Best States for Manufacturing in 2019
by Josh Bays, on Jun 25, 2019 4:56:38 PM
Site Selection Group, a full-service location advisory, economic incentives and real estate services firm, annually scores and ranks all 50 states in the nation based on site selection variables that influence the location decisions of manufacturers.
Because this analysis is done at the state level, these variables are not as comprehensive as what would be needed for a real manufacturing project. But, they are representative of those typically utilized in industrial projects and the results are a good proxy for manufacturing investment trends.
Using a balanced weighting methodology
Although location criteria are unique to each specific project’s needs, there are standard site selection drivers that typically drive manufacturing location decisions. A company’s ability to hire and retain a qualified workforce, as well as its ability to receive and ship goods in a cost-effective and timely manner are typically the most influential factors that drive final site selection decisions. However, business environment, regulatory climate, utilities, infrastructure, real estate and economic incentives play an important role in the process. Since no location scores the best in each of these categories, the optimal location for a project is one that has no critical deficiencies. Those factors and weightings used for this exercise are shown in the table below.
|Labor Scalability||5.0%||Measures the volume of workforce to ensure companies can scale their workforce|
|Target Skill Sets||25.0%||Assesses industry and occupation presence to confirm the availability of targeted skill sets|
|Labor Demand||20.0%||Analyzes the pressures other employers place on the employment market|
|Operating Costs||30.0%||Quantifies the operating costs such as utilities, taxes, real estate, labor, etc.|
|Organized Labor||10.0%||Assesses the threat posed by organized labor|
|Accessibility||10.0%||Analyzes the population base with a one-day drive time of the site and distance to major ports|
Regions vary in competitiveness
Site Selection Group mapped and listed the results in the dashboard below. A score of 100% in any one category represents the national average. While no one state or region is a perfect fit for every project or specific industrial sector, there are a couple of clear trends. For starters, we see some of the “usual suspects” rise to the top – states that tend to rank well in manufacturing and business competitiveness rankings. Those include Southeastern states such as Georgia, South Carolina, Tennessee and North Carolina. In addition, many states show clear trade-offs between labor quality and cost, something companies will need to consider in their long-term strategy.
Again, this analysis focuses on high-level state manufacturing trends. For its clients, Site Selection Group evaluates granular geographies, integrates the specific occupational and industry requirements of a project, and includes a comprehensive supply chain analysis unique to them. And once a tool like this is used to identify those markets that warrant an in-depth analysis, the real work starts thereafter: Conducting an in-depth, community-level analysis with real-time data is the critical next phase to pinpoint the handful of communities and/or sites that are truly competitive. While analyses like the one shown here are always informative, they’re only one part of an effective site selection exercise.