5 Considerations for European Manufacturers Interested in the U.S.

Expanding operations and building a manufacturing plant in the United States is a major strategic decision for many European manufacturers. Whether driven by shifting global trade policies, the desire to better serve North American customers, or to reduce supply chain risk, establishing a U.S. manufacturing footprint can offer substantial advantages. However, navigating the U.S. site selection process requires careful planning and market knowledge.

At Site Selection Group, the largest independent location advisory, real estate, and economic incentives firm in the United States, we work closely with European companies, especially those smaller to mid-sized companies entering the U.S. market for the first time. Our team helps these firms avoid common pitfalls and develop tailored location strategies to ensure long-term success.

Based on our experience advising hundreds of companies, we’ve identified five key considerations European manufacturers must keep in mind when selecting a U.S. location:

1. Narrow Your U.S. Site Selection with Logistics Network Analysis

The geographic size of the United States often surprises first-time investors. Many European firms start with a shortlist that spans thousands of miles—places like Texas, South Carolina, and Ohio—without realizing that these regions may not align with their supply chain goals and are often a multiday drive time apart.

Conducting a center of gravity logistics analysis based on inbound and outbound shipping patterns can significantly reduce your search area. This strategic step ensures your manufacturing facility is positioned to optimize distribution, lead times, and transportation costs.

2. Don’t Let U.S. Economic Incentives Drive the Initial Location Strategy

U.S. states and regions aggressively promote foreign direct investment (FDI) and often highlight generous economic development incentives. While these incentives can add significant value, especially during final negotiations, they should not be used to develop the initial list of target states.

Using incentives as a filter early on may lead your company to locations with workforce or infrastructure mismatches, given that most incentives are crafted to mask an operating environment deficiency. Instead, prioritize operational criteria—such as labor availability, transportation access, and real estate fit—and view incentives as a bonus to draw fine distinctions between a set of competitive semifinalist locations.

3. Understand Regional Differences Within States

Even in relatively small U.S. states, regional variation in operating environment can be substantial. A one-size-fits-all view of a state like South Carolina or Georgia can be misleading.

Take South Carolina, for example; cost structures and workforce characteristics vary widely across the state: Charleston (a port city with a strong industrial base), Greenville-Spartanburg (an inland legacy manufacturing market), and Florence (a smaller market with a strong industrial base).

Each region has unique characteristics in terms of infrastructure, labor pool, and costs. Carefully comparing submarkets within a state is essential for aligning with your operational needs and long-term goals.

4. Learn How U.S. Economic Development Organizations Differ

There are states with powerful, centralized state economic development agencies, those driven by local and regional organizations, and those with a strong electric utility co-leading the efforts. Often, companies use their initial interactions with state economic development agencies as a proxy for site selection. While it can be a decent indicator in some instances, it is important to distinguish between their structure and approach before drawing conclusions. 

5. Run Greenfield and Existing Industrial Building Searches in Parallel

As Site Selection Group outlined recently in this blog, the U.S. industrial real estate market finds itself in a peculiar situation of having a glut of existing space on the market. Because many mid-sized manufacturing and assembly operations with a benign utility profile can entertain an existing building, it behooves companies not requiring a purpose-built facility to run a parallel search for existing buildings and greenfield sites. It can often shave time and cost from the site selection process.   

Final Thoughts: Building a U.S. Manufacturing Plant the Smart Way

Establishing a manufacturing facility in the U.S. is a transformative move for many European manufacturers. At Site Selection Group, we specialize in helping international firms navigate the U.S. site selection process with clarity and confidence. From location analysis and labor market assessments to real estate negotiations and incentives procurement, we provide end-to-end support for your expansion journey.