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 2019 that the costs of running a company in the United States have 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.
In some states the business climate can be downright hostile. The worst is California, although New York, New Jersey, Connecticut and Illinois routinely top the lists of the most business-unfriendly, high-cost states.
In some U.S. communities, a worsening business environment motivates companies to consider alternative locations, particularly for manufacturing, if they are to remain competitive.
Sometimes those sites are not just in other states but in other countries.
In fact, in our new 2019 report about businesses leaving California, we found that the top ten nations attracting businesses from that state over the last nine years are (1) Mexico, (2) India, (3) China, (4) Canada, (5) Philippines, (6) Costa Rica, (7) Malaysia, (8) Singapore, (9) Thailand, and Japan and Taiwan were tied for tenth place.
It’s a different story for foreign 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.
We know that location “hotspots” and economic incentives 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, we work with a team of site selection experts who for many years have evaluated locations worldwide for all sorts of industries.