Come one! Come all! Promoting your city to business and industry
For the south central Virginia communities of Martinsville and Henry County, the bad times started in May 1995. That was when the textile industry began its nosedive.
First, Sara Lee Knit Products closed the manufacturing facility that it operated in the county of 73,000. Then, from June 1998 through November 1999, DuPont, 5Bs, Pluma and Ashmore Sportswear closed their plants. Tultex, another textile manufacturer, downsized last October and again in December, before finally declaring bankruptcy in January. Also in December, Hampton Industries cut its Henry County workforce by two-thirds. In the last six months, the area has lost 3,100 jobs.
Sherry Ramsey has every reason to feel frustrated and depressed. But Ramsey, executive director of the Patrick Henry Development Council for Martinsville and Henry County, actually is feeling pretty good. Under the circumstances, her job — marketing Martinsville and Henry County to the corporate world — is not as tough as most would imagine.
“We were fourth in the state out of 135 communities in capital investment and job creation [last year],” Ramsey says. “We got the two big hits in December (Tultex and Hampton Industries). But since then, we’ve announced that National Catalog Corp. is going to put in a distribution center that will hire 200 people immediately. Trans World Connections, a cable manufacturer out of Lynchburg, came in and hired 25 people. On Feb. 22, Nautica announced that it had selected Henry County as the site for a 525,000-square-foot [sportswear manufacturing] facility. They’re already hiring in a temporary facility. That’s a $40 million project.”
Additionally, Martinsville has a standing offer to trade the Rives Road Industrial Park, a 50-acre site served by the Norfolk-Southern Railroad, to any company that agrees to invest locally $30 million in capital and equipment and promises to hire 300 local residents. The city is targeting manufacturers of plastics and automotive parts, but it also is looking at information technology firms and food processing companies. (The park also is in an enterprise zone, which means tax breaks on top of the free land.) “We’ve had some indications of interest,” says Tom Harned, assistant to the city manager for development.
It is no accident that Martinsville and Henry County have survived — and even prospered in — trying economic times. The two governments long ago figured out that their fortunes were tied to mutual cooperation. “I credit city and county officials,” Ramsey says. “They work together as a team. It doesn’t matter if a company is considering Martinsville or Henry County, they will work to get it done.”
Through the development council, the two jurisdictions also market themselves together in slick promotional pieces that tout the area’s low water and electricity rates, its extensive transportation system, the state’s largest manufacturing base per capita, the abundance of available industrial land, and the proximity of “excellent educational resources.”
What businesses want
The ability to attract new or expanding business is key to the success of economic development initiatives across the country. That is why the Washington, D.C.-based Council on Urban Economic Development (CUED) and the Park Ridge, Ill.-based American Economic Development Council (AEDC) appointed a Site Selection Data Task Force charged with creating a comprehensive data set for areas attempting to lure new business.
The task force’s labor resulted in the collection of information (which can be found on CUED’s web site at www.cued.org) that cities, counties, towns and regions need to make effective economic development plans. “CUED and AEDC members were asking about the kinds of information site selection consultants wanted,” says George Harbin, chief executive director of research and presentation systems with the South Carolina Department of Commerce and AEDC’s representative on the task force. “We called in some of the best [site selection] firms in the country and worked for more than two-and-a-half years to come up with data we considered valuable.”
Information — incredible amounts of it — is the cornerstone of any effective economic development strategy, ac-cording to task force member Dennis Donovan, a principal with Wadley-Donovan, a Morristown, N.J.-based site selection consultant. “You must have the requisite information that corporations will require to make informed decisions,” he says. “Right now, most communities do not possess that information.”
Of those that do, few have the information in any kind of standardized format, Donovan says. And that poses a challenge for businesses that need compatible data to do site comparisons.
The task force was set up to address that problem, as well as others relating to economic development. The result of its efforts — a comprehensive, table-format questionnaire — can help cities and counties answer the questions business and industry most often ask as they plan expansions or relocations. The tables, available on the CUED web site, address an array of issues, including: * demographics; * commute times; * the presence of a military facility; * leading employers (and types of industry; i.e., manufacturing, high-tech); * union affiliation; * median salary; * worker’s compensation and unemployment insurance; * local taxation; * availability and cost of utilities; * type of local government; * quality-of-life factors (housing availability, average temperature and rainfall, etc.); * educational attainment (average ACT score, number of students taking the SAT, number of students who are National Merit finalists); * proximity of cultural and athletic events; * transportation systems; and * available office and industrial space.
Knowing your workers
Labor market data is particularly critical, according to Donovan. “By far and away, the most important variable is knowledge about the human resource base within a community,” he says.
Donovan’s company has been instrumental in helping communities compile information about their workforces. In Maine, it helped the state design a database that addressed issues such as workforce stability, commuting patterns and underemployment. (The state helped out by conducting a comprehensive survey of employers to elicit specific information. “All communities should be doing employer surveys in all areas,” Donovan notes. “Those surveys allow the communities to develop marketing material based on the pluses that emerge.”)
According to Dick Kelso, being able to provide that kind of human resource data was crucial in Maine because, as he says, “we’re not exactly on the national radar screen.” Thus, business and industry are not as likely to have any working knowledge about the employment situation in Maine. Kelso, who is president of Waterville-based Economic Management Services and has worked with a regional nonprofit development corporation, says it was site location professionals who first suggested a detailed labor force analysis for Maine. However, such an analysis can be an expensive undertaking — and that was where Kimberly-Clark came in.
The paper manufacturer was closing its Winslow, Maine, mill, which employed hundreds of people and accounted for 17 percent of the town’s total taxes. To ease the blow, the Kimberly-Clark Foundation provided $100,000 in seed money to begin the labor market analysis. “The governor called it guilt; I called it corporate responsibility,” Kelso says. “But we got the money. Sometimes, no amount of planning beats dumb luck.”
The analysis divided the state into 17 labor market regions and created an employment template that has won several awards. It worked so well that “the legislature didn’t bat an eye when we asked for $250,000 a year for two years to fund this thing,” Kelso says. (The analysis will be completed this fall, and Kelso expects the state will need about $100,000 a year for maintenance. Every five years, the entire study will be re-done.)
“We’ve had a number of prospects that have been delighted with the amount of material we’ve been able to give them,” Kelso says. “Just this weekend, a financial services firm asked us for specific data. They didn’t think we’d have it, but we did.”
Seymour, Ind., acknowledged the importance of labor and employment data when it created a full-time position on the staff of the Jackson County Industrial Development Corp. to address workforce development. Community Partnership Director Dee Kovener is responsible for working with industries and schools to determine what local companies need and what schools can do to produce it for them. Part of her job is placing teachers into summer internships with local businesses to give them a first-hand look at company needs.
In the current economy, with its low unemployment rates, what most companies need is people. In Martinsville, the fact that so many people had been thrown out of work helped the area’s efforts to attract new business. “Bad news travels fast,” Ramsey says. “Our phone has rung off the hook. Companies across the United States have called. You look at the unemployment rate nationwide. Companies are trying to find pockets of unemployment, and that’s where they’ll go. If unemployment was 10 to 12 percent, I wouldn’t be so optimistic.”
“The workforce is key in every location right now,” says Scott Fulford, a CUED-AEDC task force member and manager of economic development marketing for Cinergy PSI, a Plainfield, Ind.-based electric utility. “You have pockets of low unemployment and pockets of available workers right now, and they aren’t tied to community size.”
However, sheer numbers are not the only answer. As Seymour learned, a city may have hundreds of unemployed residents, but if their skill levels do not match those needed by business, things likely will not work out. Fulford encourages cities to work with local colleges, universities and training centers to ensure that they are creating the workforce they need.
While information about employment numbers and labor markets are undoubtedly critical in efforts to lure new business, Rick Duke, director of the Georgia Institute of Technology’s Center for Economic Development Services (CEDS) in Gainesville, Ga., says that other factors also merit attention. He points to the need for information about infrastructure — both high- and low-tech.
Site selection pros tout the importance of adequate roads and sewer and water systems, but more and more, they say, companies are looking at the high-tech systems that many cities have ignored. “The telecommunications infrastructure, particularly in smaller, more rural areas, cannot be underestimated,” Duke says. “It is important now and will become more important than highways, rail and air service.”
Scott Fulford, a CUED-AEDC task force member and manager of economic development marketing for Plainfield, Ind.-based Cinergy PSI, concurs. He notes that some areas, particularly smaller ones, “have a real infrastructure problem. If you don’t have fiber optics or Internet access, you will be left behind.”
“The telecommunications infrastructure, particularly in smaller, more rural areas, cannot be underestimated,” Georgia Tech’s Duke says. “It is important now and will become more important than highways, rail and air service.”
Consequently, it is imperative that communities undertake comprehensive infrastructure analyses. CEDS, part of a service unit called the Economic Development Institute, can help them do that. Operating as sort of an “engineering extension service,” according to Duke, CEDS focuses its efforts on helping communities lay the groundwork for more extensive economic development efforts.
CEDS’s mission, however, is much broader than infrastructure. In Cordele, Ga., the center is heading up a site identification and technical evaluation project that will help the city set priorities for new business and industrial development. In Jesup, Ga., it is assessing the community’s position and its plans for the future. The center also has developed LOCI, a software tool that analyzes the impact of potential business investment on local government revenue.
Its nonprofit status allows CEDS the flexibility to change approaches, based on the circumstances before it. “We subscribe to the philosophy that there is no one approach that is appropriate for every community at every time,” Duke says. “What is right for Jesup and Wayne County, Ga., today may not be appropriate two years from now. We need to be able to change priorities to meet new challenges.”
Additionally, Duke says, new business attraction may not be the right priority for every community. “It may not be the highest and best activity they could pursue in terms of economic development,” he says. “Sometimes, the most cost-effective approach is retaining and expanding existing industry. And for many rural communities, enhancing tourism and creating a climate of support for entrepreneurial efforts are better activities. New business attraction is a high-risk, high-reward strategy that doesn’t work everywhere.”
Advantages of being small
Although Fulford agrees that information is a vital component in the search for new business, he notes that there is a difference between the needs of larger areas and those of smaller communities. “I’m looking at it from the standpoint of how much information does a community need to be in the ballgame?” he says. “A lot of what we decided on is not appropriate or is harder for a little community to get because they don’t have the resources to complete extensive databases.”
Then again, they may not need those resources. Fulford, and others on the task force, looked at the tables as merely a helpful guide — not a cast-in-stone directive. “Some of us thought that not every table had to be filled out on the front end in order for an area to be considered by a relocating business,” he says. “Still, if someone wants to know what kind of information they should begin to accumulate, they can use this data set almost as an Economic Development 101 course.”
Like Duke, Fulford believes that a one-size-fits-all approach will not work. Cities and counties can provide all the information requested, but a few facts are unchangeable. “A lot depends on the specific location,” he says. “Communities, large or small, on major transportation routes have a big advantage.”
Nevertheless, small areas do have some advantages although high-tech infrastructure may not be one of them, according to Fulford. “A business can go in and be the employer of choice,” he says. “If it goes to Atlanta or Chicago, it’s buried.” He also touts the work ethic of smaller communities. “It sounds trite, but it really is true,” he says. “People in small towns are more independent and more used to being responsible for themselves.”
The quality of life debate
Unfortunately for the small towns, the quality-of-life issues they like to tout do not always rank high on business’s list of priorities. In fact, many site selection professionals pooh-pooh the idea of the importance of those factors, noting that emphasizing them too much can be a mistake. “A lot of communities put too much emphasis on quality of life,” Donovan says. “I see companies giving up millions of dollars a year to be able to have those niceties. I know of one situation where a company picked a large city in Florida for its relocation because of quality of life and nearby air service. It was a white collar data processing operation that paid a premium of $2 an hour per employee to relocate in this particular city. But the labor market didn’t support it. There was already a similar company there, and it had cornered the workforce. Companies have an uncanny instinct for following other similar companies to wherever they are. It’s usually a big mistake.”
“There are three phases in the site location process,” Duke says. “The first phase involves all the competitiveness issues — the availability and skill level of the workforce, infrastructure, etc. Once those issues are satisfied, the quality-of-life factors — cost of living, access to education, cultural aspects — come into play. After that, incentives (tax breaks and freebies that the media like to call “corporate welfare”) come into play. “If you’re being asked to offer incentives, your community is in the ballgame.”
Fulford agrees that quality-of-life issues currently are not the most important factors in site selection, but he thinks they can make a difference nonetheless. “Once you make it through the first cut, then the difference between your community and your competitor may well be quality-of-life issues,” he says.
And, some observers — Fulford is one — see those issues taking on a greater importance in the future. “As we move into a new economy and new types of jobs, we may need to look at quality-of-life factors as having more importance,” he says. “Knowledge-based businesses can operate anywhere there’s a tower or a satellite. The people who run them are going to be looking for places to raise their kids.”
Knowing a company’s needs — and having the wherewithal to meet those needs — can give a community a leg up on its neighbors in the economic development wars. For cities and counties wanting to get into the business attraction business, a wealth of information is available to help their efforts. Still, it is not by any means an easy undertaking. “It takes a little imagination and a lot of hard work,” says Henry County’s Ramsey. “We could have just folded up and walked around saying, ‘Poor, poor us.’ But we dug in. And now [our efforts] are paying off.”