4 Mistakes That Can Eliminate Your Best Site Too Early

Artificial intelligence and increasingly powerful public data have made it easier than ever for companies to conduct their own preliminary site selection analysis. In a matter of minutes, companies can narrow hundreds of potential locations based on labor costs, logistics, taxes, demographics, and dozens of other variables before ever engaging a site selection consultant.

We encourage that kind of preparation. In fact, when clients come to Site Selection Group with a well-defined geographic focus, it often allows us to move much more quickly into evaluating real opportunities—specific buildings, sites and communities.

But we've also seen companies unknowingly eliminate some of their strongest location options because of overly simplistic assumptions early in the filtering process. Here are four of the most common mistakes we see and how to avoid them.

1. Filtering at the State Level (Most of the Time)

One of the most common mistakes companies make is drawing state boundaries too early in the process. There are certainly situations where a state-level filter makes sense. A unique tax structure, industry-specific regulations, or corporate legal considerations may legitimately eliminate certain states. But those situations are the exception, not the rule.

The reality is that workforce conditions, operating costs and logistics can vary dramatically within the same state.

Consider Texas. The workforce dynamics in Dallas look very different from Houston, which differ again from West Texas or the Rio Grande Valley. The same is true in North Carolina, where Raleigh and Hickory offer entirely different labor markets despite being in the same state.

Operating costs also fluctuate considerably. Labor costs, industrial land prices, utility rates and tax burdens often vary more within a state than between neighboring states. Likewise, logistics advantages can depend far more on proximity to ports, interstate corridors or customer locations than on which side of a state line a facility sits.

Even "right-to-work" status, while an important consideration for many manufacturers, shouldn't automatically eliminate every non-right-to-work state. Some communities in traditionally unionized states offer exceptionally favorable operating environments, while certain right-to-work states may present workforce challenges that outweigh that advantage.

The solution: Think in terms of regions and business drivers rather than political boundaries. If you're going to filter markets internally, make sure those filters reflect the realities of your operation—not simply a state map. 

2. Overweighting Logistics When Logistics Aren't the Primary Cost Driver

This one may sound surprising coming from a site selection firm, especially when our process often begins with logistics analysis because, for many manufacturers and distributors, transportation costs define where a project should be located. In those situations, logistics absolutely deserves significant weight.

But not every project fits that model.

For companies with relatively low shipping volumes, transportation costs may represent only a small share of total operating expenses. Likewise, companies serving customers or suppliers spread across multiple regions may discover that transportation costs are remarkably similar across a broad geographic area.

Imagine a manufacturer serving one major customer in Phoenix and another in Columbus, Ohio. Unless there are unique lane rates or service requirements, the total transportation cost may be relatively similar anywhere on that imaginary line between those two distant markets. In those cases, labor availability, utilities, taxes, or operating costs may become much more important differentiators than freight expense.

We've seen companies spend considerable time optimizing for logistics when the difference ultimately amounts to basically a rounding error.  

The solution: Before using logistics as your primary geographic filter, quantify its actual impact on your operating costs. Test multiple scenarios and understand how sensitive your business really is to transportation costs. Sometimes logistics should drive the decision. Sometimes it shouldn't.

3. Underestimating Property Taxes for Capital-Intensive Projects

Site Selection Group typically encourages companies to really focus on incentives during the later stages of site selection. But that might not make sense when a capital-intensive project is uniquely sensitive to wide ranges in property taxes (and potential incentives to offset them).  

For capital-intensive manufacturing projects, property taxes can become a significant operating expense over the life of a facility. More importantly, property tax systems differ substantially across states and local jurisdictions.

Some states tax both real property and manufacturing equipment heavily. Others exempt machinery and equipment altogether. Assessment methodologies, depreciation schedules, and local tax rates also vary considerably.

A project doesn't need to involve billions of dollars in capital investment before these differences become meaningful. Even projects with more modest capital expenditures can experience significant long-term cost differences depending on how jurisdictions treat manufacturing assets.

While we generally encourage companies not to become overly focused on incentives too early in the process, tax strategy for capital-intensive projects is different. Waiting too long to understand those implications can result in expensive surprises.

The solution: Develop reasonable estimates of your building investment and machinery and equipment costs early in the process. Understanding how different jurisdictions tax those assets can help ensure you're comparing locations on a truly equivalent basis.

4. Be Very, Very Careful with Using Wage Data

If property taxes are a relatively small cost item that varies dramatically, labor often represents the opposite: a very large cost item where even small differences can have significant financial implications.

That makes wage analysis critically important but also more complicated than many companies realize.
Public wage datasets such as the Bureau of Labor Statistics' Occupational Employment and Wage Statistics are excellent resources. We use them regularly. But they weren't designed to answer every site selection question.

Most public wage data is occupation-based rather than skill-based. A highly automated food manufacturing facility may require technicians whose skills more closely resemble advanced manufacturing than traditional food production. But depending on how they are classified, both might be defined as “Food Production Workers.”

Composition effects can also create misleading comparisons. One market's average wage may reflect mostly lower-skilled employers, while another market's average reflects a concentration of highly technical operations. The headline wage difference doesn't necessarily mean one location will be less expensive for your specific operation.

And, like most public datasets, wage information often lags rapidly changing labor market conditions.

The solution: Clearly define the skills your operation actually requires, then use multiple data sources to estimate competitive wages. Public data provides an excellent starting point, but private data, employer benchmarking, and local market intelligence often provide the context necessary to make confident decisions. Site Selection Group uses a blend of different sources to help our clients make accurate wage estimates.  

In Short: Don't Eliminate Your Best Site Before the Process Begins

Internal geographic filtering has never been easier. AI tools and publicly available data allow companies to evaluate markets faster than ever before, and that's a positive development. When companies arrive with thoughtful preliminary analysis, it often helps accelerate the site selection process.

But the quality of those results depends entirely on the assumptions behind them.

A little extra time spent validating your geographic filters can prevent costly missteps later in the process. The goal isn't to evaluate every market in the country—it's to ensure that your shortlist truly contains your best options.

That's where experienced site selection advisors can add value. Pressure-testing assumptions early in the process doesn't have to add significant time or cost, but it can keep companies from eliminating the very locations that may have offered the strongest long-term business case.