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31st Annual Survey of Corporate Executives Commentary: Highway Access, Labor Skills and Costs Remain Primary Concerns

Our findings align with those of the Corporate Survey; not only are highway access and labor skills and costs of the utmost importance in siting new facilities, but so are permitting and regulatory issues.

Q1 2017
As distribution facilities have measurably increased in size, we have seen four critical issues arise: One concern is highway accessibility, the top site selection factor in the 2016 survey with 94.4 percent of the respondents stating that this is a critical factor, up from a #2 ranking in 2015 at 88 percent. The three other issues we are seeing in siting larger square footage buildings are available sites, (#12 with 75.3 percent), permitting (#13 with 71.7 percent), and environmental regulations (#14 with 70.8 percent). These results are in line with similar issues facing real estate professionals, developers, and site selection professionals due to backlash over “greenfield” sites by neighbors voicing concerns over increased traffic, noise, and environmental effects.

For companies considering a new location, labor is of great concern. Skilled labor availability (#2 with 89.8 percent) and labor costs (#3 with 89.6 percent) have become key site selection factors. The labor market has tightened significantly, which is causing wage rate pressures (wages are projected to increase 3 percent this year according to a 2016 Society for Human Resource Managers’ survey). Many human resource managers are saying available positions for skilled workers seem to be more plentiful than qualified applicants.

Because the labor market has a limited qualified labor pool, companies, economic development organizations, and community colleges are working “hand in hand” to develop a pipeline of local workers. This is especially true for manufacturing companies that have to demonstrate to high school students, parents, and guidance counselors that new manufacturing jobs have better pay and require more advanced technical training than ever.
Combined Ratings, Corporate Survey 2016
As the country has climbed out of the recession, companies have more checks and balances in place than before. A typical final decision team could include several of these individuals: CFO/finance director, logistics leader, human resources leader, operations director, COO, and CEO/president.
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