ust as I thought would happen, the hubbub surrounding the issue of U.S. companies locating facilities abroad diminished markedly following the November 2004 general election. It turns out that even though corporations do site plants where it is most cost effective to do so — which frequently means outside the U.S. — plenty of them also site plants and expand existing ones in the U.S. How many more Toyota, Hyundai and Mercedes-Benz plants do we need to make the case that plenty of non-U.S. companies also locate and expand facilities, creating thousands of jobs, in the United States?
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Corporations site facilities where there is a sound business case for doing so, and many of them are finding the U.S. fits the bill just fine. In March, the Site Selection Network of the National Association of Manufacturers (NAM) and Deloitte’s manufacturing industry practice released the results of a survey that bears this out. Corporate decision makers from 220 NAM-member companies participated in the survey, which looked at existing location strategies and the factors behind new-facility location decisions. Sixty-three percent of respondents plan to expand their facilities within the next three years, and — stop the presses! — 70 percent of these expansion plans are to be domestic, meaning in the U.S.
Of the large manufacturers participating in the survey — those with more than 500 employees — 95 percent plan to expand in the next three years, with a roughly even split between U.S. and non-U.S. locations. Small and mid-sized manufacturers overwhelmingly are planning U.S. expansions.
The survey suggests, too, that the “U.S. is too expensive” argument is losing some steam. Cost reduction is the primary driver behind respondents’ location decisions, followed by access to markets, improving productivity and increasing top-line revenue. Then why are so many planning U.S. expansions? Assuming cost reduction is in fact the main location criterion, site seekers will have even more reason to look inside the U.S.
You will find in this issue of Site Selection some clear examples of how states are competing aggressively for projects on the basis of lower business costs. The Ohio Spotlight, for example, outlines Gov. Bob Taft’s plans to make his state a business-climate leader by overhauling the tax code so that Ohio can compete directly with southern U.S., Latin American and other locations for manufacturing investment. Plenty of other states are watching this closely.
You can read more about the survey online at www.deloitte.com/us/manufacturing. In the meantime, you will find plenty of content in this issue on why North American locations are winning projects and creating jobs, particularly in the Cover Story (a 2004 Top Deal), Top Groups and Competitiveness Award winner coverage.
As Dell Computer’s Kip Thompson notes in this issue’s cover story, “It’s a great day for manufacturing in the United States.”
Till next time,
