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Corporate Executive Survey Commentary: An Adjustment in Corporate Outlook and Planning

Variances in factor rankings indicate that the corporate focus is now more closely associated with revenue growth — rather than cost-saving and downsizing.

Q1 2015
The U.S. economy has improved. Labor wages have stabilized. Fuel costs and shipping costs have been slashed. These are the high-level conversations we have been hearing over the past year. We were anxious to see if these thoughts had found their way into the 29th Annual Corporate Survey.

We were interested to see if corporate attitudes had changed, since we seem to be moving away from the ultra-conservative thinking we had experienced during the economic downturn. We wanted to see if the survey results would include some of the recent corporate dynamics we have heard as well as witnessed.

With that in mind, we focused on a number of factors throughout the reported results — including the “top site selection factors,” which have always been a hallmark of the Area Development investigation. It must be noted that over the life span of this survey, the site selection factors have not changed in a material way. However, there are variances in the ranking of importance, which certainly can serve to signal adjustments in current corporate outlook and planning.

Over the past 10 years (a reasonable time span to include both pre- and post-economic downturn time periods), seven of the top-10 site selection factors have remained in the top 10 — and, in most years, have only changed minimally in corporate ranking strength. However, over the past two years, we believe that those reported changes in rankings do quite clearly indicate a re-focusing within corporations. The tide of corporate expansion and project investment can be seen coming back in.
  • Upward trending factors: available land, available buildings, occupancy and construction costs
  • Downward trending factors: availability of skilled labor, corporate tax rate, state and local incentives, labor costs
Over the past year (maybe 18 months), we have seen increased corporate activity involving expansion, migration to new/first-time locations, and a re-energizing of projects that have been placed on the back burner. This focus is now more closely associated with corporate revenue growth — rather than cost-saving and downsizing activities that we all became accustomed to over the past half-decade. This strong corporate interest can be classified as fast-moving — and more implementation-oriented — rather than a long-term planning exercise. Accordingly, those corresponding site selection factors that are strongly trending upward reinforce and confirm our observations on an everyday basis. In most client requirements, communities must understand the importance of time considerations when projects are making both their initial long lists and final short lists. This will, of course, involve the readiness of land sites, existing or proposed buildings, and construction difficulties associated with permitting and approvals.

Long-term corporate costs will always remain important in the site selection process. These costs include labor, energy, taxes, shipping, occupancy, and others as well as administering regulations, etc. However, the survey results are suggesting that those communities that can propose on-time solutions (including shovel-ready sites and quick occupancy) will be preferred over those communities without quick-time product — even if the long-term economics are a bit more favorable elsewhere.

These megatrends are also evident in other sections of the survey — including the corporate outlook involving the relocation of existing facilities (67 percent indicated that they did not change their number of facilities last year, and 67 percent also indicated no plans for existing facility relocation this year). Once again, the focus seems to be on increasing capacity for business growth at the current location.

Over the past 29 years, I always look forward to reviewing the Corporate Survey results in order to see if the overall trend of corporate thinking is what we have been experiencing in our recent project activities. This year’s survey matches our client experiences in a very strong way.
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