Siting Success: The Tale of the Diamond Cutter
Imagine you inherit an uncut diamond. The initial appraisal, if cut correctly, indicates it could be worth $1 million. The cutting process is complex and if not handled correctly could depreciate the value to as little as $50,000. Do you search for the best diamond cutter you can find? Or do you search for the lowest-priced diamond cutter you can find and hope for the best? Of course, you will seek recommendations for the best you can find and pay them accordingly (perhaps on the contingency of a job well done!). This job demands the highest skill set you can find.
Site Selection is no different. Imagine you are a corporate executive and need to recommend a site to your board for a major new manufacturing facility. This facility is expected to operate for at least 40 years. You review pro forma labor costs, logistics, and site development requirements. Your analysis shows that a poor site location decision could cost your company $50 million or more in additional operating costs over the life of the project.
It’s easy to assume the cheapest deal is the best deal when it comes to siting land and buildings. A skilled, well-connected local brokerage can find and close a deal quickly. The temptation is clear.
For instance, let’s say the brokerage would charge $150,000 to the seller and nothing to the buyer. Compare that to the buyer committing $350,000 to an experienced site selection team to do what could appear like the same thing.
Take a closer look. Real estate brokers can be a valuable part of the process. However, their expertise does not include the full spectrum of site analysis including environmental and regulatory factors, local and regional labor force availability, and logistics analysis for starters.
Site Selections teams bring additional value and long-term savings to your project:
- Unbiased insight, knowledge, and skills.
- Experience negotiating incentives with local governments and utilities.
- Motivation to find other suitable sites in other localities, including nearby states, that can compete to provide the client the best environment for success.
Restricting site selection decisions to only real estate considerations seems like a free ride, but it can be a painful trip. Understanding the breadth of services and value from a professional site selection team is a significant step to avoiding that pain and securing the right mix of incentives, costs and benefits, infrastructure, labor force, and other critical elements for success.
At Strategic Development Group, our experienced team has one goal in our crosshairs when we partner with your company—finding your project the best site for long-term success. We take a holistic approach and have the expertise to negotiate and navigate the intricacies of your unique company and needs.
We would love to hear your thoughts on our philosophy or discuss how we can help you achieve your company or community’s goals for long-term success. Contact us!
This is the first blog in our series adapted from our founder’s, Mark Williams, book Corporate Site Selection and Economic Development: A 30-Year Perspective. With a focus on the post-COVID-19 environment, this book is a must-read for corporate executives, economic developers, and elected leaders. Mark provides enlightened, direct, and real-world perspectives on facility site selection and the pursuit of economic development.
Founded in 1999, SDG is a highly specialized site selection consulting firm focused on identifying optimum locations promptly, maximizing the value of incentives, and minimizing risk for corporations from across the globe. SDG has managed projects with capital investment from $15 million to over $1 billion for companies in a wide range of industries including automotive, chemical, steel, and life science.