Highway Accessibility Is No. 1 Concern of Manufacturing CEOs in Site Selection

The nasty electoral battle in Michigan over a one-percentage-point sales-tax increase to cover road repairs climaxed with a vote on the measure this week. But it’s just one indication of the fact that, across the country, CEOs and site consultants are more concerned than ever about the fitness of the transportation infrastructure when it comes to supporting business expansion.

Michigan residents were voting on Proposal 1, the largest tax hike proposed for the state since at least 1967, which promised a net $1.9-billion tax hike. The fact that it was supported by elected officials in both Democratic and Republican parties underscored the seriousness of the crumbling-roads problem in a state that has been trying to climb up off the mat economically since the Great Recession.

Now the importance of highway infrastructure also has been highlighted by the results of a new survey of company executives and industry consultants which showed that “highway accessibility” rose to the No. 1 factor in site selection in 2014, leapfrogging past business concerns about “availability of skilled labor.”

“Highway accessibility was the No. 1 concern among survey respondents, of which 35% were manufacturers.”

Highway accessibility was the No. 1 concern cited by a combination of these two groups in 2012 and again in 2013 in the annual survey by Area Development magazine. And in the 2014 survey, it rose to No. 1, while availability of skilled labor receded to No. 5 in importance. About 35% of respondents to the survey were manufacturers.

In general, many business and government leaders have been sounding the alarm for several years about the state of the nation’s roads and bridges, and the United States fell from 7th to 18th place overall in the quality of roads in the most recent rankings by the World Economic Forum.

Concerns about road quality have become most acute among manufacturing CEOs who are putting a premium on quick access to new and expanded facilities as they make their site decisions.

“Differences in infrastructure will continue to grow in importance as we become even more of an economy where just-in-time manufacturing and distribution of goods are more critical,” Larry Gigerich, managing director of Ginovus, an Indianapolis-based site consulting firm, told CEO Briefing. “States and communities that make the investments in increasing road infrastructure, and in existing infrastructure, will be in better shape for economic development.”

Michigan voters’ decision was an important one. “Many places have let highway infrastructure go,” said Dean Uminski, partner in the Crowe Horwath consulting firm in Indiana. “Now everyone wants on-time delivery, so it had to be addressed sooner or later.”

Manufacturing CEOs are showing, in the Area Development survey and otherwise, that they want pathways streamlined for optimum delivery efficiency. States and localities that want to succeed in the economic-development derby in a recovering economy will have to heed this concern.

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