Do Manufacturers Search for a Location? The Case of Hardwood Processors

Abstract

There is growing federal, state, and local interest in forest-based economic development in the United States. Programs to encourage this development often focus on industry recruitment, implicitly assuming that firms search for new locations in other states. This study examines firms that conduct a location search and those that do not, and identifies factors related to their decisions. Concepts from neoclassical and behavioral location theory form the context for this analysis. The large majority of establishments did not conduct a multiple-site location search. To a great extent, establishments located based on personal ties. The majority of variables found to influence the likelihood of a search are not controllable by state or local government. The implication is that local development policy should focus on existing firms, rather than on recruitment.