EDITORIAL

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By Paul Caine

How do Mexico, China and India’s real estate norms stack up?

Industrial Land Acquisition

Construction Styles

• Mexico has world class capabilities; its concrete tiltup is on par with the United States.
  
• China is improving its capabilities.
  
• India features mostly older industrial zones, few
  

industrial parks and is pushing hard to improve construction:

Construction materials are primarily block or block and metal but this is changing at a good rate.

Integrating A Managed Site Selection Process

Here are a few tips regarding processes that can increase your success in siting in Mexico, China or India. Managers need to establish project objectives to create a plan and a roadmap because they know this is an investment in both time and money, and that the project will be a corporate asset.

An internal project team needs to be assigned, the size of which depends upon the size of the organization. The team can be a standing committee, a glued together project team or a one-person planning department.

Managers also need to identify service providers and consultants. Tips to assembling the team include looking for members for real estate, accounting, import/exportlogistics; and construction. Consultants are also available for operations, manufacturing and labor. Some providers feature all of these major services.

Ensure you investigate the fee structures of service providers, which can be hourly or fee based, with a success fee, or commissioned based. Everything should be negotiable. Also, there is complementary information available from service providers, some of which have a true local presence and knowledge base.

Once your team is assembled, compile regional data on the location you are considering. The economic development corporations offer strong information sources. Your team can also head to the Internet to begin the market investigation phase one study, which you may call a feasibility or due diligence study. The detail level is crucial.

Evaluation factors can be detailed. NAI Mexico has one checklist with more than 1,800 factors. You should decide if you need a multi-market analysis vs. single market or if you need a multi-county analysis.

Consider using aerial views, and analyze the labor and neighboring uses. Take things up a notch. Where is the infrastructure delivered from and how reliable is that supply? Where does the neighboring labor work?

In regard to labor research, what is the capture area for this plant for labor? Which public transportation services this location for shifts? Who is your competition for the same labor?

The next step to ensuring a successful site selection process is to develop and approve your company’s project investment budget. Use a total cost model. International models are readily available. The detail and quality of the information is critical. Labor, real estate and logistics are major components. Factor the impact of delays on other operations. Consider that hidden costs can add up to hundreds of thousands of dollars.

The typical next step is to short list selected locations. Benchmark comparable local data. You may find that one item that will save you a costly mistake. A number of companies used weighted factors in the process.

Another key element in the international expansion process is the project management and reporting system. A critical feature is to have complete communication among all project decision-makers. Tips for project reporting with multiple managers and multiple locations include using hard copy reporting, as long as you also do it online. Your team can also include e-mail, Microsoft Project or Web-based reporting. The important thing is to have one location for all available information, based on 24/7 access. Offshore projects always have challenges, and a reporting system will alleviate any potential for fingerpointing. It also provides an excellent historical repository.

Moving on to negotiating the final lease or purchase of a facility for an international project, remember that owners make many representations. Confirm the owner’s performance with previous clients; financing source for your project; estimated project costs (you should have a preestablished budget so you can benchmark all input from owners); and verify dates for all permits and approvals.

In order to ensure your company achieves a successful international site selection, select a team following a solid process. The team should have the ability to access the management of the project online 24/7, in order to create a phase one due diligence study, tailored around your needs for transaction management.

Don’t forget to compare multiple markets within your target country or multiple target countries. And, use an experienced team to help you make the best site selection decision.