An aircraft manufacturer conducting a search for a new production site has one crucial criterion: The location must have at least 300 "clear air" days a year to allow visual landings on an adjacent airstrip. Another plane maker, however, couldn't care less about weather: It currently is seeking a site beside a "Category 1" airfield that enables both visual and instrument landings. Similarly, a "must" for one precast concrete-wall manufacturer, to whom low product-distribution costs are a top priority, is a location within 500 miles of its customers. Yet a rival firm is willing to locate anywhere in North America -- as long as the community has a major airport to allow installers to travel conveniently to job sites. As these examples show, differing needs prompt companies in the same industry to seek differing site locations. Their choices depend upon their unique critical success factors -- CSFs, we'll call them -- that can make or break a business. Here are several requirements firms commonly identify as "critical," but probably aren't:
- Availability of labor. In reality, there always is plenty of labor -- depending upon how you peg wages, train employees, and manage staff.
- A right-to-work state. Companies often believe that a state with a right-to-work law will assure them a union-free operation. That's erroneous.
- Airport accessibility. Although the closeness of a major airport is a surrogate for a high quality of life, rarely does this factor actually dictate whether a project succeeds or fails.
- An existing facility. Those planning projects on a fast track mistakenly believe that retrofitting an existing building will save time compared with new construction. Often retrofitting takes longer.
- Proximity to suppliers. Companies find that existing suppliers will follow them to the new site; if not, they can find new ones.
- Corporate strategy. A company may choose a site because it wants to enter a new market and be identified as a "player" in its industry. Or it may use a site to avoid trade restrictions or to expedite currency transfers.
- Credibility. Some firms use a "reasonableness" test. They ask themselves whether a selected site will prompt shareholders and analysts to question their intentions and decision-making ability.
- Risk minimization. Sometimes the cost of a project, its risk, and its margin for error are so important that a company must narrow its search to only the most obvious sites.
- Quality of life. A vague term, but it can significantly impact a firm's ability to recruit and retain staff. It's surprising, for instance, how important a good hotel and restaurant can be.