# 1 — To acquire more room. The No. 1 reason a company will move to another facility is because their current facility no longer has enough space for them to do the things they need to do. One of two factors comes into play: either the surrounding property does not have enough open space to accommodate a physical expansion of the building, or management has determined that such a facility expansion on the existing site would not be cost effective.
# 2 — To lower operating costs. While the need for more space may be the No. 1 reason, right behind it is the fact that high operating costs have made a company or plant uncompetitive. Sometimes it’s the cost of labor: average salaries, benefits, workers comp and unemployment insurance costs, etc. Or it could be the onerous environmental regulations, or high taxes.
# 3 — To modernize equipment and facilities. Sometimes a company’s existing facility, its equipment, or both, have become so antiquated that the company is put at an impossible disadvantage compared to its competitors.
# 4 — To move closer to a large segment of their market, or to establish a presence in a new market. Long distances to market mean two things: time and money. If a significant portion of a company’s market is in a particular region, that company may be able to save a lot of money in transportation costs — and also reduce their product delivery times — by establishing an operation in that region.
# 5 — To consolidate into fewer facilities. Sometimes a company just has more manufacturing facilities than it needs.
# 6 — To be closer to certain suppliers or natural resources. The same market forces that apply to a company’s customer base also apply to its suppliers. Long distances mean higher transportation costs and longer response times.
# 7 — To access a better or larger labor pool. These days labor is top concern expanding or relocating companies have when they look at locations. Sometimes, a company or facility grows to the point where the local community can no longer supply a work force in sufficient numbers and quality.
# 8 — To eliminate specific labor-related situations. Sometimes a company or facility is having a bad experience with unions — recent strikes, costly benefit packages, or whatever — and the only solution is to move as far away as they can.
# 9 — To be closer to similar-type companies (clustering). Many companies like to cluster around other companies within the same industry. Silicon Valley and Detroit are classic examples, but there are plenty of other examples all over the country.
# 10 — To improve quality of life. Some companies just want to improve their quality of life. This may be the personal choice of the owner for certain privately-held companies, or it may be to so that the company can better attract certain types of employees (engineers, scientists, graphic artists or whatever) by being in “high quality of life” location.
All of us feel that the place we live has the best quality of life in the world. The important thing is how other people perceive the quality of life in a particular location. If a company recruits nationally, or internationally, for high-talent employees, then being in a location generally perceived to be “cool” is a definite asset.
This article was written by Expansion Management