Yakima County Development Association - Key Issues Affect Location of New Facilities

Jonathan Smith

The President’s Pen is a weekly blog written by Jonathan Smith, New Vision’s President and CEO about local economic development projects and initiatives. It also covers economic trends, workforce issues, business climate policies, and manufacturing news. 



Key Issues Affect Location of New Facilities

April 11, 2011

Each year I look forward to the results of Area Development Magazine's (ADM) annual survey of corporate executives. It provides some interesting insights into the top factors driving the location of new business facilities. Each year ADM takes a pulse of business leaders to determine: 1) how companies are faring economically; 2) what C-level executives view as the most important criteria driving new facility location; and 3) how and when businesses look at specific areas during the site selection process.

Area Development surveyed top executives last fall (2010) and found that they were more optimistic about the economy. The number of companies forecasting new facilities spiked upwards – 56 percent of the respondents were planning to build new plants (versus 46% the year before). New facilities in the pipeline will not, however, produce a lot of jobs. According to the magazine's survey respondents nearly half of the new facilities will employ less than 20. Over three-quarters of the new facilities will create fewer than 100 jobs.

Business executives cited that highway accessibility and labor costs were the most important site selection factors. The magazine cited that these two factors have always been at or near the top of the priority list over the survey's 25-year history. Tax exemptions and incentives came next in terms of importance along with occupancy and construction costs.

According to ADM, tax issues climbed significantly as site selection factors over the last year. Conversely I have noticed that the availability of skilled labor has dropped down the list substantially. This is not a big surprise. The recession has made it easier for companies to find skilled employees.

The availability of unskilled labor took a big drop in ADM's survey. Some of the drop is probably due to the recession, but I also believe that companies are moving operations overseas to take advantage of unskilled labor at lower costs.

Another factor that dropped in importance was the availability of broadband/information technology services. It dropped from ninth to fourteenth in the rankings and ADM suggested many communities have improved their bandwidth so this factor is less important.

The magazine also asked executives when and how they evaluate communities for new business facilities. Over two-thirds of the business executives surveyed said they start gathering information one to two-plus years in advance of selecting a facility location. A significant number of companies do not even contact specific locations until at least six months after they start researching communities.

Three quarters of the magazine's survey respondents use the Internet in their site and facility planning. Online listings of sites and buildings are especially popular areas on community websites. Another influencer, magazines and papers, were cited by about half the c-level executives as an important source of information surrounding new facility location.

Staying in touch with these trends is important. The survey helps New Vision stay abreast of issues that are likely impacting local industry and it helps us position the Yakima Valley when we are marketing the region to prospective businesses. To see a copy of the full article click here

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"A lot of the leaders here in Yakima are very probusiness and make it easy to do business in Yakima." - Lisa Shields-Long, Co-President, Shields Bag & Printing