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Corporate Executive Survey Commentary: Determining a Location’s Value Proposition

As low cost alone is no longer the driving competitive advantage in the site selection process, successful locations are those that have developed their skill set niches.

Q1 2016
The 2015 Corporate Survey results illustrate very precisely the major trend that we are seeing in the marketplace. The most sought-after companies by economic developers are actively chasing very select and in-demand skill sets. Irrespective of the industry, corporate decision-makers are seeking the “value add” quotient for their businesses, and they are searching for and catering to that talent factor with increasing ferocity. In a mature value-added economy like the U.S., a location would be wise to prove its particular value proposition and help match corporate needs to the requisite type of skilled labor it has to offer.

If the site selection process is about anything, at its core, it should be about finding the best possible location to make a particular product or to perform a particular service better than anywhere else. Ultimately, that means finding the workforce that can do the task better than the competition and grow the business. That is why skilled labor is the number-one factor and, to a large degree, why the quality-of-life factor has grown in importance. This is a trend likely to continue.

But there is one catch and it’s the premium paid for that workforce and the attendant amenities. All of the other factors in the survey really reflect costs to ultimately secure that workforce. Determining a location’s value proposition is more important than ever. How those costs are balanced and mitigated against the value-add quotient that the workforce can create is critical in moving a location from short-list to winner.

Macro-economic events like globalization, shale oil, the 2008 recession, and the sustained period of zero interest rates have commoditized many of the survey factors that historically served as cost differentiators across the US. Survey factors like real estate, energy, buildings, highway accessibility, and low-skill labor are all declining in importance as price differences narrow across geographies. Low cost alone is no longer the driving competitive advantage in the site selection process.

Successful locations would be wise to develop their skill set niches and not merely rely on the old cost differential. As more locations compete for high-skilled and value-add jobs in the U.S., the effective use of targeted and useable incentives can be a decided advantage when coupled with the right product in the location process. It’s surprising to see their slight decline in the Corporate Survey as senior corporate decision-makers are actively driving for these benefits on projects, and now they can often be the deciding number in the value proposition calculation and a key differentiator amongst the short-list contenders.
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