19 Apr CityBusiness Guest Perspective: Factors That Influence Decisions to Relocate, Expand

Quentin Messer Jr.

New Orleans Business Alliance President & CEO Quentin Messer, Jr. writes in the April edition of CityBusiness about how companies decide to relocate and expand their businesses to New Orleans, and how the process has changed through the years.

In my columns about economic development’s workings and why it matters, I’ve talked a lot about how economic development organizations function. Last month, I explained a few of the state level incentives and their value in attracting interest from businesses looking to relocate. This month, I’d like to focus the other side of the equation, to discuss how companies make relocation and expansion decisions.

In our experience at the New Orleans Business Alliance, and my prior experience with Louisiana Economic Development, enhancing competitiveness and improving profitability drive the decision for most businesses.

For large corporations and companies – and some small ones – site selection consultants play a significant role. Where companies once employed site selectors in-house (for example, my colleague, Brenda Canada, vice president of retail attraction, development and strategy, once held a similar post with Gap), location evaluation has been outsourced largely to Ernst & Young, KMPG and others. These consultants assess client needs and then develop an evaluation matrix to identify locations meeting those requirements. Companies that elect not to outsource site selection often rely on their executives to visit prospective locations, evaluate the city, create and complete their own matrices and then analyze their findings –while running a company.

Business relocation is a highly data-driven process. Within this “attributes matrix,” site selectors assign values to location attributes such as labor shed (an industry term for the geographic area and population from which they can draw employees), local and state tax structures, network effects (proximity to suppliers, customers or markets) and quality of life (in addition to housing, education and amenities, this includes accessibility of domestic and international business flights). Different companies weigh different attributes more heavily.

For example, an advanced manufacturer looks for rail proximity and workers living within a 45-minute commute, while corporate headquarters prospects focus more on direct flight accessibility and K-12 public education options. A growing digital health company homes in on proximity to clinical and research assets and the location’s attractiveness to millennial talent.

The matrix yields a location consideration set. Making that cut is competitive, and external perceptions of a city can influence the outcome. Recall PayPal’s recent reversal of its decision to move to North Carolina. Relocations, especially of publicly traded companies, are multi-year processes involving local, regional and state EDOs and can be affected by political events, even after the decision.

For growth-stage companies, the process is often more streamlined. Witness Smashing Boxes. From its initial conversations about New Orleans with NOLABA and GNO Inc. to ultimately opening shop in the Exchange Centre downtown, the total timeline spanned only a few months. They had the advantage of a nimble and aggressive internal culture and limited stakeholders (unlike PayPal, which faces Wall Street, regulators and a larger executive suite). Growth companies, like those attending Collison, tend to decide faster, yet 18 to 24 months remains the norm for them.

NOLABA and our economic development peers stand ready to showcase New Orleans and explain the locational advantages of our city to more companies. As the city prepares for another rush of national press with Collison and Jazz Fest, collectively we have the opportunity to elevate New Orleans into the consideration sets of more executives seeking to minimize costs. Yes, there are reminders that much remains to be done here, but the positives can arm each of us to be invaluable ambassadors for New Orleans.

Quentin Messer Jr. is president and CEO of the New Orleans Business Alliance.

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