There is a conversation happening in economic development circles right now that might be generating more anxiety than it should. Project activity is down. Leads are slower. The phones are not ringing the way they were in 2021, 2022, and 2023, and for a lot of practitioners who came up during that extraordinary run, the current environment feels like a contraction.
The data tells a more complicated story. Yes, project activity has declined from its post-COVID peak. But when you put those numbers in historical context, we are still operating at or above the levels that characterized the decade before COVID. What we are seeing is not a contraction from normal — it is a normalization from exceptional. The projects that are moving forward today are doing so because the underlying business case is genuinely strong, not because a window of federal incentive money was available or because a company was testing the market to see what it could get. That distinction matters for how you think about your pipeline.
The Project That Is Moving Is Worth More Than Three That Aren't
One of the most useful frames I have for thinking about the current environment is what I call the intentionality shift. Average project capex has roughly tripled over the past five years, from around 125 million dollars per project to approximately 300 million. The number of projects has moderated. The size and strategic significance of the ones that are moving has grown substantially. For economic developers, this has a specific implication: the projects you are competing for today are more consequential and more demanding than the projects that drove your activity numbers three years ago. The companies pursuing them have done more rigorous internal analysis before they go to market. They have higher expectations for what communities can demonstrate about site readiness, utility capacity, workforce depth, and permitting speed. And they have more alternatives — including international alternatives — than they did when the US was the dominant destination for major industrial investment.
What we're seeing is not a contraction from normal. It's a normalization from exceptional.
Mega projects illustrate this most clearly. In 2015, we classified a mega project as anything over 200 jobs and 200 million dollars in investment. That threshold has moved to over a billion dollars and typically over a thousand jobs. The communities that landed a mega project in 2019 are operating in a fundamentally different competitive environment than the ones trying to land one today, and strategies built on the 2019 playbook are going to underperform.
The Competition Is No Longer Next Door
One of the most significant structural shifts in the location advisory business over the past decade is the internationalization of competition for major industrial projects. When I started in economic development, Alabama was competing with Georgia and Mississippi. It was genuinely rare to be in a process where the US was competing with Germany or Poland or a Southeast Asian alternative. That is no longer rare. It is increasingly common, particularly for capital-intensive manufacturing projects where labor cost structure, energy cost, and supply chain proximity to European or Asian markets create genuine international alternatives to US locations. Developed economies in Western Europe and Asia have built out their industrial infrastructure, their incentive programs, and their regulatory frameworks in ways that make them credible competitors for exactly the kind of high-investment, lower-headcount projects that are driving the current market.
$300M
For US communities, the practical implication is that the competitive set for a major project may include locations your prospect has never told you about. When a company goes quiet in the middle of a process, it is not always because a domestic competitor edged you out. Sometimes it is because the business case for a European location improved when the dollar-euro exchange rate moved, or because a Southeast Asian government put an infrastructure package on the table that changed the math.
Understanding that you are in a global competition — and communicating your community's specific advantages in that context — requires a different kind of preparation than benchmarking yourself against neighboring states.
The projects that are moving today are doing so because the underlying business case is genuinely strong.
When a company goes quiet in the middle of a process, it is not always because a domestic competitor edged you out. Sometimes the business case for a European location improved, or a Southeast Asian government put an infrastructure package on the table that changed the math.
Spending Your Dollar in the Right Place
Every economic development organization is operating with limited resources. Every dollar you spend on site development, marketing, workforce programs, or incentive packaging is a dollar you cannot spend somewhere else. In an environment where the projects that matter are more demanding and the competition is broader, the question of where to concentrate your resources has real strategic consequences.
The framework I keep coming back to is simple: know what you are genuinely competitive for, and build your strategy around those targets rather than chasing what is currently generating headlines. If you have robust power infrastructure and low-cost energy, energy-intensive manufacturing is a logical target. If you have a strong technical training ecosystem, advanced manufacturing with a skilled trades requirement plays to your strengths. If you have an existing industry cluster with high location quotient, mapping the full value chain of that cluster and looking for gaps is a more productive use of resources than competing for industries where you have no natural advantage.
The competition for major industrial projects is no longer next door.
This sounds obvious. It is not how most communities operate. The pull of a high-profile sector announcement — data centers, semiconductor fabs, EV battery plants — is powerful, and communities regularly invest in site development and marketing for project types that have no real fit with their existing assets. Not every community can be the hub for AI infrastructure. Not every community should try to be.
The communities that are going to outperform over the next decade are not the ones with the largest budgets or the most aggressive incentive programs. They are the ones that have done the honest work of understanding what they are, what they have, and which investments in readiness and positioning will move the needle for the specific types of projects where they can genuinely compete. In an environment where the projects that matter are fewer, larger, and more strategically consequential, that discipline is not optional. It is the whole game.
