Site and Efficiency

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According to the Merriam-Webster dictionary, efficiency is defined as “the ability to do something or produce something without wasting materials, time, or energy” 1.  Efficiency has an obvious importance to industry.  However, its level of importance to corporations can vary in respect to growth and other corporate priorities.   Recent studies have indicated that U.S. corporations are planning on investing capital to improve efficiency in their home countries and services to their current customers 2.

In employing such investments, industrial firms should strongly consider the role of its real estate site selection and improved performance.  In considering a specific site, the following categories and answers to key questions can have a significant impact on the operational efficiency of an industrial firm:

  • Location-How is the site’s access to highways, airports, incentive zones, customers, and suppliers?
  • Labor-Is there available labor? How favorable are the wages, organized labor rates?  What is the average education level?
  • Building and site layout-Does the building configuration and bay spacing meet standards for flow or manufacturing processes?  Does the site allow for present and future distribution and parking requirements?  Is there a potential to expand the building on the site?
  • Amenities-Does the clearance height and sprinkler system allow product to be stored in an efficient manner?  Is the electrical infrastructure currently sufficient and expandable to meet future requirements?  Does the building have fiber installed or available to the building?
  • Building tenancy-Single tenant versus multi-tenant?  Does the security of a single tenant building outweigh the flexibility of a multi-tenant building?
  • Number of Building(s)-Is it important to have a single building with no labor competitors nearby?  Would a campus/park environment be preferred for expansion options in the future?
  • Utility-How reliable is the energy supply to the building?  How do the energy rates compare to other sites?  Can the utility supply to the building be increased to meet future demand?  At what cost?
  • Tax and Incentives-What are the insurance rates?  Are the any employee training programs nearby?  What is the workers compensation insurance structure?  Are there any relocation incentives offered?  What is the municipal and state tax structure?

These categories and questions are by no means exhaustive and each individual firm will have its own priorities when it selects a site.  What is universal is the promise of increased efficiency when industrial firms make rational site selection decisions.

  1.  “Efficiency”.  Merriam-Webster.  Merriam-Webster, n.d. Web. 05 Apr. 2014 
  2.  “HBR Blog Network.” Harvard Business Review. N.p., n.d. Web. 07 Apr. 2014;  CFO SignalsTM: 2014 Q1 Results.” Deloitte. N.p., n.d. Web. 06 Apr. 2014