Due diligence a key to knowing where to expand

by Dan Malovany
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Bakery production facility
In determining where to build a new baking production facility or distribution center, location remains the top priority.

The baking industry seems as strong as it’s been in years, but companies still need to do their due diligence when expanding their businesses. In determining where to build a new production facility or distribution center, location remains the top priority. But there is a lot more to consider.

“Once you narrow it down to five or six communities in a region, that’s where the incentives can be a deciding factor on your final location,” noted Frank Spano, managing director, Austin Consulting, Cleveland.

Overall, government incentives can reduce initial operating costs as well as long-term overhead. In the short run, the goal might be to obtain free real estate or reduced costs for land or buildings in a community or industrial area — or to negotiate favorable leasing rates or a reduced purchase price. Reducing infrastructure costs should also be a priority.

Frank Spano, Austin Consulting
Frank Spano, managing director of Austin Consulting

“If a road needs to be improved or needs to be widened, get it done immediately,” Mr. Spano advised. To alleviate ongoing costs, Mr. Spano noted exploring tax abatements that can provide long-term assistance. The state may provide corporate tax assistance. Many communities also may lower utility bills, such as water or sewer usage, up to 20% or more for several years. Mr. Spano also examines the “labor shed” within a 30-mile range of a potential new bakery location.

Talking with existing businesses — especially food companies in the region — often will determine whether the current available workforce can absorb hiring an extra 100 skilled employees. It’s no wonder why the best companies often get ahead with a little help from their friends. Check out the October issue of Baking & Snack for more helpful information.
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