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The Importance of Community Strategic Planning in the Location Decision

As the surge in corporate relocation continues, sophisticated organizations are demanding a relatively new — but critical — component for streamlining their site selection process and increasing the likelihood of success.

Q4 2017
Communities across the country are clamoring to vie for corporate relocation and expansion projects. Many come to the negotiating table boasting generous incentives, but incentives alone cannot guarantee a relocation or expansion project will work out as a company hopes. To truly determine whether a community will be a good fit for an existing expansion or a new location project, corporations should require local and regional economic development organizations (EDOs) to provide community strategic plans that identify their main priorities and goals and lay out a road map for achieving them.

Community Strategic Plans Take Center Stage
With the competition for expansion and relocation projects heating up, EDOs increasingly are seeing the value of formulating community strategic plans to entice companies to consider their areas. Strategic plans show that an EDO recognizes the need to do things differently than they were done in the past — the need, in other words, to become efficient and progressive in order to compete in the global marketplace. A strategic plan should provide the foundation for a community’s realistic and cost-effective economic development efforts and reinforces its commitment to achieving and maintaining those efforts. It also is evidence of an EDO’s ability to collaborate and develop consensus to make sound fiscal decisions and enhance community image and branding.

Expecting an EDO to have a strategic plan might not seem important to some companies, but the lack of such a plan can endanger the future of an expansion or relocation project that might have unique workforce needs. For example, incentive packages typically include clawbacks that penalize a company if it fails to live up to its job creation promises. But if a community does not have an adequate pipeline of workers, the best-intentioned business will have problems adding employees. It’s one thing for an EDO to say it will supply the workers a company needs; it’s another for the EDO to have an actual plan for doing so.

Moreover, community strategic plans can help to expedite the site selection process. EDOs usually put their strategic plans online, so a company can use weak or incompatible plans (or the absence of plans) to weed out locations without even putting out feelers to their EDOs.

What to Look for in a Community Strategic Plan
An effective strategic plan will address several essential elements of economic development, including:
"If a community does not currently have a pipeline of workers, its strategic plan must include initiatives to develop one. "
  • Workforce development — From a company’s perspective, perhaps no element is as vital these days as workforce development. Companies are struggling to find locations with the workforces they require, largely because many of the jobs being “reshored” are highly automated and require different skill sets than associated with earlier manufacturing jobs. Companies are looking for employees with experience in advanced manufacturing, robotics, and computer-aided design (CAD), but many communities fail to bring key business and educational leaders together to discuss each other’s needs and craft solutions.

    If a community does not currently have a pipeline of workers, its strategic plan must include initiatives to develop one. For example, a community in northwest Indiana learned that one of its top employers was importing 60 percent of its labor from other areas. The community tackled the issue by developing a construction trade apprenticeship program for local high school students interested in trade industry careers and by collaborating with vocational schools to develop and implement trade and logistics programming for residents seeking specialized technical careers.
  • Business attraction and retention — Does the community have aggressive plans for attracting new businesses and holding onto (and encouraging expansion by) existing businesses? For instance, the community’s strategic plan might include development of a new business park that would satisfy advanced manufacturing businesses’ requirements. It also could call for a cluster analysis of certain industries to find opportunities to appeal to companies connected by vertical and horizontal supply chains.

    In addition, the plan should include action items related to making annual site visits, providing businesses with the necessary support to thrive, and connecting companies, government, and residents. Concrete plans for such initiatives are a promising sign that an EDO has a documented road map to meet the needs of companies interested in its community.
  • Integration with community development — The strategic plan should demonstrate that the community recognizes the vital interplay between community development and economic development. It could include strategies regarding affordable housing, education, healthcare, cultural diversity and social integration, and the environment that involves all stakeholders — residents, community-based organizations, public agencies, and the private sector. For example, the plan might encompass initiatives to establish a mix of incomes and development activities that can act as a defense during economic swings. This element also should address infrastructure — roads, utilities, and the like. Does the community have the necessary infrastructure to bring in (and retain) the diversity of businesses necessary to build a formidable tax base? Is the infrastructure regularly monitored to guard against deterioration? Is it up-to-date from a technological standpoint? For instance, does the community have a fiberoptic network?
  • Organization sustainability — Effective EDOs plan not only for the community’s continued growth but also for their own continued viability, including adequate staffing and funding. That might include generating an annual operational plan at the beginning of every fiscal year that outlines the year’s priorities and identifies metrics to hold staff accountable. Each annual plan would incorporate action items from the strategic plan and report on the progress made on the plan’s objectives. EDOs also should have policies for development of staff and the board of directors, as well as long-term fundraising plans and a formal reserve fund policy.
  • Benchmarking — Strategic plans must have specific benchmarks for monitoring and measuring progress. The EDO for the community in Northwest Indiana with workforce issues, for example, set a benchmark of achieving local labor force characteristics that are at least equivalent to averages for the state of Indiana, including educational attainment and employment rates, by 2025.
Vision for the Future
More and more EDOs are seeing the benefits of developing, implementing, and monitoring community strategic plans. Such plans provide a vision and a vehicle for creating short- and long-term economic growth, but they also provide companies pondering relocations valuable tools for evaluating potential sites.
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