By Adam Clark, OF THE MORNING CALL
Big-name corporations, hundreds of jobs and thousands of dollars in tax revenue are coming soon to the Lehigh Valley.
All at the expense of New York and New Jersey.
With state grants, tax incentives and some luck, Lehigh County secured relocation commitments from four out-of-state companies in about an 80-day span earlier this year.
Between mid-February and early May, juicemaker Ocean Spray, credit and debit payment processor United Bank Card and chemical company Avantor Performance Materials announced they will leave New Jersey for facilities in the Valley. Iconic Yankee Stadium peanut provider A.L. Bazzini said it will transfer its nut production from New York to a plant it already operates in Upper Macungie Township.
"It was a pretty good three-month run for us," Lehigh County Executive Don Cunningham said. "You need a strong corporate presence and continued growth to ensure that the quality of the life of the area and the stability of the area continues to move forward."
The Lehigh Valley is benefiting from a nationwide trend of companies moving to cut costs, said Mark M. Sweeney, senior principal at McCallum Sweeney Consulting, a site selection firm in Greenville, S.C.
Sweeney, who helps companies around the world find more efficient and cost-effective locations, is familiar with the Lehigh Valley's appeal. Earlier this year, he helped Japanese drugmaker Daiichi Sankyo Inc. locate its new packaging plant inBethlehem Township.
Proximity to New York and other major East Coast markets makes the Lehigh Valley attractive, but the region has many other lures.
When compared with New York and New Jersey, real estate taxes and state income taxes are lower, housing is more affordable and the labor pool is cheaper, said Tony Ianelli, president and CEO of the Greater Lehigh Valley Chamber of Commerce.
Distribution and travel are easy because of Interstate 78, and goods also can be sent by air through Lehigh Valley International Airport and by ground along the Norfolk Southern Railway, which runs through the heart of the Lehigh Valley.
"When you add it all up, it becomes appealing," Ianelli said. "From a New York and New Jersey standpoint, we're very tough competition."
Incentive packages doled out by the state have helped too.
In February Lehigh County commissioners signed off on a $3 million state grant to allow Avantor Performance Materials to transfer 140 jobs from Philipsburg, N.J., to the Stabler Corporate Center in Upper Saucon Township.
The grant, which comes from the Redevelopment Assistance Capital Program, is on top of $600,000 in job creation tax credits, a $200,000 opportunity grant and $90,000 in job training assistance the company also secured from the state.
United Bank Card also received financial assistance to move corporate and warehouse operations to Hanover Township, Lehigh County, from two facilities in Hunterdon County, N.J. The Lehigh Valley Economic Development Corp. helped the company score $778,750 in funding from the state Department of Community and Economic Development, including a $350,000 grant and $78,750 for job training assistance.
Another $350,000 in tax credits came after the company promised to create 175 jobs at the new location within three years.
"On the incentive side, Pennsylvania has had some good tools in the tool box," Sweeney said."
Sweeney worries that Pennsylvania's budget woes may prompt it to skimp on business incentives. As long as that does not happen, he said, the Lehigh Valley will continue to be attractive to businesses.
Sweeney said a strong "economic development infrastructure" also has helped the region. Groups such as the LVEDC, which serves as a bridge between businesses and governments, aren't as established in New Jersey, he said.
The first few months of 2011 proved to be the LVEDC's busiest stretch in years in terms of fielding interest from companies, said Pete Reinke, the organization's vice president of regional development.
Saturday, July 02, 2011
Auto industry dominates Texas-Mexico border trade
By DAVID HENDRICKS
STAFF WRITER
Editor's note: This article is part of an occasional series examining U.S.-Mexico trade and the economy along the Texas-Mexico border.
SAN ANTONIO — Anyone wondering which industrial sector is the most important in U.S.-Mexico border trade only has to see what the double-stacked freight cars are carrying on the rail lines parallel to Interstate 35 between San Antonio and Laredo.
Newly assembled cars and car parts, especially stacks of chassis, are the most visible and tell the story, even if they only show a fraction of what occurs along the U.S.-Mexico border.
Automotive investments are continuing despite Mexico's widely publicized violence.
Border business leaders uniformly said Mexico's drug-cartel turf wars and organized crime have not been barriers to auto industry activities and auto border trade.
"We lost a few factories that did not survive the U.S. recession, operations that were purchased or merged. But Reynosa last year added 4,000 jobs, even with the violence, at maquiladoras in all categories," said McAllen Economic Development Corp. President Keith Patridge.
"What violence? What organized crime?" asked Roger Creery, in an interview before recently resigning as executive director of the Laredo Development Foundation.
"What I can say is this: We've had several announcements of plant expansions. Foreign investments have been made in Nuevo Laredo and in central Mexico. Based on the amount of those foreign investments, business growth has not been negatively impacted by societal issues going on in Mexico," Creery said.
A powerful region
The Texas-northeast Mexico auto-manufacturing region has emerged over the past decade as the glue connecting automakers with plants in Detroit and the U.S. South to the concentration of assembly plants in central Mexico, such as those in León and Toluca and as far south as Puebla.
The auto supply chains run north and south, from Mexico to Canada, like an electric current, day and night. More of the auto industry flow passes through Laredo than any other U.S.-Mexico port.
In 2010, about $114 billion in international freight crossed through Laredo. Nearly half of it was auto-related, Creery said.
The next-largest category, mainly electronic products and components, amounts only to one-fourth the amount of auto freight, Creery said.
In 2008 and 2009, the U.S. recession hit the auto industry particularly hard. Laredo saw annual declines of 15 percent to 18 percent in auto freight processed through its port those years, Creery said. But the auto freight volumes recovered in 2010 and are on pace for a 10 percent increase in 2011.
Laredo's vast logistics operations of truck and rail bridges and Union Pacific Corp.'s rail yard handle freight for assembly plants and parts factories from central Mexico to Canada.
Bexar front and center
Bexar County has become the leader for the Texas-northeast Mexico auto corridor. The county's Economic Development Department in 2008 formed the Texas Mexico Automotive SuperCluster. The department since has marketed the region's workforce and location globally for further auto industry investments for the region.
San Antonio became an automotive city in 2006 when Toyota Motor Co. opened an assembly plant for the Tundra pickup truck models and expanded with production of the Tacoma pickup last year.
The employment numbers in the region are considerable, according to the latest numbers from the Texas Mexico automotive group.
More than 12,800 assembly plant employees work in two passenger-vehicle plants in Texas and three in northeast Mexico, operated by General Motors Co., Chrysler and Toyota. GM operates a plant in Dallas and two in Mexico. Chrysler operates a pickup truck assembly plant near Saltillo, Mexico, and Toyota's pickup truck plant is in San Antonio.
Another combined 5,700 assembly workers are employed at heavy vehicle assembly plants operated by Peterbilt, Navistar, BAE Systems, Marcopolo and Daimler-Freightliner in the same region.
More than 130,000 workers are employed at supplier manufacturing plants in the region.
Bexar County Economic Development Executive Director David Marquez said North American-based automakers and suppliers continue to study the region for further investment.
"The supply chain is recovering" along with the U.S. economy, he said.
Supplier hubs
Texas-Mexico border cities all have automotive supplier clusters, from El Paso-Ciudad Juarez to McAllen-Reynosa.
Thanks to being a logistics hub, Laredo and Nuevo Laredo have attracted a handful of supplier operations. Maryland-based Bowles Fluidics, which makes windshield washer fluid nozzles and hoses in a Zacatecas, Mexico, plant, distributes its products from a Laredo warehouse. MBtech, once associated with Mercedes-Benz, operates an automotive Laredo test track. In Nuevo Laredo, supplier plants manufacture radiators, heavy-equipment parts, auto seat treatments, among other original equipment parts.
McAllen's efforts to develop an auto industry footprint also have been successful. Over the past 23 years, the McAllen Economic Development Corp. has recruited 60 auto suppliers, mostly in Reynosa, whose clients cumulatively reach all North American and European automakers and many of those in Asia.
"We have a significant base," McAllen's Patridge said. "Site selection consultants have told us, 'We have never seen an area with so many suppliers that didn't have an assembly plant.' "
But landing an assembly plant has been elusive. According to a 2009 Dallas Morning News article, Mc-Allen lost a 2006 competition for a Kia Motors assembly plant to a site in Georgia.
"We were close on one, but there's another one we are still in the running for, although the project is not active now," Patridge said. "I'm not going to give any names."
Global impact
The recent Japan disaster could have a lasting effect in Texas and North Mexico.
The March 11 earthquake and tsunami, which closed some of Japan's auto parts factories and disrupted some North American assembly operations, caused auto- makers to rethink their supply chains, Patridge said.
The Japan disaster "is changing perspectives and strategies on where to put suppliers or plants to avoid disruptions from natural disasters and political situations," Patridge said. The auto- makers are more interested now in moving away from single-source suppliers and spreading the risk, he added.
More suppliers based around the world could invest in the Texas-North Mexico corridor.
Bexar County and the Texas Mexico Automotive SuperCluster have marketed the Texas-northeast Mexico region to India and China.
"This can be a great pipeline in the future" for investment, Marquez said.
dhendricks@express-news.net
STAFF WRITER
Editor's note: This article is part of an occasional series examining U.S.-Mexico trade and the economy along the Texas-Mexico border.
SAN ANTONIO — Anyone wondering which industrial sector is the most important in U.S.-Mexico border trade only has to see what the double-stacked freight cars are carrying on the rail lines parallel to Interstate 35 between San Antonio and Laredo.
Newly assembled cars and car parts, especially stacks of chassis, are the most visible and tell the story, even if they only show a fraction of what occurs along the U.S.-Mexico border.
Automotive investments are continuing despite Mexico's widely publicized violence.
Border business leaders uniformly said Mexico's drug-cartel turf wars and organized crime have not been barriers to auto industry activities and auto border trade.
"We lost a few factories that did not survive the U.S. recession, operations that were purchased or merged. But Reynosa last year added 4,000 jobs, even with the violence, at maquiladoras in all categories," said McAllen Economic Development Corp. President Keith Patridge.
"What violence? What organized crime?" asked Roger Creery, in an interview before recently resigning as executive director of the Laredo Development Foundation.
"What I can say is this: We've had several announcements of plant expansions. Foreign investments have been made in Nuevo Laredo and in central Mexico. Based on the amount of those foreign investments, business growth has not been negatively impacted by societal issues going on in Mexico," Creery said.
A powerful region
The Texas-northeast Mexico auto-manufacturing region has emerged over the past decade as the glue connecting automakers with plants in Detroit and the U.S. South to the concentration of assembly plants in central Mexico, such as those in León and Toluca and as far south as Puebla.
The auto supply chains run north and south, from Mexico to Canada, like an electric current, day and night. More of the auto industry flow passes through Laredo than any other U.S.-Mexico port.
In 2010, about $114 billion in international freight crossed through Laredo. Nearly half of it was auto-related, Creery said.
The next-largest category, mainly electronic products and components, amounts only to one-fourth the amount of auto freight, Creery said.
In 2008 and 2009, the U.S. recession hit the auto industry particularly hard. Laredo saw annual declines of 15 percent to 18 percent in auto freight processed through its port those years, Creery said. But the auto freight volumes recovered in 2010 and are on pace for a 10 percent increase in 2011.
Laredo's vast logistics operations of truck and rail bridges and Union Pacific Corp.'s rail yard handle freight for assembly plants and parts factories from central Mexico to Canada.
Bexar front and center
Bexar County has become the leader for the Texas-northeast Mexico auto corridor. The county's Economic Development Department in 2008 formed the Texas Mexico Automotive SuperCluster. The department since has marketed the region's workforce and location globally for further auto industry investments for the region.
San Antonio became an automotive city in 2006 when Toyota Motor Co. opened an assembly plant for the Tundra pickup truck models and expanded with production of the Tacoma pickup last year.
The employment numbers in the region are considerable, according to the latest numbers from the Texas Mexico automotive group.
More than 12,800 assembly plant employees work in two passenger-vehicle plants in Texas and three in northeast Mexico, operated by General Motors Co., Chrysler and Toyota. GM operates a plant in Dallas and two in Mexico. Chrysler operates a pickup truck assembly plant near Saltillo, Mexico, and Toyota's pickup truck plant is in San Antonio.
Another combined 5,700 assembly workers are employed at heavy vehicle assembly plants operated by Peterbilt, Navistar, BAE Systems, Marcopolo and Daimler-Freightliner in the same region.
More than 130,000 workers are employed at supplier manufacturing plants in the region.
Bexar County Economic Development Executive Director David Marquez said North American-based automakers and suppliers continue to study the region for further investment.
"The supply chain is recovering" along with the U.S. economy, he said.
Supplier hubs
Texas-Mexico border cities all have automotive supplier clusters, from El Paso-Ciudad Juarez to McAllen-Reynosa.
Thanks to being a logistics hub, Laredo and Nuevo Laredo have attracted a handful of supplier operations. Maryland-based Bowles Fluidics, which makes windshield washer fluid nozzles and hoses in a Zacatecas, Mexico, plant, distributes its products from a Laredo warehouse. MBtech, once associated with Mercedes-Benz, operates an automotive Laredo test track. In Nuevo Laredo, supplier plants manufacture radiators, heavy-equipment parts, auto seat treatments, among other original equipment parts.
McAllen's efforts to develop an auto industry footprint also have been successful. Over the past 23 years, the McAllen Economic Development Corp. has recruited 60 auto suppliers, mostly in Reynosa, whose clients cumulatively reach all North American and European automakers and many of those in Asia.
"We have a significant base," McAllen's Patridge said. "Site selection consultants have told us, 'We have never seen an area with so many suppliers that didn't have an assembly plant.' "
But landing an assembly plant has been elusive. According to a 2009 Dallas Morning News article, Mc-Allen lost a 2006 competition for a Kia Motors assembly plant to a site in Georgia.
"We were close on one, but there's another one we are still in the running for, although the project is not active now," Patridge said. "I'm not going to give any names."
Global impact
The recent Japan disaster could have a lasting effect in Texas and North Mexico.
The March 11 earthquake and tsunami, which closed some of Japan's auto parts factories and disrupted some North American assembly operations, caused auto- makers to rethink their supply chains, Patridge said.
The Japan disaster "is changing perspectives and strategies on where to put suppliers or plants to avoid disruptions from natural disasters and political situations," Patridge said. The auto- makers are more interested now in moving away from single-source suppliers and spreading the risk, he added.
More suppliers based around the world could invest in the Texas-North Mexico corridor.
Bexar County and the Texas Mexico Automotive SuperCluster have marketed the Texas-northeast Mexico region to India and China.
"This can be a great pipeline in the future" for investment, Marquez said.
dhendricks@express-news.net
Friday, July 01, 2011
Lexington, Louisville to study economic partnership
By Scott Sloan — ssloan@herald-leader.com
Lexington and Louisville will soon begin studying ways the cities can cooperate on regional economic development, specifically how to become more competitive in advanced manufacturing such as the automotive industry.
Mayors Jim Gray and Greg Fischer pointed to the Ford and Toyota plants as evidence that the state's two largest cities already are a center of advanced manufacturing but can do more.
"Those investments in people and process are significant, and we really have to ask ourselves if we're leveraging these assets adequately. ... Both Greg and I have backgrounds in business, and it's part of our DNA to be out marketing and selling," Gray said Thursday.
The 18-month study will be led by businessman Jim Host, who recently wrapped up work overseeing the development of the KFC Yum Center in downtown Louisville. Host said that project, with which he was involved for more than five years, helped him learn a great deal about Louisville.
"Up until last October, I drove every day from Lexington to Louisville to work on that facility and drove back at night," he said. "I've learned what makes Louisville work and have felt for many years that the Lexington-Louisville corridor should be like the Dallas-Fort Worth corridor."
Host noted the formal partnership will build on an informal one in the past few years. For instance, members of Commerce Lexington last year joined counterparts from Greater Louisville, the city's chamber of commerce, for a trip to study regional cooperation in Pittsburgh.
"These two communities have always been at opposite poles, and it's crazy in this state for these two communities to not work together," Host said.
The city's mayors will appoint the committee to do the study, and Host expects the first meeting to take place in August or September. The group will be assisted by the Brookings Institution, a non-profit public policy research firm in Washington, D.C. Laura Chandler, who worked on the Louisville Arena Authority with Host, will serve as project manager.
Gray and Fischer will elaborate on the study during a luncheon Aug. 11 in Louisville and a Commerce Lexington-sponsored luncheon Aug. 17 in Lexington.
Host said he has a few tangible suggestions the study will develop but declined to share them, saying he preferred they be discussed at the group's first meeting.
"There's nothing more important to this state than the cooperation between Lexington and Louisville," he said. "Forty cents of every tax dollar generated in Louisville helps the rest of Kentucky, and 20 cents of every tax dollar generated in Lexington helps the rest of Kentucky.
"The better we can help economic development in the two cities, the better it helps the state."
Lexington and Louisville will soon begin studying ways the cities can cooperate on regional economic development, specifically how to become more competitive in advanced manufacturing such as the automotive industry.
Mayors Jim Gray and Greg Fischer pointed to the Ford and Toyota plants as evidence that the state's two largest cities already are a center of advanced manufacturing but can do more.
"Those investments in people and process are significant, and we really have to ask ourselves if we're leveraging these assets adequately. ... Both Greg and I have backgrounds in business, and it's part of our DNA to be out marketing and selling," Gray said Thursday.
The 18-month study will be led by businessman Jim Host, who recently wrapped up work overseeing the development of the KFC Yum Center in downtown Louisville. Host said that project, with which he was involved for more than five years, helped him learn a great deal about Louisville.
"Up until last October, I drove every day from Lexington to Louisville to work on that facility and drove back at night," he said. "I've learned what makes Louisville work and have felt for many years that the Lexington-Louisville corridor should be like the Dallas-Fort Worth corridor."
Host noted the formal partnership will build on an informal one in the past few years. For instance, members of Commerce Lexington last year joined counterparts from Greater Louisville, the city's chamber of commerce, for a trip to study regional cooperation in Pittsburgh.
"These two communities have always been at opposite poles, and it's crazy in this state for these two communities to not work together," Host said.
The city's mayors will appoint the committee to do the study, and Host expects the first meeting to take place in August or September. The group will be assisted by the Brookings Institution, a non-profit public policy research firm in Washington, D.C. Laura Chandler, who worked on the Louisville Arena Authority with Host, will serve as project manager.
Gray and Fischer will elaborate on the study during a luncheon Aug. 11 in Louisville and a Commerce Lexington-sponsored luncheon Aug. 17 in Lexington.
Host said he has a few tangible suggestions the study will develop but declined to share them, saying he preferred they be discussed at the group's first meeting.
"There's nothing more important to this state than the cooperation between Lexington and Louisville," he said. "Forty cents of every tax dollar generated in Louisville helps the rest of Kentucky, and 20 cents of every tax dollar generated in Lexington helps the rest of Kentucky.
"The better we can help economic development in the two cities, the better it helps the state."
Thursday, June 30, 2011
Economic group gets new name, identity.
Greenlight Greater Portland, a private-public economic development organization, has a new name along with a new brand identity and website, the group said Wednesday.
“We want the Portland-Vancouver area to become a real player in the international market, and this new brand is the first step toward building that credibility,” Greg Ness, president and CEO of StanCorp Financial Group and marketing liaison for Greater Portland Inc., said in a news release.
Underpinning the group’s new efforts are three concepts: intelligent confidence; assertive; and progressive: the capacity to lead a new direction, it said.
Greater Portland plans to fly in about 25 CEOs from around the world this fall to show what the Portland-Vancouver region has to offer.
“We want the Portland-Vancouver area to become a real player in the international market, and this new brand is the first step toward building that credibility,” Greg Ness, president and CEO of StanCorp Financial Group and marketing liaison for Greater Portland Inc., said in a news release.
Underpinning the group’s new efforts are three concepts: intelligent confidence; assertive; and progressive: the capacity to lead a new direction, it said.
Greater Portland plans to fly in about 25 CEOs from around the world this fall to show what the Portland-Vancouver region has to offer.
Tuesday, June 28, 2011
Michigan can compete, economic chief says
Jaclyn Trop and Brian J. O'Connor/ The Detroit News
After Gov. Rick Snyder eliminated some of the tax breaks used to lure out-of-state businesses to Michigan, developers and municipalities worried that the state had unilaterally disarmed them in the midst of the war to boost jobs and tax base.
But the state's economic development chief, in an exclusive interview with The Detroit News, says Michigan will attract businesses and help existing ones by emphasizing the state's assets and the newly lowered and simplified business tax, and by launching new economic development programs.
Whispers of a $50 million deal being hatched to lure the corporate headquarters of the merged Sears and Kmart back to Kmart's original home in Metro Detroit lends credence to that assurance from Mike Finney, who took over the Michigan Economic Development Corp. in January.
"We've told those developers: There's no reason to slow down because we'll still approve your projects," Finney told The News. "We tell everyone we meet with to bring their projects forward."
Finney's agency is much more closemouthed about the prospects of bringing Sears Holdings, the firm formed when Kmart purchased Sears, back to the state where Kmart was born. But battle-hardened experts in the fight to steal jobs from other states say corporations often make a feint at relocating in order to wring tax breaks and concessions in their current homes.
Because of the enormous cost and complexity of relocating a corporate headquarters the size of the Sears operation in Hoffman Estates, Ill., concessions and incentives from Michigan would have to be at least enough to match any Illinois offer — plus moving costs.
In fact, Kmart in 2004 was on the cusp of finalizing an economic incentive package to stay in Michigan when it suddenly halted discussions and announced the merger with Sears that emptied out the vast Kmart headquarters building that still stands empty on Big Beaver Road in Troy.
If Michigan does move to entice Sears, it won't be with incentives, according to earlier comments Finney made before the rumors started swirling.
Incentives — rather than Michigan's quality of life, cost of doing business and talented work force — "were an awful way to sell" the state, Finney said.
"You should be promoting based on your assets," he said.
Incentives back in line
The budget Snyder signed last week provides $125 million in incentives for business development and $25 million for film incentives. That number is roughly on par with the $150 million in annual tax credits some Michigan businesses received from the development corporation on average from 2000 to 2008, Finney said.
The state hiked its tax break spending to an estimated $199 million in 2009 and $219 million last year after the Legislature loosened the criteria for tax break programs. The increased spending was unsustainable, and the new budget will bring the amount of the incentives in line with pre-recession times, Finney said. But the new budget also eliminated incentives that promoted the redevelopment of contaminated or old properties through brownfield and historic preservation tax credits.
The state's decision to replace the complicated Michigan Business Tax, an obstacle to business attraction, with a flat 6 percent tax will more than offset the loss of brownfield and historic preservation tax credits to develop contaminated or obsolete sites, Finney said. The repeal amounts on average to an 80 percent tax cut for businesses, he said.
And while some developers are worried about the loss of the old tax breaks, the development agency will make up for them with a new program of loans, investments and grants, Finney said.
A working group is developing the details for the new $100 million business attraction program that replaces the Michigan Economic Growth Authority, and brownfield and historic tax credits, said a development corporation spokesman. The group may have a plan ready for the agency's board to approve in late August for the fiscal year that begins Oct. 1, he said.
Tactic gives cities pause
But cities and developers remain on edge about the new approach, said Andy Schor, assistant director of state affairs for the Michigan Municipal League.
"There is a lot of nervousness among my members and developers" because there is less money to do redevelopment projects with state-sponsored financing, he said.
But "we are cautiously optimistic" about the new $100 million program because the league is being consulted about it and likes its initial direction, Schor said. The one drawback is that the money is being split between business attraction and redevelopment — instead of being devoted solely to redevelopment, as the league was led to believe, he said.
If that's the case, the rumored $50 million package of incentives for Sears could eat up a big chunk of the program's cash, although some of that cost would be borne by the county or city where the retail giant would end up landing, bringing an estimated 5,000 jobs. The speculation is that one potential site is on Ford Road in Dearborn, and the other in Southfield, with both Wayne and Oakland counties assisting the development corporation in structuring an offer.
Representatives of Oakland and Wayne counties, as well as a spokesman for the development corporation, wouldn't comment or confirm the rumors Monday. Sears has not confirmed or denied the reports, which also claim the firm is considering making the move to New Jersey, Texas, Tennessee or North Carolina.
jtrop@detnews.com
After Gov. Rick Snyder eliminated some of the tax breaks used to lure out-of-state businesses to Michigan, developers and municipalities worried that the state had unilaterally disarmed them in the midst of the war to boost jobs and tax base.
But the state's economic development chief, in an exclusive interview with The Detroit News, says Michigan will attract businesses and help existing ones by emphasizing the state's assets and the newly lowered and simplified business tax, and by launching new economic development programs.
Whispers of a $50 million deal being hatched to lure the corporate headquarters of the merged Sears and Kmart back to Kmart's original home in Metro Detroit lends credence to that assurance from Mike Finney, who took over the Michigan Economic Development Corp. in January.
"We've told those developers: There's no reason to slow down because we'll still approve your projects," Finney told The News. "We tell everyone we meet with to bring their projects forward."
Finney's agency is much more closemouthed about the prospects of bringing Sears Holdings, the firm formed when Kmart purchased Sears, back to the state where Kmart was born. But battle-hardened experts in the fight to steal jobs from other states say corporations often make a feint at relocating in order to wring tax breaks and concessions in their current homes.
Because of the enormous cost and complexity of relocating a corporate headquarters the size of the Sears operation in Hoffman Estates, Ill., concessions and incentives from Michigan would have to be at least enough to match any Illinois offer — plus moving costs.
In fact, Kmart in 2004 was on the cusp of finalizing an economic incentive package to stay in Michigan when it suddenly halted discussions and announced the merger with Sears that emptied out the vast Kmart headquarters building that still stands empty on Big Beaver Road in Troy.
If Michigan does move to entice Sears, it won't be with incentives, according to earlier comments Finney made before the rumors started swirling.
Incentives — rather than Michigan's quality of life, cost of doing business and talented work force — "were an awful way to sell" the state, Finney said.
"You should be promoting based on your assets," he said.
Incentives back in line
The budget Snyder signed last week provides $125 million in incentives for business development and $25 million for film incentives. That number is roughly on par with the $150 million in annual tax credits some Michigan businesses received from the development corporation on average from 2000 to 2008, Finney said.
The state hiked its tax break spending to an estimated $199 million in 2009 and $219 million last year after the Legislature loosened the criteria for tax break programs. The increased spending was unsustainable, and the new budget will bring the amount of the incentives in line with pre-recession times, Finney said. But the new budget also eliminated incentives that promoted the redevelopment of contaminated or old properties through brownfield and historic preservation tax credits.
The state's decision to replace the complicated Michigan Business Tax, an obstacle to business attraction, with a flat 6 percent tax will more than offset the loss of brownfield and historic preservation tax credits to develop contaminated or obsolete sites, Finney said. The repeal amounts on average to an 80 percent tax cut for businesses, he said.
And while some developers are worried about the loss of the old tax breaks, the development agency will make up for them with a new program of loans, investments and grants, Finney said.
A working group is developing the details for the new $100 million business attraction program that replaces the Michigan Economic Growth Authority, and brownfield and historic tax credits, said a development corporation spokesman. The group may have a plan ready for the agency's board to approve in late August for the fiscal year that begins Oct. 1, he said.
Tactic gives cities pause
But cities and developers remain on edge about the new approach, said Andy Schor, assistant director of state affairs for the Michigan Municipal League.
"There is a lot of nervousness among my members and developers" because there is less money to do redevelopment projects with state-sponsored financing, he said.
But "we are cautiously optimistic" about the new $100 million program because the league is being consulted about it and likes its initial direction, Schor said. The one drawback is that the money is being split between business attraction and redevelopment — instead of being devoted solely to redevelopment, as the league was led to believe, he said.
If that's the case, the rumored $50 million package of incentives for Sears could eat up a big chunk of the program's cash, although some of that cost would be borne by the county or city where the retail giant would end up landing, bringing an estimated 5,000 jobs. The speculation is that one potential site is on Ford Road in Dearborn, and the other in Southfield, with both Wayne and Oakland counties assisting the development corporation in structuring an offer.
Representatives of Oakland and Wayne counties, as well as a spokesman for the development corporation, wouldn't comment or confirm the rumors Monday. Sears has not confirmed or denied the reports, which also claim the firm is considering making the move to New Jersey, Texas, Tennessee or North Carolina.
jtrop@detnews.com
Monday, June 27, 2011
Headquarters come and go - it's jobs that count
BY DAVID BRACKEN - Staff Writer
The Triangle: A great place to live and work; not so great for a corporate headquarters.
You'd never hear this region's boosters utter such a line, but it's hard not to at least think it after a week in which the Triangle received another economic pat on the back and downtown Raleigh lost another headquarters.
The accolade came from the Brookings Institution, a Washington think tank, which ranked the Triangle among the 20 strongest performing metro areas in the U.S. through the first quarter.
The lost headquarters, of course, is RBC Bank, which is being bought by Pittsburgh-based PNC Financial Group for $3.45 billion. News of the deal comes less than six months after Duke Energy announced it would acquire Raleigh-based Progress Energy and locate the merged company's headquarters in Charlotte.
The mergers are sure to result in job losses, and possibly reduced real estate footprints.
But there's an argument to be made that, both from a commercial real estate standpoint and an economic standpoint, the damage is mostly cosmetic.
"I don't think it matters as much as long as there are people here creating jobs," said Andrew Kelton, head of CB Richard Ellis' asset services group in Raleigh. "It hurts to lose the prestige of it, but this is just simple business."
It's still growing
As a tertiary market, the Triangle has never been home to a large number of corporate headquarters.
At the moment, the region has two Fortune 500 companies - the Pantry in Cary and the soon-to-depart Progress.
That hasn't hindered the Triangle's growth, as many large companies have flocked to the region to set up research-and-development and back-office operations. Boston-based Fidelity Investments, for example, has added hundreds of local employees during the past five years and now employs more than 2,200 here.
"We're seeing jobs being created; they're just not being created by Fortune 500 headquarters," Kelton said. "We have a lot of activity right now in the 2,000- to 5,000-square-foot range. That's a good sign for the economy. For us in real estate that fills the holes that usually sit empty."
Among the 100 largest metro areas in the U.S., the Raleigh-Cary market ranked No. 1 in employment growth from the fourth quarter of 2010 to the first quarter this year, according to the Brookings report.
The job creators
The Triangle benefits from being home to lots of small companies, as opposed to relying heavily on a few larger employers, said Jim Anthony, a Raleigh real estate investor.
"They are not the real job creators when you look at the numbers," he said. "I'd rather have job-creating companies than headquarters of companies that are stagnant or shrinking."
The most obvious downside to this region's dearth of corporate headquarters is that it makes revitalizing downtown areas that much harder.
Both Durham and Raleigh are trying to build up the density of workers and residents in their downtowns.
Each downtown has a number of proposed office projects that will require a large anchor tenant to get built. In Raleigh, there's Charter Square at the south end of Fayetteville Street and Edison across Blount Street from City Market.
In Durham, there's the Diamond View III office building planned for American Tobacco Campus and the old Woolworth's site, where Greenfire Development hopes to build a new office tower.
Sometimes a ploy
Few large tenants are trying to relocate, and many that are looking simply use the exercise as a way to extract more incentives from their hometowns.
"Getting a large corporate relocation is no picnic," Anthony said. "It's a very competitive marketplace and a lot of the companies that were going to (move) have already done so."
This explains the euphoria over Red Hat's decision to stick around.
The software firm started in Durham, moved to Raleigh and is now looking for 300,000 to 400,000 square feet in Wake County.
The lesson being, instead of trying to persuade a corporation to relocate, the Triangle is probably better off nurturing its own.
david.bracken@newsobserver.com or 919-829-4548
The Triangle: A great place to live and work; not so great for a corporate headquarters.
You'd never hear this region's boosters utter such a line, but it's hard not to at least think it after a week in which the Triangle received another economic pat on the back and downtown Raleigh lost another headquarters.
The accolade came from the Brookings Institution, a Washington think tank, which ranked the Triangle among the 20 strongest performing metro areas in the U.S. through the first quarter.
The lost headquarters, of course, is RBC Bank, which is being bought by Pittsburgh-based PNC Financial Group for $3.45 billion. News of the deal comes less than six months after Duke Energy announced it would acquire Raleigh-based Progress Energy and locate the merged company's headquarters in Charlotte.
The mergers are sure to result in job losses, and possibly reduced real estate footprints.
But there's an argument to be made that, both from a commercial real estate standpoint and an economic standpoint, the damage is mostly cosmetic.
"I don't think it matters as much as long as there are people here creating jobs," said Andrew Kelton, head of CB Richard Ellis' asset services group in Raleigh. "It hurts to lose the prestige of it, but this is just simple business."
It's still growing
As a tertiary market, the Triangle has never been home to a large number of corporate headquarters.
At the moment, the region has two Fortune 500 companies - the Pantry in Cary and the soon-to-depart Progress.
That hasn't hindered the Triangle's growth, as many large companies have flocked to the region to set up research-and-development and back-office operations. Boston-based Fidelity Investments, for example, has added hundreds of local employees during the past five years and now employs more than 2,200 here.
"We're seeing jobs being created; they're just not being created by Fortune 500 headquarters," Kelton said. "We have a lot of activity right now in the 2,000- to 5,000-square-foot range. That's a good sign for the economy. For us in real estate that fills the holes that usually sit empty."
Among the 100 largest metro areas in the U.S., the Raleigh-Cary market ranked No. 1 in employment growth from the fourth quarter of 2010 to the first quarter this year, according to the Brookings report.
The job creators
The Triangle benefits from being home to lots of small companies, as opposed to relying heavily on a few larger employers, said Jim Anthony, a Raleigh real estate investor.
"They are not the real job creators when you look at the numbers," he said. "I'd rather have job-creating companies than headquarters of companies that are stagnant or shrinking."
The most obvious downside to this region's dearth of corporate headquarters is that it makes revitalizing downtown areas that much harder.
Both Durham and Raleigh are trying to build up the density of workers and residents in their downtowns.
Each downtown has a number of proposed office projects that will require a large anchor tenant to get built. In Raleigh, there's Charter Square at the south end of Fayetteville Street and Edison across Blount Street from City Market.
In Durham, there's the Diamond View III office building planned for American Tobacco Campus and the old Woolworth's site, where Greenfire Development hopes to build a new office tower.
Sometimes a ploy
Few large tenants are trying to relocate, and many that are looking simply use the exercise as a way to extract more incentives from their hometowns.
"Getting a large corporate relocation is no picnic," Anthony said. "It's a very competitive marketplace and a lot of the companies that were going to (move) have already done so."
This explains the euphoria over Red Hat's decision to stick around.
The software firm started in Durham, moved to Raleigh and is now looking for 300,000 to 400,000 square feet in Wake County.
The lesson being, instead of trying to persuade a corporation to relocate, the Triangle is probably better off nurturing its own.
david.bracken@newsobserver.com or 919-829-4548
Friday, June 24, 2011
Officials meet to discuss possible alliance
By Shajia Ahmad - Special to The News
LIBERAL - All there is in southwest Kansas is dust and wheat.
That belief, according to several who are looking to form a regional economic partnership, is a common and frustrating misperception by outsiders, and a hindrance to economic development across the region.
----------advertisement-----------
The Southwest Kansas Chambers Of Commerce hosted a retreat-like planning and development meeting Thursday at the Rock Island Depot in Liberal to discuss these challenges and begin working toward what they hope will become the Southwest Kansas Alliance.
Several dozen local and state leaders were in attendance for the two-plus hour planning session, including state senators and representatives from southwest Kansas, city and county commissioners, and other business and community leaders from Garden City, Dodge City, Liberal, Ulysses, Hugoton and Scott City, just to name a few.
Paul Joseph, president of the Garden City Area Chamber of Commerce and additionally the leader of the southwest Kansas chambers group, said that today's global economy dictates that communities work together to compete for economic development.
Joseph said that while the idea to organize a regional economic partnership has been discussed for many years, only in the past year or so did the Southwest Kansas Chambers move forward with this plan, especially important in today's competing global market, he said.
"We, as southwest Kansans, must compete or die. No longer are our competitors other (southwest Kansas) communities. ... other regions in the nation or even Mexico," Joseph said. "In today's new world economy, our competitors are the likes of Pakistan, India, China, Brazil."
Many local leaders in attendance agreed that for much of recent history most southwest Kansas communities - especially the three most populated ones in Finney, Ford and Seward counties - have competed aggressively with each other for economic development and other opportunities that better their own communities.
That competing mind-set, many agreed, needs to change to tackle issues that plague most all southwest Kansas communities, such as stagnant job growth and tourism, declining rural populations, and limited transportation.
Increasing communication between the various localities to promote economic development for all, and to come up with a brand that would help identify southwest Kansas to the rest of the world are some of the ideas leaders gathered Thursday agreed are pertinent to regional economic success.
"From Scott City to Liberal, we're very unique. But we can work as a region and still maintain that identity at a local level," Joseph said.
Another desired success of a regional economic group, many agreed Thursday, was to tackle the "brain drain" issues plaguing many rural areas.
Garden City Mayor John Doll said more high-paying and specialized jobs born from greater economic development is essential to "keeping our kids home."
The Southwest Kansas Chambers of Commerce invited Joe Yager, a sole staff member of REAP of South Central Kansas, a regional economic area partnership consisting of nearly 40 cities and counties in and around Wichita, to facilitate Thursday's convention.
REAP's stated purpose is to guide state and national actions that affect economic development in the region by adopting joint actions among member governments that enhance their regional economy, and chamber leaders said they want to see the idea modeled in southwest Kansas.
Yager told southwest Kansas leaders that by beginning to identify their purpose and prioritizing regional opportunities, the group could begin branding themselves as a region and combat outside misperceptions.
"We want you to recognize the common themes," Yager said Thursday. "You need a decent idea of why you're here and who you are."
State Rep. Reynaldo Mesa, R-Garden City, reminded everyone that commitment, including fiscal commitment, was key to moving forward with an organizational structure that could ultimately benefit economic growth all across the region.
"These things are not just going to happen on their own," Mesa said.
The Southwest Kansas Chambers of Commerce has tentatively set up another Southwest Kansas Alliance meeting for 10 a.m. to noon Aug. 18 in Garden City, according to Rozelle Webb, executive director of Liberal Kansas Chamber of Commerce. A location has not yet been determined.
Webb said she was pleased with the attendance Thursday, and she and other southwest Kansas chamber executives are working to get some of the other outlying and smaller communities in the region involved.
"We'll know pretty well by next meeting or two the (level of) commitment from people," Webb said. "As far as the Southwest Kansas Chambers, we're determined to continue with this because it's so important. We can't drop it for any reason."
LIBERAL - All there is in southwest Kansas is dust and wheat.
That belief, according to several who are looking to form a regional economic partnership, is a common and frustrating misperception by outsiders, and a hindrance to economic development across the region.
----------advertisement-----------
The Southwest Kansas Chambers Of Commerce hosted a retreat-like planning and development meeting Thursday at the Rock Island Depot in Liberal to discuss these challenges and begin working toward what they hope will become the Southwest Kansas Alliance.
Several dozen local and state leaders were in attendance for the two-plus hour planning session, including state senators and representatives from southwest Kansas, city and county commissioners, and other business and community leaders from Garden City, Dodge City, Liberal, Ulysses, Hugoton and Scott City, just to name a few.
Paul Joseph, president of the Garden City Area Chamber of Commerce and additionally the leader of the southwest Kansas chambers group, said that today's global economy dictates that communities work together to compete for economic development.
Joseph said that while the idea to organize a regional economic partnership has been discussed for many years, only in the past year or so did the Southwest Kansas Chambers move forward with this plan, especially important in today's competing global market, he said.
"We, as southwest Kansans, must compete or die. No longer are our competitors other (southwest Kansas) communities. ... other regions in the nation or even Mexico," Joseph said. "In today's new world economy, our competitors are the likes of Pakistan, India, China, Brazil."
Many local leaders in attendance agreed that for much of recent history most southwest Kansas communities - especially the three most populated ones in Finney, Ford and Seward counties - have competed aggressively with each other for economic development and other opportunities that better their own communities.
That competing mind-set, many agreed, needs to change to tackle issues that plague most all southwest Kansas communities, such as stagnant job growth and tourism, declining rural populations, and limited transportation.
Increasing communication between the various localities to promote economic development for all, and to come up with a brand that would help identify southwest Kansas to the rest of the world are some of the ideas leaders gathered Thursday agreed are pertinent to regional economic success.
"From Scott City to Liberal, we're very unique. But we can work as a region and still maintain that identity at a local level," Joseph said.
Another desired success of a regional economic group, many agreed Thursday, was to tackle the "brain drain" issues plaguing many rural areas.
Garden City Mayor John Doll said more high-paying and specialized jobs born from greater economic development is essential to "keeping our kids home."
The Southwest Kansas Chambers of Commerce invited Joe Yager, a sole staff member of REAP of South Central Kansas, a regional economic area partnership consisting of nearly 40 cities and counties in and around Wichita, to facilitate Thursday's convention.
REAP's stated purpose is to guide state and national actions that affect economic development in the region by adopting joint actions among member governments that enhance their regional economy, and chamber leaders said they want to see the idea modeled in southwest Kansas.
Yager told southwest Kansas leaders that by beginning to identify their purpose and prioritizing regional opportunities, the group could begin branding themselves as a region and combat outside misperceptions.
"We want you to recognize the common themes," Yager said Thursday. "You need a decent idea of why you're here and who you are."
State Rep. Reynaldo Mesa, R-Garden City, reminded everyone that commitment, including fiscal commitment, was key to moving forward with an organizational structure that could ultimately benefit economic growth all across the region.
"These things are not just going to happen on their own," Mesa said.
The Southwest Kansas Chambers of Commerce has tentatively set up another Southwest Kansas Alliance meeting for 10 a.m. to noon Aug. 18 in Garden City, according to Rozelle Webb, executive director of Liberal Kansas Chamber of Commerce. A location has not yet been determined.
Webb said she was pleased with the attendance Thursday, and she and other southwest Kansas chamber executives are working to get some of the other outlying and smaller communities in the region involved.
"We'll know pretty well by next meeting or two the (level of) commitment from people," Webb said. "As far as the Southwest Kansas Chambers, we're determined to continue with this because it's so important. We can't drop it for any reason."
Tuesday, June 21, 2011
Giving Cobb an EDGE: Chamber aims to boost economic development through program
by Katy Ruth Camp
krcamp@mdjonline.com
MARIETTA — What’s in it for me?
That’s the question the Cobb Chamber of Commerce aims to answer with its new, six-month economic development program, Cobb’s Competitive EDGE.
The Chamber’s CEO, chief operating officer and three of the county’s top business executives visited the Journal on Tuesday to unveil the initiative they say will assist in attracting and keeping businesses — and jobs — in Cobb.
“We want to take a leadership role and be sure this community attracts jobs and invests in the future,” said Chamber President and CEO David Connell. “Jobs and investments are the best ways for a community to grow, from a prosperity standpoint.”
The Chamber hired Atlanta-based Market Street Services to conduct the program, called Cobb’s Competitive EDGE — or Economic Development for a Growing Economy — in June. Connell said the program will likely cost $180,000 to $200,000, but no taxpayer money will be used to fund the initiative. The program will involve a four-part process, almost identical to Gwinnett County’s recent initiative, Partnership Gwinnett, said Demming Bass, the Chamber’s chief operating officer.
Bass, who was hired by the Cobb Chamber in December, was the key figure in the Gwinnett initiative launched in 2006 and implemented in 2007 when he served as the Gwinnett Chamber of Commerce’s vice president of marketing and public policy from April 2005 to December.
But this program will be bigger and better than Gwinnett’s, Bass said, as Cobb has more to offer than the county it is most often compared to.
“Cobb has phenomenal assets in place already. The problem is, I don’t think we’ve done a good job of telling our story,” Bass said. “Even internally, within our own county. For example — I had a conversation with the CEO of the (Cumberland area-based) Weather Channel, and he said they don’t have a problem recruiting anchors, but most of their hires are software engineers. He said they struggle with finding those workers but get a lot from Georgia Tech. So I asked him about (Southern Polytechnic State University), and he wasn’t that familiar with their programs, so now we’re putting them in touch. So if people locally don’t even know about the assets we have here in Cobb, then we need to do a better job of marketing both internally and externally.”
The four phases include competitive assessment, target cluster analysis, economic and community development strategy, and economic and community development implementation plan. The competitive assessment phase will include one-on-one interviews with major public figures such as former Gov. Roy Barnes and current Attorney General Sam Olens, focus groups with targeted business groups such as young professionals, public surveys and data collection. The survey can be filled out online now through July 11 by anyone who wishes to take it, Connell said. That survey can be accessed at www.SurveyMonkey.com/CobbEDGE.
Some of the data that will be used and analyzed could include demographic information and recent business trends in Cobb, Bass said. This phase will also include comparisons to three other communities being identified as most similar to Cobb, such as Gwinnett County; Wake County, N.C. — which Bass said is fast growing and known as the “research triangle” for its higher education similarities — and Collin County, Texas — which is just outside of Dallas and has similar business corridors, Bass said.
The results of the first phase of analysis will be revealed and available to the public by the end of August, Bass said.
The second phase includes an analysis of the most important existing and the most promising niche industries for the county to focus its marketing, such as health care and aeronautics. Once those are identified, marketing Cobb to potential businesses becomes easier and more feasible, Connell said. This will conclude and be revealed by the end of September, Bass said.
The third phase will involve the program’s steering committee — made up of 39 of Cobb’s top business, education, civic and political leaders — taking the data that has been collected and developing a five-year economic and community development strategy, which will serve as the blueprint for Cobb’s immediate and long-term goals, Bass said. This will be presented to the public sometime between October and December, Bass said.
The fourth and final phase involves the committee’s creation of an implementation plan that will enable the Chamber and government leaders to “hit the ground running” with the strategy’s goals, Bass said.
That plan will likely focus on how to generate high-wage job growth in the county, said steering committee member Heath Garrett, a Marietta attorney. And Menefee and Styf agreed those high-wage jobs are necessary not only to keep their workforces strong, but also to generate revenues within their companies as those employees will be able to pay for their own health care, instead of requiring subsidies.
“The purpose is to get everybody on same page — retaining and recruiting high-wage jobs,” Garrett said. “If we can get and keep those jobs here, the county will prosper, people will be healthier and Cobb will be the kind of community companies around the world want to come to.”
krcamp@mdjonline.com
MARIETTA — What’s in it for me?
That’s the question the Cobb Chamber of Commerce aims to answer with its new, six-month economic development program, Cobb’s Competitive EDGE.
The Chamber’s CEO, chief operating officer and three of the county’s top business executives visited the Journal on Tuesday to unveil the initiative they say will assist in attracting and keeping businesses — and jobs — in Cobb.
“We want to take a leadership role and be sure this community attracts jobs and invests in the future,” said Chamber President and CEO David Connell. “Jobs and investments are the best ways for a community to grow, from a prosperity standpoint.”
The Chamber hired Atlanta-based Market Street Services to conduct the program, called Cobb’s Competitive EDGE — or Economic Development for a Growing Economy — in June. Connell said the program will likely cost $180,000 to $200,000, but no taxpayer money will be used to fund the initiative. The program will involve a four-part process, almost identical to Gwinnett County’s recent initiative, Partnership Gwinnett, said Demming Bass, the Chamber’s chief operating officer.
Bass, who was hired by the Cobb Chamber in December, was the key figure in the Gwinnett initiative launched in 2006 and implemented in 2007 when he served as the Gwinnett Chamber of Commerce’s vice president of marketing and public policy from April 2005 to December.
But this program will be bigger and better than Gwinnett’s, Bass said, as Cobb has more to offer than the county it is most often compared to.
“Cobb has phenomenal assets in place already. The problem is, I don’t think we’ve done a good job of telling our story,” Bass said. “Even internally, within our own county. For example — I had a conversation with the CEO of the (Cumberland area-based) Weather Channel, and he said they don’t have a problem recruiting anchors, but most of their hires are software engineers. He said they struggle with finding those workers but get a lot from Georgia Tech. So I asked him about (Southern Polytechnic State University), and he wasn’t that familiar with their programs, so now we’re putting them in touch. So if people locally don’t even know about the assets we have here in Cobb, then we need to do a better job of marketing both internally and externally.”
The four phases include competitive assessment, target cluster analysis, economic and community development strategy, and economic and community development implementation plan. The competitive assessment phase will include one-on-one interviews with major public figures such as former Gov. Roy Barnes and current Attorney General Sam Olens, focus groups with targeted business groups such as young professionals, public surveys and data collection. The survey can be filled out online now through July 11 by anyone who wishes to take it, Connell said. That survey can be accessed at www.SurveyMonkey.com/CobbEDGE.
Some of the data that will be used and analyzed could include demographic information and recent business trends in Cobb, Bass said. This phase will also include comparisons to three other communities being identified as most similar to Cobb, such as Gwinnett County; Wake County, N.C. — which Bass said is fast growing and known as the “research triangle” for its higher education similarities — and Collin County, Texas — which is just outside of Dallas and has similar business corridors, Bass said.
The results of the first phase of analysis will be revealed and available to the public by the end of August, Bass said.
The second phase includes an analysis of the most important existing and the most promising niche industries for the county to focus its marketing, such as health care and aeronautics. Once those are identified, marketing Cobb to potential businesses becomes easier and more feasible, Connell said. This will conclude and be revealed by the end of September, Bass said.
The third phase will involve the program’s steering committee — made up of 39 of Cobb’s top business, education, civic and political leaders — taking the data that has been collected and developing a five-year economic and community development strategy, which will serve as the blueprint for Cobb’s immediate and long-term goals, Bass said. This will be presented to the public sometime between October and December, Bass said.
The fourth and final phase involves the committee’s creation of an implementation plan that will enable the Chamber and government leaders to “hit the ground running” with the strategy’s goals, Bass said.
That plan will likely focus on how to generate high-wage job growth in the county, said steering committee member Heath Garrett, a Marietta attorney. And Menefee and Styf agreed those high-wage jobs are necessary not only to keep their workforces strong, but also to generate revenues within their companies as those employees will be able to pay for their own health care, instead of requiring subsidies.
“The purpose is to get everybody on same page — retaining and recruiting high-wage jobs,” Garrett said. “If we can get and keep those jobs here, the county will prosper, people will be healthier and Cobb will be the kind of community companies around the world want to come to.”
Sunday, June 19, 2011
After a year, impact of Whirlpool closing is mixed
By Susan Orr
EVANSVILLE — It's been a full year since Whirlpool's Evansville refrigerator production reached the end of the line, putting more than 1,000 people out of work.
In August 2009, the manufacturer announced plans to shut down the Evansville plant and move those jobs to a plant in Mexico. In March 2010, the plant eliminated its second shift, and on June 26 production ceased.
The plant shutdown cost some 1,200 employees, most of them hourly production workers, their jobs and brought uncertainty to the Evansville-area economy.
"When you take 1,000 manufacturing jobs out of any market — I don't care how large your market is — there's going to be some impact," said Greg Wathen, president and chief executive officer of the Economic Development Coalition of Southwest Indiana.
Whirlpool still maintains its Evansville refrigeration design center where 300 people — most of them engineers — work on designing new products.
Last year, the best anyone could offer was predictions on the economic impact of Whirlpool ending production. The economic impact is still difficult to pin down. Some parties were hurt significantly, others not at all. Some impacts are yet to be determined, and others will likely never be fully known.
The shutdown happened during a time of great challenges for the housing market, the automotive industry and other segments of the national economy. All of those factors affect each other, making it hard to quantify the exact local impact of the plant closure. "They (Whirlpool) contributed to a downturn in our economy, but it's difficult to say 'this' contributed to 'what,'" Wathen said. "There were just so many things going on at the same time."
Whirlpool declined to comment for this story other than to provide brief factual information: Whirlpool has nine U.S. plants with approximately 23,500 employees, including about 17,000 manufacturing employees; the company expects to retain its design center in Evansville.
Employment
What happened to that group of workers isn't easy to determine. Unemployment statistics from the U.S. Bureau of Labor Statistics don't provide much clarity.
Vanderburgh County had 8,321 unemployed residents in March 2010. In April — the earliest that the first wave of displaced workers would show up in the numbers — the number of unemployed dropped to 7,904. In July — when others who lost their jobs would have started showing up in the numbers — that number was 8,256.
There are numerous reasons why unemployment numbers don't line up exactly with reality. The numbers are based on sampling and surveys, not an actual count of the unemployed.
"I wouldn't put too much stock in these numbers reflecting all the unemployed workers," said Sudesh Mujumdar, chairman of the economics and marketing department at the University of Southern Indiana.
"You won't get every person who's unemployed showing up in that count."
Another factor, Mujumdar said, is all jobs are not created equal. He's talked to several people who took new jobs paying significantly less than they earned at Whirlpool.
This, Mujumdar said, echoes a national trend he described as the "hollowing-out of the middle class" — as people lose middle-income jobs, they may only be able to find lower paying jobs, moving them down the socio-economic scale.
"These are the things that get masked when looking only at the (unemployment) rates," Mujumdar said. "It has big implications for our social fabric."
Unemployment numbers also don't account for displaced workers who chose to retire or attend school full-time and are thus not currently looking for work. A significant portion of the Whirlpool workers fall into one of these categories.
Because their jobs were lost to foreign competition, the Whirlpool workers were eligible to receive Trade Adjustment Assistance. The program, popularly known as TAA, is a federal program that provides financial assistance for things like training, education and job-search expenses. The goal is to get displaced workers back into the workforce.
About 400 former Whirlpool workers are taking part in the TAA program and are enrolled in a training, certification or degree program, said Valerie Kroeger, communications director for the Indiana Department of Workforce Development.
Sandie Nelson, director of workforce and economic development at Ivy Tech Community College, said that during the recent spring semester, the school had 183 students who were receiving TAA funding. The majority of those were former Whirlpool workers, Nelson said.
Other Whirlpool workers attend Ivy Tech using Pell Grant money, a federal program provides funds to low-income college students.
Ivy Tech also offered eight-week sessions in basic math, English, computer skills and leadership training to 190 displaced workers, most of them through Whirlpool.
Some former Whirlpool workers may yet enroll in school, Nelson said — she's holding an information session in July for displaced workers interested in short-term training opportunities.
And there are certainly a number of students who enrolled at another school besides Ivy Tech or dropped out, Nelson said.
"It is hard data to hold down and grab onto."
But as a whole, Nelson said, the former Whirlpool workers have proven to be "very dedicated students" at Ivy Tech.
Many formed study groups and met to do schoolwork on campus in between classes.
"They came in the morning and would stay all day. They treated it like it was a job," Nelson said.
Others chose to leave the workforce altogether, Kroeger said.
Because Whirlpool's workforce tended to be older, Kroeger said, "They had a really high percentage who could retire."
Suppliers impacted differently
On one end of the scale is Fortis Plastics, which shut down its injection molding plant in Henderson, Ky. because of Whirlpool's departure. The Fortis closure in November, cost 60 employees their jobs.
Fortis could not be reached for this story. But in an interview last fall with The Gleaner, Henderson's daily newspaper, Fortis President and Chief Executive Officer Joe Mallak said Whirlpool represented a large percentage of Fortis' business, and after the local Whirlpool closure the company couldn't find enough new business to make up the difference.
Another local Whirlpool supplier had an entirely different outcome.
Evansville-based Master Manufacturing, which has 40 employees, makes parts for the appliance and the automotive industries.
Master Manufacturing is doing more business than ever with the appliance maker.
"We've actually grown our business with Whirlpool over the past year or two," said Tim Chancellor, vice president and general manager at Master Manufacturing.Whirlpool, Chancellor said, makes up about 25 to 30 percent of his company's business.
"They were our biggest customer, and they still are," Chancellor said.
The Evansville plant closure wasn't a big issue for Master Manufacturing, Chancellor said, because his company supplies Whirlpool plants in numerous locations, including Mexico.
"There was a time 20 years ago when it would have been maybe pretty devastating because we were pretty exclusive with this (Evansville) plant," Chancellor said. "We had diversified, even within Whirlpool, over the last four or five years."
Much of that diversification push, Chancellor said, came at the direction of company president and owner John Gannon.
Also working in Master Manufacturing's favor, Chancellor said, is that Whirlpool retained its product design center here.
If Whirlpool comes up with a new refrigerator design, that might affect the type of parts it needs from Master Manufacturing. So it's very convenient for the two companies to be located near each other.
"It's hard to beat a face-to-face meeting, especially when you're engineering something," Chancellor said.
Still awaiting the tax impact
Whirlpool's plant shutdown will also affect the tax rolls, though the full impact hasn't been seen.
Last year, Vanderburgh County Treasurer Rick Davis prepared a report for the Vanderburgh County Council estimating the tax impact of the Whirlpool plant closure.
Tax revenue from a manufacturing operation includes property taxes on a company's building and land; personal property taxes on the equipment inside the building; and county option income tax revenues, or COIT, paid by employees based on their earnings.
Whirlpool has shipped out or sold much of the equipment that had been in the plant, which reduces the taxable value of its personal property at the Evansville facility.
Davis wrote that in a "worst-case scenario" of all the plant's property being shipped out and all former Whirlpool workers remaining jobless, "Vanderburgh County taxpayers will have to make up $1.9 million in combined COIT and personal property tax totals due to Whirlpool's closing."
Because of the lag time built into the tax-collection schedule, Davis wrote, the full impact of the closure won't be felt until 2013.
In a recent phone interview, Davis said that worst-case scenario won't come to pass, because many of those workers have found other jobs and are paying COIT taxes on those earnings.
But, Davis said, if those jobs are lower paying than the Whirlpool jobs, the county receives less tax revenue than before.
Although the full tax implications of the closure are not yet evident, Davis said, overall "it was not a good thing."
Reasons for optimism
In April, The Kunkel Group announced it paid $2.9 million for 1.2 million square feet of the former Whirlpool plant, the majority of the property.
Whirlpool retained ownership of a portion of the property, and it is leasing back some of the space that Kunkel purchased.
In May, Evansville-based CrossPoint Polymer Technologies, a plastics company founded last year, announced it would lease about 110,000 square feet of the former Whirlpool plant from Kunkel.
Chuck Harper, vice president of The Kunkel Group Realty, said additional tenant announcements are pending soon.
"We have other tenants but we're not ready to make those announcements yet," Harper said.
The goal is to fill the space with manufacturing and warehousing tenants, Harper said.
Harper said the property was appealing to Kunkel because it's in good physical condition, in a desirable location near the Evansville Regional Airport and was available for a good price.
Also, Harper said, Kunkel has experience in buying existing buildings and repurposing them for new use. The company did this with the former Welborn Hospital in Downtown Evansville, which now houses office space and the Riverwalk Communities assisted living center; two former Downtown department stores that were converted to condominiums; and the old Knights of Columbus facility Downtown, which will be an independent living facility.
"Our ethos is to take properties that for whatever reason are not in use any more and try to put them back on the productive tax rolls," Harper said.
Economic study
Work is nearing completion on a regional economic study made possible by the Whirlpool plant closure.
Soon after the plant shutdown, the city of Evansville announced that it and the Evansville Regional Airport intended to purchase and develop the site into a product-design park. The Economic Development Coalition of Southwest Indiana secured a $231,482 federal grant to help fund those redevelopment plans, but when those plans fell through Wathen's group received permission to use that money for a study of the region's economic assets and growth possibilities.
Wathen said the study will likely be made public in August.
One major focus of the study, Wathen said, is looking how different parts of the regional economy could fit together. For instance, if a certain industry shows potential for local growth, are there sufficient resources for training new workers in that industry?
The study's findings, Wathen said could help bridge the skills gap that displaced workers may face in trying to find a new job.
"In this area, we still have to work on having better alignment between the opportunities that exist," Wathen said.
EVANSVILLE — It's been a full year since Whirlpool's Evansville refrigerator production reached the end of the line, putting more than 1,000 people out of work.
In August 2009, the manufacturer announced plans to shut down the Evansville plant and move those jobs to a plant in Mexico. In March 2010, the plant eliminated its second shift, and on June 26 production ceased.
The plant shutdown cost some 1,200 employees, most of them hourly production workers, their jobs and brought uncertainty to the Evansville-area economy.
"When you take 1,000 manufacturing jobs out of any market — I don't care how large your market is — there's going to be some impact," said Greg Wathen, president and chief executive officer of the Economic Development Coalition of Southwest Indiana.
Whirlpool still maintains its Evansville refrigeration design center where 300 people — most of them engineers — work on designing new products.
Last year, the best anyone could offer was predictions on the economic impact of Whirlpool ending production. The economic impact is still difficult to pin down. Some parties were hurt significantly, others not at all. Some impacts are yet to be determined, and others will likely never be fully known.
The shutdown happened during a time of great challenges for the housing market, the automotive industry and other segments of the national economy. All of those factors affect each other, making it hard to quantify the exact local impact of the plant closure. "They (Whirlpool) contributed to a downturn in our economy, but it's difficult to say 'this' contributed to 'what,'" Wathen said. "There were just so many things going on at the same time."
Whirlpool declined to comment for this story other than to provide brief factual information: Whirlpool has nine U.S. plants with approximately 23,500 employees, including about 17,000 manufacturing employees; the company expects to retain its design center in Evansville.
Employment
What happened to that group of workers isn't easy to determine. Unemployment statistics from the U.S. Bureau of Labor Statistics don't provide much clarity.
Vanderburgh County had 8,321 unemployed residents in March 2010. In April — the earliest that the first wave of displaced workers would show up in the numbers — the number of unemployed dropped to 7,904. In July — when others who lost their jobs would have started showing up in the numbers — that number was 8,256.
There are numerous reasons why unemployment numbers don't line up exactly with reality. The numbers are based on sampling and surveys, not an actual count of the unemployed.
"I wouldn't put too much stock in these numbers reflecting all the unemployed workers," said Sudesh Mujumdar, chairman of the economics and marketing department at the University of Southern Indiana.
"You won't get every person who's unemployed showing up in that count."
Another factor, Mujumdar said, is all jobs are not created equal. He's talked to several people who took new jobs paying significantly less than they earned at Whirlpool.
This, Mujumdar said, echoes a national trend he described as the "hollowing-out of the middle class" — as people lose middle-income jobs, they may only be able to find lower paying jobs, moving them down the socio-economic scale.
"These are the things that get masked when looking only at the (unemployment) rates," Mujumdar said. "It has big implications for our social fabric."
Unemployment numbers also don't account for displaced workers who chose to retire or attend school full-time and are thus not currently looking for work. A significant portion of the Whirlpool workers fall into one of these categories.
Because their jobs were lost to foreign competition, the Whirlpool workers were eligible to receive Trade Adjustment Assistance. The program, popularly known as TAA, is a federal program that provides financial assistance for things like training, education and job-search expenses. The goal is to get displaced workers back into the workforce.
About 400 former Whirlpool workers are taking part in the TAA program and are enrolled in a training, certification or degree program, said Valerie Kroeger, communications director for the Indiana Department of Workforce Development.
Sandie Nelson, director of workforce and economic development at Ivy Tech Community College, said that during the recent spring semester, the school had 183 students who were receiving TAA funding. The majority of those were former Whirlpool workers, Nelson said.
Other Whirlpool workers attend Ivy Tech using Pell Grant money, a federal program provides funds to low-income college students.
Ivy Tech also offered eight-week sessions in basic math, English, computer skills and leadership training to 190 displaced workers, most of them through Whirlpool.
Some former Whirlpool workers may yet enroll in school, Nelson said — she's holding an information session in July for displaced workers interested in short-term training opportunities.
And there are certainly a number of students who enrolled at another school besides Ivy Tech or dropped out, Nelson said.
"It is hard data to hold down and grab onto."
But as a whole, Nelson said, the former Whirlpool workers have proven to be "very dedicated students" at Ivy Tech.
Many formed study groups and met to do schoolwork on campus in between classes.
"They came in the morning and would stay all day. They treated it like it was a job," Nelson said.
Others chose to leave the workforce altogether, Kroeger said.
Because Whirlpool's workforce tended to be older, Kroeger said, "They had a really high percentage who could retire."
Suppliers impacted differently
On one end of the scale is Fortis Plastics, which shut down its injection molding plant in Henderson, Ky. because of Whirlpool's departure. The Fortis closure in November, cost 60 employees their jobs.
Fortis could not be reached for this story. But in an interview last fall with The Gleaner, Henderson's daily newspaper, Fortis President and Chief Executive Officer Joe Mallak said Whirlpool represented a large percentage of Fortis' business, and after the local Whirlpool closure the company couldn't find enough new business to make up the difference.
Another local Whirlpool supplier had an entirely different outcome.
Evansville-based Master Manufacturing, which has 40 employees, makes parts for the appliance and the automotive industries.
Master Manufacturing is doing more business than ever with the appliance maker.
"We've actually grown our business with Whirlpool over the past year or two," said Tim Chancellor, vice president and general manager at Master Manufacturing.Whirlpool, Chancellor said, makes up about 25 to 30 percent of his company's business.
"They were our biggest customer, and they still are," Chancellor said.
The Evansville plant closure wasn't a big issue for Master Manufacturing, Chancellor said, because his company supplies Whirlpool plants in numerous locations, including Mexico.
"There was a time 20 years ago when it would have been maybe pretty devastating because we were pretty exclusive with this (Evansville) plant," Chancellor said. "We had diversified, even within Whirlpool, over the last four or five years."
Much of that diversification push, Chancellor said, came at the direction of company president and owner John Gannon.
Also working in Master Manufacturing's favor, Chancellor said, is that Whirlpool retained its product design center here.
If Whirlpool comes up with a new refrigerator design, that might affect the type of parts it needs from Master Manufacturing. So it's very convenient for the two companies to be located near each other.
"It's hard to beat a face-to-face meeting, especially when you're engineering something," Chancellor said.
Still awaiting the tax impact
Whirlpool's plant shutdown will also affect the tax rolls, though the full impact hasn't been seen.
Last year, Vanderburgh County Treasurer Rick Davis prepared a report for the Vanderburgh County Council estimating the tax impact of the Whirlpool plant closure.
Tax revenue from a manufacturing operation includes property taxes on a company's building and land; personal property taxes on the equipment inside the building; and county option income tax revenues, or COIT, paid by employees based on their earnings.
Whirlpool has shipped out or sold much of the equipment that had been in the plant, which reduces the taxable value of its personal property at the Evansville facility.
Davis wrote that in a "worst-case scenario" of all the plant's property being shipped out and all former Whirlpool workers remaining jobless, "Vanderburgh County taxpayers will have to make up $1.9 million in combined COIT and personal property tax totals due to Whirlpool's closing."
Because of the lag time built into the tax-collection schedule, Davis wrote, the full impact of the closure won't be felt until 2013.
In a recent phone interview, Davis said that worst-case scenario won't come to pass, because many of those workers have found other jobs and are paying COIT taxes on those earnings.
But, Davis said, if those jobs are lower paying than the Whirlpool jobs, the county receives less tax revenue than before.
Although the full tax implications of the closure are not yet evident, Davis said, overall "it was not a good thing."
Reasons for optimism
In April, The Kunkel Group announced it paid $2.9 million for 1.2 million square feet of the former Whirlpool plant, the majority of the property.
Whirlpool retained ownership of a portion of the property, and it is leasing back some of the space that Kunkel purchased.
In May, Evansville-based CrossPoint Polymer Technologies, a plastics company founded last year, announced it would lease about 110,000 square feet of the former Whirlpool plant from Kunkel.
Chuck Harper, vice president of The Kunkel Group Realty, said additional tenant announcements are pending soon.
"We have other tenants but we're not ready to make those announcements yet," Harper said.
The goal is to fill the space with manufacturing and warehousing tenants, Harper said.
Harper said the property was appealing to Kunkel because it's in good physical condition, in a desirable location near the Evansville Regional Airport and was available for a good price.
Also, Harper said, Kunkel has experience in buying existing buildings and repurposing them for new use. The company did this with the former Welborn Hospital in Downtown Evansville, which now houses office space and the Riverwalk Communities assisted living center; two former Downtown department stores that were converted to condominiums; and the old Knights of Columbus facility Downtown, which will be an independent living facility.
"Our ethos is to take properties that for whatever reason are not in use any more and try to put them back on the productive tax rolls," Harper said.
Economic study
Work is nearing completion on a regional economic study made possible by the Whirlpool plant closure.
Soon after the plant shutdown, the city of Evansville announced that it and the Evansville Regional Airport intended to purchase and develop the site into a product-design park. The Economic Development Coalition of Southwest Indiana secured a $231,482 federal grant to help fund those redevelopment plans, but when those plans fell through Wathen's group received permission to use that money for a study of the region's economic assets and growth possibilities.
Wathen said the study will likely be made public in August.
One major focus of the study, Wathen said, is looking how different parts of the regional economy could fit together. For instance, if a certain industry shows potential for local growth, are there sufficient resources for training new workers in that industry?
The study's findings, Wathen said could help bridge the skills gap that displaced workers may face in trying to find a new job.
"In this area, we still have to work on having better alignment between the opportunities that exist," Wathen said.
Saturday, June 18, 2011
Further cuts would damage GYEDC, Engel says
BY CHRIS McDANIEL - SUN STAFF WRITER
Already facing a budget reduction of $38,000, a further cut in funding from the city of Yuma would be damaging to the Greater Yuma Economic Development Corporation, said GYEDC President and CEO Julie Engel.
“It will mean we have to reduce our marketing and we will have to reduce our staff by one person, and this is an awful time to reduce our marketing efforts.”
GYEDC helps local businesses network abroad, and offers national and international companies data and information about local economic conditions and opportunities.
The city of Yuma has proposed providing GYEDC with $200,000 for fiscal year 2011-2012 — short of the $247,500 GYEDC projected receiving.
The city council is considering the possibility of providing the amount requested by GYEDC, but would have to approve that with a majority vote. The Council is scheduled to discuss the matter July 6.
Yuma County has already adopted a budget which reduces funding to GYEDC by $3,000, while the city of San Luis has adopted a budget which reduces funding by $35,000, Engel said.
If the Yuma City Council does not approve the funding increase, the GYEDC would have to make due with a budget which is $85,500 smaller than last year.
City of Yuma Administrator Greg Wilkinson said the reduction isn't a slight against GYEDC, but rather matches what other municipalities have done with their budgets.
“I think the biggest thing is trying to share the cost,” he explained. “GYEDC is a regional entity, and we wanted to make sure there was a good cost share between all the different agencies that supported it.”
The reduction was an important step to keep the budget balanced, Wilkinson said.
“GYEDC does a good job, but obviously there is a tight budget for everybody and we are trying to look at a better balance for what all the different entities were contributing.”
Over the last three years, GYEDC has gone from a $900,000 yearly budget to a $500,000 yearly budget, Engel said.
“We are barely hanging on now, and every time they chip a little bit more, it affects us immediately.”
Several prominent business professionals have voiced their support for GYEDC, and have called on the city council to restore funding.
“You've really got to have somebody out there churning the market, making sure Yuma is being exposed, and that you are not missing any leads and that the leads that are there are being handled,” said Thomas J. Pancrazi, owner of A.T. Pancrazi Real Estate. “GYEDC is doing a very good job of handling that.”
Craig Williams, Yuma International Airport manager, said a reduction in funding could undermine the success of business at the airport in the future.
“From our perspective, that would place in jeopardy the economic development efforts that we have been working on for quite a long time.”
GYEDC has played a major part in bringing millions of dollars in business to the airport through new projects, including the defense contractor complex which will house engineers and scientists who will work on the F-35 Joint Strike Fighter when it arrives at Marine Corps Air Station Yuma in a few years, he added.
“The defense contractor complex — you look at the tenants we are talking about and these are large global corporations that are going to bring lots of jobs into the city.”
Investing in GYEDC is investing in the future, Williams said.
“We are not working on short-term problems, we are working on economic development that is going to bring jobs into the city for our kids over the long haul.”
The defense contractor complex will bring invaluable jobs to the hard-hit construction industry in Yuma, said Nate Schug, president of Westmoor Electrical.
“GYEDC put this thing together and we've been successful and a lot of money has been awarded in contracts here. Believe me, to people in my business that means a lot. This is a successful thing for the city of Yuma, and again GYEDC has been instrumental in it. It is going to bring hope, it is going to bring jobs, it's going to bring money to a lot of people in Yuma.”
With the recent cuts in funding made to the Arizona Health Care Cost Containment System (AHCCCS), Pat Walz, president and CEO of YRMC, said GYEDC is essential to the hospital.
“The hospital itself... has seen a reduction for the next fiscal year of about $17 million in revenue.”
The goal of GYEDC is to bring new jobs to Yuma, which indirectly helps YRMC, Walz added.
“It brings business people who are getting paid wages and have health care benefits to help obviate some of the cuts we get from the government.”
Chris McDaniel can be reached at cmcdaniel@yumasun.com or 539-6849.
Already facing a budget reduction of $38,000, a further cut in funding from the city of Yuma would be damaging to the Greater Yuma Economic Development Corporation, said GYEDC President and CEO Julie Engel.
“It will mean we have to reduce our marketing and we will have to reduce our staff by one person, and this is an awful time to reduce our marketing efforts.”
GYEDC helps local businesses network abroad, and offers national and international companies data and information about local economic conditions and opportunities.
The city of Yuma has proposed providing GYEDC with $200,000 for fiscal year 2011-2012 — short of the $247,500 GYEDC projected receiving.
The city council is considering the possibility of providing the amount requested by GYEDC, but would have to approve that with a majority vote. The Council is scheduled to discuss the matter July 6.
Yuma County has already adopted a budget which reduces funding to GYEDC by $3,000, while the city of San Luis has adopted a budget which reduces funding by $35,000, Engel said.
If the Yuma City Council does not approve the funding increase, the GYEDC would have to make due with a budget which is $85,500 smaller than last year.
City of Yuma Administrator Greg Wilkinson said the reduction isn't a slight against GYEDC, but rather matches what other municipalities have done with their budgets.
“I think the biggest thing is trying to share the cost,” he explained. “GYEDC is a regional entity, and we wanted to make sure there was a good cost share between all the different agencies that supported it.”
The reduction was an important step to keep the budget balanced, Wilkinson said.
“GYEDC does a good job, but obviously there is a tight budget for everybody and we are trying to look at a better balance for what all the different entities were contributing.”
Over the last three years, GYEDC has gone from a $900,000 yearly budget to a $500,000 yearly budget, Engel said.
“We are barely hanging on now, and every time they chip a little bit more, it affects us immediately.”
Several prominent business professionals have voiced their support for GYEDC, and have called on the city council to restore funding.
“You've really got to have somebody out there churning the market, making sure Yuma is being exposed, and that you are not missing any leads and that the leads that are there are being handled,” said Thomas J. Pancrazi, owner of A.T. Pancrazi Real Estate. “GYEDC is doing a very good job of handling that.”
Craig Williams, Yuma International Airport manager, said a reduction in funding could undermine the success of business at the airport in the future.
“From our perspective, that would place in jeopardy the economic development efforts that we have been working on for quite a long time.”
GYEDC has played a major part in bringing millions of dollars in business to the airport through new projects, including the defense contractor complex which will house engineers and scientists who will work on the F-35 Joint Strike Fighter when it arrives at Marine Corps Air Station Yuma in a few years, he added.
“The defense contractor complex — you look at the tenants we are talking about and these are large global corporations that are going to bring lots of jobs into the city.”
Investing in GYEDC is investing in the future, Williams said.
“We are not working on short-term problems, we are working on economic development that is going to bring jobs into the city for our kids over the long haul.”
The defense contractor complex will bring invaluable jobs to the hard-hit construction industry in Yuma, said Nate Schug, president of Westmoor Electrical.
“GYEDC put this thing together and we've been successful and a lot of money has been awarded in contracts here. Believe me, to people in my business that means a lot. This is a successful thing for the city of Yuma, and again GYEDC has been instrumental in it. It is going to bring hope, it is going to bring jobs, it's going to bring money to a lot of people in Yuma.”
With the recent cuts in funding made to the Arizona Health Care Cost Containment System (AHCCCS), Pat Walz, president and CEO of YRMC, said GYEDC is essential to the hospital.
“The hospital itself... has seen a reduction for the next fiscal year of about $17 million in revenue.”
The goal of GYEDC is to bring new jobs to Yuma, which indirectly helps YRMC, Walz added.
“It brings business people who are getting paid wages and have health care benefits to help obviate some of the cuts we get from the government.”
Chris McDaniel can be reached at cmcdaniel@yumasun.com or 539-6849.
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