How do you choose the best plant location?

1 Factor 1: Demand and Supply

The first factor to consider is the demand and supply of your products and inputs. You want to locate your plant close to your target markets, as well as your suppliers, to reduce transportation costs and time, and to ensure timely delivery and quality. You also want to consider the potential growth of demand and supply in the future, and how that might affect your plant capacity and location.

2 Factor 2: Labor and Infrastructure

The second factor to consider is the availability and cost of labor and infrastructure. You want to locate your plant where you can access skilled and reliable workers, as well as adequate and affordable utilities, such as water, electricity, gas, and telecommunications. You also want to consider the labor laws, regulations, and unions that might affect your plant operations and costs.

3 Factor 3: Costs and Incentives

The third factor to consider is the costs and incentives of different plant locations. You want to compare the fixed and variable costs of operating your plant in different locations, such as land, building, equipment, taxes, insurance, and maintenance. You also want to consider the incentives that might be offered by local or regional governments, such as subsidies, tax breaks, grants, or loans, to attract or retain your plant.

4 Factor 4: Risks and Opportunities

The fourth factor to consider is the risks and opportunities of different plant locations. You want to assess the political, economic, social, and environmental risks that might affect your plant operations and profitability, such as instability, inflation, exchange rates, competition, regulations, natural disasters, or climate change. You also want to identify the opportunities that might arise from locating your plant in a certain area, such as innovation, diversification, collaboration, or expansion.

5 Step 1: Identify Potential Locations

The first step to choose the best plant location is to identify potential locations that meet your basic criteria and objectives. You can use various sources of information, such as market research, industry reports, trade associations, government agencies, or consultants, to narrow down your options. You can also use geographic information systems (GIS) or location analysis software to map and visualize your potential locations.

6 Step 2: Evaluate and Compare Locations

The second step to choose the best plant location is to evaluate and compare the locations based on the factors mentioned above. You can use various methods and tools, such as cost-benefit analysis, scoring models, break-even analysis, or simulation, to quantify and rank your options. You can also use qualitative methods, such as site visits, interviews, or surveys, to gather feedback and insights from stakeholders, such as customers, suppliers, employees, or local communities.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?