Determinants of U.S. manufacturing firms’ new location decisions: What factors shape state-level entry?

Abstract

The location of new manufacturing facilities is a critical determinant of firm performance and long-term competitiveness in an increasingly dynamic global economy. This decision-making process is complex, shaped by economic, social, geographic, and regulatory conditions. Understanding these factors is essential for policymakers, investors, and firms seeking to design strategies that foster regional development, job creation, and sustainable economic growth. This study examines the key determinants of manufacturing firms’ new-location choices in the United States. Although factors such as land availability, workforce productivity, and regulatory stability are well recognized, the magnitude and mechanisms through which they affect location decisions remain insufficiently understood. Using data from governmental and industry sources, this analysis investigates how these variables shape site selection. The findings indicate that the density of current establishments and prior business activity strongly predicts new location choices, highlighting the importance of clustering effects in manufacturing expansion. The results show that current business density and firm turnover are the dominant predictors of new entry, while energy costs, public safety, and infrastructure conditions play a statistically consistent but secondary role.