Case Studies, Case Studies,
We Need Economic Development Case Studies

A couple weeks ago I described why case studies are vital to our learning curve in economic development. Who has case studies of development projects, programs, studies, governance, personnel recruitment, fund-raising and other activities in economic development? Who will be the first to write the first really honest case study about the upside and downside of organizing a regional program or organization? Do you have an organizational history of your EDO that describes how it started, who founded it and how it has evolved in the face of change?

Why do these things? Because they speak to the "value" you represent and provide to society. Do not assume that people know. They don't. This is the perfect time to develop your case. Let me know if I can help.

During These Hard Budget Times,
Use the Net

Are you making adequate use of the Internet to help you do your ED job during these hard budget times? The Internet is not only an effective and efficient way to communicate, provide information, market, learn, survey your marketplace and stakeholders, hold net meetings, and other things--it's cost-effective.

I am watching as state, regional and national ED associations across the U.S. and abroad are suffering because of low attendance at conferences and seminars. Maybe we should be making more extensive use of the Internet to accomplish these objectives until budgets re-adjust. This is the perfect time to use the power of distance learning to accomplish your ED training objectives. For the price of attending one annual conference, you can buy a new computer and purchase a one-year DSL or cable Internet subscription. Think about it.

New Pennsylvania Governor Says
Spread Economic Development Benefits Around

In announcing funding for a new e-business center in Eric, PA, the state's new ED chief said: "Economic development and community development under Gov. Rendell will not be just about Pittsburgh and Philadelphia," he said. "We have to be successful all across the commonwealth. It should be about Johnstown and Erie and Meadville and all of the communities across the state."

Go here to read more about the new Erie center.

Debate About Iowa ED Funding Continues

The debate about state funding for economic development continues in Iowa. The good news is the debate in going on. It has stopped in some states where state legislators have moved ahead with cuts. Many believe that the more conservative ED funding plan will be adopted in Iowa. Go here to read the latest.

Good News: 2000 County-County
Commuting Pattern Released Today

This is what many of us have been waiting for. The 2000 Census data on county-to-county commuting patterns is now available. As Steve Kelley, Director of the Ohio Department of Development's Office of Strategic Research says: "It's here and now we have fresh data to work with. Future data formatting and summaries will greatly enhance data usability. That will happen shortly."

Consider using this data in your workforce and economic development plans and strategies. We have been relying on the much-outdated 1990 data, which creates a very distorted picture of local and regional labor markets today.

Go here to download the data.

What Value Does Economic Development
Produce in Society?

I think many people are asking this question right now, so let's deal with it. The question has reared its head a number of times during my 27 years in this fine and worthwhile business. The "value question" has a tendency to surface during problematic and challenging times. I think that is an apt description of our current environment.

Job development immediately comes to mind to most people, when you ask them what economic development is all about. The majority of people associate economic development with job creation, and increasingly "quality" job creation. In this sense, we add value to people's lives by providing them with meaningful employment opportunities that help them prosper and use their God-given talents. Through our jobs, we contribute to the good of society. That is what makes economic development so important.

When I started in economic development with the Greater Cleveland Growth Association back in the late 1970's, we saw our mission as "saving" jobs and businesses for Cleveland and the surrounding region. The Greater Cleveland economy was in dire straits, not unlike our "not so quiet crisis" today.

The Cleveland area was hemorrhaging both jobs and businesses. Greater Clevelanders had lost confidence in their city. This was a difficult time to show results. Few could see the value added by economic development because we were unable to counteract the effects of many years of neglect and mismanagement of the city. On top of that, an oil embargo, heightened foreign competition, increased federal regulations, major technology shifts and globalization were altering the capacity of local economies to grow and prosper.

Every problem we encountered seemed too large to tackle. The economy was growing increasingly unforgiving, businesses were closing and moving southward, business and community leaders didn't trust each other, the city was headed to bankruptcy, and any place on Earth looked better than Cleveland. Then, our national economy fell into back to back recessions in the early 1980's, making it even harder to demonstrate what value economic development gives to a city and region.

We survived because we changed how we were thinking about the problem. We realized that we had many opportunities and we needed to spend more time thinking about opportunity. Light began to appear at the end of the tunnel. The economic fog lifted from our nation.

George Voinovich took office as Cleveland's mayor. Business leaders formed Cleveland Tomorrow and went to work on some of our most difficult economic challenges. The Growth Association and its New Cleveland Campaign began to turn some heads. Our deal packaging got better and we were actually able to save some companies and jobs. We started paying attention to the nettlesome details that often plague the development process. We launched a series of target industry initiatives that focused on transitioning and emerging industry sectors. Greater Clevelanders' self-confidence grew and people across the nation and worldwide began to see Cleveland as the poster-child "Comeback City." In short, we decided to invest more, not less, in economic development. Maybe we should use the same line of thinking today as we attempt to cope with the mammoth economic problems facing us.

As I reflect on Greater Cleveland's economic development experience of the late 1970's and early 1980's, I am reminded of two other essential forms of value that economic development provides. The first is "perseverance." Unless you persevere, nothing really gets done. Most economic developers I know have great tenacity and the will to persevere. They bring these gifts to the communities they work for. A close relative to perseverance is "vision." A community must have a vision of what it wants to become. Our ability to persevere is diminished where there is no vision of the future.

The second value we add in today's ever-changing and complex world is "calculated risk-taking." To grow in value, you must take some risks. Economic developers help communities take appropriate risks. We are rapidly becoming "economic risk managers," which I see becoming a bigger part of our jobs in the coming years. Risk assessment and risk management are two new knowledge and skill sets that all of us must acquire if we are going to continue to add value to society.

As I look across the country, I see too many government, business and community leaders turning into "David Stockman-type budget managers." It has become fashionable to cut economic development budgets because everybody else is doing it. We do these things because we think everyone expects us to do them. That's wrong-headed thinking. Economic development is an investment, not an expense.

It's true that money is tight and we don't know how long the current environment will linger. At the same time, we must be careful not to give up on our long term economic hopes and dreams. With that in mind, I would encourage all of you to wield that budget knife with great care, and remember that the true sign of a community's worth is how it does during the really tough times. Stop blaming your economic developer for the sad state of world affairs, and start helping him or her. Economic development is not an easy job, and it's even tougher in today's environment.

This is a time for pulling together and not pulling apart. If you do that, there will be no question in your mind about what value is provided by your economic development program.

Biotech Merger Mania: Listen Up

Many analysts have predicted a wave of mergers in the biotechnology industry. Now, it's happening. After all, many companies with promising technology now have low stock prices and are running out of money, making them takeover candidates. Something new is reflected in this new wave of mergers--many of the companies being taken over recently are the opposite of what has been predicted. They have money and are being acquired for their cash rather than for their technology. Read the latest in the New York Times on the topic. Go here.

Biotech has an insatiable appetite for capital for research, new product development, and just plain old daily operating funds. I will go on record here. Beware economic development friends. We are headed down a very slippery slope, and the economic development community just might be creating its own ice.

The biosciences are of major importance to our future. There is no question about that. Yet, the global "biotech frenzy" concerns me deeply. It smells of a 90's Internet revolution, and it's not a pleasant aroma.

We may be running the risk of flooding the market with far more biotech companies than can possibly survive. While it is true that the market can and will take "corrective action" to handle over-capacity problems, my concern relates to the substantial public sector investment being made in biotech, biosciences, life sciences, genomics and other terms you want to use to describe this sector. When these companies go belly-up or are bought by another company, your public dollars are either lost or seriously at risk.

Nearly every state and metro area across America is a biotech wannabe. Governors, legislators, mayors, chamber presidents and university presidents seem almost embarrassed if they don't mention the words "biotech" or "life sciences" at least five times in their speeches.

I see huge expectations being created that bioscience will save us from all our economic misery, and guess what? It will not. Can it help? Of course. Prudence, my economic development friends. Weigh your bets carefully. Be careful who you give your scant dollars to. I say invest in people and infrastructure that will remain in your community long after your fleet-footed biotech startup dances to another city. Start lifting weights today. The arm-wrestling could get ugly. Better yet, learn a martial art. Go here for one recent example.

Don't get me wrong. I like many of the things that I see happening in the biosciences across the U.S. and other countries. I will say it again. This is a vitally important industry to all us. My concern is the "cowboy economics" strategy that I see being followed in many places. "Ride 'em, rope 'em and brand 'em" is not the best economic development strategy for bioscience development.

Get out your calculators and run the numbers again. For some good ideas on how to get smarter about biotech, go here.

More from Montreal

Galileo Genomics Inc., a leading Metro Montréal-based population genetics company, announced that it has recently closed two financings totaling $7.7 million. The private placement of equity financing was funded by venture capital investors, including HBM Bioventures (Zurich), Investissement Desjardins (Montréal), BTF (Amsterdam), MVI (London) and BioFund (Helsinki). Galileo also closed a capital equipment-based financing with MM Venture Partners worth up to $2 million US.

Montreal is working hard to expand its reputation as a leading life science research and business center. What does its resume say?

- 300 private companies that employ 18,700 people.
- 6,000 jobs in public and parapublic research facilities.
- 76 research centres (24 teaching hospitals and 52 public research centres).
- 2 world-class universities: McGill University and University of Montréal.
- $3.4 billion in manufacturing deliveries in 2001 for pharmaceutical products and drugs: nearly 50% of all Canadian activity in the sector.
- Ranked eighth in North America for biopharmaceutical jobs.
- Legislation that protects drug patents.
- Administrative rule for medical formulary listings (15-year rule), which favours Québec.
- Innovative tax measures: R&D tax credits and tax breaks for foreign experts and researchers.
- Top-ranked in North America for competitiveness in terms of company operating costs.

To learn more, go here.

Montreal Boosts Biotech Efforts

Canada Economic Development announced some good news for the Montreal area. It will invest $600,000 in the Cité, which is a new agency that will encourage the establishment of some 35 new biotech businesses by 2005, along with the award of some $200 million in research funds by 2010, through different types of inter-university co-operation programs. The agency will oversee the operation and application of facilities and services, the organization and promotion of the Cité itself and the development and enhancement of existing know-how within the park.

Carole-Marie Allard, Member of Parliament for Laval-Est said "Encouragement of the startup, growth and attraction of businesses and world class centres of expertise in the biotechnology sector will greatly contribute to the development of the knowledge economy in Quebec and in the rest of the country."

Go here to read more.

Don't forget to mark your calendar to attend the International Economic Development Council (IEDC) meeting, which will be held in Montreal on June 4-6. It should be a very interesting conference. This will be a great opportunity to learn more about Canadian economic development policies and practices.

More Budget Cuts and Battles for Economic Development

As we scan the country to keep you informed about what is happening in economic development, we are finding a wave of bad news about economic development budgets. Not all the situations listed below have been decided, but many appear to be headed in the wrong direction as far as state and local economic developers are concerned. And yes, there is some good news mixed in.

Here are some recent ones we've encountered:

- Glendale, AZ.

- State of Arizona.

- Iowa, which we reported on in the previous article.

- Big Springs, Texas.

- Wyoming.

- Erie, PA, which is expected to get some additional funding (Good news.)

- Kentucky Enterprise Zone Program faces difficulty in getting renewed.

- Topeka, Kansas raises $750,000 new dollars for economic development. (Good news.)

This is a tight environment for ED fund-raising. Not impossible, but very difficult. Arm yourself with the evidence that your program or organization has created new value for its stakeholders. Be ready to talk about your economic impact. Be sensible about these efforts. Don't exaggerate benefits.

Economic development done properly is a long-term investment in your area. Make the investment argument. If all else fails, be ready to explore alternative strategies. Most importantly, raise money for the right types of programs and initiatives.

Missouri Readies for Shift to High-Tech
and Knowledge Economy Development

State leaders released a new economic plan yesterday, called “A Blueprint for Prosperity and Jobs.'' The study and planning effort aimed at finding out where Iowa was weak. Here are some of its major findings:

"Missouri's elementary students lag slightly behind national averages in several academic categories. Missouri also falls behind the national average in college enrollment, the report said, and Missouri college students pay 7 percent more than the national average when the states' cost-of-living is taken into account. The report says Missouri needs to spend more on higher education, particularly on research, and also maintain sound funding for elementary and secondary schools."

"Missouri ranked in the middle of the pack in terms of its “knowledge jobs'' and ranked last in job growth in 2000 and 2001. The report recommends Missouri cultivate businesses that focus on plant and life sciences, advanced manufacturing and information technologies. Missouri's mainstay businesses historically have included tourism, finance and banking, agriculture and traditional manufacturing. To strengthen those industries, the state must change criteria for granting financial incentives from the current “job creation'' approach to rewarding businesses for enhancing productivity and providing high-wage jobs."

"Missouri's rate of investment in research and development fell far below the national average. Beyond spending state money on research, the report suggests that state pension funds should invest a small portion of their money in venture and seed capital to help jump-start new Missouri companies. The report also suggests additional state tax credits targeted at research."

Missouri needs to do more to improve its infrastructure, which includes both its transportation and communications systems. Missouri lags the nation in the percentage of ZIP codes with broadband Internet providers, the report said. Missouri's roads and bridges have repeatedly been rated poor by national surveys."

To learn more, go here. More detailed information can be acquired from the state's website here.

Iowa League of Cities Fights to Keep
State's ED Finance Tools

Iowa cities believe economic development is vital to their survival and future success. While recognizing that state and local government budgets are very tight, the Iowa League of Cities has entered the debate on whether existing state provided and authorized development finance tools, such as tax increment financing (TIF), should be retained. In addition, they believe that new ones should be created to bolster Iowa's future competitive position. State lawmakers are looking for excuses to axe programs to conserve revenue.

Go here to read more about the Iowa League of Cities proposal.

Toyota Comes to Texas, and there are
Details to be Resolved

The new Toyota plant is good economic news for Texas. Big deals are rarely easy deals to do. Ask any economic developer who has ever put one of these projects together. There are lots of minute details and snags that fall in your path as you try to put a major project development plan into action. What's the hang up in Texas? A 100-year old house that sits in the middle of the site to be used for the new development.

What do you do with a 100-year old ranch house? Build around it? Tear it down? Move it? Integrate it into the development plan? This is an issue that local and state economic developers must resolve before the land transfer occurs at the end of this month.

It's amazing how history has a way of getting in the way of our future at times.

Go here to read more.

Cuts, Cuts, Cuts Everywhere

Many economic development organizations (EDO's) are experiencing sizable budget cuts because of state and local government revenue shortfalls caused by our national economic problems. While this is no surprise to those running these organizations, we need to try out some new ideas on how to get our jobs done with a shrinking budget pie.

An illustration of this is the recent budget cut proposed for the Maryland Technology Development Corporation (TEDCO). If Maryland General Assembly budget-cutters have their way, TEDCO's budget will be slashed 26 percent, from $5.75 million in 2003 to $4.25 million in 2004. Another issue pointed up by this situation is the need to be ready to describe the "value" provided by your ED program. Funding sources are hitting hard on this issue. Our advice: anticipate it and be ready.

EDO's are finding it much harder right now to answer the question being asked by funding sources: "What have you done for me lately? The economy has simply taken its toll on business investment, the driving engine for economic development. There are fewer deals to be done this time.

Do not despair, fellow professionals. Take the high road in dealing with these tough budget issues. Keep your eye focused on your goals. Innovate. Find alternative strategies to accomplish your goals. Examine how new regional, statewide and national and international collaborative strategies can help you achieve your goals. Work with your peers and even your competition where you need to.

Look for new ways to use the Internet to accomplish your work. Technology could be your best friend right now.

Go here to read more about the Maryland situation.

Quality of Life Study Says Michigan Cities
Lag Their National Counterparts

The new economy race has everybody scurrying for the facts about their competitiveness. Michigan's business leaders yesterday released a report that examined Michigan's cities' competitiveness nationally. Titled "Impacts of Quality of Life Indicators on Michigan Cities," the report was a cooperative effort between the Michigan Business Roundtable and the Michigan Economic Development Corporation (MEDC) and was funded by the MEDC, the Frey Foundation in Grand Rapids and the Hudson Webber Foundation in Detroit.

What did the study conclude? The quality-of-life indicator index shows that Michigan cities, with the exception of Ann Arbor, trail their peer cities across the nation in terms of providing an environment that incubates new economy businesses. Indicators such as culture, education, health, housing, labor market, globalization, cost of living, parks, safety, transportation, and weather were studied. In addition to this ranking, the report also includes perceptions of Michigan based on focus groups and survey results.

To learn more, click here.

Greater Cleveland Sharpens Its Focus on
Stem Cell Research

Despite its controversial nature, the stem cell research race remains red hot. For a look at what Cleveland is up to in this area, click here and read a recent Cleveland Plain Dealer article discussing the "money hunt" to fund future stem cell research.

On a related note, speculation continues whether Athersys Inc., a Cleveland biotech company, will pack its bags and move southward to North Carolina's Research Triangle area. We would throw in our two cents worth on this situation. Hopefully Athersys will decide to stay and grow its base in the Cleveland area. Maybe we will get lucky and head off this move for now. How long will they stay? As we look across the country, we see economic development competition intensifying for high-tech companies like this. The tea leaves right now suggest that these types of companies will be very mobile in the future as they look to strengthen their global technology and market connections.

Our advice to Cleveland and any city aspiring to become a future bioscience hub is: 1) don't put all your eggs in one basket; 2) increase the breadth of your investments in bioscience startups, that is invest in several good ones; 3) assume that these companies will continue to be highly mobile in the future and therefore the game is to win more than you lose on an ongoing basis; and finally build working ties with other bioscience centers to head-off non-productive rivalry for these darlings.

Business Tax Breaks Take
Some Heat in California

When you are hunting for revenues to make ends meet, any revenue source is fair game. That appears to be the situation in California and some other states where business tax credits and economic development incentives for business have come under fire as states look for ways to fix their ailing budgets. The independent California Budget Project (CBP) issued a report recently that casts doubt on whether the business tax breaks are truly aiding California's economy.

"Little or no attention has been paid to whether the billions of dollars the state spends each year to promote a healthy economy are achieving their desired result," the CBP study says.

"While recent policy debates around issues such as education have focused on accountability and performance standards, no similar standards have been applied to state spending for economic development," the report concludes. The state now allows at least $5.5 billion annually in tax "expenditures" -- or breaks -- aimed at economic development, according to the California Budget Project. The state has added or expanded more than 25 such tax expenditures since 1990, bringing the total to about 75.

Business and economic development advocacy groups counter that California is among the most expensive states in the country to do business and without these tax credits and incentives, the state's economy would suffer a significant loss of competitive advantage.

The California situation points to the growing necessity for economic development organizations everywhere to arm themselves with better facts about the economic costs and benefits of their programs. We need to work much harder at making our programs more performance-based. All programs have both benefits and costs. Some of these impacts can be measured in a quantitative way, while others cannot. If programs cut the mustard and produce more benefits than costs, they should be continued. If not, they should be done away with.

During this time of higher than usual risk and uncertainty, everyone, including businesses, are looking for a safety net to soften the fall during tough economic times. At the time when we need this net the most, we are least able to provide it. That seems to be the message coming from many states from what we can see.

Go here to read the recent Oakland Tribune article on the California situation. You can find the California Budget Project report here. You may find it useful to contact the California Association for Local Economic Development (CALED) to find out what role they are playing in the current California debate. You can find the CALED website here.

A Lesson in Economic Impact Analysis

Economic impact analysis has grown in popularity in economic development across the country. If you are experiencing difficulty in selling a project, simply commission an economic impact study that demonstrates the project's benefits. That should work, right? Not necessarily.

Having done many of these studies, let me issue an alert on this one. Be careful. The public is smarter than we think. And, an increasing number of news reporters have become "schooled" in the art and science of economic impact analysis. Do not expect your numbers to be accepted without some fight, especially from those on the other side of your argument.

Here is an example from Northern Virginia, which looks at an economic impact study done to show the benefits of the Montreal Expos move to Northern Virginia. The study was completed to justify a public investment in a new ballpark. The value of the article is its pounding on why these studies need to show "net" impacts and not just "total" impacts. It also reminds us that we need to account for difference between spending shifts and new growth.

If you plan to do these studies, please do them right. Go here to read more about what the news had to say. Go here to review the impact study.

For What Reasons Would We Fight?

Whether or not you agree with what others think and say, it is still important to know what they are thinking and saying. The Iranian view of our prospective war with Iraq contains several possible theories about why this war and why now. One of those reasons is American economic development. Oil, say the Iranians, is central to U.S. and world economic progress. They also say that the growth of our "war industries" (military-industrial complex) is an issue. These are far from new explanations.

ED Futures tries to reflect different perspectives of economic development, including those that defy our beliefs. Why? Because our beliefs at times can undermine our ability to know the multiple realities that co-exist in the world. If we aim to solve the world's most serious problems, this understanding is vital.

Go here to read more about what Iranian's think about our reasons for going to war with Iraq.

Chinese See Economic Development and
Strengthened Relations with the U.S. as Priorities

China has become the economic poster child of the world at the start of this new century. It has the only national economy worldwide that is booming right now. Economic development is important on all levels in China. We need to keep a close eye on what is happening there.

Henry Hu, professor of political science and international affairs at the George Washington University had this to say about China's priorities: “And China’s main interest, I believe, will remain economic development.” He said that unlike many Islamic countries, China had embraced the Western path of economic modernization and there was no reason for this to change."

Go here to read more.

Nobel Prize-Winning Economist Reminds Us of the Other
Reasons Why Economic Development is Important

Economic development is about how nations, states, regions and communities increase prosperity, but that's not all.

Economic development is also important because it contributes to social stability, averts hunger and famine and other things in society. That was the message that won Amartya Sen the 1998 Nobel Memorial Prize in Economic Science. Mr. Sen changed the way economists think about such issues as collective decision-making, welfare economics and measuring poverty.

Go here to read more.

Quad City Workers Want More Money
But Say that Job Security, Benefits More Important

We live in an uncertain world and this uncertainty impacts where people place value on their jobs. That same point was echoed by Iowa workforce and economic development officials.

Workers want to make more money, but other things come first right now. “Salary, anymore, isn’t the first concern. It used to be five, seven, eight years ago,” said Mike Witt, the business service representative for Iowa Workforce Development, Davenport. “In a tight labor market, salary is third or fourth on a person’s list. Most are looking for a job that is safe and secure, one that’s going to be around and provide the benefits for their family.”

What else is important? Flexible hours and the ability to work from home are vitally important to young working parents who are searching for ways to spend more time with their families and juggle the added demands on their schedule.

Go here to read more about job perceptions in the Quad City area in Iowa and Illinois.

Education Number One Priority
for North Carolina County Economic Development

A just released strategy report for Montgomery County, NC concluded that education should be its top economic development priority.

We are drawing this same conclusion in a growing number of the economic strategies and plans we develop for our clients across the country. Go here to read more about Montgomery County's new comprehensive economic development strategy (CEDS), which are funded by the Economic Development Administration of the U.S. Department of Commerce.