Adapting the Site Selection Process
by Beth H. Land, CEcD, on Sep 11, 2020 11:44:42 AM
While the site selection industry is constantly evolving, no one anticipated the changes that COVID-19 would bring in 2020. COVID-19 has impacted what types of projects are in the marketplace and how executives, consultants and economic developers are adapting the site selection process. This article will explore some of these changes and offer some practical advice for economic developers as they adjust to the new normal.
When COVID-19 hit the U.S. in early March, SSG saw an initial dip in activity as companies reacted to uncertainty in the market and rapidly changing consumer trends. Most executive teams that had active projects were in firefighting mode, trying to change their business models to allow for best practices with COVID-19, transitioning employees to remote work environments, establishing new customer interface protocols, etc.
Even though uncertainty loomed, most executives were confident that their projects would continue once there was more clarity. One major anomaly during the downturn was food and beverage manufacturing projects. SSG’s pipeline was and still is dominated by heavy investments in the food and beverage manufacturing industry. Companies that were experiencing growth pre-COVID-19 saw increases in demand and are transitioning facilities to accommodate new customer buying habits. By June, overall project activity somewhat rebounded, but approvals for large capital expenditures were still delayed.
SSG believes there will continue to be opportunities in the food and beverage industry. We also foresee significant investment within the varying components of supply chain logistics, as detailed below:
- Retail and e-commerce:
Retail and e-commerce had momentum coming into 2020, but we foresee a big paradigm shift as society accepts online purchases as the new normal (and safe way) to purchase goods. Warehouse space near growing population hubs will likely thrive and see an uptick in activity over the next 18-24 months.
- Supply chain diversification:
Supply chain diversification will also likely happen within the next 18-24 months. As company executives look toward the future, they are implementing changes to prevent future supply chain disruption from abroad. There will likely be activity coming out of the Asia supply chain basket, with movement toward Latin America and markets in the U.S. that have lower operating costs.
- Consolidation/cost-cutting initiatives:
Consolidations and cost-cutting initiatives are also underway to move companies out of high-cost areas (i.e. California, Northeast U.S., etc.). A downturn in the economy often provides an opportunity to rethink customer and supplier bases and optimize footprints to gain efficiencies.
- Just-in-time (JIT) manufacturing:
JIT was a system designed to deliver materials and components to manufacturers immediately before they are required, in order to minimize inventory costs. JIT is highly effective, until something (like a global pandemic) goes wrong. COVID-19 exposed weaknesses in the U.S. JIT network. While there were some parts available in excess, other parts were scarce and held up entire automotive plants. Increased project activity will likely follow in the next 24-36 months as the economy recovers and companies fix their supply chain gaps, ensure supplier redundancy and increase inventories.
Retail & E-commerce
Supply Chain Diversification
Office space dynamics
There is no crystal ball for the future of office space dynamics, but there will certainly be big changes. These changes will likely be regionally specific. For example, the impacts will be drastically higher in large metro areas like Manhattan or Washington D.C., where so many rely on public transportation. These impacts may be less dramatic in cities like Nashville, where employees are accustomed to driving themselves to work. Transitioning remote workers home for the long-term has also presented logistics issues, security breach risks and impacted productivity.
Some specific office changes will likely be a shift away from large common office space areas and hot desking (where workers take whatever desk is available). Many corporate offices recently invested millions in this type of set-up, only for the newly renovated space to seem outdated with new COVID-19 risks. SSG hypothesizes that there won’t be a mass exodus of companies leaving Manhattan or large metro areas to smaller, more rural areas. Rather, companies may set up hub-and-spoke models where there is a central hub for things such as employee training and events with smaller offices in the submarkets to lessen the exposure their employees have to mass transit systems and common area spaces.
How are economic developers adapting?
Understanding now some of the emerging trends on the corporate side, SSG would like to offer some practical advice for economic developers to adopt as they evolve with the industry.
- Supplement local workforce data:
While workforce has been one of, if not the most important driver for corporate projects, it’s now critical to rethink how data should be presented post-COVID-19. There is a lag on most traditional data sources (for example, the Bureau of Labor Statistics, Quarterly Census of Employment and Wages, etc.) that does not capture rapid changes in workforce ecosystem. Job posting data can be a nice supplement to capture real time proxies for hiring and demand in your area. It’s also important to monitor Worker Adjustment and Retraining Notification Act (WARN) notices and local unemployment claim trends. Local unemployment representatives have been an especially great resource to gather real-time data, and more qualitative feedback as they have their finger on the pulse of the community.
- Business retention & expansion:
Now is the time, more than ever, to hold your existing industries close and help them survive the pandemic and economic downturn. SSG has seen communities helping with unique existing industry problems, such as developing solutions around COVID-19 impacts to childcare, being an advocate for telecommunications services in rural areas, and writing grants for thermometers and PPE. Many communities are formalizing a survey/data gathering process to provide the assistance many employers desperately need.
- Preparing site and buildings:
While overall prospect activity is slower in many parts of the country, the downturn is a great opportunity for communities to prepare for the return. Having a diverse portfolio of properties is a key fundamental step toward landing competitive projects. SSG has had the pleasure of working with utility providers, states and other economic development groups on site readiness programs. SSG puts a heavy emphasis on completing site prep projects that have a customized and prioritized strategic plan to development, have a good return on investment, and incorporate the assets and gaps in a workforce ecosystem to target potential end users. It’s imperative to take this holistic approach to product development and to also consider COVID-19’s swift impact on the importance of virtual site visits.
- Virtual site visits:
Again, while virtual site visits had some momentum before COVID-19, the ban on travel has given this newer trend a large shot of adrenaline. Companies and consultants are looking for ways to keep projects moving, without exposure risk and without sacrificing quality in decision-making. Virtual site visits will never provide the depth or breadth needed to pick a final site, but it does provide an opportunity to cull or eliminate sites – minimizing the number of site visits and potential COVID exposure points.
Since virtual site visits can have such a large impact on the final decision, it is important to execute them well. It is also a great opportunity for rural markets to make the “short-list,” where they may have otherwise been cut for cumbersome site visit/tour logistics. Below are a few steps to help present vivid, professional and memorable virtual site visits.
Tips for a successful virtual site visit
- Select a web platform:
Become familiar with a web meeting platform (Zoom, Go-To Meeting, Teams, etc.) and train all those who will be involved on the virtual site visit.
- Coach team members:
Coach team members on the importance of an engaged body posture, professional background and limiting distracting background noise.
- Hold a dress rehearsal:
Consider a full rehearsal with the project team to limit technical difficulties during the actual call, and practice transitions in media and screen sharing.
- Organize team members:
One easy way to introduce your project team to a company is have team rename themselves in the web platform to their name and role they play. For example, “Beth Land – SSG – Site and Infrastructure Support.” A bonus is providing an attendee list with names, titles, organizations and headshot of team members prior to the meeting. These tactics all set a great tone that you have prepared, have the right team members in place, and everyone knows the team members’ key roles.
- Understand goals/objective of the meeting:
Ask consultant and company what they specifically want to accomplish – could be an informal discussion where screens are shared, or they may want a more formal presentation, drone photography, or workforce discussion.
- Share the agenda:
Share a tight agenda with prospects and internal team members but be prepared to pivot.
- Own the moderator role:
Nothing is more awkward than a web meeting without an official moderator. Ensure the project team addresses the prospect’s questions and be ready to pick up the slack or awkward silence on calls. If you didn’t understand your team’s answer, chances are our client didn’t either.
- Provide a virtual sense of place:
It is amazing what executives pick up on during in-person tours that are lost in the virtual world. Where will my employees live? Where will my truck drivers stop for gas? How cohesive is the economic development and workforce training team? Use images and video to help portray what makes your community unique and memorable, addressing issues like these outside of the more tangible site and utility information.
Follow-up on unanswered questions, to show the prospect you are attentive to detail.
- Provide creative alternative media:
We could devote another article solely to the topic of drone photography, which can be helpful when produced the right way. Consider using alternative types of media (drone, aerials, Google street view, etc.) to convey your message. While some of these tools can be expensive, but there are also a lot of free products that can help share your message.
While consultants likely won’t ever use virtual site visits to select a final site, the virtual world will continue to play a more dominant role in the site selection process. Consultants and economic developers will continue to evolve together, spurring innovative techniques to improve the site selection process. Hopefully the tips above and insights into the broader site selection industry can help you calibrate to the new normal.