New Logic in US Manufacturing Site Selection: How Energy Infrastructure Becomes a Core Competitive Advantage

Core Observations

1. Energy availability surpasses cost as the primary factor in manufacturers' site selection

Over the past five years, when evaluating new factory locations, U.S. manufacturers have shifted their focus from "how low is the electricity price" to "whether reliable and sufficient power can be supplied." In the Greater Richmond area, utility companies (Dominion Energy and Columbia Gas) and economic development agencies (Greater Richmond Partnership) get involved early in project planning, discussing details such as megawatt demand for the next three to five years and dual-circuit redundant power supply. This deep, upfront collaboration provides certainty for advanced manufacturers—something many high-growth regions cannot promise.

2. Long-term utility planning and fuel diversity build competitive barriers

Columbia Gas ensures natural gas supply through multiple interstate pipeline interconnection points and intrastate pipeline systems; Dominion Energy develops a 20-year integrated resource plan to balance future power generation mix. This planning capability means manufacturers do not need to worry about power bottlenecks over a 10-year cycle. In contrast, some U.S. regions delay or reject new large industrial loads due to insufficient grid capacity. Greater Richmond's proactive planning creates a structural advantage.

3. Carbon-neutral factories shift from "vision" to "hard site-selection criteria"

The LEGO case is highly representative: the company set a net-zero operations target for its Virginia factory, requiring that annual electricity consumption be fully offset by on-site renewable energy. Utility partners in Greater Richmond not only did not shy away from this challenge but turned it into a competitive advantage. By planning a 28-megawatt rooftop and ground-mounted solar photovoltaic station, they helped LEGO achieve its first large-scale carbon-neutral manufacturing base globally. This contrasts sharply with the traditional "build the factory first, then find green power" model, marking that major manufacturers have embedded sustainability requirements into their site-selection white papers.

4. Low natural disaster risk becomes a moat for operational resilience

FEMA's National Risk Index rates the overall natural disaster risk for the Greater Richmond area as low to moderate, far lower than many major U.S. metropolitan areas. For continuously operating high-load manufacturing facilities, even a brief power outage can cause millions of dollars in losses. The region is far from hurricane corridors, wildfire zones, and earthquake belts. Against the backdrop of increasing supply chain vulnerability, this geographic characteristic becomes an increasingly important advantage.

Industry Dimension Analysis| Dimension | Impact | |------|------| | Industry Dimension | High-load industries such as advanced manufacturing, food processing, logistics, and clean technology benefit; upstream and downstream enterprises like aluminum foil, packaging, and measurement equipment expand simultaneously. | | Enterprise Dimension | Companies that have already invested, such as LEGO, Alfa Laval, Mondelez, Sabra, and Sapporo, gain operational certainty; utility companies (Dominion, Columbia Gas) achieve revenue growth by serving industrial customers. | | Regional Dimension | Expansion in Greater Richmond, Virginia, while California and parts of the Northeast with severe grid bottlenecks may lose investment opportunities. | | Policy Dimension | The federal IRA and CHIPS Acts' clean energy and manufacturing incentives indirectly support this site selection model; local economic development agencies provide fast-track approval processes. | | Investment Dimension | Capital shifts from solely pursuing low tax burdens to regions with well-developed energy infrastructure; it is recommended that manufacturers allocate more than 10% of their investment budget to energy system planning. | | Supply Chain Dimension | Food packaging (Smurfit Westrock), industrial components (Anton Paar), and others form clusters around core manufacturers; logistics costs are optimized due to factory proximity to the East Coast market. |

Deeper Impact on U.S. Manufacturing

Why Is This Happening?

The wave of U.S. manufacturing reshoring meets an aging power grid and carbon neutrality pressures. Companies cannot afford power outages or long waits for grid connection, so they proactively seek regions that can simultaneously meet scale, reliability, and decarbonization goals. The Greater Richmond cooperation model—where government, utilities, and economic development agencies coordinate before environmental impact assessments—has become a practical example of solving the "energy trilemma."

Which Industries Will Benefit?

• High-energy-intensity continuous process industries: Advanced materials, chemicals, semiconductors, food processing.
• Branded manufacturers with net-zero commitments: Such as toys, packaged consumer goods.
• Renewable energy equipment suppliers: Photovoltaic, energy storage, heat exchanger manufacturers (e.g., Alfa Laval's expansion is precisely in response to such demand).

Which Industries Will Be Under Pressure?

• Industries relying on cheap but unreliable grids: Existing factories operating in grid-vulnerable regions need additional investment for backup power.
• Regions unable to provide sufficient carbon-neutral energy: For example, some inland areas lack adequate renewable energy bases.

What Does This Mean for Corporate Investment?

Energy due diligence will be elevated to a position as important as labor costs and taxes. Companies must require utilities to provide data-center-level power commitments (e.g., 20-year megawatt-level capacity lock) and assess the local grid's fuel diversity, backup redundancy, and green electricity procurement options.### What does this mean for the next five years?

"Energy-first" industrial parks similar to Greater Richmond will increase. The U.S. may form a few manufacturing hubs with strong utility collaboration, while other regions risk losing industrial investment if they cannot quickly upgrade grid planning and renewable infrastructure. At the federal level, standardized industrial electricity capacity reservation systems may need to be introduced to support reindustrialization goals.

Conclusion

The case of Greater Richmond goes beyond a single success story, revealing a core shift in U.S. manufacturing site selection: energy infrastructure has been elevated from a "support function" to a "decision-making core." In the wave of reindustrialization, those who can provide certainty in grid reliability, carbon neutrality plans, and long-term planning will win the next generation of manufacturing plants.