Labor Supply, Quality of Life are Top of Mind for CEOs

Appealing to CEOs as a business site location often can be a matter of emphasizing quality over quantity. Attributes such as the availability of qualified workers, and local and regional amenities such as being near a transportation hub, can become more important than hard, quantitative measures such as taxes and costs.

In fact, the availability of skilled labor is a key factor when it comes to critical considerations for site selection in recent surveys of CEOs such as Chief Executive’s Best & Worst States for Business. It was No. 1 for Area Development magazine; highway accessibility was No. 2; quality of life was No. 3.

The supply of labor is top of mind for business chiefs who are looking for blue-collar, white-collar and technical people. And the advantages of places that can supply enough skilled labor is becoming more noticeable as the economy picks up momentum.

“Every time I’m together with leaders of manufacturing companies, they talk about [the availability of labor] as being the here-and-now problem that is at the top of their lists,” Blake Moret, CEO of Milwaukee-based Rockwell Automation, told Chief Executive.

“CEOS consider the availability of skilled labor a key consideration for site selection.”

Josh Smith said that Metova, an Arkansas-based software developer, placed a development center in Fayetteville, Ark., “right next to the University of Arkansas with its 25,000 enrollment” and not far from Walmart’s headquarters in Bentonville, Ark. Metova’s ceaseless hunt for millennials who are digitally able also drew it to set up centers in Conway, Ark., also not far from Bentonville, and in Franklin, Tenn., a short distance from Nashville, which is home to more than 20 colleges and universities.

And, of course, GE CEO Jeff Immelt famously moved the technology titan’s headquarters out of high-tax Connecticut and into high-tax Boston almost exclusively to chase the software-savvy stream of millennials graduating from the city’s many colleges and universities.

Even headlines scream this trend. Dan Ariens, CEO of privately owned Ariens Co., a maker of lawnmowers and snowblowers based in Brillion, Wis., told the Wall Street Journal in a front-page story this month that he could raise production by 40% but he can’t find enough skilled workers to man their factories, even though he’s spending up to $15,000 a month on recruiting.

Quality-of-life considerations often are tied to the availability of labor, of course, especially for digitally skilled millennials who can take their technology qualifications just about anywhere. California and New York are able to land new business in large part because they’re ranked highly in considerations of lifestyle and amenities.

Another factor that ranks surprisingly high in site decisions is highway accessibility. If they can’t bring their supply chain efficiently to their factory, and get goods out easily, for example, manufacturers won’t even consider most sites.