities for each of these three regions.


Next: Figure 18 - Location of New Facilities Planned for Asia (as a percentage of total new Asian projects)

Figure 18 - Location of New Facilities Planned for Asia (as a percentage of total new Asian projects) (18 of 44)

Figure 18 - Location of New Facilities Planned for Asia
(as a percentage of total new Asian projects):

Year-over-year interest in Asia by the Corporate Survey respondents has declined somewhat. This year's survey respondents say 28 percent of their new foreign facilities are planned for Asia, down from 33 percent of those planned by the prior year's respondents. Two thirds of the new facilities planned for Asia will be in China.


Next: Figure 19 - Types of New Foreign facilities (as a percentage of total number to be opened)

Figure 19 - Types of New Foreign facilities (as a percentage of total number to be opened) (19 of 44)

Figure 19 - Types of New Foreign facilities
(as a percentage of total number to be opened):

Nearly 30 percent of the planned new foreign facilities will house manufacturing operations, and there will be many more foreign back office/call center (10 percent of total projects) and shared services facilities (14 percent) than seen on the domestic front (10 percent in all).


Next: Figure 20 - Number of New Jobs to be Created at New Foreign Facilities

Figure 20 - Number of New Jobs to be Created at New Foreign Facilities (20 of 44)

Figure 20 - Number of New Jobs to be Created at New
Foreign Facilities:

Additionally, about a third of the Corporate Survey respondents say their new foreign facilities will create more than 100 jobs - more than expected at the planned new domestic facilities. Investment expectations are similar, however.


Next: Figure 21 - Amount to be Invested In New Foreign Facilities

Figure 21 - Amount to be Invested In New Foreign Facilities (21 of 44)

Figure 21 - Amount to be Invested In New Foreign Facilities:

Sixty percent of the respondents say they will invest less than $10 million in new foreign facilities, and a quarter will invest between $10 million and $50 million.


Figure 22 - Expect to Expand existing Facilities at Present Location Within

Figure 22 - Expect to Expand existing Facilities at Present Location Within (22 of 44)

Figure 22 - Expect to Expand existing Facilities at Present
Location Within:

Half of the 27th Annual Corporate Survey respondents have no plans to expand facilities at their present locations — as was the case with the prior year's survey respondents. Just 35 percent say they expect to expand facilities over the next two years.


Next: Figure 23 - Number of New Jobs to be Created by Expansion

Figure 23 - Number of New Jobs to be Created by Expansion (23 of 44)

Figure 23 - Number of New Jobs to be Created by Expansion:

However, these expansions will not create many new jobs. More than 80 percent of those with expansion plans say their existing facility expansions will create fewer than 100 new jobs.


Next: Figure 24 - Expect to Relocate a Domestic Facility Within

Figure 24 - Expect to Relocate a Domestic Facility Within (24 of 44)

Figure 24 - Expect to Relocate a Domestic Facility Within:

Seventy percent of the Corporate Survey respondents also have no relocation plans, with only a fifth expecting to relocate within the next two years


Next: Figure 25 - Of Those with Plans, the Primary Reasons for Moving from Current Location

Figure 25 - Of Those with Plans, the Primary Reasons for Moving from Current Location (25 of 44)

Figure 25 - Of Those with Plans, the Primary Reasons for
Moving from Current Location:

Of those with relocation plans, a third cite high taxes and excessive government regulations as their reasons for moving, while a quarter need to be in closer proximity to suppliers and/or markets served, and about a fifth are also concerned with healthcare costs and the quality of life at their present locations.


Figure 26 - Expect to Relocate a Domestic Facility to an Offshore Location

Figure 26 - Expect to Relocate a Domestic Facility to an Offshore Location (26 of 44)

Figure 26 - Expect to Relocate a Domestic Facility
to an Offshore Location:

Nonetheless, only 3 percent of the Corporate Survey respondents expect to relocate a domestic operation to offshore or a foreign facility back to the United States


Next: Figure 27 - If So, Reasons for Re-Shoring

Figure 27 - If So, Reasons for Re-Shoring (27 of 44)

Figure 27 - If So, Reasons for Re-Shoring:

Of those who say they will re-shore, a third cite social/cultural barriers as their reasons for doing so, and a fifth are concerned about rising foreign labor and energy costs, product quality issues, and difficulties transporting supplies/products.


Next: Figure 28 - Issues Preventing Company from Spending More of Its Earnings on Investment in U.S. Facilities

Figure 28 - Issues Preventing Company from Spending More of Its Earnings on Investment in U.S. Facilities (28 of 44)

Figure 28 - Issues Preventing Company from Spending More
of Its Earnings on Investment in U.S. Facilities:

When asked about the issues preventing their companies from spending more of their earnings on investment in U.S. facilities, more than half of the respondents cite high U.S. tax rates/tax uncertainty and excessive government regulations; nearly 40 percent are also concerned about new healthcare regulations and, importantly, fully two-thirds are concerned about general economic instability


Next: Figure 31 - High Unemployment Rates are Making it Easier to Find the Necessary Labor

Figure 31 - High Unemployment Rates are Making it Easier to Find the Necessary Labor (29 of 44)

Figure 31 - High Unemployment Rates are Making
it Easier to Find the Necessary Labor:

In a related question, we asked our survey-takers if the relatively high unemployment rates throughout the nation are making it easier for them to find the labor they need. More than two thirds say this is not the case.


Next: Figure 32 - Many Unemployed Are Lacking

Figure 32 - Many Unemployed Are Lacking (30 of 44)

Figure 32 - Many Unemployed Are Lacking:

About two-fifths of the Corporate Survey respondents say the unemployed are lacking basic reading and math skills; 75 percent say that, most importantly, they are lacking the more advanced skills that the respondents require, e.g., advanced welding, machine tool programming, etc.


Next: Figure 33 - Dependency on Contract Workers or Contingent Labor

Figure 33 - Dependency on Contract Workers or Contingent Labor (31 of 44)

Figure 33 - Dependency on Contract Workers
or Contingent Labor:

A lack of skilled labor may be the reason that 57 percent of the respondents say they are very or somewhat dependent on contract or contingent workers.


Next: Figure 34 - Percentage of Contract Labor Employed at Any Given Time

Figure 34 - Percentage of Contract Labor Employed at Any Given Time (32 of 44)

Figure 34 - Percentage of Contract Labor Employed
at Any Given Time:

Although, at any given time, less than 25 percent of their work forces are comprised of contract labor, according to nearly 80 percent of the respondents.


Next: Figure 35 - Importance of the Existence of an available Building in the Site search

Figure 35 - Importance of the Existence of an available Building in the Site search (33 of 44)

Figure 35 - Importance of the Existence of an available
Building in the Site search:

This factor jumped in the rankings from fifteenth place in the year-prior survey to eighth place this year - the second- largest jump in the rankings - considered "very important" or "important" by 78.4 percent of the respondents.


Next: Figure 36 - Importance of the Existence of a Shovelready/ Pre-Certified Site

Figure 36 - Importance of the Existence of a Shovelready/ Pre-Certified Site (34 of 44)

Figure 36 - Importance of the Existence of a Shovelready/
Pre-Certified Site:

Moreover, when they are looking for available land for construction, 50 percent of our Corporate Survey respondents consider the existence of a shovel-ready or pre-certified site as very or somewhat important


Next: Figure 37 - Impact of High Energy Costs on Facility Plans

Figure 37 - Impact of High Energy Costs on Facility Plans (35 of 44)

Figure 37 - Impact of High Energy Costs on Facility Plans:

Energy availability and costs is ranked sixth among the factors, considered "very important" or "important" by 81.3 percent of the Corporate Survey respondents. It is hard to explain, therefore, why 60 percent of the respondents say energy costs are having no impact on their facility operations or supply/distribution networks.


Next: Figure 38 - Sustainable Development is More Important Now than in the Past:

Figure 38 - Sustainable Development is More Important Now than in the Past (36 of 44)

Figure 38 - Sustainable Development is More Important
Now than in the Past:

Nonetheless, 68 percent of the respondents say sustainable development is more important to their company now than in the past.


Next: Figure 39 - Measures Being Undertaken to Reduce Company's "Carbon Footprint"

Figure 39 - Measures Being Undertaken to Reduce Company's "Carbon Footprint" (37 of 44)

Figure 39 - Measures Being Undertaken to Reduce
Company's

Three quarters of the respondents are making energy-saving modifications to their facilities, while two thirds are recycling or re-using waste products.


Next: Figure 40 - Company has Received and Utilized Incentives in the Past

Figure 40 - Company has Received and Utilized Incentives in the Past (38 of 44)

Figure 40 - Company has Received and Utilized Incentives
in the Past:

Only slightly more than half of the respondents say they have received and utilized incentives in the past


Next: Figure 41 - If so, Percentage of the Incentives Initially Estimated Value Secured

Figure 41 - If so, Percentage of the Incentives Initially Estimated Value Secured (39 of 44)

Figure 41 - If so, Percentage of the Incentives Initially
Estimated Value Secured:

Of those, three quarters say they have only secured up to 50 percent of the incentives estimated value.


Next: Figure 42 - Company has had to Repay Incentives Monies because Investment and/or Job Creation Obligations Were not Met

Figure 42 - Company has had to Repay Incentives Monies because Investment and/or Job Creation Obligations Were not Met (40 of 44)

Figure 42 - Company has had to Repay Incentives Monies
because Investment and/or Job Creation
Obligations Were not Met:

Only 5 percent have had to repay incentives monies because investment or job creation obligations were not met.


Next: Figure 43 - Types of Incentives Considered Most Important When Making a Location Decision

Figure 43 - Types of Incentives Considered Most Important When Making a Location Decision (41 of 44)

Figure 43 - Types of Incentives Considered Most Important
When Making a Location Decision:

When considering all types of incentives, more than two thirds of the respondents believe tax incentives are the most important type, while nearly half also prefer miscellaneous incentives such as free land, utility-rate subsidies, and infrastructure support.


Next: Figure 44 - Importance of Incentives to a Project Moving Forward in a Particular Location

Figure 44 - Importance of Incentives to a Project Moving Forward in a Particular Location (42 of 44)

Figure 44 - Importance of Incentives to a Project Moving
Forward in a Particular Location:

Seventy percent of the respondents also feel that incentives can be important to moving a project forward in a specific location.


Next: Figure 45 - Communities are Offering Specific Incentives for "Green Initiatives"

Figure 45 - Communities are Offering Specific Incentives for "Green Initiatives" (43 of 44)

Figure 45 - Communities are Offering Specific Incentives
for Green Initiatives:

Approximately 80 percent of the respondents also confirm they have not encountered any "green performance" requirements as a stipulation for receiving incentives.


Next: Figure 46 - Existence of Businesses Performing Similar Activities in the Area of search is Taken Into Consideration

Figure 46 - Existence of Businesses Performing Similar Activities in the Area of search is Taken Into Consideration (44 of 44)

Figure 46 - Existence of Businesses Performing Similar
Activities in the Area of search is Taken Into
Consideration:

Seventy percent of the respondents say they take into consideration the existence of businesses performing similar activities to theirs in the area of search.




Respondents Rank the Factors
When making their site decisions, our Corporate Survey respondents consider and weigh the various site selection and quality-of-life factors. We ask them to rate the factors as either “very important,” “important,” “minor consideration,” or “of no importance.” Their ratings are shown in (Figure 29). We then add the “very important” and “important” ratings in order to rank the factors in order of importance to this year’s respondents. The site selection and quality-of-life factors are ranked separately. The combined ratings/rankings appear in (Figure 30) along with the prior year’s survey combined ratings/rankings for comparison’s sake.

27th Annual Survey of Corporate Executives and 9th Annual Survey of Consultants

Corporate Survey respondents consider and weigh the various site selection and quality-of-life factors. We ask them to rate the factors as either "very important," "important," "minor consideration," or "of no importance." Their ratings are shown in Figure 29. Click 'enlarge' to see the full chart.
Site selection and quality-of-life factors are ranked (separately) in order of importance to this year's respondents. The combined ratings/rankings appear in Figure 30 along with the prior year's survey combined ratings/rankings for comparison's sake. Click 'enlarge' to see the full chart.
CONSULTANTS COMMENTARY
Brett HunsakerSurvey Results Point to a "Positive Hold"
Brett Hunsaker, executive vice president and regional managing director at Newmark Grubb Knight Frank
Bill LuttrellEmergence of Big Data Affects Corporate Survey Respondents' Priorities
Bill Luttrell, senior locations strategist at Werner Enterprises
Ed McCallumA Lackluster Recovery
Ed McCallum, senior principal at McCallum Sweeney Consulting
Christopher B. SchastokCorporate Survey Results Mirror General Market Trends
Christopher B. Schastok, vice president at Jones Lang LaSalleg
Andrew ShapiroIncentives Are Still Important
Andrew Shapiro, managing director at Biggins Lacy Shapiro & Company
Thomas StringerCorporate Survey Reflects the New Economic Normal
Thomas Stringer, Business Advisory Services, Ryan & Company
Historically, labor costs and highway accessibility are the top ranked factors and this year is no different. Labor costs is ranked first among the site selection factors, considered “very important” or “important” by 90.8 percent of the respondents, closely followed by highway accessibility, with a combined importance rating of 90.1 percent. These two factors swapped positions from the prior year’s survey.

Availability of skilled labor, which was ranked second (tied) in last year’s survey, is now ranked third among the site selection factors, with an 89.4 percent combined “very important” or “important” rating.

In a related question, we asked our survey-takers if the relatively high unemployment rates throughout the nation are making it easier for them to find the labor they need. More than two thirds say this is not the case (Figure 31). About two-fifths of the Corporate Survey respondents say the unemployed are lacking basic reading and math skills; 75 percent say that, most importantly, they are lacking the more advanced skills that the respondents require, e.g., advanced welding, machine tool programming, etc. (Figure 32). As a result, the availability of unskilled labor factor showed the largest percentage decrease in importance (and the largest plus or minus change overall). This factor dropped 16 percentage points and five spots to 25th place and is now considered “very important or “important” by fewer than half of the Corporate Survey respondents — just 42.9 percent.

A lack of skilled labor may be the reason that 57 percent of the respondents say they are very or somewhat dependent on contract or contingent workers (Figure 33). Although, at any given time, less than 25 percent of their work forces are comprised of contract labor, according to nearly 80 percent of the respondents (Figure 34).

And, since availability of skilled labor is so important to our Corporate Survey respondents, it follows that proximity to technical college/training shows the largest percentage increase in combined importance rating — jumping 10.1 percentage points and now considered “very important” or “important” by more than half of the respondents — although this requirement is still ranked toward the bottom of the list at number 22 among the site selection factors. Training programs also jumped 4.1 percentage points in importance and three places in the site selection factor rankings.

Interestingly, only seven of the 26 site selection factors have increased their combined “very important” or “important” ratings on a year-over-year basis. The factor showing the third-largest jump in its importance rating — increasing 8.5 percentage points — is availability of advanced ICT services, which is now ranked fourth among the factors by the survey respondents — up nine spots from 13th place in the year-prior survey and representing the biggest leap in the factor rankings. While advanced communication capabilities are important to manufacturers, they are even more vital to those operating data centers or providing financial/insurance or real estate-related services. This year’s Corporate Survey respondents are comprised of twice as many representatives of these types of firms as compared with the year prior’s group of respondents (16 percent vs. 8 percent) so this may account for the big jump in the rating and ranking of the availability of advanced ICT services factor. Additionally, the availability of these services is even more critical in emerging market locations and with many of this year’s respondents planning new foreign facilities, they may have more heavily weighted this factor.

Occupancy and construction costs maintained its fifth place ranking among the site selection factors from the prior year’s survey, considered “very important” or “important” by 82.8 percent of the Corporate Survey respondents. Perhaps in a move to keep these costs down, our survey respondents also think available buildings are quite important. This factor jumped in the rankings from fifteenth place in the year-prior survey to eighth place this year — the second-largest jump in the rankings — considered “very important” or “important” by 78.4 percent of the respondents. (Also see Figure 35 on this same question.) As a counterpoint, that may be the reason that available land showed the third-largest percentage decrease in the factor ratings, dropping by 14.9 percentage points and considered “very important” or “important” by only 59 percent of the respondents, although it maintained its middle to low ranking among the site selection factors at 18th place this year. Moreover, when they are looking for available land for construction, 50 percent of our Corporate Survey respondents consider the existence of a shovel-ready or pre-certified site as very or somewhat important (Figure 36). Energy availability and costs is ranked sixth among the factors, considered “very important” or “important” by 81.3 percent of the Corporate Survey respondents. It is hard to explain, therefore, why 60 percent of the respondents say energy costs are having no impact on their facility operations or supply/distribution networks (Figure 37). Nonetheless, 68 percent of the respondents say sustainable development is more important to their company now than in the past (Figure 38), and three quarters of the respondents are making energy-saving modifications to their facilities, while two thirds are recycling or re-using waste products (Figure 39).

Corporate tax rate, tax exemptions, and state and local incentives historically rank high in importance among our Corporate Survey-takers. However, these factors took somewhat of a back seat this year. Corporate tax rate fell from fourth to seventh position (-6.7 percentage points); tax exemptions fell one spot to ninth (-8.2 percentage points); and state and local incentives fell an astounding eight spots (biggest ranking drop in the factors overall) from fifth (tied) to 13th (tied) position in the rankings (-14.8 percentage points). All three of these site selection factors are considered “very important” or “important” by less than 80 percent of the Corporate Survey respondents. Why this drop in the rankings of these factors? Perhaps the Corporate Survey respondents are realizing that incentives can’t make up for high labor costs, poor highway access, a lack of skilled labor, or high energy or occupancy costs, i.e., they can’t make a bad deal good. Consequently, the respondents have adjusted their priorities.

Interestingly, only slightly more than half of the respondents say they have received and utilized incentives in the past (Figure 40). Of those, three quarters say they have only secured up to 50 percent of the incentives estimated value (Figure 41). Fortunately, only 5 percent have had to repay incentives monies because investment or job creation obligations were not met (Figure 42).

When considering all types of incentives, more than two thirds of the respondents believe tax incentives are the most important type, while nearly half also prefer miscellaneous incentives such as free land, utility-rate subsidies, and infrastructure support (Figure 43). Seventy percent of the respondents also feel that incentives can be important to moving a project forward in a specific location (Figure 44).

And while nearly 70 percent of the respondents say that sustainability is more important now than in the past, two thirds of the Corporate Survey respondents note that communities are not offering specific incentives for green initiatives. Approximately 80 percent of the respondents also confirm they have not encountered any “green performance” requirements as a stipulation for receiving incentives (Figure 45).

Overall, 19 factors show decreases in their combined “very important” or “important” ratings. The second-largest drop in the importance ratings (-15.5 percentage points) went to inbound/outbound shipping costs, which fell five spots in the Corporate Survey rankings to 16th place. Proximity to major markets also fell in the rankings — three positions to 12th place and 10.8 percentage points for a combined 72.2 percent “very important” or “important” rating. Proximity to suppliers maintained its 19th place spot in the rankings, but fell 12.9 percentage points in the combined importance ratings with a 54.9 percent combined score. The only explanation I can offer for the drop in importance of these three related factors is the make-up of the pool of survey respondents. With fewer durable goods manufacturers represented by the 27th Annual Corporate Survey respondents, these factors do not appear to be weighted as heavily.

Nevertheless, railroad service, which is always near the bottom of the rankings (#24 among the site selection factors this year) actually saw the second-largest increase in importance rating — jumping 10 percentage points to be considered “very important” or “important” by nearly half (43.6 percent) of the Corporate Survey respondents. Increased fuel costs and highway congestion may be making shipping by rail a more economically attractive option than shipping over land when feasible for the product.

Finally, our Corporate Survey respondents say their companies like to stick together with other firms in their industries, i.e., cluster. Seventy percent of the respondents say they take into consideration the existence of businesses performing similar activities to theirs in the area of search (Figure 46), with nearly 60 percent of the respondents saying this factor is very or somewhat important.

The quality of life factors — which should be considered tiebreakers when all other site requirements have been satisfied — are rated and ranked separately. Throughout the survey’s history, low crime rate has been ranked the number-one quality-of-life factor, and this year is no exception, with this factor receiving a 79.3 percent importance rating. If considered with the other site selection factors, low crime rate would actually tie for seventh place.

All of the other quality-of-life factors are considered “very important” or “important” by less than 70 percent of the Corporate Survey respondents. Healthcare facilities and housing availability are most important, tied for second place, followed by housing costs. Educational institutions in the area are considered after these basic needs are met, and an area’s climate and cultural and recreational amenities bring up the rear.


Next: Respondents’ Sources of Information
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