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Corporate Executive Survey Analysis: Unacceptable Employment Rates Should Lead to Improved Incentives for Expanding Business

Although states and communities have suffered economically during the Great Recession, they are still providing incentives. And, in some cases, because unemployment rates are still unacceptable, I expect to see improved incentives during this year's legislative sessions.

Winter 2012
As 2011 was coming to an end, Area Development again surveyed corporations for pertinent information related to their operations over the past year and expectations for the future. In reviewing the results from this year's survey, I noted that manufacturers comprised a little less than 50 percent of the respondents versus two-thirds in 2010. Distribution, logistics, and warehousing services are better represented this year - 22 percent versus 11 percent in 2010.

A full 55 percent of all 2011 respondents have a primary role in final location decisions, whereas in 2010 that number was 43 percent. Clearly, executive management continues to be significantly involved in the site selection process, as 88 percent of the respondents confirmed.

There was good news in that 60 percent of the respondents reported no change in their number of facilities during the past 12 months, which is consistent with last year's survey. We do see that 30 percent of the Corporate Survey respondents say they are still planning on opening new facilities or expanding existing ones [despite the sluggish economy], and 27 percent have plans to increase hiring.

One definite negative trend is the outlook for significant improvement in the economy. In the 2010 survey, 48 percent thought it would significantly improve by 2012. As economists and politicians warn that the immediate outlook shows slow but steady growth, only 19 percent of those surveyed for 2011 see 2012 as the year for significant improvement, while 37 percent expect to see significant changes in 2013, and 43 percent in 2014.

Site selection factors remain fairly consistent in importance year over year. It is interesting to note that although the capital market seems to be loosening up, 42.2 percent of respondents cite the availability of long-term financing as very important, as opposed to only 30.5 percent in 2010's survey. In my own work with corporate users, sustainable development has become a real focus and a common element in site selection as the survey results indicate.

Incentives still play an important role in site selection decisions as well. As I always say, incentives don't make a bad (business) deal good - they make a good deal better. Although states and communities have suffered economically during the Great Recession, they are still providing incentives. And, in some cases, because unemployment rates are still unacceptable, I expect to see improved incentives during this year's legislative sessions.

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