In an earlier article we looked at various factors that will play a role during location decisions. Among the most important factors to consider are the political dimensions which can come into play in several different ways. They are likely to play a part where the company is faced with a choice between two close or reasonably close alternatives. Here we will consider the internal political dimension as in the internal relationships and decision making processes with an organisation and the external dimension where political representatives of a region play their part in convincing a company to choose their region.
Internal politicsEarlier in my career I was involved in a location decision for a major factory with potential for around 900 jobs. The project was large enough for government level politicians from each country to request visits to the corporate headquarters. The numbers were calculated and were clearly in favour of a particular location in a particular country. However the final decision went in favour of the country and location which came second in the analysis. A new totally subjective criterion was introduced at the 11th hour by two key executives at a point in the process where it could not be challenged. At the time that I was informed of the decision, I was lost for words but with hindsight I should have guessed the final outcome early in the project. The surnames of the two of the key executives were the clue. They clearly had historical family connections with one of the countries – and you’ve guessed it – that’s where the new factory went.
So what are the implications for bodies competing inward investment? Take nothing for granted. Even though you may be the most logical choice, you can never be certain because there are always factors which are out of your control. Conversely, even though you may not be the most logical choice, never give up. You never know when some previously unknown factor might come into play.
Attracting inward investment will almost always be based on a professional and amiable relationship between the people leading each side of the project. Once that is established municipalities should endeavour to understand the internal politics of the client organisation and where possible create and take every possible opportunity to broaden their network of contacts within the organisation, without by-passing your immediate contact.
Even if you do all of the above, you can’t control everything. All you can do is maximise your chances.
Problems can also arise in the broader political arena. In most countries the region will be represented by both civic employees and elected individuals. Those who rely on votes are always keen be the person who gives out the good news of new inward investment projects to the media. There is a great temptation to go to the press too early, before the deal is irrevocably signed. I have been involved in two projects where this has happened. Understandably the new company is very upset and indeed angry. Putting this information into the public domain may breach Stock Exchange rules and may cause industrial relations problems if job transfers are involved. They may be forced to deny the project or threaten to walk away. This puts the location at a serious disadvantage in further negotiations and they may be forced to “sweeten” the deal if they do not want to lose the project.
The message here is clear. Don’t let the politicians speak too soon or out of turn if you want to make sure you don’t lose a project.
In conclusion, both internal and external political issues exist in every relocation project. Ignore them at your peril.