According to Atlas Van Lines, 2018 was another positive year for the relocation industry, with roughly 90% of organisations indicating relocation volumes and budgets either held steady or increased.
Atlas’ annual Corporate Relocation Survey captures comprehensive relocation policy data from industry professionals operating in North American companies and managing employee relocations as part of their job function.
Mid-size firms (500-4,999 salaried employees) reported employee relocation increases occurring most often, with nearly 60% reporting budget increases, compared to roughly 40% of small (fewer than 500 salaried employees) and large firms (5,000+ salaried employees). Projections for 2019 are similarly optimistic, with more than 40% of organisations expecting increases in volume and budget for 2019. With further changes needed to adapt to tax reform and increasing costs, there is acknowledgement that firms are having to ensure budgets cover the greater numbers of relocations projected in the coming year.
Among firms relocating employees internationally, 48% overall saw increases in international volumes last year and 47% expect to see increases in 2019. While projected increases appear to outpace decreases roughly three to one, there is the wildcard of Brexit looming. Among firms relocating employees internationally, 21% aren’t sure how Brexit will impact 2019 relocation volumes.
This year, 444 corporate relocation professionals completed Atlas Van Lines’ online survey. Each respondent has responsibility for relocation and is employed by a company that has either relocated employees during the past two years or plans to relocate employees this year.
Below are additional trends and findings identified in this year’s Corporate Relocation Survey.
The continued use of multiple reimbursement methods shows how companies tailor assistance to answer the needs of employees and businesses. For the fifth consecutive year, full reimbursement for new hires remains near historically low levels, out of favour in comparison to lump-sum payments running at 56% for both new hires and transfers. One out of seven relocations at mid-size or small firms did not receive any reimbursement and were employee paid.
Tax Reform and Brexit
Most organisations implemented policy changes in 2018 in response to the US Tax Cuts and Jobs Act last year, and have plans to do so again in 2019. While the most common move last year was to gross-up taxable relocation benefits only 49% of firms plan to do so in 2019. Fewer mid-size firms plan to implement a policy change to gross-up on taxable relocation benefits while more than half of large and small firms plan to do so. Approximately 50% of firms plan to restructure policy and policy tiers, withhold on taxable relocation benefits, and streamline relocation processes to reduce costs.
One third of organisations are vastly uncertain how the exit of Great Britain from the European Union will impact relocation this year. The anticipated impact of Brexit among firms that relocate internationally varies across company size. Around 40% of small and mid-size firms believe policy changes will increase due to Brexit compared with 22% of large firms. A similar proportion of small and mid-size firms also anticipate increasing relocation costs compared with only 25% of large firms. Nearly half of mid-size firms are concerned Brexit will increase relocation administration complexity for them, compared to a third of small or large firms.
While the vast majority of firms expect either stability or improvement in the US economy this year, the percentage expecting further gains has fallen markedly from 55% in 2018 to 46% in 2019. While not at recessionary levels, the optimism drop is similar to what occurred before the 2008 recession. Most firms expect improvement in their company’s overall financial performance this year, however, there is a declining trend in optimism emerging across indicators. Expectations for improvement in the US real estate market have fallen even lower for 2019. Interest rates have been on the rise and, after roughly seven years of recovery from the Great Recession, housing costs are notably higher. While nearly half expect stability during 2019 and more than a third expect growth, the scale is tipping away from high levels of optimism to a recognition of a potentially challenging environment.