Analysis of Project Characteristics & Decision Factors

Missouri Partnership considers a project Lost when Missouri is eliminated from consideration as a location for a particular project. This can happen at any stage of a project and clients/consultants only sometimes share the elimination reason. Moreover, while Missouri Partnership often learns the location of the winning option either through direct communication or public announcement, we sometimes do not obtain that information. In addition, projects can end up Dead after Missouri was eliminated. 

It is important to understand the reasons Missouri was eliminated as a location for a potential project so that we can take steps to become more competitive for future projects. However, it is also important to understand which decision factors we might influence and improve versus those that we cannot control. Further, as previously noted, we do not know how often Missouri is eliminated from contention for a project after a consultant or company conducts a “desktop screening.” Moreover, these projects are typically moving targets with changing requirements. We have clients that consistently make changes throughout the process as they navigate the complexity of site selection. 

Lost Projects By Sector

As previously noted, Missouri lost 192 (24%) of the total opened active projects between FY 2016 and FY 2023. Missouri Partnership sourced/led 69% of the total lost projects, while 31% of the lost projects were led by our partners. Notably, projects in the advanced manufacturing sector comprise 38% of Missouri’s total lost projects, whereas we lost 25% of the total advanced manufacturing projects opened during this time frame. Also notable is Missouri lost 33% of the total health innovation projects opened and 35% of the total general industry projects opened during this period.

Lost Project Characteristics

Most of Missouri’s lost projects had a job count between 50 and 99. However, these 23 lost projects make up only 20% of the total projects opened in this size range. Missouri also lost 22 projects with a job count of 100–149, but these account for a larger share (35%) of the total opened projects of this size.

Most of the opened projects had a capital investment of less than $5 million, 23% of which Missouri lost. Missouri also lost 22% of projects with a capital investment of $5 million to $9.9 million, although there were fewer total projects opened in this size range.

Decision Factors for Lost Projects

While the preceding data can be useful to understand the characteristics of projects Missouri lost from FY 2016 to FY 2023, the most useful data is that which helps explain why we lost those projects. As previously noted, this information is limited since the clients do not always share the reasons they eliminate Missouri from consideration. However, we are able to conclude from the information we do have that issues related to real estate and industrial sites are the primary reason Missouri is eliminated from projects, followed by available workforce. Business attraction is very time sensitive, which requires us to have product ready. Unlike expansion projects, which may have a higher tolerance for delays when investing in their own communities, attraction projects may not have a stake in the community and will often go to where the offering is available the soonest. The fact that our data reflects available real estate/sites and available workforce are the primary reasons Missouri lost these business attraction projects is very consistent with the trends reported by site selection consultants and professionals. 

In August 2022, the 62-member Site Selectors Guild partnered with the Development Counsellors International (DCI) to prepare the second edition of The State of Site Selection — a primary research study that identifies the top trends impacting the facility location decision-making process in the United States and globally. See The State of Site Selection pg 5. “While none of these topics or factors operate in a vacuum and often overlap, there are key themes and trends that play a more influential role in the location and site selection process.” Id. at pg 5.

The study notes that “[a]ccess to talent remains the most important global factor in location decisions but remains a greater priority for office employers (i.e. technology, R&D, service centers, headquarters and data centers)” Id. at pg 13. Moreover, “[t]here is a shortage of industrial sites that also have the desired utility infrastructure and an available workforce with the required skills.” Id. at pg 37.

“Consultants agree that states and provinces are not currently adequately investing in infrastructure to address the lack of sites and buildings. Communities that have invested in site-readiness initiatives typically have an advantage and are better positioned to compete for projects.” Id. at pg 34.

Notably, for the past two years, Missouri Partnership has made investment in site-readiness initiatives a top priority. 

In addition, the following is a list of specific reasons for eliminating Missouri for a variety of projects. Many of these are direct quotes from companies and consultants that were stored in Missouri Partnership’s CRM database. Others are based on Missouri Partnership project managers’ understanding of the project outcomes.

Real estate/Site related issues

“The elimination came down to the site shape and readiness combined with the proximity to major metro. He emphasized that the site was ultimately just not a fit for this particular project, but thinks it has a lot of potential.”

“Site was too raw and too risky.” 

“Consultant notified us that the Missouri real estate options were too expensive. The company had asked for free land to offset the initial large capital investment.”

“Real estate would have required significant upgrades.” 

“The size of the building – if the company had more time the building might have worked, but they don’t have the time to expand/retrofit to fit their needs.”

“We started a formal site selection process a few months ago and are now in the final stage with a shortlist of candidate locations. In our selection we also received proposals from Missouri, which we evaluated but considered less competitive than others. The prevailing criterion for our choice was the speed of execution of the project that each site would have allowed, therefore aspects relating to the timing for permits and the construction of the necessary infrastructure played a primary role.”

“The two Missouri sites needed substantial upgrades to the electric and water infrastructure outside of the company’s needed timeline.”

Workforce

“The other shortfall related to labor. The sites are far from the larger population shed – with the need to have 1200 workers (thereof 200-300 engineers) basically at start of production, there would be a bigger push here than many of the other potential sites. Out of the 20+ sites received through the RFI, the two MO sites scored in the last 25%.”

“The other two markets had a larger concentration of talent relevant to their industry and the skillsets they were looking for.” 

“First, they acknowledged that we have a solid IT workforce with the required skills, but their analysis showed the IT job market is tightening up here. In short, the regions that were selected have overall population growth higher than ours, so there was a higher degree of confidence that the firm could ramp up to their full 2,000 jobs within five years. The consultant stated that if this were a 400-600 job project, our region could accommodate that. The second reason given was that although the cost of doing business in our region is attractive, the other two regions had slightly lower costs. Cost was especially sensitive in this case because this operation is being re-shored from overseas.”

“Labor rates were a $1.00 higher in Missouri community than the other markets.” 

“Labor was another shortfall. The sites submitted were far from the larger population shed needed to hire 1,200 workers (200-300 engineers) at the start of production, requiring an extensive recruitment push compared to other locations.”

Supply chain proximity

“While the client initially wanted to be in a one-hour driving radius from one supplier, they decided they actually wanted to be in a one-hour driving radius from two different suppliers, which automatically eliminated many of the initially considered states.” (An example of how project requirements change over the course of a project)

“Client needed to be within 30 miles of kill center, Mississippi River posed a problem getting between locations.”

“During the meetings, additional criteria emerged that the company found more important than previously anticipated, especially proximity to urban areas and the availability of short flight connections to Germany.”

Decided to expand at existing facility

“The most compelling reason was their capacity to build on an existing footprint with an operational center already in place in Atlanta…Another contributing factor was the lack of Class A office speculative development…and lastly…a member of the leadership team with strong ties to Atlanta that did not join the site team on any of the Missouri visits.”

“Ultimately the decision team felt it would be too challenging at this stage of their growth to spend time and money sending company leadership out of their current market to establish a market presence here. Business costs were also a factor with Missouri ranked in the middle of the pack.”

Strengths in other locations

“Arkansas was chosen in a multi-state search for its workforce, culture, business climate and industry support.” 

“In the end, the State of Alabama offered a very competitive package and the leadership of our company felt that the synergies of having our manufacturing near our distribution center, coupled with the prospective disruption of a major move, outweighed the wonderful location and generous incentives offered by the State of Missouri.” 

“The company’s board of directors felt that Orlando was better based on future population growth and the ability to attract talent from other locations throughout the U.S.”

“The primary factor that led them to select Indianapolis was the presence of FedEx’s second largest hub in the world that is well equipped to handle the company’s radioactive products for shipment. This was especially important to the company as its products have a usable half-life of only five days and must be shipped all over North America.”

“Philadelphia’s well-established and growing life sciences sector has strong academic and research institutions, a robust talent pipeline from recent college graduates to senior executives and scientists, and a central location on the East Coast.”

Where Lost Projects Landed

As previously noted, we do not know where many of the projects landed after Missouri was eliminated. For the projects that we have confirmed, the largest percentage selected the South, followed by Kansas and the rest of the Midwest. It is important to note the Kansas City region is a very strong market with the state line running right through the market. Thus, we believe many of these project losses can be attributed to the strength of the Kansas City region overall, which falls in both states. Oftentimes the competition with Kansas is a company simply deciding on what side of the state line
to locate.