What Drives Business Site Selection Decisions?

Like most people in the economic development field, I read the monthly and quarterly industry trade magazines, such as Site Selection, Area Development, Expansion Management and the others.

The May issue of Area Development Magazine contains an article about driving factors influencing business site selection decisions. Economic developers across the country were asked to describe what factors were most important to certain specific business investment projects that occurred in their areas.

In reading the reasons listed, I observed two things. First, the reasons given were as different as the companies themselves, and where there were "tie breakers," they were things that the company really needed or wanted and one location could provide it better than others evaluated. Second, there does not appear to be much new in how and why companies locate their facilities. That is, the usual site selection factors were listed as the drivers, including labor skill availability, proximity to market, business operating costs, ED incentives, business-friendly environment, quality of life, etc.

On one level, it's comforting to know that the things that have always been important remain important. On another level, this picture of continuity makes me wonder if we might be missing something. Are there emerging undercurrents that do not appear on our radar screen, such as how companies are coping with rising risks and uncertainties in their business environment? I plan to do some digging in this area of the garden to see what I can find. I will get back to you on what I find.

Interestingly, not one of the 42 projects reviewed listed anything as glamorous as "industry cluster dynamics or advantages" as a driving factor, which makes me wonder how long the "cluster rage" will last in economic development. I was struck by the "meat and potato" issues that are considered most important to why companies choose particular locations. Then again, much of business is pretty "meat and potatoes."

In my assessment, business is trying desperately to return to normalcy, given the harsh state of world affairs during the last three years. I can understand and appreciate that. Many businesses want nothing more than to return to the routine matters of producing a product or service and selling it. And guess what? If they do that, they are providing much needed jobs in communities that need them. So, three cheers for "meat and potatoes!"

Article link.