Friendly persuaders (page 2)

-- Logistics Management, 1/1/2006

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Similar organizations exist almost everywhere in the United States. One of the many possible examples is Nevadaworks, a state-funded organization that gathers occupational and workforce statistics for northern Nevada. Such agencies collect and organize quantitative data that is publicly available, notes Michael McCabe, leasing vice president at DP Partners, a Reno, Nev.-based industrial space developer that frequently uses information from Nevadaworks.

In addition to providing economic data, agencies often are willing to conduct research or assist with negotiating tax breaks, but such specific services usually are offered after the search has been narrowed to two or three final contenders. Some will go even further to make sure that a company will get what it needs after it makes the move. Piedmont Triad, for example, has helped companies arrange customized training for new employees.

Facility Developers

Facility developers, not surprisingly, have a vested interest in helping shippers find an appropriate site. They usually get involved after the shipper has identified the general area where it wants to locate its warehouses or DCs, although they sometimes assist clients in making that decision, says Michael Towerman, president of St.Louis-based TRiSTAR Business Communities. More typically, developers try to attract businesses to industrial parks they own, he adds.

They do so by making sure those properties have what shippers are looking for. For companies involved in international trade, that means multiple transportation options, says Bill Burton, senior vice president of Dallas-based Hillwood. His company's 17,000-acre AllianceTexas distribution park is located 15 miles from Dallas-Fort Worth International Airport, where UPS operates a sorting center. Fort Worth Alliance Airport, where FedEx operates a similar facility, is located on AllianceTexas grounds. Rail access is another big attraction: Union Pacific runs a main line through the eastern portion of the park, and BNSF operates an intermodal yard on the property. With so many transportation options, not to mention foreign trade zones and customs examination sites-literally next door, it's no surprise that such big-name companies as Motorola and JC Penny have located sizable DCs there.

Developers' build-to-suit programs can provide a wide range of services, including some of the same ones offered by consultants and economic development agencies. Atlanta-based IDI, for example, has a dedicated team that will start with a site search and follow through all phases of design, implementation, construction, and development, says Sean Fitzsimmons, director of national business. Even with those capabilities, though, IDI always works closely with real estate brokers and economic development agencies that have local expertise, he adds.

Like economic development agencies, developers can assist clients to obtain economic incentives. That's one way TRiSTAR was able to convince Hershey Foods to locate a 1 million square-foot, climate-controlled DC in the developer's Gateway Commerce Center in Pontoon Beach, Mo. The center is located in a state-designated enterprise zone and portions of the business park are situated within another type of tax-benefit district.

Careful Comparisons

As those who have been involved in this challenging exercise will attest, site selection is a company- and industry-specific process. Each shipper has unique needs, priorities, and constraints that must be taken into account when making a decision.

As we've seen, there are plenty of organizations that are anxious to help shippers through the selection process. The trick is to not only get the greatest value from those resources but to also ensure that your decision is based on a careful, accurate comparison of the options—no matter where you choose to get your information.

Author Information

Karen E. Thuermer is a freelance writer who covers transportation and site selection for a number of business publications.

Advice From the Pros

The number of considerations that can go into a site selection decision are almost too numerous to mention. Here is a sampling of the advice offered by experts interviewed for this article.

Sean Fitzsimmons, director of national business, IDI: Economic incentives should be carefully evaluated in the context of total cost. "If someone is giving you land for free, it could be for a reason and could end up costing you more. It could be in the middle of nowhere, with no labor force to support your project."

Steve Callaway, senior vice president, AMB Property Corp.: Companies that need a new facility fast may want to work with a developer or broker that has its finger on the pulse of a specific market. "Decisions are largely driven by what is available, based on the client's size, timing, and location requirements."

Alan Harris, vice president, after sales, BMW of North America: Where you site a DC relative to your customers' locations will have a significant impact on total transportation spending. "Each time we add a distribution center, we reduce the average distance between ourselves and our customers, which in turn reduces both our freight costs and carrier-related damages on outbound shipments."

Michael Towerman, president, TRiSTAR Business Communities: Shippers usually evaluate sites based on a hierarchy of factors they've weighted according to their own priorities. "When Hershey Foods concluded that they needed a Midwest distribution center ... The number one determining factor was transportation costs. Number two was labor. Then they considered what kind of economic incentive package they could get at the state or local level."

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