The Secret to Site Selection Success
Following the recipe of labor, real estate, and incentives has become a proven framework for both foreign and domestic companies to make educated decisions on new sites.
Location USA 2018
People make the widgets, manage the supply chain, market your brand, and drive business strategy. After identifying your ideal labor force, explore real estate development sites next to determine the most well-suited location for your operational needs and your team’s productivity and satisfaction. Look for incentives as the necessary push to get your deal past the finish line, and set your team up for long-term success. Economic incentives aren’t a secret anymore; they’ve become more of public auction. Given the past year’s splashy, household-name searches, it’s more important than ever for companies to come to the table educated and for states to have a new baseline level of programs in play and ready to deploy.
After years of partnering with many global Fortune 500s on their next headquarters offices and manufacturing facilities, our team has sharpened the ability to marry global and local perspectives, acting as a trusted facilitator of corporate and governmental partnerships that drive economic growth. Below I’ll outline our approach, which has been shaped by experience, positive outcomes, hard data, and qualitative observations made on the site selection trail.
Labor comes first.
As increasing numbers of global companies consider the United States for their next facility or headquarters location, we’re looking at labor analytics in an entirely new way. Every search should start with labor availability and, more specifically, job classification requirements. Companies gain a full picture of a potential future workforce by analyzing net migration and population growth, which are integral, forward-looking indicators for an investment-heavy site that will be operational for decades to come.
Around the country, job growth continues rapidly even with talent shortages and employment occurring faster than the labor force can expand. But these workforce shortages can’t be ignored, especially when the complexion of your labor force is highly specialized. Finding the right talent, today and tomorrow, that won’t abandon ship for a marginally higher salary at a competitor, takes a deep dive into specific areas’ populations and long-term potential. Choosing a site with the cheapest labor today may be a harmful, short-sighted mistake without the proper analysis, causing significant turnover, hiring challenges, and productivity drains in the long run.
The U.S. economy is driven by talent. Before kicking off Toyota and Mazda’s $1.6 billion auto plant search, we spent a lot of time digging into the key characteristics of both companies’ ideal team members. I’ll note here that they make a point to refer to them as “team members,” which indicates a keen understanding that it takes a successful front line to lay the foundation to achieve global business goals. One of the major reasons Huntsville, Alabama, ended up winning this historic prize was its rare combination of skilled manufacturing and knowledge workers; but we didn’t just take the numbers at face value. On our tours in each state, we made a point to interview various HR directors and large employers in the area, which helped validate our understanding of the marketplace with firsthand, local observations.
“But there’s land everywhere.”
Toyota and Mazda required thousands of acres of land, which you would think would be easy to find in a country as vast as the United States. We saw land everywhere, but well-equipped mega sites that were truly ready for construction and move-in were more elusive. National site searches offer states and local developers the opportunity to assemble unique and often massive development parcels.
With today’s national publicity around incentives, company names can no longer remain a big secret until they are ready to announce a final decision. The real estate piece of site selection is an invaluable opportunity for public-private partnerships. When developers and municipalities can consolidate ownership and collaborate on infrastructure (rail, power, sewer, etc.), the resulting sites start to sell much more than the land itself. Then they can begin telling a story around connectivity, a live/work/play lifestyle for employees, and highly efficient operations and supply chain. The front-end cost may oftentimes require millions, including federal funds. But for the potential economic impact, landing this facility or the next one, it is well worth the investment.
Mega sites are deserving of serious consideration by both states and foreign companies alike. And they can take many different forms, from a suburban build-to-suit to an urban hub that can accommodate large populations, quickly, in large city centers. Take the city of Greensboro, North Carolina, for example, a finalist in the Toyota and Mazda search. The city proactively reached out to our team with a mega site. Once they made the list, the city completed years of work on the site within a five-month period, allowing them to compete on a national stage with a site that was not on our radar the previous year.
One of the reasons my hometown of Chicago has been very successful in landing major headquarters moves and iconic projects — from ConAgra in the Merchandise Mart to the Obama Presidential Center on the South Side — is the city’s ability to mobilize quickly. The capacity to move from announcement to relocation within 18 months is almost unheard of, and combining this speed with unconventional real estate offerings and alternatives has positioned Chicago at the top of corporate tour itineraries.
Broaden the Incentives “wish list.”
With today’s national publicity around incentives, company names can no longer remain a big secret until they are ready to announce a final decision. That might make some companies fearful of the attention, but I would like to suggest that it can be a positive development, and I certainly will not miss trying to find old project folders with indecipherable code names.
Around the country, job growth continues rapidly even with talent shortages and employment occurring faster than the labor force can expand. Both governments and businesses can benefit when we can share the name of the searching company as openly and widely as possible. There are exceptions, of course, in situations like a full corporate headquarters relocation where companies have sensitivities about losing their top talent. But by going public, companies can tell a convincing, specific story about the benefits they could create in a new market. This allows states and economic development groups to craft a customized incentives package more likely to close the deal. Lately, we are seeing both sides come to the table with nontraditional incentives, which are creative and effective ways to encourage corporate investment.
When considering your incentives “wish list,” take the time to think bigger and broader than traditional tax abatement or job training. States will take your requests seriously and respond with thoughtful alternatives when there are large numbers of jobs or a substantial capital investment (i.e., a data center) at stake. For example, imagine your own ombudsman within the permitting department who serves as a single point of contact for your interactions with all government agencies. For a big brand, perks like naming rights or product displays in high-density areas (like the airport) could prove priceless. For others, exclusive sponsorship opportunities within the community could be key for generating local goodwill. We can’t forget that companies need a cultural fit as well, meaning they can conduct their business in a location that reflects their core values.
Following the recipe of labor, real estate, and incentives has become a proven framework for companies to make educated decisions on new sites. While traditionally there can only be one winning location, the playbooks that governments have created for corporate users scouting locations are a worthy exercise. If they tell a memorable, distinctive story, they can be reused when — not if — future pursuits hit the market. The demand is there, the volume is only growing, and both companies and states won’t be taking their feet off the gas any time soon.
South Korea-Based KRA Operations Plans First U.S. Manufacturing Plant in Newberry County, South Carolina