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Nebraska: Entrepreneurial Ventures and Aggressive Incentives Relieving Economic Stress

Aug/Sep 09
Nebraska has fared much better than other states in the current economic downturn. Its June 2009 unemployment rate of 5 percent - compared to 9.5 percent for the United States overall - was second only to North Dakota's. The state's foreclosure rates are also much lower than the national average, as it missed the housing bubble and therefore did not suffer the bubble's burst.

Earlier this year, named Nebraska the Happiest State in the Nation in its inaugural Happiness Index, which ranks states based on unemployment, foreclosures, and other factors. Likewise, the Associated Press May 2009 Economic Stress Index, released in July, named Nebraska as one of the two "least stressed states" in the United States, attributing this to two of the state's main industries, agriculture and food production.
Nonetheless, the Cornhusker State has not been immune to the effects of the recession. In DeWitt, birthplace of Vise-Grip brand tools 70 years ago, about 350 workers were affected last November when Irwin Industrial Tool Co. shut its plant there and moved Vise-Grip production to China. Kawasaki Motor Manufacturing, one of Lincoln's largest employers, laid off 170 in January and another 320 in May, citing rapidly declining sales; however, railcar production at Lincoln facility still employs about 1,000. Qwest Communications closed a residential customer sales and service call center in July, affecting 176 workers.

The state has responded with a wide range of services for displaced workers as it also continues to enhance its array of incentives to attract new business developments and expansions. The 2005 Nebraska Advantage Act, a comprehensive incentive package based on investment and job creation numbers, was expanded last year with passage of the "Nebraska Super Advantage" legislation. This year, the legislation was updated with additional provisions extending certain sunset dates and allowing businesses the flexibility to amend their applications and qualify for a lower tier if they are unable to attain their original goals. This year's legislative session also extended the Nebraska Advantage Customized Job Training program and doubled the incentive for companies partnering with state universities or colleges in on-campus R&D activities.

Yahoo! cited the Nebraska Advantage Act as a major factor in its selection of Omaha for a new customer call center and LaVista for a new 150,000-square-foot data center. Nebraska has targeted data centers as an industry segment with high growth potential due to the industry's high energy requirements and Nebraska's lower-than-average energy costs.

Biofuels is another key growth target for the state, which is second only to Iowa in ethanol production. Denmark-based Novozymes, at a groundbreaking in March for its new bioethanol enzyme production facility in Blair, announced that due to market demand, it would be doubling its originally planned investment to $200 million and building a much larger plant.

On a smaller scale, Vireo Resources, a subsidiary of Tennessee-based Vireo Systems, held a ribbon-cutting in April at its new 2,000-square-foot, $300,000 facility in Plattsmouth, where it processes and packages human nutritional products and animal healthcare products developed by the University of Nebraska Medical Center. Entrepreneurial ventures such as this one are the reason the Kaufmann Foundation has ranked Nebraska first in the nation for "gazelle" jobs - defining "gazelles" as new, rapidly growing firms - for two years in a row in its State New Economy Index.

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