Incentives Still Up There as Site Selection Driver

That is the message in a recent Area Development Magazine article. Here is an excerpt from the article to bear in mind:

"The reasons that incentives are given such weight in the decision-making process are severalfold:

• Incentives are looked at no differently from other economic factors. They have a direct financial impact on the outcome of a proposed investment. Incentives affect the return that a company realizes when undertaking capital investment in a project and may be a determinative of the proposed project’s meeting return-on-investment requirements. These include both project startup costs and ongoing operating expenses. The decision-maker must ask, “Would the company realize a higher return on its capital if the capital were invested elsewhere?”

• Incentives have a direct impact on other primary location factors. For many companies, the burden of state and local taxes is of great importance in their location decision-making. Incentives have a direct impact on the long-term tax liability that a company will face at each location being considered. Tax incentives may enable a location with a decided tax disadvantage to fare better than competing locations that have an initial tax advantage.

• Incentives provide a definite competitive advantage to companies that are able to secure state and community support. More companies are realizing that competitors that secure incentives have lower project startup and operating costs. This provides a competitive advantage to these companies that decision-makers should not ignore."

Source: Area Development Magazine