By Eric Voyles
Whether you are considering moving your business to a new market, acquiring or merging with a competitor, adding staff, or increasing your service lines, the risk to relocate or expand a manufacturing operation can be enormous. With careful research, smart decisions, and support, the benefits to taking the next step for your business can far outweigh any negative pressures.
For companies thinking about relocating, the considerations are extensive. Minimizing downtime and supply chain disruption are top priorities, but those pitfalls can be overcome when you plan in advance.
When making your decision, ask the following questions and consider these important factors:
What should my company look for when relocating to a different region?
A business must minimize disruption to increase the chances of success when making a move. First, look for a location that has an existing workforce that mirrors the workforce you currently employ. Having like-kind industries guarantees there are suppliers in the market as well.
Next, determine whether you would best be served by purchasing an existing building or a new facility designed to suit your business.
If your company finds an existing building that needs adjustments, that could be advantageous to your operations: You’ll likely be operational three to six months sooner if the building is already suited for your company. It is critical to do your due diligence ahead of time to ensure you know what accommodations need to be made and to avoid unexpected issues that could arise.
If you are debating between two properties, and one is a bit tight while the other is a tad large — go big. Factor in a five-to-10-year growth potential. Once already established in a building, being landlocked will not be a concern if the need to move again arises. The direct cost to move manufacturing machinery, as well as the indirect costs of losing people and experiencing disruption to production is simply too high.
If an existing building isn’t available, then research must be done ahead of time to determine if a developable piece of property is suitable for constructing the type of building your company needs. If a property is truly development-ready, end users can begin construction much sooner. Companies don’t need lengthy delays while the entitlement, infrastructure, utilities, and transportation requirements are put into place.
Lastly, the presence of restaurants, hotels and nightlife might not seem critical to industrial builds, but consider that some of your employees will want to go out to lunch; clients will need a place to stay for site visits; and traveling executives will look for evening entertainment after their meetings. Ultimately for you and your employees, happiness at work and in life matters.
How important is support from the economic development community?
Any company that is considering relocating should expect assistance from an economic development group in the region. Initially, you should receive quantitative data that will help you determine how long it is going to take to hire employees, stabilize production, and meet acceptable run standards. An economic development group will have models put together on your behalf with data points including electricity costs, tax rates, real estate and inventory taxes, labor rates, and costs to hire.
As your company moves forward with narrowing down cities to relocate to, you should expect quantitative information to transition to a more qualitative relationship. An economic development group should be able to help you identify partners nearby to assist in the manufacturing, warehousing, or the logistics part of the business. An economic group can even have someone available to help with language barriers, cultural differences, or guidance in doing things like opening a bank account or finding housing for workers.
As you get closer to your decision, a company should view the economic group as a partner that is invested in their success.
What are ways to help facilitate supply chains to hit the ground running?
For many businesses, it will be the help of third-party logistics (3PL) services that will support supply chains and allow businesses to expand more confidently by minimizing risk. Warehousing, fulfillment services, transportation of goods and management of labor forces are all benefits 3PL companies can provide.
Whether companies are manufacturing or distributing, they need flexibility. They are looking for locations with adequate labor supplies, great access to major transportation routes and an existing physical structure or facility. A company that is testing a market or a concept might be looking to lease space. Outsourcing any of these requirements to a 3PL partner and having a trusted partner that can provide needed services in a flexible format is a great way to test a market.
Eric Voyles is the Executive Vice President and Chief Economic Development Officer at TexAmericas Center. He is responsible for a lease portfolio of nearly 1.1 million square feet and efforts to lease or sell nearly 3.5 million square feet of commercial space for office, warehouse, production/manufacturing, dry storage, and explosive bunker/magazine use, in addition to 12,000 acres of transactable property.
