Development Of A Strategic Analysis Tool
For Determining The Most Suitable Location
For The Expansion Of A Manufacturing Facility

Alison Duperron
B.Sc., University of British Columbia, 1988

Project Submitted In Partial Fulfillment Of
The Requirements For The Degree Of
Master Of Business Administration

The University OfNorthern British Columbia
April2008
© Alison Duperron, 2008
UNWERSlTY of NORTHERN
BRITISH COLUMBIA

LIBRARY
Prince George, B.C.

Thursday- April 17, 2008
4:00pm
Teaching & Learning Centre Building- Room 10-4520
UNBC Prince George Campus
Ms. Alison Duperron will be defending her project entitled:
"Development Of A Strategic Analysis Tool For Determining The Most Suitable
Location For The Expansion Of A Manufacturing Facility"
Ms. Duperron is a candidate for the degree: Master of Business Administration.
SIGNATURE REQUIRED FOR THOSE ATTENDING DEFENCE:
"By my signature below I acknowledge that confidential material may be presented at
this project defence. I will not discuss any of the material presented with any person not
present at this defence for a period of two years."
Printed Name:
i.sof\ .D::r=r/0 n

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StNG H J>e..o

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ABSTRACT

A Prince George pre-fabricated home building business has made the decision to expand
into the Ontario market. At this point they must decide on the most attractive location for
this expansion bearing in mind key factors such as proximity to markets, suppliers, and
distributors. Also important to the expansion location are labour availability, labour rates,
tax rates, land cost and utility rates.
There are numerous models and checklists available for determining a site but there does
not appear to be a model that extensively integrates theory into a model. This study is an
attempt to use theory, specifically Porter's Five Forces Model and VRIO (Value - Rarity
- illimitability - Organization) to analyze the internal and external factors of a firm prior
to developing key expansion location criteria. The integration of theory and existing site
analysis tools led to the development of a site selection analysis model.

This model was then used to determine the most suitable expansion location for the
company. Five key criteria were selected using the model and then an analysis of
seventeen communities, chosen for the location and presence of the distributor, was
undertaken. Using these criteria the list of communities was shortened to eight. The eight
communities were then analyzed using the remaining criteria. Three final communities
were then judged against each other to determine the most suitable location for
expansiOn.

lll

TABLE OF CONTENTS
ABSTRACT
LIST OF TABLES
LIST OF FIGURES
CHAPTER 1
1.1
INTRODUCTION
1.2
BACKGROUND
1.3
PROJECT OBJECTIVES
CHAPTER2
2.1
LITERATURE REVIEW
CHAPTER3
3.1
METHODOLOGY
CHAPTER4
4.1
INDUSTRY DESCRIPTION
4.2
COMPANY DESCRIPTION
4.3
AREA DESCRIPTION
CHAPTERS

5.1
RESULTS
CHAPTER6
6.1
ANALYSIS
6.2
SHORTLISTING COMMUNTIES
CONCLUSION
APPENDIX 1 Community Utility Rates
APPENDIX 2: Sample Request for Proposal (RFP) for site selection
BIBLIOGRAPHY

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IV

LIST OF TABLES

Table 4.1:

The Company's Porter's Five Forces Analysis

Table 4.2:

The Company's SWOT Analysis

Table 4.3:

Ontario Labour Force

Table 4.4:

National Cottage Prices

Table 5.1:

Location Criteria

Table 5.2:

Population, Age and Sex Demographics

Table 5.3:

Dwelling Rates & Migration

Table 5.4:

Education Levels as% ofTotal

Table 5.5:

Percent of Labourers in the Manufacturing Industry

Table 5.6:

Unemployment Rates

Table 5.7:

Hourly Wages for General Labourers per Region

Table 5.8:

Economic Development Office Responses

Table 5.9:

Transportation Routes

Table 5.10:

Municipal Tax Rates

Table 5.11:

Serviced Land Cost per Acre

Table 6.1:

Estimated Electrical Charge per Month

Table 6.2:

Summary of Attributes of the Final Three Communities

v

LIST OF FIGURES
Figure 2.1:

Porter' s Five Forces Model

Figure 4.1:

Map of Ontario

Figure 4.2 :

Ontario GDP by Industry

Figure 4.3:

Map of the Muskoka Region

Figure 6.1

Strategic Site Analysis Model

vi

CHAPTERl
1.1

INTRODUCTION

A local prefabricated home manufacturing company (which will now be referred to as
The Company) is nearing capacity at its Prince George location. In order to expand the
business, The Company would like to open a second facility somewhere in the mid to
central part of Canada, preferably Ontario. The location of this facility must be close to
both its market and its suppliers, but it must also be located strategically to open up new
markets. The exact location of the second facility is therefore essential for the growth of
this company. Thus the key issue is to find the most appropriate location for the second
site for this company.

In determining the location of the manufacturing facility there are many factors that must
be considered. Proximity to the market and to supply is crucial as transportation costs
play a significant role. Also of importance will be demographics and economic outlook
for the communities considered. Utility costs and availability, especially in terms of
power, will be critical to the success of the expansion. Government regulations and
taxation must also be measured. In today's business climate environmental issues will be
significant. Intangible factors such as community "buy - in" and political atmosphere
must also somehow be brought into the decision.

In determining this location it is evident that the process must be extensive and that the
simple practice of acceptance or rejection is not sufficient. In order to successfully find

the best possible location, it IS would appear that a strategic analysis tool must be
developed and used.

1.2

BACKGROUND

The Company being studied has determined that the best way to expand their current
operations is to move into the Ontario market. At this point the firm sells its products to
Western Canada and a small portion of the United States. By locating in the Ontario area
there will be opportunity to not only service the Ontario market but also potentially,
Eastern Canada. The two locations, one in Prince George, and the other in Ontario, will
ensure that the company is well situated in the Canadian marketplace.

The decision to move into Ontario is due to the presence of a distribution network with
which the company already has connections. By leveraging this relationship, the firm
feels that the transition into the new marketplace will run more smoothly than if it were to
enter into a new market on its own. The company will manufacture products that are
agreed upon by the distributor and the distributor will actually do part of the marketing
for the product. This symbiotic relationship will therefore be advantageous to both
organizations.

Specifically the company will manufacture one line of its current product offerings,
which are its cottage packages. Due to the popularity of recreational properties among the
people of southern Ontario, there is hope that a new, affordable cottage line will allow
middle income families to enter into this market. A location that is close to the numerous
lakes in the province of Ontario will be advantageous.

2

It will be necessary that potential sites for the expansion be located close to the existing

distribution centers. This will provide a starting point for determining the exact location.
With this as a starting point, the most suitable location will be determined using the
strategic site analysis tool.
1.3

PROJECT OBJECTIVES

The objectives of this project are twofold. The first is the development of a strategic site
analysis model. The second is the determination of the most suitable site for the
expansion location for the prefabricated home manufacturer. The second objective is to
be completed using the strategic site analysis model to confirm its validity.

CHAPTER2
2.1

LITERATURE REVIEW

At present there are numerous models for site selection and the background theory is
extensive. Models range from simple checklists to complicated mathematical projections
but few integrate strategic theory. In addition there are now many pressures on companies
to ensure that sites are environmentally friendly and manufacturing processes are
"green". The purpose of this study is to produce a model that not only incorporates
strategic theory but also looks at the impact that new environmental regulations will have
on the manufacturing industry and expansion plans.

The use of strategic theory to select a site for a firm's expansion is crucial. Porter's Five
Forces model (figure 2.1) is a good starting P.oint for any company to apply when it is

3

considering expansion and growth. In order for a company to select the best site it must
thoroughly know the organization. The strengths and weaknesses, along with
opportunities and threats, must be considered. Hoffman and Schniederjans (1996) state
that a firm's success in finding a site for expansion is contingent on the site fitting
properly with the company' s internal strengths and weaknesses.

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Figure 2.1: Porter' s Five Forces Model (Porter, 2008)

Barney (2001) suggests that in the ever-changing market place a resource-based view of
competitive strategy is essential. To review a company' s resources a VRIO (valuable,
rare, inimitable, and organization) examination should be completed. The resource based
view indicates why some firms are better able to perform. This process looks specifically
at the resources and capabilities of the company in an effort to determine the company' s
competitive advantage and how that advantage may be levered. The resources are
4

initially viewed to determine if they are valuable and thus enable the company to increase
revenues, decrease cost or both. Rarity of the resource determines the extent of
competitive advantage that a firm may hold based on how easily other firms can possess
the resource. Inimitability indicates how well a company has protected itself from
imitation by others. Reputation and branding are ways in which a firm can ensure that
their product is not easily imitated. The final question is that of the organization itself.
The question of organization looks at the how the firm is structured and controlled in
order to allow employees to engage in exploiting the company's resource for the benefit
of the organization. In fact it is often the capabilities of the firm, and its employees, that
ensure that all four categories of the VRIO analysis are positive.

Partovi (2006) states that while many frameworks have studied specific location features,
there should be a complete analysis done on both internal and external components.
Internal components include those factors which are essential for the manufacturing of
the product. External components look more at what the customer desires, the
competitor's position and specific location requirements.

Partovi's analysis model

essentially quantifies both a VRIO analysis (the internal components) and Porter's Five
Forces model (the external factors) . This model is a complex statistical analysis tool
using matrices to compare the different factors and the synergies between them. While
helpful, it would not be an effective tool for most managers due to the complexity of
integrating three separate statistical analysis tools.

5

Companies should begin the process of selecting a second site for expansiOn by
reviewing what they currently have. A thorough review of existing facilities is essential
in determining what a company will require for its new facility. The International
Economic Development Council (2008) lists the following as some of the most important
features to be considered: the acreage of the existing plant, geographic features such as
soil types; existing transportation opportunities; water, sewer, hydro and natural gas
services; and telecommunications services as important features. A firm must
comprehensively look at the features that are important for its existing location before it
can make decisions about a second location. In this review, the company can also identify
the factors of the present site that are not optimal. This will assist in finding a site that is
right for the expansion and may also help the firm to look at ways to increase production
on its primary site.

Once a methodical examination of the pnmary manufacturing site IS complete, a
questionnaire (De Meirleir, 2006) or a model (Badri et al 1995) is suggested. The
questionnaire method is used to limit the geographic search thus eliminating sites that
simply are not suitable. Singhvi says (1987) that the approach must be far more
quantitative and include a method to evaluate both tangible and intangible factors. He
suggests that the site selection begins close to markets where transportation routes for
materials and the product are optimal. The next step in this approach is to build a
simulation model that includes transportation, labour, utility, construction and tax costs.
At this point sites can be eliminated and then quantitative analysis of the remaining sites
can occur. The approaches all typically include cost of real-estate, availability and cost of

6

labour, property and other taxes, cost of transportation and utilities, distance from
suppliers and distance to customer. All of these factors play a pivotal role in site
selection. In terms of intangible factors Singhvi (1987) suggests that labour availability,
cost of utilities, proximity to market, political climates, and quality of life, while
intangible, are all measurable and that a firm must clearly have some means to weigh
these factors against each other when picking a location. He indicates that they are not
measurable in terms of finance but that they can be rated according to their perceived
attractiveness.

According to Chou et al (2007) attributes for site selection based on life issues can be
grouped into three categories:
critical attributes- availability of utilities and community attitudes
objective attributes- investment and labour costs
subjective attributes - closeness to markets, political Issues and the more
qualitative issues.
They maintain that this makes location selection a rather imprecise science and open to
human interpretation, and they use as a descriptive term fuzzy multiple attributes
decision-making.

De Meirleir (2006), CEO of Business Location International, indicates that there is a
questionnaire that is beneficial to firms that are trying to select a building location. The
process initially includes the elimination of sites that do not strategically fit. After sites
have been eliminated other sites are compared using three series of factors - investment

7

cost factors, operating cost factors and intangibles. At this point all remaining sites are
analyzed and compared, to determine the optimal (not perfect) site. De Meirleir (2006),
states that while there may be an optimal site, there is never a perfect site.

Barringer and Greening (1999) suggest that little research has been carried out on the
implications of small business expansions. They develop a theoretical model and then,
using five existing small businesses, develop an analytical model. The use of the case
study method rather than a theoretical model assists in showing the need for careful
planning in the expansion process. As with the other studies, it is clearly evident that
expansion without considerable research is risky at best.

Indications of market trends will also have to be studied and the data quantified. As
Olijnyk (2006) states Canadians are fearful when they hear news of the American
housing economy; however, our trend is actually different. While the housing market
may be cooling, there is still a significant profit being made. Although the entire North
American market is important to understand, Canadian companies may well need to
focus their attention primarily on domestic markets given the instability in the United
States. Orsino (1992) states that growing your domestic market, is a tried and true method
for successful expansion. Market trends, for domestic markets, will play an integral role
in part of the selection process.

While it is important to review demographic changes and population changes, these
numbers will only tell a small part of the picture for site selection. Many of these

8

communities may not like to have manufacturing or heavy duty industry in their
jurisdiction. Glover & Rosene (2001) indicate that a good site must be a wm-wm
situation not only for the company but for the community as well. Community analysis
must be reviewed not only from a specific site requirement view but also from a
community enhancement view. Members of communities as a whole should be happy to
have a new business start up in their location. If this is not the case, then it will be
difficult to hire staff and ensure that the project is a success.

Birch and Haggerty (1998) suggest that there is a series of questions that need to asked,
in regards to entrepreneurial climates in different communities. These questions delve
deeply into how a community supports its small to mid-size companies. In determining
the community's attitude with regards to new firms, Economic Development offices
should be able to supply a great deal of information. Pittman (2006) suggests that
Economic Development staff probably know more about site selection than do executives
from small to medium sized firms. The use of these individuals is critical to fostering
happy communities and successful expansion. Prager (2006 page 22) states that
"successfully wooing manufacturing is one part art but at least two parts science".
Regardless of what a community states that it has to offer there must be an ability to meet
a manufacturer's needs. Development costs and business initiatives can play a pivotal
role in a business's decision on whether or not to locate in any given community.

Transportation is the key to successful location selection. Transportation costs represent a
significant consideration in the location of specific activities (Alonso-Villar, 2005). Since

9

distribution of the product will be paramount to the success of the firm, transportation
issues will be a key driver in determining the expansion location.

While all the above-noted methods above provide significant information in regards to
site selection, there is an important component that has been omitted. Environmental
concerns with respect to industry are becoming the push of most industrialized nations.
Salwen (1999) indicates that plans to build a new industrial facility are likely to come
under close scrutiny by many environmental groups and even concerned citizens. Salwen
(1999 pages 2-3) states: "In this atmosphere of heightened environmental sensitivity,
even a minor or routine construction project may prove to be an exercise that challenges
those with the finest technical, political, and negotiating skills." It is more imperative
than ever to ensure that any site selected will not have a major negative environmental
impact in the area. This would have extremely detrimental implications to the firm's
relationship with the community. Clearly any site analysis tool must include parameters
for environmental control.

In determining a potential site for expansion, an organization must first be clearly aware

of its present conditions. The use of strategic theory to examine both external forces
(Porter' s Five Forces analysis) and internal forces (VRIO analysis) provides a firm with
not only an understanding of where it stands in the industry but also some comprehension
and awareness of its competitive advantage. Once expansion has been determined to
strategically fit with the organization' s goals, potential sites must be determined. At this
point a site selection model, including all key factors, will be useful to the firm. In this

10

way both theory and key components from the current research and existing models will
be integrated into the proposed improved model.

CHAPTER3
3.1

METHODOLOGY

The primary tools of analysis that will be used in this project will be an extensive
literature review, exploratory research, personal interview and rev1ew of third party
information. The literature review section looked at the present models being used for site
selection in addition to an analysis of the current theory in strategic expansion. This
review helped in determining key factors required to determine potential sites. It also
assisted in linking theory with current site assessment tools.

In addition to a literature review, exploratory research was conducted. This included a
study of the community's demographics. Population, median age, number of people
staying in community for the past year, number of people staying in the community for
the past five years, levels of education and unemployment/employment rates were
reviewed. While this information may not clearly indicate the exact labour pool, it does
provide a significant amount of material regarding the community's societal makeup.

Personal interviews were carried out with Economic Development Offices in
communities short-listed for selection. These interviews included a discussion on labour
availability, labour costs, land costs, transportation costs, tax rates and the overall

11

business environment m each community. Data was recorded, as was the overall
impression of the community' s willingness to discuss new business opportunities.

To ensure that all the necessary data was included a review of all of the community's
economic development websites was carried out. This information was used to guarantee
that each community is comprehensively analyzed.

CHAPTER4
4.1

INDUSTRY DESCRIPTION

Pre-manufactured home building has been carried out in Canada since the early 1900' s
but has never gained huge momentum. In Sweden ninety percent of all new homes are
prefabricated. It would appear that the Canadian market is slowly following suit.
Canadian Manufactured Housing Institute states that from 1994 to 2004, sales of premanufactured homes in Canada rose by 65 percent (Kahane, 2006). Manufactured homes
have gained popularity due to their typically lower cost than a house built on site. As
mortgage rates rise and availability of skilled framers decreases, perhaps more people
will look to prefabricated homes.

The concept of pre-manufactured cottages is also gammg m popularity. There are
numerous advantages to building a prefabricated cottage which include their competitive
price, the ease of building and the shortened length of time required to complete the
project. Since recreational properties are typically seasonal, all of these advantages make
pre-manufactured homes more attractive.

12

A number of firms already build prefabricated homes in Ontario. These compames
include Royal Homes, Viceroy, and Linda! Homes (Kohane, 2006). They build both
residential and recreational homes.

Table 4.1 shows Porter's Five Forces analysis of the industry as carried out by The
Company. It shows each force and how the company views the external environment.

Threat of Potential Entrants - VERY HIGH (Increasing)
Increasing labour shortages means building contractors will rely on building components.
As capacity is reached, wait times become longer and the price will increase, opening an
opportunity for new entrants
Customers who feel like they are paying too much may/will look at opening their own
facility
A new truss plant will only arise out of a truss company or people currently working in
the manufacture of trusses as significant skill and knowledge is required and a moderate
amount of capital is required
Framers are already building walls and building on a table won't require much --> already
have the skills and little capital is required.
Limited ability to retaliate to a new entrant
Little or no product differences - essentially trusses and walls are commodities
Other than truss design knowledge, there are few barriers to entry
Bargaining Power of Suppliers- HIGH- MODERATE (Decreasing)
Overall, Pre- fabrication is only 1-2% of total housing market resulting in high supplier
power for the industry
Housing market is very fragmented, further increasing the power of suppliers
Larger competitors will have more power against their supplier
Many building product alternatives are available from many different sources limiting the
power of the suppliers
An opportunity to decrease supplier power by better purchasing analysis and negotiation.
The company is limited by its information system
Given the tight labour market, the union could have significant power

Rivalry Among Firms - Moderate (Increasing)
Occasionally, compete directly with other prefabricating companies on projects but
generally housing market is so large that prefabricating companies do not compete
directly very often
13

Rivalry arises from competing with conventional stick framers
The truss department experiences very little competition
As timelines increase, other companies might enter as contractors do not want to wait the
longer timelines for their trusses
Large truss plants, with a little capital investment, could compete locally, significantly
increasing the rivalry
As labour shortages worsen, the need for building components will increase. Contractors
may begin manufacturing walls, on tables, themselves presenting a great risk
There are few exit barriers
Bargaining Power of Buyers- LOW- MODERATE (Increasing)
The "one of' buyers have very limited bargaining power
As the company moves to supplying multi-unit/commercial projects the buyer will gain
increasing bargaining power due to the volume of purchases.
Threat of Substitutes -HIGH
There are many alternatives to pre-fabricated homes, such as stick framed, modular and
log homes
Stick framing is customarily used as a result of limited familiarity of home building and
the options available
Additionally, contractors are very loyal to their sub-trades making it difficult to break
into the contractor market with a pre-fabricated product
Source: The Company (2008)
Table 4.1:

Porter's Five Forces Analysis of the Prefabricated Home Industry

As evidenced above this may well become a very competitive market but at the present
time due to the limited number of pre-fabricated home builders, competition between
companies is not intense. The most significant issue is that most people do not think of
pre-fabricated homes when they build and therefore the challenge appears to be in the
education of consumers and builders about the ease of construction with this method of
building.

14

4.2

COMPANY DESCRIPTION

The company, at present, is a mid-sized enterprise that manufactures pre-fabricated
homes including engineered walls and trusses. It has one manufacturing site with the
corporate office and sales department on-site. The Company exhibits forward vertical
integration with the various divisions of the parent company. This is advantageous to the
firm . In recent years the company has significantly automated its operations. As
previously stated, in order to grow its markets it is evident that it must look to a different
geographic area. Given the difficulties in the United States in terms of their economy and
home building, it is apparent that the Canadian market presents the most logical option.
The Ontario market opens up the door to a large population and therefore a large market
base.

The company's pnmary work force is general labourers. High school graduation is
required of the workers. The plant was automated to more effectively use high school
graduates and open up a larger employment pool. Office staff has different educational
requirements depending on their position.

Utilities, particularly hydro, play a significant role in production. A constant power
supply is required for the company to function . The company uses on average 92 kW of
electricity per month or 954 kWh.

15

At present the company understands its strengths and weaknesses. The analysis was
carried out The Company. Table 4.2 shows an internal analysis of the company's
strengths, weaknesses, opportunities, and threats (SWOT analysis).

Internal SWOT Analysis
Strengths
Weaknesses
Marketing, including distribution, is
Dedication and passion of employees
unfocused and confusing to the customer
Genuine employee concern and interest in
Poor understanding of costs and the
the company's future
economic value of our product
Technical and design skills
Product cost is high
Product quality
Poor team dynamics between departments,
resulting in poor communication and
"silos"
Customer service
Unable to get skilled and reliable labourers
for the plant
Information systems limit the company's
ability to extract useful information
Operations are limited by building size and
yard space
Opportunities
Use of automation and mechanization to
drive down raw material costs

Develop the multi-unit market segment and
leverage the economies of scale to become
more cost effective with "one of' buyers
Become cost competitive with American
producers with Canadian dollar at par with
the American dollar
Become a purchasing centric organization
Get involved with product development
Source: The Company (2008)
Table 4.2:

Threats
Huge opportunities for new competitors to
enter the market - both in trusses and home
packages
Rising fuel costs could limit the ability to
cost effectively ship the product

With the threat of new competitors, the
company is exposed to the risk of losing
employees to the competition
Rising Canadian dollar when compared to
the American dollar
Exposed to supplier timelines and their
rising costs

The Company's SWOT Analysis

16

In addition to the SWOT analysis, a resource based VRIO examination carried out by

The Company has resulted in the following conclusions. The product is valuable in that
prices for units can be set unlike a typical commodity market place and since
prefabricated homes take approximately 40% less time to frame there is economic value
in the product itself (Dynacor Media Group, 2007). The rarity of this product is the
vertical integration of the company which allows for greater control. The organization is
not easily imitated due to the level of automation in the plant and the capital expenditures
that can occur due to the connection to the parent company. Organizationally the firm has
a dedicated and passionate work force that is concerned with the company's future.
Customer service is another factor in the firm's competitive advantage.

4.3

AREA DESCRIPTION

Ontario has a land mass of917,741 square kilometers with 158, 654 square kilometers of
fresh water giving it the third largest land mass in Canada after Quebec and the
Northwest Territories. (See Figure 4.1) Ontario has a population of 12,803,861 as of July
1, 2007, representing 38.8% ofthe total population ofCanada and the largest of all ofthe
provinces. The majority of the population lives in Southern Ontario with fewer large
centers as one moves north. Almost 40% of the population of North America is within
one day's drive. Ontario has extensive paved highways, including a 14 lane section of
Highway 401 , the second most traveled highway in North America. In addition to
numerous trucking routes, Ontario has rail-lines that run to eastern and western Canada as
well as to the United States. There are over 60 airports in the province that receive

17

scheduled flights . The St. Lawrence Seaway is a system of water that connects Ontario
with the Atlantic Ocean and houses 33 cargo loading ports Ontario (2008).
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Figure 4.1

Map of Ontario

Ontario has a very diverse work force probably due in part to the sheer population. Table
4.3 shows the number of people employed per industry. It is evident that there are skilled
workers in all industries although the numbers in the manufacturing sector have shown a
decline of almost 8% from 2002 to 2006. The manufacturing sector pays a rate of22.12%

18

federal tax and 12.0% provincial tax for a combined tax rate of 34.12%. This is the same
tax rate as in British Columbia for the manufacturing sector Deloitte (2006).

1,638.8 1,636.5 1,600.5

1,603.0

1,629.6

Agriculture

76.7

81 .5

78.9

93.1

100.4

Forestry, Fishing, Mining , Oil and Gas

34.9

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34.7

38.7

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25.0

22.5

21.4

23.3

27.0

Utilities

52.9

54.5

58.4

49.9

49.0

Goods-producing Total

Manufacturing
Construction
Service-producing Total

1,093.9 1,093.3 1,099.8 1,046.0 1,007.2
344.5

369.1

367.6

394.8

405.2

4,428.4 4,583.5 4,677.7 4,761 .2 4,892.2
290.3

294.7

289.4

922.6

944.7

969.6

995.2 1,015.7

Wholesale

224.0

226.2

241 .1

248.5

244.4

Retail

698.6

718.6

728.5

746.7

771.3

Finance, Insurance, Real Estate and Leasing

392.9

414.9

435.5

451.9

476.8

Professional, Scientific and Technical Services

436.2

448.6

441 .2

443.4

453.8

Business, Building and Other Support Services

247.2

264.4

277.6

282.5

295.8

Information, Culture and Recreation

298.2

289.4

303.0

300.7

319.6

Transportation and Warehousing

278.8

Trade

296.1

Accommodation and Food Services

361.3

369.8

365.6

364.3

373.2

Educational Services

369.3

376.0

390.0

428.2

444.5

Health Care and Social Assistance

581 .8

611.6

635.0

626.3

638.2

Other Services

246.7

264.3

253.5

256.9

264.0

293.1

309.5

312.2

322.4

314.5

Public Administration
TOTAL- ALL INDUSTRIAL SECTORS

6,031.4 6,213.2 6,316.5 6,397.7 6,492.7

Statistics Canada, Labour Force Survey 2006, February 2007 (312007)

Table 4.3:

Ontario Labour Force

At the present time the ruling provincial premier is Dalton McGuinty, who has held
power since October 23, 2003. Mr. McGuinty is a member of the Liberal Party. In the
March 2008 budget, Mr. McGuinty' s party concentrated on investing in families and
quality of life (Ontario Minister of Finance, 2008). Ontario is considered a free market
mixed economy and represents almost 40% of the gross domestic product (GDP) of

19

Canada at over $556 billion in 2006 (Ontario, 2008). As shown in Figure 4.2 the
economy is diversified with finance, insurance, real-estate and leasing with the top GDP,
by industry grouping, and then manufacturing in second place.

110,000
100.000
90.000

....

80,000

~

70.000

ClO
ClO
VI

c:

60.000

·e~c: 50,000

-o

u

~

.5

40.000
30 .000
20.000
10,000
0

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

industry
1: Primary
3: Construction
5: Transportation & Warehousing
7: lMlotesale Trade
9: Finance, Insurance. Real Estate. & leasing
11 : Education
13: Ms. Entertainment & Recreation
15: Public Aiministration

2: Manufacturing
4: Utilities
6: Information & Culture (incl. telecommunications)
8: Retail Trade
10: Professional & Aiministrativ e Services
12: Health Care & Social Services
14: Accommodation & Food
16 : Other Services

Source: Ontario Ministry of Finance, Ontario Economic Accounts, Q2 2007,
October 2007 (1012007)

Figure 4.2:

Ontario GDP by Industry

The provmce has a number of regulations including business regulations, land-use
regulations, environmental regulations and labour relations. The province of Ontario
makes policy in regards to the environment while municipalities make their own
development decisions. Construction in the province is governed by the Ontario Building
Code.

20

Ontario is known for its "cottage country". Due to presence of significant freshwater, the
province has numerous lakes that are found in a variety of geographic areas. The most
popular of these is the Muskoka Lake region found to the northeast of Toronto as shown
in Figure 4.3. This area is where most of the cottage building occurs within the province
of Ontario. In 2005 it was estimated that nine percent of Canadians owned recreational
property and that five percent more planned to buy in the next few years (Royal LePage,
2005).

Muskoka Tourism 2008
Figure 4.3:

Map of the Muskoka Region

As the population ages, it is suggested that there will be more new construction, rather
than re-sales and that the sale of vacation properties will be popular. In Howland (2007)
Richard Yasinski, a planner with Financially Sound in Stittsville Ontario believes that
cottage property is going to be a good investment for 30 to 40 years and that people may
be willing to find extra money, believing that recreational properties may improve their

21

lifestyles (CanWest Global Interactive Inc., 2004). Table 4.4 shows that in almost every
province of Canada that the prices of recreational properties are in fact on the rise.

-

Recreational Propert)l.Price ~ r ..... ...
\
A1verage Price by Provi ee
*l
Standard Land Access Waterfront Properties
,... J ,.. .,_.__.., 2004
06)5
"1'

Prov!ncJ
Prince Edward Island
II(
s~
New

$ 115,000
$79,375
$ 147,000
• - .. $ 47,?00

$ 119,375
• ' $ 4,:5/15•
$ 146,500
--u $,.53,000

$ 328,667
$ ~
$ 204,167
...... ' . . .. $1 0,0(')0
$ 500,000
~ 135 2§
$ 203,441
National Average Cottage
Source: Royal LePage 2005

$ 412,500
d$ 354,212
$ 262,500
-. ~ $ !57,500
$ 625,000
d $ 144
~
$ 235,654

.......

Quebec
Ontario
Manitoba
Saskatc ewan
Alberta

Table 4.4

...
J.

% Change
3.8%

~
...... .--

•

1

-0.3%

7.2%
28.6%
I I
5.0%
25.0%
.J .O%
15.8%

,

l_ 1

National Cottage Prices

CHAPTERS
5.1

RESULTS

Initially, discussions with the company and the use of existing research led to the
formation of the location criteria as shown in Table 5.1. The company then ranked
criteria against each other using a point system. During this ranking process information
from both the internal and external analysis completed in the Porter's Five Forces
analysis, SWOT analysis and VRIO analysis, were used to determine the five most
important factors to be considered for the expansion. The combination of a ranking scale

22

along with analysis of the firm, both externally and internally allowed for the most
important factors to be identified. The five key factors were determined to be in, order of
their importance: labour availability, labour cost, business environment, transportation,
and taxes.

n en

•

1

•

I

...L

, -

ewage, etc.}
~
Transportation availability and cost
.............._ .-,-.- . . ..
. _ . _ • j IL""''
~es
~ _
Accessibility (for company)
....,....
1
Labour Costs
-a. ..
Labour Availability (including managers)
ProKirpitM r o ~ e - .,
• _ ~
Resource Availability
1 .
Envif ~
:policies
Suppliers
~r

--L_._ . . . ._. -.._"'..

..

.._-

1
.....,

I..

._

....... -I...J

Business environment (new firms in the area, expansion of firms, incentives, etc.)
Table 5.1
Location Criteria

Seventeen communities were selected according to their proximity to the distributor and
distance from the greater Toronto area. A location too close to Toronto would be limiting
to the company due to demands on industrial space and the cost of transportation. The
majority of communities are found to the north of Toronto and to the east of Lake
Superior. First Nation Reserve Communities were not selected due to The Company's
desire to have a distributor in the selected community. Each community was coded with
the same letter for each criterion.

23

Once the seventeen communities were determined, labour availability was determined by
looking at the demographics of the community's population. Initially population size and
sex distribution were determined. Table 5.2 shows the demographic breakdown
community by community with the overall Ontario situation included. Please note that in
all of the following tables, numbers in red indicate high statistics in a given category and
numbers in blue indicate low statistics.

Community Population
A
B

c

D
E
F
G
H
I
J
K
L
M
N

0
p

Q

Change from 2001 (in%)

47,625
128,430
48,821
15,652
433,806
21 ,957
114,943
18,280
117,207
53 ,966
30,259
21 ,753
74,898
74,948
157,857
109,140
97,475

Ontario
12,160,282
Statistics Canada, Census 2006
Table 5.2:

18.6
23 .8
6.1
13.8
33.3
3.0
8.3
5.4
2.6
2.3
3.9
1.4
4.8
0.5
1.7
0.1
12.6

Average
Age
37.2
35.4
41.8
44.5
33.7
44.2
36.4
43.5
40.0
40.8
42.7
43.4
41.7
43.9
41.1
41.7
35.4

Male
Age
36.0
34.5
40.2
43.1
33.2
42.7
35.5
42.7
38.4
39.1
41
41.4
39.5
42.9
40.1
40.6
34

Female
Age
38.0
36.1
43.2
45.7
34.1
45.6
37.4
44.1
41.4
42.0
44.2
45.4
43.6
44.7
41.9
42.7
36.7

6.6

39

38.1

39.9

Population, Age and Sex Demographics

In addition to population and age levels, it was imperative to know about the stability of
the community. This was measured using the data for people who still lived in the same

24

address one year ago and five years ago (shown in Table 5.3). While this information is
valuable it must be realized that while someone may not live at the same dwelling that
they did not necessarily leave the community.

Community Lived at same address
1 year ago (in %)
90.2
A
82.6
B
c
82.9
D
88.0
83.7
E
F
85.0
G
83.8
88.4
H
I
82.6
83.6
J
K
82.6
L
83.9
M
83.5
N
87.0
87.4
0
p
87.9
Q
83.6
Ontario
86.0
Statistics Canada, Census 2006
Table 5.3:

Lived at same address
5 years ago (in %)
57.3
46.1
56.7
62.0
45.1
55.7
53.0
61.7
53.9
56.5
55.0
57.0
56.8
66.7
64.2
65.2
52.7

58.7

Dwelling Rates and Migration

Education rates indicate the types of people who live in each community. By looking at
the number of trades-people, for example, this may well show the availability of skilled
workers for the expansion. In addition, the number of people with university degrees
gives a strong idea of the managerial pool in each community. Table 5.4 indicates the
education levels of the working population in each of the seventeen communities.

25

e

~

...-c.
~

bJ)

-.c:-= ...-

~

...

...

"'0
~

...
>
...

...
"'0
...
e

~

~

~

~

~

~
~

....

--=
--

~

-...c.

It')

~

or

~

~

=
'="'
~

~

~

~
~

~
.€
~
~

~
~

~

...

~
~

~

~

"'0

...
~

...
..cc.
~

...t:

.c

~

rll

~

z

15.6

=

21.8

29.4

8.9

c

99,510
39,925

25.3

28.4

D

12,870

21.0

E

332,235

F

~

c.
~

=

e=
e

u

"'0

~

....c

~

- -

...=
~

~

~

~

~
~

~

~

~

~

~

~

~
~
~

...

.c
bJ)

rll

~
~

...c.=
c.

<

~
~

~

t:

bJ)

~

~

...
e

"'0

,.Q

~
~

....c...

e
~

-...c. -c.
...
...
~
~

~

~

~

>

~

-

"'0

-

I

~

"'0

~

~

~

~

~

...

-...

...

~

~

~

- ...
- - ====
..
~

~
~

- ...
...

~

~

~

~

.c
~

--... -~

~

~e
~

~

-~ c.

U"''
20.7

~
~

....c ... ....c
...=>.C .c:
~
~

~

.€
~

~

.rll

rll

~

~

~

~

~

~
~

=

~
4.8

~

23.6

3.3

13.1

7.6

23.3

2.5

12.8

27.7

11.1

22.3

3.0

14.8

22.6

29.6

7.7

17.4

5.6

17.2

18,310

25.6

27.7

7.4

23.7

3.2

12.2

G

92,390

20.0

27.7

7.3

17.2

3.5

24.4

H

14,965

25.2

28.4

11.2

18.8

2.5

14.0

I

95,520

18.2

26.6

7.4

20.4

3.2

24.1

J

44,315

23.8

25.8

10.1

23.1

2.8

14.4

K

24,160

27.2

27.9

9.2

21.3

2.6

11.8

L

17,445

28.8

26.9

9.6

21.3

1.9

11.5

M

62,355

23.6

28.7

7.8

21.8

2.6

15.4

N

62,455

25.4

28.4

9.3

20.2

3.0

13.7

0

129,435

25.7

25.0

10.7

23.1

2.3

13.2

p

89,545

25.6

25.4

10.8

20.2

3.0

15.1

Q

78,980

16.3

27.2

6.0

16.0

3.4

31.2

22.2

26.8

8.0

18.4

4.1

20.5

~

A
B

36,470

9,818,420
Statistics Canada, Census 2006

Ontario

Table 5.4:

25.3

5.8

28.0

Education Levels as % of Total

26

Table 5.5 shows the workforce involved specifically in the manufacturing industry. Not
only does this provide information about the number of workers in the industry, it is also
very indicative of each community's level of manufacturing activities.

Community Manufacturing Industry Total experienced labour % in Manufacturing
15 years & over
3,275
10,315
3,590
780
50,375
1,655
15,985
1,200
2,845
1,530
1,280
1,425
3,855
4,565
4,770
4,300
8,895

27,355
71,140
25,000
8,460
236,265
10,250
65,770
9,800
60,310
26,660
15,295
10,570
37,500
36,420
79,795
55,655
55,550

12.0
14.5
14.4
9.2
21.3
16.1
24.3
12.2
4.7
5.7
8.4
13.5
10.3
12.5
6.0
7.7
16.0

Ontario
899,670
Statistics Canada, Census 2006

6,473,730

13.9

A
B

c

D
E
F
G
H
I
J
K
L
M
N

0
p
Q

Table 5.5

Percent of Labourers in the Manufacturing Industry

27

The last component of labour availability is that of the unemployment rate. Table 5.6
indicates the unemployment rate in each community. Economic aspects of the community
can impact this rate. For example in one community there is a low unemployment due to
strong economic activities in the mining sector in that community.

Community

Unemployment Rates

A
B

5.0
6.0
6.5
3.9
6.6
7.6

c

D
E
F
G
H
I
J
K
L
M
N

4.8

7.0

7.7
5.7
7.4
8.1
8.1
7.8

0
p

7.2

Q

5.5

Ontario
Statistics Canada, Census 2006
Table 5.6

5.3

6.4

Unemployment Rates

The next factor that was determined to be very important was that of labour cost. Due to
the nature of this factor it was somewhat difficult to get an exact figure. Some cities
discuss the nature of wages on an hourly basis; others use an annual basis while others
make a comparison to other centers. The province of Ontario has information on the rates

28

in geographic regions of the province. Table 5.7 shows both individual community rates
and geographic region averages, where the community rate was unavailable.
"•

r.

..~

.... • I
...........
~

...,

B

D

••

....

H
I
J
1}.
L
M

1.

~

, Average Genera 1La ouFer's

..

.. 1 • r

......
......

~

. C_.!)mmunity ~ .. ~- .Tr . ] •

1lf f

•

1 -$

2.
r hour
$11.00 to $15.00 per hour*
T
$14.30
$12.00 to $18.00 per hour
$12.00 to $g;oo per ho r *
$14.40 per hour
$1-3.00 per hour I ··1 I

,.- ;

.

J

~r

-··

·-

p

r(* - wages
''-,.
Q.AL.
not available

averages)
( • - as per Economic Development Officer for Community M)

Table 5.7:

~

area

General Labourer's Wage per hour

Business environment was again difficult to measure. Economic Development Offices
were surveyed for each community and results ranged significantly (Table 5.8). Officers
were either very willing to help, did not return any messages or suggested that the
community's website be used to gather the data. Qualitatively this data provided a
significant indication of the community's desire to work with new business.

29

··- ., -

.~

A l-

r

r

B

c ,

•

•

..
"

1.-.

rr
.
'

..t .•

D

......

F

...., /-

.-

, ....

...
•
H
J

•

L_

K

r'.

Table 5.8:

~

-•

---

....

_

o

.............
•

L

0--

..........,.

.-

..,.,..
....

N

l.L.LJ

....

.

~

-

E:mai r.eceived eontalD:liJlg parts of the
community• s web i e
Asked to e-mail my questions
I
-SpoR:e; to assistant and tried to ..contact
Economic Development ®fficer-numerous
times
Spoke to officer and information was emailed
SpoKe
.. e~r and awaited e-trtailed
~ J
information
Spoke to assistant
' ·· . . ., ,..-ynstructed to look a the website
was
later; e~
e information upon second
..l"tLL.
r uest
•
Messages left and not returned
Couldn't eacJlJ Officer

..JIIIIt .......-

•

,
message was sent
,.,. SpoR:e to Officer
and was sent e:x!tensive
.

.

Jill....

data
p
Couldn't reach Officer so an e-mail
message was sent
Couldn' reach Officer-so an e-mail
_.
..........__..
message- as sen
'l
Economic Development Office Responses

1

The information required was generally not received from the Economic Development
Offices so e-mail requests were then sent to all offices. Most replies were from Economic
Development offices that had already given information.

30

Transportation rates were not available. There was not a single Economic Development
Office that could give any data on average trucking or rail costs. For this reason,
transportation was measured according to the different transportation routes available into
and out of each community. The size of the highway and number of highways was
determined as were the rail routes coming into the community. Table 5.9 outlines the

.,

transportation routes available.
.__ Community

...._, ,

4 lane highway
(or distance to
closest one)

l •• -r 1lllf

' .

.......

,..

-

.I

c

.

.....

1
1

---- --,J

F

.... ... H

l

1

.. I!>
E

l"'f r

"'

r

...,...., JI

K

0

•.3

_} . .
2

--y-· ...,...
I

ll

3

f .... . . . . . , . . '

120km

'f

3

1

1

I

_j

1
r .
!4 _J

0

1

_1 _

•

-

0

R

.,

Q
Ontario 2008

Table 5.9:

-

11'

..__ ....

315 km

.... L_A. ~ JrL

j

.r~

2
I L-2
.._.....__..

1

2

•

•

CN
rr ~

CN+CP

•• I

. Cl'L

CN
etf""-t-2 local

.r-

...

..

CN

1

10km

G

>

2
1 ...,_......_
g

"

Number of
Inter-modal
Facilities

Rail facilities

Other major
highways in
community

1

A

~

·- J

1

0

0
0 L
1

-

I

CN
None
CN + 1local
CN+ ...CP L... •
CN + CP
.. . .~ ~ ..
. . ~
CN+CP

lfl_

1
0

3·2

1 ....
0

..,

a

0

~

0
1

~

J...
!

0

Transportation Routes

31

Tax rates were also difficult to determine. The nature of many municipal tax rate
structures is that different parts of the organization will be taxed at a different rate. For
example, the square footage of the office would be taxed at a different rate than the
production floor. To ensure consistency, municipal tax rates, for the industry sector as a
whole, were used for each community. Municipal tax rates in Ontario are calculated by:
the municipal tax rate x the assessed property value.

This information was taken

specifically from community websites.
Community
A

B

c

D
E
F
G
H
I
J
K
L
M
N
0
p

Table 5.10:

Q
Municipal Tax Rates

Municipal Tax Rates
2.783086%
3.305197%
6.477975%
2.48%
3.150304%
4.407281%
5.371425%
2.41%
5.61225 to 5.96259%
3.982115%
3.993903%
5.31%
2.63000%
5.832505%
6.823933%
7.262670%
2.4500%

32

Given the difficulty in finding specific information in regards to the identified factors the
sixth factor, land cost per acre, was used in the general analysis. The price per acre for
land varied significantly between communities. For ease of comparison the price of
serviced land was used.

I

T

Community
A
..
B ,

l

c

E

G

.......~

r. ,.. · ·. . r··

_§ervi ed L;.and Cost er ~ r~
$125,000- $475,000
$23o,ooo - $275,o::--"!o=o----.._l..., f

d .l Jl ..~.

~
~ ~

~

~

>

'JLit
I

....

... ... ...
r

-

Table 5.11:

,..

..

M

,.... ..

I

NIT,
0

Q

~

_ & ...._ _.... .Not available ,

- ...

$125,000

Serviced Land Cost per Acre

33

CHAPTER6
6.1

ANALYSIS

THE MODEL

The strategic site analysis model developed in this paper was derived using both the
strategic analysis theories described (VRIO and Porter's Five Forces) along with existing
site location models. The interaction of both is essential to the functionality of the model.
While it is evident that a simple checklist could assist a firm in finding a site for
expansion, without a thorough examination of the core competitive advantage of a
company the whole concept of expansion comes into question. The model shown in
figure 6.1 not only allows a company to find an expansion location, it also provides a
means to examine internal and external factors that impact the company as a whole. In
fact, it is this analysis of competitive advantage that will drive the selection of factors that
are most crucial to the company's expansion and therefore the expansion location itself.

Firms that simply select a location may neglect the organization as a whole. In order for
an expansion to be successful it must fit with the company's strategic goals and long term
vision which form part of the internal and external analysis. The model displayed ensures
that a company will not overlook the obvious - the real reason for expansion. By
reviewing both internal and external factors, the company ensures that the expansion fits
with the firm's existing goals and objectives. Strategic fit is imperative when a firm
makes the decision to expand and the model will assist with this proposition.

34

Entire
Location
Criteria List

VRIO
Analysis

Porter's Five
Forces
Analysis

----------..-

/
Top 5
Criteria

Analysis of 5 factors

Shortlist
locations

Analysis of remaining
factors

Select the most
suitable location
Figure 6.1

Strategic Site Analysis Model

35

ANALYSIS USING THE MODEL
The firm in question developed the location criteria as indicated in Table 5 .1. Using both
Porter's Five Forces and a VRIO analysis as tools, the company was able to strategically
select the top five factors in site selection. The five factors- labour availability, labour
cost, business environment, transportation, and taxes- were then evaluated.

Labour availability, as indicated, was measured usmg community demographics
including population and population change; number of people living at the same
dwelling in the past one or five years; education levels; percentage of labourers working
in the manufacturing sector; and unemployment rates. It is interesting to note that in all of
the communities studied the population has increased since the 2001 census. There was
not a clear pattern in regards to population growth (Table 5.2). While mid-size to larger
communities tended to see higher growth rates (community B - 23 .8%, E- 33.3% and Q
- 12.6%), two smaller communities saw double digit growth (community A- 18.6% & D
- 13.8%). The remaining communities saw growth of less than 10%. The average age in
each community ranged from 33.7 to 44.5 years of age, with an Ontario average of 39.0.
For females the range was from 34.1 to 45 .7 years, with a provincial average of39.9. The
range for males was 33 .2 to 43.1 years of age with a provincial average of 3 8.1.

Dwelling rates and migration were provided in Table 5.3. The percent of people dwelling
in the same home one year ago ranged from 82.6% to 90.2%, with the provincial rate
being 86.0%. These figures were not as diverse as the numbers living in the same home
five years ago. The range for the five year period was 45 .1% to 66.7%, with the Ontario

36

rate being 58.7%. The communities with the lower percent of stability, for both one year
and five years, tended to be the larger communities (B, E, I, and Q). Smaller
communities, such as A, D and H, showed higher dwelling rates for both periods. This
may indicate that people in smaller communities are more likely to stay in one home but
communities N, 0, and P, which are mid-sized to larger communities, show a relatively
stable dwelling rate. This data may well show some trends in migration but economics,
geography, and life-style, which were not measured, also play a considerable role.

Education rates for the seventeen communities were measured (see Table 5.4). The
number of people without high school education ranged from 15.6% to 28.8%; with high
school education from 25.0% to 29.6%; trades or apprenticeships from 5.8% to 11.2%;
college diplomas from 16.0% to 23.7%; university certificate or diploma below bachelor
level from 1.9% to 5.6%; and university degree at the bachelor level or higher from
11.5% to 31.2%. The number of people without high school education and the number of
people with university degrees seemed to have the largest variability. When viewing each
community there was a correlation between the percentage of people without high school
education and those not having university degrees, as one would expect. Community L
for example had a high percentage (28.8%) without high school education and a low
percentage (11.5%) with a university degree. Community Q on the other hand, had a low
percentage (16.3%) without a high school education and a high percentage (31.2%) with
a university degree. Given that the company requires high school graduates to work in its
facility this number is very pertinent. The range for each community, in terms of high
school completion is relatively small. It would appear that there are a significant number

37

of high school graduates in every community which provides a good labour pool for the
organization.

Perhaps even more crucial than the number of high school graduates is the number of
people employed in the manufacturing industry. There is a significant range of 4. 7% to
24.3% of the population of each community employed in the manufacturing sector. There
was no direct correlation between the size of the community and the number of workers
in this category. Of course the industrial activity in each location will have a direct
bearing on the number and types of workers in that field. A higher percent of workers in
this area indicate that the community is quite involved in manufacturing activities.

Unemployment rates ranged from a low of 3.9% to a high of 8.1%. Again these numbers
need to be looked at in relation to the size of the community, the types of industry in the
community (e.g. is there seasonal work?), and economic factors in the community. Also
the stability of different industries and whether or not there are trends in unemployment
should be looked at for the short listed communities.

General labourer wage rates were essentially very difficult to analyze. The rates appear to
be well within a given range. Since average hourly rates were found for some
communities, and for others a regional average, the data does not provide a clear
indication as to whether or not a community's labour rate is advantageous or not. This
data gives an indication of very general salary expenses and probably nothing more.

38

Economic development office responses were very enlightening. As indicated in Table
5.8, the responses varied from extensive feedback to responses such as "you can find that
information on our website". This information, in fact, proved most valuable. There was
no one other factor that impacted the shortlist and final selection of sites more
significantly. When a community's first line business person is willing to assist a
company in any way this indicates that the community as a whole is "open for business".
Communities L, M and 0 were very proactive. Community M's Economic Development
Officer spent a very long time on the telephone in discussion about the project. This
person then e-mailed and offered assistance on any further information required.
Community L's Economic Development Officer spent a considerable amount of time
asking questions about the project. In addition this person followed up twice withe-mails
and information, and offered to come to Prince George to give a presentation (or for
representatives to come to the community). Community O's Economic Development
Officer e-mailed extensive information in regards to the community. Community D's
Economic Development Officer e-mailed pieces of information from the community
website.

After the first request over the phone, a second e-mail request went out to communities.
The response varied again. Some communities replied with very direct information, while
other communities did not respond.

Given that communities were given two

opportunities to provide information, responses perhaps indicated a willingness, or lack
there-of, to accommodate new business in their community.

39

Transportation is paramount to the success of this organization. Housing components will
be shipped throughout the province of Ontario and into Manitoba, and in the future
perhaps into Quebec. The majority of communities, with the exception of three (G, L, and
0) have four lane highways within their municipality. All but four communities (A, D, M
and N) have more than one highway system going through their town. Community L is
the only municipality without rail access. Eight communities have inter-modal facilities
at their rail yards . It is evident that Ontario has extensive transportation routes and that
none of the communities studied is secluded. Ports and airports were not studied as they
would not be the primary means of transportation for this product.

Municipal tax rates varied significantly from community to community. The range was
from 2.41% to 7.262670%. While this appears to be a significant variation, the
calculation of assessed property value x the tax rate indicates that two factors determine
the actual tax payment. While a municipal rate may be low, the property assessment may
be high, in which case a company would still pay a considerable amount of tax. This
indicates that property assessment is as important as the tax rate itself. Since the property
has not been chosen, and there is no assessed property value, it is difficult to determine
the amount of taxes that will have to be paid.

The price of serviced land provided another key indicator to site selection. There is a
considerable range in the price of serviced industrial land from community to
community. The range is from $12,000 to $600,000 per acre.

When a company is

looking for an expansion location, land price could be a determining feature. It would be

40

difficult for a company to justify spending $600,000 per acre for land when in another
community similar land goes for a fraction of that cost. The data collected is for the
average cost of serviced land. It is important to note that the type of land is not indicated.
In community J, land cost is relatively low but the development cost is high. Topography,
zoning and location will all play a role in the price of the land. Another factor is that
some of the land is owned by the municipality and other land is privately held. This can
impact sale price as well.

6.2

SHORTLISTING COMMUNTIES

Six factors were looked at in order to determine a group of communities that appear to be
the most attractive. Population demographics, including size, change in population,
average age, migration and dwelling rates, education levels, percentage of the population
employed in the manufacturing industry and unemployment rates, were studied. The sixth
factor, average cost of serviced land, was added to help further differentiate between the
communities. While the data suggests that there may be some communities more
attractive than others, in terms oflabour pool, this information was not significant enough
to eliminate communities.

Labour cost was very difficult to accurately measure; therefore this data gives an overall
picture as to the cost of labour but is not precise enough to justify selecting one location
over another.

41

Economic Development Officers response was very informative. First impressions really
do have an impact on decisions. Responses ranging from extensive telephone
conversations and follow-ups, to no reply at all clearly show which Officers were
interested in assisting a business start up in their community. Three Officers, with a
potential fourth, stood out in this category. Responses from Economic Development
Officers in Community L, M, and 0 were by far the most extensive and welcoming.
Community D's Economic Development Officer also provided information quickly but it
was more of a summary of existing information. As for the remaining communities,
responses were received from Economic Development Officers in communities A, B, G,
I, J, and K with specific questions answered. Community P's Economic Development
Officer e-mailed to indicate that it had received the e-mail request and would respond to
it at some point. The other communities' Economic Development Officers did not reply
and for this reason were eliminated from the list (Communities C, E, F, H, N, and Q).

Transportation routes throughout the province of Ontario, both in terms of highways and
rail, appear quite extensive. Most communities had more than one highway coming and
going as well as a four lane highway through the municipality. The four lane highway is
more than Prince George has at the present time. While community L does not have rail
access or a four lane highway, it is not being eliminated at this point due to the nature of
the replies from the Economic Development officer. Due to the extensive highway and
rail routes in the province, transportation routes did not provide enough qualifying
information to eliminate communities.

42

Tax rates were very complicated due to the calculation of assessed property value x
municipal tax rate. While municipal tax rate could be quantified the property value could
not. Therefore, taxes paid could not be determined. A further complication was the fact
that different parts of the building may be taxed at a different rate. Until a building is
constructed or purchased the tax rate would remain uncertain. Due to the significant
number of variables, tax rate as quantified in this study does not appear to be a good
criterion for the short listing of communities and was not used to eliminate communities.

The sixth factor, land price, was quite useful. The prices ranged significantly but as
previously noted there was no distinction made about the type of land other than that is
was serviced industrial land. Due to the significant price of land (i.e. land over $100,000
per acres) communities A, B, and G were eliminated. (Communities E, H and Q were
already eliminated due to lack of contact from the Economic Development Offices.)

At this point eight communities remain. These communities are D, I, J, K, L, M, 0 and P.
The next factor of importance was determined to be utility rates . Appendix 1 shows the
utility rates for the communities. Community D provided outdated information for two
utilities - water and sewer so they are not indicative of today's rates. The other
communities (with the exception of one) provided current information. Looking purely at
electricity costs, based on 92 kW or 954 kWh for the company' s requirements, the cost
per community is shown in Table 6.1. Community M certainly shows a significantly
lower rate than the majority of the other communities. Community D and L show very
high hydro rates and will therefore not be likely candidates for site selection. Natural gas

43

is provided to the majority of communities by Union Gas so there is little variation in the
pnce.
D
I
J
l

L

l ...
I

-'·

...

...L',II[•

,,f]
)

.,...

0

.P·

._

f

""'"-

I. .

.....

T

• · Estimated Eiectrical (t)harg_e er Mont
$1376.82

•

...

~

~

--..

•1

$913.36
$760.18
$1133.41
$425.]5
$953.15 *

........

........

,

.

(* - Commodity charge omitted as it was not available)
Table 6.1:
Estimated Electrical Charge per Month

The next variable to be measured is site development cost per acre. Site development
varies significantly from one property to another. Development costs also vary from
community to community.

Community I waives development and impost fees .

Community M also exempts development charges on serviced lots. The other
communities did not provide specific details in regards to the cost.

Accessibility is an issue for the company. Since the parent company is located in Prince
George, management will need to travel to the second location. Any expansion location
must be reached in one day of travel from Prince George. All of the remaining locations
fit these criteria.

Zoning does not appear to be an issue as all communities have industrial areas and have
sites for a manufacturing facility. In fact the next three factors, resource availability,
suppliers, and proximity to markets also do not have significant impact. The communities

44

are found in areas where there is access due to the extensive transportation routes
throughout the province of Ontario.

Competition may be an issue for the final selection. It was noted that three companies
have a significant presence in the Ontario market. Royal Homes had seven distribution
centers in Ontario (Wingham, Windsor, Beaverton, Stirling, Minden, Innistil, and
Peterborough) (Royal Homes, 2008). Lindal Homes has two locations in Ontario (Barrie
and Thunder Bay) (Lindal Homes, 2008). Viceroy Homes is definitely the largest
company in Ontario with locations in 35 communities (Minden, Dorset, Midland, Innisfil,
Peterborough, Bobcaygeon, Brockville, Thornbury, Bancroft, Kincardine, Etobicoke,
Parry Sound, Markham, Gravenhurst, Woodview, Belle River, Belleville, Mississauga,
Nepean, Honey Harbour, Elliot Lake, Whitby, Round Lake Center, Flesherton,
Hepworth, Kingston, Woodbridge, Hamilton, Beaverton, Kirkland Lake, Grand Bend,
Timmins, Lucan, Huntsville, and Mindemoya) (Viceroy, 2008). It is evident that Viceroy
Homes is found extensively throughout the province and will therefore be a competitor
regardless of the community selected by The Company. The Company' s advantage will
of course be its relationship with the distribution network. While competition will be
considered there are in fact only two communities listed above that are on the short listed
group.

Given all of the information in regards to the key location criteria three communities have
been selected. The three communities with the lowest hydro rates were chosen as finalists
as they fulfilled all of the other requirements for short listing. These communities are I,

45

K and M. The three final communities compared in terms of all criteria are shown in
Table 6.2.

Average age
D en· grate (one
..
year
r
Dwelling rate (five
years)

~ ,_

Com unity I
40.0
82.6

J

53.9
26.6% .
I.

% ofwork force in
manufacturing
pn'employtnent rates 1a
General Labourer' s
wages

Com umtf K
42.7
~.

L..J..l

41.7
83.5

55.0

56.8

-. 27.9% -

28.7%

.J

4.7%

,..

..- <;ommuni
.

• 8.4%

~

~

10.3%

.1%

. .IIi

r

8 - 12% lower
cost than other
areas
e-mail was sent after A e-mait as sent after Spoke e-x: nsively
........ l...Econorrlic
'
,!
no reply to voice ... · to Officer
•~ n\3 ·eply to voi'ee
Develop,ment l s
messa e
pho e response
1111 ·w.. . . o= =
e-mail reply
e-mail reply
e-mail reply
Economic
Development 2"d ereceived
received
received
mail response
4 -lahe--highway
4- lane ~
Transportation Reutes
' 4 lane ~ ay
~e er lligliw-ay
3 - other lligliway
Ne other
G rail seooee ~ · CN rail se~ e
,.
highways
...
~ ~ inter-:modal
2 inter-modal
CN + 1 l?cal ~ ,.
,.;111ft
4
facilities
facilities
seF¥J.ees
••
••
No inter-modal
~
~
facilities
I
3.993903%
Municipal Tax Rates
5.61225 to
2.630000%

r

I

$15 .00/hour

j,

...

~

••
.......

per acre
Estimated Electrical
Charges per month
Table 6.2: Summary of Attributes of the Final Three Communities

_...___

..

$425.75

46

In reviewing the three finalists it would appear that in almost every factor Community M
is the forerunner. For this reason it will be recommended to The Company that
Community M is the first choice for site selection. Community I and K would be
alternates.
CONCLUSION

This study showed that the use of theory, both Porter's Five Forces for external review
and VRIO analysis for internal review, along with general site selection criteria is an
efficient, thoughtful process to determine key factors for determining an expansion
location. The addition of theory clearly indicates to a company the reason for deciding to
expand as well as those factors which will be paramount in the expansion decision. The
model as proposed is a very useful tool to at the very least determine the top criteria for
selection.

While it had been anticipated that an environmental component would be added into the
model, this proved not to be possible. Environmental regulations and laws were very
specific and as such did not fit well into the criteria set out. For this reason the
environment is not part of the model. It is hoped that at a future date this very important
aspect can be integrated into the model.

Once the five top criteria were determined some of the information was very easy to
gather, while others were more difficult. It was evident that Economic Development
Offices did not respond well to telephone contact. It would certainly appear that the
majority of offices prefer to communicate via e-mail. The Officers who did respond to

47

telephone calls were, with the exception of one city, very willing to discuss their
community. In fact these Officers seemed by far more interested in the prospect of doing
business, and sent signifiqmtly more information in regards to their community than
those who relied on e-mail alone. While e-mail requests may have garnered a better
overall response, the enthusiasm of the Officer to investment in his/her community could
only be measured by actual conversation. This component is essential to selecting a
community for expansion and therefore phone interviews were beneficial. Economic
Development Offices could learn lessons in how their approaches to requests are received
by the caller. Perhaps a request for proposal as shown in Appendix 2 could have initially
been used and then a follow up telephone conversation could have been made.

While five criteria (labour availability, labour cost, business environment, transportation
cost and taxes) were initially selected there was not enough difference between
communities to allow for elimination of the location. The addition of the sixth factor
(land cost) provided more meaningful data and allowed for communities to be ranked
against each other. Analysis of the six top criteria allowed for the list of 17 communities
to be reduced to eight communities. Using the existing criteria, especially hydro rates,
three final communities were selected. Thirteen differentiating criteria were then
compared to deduce that Community M is the most suitable location for the expansion of
a manufacturing facility.

The strategic site analysis model is a beneficial tool to any company wishing to expand.
While the model was derived specifically for a manufacturing firm it is evident that the

48

tool could be used in any type of organization. The criteria are not selected by chance but
are instead determined by an extensive evaluation of the company's situation. By
reviewing both internal and external factors a firm should better understand its
competitive advantage and should be able to lever this advantage in its expansion.
Without a solid understanding of the company' s strategic position any expansion may
well not fit into the company's long term plan and ultimately be a failure. The use of the
strategic site analysis model will ensure that there is a strategic fit between the expansion
and the existing operation. It is hoped that this will allow the company to be better
situated in the. long term after going forward with the expansion. Synergies between the
existing location and the new location should also be better understood and leveraged
using this model. The strategic site analysis model therefore not only provides a company
with an expansion site but also with a strategic tool to maximize the firm's performance
and create competitive advantage.

49

APPENDIX 1 Community Utility Rates

,. ..- _.

Community D Utility Rates

.,

Consumption Rate

,._,.
~e

~

r

L..al •

..... __

...

_

•

...

.. .. ..... .~ ..

Debt Retirement

r·.
r

..._.. .... -

Monthly Service Charge

~

·-

odity ~e
Transportation
0

-.,- -

. -.r.J

I

Delivery includes: Customer Charge
Di 'bution
Transmission Network

~

T

ates)

Electricity Charge: I" 750 kWh

$2.1218/kW
$1.7882 w
$0.25/connection/month
$0.0062tk:
$.0070/kWh

••
..........

$0.041155/m3

g

Delivery: First I ,000 m3
• · t9,000m3
Next 20,000 m 3

7 ,

All over I 00,000 m3

$0.050375

T

...l...:....J: $0.044848
$0.023913

Community I Utility Rates

- •

I

l :.....__] .J

-

Consumption Rate - first 50 m3
0 erj0m3
Rate

-. _

..

r

...

•

----

1lJ

-- L

L

Natural Gas (as of April I, 2008 rates)

-I

-.::.

I

I

$0.305197/m 3
$0.04
.~ $0.019088/m3

1

'I--.

- .,.

_. J. S70.

•

o.e1 145

~ ~~

'1 ... !"'*

~

Il

...-

an

LL.....
-T

---50

Community J Utility

Third 50,000 gallons

•

Rate

L.

-

l

••

..l._._
Wa!£r ~~r es
$3.21 /1,000 gallons

...1 .-- ...J

$,2. 4/1 ,QQOMb
$2.46/1,000 gallons

Sewage

.•

y·

-

~ es

..,

... -.,

I

- , -__, -..--·.-.
~ ...

.

Regulatory asset recovery

....

.....

Retail transmission rate - Line & transformation connection
service rate
Rural rate protection charge
Standar1i .supply serviceAgp,rill.i§.trative chm;ge (if .~

}

$1.6678/kW

.l

•

$0.0010/kWh
$0.25

$0.30 1980/m3
$0.035432/m3
$0.015960/m 3

Gas Commodity Rate

~

l$o.o74f4s

$0.059007
$0.044848
- "$0.023913

·-....
s J

.

-

cost:

te per CO]Illectio
Basic S_1:w
Sewer Use Rate

Service charge

onth

$1.00/m3 or $4.55/1,000 gallons

_ """"'"""'..:,..'ty (50 to 4,999 kWX2o07 rate§)-

------

DistribJI..Iio n volu . c ge
Regulatory asset recovery

-

r

__.._ u

$337.98
$
($0.1113/kW)

--

Gas Commodity Rate

T s
Storage

. I

L

'If . .

.....

ry: """"'"""""""""",___.

Next 9,000 m 3
e 2@ 000 m3,_•_.•jr

Next 70,000 m 3
r.\11 over 100,0

1

•

-

...

Natural Gas (2008 rates)

Ll -----...:..
""

$70

- '

-:-I_ 'T TI.-

..r• :.a.- -

.....

, """"""'
<..:....:..:...""'
$0.059007
$Q.050375

4

-

..f_...JI
r::-..::::· ..I.I.I I
a

~ - i __,

$1.2987/kW

$00052/kWh
$0.0010/kWh
...-"' rs"0.25

...

... ----

j[ $'1.5640/kW

Retail transmission rate - Line & transformation connection
service rate

WholesaJe market s ·ce Jile _
Rural rate protection charge

. ,.... ,

-... . 1 I

Water (2008 rates)
$8.45
' $,0.8:Um3 or $3 .73/1,000 gallons
Sewer (2008 rates)
-, $8.45

Basic Water Rate per connection/month
~

r--

•

- -.. .. ..

Community L Utility Rates

..

u .L..;

::-slg_<:k J..i.rn!t ·,o
Next lOOm

.......-

Consumption charges :

_..

N
~
Balance

T

.. ..

I

r

·---""

Rate

$0.669/m 3

_.

"'"J

1 l

n-...a

W•

.

~.

.:.·-

'1...1:

$0.25/month
$0.0010/k:Wh

--

~
$0.54/m3
.--:
$0.38/m3
Sewer (2008 rates)

..

.L...... ..-.

..

., '

l

•

~

.J.

-

....

,--

~

.

I .

Tl

•

.L. 1

=--- . ,
::JL.::::

I

lJ

J

I_

$217.77

j

-- _.
..._
1

1

Natural Gas

~

+

$0.305197 /m 3
$0.019088/m3
$,0.0 4145_

r

.I rlJ 'L£

[ _:_r,rul"""''llw_.......

..

..

··-

..,.

.
L

...

$0.059007

1
.... $.{>. Q 7.
$0.044848
L .. _ 'LJ Q,Q23913 IT .J

.L

...

••

Electricity (2008 rates)

1 ..• ..--

-

$1.73/k:W

• $p.

•

Fixed Service Charge Monthly
LOca1JYjstifbution variable rate

Storage
De\<

-·

. ~
$8.65/k:W

0.033964
$0.031445

..:=J ra..-... I

l.J.

~

$0.305197/m
$0.030472/
$0.007273/m3
$Q.036769
$0.036064

'"TJ. _-.~ .-a W

l

_j

3

Gas Commodity Rate
~ r
-..I.

Consumption :
0-100

..

•

~~ ...... . ... .

r'l

Standard supply service administration
Rural rate protectiop chatm;_
_
Wholesale market service rate

I

1 $0.660/nP--. ..........

..,

_)_'\.a

I

$0.596/m3

--·'

-

'

52

Community 0 Utility Rates

.Consumption Rate -W

~r .

'1. l

w er

Rate

r•

..... - ....
-

J

r

r~

L...... -

$177.96
$3.i5b5tkW
$0.0062/kWh

~ er ~ s ot price

.JO.l.ll-ltl..'><!!
as (as of April I,
$70.00

I

. $0.074145

r

$0.044848

~

so.Q.£3913-.

P Utility Rates
..... ~ r.

~

All over I 00,000 m3

=y

~ es

$1 .5848/m 3

]a_

-

so.04527tday

T I' [1• •1

Electricity (2008 rates) -Not available

L

.,

Natural Gas (2008 rates)

-

JL

1

n

.LL

. ~

""""""'""""""'""'

l . rw .-

--

··--

I......,..==<:.M;..... f

_l•

·····"'-

r

$4.4743/kW

kWh x
$0.0062

,....

•

• sp.oo11 :w1l

• r.
.....

"'1.. .._- •

Jnr

Elecl ri

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53

APPENDIX 2: Sample Request for Proposal (RFP) for site selection

~ Pa rkl .lnd Onu lt"vMd
~

AUSTIN CONSUl-TING

.

~

~

s

Ohio r. .

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.~

.

PH 440.SH .2600 f>: 440.544.2690

DATE:

July 20, 2007

TO:

Selected Regional and Local Economic Development Agencies in Ontario

FROM:

Don Schjeldahl
Austin Consulting

SUBJECT:

Project Afpha - Proposed New Automotive Parts Manufacturing Plant
Project Description and Request for Proposal (RFP)

Michelle Con1e1ford
Austin Consulting

Austin Consulting is currently working with a U.S. based manufacturer and supplier of automotive
parts. The growing automotive sector in Ontario has increased demand for parts suppliers to serve
this market. Known as Pwject Alpha, our client is quickly moving forward to select the best
location for tl1e new manufacturing operation.

Over the past months we have been investigating communities in Ontario in close proximity to
current and known future automotive manufacturing operations.
The purpose of the
investigation has been to identify candidate locations for the new manufacturing fadlity. As a
result of that screening, your community has been included on a short list of possible locations
for the new operation. I am requesting information about suitable sites and communities in
your area that might meet project requirements as described in this document. Presented
below for your reference is a description of the project followed by a Request for Proposal
(RFP).
Please submit your responses to arrive no later than Noon on Friday, July 27, 2007
via email or express mail to the contact Information as provided on Page 5 ,

[ Please Note: The following Project Description and Request for Proposal (RFP) is part of the
EDCO's Local Economies in Transition Initiative. This mock project was created to give each
community the oppo1tunlty to respond to a site location request and receive feedback from site
selection consultants. As time permits, Austin Consulting will be evaluating a select number of
responses on a first-come first serve basis and providing feedback during the conferences to be
held in each region next month. Additional communities that respond to the RFP by the
deadline but are not evaluated in time for the regional conferences will be reviewed and
provided feedback at a later date.]

Project Description and Requirements:
1. Project Schedule: The schedule is to be in operation by Spring 2009 and in full
production by Summer 2009. The information presented in this RFP is based on
requirements for the SUmmer 2009 operation.
2. Work Force: Total employment is expected to be approximately 46 hourly workers. In
addition, the plant will employ 6 salaried employees. All workers will be hired locally. A
breakdown of these employees is presented below:

Hourly workers to be hired locally include the following :

54

Project Alpha
July 20, 2007
Page 2 of 5

Semi-Skilled
2 electricians/maintenance mechanics
2 line supervisors

40 machine operators I general

labor

2 fork lift operators

46TOTAL

Salaried workers to be hired locally include the following:

1 plant manager
1 human resource manager
1 administrative assistant
3 shift managers
6TOTAL
3.

Wages and Fringe Benefits: Local wage and fringe benefit patterns will be followed. TI1e
company desired to be in the 7S'f' percentile with regard to the regard to the local wage and
fringe benefit structure.

4.

Plant Operating· Schedule: The plant will operate 5 days per week, 16 hours per day in
order to supply the automotive plants. This will be a two shift, 8-hours per shift operation.

5. Inbound Transportation : Inbound shipments consist of truckload deliveries from North
American suppliers. Up to 20 trucks per week will call on the facility.

6. Outbound Transportation: OUtbound shipments of components and finished products
and will move via contract carrier (truckload) and common carrier (less-than-truckload), as
required. Up to 60 trucks per week wfll call on the facility.
7.

Building and Site Requ irements: The proposed facility will be approximately 80,000
square feet in size and require a site of 6 to 8 acres. The Ideal site configuration Is slightly
rectangular. TI1e site must be able to support efficient vehicle circulation, trailer storage,
and future expansion that could double the facility size. Expected building characteristics
are as follows:
60,000 square feet including 3,000 square feet of office
up to 30' clear height
40' x 40' or greater bay spacing
3 receMng docks
5 shipping docks
Parking for 10 trucks
Security fencing for b·uck dock area

55

Project Alpha
July 20, 2007
Page 3 of 5

8.

Water and Wastewater Requirements : Estimated water use is 4,000 gallons per day
(GPD). Municipal service Is required . Water is used for domestic use only. Discharge will
also be approximately 4,000 gallons per day.

9.

Electric Power Requirements: Electric power is very important to the operation as the
production equipment requires a reliable power source. Estimated electric requirements
are:

500
170,000
.9

•
•

Demand (kW):
Consumption (kWh) per month:

•
•

Power factor:
Secondary service is preferred (the utility will own and maintain elecb·ic transformers)

10. Natural Gas Requirements:

Natural gas is required for space heating only.

The

estimated annual natural gas volume Is as follows:
•
•

Annual Space Heating and Office Area: 100,000 thenns
An Interruptible supply of natural gas will be considered for the operation

11 . Investment (in $U.S.):
•

Land:

•

Building:

•

Machinery and Equipment:

•

Inventories:
•

Raw materials

•
•

Goods-in-process
Finished goods

Total Investment

(to-be-determined)

$4,000,000
5,000,000
2,500,000
500,000
1.000.000

$ 13,000,000 (excluding land)

12. Community Requirements:
a.

b.

The recommended community and labor market should be large enough to supply the
necessary workforce.

n-.e recommended community must be accessible via highway access for transportation

requirements. It is preferred (but not required) that recommended sites be less than 10
miles from a four lane highway.

c.

TI1e recommended community must have access to industrial support service providers
such as general maintenance, cleaning, and uniforms.

d.

The community must be served by a two-year community, technical, or vocational college
with a variety of operational b·aining programs including welding, electrical maintenance,
~er programs
and macl1ine conb'Ois. ~e school must be willing to provide training and
for the company as required.

56

Project Alpha
July 20, 2007
Page 4 of 5

Request For Prooosali

Austin Consulting requests your assistance in developing information that will help us evaluate
your area for this project. Please submit your responses to anive no later than Noon on
Friday, July 27_ 2007 via email or express mail to contact information as provided on Page 5

of this document

1. Available Sites and Buildings - Please provide information on available sites and
industrial buildings for the operation as outlined above. Information should include
site/building details, address and location, maps, utility services, zoning and applicable tax
rates.

> Sites: 6 to 8 acres- it is preferred that these sites are "shovel ready" (i.e. utilities in
place and available in the desired capadties at the site)

>
2.

Existing Buildings: 50,000 to 70,000 square foot buildings with room to expand.
Larger, multi-tenant buildings will be wnsidered, if available.

labor Availability and Wage Rates - Please provide information relative to
unemployment rates, local wage surveys, list of area employers and employee counts, and
training resources. In addition, please supply other labor market data, such as a labor-shed
map and commuting pattern information, if available.

3. Electric Power - Please provide a description of the service provider and rate schedule, as
well as an estimated monthly electric power costs based on the requirements outlined
above. Estimates to be quoted with and without applicable Incentive programs.
4.

Natural Gas - Please provide a description of the service provider and rate schedule, as
well as estimated montl1ly natural gas costs for firm (non-Interruptible) and interruptible gas
service based on estimated requirements outlined above. Estimates to be quoted witll and
without incentive programs.

5. Water and Wastewater - Please provide a description of tile service provider and rate
schedule, as well as estimated monthly water and wastewater costs based on the
requirements outlined above. Also describe impact fees relative to securing .water and
wastewater services.

6. Community Information - Please provide general information about the community
including a community map(s).
7. Taxes - Please provide applicable tax rates and calculating information for focal property
taxes, local personal property taxes (if applicable), corporate business or franchise taxes,
corporate income taxes, and any other applicable taxes t11at may apply to this project.
8.

Permitting - Please provided a general description of permitting requirements including
typical schedule. Also, include any general permitting or other business fees that may apply
to this project.

9. Incentives - Incentives are critical in determining the location of tl1e proposed operation.
Incentive programs that may be available for this project are of interest. Please provide an
overview of incentive programs tllat may apply to tl1is project.

57

Project Alpha
July 20, 2007
Page 5 of 5

Project Contacts:

Don Schjeldahl

Michelle Comerford

Vke President I Director
Austin Consulting
6095 Parkland Blvd.
Cleveland, OH 44124

Senior Location Consultant
Austin Consulting
6095 Parkland Blvd.
Cleveland, OH 44124

Phone: 440-544-2617
Fax: 440-544-2690
Email: don.schjeldahl@theaustin.com

Phone: 440-544-2682
Fax: 440-544-2690

Email: michelle.comerford@theaustin.com

58

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