The Southern Economic Development Council (SEDC) Meet the Consultants conference was held in Chicago, March 20th and 21st. In the six panel discussions, we learned about the trends in site location of back offices, distribution/logistics centers, advanced manufacturing, food processing and headquarters. Understanding these trends help us better target companies for our clients.
The Distribution/Logistic panel said that the projects they are seeing have few jobs due to automation but much higher capital investment. The panelists differentiated between fulfillment centers and distribution facilities. Fulfillment center often choose closing-in locations and may use a re-development site to get closer to the customer. They are engaged at the individual package level and the “last mile” with same-day delivery to the home day. The distribution center, on the other hand, is dealing with pallets of goods and is concerned with transportation network including intermodal facilities. The consultant panelists reminded the audience of the critical need for confidentiality when working with prospective companies and the need to build trust. Incentives based on number of jobs created is out-of-step with the trends toward much higher capital investments but fewer jobs created.
The trends they mentioned are the increasing importance of quality of life, the “millennial factor – attracting talent” international trade uncertainty that is delaying several projects, and the impact of autonomous vehicles especially trucks. Higher ceiling heights above 36 ft. the need for a workforce pipeline, and the need for re-zoning to enable re-use of properties were also discussed.
The Advanced Manufacturing panel suggested that communities see themselves as a partner with each business. Learning what a business needs and wants from their point of view is critical to successful recruiting these businesses. Building space for this fast-growing sector is in short supply. Speculative buildings are being sold to insurance company as investments even before the construction is completed or the building is leased. Advanced manufacturing firms are looking for help in mitigating risk. Other issues the panel discussed are the impact the opioid addiction is having on the workforce in a growing number of communities.
The Food Industry is struggling to keep with the rapid changes in consumer preferences including organic, fresh, healthy and locally sourced to name a few. The site location consultants recommended that communities be prepared to assist food processing companies as adapt their supply chain to rapidly changing consumer tastes. Aside: During my weekend shopping expedition, I quizzed the in-store personal shoppers, meat department and produce department staff. They confirmed the same view regarding the rapidly changing consumer preferences but also the desire for convenience. The demand for “pick-up” at the curb and the home delivery is growing rapidly among shut-ins, elderly, and time challenged professionals as well as those with young children and large families.
The Corporate Headquarters panel said that commute times are a factor in site selection. However, this pattern may change with the advent of “self-driving” vehicles. The forecasted demise of the office appears not to be happening because of our basic need for connection with others and the increasing need to collaborate. Other factors impacting the location of corporate headquarters include the available educated workforce, infrastructure, qualify of life, and real estate cost. The panel members said that incentives are now comparable place-to-place and offer little competitive advantage. The ease of doing business within the community was mentioned along with the fact that Tier II cities are getting a second look for headquarter locations.
SEDC put on a great program. In addition to informative content, there was also an evening fun reception featuring a “Blues Brothers” DJ complete with hats and sunglasses” and a wandering magician. All in all, it was a few days well spent.