LANDED Episode 3: A Site Selector’s Role in Business Expansion

However, global expansion is not without its challenges, such as dealing with different laws, understanding new cultures and, most importantly, figuring out the best location to set up shop.

Finding the right location is more than just picking a country or city. It’s about finding a place where your business goals align with the local ecosystem and economy. Making the right choice can lead to a successful expansion, but the wrong one can be costly.

That’s where a site selector comes in.

A Site Selector’s Role in Business Expansion

In Episode 3 of LANDED, host Eamon O’Flynn sits down with Gregg Wassmansdorf, a professional site selector and Senior Managing Director at Newmark, to discuss the critical role of site selection in international expansion strategies.

Thinking about engaging a site selector? Get the inside scoop from Gregg as he covers key topics such as:

• The role of a professional site selector
• The benefits of site selection services
• Finding a reliable site selector
• The shifting landscape of international investment
• Questions to always ask your site selector

Gregg’s wealth of knowledge will prepare you to make informed decisions when it comes to selecting the best location for your business expansion.

Tony’s Take

Expanding to a new location is a multi-stage process that requires local expertise. Tony LaMantia, President & CEO of Waterloo EDC, is no stranger to site selection and recognizes the importance of finding the best fit for both the business and the community.

In this mini episode of LANDED, Tony talks about the site selection process and how Waterloo EDC can help you find the right location to grow your business.

Listen now:

Listen, learn and propel your business forward

LANDED isn’t just a podcast – it’s your exclusive guide to navigating international business expansion, from start to finish and beyond.

With each episode, you’ll gain insider knowledge, strategic advice and firsthand accounts from industry leaders who have successfully taken their businesses to new heights on a global scale.

Missed the first two episodes? Listen to them now.

Ready to start your international expansion journey? Tune in to LANDED on Apple Podcasts, Spotify, Google Podcasts, Amazon Music or at waterlooedc.ca/podcast. Don’t miss out on the valuable insights – subscribe today!

Episode 3 Transcript

Eamon: 0:08

This is “LANDED,” a podcast that gives you insider tips on international business expansion. My name is Eamon O’Flynn. I work at Waterloo EDC. Our organization helps companies from all over the world land in Waterloo, Canada. No matter which industry you work in, you’ve heard of some of our clients, like SAP, Toyota, Masterclass, Beckhoff Automation and more.

We’ve attracted more than $1 billion in new business investment in our community, which means we have access to dozens of top business leaders and service providers who have direct experience guiding growing companies through international expansion. This podcast is all about passing their hard-won perspectives and experience to you.

International business expansion is a team sport. Your internal stakeholders must be pulling in the same direction. You will need help from experts in business law, business location strategy, real estate recruiting, and accounting. And you can boost your efforts by taking advantage of government support and economic development services.

Depending on your needs, a professional site selector could be the perfect way to round out your team.

Today we’re talking to Gregg Wassmansdorf, a professional site selector for more than 25 years and is the former Executive Board Chair of the Site Selectors Guild, the only association of the world’s foremost professional site selection consultants. Gregg works at Newmark, one of the world’s largest commercial real estate services companies delivering services to occupiers, owners and investors.

Within Newmark, Gregg is a senior managing director in the Global Strategy consulting group, a specialized team of consultants in the Global Corporate Services division. Global Strategy consultants help companies with portfolio strategy, global facility footprint strategy, location strategy and site selection and economic incentives advisory needs.

Our conversation will touch on everything from the process of contracting a site selector to how site selectors help with complex business location decisions. He’ll also tell us which questions he thinks every company should ask before choosing a location.

Let’s chat with Gregg.

Eamon: 2:30

Alright, so thanks for joining us today, Gregg. You know, when I think of site selectors, I think it’s very mysterious. There’s a Site Selectors Guild. I think a lot of people might not really know exactly what site selectors do, so I think it’s a big question, but it’s the obvious place to start. What does a professional site selector do?

Gregg: 2:49

That is a great question. It is a big question. The simplest way I would explain it is to say we help companies answer the question: Where in the world should I locate my business operations? That’s it in a nutshell. For a company that is started and grown locally, the answer just presents itself. It’s wherever you started your business. But for larger organizations that have a bigger footprint, and they have optionality around where they put facilities. The question then creeps in, where should I be, where’s the best place for me to competitively operate my business? So that could be a headquarters or regional office. It could be a shared services centre, a data centre that doesn’t employ a lot of people, but is a very major investment. And then, of course, for manufacturing and distribution operations, that could literally be for these types of facilities anywhere in the world.

And so, our job as site selectors is to turn geography into a competitive advantage for the business. And that expresses itself in a lot of different ways. The site selection decision can be a metro level or regional decision, but more typically, when the consultants get involved, it’s more of a national, continental or global decision.

So, in the Canadian context, which province and metro should I be in? Or if it’s a global question, we face these questions all the time. We recently helped a San Francisco Bay Area company make a decision about a new product development, computer IT product development centre, not in an obvious location, but we chose Montevideo, Uruguay. That’s the final decision. So that’s how we turn geography into a competitive advantage?

So that’s it in a nutshell, but then, tactically, what do we do? It’s not a core skill set for most people who own or operate a business or who are in management roles. It’s not a core skill set to be doing site selection. Most people already have a day job. It’s not site selection, and so they need special expertise.

Site selectors and the team that’s involved in the site selection process are doing desktop research and analysis of all the various factors that need to be considered in a location strategy decision. But after the desktop research, there’s also field research. So, getting out in the world, flying places, getting on the ground, meeting with people, seeing property, meeting with utilities. And those are fact-finding meetings, but also negotiating meetings, ultimately.

And we prepare the analysis of all these location factors. It’s qualitative data, quantitative data. We look at cost, we look at risk. And again, that could be local, it could be continental, it could be global. And then ultimately, the site selectors involved in negotiations, either with property owners, governments, utilities, railway companies, etc., because that’s all part of the location solution that has to be finally derived.

And then putting the business case together for the two or three finalist locations so that the client can make a really confident choice on where to be. That’s all part of the site selection discipline. And then executing the project would be another phase.

Eamon: 6:40

So, I remember you saying before when you spoke at one of our events that your job is to eliminate communities too. To basically look and say, “Okay, why does this not fit? Why is this not going to provide that competitive advantage?”

Gregg: 7:25

Let me put it this way. Only certain companies that are of a very large scale tend to have the whole world as the universe of opportunities for them to consider. Most companies have an idea that this next facility ought to be in Europe, this next facility needs to serve Latin America or this next facility really ought to focus on, let’s say, the western region of the United States. There’s usually some geographic sense of where we need to go. Sometimes not, sometimes it is global. But as you said, job one is first of all, find locations that might be reasonable options, but our very next step is to disqualify locations that do not work, either because there’s some fatal flaw. There are some critical requirements for the business that that location, whether it’s a country, region or a metro area, those locations simply will not satisfy fundamental business needs. So it’s a fatal flaw, it’s removed. Or you have to get deeper and deeper into the analysis to then start weighting factors, scoring certain criteria and realizing, okay, I’m sensing now that some places are clearly better than others, and you continue to cull the optionality and get down to fewer and fewer number of locations.

So, find the locations, disqualify the locations, step two, step three, optimize those locations. So once you’re down to a very small set of 2, 3, 4 or 5 locations that you think could be optimal, well, they’re not optimal until you do a lot of work. Meeting with utilities, meeting with property owners, meeting with local and regional senior levels of government, negotiating economic incentives, and on and on. So it can get very involved and a complicated effort.

Eamon: 8:57

And you know, that’s a big part of the reason why this podcast exists. Because as you said, you can become the CEO of a company and there’s no reason you would have ever done location or the CTO or the head of research or whatever your background might be. It’s very rare to also have and, by the way, I’ve set up new offices or new facilities in new places.

Gregg: 9:20

That’s right.

Eamon: 9:21

Is there a particular size or type of company that should hire a site selector or is it kind of just any company should at least consider it?

Gregg: 9:34

Any company should consider it, but it’s really driven by the need. So, are you big enough as a company, or big enough in this particular facility requirement that you have, that it’s large enough to be a challenging problem? And are you small enough that you do not have the answers in house? So yes, that would be the starting point. I’ve got a big problem. I don’t know how to answer it with the resources that I have in house.

But after that, even some of the largest companies in the world use site selection consultants, and why is that? One company that I worked with years ago, a Fortune 25 company. It’s a brand name that everybody pretty much on the planet knows. They hired me and my team because they said we haven’t done a true greenfield manufacturing site selection project in 25 years.

We don’t actually have that skill set in-house. We’ve got amazing people, amazing resources from manufacturing to supply chain through HR and IT and our operations team, our finance team, they’re amazing. But how do you organize all of that, put it together into a process that will bring us to a point of making a great location decision for this next facility that we’re going to invest in? That isn’t something we do every day.

So regardless of the size of the company, be it small or large, there are a few things to consider. First of all, if you have the capability to do this kind of unique consulting work for yourself. Even if you have the capability, do you have the capacity? I think I said this earlier, most people already have a full-time day job that spills over into their evenings and weekends. You throw a complex site selection project on top of the normal duties and it’s overwhelming.

So, capability. Do you have the capacity? And there are unique challenges. Some projects are very complex, there are regulatory issues involved, utility constraints, other things that need to be factored in. So just the complexity of it. You want to have another set of professional eyes looking at it and hands working on it.

And then is there a unique geography that you want to be exploring? And it doesn’t have to be some esoteric, strange location in the world. It’s simply a place that you’re not familiar with. So, if you’ve only done business in Canada, if you’ve only done business in the United States and now all of a sudden you’re considering Mexico? Sounds simple, easy to fly there. You may have taken a vacation there, but have you made a business decision about how to actually stand up a new facility in Mexico or choose between Panama or Costa Rica? If you’re going to, let’s say, put up a shared services centre in a Latin American country. How do you make the decision? Well, there are consultants who do this every day.

Eamon: 12:56

And the capacity thing I think would ring true with anyone in a position at a company right now. We do this all the time. I work in Marketing. I can do a lot of things in marketing, but I don’t have the capacity to do everything we want to do in marketing. And so how do we find that additional capacity when capacity is a problem or you know, I’m great at certain things in marketing. I’m not necessarily a data whiz. Where do we find someone who can help with that sort of thing? So it happens in every area, but the difference? Site selection is a very unique skill set as well. It’s outside of normal business operation. So it only makes sense that you would find an expert.

Do individual site selectors have different specialties. Is there something you specialize in? Or do you broadly help no matter what the issue is?

Gregg: 13:46

So, by virtue of the fact that I’ve been doing this for 25 years, I’ve developed a wide range of experience in industries and assets and geographies. That’s not true for everybody or maybe someone who’s younger in their career, but I also benefit from the fact that, at Newmark, we’ve got one of the largest location strategy site selection practices in the world. And as a consequence of being one of the leaders in that practice, I get to see and touch and be involved in a lot of different project types.

Having said that, we’ve got members of our team, and if you look at other site selection firms, some of them do very much specialize, and they say, ‘I do mostly manufacturing and distribution projects’, or ‘I do mostly head office, shared services, call centres and BPO type operations that are office functions, very people focused and could be global’. So yes, there’s definitely a specialization. Let me put it this way. It’s difficult for someone who has mostly worked on office projects to all of a sudden become an expert in rail and ocean freight and heavy capacity utilities on a greenfield manufacturing site.

Eamon: 15:15

Yeah. And leads the next question. I think there is a short answer to this question, which is Newmark, but where should companies go looking for sites? And how do you hire one, how do you find them in the first place?

Gregg: 15:28

Sure. Yeah, look up Newmark Global Strategy. That’s a good start, but let me be honest, I’ll give you a multi-part answer. There are many places where you can look for support. For the best of the best in location, strategy and site selection, I’m going to point to the organization that you mentioned at the top of our discussion, which is the Site Selectors Guild. I’ve been involved in the Guild for almost 10 years. I’ve been on the Board for the last four and a half years and I’m the immediate past Chair of the Board of Directors for the Site Selectors Guild.

Eamon: 16:15

I have a question that I’m sure would come up for anyone, and it might be a touchy subject, but how are site selectors compensated? How does that part of it even work? Or is it just changed depending on the project?

Gregg: 16:29

It’s a simple answer, really. And, of course, I’m glad you asked the question because everyone does need to know at some point. If I need this expertise, how do I get it? How do I pay for it?

So, there are really three ways. Most consulting work is done, and this won’t surprise people, it’s done on a fixed fee basis for a known scope of work. So typically, consultants really in any field, once they’ve been able to interact with their prospective client, talk about what actually needs to be accomplished, there’s enough experience there that the consultant can say okay, I understand the problem you’re trying to solve. Here’s a process that we can take you through. This is how long we expect it will take. And for us to do all of that, our fixed fee for that part of the engagement is X dollars.

And then some of it might be fixed fee, but we’re flexible. So, for example, if you say we’ll run you through the first two phases of our project, and that will get you down to let’s say, a shortlist. But now we need to go out in the field, we need to go fly somewhere, sometimes with a client sometimes without, but we need to fly around the world, fly to different markets and meet with people. But we might go to two locations, we might go to three, we might go to four, we don’t know. Those will become like optional extra pieces of work on a fixed fee basis, right? But there’s optionality to it. So, there’s that.

There are success fees that can be paid to consultants. Some clients really prefer having a success fee if there are certain financial goals that are achieved on a project. Sometimes it’s a hybrid. There’s a base amount with a success fee proportion over that.

Eamon: 18:28

You’re on the ground and you see this more than just about anyone. How is international investment and expansion changing, especially over the last few years which have been pretty tumultuous?

Gregg: 18:37

Yes, very tumultuous. Yeah. Where do we begin? With the pandemic really disrupting supply chains all around the world, and then spilling out of that geopolitical conflict, changes in the energy markets. Those energy markets being partly because of geopolitical conflict, partly because of COVID. All of these things intertwined. And then a growing sense of just, I’ll say, small ‘n’ nationalism, sort of creeping into policy development and investment attraction.

We’ve really seen a shift from what used to be just considered globalization, where the whole world is your oyster and everybody invests everywhere. That was never totally the case but that was generally the model of globalization, and we really have shifted more to a regionalization model around the world where companies are saying, I can’t just source from China everything that I need in the United States, or I can’t just get from Taiwan everything that I want to have in Canada. That’s too tight a string tied around the world from point to point. I need optionality. I need to manage my risk by being closer to my points of production or points of distribution to my end user customer. So, I need an Americas solution for my facilities. I need a European solution for my facilities. I need an Asia solution.

And so, it’s manifesting itself in many different ways. You hear a lot about reshoring or nearshoring. That is definitely happening, where companies are bringing some of that productive capacity from Asia back into let’s say, North America, but it’s not as simple as that. If capacity is leaving China, for example, often it’s not coming back to North America. It’s just going to Vietnam or Thailand or Malaysia. So, it stays in Asia, but it becomes a China-plus-one or two other locations.

If capacity, sometimes, capacity is not being actually physically lifted and returned to North America, but what’s happening is companies are saying I’m not going to put any more into China. I need some other solutions. So, what’s my America solution? My European solution? My Asia solution. So, it’s become very dynamic, a very complex in the way that companies are responding to this. I’ve written a lot about this in FDI Intelligence magazine. I’ve done a lot of interviews on this in the last several years about globalization shifting. USMCA or the CUSMA trade agreement, Canada, US, Mexico. That provided some important changes to where content gets produced just in North America. But now, as well, we’ve seen massive policy interventions from the United States, the CHIPS and Science Act, Inflation Reduction Act, the Infrastructure Act. All of these things have changed the competitive landscape globally.

And I know in Canada, some governments, Federal, Ontario, for example, are taking some criticism for the incentives being given on certain key major projects, especially in the automotive and EV battery space. That’s all in response to the policies being developed in the United States. And it’s not just Canada. The European Union, in record time, transformed the way and the amount of incentives that they give to projects all across Europe because of what’s happened in the United States. So, there’s a ripple effect to policymaking that we’re seeing all around the globe. It’s fascinating, but also very, very challenging.

And maybe just my last comment on that. It’s the big projects, the mega projects get a ton of attention. But I’ll say just going back to the core of your question, which is how is investment changing? It’s important to remember that like core industries continue to just do a lot of new product investment, and facility investment, globally and all across North America and in Canada. So, I’m thinking food and beverage, building products, you know, the things that we sometimes take for granted, and consumer goods and basic durable goods. We sometimes forget about them but are really important parts of the entire fabric of global investment, and site selectors are deeply involved in those sectors, too.

Eamon: 23:47

I had a few other questions, but I think we’ve answered most of them. So, I think I’d end with this one, which is what questions do you always want clients to ask you when they are seeking your services? What are the questions that they should be asking you?

Gregg: 24:07

Yeah. I’ll start by saying the question that is, my red flag alert, when I’m first called by a company is if they want to start the conversation with the question, ‘Where can I go where the government will give me the most money?’ That’s a red flag for me. It causes concern that there is no real business plan.

There isn’t a real strategy and this is not going to go well for the company, myself, my firm working with them, or for the community where they ultimately want to go. Because, coming back to your question, the sorts of questions that I hope to receive when we start a scoping discussion or just a discovery call where someone reaches out and they say, we may or may not need your help, we’re not sure but can we talk about this?

That’s a great way to start. Because then we can really talk about need. What are you trying to accomplish with your business? Right? What are the geographies that you have in mind as you consider your expansion? Is this something local? Is it regional? Are you looking at the whole continent? What are the drivers? So, I’m kind of flipping it around, not the questions I want to be asked but the sort of questions that kind of go back and forth on the client, the client to me, and ultimately, we want to know, and I’d like to hear the client ask questions that that puts a value to the process.

Yes, there’s going to be cost. It can be expensive to hire a consultant. But where’s the value that’s derived? Well, it’s in reducing the cost of capital in the place where we ultimately land the project. It’s in reducing the operating expenses not in just year one, but over the life of the facility. Where can we find you better operating cost savings? Where can we find you a more long-lasting pipeline of talent that’s going to support your business? Where will the economic incentives be reasonable and properly tuned up to what I need for the business. So, when we have this sort of a conversation, where we’re really trying to do problem solving to make the business better, that is a very interesting conversation for me.

Eamon: 27:00

That was my conversation with Gregg Wassmansdorf, Senior Managing Director at Newmark Global Strategy, the consulting arm of the commercial real estate services company, Newmark. If you Google his name, Gregg Wassmansdorf, you’ll quickly find his bio on LinkedIn or at Newmark.