Transformative Manufacturing Site Selection Project Announcements from 2018
by Josh Bays, on Jan 22, 2019 4:29:27 PM
Manufacturers continued to grow and expand their footprints across the country in the past year. While many of those projects represent small and medium-sized operations, there were also a number of large-scale projects that have the potential to transform a community. While communities will undoubtedly benefit from these announcements, big projects can significantly impact the site selection activities of other firms – locating next to another operation that’s trying to hire hundreds of new workers can be a non-starter.
As a result, Site Selection Group, a leading location advisory and economic incentives firm, researched site selection trends for large-scale manufacturing projects announced in 2018. The map below displays 2018 projects with over 500 new jobs created.
Notable manufacturing announcements
Site Selection Group identified the three “mega projects” from the past year that may affect the competitive landscape for the surrounding areas:
- Toyota Mazda in Huntsville, Alabama: The traditionally aerospace-focused market made waves this year with the announcement of a 3.3 million-square-foot facility expected to hire 4,000 employees.
- Nikola Motor Co. in Phoenix: The electric vehicle startup will build electric semi-trucks in their new facility, which comes with a $1 billion investment.
- Royal Dutch Shell in Pittsburgh: An ethane cracker plant is under construction in Pittsburgh, which will employ an eventual 6,000 workers.
How large manufacturing deals can impact other site selection decisions
We have all heard ad nauseam how Amazon’s HQ2 announcement may affect housing prices, taxes and traffic in New York City and Northern Virginia. Similarly, recent mega-project announcements on the industrial side will have similar impacts, and in smaller and medium-sized communities, those impacts will be magnified. For example, project announcements like Toyota-Mazda, Nikola Motors and Royal Dutch Shell will have major workforce, supply chain, housing and demographic impacts on their communities for years to come.
As a result, other companies considering new and expanded operations in those and other fast-growing markets need to pay close attention on the real-time and future impacts of those announcements on their own decisions. For example, these mega-announcements are going to put significant pressure on workforce availability and recruiting along with upward pressure on wages. A new 100-employee operation (a very common project size) needs to be very cognizant of the impacts of locating next to or even within the same labor shed of these huge new manufacturing operations. Even for larger markets like Phoenix or Pittsburgh, a project bringing 2,000 new jobs has the power to transform the labor market.
Site Selection Group pays very close attention to these types of announcements and utilizes extensive market and industry intelligence to counsel our clients to ensure they will be successful in their new location. The overall impact of these projects won’t be seen in traditional economic data like unemployment rates, wage-levels and employment statistics for some time, so understanding what’s happening today can help avoid significant challenges moving forward.
Predicting where the next large industrial project will go
While recent projects from 2018 are important to consider while evaluating a new location, it is also critical to look to the future and plan for the next big project announcement, and how that will impact other location decisions. The Toyota-Mazda and HQ2 searches were well-publicized, but there are certainly other active but quiet large-scale projects out there that could announce a decision tomorrow and transform a market.
While it’s impossible to predict which market will be home to the next automotive or aerospace OEM, it is essential that companies and their location partners have their finger on the pulse of which markets may be ripe for the next big announcement. For example, it’s critical to have intimate knowledge of which states are looking to target the next assembly plant, which markets have “shovel-ready” megasites that will likely be on a short-list for a major investment, and which communities are going to go all in to support a huge project.
While it’s impossible to know where the next big industrial project will locate, because of its experience, project volume and relationships, Site Selection Group can advise its clients on how best to mitigate that risk to avoid locating adjacent to the next big one.