Gregg Healy, Executive Vice President and Head of Savills Industrial Services in North America shares insights into the sector and the importance of facilities location strategy
Can we start with an introduction to you, your career history, and how you came to be at Savills?
I’ve had a bit of an unusual path to get to this role. I’m certain my parents never expected their son who majored in Philosophy and Japanese to be leading the North American industrial platform for a global commercial real estate advisory firm!
After spending several of my university years between Scandinavia and Japan, I ended up taking a management training role with a Japanese plastics company outside Tokyo. I was the only non-Japanese person working at the company, so it was a truly immersive experience.
From the get-go, I had to attend plastic injection molding school in Japanese, and then work the production line for several months before my next rotation. It was an experience that every young person should go through early in their career. We worked Monday to Friday from 8:00 in the morning until 8:00 at night, with meals provided by the company. On Saturdays, with overtime pay, we worked from 8:00 to 5:00. I took a company bus to work and back daily and lived in a company dormitory, with my room being about ten-by-ten with no furniture – just mats on the floor and shared bathrooms. It was an amazing experience, one that really shaped my work ethic. As I advanced through the internal rotations, the company put me on the global business development team. Being the only true English speaker, I was sent all over the world, helping the company establish global partners for sales and distribution as well as licensing to manufacture.
Later, I was tasked with building a new manufacturing operation for this company in the United States which brought me back home. That was my hands-on MBA as I had to develop a team and do everything from product certification to manufacturing line setup to sales and distribution. After five years, my (future) wife encouraged me to put my resume out to market for an opportunity for growth.
I accepted a position with a newly formed Honda Motors subsidiary known as Komyo America (aka Honda Logistics). This moved me to Ohio where I was fortunate to work with many Honda suppliers – getting to see how the myriad pieces come together from numerous suppliers to make a Honda or Acura vehicle. I spent my time in Ohio also pursuing my MBA with the University of Michigan. Later, I was promoted and moved back to California to oversee operations, finance and HR.
I spent 11 years at Komyo/Honda before leaving to start my own supply chain consulting and third-party logistics organization. We grew very quickly in Southern California, but I had tapped out the ability to grow the business, so I sold it to a larger third-party logistics company when Colliers International tapped me on the shoulder to establish their internal supply chain consulting practice. At Colliers International, I worked alongside the industrial brokers and their clients to help develop business strategies around supply chain drivers.
After almost five years at Colliers, Savills approached me about leading their growing industrial practice – which meant designing and building an industrial real estate and consulting platform with my vision. Since most of my professional life had been in both global manufacturing and distribution, I have a different perspective – one from the users of the space – about how to approach the challenges. Savills has supported this vision of designing an industrial advisory practice from the inside out, with the REAL tools and data that clients need to make informed decisions about where and how to locate their facilities. And we’ve expanded our capabilities to also help developers and landlords choose markets, as well as types of buildings to develop on speculation based on supply chain drivers.
It’s been nearly three years, and I’m very proud of the progress we have made. Clients have embraced our approach as we’ve seen the number of brokers joining our team increase tremendously and moreover, the number of clients migrating to Savills Industrial is the real proof. We had the best year ever in 2022 for Savills Industrial, and we increased our sales by more than 50 percent in 2023. Most importantly, we are doing this by providing the highest level of skilled professionals and a white-glove service for our clients.
Additionally, with the role of leading Industrial Services for Savills in North America comes the amazing opportunity for me to reach out to our over 700 Savills global offices in over 70 countries around the world. We collaborate on opportunities and support our global clients collectively.
Savills only arrived in the United States (from the UK) about ten years ago but has an over 155-year history. So, we are getting the opportunity to really introduce this brand to more clients in North America and show the tremendous capabilities we have. In this role, I still get to build something – only this time it’s building the Savills Industrial brand in North America!
What aspect of the business do you enjoy the most and why?
Easy question. The best aspect of this role is that I get to help people and organizations extract value through their location strategy. I work with companies from across various industries, of all sizes and from all over the world to navigate industrial real estate in North America and better position themselves to make the most effective use of their capital, service their customers better and be more resilient to the constantly changing world around us.
The Savills Industrial team offers strategic advisory capabilities. Could you elaborate on your integrated services and how they add value to manufacturing organizations’ operations?
Savills, although known more in North America as a commercial real estate firm, is so much more. We are business problem solvers that look at every aspect of a client’s physical space – how it’s used, where it’s at, the ecosystem around it – and marry that with our team of experts, many of them from consulting or industry. We strategically work to support our clients at any stage in their business lifecycle.
For manufacturers, it is about where to locate a facility that provides the long-term environment for their success. Whether that be location of suppliers, customers, labor, utilities, infrastructure or any other variable that’s important to the client, we can develop business models which put all relevant variables, financial and otherwise, into a working plan that objectively synthesizes the data to provide a defensible framework for where to locate a facility. We have developed interactive tools that help clients visualize their location strategy which are dynamic as the world around us evolves. All of this is objective in nature.
But there is more. The culture of an organization is equally important. Our teams go beneath the surface to understand the heartbeat of the organization – not just who it is today, but inspirationally, where it wants to go in the future – and take these matters into account.
What benefits have your clients experienced since partnering with Savills?
We have had a lot of successes with our clients. On the most basic level, we have helped our clients lease or buy buildings with very favorable terms, but that is the expectation of a commercial real estate firm to do on behalf of their clients. Where we really have added the most value for our clients is when we have partnered with them in developing a longer-term business strategy – specifically if there is a problem to solve around manufacturing or distribution in North America, or even globally. When clients come to us and say, “We really want to manufacture our products in North America, can you help us determine where?” or “We’ve got distribution in Southern California and New Jersey, but aren’t able to get to our customers fast enough. Can you help?”– these are the times when we can really partner with our clients and use the tools, technology, research and consulting capabilities of Savills to drive a long-term strategy. Some of our recent successes for our clients include locating a new solar panel manufacturing site in Alabama that will employ over 700 people in manufacturing with above-market wages. The finalized location is on the site of a shuttered paper mill, so it is exciting to think that we are reinjecting a community with life and activity. For the client, we negotiated not only a successful transaction, but also secured financial assistance from state and local government, helping to mitigate the financial impact of setting up such a large manufacturing facility. We often succeed in navigating the incentive opportunities, which can be a huge benefit for our clients in the short term, but moreover the long term.
Another recent success was working with a client to consolidate five various food distribution facilities in Southern California. The new 1.4-million-square-foot facility will have a modern, more efficient operation that incorporates green technologies, such as solar on the roof and better temperature regulation for associates. The real win for the client was through consolidation. They are able to reduce their transportation spend by consolidating shipments to their stores and eliminate cross-shipment of product. Additionally, the facility not only meets their current needs but is designed to lean into their future growth. The client was also made aware of the CARES Act and qualified for substantial credits for employee retention.
In the two years since the passage of the Inflation Reduction Act, the sheer volume of global companies that are looking to start or expand manufacturing operations in the United States is staggering. Our internal tracking of reshoring activities shows that between 2021 and 2023, 66 percent of reshoring job announcements were tied to EVs and batteries, chips, clean energy or biomanufacturing. There is some serious momentum to manufacture products again in North America, and specifically in the United States.
We have 45 offices across North America and transact in every state and province in the region. We truly strive to be the one-stop shop to support our clients throughout the entire business lifecycle. Whether it be expanding, contracting or realigning a location strategy, Savills can support through both consulting and transactions.
What are the biggest industry changes you’ve seen in recent years?
It’s about the data now. No longer is it enough to just think or feel that a facility should be in one state or town or another, true metrics are used to validate location strategy decisions. A careful understanding of utilities, labor and infrastructure are critical to deciding where to site a facility. Real estate decisions are long-term in nature and can be costly as well. It’s important to get it right.
It used to be that a factory or warehouse was decided with a simpler methodology – like the company may have had some extra land somewhere, or in another area there is a good labor pool. Nowadays, the understanding that your facility is not just a cost of goods sold but can provide strategic advantages in terms of total landed costs, supply chain resilience, speed to customers, etc. means that the entire process needs to be carefully evaluated.
As a company that’s been around for 150 years, Savills understands the drivers that impact the decision-making process. We don’t use the terms “I think” or “I feel” much in this part of the process, because the data drives the decision-making process. It is the heat shield to show that the due diligence has been performed. We can quantify the savings of locating in one place over another, so you are not leaving money, or opportunities, on the table.
Once the quantitative side of the exercise is complete, there is the qualitative side as well – where we make certain that there is a cultural fit with the communities in consideration.
What would you say are the biggest challenges facing the manufacturing industry, and what strategies do organizations need to ensure are in place to tackle them?
There are so many challenges out there. The consumer demands are changing faster, the competition is more global in nature and the threat of constant global disruption threatens supply chains – All things that we cannot control!
In my opinion, the one thing that business leaders can do to take on these challenges is cultivate and maintain a corporate culture that focuses on continuous improvement and relentless innovation. The competition is tough out there, and no company can rest on its laurels when we live in such a hyper-competitive world. We are constantly under threat of newer, cheaper and better products coming to market that could erode our market share.
We don’t know what the next changepoint will be that shifts manufacturing, and sometimes just reacting is not enough. To foster a corporate philosophy on continuous improvement, open dialogue and relentless innovation are the things that we CAN do within our organizations to prepare for whatever challenges lie ahead. I want American industries to thrive! In my mind, if a company does not continuously evolve, they will become less relevant and eventually become extinct. We must embrace and lean into change.
What should be top of the agenda for manufacturing leaders today?
The number one priority for manufacturing leaders today is to recognize and ACT on building more resilient supply chains. Without the ability to manufacture and get products to market, companies fail. No product means no business. The world has shifted so much over the last five years – economically, geopolitically and technologically. These three changepoints create tremendous opportunity in the manufacturing industry. There are various approaches to address these opportunities through a renewed focus on sourcing strategy, manufacturing location strategy and distribution strategy. Beyond that, it’s the deployment of advanced technologies to stratify production. 3D printing technologies are on the precipice of being deployable at greater levels of adoption across various verticals. This will mark the advent of the next manufacturing revolution globally. Our physical footprints for manufacturing will be disrupted along with the entire supply chain. This is what manufacturers should be leaning into. It’s coming.
Is there anything else you’d like to add?
With an eye towards the future, what manufacturing looks like in ten years will shift dramatically. With the renaissance of reshoring manufacturing to North America, coupled with advancements in automation, additive manufacturing opportunities will continue to grow.
Since speed to market is such a powerful driver, and transportation costs at the last mile are a large consideration, I can anticipate a merging of third-party logistics companies with third-party manufacturing companies so items can be designed globally, sent via a file to the nearest third-party manufacturer AND logistics that can produce at the best total landed cost (and customer anticipated speed). The ability to do diverse manufacturing using flexible automated machinery and 3D printing technology will be crucial.
We already see third-party logistics firms moving in the direction of light manufacturing as their clients ask for increased levels of customization of product before shipping to the final customer. Perhaps, manufacturers should also consider moving towards the 3PL space as well. Amazon already has a patent on a vehicle with a 3D printer inside it to literally make the product while driving to the customer. How is that for hot off the press?
Thus, I anticipate a merging of the third-party logistics and third-party manufacturing industries as the distinction between the two verticals continues to blur.