Global location trends: 2020 special edition

For decades, technology and global trade agreements have enabled organizations to locate components of their operations where they can find the best mix of quality resources while optimizing total operating cost. Location strategy was like chess, with organizations selecting locations with the greatest value proposition for a specific business function. Freedom of movement of people, goods, and services was relatively unrestricted. And we took it for granted.

But in March 2020, COVID-19 showed what a global Black Swan event can do to an interconnected global economy. Seemingly overnight, everything changed: ports closed, planes were grounded, businesses shuttered, and workers were sent home. The movement of people across borders came to a standstill in much of the world, as most countries imposed partial or complete border closures in response to the coronavirus outbreak. The global economy stalled.

Location trends for a different world

For more than a decade our Global Location Trends report has looked back at investment activity from the prior year to identify trends and anticipate the future. The pandemic has changed our world, our global economy, and how organizations will likely approach location strategy moving forward. As such, our report has also changed.

COVID-19 showed what a global Black Swan event can do to an interconnected global economy.

This year’s report focuses on how the pandemic has impacted existing investment plans, where investors see opportunity and risks in the future, and what factors are expected to drive corporate investment decisions in the “new normal.” We also explore the role digital technologies can play in enabling resilient business and operating models to mitigate the risk of future events like the COVID-19 pandemic.

The COVID-19 impact

Going into 2020, a majority of executives surveyed indicated they had plans for investment projects in either their own home country or a foreign country. On average, companies indicated they expect to create more than 350 new jobs in their home country and 225 jobs abroad from new greenfield or expansion investments in 2020.

Despite massive disruption, most organizations indicate that COVID-19 had little immediate impact on their investment plans.

Despite massive disruption to the global economy, most organizations indicate there was little immediate impact on their investment plans as a result of the COVID-19 pandemic. A total of 95 investment projects were reported to be canceled or postponed in our survey of 503 companies.

Implications for the future

Looking beyond 2020, companies are expected to create an average of more than 500 jobs in their home countries through greenfield and expansion investment in the next 1 to 3 years and almost 800 jobs in the next 3 to 5 years. Meanwhile, they anticipate creating almost 400 jobs abroad in the next 1 to 3 years and almost 600 jobs in the next 3 to 5 years.

The most important strategic drivers for these future investments at home and abroad are resilience and business continuity. Access to markets and proximity to customers, either at home or abroad, are also important considerations.

However, new investments and expansions only constitute one part of the adjustment to corporate footprints in response to recent turmoil. The other part that may shape where and how companies operate is linked to consolidation plans. From this perspective, we see a dramatically different picture, with 60% of respondents indicating they are planning to consolidate activities in their home country in 2020, while only 27% of respondents expect to consolidate activities abroad.

Companies expect to consolidate activities in their home countries in 2020

Read the full report to explore more trends impacting corporate location strategies and learn how you can position your organization for growth in a rapidly changing business environment.