Finding Gems Amid Current Trends
By Susan Burnell
Rising energy costs and credit issues are causing many companies to rethink their strategies for moving or expanding. Workforce challenges and the need for infrastructure capacity add further layers of complexity to relocation decisions. Yet, by paying attention to current and evolving trends, growth-minded companies can find opportunities to succeed, say corporate relocation consultants.
Aligning Location With Customers’ Goals
“Often, because of the increased cost of logistics, it may make sense for certain businesses to consider locating new facilities closer to their targeted end-user markets,” says Jim Colson, chief operating officer and president of site selection, AngelouEconomics. “We’re beginning to see more companies deciding to locate in North America, including Mexico, where previously they may have considered overseas locations.
“While we’ve seen a slowdown in certain industrial sectors, at the same time there is a tremendous amount of industrial facility development still occurring around the U.S. and the world,” says Colson. “India, China and Vietnam have become very active targets for foreign direct investment, and so have Russia and Brazil.”
Corporate relocation choices are being driven by a desire for greater efficiency, not necessarily cost cutting alone, says Dennis R. Burnside, president and chief executive officer, BurnsideAnalytics. “A relocation decision might be prompted by a variety of factors, including cost, a need to better serve clients and proximity to key markets,” says Burnside. “It’s a business decision first — companies are looking for locations that align best with their ultimate objectives.”
The condition and capacity of a loca-tion’s infrastructure should be a key consideration in the relocation equation. “No one wants to take a company where there are water-main breaks, roads in disrepair or inadequate parking,” says Burnside. “And companies want to make sure their location is wired for the levels of high-speed data transmission and communications they will need now and in the future.”
Aging and insufficient infrastructure is a vital factor that should be on corporate radar screens as companies evaluate suitable locations, adds Colson. “Companies also need to study the ability and willingness of a community to invest in infrastructure. In some locations, we’ve seen an interesting concept used, in which private investors are partnering with the public sector to design, fund and operate public infrastructure to address the lack of public capacity to meet existing and futureinfrastructure requirements — transportation and public utilities, for example. This trend reflects the importance of addressing the growing infrastructure gap, and I think you’ll be seeing more of it in the future.”
“Companies are asking, ‘How does a location match up with our ability to do what we do?’”
Dennis R. Burnside, President and CEO, BurnsideAnalytics
“Historically, the types of incentives provided by communities and states have focused on grants for job training, property tax abatement and tax credits,” says Colson. “More states now realize they have to become more aggressive in how they compete for high-quality projects. What has changed recently is that companies expect — and are successfully negotiating — more cash-oriented incentives. This might include up-front funding for facility construction, equipment purchases and funds to offset start-up costs.”
“When determining the optimal location for the new site, a company is best served by articulating its specific requirements and expectations in 13 basic areas,” says Jim Colson, chief operating officer and president of site selection, AngelouEconomics. Each project is different, so companies will assign a different level of prioritization and weight to each of these factors:
Incentives, business climate and infrastructure are still high on the list of requirements when a company relocates. Yet, foremost is access to a workforce that fulfills the company’s vision and improves its ability to deliver a product or service.
Burnside sees part of the solution in the growing trend toward urbanism, especially for companies competing for younger employees. “Many young people have no desire to work in the suburbs,” he notes. “They want to be close to public transportation and within walking distance of work and shopping. They’re gravitating to locations that offer a sense of place and energy. If those employees want to be in the city, companies will have to move closer.
“There may be opportunities for companies that look beyond the typical class-A office space in core urban locations,” Burnside says. “A vacant warehouse or an old department store, for example, may be ideal if it can be redeveloped for a new use.”
“The biggest challenges for retaining and attracting corporate facilities going forward
will be providing qualified labor, especially technicians who have the capacity to work
in growing industries, such as renewable energy manufacturing.”
Jim Colson, COO and President, Site Selection, AngelouEconomics
To make a successful analysis of suitable business locations, decision makers should prioritize their company’s requirements, then keep an open mind as they search for the best match for those requirements.
“One of the biggest mistakes I see is when a decision maker goes into the process fully convinced that they want to move to a specific location,” says Colson. “People get excited about a city or a country because of something they’ve read or heard about it. Yet, we urge them to go through the process of prioritizing their needs and expectations in a methodical way. In some cases, we have discovered unexpected labor, infrastructure or other issues that made that first-choice location unsuitable.”
A site-selection consultant can apply a consistent level of discipline to the process, help clients understand all the implications of a location and help them avoid costly mistakes or surprises.
BurnsideAnalytics is a Cleveland-based consulting firm that serves the economic development community, the commercial real estate industry and corporate America.
AngelouEconomics is an economic development consulting firm specializing in the site-selection needs of the tech-nology industry and the communities seeking to recruit them. It has offices in Austin, Texas, and Dubai.
Touring and Rental Solutions Help Companies Recruit and Retain Employees
The recruitment and retention of skilled talent is a critical business priority — especially for organizations feeling the pressure of hard economic times and the needs of changing demographic populations.
For companies needing to relocate or temporarily assign employees, successful recruitment and retention can be even more difficult. According to the U.S. Bureau of Labor Statistics, the national voluntary turnover rate is 23.4% annually, and replacing each lost employee will cost a business one-half to five times the employee’s annual salary.
The process of relocating for a new job or temporary position is often a stressful and overwhelming experience. In addition to being productive in their new position, employees have to deal with the stresses and hassles of uprooting their life and finding their way in a new city.
According to a 2008 survey conducted by the Worldwide ERC, fewer than half of companies have a formal policy in place for handling temporary assignments. Historically, relocation services have only been available through real estate agents assisting home buyers and were mainly designed to address the needs of permanent relocations. However, more than half of people relocating for a job and more than 90% of those on temporary assignment will need to rent at least some of their accommodations for some period of time.
In today’s work environment, employers are beginning to seek the help of companies that specialize in coordinating services for rental relocations and temporary assignments. These services can include finding an apartment close to work, job search support for spouses, renter’s insurance, and furniture and car rentals.
According to a 2008 survey conducted by the Worldwide ERC, fewer than
half of companies have a formal policy in place for handling temporary assignments.
Also growing in popularity are area orientation tours. When moving to a new city, most individuals are not familiar with the nuances of different neighborhoods within the city or the social scene. Area tours can help employees and their families find a place to live that best meets their needs, including a neighborhood that suits their lifestyle.
A recent research study conducted by the Robert H. Smith School of Business at the University of Maryland found that most new employees wished, in hindsight, that they had learned more about their new city. Younger employees especially cited a desire to learn more about the different areas within the city and to have information about the restaurants and nightlife.
In a competitive job market, companies that invest in touring and other rental relocation services may have more success at recruiting and retaining productive employees.