Exclusive JUMP resource · A guide to Site Selection for US Manufacturers

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This article has been kindly provided by Biggins Lacy Shapiro & Company, LLC (BLS & Co.). You can download a PDF version below:

Site Selection - Choosing the Best Location.pdf


Site Selection: Choosing the Best Location for your US Manufacturing Plant

Selecting the right location for your U.S. manufacturing plant is a complicated process. It is critical to have knowledge of the process, the stakeholders, the regulators, and the information you should consider in making this decision, to ensure nothing is missed that may otherwise cost you time and money during the site selection process or in the future.

Every project is unique, but all require a deliberate, rigorous evaluation process that incorporates consideration of operating environments and costs to ensure a location can meet the company's current and future needs.

How to Begin and Approach the Site Selection for Your New Plant

Step 1: Create the Project Team

Your new operation will have many important operating criteria which will require input from all facets of your business. Consider creating a project team that includes the following people/perspectives for input on the design and location criteria:

  • Project Manager (Lead)
  • Operations/Manufacturing
  • R&D / Engineering
  • Human Resources
  • Finance / Accounting
  • Sales / Marketing
  • Executive Management 

Your team may also include outside advisors, including consultants, a construction manager, architects, and/or engineers. Note that not everyone will participate in the same capacity throughout the life of the project, but capturing their perspective in the beginning of the project and at certain key points along the course of the project will be key to the success of the future operation.

Another important consideration during this formative phase is how you want to manage communications around the project. Most companies prefer to tightly control information about the project and process for several reasons:

  1. To avoid premature concerns and rumors among the existing workforce;
  2. To maintain control of messaging to the market during real estate negotiations and to the economic development community during incentive negotiations;
  3. To allow the company to move forward without its competitors being aware of its plans; and
  4. To prevent unwanted contact by a flood of vendors and suppliers regarding the project.

Step 2: Define the Proposed Operational Requirements

Before beginning to evaluate location options, it is critical to first define the proposed manufacturing facility and its operational requirements in order to properly evaluate location opportunities that will suit the needs of the operation. If not complete already, you may need to work with a process engineer to design the production process, which, in many cases for a reshoring project, may be much more automated than the current production process overseas.

Once the production process is designed, you will then need to define the required production inputs and requirements for the operation. Below is a list of criteria to help guide this process:

 Location Requirements Checklist

  • Inbound Shipments - Identify raw material sources and other suppliers, locations, annual volumes, number of shipments, modes of transportation
  • Outbound Shipments - Identify customers to be served from the new facility, locations, annual volumes, number of shipments, modes of transportation
  • Labor Requirements - Number and types of jobs, desired skill sets, wages and benefits, shifts and schedules, work ethic, and labor/management relationships
  • Building Requirements - Size, configuration, breakdown of manufacturing/warehouse/office space needs, clear heights, truck docks, and other facility needs
  • Site Requirements - Size, configuration to support vehicle circulation, on-site storage, employee and truck parking, and other project needs
  • Electric Power Requirements - Electric power usage (demand and consumption by month), line size required, service type preference (primary vs secondary), service redundancy needs
  • Natural Gas Requirements - Natural gas usage (consumption by month), line size required, service redundancy needs
  • Water Requirements - Water usage (volume by day and month, peak usage by hour), line size required, redundancy needs, fire service needs
  • Wastewater Requirements - Discharge volume (by day and month, peak volume by hour), line size required, wastewater effluent characteristics
  • Telecommunications Requirements - Service requirements
  • Air Emissions - Description and estimated volumes of air emissions by type
  • Community Preferences - Community characteristics and amenities preferred, training resources available, highway proximity and infrastructure, community culture, sustainability aspects, other requirements
  • Project Investment - Estimated value of land and building, equipment purchases and installation, other start-up costs
  • Incentives - Desired types of incentives programs including tax credits, loans, grants, and other financing assistance
  • Project timeline - Target real estate acquisition date, staffing ramp-up schedule, utility ramp-up schedule, equipment commissioning, production start date, etc.
  • Other Factors - Other location criteria factors that are unique to the operation

Step 3: Plan your evaluation proces

An efficient site selection process is really more of a site "elimination" process. Location screening and scoring criteria, beginning with high-level, large-geography considerations and then evolving into site-specific considerations, will guide you through a progressively shorter and shorter list of potential locations. While each project will require a customized approach, weighting of factors, and sequencing of analysis, each step of the process should allow you to narrow down to options that hold the greatest potential for the new operation, while eliminating those that do not. The process should look like a funnel:


 


Top site selection factors to consider

In order to ensure the selection of a location that is optimal for your specific operational needs, there are many factors that must be considered along the decision making process. The table below provides a high level summary of factors for manufacturing operations. Each of these factors should be considered at different capacities along the way, but all should be taken into consideration and evaluated against your needs. Keep in mind, there may be other factors that are also unique to your operation that should also be included in your decision.

 Transportation and Logistics

  • Inbound transportation costs to ship raw materials into the plant
  • Outbound transportation costs to ship finished products to customers
  • Transportation Service and Infrastructure Availability and Connectivity (all applicable modes)
  • Airport Accessibility
  • Ability of community to keep pace with needed infrastructure maintenance and investment


Labor

  • Labor Costs
  • Labor / Management Relations
  • Mandated Benefits
  • Population / Demographics
  • Concentration of Specified Labor Skills
  • Labor Training Programs


Utilities

  • Electric Power - availability and cost
  • Natural Gas - availability and cost
  • Water - availability and cost
  • Wastewater - availability and cost
  • Telecommunications - availability and cost 


Taxes
  • State Corporate Taxes
  • Property Taxes - Real and Personal
  • Inventory Taxes


 Incentives
  • State Incentives
  • Local Incentives
  • Utility Service Incentives
  • Other Programs


Real Estate
  • Availability of Sites and/or Buildings
  • Size, Configuration and Condition of Property
  • Cost of Real Estate
  • Design of Production Process and Equipment


Regulatory Environment
  • State and Local Business Climate
  • State Regulations
  • Environmental Regulations
  • Local Permitting Process and Timeline


Site Selection Resources

The following resources may be helpful to you during your site selection project:

Economic Development Agencies

Economic development agencies operate in the U.S. at the state, local and regional levels. Some are governmental organizations; others are public-private or even private entities that have been given responsibility to help attract and retain business investment and jobs to their respective states and communities. They may represent an entire state, a county, a municipality, or a region comprised of multiple counties and municipalities.

They can be excellent initial resources of preliminary information, at no cost, including available properties, workforce information, utility information, state and local tax rates, and available incentives. However, there are also some limitations to the information available from the economic development organizations; the information available from one ED organization may not be available at the same level of detail or in same format as other regions you are considering making it difficult to compare locations.

Bear in mind that economic development organizations do not have a fiduciary responsibility to your company. Rather, they are required to represent the best interest of the communities they represent. - i.e., to get you to choose their location for the lowest incentives. 

Site Selection and Incentives Consultants

A professional site selection consultant functions as a specialized management consultant, serving as the company's advocate and advisor, and assisting companies in formulating their site selection process. Consultants also manage the execution of that strategy including data collection, analysis and field work. Most site selection consultants work closely with state and local economic development agencies as well as utilizing internal and subscription-based data services and other tools through an established methodology. This expertise can be a valuable resource to your project to keep the search process objective, confidential, focused, on-schedule, and efficient, while also not draining your internal personnel resources.

Incentives advisory services are frequently - though not always - offered in conjunction with site selection consulting services. Ultimately, the two disciplines are most effective when deployed holistically, with the incentives process informing the site selection process at the appropriate juncture, and the site selection process identifying opportunities for enhanced incentive benefits. In addition to bringing experience to a process that most companies do not perform on a daily basis, they can also serve to protect your confidentiality, as well as provide a buffer between company officials and community leadership.

Content provided by Biggins Lacy Shapiro & Company



 
Biggins Lacy Shapiro & Company, LLC (BLS & Co.) helps corporations identify the best locations, negotiate incentives, secure development approvals and optimize energy strategies. Location Economics™, the firm's trademarked multi-disciplinary approach, focuses on creating value for companies and their communities.

BLS & Co. is headquartered in Princeton, NJ, with offices in New York, Chicago, and Cleveland · www.blsstrategies.com

With questions or for more information, please contact Michelle Comerford (mcomerford@BLSstrategies.com or 216-973-8872) or Tracey Hyatt Bosman (tbosman@BLSstrategies.com or 312-924-2490).


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