3 MIN. READ
What is important when choosing a location for a new factory? Whether in response to government incentives or seeking the security of American shores, more manufacturers are choosing to build domestic facilities. However, finding the best site poses multiple problems. This is particularly true of “mega sites,” such as the Tesla Gigafactory in Nevada, requiring large parcels of land. However, many companies also search for smaller sites most suited to their needs.
Why Does Location Matter?
One criterion for choosing a location is speed. The economic development board in a target city must be agile enough to act within tight deadlines. If not, a factory won’t rise in time to meet marketplace demand.
Some factories also require a high level of physical stability. Proximity to a vibration source, such as a rail line, causes manufacturing faults.
While many considerations exist for choosing a city or town, manufacturers must also look at criteria specific to a land parcel.
Which Resources are Essential?
1. Power
Factories can’t function without sufficient and dependable energy. The lack of adequate power, or power from sustainable sources, may knock sites out of the running. Facilities must also readily link to the grid providing power. Without connective infrastructure, building can’t proceed.
The cost of power will also be a significant factor in selecting a location. Cost calculations must include current rates and anticipate changes. As energy sources shift over time, costs may rise or possibly fall. Still, a manufacturer must perform the most precise calculations possible.
2. Water
Many industries use significant amounts of water. These include:
• Textiles.
• Meat.
• Beverages.
• Automotive.
Factory builders must determine whether a site affords sufficient water access. They must also plan for wastewater treatment and disposal.
3. Communications
Procuring functional cell service is not the only factor for communications. Manufacturing facilities not only reach outward but must also maintain internal networks and contact among factory floor stations. Much equipment will function through the Internet of Things (IoT). This requires robust support for the following:
• Sensors.
• Monitors.
• Analytical equipment.
• Robotics.
Some factories will also be using augmented reality to aid in assembly.
Enough bandwidth should be available for current and developing manufacturing needs.
4. Infrastructure and Logistics
Goods must reach the marketplace. Raw materials and parts must reach factories. These functions may require roads, rail and air transportation depending on the industry. A factory site must have dependable and rapid access to shipping routes. Roadways or other improvements must be in place when the facility opens.
Manufacturers also need access to logistics partners who can aid in cost control. Building a facility as close as possible to suppliers will also keep costs down and make the availability of materials more predictable.
5. Workforce
Despite the rise of automation, factories must have a good labor pool. When choosing a location, manufacturers must analyze their workforce needs. This analysis will include many elements. Planners will be looking at whether a site will draw permanent labor. They can examine sources of temporary workers. The local wage structure must fit in with a projected operating budget. A workforce must meet current needs and those that will arise throughout the facility’s working life.
6. Government Policies & Incentives
The CHIPS and Science Act will be a boon to many electronics manufacturers and related industries. However, many states and local communities also offer inducements to bring facilities into their jurisdictions. These may include:
• Land discounts.
• Building discounts.
• Infrastructure improvements.
• Utility rate discounts.
• Job training programs.
• Tax cuts.
These incentives can make or break the success of a facility. For example, job training programs can cut labor costs by providing qualified workers at introductory pay scales. Utility rate discounts reduce operating costs. Tax cuts allow for higher profitability. Even in areas where land values may appear higher, a combination of incentives will keep costs in line.
7.Sustainability & Climate
In many areas, communities take sustainability very seriously. To get local officials to buy into a building plan, a manufacturer must provide assurances of sustainable operations. The last thing a plant needs is protesters objecting to construction in their backyards (NIMBY).
Climate change may also affect plant design. Some facilities, notably in Texas, were designed without considering freezing temperatures. With Tornado Alley moving eastward and other climate shifts, plant builders must allow for adverse conditions that previously didn’t exist.
How can IndustryNet Help?
IndustryNet is an industrial marketplace where industrial buyers can search, sort, and quote for free among 420,000 U.S. suppliers, making it an essential resource for site planners to research local suppliers in any U.S. location. The search for facility resources starts here.
