Making a Well-Informed U.S. Location Decision
By properly defining their search and taking advantage of expert help, food and beverage companies can make a well-informed U.S. location decision.
Location USA 2019
Like thousands of other food and beverage industry companies in the U.S. and abroad, you have an interest in expansion and growth of your manufacturing footprint but lack meaningful experience in determining where an optimal, or simply beneficial, location would be for your business. How do you formulate a plan for a search, execute upon it, and keep your existing business operations functioning? There is an infinite combination of factors that can be considered for such an important decision to your business, many of which you are keenly aware of, but some that will come as a surprise due to limited exposure to operating within a specific region of the U.S. I would like to offer some advice on how to approach this effort and put your team and business on a path to a well-informed location decision.
Consider hiring a site consultant.
The support of a well-qualified site consultant will be especially helpful if you have little or no experience in undertaking a U.S. location decision. Despite similarities in their general description, site consultants differ significantly in how they operate. Before deciding whom to hire, there are some critical things to consider.
Look for a consultant who has at least some experience in conducting a search for a facility type and use relatively similar to your own. Arguably, this experience is more critical than the level of geographic familiarity and experience within the desired search region. Ideally, you can find a consultant who possesses both.
Stay focused on the fact that your search should be a process of elimination, rather than an immediate jump to a conclusion. You also should understand what services and analysis the consultant will and will not provide. Be comfortable with the search process he/she employs and the likely duration as well as cost. Ask and get clarity as to what other service providers might be necessary to complete the site search process and whether the consultant will be able to help you identify and procure those services, when they are legitimately needed.
Make sure you take the time to explain your existing business successes and challenges and how you envision those could translate to U.S. markets. Your consultant needs to understand your facility and operating needs. This should include a visit to an existing facility on foreign soil. And, above all else, be comfortable that the individual or team are people you can start and maintain a trusted relationship with for an extended period, as the search process will not happen quickly and will likely involve moments of surprise and frustration.
Start by taking some time to define what you need from your new location.
Start the search process by taking the time to put your required needs (in their broadest definition) in writing. Doing so will have significant benefit; it will provide you and your team the chance to consider and define what success would look like in the way of property, labor, utilities, access and transportation infrastructure, other businesses in the area, food facility support services, taxes and incentives, etc.
You can look for guidance from your consultant as to what should and should not be included, especially after he/she has a chance to see your existing operations. This will serve as the benchmark basis to compare various proposed alternatives. Economic developers who receive a well-constructed and detailed RFI/RFP will appreciate the detail and look upon your requirements and team as being serious and well organized.
As you narrow your list, look for local resources that will help your business long term.
Stay focused on the fact that your search should be a process of elimination, rather than an immediate jump to a conclusion. This process will involve many judgements along the way, which will likely get more difficult as your list of prospective locations becomes shorter.
Whenever possible, place value in resources and local factors that will benefit your business over the long term. These may be related to overall operating cost, real estate, supply chain, utility cost/availability and, of course, labor cost and supply. Almost any food-related business will benefit from a predictable and low-cost operating environment that minimizes the risk associated with delivering and operating a facility. It’s important to take a long-term perspective during your search.
Keep incentives in perspective.
In researching or discussing your plans to expand to the U.S., the subject of incentives has likely surfaced, possibly with some dollar figures that seemed surprisingly high. However, any incentive award, regardless of size, will not make a fundamentally poor location decision any better.
The support of a well-qualified site consultant will be especially helpful if you have little or no experience in undertaking a U.S. location decision. Also be aware that the vast majority of the dollar value noted in other incentive announcements you may have heard or read about were not in the form of cash that flowed directly to the company; these figures typically include significant amounts of cost avoidance, various forms of credits that have limited value, and awards that will flow to the company over time, subject to reaching specific milestones for investment and job creation.
Incentive programs will vary in size and form based on a very wide array of factors. Location, wages, level of economic impact, type of industry, policy of the governing jurisdiction(s) in office at the time are among just a few of them.
Hire a quality team for technical and legal support.
As you go through your search process and narrow your options, you will likely be increasingly focused on various technical (site development and construction-related), legal (real estate, form of corporate entity, incentive-commitment related) issues to understand and quantify the impact on your location decision. An experienced consultant should be able to help identify which of these service providers are needed and, more importantly, when the time is right to get them involved. Utilizing the services these firms can provide can often save you time and money, as well as help you to avoid unexpected setbacks later in the process, when addressing them may very well be more costly and time-consuming.
Your own site selection requirements and concerns will surely involve a distinct set of resource needs and constraints that will be added to the list above. But adopting the strategies outlined herein will help your efforts stay focused and result in a well-informed decision.
South Korea-Based KRA Operations Plans First U.S. Manufacturing Plant in Newberry County, South Carolina