Where to Begin
Site selection is a rare event in the life of most companies. Even the thought of it can be very daunting, and time consuming. What follows is a short guide on how to be better prepared when choosing where to relocate or expand your business. It will help you articulate your prime objectives, clarify your critical goals, and take some of the mystery out of choosing a location.
Also take a look at our Site Selector mapping tool to help visualize optimum areas for business location in Chicago.
A Short Guide
For many larger companies, there is no doubt that using a professional site location firm is an efficient and, frequently, cost-effective way of managing the whole complicated and time-consuming process of relocation/expansion. A site location firm will sift and compare potential sites based on your business needs, strategy and project-specific criteria. In the first phase, they typically reduce the prospect list to three to four targets. Site visits, transition planning and project management are also part of their services. If you are not using a site location firm, the information below can help provide some guidance.
"Why are we even considering this?" First and foremost, there are no hard and fast rules or, sadly, any worthwhile shortcuts. Each project has its own unique components that involve a distinct balance of factors and considerations. The first step in any site selection process is to clearly answer the question: "Why are we even considering this?" WBC knows that only you can decide your critical goals, but we offer for your consideration this list of prime objectives:
- Need for more production space
- Facilitate the move into a new market
- Greater access to existing markets
- Larger labor pool of skilled/experienced workers
- Improve efficiencies in production via a new facility and modern production equipment
The key to a successful site selection effort is team process. It is crucial that all the representatives of the company's operations be included on a site selection team to ensure that the process allows for the consideration of a variety of new directions for the company; changes in technology, new product or service offerings, logistics, administration. Their individual expertise will be invaluable. Discussion and interaction among these staff should be encouraged to prevent lost opportunities. And it's best not to overly focus on initial concerns and start-up projections; the facility must be able to accommodate future needs and longer-term considerations. Insights from this team process will help you arrive at a set of prioritized and measurable criteria used to choose the eventual location. This process can also reduce the list of potential locations and greatly aid in keeping the investigation/research element of the project manageable, no matter what resources you have available.
Rank and Score Your Considerations
Each site selection project will develop its own set of criteria, but we have drawn up a generic checklist that, hopefully, can be tailored to your particular situation. The matrix format enables you to easily rank and score particular considerations. Using such a matrix will frequently indicate patterns that will quickly concentrate the search to particular types of locations: large urban conurbations, mid-sized metro areas, rural. Each will have its particular advantages; obviously rural land prices and cost of living will be cheaper, but their pool of particular skilled labor is often limited/scarce/non-existent. Also, rural transportation access and/or rate per route mile usually is much more expensive. Remember, today, labor is king.
Research Site Data
Free information on particular subjects in the regions, cities, and metro areas that you have identified is available at the following web sites:
- U.S. Census Bureau
- U.S. Bureau of Labor Statistics
- U.S. Bureau of Economic Analysis
- U.S. Energy Information Administration, State Electricity Profiles
- AreaDevelopment Online
States, metropolitan areas, cities and rural counties usually have web sites like these and they can be invaluable in providing information not gathered elsewhere. The quality of the information, however, can vary considerably. Unlike World Business Chicago, many economic development agencies do not always tell the whole story and can edit information to the extent that only the positive picture is portrayed. Be suitably circumspect when viewing such sites. (In true Midwestern fashion, we tell it like it is.) Your local library can also be a very valuable and largely free source of up-to-date information on national and regional industry, economic, population, cost-of-living and quality-of-life trends.
Workforce is King
"Human Capital" is today's driving force for most companies irrespective of the business in which a company is engaged. In our experience, labor issues are the number one critical factor in governing where a relocation or expansion takes place. Do not confine your research in this area to average wages, overall labor pool statistics, or skills availability. These are important, but the quality of life is what draws people to live and work in a particular region. Quality-of-life is as important today as wages, advancement, or stock options.
Take time to research recent trends in your target areas, for example, in the Chicago region, companies wishing to hire "tech-savvy" younger workers find it hard to recruit, and especially retain, employees if the commute to work is over an hour and the employees want to work in a "happening place" close to where they live. They work hard but also want to play hard and sitting in commuter traffic is no game. As a consequence, many firms have relocated close to the Downtown area where these employees live. In an economy where most families have two wage earners, do not forget to look at the professional spouses of your employees, and their quest to secure meaningful work.
Short List Incentives
By now you have gathered your site data, scored it against your project criteria, argued back and forth and have, hopefully, a shortlist of no more than three areas. Now you need to visit these areas and discuss matters with realtors and the local economic development agencies. It is at this point that you should gather information on taxes and government incentives.
A common misconception is that incentives and tax rates drive a site location process. Far too many companies start out seeking sites based on these considerations but in fact, they generally affect the cost of business only marginally and you should exercise caution in entering them into your search criteria. Incentives can tip the balance in favor of a particular location if all else is equal, which is why you should only consider them in the final stage of your search.
When working with the area's local economic development staff, you should be frank about your goals, budget, and the number and type of employees. Keep them informed of your progress, and your problems--remember it is their job to smooth the way for your entry into their economy. If they do not know the answer to a particular request, they will know someone who does. They are invaluable in assisting your company through the inevitable bureaucracy involved once you finally decide on a site. The more they know about your plans and hopes, the more their local knowledge and introductions will help you. They are accustomed to keeping your interest confidential and they will have insights into future land and building availability that realtors may not. They will also be up-to-date on forthcoming government training programs, R&D grants/incentives, and new vocational training centers. Most of all, they will facilitate your negotiations with developers, city, state and federal officials; and try to keep the project on your timescale.
We hope that our brief guide has helped you. Remember, clarification of your goals often eases selection of your company's new home.