What Companies Really Want

Sep 25, 2012 | Business & Economy, Business-Friendly Environment, Economy, Talent

When mid- to large-sized companies are looking to expand, they contract with professionals known as site locators who help them identify communities and sites suitable to meet the companies’ needs. It’s a sophisticated and number-driven process, but it’s also about relationships.

To foster more awareness of the Denver Metro area and strengthen relationships, the Denver Metro Economic Development Corporation annually hosts a group of site location professionals. They tour the region, meet civic and business leaders and are briefed on the economic prospects of the Denver area and Colorado. The culminating event is a breakfast at which the site locators shared some of their thoughts. The Northern Colorado Economic Development Corporation was a host of the Metro Denver Site Selection Conference this year, and I was a guest at their table for the breakfast. Eight site locators participated.

Among the trends and observations they shared:

  • Less expansion and more consolidation. Companies are looking at their entire facility platform and rationalizing what they have. this is being done in the context of their entire operating footprint. That means that each location is being looked at in the context of the whole.
  • There is no such thing as a top 3 communities list for companies. It depends on the industry and is very company specific.
  • Ten years ago companies shifted into smaller sized communities, but the trend is the now back to bigger cities due to the size of the available labor market.
  • Globalization continues to be a big trend. American towns and cities are competing worldwide for capital investment and workforce requirements are much more sophisticated.
  • For many companies, the cost of power is very important.
  • In most cases community incentives are not THE deciding factor for where companies locate but they matter at the final point of decision. Access to an airport, community reputation, the quality of the workforce and a pipeline for the future workforce tend to matter more. Also important are tax burden and the ability of a company to get a facility up and running quickly. However, incentives have a big psychological impact. They are a signal of community support and intent.
  • Many communities have established deal closing funds. This is cash used to sweeten the deal. Some small Texas communities have as much as $20 million set aside in such funds. The incentives are performance based and have claw back provisions if a company does not meet its end of the arrangement.

As Fort Collins is working with several existing companies that are looking to expand or consolidate, there are some salient points here to keep in mind.