Excerpt: By Dennis J. Donovan

Relocation Drivers

Companies relocate business operations for a variety of reasons. Whatever the motivating rationale, the bottom-line goal is to improve competitive position and business performance. Many companies relocate for non-financial reasons, such as getting closer to customers. Typically, corporate moves for the following operations do not yield a positive economic payback: corporate headquarters, research and development, regional offices, service centers and data processing centers. Generally speaking, these kinds of entities haveemployee populations dominated by professionals (exempt personnel) wherein geographic salary differentials are more compressed. On the other hand, there are several types of business entities wherein relocation is driven by the imperative of lowering the corporate cost structure. Such entities often include manufacturing facilities, distribution centers, customer service centers, shared services centers and various back-office operations. These enterprises usually have a high proportion of hourly (non-exempt) employees wherein geographic wage contours can be markedly different.

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