Tight Labor Conditions Spur Site Selection Activity

As the economy continues in the longest bull market run, companies continue to expand across the U.S. as they seek the right balance of labor availability, labor quality and pipeline of future workers. Labor conditions continue to tighten as companies struggle to hire and retain workers in their existing locations. As a result, the site selection process has become more complicated and the role of site selectors has become more important as companies attempt to make smarter location decisions. To help you navigate through the process, we have summarized some of the trends and project activity to help you develop your site selection strategy.

Tight labor conditions drive project activity

Companies are typically coming to site selectors for a variety of reasons including opening new sites, expanding existing sites, consolidations and corporate relocations. Project activity can spike when labor conditions get tight due to a booming economy driving overall growth as well as companies becoming more concerned about their ability to hire and retain employees. Companies tap out labor markets at their existing sites and need to figure out if they should expand where they are today or enter a new labor market that might be softer. This can make the site selection process more complicated and require more advanced labor analytics to find the best solution for a company. Good site selectors are looking at far more than standard census data these days. They are conducting complex labor market modeling to evaluate both current and future workforce conditions. Companies need to make long-term location decisions as labor conditions will ebb and flow with the economy over time. It’s important to analyze labor markets carefully.

Economic incentives are available when adding employees at existing and new sites

As companies narrow the field of options, economic incentives will play an important role in making final site selection decisions. There are two primary factors that make companies eligible for economic incentives – job creation and capital investment. These incentives may be available at existing sites as well as new ones. The first two questions you need to answer when pursuing economic incentives are: How many jobs will be created, and what do they pay? Many cash grants and payroll rebate programs will be directly linked to job creation and wages while tax abatements will directly correlate to your capital investment. The higher the wages the more likely it is that you will be eligible for economic incentives. Make sure to evaluate the availability of these incentives prior to making your final location decision. 

Project activity spikes in tight labor conditions

The following map and list of projects identifies some of the biggest job creation projects for the 1^sthalf of 2019.  These companies have typically gone through some type of site selection process prior to making these decisions and worked with economic development officials to make these projects happen. 

Largest U.S. Job Creation Projects of 1^stHalf of 2019

Conclusions

Companies continue to expand across the U.S. with a variety of different project types. Utilizing the latest data and workforce analytics has become more important than ever. Until the economy cools down, it is critical that companies carefully evaluate labor conditions in order to make intelligent site selection decisions.