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Episode 9 – The Importance of Site Readiness in Site Selection

Site Selectors Guild
Episode 9 - The Importance of Site Readiness in Site Selection

Rick Weddle: Welcome to Site Selection Matters, where we take a close look at the art and science of site selection decision-making. I’m your host, Rick Weddle, president of the Site Selectors Guild. In each episode, we introduce you to leaders in the world of corporate site selection and economic development. We speak with members of the Site Selection Guild, our economic development partners, and corporate decision-makers to provide you with deep insight into the best and next practices in our profession. In this episode, we have as our guest, Phil Schneider, president of Schneider Consulting. Phil has over 30 years of consulting experience in the fields of corporate global location strategy, site selection, incentive negotiation, and economic development strategy. He’s conducted nearly 400 engagements across the full range of all corporate functions. Today, Phil will talk with us about the importance of site readiness in economic development. Join me as we welcome Phil Schneider, for “Site Selection Matters.” Phil, today we hear a lot about site readiness, or perhaps, the lack or absence of site readiness for economic development. What exactly does site readiness mean?

Phil Schneider: Well, Rick, I think as we’ll probably end up discussing, it’s an open question that needs answering, but site readiness programs really begun the process of answering it. What site readiness really means to me and I think my colleagues are that sites that, essentially as the word would say, are ready to go, ready to be developed when a project comes, whether it’s a manufacturing project or distribution or whatever that the company and the consultant can be confident that that site is pretty much ready to go and there isn’t going to be a massive surprise that hasn’t been already analyzed. So due diligence has been done to a level that the consultant or the company can say, “yay” or “nay.” “Yeah, I wanna pursue this further. There seems to be a workable for the project defined,” or “No, let’s go look at something else.” So, site readiness programs were basically created to provide that documentation of data that give the consultant and the company confidence that that site has a good chance of working for them.

Rick: You know, Phil, going back to my early days in economic development, we learned or were taught early on that you really can’t sell from an empty wagon and that, you know, getting your property together, your sites, and getting them ready for a company to consider are kinda part of economic development 101. So, you really can’t sell from an empty wagon, can you?

Phil: No, and there’s an old saying in our industry, “No property, no projects.” You gotta have properties that are ready to go. Yeah, you have to have a lot of other things too but, you know, you could have great workforce and great utilities and great location, and you don’t have a good site, you’re not gonna get a project. So, no projects if you don’t have the property that’s ready to go. It’s simple. You’re right. It’s 101, you gotta have it.

Rick: You know, Phil, as we talk about this, I hear people talk about site readiness, I hear people talk about site certification or different…is there really a distinction between those two terms?

Phil: That’s a really good question that’s constantly debated amongst colleagues and amongst EDOs as well because the terminology isn’t set. What one consultant or even an economic development organization or a property owner would say is certified, the next project comes along we’ll say, “Well, it’s not certified for me. I mean, not certified for my project. I’m looking for far more robust utilities,” or “I’m looking for a far more complicated manufacturing plant with deep pits and foundations. This site doesn’t work for that, but it might work perfectly well for a distribution center or light manufacturing.” So that’s really kind of the nub of the question that’s gnawing at consultants and at EDOs. If it’s certified, is it certified for what? If it’s ready, is it ready for what? And I think there is starting to become some clarification, is that readiness may be more of a discussion around the documentation is ready. It’s ready for the consultant or the company or the engineering firm to review. It doesn’t mean it’s certified for their use, but it’s ready to be reviewed and they can make a determination that they’ve seen enough data determined to move forward or not. When you start getting into a certification, A) It means that somebody has certified it, could be a site selection consultant, it could be an engineering firm has said, “The data that we looked at has been verified and we certify that this is true.” But again, the question will be well, is it certified for what? So, certification, it just may mean that somebody has verified it and put their badge on it, but it doesn’t necessarily mean it’s certified for any particular project. Does that make sense?

Rick: Yeah, it does. It does. And it gets into a question I was thinking about on the issue of are sites assessed for specific or general reuse, and then are their differences and standards that would apply to different industries? My guess is you’re going to say yes to that, but could you elaborate on that?

Phil: Yes. And again, it’s another question that gnaws at people and it gets what I said just a second ago. So, if you want to get into certified for what, which is the question that’s already asked, then that means that you’re gonna certify for a particular industry or a particular type of project. So, you’re gonna look at issues like size and utility capacity and transportation access. And also, you’re going to look at various engineering studies or other studies that have been done that verify the site is clean, that the geotechnical subsurface issues are satisfactory for you. But there’s going to be a set of industry or project guidelines that will guide that. But the question will still remain, you know, that every different project that comes along by different companies will have slightly different needs. So even if you’ve gone the extra mile and feel that you’ve certified it, whether it’s, you know, consultant or engineering firm and with the EDO that we’ve certified this for food processing industry or for a data center, or what have you, there’s a chance the next project that comes along will say, “Well, you know, we need double that,” you know, so, you know, our process defines a whole different way of building this plant. It has a whole different set of utility specifications. So, it gets you closer, but it still doesn’t necessarily mean it’s going to be certifiably acceptable for that particular project.

Rick: Right. It could be ready, it could be certified, but it still might have further definition that needs to be done for a very specific and complicated project. You know, Phil, we’ve been talking a lot about the “what” of site readiness or site certification. Now, let’s talk a little bit about the who. Who would typically do this, who performs site certification, and what goes into that evaluation process?

Phil: It’s a good question because it’s also being challenged and there’s lots of different ways because there are no real national, international standards around this. There’s a lot of different approaches and you’ve already picked that up. And there’s even a lot of different approaches on who does it. It really began with a collaboration between site selection consultants and economic development organizations working together on these. They say we really want to identify sites that are workable for the semiconductor industry, for the automotive industry, for steel mills. That’s really where this started, you know, 20 or 30 years ago. We’ve got these big, complicated projects and we wanna have sites that are ready to go because it takes forever to assemble them go through the process of in a project, in a typical project, what data, site data, and capacity data, do you require? So, the site selection consultants worked with them. Well, it evolved over time to engineering firms doing this because engineering firms are, you know, almost necessary in the process to do, whether it’s geotechnical work, could be environmental analysis, wetlands delineation, a lot of technical work that has to be done. So, engineering firms started being involved in certifying them as well. And then you got to the next level of self-certification where economic development organizations felt that they had the internal capacity or could assemble that capacity and talent locally to get the job done and certify it themselves. There’s debate about that, whether that has value or enough value to satisfy a project or a prospect that comes along, you know, self-certification can be also self-serving, but it is being done and often being done effectively. So, the short answer is it’s usually a third-party consultant, often a site selection consultant. It now is including engineering firms in some level of self-certification.

Rick: Very interesting. You know, this sounds like it’s gonna cost a lot of money or a good amount of money. I guess the question always comes, is it worth it? What’s the payout, what’s the direct benefit of going through this site readiness or site certification effort? Will I get my money back? Will it pay out over time? Could you share with our audience some specific examples that you may have seen where this has actually worked and paid out and been a good investment?

Phil: Yeah, sure. And, you know, I’ll go back to one of our earlier questions that you asked. If you don’t have ready-to-go properties, you don’t have good sites. You’re not going to get projects. So, you say, well, I don’t want to spend that money. Well, then, you know, you may or may not have a ready site that’s gonna get projects. So, as you said, it’s become 101, it’s become table stakes. You’ve got to have sites and the fact that now we have over 30 states that have some sort of program, either that they’re running, or utilities or regions are running, it’s become table stakes. You sort of have to have it. So, the payoff question becomes a little more complicated because it’s a tool that you need to have in your tool chest anymore. So that’s one part of the answer.

Yeah, you’re right. They do cost a lot of money, these engineering studies and, you know, consultant review and everything, it could cost $50,000, $60,000, $75,000 to get a site fully, fully certified to the level that a specific industry may want. So that is a fair amount of property, but then you have something that you can market. You have something very tangible for that industry. It’s part of your target industry marketing program that you’ve got to sell. You’ve got a product now that you can sell, and it has paid off. And if it didn’t pay off, you wouldn’t see this replicated all over the country and now other parts of the world as well, because they’re able to turn that in. I know projects that I’ve looked at recently, and in particular, in this case, was data centers where there are a number of places now that have, you know, “data center-ready sites” and the same thing’s true, food processing and automotive and others. And when you looked at the data, we knew what that meant. That meant that they had very good power capacity. That meant they had good water capacity, good prices, and a number of other issues. And that put the site on the radar and in this particular case, the site that’s going to be closed on is a ready site, particularly focused on data centers. So, and I know my colleagues in the Guild have had similar experiences, doesn’t always work out, but there are many cases out there that those certified sites have paid off, giving the EDO something to market and giving the consultants and the company something very tangible and ready to chew on.

Rick: Phil, is this exercise in site readiness something that becomes more important as the size of the project or the size of the site goes up? I hear and heard about issues around what some states would call megasites, in other words, large tracts of land that they hope to locate a very large assembly plant or some other process industry, some other kind of industry on. Is it more or less important going up the size scale?

Phil: Yeah, I think that’s a fair statement. But, you know, and I’ll caveat this by saying, it depends on the market that you’re in. So, I’ll start with, you know, because some markets there’s such a great need for 10, 15, 20-acre sites and having them ready to go is a market differentiator for a particular community. But let me start with the megasite thing, and I think that’s a really good place to start because that’s really what got this process going, you know, 30-something years ago. Even before there was such a thing as a certified site, there were megasites, and this was a response primarily to the auto industry, but also steel mills, chemical processing, these projects that require thousand plus acres because they’re giant projects, they need giant buffers, they have massive utility and transportation requirements. In order to compete, as I’m sure you recall, Rick, going back 30 years when there’s a lot of automotive plants coming into the United States, it became extraordinarily competitive and if you didn’t have a site ready to go or close to ready to go, you weren’t going to win those projects and early on the states figured out that they needed to assemble that land, get it under one ownership or at least one option price. And then they had to make sure that to do the due diligence to make sure that the typical requirements of an automotive plant or steel plant that could be dual power, dual rail, multiple highway access, geotechnical subsurface that really worked for them putting in big pits in for stamping machines, etc., that was there and ready to go and provable. If you had that, if you could assemble that large site with the due diligence done, their chances of winning the project went way up. If you were starting from scratch and I’ve been through those kinds of projects where they say, well, we’re putting that 2000-acre site together, starting today when we got that RFP, that could take them a year. So, if somebody could get it…could’ve gotten a nine-month head start by having it assembled. So those megaprojects with megasites really got this concept going because states were getting the wins when they put it together and getting that economic payback.

So, and then it trickled down from there on areas we need. You know, we don’t have any hundred-acre sites and a hundred-acre site in our area would be a massive economic impact for us. And it continued to trickle down where we see now in certain parts of the country, they’re saying our chances of getting that giant megasite project are next to nil, but we can get 20 to 30-acre projects based on our workforce and based on our utility capacities, if we have them ready to go, because we’re competing with other places like us, and they have soybean fields and corn fields where everything needs to be extended and no due diligence has been done. If we’ve done that due diligence and we can prove that we have a 30-acre site ready to go, our chances of winning go up and that’s economic impact that means something to us and a project that we can win. So yes, it started at megasites and is extraordinarily important, but based on the heart of the country that you’re in and the type of projects they get, for those communities, that 30-acre site could be just as important and meaningful.

Rick: You know, Phil, you’ve given us a lot to think about today. We started, you talked about the what of site readiness, the who, talking about the consultants’ role, the engineering firms, and others, and you wrapped it up there in talking about the why because it’s absolutely essential in the battle to win projects and create high-quality jobs. So, we’ve got the what, the who, and now we have the why. So, thank you very much for sharing that with us today. What a great conversation. That’s really about all the time we have. Let me say thanks, Phil, for taking the time to talk with us today on this episode of “Site Selection Matters.”

Phil: Very welcome, Rick, and thank you. It’s a topic I’m passionate about as you can tell.

Rick: Thanks for listening to this episode of Site Selection Matters and a special thanks to Phil Schneider for helping us get inside and better understand the importance of site readiness in economic development and how it ultimately relates to new investment and good-quality job creation. What an informative discussion that leaves us with a lot to think about. Again, I’m Rick Weddle, president of the Site Selectors Guild. We hope you’ll subscribe to the Site Selection Matters podcast on Apple Podcasts, Stitcher, Spotify, or wherever you listen to your podcast. We look forward to bringing you some great discussions in the year ahead. Until next time, good day.