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Editor's Note: Cautious Optimism for 2023

Although manufacturers are facing a challenging year, many are optimistic that lessons learned during the pandemic will help them weather whatever lies ahead.

Q1 2023
Rising inflation, supply chain vulnerability, and labor shortages made 2022 a challenging year for manufacturers. According to software solutions firm Aptean, these are the top concerns of manufacturing companies. Those responding to Area Development’s 37th Annual Corporate Survey, the results of which are in this issue, would agree.

Nearly half of the Corporate Survey respondents say economic pressures, i.e., inflation, threat of recession, etc., are their top concern. However, half also say recent government legislation — e.g., CHIPS Act, Inflation Reduction Act — would greatly or moderately affect their investment plans. And of those responding to our Consultants Survey, half also say economic pressures are their clients’ top concern, with three quarters saying recent government legislation will affect their clients’ expansion/investment plans.

While the $50 billion CHIPS and Science Act was formulated to encourage domestic investment in the semiconductor industry, “the legislation may serve as a gateway to increase investment and encourage more domestic production in adjacent industries,” say consultants at Deloitte who have the “last word” in our Q1 issue.

For the first time, our Corporate and Consultants surveys also asked the respondents to rate the importance of DEI and ESG initiatives, with between 40 and 50 percent of each group confirming the importance of these initiatives among the site selection factors. In this issue’s cover story, David Hickey of Hickey & Associates, explains how business leaders can utilize location strategy as part of their ESG mission.

Nearly two thirds of the respondents to our Consultants Survey claim they work with automotive/battery manufacturers on their location and investment projects. We continue our look at the evolving EV/battery sector in a special section in this issue. Fleet electrification is the latest disrupter, which is also helping organizations meet their ESG goals — from last-mile deliverers to utility companies to school districts.

As we move toward the end of 2023’s first quarter, views on the economic outlook continue to diverge. A February measure of CEO confidence by the Conference Board indicates that although 93 percent of CEOs are preparing for a recession, they feel it will be brief and shallow. It’s hoped that lessons learned during the pandemic about controlling costs, addressing supply chain woes, and embracing innovation will help business leaders to weather whatever lies ahead.

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