• Step 1 -
Project setup/needs assessment: It is important to determine project
goals, facility needs, and site selection criteria in the initial
phases of any site selection project. Initiate a one- to two-day
brainstorming session regarding the scope of the project, desired
outcomes, and timeframe. These meetings should include top management,
facility directors, financial executives, accounting consultants, and
site selection consultants. Often, executives have early expectations
on where their next facility or office is best suited. A discussion of
incentives begins here, with the site selection consultants giving an
early assessment of what incentives could be available based on similar
type expansions and relocations. Milestones and success metrics should
be set. The most effective site selection efforts allow four to eight
months for the full evaluation, negotiation, and selection of a
community.
• Step 2 -
Determine an incentives strategy: Most technology companies are moving
at a pace too fast to allow the exploration of incentives in their site
selection decisions. For many, incentives are often the icing on the
cake, sweetening the deal after a decision has already been made.
Software companies are generally too small to see the benefit of
financial incentives or just don't qualify. But others, such as
manufacturers, know just how valuable incentives can be. New industries
such as nanotechnology, biotechnology, and fuel cells are now caught up
in a virtual "incentives arms race" among states and communities.
Hiring a site selection consultant is a requirement to effectively
explore the full range of incentives opportunities. In addition, a
consultant provides "arm's length" protection from any problems or
aggressive negotiations that might sour the public relations impact of
an announced move. While the primary effect of incentives is to remedy
a prejudiced or burdensome tax system, incentives often become a stamp
of approval by communities that companies seek in their local public
relations. More than ever, incentives are cash-based, where state and
local governments commit funds to invest in infrastructure, work force
training, free land, and buildings. Many states are now choosing to
deliver hard cash to a company in order to win these strategic projects
and make a marketing statement to the world.
• Step 3 -
Issue a request for proposals: If a bioconvergence company wishes to
pursue incentives, it is important that its site selection
representative issue a request for proposals to a large list of
communities. This ensures that a full range of options are presented to
the decision makers, and incentives negotiations can begin. Companies
should present themselves to communities in a confidential fashion,
using project code names and relying on non-staff to interact with
local business and government representatives.
• Step 4 -
Evaluation of top locations and sites: The technology company or its
site selection consultant must do thorough research on its list of
potential locations. Today, communities maintain much of their
information on an economic development website. In fact, site selectors
use the Internet to gain most of the information they need in their
evaluation before any phone calls or visits occur. Communities should
be evaluated for each of the criteria set out in Step 1. Good site
selectors will devise a weighted ranking system for all factors and
rate communities on each.
For companies that require very
specific sites for new construction, such as medical device
manufacturers, visits to a community must be conducted by an
experienced engineering or site selection team. These individuals make
physical evaluations of sites and typically get information from local
authorities on their acreage, topography, soil type, zoning,
geo-technical conditions, utilities, and access points. The lack of
sites and infrastructure may remove a community from a site selector's
evaluation list. Technology manufacturers are increasingly focused on
the supply of developed, "shovel-ready" sites in communities throughout
the United States, thus raising the bar for corporate recruitment. Many
communities precertify their manufacturing sites for specific uses such
as semiconductor manufacturing or automotive manufacturing.
Utility
evaluations are still very important to bioconvergence firms,
particularly those with sensitive manufacturing processes or a large
datacenter requirement. The demands of the digital world result in the
large consumption of power. Affordable, reliable electricity is of
utmost importance, particularly for manufacturers or datacenters.
Dual-feed and gasoline-powered backup generators are extreme examples
of requirements. Reliable telecommunications are equally important.
Site selectors will evaluate brownouts, outages due to storms, power
spikes, and excess capacity for peak periods. In light of the massive
blackouts in the Northeast in recent years, reliability of the electric
grid deserves greater scrutiny.
• Step 5 -
Cost of operation benchmarking: Bioconvergence firms vary in their
attention to costs. Manufacturers and large consumers of electricity do
thorough evaluations of the costs for various locations. This
benchmarking analysis should cover the cost of labor, supplier
purchases, air travel among locations, real estate costs, and tax
costs. This analysis is generally done by the site selection consultant
or an in-house financial analyst. Benchmarking the final communities
for a variety of weighted scores can help determine where an operation
would experience the lowest operating costs. Numerous factors are
ranked and weighted for all areas in contention to determine which
areas are best suited for the operation.
• Step 6 -
Short-list communities and visit: Once the initial analysis is
completed, it is necessary to visit the candidate communities on the
short list. These visits are meant to confirm the data sent by the
community, visit prospective sites or buildings, and meet with local
government, academic, and business leaders. The community visit is the
most important part of the site selection process, and should be the
determining factor in selecting a finalist city. Typically, a company
will select a primary location but will have one or two other
acceptable alternatives. This will allow more effective negotiations at
the end of the process and provide a working alternative in the event a
"fatal flaw" is discovered during detailed analysis and negotiations.
Visits should generally be planned for one to two days per city in
order to thoroughly review all the requirements in the selection
process.
• Step 7 - Final selection:
If incentives are part of the selection process, intense negotiations
are required in the final weeks of the decision. Corporate executives
must be involved in these negotiations, and an internal understanding
of incentives targets is key. Confidentiality is best kept throughout
negotiations with communities.
The final selection of a
community often rests on one or two key requirements, including the
availability of a site, the desire of the CEO, a marketing goal, or an
incentive. The winning city is almost certain to be the one that
brought the most comfort and enthusiasm to the CEO and the executive
team. Thorough evaluations by staff and consultants can provide strong
guidance to decision makers, but not a final decision. Once a decision
is made, a company should make every effort to maximize the publicity
and exposure in the community in order to build goodwill and begin to
attract the critical technical talent that they will need.
The Future of BioConvergence
The
integration of biotechnology and information technologies into the
health care industry will continue at a steady pace for many years. The
locational shift that will be associated with this industry will likely
continue until new bioconvergence regions clearly emerge as winners.
The role of global players in this industry should be monitored for its
effect, particularly in areas that have fewer restrictions - stem-cell
research in Asia, for example - or a growing specialized work force,
such as technicians and doctors in India. More and more bioconvergence
companies will go "virtual," keeping all manufacturing abroad as well
as a large share of their research capabilities. The future of the
bioconvergence industry is still unclear, but its wide-ranging effect
and future economic impact deserves our personal and business
attention. Hopefully, we will be watching its progress for many years
to come.
