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In-Demand Workers Insist on Locations With Reputations

Employees, especially managerial and technical workers, are becoming increasingly choosy about where they'll live. To attract the best, companies need to seriously consider the appeal of their current and future locations.

  [ 5/1/1999 ]  By: Roy Harryman, Managing Editor   Print This Article  Reprint/License This Article  E-mail This Article To A Friend  
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Norton Lilly International uprooted its headquarters from the Northeast and moved it to Jacksonville, Fla., for hard-boiled business reasons.

Work force and work ethic. Air transportation. Lower operating costs.

But the softer factors of weather, recreational opportunities, and free-flowing highways also factored into the more than 150-year-old shipping company's decision to set up shop in the Sunshine State.

"Certainly quality of life is important," said President W. Grove Conrad. "I don't play golf, but there's a golf course on every corner down here."

And, compared to the Northeast, Jacksonville's weather has proven to be more than a footnote in the company's move.

"When it snows, employees have a tough time getting to work," Conrad said. "You lose a day, half a day. You may even have to close an office."

With the sunny weather: "You just get more done."

And traffic congestion? Conrad was used to commutes of more than an hour each way, with six jam-packed lanes.

"While some people may complain about traffic in Jacksonville, to me it's a piece of cake," he said.

Norton Lilly isn't alone in considering quality of life in its relocation decision.

Site selection consultants say the labor market squeeze is making lifestyle concerns an increasingly important factor for expanding firms.

While companies can't choose their next business location based on which city has the best beach, a community's lifestyle is obviously a factor.

The Nation's 10 Most Affordable Housing Markets

1. Kokomo, Ind.
2. Duluth-Superior, Minn.
3. Baton Rouge, La.
4. Springfield, Ill.
5. Rockford, Ill.
6. Anchorage, Alaska
7. Binghamton, N.Y.
7. Wilmington-Newark, Del.-Md.
9. Utica-Rome, N.Y.
10. Des Moines, Iowa

Source: First American Real Estate Solutions data analyzed by the National Association of Home Builders.

The ratings are based on the association's Housing Opportunity Index. The index is a measure of the percentage of homes sold in a given market that a family earning the median income in that market can afford to buy.

How important should quality of life (QOL for short) be in your site search? And is it important for every company's move?

To find out, we asked the experts.

Defining quality
Communities and companies can count QOL factors to include everything from the number of museums and hospitals to tax rates. To keep from being overwhelmed, site selection consultants tend to focus on only a few factors that can be objectively measured.

Dave Kolzow, a Greer, S.C.,-based principal with Lockwood Greene Consulting, focuses on education and housing affordability when assessing QOL for clients.

Education includes not only schools for children, but continuing learning opportunities for adults.

Kerstin Nemec, national partner in charge for strategic relocation and expansion services of KPMG LLP, focuses on measurable issues including crime rates, educational systems and student test scores. She also takes note of recreational facilities -- such as golf courses -- and cultural amenities.

For international clients moving to the United States, KPMG will evaluate whether appropriate cultural opportunities are available.

In Alabama, for example, German and Japanese executives' transition into the American South has been made easier by the presence of international schools. The impetus for the programs was the location of JVC, a Japanese company, and Germany's Mercedes-Benz, both of which set up operations in Tuscaloosa County.

John Rhodes, president of Moran, Stahl & Boyer, a business unit of Prudential Real Estate and Relocation Solutions, calls cost of living, education and crime rates the "bread and butter" of QOL. After that, it often comes down to executives' personal lifestyle preferences.

"We felt quality of life would attract the kind of people we were looking for. With some of the really key talent positions, it's virtually a global search."

-- Dirk Schlimm, vice president, human resources, Husky Injection Molding Systems

These may include professional sports teams, the arts, health care, green space, outdoor sports opportunities and climate.

Still another important QOL factor is the opportunity for employees to network with people in related industries.

Semiconductors vs. Sausage Making
Although every business appreciates QOL, not every company needs it when it comes to a location decision.

"If you're hiring the local labor pool, it's not an issue," said Rhodes.

Generally, QOL should only have prime consideration when a company is opening a facility requiring technical, managerial and college educated workers who are relocating or being recruited on a national basis.

In terms of facilities, QOL is a priority for headquarters operations, research and development sites and technical- or engineering-intensive manufacturing operations.

"For those operations, quality of life is a No. 10 on a scale of 1 to 10," said Dennis Donovan, principal with the Wadley-Donovan Group of Morristown, N.J.

QOL was part of Southern National Corp.'s decision to move its headquarters to Winston-Salem, N.C., in the mid-'90s.

Southern National, now known as BB&T Corp. after a merger, moved from a rural North Carolina location that was well liked but not adequate for the company's growth plans.

"We did have some challenges trying to recruit professionals to a smaller town," said David Park, executive vice president.

Park said Winston-Salem offers a regional airport, a strong university presence and an area population of approximately one million. Yet it retains a friendly, small-town feel.

The location is also 90 minutes from the Appalachians and three hours from the Atlantic coast.

"The whole geography of the area made it more attractive for recruitment," Parks said.

Priorities, Priorities
For businesses where QOL is important to their site decision, the issue must be put in perspective.

"There has to be something significant for the business other than quality of life," Rhodes said. "It's the ice cream, not the cake. I've never had a company say, 'Give me a city with the highest quality of life.'"

Labor and transportation issues still drive most locations, Kolzow said.

"Quality of life generally is not something you start up with," he said. "It's something you wind up with."

For a corporate headquarters move, QOL falls behind the overall question of whether the location makes strategic sense for the company.

"In other words, you would get unsolicited resumes because of that location. In many areas the perception is not there."

-- Dennis Donovan, principal, Wadley-Donovan Group, Morristown, N.J.

"In the second cut you say, 'Does this city have the cost of living and educational quality for the type of people we're trying to attract and retain?'" Rhodes said.

Perception vs. Reality
An issue that may make or break your QOL decision is perception. That is, what employees think about a community is more important than its reality.

"In other words, you would get unsolicited resumes because of that location," Donovan said. "In many areas the perception is not there. We call it quality of life transfer appeal.

"That can be significant when it's so hard to get technical skills."

Who's Hot?
When Coltec moved its headquarters from New York City to Charlotte, N.C., its CEO was concerned about cutting costs and changing the company's culture.

What it also found in Charlotte was a completely different QOL, with 70 degree weather in mid-March and a young city on the move.

After pit stops to check out cities in the upper Midwest and Northeast -- both impressive -- Charlotte jumped off the map.

That wasn't the case before the visit, said Rhodes.

But after the initial tour, the company was hooked.

"I don't think the CEO ever went home," Rhodes said. "They put a brand new, very fine looking headquarters not too far from the airport."

Consultants also cited several other cities perceived to have a high QOL by executives searching for a new home, including Seattle, Portland and the Raleigh-Research Triangle area.

"Next-tier" cities in general are popular, according to Nemec. These offer cosmopolitan amenities without overwhelming congestion.

In addition, Rhodes cited Phoenix, Orlando, Atlanta, Denver, Salt Lake City and San Francisco.

Several other California cities can also go in that category, "for certain people and certain kinds of operations," he said.

The state's cutting-edge appeal helped draw Ford's Lincoln Mercury headquarters to Irvine last year. The Wall Street Journal reported in April that the move was "part of an effort to get hipper."

But one company's hot spot might be on another's reject list.

"There's not a universal quality of life city," Rhodes said. "It really depends on where you are coming from and where you are going to in how it might be received."

A Strategy That Works
QOL isn't going away as a site selection factor.

"We have seen quality of life become more of a factor because of the labor market," said Nemec.

That means your next location needs to be chosen carefully, not only in terms of the labor pool, transportation and operating costs -- but in the way that site will be viewed by the people who will make your operation a success.

"We have seen quality of life become more of a factor because of the labor market."

-- Kerstin Nemec, national partner in charge of strategic relocation and expansion services, KPMG LLP

This principle was a key factor in Husky Injection Molding Systems' decision to build a manufacturing campus in Milton, Vt. Husky employs 230 at the site, but has long-term plans for 2,000 workers. Operations began in July of 1998.

The Bolton, Ontario,-based global supplier of injection molding systems for the plastics industry focused on choosing a location that would attract and provide the right people, said Dirk Schlimm, vice president of human resources, who helped Husky implement its expansion plans.

In addition to Vermont's reputation for natural beauty, the state is also in the middle of the cosmopolitan Montreal-Boston-New York triangle.

Husky bet that workers leaving Vermont -- or considering it -- would be eager to stay or return for the right opportunity.

Others, especially engineering and managerial talent, would be willing to migrate to the Green Mountain State.

It's evident that QOL was high on Husky's list when it choose the city of Milton, north of Burlington, for its 240,000 square foot, $80 million facility. Although the company puts a high value on protecting the environment, it could have chosen a state with less rigorous standards.

"For the environmental permitting, Vermont is not the easiest state," Schlimm said. "In the end, they were not unreasonable."

Husky could have also shopped around for a bigger incentive package, but it didn't put the project out for a tax-cutting competition among states.

"We felt quality of life would attract the kind of people we were looking for," said Schlimm. "With some of the really key talent positions, it's virtually a global search.

"This strategy is working."

Executives of Expanding Companies Speak Out on Quality of Life
From Florida to Oregon, business leaders evaluate the lifestyle offerings of cities before they put down roots.

When Bombardier Capital decided to open two new divisions and relocate employees from Vermont, company executives knew the next location would have to possess a unique quality of life.

They settled on Jacksonville, Fla.

"They wanted a place that would be easy to attract good employees and they found that in Jacksonville," said Jennifer Wade, manager of communications. "They also wanted a place where we could move headquarters staff -- a place where people wanted to live. We were moving people from Vermont, so we wanted it to be a place they'd be happy with."

In southern Florida, companies including Mercedes-Benz Latina, United Airlines, Ericsson and Burger King cited the quality of life in the Miami area as part of their location decisions.

In Texas, San Antonio made strategic sense for BABN Technologies when it chose the city for a $40 million, state-of-the-art printing facility for scratch-off lottery tickets.

But San Antonio's reputation also enhanced BABN's relationship with its customers. Numerous clients visit the plant, and the city leaves an impression on them with its mild weather, famous riverfront, theme parks, and historic sites.

"They are in the city for more than just an overnight stay," said Phyllis Duncan, senior vice president of BABN. "It's very accepted to come to San Antonio. The weather is great, we have very few bad days."

In central Oregon, clean air and an abundance of golf courses and other recreational opportunities helped draw Fontana Wood Products from California two years ago.

"It played a pretty big part," said company President Ken Hays. "I wanted to live here. It's a whole different world here from Southern California."

Fontana employs 73 at its 28,000 square foot plant in Redmond.

The business hires some of its administrative staff from out of state, and Hays said the area is an excellent drawing card.

"Everybody loves it here," he said.

Roy Harryman is the managing editor of Expansion Management Magazine.

 

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