Subscribe
Close
  • Free for qualified executives and consultants to industry

  • Receive quarterly issues of Area Development Magazine and special market report and directory issues

Renew

Corporate Executive Survey Commentary: A Continued Cautious Approach

Due to economic volatility, company decision-makers are continuing to wait as long as possible to invest capital and hire employees.

Q1 2014
The 2013 Area Development Corporate Survey results demonstrate the continued importance of labor factors in the site selection process. Human capital will be the key driver for corporate decision-makers, and the communities/states that focus on this issue will be the economic winners in the future. The importance of labor factors cannot be overstated in today's world.

The cost and availability of real estate, utilities, and infrastructure, along with tax structure, remain very important in the site selection process. Utilities and infrastructure are of vital importance to manufacturing and distribution projects. This trend has held consistent for many years.

Quality-of-life factors can also play a role in the site selection process, particularly for professional and technical-laden companies. However, the importance of these factors has generally declined during the past five years due to economic conditions in the United States and around the world. In this year's survey, the highest ranked quality-of-life factor would only rank tenth if included on the list of site selection factors.

The 2013 survey reflects the continued vital role of executive management in the site selection process. At 60 percent, the percentage of senior executives significantly involved in the process dwarves the participation of real estate (18 percent) and operations/business unit management (15 percent).

It is also interesting to note the continued cautious approach of corporate decision-makers in terms of the economy. Sixty percent of the respondents to this year's Corporate Survey indicate that their number of company facilities has not changed during the past year. In addition, many of the respondents have put facility projects on hold (21 percent), closed or consolidated facilities (10 percent), and/or reduced employment at facilities (13 percent). Finally, 59 percent of the respondents do not expect the economy to grow at a faster pace until 2015 or 2016. This suggests that company decision-makers will continue to wait as long as they can to invest capital and hire employees, due to economic volatility.

For those companies planning to open new facilities, the South and Midwest appear to be the favored locations. Corporate decision-makers indicate that 16 percent of new facilities will be opened in the South, while 14 percent will be opened in the Midwest. This trend mirrors what we are seeing from clients and also reflects well on the changes made to improve the business climate in these regions.

Exclusive Research