Five hidden risks in choosing manufacturing sites

Choosing the perfect site for your new manufacturing facility isn’t just about finding the right location on a map—it's about navigating a maze of hidden challenges that could derail your plans. With the right strategies and foresight, however, these hidden risks can be uncovered early, allowing companies to address potential pitfalls before they become costly problems.

Even with meticulous research, unforeseen risks can emerge in any prospective industrial site, threatening to disrupt your timeline and budget. And in today's fast-paced and highly competitive manufacturing sector, where delays and disruptions can lead to significant financial loss and missed market opportunities, identifying these risks early is more important than ever.

Below, we’ve identified five often-overlooked risks in site selection—and the actions you can take to steer clear of them.

Hidden risk #1: Soil surprises can derail projects

Spurred by the resurgence of manufacturing, reshoring efforts and supply chain optimization, the demand for manufacturing sites with solid geotechnical foundation has never been higher—that is, the underlying soil and rock structures that support a building. Geotechnical studies are crucial for understanding soil conditions, like load-bearing capacity and soil stability, which can significantly impact construction costs and timelines.

Without these studies, you may not discover unsuitable soil conditions until after breaking ground, leading to unexpected foundational improvements like piling, which can cause major cost overruns and delays.

To avoid those headaches, conduct comprehensive geotechnical studies before acquiring a site—and request that the seller cover the cost of these studies upfront. By identifying geotechnical issues early on, you can avoid the risk of them emerging as costly surprises down the line.

Hidden risk #2: Wetlands and waterways delay key approvals

The presence of rivers, lakes, streams, ponds, and/or wetlands on a site may be favorable aesthetically—but they can introduce significant complications to site selection. Disrupting many bodies of water in the U.S., require approval from the U.S. Army Corps of Engineers, a process that can take six to 18 months or more and lead to major earthwork and construction delays.

Conducting an early environmental assessment is key to determining whether a given site will need approval. From there, consider partnering with environmental consultants who specialize in wetlands mitigation to help speed up the approval process, or consider alternative sites with fewer regulatory constraints to reduce these types of delays.

Hidden risk #3: Electrical upgrades can extend timelines

Increased manufacturing investments and the push for electrification have sent demand for electrical power skyrocketing, straining existing infrastructure and creating a new challenge for industrial leaders. This growing need for electricity often necessitates upgrades or extensions to electrical infrastructure. But upgrading or extending electrical systems now involves lengthy procurement lead times for equipment like transformers and breakers, which can delay projects by 36 months or more.

To avoid these setbacks, engage with utility companies early in the site selection process. By taking time to understand the path to power, equipment lead times and align project timelines with infrastructure availability, you can avoid delays—or at least plan around them. Overall, a thorough assessment of any potential site’s electrical capacity and upgrade feasibility can directly support decision-making.

Hidden risk #4: Transportation upgrades spark unpredictable costs and timelines

Transportation infrastructure poses another hidden risk in manufacturing site selection. Upgrades needed for supply chain, logistics and employee needs often involve complex coordination with state transportation departments and rail service providers, leading to unpredictable timelines and costs.

Essential transportation elements like rail lines, highways, interchanges, and industrial access roads may require significant enhancements, such as extending rail services or upgrading roads for heavy truck traffic. To navigate these challenges, work closely with transportation authorities to get accurate lead times estimates and consider negotiating incentives with government entities to help manage costs.

Hidden risk #5: Relying on basic labor supply data can impair recruitment

Labor market constraints can pose significant challenges for new manufacturing operations. Without a clear understanding of the local talent pool, companies may struggle to recruit and retain appropriately skilled workers, hampering long-term success. Most data sources focus on the supply side of the labor market and provide no visibility into local labor demand. This can become a notable issue because if demand exceeds supply, a company will run into challenges regardless of the supply of labor in a market. For example, if a company needs 1,200 workers but the local labor pool has only 1,000 qualified individuals, there's a noticeable shortfall. To bridge this gap, conducting in-depth labor market research—such as interviewing local employers and recruitment agencies—provides a clearer picture of both talent availability and demand. This enables companies to develop more effective recruitment strategies and address potential workforce shortages.

Spot and solve hidden risks in manufacturing site selection

Manufacturing site selection is a complex journey with many hidden risks, from geotechnical conditions and environmental challenges to infrastructure and labor market constraints. Spotting these risks early and shaping strategies to address them keeps projects on track and ultimately fuels bigger-picture success for your manufacturing operations.

By teaming up with an expert service provider, you can navigate these complexities with confidence. With specialized industry knowledge and resources, the right partner can help identify potential pitfalls, streamline approvals and develop a comprehensive strategy that aligns with your company’s operational needs and goals.

Don’t let hidden risks derail your manufacturing project—stay ahead of the game by securing the right partnerships and making informed decisions from the start.

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