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32nd Annual Survey of Corporate Executives Commentary: Investment Decisions - A Complex Evaluation in an Uncertain Environment

The Corporate Survey results illustrate a level of uncertainty by investors — a clear indication of how challenging the investment project decision-making process has become.

Q1 2018
The 2017 Corporate Survey provides a first look at how executives involved in the investment decision process dealt with last year’s political and economic uncertainty in the U.S., and around the world.

It appears that the recently passed corporate tax rate cut or regulatory reforms have had a limited impact, for now, on the decision to open or expand a facility, with only 34 percent of respondents citing it as a reason for investment. There was clearly more optimism in 2016, when that survey demonstrated at the time that 68 percent of respondents believed that economic conditions under President Trump would be favorable for moving ahead with new facilities or expansion plans. But this really comes as no surprise since international supply chains and global market development are driving forces for many companies. And this uncertainty is also reflected in the number of facilities that remained the same or decreased for 80 percent of respondents (79 percent in 2016). If corporate investors were delaying investment project decision-making in 2016 due to the election year, it appears that the existing state of affairs underlines the same caution from investors.

The Corporate Survey results illustrate a level of uncertainty by investors — a clear indication of how challenging the investment project decision-making process has become. When comparing the combined ratings, the difference between the number-one factor and number-five factor is only 5.4 percent, compared to 10.4 percent the previous year. What this implies is that these top five factors are ultimately playing an even bigger role in the decision-making process today.

Investment decision-making and site selection in general are experiencing greater complexity today as relevant data is so readily available. Evaluating all options has become an even more demanding task for decision-makers, in part because of technology that has given access to so much information that an investor can’t possibly evaluate all of the options. As we reflect back on 2017 from a site selection perspective, it was definitely a year of uncertainty and caution, and the survey results reflect this — many projects put on hold while decision-makers wait to see how political uncertainties will unfold. In the meantime, there’s enough data out there to keep them busy evaluating their options.
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