Study names city second best in CA for manufacturing facility

Porterville should be quite enticing to a high tech manufacturing company looking for a small city in which to operate a production facility, according to a recently released study.

New Jersey-based consultancy The Boyd Company ranked Porterville 30 on a list of 45 small U.S. cities where a manufacturing facility could be operated most cost-effectively, based solely on operating costs.

Among the seven California locales that made the list, Porterville scored second-best, with a hypothetical 250,000 square foot production facility employing 300 workers expected to cost a company approximately $25.5 million to operate.

“If you add to this affordable land values and the pool of available labor, it does make Porterville a target for new manufacturing,” Linda Wammack, development associate with the city of Porterville.

The other California cities included in the study were Walnut Creek, Davis, Folsom, Merced, Riverbank and Apple Valley.

Among those cities, the estimates for operating such a facility in Porterville gave the city the second lowest weighted average hourly earnings, annual base payroll costs and the lowest cost fringe benefits.

In addition to low labor costs, Porterville also recorded a three-way tie for the second lowest electric power costs at such a manufacturing operation.

However, the city also was second highest in property and sales tax costs.

The 45 cities selected were chosen because Boyd considered them up and coming small market cities in each region of the country “considered to be on the radar screen for new industry as the economy emerges from recession.”

In addition, the study cited a increasing focus on operating costs as a tight economy makes revenues uncertain.

“In today’s difficult economy and credit crunch, comparative economics are ruling the corporate site selection process,” the analysis states. “For many companies, improving the bottom line on the cost side of the ledger is far easier than on the revenue side. As a result, location decisions at every level of the corporate organizational structure, from off-shored call centers and remote branch plants and warehouses right up to the corporate head office, are all being made with cost minimization as an overriding objective.”

In the Western U.S. cities surveyed, annual costs ranged from a high of $28 million per year in Walnut Creek, CA, to a low of $21.1 million in Quincy, WA.

The study was intended to be a “useful cost-comparison tool” for high technology companies engaged in advanced manufacturing operations and computer-operated production processes in sectors such as precision metal working, engineered plastics, composites and other advanced manufacturing fields.

According to Wammack, these manufacturing sectors align closely with a strategic plan written for Porterville more than 10 years ago.

The Economic Development Strategic Plan focused solely on manufacturing industries — those the Boyd study proposes would be a good fit for the city’s financial situation.

However, Wammack said, since then she has seen “very little movement” within those industries.

She also emphasized that many other factors play a role in the decision of companies to move their operations.

Where a company’s suppliers are located, how far a city is from the company’s targeted market and the availability of transport to those markets are all important facets.

Likewise, incentives can also “tip the hat for a community,” she said.

The recent redesignation of Porterville as part of the Sequoia Valley Enterprise Zone could be that necessary enticement for a company to consider a move to the area, she said.

The designation — among other incentives — offers businesses financial remuneration, in the form of tax credits, for hiring new employees.

Along with that designation comes the ability to locally fast track permits for new facilities.

While Porterville has no vacant 250,000 square foot facilities, like the one used in the study’s cost analyses, empty land is available where one could be constructed.

“We could fast track the permit system to get it up and running in a reasonable amount of time,” Wammack said.

She said such an addition would “help revitalize” the local economy with the approximately $17 million expected to enter the economy in the form of total annual labor costs.

--Contact Sarah de Crescenzo at 784-500, Ext. 1045 or sdecrescenzo@portervillerecorder.com.