• COVER PAGE

  • MOTOWN RULES

  • 1998 PROPORTIONAL
  PERSPECTIVES

  • METHODOLOGY

  • NEW CORPORATE
 FACILITIES AND
 EXPANSIONS

  • THE LONG VIEW:
 MICHIGAN

  • 1999 FORECAST

  • 1998 TOP 20 U.S.
 FACILITIES

What in Chicken Little's name is going on?

That's the obvious question spurred by 1999's Site Selection Index (SSI). Amid dime-a-dozen doomsday prognostications, '99's SSI projects 15 percent global growth in new facilities and expansions over 1998's record-setting total of 12,914.

Does SSI know something economic prognosticators don't? Possibly. Since its 1991 inception, the SSI has been frighteningly right. It's accurately predicted corporate expansion trends for eight straight years (see accompanying chart).

Reader Alert: A Flimsy Imitation

Even so, considering how contrary 1999's Index is to conventional wisdom, a bit of background is in order.

SSI's backbone is Site Selection's New Plant database, widely acknowledged as the world's most complete storehouse of corporate expansion data (for more, see "Methodology" box on pg. 198). Frankly, those laurels are warranted. Through New Plant, Site Selection has systematically tracked, tallied and analyzed corporate expansion activity for more than 25 years. No one comes remotely close to SS's sustained, year-round effort.

Now, however, SS's acclaimed annual scoreboard has earned that most dubious flattery, imitation. And the facts behind our competitors' pale, smoke-and-mirrors mimicry prompt a Reader Red Alert:

Fact 1: Our imitators have created 1998 expansion rankings.

Fact 2: Our imitators don't publish actual numbers. It's highly unlikely they even bother to properly store and categorize their expansion information for analysis, instead taking incomplete, sporadically gathered data as gospel. Moreover, their data span only nine months, three in 1997.

Clearly, that ersatz "analysis" insults everyone's intelligence. What's the difference between Site Selection's annual study and our imitators'? It's the difference between Sinatra and Milli Vanilli, between reality and virtual reality.

In short, the shallow imitation of SS's authoritative scoreboard evokes the ancient folk adage: You get what you pay for. Caveat emptor.

'Ticking Time Bombs'

So much for follow-the-leader issues -- which, frankly, are far less newsworthy than those surrounding the 1999 Index's 15 percent growth projection, which comes amid ominous forecasts.

As Standard & Poors Chief Economist Nariman Behravesh noted in late 1998,"Ticking time bombs could create a worldwide recession."

From Japan's banking crisis to China and Brazil's currency devaluations to the potential for a global credit crunch or a stock market collapse, those "time bombs" have clustered, Behravesh said, creating a scenario for a house-of-cards' global economic collapse. "If one or more of these time bombs explodes," he warned, "then the worst-case scenario [of worldwide recession] will come to pass."

'Embracing Adaptive Change'

Others, however, see expansion prospects paralleling weichi, the Chinese word for crisis, which contains characters depicting danger and opportunity.

For example, Steven Choo, Jones Lang Wootton Singapore executive director, readily acknowledges today's economic unrest. Choo, however, draws a critical distinction: global economic woes' short-term business impact vs. the long-term real estate opportunities they've created, including major occupancy cost cuts in key regions, greatly increased leasing flexibility and property ownership affordability, and relaxed foreign ownership regulations.

"Look at where the cost savings can be made: vacancies, project cost amortization, cube density, offices, rent, finish levels and underutilized space," Choo advises. "In an economically or politically unstable market, you must look for those who embrace adaptive change."

Such thinking likely lies behind the 15 percent expansion predicted in SS's poll of top corporate executives at some of the world's premier firms.

Consider, too, late-1998's observation by Flemming Larsen, International Monetary Fund research deputy director, who concluded, "We think the worst of this crisis is probably behind us."

That, obviously, could change in a heartbeat.

Still, Site Selection's Index deals in hard numbers, ones that bear history's considerable weight. 1999's numbers speak plain: 15 percent expansion. SS