Choosing a U.S. Manufacturing Location: Why Incentives Should Not Be the First Question

When Chinese companies consider building a manufacturing facility in the U.S., one of the first questions is often:

“Which state offers the best incentives?”

We believe that is the wrong place to start.

A manufacturing location is a 10–20 year operating and capital decision. Incentives matter—but they are only one variable in a much larger equation.

At CFW Advisory, we look at site selection through a broader framework:

Market → Customer → Supply Chain → Power → Workforce → Site → Incentives → Compliance → Capital → Expansion

Before comparing incentive packages, companies should first ask:

Where will our U.S. customers be?
How will materials and finished products move?
Can the location provide sufficient and reliable power?
Can we recruit and retain the workforce we need?
How quickly can the site become operational?
What regulatory and compliance requirements could affect the project?
And can the location support Phase II or Phase III expansion?

Texas provides a useful illustration.

Blue Origin announced approximately $554.78 million in investment for its Hutto project, supported by approximately $18.17 million from the Texas Enterprise Fund.

Toyota’s San Antonio expansion represents approximately $3.6 billion in investment, with $20 million from the Texas Enterprise Fund, while also qualifying under the Texas JETI program.

The lesson is not that incentives are unimportant.

The lesson is that incentives should improve the economics of a project—not create the fundamental business case for one.

For companies evaluating U.S. manufacturing, the better question is not:

“Where can we get the largest subsidy?”

It is:

“Where can we build a competitive, compliant and scalable U.S. operation with the strongest long-term economics?”

That is the question a serious site-selection process should answer.

CFW Advisory
ENTER → INVEST → OPERATE → COMPLY → CAPITALIZE