Dealing with financial, logistical, cultural & political issues
Globalization is a fact of life – one that can spark a business expansion, consolidation or relocation.
It’s clear in 2018 that the costs of running a company in the United States has decreased because of long-overdue Federal business tax reforms and easing of the Federal regulatory environment. But that doesn’t mean that a favorable business climate exists uniformly across the nation.
Some states embrace their hostile business climate, the most worrisome of which is California. There, it’s typical for 800 new laws to be enacted each year, many of which impose new business regulations, new business taxes, and worsen labor laws to make it easier for employees to sue their companies over frivolous claims.
Also, California has penalties and fees on electric and natural gas utilities, and senseless water policies, too, all of which increase business costs to an exorbitant level compared to other states.
In California and elsewhere in the nation, prospects for an increasingly hostile business environment is so real that companies believe they must look for alternative locations if they are to remain competitive. It’s hardly a wonder why so many companies leave California.
Sometimes those sites are not just in other states but 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 may be needed if a company wants to boost its prospects of success in North America.
Internationally, location “hotspots” and economic incentives may change from time to time. And it is a challenge to optimize investments when working with unfamiliar national, provincial or local authorities. Such variables are true regardless of whether a project is called onshoring, offshoring or nearshoring.
Despite nationalistic tendencies, companies boost their competitiveness by finding international locations that offer the needed talent, an attractive cost structure and reasonable risks. If site selection studies are properly done, businesses find optimum locations that allow quality to be maintained while improving productivity, marketability and ROI.
On international projects, Joe Vranich teams with site selection experts who for many years have evaluated locations worldwide for all sorts of industries.