In due course, most of our readers will face the difficult prospect of deciding whether to expand in their current facility, or move to an entirely different location.
In most cases, expanding in your present location is by far the cheaper solution. However, it’s not always the best solution. While moving to an entirely new location can be a monumental distraction to your daily operations, there are a number of important advantages to taking off for greener pastures.
Here are just a few of them:
To lower operating costs. This is probably the No. 1 reason companies move. High operating costs have made them uncompetitive. The reasons for these high costs are important for you to know because you want to make sure that your new location doesn’t have those problems, too. Some times it may be high taxes, in which case you counter with lower taxes. Sometimes it’s the cost of labor: average salaries, benefits, workers comp and unemployment insurance costs, etc. Or it could be the onerous environmental regulations.
To be closer to a large segment of their market. Long distances to market mean two things: time and money. If a significant portion of a company’s market is in a particular region, that company may be able to save a lot of money in transportation costs — and also reduce their product delivery times — by establishing an operation in that region.
To be closer to certain suppliers or natural resources. The same market forces that apply to a company’s final market also apply to its suppliers. Long distances mean higher transportation costs and longer response times. With major manufacturers moving to just-in-time supply systems in order to save money, proximity to suppliers has become an increasingly critical factor.
To access a better or larger labor pool. These days labor is the No. 1primary concern expanding or relocating companies have when they look at locations. In a period of low unemployment throughout the nation, companies need to know that a community can supply their work force needs in terms of both quantity and quality.
To be closer to similar companies. Many companies like to cluster around other companies within the same industry. Silicon Valley is a classic example, but there are other examples all over the country. The reasons they do this are many: the work force is there, the suppliers are there, the infrastructure is there and, most of all, companies are able to benefit from an “intellectual cross pollination” with their competitors and peers.
To increase the quality of life. Some companies just want to improve their quality of life. This may be the personal choice of the owner for certain privately-held companies, or it may be to so that the company can better attract certain types of employees (engineers, graphic artists or whatever) by being in “high quality of life” location.
To modernize equipment and facilities. Sometimes a company’s existing facility or equipment (or both) have become so antiquated that the company is put at an impossible disadvantage compared to its competitors. Moving to a new location obviously gives a company new (hopefully better) facilities, but it is important to remember that most companies use this opportunity to install newer equipment, as well as develop and implement new procedures.
These reasons are by no means mutually exclusive, either. In fact, the more of these you satisfy, the happier — and more profitable — you’ll be in your new location
