Aug 27, 2021
Chris Lloyd Details the Importance of Incentives as Companies Explore Locating, Relocating or Expanding Business
In an Aug. 16 article for Inbound Logistics, McGuireWoods Consulting senior vice president and director of infrastructure and economic development, Chris Lloyd, discussed how tax, energy and land incentives are just as important as location for companies looking to relocate or expand.
"Incentives are a function of public policy," Lloyd said. “Location must be put in its proper context in site decision-making.”
Companies have to consider access to their supply chain and make their decisions based on both current financial models and what they expect will happen in the marketplace in the future.
"We see a shift in the types of incentives states and municipalities are offering," Lloyd said. “It's no longer a one-size-fits-all arrangement. There's a big difference between a partnership and a transaction. That means companies must work closely with governments and utilities to make sure that incentive packages are attractive and beneficial for both.”
State and local incentives help companies offset capital investments and reduce operating costs, but often the incentive options require careful analysis to determine the impact of the benefits. The combination of incentives and location is vital to making the right decision.
"All the money in the world will not compensate for a bad workforce and a poor location," Lloyd added.
The location decision process has changed since the pandemic, and current economic development and political events are also impacting site selection trends. More and more companies are now considering hybrid in-office models, sustainability, green energy, diversity, downtown recovery, tourism and other factors. States and localities have built incentive packages to attract companies based on this changing landscape.
“Companies embarking on the process of finding a location typically construct a project checklist with the help of a professional service provider,” Lloyd said. “Key factors to examine include the forces driving the project, the nature and quality of the workforce needed, and the economics of the move. Other factors include choosing reliable, experienced, trustworthy partners to facilitate the site selection decision.”