The Wrong Starting Question Costs Time and Money
Companies planning a U.S. entry quickly find their internal discussions gravitating toward Texas or the Southeast. The Midwest, if it comes up at all, tends to enter the conversation only later. Yet the decisive question is a different one entirely: What does the planned U.S. presence actually require in order to function operationally and remain viable over the long term?
The three major industrial regions differ significantly across critical dimensions: proximity to customers, availability of skilled labor, supply chain structures, cost frameworks, and the industrial environment each follow their own logic depending on the region. A location decision that fails to account for these differences in a systematic way carries risks that may not become apparent until after market entry.
The Southeast: Established Clusters and Greenfield Experience
Tennessee, South Carolina, Alabama, and Georgia have developed over the past several decades into recognized locations for international industrial companies. Automotive clusters, established supplier networks, and professional economic development structures make it possible to integrate a new facility into an existing industrial ecosystem relatively quickly.
South Carolina, for example, counts more than 500 companies in the automotive sector. This density lowers the barriers to entry for suppliers and component manufacturers seeking rapid integration into existing value chains.
Texas: Scale, Energy, and Access to Mexico
Texas offers a large domestic industrial market, robust energy infrastructure, major seaports, and direct connectivity to the Mexican manufacturing network. For companies with the right product portfolio or supply chain logic, this can represent a decisive advantage.
That said, Texas is not a homogeneous location. Power availability, water supply, the skilled labor pool, and suitable sites vary considerably within the state. Proximity to relevant customers, as well as the availability of sales and management personnel, also depends heavily on which sub-region a project is intended to serve.
The Midwest: Industrial Depth Over Growth Momentum
Ohio, Indiana, Michigan, Illinois, and Wisconsin possess something that cannot be built in a short period of time: decades of accumulated expertise in metalworking, mechanical engineering, automotive manufacturing, and industrial supply. This substance is reflected both in the breadth and depth of specialization within the available workforce and in the region’s dense industrial supply base.
For companies that require specialized manufacturing capacity or technically qualified personnel, the Midwest can remain a compelling location. The access to a broad network of industrial suppliers is an additional argument in the region’s favor. Accordingly, the Midwest should not be dismissed prematurely in favor of higher-growth regions.
Growth Alone Is Not a Site-Selection Criterion
The fastest-growing region is not automatically the most suitable one — neither for a greenfield project nor for an acquisition search with a regional focus. What matters is the specific requirements of one’s own business model: Who are the customers? Which processes need to be replicated? Which supply chain must be supported? What kind of personnel is required?
Only from the totality of these factors does the right region emerge — and, in a second step, the right location within that region.
Pegasus Partners has been supporting European industrial companies in planning and executing their U.S. presence for more than 40 years — from site analysis and greenfield projects through to acquisition strategy.