Site Evaluation Criteria in a Changing World
Some things never change. The sky is blue, water is wet, a market economy requires a free market, and market equilibrium is established at the intersection of supply and demand. Furthermore, in the market, manufacturers consider certain criteria when evaluating potential new production sites. Important factors include, for example, logistical proximity, local and government incentive programs, and the availability of labor. Numerous other aspects stem from the individual focus of each company. For instance, energy-intensive industries—such as the pharmaceutical, chemical, glass, metal, and construction sectors—focus on their substantial energy requirements.
However, one thing remains true: Nothing is as constant as change. Or, as the saying goes in the business world: If you don’t keep up with the times, you’ll be left behind. Staying with the topic of energy-intensive industries: With the rising demand for renewable energy, the former favorites among foreign investors are increasingly losing ground—especially in the low-wage countries of Eastern and Central Europe, where renewable energy does not constitute a significant industrial sector. Poland, however, is an exception here. On the contrary, the country actually appears quite attractive in the location evaluation criteria of Western European customers—thanks to comparatively low investment costs, the availability of wind and solar energy, and its regional location on the border with Germany.
Those who invest reap the benefits ×
In addition to Western Europe, countries with a high share of renewable energy are traditionally found in North Africa and North America. Those who invest in sustainable technologies there benefit, for example, from the stable prices of renewable energy. Unlike fossil fuels, whose prices are generally subject to fluctuations, renewable energy allows for precise cost calculations. In addition, individual assessments are necessary. Where are the local centers of expertise? Is there access to clean energy? How resilient is the economy? What corporate regulations must be observed? What is the state of transparency? What subsidies are available? Questions like these form the basis of strategic concepts.
A revolution is currently taking shape in the U.S.: The Inflation Reduction Act (IRA) was passed in 2022. It is the most significant federal investment in U.S. history to combat climate change. At the same time, the Infrastructure Investment and Jobs Act (IIJA) is fueling the economy—with one-time investments totaling 1.2 trillion dollars. A truly immense figure! It corresponds roughly to one-quarter of Germany’s gross domestic product.
With these two laws, the U.S. Congress has put together a support package of unprecedented scale. They are considered enormous catalysts for private investment in clean energy. The IRA, for example, promotes solar energy, wind turbines, green and blue hydrogen, biodiesel, heat pumps, e-mobility, and battery storage. The IIJA, in turn, aims, among other things, at the sustainable modernization of public infrastructure—including the expansion of the electric vehicle charging station network.
Benefit in the long term ×
Can energy-intensive industries now celebrate? Hopefully—especially in an era of declared sustainability goals. But hope alone doesn’t make for a good forecast. An efficient location assessment requires detailed knowledge of local market requirements, customized problem analyses, a knack for practical solutions—and much more. For energy-intensive industries, as for all others, the same principle applies: Those who want to seize growth opportunities and benefit from them in the long term need customized development strategies.
Anna Ahlborn
Anna Ahlborn is a partner at EAC – International Consulting, a global management consulting firm specializing in internationalization strategies for growth markets around the world. Since 2010, she has been advising internationally active clients on strategic issues with a focus on Eastern Europe and the Americas. Her industry focus is primarily on the mobility, construction, and infrastructure sectors. She holds a master’s degree in economics, political science, and law from LMU Munich.
Anna Ahlborn will be happy to assist you:
