Bottom Line First
Quality of life and pursuit of creative talent are not as high on the priority list for some industries. In what Boyd calls a "trophy project," Kia is opening a 2,500-employee automobile manufacturing plant at the end of 2009 in West Point, Georgia, approximately 80 miles southwest of Atlanta. JoAnne Mabrey, assistant manager of public relations at Kia, cites major state and local incentives, a state sponsored training facility on-site, and good transportation access as the main drivers in Kia's decision.
According to officials with the Greater Memphis Chamber in Tennessee, one in four jobs in the Memphis metro area is tied in some way to the presence of FedEx, primarily to the access it provides. Jim Covington, vice-president of logistics and aerotropolis development for the Greater Memphis Chamber, says, "Anything time sensitive comes down to these two cities," referring to the unique access provided by UPS in Louisville, Kentucky, and FedEx in Memphis.
DealerTrack is one recent example of a company that located a facility in Memphis due to the presence of FedEx. DealerTrack supports document imaging for automobile financing contracts. Being located near the FedEx hub allows them to receive packages just after midnight rather than the following morning. Kathy Kassinos, senior director of operations at DealerTrack, says the company only considered Louisville and Memphis.
Auto glass company Safelite is another example in which superior access to logistics takes precedence over talent. They recently opened a 282,000-square-foot warehouse with 50 employees in the city of Ontario, California, primarily because of the proximity to the nearby port in Long Beach/Los Angeles. According to Randy Randolph, vice-president of quality assurance and retail support at Safelite, "there is no right answer for everybody. You must look at your own operations." For Safelite, being located near the marine port and within a reasonable distance by truck to 23 of the company's markets was the key deciding factor for their decision to locate there.
The Austin Example
It would be simplistic to assume that companies choose to locate in Austin only because of its quality of life. But such factors as "Keep Austin Weird," an effort by the Austin Independent Business Alliance to support local businesses and keep the city from becoming over-commercialized, demonstrate a commitment to attracting creative talent in technology, software, and the arts. Tony Schum, director of economic development with the Austin Chamber of Commerce, says this is a good part of what makes Austin attractive to talented, educated workers - and that gets the attention of companies like high-tech companies Twisted Pixel and Red Oxygen. In Austin, these and other firms believe they will have good employee retention and cross-pollenization of ideas.
Michael Wilford, CEO of Twisted Pixel, which makes video games, says the fact that Austin area has a good quality of life was one of many reasons for their relocating there from Madison, Indiana. The company considered a number of other places before picking Austin, including Raleigh, North Carolina; and Seattle, Washington. "Ultimately we settled on Austin because it had everything," he says. "Great weather, quality of life, low crime, [low] cost of living, [low] cost of doing business, talent pool, substantial digital media scene, university interest and collaboration." He says other places had many of these things and were sometimes better than what Austin offered. But, he says, "Austin was the only place that had a respectable score on every single one of these factors."
When Red Oxygen, a Brisbane, Australia-based company that creates text messaging software, decided to open an American headquarters, it chose Austin over the Bay Area. Among the deciding factors were a progressive population and an entrepreneurial environment. Plus, CEO Tom Sheahan is a native Texan who wanted to maintain roots there.
Weighing the Factors
A company must decide if locating based on talent is indeed the most important factor for its long-term success. On one hand, while the examples of companies moving to talent-rich cities like Denver or Austin certainly indicate quality of life as a key factor, the bottom line isn't always ignored. "Keep in mind, qualitative factors are highly subjective," says Boyd. "Some of our clients like vanilla, some chocolate when it comes down to lifestyle considerations. Cost structures, however, are real."
On the other hand, Boyd says it is increasingly difficult to convince people to move. Can spouses find work in new locations? Can people sell their existing home? Are there other personal considerations that tie those talented workers to where they are? It may be necessary for a company to consider locating near those workers to ensure that they will not have to entice relocation to have the high-caliber labor they need on hand.
"The trouble is," says Cortright, "the world isn't flat."