Beyond the Incentive Check: Why Strategic Location Decisions Outperform Short-Term Gains

Nueconomy’s Data-Driven Approach to Sustainable Site Selection for Corporate Expansion

After guiding over 130 Fortune 1000 companies through strategic location decisions over Nueconomy’s 15-year history, we’ve observed a consistent pattern: organizations fixated solely on maximizing incentive packages often find themselves relocating again within 5-7 years. This continuous cycle consumes resources and disrupts operations that could otherwise drive innovation and growth.

The obvious truth is that incentives matter in the site selection process. However, our proprietary Viability Index reveals the non-obvious insight that incentives typically represent just 7-12% of total operational costs over a decade-long horizon. According to a 2023 Deloitte study, companies overestimate incentive value by an average of 23% in their financial models.

Consider these contrasting examples:

• When Moderna selected Massachusetts for their manufacturing expansion despite higher costs and lower incentives than competing locations, they recognized something our data has consistently confirmed: workforce ecosystems are nearly impossible to replicate. Five years later, their access to biotech talent has accelerated R&D timelines by 31% compared to industry averages (BioSpace Industry Report, 2024).

• Conversely, Intel’s $20 billion Ohio chip plant, which received over $2 billion in incentives (Wall Street Journal, 2023), has faced significant timeline delays primarily due to unforeseen workforce development challenges—a factor that ranked lower in their initial site selection matrix.

Our forensic analysis of failed corporate relocations has identified three non-obvious factors that consistently predict location success beyond incentive periods:

1. Talent velocity – Not just current workforce availability but the regional production rate of relevant skills (particularly critical for technology and advanced manufacturing sectors)
   
2. Governance alignment – The degree to which local regulatory priorities align with industry needs, reducing future compliance costs
   
3. Infrastructure evolution – Indicators of future infrastructure capabilities, not just current assets, especially for logistics-dependent operations

Samsung’s Austin facility expansion demonstrates this perfectly—while Texas offered competitive incentives, their decision cited the region’s semiconductor talent pipeline and power grid investments as decisive factors (Austin Business Journal, 2022).

Particularly revealing is our finding that locations offering the most aggressive upfront incentives typically score lowest on these three critical metrics in our site selection decision matrix. The Area Development Corporate Survey (2023) corroborates this, showing that 64% of relocations driven primarily by incentives underperform operational projections by year five.

For C-suite executives and corporate real estate directors, our recommendation is straightforward: restructure your location evaluation framework to weigh 10+ year operational factors at 70% and incentive packages at 30%. For economic development organizations, we suggest promoting sustainable advantages that create mutual long-term value rather than competing primarily on incentive magnitude.

At Nueconomy, our comprehensive location strategy consulting helps companies identify sites where operational excellence and financial incentives converge to create sustainable competitive advantage—because enduring location partnerships are built on operational synergy, not financial arbitrage. Reach out to us today.