C-Suite Executives and Site Location

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C-Suite Executives and Site Location

When it comes to choosing a location to relocate or expand, the key motivations of a company are state taxes and incentives, opportunity zones, repurposing retail buildings, relocation while working with an EDO, and policies and programs designed for foreign talent. On the other hand, barriers for company site selection include the lack of skilled workers, the lack of usable buildings, unfavorable or negative reaction from the community, the inability to efficiently relocate, and ineffective communication.

MOTIVATIONS

  • When companies relocate or expand, they are motivated by state taxes and incentives involved in job creation and how they can be applied for maximum benefit.
  • They are also motivated by opportunity zones, which has three benefits: tax deferment of capital gains, reduced payment of taxes by 10 to 15% for investing in an opportunity zone, and any gain after ten years is tax-free.
  • The decline of the retail industry due to a rise in tech companies like Amazon, Instacart, and Shipt has opened the door for the industrial companies to relocate warehouses to previous retail locations, such as grocery stores.
  • Relocation while working with an EDO (economic development organization) in an effort to grow locally or expand into another market can provide the distinct shift in strategy that a company requires to stay competitive in an industry that is shifting focus.
  • Companies are also motivated by policies and programs designed to encourage the immigration and permanent residency of foreign talent.

BARRIERS

  • One of the barriers of relocation is the lack of skilled workers or finding an educated workforce that a company needs and requires.
  • Within the company relocation industry, one of the biggest risks is the lack of usable buildings.
  • Pushback from communities whose values do not align with the relocating or expanding company can completely halt the process of relocation or expansion even if the company has already decided on the location. This was the case of Amazon pulling out of its plan of establishing headquarters in New York City.
  • The ability to quickly and efficiently relocate a company will become paramount to sustaining success into the next decade as technology continues to disrupt the economic philosophy and substantially alter the way people live, work, play, and consume.
  • Another barrier is when a relocating or expanding company cannot effectively communicate that the major factor in the site selection is the incentives.

VARIATIONS BY INDUSTRY

  • Industrial manufacturing industry companies should focus on whether a community has hard infrastructure, such as highways, railroads, electrical power, sewers, and water.
  • Modern manufacturing industry companies require STEM skills, critical thinking, aptitude for working with software and computer-assisted machinery, teamwork, and the ability to make independent decisions within their labor and workforce.
  • Tech or service industry companies need to focus on finding an educated and skilled workforce with access to urban transit and parks and whether an office will be within walking distance or provide public transportation to the location with high-end restaurants and proper live-work-play options for employees.
  • Industrial industry 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.
  • The retail industry’s precipitous decline has created an opportunity for industrial companies looking to relocate with the solution being the repurposing of designated retail space into industrial warehouses.
  • Within the banking industry, major layoffs and closing of branch locations have been seen at large corporations like GB, US Bank, and Wells Fargo, highlighting a fundamental shift in the products consumers value and the jobs that will be required to produce them.

COMMON KEY FACTORS IN SITE SELECTION

OTHER HELPFUL FINDINGS

  • A common philosophy with retail projects is that they depend on the needs of the surrounding population, consumer market, and business community, and that such operations would still exist (and potentially thrive) without state assistance.
  • Governments at the federal, state, and local levels will typically incent job creation, employee training, real and personal property investments associated with some sort of corporate expansion, new facility location, consolidation of operations, or relocation.
Sources
Sources

Quotes
  • "For a company, it is important to understand that in whatever state you are potentially locating your facility, your mindset in a negotiation is typically the same... a jobs-based tax credit refunds a company a percentage of its new payroll creation. It is seen as a relatively low-risk incentive because in nearly all cases a company does not receive the benefit until the job is created and the employee has been compensated."
Quotes
  • "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."
Quotes
  • "The program, enacted as part of the Tax Cuts and Jobs Act of December 2017, targets the trillions of dollars in unrealized capital gains that currently lay dormant on balance sheets. It enables institutional and private investors to reduce taxes on current capital gains and avoid taxes on future capital gains—if they invest in low-income and rural communities."
Quotes
  • "The retail industry’s precipitous decline has inspired major questions for people within the site selection industry and companies looking for new locations... What industries and business activities will fill the gap ... An exciting solution could be to repurpose designated retail space for industrial use."
Quotes
  • "If you operate a business that is growing or needs assistance to address a changing marketplace, it’s worth asking your EDO to see what they might be willing to do to keep your company in the community. Or, if you’re seeking to expand in a new market and learn that your company doesn’t fit the desired target profile, you can make an argument for the economic impact your business will bring. "
Quotes
  • "The renowned University of Toronto is a top 20 global university, with five other schools in Ontario cracking the top 300 in the world. And the graduates of these schools aren’t just simply getting a piece of paper — they are well set up to enter the workforce in the digital age."