A lack of suitable industrial sites near major US metro areas is forcing manufacturers to look at Tier 2 cities and rural communities for their investment projects, according to a new survey of site selectors. 

In the report, released on April 5 by the Site Selectors Guild (SSG) trade body, 82% of the 68 site selectors surveyed globally strongly agreed that the availability of development-ready sites with sufficient infrastructure capacity will be the top driver of where companies decide to set up their production facilities in 2024. 

“Years of unabated growth have strained all resources — land, power, talent — to the extent that the time and cost required to prepare a site and begin construction is, at best, delaying timelines and, at worst, risking projects,” according to the State of Site Selection 2024 report. This has forced site selectors to look in more rural areas for development-ready sites, but these locations are often lacking in the available workforce needed to run factories.

In the US, this mismatch between site demand and supply follows record capital investment pledged to manufacturing projects by domestic and foreign companies since the Covid-19 pandemic. Manufacturers announced more than $138bn of commitments to US projects last year, which followed $224bn in 2022 and almost $168bn in 2021, according to fDi Markets.

“Just as we saw a migration of agricultural and farm workers to urban areas in the late 1800s to support the second industrial revolution, we may see a reverse migration today with workers living in urban areas but commuting outside those areas to where the jobs are,” Didi Caldwell, the CEO of Global Locations Strategies, says in the SSG report. 

The report called upon locations to invest more into infrastructure and certify development-ready industrial sites to make themselves more competitive to manufacturers expanding in the US. 

“Everything is moving at a faster pace,” said Michelle Comerford, leader of industrial and supply chain practice at Biggins Lacy Shapiro & Co, in the report. “If you are a community that truly wants to attract new jobs and investment … you must get your sites and infrastructure prepared ahead of these search inquiries.”

The manufacturing investment boom has been in part driven by a strong US economy and mega projects, which have at least $1bn of capital pledges, massive infrastructure and talent requirements. Many cleantech and high-tech manufacturing companies have also been offered lucrative tax incentives under the Inflation Reduction Act and Chips and Science Act.

US semiconductor maker Intel is a case in point. On March 20, the White House confirmed that the company will receive up to $8.5bn in direct funding and $11bn in loans under the Chips and Science Act. 

The funding package will help support Intel’s plans to invest $100bn across the four states, including at least $20bn in Licking County, a rural region near to Ohio’s state capital Columbus.

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