Cities battle economic forces to shape their recoveries

By DONNELLE ELLER • deller@dmreg.com • August 16, 2009

A year ago, nearly 70 percent of leading Sioux City businesses said they expected to expand - investing $372 million and adding 519 workers.

This year, about half of the same businesses said they're considering expanding - investing $10 million to create 75 jobs.

"It's a dramatically different picture," Debi Durham, president of the Siouxland Initiative, said about the economic development group's first-quarter surveys.

As Iowa cities weather one of the worst economies in history, economic development leaders said many companies are struggling to hold their own. They're faced with declining national and world demand, limited access to capital and parent companies looking to consolidate.

"The economy is telling us what it wants the state to look like," said Liesl Eathington, an Iowa State University economist. "Despite a lot of policies and economic development efforts, it will be hard to overcome these forces."

Trends to watch, Eathington and other specialists said:

Migration: The economic downturn will accelerate the longtime drive of workers and jobs from small towns and rural areas to large cities. State data show most of Iowa's largest cities gained workers in 2008 from 2007, primarily from inside Iowa.

"It's a chicken-and-egg thing," Eathington said. "Workers go where they expect to find jobs. Companies expand where they're likely to find adequate work force."

Shifting employment: Down 27,700 factory jobs in June, Iowa will never see some of those jobs return as corporations permanently downsize, leaders said. But other types of jobs have been created - especially in renewable energy - helping Iowa workers as the recession rages.

"Renewable fuels is one of those things we saw take off a year or two ago ... and it has helped stabilize us," said John Kramer, a Fort Dodge economic development leader.

Emerging advantages: A newly trained corps of dislocated workers could give the state an economic development edge as businesses again look to expand. Also, Iowa's low costs could attract businesses and workers, especially as states raise taxes to regain a financial footing, leaders said.

"Workers and businesses weren't as desperate for affordability," said Martha Willits, chief executive of the Greater Des Moines Partnership. "They could live in Chicago, New York. But the recession has changed that. Affordability will be huge. Lifestyle will be huge." More here.