Site Selection for a Production Plant

For most companies locating at the right location, in the right region and finding the right plot of land or building, is becoming even more important. New investments in land, buildings, machines and talent are done for the longer term. This is even more the case for new manufacturing plants. As the global business environment in which a company needs to make a location decision is becoming more uncertain every day it is of huge importance to make a robust and future proof decision on the location for a new production plant.

The importance of a thorough location decision process

Companies can have a variety of reasons for starting the location selection process for a new manufacturing plant: cost reduction, expansion of capacity to facilitate business growth, the entry of new markets, tapping into new labor pools, rationalization after a merger or acquisition, coping with geopolitical developments.
The realization of a new production plant comes with significant investments and internal changes. The investments are done for a long period of time and therefore the impact of the new location should also contribute positively for a prolonged period of time. In other words: in case of a wrong location decision the negative implications will also have a negative impact for a long period (e.g. higher costs, issues in finding the right labor, customs issues).

Location selection criteria for production plants

Location selection by BCI is done based on three types of factors

  • Costs - All relevant factors that can be translated into money such as land, real estate, labor, logistics costs, taxes, etc.
  • Quality of the business environment - Factors that cannot be translated directly into currencies but that still have a direct effect on the performance of the new operations. Think of availability of labor, accessibility, supplier availability, customs regulations, ease of doing business
  • Risk - All external business disruption risk factors that a company itself cannot influence but that still may have a substantial impact on the future operations such as inflation risk, currency exchange rate risk, transparency risk, natural disaster risk, etc.

In the location selection for a new manufacturing plant a key driver is the talent factor for the new plant: is it a highly automated plant where only a limited number of high skilled operators will be working or is it a labor-intensive operation with hundreds of low skilled workers? These varying profile(s) have a large impact on the importance of factors such as labor costs, labor availability, labor market competition, flexibility of working hours, etc.
Investment incentives and tax reduction measures can also be attractive in certain countries/States and regions in Europe, Asia and the Americas. Especially for manufacturing plants with a large number of workers and/or with high investments in new capital equipment, the total financial packages can be (very) interesting for the investing company.

Site selection for a production plant & BCI advice

BCI advises companies throughout the world in the selection of the optimal location for their new production plant. BCI, based on more than 33 years of experience, has developed a proven approach for international location and site selection. This approach is based on an integrated assessment of costs, quality of the business environment factors and risk factors.
Our approach is fact-based, utilizing own databases, international reliable sources as well as a unique network of contacts around the globe (recruiters, investment agencies, real estate agents, etc.).
BCI delivers a clear final report with unbiased recommendations as well as a detailed data report showing the complete process of site selection and all data used for comparing the locations in each phase of the project.

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Ask your question to one of our experts

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