Area Development
As in years past, Area Development's editors also asked the location consultants who help our corporate executive readers make their site decisions to take a survey similar to the one given to the latter group. Since only about half of those responding to our 2009 Corporate Survey claimed to utilize the services of consultants, we would expect the results of the Consultants Survey to differ substantially from the results of the Corporate Survey. Let's see if this holds true.

Clients Served
For the most part, less than a third of those responding to our 2009 Consultants Survey have worked on projects in any one manufacturing sector (Chart A). Again, since 65 percent of the respondents to our Corporate Survey are with manufacturing firms, the responses given by the consultants should differ from those given by the corporate executives. In fact, about 40 percent of the responding consultants have worked on warehouse/distribution projects (only 8 percent of the corporate respondents claimed to represent these types of operations), and 29 percent of the responding consultants have worked on projects in the financial services sector, which was represented by a mere 2 percent of the corporate respondents.

What services do these consultants provide? Thirty-seven percent of the responding consultants claimed to actually make their clients' site selection decisions. About a quarter also said they perform location studies/comparative analyses, incentives comparisons and negotiations, as well as help with real estate transactions (Chart B). Interestingly, more than two-thirds of the corporate executives who said they utilize the services of consultants said they use them to assist with real estate transactions.

Forty percent of the responding consultants said that those clients who ask them to perform a location search have actually already narrowed down the geographic area in which they wish to locate (Chart C), i.e., consultants are called in more toward the end of the site selection process.

In terms of size, those companies utilizing the services of the responding consultants are generally small to mid-size (fewer than 500 employees), as reported by 68 percent of the Consultants Survey respondents (Chart D).

Not surprisingly, more than half of the respondents to our 6th Annual Survey of Consultants said the downturn in the U.S. economy had caused their clients to put new facility plans on hold, and nearly half said their clients were deferring capital spending. About a third of the respondents also said their clients were closing/consolidating facilities (Chart E). These percentages are all greater than those reported in the responses to our 2009 Corporate Survey. Conversely, whereas only 6 percent of the responding consultants said their clients still plan to increase hiring, 22 percent of the respondents to the Corporate Survey said they still plan to increase hiring. Nevertheless, 46 percent of the respondents to our 2009 Consultants Survey think the economy will improve significantly in 2010 (Chart F), about the same percentage of corporate executives who think it will do so.

Clients' Facilities Plans
While only 34 percent of the respondents to our 2009 Corporate Survey said they plan to open new facilities within one to two years, three quarters of those responding to the Consultants Survey said their clients expect to open new facilities in one to two years (Chart G). This is another indication that the corporate executives who do use consultants do not engage them until they are further along in the location process. Additionally, this is still far fewer than the 88 percent of the respondents to our 2008 Consultants Survey who said their clients had similar one- to two-year new facility plans.

Further reflecting the economic downturn, only 26 percent of the responding consultants said their clients plan to open more than one new facility - down from 36 percent last year (Chart H). By comparison, 44 percent of the Corporate Survey respondents said they have plans for more than one new facility.

Many of the projects the 2009 Consultants Survey respondents' clients are working on are slated for the South (16 percent of the projects are expected to go to Alabama, Florida, Georgia, Louisiana, and Mississippi) and the Midwest (14 percent for Illinois, Indiana, Michigan, Ohio, and Wisconsin). It should be noted that only 10 percent of the projects reported by the Corporate Survey respondents were slated for the South. The Southwest (Arizona, New Mexico, Oklahoma, and Texas) is expected to garner 13 percent of their clients' new facilities, and the South Atlantic (North Carolina, South Carolina, Virginia, and West Virginia) will get some 12 percent of the projects (Chart I).

In line with their client representation as illustrated in Chart A, 29 percent of the new domestic facilities planned by the consultants' clients will house warehouse/distribution operations, with just 27 percent planned as manufacturing facilities (Chart J).

Surprisingly, just 26 percent of the projects the responding consultants' clients have slated for offshore locations will go to Asia (down from 36 percent reported by the consultants last year, and compared to 39 percent of the projects slated for Asia by the 2009 Corporate Survey respondents). However, the consultants' clients have a heightened interest in Canada (up from 10 percent of the projects reported by the consultants in 2008 to 16 percent of the planned new foreign facilities this year). This is also a much better showing than the mere 4 percent of the projects the 2009 Corporate Survey respondents have slated for Canada. And Western Europe - a favorite among the 2009 Corporate Survey respondents, who said they were planning 14 percent of their new foreign facilities for this region of the world - will receive only 9 percent of the responding consultants' clients' new facilities (Chart K).

The consultants' clients show more diversity in their plans for Asia than do the respondents to our Corporate Survey. Of those facilities that the consultants reported are planned for Asia, just 34 percent will go to China and 28 percent to India (Chart L), with the rest slated for other Asian nations. And nearly a third of the planned foreign facilities will be manufacturing operations, with about a fifth expected to be used for distribution/warehouse purposes (Chart M).

Of note, the respondents to our 2009 Consultants Survey have seen a sizable amount of offshoring and onshoring activity. More than a quarter of the responding consultants said they have seen an increase in the number of companies establishing foreign facilities as opposed to domestic ones; a similar percentage said they have seen clients relocating offshore facilities back to the United States (Chart N), creating a sort of "wash" effect.

Many of the responding consultants cite problems encountered by their clients operating offshore, including trouble finding qualified and/or English-speaking labor (cited by 22 percent of the respondents); 20 percent said there were product quality issues - as the latest hazards of China-made products bear out; and 28 percent said the cost of transporting supplies and/or finished products was burdensome to their clients (Chart O).

Site Selection Priorities
We asked the consultants to rate the same site selection and quality-of-life factors rated by the corporate executives as either "very important," "important," "minor consideration," or "of no importance." We then added together the "very important" and "important" ratings to rank the factors in order of priority, as shown in Chart P.

This year, our responding consultants are of the same mindset as our responding corporate executives when it comes to the site selection factors. The respondents to our 2009 Consultants Survey have ranked highway accessibility first (98.9 percent of the respondents gave it a "very important" or "important" rating) and labor costs in second position, with a 94.3 percent rating in importance. Last year, the labor costs factor was only ranked 10th by the consultants with an 82.8 percent rating.

With costs being paramount in everyone's minds, the respondents to our 6th Annual Consultants Survey gave occupancy and construction costs a 92.9 percent importance rating, ranking this factor third - up from sixth position in 2008 with an 87.1 importance rating.

Availability of skilled labor, which is always a great concern, was ranked fourth by the responding consultants, with 92.2 percent importance rating. And it may be that this year's responding consultants are working on build-to-suit projects for their clients because 90.8 percent of them rated availability of land as "very important" or "important," ranking this factor sixth. The "tax" factors - state and local incentives, tax exemptions, and corporate tax rate - ranked fifth, eighth, and tenth, with respective importance ratings of 92 percent, 89.6 percent, and 87.4 percent.

When asked separately about incentives, 44 percent of the respondents to our 2009 Consultants Survey said incentives are now more important than in the past (Chart Q). Slightly less than half said tax incentives and other financial incentives such as grants and bonds are considered most important by their clients (Chart R). And a quarter of the respondents said that more communities than in the past are instituting criteria that must be met in order for companies to receive the promised incentives (Chart S).

Additionally, 41 percent of the responding consultants said they have found incentives closing funds to be the most deficient among the factors recently evaluated for location or expansion projects (Chart T), with 78 percent of the respondents saying that funds from the federal government's Stimulus Plan were having no effect on their clients' facility plans (Chart U). The responding consultants ranked energy availability and costs seventh with an 89.7 percent rating in importance. In response to a separate question, 42 percent of the respondents said energy costs were affecting their clients' facility operations, and a quarter said they were affecting their clients' supply/distribution network decisions (Chart V).

A related factor - inbound/outbound shipping costs - is new to the list this year. The responding consultants only ranked this factor 20th with a 67.5 percent importance rating. It should be noted that the respondents to our Corporate Survey ranked inbound/outbound-shipping costs tenth, with 81.7 rating this factor as "very important" or "important."

In a separate energy-related question, the consultants were asked about the implications of pending cap-and-trade legislation on their clients' facility plans. Nearly half said the legislation was having an effect, with 23 percent of the respondents noting it was causing their clients to delay scheduled investments, and nearly a fifth saying the proposed legislation was making their clients question the attractiveness of the United States for investment (Chart W). Interestingly, more than 70 percent of the respondents to the Corporate Survey said this legislation was having no effect on their facility plans.

In another energy-related question, the 2009 Consultants Survey-takers were also asked whether sustainable development was more important to their clients now than in the past, and 68 percent said yes. More than 60 percent of the respondents said their clients were undertaking energy-saving modifications to their existing facilities to reduce their companies' carbon footprint, and more than 40 percent said their clients were seeking LEED certification (Chart X). More than half of the responding consultants also said the communities they were working with were, in fact, offering specific incentives for "green" initiatives (Chart Y).

The site selection factor that showed the greatest change overall - a jump of 16.5 percentage points - was availability of long-term financing. This factor received a 75 percent importance rating this year, up from 58.5 percent in 2008, although its ranking in relation to the other site selection factors did not change significantly. Tight credit markets are having their effect on the consultants' clients.

Another factor that increased its importance rating - up 13.5 percentage points to 61.9 percent - while maintaining its relative place in the rankings was availability of unskilled labor. With record unemployment across most of the nation, this increase in importance rating comes as a surprise.

The third-largest increase in the ratings (12.3 percentage points) goes to the right-to-work state factor, which was rated "very important" or "important" by 81.2 percent of the respondents to our 2009 Consultants Survey, up from 68.9 percent in 2008; it was ranked 13th among the 2009 site selection factors. Consultants are perhaps keenly aware of the constraints put on companies' management by organized labor.

The two factors showing the largest decreases in importance ratings - about 11 percentage points each - were railroad services and waterway or oceanport accessibility. Nonetheless, these factors are historically ranked at or near the bottom of all the site selection factors by both corporate and consultant respondents and that is where they remain in both surveys for 2009.

When it comes to quality-of-life factors, the responding consultants gave ratings of public schools and housing costs top priority - each were rated "very important" or "important" by 71 percent of the responding consultants and were tied for first place. With home prices being depressed across the nation, this high ranking for the latter factor comes as a surprise. However, ratings of public schools as well as colleges and universities in area (ranked third among the quality-of-life factors with a 70.1 percent importance rating) are always of importance to consultants and their clients as they look to satisfy their labor force needs.

Finally, the consultants were asked whether their clients considered if there are businesses performing activities similar to theirs in the area of search. More than 80 percent of the consultants responding to our survey said yes - by comparison, only slightly more than half of the Corporate Survey-takers said this was a concern. And about 80 percent of the responding consultants also said this factor was very or somewhat important in their clients' location decisions (Chart Z).

Sources of Information
The 2009 Consultants Survey-takers were asked which sources of site selection information they have used during the past year: more than two-thirds said they use site magazines like Area Development as their primary source (Chart AA). Needless to say, nearly 90 percent also use the Internet for site and facility planning (Chart BB).

About 60 percent of those responding consultants who go online are looking for information on specific locations, contact information for economic development agencies, and listings of available sites and buildings like those found on (Chart CC). About a third of the respondents said they use the Internet a few times a week for these purposes, with a similar percentage reporting they use it just once a week when looking for site and facility planning information (Chart DD).

About half of the respondents to our 2009 Consultants Survey also said their clients make contact with locations of interest within a month of the initial search (Chart EE) - another indication that the consultants are not utilized until toward the end of the client's site search. Eighty-six percent of the respondents said between just one and five locations make their clients' "short list" (Chart FF), with 62 percent claiming they and/or their clients visit up to five communities before making the final location decision (Chart GG).

How Do the Surveys Compare?
To wrap up, the facility plans reported by the consultants for their clients do differ somewhat from those reported by the corporate executives, which was to be expected considering the consultants' client base. One must also consider the fact that consultants are generally called in by the corporate executives who utilize their services toward the end of the location process. However, the site selection priorities of those responding to our Corporate Survey and our Consultants Survey are more alike this year than in years past.

Remember, though, both groups' responses were received in late September/early October, probably not reflecting any of the somewhat positive economic news from the third quarter of 2009.