Reviewing the 35th Annual Corporate Survey, I was personally interested in the comparison of site selection factors. Let’s face it — 2020 brought on a lot of change and I was interested in how some of the pandemic-related business themes (e.g., global supply-chain realignment, work from anywhere, and potential tax changes) over the last year impacted responses. A few factors stood out to me, based on my project activity and personal observations.
Let’s start with the availability of skilled labor. No surprise here that this factor remains high on the list — it’s top of mind for nearly every project; the challenge is how best to measure it. While data answers part of the question, this factor is becoming increasingly difficult to assess in a “work from anywhere” environment. Capturing the right talent seems to be a moving target. The measurement is often more art than science, depending on the industry and sector. The general acceptance of virtual work will have a lasting impact and challenge the way we measure talent availability.
Another factor that stood out to me was state and local incentives, which jumped into the top 10 for 2020. While most companies approach site selection very holistically, the realignment of supply chains and renewed demand for U.S. investment have put pressure on corporate budgets. Business incentives are often viewed as one way to reduce this pressure and further justify the economics of project. Unfortunately, the pandemic has put many state and local authorities in a challenging fiscal position, so only time will tell if they are able to respond in a meaningful way to this factor.
Somewhat related to incentives are corporate tax rates. While state corporate net income tax rates generally garner only marginal attention during the site selection process, they have come more into focus since the tax reform. Accordingly, I was surprised to see this factor give up some ground in this year’s rankings, as most of my projects are closely evaluating the long-term operational cost impacts within a state as a final site selection is made.
The final factors that caught my attention were available land and available buildings. While there seem to be plenty of land/building choices in the U.S., it is often the truly market-ready product that is lacking. With economic recovery happening aggressively in some industries, speed to market is becoming increasingly important to corporate investors. Accordingly, I think the areas of the country that have the best “shovel-ready product” will be in a better position to compete for investment.
This past year has been a turbulent and dynamic year on several levels, and while these site selection factor rankings may offer some perspective, more time will need to pass before we truly see the full impact of these business themes. I will be closely watching the migration of talent, the recalibration of the state and local economic development approaches, and the overall tax environment, both at the state and federal levels.