Corporate Site Selection and Economic Development by Mark L. Williams

CHAPTER 1 - ECONOMIC DEVELOPMENT: WHAT IS IT AND WHY DO IT?

Economic Development - taking in more money into a "home" economy than is sent out. 

• When this positive balance occurs on a local or state level, dollars become available for essential public functions such as education, infrastructure development, top-notch medical care, and enhancement of amenities that increase the quality of life for its citizens. 
• Those communities that succeed thrive and prosper. Those that don't lose population, are underfunded, and have withering quality of life.

Economic Leakage - expenditures that flow away from the home system, like federal taxes, faraway vacations, and purchases of goods from outside your community

• Similar to a leaky bucket that has more water running out than staying in. The "fill" level in the bucket is the measure of wealth.
• For economic development to be successful, communities must import wealth from outside the home system. 
• Retail businesses may contribute to quality of life, but they do not import money from outside the system. 
• Manufacturers, call centers, consulting firms, office headquarters, and tourism are export businesses in that they export their goods/services and bring money into the home system.

Economic Multipliers - A new manufacturer in a community creates new jobs. These workers have money to spend in the local economy, which creates additional tax revenue and new retail businesses. Additionally, new supplier businesses may be started to supply the new manufacturer with needed materials or services. This is the multiplier effect.

Economic Impact Analysis - the primary purpose of such an analysis is to determine the interrelationships among the various sectors of an economy and the business and industry multipliers applied to calculate economic impacts of bringing in a new business. Using these relationships, the ramifications of any economic activity can be traced through the linkages within the various economic sectors.

• IMPLAN (Impact Analysis for Planning) is an input-output database that was developed in the mid-1970s for the purpose of conducting community impact modeling. 
• The idea is to estimate how many additional jobs would be created by bringing in a new business. For example, for every 100 jobs a new manufacturer brings in, an IMPLAN study might find that an additional 350 jobs will be created through new suppliers being started, retail businesses growing, etc. Some types of businesses have a greater economic impact than others i.e. manufacturing vs. retail.

Many people question the wisdom of states offering incentives to attract new large businesses. An example of how this works well is given using South Carolina's recruitment of BMW's manufacturing plant. After 25 years in operation, an economic impact study was done and made these findings:

• Nearly 89% of BMW's total impact on the US comes from its South Carolina manufacturing plant. SC's annual share of economic impact is approximately $38.5 Billion. This figure reflects the annual dollar value representing all final goods and services produced across the US that can be attributed (either directly or indirectly) to BMW.
• Total US job creation resulting from the SC plant is 103,900.
• Approximately 70% of SC production is exported to over 140 countries. This represents new money flowing into the US economy that would not otherwise exist.

CHAPTER 2 - HOW ECONOMIC DEVELOPMENT IS DONE IN THE US

Cities and Counties

In the end, all economic development is local. Buildings or sites are local as is permitting and zoning. Infrastructure is local. Workforce availability is local. Many cities and counties have a local EDO (economic development organization).

Regional Groups

Comprised of multiple counties to cover a specific geography. Are usually nonprofits with independent boards that are funded through both private contributions and government allocations. Activities typically include business location lead generation, site analysis and readiness, business research, coordination of water and swere utilities and road networks.

Utilities and Railroads

Most have aggressive economic development programs in order to increase business and job growth. Some even have "site readiness certification" programs.

The Private Sector: Engineering, Environmental and Geotechnical Firms

These types of firms provide due diligence services on sites being considered for new businesses. This includes verifying issues such as soil conditions, wetlands, endangered species, and potential presence of archeological sites.

States

Most states have a Dept of Commerce (or similar) that leads a state's pursuit of major site location projects. They generally serve as the initial points of contact for corporations and site selectors. They principally exist as either a cabinet agency reporting directly to the governor or as a government/private-sector funded nonprofit.

Governors

Most governors take an active role in selling their state for economic development projects. For state development agencies, if deployed correctly, a governor is the best sales tool they have. The most aggressive governors travel to call on significant prospects and make it clear to state agency leadership they are available for active selling for high-impact deals. 

Successful economic development is typically measured in terms of new job creation and new capital investment.

Tactics Used to Generate Leads and Secure Site Locations

• Management of site location projects 
  • State agencies typically receive requests for information (RFIs) from corporations or site selectors outlining site requirements such as site size, utility needs, workforce needs, and transportation needs. The agency responds with site candidates that meet these requirements. They often bring in allies such as local EDOs and utility companies to provide relevant information for the RFI.
• Pursuit of Foreign Direct Investment (FDI)
  • EDOs try to make contacts with foreign companies to entice them to open a location in their region. This is typically done through establishing foreign offices, attending international trade shows, and contracting foreign sales representatives.
• Interactions with Professional Site Consultants
  • Site consultants represent corporations looking for a new site. They help corporations find the most suitable locations amongst the hundreds of possible locations in the US. These interactions generally take one of these forms:
    1. Meetings at consultant offices
    2. Interacting with site consultants at conferences
    3. Familiarization (fam) tours - Economic developers bring in groups of site consultants for multiple days to attend presentations about a particular territory.
    4. Paid consultant engagements - Site consultants are engaged by EDOs to conduct brief community and site assessments and to provide summaries of observations and recommendations for improvement.
    5. Various electronic and mail/package delivery to highlight assets of their community
• Conferences and trade shows
  • EDOs will attend conferences and trade shows where they can interact with corporate site location decision makers who might be considering new projects.
• Site databases
  • Many EDOs maintain a searchable database of available properties on their website that lists relevant information such as environmental conditions, pricing, zoning, utility access, transportation access, and labor draw.
• Product development and site readiness
  • Many states and utilities have initiated "site certification" programs to "verify" the readiness of sites for project locations. Some preemptively prepare sites for different types of industries such as automotive, office headquarters, etc. This may include adding utilities, roads, rails, and even flex buildings.
• Incentives
  • Many states offer incentives to companies considering large site location investments. These incentives are often worth hundreds of millions of dollars.
  • They are very controversial. Some see them as necessary to secure large location projects. Others see them as giveaways and corporate welfare.
  • The author sees them as useful as long as the public sector verifies the following before offering and determining the value of incentives.
    1. The offered incentive will impact the site decision.
    2. After the economic benefits of a site location project are determined, the ROI of applied incentives is verified to be positive
    3. The ability to utilize enforceable "clawbacks" in the case of non-performance is established. Clawbacks are the ability for public bodies to be repaid for incentives awarded when performance requirements are not met.
  • Incentives often include some combination of the following:
    • Property tax abatements
    • Income tax credits
    • Rebates of payroll tax
    • Sales tax exemptions
    • Site preparation grants
    • Free or reduced-price land
    • Financial support for site due diligence and site mitigation
    • Utility rate and infrastructure cost reductions
    • Training
• Targeted marketing
  • Industries and companies within those industries with a propensity for growth and which have a match for the assets of a territory are identified and approached about the potential of investing in a region. Materials are usually developed to help illustrate the ways the territory's assets are a good match for the needs of a locating company.
• Existing industry calls
  • It is not uncommon for economic developers to interact with existing companies in their region to simply convey goodwill, to pitch growth in their community, or to identify suppliers that can be recruited.
• Seminars
  • EDOs may conduct seminars in major cities to convene potential FDI investors for briefings. These are often title Doing Business in [city name here].
• Cross border recruiting (poaching)
  • States and utilities have been active in recruiting business from areas of the country perceived to be less competitive.

CHAPTER 3 - COMMON MISTAKES MADE BY ECONOMIC DEVELOPERS WITH RELATED RECOMMENDATIONS

Mistake 1: An EDO Lacks Results-Oriented Goals

Any EDO should be able to summarize its desired bottom-line results in a page or two. If poor results are occurring consistently, a new strategy should be implemented. Don't confuse being busy with being productive.

Mistake 2: Tolerating Lack of Leadership

Economic development board leadership must set clear objectives and goals, both quantitative and qualitative, and charge operational leadership with accomplishing these goals within a reasonable period of time. Boards must hire operational leadership they believe can accomplish these objectives and goals. If goals are not accomplished, boards should coach or replace operational leadership until they are. If this action is not carried out, the boards should be replaced.

Mistake 3: Don't Know a Good Project (or a bad one) When They See It

EDOs should know what their ideal business development targets look like so that when a project comes knocking they can either say yes or no. It helps to start with the end in mind. 

If you could look back in five years and say you had phenomenal success in business development, what does that look like? What types of businesses did you recruit? How large were they, what business sectors were they in, what were the typical costs to recruit and establish? What type of employees were hired and what was their compensation level? What level of environmental impacts did the recruited companies have?

Mistake 4: Communities, Particularly Rural Ones, Not Selling to Assets

Every community should identify assets and liabilities. Assets could include natural resources, tourism, great internet connections, for example. Once assets are identified, the community should target opportunities that treasure their assets and don't care so much about their liabilities.

Mistake 5: Too Many Chiefs - Who Does a Site Selector Call?

To compete for site selection projects, a lead EDO that coordinates activity of other "allies" across the geography being considered should be chosen. As the number of locations for a project narrows, the need for interaction with local entities will become greater. Like a well-functioning orchestra, every project needs a conductor who can adeptly cue the appropriate economic development ally to add value to the site selection process at the right time.

Mistake 6: Lack of Research about Site Location Competitors

It is critical that developers short-listed in site selection projects understand the strengths and weaknesses of their competition relative to their own. Understanding a competitor's site in terms of ingress and egress, utility connectivity, topography, and other site characteristics will help you better position your site to win the deal. Being informed on other factors like labor draw, costs and incentives, and business climate issues is also necessary. Comparing the true value of incentives is also important.

Mistake 7: Not Being Prudent in Incentive Negotiations

Understand the strengths and weaknesses of incentive programs offered by competitors and structure and sell yours accordingly.

Do your best to understand site development costs at your competitor's site. You may offer fewer incentives but your net cost to the client is less. Don't negotiate against yourself.

Verify the financial wants and needs of a client before structuring an incentive package. Try to identify incentive items that have high value to the client and least value to you.

Understand the economic impact of the deals you are courting and structure incentive packages that provide a significant risk-adjusted return to your state and community.

Offer performance-based incentives whenever possible and structure clawbacks that can be implemented for grants and other upfront payments.

Mistake 8: Not Listening to and Selling to Project Needs

A site selector's goal is always to verify the project's "have to haves" first and then move down the list of priorities. They want to find any fatal flaws as early as possible with least expenditure of time and resources. If a site selector asks for technical details and a developer sends quality of life information, that community will likely be removed from the short-list.

Mistake 9: More Not Listening

When a site consultant is drilling down on a particular point or need, there is a reason. Listen carefully and provide the best answers and solutions possible.

Mistake 10: Not Keeping Projects Confidential

Site selectors generally prefer their projects remain confidential for competitive reasons and also so as not to upset their employees before a decision is made. Developers will be approached by numerous parties and asked to reveal all or parts of a site selection client's identity and project scope. They should resist the temptation to discuss any aspects of the group's project and make it clear on an ongoing basis that they do not discuss details of projects or even a project's existence. They should also use common sense in arrangement of meetings to keep outside exposure to a minimum.

Mistake 11: Not Understanding the Potential Positive Economic Impact of a Candidate Project and Pursuing Accordingly

Three key positive impacts that can result from landing a solid project in one's location include:

• Economic impact - large projects can have multi-decade, multibillion-dollar economic impacts
• Reputational impact - if you win this project, others will take note and be attracted to your location
• Stretching a community's positive attributes creating a snowball effect - i.e., attracting a knowledge-based business that further stimulates the community's education and training assets

Not marshaling resources necessary to win high-impact projects is a common mistake. These resources can include:

• Adding marketing and research resources to better illustrate a compelling case for a project location
• Utilizing access to helicopters, drones, or other resources that give the site selector and client the perspective of a site
• Making commitments such as providing sites, training programs, or other assets that show buy-in and have extremely high psychological impact

Mistake 12: Not Being Prepared on Site Inspections

Verify and carry out the required site visit agenda, address details in a meticulous way, and be prepared to deal with the unexpected.

Mistake 13: Lack of Protocol When Recruiting FDI

FDI recruitment is valuable, and a hallmark of good business is being respectful and polite. FDI executives don't expect perfection in adapting to their culture. What they do expect is a reasonable effort to accommodate them. 

It is a good idea to read background about their culture and business norms, learn a few kind phrases and gestures, and do your best to prepare for interactions with FDI executives. In the end, your respect will shing through and the chance of economic development success will be improved.

CHAPTER 4 - THE SITE SELECTION PROFESSION

What Is Site Selection?

It is the art and science of finding a location to manufacture a product or provide a service that is optimum in terms of efficiency, cost, and quality. 

Selecting a bad site can have negative consequences forever, which is why many businesses utilize a professional site selection consultant.

Site selection is a niche business sector with only about 75 professional firms in the US. These 75 firms handle 50-60% of the capital investment dollar volume of site selection projects in the US.

The Site Selectors Guild

Founded in 2020, the Guild is dedicated to advancing the profession of corporate site selection by promoting integrity, objectivity, and professional development. Members are peer-nominated and must undergo a rigorous vetting process based on years of experience and client projects managed to become members.

Most Common Reasons for Site Location Projects

• Expansion of Capacity
  • Perhaps the most common reason to consider a site location is the need to expand capacity to produce an existing or new product or expand office capacity to manage company operations.
• Attacking a New Market
  • Given the US's reign as the world's largest consumer market, many foreign companies have been locating in the US for decades to seek direct access to this market.
• Seeking a More Competitive Location
  • Businesses sometimes look to move for the potential of finding better cost structures, talent availability, business climate, and proximity to core businesses.
• Downsizing of Capacity
  • In this type of project, a corporation analyzes multiple locations to cost model the comparative competitiveness of each facility, and the least competitive would be closed. These projects often involve a consolidation component whereby one facility in a  would close and another would remain open and be expanded via consolidation of some capacity from the closed facility.

What Matters Most in Site Location Decisions

Every project is unique. A project's key site locations factors are "have to haves" whereas other factors that are important but not essential are "like to haves."

• Sites (and Existing Buildings)
  • There must be a suitable piece of property that can be purchased, leased, or otherwise controlled that meets a specific project's physical requirements.
  • For a community, having sites or buildings available for consideration for site selection projects is one of the most basic elements leading to economic development success.
  • Greenfield - A site where a new facility is to be constructed
  • Brownfield - Sites that have been previously used
  • Physical requirements typically include:
    • Site/building size
    • Site/building configuration
    • Site topography
    • Utility service, electricity, gas water and sewer, internet and telecom
    • Acceptable geotechnical, environmental, archeological conditions
    • Appropriate zoning
    • Suitable surroundings
    • Suitable road access and rail service, if required
• Logistics
  • There are two primary logistical considerations:
    1. If a product is being manufactured, it's important that a site location considers the methods of transport available from suppliers and to customers. Supply chains can be extremely complex.
    2. The location of customers and methods of transportation a site has available to reach customers are an important cost, timing, and risk factor.
  • Easy access for employees is also an important consideration.
• Utilities
  • Properties with unique utility needs are heavily dependent on the availability, quality, and cost of electricity, telecommunications, natural gas, water and sewer services. These projects typically include process manufacturing such as steel, chemical and automotive facilities as well as data centers
  • In such instances, it's imperative that utility providers be involved in the site location process.
  • It's also important to verify the feasibility and cost of rail service and ingress and egress of road traffic.
• Workforce
  • Availability of a qualified workforce is critical for all projects so labor sheds must be evaluated carefully.
  • As automation in manufacturing increases, skill sets for employees will require higher technological aptitudes.
• Financial Case
  • Likely the most important comparative consideration between sites is the net financial cost of developing and operating a facility.
  • Key considerations include cost of acquisition and construction as well as costs of clearing, grading, geotechnical remediation, and installation of roads and rails.
  • Some of these costs can be offset with grants and incentives.
• The Feeling
  • Many corporations place significant decision weight on qualitative factors and, for some projects, they are the final determinant of site location. 
  • Once the "have to haves" are met, they look for comfort of various forms to verify a decision feels good in the gut, whether it's that the region reminds them of home or that they will be welcomed and supported by the community. 
  • This is especially important for foreign corporations that are a long way from home and making significant large investments.

Key Steps in the Site Selection Process

The goal is to find the optimum site to meet a client's needs based on their stated priorities. The following are typical steps carried out in a project facilitated by a professional site selection consultant.

1. Project Alignment

The most important step in the process is verification of client goals and objectives, project timing, and key decision criteria with weights of significance.

A questionnaire and in-person discussion are useful to ensure all site selection topics are defined and discussed. It's important to continually ask "why" during this process to help the client clarify in their own mind why they have chosen the criteria they have.

2. Site Identification

Identification of candidate sites meeting essential location criteria is typically carried out via review of internal databases and query of networks of state, regional, and local economic development allies. This typically results in a long list of potential sites. 

Once a list of candidate sites is collected, site elimination begins. Sites that don't meet essential criteria are eliminated. Sites that meet "have to haves" but not "like to haves" may be eliminated. 

3. Recommend Short-Listed Sites

Systematic elimination of sites least able to meet project criteria leads to a short list of 2-3 sites that are believed to be most suitable for the project. These sites will be scrubbed further.

This analysis typically includes deeper dives into site and utility due diligence, labor studies and verification of anticipated project development costs. As part of this process, detailed site comparison matrices are developed to compare quantitative and qualitative factors for short-listed sites. Client site inspections are usually part of the short-listing process.

4. Negotiate Incentives

Since costs are always a key factor in the final selection of sites, negotiation of project development costs (land acquisition and infrastructure) are important at this stage. Incentive negotiations related to taxes, grants, utility rates, and transportation also occur at this stage to verify the net cost of developing and operating each short-listed site.

5. Pinpoint the Optimal Site

The final site is chosen. Legal documentation of all project commitments, including incentives, occurs, and the project is announced publicly.

6. Launch the Project

CHAPTER 5 - THE ROLE OF A SITE SELECTOR

There is currently no licensing standard for site selectors, which is why the Site Selector Guild is so valuable for finding experienced and knowledgeable site selectors.

Typical Characteristics of Successful Site Selectors

• Students of business - have an inherent interest in business decision making and the results that drive success for their clients
• Organized
• Analytical - able to synthesize data and observations and general meaningful conclusions and recommendations
• Systematic - able to move quickly from consideration of many sites to one final site recommendation
• Sales oriented
• Adaptive to change
• Entrepreneurial - most site selectors have either started their own firm or managed a discrete department within a larger firm
• Excellent communicators - must be able to condense complex information into focused recommendations
• Self-confidence - site selectors do often have egos, some more than others

What Do Site Selectors Do?

This is a summary of the most common tasks performed by qualified site selectors.

• Client Convener and Promoter of Project Alignment

The most important and first task is verification of the needs and priorities of the site selection client. Issues related to site characteristics, requirements for utility and rail, logistics and geographic preference, business climate preference, and workforce needs are fully vetted. It is not uncommon that preconceived client opinions on these factors are modified in the alignment process.

This process often requires discussion with various departments such as Strategic Planning, Legal, Environmental, Human Resources, Engineering, Production, and Logistics to verify consensus on project factors that are "have to haves" and those that are "nice to haves."

• Developer of Solutions

A site consultant is expected by their client to develop solutions to problems and mitigate any damage to project schedules or costs. These problems can include sites that were thought to be finalists but found to have a fatal flaw, news about a confidential project being leaked, or an irritated governor that was left out of a meeting.

Site selectors must coordinate complex schedules for site visitation and evaluation with numerous moving parts and people that simply don't always work together as planned.

• Gatherer of Qualified Sites

Based on site requirements, the selector will consult internal and other site databases as well as solicit sites from a variety of sources to determine which qualified sites may exist within the geographic search area. Sources of potential sites include EDOs, utility companies, and real estate professionals.

• Keeper of Confidentiality

Most corporations prefer their site location projects be kept confidential until they are ready to publicly announce them. Site selectors often secure NDAs from allies needed to generate site candidates accompanied by a firm verbal warning regarding confidentiality.

A project code is typically used to protect all communications. This code should have meaning to the client but not be recognizable for others. An example is Project Triple M for the third micro mini mill for a steel production company.

• Site Evaluation and Due Diligence Analyst

Numerous sites are identified through the site solicitation process. Then through thorough analysis, including verifying utility service site buffer, demographics, site due diligence (topographical, geotechnical, environmental, endangered species, archeological), the number of sites will be cut to 10-20. At this point, field inspections will take place, and the number of sites will be cut to 2-3 for the client's review.

• Services Coordinator

Site selectors coordinate a variety of service providers to ensure thorough due diligence, including engineers, architects, environmental experts, lawyers, and accountants.

• Labor and Demographic Analyst

Labor evaluation is one of the most critical aspects of the site selection process. Site selectors use a variety of databases to inventory the number of people employed in a "labor shed" that have occupations the same or similar to the positions to be required. They also look at the universities and trade schools available in the region to train future workers, and they perform field interviews with employers to determine the quality of the current workers.

• Evaluator of Logistics

For facilities heavily dependent on shipping, locating in the wrong place can cost millions of dollars over the life of the facility. A key role for a site selector is ensuring a site provides logistics that best reduce cost and risk for their client.

• Business Climate Analyst

Site selectors must identify positive business climates for their clients. Elements evaluated in analysis of business climate include political stability, labor unions, ability to expedite permitting, acceptance of corporate cultures, right size fish in right size pond.

• Financial Analyst/Comparative Cost Modeler

Site selectors provide financial models that project cost comparisons for short-listed sites. Costs to be evaluated include those related to site development, construction, logistics, labor force, and utilities. Incentives may be offered to offset some costs, and a site selector much accurately value incentives.

• Political Advisor

Interaction with political leaders and government agencies is a critical part of site location projects. Zoning and permits are needed and various concessions and commitments are required. Unfortunately, government and businesses often do not understand the issues and processes the other side must navigate, so the site selector must explain it to both sides.

• Negotiator

Negotiating a variety of location factors such as land costs and incentives is a critical role typically carried out by site selectors once a few sites have been short-listed.

There are 3 primary outcomes of a successful negotiation:

1. Maximizing financial and other benefits to clients
2. Verifying direct and indirect benefits to those negotiated with, pointing out a positive ROI for them
3. Not irritating those we are negotiating with to the point where they walk away and stay away or goodwill is permanently compromised

It is important to negotiate on "have to haves" before negotiating "nice to haves." Common points of negotiation are:

• Financial benefits including tax benefits and grants
• Funding for site due diligence
• Infrastructure improvements for utilities
• Workforce and school system development
• Transportation infrastructure
• Training services and grants for training
• Land acquisition/lease conditions/land options
• Job and investment thresholds to qualify for incentives and non-performance conditions
• Rail rates, electricity and gas rates, and related infrastructure costs
• Qualitative issues, i.e., street and park names
• Items of value to a client that no one ever thought of before

For high-impact projects, it is useful to conduct incentive negotiations with an economic impact analysis in hand so the community can understand the job and economic impact multipliers that will result from a project.

It is also important to ensure a site selector is negotiating with the person who can actually make commitments on negotiated points.

CHAPTER 6 - COMMON MISTAKES MADE IN SITE SELECTION

Site selection decisions are not made frequently but can have competitive and financial impacts for decades. A bad decision can cost a corporation tens of millions of dollars over the lifetime of a facility. This is why it's important to choose a professional site selector with experience in the site selection process. These professionals have checklists of items that must be verified to ensure optimal site selection.

The Top 10 Site Selection Mistakes

1. Lack of Alignment Among the Client Team

Lack of alignment results in team members questioning goals and objectives after a search has started resulting in a loss of time and money. A site selector must help their client identify key aspects of project success before a search begins.

2. Not Setting Up a Competitive Project Environment

Failure to set up a competitive project environment means there is little negotiating leverage between states or utility providers. A good site selector must ensure that there are last two sites in different states with different utility and transportation providers in order to ensure the lowest rates and highest incentive values possible.

3. Failure to Maintain Confidentiality

The best site selectors implement proven strategies to maintain project confidentiality. Failure to do so can result in competitors and employees learning about the project, resulting in a competitive disadvantage and employee turnover.

4. Non-Optimum Logistics

Not considering the cost of logistics related to highways, ports, rail, and air can cause a long-term cost disadvantage. Qualified site selectors location cost modeling occurs. Where possible, they recommend site locations that have multiple transportation options to create competition and shipping alternatives in case issues shut down primary shipping options.

5. Lack of Site Due Diligence

Not conducting adequate geotechnical and environmental due diligence can result in significant unforeseen costs and delays. Issues such as poor soil types, the presence of rock formations or sinkholes, high water tables, or the presence of wetlands, archeological issues or endangered species can be very challenging. This is why it's necessary to hire the appropriate experts to evaluate sites for these issues before moving forward.

6. Limiting the Site Search Area

Often company site selection teams working without a site selection consultant limit the search area based on internal biases, such as only looking at right-to-work states, without considering comprehensive project needs. This can result in a less attractive site being selected that compromises competitiveness forever.

7. Selecting a Site That is Too Small to Accommodate Future Growth

Locating on a site that is too small often limits future growth and results in unnecessary and repetitive capital investments in infrastructure and site preparation if a new site must be identified for expansion.

8. Failure to Document Commitments

If commitments are not fully recorded, they may not be included in MOUs and agreements. For example, if a commitment for gas volume and pressure is not recorded in an agreement, at some future point there could be significant issues related to delivery of gas as committed, threatening a company's ability to manufacture product.

9. Not Understanding the True Value of Incentive Packages

Not truly understanding the full value of incentives and their related timing and likelihood of being secured can generate input into comparative financial models that is misleading and can lead to faulty site location decision making.

Types of incentives commonly offered are state income tax credits, property tax abatements or reductions, and job creation incentives.

10. Selecting a Site Based Primarily on Incentives

Compelling incentive packages can influence site decisions in a manner that results in choosing the wrong site. Incentives can't make a bad site good. This type of mistake could result in lifelong project costs that are far greater than the value provided by the incentives package. 

CHAPTER 7 - CASE STUDY SUMMARIES OF SUCCESSFUL SITE SELECTION PROJECTS THAT PIVOTED

(These notes do not encompass the details of the case studies; only the lessons learned.)

• Case Study Overview #1: Heavy Manufacturer in the Construction Materials Sector

The manufacturer needed to add significant new production capacity and was leaning toward expanding on an existing site, but a site consultant convinced them to look at options in other states. In the end, the manufacturer decided to expand at a new location in another state rather than at their existing production site.

Key Takeaways

1. Consider multiple location options

This process creates healthy competition between locations and can lead to discovery of alternate options that have significant benefit over expansion.

2. Definitive answers matter

"Yes" and "no" are the only acceptable answers from economic development agencies and government regarding utility expansion and incentives. "Maybe" or "we'll see" are unacceptable.

3. Incentives can make a difference

While incentives aren't the primary reason a site decision is made, they can mitigate negatives of a site to the point that other positive attributes of a new site prevail.

4. The "feeling" matters

Most corporations seek a gut feeling that they will be accepted and supported in a community that they select for their project.

• Case Study Overview #2: Life Science Headquarters and Manufacturing Production Relocation

The client was preparing to announce a new project at their initial site choice but became so concerned about the lack of commitment and support from the county that they pivoted and initiated a new search, ultimately leading to an alternative site selection.

Key Takeaways

1. Indecision and lack of commitment can kill a project

During the project process, site selectors and their clients look for positive and negative signs in their dealings with local government as a gauge of business climate. Lack of support or inability to reach decisions creates doubt about future support and can kill a project.

• Case Study Overview #3: Manufacturer in the Transportation Sector

The client had already selected and announced a new site location, but a fatal flaw was then found at the site, requiring the client to initiate a new search. on an expedited timeline The client was leaning toward locating on excess land at an existing site. They later found this option wouldn't work, but there was a nearby site that had a high level of "site readiness" and was superior to other greenfield options.

Key Takeaways:

1. Constantly scan for workable site options--be flexible

Site consultants and their clients must be open to evaluation of new site opportunities which provide significant improvement over existing site candidates.

2. Actively involve members of the client's site location team in the site analysis

When a project is being expedited, it is critical that the client's site evaluation experts are actively engaged on a day-to-day basis to consider information generated on a real-time basis related to site characteristics, utility service, labor draw evaluation, and financial analysis.

3. Understand the value of site certification/due diligence programs

It's important that site locators and their clients have access to databases that can generate site candidates that have already gone through a rigorous due diligence process.

CHAPTER 8 - SITE SELECTION AND ECONOMIC DEVELOPMENT MOVING FORWARD

Are Site Selectors Still Needed or Will Corporations Simply Do Location Projects On Their Own

There is a lot of data available online such as demographics, site readiness, and GIS mapping, so why do corporations need site selectors?

1. Data doesn't provide all the information needed for a site location decision.

The increase in accessibility to data has allowed more desktop analysis to occur before making field inspections, thus reducing time in the field and overall costs as site candidates can be narrowed down earlier in the process. However, qualitative factors such as the business climate, community support, and the gut feeling must still be handled in the field.

2. Corporations rarely have staff with the time capacity to focus on site selection projects.

Site selection projects are very time-intensive due to analyzing dozens of sites and interactions with numerous people from the public and private sector. Internal management has other responsibilities that are important to core business production, and conducting a site selection project is not the highest and best use of their time.

3. Corporations do not usually have staff with the expertise to fully address site selection projects.

Corporate site selection is increasingly complex, and mistakes can have large negative cost and competitive impacts for the long term. The process is best guided by professionals who deal with site locations dynamics every day.

4. The cost of getting a site location decision wrong or "a little" wrong is immense.

Errors in site selection must be endured for the life of the facility, perhaps 30 or 50 years. The larger the project, the greater the financial loss, often in the billions of dollars over the life of larger projects.

APPENDIX I - KEY TOPICS AND QUESTIONS FOR PROJECT ALIGNMENT PROCESS

This is a list of information that a site selector should ascertain when beginning a site selection project. I'm not going to recreate it here, but it could be very useful for anyone entering into site selection.

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