OP-ED: Existing business and industry vital to economic development

Traditionally, economic development organizations have focused on creating a community’s wealth by directing a majority of their business recruitment efforts outside the community.

These efforts include external marketing campaigns, company visits, trade show attendance and the extension of invitations to corporate decision-makers, journalists and site selection consultants.

The behavior of recruiting companies from away is reinforced by media outlets that report with great prominence on the new capital investment and job creation.

Generally, the financial cost, vis-a-vis tax incentives associated with recruiting companies from outside a community, is higher than any other form of business recruitment.

Further, it sends a message to the existing business community that they are less important.Statistical data tell us that approximately 80% of all job creation occurs from within the community.

With this in mind, it is important for economic development organizations to provide a high level of business support to their existing business community.

Although communities typically hire outside consultants to provide them with their wisdom about business recruitment strategy, a better quality of actionable intelligence can be gained by speaking with the community’s existing businesses; not in group discussions or public forums but in private, one-on-one meetings.

If the gathered arsenal of information is acted upon, it will not only strengthen the community’s economic base and bolster the existing businesses, it will create a more attractive setting for businesses seeking to relocate.

Although the current economic climate has caused a dramatic decrease in new company relocation announcements and accompanying headlines, many businesses are being created in the city of Charleston.

Existing businesses, especially the knowledge-based companies, continue to grow and thrive, reinforcing the aforementioned statistics on job creation.

Now more than ever, economic development organizations need to utilize their resources to provide value-added services to support their business constituents and spend less time and resources chasing companies that are unlikely to relocate their business operations.

However, one exception does exist: Foreign companies are increasingly seeking to take advantage of the weaker, but currently strengthening, U.S. dollar to expand into new markets.

Although state economic development organizations are often better-equipped to capture some of the capital investment by large foreign companies, local and regional development initiatives can create opportunity by facilitating expansions by the smaller foreign companies.

Local economic development organizations are positioned to best identify technologies that have applicability within their communities and leverage the respective stakeholders and network to build companies with local resources — a win-win for the community.

Tomorrow’s successful economic development organizations will be defined as those that acknowledge the changing face of economic development and optimize their financial and staff resources between business recruitment and retention strategy.

These efforts should be augmented by the development of technologies into successful businesses using local and regional networks to create value for the community in times of prosperity and in a challenging economic environment.

Ernest Andrade is the director of the Charleston Digital Corridor, www.charlestondigitalcorridor.com, and principal of Andrade Economics, an economic development consulting firm.