Does Community Size Matter in Business Success?
From new business incentives to hand-to-hand combat, smaller cities are competing in this recession; but a community's size - large or small - does not tell all.
Michelle Cammarata, Director, Site Selection and Business Incentives Group, BDO USA (Oct/Nov 09)
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Investing in Work Force
Investments in human capital may take longer to develop than a new incentive program but are sure to have lasting effects on a community, as Tier III Kingsport, Tenn., has shown with its "Educate and Grow" campaign, an initiative designed to address obstacles to economic development, such as overreliance on heavy manufacturing, an aging population, shrinking younger work force, and dropping education levels.
Through the "Educate and Grow" campaign, business and government leaders launched several programs to improve the work force, including a K-to-14 program, the first in the country, which extends public high school by an optional two years. Kingsport's high school students have the opportunity to take college-level classes, and any Kingsport high school graduate is eligible for a four-semester scholarship at Northeast State Technical Community College.
The community has invested in bricks and mortar as well, building an "academic village" that includes a Regional Center for Advanced Manufacturing and a Regional Center for Health Professionals. These investments are paying off with increased tax revenues, rising property values, and growth in the population of young families and young adults, along with a 2 percent increase in the number of residents earning college degrees.
While Tier III Kingsport invests in its young people, Tier III Boise is seeing the fruits of investment in research at Boise State University, a resource that helps this small city compete against Tier I cities of Salt Lake City, Portland, and Phoenix. New research at Boise State will drive diversification of the local economy beyond its base in information technology and high-tech manufacturing, as the school wins research grants for a range of studies, from breast cancer metastases to electric propulsion systems for NASA.
Richmond - a Tier II metro - wins headquarters projects against much larger Tier I competitors, such as Charlotte and Atlanta. In headquarters site selection, quality of life plays a larger role in the ultimate decision than in most industrial projects, since many employees will relocate from outside the region. To beat Atlanta for MeadWestvaco's headquarters, Richmond officials convinced the company that the area could offer all the cultural and educational amenities employees could want, with shorter commutes and lower housing costs. The area offers 10 colleges and universities, a fine arts museum, a science museum, and 400 years of history and architecture.
"Richmond is smaller than our competitors, but we have the highest concentration of Fortune 1000 employers per capita outside of San Jose," said Greg Wingfield, president of the Greater Richmond Partnership.
Marketing to New and Existing Companies
As economic development organizations in cities of every size cope with budget cuts and staff reductions, they have changed their marketing strategies, focusing more on networking within the existing business community. In tough times, protecting existing industry is priority one.
Tier II Columbia, S.C., has attracted $560 million in new investment and 2,600 jobs in the last year, according to Mark Simmons, executive vice president of the CentralSC Alliance. "We're competing by staying very close to our existing industries and looking for opportunities to bring their suppliers and vendors to the region. If we hear that one of our employers is facing consolidation nationally, we'll help them make the case for consolidating in Columbia," said Simmons.
Rod Moseman of Omaha concurred. "This is the year of the existing customer," he said. His organization deploys a team of ambassadors to make 300 visits with area companies to identify growth opportunities or uncover plans for downsizing.
When business attraction is the goal, organizations focus scarce resources on targeted marketing. For example, the Omaha Economic Development Partnership has shuffled its outreach efforts. "We're in hand-to-hand combat focused on specific industries where Omaha has a story to tell," said Moseman, reflecting the intense competition for every project.
Tier III cities often face a competitive disadvantage in the form of smaller budgets and leaner staffs. To attract advanced manufacturing projects in the solar industry, Boise must compete against its larger and better-known Tier II competitor, Albuquerque.
"Downsizing in semiconductors and computer manufacturing has left Boise with large manufacturing spaces and skilled workers ready to transfer their knowledge to a new industry," said Jana Chalfant, director of economic development services for the Boise Valley Economic Partnership. "We spend a lot of time on the road meeting with companies and investing in relationship building."
The challenges facing cities and their economic developers are not likely to disappear any time soon. Economic indicators show the recession is lifting, but job growth will continue to lag, perhaps for years to come. Whatever the size of their populations, business and government leaders will succeed based on their ability to understand how their regions can support existing and emerging industries and their ability to develop the business and cultural assets that employers value.
Michelle Cammarata, vice president of Workforce & Location Planning with CresaPartners, has more than 11 years of experience in site selection and business incentives services. Research support for this article was provided by Mari Carozza, Workforce Research/National Accounts Associate, CresaPartners.