Why do companies choose one location over another?

Decades ago corporate relocation strategy relied mainly on taking advantage of location, cost of doing business, and attractive real estate opportunities to move, relocate, and expand to a region. The conventional wisdom was that labor and workforce would follow. The landscape is very different now.

With the downturn in the economy, increasingly companies are looking to cities and states to demonstrate their interest by offering incentives. In fact, state and local incentives now are in the #2 spot of the top factors considered by site selectors according to results released in 2012 of a survey conducted by Area Development magazine.

The #1 item on the list is labor costs. With the advent of the Internet and other technology that enables businesses to operate efficiently from anywhere, companies now rank the cost of hiring talent to be at the top of their list of factors driving relocation decisions.

There are other reasons for company relocation ranging from reducing operating costs, establishing a presence in a particular time zone, diversifying risk, or the desire of the owner to enjoy a better quality of life. Every industry, company or corporate executive is different. It is the role of an economic developer to understand a company’s needs and to highlight the area’s assets that are relevant to the decision maker.

At TREO the majority of companies that we speak with also put availability of a skilled workforce as very high on the list – in fact, even higher than this nationwide survey would indicate. And to attract and keep that skilled workforce, companies are learning that ambience, a vibrant downtown, outdoor amenities, quality education opportunities and an affordable area in which to live and work are critical.

According to data released in 2012 by Area Development magazine, the top 10 site selection criteria are:

1. Labor costs
2. State and local incentives
3. Highway accessibiity
4. Availability of skilled labor
5. Energy availability and costs
6. Proximity to major markets
7. Tax exemptions
8. Occupancy or construction costs
9. Corporate tax rate
10. Availability of buildings

Remember, a community is not judged by where it is today. It is judged by where the community is going. TREO’s Economic Blueprint is a strategic plan that defines a performance-based strategy and economic vision to effectively position the Tucson region to capitalize on its best economic development opportunities in the coming decades. The Blueprint is designed to guide our community’s economic development efforts – leveraging existing assets, strengthening foundations and defining the key steps that the region’s leaders must take to transform a common vision to reality.

The Tucson region is in an excellent position to attract qualified primary employers. Thanks to its strong leadership, trained workforce, superior quality of life, and a strong guiding vision, the Tucson region will continue to be a location of choice for both new residents and businesses alike.

Special thanks to Tom Clark of the Metro Denver Development Corp. for writing this
piece originally, and allowing TREO's adaptation and use.