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Supplier Global Resource Magazine March/April 2012 : Page 27

Chris Clark Vice President of Sales, Ash City USA Any time a business finds itself with higher labor costs, higher taxes, facilities that need updating and no real incentives to remain where they are, it’s a cause for con-cern. And if there are incentives to move or relocate, they must be seriously considered. When weighing the pros and cons for staying vs. relocating, the company needs to look at statistical data involving the region of the country to which they’re looking at relocating. Is the labor pool stable? Are taxes stable? Do incentives exist to move there such as tax breaks or help in building or refurbishing an existing building? And then of course there is the question of existing employees. Will they be willing to relocate with the com-pany? Are there incentives to help them decide? Another scenario would be to keep certain parts of the organization where they currently are (such as customer service, account-ing, design, merchandising, IT, etc.) and just relocate the manufacturing and inventory. Either way, it’s a tough decision, but in this day and age, all options must be considered in order to help a company remain stable and look toward growth. Chris Clark, currently vice president of sales for Counselor Top 40 apparel supplier Ash City USA since 2002, is an industry veteran with over 23 years of experience in the apparel market. He can be reached at (732) 381-2525 or Joseph VraniCh Principal, Spectrum Location Solutions Moving a manufacturing company is more challenging than moving other types of facilities because of the risk of a decline in production, the sheer weight and mass of the machinery to be hauled to a new location, and the potential loss of skilled workers. Yet, crossing into another state can make a company more competitive, especially if rivals are in low-cost states or coun-tries. A move can lower or completely eliminate certain taxes, and costs can be reduced for facility construction or leasing, utilities, regulatory compliance, workers’ compensation and unemployment compensation. Employees can reduce expenses while improving the quality of their lives. Where affordable housing exists, apartment renters can buy a home. If in a state where there’s no personal income tax, take-home pay rises even if the compensation remains stable. However, moving costs, production disruptions and losing valuable employees are significant issues. One manufacturer heading across the country will pay $18.5 million to move machinery, spare parts and inventory. The cost would be higher except the company is purchasing advanced machinery that will be sent directly to the new factory. Minimizing production delays requires a choreographed arrangement where equipment is moved in stages so that some machines will always be producing product. Motivating key employees to stay with the company can be accomplished with bonuses and fair treatment. It may be that a manager will not relocate, but it’s vital that he stay in the exist-ing plant through closing day. The solution is to offer a generous retention bonus and be very nice to him. To convince someone to relocate, an inducement would be a company-paid familiarization trip to the new com-munity for the entire family. Covering the cost of shipping household goods is expected, and a relocation bonus also might be required. The total cost to relocate can be intimidating. However, economic development agencies will offer incentives to lower taxes, underwrite some moving costs, support low-interest loans and provide employee training grants. The bottom line is the project’s return on investment. If a three-to-five-year cost-recovery period is forecast, often companies will relocate. With a seven-year ROI, the decision becomes blurry, and companies will often drop plans if it’s 10 or more years. With careful planning, a business relocation can result in financial rewards. Joseph Vranich is an executive coach/consultant who helps busi-nesses make location or relocation decisions driven by growth, market changes, tax and regulatory climate or a need to improve competi-tiveness. His clients, located throughout the United States, range from family-owned businesses to international corporations. He has been a repeated guest on network and cable news programs and has frequently testified before Congress. He can be reached at Joe@ . WWW.SUPPLIERGLOBALRESOURCE.COM MARCH/APRIL 2012 27

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