Supply Chain Strategy Shift is Bright Spot for North America

Site Selectors Guild Increased activity in warehousing/distribution and production is predicted for a post COVID-19 world.

SAN FRANCISCO—An uptick in on-shoring especially in the pharmaceutical and life science industries, increased activity in warehousing/distribution and production post COVID-19, and a dwindling demand for office real estate as remote work continues were among findings of a survey on the impact of COVID-19 released by the Site Selectors Guild. Conducted in partnership with Development Counsellors International, the online survey of Guild members aims to inform both corporate decision makers and economic development organizations on how site selection trends are shifting.

“Our hope is that this new research will help corporate clients and economic development organizations understand and plan in this economic calamity,” said Jay Garner, Site Selectors Guild board chair and president of Garner Economics LLC.

Top findings of the research:

The shift in global manufacturing and supply chain strategy is a bright spot for North America. Guild members predict COVID-19 will accelerate the regionalization of supply chains, with 81% of respondents saying COVID-19 will have a major impact on global supply chain strategies.

Members pointed out that the previous focus on the lowest cost scenario, which led to growth in China and Southeast Asia, will now become more balanced as companies look to reduce risk. This could benefit North American locations as more companies look to locate production facilities close to the customers they serve and increase redundancy. Many Guild members predict an uptick in on-shoring to the United States, Canada and Mexico–especially in the pharma and life sciences industries.

Warehousing and production will be the most active functions post COVID-19. Decisions on the relocation or expansion of other functions such as R&D and national/regional headquarters are less likely to have as much activity.

“Warehousing/distribution centers will indeed grow significantly,” Garner tells “As the supply chain positions more towards a North American regionalization from other parts of the world, i.e. China, so will the demand for large distribution space. But there will also be an increase in production activity in the pharma, medical supplies and medical equipment sectors, prompting an increased demand in industrial space. Ports and inland hubs may see benefits, perhaps in the very short term, but when you see more concerted activity to protect the supply chain in the US and North America as a whole, those USMCA countries, then port or inland hubs may not see any unusual growth that is not already occurring since imports might slow, especially if policy makers act on their threats to incentivize on-shoring.”

The work from home experiment will change the footprint of office real estate. Nearly three-fourths (72%) of respondents believe the current rise in remote workers will have a major impact on how work is done in the future for both the employer and employee. From the employer perspective, Guild members predict a decrease in demand for office space and adoption of new technologies that allow remote employees to work more effectively.

From a talent perspective, Guild members believe impacts could range from employees expecting and wanting more work-at-home opportunities and changes in the way teams work and interact.

A majority of site selection projects are paused and nearly half of projects are moving forward. When asked to reflect on their interactions with client companies since mid-March, 52% of Guild members responding to the survey said that companies are pausing site selection projects, 45% said companies are moving forward with site selection projects and the remaining 3% indicated it was a combination but highly dependent on the industry and function. None of the Guild members surveyed said that clients were canceling projects outright at this time.

Life sciences, logistics and advanced manufacturing emerge as hot industries in a post-COVID world. When asked to select the industry sectors that will have the most location decision activity post COVID-19, 68% predicted that the biotech/life science sector will be the most active industry sector. Approximately 48% anticipate an increase in location decisions in the transportation and logistics sector followed by the advanced manufacturing sector (39%). Rounding out the top five sectors most likely for increased location activity are the software/information technology sector (19%) and the food and beverage sector (16%).

Economic development organizations should focus on both business and workforce retention. While Guild members are confident about an uptick in location decisions in the next 12 months, they also agree economic development organizations should focus on business and talent retention. It was nearly unanimous that economic development organizations need to focus on existing business retention and helping employers to weather this storm. Similarly, workforce retention was also seen as a priority–including helping displaced workers find employment–closely followed by talent/workforce attraction initiatives.

It is critical for economic developers and site selectors to maintain relationships. Guild members surveyed stressed that as economic developers and site selectors try to grasp what the future will hold, it is critical to maintain relationships and not social distance in the literal sense. Guild members reinforce that they are still busy, projects are moving forward and communication from economic development organizations is still helpful.

“While none of us have a crystal ball, our 50 members represent the nexus between communities and corporations,” said Rick Weddle, president and CEO of the Site Selectors Guild. “This survey gives us a sense for what site selectors are seeing from their corporate clients, and a glimpse into what we might expect coming out of this crisis.”

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