Relocate for cost reasons or to access qualified employees or support
Relocate for cost reasons or to access qualified employees or support
It is certainly possible for a business to cost justify another facility, instead of or in addition to, because of location-sensitive operating costs, community incentives and tax combination, regulatory climate. Access to qualified employees or specialized vendors and support is another reason for a company to urgently seek another locale even in a poor economy, in order to maintain product volume or quality.
For cost justification, the characteristics of your company will determine what costs can be lower in another community, and if a payback is possible after relocation cost.
In a relocation or expansion, there WILL be short term costs. There MAY be long term benefits. A company will need to identify, quantify and compare one time and operating costs and benefits at the current and alternative new locations, then calculate the net financial payback of each alternative. Be sure to consider:
1. Direct and indirect headcount at all levels of the organization: cost of pay; cost to hire and train at the destination, cost of an attrition plan or termination at the source.
2. Buy or build or lease space in the facility for: Equipment, Inventory, Headcount related, Maintenance, Other support and administration.
3. Equipment added for operation, purchase and depreciation, tooling
4. Utilities and energy, including waste treatment, waste disposal and emissions
5. Transportation in and out; and this variable is increasingly important in the time of rising fuel costs.
6. Regulatory cost of being a resident of a particular state and community, and those costs vary dramatically.
7. Startup costs: to disconnect, move, reconnect, train, absorb learning curve losses; for travel, for process qualification and validation. Technology transfer costs usually increase as complexity of the operation increases. Cost of the move itself increase as machinery size, weight, plumbing and foundations increase.
8. Cost of closedown at the source, and any property actions.
9. Possible interruption to channels of supply
10. Costs of actions to avoid business interruption, such as inventory buildup, or parallel operation of facilities.
11. Taxes and the offset of relocation incentives which can possibly be negotiated.
For assess to people, vendors and support, the characteristics of your company will determine what communities could offer resources more attractively than at present.
People
One of the most significant considerations in facility location is the availability of qualified employees. The unemployment rate in a community is important and easily quantified. Whether or not there are potential employees suited for your business is another question, much more difficult to evaluate in advance.
First, what kind of requirements does your company have? And are you able to meet that requirement where you are?
Does the educational system provide people trained to the level you need, generally? In a community you consider? Will you pay to relocate skills from another location? Can you train employees in the skills? Is training one of the incentives that a community will provide? (Training subsidies are quite common.)
Support
Similar questions should be asked about the availability of specialized vendors and support that you will require in the community you choose. There are many technology centers in the US, areas such as Silicon Valley in California; a similar community near Boston; Research Triangle in North Carolina. Large cities sponsor attempts to create such centers, in one or another technology, in their vicinity. These centers can provide services just across the street that are vital to the success of a company, so be sure that you understand the importance of support that you depend on. In this day of overnight package service, perhaps local support is not as important as before but check it out.
Relocate for cost reasons or to access qualified employees or support - To learn more about this author, visit Jack Greene's Website.
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Relocate for cost reasons, or to access qualified employees or support
It is certainly possible for a business to cost justify another facility, instead of or in addition to, because of location-sensitive operating costs, community incentives and tax combination, regulatory climate. Access to qualified employees or specialized vendors and support is another reason for a company to urgently seek another locale even in a poor economy, in order to maintain product volume or quality.
For cost justification, the characteristics of your company will determine what costs can be lower in another community, and if a payback is possible after relocation cost.
In a relocation or expansion, there WILL be short term costs. There MAY be long term benefits. A company will need to identify, quantify and compare one time and operating costs and benefits at the current and alternative new locations, then calculate the net financial payback of each alternative. Be sure to consider:
1. Direct and indirect headcount at all levels of the organization: cost of pay; cost to hire and train at the destination, cost of an attrition plan or termination at the source.
2. Buy or build or lease space in the facility for: Equipment, Inventory, Headcount related, Maintenance, Other support and administration.
3. Equipment added for operation, purchase and depreciation, tooling
4. Utilities and energy, including waste treatment, waste disposal and emissions
5. Transportation in and out; and this variable is increasingly important in the time of rising fuel costs.
6. Regulatory cost of being a resident of a particular state and community, and those costs vary dramatically.
7. Startup costs: to disconnect, move, reconnect, train, absorb learning curve losses; for travel, for process qualification and validation. Technology transfer costs usually increase as complexity of the operation increases. Cost of the move itself increase as machinery size, weight, plumbing and foundations increase.
8. Cost of closedown at the source, and any property actions.
9. Possible interruption to channels of supply
10. Costs of actions to avoid business interruption, such as inventory buildup, or parallel operation of facilities.
11. Taxes and the offset of relocation incentives which can possibly be negotiated.
For assess to people, vendors and support, the characteristics of your company will determine what communities could offer resources more attractively than at present.
People
One of the most significant considerations in facility location is the availability of qualified employees. The unemployment rate in a community is important and easily quantified. Whether or not there are potential employees suited for your business is another question, much more difficult to evaluate in advance.
First, what kind of requirements does your company have? And are you able to meet that requirement where you are?
Does the educational system provide people trained to the level you need, generally? In a community you consider? Will you pay to relocate skills from another location? Can you train employees in the skills? Is training one of the incentives that a community will provide? (Training subsidies are quite common.)
Support
Similar questions should be asked about the availability of specialized vendors and support that you will require in the community you choose. There are many technology centers in the US, areas such as Silicon Valley in California; a similar community near Boston; Research Triangle in North Carolina. Large cities sponsor attempts to create such centers, in one or another technology, in their vicinity. These centers can provide services just across the street that are vital to the success of a company, so be sure that you understand the importance of support that you depend on. In this day of overnight package service, perhaps local support is not as important as before but check it out.
Relocate for cost reasons or to access qualified employees or support - To learn more about this author, visit Jack Greene's Website.
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Joe DagerJoe Dager is President of Business901, a progressive coaching company providing no-nonsense direction in areas such as Lean Six Sigma Marketing and organized referral marketing. What others say: In the past 20 years, Joe and I have collaborated on many difficult issues. Joe’s ability to combine his expertise with “out of the box” thinking is unsurpassed. He has always delivered quickly, cost effectively and with ingenuity. A brilliant mind that is always a pleasure to work with.” - James R. If you want to learn more about Business901, start a conversation with us. We can be found @ Web/Blog: Business901.com Web/Blog: FundingYourNonprofit.com LinkedIn Profile Follow me on Twitter - Visit Joe Dager's Website |
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Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
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Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
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Cheryl MatthynssensCheryl is a life skills coach, licensed Chemical Dependency Counselor and a 20 year entrepreneur. Cheryl's dedication to achieving a life of balance led to her expanding her teaching from the simple managing of life's daily challenges to adding financial well being as well. A direct marketer with DrinkACT, she is gaining ground in the online community with her concepts of making sure business owners, entreprenuers and employees have well rounded life styles. She opened up a small affiliate site - The Balance Guide- to help others find resources for mental and emotional well being. Visit Cheryl's blog to see more of the diversity beyond business she has began offering online at www.thebalanceguide.blogspot.com - Visit Cheryl Matthynssens's Website |
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Dianne CramptonDianne Crampton is an executive leadership coach, team culture consultant, author and president of TIGERS Success Series, Inc. Dianne has been helping CEO's and Executives connect their employees to their core values and goals for over 20 years using the trademarked TIGERS team culture process, which stands for trust, interdependence, genuineness, empathy, risk and success. To download a free white paper on behaviors that build strong teams and behaviors that will predictably tear them down go here. Dianne's contribution to the 2010 Pfeiffer Consulting Journal (an imprint of John Wiley and Sons Publishers) entitled TIGERS Hearted Teams is available in November 2009. Her new book TIGERS Among Us: 5 Winning Business Team Cultures And Why, Three Creeks Publishing will release in March 2010. To receive publishing discounts, subscribe to the free TigerTracks Newsletter here. - Visit Dianne Crampton's Website |
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