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Six Keys to Plant Site Selection

Six Keys to Plant Site Selection

Tax rate is large factor when companies consider making a move

As the economy begins to show signs of recovery, some manufacturers will be making plans for expansion or relocation. One of the most common factors companies consider when making a move is the tax rate of a particular region. While taxes are important, companies may discover states with low rates are still cost prohibitive because of high property costs or a lack of qualified labor, says Dana Olson, president and CEO of site-selection firm Ecodev LLC. Other points to consider, says Olson, include:

Dana Olson: States with low tax rates arent necessarily the most cost-effective locations.
  • Labor needs of the business: Since the cost of labor is the biggest expense for most companies, it is important to carefully assess labor needs to find the area that will provide the most cost-effective, qualified labor.
  • Proximity to clients or vendors: If the majority of a business' clients or key vendors are located in a particular region, it may make sense to locate the business in close proximity to reduce travel or shipping expenses or to provide faster customer service.
  • Transportation needs: Does the business need to be located near a port or rail system? With rising fuel costs, more companies are looking for ways to scale back transportation and shipping of products.
  • Local tax situation: Even states that boast they are a no-tax state (e.g., no corporate income tax) do have taxes that will affect your business in one way or another. It is important for a business to know all the applicable taxes it will face, from franchise taxes to sales and use taxes.
  • Property requirements: The cost of property varies dramatically, up to twice as much, depending on location. As a starting point, companies should outline the amount and type of space required to operate the business.
  • Quality of life: Before locating a business, companies should ask if the area is recognized as a nice place to "live" beyond a good place to operate a business. Employee retention and future recruitment depend on offering a good quality of life.

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