Plastics – Trade & Industry Magazine – Nov/Dec 2007

NovDec_07_AnimCover.gifPlastics
From Bags to Medical Devices – Best Practices for Location Choices
By: Michael P. Hickey

Nov/Dec 2007

The Reality of the Market

Plastics are everywhere and in almost everything. They make airplanes, cars and boats lighter and more efficient, provide containers for food and beverages, and create better, but cheaper, medical devices and equipment. Even children’s toys are sturdier, safer and affordable because of plastics technology. In fact, most of our kitchen appliances, and other items throughout the home, rely on plastics. They are a part of our everyday life.

The magnitude of the industry is significant in terms of the economy, jobs, wages, capital investment and new capital circulation in the local economy and in global trade benefits. Recent statistics include:

  • Over $350 billion of plastics goods shipped in a year
  • Directly employ over 1.5 million people (the multiplier/spinoff in indirect and induced jobs is at least three times this number)
  • Over 19,000 operating facilities industry-wide.

Global Competition

According to the Freedonia Group, a plastics industry research group in Cleveland, the demand for certain plastics will continue to see growth in the U.S. (frozen and refrigerated food containers, medical devices, plastic bags, etc.). Other studies also show growth in Central and Eastern Europe, Asia and other areas. China, with its overall industrial boom and double-digit economic growth, continues to have a strong thirst for plastics and a dedicated effort to produce within its borders for its own consumption, as well as for exporting.

Overseas firms are continuing their aggressive pursuit of American markets, and similar to global automakers (Toyota, Nissen, Mercedes, etc.), are seeking opportunities to build and expand operations in the U.S. Firms, for example, from Japan, India, Europe and other locations, are finding opportunities and right fits in the U.S. Where the large producers go, so will the other firms that supply the producers and the other companies that use their products.

The good news should be obvious to the plastics industries at large…studies show the U.S. will continue to be positioned to grow opportunities onshore such as packaging, particularly for food and beverages, as well as for pharmaceuticals. The Freedonia Group found that U.S. beverage container demand will continue to grow to over $20 billion within a few years.

The potential impact for the industry is significant. Recognizing opportunities for the best places to locate a business and seizing upon them will continue to be the best avenue to success. From a site selection reality, it makes good sense, or more aptly put, a business imperative, to be close to a geographic network of suppliers and vendors. There are communities across the U.S. that have a strong focus on manufacturing (and the plastics industry in particular), which suggests they have a good understanding of the services and support they need to provide to continue to nurture the industry.

The best method to learn which locations would be the best fit is directly from other companies operating in the community, as well as from trade industry associations, publications and site selectors. Additionally, states and communities should have extensive Web sites managed through their economic development offices that give a company a good indication of their priority industry clusters. 

Drivers for Growth

The major growth domestically is in the smaller, faster, higher value and lighter products. Locating close to U.S. customer markets is the key driver, along with ample existing building space, land, available talent, reasonable costs of doing business, public incentives and business-friendly communities.

The American technology and mastery in best business practices will continue to provide an advantage in the higher value and more advanced products. The good news is that the industry will continue to improve to create better and more cost-effective products. Lean manufacturing principles continue to be a staple of the industry.

Due Diligence

A company looking to relocate should first determine their particular “”Factors for Success.”” Then, when performing due diligence and before investing significant capital, the process should always include a list of potential site locations. The process of the intense search begins to eliminate communities that do not meet the “”Factors.””

Some of the factors of success in the plastics industry are also standard for other manufacturing companies. However, several unique requirements for this industry include:

  • Available specialized talent at reasonable wages
  • Ability to retain the talent
  • The regulatory environment
  • Cost and reliability of power
  • Proximity to an international airport with many flight options
  • Good road transportation network
  • Availability of research and development institutes specializing in plastics technology.

Factors for Success

The key factors in site selection are ever-evolving, but the strategy should always be for long-term solutions, not just short-term gain. The upfront and focus diligence will lead to long-term success.

Even though no one location can be all things to all companies, the corporation should closely look to communities with leaders who have identified their industry as a priority and clearly articulate their understanding of the needs associated with their industry and how to best develop the cluster approach to support that industry’s needs. The company should also look for a community that has a strategic plan for developing and nurturing the special needs of the industry and a willingness to create an environment for similar companies to support one another.

The corporation should also look for a community that invests in themselves through investing in the infrastructure required and expected by the industry. A word of caution, one might deduce that if there are similar companies in a particular community, then it must be the best place. However, it may no longer be as attractive since it may be oversaturated in a difficult employee recruitment market.

When the company evaluates any community, it should do so based on their established requirements, but also evaluate these requirements relative to other communities’ assets and infrastructure. Public incentives are considered a community asset that can be shared with a company with the understanding it will contribute back many times over. As one city manager in the southwest U.S. stated, “”We ought to be willing to invest in companies that are willing to invest in us.””

The “”Ground Game””

The ground game can make all the difference. Visiting communities has become the essential part of the process. There have been numerous occasions where the site location decision matrix evaluates communities high or low only to change and reprioritize once the team gets on the ground, views the community up close and meets the key people. Company officials must personally visit each location and not rely solely on site selectors or real estate brokers. These consultants are an important part of the team; however companies should never rely on outside council to make the selection.

When visiting a potential location, the team needs to meet more than just the economic development and elected officials. They should insist on meeting other companies operating in the community. Meet separately with business leaders without the public officials. Candid discussions should involve an available and realized workforce, regulatory environment, cost of doing business and perceived business friendliness with an appreciation for the manufacturing sector. Always ask, “”If you had it to do over again, would you choose this community? Why or why not?”” There is no substitute for face-to-face discussions with other businesses.

Case in point, we were recently involved in a project where outside labor and government studies seemed to indicate the appropriate wages to best recruit and retain employees. However, after meeting with similar companies in the potential community, the reality was a different story. The communication from the business human resources and site management team strongly suggested that to best compete for employees in the market the wages would need to be 10 to 20 percent above what the studies indicated. As a result, the company chose a site elsewhere.

Costs and Incentives

Costs of doing business and incentives can become key location discriminators when selecting a site. Cost is determined by many factors: proximity to markets, transportation (truck, highway and air service that is reliable and convenient, with flight frequency options especially for the lighter weight plastics that can be delivered “”Just In Time””), utility and power expenses, availability of existing buildings and site-ready land at reasonable costs, and sufficient and reliable talent pool (work force) at reasonable wages.

Incentives that lower the cost of business and potentially mitigate some of the financial and other risks often become key discriminators. Some industries will contend that if a community is offering incentives, there must be a negative reason why. However, it is a positive message that the community covets the company and they understand the nature of business. “”The sole purpose of the public corporation is to increase shareholder wealth”” while in reality also increasing community wealth.

The right mix of the corporate “”must haves”” with the right mix of community assets and incentives will create the right formula for success for all involved.

Other Key Considerations

The plastics industry has some standard expectations and requirements that must be in place before a respective community is able to capture and grow these high-salary companies. Some of the community infrastructure factors that should be available are as follows:

Expected Considerations:

  • Existing reasonably priced buildings of sufficient size
  • Sufficient land available (shovel-ready)
  • Complete utility- and power-ready support with ample back up
  • Sufficient transportation networks
  • Sufficient physical infrastructure support
  • Excellent educational institutions
  • Available workforce at reasonable wages.

  Other Incentives:

  • Tax credits, abatements, exemptions, etc. for corporate income taxes, property taxes, sales/use taxes, impact fees, etc.
  • Training Grants
  • Cash Grants
  • Expedited permitting
  • Swift environmental approvals
  • Reasonable energy costs.


All of the above incentives are considered “”high value,”” and if a community does not have the extensive incentive portfolio, then they should no longer be considered. However, remember many other factors determine cost, as described earlier, but hard and soft incentives can be key discriminators. 

Danger on the Horizon

The political process can adversely or positively affect the site location decisions. As has been said, “”The government will always do something to you or something for you, either good or bad, but will always do something.”” There are many examples of environmental groups sidetracking, or stopping, a project. The political environment is ever changing and if the perception, or reality, is that the plastics industry is not welcome due to exhaustive court cases, delayed projects or political action or inaction, then other pastures should be pursued.

Also, potential environmental obstacles and sense of the appetite in the community for a perceived chemical-related plastics company are critical business-friendly factors. Plastics companies are seizing upon the earth-friendly movement and responding to the Green initiatives through recycling efforts, changing the composition of the containers to be more earth friendly, and implementing greener practices among many other environmentally-friendly efforts. If your company is one of these, remember, your company should be considered a good neighbor and will bring high-value economic rewards and significant job and capital impacts to the community. 

Go For It

A final message to the industry…many communities have designed tax codes, infrastructure, public incentives, cluster parks and other amenities to attract and grow the industry. Develop your knowledge on where these communities exist and how to best contact them, develop relationships and access their support. If you find a community that supports your “”Factors for Success,”” by meeting the requirements most important to you, then “”go for it”” – at least make the initial site visit.

Mike Hickey Presenter at Leading Logistics & Transport Conference

Eye for TransportMike Hickey, President of Hickey & Associates, LLC, was a featured Presenter at this year’s Logistics Property & Site Selection Forum.

Mike’s presentation entitled “2008 Real Estate Opportunities” focused on where and how to find

significant incentive opportunities worldwide.

For more information about the Forum, please contact Eye for Transport, one of the world’s leading provider of Logistcs and Transportation information and services.

Financial Services & IT: Heading for “Shore”

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Financial Services & IT: Heading for “”Shore””

Security and cost concerns are driving more financial services and IT companies toward offshore and small-market “”near-shore”” locations.

By Mark Crawford (Oct/Nov 07)

One of the biggest globalization trends in the financial services/IT sectors is outsourcing back-office functions to lower-cost destinations. “”There is plenty of site location activity going on in both these industries,”” says Dennis Donovan, principal with the Wadley-Donovan Consulting Group.

For financial services, business process operations (BPO) such as customer service centers, shared service centers (accounting), and insurance claims processing are being set up in smaller U.S. cities or overseas. The same thing is happening in the IT industry for BPO, as well as tech support, software development, and data centers.

“”Business continuity is a very big deal,”” says Mark Gibson, director of corporate real estate for Ernst & Young. “”Because of 9/11, companies have been leaving Manhattan to set up redundant or mirrored centers elsewhere.””

Mark M. Sweeney, senior principal with McCallum Sweeney Consulting, agrees. “”It’s been a slow, almost parochial reaction to 9/11,”” he says. “”More and more companies are realizing that having so much concentrated capacity in one city is high risk. It’s taken a while for them to get out of the New York Metro mindset — in the first few years they thought they could mitigate that risk by moving to uptown Manhattan or New Jersey, but that’s not safe enough.””

Many major financial services players have moved data centers out of New York City and set up mirrored centers in Connecticut or New Jersey. Others have moved data processing completely away to places like Florida, Wyoming, and Texas. If you’re wondering why you haven’t heard about these relocations, it’s by design. “”For security reasons, companies are trying to keep low profiles by not providing a lot of press,”” says Sweeney.

Even though security is the biggest driving force for moving out of big cities, another is simply cost. Rents in New York City (and other international financial centers such as London and Hong Kong) are about $140 per square foot, which makes it very expensive to maintain back-office operations in these cities.

A new trend is that it’s not just the lowest levels of processing or transactions that are being offshored anymore — more “”brain-powered”” work is being outsourced as well. “”A greater variety of services are being relocated,”” says Matt Jackson, consulting partner with Cushman & Wakefield. “”They’re starting to move up the value chain. At first it was just low-value transactions, but now an increasing number of higher-value transactions are going offshore.””

Some co-shoring is coming to North America, mostly Canada, from India. “”These companies need facilities in North America,”” says Gibson, who indicates they want lower costs than in the United States. Canadian hotspots are Calgary, Manitoba, Toronto, and New Brunswick.

A number of Indian outsourcers are also setting up operations in Europe to provide near-shore services to their European customer base, in their local languages. For example, India’s second-largest outsourcer, Infosys Technologies, has established a customer-service center in Brno in the Czech Republic.

Staying in America
Even though offshoring to lower-cost countries is still very popular, a number of companies are finding big cost savings in smaller towns across America. “”For these industries,”” says Donovan, “”site selection in the U.S. is probably as robust as it has ever been. This is impressive when you consider the amount of offshoring going on.””

“”Mid-sized metropolitan areas have been the preferred sites for these companies,”” says L. Clinton Hoch, managing director of location services for DCG Corplan Consulting. “”Ranked by frequency of inclusion on the short list are Tampa, Charlotte, Des Moines, San Antonio, Phoenix, Indianapolis, Greenville, and Knoxville. Among our latest 25 major projects for clients in the financial sector, all but four have landed in the Southeast or Southwest.””

A newer trend is financial services and IT firms setting up back-office operations and data centers in second- to fourth-tier metropolitan areas in the United States. They are looking for places with abundant qualified labor, cheaper electricity, lower overall business costs, and minimal terror/natural disaster risks. The trick is not hunting with the pack and trying to find relatively undiscovered areas with a good supply of untapped labor. “”Generally speaking, all these locations are labor-driven,”” says Donovan. “”They want sustainable advantages — if they can find good quality labor in smaller cities, they can save 20 percent or more on their labor costs.””

One of the smaller cities on the radar is El Paso, Texas, which recently landed a sizeable back-office operation for ADP, providing high-end business-to-business customer solutions. Albuquerque, New Mexico, and Knoxville, Tennessee, have several major accounting, customer service, and payroll shared-service centers. Fresno, Merced, and Modesto, California; Colorado Springs, Colorado; Kansas City, Kansas/Missouri; and St. Louis are all attracting attention.

Oklahoma has also had success attracting BPOs, especially for Google, which will build a $600 million data center at MidAmerica Industrial Park in Mayes County. EDS, a top global technology services provider, recently announced it will more than double the square footage of its service management center in Tulsa to a total of 440,000 square feet.

“”What really pays off is the collaboration between financial services/IT companies and the two- and four-year community colleges to develop talent banks,”” says Donovan. “”This is reflected by the success states like Oklahoma, North Carolina, Florida, and Missouri have had in attracting this kind of investment.””

For companies that build data centers, reliable and lower-cost power is a key site-location factor. Data centers tend to be high-priced — usually $100 million or more — and require expensive equipment. “”Incentives can make a big difference in attracting data centers, especially breaks on power or infrastructure,”” says Mike Hickey, president of Hickey and Associates in Minneapolis. “”Smaller third- and fourth-tier cities can be competitive by offering creative incentives packages.

There are also entire regions that aggressively court back-office investments, such as northeastern Pennsylvania. This part of Pennsylvania received many of the companies that left Manhattan in the first wave after 9/11. “”This area is far enough away from New York City to be considered free from terrorist effects, including fallout from a dirty bomb, but still close enough to technically commute,”” says Sweeney.

More than 20,000 people in that region work in the financial services and insurance sectors, handling back-office functions, data processing, software development, customer service, and sales for big companies like ALLTEL, Bank of America, Blue Cross/Blue Shield of NEPA, CIGNA HealthCare, Guard Insurance Group, Prudential Financial, Met Life, and Sallie Mae. Labor costs are 22 percent below the U.S. average and as much as 40 percent less than northern New Jersey and New York City.

Financed by a $40 million initiative, the organization Wall Street West promotes the goal of making northeastern Pennsylvania the total backup solution for New York City financial institutions in the event of disaster. It recently announced it will build a fiber optic network connecting lower Manhattan with northeastern Pennsylvania that will enable redundant, instantaneous data transmission between the two areas.

Expanding Overseas
Large financial services firms and IT firms are continuing to deploy BPO sites around the world. Smaller financial services companies are starting to follow their lead, “”although they have been fairly slow at adopting offshoring,”” says Jackson. “”Retail banks are adopting near shore/offshore relocations more readily than investment banks, like Merrill Lynch and Lehmann Brothers, but these investment banks are starting to look.””

• United Kingdom: Financial-sector firms have been locating in London, Sheffield, Manchester, Dublin, Belfast, Glasgow, and Edinburgh. In fact, the financial services industry is the fastest-growing sector in the Scottish economy—it grew by 55 percent from 2000 to 2006. Morgan Stanley is currently expanding its operations in Glasgow and will add 600 more workers, especially in operations, IT, and financial analysis.

• Eastern Europe: “”Companies that want lower risk and higher security are locating operations in Eastern Europe,”” says Gibson, adding that they can find excellent skill sets and language capability. Popular destinations are Croatia, Hungary, Romania, and the Czech Republic. “”Many financial services and IT firms already have some sort of presence in Budapest,”” says Jackson. “”There is also a lot of activity in Warsaw and Bucharest.”” Clinton reports an increased interest in Poland, Russia, Slovakia, and Latvia.

• South America/Caribbean: Popular location sites in this region include Chili, Uruguay, Argentina, and second-tier cities in Brazil. EDS has been growing there at a rate of 25 percent a year. Its two data centers in São Bernardo do Campo and Alphaville handle credit card processing, e-security solutions, and other services. Because of its long-term BPO presence, EDS has also evolved into Brazil’s second-largest provider of IT services. “”In the Caribbean, Barbados is the most popular destination,”” says Clinton. “”The main reasons for this are fluency in English, high literacy rate, business friendly government, low crime rate, excellent legal system, and frequent air service.”” Jackson adds that Panama will soon emerge as a choice offshore site because of “”its huge financial talent pool.””

• India: Of course, India has been the leading offshore destination for over a decade. Although it continues to dominate the outsourcing of call centers and data processing, India is growing less attractive as a destination country because of rapidly-escalating labor costs and high turnover. With the fierce competition for skilled workers in first-tier cities, many experts feel the Indian market is becoming saturated. “”Financial services and IT companies have increasing levels of concerns about operating in India,”” says Jackson. “”Demand is starting to outstrip supply. Some companies we have talked to report turnover rates that exceed 100 percent annually.”” For these reasons, new support operations are being located in developing second-tier cities in India, such as Pune and Jaipur, where there are more workers and lower operating costs.

• Middle East/North Africa: “”We’re also starting to see a migration of financial services and IT/technology firms to Lebanon, North Africa, Egypt, Morocco, and Tunisia,”” says Jackson. “”This trend really hasn’t hit the news yet — one of the biggest advantages of this region is the highly skilled work force that can speak French, English, and other languages. Microsoft, Oracle, Ericsson, and Nokia already conduct IT engineering, back-office processing, and customer service-related activities in North Africa. AIG has also invested in Morocco in a big way, creating thousands of jobs.”” Another example is Ericsson, which recently opened a new global service delivery center in Beirut, Lebanon. Beirut is attractive because of its strategic location, pro-business climate, and cultural affinities across the Middle East and Africa. Lebanon’s 17 universities produce highly-skilled, multilingual professionals who are willing to work globally. Ericsson plans to hire over 100 engineers and other professional staff for systems integration, network and technology consulting, and managed services.

All contents copyright © 2007 Halcyon Business Publications, Inc.

Mike Hickey to be a Panelist for CoreNet Global Midwest Chapter event

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Public Incentives – “”The Winners Circle””

Mike Hickey, President of Hickey & Associates, will be joined by a panel of leading experts in the fields of Corporate Real Estate, Finance and Economic Incentives.  The topic will be “Public Incentives – ‘The Winners Circle'”.  The event is sponsored by the Midwest Chapter of CoreNet Global, a leading international association of Corporate Real Estate decision makers.

The success of American Capitalism is significantly rooted in competition, where profit is free to flourish, jobs are created and capital is invested.  Public incentives are a natural extension of the American process where the best prepared to respond to market needs wins.

Event Info:
Date: Tuesday, October 9, 2007
Time: 11:30 a.m. – 1:00 p.m.
Location: HGA, 701 Washington Ave. N., Minneapolis
Topic: Incentives – “The Winner’s Circle”
Speakers: Mike Hickey, Arthur Rolnick, Dan McElroy, Linda Larson (Moderator)

Business Facilities Infractructure Checklist

INFRASTRUCTURE CHECKLIST

In the wake of Minnesota’s tragic bridge collapse, the state of U.S. infrastructure is the new topic of national conversation. It’s time to take a look at the infrastructure questions you need to ask when evaluating a location.

By Pearl Gabel

Imagine that a utility company has embarked on a major relocation project—building a corporate headquarters in a Midwestern city. The area is perfect, incentives are in place, the staff is excited, and the pristine grassland is easy to build on. All of a sudden, the company hits a snag: prairie dogs.

“”We found there was an entire ‘doggie city’ living under there,”” says Jan Dickinson.

Years ago, Dickinson, the founder of Dickinson Consulting in Portland, OR, was hired to help a certain company with its relocation. The prairie dogs—small, burrowing rodents—are known to live in large colonies that can span hundreds of acres underground through a complex system of tunnels and chambers. The species is a “”keystone species,”” crucial to the environment and controversial if exterminated. As opposed to exterminating the colony, the company agreed to capture and relocate the animals.

“”A professional ‘critter-gitter’ was engaged,”” says Dickinson. “”It showed that our new corporate citizen was the one who cared about everyone living there.””

Scott Harvey, the founder of Enviro-Zone, a prairie dog relocation service in Colorado, is often hired by similar companies. “”We seem to have an influx of new offices coming up where prairie dogs are,”” says Harvey. “”I just received a call to relocate 68-acres of prairie dogs for a corporation. It’s a pretty common problem.””

Animals burrowing below a proposed site is one of the many infrastructure issues that a company can face. Many projects can get curtailed, delayed, or even terminated because of simple infrastructure issues.

Infrastructure Nation

The tragic collapse of the I-35W bridge in Minnesota in August brought to light the nation’s need to examine its public infrastructure more closely. Experts debated how bridges and roads can be built better and maintained to withstand factors like weather and capacity—both present and future capacity. Choosing and building private infrastructure is an equally important—and sometimes overlooked—due diligence obligation of a company.

When selecting your next site, location, price, and incentives should not be the only considerations. The physical infrastructure of a site—from the surrounding area resources to below-ground—is an integral part of choosing any facility. (We are purposely defining “”infrastructure”” broadly, spanning physical infrastructure to virtual infrastructure, including data and telecommunications, environmental, and community considerations.)

Business Facilities brings you, via our checklist on page 13, crucial questions to ask when choosing your next facility or site. Consider using this checklist for every site that your company evaluates. We’ve compiled a thorough list, with the help of our team of experts, that will help you with any type of site evaluation—from industrial manufacturing to office space to data center.

General Guidelines

Corporate citizenship—the contribution that a company makes to society and the environment through its business practices—begins with the physical effect that a facility has locally. Each facility has a unique relationship to the community that it inhabits, which can affect the company’s business goals, reputation, and success. One obvious example:

“”You do not want to build an industrial project on a site near a school,”” says Dennis Mingyar, economic development director of Buckeye Power in Ohio.

Ask yourself, is there a possibility that the project will affect the living conditions of people nearby? How will the company be viewed by local residents? Once the community has been assessed, you will be able to determine key infrastructure points. That means discovering which infrastructure is in place, and which infrastructure needs to be planned, scheduled, and funded. Consider your company’s projected growth, and determine whether the local infrastructure can meet that growth, and whether the costs are reasonable.

Energy

Any type of facility requires reliable access to energy. When considering utility lines on a site, you need to consider more than actual line size.

“”You need to ask how much excess capacity is available. This is true of both gas and electrical,”” says Mingyar.

Access to install power line towers, submarine cables, or if needed, electric power and distribution lines, is crucial if you plan to expand your facility in the future.

Once you know who the energy and gas service providers are, it may also be worthwhile to find out their performance over the past few years. For example, how many utility outages have there been in the service area and how has the provider performed during natural disasters? If there is provider choice, which provider has the most competitive rate? It may even be useful to canvas other users in the service area to get their opinions of this energy provider.

Often, a rate code is assigned during the construction of a new property, and that rate may be chosen during the construction process by a site foreman. According to Christian Blattenberger, the manager of procurement for electric, natural gas, and renewable energy for Cadence Network, the rate code that is needed once the property is operating may be different than what is needed during the construction phase. Over the years, being on the incorrect rate can cost you a substantial amount of money. The ability of an energy provider to grow with your infrastructure is another element to successful planning. Dual providers or an on-site generator is an option for some telecommunications and data companies.

“”What I like to do is get at least two power sources,”” says Michael Hickey, founder of Hickey and Associates, a national corporate site selection consulting firm. “”Backup power is a key component to any facility, especially to data centers, which have major power needs.””

Telecommunications/Data

In the same way that your company chooses an energy provider, data and telecommunications pro-viders should also be compared. The provider’s reliability, cost-competitiveness, technology, and ability to grow with your business are the key factors affecting a business that relies on this component of infrastructure.

Determine whether this particular site and facility can handle the level of telecommunication and Internet connection that your company requires. This includes not only bandwidth and network capacity, but computer room environments, such as increased heat and power requirements associated with running blade servers and other types of technology. A significant limiting factor for a data center’s growth is power capacity, network bandwidth, and cooling capacity.

The data center is a particularly important facility for financial and healthcare institutions, as well as many other businesses. When siting a critical data center, experts routinely emphasize the importance of a stable weather environment.

IN CASE OF EMERGENCY

Security is a matter of emergency response, safety, prevention, and preparedness for natural disaster. The response time of emergency responders in the area and their ability to access your facility are important to all businesses, especially with regard to a company’s manufacturing and industrial facilities. How soon can a fire engine arrive? Is there more than one entrance and exit to the site? How soon can a utility company make on-site repairs? Developing a relationship with local emergency responders, and familiarizing these teams with your facility, is recommended.

For small and medium-sized business, knowing your employees is extremely important, according to Jan Dickinson. “”I always recommend 24-hour security on hand at every facility,”” says Dickinson. “”I recommend a sign-in and sign-out system, and a security team in a central location able to view all doors and the parking lot.””

Determine the risk of flooding, earthquakes, and hurricanes in the area, and investigate whether the facility (or proposed facility) is equipped to withstand these natural disasters. For instance, companies building in parts of Nebraska known for frequent tornadoes are encouraged to have (or build) a berm along the walls of the building, planted with grass, so that the tornado can pass over the building without affecting it. For facilities in higher earthquake zones, base-isolation techniques can minimize risk.

Roads, Transportation, and Mass Transit

Since the collapse of the I-35W bridge in Minnesota, companies have been thinking not just of their infrastructure’s cost, but also its safety and reliability. The Bureau of Transportation has state-by-state statistics on public infrastructure, online at www.bts.gov.

Still, your company’s concern for transportation infrastructure should mostly focus on issue of access and capacity. Identifying the transportation needs of your facility is the first step in assessing transportation infrastructure. This includes the ability to smoothly import and expert goods to and from the facility, and also the ability of your employees and clients to comfortably commute.

Dickinson recalls the example of a mail order company whose distribution center was situated in a small town adjoining a big city. According to Dickinson, its biggest problem was attracting workers—the main highway was good for shipping packages, but it was a stressful and crowded commute.

Whether your facility is industrial, commercial office space, or laboratory space, there is going to be a need for a steady, reliable transportation and access. Ask yourself, is the site close enough to an airport with sufficient flight options? Is it easy to reach major roads and highways? Is there access to major shipping lanes, if needed? If you need short-line rail access, is it allowed to come into the plant? Will your employees have a difficult time getting to and from work?

ENVIRONMENTAL

Spotting unusual features of the general land (i.e. sinking sand spots) can be key to preventing future problems. The site should also be as far away from a flood plain if possible (at least 100 feet above the maximum protected flood elevation level).

Hopefully, the site that you have selected is not within a rainforest, or other ecologically valuable habitat. Even if it’s not, you should find out if there are any endangered species in the area. Consult with local groups, as well as your contractor, to determine how the project will affect the environment.

“”You want to make sure that you know what the topography of the land is,”” says Michael Hickey. “”You want to know where the land is relative to a wetland, and that there are no other environmental issues.””

When choosing an already established facility, find out whether air pollutants and wastes emitted meet local standards. Are adequate measures being taken to assure no contamination of soil and groundwater? Will local providers be able to provide enough water to your facility, and what are your treatment options? Ensure that the project will not adversely affect the living conditions of people living nearby.

Every facility that a company runs is a flagship for that company. Being positively viewed locally is crucial to its success—whether that includes publicizing your dedication to the environment (building green or becoming LEED-certified), ensuring that the facility will not affect local ecology, or relocating prairie dogs as opposed to terminating them.

Labor

No company can be successful without a successful workforce, which is why the educational, worker training, and labor supply pipeline infrastructure of an area is so important. Determine whether there are enough parks and cultural programs, for instance. Familiarizing yourself with local wages, labor policies, and regulations is as important as investigating the workforce availability.

Planning for the Future

It is important to allow room for growth in your next location. If there are restrictions limiting the height or the footprint of your building, make sure that you can live with that for a long time. These limitations may have been established by public or private zoning acts. Cities will often have a planning and building codes or a similar department to consult.

What are the growth plans for the facility? The local infrastructure may meet your needs today, but will it work tomorrow?

Business Facilities Infrastructure Checklist.pdf

Mike Hickey to Present at Business Facilities LiveXchange

Mike Hickey, President of Hickey & Associates, LLC, will be a speaker at the Business Facilities LiveXchange, taking place from September 30 – October 2, 2007 at The Houstonian Hotel, Club   and Spa in Houston, TX.

Hickey’s presentation entitled “”Digging Deeper Into Financial Incentives for Relocation/Expansion: What You Really Need to Know”” will focus on business incentives and if they are worth pursuing, and if so, how to manage the internal corporate process.

This is the third year Mike Hickey has been asked to be a presenter at the Business Facilities LiveXchange.

For more information, or if you would like to attend, please visit the LiveXchange website: www.bflivexchange.com

CoreNet Global Honors Economic Development Leadership Award Winners

corenet-global-logoCoreNet Global, the world’s leading professional association of corporate real estate executives, announced four winners of the 5th Annual Economic Development Leadership Awards at the CoreNet Global Summit in Denver.

Hickey & Associates client Lockheed Martin was the winner of the “2007 Economic Development Leadership Award for Major Projects/Deals”

In the following statement, CoreNet Global outlined the significance of the multi-state deal:

“Lockheed Martin Corporation and Colorado, Florida, Louisiana, Texas Value Circle – Lockheed Martin placed a high importance on economic development incentives as a contract discriminator for the $5 billion Orion Spacecraft contract award and created a Capture Team to work with prospective communities. The result was an Economic Development Public/Private Partnership with three states (Florida, Texas, Louisiana and Colorado) that reduced the contract bid cost by approximately $50 million.”

As a Service Provider to Lockheed Martin, Hickey & Associates congratulates all the parties involved.