So your boss dropped by your office and told you to recommend a place to build a new plant for your company. You were informed that this would be a highly confidential assignment and, oh by the way, don't spend too much in completing the task — as quickly as possible, of course.

You are flattered that top management has placed so much confidence in you by assigning this responsibility; on the other hand, you are wary since you have never done a plant location selection project, and neither has the company.

You are, however, familiar with the manufacturing operation and what it needs to succeed. You are vaguely aware that there are consultants that can provide professional expertise to assist you, but given corporate budget concerns you opt against that alternative, at least initially.

Besides that, how hard can it be to pick a plant location?

Well my friend, contrary to what many people will tell you, it is not that hard to find a location in which to place your plant. What is hard is selecting a good location in which to operate successfully.

And what is even more difficult is to identify the best location for the new facility.

The measure of a site selector's success will not be known until long after the location decision. Acquiring property, design and construction, hiring and training a work force, plant startup, and time to evaluate the ongoing operation must pass before the verdict is clear.

Moreover, it will never be known whether the best location was chosen, because there are no readily available benchmarks to measure how successful your plant would have been in communities that were rejected.

First Steps Are Critical

If you are going to proceed on your own, your best bet is to follow the approach generally used by most site selection professionals, both corporate and consultants. The process starts with defining the largest geographic search area for the project that is also acceptable to management, and then eliminating less desirable geographic sectors and individual communities.

Many economic developers believe the entire location process is an elimination procedure, and that consultants, in particular, spend their time looking for location flaws to drop candidates until only one is left.

The more conscientious approach is to screen out less qualified locations to get a select group of candidate communities that appear to have the attributes needed. An astute and knowledgeable comparative evaluation of this limited number of locations will then lead to identification of the best choice for the proposed plant.

As the first (and perhaps most critical) step, it is necessary to define the reasons you are going to build a new plant, the operating specifications of the proposed facility, and the goals and objectives to be realized. This information should be quantitative wherever possible, and not overly limiting or more precise than it needs to be.

These documents become the standard used to screen for locations worth further consideration and as a base for evaluating and comparing contending locations.

With the basis for your project clearly defined, you can begin the selection process. If your project has a very large initially defined search area, it is often efficient to first cut it down to a more manageable geographic size.

Logistics costs and customer service constraints are often a good start at zeroing in on a targeted area for a manufacturing plant or distribution center.

Other relevant ways to limit the search area may be found in your locational criteria and project specifications. If being near frequent commercial air service is a requirement, you can draw radii or drive-time constraints around acceptable airports to delineate a disjointed but usable set of areas for further screening.

If you need a great deal of electric power, you might do a first-pass estimate of electricity rates by utility and cut relatively unfavorable areas.

Identify Candidates to Focus Efforts

Once your geographic search area is as refined as possible, but not reduced to a level where you miss outstanding locational opportunities, your objective is to select a short list of the most advantageous candidate locations for your plant. This is best done by in-house screening and research.

For a manufacturing plant, a typical screening evaluates the selected search area on a county-by-county basis, with the largest city in each county as the default community of initial interest.

For other projects, screening of MSAs or at the community level may be appropriate.

Screening is most readily facilitated by using go/no-go constraints, labor-related statistics, demographic data, access and other location factors important to the operation.

When the list of choices is cut to a reasonable size (about 10 and not more than 20), it is worthwhile to review available Web sites and contact each community’s economic development group.

You should verify that they have a site that has the potential to work for you, make sure that the community is interested in your project, and request any important information needed to differentiate among contending locations.

Typically at this point in the process, you can select about a half-dozen promising locations and prepare tables displaying information so that you and other decision-makers can readily compare them.

Operating cost estimates for each location should be included in the comparisons. In some projects, the potential for incentives may be included, but experienced site locators caution against using incentives as a tool to select candidates, as opposed to concentrating at this stage on the location’s ability to satisfy operating needs.

The screening procedure outlined above presumes that most communities will have a site available for your consideration, which is usually true unless you have a site-driven project.

A site-driven project is one in which stringent site parameters cause an expectation that there will be limited numbers of suitable properties. An extreme case is a steel manufacturing facility requiring 500 acres on a navigable waterway with greater than 15-foot draft to an on-site barge dock.

As a first screen you should concentrate on identifying potentially qualified properties on suitable waterways, rather than doing any geographic cutting of the search area or community related screening.

More commonly, a site driven project is one in which an existing industrial building of a relatively large size, or with unusual characteristics, is an absolute need. Those communities having a potentially suitable facility available will define the limited universe of locations to be analyzed, evaluated and compared in a screening similar to that for a greenfield project.

Kick Some Dirt

The next phase of your assignment is to conduct field investigations in the communities selected in your screening. The purpose is to verify screening results and to further evaluate and compare the finalist locations.

Choosing which communities to visit should be a shared responsibility of those in the location decision process and those who will be accountable for the new operation.

A choice of three locations allows variations in advantages and disadvantages and provides leverage for ensuing incentives negotiations. In some projects it is useful for a corporate team to make a quick tour to preview all remaining candidates before choosing the finalists. This is especially relevant if available buildings are involved.

In your field investigations of the finalist communities, three general areas should be emphasized: the labor market, the site and the community.

Empirical data from those companies operating in the labor market must be added to demographic and labor market statistics to get a full picture of local conditions.

Your field visits give you an opportunity to meet with local employers who can provide valuable insights into the competitive environment. Try to arrange to meet with companies who recruit similar skill sets to those you need.

Seek out a variety of high and low paying industries, and look for a mix of plants that are your size, as well as the dominant employers in the area.

The local economic developer is an essential ally in arranging these interviews, but should not participate in the private discussions.

In each local company you interview, try to talk to a representative who is familiar with hiring practices, work force quality and other labor-related issues, typically an HR manager. Be wary of biased information from interviewees who have their own agendas, e.g., don’t want a new company coming in to compete for their labor.

Also compare information for consistency among interviewees to see if there are variations by wage level, by industry, by location within the community or by any other discernible variable. This analysis not only helps determine whether the labor market is right for your project, but also how to set wages and where it is best to be situated within the community.

The second key field investigation element focuses on inspecting sites, and if there are several, zeroing in on one or two most suitable for your project.

Be especially wary of environmental issues — get a completed Phase I report, wetlands delineation, flood plain maps, etc. Be sure that utility lines are already in place and that each utility has the capacity to provide the service you need.

The community itself is the third major consideration to address during fieldwork.

The look and “character” of each community may be difficult to assess for a first time site locator. When in doubt ask a lot of questions, get as much information as possible and go with your gut impression.

If transferees are to be moved in, or if you may recruit beyond the community for some positions, quality of life issues should be considered.

The school system and residential housing are of prime importance to most relocating families.

During field visits, it is useful to discuss incentives with local and state officials and to position your company for ensuing incentive negotiations.

Factor-by-Factor Comparison

At the conclusion of fieldwork, you should prepare an economic analysis comparing operating costs at each contending site, along with differences in one-time costs. It is helpful to list strengths and weaknesses of each location and to note how well each meets your locational criteria and satisfies your project goals.

Based on these results you should rank the candidates and note whether incentives could cause you to change the ranking and your final recommendation.

Before entering incentive negotiations, it is wise to set a negotiating strategy that reflects your targeted levels of participation in identified programs, time constraints for completing negotiations, and your degree of interest in each contending location.

To enhance your position it may be useful to develop an economic impact statement demonstrating to the community the financial benefits to them of your plant. Depending on the property ownership and method of acquisition, the site may be tied into the incentives package (e.g., free land in a community-controlled industrial park).

It is very important that you obtain written commitments from all participating entities. The results should be the final input in making a location choice.

If the location selection process seems overly detailed and complex from the explanation above, please be aware that in reality it is even more so.

Data that you need will not always be readily available and may be difficult to interpret. Conflicting information regarding a location is a typical condition you must deal with. If your company is like most, there will be as many opinions on each alternate location as there are people involved in the decision.

The most important things you can do are to be thorough in your research, verify and document all critical data, and build your recommendation in a logical manner, with justification for all alternatives you discard.

It is extremely helpful to have buy-in along the way from those who are involved in the location choice, by getting agreement on interim steps and lists of contending locations prior to a final recommendation.

The major cost of doing the location work yourself is the time and money spent by those doing the work in-house, plus any purchases of information and databases you use to do a better job.

In the long run, however, the most expensive item for your company could be the cost involved with the choice of an incorrect or less-than-ideal location.

If you don’t want to spend money on professional consulting assistance (this can typically be a relatively small amount vs. your proposed investment), it may be wise to engage an expert to at least review your selection process and provide an evaluation of your final choice location. It is not a decision that can readily be changed once you make a commitment.

-Saul E. Grohs is a partner in Location Advisory Services of Fords, N.J. He can be reached at las.consulting@verizon.net .