Site Selection: A Power Production
Locating warehouses and distribution centers in areas offering reliable energy generates cost savings and efficiency.
When companies consider expanding or relocating to a new site, they must weigh myriad factors to select a location that enables them to complete the work they need to do effectively and cost efficiently. Access to reliable, affordable power is one such crucial factor.
Entities such as ElectriCities of North Carolina, which work with companies considering an expansion or site relocation, must be prepared to examine each business case by case, rather than applying a generic template, says Brenda Daniels, manager of economic development for the utility company.
ElectriCities is a nonprofit membership organization that includes public power communities in North Carolina, South Carolina, and Virginia. ElectriCities consolidates many of the administrative, technical, legal, and legislative services these municipally owned electric utilities need, saving both the communities and their customers money. The organization also provides management services to the state's two municipal power agencies—North Carolina Municipal Power Agency Number 1 and North Carolina Eastern Municipal Power Agency.
Creating tailor-made reports and analyses for each company, and collaborating closely to understand and meet their strategic needs and goals, is an essential piece of the site relocation puzzle. This is particularly true for utilities.
"Some utilities might use cookie-cutter proposals, but ours are specific to each company," Daniels says. "We look at their usage, as well as infrastructure and labor force needs. We want to make sure we cover everything they haven't even thought about yet."
Rates and Incentives
Competitive rates are only part of the cost equation that helps drive site selection decisions. Also important is the dependability of those rates. Companies want clarity on the costs they will regularly incur, instead of attempting to manage fluctuating costs that are difficult to project and plan for. ElectriCities has rate analysts on staff who evaluate each company considering a new site or expansion, paying close attention to the unique needs and behaviors of each individual organization.
Producing accurate cost projections depends on open collaboration among the companies involved. This approach helps companies with long-term planning, and allows them to weigh the pros and cons of a potential site development with confidence. ElectriCities also can work with each company to explore ways of minimizing costs and maximizing efficiency at a potential new or expanded site.
"We're able to look at the rates a company would be expected to pay, and make recommendations on how to improve them," Daniels says. "It is about listening to what customers think they need, and what they plan to do. Then we consider how we can help them accomplish that."
Incentives are a key component of attracting companies looking to either expand an existing facility or open a new one. They help offset costs and reward organizations for the investments they make that provide an economic boost to a region. Incentives play an important role in North Carolina, too, including through ElectriCities' efforts with its member communities.
ElectriCities offers an economic development rider that starts at a 15-percent reduction of electricity costs, and gradually declines to 0 percent in the fifth year of occupying the site. If the company chooses to expand the site within those five years, then that expansion qualifies for a new rider, starting again at 15 percent.
In addition, each member municipal utility has the capacity to offer related incentives that frequently are tied to the type of company occupying the site, the jobs it will create, and the investments it will make in the community. Local communities and the state of North Carolina can provide additional incentives to encourage the move and ease its costs.
Because the bottom line reigns, companies can become fixated on the cost component. However, reliability and service should be strong selling points and important considerations, too.
One crucial element of the reliability question is whether a utility can pay suitably prompt attention to maintenance and service issues. A business that cannot count on a high level of awareness and a ready response from its electric company could find itself perpetually battling a series of nagging issues that hamper operations.
ElectriCities is able to put its best foot forward with service because—by its nature—it maintains a strong presence in each community it serves.
"ElectriCities is locally owned by the communities," Daniels says. "Investor-owned utilities might not be in the area, customers might not be sure where the call center is located, and might not be sure how long to wait for a response. In our communities, such as Gastonia or Rocky Mount, someone can be at a customer's plant in minutes to assess a situation. We like to tout that reliability."
When choosing a location, a critical factor for some companies is having the capacity for on-site electricity generation to prevent service interruptions that can shut down operations and lead to costly delays. Even a short period of time without power can cost businesses dearly, and lead to widespread negative ramifications, Daniels notes.
ElectriCities can offer companies a site at one of its two prime power parks—in Albemarle and Gastonia—which provide backup generation without any cost to the customer. This means reliable, instantaneous power if an event disrupts the electrical supply.
The sites, both of which are located near Charlotte, have proved popular. The older Gastonia power park has only one open site remaining. Most of the companies that have located at the park are internationally based manufacturers, including plastics and chemicals companies.
The Albemarle park, which in many ways is still in its beginning stages, has more room for possible new occupants. It also has the added advantage of being located near the Stanly County Airport, which includes a National Guard air base. That location offers both convenience for travel, and an opportunity for military-focused suppliers to locate in proximity to potential customers.
The key is to seek out the types of businesses that can particularly benefit from the value of the prime power parks—those that have the type of crucial, ongoing electrical needs that tap into the parks' strengths.
"We target companies such as food processing, automotive, or plastics, which are vulnerable if something happens in their system and there's no generation to back up what they're doing," says Daniels. "For those companies, having a system down for even one hour could cost hundreds of thousands of dollars."
Utilities can play a critical role in the recruiting process by partnering with other community organizations, regional economic development groups, and local, regional, and state governments. They also can take steps themselves to help attract new commercial customers to the region. It is all part of the essential role utilities play in the economic development climate they inhabit.
ElectriCities travels frequently to trade shows, where it hosts booths and walks the floor to connect with companies and gauge whether their strategic needs may be a good fit for the North Carolina business environment. ElectriCities meets and connects with all kinds of industries, but some business areas that seem to particularly gravitate to the state include food processing, aerospace and aviation, and chemicals and plastics, among others. Daniels has also seen increased recent interest from textiles companies in North Carolina.
In addition to the value ElectriCities can offer with electrical needs, the organization can help sell the appeal of North Carolina to businesses.
To clear the path for expanding and relocating companies, ElectriCities introduced the Smart Sites program to help member communities prepare shovel-ready sites for economic development. New and expanding companies prefer existing buildings or a prepared site to reduce construction time and launch operations at a facility as quickly as possible.
ElectriCities provides valuable due diligence, working with the site selection consultants and engineering firms that evaluate sites submitted for the Smart Sites program to simplify the process of preparing sites for development.
The cumulative efforts of ElectriCities and its partners in North Carolina have reaped success. ElectriCities has been involved with some stellar economic redevelopment projects announced in 2016 as companies invest in new sites in the state. For instance, CSX plans to build a $272-million cargo terminal in Rocky Mount—a project that is expected to create 1,500 jobs—and Bridgestone plans a $164-million expansion of its passenger tire manufacturing facility in Wilson. "There has been lots of activity across the state," Daniels notes.
For North Carolina and other states, utilities are an important part of site selection decisions, and have the juice to help attract new businesses.