In today's global marketplace, five years is a very long time.

Manufacturing techniques advance so rapidly that if a machinist were to take a leave of absence from his job, he may not recognize it upon return. Manufacturers that haven't had to evaluate sites for a new facility in the past few years are a little like the machinist: they may not even recognize the world of expansion management.

A critical aspect of site selection is infrastructure analysis. The infrastructure of a site, at the basic level, includes utilities, transportation network, and telecommunications services. Each one is vital to a manufacturer's operation.

What utilities do I need?

The term "utilities" refers to three main products: electricity, natural gas, and water. As manufacturers become more tech-savvy, electricity becomes more critical.

Companies need to have enough electricity to power their operations, and they need to know their service won't be interrupted. Reliability -

a provider's ability to provide seamless service - is a function of both generation capacity and distribution capacity.

"Just because an area may have excess generation capacity, that doesn't necessarily translate into enhanced reliability of that power," said Scott Springer, vice president of Roy F. Weston Inc., an infrastructure redevelopment services firm.

Companies that are evaluating a site should look at the area's demand-versus-supply statistics: Will supply meet or exceed demand now and into the future? They should also research the reliability of the area's transmission system. If an area has a surplus of energy but inadequate transmission lines, power users will run into problems.

An emerging issue on the utilities landscape is that of clean power.

"Because the markets are being deregulated and because a lot of new plants are going online now, many of the existing plants don't employ the best technology has to offer in terms of clean-burning fuels and clean-burning technology," said Springer.

New electric plants are being fueled by natural gas, which is much cleaner-burning than fossil fuels. Many older plants are still burning coal and other fossil fuels to generate electricity; eventually they will have to retrofit their facilities with clean power systems to meet new environmental regulations.

Retrofitting a power plant is an expensive endeavor, and the cost will be passed on to customers. If a company chooses a site in a deregulated energy environment, it can simply choose a newer electricity supplier and avoid these extra costs.

Yet, sites in regulated states may limit companies to older electricity providers, additional costs and all. Like electricity, natural gas is more complicated than it sounds. Companies should ask themselves, "How reliant are we on natural gas?"

If the answer is, "Very," then a site that boasts multiple interstate gas lines is preferable to one that has only one pipeline feeding into it.

Some companies evaluate the cost-effectiveness of adopting a dual fuel system, which uses natural gas and fuel oil. Fuel oil users must have permits to store the oil either underground or aboveground. Potential sites that cannot accommodate this storage space need not be ruled out. Springer also recommends that companies consider interruptible service.

"In many cases, uninterruptible service is very expensive to buy," he said. "That's a front-end issue you need to address."

Water is perhaps the most site-dependent utility product. Geologists anticipate that water supplies will not be able to keep pace with demand in the near future. Local communities are placing restrictions on groundwater withdrawal and limiting development around critical groundwater recharge areas. As the population grows, water districts must create increasingly complex systems for balancing the needs of residential, commercial, agricultural, and industrial growth.

Water-intensive manufacturers, such as chipmakers, need abundant water resources now and in the future; their site choices must reflect this.

Don't forget transportation

The global economy is leaving its fingerprints all over the nation's transportation systems. The transportation network is forming links among modes, particularly between railroads and trucks, and ships and trucks.

"Many companies are choosing to locate close to these intermodal transportation hubs," said Springer.

Container ships, for example, typically transport containers to ports, where they're loaded onto trucks or railroads and shipped inland.

Companies should be looking at sites that are actively developing multimodal systems and attracting transportation hubs to address future needs.

Manufacturers involved in supply chains and just-in-time delivery systems require direct access to one another. For example, an automotive supplier that custom-builds parts and delivers them to neighboring manufacturers for immediate installation cannot accept delivery delays.

"The significance of proximal locations to these extended enterprises is paramount," said Springer.

Telecommunications a must

Evaluating a site's telecommunications infrastructure is a little like playing "Who Wants to be a Millionaire?" It begins with the simple questions and gets increasingly harder.

First, what is the local phone company?

"Ten years ago, that was a fairly easy question to answer. But because of mergers and acquisitions, the phone company today may not be the same tomorrow," said Jim Beatty, president of NCS International, a telecommunications consulting company in Montgomery, Ala.

Second, what services does the local phone company offer?

"Most of a company's telecommunications costs are about data communications," said Beatty.

For example, a company such as Boeing may design aircraft with the input of dozens of other firms. Each player shares computer data files, many with detailed drawings that use enormous amounts of computer memory. Will the local telephone company be able to provide the necessary equipment? Does it have T1 access, DS3 access, Internet access, ISDN (integrated services digital network), and DSL (digital subscriber loop)? These are all key considerations.

Companies that rely heavily on chat sessions, teleconferencing, and video conferencing need to know if the local phone company can handle these group interactions. Another key consideration in telecommunications is, of course, cost.

"Every company is going to require an Interexchange Network Carrier," said Beatty.

"Most people call it a long-distance company. Who are they, and where are their points of presence (POPs)? These are two critical questions."

POPs are sites where calls switch from the local phone company to the long-distance carrier.

"Generally, if I'm a large user of voice and data, a T1 line is 24 lines combined into one circuit," said Beatty. "The T1 line will run from my office to the long-distance carrier's POP."

The farther a company is from a POP, the more it will pay for services. Another factor affecting cost is taxation."If the manufacturer is a heavy user of 800 numbers, some states tax that, others don't," said Beatty. "It's important to research a state's telecommunications tax structure on the front end."

Yet another factor that varies state to state is the law regarding the actual phone calls.

"If a company has a customer service group, it may need to monitor phone calls for coaching purposes," said Beatty. "Some states require two-party consent, some require one-party consent. You need to be aware of these laws."

Additional Charts

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