Globalization is a fact of life – one that can spark
a business expansion, consolidation or relocation
The cost of running a business in the United States continues to rise for a number of reasons, the most recent of which are new health care requirements. And, unfortunately, there are few signs that the federal tax burden on corporations will be eased.
Other difficult circumstances include new regulations on everything from how trucking companies can operate to penalties on electric and natural gas utilities and water usage, all of which result in added business costs. Unprecedented pro-union activity by the U.S. Department of Labor and some state governments represent another high-risk factor for businesses to consider.
In some states and communities, the prospect for higher business taxes is so real that company leaders feel that they are forced to look for alternative locations if they are to remain competitive. Sometimes those sites are in other countries.
It's a different story for overseas corporations in the consumer products business because the market in the United States is enormous. Establishing a presence here is likely to be a requirement if a company wants to boost its prospects of success in North America.
Location "hotspots" and available economic incentives may change from time to time. And it is a challenge to optimize investments when working with unfamiliar national or provincial governmental authorities. Such variables are true regardless of whether a project is called onshoring, offshoring or nearshoring.
There are several ways to establish a facility in another country:
- Create a wholly-owned subsidiary or joint venture oriented to a particular location.
- Outsource to a manufacturer or service provider that meets your criteria, one who maintains the proper certifications and guarantees quality work.
- Contract with a company that specializes in "turnkey" or "shelter" operations that provide buildings, labor and support services in a seamless fashion.
Despite nationalistic tendencies, companies boost their competitiveness by finding international locations that offer the appropriate talent, an attractive cost structure, and reasonable risks. If assessments are done properly, businesses find optimum locations that allow quality to be maintained while improving productivity and marketability.
On international projects, Joe Vranich teams with site selection experts who for many years have evaluated potential projects worldwide for all sorts of industries.