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Economic Update: What's Important to Site Selectors

By: Cleve Poole


When a young couple starts looking for their first house, they pick a neighborhood, a price range and look around until they find the starter home that suits them.  Site Selectors for industries work a little differently.  Their clients tell them a list of “must have” criteria and then set about scratching every potential match off the list until there is only one left.


Area Development Magazine sponsors an annual survey to determine site selection factors that are critical for industries that are expanding into new regions.


Based on their most recent study, the number one critical site selection factor is “Availability of Skilled Labor.”  As has been said in this column on several occasions, workforce development is a focus within the state of Alabama and on local levels, as well.  Typically, industries looking at a site will look at available skilled labor within a 50-mile radius – the area from which folks are willing to drive to get a good job, and commute daily.


The second most critical factor listed in the survey was Highway Accessibility.  Transportation is a big cost for most industries.  In Pioneer’s service territory, Interstate 65, US Highways 31 and 80, and Alabama Highway 10 are all positive attractors for industries.  Access to rail and the proximity to Mobile’s seaport also work in our favor.


Factor number 3 is “Quality of Life.”  Of course, the phrase “quality of life” means different things to different people.  In Pioneer’s service territory, the availability of big city conveniences within a short drive, and the coziness of a rural setting can be alluring.  Having the beaches of the Gulf Coast within a short drive helps, too!


The fourth major factor is “Occupancy or Construction Costs.”  As the recession ends, these costs start inching up and become more and more of a factor.  It must be remembered, though, that operational costs are ongoing and are typically a bigger factor than the one-time costs of getting situated on a site.


The fifth factor, according to this year’s poll is “Available Buildings.”  This factor is really another way of saying that once a decision is made to move or expand, industries prefer to act quickly rather than wait on a building to be built to suit their specific needs.  Many communities invest in speculative buildings to give them a “leg up” when competing for new or expanding industries.


The rest of the top ten factors are Labor Costs (Alabama is traditionally known as a low cost state), Corporate Tax Rates (again, Alabama has a low rate), Proximity to Major Markets (“just in time” delivery is more and more critical for today’s industries – both for their suppliers and their markets), State and Local Incentives (Alabama continually looks at and tweaks their incentive packages.  Rural areas work to get additional incentives to build up their attractiveness), and Energy Availability and Costs (the Southeast has low energy costs and a robust grid system, making it prime for energy hungry industries).


Pioneer Electric Cooperative, Inc. works constantly with economic developers and elected officials within its service territory and the state of Alabama to make the area more and more attractive to industry.  It certainly helps our efforts to know just what Site Selectors are looking for, and responding to their needs.


 Cleve Poole serves as the Vice President of Economic Development and Legal Affairs at Pioneer Electric Cooperative. This article was originally published in the Pioneer Electric edition of Alabama Living magazine in March 2017.


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