Sunday, February 13, 2011

Economic development groups try to lay seed for job growth

By Larry Avila • for The Northwestern • February 6, 2011

Bringing jobs to a region is like bringing a harvest to market.

Before that can happen, a field must be prepared, seeds planted, and crops tended to grow and mature into a bumper crop. The same approach is taken by economic development groups, which are under constant pressure to recruit innovative companies to the region to provide highpaying jobs that support families well into the future.

It's these same groups that also are under the gun to convince existing Valley employers to expand as well as keep those still in operation from moving elsewhere.

"What we're really trying to do is leverage all the regional resources and use what we have to create what constitutes a healthy economy," said Jerry Murphy, executive director of The New North Inc., economic development organization representing an 18-county region of northeast Wisconsin.

Murphy said New North's goal is to encourage business investment, which is a key ingredient for job creation.

"In order for jobs to be created, there has to be someone making an investment," he said. "So the kinds of things we're trying to do really are designed not only to encourage it, but accelerate it."

One New North initiative is Wisconsin Wind Works. With the nation seeking alternative energy sources, New North evaluated the resources of northeast Wisconsin and compiled a list of companies that could produce components for electricity generating wind turbines.

Its research not only found companies that could make all of the parts and components, but businesses that also could install and maintain the massive turbines.
The regional program has since blossomed to an online statewide directory, which features more than 280 businesses that can serve the wind power-generating industry in an assortment of capacities.

Murphy said New North simply is the first part of the job creation strategy for the region.

"We're coordinating a lot of strategic activity that adds up to an environment for
investment," he said. "We're in a coordinating role that helps define the best of what the region has to offer."

Grassroots effort

The Fox Cities Chamber of Commerce & Industry, a business advocacy group representing about 1,800 companies, launched the Team Fox Cities initiative in 2006. The program was designed to work with Fox Cities companies with a major presence here, but headquartered elsewhere.

The chamber focused on these businesses because its research found about 90 percent of these companies would be responsible for future job growth in the Fox Cities.
Jim Schlies, vice president of economic development for the chamber, said the program called for chamber staff and board members to make site visits to regional companies to get to know the businesses, understand what they do and what obstacles precluded them from doing business in Wisconsin.

"We would often hear from companies who would say they like doing business in Wisconsin, so then we'd ask, 'If you like it here so much, why not bring other operations here,'" he said.

Team Fox Cities also worked on business recruitment, although Schlies said this was the more challenging route.

"A lot of organizations devote a lot of resources to this," he said. "It's the one thing everyone focuses on."

Site visits and working with businesses led to some success stories, Schlies said.
National Envelope, based in Texas with operations across the country including an Appleton plant, moved 55 jobs from one of its sites to the Fox Cities. Albany International, a papermaker in Menasha, relocated its research and development arm here.

"There have been others," Schlies said.

The recession has stalled regional job creation in recent years, he said. But as the economy began its slow recovery months ago, companies began pointing to other obstacles.

"When we have asked about job growth recently, it's been a mixed bag," Schlies said. "For some, it's the business climate in Wisconsin, while others will say it's the high energy costs … It's not really crystal clear."

Schlies said the chamber can be more proactive in identifying the types of industries that would thrive in the Fox Cities and pair well with existing businesses and services.

"I think it starts with good targeting," he said.

Need drives job growthBefore any company will add workers, it needs a market that will provide sustainable sales, said Scott Anderson, a Minneapolis-based senior economist with Wells Fargo.He said job growth has been stagnant nationally because businesses learned to maximize production with fewer workers during the recession.

"So not only did companies cut back on employees, they also cut back on inventories," Anderson said.

With consumer spending — the primary driver of the U.S. economy — showing signs of a sustainable recovery, businesses may be nearing a point where they need additional workers to replenish business inventories.

"I think we're close to that tipping point now," Anderson said. "This is where the efficiency model starts to break down and businesses will have to start hiring."
Anderson said U.S. manufacturing appears re-energized.

"Demand drives production and it is starting to look like it will be self-sustaining," he said.

Anderson said the economy is expected to create at least 2 million new jobs in 2011.

That breaks down to about 170,000 a month.

But he and other analysts caution a job rebound won't happen overnight because the recession, which lasted 18 months, was among the longest in U.S. history. What will keep jobless rates high for the near-term are the unemployed who gave up looking for work during the recession but will re-launch their job search as employers return to a hiring mode, Anderson said.

"Even if the present pace is maintained, it will take a long time to get back to a normal level of unemployment," Anderson said. "We're probably looking at 2014 to 2015 before we see unemployment back down to 6 percent."

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