Criteria for Site Selection In an Ever-Evolving Business Environment
- Dec 22, 2016
By Michele Brown, President and CEO, Choose New Jersey Inc.
To be successful in a dynamic business environment, astute executives have long recognized the need to constantly evaluate and adjust their business strategies and operations to meet new challenges and capture new opportunities. At a time when technology, e-commerce and the quest for fast-tracked innovation are changing the playing field for companies across all industries, the ability to adapt to a changing business environment is becoming increasingly important.
What are the implications for location decisions? While the criteria for the selection of a site will continue to vary from company to company, priorities for companies in most industries are likely to shift. Here are three criteria that may rise to the top of the site selection list in an ever-evolving business environment.
Access to specialized, highly educated talent
While workforce availability has always been one of the top site selection considerations, access to highly educated, specialized talent may move to the top of most lists in years ahead.
Availability of a highly educated workforce already has proven vital for companies in the technology, pharmaceutical, advanced manufacturing, biotechnology and other STEM-related industries, where talent to drive innovation can mean the difference between success and extinction. However, it is becoming increasingly important in other industries too.
For example, an increasing number of food companies are selecting locations where scientific talent is readily available as consumers demand healthier food options. Solving the complexities of processing tastier food with less sugar, less salt and more natural ingredients will become standard operating procedure for companies that want to remain competitive as consumer preferences change.
The financial services industry also is becoming increasingly reliant on highly specialized talent. Access to a workforce that understands the technology and nuances of the growing field of financial technology (FinTech) and next-generation banking and investment services are becoming a necessity to driving a company’s growth in a highly-competitive industry.
While the growing need for highly educated, specialized talent doesn’t diminish the value of choosing a location that has a quality workforce for logistics, distribution, administration and other operations, even these fields will require more sophisticated workers in years to come. With technology and automation driving the efficiency of all industries, site selectors may favor locations where trained, tech-savvy workers are readily available.
Not coincidentally, these locations are often those that offer a robust quality of life, which will become increasingly important to attract millennial talent as they become the largest segment of the workforce. In fact, access to a variety of recreational and cultural amenities, as well as high quality education and healthcare, may be one of the most important location considerations in the future as companies compete for top talent.
Location, location, location
Location and market access have always been important considerations in the selection of a site. In an era where speed-of-delivery can give a company a significant competitive advantage, proximity to major markets will, in some case, be the deciding factor in the selection of a site.
The reason is simple: For many companies, the only way to keep costs in check is selecting a location that offers convenient and broad access to the markets and partners they need to reach. That is why an increasing number of companies are choosing locations in highly concentrated, densely populated areas, where customers and suppliers can be reached in hours, not days.
This is particularly true for distribution warehouses, fulfillment centers and e-commerce companies that rely on same-day deliveries. Since e-commerce giant, Amazon, raised the bar for speed-of-delivery with its new two-hour Prime Now service, customers are not only beginning to expect, but demand, same-day delivery of the products they order. It is certain that the demand for lightning-fast delivery will only intensify, placing pressure on all companies in these sectors. That is one of the reasons why the U.S. Northeast Corridor, one of the most concentrated consumer markets in the world, has become a popular landing place for companies that need to reach their customers quickly. For example, a business located in central New Jersey can gain access to and serve more than 22 million consumers, who collectively have nearly $800 billion in disposable income and live within a two-hour drive.
Location also will become increasingly important for companies that require access to regulatory and financial centers as part of normal business operations. Easy connections to major U.S. financial and regulatory hubs, like New York City and Washington, D.C., will be increasingly important for companies that require quick access to capital or regulatory approvals.
For many companies, access to highways, rail networks, seaports and/or air transportation is already an essential part of the location equation. The availability of a multi-modal transportation infrastructure may increase in importance as companies broaden their market reach to capture new opportunities.
Easy access to Interstates and highways has long been a primary criterion for logistics, distribution and manufacturing organizations, but as market opportunities expand and business becomes increasingly global, rail/sea connections and airport access are also considerations for many companies. In fact, a location near a port can rank the number one criteria for companies that have global operations and customers. When a company has locations around the world, easy access to passenger air service also becomes important to facilitate broader collaboration between global team members.
But the availability of highways, rail networks, seaports and airports aren’t the only infrastructure assets that should be taken into consideration to ensure a company is ready to capture opportunities today and tomorrow. As e-commerce, big data and online communications increasingly become part of everyday operations, a location may be selected or rejected based on access to a state-of-the art high-speed broadband infrastructure and availability of data-centers to accommodate their requirements.
Naturally, other infrastructure considerations, such as the availability of resilient clean energy and clean water will always be part of a location decision.
It is certain that as the business environment continues to evolve, the criteria for location decisions will evolve too. Executives that evaluate their companies’ needs today and plan for the future will have a competitive advantage in the ever-changing business world of the future.
Michele Brown is president and CEO of Choose New Jersey Inc., a privately funded 501(c)(3) corporation charged with encouraging and nurturing economic growth throughout New Jersey with a focus on its urban centers. It is a member of the New Jersey Partnership for Action (PFA), which is led by Lt. Governor Kim Guadagno and also includes the New Jersey Business Action Center, the New Jersey Economic Development Authority and the Office of the Secretary of Higher Education. For more information, visit www.choosenj.com.