FACILITIES SIZE, LOCATION, AND LAYOUT:PROCEDURE—THE MICRO ANALYSIS (SITE SELECTION)

PROCEDURE—THE MICRO ANALYSIS (SITE SELECTION)

Once the ‘‘big picture’’ has been analyzed and a macro analysis developed, the microlevel work, in which a specific site must be chosen, begins. This is illustrated in Figure 5.

3.1. Community Selection

Once the general area for site selection has been determined by means of the macro analysis, the selection team should identify specific communities within that area for serious consideration. Since each community will interpret and administer legislation and government mandated / funded programs differently, the site-selection team must take special care to assess each community against company criteria and objectives. The team must therefore view and evaluate communities as they are likely to exist when the proposed facility comes on-line.

A checklist is an ideal method for measuring community attitudes and trends. The following presents some general subjects against which a community might be evaluated:

1. Are attitudes of government favorable to industry and progress?

2. How acceptable are the educational and training systems, from daycare through university?

3. Are municipal services operating on a level acceptable for community progress?

4. How is the quality of life as far as shopping, entertainment, and medical facilities?

5. Are there accessible support services for industry, such as maintenance and machine shops?

6. What are the residential neighborhoods like?

7. Can a labor force be built without compromising skill and productivity requirements?

8. Are construction and contracting services sufficient to build a facility?

9. What economic incentives are being offered?

One important economic factor is the local tax on inventories, primarily because this cost can vary significantly from one location to another. States or other taxing authorities have used the presence of inventory in storage as a basis for levying franchise, income, or other taxes on the owner of the property. Rates of taxation within states, or even within counties or towns, can also show

significant differences. Because state and local tax situations change frequently, expert advice should be sought when comparing tax policies of different communities.

3.2. A Site-Selection Checklist

One must utilize a comprehensive site selection checklist as part of an assessment of a particular location. A sample checklist is provided below. Checklists such as the one below are useful when establishing contacts in prospective site areas. It is not recommended that site-selection teams solicit information ‘‘cold’’; in other words, observation, rather than someone else’s perception, will provide an accurate depiction of the site and its advantages and disadvantages.

Site Factors

1. General Information

• Site location

City County State

• Total acreage

• Approximate cost per acre

• Approximate dimension of site Width Length

2. Zoning

• Current Residential Light Medium Heavy Industry

Commercial Other

• Can zoning be changed? Yes No

• Check which, if any, is required: Rezoning Variance Special Exception

• Probability for success: Excellent Good Fair Poor

• Applicable zoning regulations (attach copy)

• Parking / loading regulations

• Open space requirements Office / portion

Maximum building allowed Warehouse / DC portion

Percent of lot occupancy allowed Setbacks if required

• On-site waste treatment required

• Height restrictions

• Noise limits

• Odor limits

• Are neighboring uses compatible with proposed use? Yes No

• Can a good title be secured? Yes No

• Can protective easements, protective covenants, or mineral rights be tolerated? Yes

No

• Is expansion allowed? Yes No If yes, how much?

3. Topography

• Grade of slope level rolling mostly level steep Lowest elevation

Highest elevation

• Drainage Excellent Good Fair Poor

• Are there any: Marshlands Ponds Streams Brooks

Ditches Lakes

• Are they: On site Adjacent to Site Bordering Site

• What is the 100-year flood plan?

• Is any part of the site subject to flooding?

• What is the groundwater level? feet

• Describe surface soil:

• Does site have any fill? Yes No

• Soil percolation rate: Good Fair

• Load-bearing capacity of soil: lb/ ft2

• Is site wooded? Yes No How much?

• Cost of removal

• Cost of grading

• Storm water discharged: storm sewer other

• Roof drainage discharged: storm sewer other Collection required Yes No

4. Landscaping requirements

• Building and parking lot

• Access road

• Loading zones

• Site buffer

5. Access to site

Is site visible from the highway? Yes No Describe access including distance from site to:

Interstate highways Major local roads Central business district

Rail Water Airport

Describe availability of public transportation

Will access road need to be built? Yes No If yes, who will build?

Who will maintain? Cost of maintenance?

Is rail extended to site? Yes No Name of railroad(s)

If no, how far?

Cost of extension to site

Who will maintain extension?

6. Sanitary sewage

• Is sanitary sewage on site? Yes No

• Reserve capacity in treatment plant GPD

• Tap charges

• Special regulations

• Anticipated long-range plans for permanent disposal of sewage

7. Water

• Is water line on site? Yes No

• Location of water main

• Size of main

• Static pressure PSI

• Residual pressure at 1000 GPM flow PSI

• Hardness of water

• Is supply adequate? Yes No

• Capacity of water plant gallons

• Are fire hydrants metered? Yes No

• If water and sewer not on site: What is distance to nearest line

Water Sewer Line size Water Sewer

Cost to extend line Water

Sewer

8. Sprinklers

• What type of sprinkler system does code permit?

• Is there sufficient water pressure for sprinkler system? Yes No

• Is water for sprinkler metered? Yes No

• Is separate water supply required for sprinkler system? Yes No

• Where can sprinkler drainage be discharged?

9. Electric power

• Is adequate electric power available to site? Yes No Capacity available to site

• Describe high-voltage lines on site

• Service is underground overhead

• Is submetering permitted? Yes No

• Indicate if reduced rates are available for: Heat pumps Yes No Electric heating Yes No Insulation Yes No

• Rates

10. Gas

• Type of gas available natural LP

• Capacity

• Line size inches

• Pressure of gas PSI

• Is submetering permitted? Yes No If not, cost of extension

• Rates

11. Other utilities

• Coal

Source of supply Reserves

Quality

Cost per million BTU delivered Method of delivery

• Oil

Source of supply Volume

Quality

Cost per million BTU delivered Method of delivery

12. Taxes

• Date of most recent appraisal

• Real estate tax history, last five years

• History of tax assessments, last five years

• Proposed Increases Assessments Tax rates

• Are abatement programs in effect? Yes No If yes, describe

• Is site in an Enterprise Zone? Yes No

• Are industrial revenue bonds available? Yes No

• Services provided for taxes paid Community Factors

1. Labor history

• Does labor force have deep community roots?

• Do most workers own their own homes?

• Is labor force largely transient?

• Can you determine prospects of future favor tranquillity as evidence by labor turnover or absenteeism?

• Has labor group maintained a good reputation for accepting technological change?

• Do employees have a good reputation for housekeeping practices and care of equipment?

• Labor availability survey

• Population at last census

• Population density per square mile

• Percent agriculture

• Total employed in manufacturing

• Total employed in nonmanufacturing

• Percent men in labor force

• County-wide potential employment

• Unemployed available workers

• Shift willingness

• Distribution of available labor Skilled

Semiskilled Unskilled

• For women: average family income and whether basic need exists for supplemental income

• Do farm areas serve as good labor pool?

• Is there high degree of farm mechanization?

• Does community have increasing supply of women seeking industrial jobs?

• Can you complement rather than compete with existing industry?

• Will seasonal jobs in nearby resort areas affect labor availability?

• Is community subject to other seasonal labor variations?

• Does adequate labor pool exist within reasonable radius?

• Are young people taking jobs elsewhere?

• Would better opportunities keep young people at home?

• Influence of local industry on labor

• Principle community factors

• Wage rates, by skill

• Working hours

• Shift patterns

• Hourly or piece rates

• Fringe benefits

• Degree of competition for skills

• Pattern of productivity

• Seniority provisions

• Layoff provisions

• Grievance

• Presence of any unusual or radical tendencies

• Does industrial accident rate for community compare favorably with national averages?

• Will you be direct (or indirect) competition with an industrial pace-setter?

2. Maturity of citizens

• Do local civic and religious leaders have enlightened and progressive attitude toward busi- ness and industry?

• Do people of community display political awareness?

• How many voters went to the polls in the last municipal election?

• How many voters went to the polls in the last national election?

• Do local people understand how business operates in the American economy?

• Are there community educational programs directed at young people?

• Do social and economic backgrounds of community point toward maturity?

• Is standard of living at or above normal average?

3. Management potential

• Can prospective workers be expected to grow into added responsibilities?

• Can you translate evaluation into estimates for potential supervisors and executives?

• Can you expect to recruit certain management echelons locally?

• Are specialized skills available such as specific and technical manpower?

• Have local people responded well to in-plant training?

4. Water pollution

• Will you have waste disposal problems?

• Can streams nearby accommodate waste water?

• Will good business practice plus local or state ordinances call for waste treatment?

5. Transportation

• Rail

On a rate-blanketing basis, are rates to principle markets satisfactory?

Has pattern of differential freight rate increases been relatively favorable for your proposed area?

Area?

Are there amply freight forwarders for LCL

Does railroad give transit or stop-off privileges for partial unloading and loading enroute? Are there adequate truck handling facilities at freight terminals?

Is pick-up and deliver service available?

Which of these principal rail considerations are important? Branch or mail line

Freight schedules Switching per day Yard limits

Direction of turnout to private siding from yard Orientation of site to roadbed

Relative elevation of site and roadbed

Potential construction difficulties such as culvert, fill, bridge, cut

Does prospective rail carrier favor the use of technologically improved equipment to meet shipper needs?

• Truck

Are there state laws re: truck size and weight restrictions Is site near a trucking gateway in order to reduce in-transit times?

Are state gasoline taxes in line with alternate sites?

Is the pattern of recent truck freight rate increased reasonable?

Will the new Federal Highway Program help solve trucking problems? Is there good access to bridges and culverts?

Which of these factors are important? Natural traffic flow

Specific routes Schedules Rates Transfers

Common, contract, or private carrier

• Air

Is site near a good airport?

Are rates and schedules or scheduled airlines satisfactory for hire shipment? Are there good air-freight forwarders nearby?

Is airport service convenient for transport of personnel? Is there helicopter shuttle service?

• Ocean

Is proximity to inland water transport important? Is proximity to overseas shipping important?

Does area have alert and progressive port authority? Are port facilities closed in winter?

Is ample lighterage available?

Is access to port convenient and economical?

Are water transport rates and schedules competitive?

• Other

Is railway express service available? Are pipelines used as common carriers?

Does community have desirable level of passenger transportation facilities? Are there toll roads or bridges?

Do winter conditions adversely affect transport?

Does community have public or private warehouse available to help out witht short-range inventory storage problems?

6. Raw material supply

• Are raw material sources reliable? Close enough?

• Are the raw materials committed to others?

• Are terms of sale and delivery right?

• Are multiple supply areas available?

7. Residential housing

• Are there plentiful rental properties?

• Are houses available in several costs brackets?

• Does extent of home ownership among hourly employees indicate stability and community pride?

• Are residential property values increasing?

• Are attractive suburbs within convenient distance of selected community?

• Is community saddled with submarginal or slum areas? Is rehabilitation in progress?

8. Education

• Assess the number and sufficiency of Public schools

Vocational colleges, trade schools, and apprenticeships Foremanship courses

Adult education, degree programs

• Is school growth keeping up with community growth?

• What is the overall education picture? Expense to public

Teacher salaries PTA enthusiasm Building program

9. Health and welfare

• Are there satisfactory Hospitals

General practitioners Dentists

Clinics Nurses

Public health facilities

• Do hospitals have adequate ratings by State Board of Health?

• How large an area is served by hospitals?

• Are Blue Cross and allied plans available?

• Does community have a workable disaster plan?

• Are there reasonable state industrial safety and health laws?

• Does the community have adequate and well-enforced sanitary laws?

10. General community aspects

• How sufficient is the community recreation system insofar as: Family recreation (e.g. parks and playgrounds)

Outdoor activities (e.g. golf and tennis) Libraries

Civic attractions (e.g. museums) Fraternal organizations

• Sufficiency of public buildings Gyms

Churches Auditoriums

• Is the physical center of town attractive?

• Are there good hotels, motels, and restaurants?

• Is banking adequate?

• Are shopping and commercial districts well laid out?

11. Commercial services

• Evaluate quantity and quality of commercial services typically required by industry Major repair shops

Industrial distributors Lumber and allied materials Stationery

Local trucking

Air freight services Blueprint services HVAC repair Testing labs

Electric motor maintenance Lubricants

Engineering department supplies Food and sundry vending Railway express

Postal service Industrial repair Janitorial service

• Evaluate quantity and quality of construction services and facilities in or near the com- munity

Architects

Prime contractors Mechanics Engineers Subcontractors Electricians Piping Construction labor Special equipment Plasterer

Painting Paving Carpentry Rigger Mason Tiling Landscape

12. Police

• Does police department have high standards of personnel, equipment, training, and morale?

• Is police patrol provided for industrial properties?

• Are private watchmen or uniformed detective services available?

• Is incidence of crime as low or lower than in surrounding area?

• Does community have disproportionate number of bars?

• Is judiciary system well organized?

13. Fire department

• Does fire department have high standards of personnel, equipment, training, and morale?

• Is community fire insurance classification up near the top?

• Is site within fire hydrant limits?

• Are adjacent communities near enough to send apparatus in case of serious fire?

14. Infrastructure

• Does quality of construction and maintenance indicate an efficient highway department?

• Are roads kept free of ice and snow?

• Is there a satisfactory highway improvement program in place?

• How adequate is garbage collection?

• Does the sewage department have realistic plans for expansion and improvement?

15. Planning and zoning

• Is the city planning commission active and progressive?

• Are smoke, noise, and odors controlled?

• Can facilities expect protection from undesirables?

• Do building inspectors have a reputation for honesty and integrity?

16. Community financial picture

• Does community indebtedness present a healthy picture?

• Is community taxation well balanced between residential, commercial, and industrial sources?

• Is pattern of community expenditures well balanced between needs and income?

• Is total community tax picture in line with services received?

• Are community tax inducements offered to prospective industries?

17. Community business climate

• Is attitude of local officials sympathetic and enthusiastic toward existing and new industry?

• Is record of local government good insofar as honesty, efficiency, and principles?

• Does community have business-sponsored civic organizations dedicated to improving busi- ness climate? Have results been achieved?

• Is community industrially well diversified?

• Have any manufacturers migrated from the community recently?

• Are the industries dynamic and growing?

18. Community employer evaluation

• Have most employers demonstrated enlightened management policies?

• Have employers kept pace with rising wage standards voluntarily?

• How do you rate employee / employer communications within the manufacturing commu- nity?

19. State taxes

• What is the existing gross debt of the state?

• Do state corporate taxes compare favorably with those of competition elsewhere?

• Is there a state individual income tax?

• Does the state levy property taxes?

• Is there a state sales tax?

• Does the state grant permission to deduct Federal Income Tax?

20. State business climate

• Are state legislative, executive, and judiciary branches performing as well as counterparts in other states?

• Are state salaries attractive enough to get and keep good people?

• Are state wage and hour laws fairly written and administered?

• Is state workman’s compensation satisfactory?

• Is state unemployment compensation equitable?

• Does state have an active and progressive development commission?

• What are state laws regarding: Unreasonable union acts? Secondary boycotts?

Illegal strikes and picketing?

• Have other industries been asked whether there are hidden restrictive laws?

3.2.1. Comparing Specific Sites Based on Organization-Specific Criteria

The following example shows how specific sites can be compared. The matrix established is based on weighted criteria deemed important to the client; both qualitative and quantitative factors are included in the assessment. Information is gathered from a variety of sources, including:

• U.S. government agencies

• State economic developers

• County development agencies

• City governments

• Trade groups

• Commercial real estate agents

3.2.2. Evaluation of The methodology by which information is gathered is to establish an open, fruitful dialogue with these sources; this can be through a phone call, fax transmission, e-mail, or postal correspondence. It is vital to the success of any site-selection process that the information be shared on an immediate basis and follow-up (including questions) be timely and constructive.

The deliverable of this comprehensive study of sites is the recommendation of the best fit for expansion or location / relocation.

3.3. Environmental Factors

Even ‘‘clean’’ facilities need to be cognizant of the many regulations protecting the environment. Site-selection teams should be aware that cases can be cited of companies buying sites at low prices but having ‘‘to eat’’ prohibitive cleanup costs, a legacy left by the previous tenant. Even though firms that have potential pollution problems are supposed to notify the United States Environmental Pro- tection Agency (U.S. EPA) of these problems, site-selection teams need to be alert to certain red flags when considering previously inhabited sites.

• Landfills and other solid waste depositories should be excluded from the selection process. Remediation costs normally exceed land value.

• Any site with underground storage tanks (USTs) should be thoroughly assessed. Older tanks need to be checked for rust and leaks, and all USTs must be evaluated and maintained regularly. Underground gasoline tanks must, by law in many states, be noncorrosive; replacement of old, corrosive tanks is an expensive process.

• Any facility with asbestos will require abatement or encapsulation, which is a costly procedure.

• Sites with potential for soil and groundwater contamination, due to inadequately treated sewage, discharge of manufactured or agricultural wastes, the dumping of toxic wastes, or even runoff from nearby golf courses, should be considered problematic.

• Storm water is considered one of the three leading causes of pollution in U.S. waters. Permits are required for storm water discharge, and contingencies must be made for storm water to be separated from sanitary sewer systems.

• Sites where solid waste disposal is necessary must be located near a licensed outlet. Burning of waste materials is not permitted in most locales.

Site-selection teams must learn all about pertinent regulations that govern the use of a site for specific operations. Teams should never assume the site is ‘‘clean’’; this is an expensive assumption to make.

3.4. Free Trade Zones

One of the considerations in selecting a site is whether or not the site is in a free trade zone (FTZ) and whether or not the FTZ meets the company’s needs. FTZs are secured areas within the United States but they are legally considered outside the company’s territory. The purpose is to attract and promote international trade and commerce. Foreign and domestic goods may be stored, manufactured, and processed duty-free in the FTZ, which is typically a fenced-in area with warehouse facilities and industrial park space and access to all modes of transportation. Subzones, which fall beyond the perimeter of the public zone, are set up to accommodate industries that satisfy specific government criteria (e.g. ability to generate public benefit through employment).

Companies that intend to import products for manufacture or sale should research the feasibility of the FTZ. The advantages are:

• Customs duty and internal revenue tax, if applicable, are paid only when merchandise is trans- ferred from a foreign trade zone to a custom territory for consumption.

• Goods may be exported from a zone free of duty and tax.

• Merchandise may remain in a zone indefinitely, whether or not subject to duty.

Companies should note that certain commodities and industries are excluded from zone consid- eration: alcoholic beverages, tobacco, firearms, white phosphorous material, sugar, and material op- erations that may prove to be a detriment to public health and welfare. No retail trade is allowed in FTZs.

3.5. Site Visitation

The team should visit the final round of site candidates. Items either misrepresented or unrepresented in previous information can be determined, and the final assessment may be based on this new information. Extensive research should be done at each site visitation, including in-depth interviews with managers of similar businesses. The project team should keep in mind labor market dynamics, business costs, and support infrastructure.

3.6. Finalizing the Process

Once the site has been selected, productivity should be maintained; in other words, a ‘‘business as usual’’ atmosphere must be generated so as to meet supply chain and customer requirements as seamlessly as possible. The following steps should be taken to ensure that the relocation or expansion plans of the company move forward smoothly:

• Identify and communicate with employees.

• Address training and recruitment issues for the new facility.

• Schedule all official announcements with discretion—premature public disclosure may alienate and demoralize employees.

• Assign either an individual or a team to monitor all aspects of the new facility, not just the construction or the move (taxes, regulations, human resources, and telecommunications all play major roles in successful site accommodation, so these must be considered and handled as diligently as the building or the relocating itself).

Site selection is the next logical step after the strategic distribution network planning, which analyzes the company’s distribution network and develops facilities requirements and customer ser- vice requirements based on the warehouse strategic master plan. Site selection is the microanalysis of the company’s needs, and through the use of a structured approach, where criteria are identified, sourced, quantified, weighted, and evaluated, it enables the company to see what the best choice is for expansion or relocation.

The team must be fully cognizant of restrictions and limitations (e.g., pollution controls or energy consumption) placed on parcels of land by governmental bodies before making lasting decisions. Through the careful processes of distribution network analysis, site evaluation and negotiation, com- panies can select a site that offers flexibility, versatility, and utility for many years.