• Free for qualified executives and consultants to industry

  • Receive quarterly issues of Area Development Magazine and special market report and directory issues


The Ever-Greater Expectations for Infrastructure

Companies providing quality jobs have never been in a better position to ask for the infrastructure and incentives they need in order to locate their facility — or remain — in a community.

Q3 2019
Over the past 25 years, my law firm has advised on more than 130 industrial startups and expansions that have created more than 33,000 jobs and more than $24 billion of investment in the Southeast. We have advised companies in deals that have brought in world-class firms with internationally recognized brands — such as Mercedes, Honda, ThyssenKrupp, Brown-Foreman, Airbus, and others. While no two businesses have the same decision matrix, infrastructure always is a key factor in location decisions. Taxes and incentives receive a lot of attention, but our clients don’t even waste time on these discussions if a community doesn’t meet the requirements for hard infrastructure.

We live in an era when technology companies such as Amazon get front-page press for every twitch that they make in their location decisions. Amazon’s search for a second headquarters and the drama of its jilted courtship with New York City may have been the biggest story ever in corporate location. With Amazon, and many other tech or service company courtships, we hear about access to urban transit and parks and whether an office will be within walking distance of world-class baristas. If you are a manufacturing company focused on whether a community has hard infrastructure such as highways, railroads, electrical power, sewers, and water, the Amazon sweepstakes may seem like something that occurred in a different universe.

Still, I think there are lessons to be learned from the Amazon experience. The unprecedented transparency of Amazon’s RFP created a healthy competition, with more than 200 cities sending in detailed proposals. In their efforts to get Amazon’s attention, many of the proposals centered on creating infrastructure that served Amazon’s needs, mostly involving transit and housing. I think sometimes companies narrow their searches too much and avoid unnecessary disclosure of their plans, usually for understandable competitive reasons. The Amazon experience shows that communities will be enormously resourceful in their bids, given the opportunity. Away from the big metro areas, smaller communities that are alert to opportunities have red carpets they want to roll out for jobs. If you don’t see the infrastructure you need, don’t assume they won’t find a way to create it.

Most infrastructure challenges can be resolved through additional capital investment. State economic development agencies and communities have become sophisticated about evaluating the economic value a company brings to a community, and they usually are good partners in these location decisions.

People are still the most important infrastructure —
We tell local and state governments that the most important infrastructure they can create is an educated and skilled workforce. Modern manufacturing requires STEM skills, critical thinking, aptitude for working with software and computer-assisted machinery, teamwork as well as the ability to make independent decisions.

Some of the most pressing issues are lack of access to a local sewer system & availability of water for manufacturing processes and fire protection. Most of the states we work with in the ever-more-competitive manufacturing plant location sweepstakes have postsecondary job training programs. Georgia, Alabama, and South Carolina all have designed programs to get their workers ready for these jobs. Companies tend to focus on the availability or willingness to build hard infrastructure, but they should demand more help from states and communities in training workers. This isn’t about improving high school graduation rates, although that certainly should be a goal for any state. Learn how Germany uses apprenticeship programs to train workers for skilled manufacturing and trade jobs. This would be a sea change in our current education model, and it will only happen if manufacturers take the lead in pushing for such programs.

Close — but not too close — to the job —
We know that most of our industrial clients are looking for geographical sweet spots. In the cities, you hear a lot about live-work-play, all of which is created by mass transit and urban infrastructure that supports density. For most of our projects outside the big cities, that’s just not a consideration. Employees at an auto or steel plant don’t want to live next door to where they work. They want to live in a suburb of a city or in a nearby small town where the schools are good and the neighborhoods are safe, and a 25-minute drive is expected. Our manufacturing clients typically look for a sweet spot — close to a workforce, but not too close.

Vance, Alabama, a town of fewer than 2,000 people, is the closest municipality to North America’s only Mercedes passenger vehicle plant. Most workers come from the neighboring Tuscaloosa area and other local communities (Birmingham, Hoover, etc.), about a half-hour drive. Lincoln, Alabama, a community of about 6,000 people, is near Honda’s plant, and it is about a half-hour drive southwest from the Birmingham metropolitan area. If you are a big manufacturer, these may be ideal locations.

State economic development agencies and communities have become sophisticated about evaluating the economic value a company brings to a community, and they usually are good partners in these location decisions. The number of sites that can accommodate a large project such as an auto plant are not plentiful. These communities had the good fortune to be near interstate highways and had the foresight and ability to provide the hard infrastructure and project-ready greenfields. It didn’t hurt that they were not burdened with zoning and land-use restrictions.

Sewer, water, and emergency response —
Some of the most pressing issues we see in hard infrastructure are the lack of access to a local sewer system, the availability of water for manufacturing processes as well as fire protection, and timely emergency medical response. Those geographical sweet spots that are within reasonable driving distance of larger communities are more likely to have this infrastructure or be able to build it. Regrettably, all three of these issues may stack the deck against small rural communities that are far from the cities.

Kick the tires —
I always tell my clients not to end their due diligence with an examination of infrastructure. Come to the community anonymously and get a feel for the people. Would the company be a good fit, or would there be tension because of what the company makes or the local leadership personalities? One thing I do that probably isn’t on anyone else’s checklist is I read back issues of the local newspaper. What is in (or not in) the newspaper will tell you a lot about a community.

Higher expectations — Everyone is always trying to land the next big thing —
This is what I call the “whale” project. Over the past five years, we have seen many more communities recognizing that their best prospects may already be in their backyard. Companies that already are providing jobs are in a strong position to ask for infrastructure improvements and incentives for jobs created. Make your needs known. Companies providing quality jobs away from the big cities have never been in a better position to ask for the infrastructure and incentives they need in order to partnership with a local community.

Exclusive Research