Site Selection Shift: Cost Is Out, Resilience Is In

Site selection is evolving, with resilience replacing the priority on low-cost analysis, according to DiDi Caldwell, CEO of Global Location Strategies. Manufacturers now consider energy, labor, logistics, tariffs, border risk and community opposition when determining where to place new facilities. The shift away from offshoring, driven by tariffs and geopolitical pressures, has led companies to prioritize flexibility over cost optimization.

North America has gained an edge due to its energy advantage, scale as a consumer market and recent transition from a net importer to a net exporter of energy. However, North American companies face challenges such as NIMBYism, exemplified by a multibillion-dollar aluminum smelter project in Oklahoma that has encountered a community moratorium.

Despite setbacks, companies are increasingly testing locations across various scenarios, opting for reversible near-term decisions instead of large, irreversible investments. Emerging destinations for international expansion include Colombia and Argentina, which offer favorable trade agreements, existing infrastructure, and favorable regulatory environments.