Centrally located and surrounded by two lakes, a stream, bike trails and parks, a stodgy manufacturing company in the Twin-Cities occupies one of the cities most attractive redevelopment sites. The awkward buildings and haphazard space program hamper the companies’ communication, weakens culture, and limits process and production. A significant portion of the warehousing function takes place in forty-foot trailers in the parking lot.
When asked, the aging CEO implied that his long-term plan is to keep the company as it is and where it is. With cheaper industrial land just five miles to the South, the advent of lean manufacturing, the horde of deep-pocketed developers banging on his door, and 100 years time, one would consider this CEO irrational. This was my thought, but I didn’t have all the facts.
The ensuing conversation revealed a potential deal-killer, the 30+ operating permits the company was grandfathered in to. Do operational efficiencies of a new facility and the economic benefit of selling (or leasing) the real estate asset at the height of the market justify relocation costs and the hassle of obtaining new permits? I don’t know. But I am fairly confident the CEO is asking himself “Will the company survive relocation, and is it worth the chance?” And he is best to know the answer of that.
Rory Johnson 6/22/2007
rory@intelligentcre.com
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