CORPORATE SITE SELECTION

Pacific Bell Wireless, a division of SBC Communications, had two call centers, both in northern California, with a total of about 1,000 employees. In recognition of the rapid expansion of wireless communications, management was proposing to establish an additional call center for this activity, designed to provide 350 work stations operating on extended hours and requiring 800 full-time and part-time employees. DCG Corplan Consulting LLC was engaged to review potential locations and to recommend suitable candidate communities in California and in Nevada that could meet the company’s strict specifications.

The study found that at least 4,000 applicants would be required for initial selective recruitment and the labor market must also have the ability to replace turnover losses, estimated at 20% per year. While about half of California’s 58 counties could meet the labor supply requirement, only a few counties in Nevada could qualify. Moreover, the job descriptions for wireless call center personnel clearly indicated need for a reasonably well-educated work force. Among the jobless persons in the two states, an estimated 30% lacked a high school diploma.

While the proposed wage level was consistent with competition in the wireless communications industry, the study documented that the average earnings would be relatively low for California and Nevada, i.e., lower than food processing, general manufacturing, or retailing. Accordingly, the search concentrated on areas of these states that were economically depressed, defined by such measures as high unemployment, low personal income, and relative absence of job opportunities in higher paying industries.

Six candidate locations (all in California) were reviewed in detail, leading to the final recommendation of the so-called Inland Empire counties of Riverside and San Bernardino. Based upon availability of suitable space, the company selected Riverside and leased 150,000 square feet to accommodate the new call center.

Providian Bancorp Services, anticipating increased demand for financial customer services, was considering two scenarios. Strategy A envisioned a mega-center of 3,000 to 6,000 employees. Strategy B would have the same number of employees but utilize a cluster of smaller offices.DCG Corplan Consulting LLC was engaged to analyze the strategies and to recommend suitable locations. No geographic limitation was placed on the area of search.

For Strategy A, the study found selective staffing for a 6,000-employee mega-center would require a minimum population base of 2 million. This effectively limited the choice to the 24 largest U.S. metropolitan areas, and all but four of these areas would require wages higher than the company’s home base. Moreover, such a large office would be quite difficult to manage and would be a prime target for unionization.

The recommendation for Strategy A, therefore, was to limit the mega-center to 3,000 employees. This would cut the minimum population requirement to 1 million and introduce 36 more candidate locations, four of which met the wage criterion. Two excellent opportunities were pinpointed in the South Atlantic region.

For Strategy B, the study recommended a “hub” administrative facility (1,000 employees) and four “spoke” production locations (no more than 500 employees per site) on radiating vectors. A total of 12 potential clusters were found to be suitable candidates. Two excellent opportunities were identified for a “new” cluster, but two of the company’s existing offices also were found to qualify for serious consideration.

The mutual conclusion was to adopt Strategy B and a lease was signed for 84.000 square feet (later increased to 250,000 square feet) to expand Providian’s office at Arlington, Texas. Should business volume continue to grow, the plan calls for adding capacity at spoke locations in the Dallas-Ft. Worth area.

IKEA Wholesaling was seeking guidance in the feasibility of increasing the workforce at two of its major distribution centers in NJ and Maryland. The proposed expansion will involve hiring of about 100 in the initial phase but would require 300 within the next five years.

DCG Corplan was retained to conduct a labor market study to compare these locations, with specific interest in (1) availability of applicants and turnover, (2) prevailing wages, (3) commuting patterns, and (4) labor quality.

At the time, both locations had unemployment rate at about 4%, but the Maryland site was ultimately recommended for expansion over the NJ location. Deciding factors for the recommendation included:

• Potential growth in site labor market
• Attractiveness of Maryland prevailing wage rates
• Commuting times
• Educational attainment
• Lower turnover rates
• Local success in supplying experienced workers
• Wider diversification of warehouse facilities

IKEA management was apprised of housing costs differentials between the two areas to help make the determination. Currently, both facilities are operating at record capacity.

In recognition of cost pressures in the property/casualty insurance business, the company set forth strict constraints for relocation of its claims processing facility. Requirements included: (1) proximity to policyholders in the Middle Atlantic and New England states, (2) a labor market that would permit selective hiring and retention of 400-500 employees, (3) a prevailing local wage level no higher than casualty insurance industry mean, and (4) available office space at reasonable rent and a term of five years (consistent with company policy on new lease commitments).

DCG Corplan Consulting was engaged and the study identified 20 suitable locations in the two designated regions. Upon careful review, Glens Falls, NY (54 miles north of Albany) was found to best meet the company’s labor requirements. As the recommended strategy, the new facility would be intercepting the sizable flow of workers living in northern counties and commuting through Glens Falls to reach places of employment in the Capital District. These potential applicants would readily accept the target wage level to reduce their time and cost of driving to and from Albany.

No suitable office space existed in the community. But, the consultants found a defunct shopping center where the owner was willing to convert 47,000 square feet of retail space to a pleasant working environment. His rent quotation was remarkably low, he was willing to accept a five-year lease term with option for renewal, and the shopping center’s existing fully paved and lighted parking lot was a free bonus.

The company accepted the conversion offer, later expanding the space by 25,000 square feet to accommodate a total of 400 employees. By relocating the operations about 150 miles from their previous site, the company achieved continuing advantages of 10% in payroll costs and almost 50% in rent.