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The Southeast has quietly emerged as one of the leading geographic regions for manufacturers to relocate their facilities today. Boasting plentiful opportunities from infrastructure to real estate costs, a move to the Southeast is giving businesses an opportunity to realize operational improvements in plant floor layout, improved processes, and technology investments toward operational efficiency and business risk mitigation that yield payoffs in the long term.
Here is a look into how the Southeast is becoming a major draw for businesses and facility executives.
Pull factors to the Southeast
The Southeast is rolling out a red-carpet welcome to the business community in more ways than one. In general, the region enjoys infrastructure systems that have allowed it to pave the way for greater business interest in the region. High-quality roads are plentiful; deep-water ports are just off Georgia’s coast, Atlanta’s Hartsfield-Jackson airport spirits passengers and cargo to almost anywhere (earning it the title of the busiest airport in the world); and “shovel-ready” Certified Sites offer new business opportunities in Georgia, Tennessee, and North Carolina.
In addition to modest land costs in the Southeast, corporate tax rates are low: Of the 11 states that levy corporate income tax at or below 5%, four of these are in the Southeast, with North Carolina being the lowest nationally at 2.5%. Atlanta also consistently ranks high for being a notable “hotbed” of tech talent.
Regarding climate impacts, projections show that the Southeast is relatively well positioned to weather the changes. While hurricanes and flooding remain an issue in coastal areas, businesses locating their plants further inland will be afforded greater protections. Temperature impacts will be relatively moderate in the Carolinas, Virginia, and Georgia; wildfire threats are minimal; and access to water (streams, rivers, and groundwater) is projected to be adequate. Long-term planning must consider these impacts in terms of supply-chain risks and overall business risk mitigation.
Big gains: An opportunity for internal change
Beyond the benefits afforded by a geographic relocation, a plant move can also bring about much-needed internal change. If you’ve ever wrung your hands lamenting your current lack of efficiency or optimization (“If only we could…”), a plant move might be the exact kind of disruption you need. You could be revising your plant floor layout, setting up shop in a lower-cost space that’s closer to your customers, capturing R&D tax credits, achieving efficiencies to lower operating costs, or improving emissions with climate disclosure rules in the offing.
Plan, then plan some more
No matter where you move, plant relocations are 90% planning, 10% execution. Facility executives, with a team of stalwart advisors, must get granular in weighing the push and pull of external factors and identifying the opportunities for internal change.
Run the models. Explore the geography. Develop contingencies. Understand your own requirements and those of your clients. Establish and test your channels of communication within the organization—from the C-suite to the frontline staff—and with stakeholders not on your organizational chart (e.g., contractors, the media). Only then should you make the call for the moving trucks to sidle up to the loading dock.
Soon, you’ll be sustaining the gains over the long term, and with any luck—nay, with planning—everyone will have declared the endeavor totally worth it.
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