Many municipalities put a great emphasis on economic development, often creating whole departments that do nothing but attract new businesses and keep old ones. A good industry can put a city or state on the map and any municipality will look at quality of life issues such as keeping its citizens gainfully employed.

  1. Price – It doesn’t matter whether a company’s assets are counted in the thousands or billions, cost is the major factor in deciding to move into a certain area. This may include land acquisition costs and the price of installing any needed infrastructure; the package is more attractive when the property or land is cheap and improvements are already in place.
  2. Infrastructure – Depending on its needs, a company will look at highway access, available railroad and shipping lines, and nearby distribution centers when deciding where to set up shop. The more ready-made infrastructure for the company’s use, the greater the attraction.
  3. Employee Pool – An employer prefers to go where the workers are, and this usually means a well-educated work force that can minimize startup costs and hoops. Wage rates are also a factor, and an employer may look at whether there is a strong labor union in the area.
  4. Tax Structure – A company will also look at an area’s tax structure when looking at places to set up shop.
  5. Friendly Government – Tying in with this, a business-friendly atmosphere will be a key factor in attracting business. If a business operator believes he has to jump through many governmental hoops before the first shovelful of dirt is turned for an industrial facility, he may decide to go someplace with a friendlier atmosphere.
  6. Customer Base – While this may be less of a factor with an industrial company or one that does most of its business online, having a good customer base is important. Many retail operations will look to the demographics before making a decision to move.
  7. Incentives – As a company is touring possible expansion areas, its representatives are likely to talk with local and state officials to see what kind of deal they can strike. Incentives may include tax exemptions and credits, or forgiveness of normally-enacted impact fees. With big-name companies that may employ many local workers, the competition by various states and municipalities could be particularly keen, and often it’s the incentive package that swings the company executives’ decision

 

-Henry Goodfriend

Henry J. Goodfriend is the Executive Vice President of Operations at NAI Global New York City.