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32nd Annual Survey of Corporate Executives Commentary: Corporate Survey Rankings Weighted Toward Manufacturing Functions

Recognizing that the respondents are heavily weighted with manufacturing functions, the top location factors make a great deal of sense.

Q1 2018
As in the past, we look forward to reviewing the annual survey responses, and are always curious to see if the view of the corporate world is different from that which we have been experiencing on actual projects. Specifically,
  • Do this year’s results differ from past years’ results?
  • Do the responses reflect what we, as location advisors, currently are experiencing with our clients on actual recent engagements?
  • Do the survey results capture trends being observed by location advisors?
In general, the responses are very consistent with surveys compiled in past years. Recognizing that the respondents are heavily weighted with manufacturing functions (based on the number of respondents from that sector), the top location factors make a great deal of sense. However, if the weighting were to shift toward distribution or office sectors, we believe we would see a slightly different ranking of top location factors.

In recent engagements, we have seen an increased emphasis on “proximity to customers” for both distribution and office projects. Additionally, although not yet included within the formal project specification and requirements for distribution projects, proximity to rail — due to increased reliance on truck delivery and a perceived imbalance of driver supply and demand — is becoming an increasingly important factor. Alternative deepwater ports have entered the conversation due to congestion at West Coast ports and the Panama Canal expansion, which may provide for faster ship unloading and delivery.

Location engagements involving office functions are experiencing increased client request for reliable air access. Although this has always been a strong client requirement for office location work, it has become even stronger on recent projects.

Aside from the factor rankings, the data collected include responses to several questions addressing potential business response to the recent U.S. tax regulation changes. We are surprised to see a fairly neutral response in terms of the impact of this change as it pertains to future investment decisions. Most respondents indicate that the changes (including a lowering of corporate net income tax rates) would not serve as a catalyst for facility or operations expansion. This is not what we have been experiencing with our clients — and have seen renewed client interest in domestic investment as a result of the potential for repatriated funds. In our opinion, as a result of the lower tax rate, companies repatriating funds (currently held in foreign accounts) will look to increasing investment in U.S.-based capital projects. This process clearly has already begun.
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