Market Report: Electronics Focuses on Economics, Access, and Sustainability
The electronics sector relies heavily on intellectual property and new technology. Such assets are derived from many sources, but an important source is the employees - namely the engineers and scientists who develop and expand the technology to compete globally in an ever-increasing marketplace.
Jim Romeo (April 2012)
Lauri Goodman Lampson, a principal with Planning Design Research (PDR), Houston, Texas, who specializes in location selection, explains: "We worked with Texas Instruments on a relocation project in Tucson, Arizona. Texas Instruments was established in the city in a building in an undesirable part of town. Neither the location nor the building was supporting the need to retain highly skilled design engineers or attract new ones. [The company] choose to sell the building and relocate to a new building in a more vibrant part of the city to better compete in the talent war."
One of the largest corporate headquarters moves in the electronics sector was Arrow Electronics' relocation of its headquarters from Melville, New York, to Denver, Colorado. The company expects to add more than 1,000 jobs at its new headquarters location, in addition to the many jobs it already provides at its existing Colorado facility, while also vowing not to cut its Melville staff.
Arrow is one of the largest electronics firms in the world, responsible for about 40 percent of the global electronics market. It will now be one of the largest firms in Colorado - a boon to the state. While the company and state officials wouldn't reveal, specifically, what it was that lured it to move its headquarters to Colorado, some speculate that the talent pool was there to support a headquarters operation, and the state also provided $11.4 million in tax credits to sweeten the deal.
Economics Is Key
"Economics is obviously also a key factor," says Lampson. "Once the options have been narrowed, economics becomes a driving force in decision-making. Smart companies know that economics must be balanced with access to appropriate talent. Economics also comes into play in other ways," Lampson adds. "Many organizations are rethinking the type of workplace they provide, putting emphasis on aspects that enhance business results. The results can be a higher performing workplace, therefore achieving a bigger return on the real estate investment."
Providing Market Access
Proximity to customers, vendors and talent sources is also paramount in the electronics and electronic technologies industries - particularly when key customers are located far away from a current location. That was the case when Federal Rated Security Technologies decided to relocate its Dallas Metroplex operations to Alamogordo, New Mexico. The company produces electronic and robotics product assemblies and sells them to the federal government.
The company did not actually receive any economic incentives to relocate, but was focused on Alamogordo's proximity to Holloman Air Force Base and the White Sands Missile Range. The company's new facility will also be located within a Small Business Administration HUB zone (Historically Underutilized Business zone), making it much more attractive when applying for federal funding.
Focus on CSR
Another key factor today is sustainability. According to a recent report from Pike Research, sustainability is growing in importance among electronics companies, particularly those that compete in the consumer electronics sectors.
According to the research, many of the largest companies in the sector are in the midst of adopting or improving sustainability practices in their new product lifecycles to include a greater focus on more sustainable design, manufacturing, distribution, use, and end-of-life management. Applying a unique index of corporate social responsibility (CSR) based on company-generated reports and metrics, the market intelligence firm finds that companies like IBM, HP, Apple, and Texas Instruments achieved the highest levels of completeness, transparency, and reported results.
"In general, the closer the company's business is related to consumer electronics, the higher its CSR score," says Pike Research President Clint Wheelock. "Many of the largest companies in the sector are in the midst of adopting or improving sustainability practices in their new product lifecycles to include a greater focus on more sustainable design, manufacturing, distribution, use, and end-of-life management."
"More and more companies require their real estate to exhibit good stewardship of the environment," adds Lampson. "The impacts aren't limited to the energy efficiency of the building, but also [include] the location and how accessible it is to transportation infrastructure. Historically, in locations that require commuting, our parking garages are larger than our office buildings. Many organizations are looking at ways to reduce the environmental and economic costs of every worker driving [his/her] car to work. An additional key feature of a sustainable site is the provision for bicycle racks and showers/changing rooms. "
The Whole Package
The global electronics industry is sizeable with many sectors within it. The industry encompasses the computing, industrial, component, and consumer sectors. The consumer sector alone comprises nearly $900 billion, with many companies within it located outside the United States. For a firm to compete, location decisions will always be driven by the availability of local talent. To compete globally, however, other attributes such as strong access to local vendors, transportation, as well as sustainable, environmentally friendly communities will factor into site selection decisions and drive the location and relocation of today's electronics firm.