Monday, June 30, 2008

Water a key to Ohio's economic recruiting

State has a wealth of fresh water resources from the Great Lakes and the Ohio River

By John Nolan
Wednesday, June 25, 2008

WEST CARROLLTON — The Appleton paper mill consumes about seven million gallons of water a day, coming from company wells that draw from the Great Miami River aquifer.

The plant's 400 jobs and 24-hour production of thermal paper, for point-of-sale receipts, and carbonless paper, for business forms, depend on the steady flow of fresh and recycled water.
"You can't make paper without water," said Nancy McDonnell, the plant's environmental manager.

Businesses like Appleton thrive, in part, because of Ohio's abundant, reliable supplies of fresh water. In this region, those also include the Dannon Co. yogurt plant in Auglaize County and the Miller Brewing Co. brewery in Butler County.

Lt. Gov. Lee Fisher, who also heads the Ohio Department of Development, said he believes that Ohio's wealth of fresh water resources will prove an increasingly valuable tool for economic recruiting in coming years. He expects that the state will step up its efforts to make corporate executives aware of the benefits afforded by the Great Lakes and the Ohio River.

"Part of marketing Ohio is marketing our access to water, both the Great Lakes and the Ohio River," Fisher said during an interview this month.

The Appleton mill, West Carrollton's second-biggest source of income tax revenue, has been in existence since 1947. Last year, the employee-owned company announced a $100 million investment in the plant to expand its thermal paper production capacity and add 35 jobs.

Increasing scarcity of water supplies in some Sunbelt regions have caused concerns about what it will mean in the long term for economic development there as the population increases.

Climate changes over time, and their effect on weather patterns and yearly precipitation, could increase the challenge for states that do not have access to freshwater sources such as the Great Lakes, said Mark Partridge, an Ohio State University professor of agricultural, environment and development economics. That could be a factor as companies consider where to locate new operations.

"It could potentially become a quality of life issue," Partridge said.

Contact this reporter at (937) 225-2242 or

Wednesday, June 25, 2008

CORPORATE RELOCATION Bribes don't attract businesses

Our View
June 23, 2008 - 10:07PM

Here's one for the popular TV show "Myth Busters," which typically blows holes in conventional wisdom and urban legends. The myth: companies relocate to the communities that pay them the most, in the form of economic development tax incentives and subsidies.

Citizens of Colorado Springs hear the myth each time some company, or even a government agency, considers moving somewhere else. We hear it when a company actually moves, or when a corporation that was considering the Springs decides on another place.

Most recently we heard it when Hewlett-Packard Co. announced last week that it would open customer service and technical support centers in New Mexico and Arkansas. The company employs about 1,800 in Colorado Springs and civic leaders were hoping the new operations would open here. It would have been a coup, because more people would have moved to Colorado Springs to buy houses and cars, pay taxes, and generally help bolster the economy.

Conway, Ark., agreed to give Hewlett-Packard a $28 million, 150,000-square-foot building for the company to lease, along with $7.2 million in cash incentives. The state offered an additional $10 million, along with tax credits as performance incentives. New Mexico offered more than $30 million in job-training tax incentives, and the governor wants the legislature to kick in $12 million in capital improvement financing.

Colorado Springs Mayor Lionel Rivera said his city was outgunned in the incentives battle. Mike Kazmierski, president of the Colorado Springs Economic Development Corp, said Colorado doesn't compete well when it comes to incentives.

That's good news, because incentives packages given to for-profit companies are a waste. Just ask Robert Ady. He's the former longtime executive of Fantus Company who heads Ady International. In Greg LeRoy's book "The Great American Jobs Scam," Ady is identified as having assisted with more corporate site relocations than any other living person. Ady said taxes, and therefore tax incentives, are the least important cost factor weighed by any company when making relocation decisions. The book cites IRS statistics that show state and local taxes comprise only 1.2 percent of the average company's overhead, dwarfed by costs of labor, materials, marketing, overhead and transportation.

The jobs scam book quotes Bruce Maus, a veteran site location consultant in Minneapolis, who cautions corporate CEOs to give economic development subsidies minimal consideration. He explains that on a 10-year basis the incentives wash out, as they're dwarfed by basic business expenses such as labor and transportation, which are the more important considerations of relocation.

The book details how corporate executives sometimes move the headquarters to a location where the CEO and other top executives live or would like to live. It explains that when a group of New York investors bought Kinko's, they moved the company from California to Dallas because the new CEO lived there. When HP chose to locate operations in the Springs in 1961, it was partly because David Packard was from nearby Pueblo.

"Companies base their decisions on business basics - affordable supply of key inputs and proximity to suppliers and customers," the book states. "Key inputs vary and so do linkages ... food processing companies locate facilities close to the farms and ranches that supply them and close to interstate highways and railheads to get product to market. Emerging high-technology companies need engineering schools and venture capital; Silicon Valley had both. Financial wheeler-dealers thrive on gossip and face-to-face meetings, so New York's Wall Street zoomed in the 1980s and 1990s. ... Sports franchises want the fattest TV contracts, so they go to the biggest metro area that is not already taken."

Though an HP spokesman said incentives were a "factor" in the decisions involving Arkansas and New Mexico, they may have been more of an afterthought. LeRoy found that relocation consultants typically knock on doors of community leaders seeking subsidies only after the relocation decision has been made. Community leaders, excited at the prospect of prosperity and jobs, don't see the real factors that went into the decision. All they see is a salesperson seeking money and promising a return.

"They don't see that the only reason the consultant is spending any time with them is because their community is an inherently profitable location for the company - it has the business basics. Any subsidies are icing on the cake, but the cake is already baked," LeRoy wrote.

Of course that's true. Any business that makes major decisions mostly on the basis of temporary subsidies isn't much of a business at all. If a business moves to Pocatello for a $10 million check, it will gladly move to Poughkeepsie a few years later for a $15 million check. Corporate prostitution isn't the key to long term success, for businesses or communities.

Paul O'Neill, former CEO of Alcoa and former secretary of the Treasury, said it best: "If you are giving money away I will take it. If you want to give me inducements for something I am going to do anyway, I will take it. But good business people do not do things because of inducements, they do it because they can see that they are going to be able to earn the cost of capital out of their own intelligence and organization of resources."

Colorado Springs has what lots of businesses want: a great geographic location with easy access to two commercial airports, beautiful scenery, a great climate, cosmopolitan amenities and small-town charm, easy access to a major American city, major rail and highway access, good colleges and schools, and an educated work force. Businesses that can thrive in Colorado Springs will feel privileged to move here. They don't need kickbacks to make themselves at home in this metropolis at the base of majesty.

Quality of life issues now central to economic development

WEST LAFAYETTE - Want to recruit high-tech business? Take note: Quality of life is just as important as a business plan for a company's success, says a Purdue University expert on economic development.

"There is no question that when companies look for a place to set up a business they are looking at the amenities as much as they are looking at tax incentives, infrastructure and other factors," says Joseph B. Hornett, senior vice president, treasurer and chief operating officer of the Purdue Research Foundation, which oversees the Purdue Research Park. "The competition for skilled employees is a worldwide phenomenon that will become more intensive as the global market continues to grow."

The International Economic Development Council agrees: Quality of life is key to economic development. Hornett says savvy research parks and communities are providing:

* Sports and fitness centers
* Child-care facilities
* Restaurants and cafes
* Shopping areas

They also invest in their schools, arts and entertainment, he says.

"There is no doubt that these qualities are critical to companies looking for a place to locate," he says. "This formula certainly is part of the success story at the Purdue Research Park in West Lafayette, Ind.

"And it is an international trend. European business parks are now offering facilities with supermarkets, residential precincts, banks, conference and catering facilities, and such perks as shower and changing facilities and relaxation areas. We are doing the same in numerous economic development parks throughout North America. That's what it takes to attract the top business tenants."

Upstate Alliance likely to reject using Greenville/Spartanburg in marketing

By Rudolph Bell • STAFF WRITER • June 24, 2008

The Upstate Alliance will likely reject a consultant’s recommendation to start highlighting the Greenville/Spartanburg name in its marketing, an official with the regional economic development organization said Tuesday.

The change is one of numerous possible changes the Alliance has been considering as it prepares a new strategic plan
The idea didn’t sit well with at least one county that is a member of the Alliance but doesn’t go by the name Greenville or Spartanburg. Anderson County Council voted against the idea in March.

Now, a task force that is leading development of the strategic plan is leaning heavily against the idea as well, said Craig White, an executive with Self Regional Healthcare in Greenwood who is chairman of the task force.

"We can’t favor one county over another in any way because if we do that we lose credibility with our investors and our counties," White said. He said the task force is thinking about marketing with the names Upstate, South Carolina, instead of just Upstate.

That would be an improvement, but still may not provide enough differentiation from other communities around the country that use the name Upstate, said Greenville businessman John Moore, another member of the task force.

"When branding we have to talk in the language that means something to our target market. It’s about talking to your target market, not what we call ourselves," said Moore, vice president of marketing for Zipit Wireless Inc. and the former senior vice president of economic development at the Greater Greenville Chamber of Commerce.

The Greenville-based Alliance markets South Carolina’s ten westernmost counties as great places to do business. Anderson County contributes $50,000 to its annual budget of $1.46 million.

In recommending the change, Amy Holloway, a marketing consultant from Austin, Texas, said too many other regions across the country use the name Upstate. She helped an Atlanta firm called Market Street Services develop drafts of the strategic plan.

Monday, June 23, 2008

State throws big bucks at potential employers

LANSING -- In the quest for jobs, Michigan's efforts to keep up in the economic-development-arms race among the states is moving beyond tax breaks to cold hard cash.

Film production incentives that are drawing dozens of movie projects to Michigan, but will cost an estimated $100 million in fiscal 2009, apparently was only the start.Gov. Jennifer Granholm and lawmakers this month are expected to complete work on a package of development grants for targeted industries worth hundreds of millions more in coming years.

One measure would allocate $18.7 million for a new Choose Michigan Fund administered by the Michigan Economic Development Corp. The earmark was rushed through the House last week and is expected to be approved in the Senate this week."It allows us to provide an upfront incentive. For companies who need upfront capital, that type of incentive is very attractive," MEDC spokeswoman Bridget Beckman said. "It's one of our legislative priorities, and if it's passed and gets to the governor's desk, that means we can put it into service sooner."

Granholm and lawmakers are scrambling to react to what may even be more deterioration in Michigan's already embattled economy. The state's unemployment rate climbed to 8.5 percent in May, and auto companies are scaling back production amid reports that car and light truck sales will continue to tumble. More here.

Saturday, June 21, 2008

'07 growth: 7 jobs, area study finds

By Sherry Slater
The Journal Gazette

Seven jobs.

The net gain between the 2,550 positions companies added in northeast Indiana last year and the 2,543 that were lost in closings and downsizings is seven, according to a study released Friday by the Northeast Indiana Regional Partnership in collaboration with the Community Research Institute.

An additional 381 jobs were retained as part of business expansions, the report said.

The nine-page Business Dynamics Survey lays out the data – without subjective commentary – on what happened in the region related to 2007 business openings, expansions and closings. The individual projects have been previously reported in The Journal Gazette.

The survey documented 158 new or expanding businesses that invested at least $750 million in the region. Dollar totals were not available for 28 of the projects. Expenditures ranged from $10,000 to $200 million for an ethanol plant in Wabash.

The Northeast Indiana Regional Partnership was created in 2006 to market an 11-county region in cooperation with local economic development organizations. The goal is to bring new jobs and investment to the area. The document released Friday reflects the organization’s first full year and sets a benchmark for evaluating future efforts. More here.

South's rural towns shrink as economic troubles grow

By Larry Copeland

GAINESVILLE, Ala. — This speck-on-the-map town, once Alabama's third largest, is home to fewer than 400 hardy souls. It has four tiny churches: Methodist, Baptist, Presbyterian and Episcopalian.

Through the years, so many people have left that members of different churches worship together so they can keep the congregations going. They call themselves "Methobapteriapalians." Says Maxine McClusky, a member of Gainesville Baptist and St. Albans Episcopal churches: "Sometimes on Sunday morning, it's just one or two of us and the preacher."

This is life in a vanishing place: Sumter County, Ala., one of the nation's fastest-shrinking counties. Since 2000, the population of the county, in west-central Alabama along the Mississippi border, has declined 10.1%, according to the Census Bureau. The drop follows decades of similar losses, a disheartening trend that is altering the way people live.

The USA's population history is most often a story of growth — of people moving to ever-growing metropolises and the challenges of accommodating them. The nation, which has one of the highest growth rates among industrialized countries, passed the 300 million mark in population almost two years ago and is expected to reach 400 million by 2040. But vast sections of the nation are seeing heavy, sustained population losses, a reflection of the decline of family farming and the lack of rural jobs and economic opportunities.

Some of the most drastic population decreases in the 20th century occurred in a wide swath of rural counties in the Great Plains, from the Canadian border to Texas.

Here in the Southeast, demographics have been dominated by dynamic growth: the New South economic engines of Atlanta, Charlotte, Raleigh, N.C., and Nashville; the steady hustle of tourist magnets such as Charleston, S.C., and Jacksonville; and business expansion even in some smaller cities such as Smyrna, Tenn., Canton, Miss., and Lincoln, Ala., where automobile manufacturing plants have brought thousands of jobs — and new residents.

But there's another story here — about places that have seen their populations fall decade after decade. Sumter and most of the Southeast's other shrinking counties are in the so-called Black Belt, where vestiges of the Old South — de facto school segregation, poor race relations and entrenched poverty — are most prevalent. Rural towns in the Carolinas and Georgia, and especially in Alabama, Louisiana, Mississippi and Arkansas, are hollowing out. More here.

Kiplinger's 2008 Best CIties to Live Work and Play

From Kiplinger's Personal Finance magazine, July 2008

Our approach this year to picking the ten best cities in which to live and work was simple: Look for places with strong economies and abundant jobs, then demand reasonable living costs and plenty of fun things to do. When we ran the numbers, some of the names that popped up made us do a double take at first. So we hit the road to meet movers, shakers and regular folks, experience the ambience and take in the sights. More here.

Economic developers want brand for region

A new consortium of regional economic developers is looking for a firm to develop a new regional branding and marketing campaign.

Southwest Florida Economic Development Partners is an initiative that includes Charlotte, Sarasota, Collier, Lee, Glades and Hendry counties.

"The focus of the regional economic development initiative is the recruitment, retention and creation of high-wage jobs in targeted high technology industries, such as health, life and environmental sciences, information technology and specialty manufacturing," said Don Root, director of Charlotte County's Economic Development Office, in a statement Tuesday.

Like other efforts throughout the state, the new group's focus is creating high-wage jobs in the region. The firm hired would need "to understand the various communities in the region, along with the unique assets and infrastructure, and join these together into an image that effectively demonstrates the regional ability to attract and grow the select business clusters that will produce high-wage jobs and diversify the region's economy," the consortium said.

"There is a need to attract high-paying industries to diversify the regional economy," said Richard Pegnetter, founding dean of the Lutgert College of Business at Florida Gulf Coast University. "For instance, in 2005 the biggest employer in the region was retail trade, which accounted for 15 percent of total employment but averaged only about $25,000 in wages, an amount that is considerably below the mean national earnings of $49,910."

The economic development group is looking for a new logo and motto, newsletters and a communications plan.

Job creators come up short

Declining economy dooms plans of economic development group
By Darrell Hughes -

The Myrtle Beach Regional Economic Development Corp. didn't come close to meeting its job creation and company investment goals for the year - mostly because of the lagging economy.

The development corporation reported in its annual report for 2007-2008 that it helped create 135 jobs, with $13.1 million in capital investments from companies locating or expanding along the Grand Strand.

The group initially set out to create 300 jobs, with $60 million in capital investments in 2007-2008.

"This is what we were shooting for, and sometimes you fall short of goals," said Hugh Owens, the corporation's president and chief executive. "We're certainly not satisfied, and we're going to continue to work to increase our performance."

Owens said the corporation's goals were further snagged by "a couple of projects that were put on hold."

"While we're still being considered for those, the economy has caused some of our projects to slow down," he said.

There are some factors influencing economic development that leaders can't predict, such as the slow economy and the pace at which businesses choose to expand or relocate, said Brant Branham, chairman of the economic development corporation.

"We will continue to be aggressive and work hard," he said, pointing out that economic development efforts are likely to pay off once more building space and industrial parks become available, which could help lure companies to the region. More here.

HP jobs mark 'transformation' of Arkansas economy, officials say

By Jason Wiest
Arkansas News Bureau

CONWAY - The type of jobs Hewlett-Packard will bring to Arkansas, not the number of them nor their wages, make the company's plans historical, economic development officials said Thursday.

One of the world's leading technology companies, HP announced plans to build a $28 million customer service and technical support center here, creating up to 1,200 new knowledge-based jobs with starting salaries paying better than $40,000 a year.

"It represents the marriage of education and economic development that is the cornerstone of where we in America, and specifically we in Arkansas, need to be in this century," Gov. Mike Beebe said at a news conference on the University of Central Arkansas campus.

The center, to be housed in a 150,000-square-foot structure on 12 acres in the Meadows Office and Technology Park, signifies "a whole new dimension of economic development" for the state, said Becky Thompson, deputy director of the Arkansas Economic Development Commission.

"It's part of the transformation of the economy and it helps us to further diversify our economic base," Thompson said following the announcement.

Economic development experts outside of Arkansas agreed."I think it will be seen as a signal," said Jon Roberts, managing director of TIP Strategies Inc., an Austin-based business and economic development consulting firm.

As the world's largest information technology company, many other companies in the sector closely track HP, known for having a different tradition and history than other companies that includes strong commitments to the places they locate, he said.

"I don't know if it's transformative, but it's a coup for them (Arkansas) to get HP," said Roberts, who was hesitant to use a strong word like transformative but said that if any technology company could make that type of a wave in Arkansas, it is HP. More here.

Saturday, June 07, 2008

Northern Ireland Builds Tech Credibility

Northern Ireland is making a name for itself as an emerging UK tech hub.

Invest Northern Ireland (NI), the regional economic development agency, is billing the region as the place for technology and financial services and is working to increase already healthy investment, and technology firms based locally are praising the skills available.

According to the latest figures from UK skills agency, e-Skills, Northern Ireland has around 15,000 employees working in the tech sector. Software giant SAP has its only UK research facility in the region while BT, Cisco, Citigroup and Nortel are other big players with a presence.
Bill Montgomery, director of international investment for Invest NI said: "I think we're better placed than a lot of regions."

In February, Northern Ireland made Gartner's top 30 locations for offshore services majoring in education, infrastructure, language, globalisation maturity and security and privacy, and recent Financial Times research found there are more software development centres in Northern Ireland than England. The region is also top in the UK for inward investment in financial services software development, attracting 35 per cent of all projects in the past five years.

And reflecting growing interest from India, Invest NI opened an office in Bangalore in February, adding to its bases in Brussels, Dublin and London. Indian companies First Source, HCL, Polaris and Tech Mahindra have all opened offices in Northern Ireland.

Invest NI emphasises the strengths of value for money, strong skills and a flexible workforce that cannot be matched elsewhere in the UK as reasons why companies should invest there rather than other UK tech hubs such as Reading or Cambridge. More here.

Mayor sets economic development course

Nagin pledges $2M to establish public-private partnership
by Jaime Guillet

Economic development leaders say they are ecstatic Mayor C. Ray Nagin climbed onboard their effort to establish a public-private economic development entity.

During his annual State of the City Address on Wednesday, Nagin officially promised $2 million from the city’s $6.5 million economic development fund to start the new organization by January, and $1 million annually thereafter.

Money for the public-private agency, which has been proposed for several years, was a crucial missing component, keeping the idea from becoming reality. With the city’s financial backing, the new office gains viability, said George Wentz, co-founder of Horizon Initiative, a grassroots economic development organization and advocate of the partnership.

“I think (Nagin) deserves a lot of credit for this,” Wentz said. “We see this as a culmination of 18 months of work. Nagin’s promise removes a lot of doubt from the public whether this is real.”
Obtaining money from the New Orleans business community to support the new entity will be easier because until last week there were serious concerns of a true partnership with the city, Wentz said.

“We didn’t know where (Nagin) stood and his level of commitment until yesterday,” said Horizon Vice President Pamela Senatore, speaking the morning after Nagin’s speech. More here.

Pitching Philly to Businesses

Philadelphia Inquirer (06/02/08) ; DiStefano, Joseph N.

Philadelphia continues to have its share of problems attracting companies and other organizations to relocate there. Brandywine Realty Trust President and CEO Gerald H. Sweeney, though, believes the metro area still has potential as a business center if it is marketed properly. He states, "We need to attract people with what we have: affordability, transportation, the cost of housing. We're reliant here on the colleges and medical schools and hospitals--'eds and meds.' They're great economic engines, but they need to be balanced with private industry that grows."

As for the Center City, Sweeney remarks, "We have a high level of redundancy in the organizations that promote Philadelphia, that promote business in this region. . . . Companies want useful information. They're looking for efficiency, performance, economics and something to take home to their base."

He concludes by stressing the need for city officials to be active with corporations' various location strategy personnel to ease the process as much as possible. He adds, "When companies are doing site selection, it's a long day [and] everything begins to blur for the people on the tour. You need to create memory points. Like when you sit down with the governor of the state and the mayor. Not a second-level policy person who might be droning on in another presentation."

( .html )