For the baking and snack industries, tax incentives can help cover initial construction and startup costs as well as provide assistance in training or other incentives that lower operating expenses in the long run.
“Anything that helps defray the tax burden on machinery and equipment is going to end up being an advantage,” pointed out Courtney Dunbar, who leads site selection and economic development for the Global Facilities Group with Burns & McDonnell.
Site selection firms offer to navigate the maze of tax incentives from local, state and federal agencies and assist with the often-extensive paperwork. In some cases, observed Mike Pierce, president of The Austin Co., bakers can even negotiate the best terms by pitting one state against another for a new business.
“We’ll look at four- or five-site areas and get the states to compete against one another,” he said. “A state will generally not favor one community or another but may offer greater incentives in areas that are economically distressed or where the project will have a great impact on the local economy.”
To facilitate the site selection process, for instance, the Michigan Economic Development Corp. (MEDC) provides a statewide database that local communities and their economic agencies can use to list properties.
Valerie Hoag, MEDC’s managing director, business initiatives and consumer support, noted the organization also offers on-demand site selection technical assistance, such as how to conduct a site visit and what information to post on MEDC’s real estate database.
In turn, Ms. Hoag said bakers need to provide the location they’re considering, facility size, water quality and wastewater needs, and other essential operating infrastructure or utility requirements.
Prior to selecting a site, get a thorough understanding of the local and state regulations concerning constructing, modifying and operating a manufacturing facility. Larry Marcucci, chief executive officer of Chicago-based Alpha Baking Co., cautioned that some city regulations may be-come burdensome and even affect the cost of a project by dictating how it should be completed or how workforce rules will be enforced.
When searching for a new facility, it’s a lot more complicated than it was in the past, but there are more tools available to respond to an ever-evolving market.
Yes, sometimes bakeries can get lucky and find a site they love at first sight, but even if they do, it’s always best to practice due diligence to make sure their commitment pays off for that happily ever after.
This article is an excerpt from the April 2020 issue of Baking & Snack. To read the entire feature on site selection, click here.