Corporate Executive Survey Commentary: Midwest, South to Garner Most Projects
Despite its Rustbelt reputation, the Midwest will garner the largest share of the respondents’ new domestic facilities.
More than a quarter of respondents added at least one facility to their portfolio in the past year, while only 6 percent cut facilities. Of those that grew, 43 percent listed “increased sales/production/services” as their primary reason for expanding. When asked directly about the impact of the economic recovery on future plans, 34 percent of respondents said they plan to open a new facility; 38 percent said they plan to increase hiring; and 35 percent said they plan to increase capital spending. All these responses are in line with the feedback we’ve received from clients, many with projects that have been growing dramatically, both in volume and scope.
Interestingly, 23 percent of the new domestic facilities reported in the survey will serve a warehousing/distribution function, though only 8 percent of respondents identified their current operations as focused on logistics. This seems to suggest that growing domestic markets are prompting businesses to emphasize distribution, even if the company itself identifies as a manufacturer. In fact, 38 percent of respondents who reported an increase in their number of facilities said this was to ensure better access to new or existing markets — another indication that higher consumer confidence and spending is rippling through the broader economy.
We were also struck by the locations benefiting from the growth mentioned above. A full 20 percent of new domestic facilities are planned for the Upper Midwest, the largest share of any region in the nation. My location in Chicago allows me to see much of this growth firsthand — and despite the Rustbelt reputation, many of our national clients have their sights set on the Great Lakes. The South also fared well, with 17 percent of planned expansions slated for that region, a trend that has similarly been seen among our clients, especially those seeking competitive labor costs.
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