Key Business Issues to Consider When Making an International Location Decision
Although each international firm and each project is unique, there are certain location and quality-of-life criteria they all must evaluate.
Location USA 2015
The critical factors impacting site selection decisions vary somewhat in importance from project to project, but all international companies should consider these factors when deciding where to expand or locate facilities. The following list summarizes the key business issues that a company should evaluate prior to making a location decision:
Location: A company must start the site selection process by identifying the potential geographic areas that could be suitable for the project. There is no point in considering a location if the business cannot serve clients or customers from the prospective area.
Workforce: A business must be confident that there is an ample supply of prospective team members with the necessary education and skill sets. Just as important, a company must be comfortable in its ability to attract, retain, and afford the people required for its operations.
Relationships built between the company’s team members, EDOs, and government entities become critical.
Real estate: A company must evaluate potential real estate options in the locations under consideration for the project in order to ensure its requirements can be met. In most cases, several adequate real estate options exist for a project, but this should be verified.
Tax structure: A complete picture of the local, regional, and state tax environment must be obtained in order to make certain that the business can operate profitably. In several areas of the country, states have made changes to their tax structures, and it is important to understand how these changes negatively or positively impact a company’s project.
Infrastructure: There must be an adequate infrastructure in place to meet the project’s current and future requirements. Transportation, telecommunications, and electronic infrastructure, to name just a few, are critical infrastructure factors to evaluate during the site selection process.
Incentives: A business must have a thorough understanding of what forms of local, regional, and/or state economic development incentives are available to help the company lower its project costs. Incentives should never drive site selection decisions, but they are important to ensure the economic feasibility of the project.
Regulatory environment: A company must understand how local, regional, and state governmental regulations will impact its business and project. Critical issues such as building plan approvals, environmental permits, utility connection approvals, and waste disposal permits can have a significant financial and timing impact on a company’s project.
Cost of living: The cost of living in a potential geographic area must be evaluated. In this way, the company can make certain it recognizes the economic impact on its team members who would be working in the selected community.
Unionization rates: A business should review unionization rates prior to making a site selection decision for a new or expanded facility. Clearly, unionization rates and right-to-work laws impact some industries more than others, but they are a factor that should be considered by all businesses.
For almost every project, international companies will relocate a handful of key personnel to launch a new operation. As a result, it is critical for the business to ensure that the location works well from not only a business perspective, but also for the relocating families.
Air Service: A company should look closely at the proximity of a potential location to an airport that provides one- or two-stop connections to where the company’s headquarters is located. It is important for business leaders to be able to efficiently travel to where their facilities are located.
Many international companies are also very interested in quality-of-life issues when considering where to locate a new facility. For almost every project, international companies will relocate a handful of key personnel to the United States to launch a new operation. As a result, it is critical for the business to ensure that the location works well from not only a business perspective, but also for the relocating families. The list below summarizes the most important quality-of-life factors our firm has seen in its work with international companies:
Low crime: It is very important for people to feel safe where they live and work. Anything that suggests an increased risk of safety will adversely impact how a community is viewed in the site selection process.
Quality of higher educational institutions: Businesses are all interested in the quality of higher educational institutions in proximity to an operation. These institutions not only impact future human capital, but can also help deliver training, certifications, and credentials to the company’s workforce.
Quality of K-12 public schools: Companies are also very interested in the quality of K-12 education. This is for some of the same reasons mentioned above, but also because it impacts families relocating to the area. For internationally based companies, the presence of international and/or foreign language schools is viewed very favorably. Access to and quality of healthcare facilities: Excellent healthcare facilities in an area are critical for the employees of the company in the event of a workplace injury. In addition, the families of employees also view access to excellent healthcare as an important community amenity.
Cost and availability of housing: Relocating families of an international company need to have ample housing choices in various price ranges.
Weather: International businesses consider weather as a quality-of-life factor when deciding where to locate facilities. The weather impacts families living in the area and business operations. Sometimes, families seek weather similar to what they are used to, but for others, different and/or better weather is a draw.
Recreational amenities: Families of employees of international companies are usually very interested in recreational amenities in an area where a facility could be located. The desire of families to spend time at lakes, in the mountains, and on biking trails is important to deciding where to live and work.
Cultural and sports amenities: International companies’ employees are very interested in cultural and sports amenities in a geographic area. Cultural amenities tied to their native country and new experiences are of interest to families. In addition, opportunities to participate in and watch sports are also a consideration for companies and their employees.
Commute times: Depending on where employees and families are coming from around the world, their experience with commute times may vary greatly. They may take a train, subway, car, bus, ferry or some other form of transportation in their native country. Locations that offer alternative modes of transportation are viewed more favorably.
Access to parks and public green space: Parks and public green space are viewed favorably by international companies. In particular, European-based companies’ employees are used to abundant parks and green space to enjoy with their families.
While additional factors may impact a company’s final decision regarding the location of a new facility, the aforementioned issues are usually on the list. These factors can be used quite effectively to eliminate potential locations from consideration. Once a business narrows its options to a few potential locations, the relationships built between the company’s team members, economic development organizations, and government entities become critical in selecting a location and successfully completing the project.
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