Corporate Executive Survey Commentary: Downward Trend in New Facilities, Expansions
Accustomed to the austere operating environment during the recession, companies are finding efficiencies in existing space rather than making investments in new or expanded facilities.
Q1 2015
An overwhelming number of companies are responding to the improving economy by investing, especially on capital equipment and growing the labor force. However, a smaller number are expanding or opening new facilities to increase capacity. This approach may be linked to the austere operating environment required during the recession — companies would rather find efficiencies in their existing space rather than launch a large capital outlay in a new facility.
New location decisions continue to be driven by the need for expanded production to meet growing domestic consumer demand. Only a small percentage of activity in 2015 projects will be an outright relocation, which will be driven by low-margin companies seeking slightly lower operating costs.
Skilled Labor
There is a large ranking gap between the importance of availability of skilled labor and proximity to college/technical training. This underlines the fact that a location should demonstrate an ample, ready workforce in key occupations. While training programs are an essential tool, there is no substitute for a labor force that already possesses required skills and a high level of experience. Among the most sought-after skills are advanced welding, machine tool programming, and bioprocessing — skills that can only be developed over many years on the job.
Domestic Growth
As the U.S. continues to lead the world in the economic recovery, most manufacturing and distribution expansions are taking place in the domestic market with robust transportation and a manufacturing legacy, especially hotbeds in the Midwest and South regions.
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Michael McDermott, Consulting Manager, Global Business Consulting, Cushman & Wakefield
Michael McDermott is responsible for performing business location analysis, incentives research and negotiation, as well as portfolio analysis to fulfill client engagements. He has also assisted in the development of Cushman & Wakefield’s proprietary planning tools.
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