Trends in Corporate Site Selection: A Q&A with GLS Senior Principal, Didi Caldwell

Have you noticed any growth in the number of companies relocating back to the U.S. from a foreign location? If so, what do you think is the reason why?

“We’ve seen that the United States has become the hot place again. For a while everyone was looking at emerging economies, like China, India, Brazil and certain countries in Europe, but companies are once again looking at investing in development in the United States.”

“Companies with high capital investments are transitioning to the U.S because of the lower energy prices, strong market and favorable logistics. Europe is facing extremely strict environmental regulations, with taxes on energy production driving the cost of business increasingly higher. While the environmental regulations are still somewhat tricky in the U.S., the strong market, IP protection and low energy costs make it easier and more attractive for companies to do business here.”

“Rising labor costs in China has also resulted in more jobs being driven to the United States, but there is a lot of competition for labor intensive projects. The Southern U.S. is competing a lot with Mexico for these projects.”

“We currently have two Chinese clients that are looking at the U.S because it’s a good stable market that has a competitive cost of doing business.  Companies realize that if they want to be a player on the global scale, they need to have investments in the U.S. or at least somewhere outside of China.”

In terms of the U.S being a hot spot, do you notice any trends in the companies coming back?

“As far as particular industries, there’s a huge boom in chemical and petrochemical projects. The increased availability and low cost of natural gas or anything derived from natural gas, such as plastic, is currently very competitive.”

“We are also seeing a lot of projects in the food industry. South Carolina isn’t viewed as a huge breadbasket, but the state does have solid agricultural production, and more importantly, a growing population. Food manufacturers usually choose sites either near their supplies or their customers, which is based on population. Since the South’s population has been growing significantly, it makes the region even more attractive for those projects.”

In terms of when companies look at new locations, expansions, new developments, etc. are there any trends you’re seeing?

“New distribution facilities have become more common in the last couple of years. Big companies are looking to realign their distribution efforts to increase their efficiency. There are all of kinds of things contributing to that, such as fuel prices, regulations on the trucking industry and other dynamic changes within the supply chain. We are seeing a lot of realignment in manufacturing and distribution because what was efficient under previous assumptions is not efficient in current conditions.”

“Workforce has always been important, but 17 years ago, there was more of a core base of manufacturing workers. When we went through the economic downtown, a lot of those people either went to do something else or retired, so when the jobs came back we no longer had the experienced manufacturing base we now need. The skills required of manufacturing workers has risen due to the increase in automation and the need for higher technical skills and many areas throughout the country just don’t have the skill base needed, so when companies are evaluating locations they are definitely looking at the availability of a skilled workforce.”

“For most companies now, it’s less about the cost and more about if they can get a quality, dependable workforce with a work ethic that ensures a company will be able to start up successfully and produce the manufacturing quality and quantity expected.” 

Do you see South Carolina, or this region specifically, being a major competitor in terms of workforce?

“South Carolina definitely has one of the best workforce training programs for new and expanding companies. The state has worked to successfully integrate and customize programs for the technical college system with the companies in the area. That’s definitely one of South Carolina’s biggest assets.”

“If you have manufacturing skills in South Carolina but don’t have a job, it’s because you don’t want one. The state has certain advantages like a non-union workforce and a history of labor and management getting along very well, so that is certainly an advantage. South Carolina is also looked at as a friendly state to do business with regards to the regulatory environment as well.”

How can South Carolina better itself?

“One of the biggest things is developing more shovel-ready sites prepared for companies to invest in an area with the infrastructure to support industry needs. Many heavy manufacturing projects require sites that are 100 acres plus, with access to rail, good quality water and waste water treatment capabilities, reliable power and an abundance of natural gas. Many of the areas in the counties in Upstate South Carolina are blessed with these things, but we do need to work on acquiring and characterizing sites and insuring they are shovel ready.”

For more information on Global Location Strategies, visit http://www.globallocationstrategies.com.

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