Unlocking Business Growth Through Strategic Location

Emerging Trends in U.S. Manufacturing Site Selection& Incentives

In recent years the U.S. has seen a resurgence of large-scale manufacturing projects – from electric vehicle (EV) plants to advanced factories – driven by supply-chain shifts and unprecedented policy support. Key federal laws (the 2021 Infrastructure Investment and Jobs Act, the 2022 CHIPS and Science Act, and the 2022 Inflation Reduction Act) collectively mobilized hundreds of billions in infrastructure and clean-technology incentives. These programs have already sparked record private investment: for example, Deloitte reports ~200 new clean-energy manufacturing facilities announced (~$88 billion and75,000 jobs) since the Inflation Reduction Act, and U.S. manufacturing construction spending (as of mid-2023) was ~$201 billion—up 70% year-over-year. Likewise, the CHIPS Act created a $52 billion package to revitalize domestic semiconductor manufacturing. Overall, these laws are reorienting industry: companies now cite COVID-era supply-chain vulnerabilities (reshoring needs) and federal incentives as top location drivers【55†】.

Figure: Three major drivers of new U.S. manufacturing site investment – supply-chain reshoring, robust federal incentives (CHIPS,IRA, etc.), and population/workforce growth (e.g. +2.6% U.S. population over 5years)【55†】.

Federal stimuli have already drawn manufacturers to newregions. For example, Georgia has become the nation’s leading EV/battery hub:since late 2021 roughly $22 billionin investments and ~24,000 EV-related jobs have been announced there(surpassing Michigan and other states). These projects – Hyundai, SK, Rivian,etc. – signal that the South’s pro-business climate and incentives are luringglobal OEMs. Even long-established industrial centers like Arizona arecapitalizing on incentives: the state offered income- and property-taxexemptions plus workforce grants to attract TSMC’s new semiconductor fab. Inshort, government funding and tax credits now play a central role insite decisions, altering the traditional calculus of location.

Shifting Site-Selection Criteria

Site-selection surveys underscore how priorities areevolving. Corporate executives and economic-development pros rate labor andworkforce issues highest. In a recent Area Development survey,manufacturers ranked labor costs and skilled workforce availabilityabove all other factors. Site consultants likewise place workforce qualityas the top concern; their clients then prioritize incentives, landavailability, and responsive government. Other factors rising in importanceinclude environmental/regulatory conditions, broadband/ICT infrastructure, andquality-of-life amenities. Indeed, industry observers note that today companies“are more mindful than ever” of local lifestyle factors – good schools,affordable housing, healthcare and recreation – when choosing sites, sincethese impact recruitment and retention.

• Labor and skills: Surveys show labor costs are the #1 site factor.     Manufacturers face a tight market: the pandemic and retirements have     reduced the available skilled pool (welders, CNC operators, etc.), even as demand for these trades surges. Many see a looming skills gap as older     workers retire and emerging regions struggle to build training pipelines. As a result, locations offering workforce training grants and     trade-education partnerships (e.g. community college programs for EV     technologies) score highly with site selectors.
• Infrastructure and Incentives: Access to utilities, transportation (ports, highways,     rail) and low operating costs remain vital. However, incentives     themselves – tax abatements, cash grants, tax credits – are now almost     equally critical. In fact, corporate respondents ranked “tax exemptions”     among their top six factors, and consultants say incentive packages are     tied for second place in decision-making. For complex capital-intensive     projects, generous incentive offers can tip the balance. Opportunity Zones  (from the 2017 Tax Act) illustrate this trend: by dedicating ~$2 trillion of private     investment towards underinvested areas, OZs have lured manufacturers like     Lucid and Nikola to Arizona’s Casa Grande, for example, and helped Texas finance semiconductor fabs.
• Regulatory Environment: States with streamlined permitting and “right-to-work” policies generally attract more projects. Survey data show that companies do consider labor laws and environmental regulations heavily. For instance, states such as South Carolina and Tennessee (with no state     income tax and low unionization) have seen a surge in new auto and appliance plants. Meanwhile, companies remain wary of possible future     policy shifts; for example, uncertainty over proposed changes to the IRA or CHIPS incentives has already spurred major lobbying efforts (e.g. by energy and auto manufacturers).

Taken together, these trends mean site searches often extend nationwide. Manufacturers today typically evaluate dozens of locations and compare them on a comprehensive scorecard of workforce, cost, infrastructure and incentives. This more sophisticated screening – often using GIS data and AI tools – reflects the stakes: a major plant can cost billions and compete globally, so every long-term factor is scrutinized.

Regional Manufacturing Hotspots

Geography is shifting. After decades in the Rust Belt and Northeast, Sun Belt and interior regions are now surging. Many consultants report that well over 90% of new U.S. projects in 2023–25 are slated for the South Atlantic, Gulf, or other Southern states. Only about half of corporate executives (vs. consultants) predict southern destinations, but the consensus is clear: Gulf Coast and Southeast states (Texas, Georgia, Alabama, Tennessee, etc.) dominate current deals. Contributing factors include lower labor costs, pro-business taxes, and abundant industrial land. For example, the Port of Savannah (GA) is now a key logistics hub for auto and battery supply chains; one analysis notes that Dallas–Fort Worth, Houston and Phoenix led the nation in industrial investment (non-port markets outpacing traditional port cities) by 2024.

• Electric Vehicles & Batteries: The electrification wave has concentrated in the Southeast. Georgia alone has scored the most EV/battery investments     nationwide. And new battery plants are announced across Alabama, Tennessee, and the Carolinas. State incentive packages (sales tax abatements for EV plants, workforce grants for battery training, etc.) have proven decisive.
• Semiconductors & High-Tech: The CHIPS Act is reshaping the West and Southwest.     Arizona (Phoenix area) and New York (Utica/Malta) quickly attracted big     fabs with multi-billion-dollar incentive packages. Texas and Ohio have also unveiled aggressive semiconductor credits (in some cases in     competition with each other).
• Food & Chemicals: Louisiana and the Gulf Coast remain strong for     petrochemicals and fertilizers, aided by state incentives for energy projects. Similarly, dairy/food processing has stayed centered in the Midwest (Wisconsin, Minnesota, Ohio) due to supply-chain advantages. But     even traditional industries are feeling the pull of new incentives: for instance, Waukesha (WI) and Shelbyville (KY) got huge deals via federal     tax credits.

Overall, “reshoring” and nearshoring trends arediversifying manufacturing away from historic hubs. A recent CBRE analysishighlights that supply-chain resilience (keeping production domestic) is aprime motivator【55†】.Coupled with demographic shifts (southern states boast higher population growthand lower median ages), many companies now target growing Sun Belt labor pools,while still weighing cost factors.

Incentive Environment: Scale and Competition

The scale of incentives in 2023–24 has been unprecedented. State and local governments across the country are aggressively competing, often matching or augmenting federal programs. For perspective: in2023, analysts report roughly $4.7 billion in incentives went to both the automotive and renewable-energy sectors (each~20% of all deals), and about $4.3 billion to electronics (18% of total). These three sectors alone grabbed nearly 60% of that year’s project incentives. (By contrast, electronics incentives collapsed from a 2022 peak, as some megadeals paused.) Federal policy directly fuels this bounty: every Biden administration initiative (IRA and CHIPS in particular) has strings that unlock matching state aid. Tax Foundation analysis notes that 12 states recently created or expanded semiconductor tax credits to catch the CHIPS Act wave. In practice this means a company building a chip fab can layer a federal grant with, say, an Arizona tax credit and a city infrastructure grant – significantly improving its ROI.

Benefits take many forms (see table below). These include grants and loans for site prep, tax abatements or credits on construction costs, sales tax waivers on equipment, and workforce training funds. For example, the CHIPS Act offers 25% investment tax credits for qualifying facilities, and states like New York added refundable tax credits on top of that. Meanwhile, the IRA’s advanced manufacturing tax credits (e.g. 45Xproduction credits for wind turbine components, batteries, solar cells, etc.) are being used to finance dozens of new domestic plants.

Federal Act

Year

Focus/Benefits

IIJA (Infrastructure Act)

2021

Transport, broadband, power–grid upgrades; supports manufacturing infrastructure (ports, roads, grids).

CHIPS and Science Act

2022

Semiconductors: $52B total ($39B manufacturing incentives,  25% investment tax credit, $11B R&D/workforce).

Inflation Reduction Act (IRA)

2022

Clean energy/EV: Production and investment tax credits for  domestic EV batteries, solar cells, wind turbines, etc.; hundreds of millions  in subsidy for “green” manufacturing.

Other: State/Local Programs

–

50+ state incentive packages (e.g. Texas semiconductor grants, Georgia EV tax credits, etc.) and local rebates, often tailored by industry.

Each program’s details are complex, but the implication for site selection is clear: the incentive pie is large and growing, so companies must factor it in. Even mid-size manufacturers (NAICS 31–33) can claim significant aid by expanding or modernizing plants. For example, Georgia has become the top beneficiary of federal clean manufacturing dollars (over $17 B announced) thanks to EV/battery investments, and states from Idaho to Pennsylvania quickly passed chip credits in 2023. Meanwhile, renewable energy manufacturing (solar cells, batteries, biofuels) is seeing a national renaissance, and many projects are greenlit largely due to IRA/IRA-aligned incentives.

Industrial Real Estate and Growth Outlook

The boom in manufacturing projects has rippled through industrial real estate. Commercial reports note massive building activity:100+ million sq.ft. of manufacturing space delivered since 2022, plus another 100 million underway. Census data confirm manufacturing construction spending has roughly tripled since 2021, reflecting new factory campuses, warehouse expansions, and supplier parks. This surge has created pockets of tight demand: Sun Belt industrial rents rose sharply in early 2025 (e.g. Atlanta and Miami saw ~9–10% annual rent growth), even as vacancy ticked up slightly from the new completions. The overall picture is one of balanced demand: new plants keep industrial vacancy generally low, even while boosting the supply pipeline.

For site planners, this means prime locations are under pressure. Large Greenfield sites (mega parks, ports) are increasingly scarce, so many companies are exploring adaptive reuse or smaller infill sites –reinforcing the need for creative site analysis. Moreover, with inland hubs (Dallas, Phoenix, Denver) drawing more business, logistics costs and talent proximity often outweigh coastal advantages. In sum, manufacturing site selection today requires scanning a wide geography, and often fast-tracking site preparations (engineering studies, entitlement, etc.) to beat competitors.

Strategic Recommendations: Leverage Expertise

In this dynamic environment, expert guidance is essential.Site selection and incentive strategy have become specialized disciplines. AreaDevelopment’s latest survey finds that 85% of site consultants say theirmanufacturing clients are “greatly or moderately” affected by new federal andstate policies (IRA, CHIPS, tariffs, etc.). Similarly, project ROI hinges onaccurately forecasting long-term costs and incentives – a task well-suited to adedicated advisor.

Manufacturers should therefore partner with experiencedlocation consultants. A firm like Area Select brings deep data andrelationships: they can rapidly screen dozens of states and communities forsite readiness, labor availability, and incentive offers. They stay on top ofevolving programs, identify hidden bonuses (e.g. workforce training grants,utility-rate deals) and then negotiate the best packages. Critically, they alsomanage the complexity and compliance of incentive applications, reducing legal/riskexposure. In practice, this means companies can make faster, more confidentdecisions: instead of hoping to capture incentives, they actively shape deals(for example, securing up-front grant funding or faster permitting based onprior experience).

Key takeaways for executives:

• Plan early and comprehensively. Incorporate incentive analysis at the start     of site screening. Incentive packages often hinge on firm commitments     (like job counts and investment levels), so early negotiation can expand awards.
• Target growth regions. The South and intermountain West are leading the     manufacturing rebound. Cast a wide net but recognize that specialized     clusters (EVs in the Southeast, semis in the Southwest, etc.) may offer     synergies for supply chain or skilled labor.
• Maximize incentive value. Don’t just accept sticker packages. With dozens of incentive programs on the table, an adviser can uncover every eligible     rebate and push for incremental concessions. Even a few percentage points     of added capex coverage can tilt the NPV of a project dramatically.
• Use data and analytics. Leverage demographic and labor data, cost indices, and market trends (like the ones cited here) to build a business case.     Blending hard data (wage rates, construction costs, tax rates) with local insights (speed of permitting, quality-of-life) yields the most objective     decisions.

U.S. manufacturers face unprecedented opportunity – and complexity – in selecting sites today. The combination of federal energy/tech incentives and aggressive state programs means that location decisions are more financially consequential than ever. By relying on thorough research and professional advisors (like Area Select), companies can ensure they identify the optimal locations and extract the maximum incentive support. In effect, a smart site selection partner turns the maze of competing offers into a strategic advantage – helping projects clear ROI hurdles and launch successfully.