Mobility USA: in good shape?
As the presidential election approaches and repercussions from the UK’s vote to leave the EU continue, Relocate assesses the state of global mobility and domestic relocation in the USA.
See more features about the mobility industry in the Autumn 2016 issue of Relocate magazine on our Digital Issues page.
Challenges for global mobilityWhat does this mixed economic picture mean for companies’ relocation and global mobility priorities?Says Dale Collins, chief innovation officer of Graebel Relocation Services Worldwide and current chairman of the Worldwide ERC board, “Economic growth generally acts as a stimulus to relocation, domestically and overseas. When the economy is growing, companies are more focused on how to create new markets, capture market share and innovate for growth, and less focused on reducing spend across all categories – including mobility.
Sourcing talentLaurette Bennhold-Samaan points out that expatriates are just one source of talent. Other options are to leverage local or regional talent, use more short-term or rotational assignments, or move parts of the organisation to the location in which the necessary talent can be found.Peggy Smith says, “Our HR and supplier members are bullish on volume, but, as always, there are continued cost pressures. On the supplier side, companies are caught between needing to make investments to remain competitive even as their margins are declining.“From the corporate perspective, there’s the challenge of a changing workforce mobility landscape, with more demands to get the right people in the right place. That can be complicated by other issues – for example, lump-sum assistance and extended business travellers.”
Keeping pace with changeDale Collins adds that, overall, especially in the US and the EU, we are seeing the underpinnings of a global economy – the free movement of people across borders, free trade agreements and harmonised tax regimes – coming under increasing scrutiny. This, he says, “raises the stakes” for companies whose growth plans depend on mobility.Bill Paxton, COO of Paxtons, which provides removals, relocation and logistics management services across the US and internationally, says, “Positive movement in US unemployment rates, existing home sales, and consumer confidence are all contributing factors to the current business environment and trends in global mobility.
In search of growthAs expansion into overseas markets continues, where are US companies sending their international assignees?A recent survey of international relocation destinations by Cartus showed that US-based employees were most likely to be relocated to the UK, Canada or China. Other destinations in the Cartus top ten were India, Singapore, Germany, Japan, the Netherlands, Saudi Arabia and Australia.
US still a mobility magnetYear after year, the US features as a top relocation destination in major global mobility surveys. Where are the moves coming from and why, and what are the main industry sectors?Among Cartus’s clients, the top three countries sending volume into the US are India, Canada and the UK.“The vast majority of the volume from India,” says Matt Spinolo, “continues to be IT-related technicians and professionals. Some of these employees work for IT firms that sell consulting, customisation, and installation projects to other firms, and some are in-house IT technical staff.“There are some oil-related transfers from Canada back to the US as the low world market price of oil shutters development projects and slows other production sites with high costs. Additionally, Canada has become a source of software-development talent, and some of our volume relates to companies repositioning talent to support new projects elsewhere.”Of the UK, Matt Spinolo says, “Our clients seem reasonably active both in and out, and our volume is a mix of financial, IT, industrial and consumer goods firms rotating talent.”China, Brazil, Singapore, Mexico, the Netherlands, Australia and Germany complete the Cartus top ten.
Embracing diversityDiversity is playing a key role in the run-up to the US election, as Laurette Bennhold-Samaan explains. “According to the Pew Research Center, the US voters this year will be the country’s most racially and ethnically diverse ever. Nearly one in three of those eligible to vote will be Hispanic, black, Asian, or from another racial or ethnic minority, up from 29 per cent in 2012.“Much of this change is due to strong growth among Hispanic eligible voters, in particular US-born youth.“The US is accustomed to diversity, as currently most expatriate assignments globally are to the US. If a president is elected who embraces less diversity, we may perhaps see a decline of interested expat talent wanting to take on US assignments.“Even with the potential for the first woman president and the voter population being more diverse, there is an ever-growing need to better understand our own lens of culture – how we view each other and the world – in order to live and work together effectively.”
Brexit implicationsWhere Brexit is concerned, the picture is complex and uncertain, particularly because there is no precedent for the UK government to follow in its forthcoming negotiations, since no country has ever before left the EU. David Everhart, president of Aperian Global, is based in London. “It is still unclear what the full impact of Brexit will be to US companies invested in the UK,” he says. “Some US-based firms, mostly financial services companies, announced very quickly in the wake of the vote that they planned to move jobs from London to Europe, but few have yet taken much action.“Because the British pound has fallen in value, international tourism remains very strong. The overriding sentiment seems to be ‘let’s wait and see’. The disaster scenarios predicted before the vote have not yet happened, and the FTSE and other stock markets have fully recovered or are above their pre-Brexit levels.“There is a growing feeling of confidence in London that, at least in the short term, the Brexit vote will have less of a negative impact than originally feared. For US companies in the UK, the best advice is pay very close attention to trends going forward, but don’t panic.”As Dale Collins points out, this wait-and-see attitude means that corporate decisions on growth and investment are being put on hold.“It’s far too early to tell what impact Brexit will have,” he says. “The UK and the EU potentially have as much as two years of negotiation ahead of them as they decouple. And this disengagement isn’t happening in a vacuum – there are other dynamics at play within the EU. There could be further disruptions.”He adds, “There’s a lot of uncertainty in the world right now, with the US presidential election playing a destabilising role as well. At the same time, uncertainty and dynamic change, like Brexit, heighten the need for thoughtful talent management planning and strategy, with flexible mobility programmes that can be adjusted or redirected as circumstances evolve.“The best substitute for a crystal ball is the ability to foresee a range of policy outcomes that impact mobility, and to have a game plan for each.”Bill Paxton says, “While US banks and the financial services sectors have the largest potential shift at risk, at Paxton we have seen normal assignment activity in and out of the UK, but have not seen any of our current clients exiting the UK to other EU member states.“One of our US financial clients with major operations in the UK has seen increased assignments to and from the UK/US and the UK/Asia in support of their strategic growth, not necessarily due to Brexit.”Cartus suggests that the fall in Treasury rates that followed the Brexit vote may result in an all-time low for US mortgage rates. Low rates could cause increased demand for homes as well as loan refinancing.
The rise of rentalsAlthough there has been an upturn in home sales across the US, the question of whether to rent or buy continues to be a hot topic in corporate relocations, Bill Paxton is finding.“According to a 2015 Worldwide ERC transfer survey,” he says, “renting has become a common choice, especially among younger working Americans. Rent.com reports that nearly six out of ten Millennials say that affordability, with ‘inherent freedom’, is a key reason for choosing to rent. Bill Paxton adds, “Corporations support with relocation assistance existing homeowners who wish to purchase in the new location, even though more than half of companies report seeing an increase over the past three years in the number of home-owning transferees choosing to rent, as the Worldwide ERC survey showed.“For US inbound assignments, most corporations are still staying clear of new home purchases, and encourage assignees to rent. In the US, most assignees will even sign their own leases. Permanent transfers to the US are more likely to purchase. We must remember, though, that relocating homeowners represent a small portion of the overall US housing market.”Exchange rates are among the factors affecting the current housing picture for international assignees. Says Dale Collins, “A stronger dollar obviously makes inbound moves to the US more costly for companies in the UK and Europe, but they really don’t have any choice.“Across virtually every industry sector, the US market simply is so huge that international companies cannot opt out, even in the face of less-favourable exchange rates. Currency-driven costs for mobility are a rounding error compared with the opportunity cost of a diminished presence in the world’s largest economy.“For inbound moves to the US, the housing-cost calculus is similar to currency impacts. Even if housing costs are on the rise in key US cities, the question is: can your company afford not to be here?”Rising property prices in some parts of the country are impacting employees relocating domestically.“I’ll give you two examples from Colorado, where Graebel is based,” says Dale Collins. “Charles Schwab has built a 47-acre campus in south suburban Denver that ultimately will employ 4,000 people – more than three times as many as its San Francisco headquarters, where housing costs are through the roof.“And Google is building a new campus in Boulder, with plans for up to 1,500 employees. Housing in Boulder is not cheap, but Boulder and nearby towns are much more affordable than Mountain View and surrounding communities in Silicon Valley.”
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