Why Companies Should Onshore in Tracy
15 Oct 2020
Approximately two of every three North American manufacturing companies surveyed by Thomas reported COVID-19 business disruptions. Interrupted supply chains and delayed product deliveries have increased significantly over the past six months. Business officials across the country are reevaluating cost savings practices such as offshoring in the current business environment. Whether they opt to move their entire operations or seek local suppliers, Tracy, California finds itself in the position to leverage its prime location as the gateway to the Bay Area, a readily available and diverse commercial real estate supply, large and affordable labor force, business friendly environment, new infrastructure, and high quality of life.
Onshoring is Logical Solution
For four decades, companies have offshored manufacturing operations overseas in order to save costs. But the COVID-19 crisis has essentially reversed the race to cut costs as companies were no longer able to supply customers and fulfil contracts. Onshoring has been increasingly embraced as the solution to reducing the risk of future disruptions and delays. Though companies may not be looking to move their entire operations back to the United States at once, gradual reopening of the U.S. manufacturing facilities has started to take place. In addition to companies onshoring directly, 28% of suppliers surveyed reported seeking domestic sources. This will create trickle expansion opportunities for current U.S. manufacturers.
Onshoring in Tracy Prior to COVID-19
Tracy is uniquely positioned to accommodate the reshoring trend and enable growth for companies seeking to leverage the benefits of returning their operation to the U.S. or those onshoring for the first time. Prior to the COVID-19 crisis, Tracy had already built significant momentum drawing new businesses like Thermo Fisher Scientific and Medline. According to Tracy’s City Manager Jenny Haruyama, the city council had planned for the future with a 30-year infrastructure master plan, providing a roadmap for infrastructure, which includes water, sewer, drainage, roads, parks, public facilities, and fire and police facilities. The City also streamlines the entitlement process with zoning permits approved at staff level.
That’s why we have one of the largest industrial parks in the nation, now probably a third built out, and another eight million square feet in the planning process over the next couple of years.” she said. “Tracy’s advantage has been in its streamlined vision for facilitating development, and the right development in particular. We get a lot of good feedback from our businesses that come here, because they want to make sure they provide as much to their employees’ satisfaction, as well.”
Onshore in Tracy
With the business community starting to adjust to impacts of the COVID-19 reality, Tracy has become an increasingly attractive location for companies looking to onshore. Key Tracy advantage benefits include the following:
Premier Location & Transportation Assets
Tracy is situated just an hour from San Francisco, San Jose, and Sacramento. A diverse supply of available commercial space and build to suit opportunities exist in Tracy with many in the International Park of Commerce and Northeast Industrial area. Both major master planned industrial parks are some of the largest in the region and take advantage of Tracy’s central location in northern California with the Port of Oakland and Port of Stockton nearby. The City has invested in truck-friendly infrastructure to connect both business parks to access major transportation routes like I-5, I-205, I-580 and Hwy 99.
A large, dedicated, and affordable labor force resides in the local area, with a significant portion skilled in Industrial/Manufacturing sector. Tracy’s strategic location offers the opportunity to draw on the broad skills of 1.7 million San Joaquin Valley residents. While many commute to the Bay Area along the Altamont Corridor for work, local employment provides a competitive opportunity to capture workers within the region.
With an ample supply of diverse and relatively affordable housing options, the City has gone through major population and employment growth over the last decade. This growth is likely to continue with the reshoring as well as the Bay Area housing shortage, which resulted in rapid population growth in south San Joaquin County.
Quality of Life
A significant reason for Tracy’s growth is an exceptional quality of life. Businesses operating in Tracy know their employees will experience a safe community with high-quality schools, ample recreation amenities, and a lively restaurant and shopping scene.
An important factor of achieving a high quality lifestyle is affordability. And WalletHub ranks Tracy in the top 40 best places to live in California for families, with it being in the top 20 for affordability.
Local schools rank consistently high in terms of graduation rates and college readiness. Additionally, recreation can be found in many forms in Tracy. Those interested in the arts find a lively environment, highlighted by the Grand Theatre Center for the Arts. The location offers live theatre, art galleries and classrooms all in one location. Downtown also hosts various culture and arts events.
Tracy offers an unmatched dining scene. Establishments such as the Morgan Territory Brewing and Ramon Rios Winery are just two options for families and couples alike. The City places a high priority on supporting local restaurants and businesses in general as a critical factor to maintaining a high quality of life. For example, city officials and downtown Tracy merchants recently collaborated on an outdoor downtown dining “streatery” program that enabled Tracy restaurants to remain open during COVID and improved the dining experience for residents and visitors. Plans to block off a road lane for outside restaurant seating during the indoor dining ban drew higher crowds of patrons to downtown and were largely praised as one of the most notable regional economic development success stories.
Reasons to Onshore Now
COVID-19 has demonstrated the scope and scale of the impact a global pandemic can make, but it’s not the only disaster that can disrupt supply chains. Environmental factors are another one. The world has suffered an increase in severe hurricanes, earthquakes, fires, etc. - all things that are unpredictable and cannot be controlled. Unfortunately, many of the same countries with U.S.-based manufacturing operations have been hardest hit by these disasters and their infrastructure is not secure enough to withstand them. For example, the 2001 earthquake and tsunami in Japan and floods in Thailand had crippling effects on the electronics and automotive manufacturing sectors. Put simply - the global supply chain is fragile. Businesses seeking lower risk have increasingly started prioritizing the total cost of doing business over the cost of production. The former reflects the value of protected supply chains and risks associated with pandemics and natural disaster events.
We Can Help
Tracy is committed to a strong, growing business climate. The process of collecting data, finding a site, obtaining permits, constructing a facility, and hiring and training an adequate workforce may seem daunting. The City of Tracy understands these challenges and partners with the business community to enable success. A wide range of business-friendly financial incentives, such as sales tax rebates, direct financial assistance incentives and Building and Planning Rebates, are available to companies choosing to locate to the City. If onshoring is part of your business protection strategy, Tracy is here to help with the entire process. Contact us to learn more.
Resources and Further Reading