Thought Leadership - Feasibility and Prudence in FDI and U.S. Industrial Expansion

Feasibility and Prudence in FDI and U.S. Industrial Expansion
How Determinants & Drivers in Location Strategy & Site Selection frame Long-Term Value
 
Carl Quesinberry, Avison Young, Senior Director, Industrial Corporate Services

America’s industrial economy is being re-engineered. For decades, site selection focused on cost minimization—find cheap land, secure incentives, build fast. But today’s environment of energy transition, automation, and supply-chain disruption has made that approach obsolete. Protecting capital now depends on understanding the true cost of operations—how location, infrastructure, and policy align to support reliable, adaptable performance over time.

A site may appear low-cost, yet real-world factors often tell another story. Free land is of little value if a region lacks sufficient skilled labor. Low property prices mean little when logistics are inefficient, utilities are unreliable or expensive, or local permitting drags on for months. What matters isn’t the incentive on day one, but how the site performs under operational pressure—when power costs spike, talent is scarce, or regulation shifts. Such potential initial benefits are quickly erased by the potential operational inefficiencies that drive up operational costs when life cycle cost analysis is used to assist in these type of decision making.

Modern location strategy and site selection measures cost holistically. It treats every investment as a living system of Determinants and Drivers.

Determinants are the fixed, non-negotiable elements that define a site’s feasibility—power reliability and cost, water access, zoning, environmental permitting, labor depth, and multimodal logistics. If these aren’t in place, the project’s foundation is weak—no incentive can overcome a missing determinant.

Drivers are the external forces that influence the flow of capital—federal and state incentives, trade and tariff policies, technological adoption, and market demand shifts. Unlike Determinants, Drivers evolve with legislation and economic trends.

Viewed together, they form a predictive framework: Determinants establish a site’s baseline viability, while Drivers amplify—or diminish—its strategic value.

Industrial location strategy is no longer a real-estate transaction—it’s a financial risk discipline. The smartest investors now apply an Investment-Safeguard Loop:

1. Drivers – Identify market demand, incentives, and policy tailwinds.
2. Determinants – Confirm infrastructure readiness and regulatory feasibility.
3. Operational alignment – Assess workforce scalability, utility redundancy, and logistics resilience.
4. Investment outcome – Model lifecycle costs and return stability under multiple scenarios.

This loop transforms site selection into a form of capital insurance, quantifying how a project performs through market cycles, not just at groundbreaking.

Semiconductors: Chip fabs rely on ultra-pure water, grid redundancy, and seismic stability—Determinants that are expensive to replicate. Federal CHIPS Act funding and reshoring trends serve as Drivers, redirecting billions toward qualified regions. Intel’s New Albany, Ohio, investment succeeded because both sets aligned: infrastructure was ready, and incentives were timed to policy momentum.

Battery and EV manufacturing: Rail access, environmental air/water permitting, and power supply & cost are critical Determinants; domestic-content rules and IRA tax credits are powerful Drivers. When both converge—as in Novelis’s Alabama project—capital efficiency and speed of execution improve dramatically.

Data centers: Power reliability and fiber density determine feasibility, while renewable-energy mandates and AI demand shape the Drivers. Sites with dual-feed power and green PPAs in markets like Texas and Virginia are now outperforming lower-cost alternatives.

A shovel-ready site represents the highest expression of determinant alignment—where infrastructure, permitting, and due diligence are complete, and construction can begin immediately. These sites convert feasibility into executional readiness. Power, water, zoning, environmental clearances, and access are validated and documented, removing uncertainty from the start of production.

Because risk is reduced, shovel-ready sites also heighten exposure to Drivers—allowing investors to capture time-sensitive opportunities such as new incentive programs, policy shifts, or demand surges. In effect, shovel-ready readiness bridges the static world of Determinants with the dynamic pulse of Drivers, turning preparedness into competitive speed.

When Determinants and Drivers are synchronized, outcomes are tangible:
- Up to 12% lower capital expenditure through pre-entitled, infrastructure-ready sites.
- 20–30% faster delivery, cutting delay costs and accelerating revenue.
- 10–15% higher ROI via integrated incentives and operational reliability.

Conversely, poor alignment—like locating in a low-cost area without labor depth or stable power—can erase savings and add 0.5% or more to annual capital costs.

Industrial growth in the U.S. has entered a new era—one defined by complexity, not simplicity. Success depends on seeing beyond incentives to the interplay of location, policy, and operations.

The next wave of competitive advantage will come from mastering location intelligence—the ability to connect physical and operational feasibility with financial resilience. Firms that view site selection as a form of risk management, not just cost management, will lead this re-industrialization cycle.

In short, the right location isn’t just a place to build—it’s a hedge against volatility and a foundation for lasting capital protection.

To explore how your organization can align its investment and project goals with the right Determinants and Drivers, contact Carl Quesinberry to discuss your project’s unique objectives and path to long-term resilience. Carl’s base office is in Cincinnati, OH but he manages projects across North America.