BLS & Co. Project Director / Industrial & Supply Chain Practice Leader Michelle Comerford spoke with Inbound Logistics about how site selection can energize logistics development. Read Michelle's insights below.
Businesses considering where to expand or move their operations evaluate myriad factors. Among the top considerations, says Jeremy Sowders, economic development manager with Hoosier Energy Economic Development, are access to a skilled workforce; proximity to a population center and customer base; easy access to infrastructure like interstate highways or ports, so the company can move goods efficiently; and a location that can meet the needs of the company. In some cases, tax and other incentives influence their decisions.
Incentives can play a role in closing deals, but typically aren’t the first consideration. “The most important site selection question is finding the right place for a facility to operate,” says Michelle Comerford, project director and industrial and supply chain practice leader with Biggins Lacy Shapiro & Company, specialists in site selection.
Once a company has narrowed its options and decided on a handful of places that should work, it assesses the initial and ongoing costs. That’s generally where incentives come into play, Comerford says. For instance, a company may check into any offsets available to help cover the cost of needed infrastructure upgrades.
Over the past two years, nearly three-quarters of supply chain leaders adjusted the size and number of locations within their supply chain networks, a recent Gartner survey finds. “In a fragmented world, global firms have been making changes to their heavily cost-optimized, one-size-fits all networks, and now favor a mix of global, regional, or local elements,” states Kamala Raman, vice president with Gartner’s supply chain practice.
This “once-in-a-generation shift” of many companies’ manufacturing footprint is a result of the shutdowns and disruptions the pandemic caused. To protect against future supply chain disruptions, “we see a shift to more regional production, all in line with a mindset of ‘make local, for local,’” Comerford says.
The expression “greening the supply chain” has been around a long time. Now, however, more companies are responding to the challenges posed by climate change, Gregg Wassmansdorf says.
Among other steps, they are connecting with their utilities to evaluate renewable energy sources and trying to cut physical waste from production processes. “Many companies are making more focused efforts to figure out how to de-carbonize the global footprint of manufacturing and supply chain operations,” he says.
While sustainability might not lead the site selection process, “it’s definitely on the list,” Comerford says. When companies pick final locations, those that can provide more support to help them meet sustainability goals might gain an edge, she adds. That’s particularly true if the company sells to consumers, or operates in the sustainability market in some way.
The currently tight labor market can also work against companies, however, as it prompts some economic development agencies to ask if they even need to award incentives.
“If the primary goal is to create jobs, and there aren’t enough people to fill jobs, there’s a fundamental question, about the need for incentives,” Comerford says.
Still, many of the jobs now available offer high wages and require skilled employees—exactly the types of jobs many communities want to attract. The upshot? “We see many states and areas continue to be aggressive when it makes sense for them,” Comerford says. “But, they can be selective in what they’ll be aggressive for.”