- December 01, 1996, Boyle, Edward
Companies everywhere are on the move. The reasons may vary, but the goal is always the same: a more successful business.
Location, location, location. That trite - but true - axiom of the real estate industry suggests, in terms of business, that the key to the success (or failure) of an enterprise can depend less on what you sell than on where you sell it.
There are many variables that may enter into the decision to relocate or expand a business, including taxes, employee base, and access to rail lines or major transportation arteries. But for many companies, it is simply a matter of following their customer base.
MPI Label Systems, today one of the nation's five largest suppliers of color process and thermal transfer labels, was established in 1968 in the quaint town of Sebring, OH. Founder and president Don McDaniel still maintains his headquarters there, but the company's substantial growth has been due in no small part to its ambitious expansion into every region of the country. From Sebring, McDaniel went on to start divisions in North Carolina, Texas, and California and to purchase already established businesses in Illinois and Connecticut.
"Ours is still sort of a local service business, and customers like to know that there is a plant relatively close to their facility," notes McDaniel. "All those other things [taxes, transportation, etc.] are important, but access to customers is the most important reason we go where we go."
Louis O. Werneke Co., Plymouth, MN, is one of the nation's largest suppliers of printing inks, with seven divisions throughout the country. New operations are established in areas where the company has an existing base of business and significant growth potential.
Chief operating officer Michael Buystedt explains that, due to the nature of Werneke's business, environmental regulations are a chief concern, along with an educated employee base, taxes, transportation, and similar factors.
"There are a lot of things to consider," says Buystedt. "Once we identify that there is a need in the area, we look at the business potential, where our other branches are located, and if there are trained employees available. But the bottom line is that when you become local, you have a better chance of gaining sales."
Many Needs, Limited Options
Roosevelt Paper Co., a producer of fine paper for the packaging and printing market, had different considerations. The company was looking to move its headquarters from within Philadelphia, PA, for financial reasons but also wanted to retain most of its 200 employees. That meant relocating within a 15-mile radius - yet still finding a property with enough land to accommodate a 335,000-sq-ft facility, plus future expansions.
As a high-volume paper producer, Roosevelt also required direct access to rail service and a large power supply. The company preferred a reduced tax burden and was hoping for retraining funds from state and/or local governments.
"There were a lot of limiting factors that really narrowed down our search," lamented John Muhic, Roosevelt's director of facilities management. After using a search company and doing its own investigating, the company ultimately found the proper site, just across the river in New Jersey, the old-fashioned way - through a realtor.
When the Tag and Label Mfrs. Institute decided to relocate its headquarters from Iowa City, IA, last year, the main priority was moving to a major city with easy access for the association's more than 300 member companies across North America.
TLMI executive director Bud Gray, who personally conducted the search, ultimately chose the Chicago, IL, suburb of Naperville. It is a fast-growing community just minutes from O'Hare International Airport. The Chicago area is home to the second largest concentration of trade associations in the country, behind only Washington, DC.
"All of our members pass through Chicago at least once a year, and our new location makes it easier for them to stop in," notes Gray.
A Pipeline of Information
Water Ink Technologies, a supplier of water-based inks and coatings headquartered in Iron City, NC, recently moved its expanded headquarters and production facility just a few miles from its old site. But, notes company president Mike Hague, "whether you move your operation across town or across country, you've still got many of the same problems."
The process of choosing an actual site to build or an existing business to purchase can be complicated and time-consuming. Some companies, like MPI, rely on a small team of employees to conduct the expansion effort, which can take from 4 to 18 months to complete. Others rely on consultants to conduct a search and advise them of potential locations that meet their requirements for relocation or expansion.
Craig Throckmorton is president of a unique Oklahoma City, OK-based service organization called Plant Site Locators (PSL). His firm supplies virtually all the information needed by a company in deciding where to locate a business: incentives offered by communities, tax rates, utility costs, the availability of buildings and sites, transportation, education and training, community services - even housing costs.
Throckmorton stresses that his company is not a "search consultant" but rather "an objective pipeline of information" about more than 400 communities in every region of the country. The service is supported by those communities, which pay an average of $1,000 a year to be considered among PSL's target locations. It is free to the companies looking to relocate or expand.
"What we have found," reports Throckmorton, "is that one size does not fit all. Companies have very different criteria for what makes a location suitable for their business."
Once an area of the country is selected, participating communities provide information about available sites that meet the company's criteria. Some will even pay the expenses to have the potential taxpayer visit the area.
According to Throckmorton, "We find those communities that offer the best incentive packages and bring them into the program. Many realize that the best way to create wealth in a community is through manufacturing - meaning jobs."
The National Assn. of Mfrs. (NAM) has promoted the services of Plant Site Locators to its own 14,000 member companies. More than 100 of them have used the service since it was established in mid-1995, some more than once, reports David Walker, director of member services for NAM.
"This is an informational system that allows [companies] to get the information they need quickly, efficiently, and free of charge," notes Walker. "It has improved their ability to make those [relocation] decisions."