NAFTA’s replacement, assuming it is ratified in its current form, will affect company supply chains, workforce, tax, regulatory, market, and other considerations. The agreement increases environmental regulations, incentivizes domestic production, and opens Canada’s dairy market to the U.S., among other features.
Policy changes like this always create new threats and opportunities. Larger uncertainty with American trade policies and the rapid progress of other global trade agreements are sure to create even greater threats and opportunities for most companies, many of which will only become apparent as global systems realign.
In today’s turbulent world, companies can delay major siting decisions, though doing so risks losing out on new market opportunities and hinges on the assumption that “sometime soon” the trade policy landscape will become more settled. Even if that is likely, which remains to be seen, rapid changes in markets and technology will ensure that corporate siting decisions continue to be made in an era of uncertainty.
Four siting strategies — How, then, can companies make smart location decisions? Four siting strategies have emerged:
- Integrating real estate location decisions within the C-Suite strategic level of company decision-making;
- Using new, more complex site analysis research tools in the decision-making process;
- Prioritizing flexibility in site selection criteria; and,
- Reducing time to market by focusing on pre-developed sites.
— Companies must be able to evolve, adapt, and adjust to manage trade policy and other uncertainties. Strategic site location decisions have become critical in securing competitive advantages. As such, corporate real estate has been elevated to the C-suite. This means site decision-making often emanates from the top — by way of an informed, carefully vetted approach.
Moving past “yesterday’s” data analysis — Companies are investing in more in-depth and customized site research, often leveraging specialized site selection consultants that have developed extensive databases and analytical algorithms. For example, workforce analysis has moved beyond occupational data — which can only provide “yesterday’s” figures — to task classification analysis, which enables innovative companies to assess workforce capabilities for occupations that do not yet exist.
Uncertainty in trade policy has led companies to focus on the flexibility of sites, in terms of their position to serve multiple markets and in the array of shipping options to adapt to supply chain and market access changes. Site and market “flexibility” —
Uncertainty in trade policy has led companies to focus on the flexibility of sites, in terms of their position to serve multiple markets and in the array of shipping options to adapt to supply chain and market access changes. The Great Falls Montana Development Authority (GFDA) has a client that recently shifted focus from growing overseas markets to domestic opportunities. Luckily, the company’s plant location allows it to quickly shift directions and modes of shipping. Today’s market tends to warrant a similar approach.
Exploring “ready-to-build” sites
— Companies seeking to manage location-decision risks while also speeding up the selection and to-market process are now prioritizing ready-to-build sites. These locations have been pre-certified and have infrastructure and much of the land-use permitting already in place.
Logistics companies such as BNSF have certified premier industrial parks that can save businesses six to nine months of construction time. BNSF’s program provides an inventory of sites available for immediate development. In Montana, a super wide/high corridor — from Great Falls to the Canadian border — has been pre-permitted and developed to eliminate the delay and permitting risk for shipping large loads such as fabricated modules.
To excel in today’s often-turbulent marketplace, innovative companies must evolve, adapt, and adjust to ever-changing environments. Managing trade policy risks and opportunities are just part of the site decision process. Yesterday’s location process and criteria are being surpassed by quicker, more strategic, and more customized site analysis.