Recent media coverage of three significant trends reinforces the need for anticipatory analysis.
First: News coverage celebrates re-shoring of activities, particularly manufacturing from Asia to the US. Key factors noted include several that might have been expected: the expense of oil and its impact on shipping costs; the US’s increasingly plentiful and cheap natural gas; accelerated product lifecycles and competitive forces that call for frequent enhancements; increases in offshore production costs (labour, energy and so on); and competition for scarce offshore technical and managerial talent and the resultant staff turnover.
Second: Mobility in the US from ‘progressive’ to ‘conservative’ states continues. Populations boosted by newly arrived immigrants sometimes mask these data, but analyses of census and household moving companies’ reports confirm the shift. While the positive impact of new immigrants is basic to the American narrative, in the short term, some areas point to added burdens for local governments. These might lead to increased local taxation on businesses and their managers.
Third: Technology work continues to increase in second-tier cities. This is measured by absolute headcounts, rates of growth and location quotients (exceeding US average percentages for specific types of technology jobs). Having already achieved mass, these places could enjoy additional technology-related growth. As the millennial generation creates families, many may prefer the single-family housing that is relatively more affordable. And, many of these communities offer economies that are sufficiently diverse to sustain two-career households with different career interests.
Ice hockey star Wayne Gretsky said he wanted to “skate to where the puck is going to be”. This is good advice for those making location choices, especially the choices that are difficult to un-do – large commitments of capital in the ground or significant numbers of professional staff who, once in place, may not be eager to relocate. Location analysis is not prophecy, but scenario planning and sensitivity analyses – the ‘what ifs’ – need insight as well as current data comparisons. Investors and places seeking investment are challenging embedded assumptions and looking ahead.
Daniel Malachuk works with business and government leaders on global direct investment strategies. He has advised many of the world's leading companies and served in the US public sector as director of White House operations. E-mail: firstname.lastname@example.org