FDI Site Selection Decisions Driven by Varied Regional and Local Geographic Factors

NKF site selection and location strategy experts Bradley Lindquist (Senior Managing Director), Gregg Wassmansdorf (Senior Managing Director), Derek Tokarz (Analyst), and Asia Lamar (Analyst) recently contributed an article to the online industry magazine Area Development, a trusted resource for corporate site selection and facility planning since 1965.

The article highlights dramatic regional and local site selection factor variances Foreign Direct Investment (FDI) is faced with when expanding into the United States. The article explains varying factors like talent, incentives, and operating costs impacting prices and capital spending requirements on parcels that may only be a few hours’ drive from each other. Today's businesses capitalize on regional and local factors to optimize their global footprint, increase profitability, and minimize risk.

Excerpt below.

“As global markets continue to flex with economic and social risks — and globalization itself is under attack from some quarters — companies continue to seek locations around the world where they can grow their business profitability, with an eye on measured risk. Based on its market size, skilled workforce, capacity for innovation, low energy costs, and other factors, the United States continues to be a premier destination for foreign direct investment. For our non-American clients looking at the vast U.S. market and geography, it can be a daunting challenge to consider where to locate new facilities of any type. Our clients acknowledge and recognize that vast differences in operational costs and conditions exist across the country — of course smaller cities in the interior will be cheaper than the tier-one metros of New York and San Francisco — and yet it is generally unknown how much variation also exists within sub-regions of the country.

It is common to hear references made to the business climate of “the Southeast,” “the Midwest”, “the Southwest,” “California” (always California on its own), “the Great Lakes States,” and so on. Yet, generalizations about regions mask a great deal of variation within those regions when one closely examines the things that matter most to business: the presence of workforce and talent; utility quality and cost; infrastructure capacities; availability of economic incentives; and other operating costs and conditions. These site selection factors (“location drivers”) are the details that differentiate locations that may be bad, good, or great for a new corporate investment, and there is often more variation at the local level than people commonly expect. Hence, when companies go global, their success often depends on place characteristics that are highly local and may only be discovered through a comprehensive site selection process.”

Read the full article, titled “Why Local Geography Still Matters in the Global Location Decision”.

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