In the past, the site selection process for most companies has generally been focused on four main areas: people, taxes/regulatory climate, real estate, and transportation.
People have always been the No. 1 consideration, in both good times and bad, and remains so today. Businesses need to know that the potential work force is of sufficient size and quality to meet their needs now and in the future. For many companies, manpower is also their No. 1 expense.
The tax and regulatory climate has also traditionally been a major consideration and that, too, has not changed. Taxes and other costs resulting from government regulatory requirements are a major expense for businesses, particularly manufacturing companies. Their impact on a company’s balance sheet is just as real as that of the cost of raw materials. This is also the area in which tax incentives and other financial inducements fall.
And, of course, real estate has always been, and will always be, a major part of the site selection process because it represents the physical presence of the business operation, the location at which the company does whatever it does.
Closely tied to real estate is the transportation infrastructure available at a particular location. For some business applications, such as distribution centers or even some major manufacturing facilities, it may even be the No. 1 consideration.
In businesses’ bi-polar world of debits and credits, transportation, like the other categories above, is important because it represents a major expense. However, one expense that hasn’t received much attention from companies engaged in the site selection process is the cost of health care.
Sure, business leaders have been painfully aware for quite some time of the ever-increasing cost of employee benefits, the most expensive of which is usually employer-provided health insurance. However, what many have not taken note of is the fact that the cost of health insurance, like just about everything else in this country, varies from state to state, and from community to community.
That’s right. The cost of health insurance, as well as the quality and availability of health care, varies from place to place. When you think about it, it seems obvious, and yet most corporate site selectors have not paid much attention to it in the past. For companies trying to squeeze every last nickel out of the expense side of the ledger, it’s crazy not to consider this fact.
Is it as important in the process as taxes or work force quality and availability? Obviously not, but it is an expense that is measurable, can be differentiated from community to community, and can really add up if your company employs a lot of people.
But as the late Everett McKinley Dirksen, former U.S. Senator from Illinois, so eloquently put it, “A billion here, a billion there, and pretty soon you’re talking about real money.”
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