NEW FACILITIES DEVELOPMENT
John C. Melaniphy
published in Area Development
New manufacturing companies with combined office and plant facilities are usually more complex, since they include senior management, middle management, supervisory personnel, skilled and semi-skilled workers, and perhaps some unskilled labor. Important elements in this process are as follows:
OBJECTIVES (might include the following): Select a city where the company can become a "big fish in a small pond."
Increase the quality of labor productivity, stabilize the labor supply, and reduce employee turnover.
Improve transportation options and cost/savings.
Reduce utility costs.
Reduce corporate taxes.
Avoid excessive government regulations.
Reduce health care costs.
Reduce unemployment compensation costs
Move closer to primary markets.
Move closer to raw materials.
Improve quality of life.
Avoid environmental issues.
Improve safety and security.
Substantially reduce real estate taxes.
The primary factors included in the market study are as follow:
Distance to primary markets
Timing to markets
Accessibility to major airport(s)
B. Raw Materials
Proximity to raw materials
Location's cost/benefit relationships
C. Product Needs
Proximity to major markets
Marketing locational requirements (if any)
Supplier proximity for service
Labor skills level
Other fringe costs
Unemployment compensation costs
Day care availability
Energy availability and costs
Trend in utility rates charged
Any special sewer or water requirements
F. Quality of Life
Housing availability and costs
Safety and security
G. Environmental Considerations
H. Governmental Services
Level of service currently provided
Fire and police protection
Community interest and cooperation
I. Special Considerations
Economic development incentives
Low cost financing
Infrastructure cost assistance
Any special requirements
K. Computer Analysis of Data
Comparison of alternatives
Model simulation of each alternative city
Computer analysis of hard number factors
Ratings of subjective data
Identification of priority ranking
L. Site Selection Alternatives
Geological report, including soil tests
Water and sewer requirements
Telephone, data, and communications links
Land cost analysis
Preliminary building costs
Site improvement costs
Acquisition of site
M. Project Financing
Method of financing
Identification of lender
Negotiating interest rate and terms
Opening the loan
Permits and approvals
Final punch list completion
There are many variations to the above depending upon individual needs, requirements, conditions, and other factors that must be reiterated and analyzed in order to identify potential locations and select the best locational opportunity. Nevertheless, through prudent and objective evaluation of the conditions that are necessary for a particular business, not only can relocation be a smooth experience, but it can also be a rewarding one.