When the ball dropped to ring in the New Year, I expected there may be an economic downturn. After all, the U.S. had logged 126 months of economic expansion, the longest in history, and it was past time for a correction. There would also be a presidential election this year, and the economy and site selection business often slow down in election years.
On February 19, the New York Stock Exchange (NYSE) hit a record high then plunged 34 percent in a matter of weeks. Driven primarily by the outbreak of COVID-19, U.S. unemployment rose to a post-World War II high and was recently 11.1 percent. The first five months of 2020 was an economic meltdown. Now, in the midst of reopening of many businesses, broader equity markets are recovering rapidly, and the unemployment rate appears to be declining. However, the US is officially in a recession. GDP numbers for the second quarter of 2020 are expected to be dismal.
For Strategic Development Group, 2019 was our best financial year in our 21-year history. Our list of new projects and clients were growing, and we entered 2020 with a significant backlog of site selection work. We are pleased to report that much of this work is proceeding with vigor, while some has slowed or paused. Travel has been severely restricted, which is a serious challenge to completing site selection and negotiation assignments for our clients; however, we are gradually re-entering the field.
Personally, at the outset of 2020, I hoped for a brief economic reset, but I never imagined this COVID-19 driven scenario. Despite the challenges of the current business environment, my team and I are truly excited about prospects for our site selection work in 2020 and 2021. I believe SDG’s entrepreneurial spirit, proven process, and dedication to customer service allows us to constantly adapt, improve, and add value for our clients.
In this Summer issue of the SDG newsletter, we’ll reflect on reshoring trends, the expansion of our work in economic impact analysis, and significant work we are doing in rural communities to prepare for the post-COVID business environment. We will also discuss several other changes we expect to see in the site selection profession resulting from COVID and the overall evolution of the site selection business. As always, we appreciate our clients in our mutual pursuit of business success. SDG’s focus remains on finding Optimal Locations and providing Superior Service.
What’s All the Talk About Reshoring?
Reshoring is a trend that’s been occurring at an increasing pace over the last decade. Generally, reshoring is defined as the process of companies that have left the U.S. to manufacture products moving operations back to the U.S. Companies consider reshoring for many reasons including increasing supply chain risks, rising foreign labor rates, challenges with product quality, protection of intellectual property, lower U.S. energy rates and increasing application of automation.
Two recent events have intensified consideration of onshoring. The first event was the increased pressure from the federal government to bring jobs that were previously “offshored,” back to the U.S. Through the institution of new tariffs, the re-negotiation of NAFTA and other policies the government tried to enhance the economics of manufacturing in the U.S.
The second event is supply chain disruption brought about by COVID-19. There continue to be concerns over delivery of components or products critical to pharmaceutical production, medical products, national defense, and various manufacturing sectors.
For over two decades, Strategic Development Group has focused exclusively on U.S.- based site selection and, as such, we are experts in helping companies navigate the complexities of site selection. Our proven process will deliver the best possible location; minimizing risks and maximizing your financial position READ MORE
For additional information, please listen to the following podcast recorded recently by Mark Williams for the Site Selectors Guild regarding trends in reshoring and related economic development.
Economic Impact Analysis
Knowledge and understanding of the positive impacts of economic development create a basis for informed decision-making regarding the use of incentives to attract new capital investment.
Unfortunately, the positive economic impact of manufacturing, distribution, and headquarter locations is often underestimated and misunderstood. It is critical that major new site selection and expansion projects are evaluated for economic impacts to ensure a full understanding of the financial return on investments.
Strategic Development Group is pleased to report that we continue to expand our services related to conducting economic impact analysis for the private and public sector.
Our clients typically use these professional services to achieve the following goals:
1) To justify incentives and other public support for site location projects and, in some cases, to show the negative impacts of a potential facility closure.
2) To illustrate the positive economic impacts of existing facilities to foster goodwill and enhance government and public relations.
Contact us if you are interested in learning more about how we can help your company demonstrate the powerful economic impact of your project on a community.
SDG Helps Rural Communities Prepare for the Post Pandemic Economy
There is much work to be done by economic developers across the U.S. to prepare for life after COVID-19. SDG is helping communities GET READY for the post-pandemic economy through a variety of economic development consulting assignments. In this newsletter, we are highlighting the Rural Certified Communities program. In conjunction with Tennessee Valley Authority (TVA) Economic Development, SDG is implementing an initiative that evaluates communities’ strategic plans, marketing materials and a number of other factors to assess a community’s ability to be successful in attracting new capital investment. SDG provides customized recommendations to each organization to enhance their economic development services and help make the community more competitive in today’s economic environment.
Rural communities must work smarter to define themselves in unique ways and market to a more targeted audience. Through our private sector work, SDG has real-time knowledge of site selection trends and can help EDO’s become more competitive and better prepared to attract new capital investment opportunities.
SDG is delighted with our partnership with TVA on this innovative project. Visit our website to learn more about SDG’s economic development services: https://strategicdev.com/services/.
SDG Completes Site Identification Project for Palmetto Electric Cooperative
In many communities, there is a shortage of qualified industrial sites due to high-level capital investment activity and the absorption of existing industrial sites. In other places, there continues to be a lack of adequate industrial sites. Traditional site evaluation and site certification programs rely on local communities to find a site. When done internally, the site identification process can be motivated by political or other factors. SDG believes that using a rational, ordered process of screening search regions allows organizations to identify sites with highest potential for success.
SDG recently completed a site identification for the Palmetto Electric Cooperative.Using GIS technology, SDG screened the three-county region of Jasper, Hampton, and Beaufort counties using the following criteria:
1) Area must be within the PEC electric service territories OR in unassigned territory.
2) Area must be within certain distance from different transportation infrastructure.
3) Area must be free of wetlands and outside the 100-year flood plain.
This provided SDG a starting point for identifying specific areas of interest. The next step was to overlay water and sewer line locations and parcel data. Using our extensive site selection knowledge, SDG identified target areas and provided recommendations on priority areas, strengths and weaknesses of each target area, likely and development timeline for each Target Area.
SDG looks forward to following PEC and their next steps in increasing the quantity and quality of product in their inventory, and ultimately their success in attracting new capital investment and jobs to their service territory.
Sample Site Identification Screen
I fell into a YouTube Rabbit Hole earlier this week and ended up watching a lecture from Asia on the difference in economic growth and economic development. I was reminded of it the when reading of your work on impact analysis. So much of what we look at in “return” is solely for economic growth and I am glad to see your analysis goes much deeper to address the “economic growth plus social welfare.” I look forward to seeing my friends at SDG in what I hope is the not too distant future. Keep up and good work, we need folks like you.
So sorry for the delayed response. We remain very interested in impact analysis and I’m doing some writing on that topic now for an upcoming publication.
Hoping we get back to normal next year.
All the best,