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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.

  • David V. Brandon, Senior Vice President, Site Selection Group, LLC
Aug/Sep 08
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Interconnected Modes
A rail-served site is often key, with strong emphasis on competing carrier access. Some preference for a connection to a main-line carrier is appropriate, although short-line rail carriers are playing ever-larger roles today, as major carriers concentrate services on higher-volume tracks in denser markets. A rail yard or transloading facility is frequently desirable in close proximity. As with the air transport considerations noted below, each transport component relies heavily on highway access and ease of use to carry out its role efficiently in the business process.

Air transport is often critical for customers, suppliers, vendors, and company executives alike as we move deeper into a truly global economy. Typically, proximity to a hub with flights to primary destinations is a preferred, but not absolute, requirement. Most North American operations have fairly common domestic destinations and often enable businesses to source high-value materials or services from distant suppliers. Such reach becomes more advantageous when combined with good highway access.

International destination access requirements are largely dependent upon the company and the nature of its operations. Headquarters and transnational establishments are most likely to incorporate international market air access in their investment decisions. Equally, high-value/low-volume/high-technology operations will rely relatively more heavily on international air service for cargo and passenger transport than more commodity-oriented manufacturing and distribution operations.

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.
Smaller airports face somewhat of a disadvantage when we consider travel from the office or home to the airport for connection to a large national hub. Increased security concerns and congestion in larger cities - where such hubs are typically located - have virtually equalized airport convenience for many communities, especially in light of current major carrier contractions that are virtually eliminating routes and discontinuing service to certain smaller markets. In this context, highway accessibility and ease of reach play an increasingly prominent role in business development decisions.

The need for waterborne transportation will vary with each project depending on where components are sourced, the nature and volumes of the commodities shipped, and their ultimate destinations. In many cases, containerized subassemblies, components, or finished goods may be coming from South America, the Caribbean, Asia, or Europe, and a link to a deepwater port via rail and interstate highways is important. Under any conditions, highway accessibility provides the essential connection among all modes of transport in use.

It's no surprise then that the respondents to Area Development's 2007 Corporate Survey ranked highway accessibility as the number-one location factor considered when companies execute the decision to invest in new productive capacity. Highway accessibility is often assumed, but not always explored openly in site selection discussions. Arguably, it may very well be a factor that we take for granted. Nonetheless, highway accessibility undeniably forms the essential nexus between workers, suppliers, producers, distributors, and markets. And while it may be supplanted from time to time by other decision factors - such as labor availability or energy cost - highway accessibility will remain near the top in its enduring influence on the location of new business investments.