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Highway Accessibility Underpins Location Decisions

Highway accessibility - the number-one ranked factor by Area Development's 2007 Corporate Survey respondents - undeniably forms the essential nexus between workers, suppliers, producers, distributors, and markets.

Aug/Sep 08
The debate over the importance of individual facility location factors has flourished through the decades. States, regions, and communities have labored to define and promote the most effective combination of factors available to them in response to evolving business needs. Business has endeavored to adapt to changing competitive circumstances and has continually revised the emphasis it places on these factors. Yet one thing remains constant in our search for the most favorable location: a strong foundation is imperative to gain competitive advantage.

Few aspects of an area's competitiveness are more fundamental than its infrastructure systems, and no other infrastructure system exerts a more elemental influence on a facility's location than the complex of highways that will serve it. Accordingly, over the course of this decade, Area Development's annual Corporate Survey has consistently ranked highway accessibility among the top-five location factors. Indeed, during the last four years, corporate decision-makers have placed highway accessibility no lower than the number-two spot and have again awarded it the number-one ranking in 2008.

A Basic Need
While corporate decision-makers, economic developers, and site selection consultants often overtly concentrate on seemingly sexier location decision factors, highway accessibility is never out of mind. Whether it delivers workers, materials, services, goods, or emergency vehicles - or provides entry to markets and customers - an area's highway system is basic to business operations. Further, the efficiency of that highway system enables informed decisions as to which modes of transport will best achieve a company's time-to-market objectives.

Corporate Survey 2007
Combined Ratings* of 2007 F actors
Site Selection Factors                   2007
1. Highway accessibility 96.9
2. Labor costs 92.3
3. Energy availability and costs 89.0
4. Availability of skilled labor 88.7
5. Occupancy or construction costs 88.2
6. Available land 85.4
7. Corporate tax rate 83.8
8. State and local incentives 83.4
9. Environmental regulations 83.2
10. Tax Exemptions 82.8
*All figures are percentages and are the total of "very important" and "important" ratings of the Area Development Corporate Survey and are rounded to the nearest tenth of a percent.
Although highway systems are among the least elastic and most expensive and time-consuming to construct, they are also among the most effective at stimulating new investment. Numerous examples exist to demonstrate this proposition. For instance, the historic growth of the distribution sector in and around Carlisle, Pa., is due in no small part to the intersection of four interstate highways nearby at Harrisburg and the supporting system of highways that facilitate surface transportation to all points of the compass. Similarly, Kentucky and Indiana's three-bridges project is already encouraging new development on both sides of the Ohio River despite its completion date - some 12 years off - in 2020. Phoenix's West Valley is also undergoing a surge in new business investment led by the distribution sector, which largely relies on the strength of the area's highway connections to West Coast markets. Further examples are manifold, and one fact is inescapable: highway accessibility exerts a preponderant influence on the distribution of economic activity throughout the United States.

Transportation infrastructure is crucial to virtually every facility for access to people, support services, just-in-time materials delivery, and end-product distribution. Moreover, logistics costs comprise the single largest variable cost category for production and distribution. Inefficiency in any one aspect of the supply chain echoes throughout the entire operation, often in an unfortunate way.

Transportation cost, reliability, highway access, and market connectivity are all interconnected. An interstate-quality highway with dual access is highly desirable for large-scale manufacturing and distribution facilities. At the site level, redundant ingress/egress points on high-quality, public secondary roads are important, not only to minimize potential barriers to access, but also to ensure access for fire-fighting, emergency medical, police, and other essential services. Additionally, assurance of adequate design standards to accommodate commercial traffic needs careful attention. Appropriate controls for truck access and employee vehicle access are also important, as is highway access for other transport modes coincident with highways. Considered together, transportation and infrastructure factors converge at the highway to promote or constrain commerce.

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