Features

Many companies worldwide have chosen to locate in logistics clusters, so what can enterprises learn about these communities that they do not already know? The answer is “a great deal,” for two reasons.

Two of the issues critically important to site selectors — work force and incentives — came into sharp relief in December, thanks to a Michigan governor and a New York Times reporter.

Iroko Pharmaceuticals was little more than a seed five years ago. But it planted itself in one of the most fertile growth mediums for life sciences: Greater Philadelphia. On Dec. 12, it achieved full bloom with a new headquarters, and sought to seed the future at the same time.

Site Selection tally of automotive sector facility projects beyond NAFTA since January 2011 shows China, India, the U.K. and Brazil leading the way, followed by the Slovak Republic, Germany and Romania. The rankings line up nearly one for one with KPMG’s “Competitive Alternatives” rankings of national business tax climates, released in October. But there are a lot more factors than tax schemes at work.

Each November in Dusseldorf, Germany, more than 135,000 visitors from more than 100 countries attend Medica, the world’s largest gathering for the medical industry. That sea of participants includes an array of state agencies from the U.S. seeking new business for existing companies and recruiting investment from firms based around the globe.

Honda likes Ohio. Since November 2010, the company has announced investments totaling more than US$500 million in operations at its two auto plants and two powertrain plants in the state. Ron Lietzke, a spokesman for Honda in the U.S., says the investment is about strengthening the companies operations in Ohio and implementing new technologies.

Airbus adds Mobile, Ala., to its global network of passenger aircraft assembly plants, adding velocity to the northern Gulf Coast’s aerospace sector. On July 2, 2012 Airbus announced that the Brookley Aeroplex on Mobile Bay would be the site of the European aerospace giant’s newest final assembly plant — and its first in the United States — for production of the A320 family of passenger aircraft.

To accurately measure an incentive’s results, states need to consider whether businesses receiving benefits would have made the same investments had the tax break not existed. When the Minnesota Legislative Auditor’s office studied the state’s Job Opportunity Building Zones program, for example, it found that about 80 percent of the jobs created by companies receiving incentives would have been created even without the help.

As the global economy struggles to recover from the worst recession in recent memory, persistent high unemployment and low investment have begun to redefine the way economic development policy makers think about employment goals. The simple but harsh math of economic development starts with a basic premise: There can be no job growth before first retaining existing employment.

North Carolina’s combination of work-force availability and skill sets of interest to employers, proactive business-development agencies, logistics assets and higher education infrastructure helped it reclaim Site Selection’s Top Business Climate spot from rival Texas

Ask someone if they should invest in Qatar more than five years ago, and they would not be able to place it on a map or give you one interesting fact. Now things have changed.

Bioplastics, while still comprising a tiny percentage of overall global plastics production, are growing at a rapid clip. Demand is growing because major consumer brands such as Procter & Gamble and Coca-Cola are focusing on sustainability in packaging.

Shale oil and gas deposits have cast energy-related site selection and the oil and gas supply chain in a new light. It now turns its transformative power to inland logistics and transportation networks. Shale plays around the country are requiring mass quantities of commodities and equipment that must be transported by rail or highway. The thousands of wells being drilled in places ranging from Pennsylvania and Ohio in the northeast to Mississippi and Louisiana in the south, to North Dakota and Wyoming in the west require extensive resources to drill and produce.

Why would a company locate its business in a small town, far from the economic activity of large cities? Such a decision doesn’t make sense for every company. But for some it makes perfect sense.

Consumer demand patterns are shifting rapidly, affecting shipping requirements, order cycle times, retail formats and service level requirements. Rising fuel and utilities costs, burdensome regulations, changes in tax laws and sustainability requirements, labor supply and union issues, municipal and state economic incentives and so many other cost considerations are volatile and challenging today.

The Top Utilities of 2012 transmit positive energy and connect better than most. Utilities today grapple with such thorny issues as EPA regulations, data center demand, customer demands for renewables and lower costs, the on again/off again comeback of nuclear power, catching up with infrastructure investment, and increasing power demand from increasingly populous territories.

When PharmaCline CEO Steve Keough needed a location to develop and commercialize his promising new pharmaceutical technology, he analyzed all 50 states. “When I arrived in South Dakota I was immediately embraced,” said Keough, who recalls how he met with the governor’s office, the South Dakota Biotech Association and venture captiatlist in his first day in the state.

More analysis, cloud computing and smarter buildings are among industry trends. Mobility of corporate real estate technology is a top priority these days as software developers rush to meet demand. Industry observers say there is still reluctance by corporate IT types to embrace the technology, but it will be widely deployed within a few years.

Energetx Composites, a progeny of long-time yacht builder S2 Yachts, is busy carving out a niche in wind turbine blade manufacturing. The Holland, Mich., company was formed in 2008 when S2 Yachts decided to diversify as the recession began to affect yacht sales. In addition to wind blades, Energetx builds structural composites for the defense, aerospace and transportation markets.

Rising wages are among the factors on site selectors’ radar when evaluating China’s business climate. But rising health issues may prove to be criteria just as meaningful to location decision-making … in more ways than one.

Health-conscious pet owners drive a trend that spurs expansion for a niche manufacturer. Americans are projected to shell out nearly US$21 billion on pet food in 2012, according to the American Pet Products Association. One of the fastest growing categories is pet treats, especially in the “healthy” category.

Manufacturing is on the way back in the U.S. Increasingly, it involves advanced techniques, equipment and processes, says a noted researcher of industrial issues in North America. But there is a catch to manufacturing’s comeback - an acute shortage of skilled workers poses a significant threat.

Openness to the climate and to new ways of thinking are among key data center location drivers. The unique climates and business climates of western North Carolina, central Oregon and Washington, Northern Virginia and Iceland are providing the most bang for the buck for major data center projects.