New role of consultants changes economic development

By MARY BETH JACKSON

There’s a powerful group rising in economic development, and their opinions of an area can be make-or-break for everyone lobbying business to their corner of the world.

Tom Elliot, executive director of Virginia’s @Corridor, appeared before the Smyth County Board of Supervisors Tuesday to talk about the changing face of economic development. The @Corridor is an organization that markets Southwest Virginia to the world as a good place to do business. It serves the counties of Smyth, Washington, Wythe, Bland, Carroll and Grayson and includes the cities of Bristol and Galax.
There is an uptick in the number of requests the organization has received to provide information about the area, said Elliot, “But we’re still not seeing them coming out and kicking the dirt yet.”

He added, “Getting them to visit is the first major step.”

That, said Elliot, is a whole new ballgame with new players. Previously, Elliot relied heavily on the Virginia Economic Development in Richmond to forward prospects. While that is still very important, the @Corridor has had to become much more proactive in seeking its own.

“When times were booming, we didn’t have to do as much proactive marketing,” he said.
Once upon a time, he might have contacted companies directly to “sell” Southwest Virginia to them as places to expand. Those opportunities are fewer.

“Typically, companies have gatekeepers that keep you from getting to the people you need to get to,” he said.

They are the site selection consultants. And going around them can be perilous to a region’s chances of attracting the firms they want.

While the @Corridor has always considered consultant relationships as an important part of their strategy, they are now critical. Companies are increasingly using site selection consultants to help them make their next moves. Elliot says 80 percent of significant prospects are generated by these deeply influential and highly paid people. They are not used for selecting sites so much as eliminating them, and that can happen before an area even knows it’s being contemplated.

The @Corridor is changing strategies to woo these consultants, whose perception of Southwest Virginia may be make-or-break for the area. A new website for the @Corridor is planned, and Elliot said the organization hopes to contract a site selection firm to create one for them. That way, he said, the @Corridor will have a more easily navigable site with the information consultants want easily at hand. Consultants check websites first, then make a contact if they want further information.

A second component of the strategy is building relationships. Elliot is going to more conferences than trade shows, as he has more of a chance to mix and mingle with consultants at conferences. Some of these conferences offer valuable panel discussions, others offer valuable one-on-one meet and greets with these consultants, who represent a stable of clients at one time.

“You have to build relationships with the right people,” he said.

Elliot has even changed his business card to add a map highlighting Southwest Virginia in relation to 18 surrounding states. He wants consultants to know where we are even as he is introducing his name.

But what do they want?

The criteria companies and their consultants consider includes geographic location, then sites and buildings. With the building boom over, companies are looking for existing buildings that might suit their purposes. They want to lease, not buy. Transportation, including convenient access to rail and highways, is considered, too.

Infrastructure is also important, as some companies require huge amounts of resources, even their own electric substations. Water and sewer is crucial. The infrastructure component, Elliot said, “can be huge.”

Next, companies look what incentives they might be able obtain to locate in a certain area, such as tax breaks. Real estate tax breaks are not as important as machinery tax breaks – the machinery in a building often far outstrips the value of the real estate. And while localities are loathe to dangle carrots like these at times, Elliot said, “Incentives always come in the picture. If we don’t do it, we’re behind.”

Finally, they need a qualified workforce.

“That’s the one that keeps them awake at night,” he said.

There is a shift from traditional to advanced manufacturing happening. Capital investment is higher. The number of jobs is fewer, but the jobs are better.

Companies look at the quality of life in an area, and Elliot said the @Corridor used to give that more stress, but companies now find that much lower in importance unless they are relocating a large group of employees.

Firms are also working on a compressed timeframe, wanting to be up and running in as little as six-months. They want all these components, and they want them now.

High stakes

The nationwide economic downturn has resulted in a more competitive race to woo consultants and their clients to Southwest Virginia.

In 2005, 1,130 jobs were added to the area with a capital investment of $214.3 million. In 2008, only 304 jobs had been added to the region, and investment dollars had slid to $35.2 million. Elliot pointed out that one major announcement was just about to press when the project was withdrawn on the gloomy economic outlook.

Last year, 452 jobs were added, and capital investment (which had risen in 2009) dipped to $40.8 million.

Why not Southwest Virginia?
As time goes on, the @Corridor will be seeking more information when Southwest Virginia hasn’t been selected for business. That’s why building relationships with the consultants is important; but first, said Elliot, Southwest Virginia has to make the short list for a project. Economic developers will never know if consultants don’t get past the “just looking” part of surfing the Web or requesting more information.

Elliot said it’s also important to know who we want to attract to Southwest Virginia. He is expecting results from a consultant study to find out what industries to target for the area.

The whole process, said Elliot, “is more a science than it used to be.”