As we enter a new decade, Business Xpansion Journal thought this would be an ideal time to look at immediate concerns for business, and what the future might hold.

Industry and site selection experts look into their crystal balls and share what the expansion process might look like from 2010 through 2015. The participants in this outlook are involved in sectors including: manufacturing; Internet and social media; talent and workforce; commercial real estate; and finance and taxes.

The commentary discusses opportunities created by the recession, what effect social media will have on the expansion process, and just where renewable energy and sustainability fits into all of this.

To view the entire outlook, visit www.bxjmag.com and select the Article Exclusives tab.

I. Manufacturing

* Larry Davis, president, Daman Products Co. Inc., Mishawaka, Ind., larryd@daman.com

* Paul Fowler, research director, National Council for Advanced Manufacturing, Washington, D.C., fowlerp@nacfam.org

BXJ: What should be the immediate concerns for manufacturing companies as we enter the new decade?

Davis: For most of us, dealing with 30 percent to 70 percent top line losses will drive companies to look for new markets. Unlike past recessions when the market roars back after a recession, no one is predicting such a recovery. We are launching a significant new product line this month [November] specifically to proactively regain some of our lost market.

Fowler: Companies must continue to competitively provide more critical products and services — as defined by your customer, your enterprise and your community. Competition on lowest cost and minimal innovation will push companies quicker into commodity hell.

BXJ: When do you expect the recovery will take hold for your firm? What opportunities will the recovery bring?

Davis: We don't expect to “feel” like we are in recovery until mid-2010. And that is uncertain given the massive debt the United States is carrying and what impact that will have on inflation. Some economists talk of a second round of slowdowns if inflation becomes an issue.

In terms of opportunity, the companies that embrace the situation, and develop and deploy appropriate battle plans will prosper. A focus on top line growth through product development and innovation has been on my mind for a number of years as the next opportunity for our company. With orders off 45 percent it would have been nice to have a new product line in the hopper a year ago, but we didn't. The good news is that the concept had been discussed and small steps had been taken to move us in a top line growth strategy direction. The severe drop in orders was the impetus to get serious about a new direction. We started in earnest in January 2009 and will roll out a major new product line in December 2009.

We have also spent more time overseas developing relationships that in the years to come we hope will lead to both selling and buying opportunities. 

 BXJ: What do you anticipate Daman Products will look like five years from now?

Davis: Having learned to be profitable in spite of a nearly 50 percent reduction in orders, combined with a new focus developing new markets both domestically and abroad, I expect that Daman will be a much stronger and diverse company in 2015.

BXJ: Based on your experiences, what will America's manufacturing sector look like in 2015?

Davis: We could experience a resurgence of work being brought back to the United States. Competitiveness is dynamic. There are issues with shipping work overseas that transcend unit purchase price. It takes time to work through quality, communications, and logistics issues to either resolve them or realize that the cheap price comes at a cost that may not be worth the effort when it comes to customer satisfaction. I've got a hunch that the trend will shift to doing more work in the United States over the next five years.

Fowler: Manufacturing jobs will continue to decline slowly. Productivity will continue to increase. Manufacturing will continue to concentrate on high value, advanced manufacturing technology processes. The dollar will continue to decline relative to the world basket of currencies. All else equal, the United States should be able to export more, but not enough to significantly close our trade gap or national unemployment rates.

BXJ: Where does renewable energy fit into the future of your manufacturing operation?

Davis: We look at renewable energy from an economic standpoint. When it makes business sense, we move forward. If there is no apparent benefit, but increased cost, we do not engage. Cleaner energy in the short term through the development of clean coal and nuclear is where the major effort should be going, followed by hydrogen power development. We don't expect to have solar panels or a wind farm on our roof anytime soon in spite of the political correctness pressure to think otherwise.

BXJ: Where does renewable energy fit into the future of manufacturing?

Fowler: Within the next decade, renewable energy will not drive down the cost of energy for manufacturers. Increases to energy cost and risk will fuel a greater focus on industrial energy efficiency practices and technologies. This productivity drive is sometimes simplistically called “from lean to green.” 

II. Internet

* Ed Burghard, executive director, Ohio Business Development Coalition; also with the Strengthening Brand America Project, www.strengtheningbrandamerica.com, eburghard@mac.com

* Anatalio Ubalde, co-founder and CEO, GIS Planning Inc. & ZoomProspector.com, San Francisco, ubalde@gisplanning.com

BXJ: Based on your experiences, what effect will social media have in site selection during the next five years?

Burghard: Empowering citizens to be community ambassadors, and providing a capability for potential capital investors to experience a community before making a location decision. With the continued growth of services such as Twitter, Facebook, LinkedIn and others it is possible to have citizens personally tell the story of a community to their contacts.

* For the capital investor, social media channels provide an unfiltered look at what it is like to live and work in a community. The difficulty of controlling the message lends to its authenticity. I would expect more aggregating services to come online in the next few years to make it easier to identify message themes or trends from social media communication. This information will be part of the mix used by capital investors to make a good location choice. 

Ubalde: Social media is an exponential expansion of the online information available to businesses as they consider the site selection process. It brings much more of the qualitative analysis of places to live, work, and grow a company through the feedback and writing from people using social media to share their ideas and opinions.

BXJ: What role will the Internet play in the site selection process during the next five years?

Burghard: More and more data is becoming available online that allows capital investors to research a location on their own rather than go through a site selection consultant. This means economic development professionals need to learn how to speak directly to the C-suite and address their information needs. Development Counsellors International completed a market research study in 2008 and found 71 percent of the time a short list of location options was identified before an economic development professional was ever contacted.

Another interesting perspective was generated by Forbes Insight in its “Rise of the Digital C-Suite” study from 2009, where they found “the Internet is the C-Suite's top information source.” 

Ubalde: The data trend is very clear that the Internet will continue to grow in importance as a method for businesses and corporate real estate professionals to evaluate locations for business site selection. As the Internet grows in value to the general public it will also grow in importance for site selectors and the communities interested in fostering business investment.

BXJ: Provide brief examples of how innovative and visionary communities are making the most of digital tools when collaborating with companies, entrepreneurs, the higher education system, state and federal agencies, and so forth.

Ubalde: Oregon is the pioneer in using online/digital collaboration tools for site selection to work with many partners and businesses. They are able to request responses for their confidential site selection projects from all of the communities in the state through OregonProspector.com. Communities can respond with appropriate land, buildings, data and documentation which make the case for why the business could be successful in their area. The state then removes unsuitable properties, proposals and edits the optimal responses — all online. Then the proposal is submitted online to the business or site selector so they can access all of the interactive features only possible through a Web site. If the business wants a printed copy all they have to do is print it out. It's faster, more efficient, more updated, and superior to the antiquated method of mailing hard copies that then have to be sorted and are not consistent. Other forward-thinking states, such as Oklahoma, Connecticut and Indiana, are also implementing similar systems.

III. The Site Selection Process

* Dennis Donovan, principal, WDG Consulting, LLC, Bridgewater, N.J., ddonovan@wdgconsulting.com

* Ed McCallum, senior principal, McCallum Sweeney Consulting, Greenville, S.C., emccallum@mccallumsweeney.com

* John Sisson, principal, Fluor Associates, Greenville, S.C., john.sisson@fluor.com

BXJ: Based on your experiences, how will the Great Recession play out in the way companies select sites in the next five years?

Donovan: Companies will be even more concerned about operating costs, both near and long term, in selecting new locations. They will also seek flexibility to upsize or downsize their facility portfolios as market conditions warrant

McCallum: Companies typically have short memories; however, this time I think that energy costs and logistics will be more than just a recurring cost on the financial reporting documents; it will be driven by a new philosophy about the wise use of resources from both a profit/loss standpoint as well as an ethical one. Anyone that thinks oil will remain at current lows is delusional.
At least for the short term, until the credit situation shakes out, those communities that can bring capital cost avoidance to the table will win projects that under normal circumstances they would not.

Sisson: It depends on the continuation of free trade. If we continue the status quo, companies will make rational selections based on the economics of the markets. Europe will invest in the United States to reach this market at a lower price than producing in Europe, and low-cost countries will continue to attract jobs where the supply chain and transportation costs work.

BXJ: What trends will emerge as site criteria “must haves?”

Donovan: Must have site criteria will include:

* Market proximity (for many manufacturers)

* Efficient transportation

* Availability of a well qualified workforce

* Available buildings

* Fast-track construction

* Business costs, especially labor

* Redundant utility service

* Low natural disaster risk

McCallum: We have been doing certified site programs for many years and our expectation is that if a community cannot show a site that is “shovel ready,” they will not be looked at. There will be a much greater awareness of energy cost and energy production sourcing than before. If Cap and Trade becomes a reality, many areas that were once designated as “non-attainment” areas and disadvantaged because of problematic permitting issues, will now become viable locations — if the federal government tries to reconcile the program with existing EPA guidelines. Workforce development will no longer simply be technical training; instead, it will include every aspect of the education platform from K-12, to community colleges and on up to graduate school. There will be a greater emphasize on learning technical skills if for no other reason than the maintenance of the 100,000 wind generators that represents just one small portion of the workforce requirements for the energy sector.

Sisson: Must haves may depend on the legislative environment and what bills get passed regarding health care and environmental legislation. The proposed environmental legislation could significantly alter the siting landscape, based on the ability of utilities to deliver low carbon content power.

BXJ: What industries do you believe will drive the economic recovery?

Donovan: The recovery should be driven by diverse industries, with the following leading the way:

* Pharma/bio

* Health services

* Alternative energy

* Financial services

* Customer service

* Info technology

* Aerospace

* E-commerce

* Manufacturing

      - Consumer goods

      - Industrial products

* Data centers

McCallum: Energy and all the associated activities surrounding it will get parts of the economy going. Once credit eases up, the consumables, auto and housing will continue the trend.

Sisson: Green, sustainable power will drive the economic recovery: wind, solar, wave, biofuels and other power sources not yet developed. Electric cars will become the norm in cities.

IV. Talent

* Dan Swinney, executive director, Chicago Manufacturing Renaissance Council, and the Center for Labor & Community Research, Chicago, dswinney@clcr.org

BXJ: What should be the immediate concerns for manufacturing companies as we enter the new decade?

Swinney: Manufacturers are facing a critical shortage of employees with the training and expertise necessary to produce complex products. The skilled labor shortage will continue to worsen as baby boomers, who make up 40 percent of the manufacturing workforce, continue to retire. Manufacturers must help to ensure that our educational system graduates more workers with strong math, science and engineering skills. With close guidance from business leaders, educational institutions can work to better align their curricula with industry needs — a move that would greatly benefit graduates as well as manufacturers.

BXJ: Highlight innovative or unique workforce training efforts and how businesses will benefit.

Swinney: One great example is Austin Polytechnical Academy, Chicago's first and only manufacturing-focused public high school. Teaming up with partner companies in the industry, Austin Polytech provides students with pre-engineering curriculum, job shadowing, and work-based projects. Starting next year, students will take electives in APA's own world-class machine shop, and earn industry-recognized certifications from the National Institute for Metalworking Skills (NIMS). This innovative school has been recognized by President Obama as a national model for education.

V. Real Estate

* Mike Cutri, managing director, Cushman & Wakefield of California, Inc., Los Angeles, Michael.curti@cushwake.com

BXJ: Based on your experiences, how will the changes in the economy play out in the way companies select sites in the next five years?

Cutri: There will be a greater focus on reducing upfront capital expenditures in support of short term financial performance of the enterprise while selecting locations that can help boost market share. Product life-cycles are very compressed today due to continual innovations in technology and the resultant need for public company performance. Our experience with the C-suite views business performance on a very short-term basis, in most cases no more than three years to five years.

Optimizing location decisions based on cost will be more critical than ever before due to the need to sustain the competitive advantage of the business.

BXJ: What effect will teleworking and other workforce trends have on facilities and land requirements during the next five years?

Cutri: The obvious impact of teleworking will be on a reduced need for functional office space and a positive impact to a company's carbon footprint. We see this frequently with our clients' customer care operations. This approach is viable for certain industries and skill sets but for many companies the need for informal day to day interaction is a critical aspect of attaining a successful organizational culture and communications plan, most notably with highly skilled labor. We have been involved with several consolidation projects for this reason and it signals a trend away from decentralization of the workforce environment to optimize overall efficiencies.

BXJ: What will green building and sustainability practices look like in the next five years?

Cutri: There seems to be tremendous political momentum for greening to succeed under the current administration, which will ultimately lead to stronger policy imperatives in the site selection implementation process, building design through LEED certification, greater sophistication in technology for building operations in the form of infrastructure design and monitoring, site and landscape planning, permitting approvals, construction practices and delivery and use of energy. Less is clearly more going forward during the next five years. I think the key will be sustainability of the current green movement. We've seen this before in the 1970s but the movement lost momentum due to high start-up costs and marginal cost benefits during the long term.

VI. Finance And Taxes

* Brian Corde, managing partner, Atlas Insight, LLC, an independent member of the BDO Seidman Alliance, Freehold, N.J., bcorde@atlasinsight.com

* Dan Levine, principal, MetroCompare LLC, Fanwood, N.J., Levine@metrocompare.com

BXJ: When do you expect the recovery will take hold? What opportunities will the recovery bring?

Corde: I still think we are about 12 months away from a full recovery where we get back what we lost during the past 20 months. Some of the biggest opportunities will be companies that slashed employees and production and office space in an effort to control costs, and which will now be looking to re-staff. Some locations that closed will not be reopened at their former site, making this an opportunity to start fresh with a new site selection project. It could be a great way for cities vying for consideration to showcase what they can do and create a new identity for themselves.

Levine: Recovery is a bit of a misnomer in this situation. Our economy has undergone a structured but orderly decline as governments, companies and households deleveraged themselves from positions of excessive debt. I do not expect to see the same level of cyclical bounce that one expects during a typical “recovery.” Consequently, during 2010 and beyond, there will be tremendous opportunities for companies to restructure and consolidate operations in locations where they can capture some of the cost-savings opportunities that result from the surplus labor and real estate now abundant in most markets.

BXJ: Based on your experiences, what role will incentive awards play in the site selection process during the next five years?

Corde: I think incentives will be critical. Incentives are practically driving the renewable energy sector today and that trend will likely continue. Competition for job growth will be fierce as many communities that were previously considered to be at “full employment” are now looking like attractive labor markets again making the playing field wide open. Incentives will be used as a difference maker as a project moves towards an ultimate decision.

Levine: There are very few incentive packages that truly influence the site selection process. Three exceptions would be programs that accelerate groundbreaking (e.g., pre-permitted sites); financial awards large enough to alter financial modeling results; or highly targeted geographic awards that reward projects that locate in difficult to develop locations (e.g., brownfields or distressed urban communities). I would expect that states will continue to consolidate incentive resources into programs that fit their strategic vision.

BXJ: When will capital markets loosen up and what will this mean for companies in the years ahead?

Levine: The tight commercial real estate credit market is a major impediment to facility rationalization. Companies that own property simply cannot sell it in this market because of the lack of credit. Similarly, some companies that wish to divest real-estate related assets have been slowed in the process for the same reason. Commercial real estate financing is typically among the last bank credit categories to loosen after a recession and consequently it might not be until late 2010 that any real improvement is evident.

To read more thought-provoking responses shared by these experts, view www.bxjmag.com and select the Article Exclusives tab.

Article compiled by Rachel Duran.