Site Selection Group, a full-service location advisory, economic incentives and real estate services firm, does an annual ranking of the Top States for Manufacturing . While Site Selection Group would caution companies against making location decisions based on any state-level rankings, this annual analysis is a good indicator of those states that are currently more attractive for manufacturing investment.
“Companies should employ a top-down approach to site selection, while making sure the process incorporates well-balanced data points based on variables that will drive operational success”, says Chris Schwinden, Vice President of Site Selection Group.
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.
Ranking the most competitive states for manufacturing
As a demonstration of this type of balanced approach, Site Selection Group used its proprietary GeoCision® analysis to provide an annual ranking of all 50 states based on weighted site selection variables that measure these primary considerations. These factors are not comprehensive, but they are representative of those typically utilized in industrial projects. Those factors and weightings used for this exercise are shown in the table below. Of course, in a “live” site selection project, Site Selection Group almost always builds this type of analysis at the metro level to score and rank all 933 metropolitan and micropolitan statistical areas to identify which ones warrant an in-depth site selection review.
|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|
Regions vary in competitiveness
Site Selection Group mapped and listed the results in the dashboard below. 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 Tennessee, North Carolina, South Carolina and Alabama. In addition, other traditionally strong manufacturing states such as Indiana and Michigan rank near the top, too.
Identifying the top states for manufacturing is only the starting point With any site selection process, it’s imperative to start with a top-down approach that identifies the region, states and communities that may be a good fit for a particular project. As demonstrated here, Site Selection Group’s GeoCision®analysis helps companies identify places that may or may not work for their project. But 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 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.