What do businesses look for when they’re considering new locations? What are the key factors which usually eliminate specific sites?
It’s a complex process says Deane Foote, COE of Foote Consulting, Phoenix, Az., which specializes in screening potential sites for businesses seeking new locations. (Facebook: Foote Consulting Group LLC). He spoke recently at the annual SIED (Southern Idaho Economic Development) annual “summit” in October at the magnificently restored Wilson Theater in Rupert.
Foote refers himself as a “site eliminator” consultant rather than a “site selector” and that would certainly be a splash of cold water to many a civic booster hoping to land the next big employer. But it’ a true description of his work, which is to find, by a process of elimination, the very best specific location for every business expansion.
It’s a bit ruthless to be told your community’s comparative shortcomings, but it’s usually put in more-or-less gentle terms, as in, “you guys may need to work on your infrastructure capacity” or “I’m not sure our client’s business park would be good fit right next to your rendering plant,” or “how about a bit more cleanup of your downtown?”
The list of criteria for site selection won’t surprise local economic development specialists, but, the rank ordering of importance may do so. Quality of life and state and/or local incentives are on the list, but not the top considerations. Every place in America can cite their plusses on those points. Rather, the top site criteria are:
One. The logistics of making, transporting and selling the business’ product. This embodies the whole reason a business may be scouting new locations: nearby product sources, transportation network, proximity to markets, opportunity for expansion, freight costs. These are way more important than is generally recognized, but they’re often the least understood.
Two. the availability and “trainability” of the workforce. Document these with specifics, says Foote. Get specifics of labor availability, quality of the workforce, wages, costs, commuting distances/time. Generally, people want to live close to work. With low unemployment, incoming businesses know they’ll have to find some workers from other employers; they need accurate details on this “real time” picture to assess this component correctly.
Three. Building sites, “move in readiness” and utility costs. Southern Idaho is very competitive nationally on electric rates, among the lowest in the nation. It’s a critical piece for many industries today.
Four. Competitiveness of wages. Businesses look for reasonable wage rates. They want skilled labor, but not over-priced labor. Read that as no unions. If you’re a Right-to-Work state (as Idaho is), you’re up on the list for many prospects. If you’re not, you’re not.
Maine is a good example. It isn’t a Right-to-Work state and is languishing, while other natural resource states zoom ahead. Thirty years ago, Maine and Idaho each had about one million people. Today, Idaho has almost doubled; Maine is mired in near-Depression economics with the oldest “stuck in place” population in the nation and few “come ins” except coastal touristas.
Southern Idaho labor rates are well below Denver, but more comparable to Boise’s labor rates. Both Twin Falls and Boise are below national averages. That’s a plus.
Five. Cost of living. Southern Idaho high-quality housing prices are way below Denver’s, and below Boise’s too, but moving closer. Today, it’s a plus. In the future, maybe not so much.
Six. Quality of life of the community and financial incentives are surely considerations. Education quality, culture, social values, recreation as well as low taxes, workforce training opportunity (think CSI), incentivized “end of pipe” windfalls are all on the list, but generally of lesser importance.
For Southern Idaho, and perhaps other locations statewide, Foote identified several emerging opportunities, including organic food processing and warehousing, as good regional opportunities.
In the food processing sector, Idaho in general and Southern Idaho in particular have all the key elements, including proximity to raw products (dairies close to cheese/milk plants); labor availability and rates; water and waste stream capacity; low cost electricity; good transportation networks and good labor-business relations.
Sure, these need more-or-less constant attention but, overall, we’re an attractive area for food processing. And there’s opportunity too in emerging specialized sectors like organic foods, which are gaining market share with many consumers.
The same list of positive attributes applies to warehousing, an emerging sector here which is often close to processors. New storage capacity, such as NewCold’s potato frozen foods automated facility in Burley, are using front-line technology, as good as any in the country.
The underlying features of Southern Idaho’s economy are pretty well in place as we expand as one of the nation’s premier agricultural regions. In another presentation, regional labor economist Jan Roeser reviewed some of the many positives in Southern Idaho’s economic picture. (www.labor.idaho.gov )
Twin Falls’ labor force is up over 24 percent since 2000, almost matching the state as a whole; there have been big jumps in sectors like health care, manufacturing, retailing and leisure/hospitality. Agricultural employment has passed 10,000 and average wages for ag workers are rising steadily.
Growth is happening in almost every sector and job category. (Newspaper employment is one exception, both regionally and nationally.) Three of the top five job prospects in Idaho are in health care, with pay levels close to $50/hour; computer/technology jobs are close, at $40/hour. Generally, wages have more than doubled in Southern Idaho in 25 years (1991-2017).
It’s numbers like these which make the region an economic powerhouse. There are always challenges, but it’s indeed a pretty good picture. Not perfect, but very nice indeed.