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Area Development - Site Selection, Facility Planning and Workforce Development

35th Annual Survey of Corporate Executives Commentary: Realignment of Supply Chains and Automation Mitigate Risks

Companies are realigning their supply chains while also instituting automated processes, which makes them more sensitive to energy reliability and rates.

Q1 2021
The results of Area Development’s 35th annual Corporate Survey are of particular interest this year as the world’s business leaders continue to deal with the effect of the global pandemic on operations. Regardless of the industry, COVID-19 has had a profound impact on how people work, and commerce continues despite the extraordinary circumstances.

The change in the number of facilities during the past 12 months is of particular interest as 78 percent of respondents indicate they have been static. An increase of facilities account for 14 percent of responses and 9 percent showed a decrease, so there is a positive net new facilities over the past 12 months. Even more interesting is the 30 percent revealing they plan to expand their domestic footprint within the next two years, of which manufacturing and warehouse distribution account for 73 percent. This metric falls in line with the 49 percent that have instituted more automated processes in response to COVID-19 and runs perfectly in parallel with the rise of energy availability and cost as important site selection criteria. This rose from 7th place last year to No. 3 this year.

Our clients have witnessed the increased importance of energy availability and cost to the overall business competitiveness of the United States in global location strategy. The United States will continue to see a new age of industrial expansion as companies realign their supply chains. This helps mitigate risk and reduces cost by locating closer to their end markets. It also results in higher levels of automation, which make users more sensitive to energy reliability and rates. The automation facilitates these operations meeting their labor requirements in an economy in which labor can be scarce, despite the higher unemployment stemming from the pandemic. Add the effects of COVID-19 to the boom in e-commerce and you have a recipe for major industrial growth over the coming years.

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