Economic Development Is a Risk Management Profession
Economic development is often described in the language of growth: job creation, capital investment, new projects, ribbon cuttings. Success is measured in announcements and press releases. Failure, when it happens, is treated as an exception—bad luck, bad actors, or bad execution.
That framing can be misleading.
At its core, economic development is a risk management profession—one practiced in an environment where uncertainty is high, information is incomplete, incentives can be misaligned, and the consequences of failure are personal as well as institutional.
Understanding this distinction matters, because many of the persistent problems in economic development do not stem from poor intentions or weak effort. They stem from unmanaged risk.
The Risk Economic Developers Actually Carry
Economic developers rarely control the outcomes they are judged on.
We do not control global markets, interest rates, technological change, corporate strategy, or supply chains. We also cannot control property owners and their willingness (or lack thereof ) to sell. We cannot control the behaviors of consumers. We often do not control final deal approval, incentive authorization, or long-term compliance enforcement. Yet when a project underperforms—or when an incentive becomes politically controversial—the risk crystallizes around a small number of individuals.
This creates a fundamental asymmetry:
Upside is shared across elected officials, boards, and institutions
Downside is concentrated on staff and leadership
From an economic perspective, this is a classic risk allocation problem. From a professional perspective, it is career-defining.
Why “Safe” Decisions Often Aren’t
In most public settings, economic developers are implicitly rewarded for avoiding visible failure and making short-term wins rather than maximizing long-term value. Think a ‘hunter’ versus a ‘farmer’. This pushes decision-making toward what appears safe in the moment:
Smaller, familiar projects
Conservative incentive structures
Overreliance on precedent and peer behavior
Avoidance of decisions that require nuanced explanation
These choices feel prudent. Politically, they often are. Economically, they can be costly.
The risk that is rarely acknowledged is opportunity cost—the cost of not acting, not adapting, or not reallocating resources in response to changing conditions. Declining competitiveness, eroding tax bases, and missed strategic shifts rarely produce a single headline. They accumulate quietly, over time.
Reframing the Role
If economic development is viewed primarily as growth promotion, then success and failure appear binary: the project landed or it didn’t; the jobs materialized or they didn’t.
If economic development is viewed as risk management, the evaluation changes:
Was risk appropriately identified?
Was downside exposure limited?
Were tradeoffs made explicit?
Was the decision defensible given constraints and information available at the time?
This reframing does not make decisions easier. But it makes them more honest—and ultimately more resilient.
Why This Matters
Many economic developers are not struggling because they lack passion, intelligence, or commitment. They are struggling because the system asks them to manage complex economic risk without naming it as such—and then penalizes them for outcomes they cannot fully control.
Until economic development is treated as the risk management function it truly is, communities will continue to see cautious decisions labeled as weak leadership, and bold but defensible decisions labeled as failures.
This series will explore the risks economic developers face—political, fiscal, institutional, and personal—and why better economics, not more optimism, is the path to better outcomes.
Performance-Based Incentives: Who Really Bears the Risk?
Performance-based incentives are often framed as “low-risk” for the public sector and “high-risk” for companies. That framing is incomplete—and not particularly useful for executives making capital allocation decisions.
The better question is not whether risk exists, but how risk is structured, sequenced, and managed.
What “Performance-Based” Actually Means
In a performance-based incentive, the company moves first.
Before any incentive is paid, the company must:
Invest capital
Build or expand a facility
Hire employees
Generate payroll, sales, or property tax base
In many structures—especially reimbursements or tax rebates—the company has already:
Spent the capital
Paid the taxes
Met the performance thresholds
Only then does the public entity rebate back a portion of the value created.
This is not speculative funding. It is a return of value already generated.
The Company’s Risk: Front-Loaded by Design
From a CFO’s perspective, performance-based incentives do carry risk—but it is front-loaded, not open-ended.
The company bears:
Construction and execution risk
Market and demand risk
Workforce and operating risk
Timing and cash flow risk
If the project underperforms, the incentive is reduced or eliminated. There is no guarantee of payment, and incentives generally cannot be recognized until earned.
But this is not incremental risk layered on top of the project. These are the same risks the company assumes in any major investment. The incentive does not create them—it simply refuses to underwrite them.
The Public Sector’s Risk: Limited and Back-End Loaded
For the incentive-granting entity, risk exposure is intentionally constrained.
Public payouts are typically:
Tied to verified outcomes
Funded from new revenue streams
Structured to avoid upfront cash outlays
If performance does not occur, funds are not paid. Compared to grants or speculative infrastructure spending, performance-based incentives significantly limit fiscal downside.
The public sector does retain political and administrative risk—but financially, exposure is modest and contingent.
Why Reimbursements Matter to Executives
Reimbursement-based incentives are often dismissed as “just rebates.” In reality, they are cash flow instruments.
Because the company pays first and recovers value later, reimbursements can:
Improve early-stage project liquidity
Reduce reliance on external financing
Lower effective project costs
Improve internal rates of return over time
For capital-intensive projects, timing matters. A dollar returned in year two or three can materially affect project viability—even if it is not booked on day one.
So Who Bears the Risk?
The short answer: both parties do—but not equally, and not at the same time.
The company bears execution and market risk
The public sector limits exposure through verification and timing
The incentive shifts when value is returned, not whether it must be created
Performance-based incentives are not about risk avoidance.
They are about risk sequencing and accountability.
The Question Executives Should Be Asking
Instead of asking, “Is this incentive risky?” CEOs and CFOs should ask:
How does this structure affect project cash flow?
What assumptions are embedded in the performance metrics?
When does capital come back relative to deployment?
How does this change downside exposure if performance lags?
When evaluated properly, performance-based incentives are not giveaways. They are disciplined financial tools that reward execution—nothing more, nothing less.
Site Selection Is a Capital Allocation Exercise (Not a Real Estate One)
Executives don’t lose sleep over square footage. They lose sleep over capital misallocation. Many companies still treat site selection as a real estate decision—focused on land price, lease rates, tax differentials, and short-term operating costs. That framing is not just incomplete; it’s dangerous.
At its core, site selection is a capital allocation decision—one that locks in risk exposure, constrains growth options, and shapes enterprise performance for decades.
When leaders misclassify it as a facilities or real estate issue, they systematically underestimate its strategic importance and overestimate the value of near-term savings.
Capital Allocation Is About Optionality, Not Optimization
Capital allocation decisions are not judged solely by lowest cost. They are judged by:
Risk-adjusted returns
Downside protection
Strategic flexibility
Opportunity cost
Path dependency
A new facility—whether manufacturing, distribution, R&D, or back-office—meets every criterion of a long-term capital commitment:
High upfront capital outlay
Long asset life
Limited reversibility
Embedded operational risk
Material impact on future growth
Yet many site selection processes optimize for static cost minimization, not dynamic value creation.
That’s a mismatch.
The Real Risk Isn’t Picking the “Wrong” Site, It’s Locking In the Wrong Constraints
Most site selection models implicitly assume that the future will look like the present—just scaled up.
That assumption fails more often than it succeeds.
The real risk is not that a site is marginally more expensive or carries more risk. It’s that the location constrains your ability to adapt when conditions change:
Labor markets tighten
Skills requirements evolve
Supply chains reconfigure
Energy costs shift
Regulatory environments change
Management attention gets stretched
Once capital is deployed, these risks become structural. They are no longer scenarios—you live with them.
From a capital allocation standpoint, the key question is not:
“Which site is cheapest?”
It is:
“Which site preserves the most strategic flexibility under uncertainty?”
Why Real Estate Thinking Fails Executives
Real estate thinking emphasizes:
Price per square foot
Lease vs. own
Incentives as offsets
Short payback periods
Capital allocation thinking emphasizes:
Enterprise risk exposure
Durability of returns
Scalability of operations
Talent reliability over time
Optionality for future investments
When site selection is framed as real estate, executives are shown tidy spreadsheets with false precision. When framed as capital allocation, the conversation shifts to risk, resilience, and growth trajectories.
That shift is uncomfortable—but necessary.
Site Selection as an Embedded Growth Strategy
Every location decision silently answers strategic questions the executive team may never explicitly discuss:
Where will future capacity come from?
How easy will it be to add shifts, lines, or headcount?
How resilient is this operation to labor disruption?
How much management bandwidth will this site consume?
Does this location expand or limit future options?
These are growth questions—not facilities questions.
From a PE perspective, site selection affects:
EBITDA stability
Capex predictability
Integration risk in add-ons
Exit multiple narratives
From an owner or CEO perspective, it affects:
Execution risk
Organizational strain
Long-term competitiveness
Ignoring these factors because they are harder to model is not prudence. It is avoidance.
Incentives Don’t Change the Nature of the Decision
Economic incentives often dominate site selection discussions because they are visible, quantifiable, and politically salient.
But incentives do not change the fundamental economics of the location. They alter timing and cash flow—not operational reality.
From a capital allocation lens:
Incentives reduce initial outlay or contribute to an initial capital stack
They rarely mitigate execution risk
They do not solve workforce fragility
They do not increase managerial capacity
Treating incentives as value creation rather than risk modifiers leads to distorted decisions.
Smart capital allocators ask:
What risk does this incentive actually offset?
What risk does it leave untouched?
What assumptions must hold for it to materialize?
Those are capital questions—not deal questions.
The Hidden Cost: Management Attention
One of the most underappreciated costs in site selection is management attention.
Some locations demand more oversight, intervention, and problem-solving than others. That “cost” never shows up in pro formas—but it shows up in missed opportunities elsewhere.
From a capital allocation standpoint, a location that absorbs disproportionate executive time is not cheaper—it is more expensive.
High-performing organizations allocate not just capital, but focus.
A Better Framing for Decision-Makers
If site selection were treated like other major capital investments, leaders would ask different questions:
What risks are we underwriting with this location?
How reversible is this decision?
What future paths does this enable—or foreclose?
How sensitive is performance to workforce volatility?
How does this location affect enterprise resilience?
These questions don’t eliminate uncertainty—but they surface it.
And surfacing uncertainty is the first step to managing it.
Final Thought
Real estate decisions optimize assets. Capital allocation decisions shape enterprises.
Companies that conflate the two may still find a site—but they often miss the strategy embedded in the decision.
The most effective executives and investors don’t ask, “Where should we build?”
They ask, “What kind of company are we becoming—and does this location support that future?”
That distinction makes all the difference.
2025: A Year of Economic Crossroads - Growth, Policy Shifts, and Structural Strains
As 2025 comes to a close, it’s clear this year will be remembered less for runaway expansion and more for strategic recalibration across global and domestic economies. From trade policy and labor markets to growth slowdowns and investment shifts, the economic narrative of 2025 was shaped by a blend of policy-driven disruption and technological resilience.
Here’s a look at some of the most consequential economic trends and events that defined 2025:
1. Global Growth Slows Amid Policy Uncertainty
After a post-pandemic rebound, the global economy entered 2025 under markedly weaker momentum. Multiple multilateral institutions and forecasts noted that growth would be subdued relative to recent years, held back by heightened trade tensions, weak investment, and elevated debt levels. Some projections put global expansion near the lowest pace in decades outside recessionary episodes, with persistent uncertainty dampening business confidence. World Bank+1
For national and regional economies, this translated into slower output growth and tighter margins on export-dependent sectors.
2. Trade Policy Returned to the Forefront
Perhaps no theme dominated 2025 quite like shifts in trade policy — particularly in the United States.
The Trump administration’s introduction of broad reciprocal tariffs and elevated average tariff rates represented one of the most significant U.S. protectionist trade actions in decades. Designed to reduce trade deficits and boost domestic production, these measures spilled over into markets worldwide, rattling supply chains and contributing to policy uncertainty. Wikipedia+1
Simultaneously, negotiators worked to stabilize relations with major partners. A framework agreement with the European Union that included tariffs and commitments on energy purchases helped avert a full-blown transatlantic trade war — though debates about long-term balance and competitiveness remain unresolved.
What this meant in practice was a heightened cost of cross-border trade, renewed global negotiation cycles, and a realignment of supply chain strategies among multinational firms.
3. U.S. Labor Market and Economic Data Wavered
The performance of the U.S. labor market — long a bellwether for broader economic strength — softened in 2025. Hiring slowed sharply compared to 2024, wage growth moderated, and unemployment climbed from historically tight levels. Labor market participation and dynamics were also shaped by policy shifts in immigration enforcement, which influenced labor supply in key industries. wsj.com+1
Meanwhile, a prolonged federal government shutdown disrupted key economic data releases and introduced volatility into markets and planning cycles. The shutdown’s fiscal cost was estimated in the tens of billions and underscored how political stalemates can ripple through real economic activity. Wikipedia
4. AI and Technology Investment Fueled a Partial Growth Cushion
Amid slower overall growth, investment in artificial intelligence and related technologies emerged as one of the year’s bright spots. Capital outlays by hyperscalers and significant hardware and software investment helped bolster segments of economic output and corporate earnings. According to some analyses, AI-related investment contributed directly to GDP growth and supported consumption through wealth effects. PIMCO
For sectors like manufacturing and logistics, this acceleration of digital transformation and automation is not just a short-term trend — it’s reshaping cost structures, workforce composition, and competitive positioning across industries.
5. Financial Markets — Volatile but Enduring
Stock markets in 2025 reflected the broader tension between growth optimism and policy uncertainty. Markets showed resilience for parts of the year, buoyed by technology stocks and earnings surprises — yet they also flashed volatility around tariff rollouts and macroeconomic data shocks.
Emerging market indices, particularly in India, experienced marked downturns during equity sell-offs, revealing investor sensitivity to global risk sentiment and cross-border capital flows. Wikipedia
6. Shifts in Global Investment Flows and Trade Patterns
Despite slowing global expansion, foreign direct investment trends diverged across regions. Some developing economies continued attracting significant capital inflows, while others saw declines, particularly in project finance and trade-linked sectors. Global merchandise trade reached record nominal levels in 2024, but momentum faded in 2025 amid policy uncertainty and shifting trade frameworks. UN Trade and Development (UNCTAD)
These divergences highlight a fracture line in how economies can remain competitive: regions that adapt policy frameworks to attract sustained investment fared better relative to those mired in volatility.
Looking Ahead: Themes for 2026
As we turn the calendar, several themes stand out for business and economic strategists:
Trade and tariff uncertainty will continue shaping supply chains and investment choices.
Technology adoption — particularly AI — will increasingly differentiate winners from laggards.
Labor market frictions and demographic pressures will become central to productivity discussions.
Policy coherence — especially around fiscal and regulatory regimes — will be a critical competitive factor.
For firms evaluating location decisions, incentives strategy, and risk management, 2025 reinforced a simple truth: macroeconomic shifts matter at the operational level. Being proactive about policy, cost structures, and market signals isn’t optional — it’s foundational to resilient growth.
Small Communities vs. Big Budgets: Competing Asymmetrically for Economic Growth
Economic development is not a level playing field. Larger metro areas often have the upper hand: bigger budgets for marketing, real estate development, incentive packages, and talent attraction. They can afford slick national ad campaigns, splashy trade show booths, high-priced lead generation consultants, and speculative industrial parks waiting for the next deal.
So where does that leave small and mid-sized communities? Outmatched? Not necessarily.
Smaller communities must work smarter, not harder. The truth is, big budgets don’t automatically win every project. Many growing companies—especially in today’s economy—are open to new places, lower costs, and community connections that large metros can’t always provide. To compete asymmetrically, small communities must focus on smart tactics that maximize impact while minimizing spend.
How Small Communities Can Compete Asymmetrically
1. Mastering Social Media on a Shoestring
Social media levels the playing field in marketing. A small community’s authentic voice can cut through the noise far better than generic corporate messaging. Effective social media campaigns don’t require big dollars—but they do demand consistency, creativity, and effort.
Showcase local success stories and unique community assets
Create video testimonials from business owners who’ve thrived locally
Use targeted LinkedIn ads to reach site selectors, executives, and brokers
Engage with industry conversations rather than just broadcasting messages
2. Building Social Capital
One of a small community’s most powerful assets is its people. Relationships and networks often influence site location decisions as much as incentives or real estate.
Local Connections: Encourage local business leaders to act as ambassadors for your community. Their word carries more weight than any marketing brochure.
Personalized Follow-Up: After initial contacts, follow up with thoughtful gestures—a quick call, customized data, or an invitation to visit. Personal touches build trust.
Regional Partnerships: Don’t try to go it alone. Regional alliances can amplify a small community’s message and share costs for marketing or talent initiatives.
3. Hyper-Targeted Prospecting
Instead of casting a wide net, small communities should be laser-focused:
Research companies whose growth needs align with your assets (e.g., logistics corridors, workforce skills, lower operating costs)
Identify executives on LinkedIn and engage them directly
Track industry news to spot businesses considering expansion or relocation
Attend smaller, niche trade shows where competition from large metros is lower
4. Creative Real Estate Solutions
Large communities might have speculative buildings sitting ready. Smaller communities can’t always afford that risk—but creative solutions exist:
Partner with local developers for build-to-suit options
Identify and pre-permit key sites to save prospects time and uncertainty
Consider innovative financing tools (TIF, New Markets Tax Credits, etc.) to make deals work
Keep high-quality aerials, 3D renderings, and virtual site tours ready for prospects
5. Focus on Quality of Life
While big metros tout their “big city amenities,” smaller communities can highlight affordability, safety, less congestion, and a genuine sense of belonging. Many executives and workers today are prioritizing quality of life over urban hustle.
Emphasize your community’s hidden gems—parks, festivals, unique local businesses
Share stories of people who’ve moved from big cities and found a better lifestyle
Make sure your online presence reflects a modern, appealing place to live and work
Additional Tactics for Smaller Communities
Beyond the ideas above, here are other ways smaller communities can compete effectively:
Data Storytelling: Use crisp, visual data to make your case quickly. Don’t bury prospects in 50-page reports—deliver insights tailored to their specific business drivers.
Talent Pipeline Development: Partner with local schools, colleges, and training providers to demonstrate a workforce pipeline for target industries.
Responsive Service: Large metros can be bureaucratic. Smaller communities can win deals simply by being quicker, more flexible, and easier to work with.
Earned Media: A story in a national industry publication costs nothing but can yield tremendous exposure. Pitch success stories to trade media or business outlets.
Virtual Site Visits: Embrace technology to show off sites and buildings virtually, saving travel costs and accelerating early prospect engagement.
Bottom line: competing with major metros doesn’t mean matching their spending. It means being strategic, nimble, and authentic. Smaller communities have unique strengths that big cities can’t replicate—and when those strengths are marketed smartly, they can punch far above their weight.
If your community wants to explore how to deploy asymmetric strategies, let’s talk. At Impact Economics, we specialize in helping places of all sizes unlock their hidden advantages.
Ready to brainstorm how your community can stand out against big-city competition? Contact us today.
Is Expensive Land Ever Worth It? When High Land Prices Make (or Break) Your Business Case
When manufacturers consider expanding or relocating, one line in the cost model always draws scrutiny: land cost.
It’s easy to assume high land prices are a dealbreaker. Why pay $200,000 per acre when land is $50,000 elsewhere? For many small and medium-sized manufacturers watching margins closely, that logic feels ironclad.
Yet the reality is more nuanced. In some cases, higher land prices actually signal greater long-term value. Other times, they’re an unnecessary burden that could jeopardize your business.
So how do you know when expensive land is worth it—and when it’s time to pack up and move?
Why Land Costs Vary So Widely
Land costs don’t exist in a vacuum. High prices typically reflect:
✅ Proximity to customers or suppliers. Land near major urban centers or industrial clusters commands a premium.
✅ Superior infrastructure. Sites with robust utilities, highway access, rail connections, and broadband fetch higher prices.
✅ Labor market strength. Strong talent pools often drive up both wages and land prices.
✅ Zoning and entitlements. Shovel-ready sites with favorable zoning can save time and money—leading to higher land values.
✅ Economic momentum. Growing regions naturally experience land price appreciation.
When Higher Land Costs Can Be Justified
Sometimes, paying more upfront can save far more over the life of your facility. Consider these scenarios:
1. Proximity Lowers Operating Costs
Locating closer to key customers, suppliers, or distribution hubs can:
Reduce transportation costs. Shorter hauls mean lower fuel, labor, and fleet maintenance costs.
Speed up delivery times. Critical for just-in-time manufacturers or those in competitive markets.
Enhance customer relationships. Physical proximity can be a competitive advantage.
If transportation makes up a significant part of your cost structure, expensive land in a prime location may pay for itself quickly.
2. Access to Specialized Workforce
In sectors requiring skilled labor—like precision machining, electronics, or food processing—being near an established talent pool is critical. Higher land costs in labor-rich regions may be worth it if:
You’d otherwise face chronic hiring challenges.
Labor shortages could halt production.
Training costs would be significantly higher in a lower-cost area.
3. Infrastructure That Reduces Risk
Sites with reliable power, robust water capacity, or rail connections may be more expensive—but they:
Minimize production downtime.
Lower future capital investments in utility upgrades.
Enhance your facility’s long-term value.
4. Speed-to-Market
Shovel-ready sites with environmental clearances, zoning approvals, and utility connections save months—or even years—of permitting. In fast-moving industries, that time-to-market advantage can outweigh a higher land price.
When High Land Prices Are a Red Flag
On the flip side, higher land costs are a warning sign when:
⚠️ Margins are razor-thin. Industries with low profit margins may not recoup the upfront cost.
⚠️ Your business doesn’t depend on location. For non-time-sensitive or commodity producers, cheaper land farther out may suffice.
⚠️ Future growth is constrained. Buying into an expensive, space-limited area might prevent you from expanding cost-effectively later.
⚠️ Speculative pricing. Some regions inflate land values based on speculative development that never materializes.
When Does It Make Sense to Relocate?
Relocation is a huge decision, but may be worth considering if:
Land prices have escalated beyond what your margins can support.
Your workforce has shifted (e.g., employees commuting from farther away).
Logistics patterns have changed, making your current location suboptimal.
Infrastructure is outdated and costly to upgrade.
New incentives elsewhere create a compelling business case.
However, remember that relocation costs extend far beyond real estate:
Disruption to operations.
Employee retention risks.
Cost of moving equipment and inventories.
Customer relationship impacts.
Relocation should only be pursued if the long-term savings or strategic advantages significantly outweigh those risks.
A Practical Approach
At Impact Economics, we advise clients:
Don’t fixate on land price alone—analyze total cost of occupancy and long-term operational efficiency.
Model different locations’ transportation, labor, utility, tax, and regulatory costs.
Consider how land cost ties into your growth strategy and customer service requirements.
Evaluate the value of proximity to clusters, infrastructure, and workforce pipelines.
High land prices can sometimes be a worthwhile investment—or a costly mistake. The key is to understand the trade-offs and run the numbers with eyes wide open.
Thinking about expanding—or questioning whether your current location still fits your business? Let’s talk about how to balance land costs with long-term competitiveness.
Talent is the Tipping Point: How Local Labor Market Data Shapes Site Selection Decisions
When companies look to expand or relocate, the first questions are often about real estate, logistics, or incentives. But the smartest site selectors know that one factor trumps them all: talent.
Your building can be retrofitted. Roads can be upgraded. Incentives will come and go. But if the right workforce doesn’t exist—or can’t be developed in time—your project will struggle before it starts.
That’s why local labor market data is a critical foundation of any successful site selection process. The question isn’t just where can we build? It’s where can we grow?
Labor Market Intelligence: Beyond Headcounts and Wage Rates
It’s tempting to scan a state labor report, see a few thousand workers listed in a target occupation, and call it good. But effective site selection requires a deeper level of labor market intelligence—data that tells you not just how many workers are there, but:
How experienced they are
What industries and employers they’re coming from
What wages they command—and what benefits they expect
How fast the local talent pipeline is growing (or shrinking)
What community colleges, training centers, or universities support them
A surface-level headcount doesn’t tell you whether the labor pool is accessible, affordable, or sustainable.
Real-World Example: Advanced Manufacturing Expansion
Imagine a midsize manufacturer looking to expand its operations in the Midwest. A shortlist of three communities all look similar on the surface—comparable wages, available buildings, and highway access.
But a deeper dive into labor data reveals key differences:
Community A has high manufacturing employment but a low replacement rate—meaning many skilled workers are near retirement, and younger workers aren’t being trained at scale.
Community B has a robust CTE pipeline and a new mechatronics training program aligned with the company’s automation needs.
Community C has a higher average wage but also lower turnover and stronger union partnerships that could streamline onboarding and retention.
In this case, the most resilient and growth-ready community isn’t necessarily the cheapest—it’s the one with the most aligned and replenishable talent base.
What Labor Market Data Should You Analyze?
At Impact Economics, we help clients go beyond boilerplate workforce stats to examine the indicators that really matter. Here are some of the most powerful labor data points we use to shape site selection decisions:
✅ Occupational Supply & Demand
Total employment in target occupations
Projected five- and ten-year growth
Job posting intensity and employer demand
✅ Skills & Education Alignment
Completion data from local colleges and training centers
Credentials earned (degrees, certificates, industry-recognized certs)
Alignment with your technical needs (e.g., PLC programming, welding certs, OSHA)
✅ Workforce Dynamics
Median wages and wage trends
Age distribution and retirement risk
Turnover rates, commute patterns, and workforce participation rates
✅ Ecosystem Assets
Availability of apprenticeships and internships
Partnerships with local workforce boards or EDOs
Employer engagement with local education providers
Labor Market Data as Risk Mitigation
Site selection is about opportunity—but it’s also about risk. Labor market gaps can derail an otherwise promising expansion. For example:
Underestimating wage inflation in tight markets
Overestimating the availability of skilled trades
Ignoring the pace of demographic decline in rural areas
Missing key retraining opportunities for transitioning workers
By integrating labor data early in the decision-making process, companies can de-risk site selection and build a more adaptive workforce strategy from day one.
What About Rural or Micropolitan Markets?
Many smaller communities worry they’ll be overlooked because they can’t match metro-level numbers. But here’s the secret: quality beats quantity—especially if a community can demonstrate:
A strong culture of workforce alignment
Custom training solutions and industry-responsive curricula
Employer retention and loyalty driven by place-based values
Rural labor markets can be attractive if they offer flexibility, cost efficiency, and collaborative ecosystems—and we can help tell that story with data to back it up.
Talent Should Lead Your Site Strategy
At Impact Economics, we believe site selection is about finding the best fit—not just the best deal. That means starting with a people-first approach:
Where will you find the workforce that powers your next decade of growth?
We use detailed labor market intelligence, sector-specific insights, and on-the-ground relationships to help our clients build talent-informed site strategies—and avoid costly missteps.
If you’re considering a new location, let’s talk. The right site isn’t just shovel-ready. It’s talent-ready.
Incentives vs. Infrastructure: What’s Worth More in the Long Run?
When small and medium-sized manufacturers look to expand, relocate, or build new facilities, two questions inevitably rise to the top:
What incentives can I get?
Does the region have the infrastructure I need?
For the purposes of this conversation, let’s include workforce as part of infrastructure.
Communities and states court manufacturers with millions in incentives—tax credits, cash grants, training subsidies, and more. It’s tempting to chase these short-term savings. Yet experienced manufacturers know that the true cost of doing business—and their long-term profitability—depends just as heavily on roads, utilities, logistics, workforce pipelines, and digital connectivity.
So, which delivers a better Return on Investment (ROI) for manufacturers in the long run: incentives or infrastructure? Let’s explore.
The Lure of Incentives
Incentives can be powerful:
✅ Lower up-front costs. Grants and tax abatements can significantly reduce initial capital outlays.
✅ Improve cash flow. Tax credits, refunds, and utility rebates help free up capital for other investments.
✅ Offset risk. For new market entrants, incentives help ease financial uncertainty.
But incentives also come with potential downsides:
⚠️ Complex compliance. Many incentives have strings attached: job creation targets, wage requirements, investment minimums. Falling short can trigger clawbacks. There are also the additional compliance reporting costs that governments will require. This typically includes additional accountant or attorneys fees; it also means staff time collecting data or completing forms.
⚠️ One-time boost. Incentives help you open your doors—but may not impact your daily operating costs for decades to come. Often, the incentives are not recurring unless there is an additional project or major capital investment.
The Power of Infrastructure
Infrastructure can be less flashy but often more fundamental:
✅ Reliable logistics. Quality highways, intermodal hubs, and rail access reduce shipping costs and improve supply chain resilience.
✅ Skilled workforce pipeline. Proximity to strong technical schools or community colleges means access to talent—and lower training costs.
✅ Utilities and energy. Reliable power, gas, water, and broadband keep operations running efficiently.
✅ Business ecosystem. Nearby suppliers, maintenance firms, and engineering services create synergies and reduce lead times.
Unlike incentives, infrastructure:
🌱 Provides recurring value. Good infrastructure lowers costs year after year, not just in your first few years of operation.
🔒 Is harder to replicate. Competitors can chase the same incentives—but infrastructure advantages often can’t be copied quickly.
ROI: Short-Term vs. Long-Term
So which is “worth more”? It depends on your business horizon.
Short-term ROI: Incentives often deliver immediate benefits and help fund your initial investment. For cash-sensitive projects, this can tip the scales on a go/no-go decision.
Long-term ROI: Infrastructure has the greater impact on operational costs and competitive advantage over 10, 20, or 30 years. For manufacturers planning to stay put for decades, infrastructure may save more than any up-front incentive package.
Here’s a rule of thumb:
If your profit margins hinge on logistics, workforce availability, and utilities, infrastructure may outweigh any incentive check.
Other Factors for Manufacturers to Weigh
If you’re a small or medium-sized manufacturer considering expansion or relocation, also think about:
🔍 Total Cost of Occupancy. Beyond incentives, consider land costs, construction costs, utilities, property taxes, and insurance premiums.
👥 Labor Market Dynamics. Workforce availability, quality, and cost are critical. An attractive incentive deal can’t compensate for an empty labor pool.
📈 Resilience and Risk. Infrastructure affects your ability to withstand supply chain disruptions, natural disasters, or market shifts.
💼 Business Ecosystem. Is there a cluster of similar manufacturers, suppliers, and service providers nearby?
So… Which Should You Chase?
At Impact Economics, we advise manufacturers to treat incentives as the cherry on top—not the cake.
Start with infrastructure. Pick locations with the logistics, workforce, utilities, and connectivity that support your operational needs and growth plans.
Then negotiate incentives. Once you’ve identified strong locations, leverage incentives to improve your business case and reduce risk.
Incentives can deliver an immediate boost, but infrastructure shapes your cost structure, workforce stability, and competitive edge for decades. For manufacturers planning to stay and grow, that’s usually where the biggest ROI lies.
Considering a new location or expansion? Impact Economics can help you weigh incentives vs. infrastructure, analyze total costs, and negotiate the best deal for long-term profitability.
Let’s talk about your next move.
Economic Development Isn’t Just Marketing - It’s Strategy
Too often, communities treat economic development like a branding exercise—design a logo, print some brochures, maybe attend a trade show or two, and hope the right company notices. But while marketing is part of the equation, real economic development goes much deeper. It’s not about selling a story—it’s about shaping your future.
At Impact Economics, I work with communities to approach economic development as a strategic, data-driven discipline, not just a promotional effort. And that starts with a hard, honest look at where you are today.
Start With the Fundamentals: Your Fiscal Foundation
Before trying to attract a single new business, every community needs to understand its current fiscal position. That means asking:
What does our tax base look like?
Is it concentrated or diversified? Are we overly reliant on a handful of large employers or a specific sector? What is the ratio of residential to non-residential value on the tax base? What is the relationship of our property tax to sales tax?What is our effective tax rate—on property, income, and sales—and how does that compare to peer communities?
What is the state of your employment base?
Are residents commuting out for work? Do we have an adequate labor pool for different types of industries?How many utility customers do we have—and are we growing or shrinking?
Utility data is a proxy for population, development momentum, and long-term financial sustainability. Is the cost of operating the utility system fall on industry or residents? Are rates competitive to peer communities?What are our demographics telling us?
Age structure, household income, educational attainment, and migration trends all signal what’s possible—and what’s not.
This baseline assessment is critical. Without it, you’re flying blind. With it, you’re ready to move from tactics to strategy.
Economic Development as Strategy, Not Reaction
Once you understand your fiscal foundation, you can begin crafting an economic development approach that fits your reality—not a neighboring city’s highlight reel.
If your tax base is stagnant, you may need to focus on redevelopment, infill, or adaptive reuse strategies that grow value without increasing infrastructure costs. Or, we may need to consider investments to attract new employers and businesses to town.
If your labor force is aging or shrinking, it may be time to invest in talent retention and attraction strategies—housing, childcare, and workforce development—before chasing another industrial lead.
If your infrastructure is underutilized, such as excess water/sewer capacity or an airport that’s underperforming, those can be assets with the right business targets—but only if you know how to position them strategically.
If you’re seeing revenue erosion, you may need to rethink your incentive policies or tax structures—not just to be competitive, but to ensure sustainability.
This is what strategic economic development looks like: not chasing leads, but building the conditions where the right investment fits, lasts, and lifts the entire community.
Don't Skip the Strategy for the Sake of the Spotlight
Marketing without strategy is like painting the front door of a house with a cracked foundation. It may look good in the photos, but it won’t stand the test of time.
Real growth happens when a community understands its position, defines its goals, and aligns its policies, investments, and partners to move in that direction.
That’s the kind of work I help our public sector clients do at Impact Economics. I bring a private-sector mindset to public-sector challenges—clear-eyed analysis, actionable strategies, and measurable outcomes.
Is your community ready to move from promotion to purpose?
Let’s have a conversation. Because economic development isn’t just about getting noticed—it’s about building something worth noticing.
Total Cost of Ownership: Why the Cheapest Site Often Isn't the Best
When manufacturers search for a new facility, there’s a natural temptation to chase the lowest price tag. On paper, a less expensive site or building can seem like a slam dunk—immediate savings, a faster path to profitability, and less upfront risk. But in economic development and industrial site selection, price doesn’t equal value. The true cost of a site is more complex and must be understood through the lens of Total Cost of Ownership (TCO).
At Impact Economics, we regularly advise clients to look beyond square footage prices or leasing terms and instead focus on a broader, more strategic understanding of operational costs. Here’s why the “cheapest” option is often the most expensive in the long run.
1. Workforce Quality and Labor Costs
A facility is only as productive as the people inside it. Communities with a shallow labor pool, weak technical training programs, or high turnover rates can impose hidden costs on your business—recruitment expenses, training delays, and production downtime.
On the flip side, paying slightly more for a site in a region with a well-aligned workforce, local training partners, and strong work ethic can improve productivity and lower labor-related risk. Sometimes, the “cheaper” location ends up costing more simply because it’s harder to staff effectively.
2. Utility Costs and Infrastructure Capacity
Older industrial buildings with bargain-basement prices often come with outdated infrastructure. Think inefficient HVAC, low power availability, or inadequate water/sewer capacity. The result? You’ll end up spending more in retrofits, higher monthly utility bills, and potential operational limitations.
Even if two sites look identical in size and configuration, energy rates and utility reliability vary dramatically by region. Over a ten-year period, a small difference in energy cost per kWh can result in six- or seven-figure differences in your bottom line.
3. Tax Structure and Regulatory Environment
Some states and localities offer low up-front costs but burden businesses with high property taxes, personal property taxes on machinery, or unpredictable regulatory enforcement. Others offer a more business-friendly tax and permitting environment that creates long-term cost advantages.
When evaluating a site, don’t just consider the building cost—consider the tax bill five years from now. Ask whether the community offers abatements, exemptions, or other long-term tax planning opportunities that offset your initial capital outlay.
4. Logistics and Proximity to Customers or Suppliers
Transportation costs are one of the biggest line items in any manufacturer’s budget. If a cheaper site adds significant mileage to your shipping routes, or positions you far from suppliers and key customers, those “savings” vanish quickly.
A site that’s 10% more expensive but 20% closer to your logistics hub may create meaningful recurring savings in fuel, time, and risk of disruption. In today’s just-in-time economy, smart location decisions are often less about real estate and more about supply chain resilience.
5. Insurance and Risk Profile
Your property insurance premiums reflect local risk factors: floodplain location, crime rate, emergency response times, and even political and environmental volatility. Choosing a lower-cost site in a higher-risk area may leave you with a monthly insurance bill that far exceeds any upfront savings.
We encourage our clients to evaluate total risk exposure—not just for property insurance, but also for business interruption coverage, workers’ comp, and liability insurance. A few hundred dollars per month in premium difference can add up fast over the life of a facility.
Making Smarter Location Decisions
The smartest manufacturers don’t look for the cheapest building—they look for the best overall value. That means understanding the long-term operating environment, aligning your location strategy with your talent and logistics needs, and partnering with communities that want to see you succeed.
At Impact Economics, we help mid-sized manufacturers move beyond surface-level comparisons and uncover the true cost—and true opportunity—of each potential site. By focusing on Total Cost of Ownership, you avoid surprises, reduce risk, and set your business up for sustainable growth.
Want to avoid costly mistakes in your next site decision?
Let’s talk. We’re ready to help you find the right site in the right community—at the right total cost.
What Really Matters in Industrial Site Selection: A Practical Framework for Mid-Sized Manufacturers
For mid-sized manufacturers, choosing a new facility location is one of the most consequential decisions you’ll ever make. It’s not just about rail access or tax rates—it’s about aligning your business strategy with a place that will support your growth for the long haul.
After two decades advising both companies and communities, I’ve seen how site selection can either unlock long-term success or slowly erode a company’s competitive edge. Here’s what really matters—and what every manufacturer should look for—when evaluating where to expand, consolidate, or relocate.
1. The Right Site in the Right Community
Industrial buildings and land are just the starting point. The real differentiator? Finding a community that wants your business and will go to bat for your success.
Communities that understand your industry, appreciate your investment, and are willing to offer tangible support will make life easier—before, during, and after your move. A great site in a disengaged community often becomes a regret. A good site in the right community becomes a competitive advantage.
2. A Competitive Incentive Package
Incentives are not just about headline numbers. The real value comes from aligning programs to your operational needs—upfront capital savings, long-term operating cost reductions, and flexibility in deployment.
Whether it’s infrastructure support, tax abatements, training grants, or discretionary cash incentives, your project deserves a package that reflects your value to the region. That only happens when the incentives are professionally scoped, negotiated, and aligned with performance.
3. Labor Cost Without Overpayment—and Training to Match
Labor availability matters. So does labor cost. But where many companies go wrong is assuming that “cheaper” means “better.” The real goal is workforce value: getting the skillsets you need without overpaying—and securing the community, state, or educational support to build your workforce over time.
Well-structured training assistance and workforce partnerships can dramatically reduce ramp-up costs and turnover rates, which pays off far beyond your first hire.
4. Proximity to Customers and Suppliers
Logistics and access remain core to manufacturing performance. Whether you’re shipping finished product or relying on just-in-time deliveries, being within reasonable proximity to key suppliers, end markets, or transportation corridors can reduce inventory carrying costs and improve on-time performance.
And the cost of being too far away? Increased shipping expenses, missed deadlines, and strained relationships with customers and vendors alike.
5. A Location That Makes Business Sense
Every business has its own mix of cost drivers, customer expectations, and operational quirks. That’s why “lowest taxes” or “cheapest land” shouldn’t be your sole filter.
What matters is whether a location supports your entire operation—your logistics model, labor model, financial model, and long-term strategy. In short: does it make business sense?
6. A Place You’ll Be Proud to Call Home
Corporate fit isn’t just for Fortune 500s. Mid-sized manufacturers often have long-standing cultures, loyal employee bases, and leadership teams that are active in their communities. You need a place that aligns with your company’s values and offers the quality of life that will attract and retain key talent.
If you're going to invest millions—and commit decades—you should like where you're landing.
The Bottom Line
Site selection is more than a real estate decision. It’s a strategic business move that affects your people, your profits, and your future.
At Impact Economics, we help mid-sized manufacturers navigate this process with clarity, confidence, and a bias for value. We bring an integrated approach that combines market data, labor analytics, incentives expertise, and community insight to ensure you land in the right place—with the right deal.
If your company is thinking about growth, expansion, or relocation, let’s have a conversation. The right site in the right community isn’t just a possibility—it’s a strategy.
Jim Gibson, CEcD
Founder, Impact Economics
Welcome to Impact Economics: Turning Insight into Advantage
In today’s competitive landscape, where you grow matters just as much as how you grow. I founded Impact Economics to help companies make smarter, faster, and more confident decisions about where to locate, how to scale, and how to leverage economic incentives along the way.
After more than a decade advising corporations on site selection, incentive negotiation, and market entry strategy, I saw a need for a more strategic, partnership-driven approach—one that aligns corporate goals with public sector opportunities to drive both business value and long-term impact.
Further, I spent a 22 year career working in local government, serving as city administrator/manager, finance director, and economic development director. I understand the language of what will resonate with community leaders and how best to convey my clients’ value proposition to achieve maximum impact.
What I Do for Corporate Clients
At Impact Economics, I serve as an extension of your internal team, bringing deep industry experience and insight to some of your most consequential decisions. I help companies:
Select Sites with Confidence – I analyze labor markets, cost structures, infrastructure, policy environments, and local dynamics to recommend locations that position your business for long-term success.
Maximize Incentive Value – I identify, negotiate, and secure economic development incentives that reduce costs, improve ROI, and strengthen community partnerships.
Navigate Public-Sector Relationships – I help you speak the language of government, align your business case with community goals, and manage complex stakeholder dynamics with credibility and clarity.
I don't just identify incentives—I unlock hidden value by helping you tell the right story to the right people, in the right way.
Built on Experience. Designed for Results.
I've had the privilege of working with companies ranging from global brands to small town entrepreneurs. I understand the pressures of growth timelines, board expectations, and internal alignment. I also know how to bridge the gap between corporate strategy and public-sector processes—because I’ve done it, project after project.
At Impact Economics, I bring this experience to every engagement with one goal: to help you grow smarter and negotiate from a position of strength.
Let’s Talk
If you’re planning a new location, evaluating expansion options, or exploring incentive opportunities, let’s connect. Impact Economics is here to help you turn insight into advantage.