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Inward Investment Guides

Editor's Note: Green=$

Geraldine Gambale, Editor, Area Development Magazine (Aug/Sep 08)
We've known for some time that we - as individuals - need to reduce our carbon footprint. And, yes, we'll get to that soon. But it's amazing how paying $4+ for a gallon of gas has just raised our environmental consciousness. Demand for hybrid vehicles has surged and no one wants to buy that SUV that you swore you really needed just a few years ago.

Environmentally responsible businesses that started to think "green" years ago are also shifting their efforts into high gear. They're looking for energy savings in their manufacturing operations and facilities, as well as in their sourcing of materials and distribution of products. This may, in turn, lead to a change in the globalization of their businesses.

Does lowering wage costs by manufacturing in Asia really pay now that costs to transport goods back to the United States have dramatically increased? Some furniture-makers are among those who've answered "no" to that question; they're moving their manufacturing operations back to places like Virginia and North Carolina - states hard hit by the outsourcing of production to China. Other businesses are also tightening their supply chains, as the cost of shipping a 40-foot container from Shanghai to the United States has gone from $3,000 to $8,000 over the last decade.

We further explore these concerns in this issue in an article about the importance of proximity to markets in the location decision ("Who Needs - or Wants - to be Near the Consumer?") as well as in our cover story this month, "Green(Ware)House Effect." As noted by Chris Steele of Transystems, "A distribution strategy that reduces a company's carbon footprint because of efforts to use less fuel has been embraced by environmentalists and accountants alike." And Rick Underwood of APL Logistics agrees, saying that centrally located distribution centers are equally attractive from a cost-cutting as well as reduced carbon footprint perspective.

Also, according to a recent study conducted by IDI, a global provider of market intelligence advisory services, small and mid-size companies are seeking:
• Manufacturing applications that support and sustain renewable production processes;
• Warehouse/distribution applications that streamline and improve inventory management; and
• Mobile-enable applications that help suppliers, manufacturers, wholesalers, and distributors to use energy-conservation devices.

It seems that industry's buzzword has shifted from "globalization" to "green," and all cost-cutting measures, which coincidentally reduce a company's carbon footprint, are being labeled as such. There's just one problem with this strategy: If and when cost issues become less of an imperative (although that seems improbable for the foreseeable future), will "green" measures be discounted? If businesses and individuals are really serious about our commitment to reducing our carbon footprint, then we must all continue to think "green" for green's sake.

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