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States are competing for new business much like people bidding at an auction. The state with the lowest cost to the Company is likely to win the bid. Tax breaks, $1 land leases, state assistance, construction costs, availability to skilled labor, and logistics are major concerns for companies. States that solve these problems are likely to win the bid but many states aren’t even in the game. Companies are always looking for the best deal when selecting potential sites for a new plant or headquarters. States long for more business to increase tax revenue, provide needed jobs and continue state growth. The problem is that every other state is doing the same thing so which state will actually win the new company? There are a number of key factors Companies look for when selecting a new site. 1.) Availability of Labor: Companies need educated labor to work in their high-tech plants. If the school system is poor and the state is pro-union it is doubtful that a company would willingly select that state for a new location. Uneducated workers and unions cost companies millions of dollars in efficiency a year and few new plants would take that risk. 2.) Taxes: Like most people companies hate taxes. States often provide tax incentives to large companies and hope to make additional revenue off of the taxes the employee pays. The more taxes companies have to pay within a state the less likely they will move their. 3.) Logistics: Having access to seaports, airports, railroads and highways is a concern for any plant. Most large companies import supplies and export finished products by the truck load. Constant delays in supplies and shipping can cause major loses when the assembly lines shut down. 4.) Construction Costs: Building manufacturing plants is no cheap endeavor. Some companies could spend a few billion dollars erecting their facilities. The local costs in labor, supplies, materials, equipment, etc. all contribute to the overall construction costs. The lower the cost within the state the better chance someone would be interested in building there. 5.) Availability of Land: Let us say that few businesses would be interested in tearing down blocks upon blocks of high priced homes to erect a plant. It would be nearly unfathomable for a company like Ford to place a major company in Boston’s high-end district or on the cost in Florida. Companies need wide open spaces and a reasonable price to erect their buildings, conduct their operations and fulfill their obligations. Alabama just won out over Mississippi in their bid for a 2,700 personnel steel plant by ThyssenKrupp AG of Germany. The total project is to cost $3.7 billion dollars and will create 29,000 construction jobs as well as 52,000 indirect jobs. Both Alabama and Mississippi offered incentives packages in the form of infrastructure improvements, tax breaks and job-training programs for their 3,467 acre site but Alabama had an industrial dock for ships and an existing rail line which made the difference. In the end taxes, labor, land and cost were the predominate factors. Murad Ali, a two-time published author, writes articles and offers advertisement space for businesses. Visit http://www.thenewbusinessworld.blogspot.com
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