Throughout the entire process of finding the best physical site for your company’s future expansion or relocation, you will be bombarded with information, all of it useful, little of it decisive.
If you do a thorough job in your search, you’ll know more about a community – many communities, in fact – than do even the “city fathers.” You will have explored, in excruciating detail, the demographic characteristics of many areas in order to determine whether or not they can supply the quantity and quality of the work force you will need to operate your facility.
You’ll know all about transportation infrastructures, tax structures, the number of hospitals and doctors, the location of all the fire stations, the electric power grid, and even the “quality of life.” You will have visited every empty building and prime piece of land that might conceivably meet your needs.
Heck, you’ll probably even be on a first name basis with the mayor and her husband. You’ll know so much about a community that, in a way, you’ll feel almost disloyal if you decide to locate your plant elsewhere. Don’t.
Remember, in the final analysis, it’s still a business decision.
Before you make your final choice, you need to be able to answer, in the affirmative, this question: will locating your facility in this particular community enable your company to be more competitive in terms of operating costs, and allow you to offer competitive pricing that will enable your company to be more profitable?
One of your biggest enemies will be time. You probably need to have your facility up and running as quickly as possible so that you can have products rolling out the door and, most importantly, revenue coming in. This is where things like existing buildings and streamlined permitting are really important, because they will greatly reduce the time you’ll need to have your plant operational.
When you examine your annualized costs, look closely at your labor costs. How much are you going to have to pay in wages and benefits to operate your plant? Have you taken advantage of new technology to reduce your labor costs?
Look at your facility occupancy costs. This is what it will cost you in rent or mortgage to use your new facility. Have you reduced your operating expenses here? If not, have your increased expenses here led to saving in other areas (e.g., labor)?
You also need to look at your future tax liabilities: not only your corporate and personal income taxes, but also taxes on real estate and inventories. And don’t forget worker-related taxes such as unemployment insurance and workers’ compensation.
Then there are your utility costs to operate your new facility. And by utilities, I don’t just mean electricity or gas. This also included telecommunications, water and sewage. For a manufacturer, even a simple half-cent break in your rate can mean tens of thousands of dollars in savings.
But even if you have to pay a little bit more in one area – say, electricity – as long as you can reduce your overall utility costs, you’ve done well.
Are there any additional costs you’ll be paying due to environmental or regulatory constraints?
Finally, does your new location afford you greater access to customers, services or markets? After all, that’s probably one of the major reasons why you’re looking for a new location in the first place.
If you can answer yes to these questions, then, and only then, is it time to say yes to Madam Mayor.
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