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Respondents’ Priorities
In order to ascertain how the respondents make their location decisions, the editors of Area Development asked them about their site selection priorities. We asked them to rate the various site selection and qualify-of-life factors as either “very important,” “important,” “minor consideration,” or “of no importance” (Slideshow, Figure 11). We then added up the percentage of respondents rating a factor as either “very important” or “important” and rounded to the nearest tenth of a percent in order to rank the factors in order of priority (Figure 12).

As in past years, highway accessibility and labor costs are our corporate readers’ top priorities when locating or expanding facilities. This year, highway accessibility is the number-one ranked factor, considered “very important” or “important” by 96.9 percent of the 2007 Corporate Survey respondents. Labor costs is ranked second, with a 92.3 percent rating. (These factors were ranked in reverse order last year, with labor costs receiving a 95.0 percent rating and highway accessibility a 90.9 percent rating.)

It’s no surprise that the corporate executives responding to our survey are concerned about access to highways. With the cost of fuel over $3 per gallon and rising, companies need the shortest access to those highways connecting them to their markets. In fact, proximity to major markets jumped from 13th place in last year’s rankings (with a 76.9 percent rating) to 10th place this year (tied with tax exemptions), rated “very important” or “important” by 82.8 percent of the survey respondents. Additionally, proximity to suppliers moved up from 21st place in the 2006 rankings to 15th place this year. This factor actually showed the largest percentage gain among all the site selection factors. It added 22.5 percentage points and was considered “very important” or “important” by 71.8 percent of the 2007 Corporate Survey respondents, as compared to only 49.3 percent of the 2006 survey respondents who gave it a similar rating. With suppliers passing their additional fuel costs on to manufacturers and other end-users, corporate executives have a new rationale to locate in proximity to suppliers.

And, another transportation-related factor — railroad service — showed the second-largest percentage increase among the site selection factors. Although it is still ranked toward the bottom of the list at 22nd, its combined “very important” and “important” rating increased from 20.8 percent in 2006 to 38.1 percent this year — a jump of 17.3 percentage points. Rising fuel prices may be causing many manufacturing executives to consider rail over truck transport.

It stands to reason that energy availability and costs moved up to third place in the rankings with an 89.0 percent rating. Last year this factor ranked ninth at 82.4 percent. Energy costs of operating facilities have been rising throughout 2007 and company executives are figuring this added expense into their bottom line.