Greater Cincinnati/Northern Kentucky Airport Expands

Cincinnati/Northern Kentucky International Airport is planning for some big-time growth, which will include:

• Groundbreaking yesterday for a third north-south runway costing $237 million that has been six years in the making.
• A $1.7 billion, 30-year master plan to reconfigure and expand the airport, beginning next year with an $8.2 million phase mostly to improve Terminals 1 and 2.
• Comair anticipates expanding temporarily into Terminal 1 in the next few years to accommodate peak-hour flights. The change would mean some passengers would have to shuttle from Terminal 3 to Concourse C, then shuttle again to Terminal 1. Eventual plans call for Comair to be housed in the new Concourse D, which won't be built for years, and for Concourse C to be razed.

Does it make sense to expand an airport in a receding economy? Experts say it does, especially in light of the long lead time in planning and constructing improvements. Also, you have to create the capacity to attract new opportunities--at least that is the theory, which has proven to work for many other major airports.

Others airports are also expanding, especially those in the Midwest, despite the nationwide slump. Cleveland Hopkins International Airport is building a 9,000-foot runway, a portion of which is already open. Indianapolis International Airport is undergoing a dramatic renovation, including a new terminal.

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Hold-Ups in Gaming Expansion

As a response to budget crises, many governors have looked to gaming/gambling. There has been lots of talk about the subject, but gambling remains a concern in many places. So, how are things going?

Voters' concerns and elected officials' doubts have dashed hopes for expanded gambling as a solution to fiscal crises, even as state budget deficits mount.

Last year, pro-gaming candidates for governor were elected in 23 states, and industry insiders and Wall Street analysts said the expansion of gaming options was more likely than at any time in the past decade because of mounting fiscal deficits.

But while deficits have continued to mount, the proliferation of gaming has been routed.

In the 20 states that have most seriously considered expanding slot machines at racetracks and new casinos as potential solutions to fiscal crises, aggregate estimates of budget deficits have ballooned to $85.6 billion in 2003.

In 14 of the states, however, proposals to expand gaming have already been crushed in the state Legislatures, said gaming critic Tom Grey, executive director the National Coalition Against Legalized Gambling.

Lotteries were considered and defeated in another 10 states.

So are gaming taxes likely to play much of a role in relieving public fiscal pressure in the short run? Not likely. Have some states moved into position with new gambling laws? Yes, Indiana for example did. The impact? Nearly $650 million in new revenues to the state treasury last year. That’s significant.

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UN Studies International Creative Sector

Sponsored by the United Nations Educational, Scientific and Cultural Organization, along with private, government and university organizations, the three-day meeting was convened at the University of Texas in Austin to examine the health of the international creative sector.

Tensions among the cultural ministers, policy analysts and academics appeared to pit those who emphasize the economic contributions of the arts against those who are more concerned with their social or cultural value

Andreas Roemer of Mexico's National Cultural Council told a public gathering at Bass Concert Hall on Friday that arts advocates are doomed to lose arguments in government circles about the generation of employment and wealth in cultural industries.

"How can you compare an artist with a company that makes a computer?" he said on the subject of economic efficiency. And if backers assert that the arts generate a lot of money, the response from an economist would be: "Then let the private sector take care of it."

The government's role, Roemer suggested, is to generate discussion about the arts, foster institutions and establish incentives through regulations and copyright laws. Then it is up to the private sector to provide training, funding and profits from the arts.

On this one, I happen to agree. Pursue the arts for the sake of art, and do not forsake art for economic development.

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Where's the Tech Jobs?

According to a recent Economy.com report, even though demand for information technology (IT) equipment is improving, tech manufacturers are still cutting jobs.

In fact, even if demand for tech equipment accelerates as expected through this year, tech manufacturing employment will not likely pick up until next year at the earliest. Hardware sales are well off their peak, production continues to move overseas, and tech manufacturers are making substantial productivity advancements.

Indeed, there are very few examples of metro areas with a significant tech industry exposure that are currently posting meaningful employment growth. Most tech center’s weak spots remain the technology industry itself, with few of these areas yet to experience any stabilization in tech employment.

In terms of job numbers, the San Francisco Bay Area has lost by far the most tech manufacturing jobs at 64,000 through March. Other metro areas that have a high exposure to tech manufacturing, and that have suffered substantial job losses over the last two and a half years include: Dallas, Boston, Orange County, Phoenix, Portland OR, Austin, Raleigh and Boise. Of those, only Austin and Raleigh have experienced any semblance of stabilization in tech manufacturing employment, but both suffered very steep declines in tech employment of more than one-third since the beginning of 2001, likely due to their exposure to the telecom equipment industry.

In other words, don't set high expectations about IT-related job growth in your area for the rest of this year. The production news is good to hear, but my main worry is how much of the IT industry will be off-shore 12-18 months from now. Cost factors are driving many companies to seek refuge in China, India, Singapore and other developing countries.

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Smart Growth Cools

Maryland's nationally acclaimed Smart Growth program, the state's major strategy for reining in sprawl development under former Gov. Parris Glendenning, has lost its momentum in the first six months of the new Ehrlich administration.

Recent studies have shown most Maryland counties continue allowing far too much development outside of the areas where Smart Growth would steer it. While the Office of Smart Growth can't be abolished without legislative consent, it's clear the administration plans to fold it into the planning department in all but name.

Another sign that Smart Growth is losing its prominence is the administration's firing of key people in agencies throughout state government.

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The Russian Internet Grows

The Ministry of Economic Development and Trade predicts that the number of Internet users in Russia will grow from 9 million to 21.5 million by 2006. And yes, that means the market for computers and related equipment, along with Internet services will grow.

Government plans to get with the online program, according to Russian officials. German Gref, the Russian economy minister said that the Electronic Russia Program will include a system for electronic procurements, the issuing of a number of licenses over the Internet, filling in tax declarations on-line, and e- control of exports, which could help with VAT refunds.

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The Creative City

No, it's not about Richard Florida this time. If you're looking for some interesting ideas on how to capitalize on your city's creative talents, visit the Partners for Livable Communities' website. They have a section called the Creative City. You may find PLC's Creative City Resource Paper to be on interest.

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Minnesota Merges Workforce and ED Agencies

A merger of the Minnesota Departments of Trade and Economic Development and Economic Security will take effect next month. The new organization, whose full name is the Department of Employment and Economic Development (DEED), will combine the state's outreach efforts to both businesses (DTED's traditional role) and workers (the focus of DES).

Why the merger? There is a hope the combined strategy will have a greater impact on economic development and worker adjustment. Also, budget realities are a factor as Minnesota looks to save money wherever it can.

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Ottawa's Tech Strategy Shifts Toward the Practical

Ottawa has fostered the growth of at least a couple generations of solid tech companies in Canada. Area leaders are now wondering if the current generation of tech startups will be able to grow to the scale that earlier companies have reached. This has prompted a shift in the areas's tech development strategy.

The area's earlier strategy was to convince the federal and provincial governments to re-think the way they treat technology companies. At the moment, the focus is on research and development, with the feds offering plenty of tax assistance. But the task force members believe the emphasis should be on commercializing technologies -- developing the right products and getting them into customers' hands.

A new group of seasoned executives, called OrbitIQ, has been formed to work specifically on increasing the sales performance of Ottawa's new technology companies. The group has decided that local tech stars must excel in getting their products and services into use. That requires smart marketing and sales, which many young entrepreneurs are not equipped to do.

This makes great sense to me. I think the practical road is the one that more areas should follow as they work to advance their new companies. Kudos to Ottawa officials!

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ASU's Morrison Institute Conducts National Research on Charter Schools

A just released report by Arizona State University (ASU), Charter School Authorizing: Are States Making the Grade? examines 23 states and the District of Columbia to determine how supportive they are of charter schools, how good a job their authorizers are doing, and how policy makers could strengthen their states' charter programs.

In the first major study ever undertaken of the quality of charter school authorizing, fifteen states earned B- or better grades for their authorizers' work but just four received similar marks for the policy environment within which charter schools and authorizers function. Massachusetts and Texas led the pack while California, Pennsylvania and New Mexico brought up the rear.

And yes, education is most definitely an economic development issue. It's important from a workforce readiness standpoint and as an important community amenity making an area attractive for economic development. Charter schools are an innovation that many businesses are supporting, therefore it is important to know how effective these new institutions are.

Download the report here.

Canada Assesses Its Progress in Information and Science-Based Industries

IEDC recently reported on a new study by Stats Canada on the country's progress in information and science-based industries.

According to the study, information and communications technology (ICT) industries have dynamic output, employment and productivity characteristics, but they are not the only source of growth in Canada's high-tech economy. The study, the first in a new analytical series that examines industrial transitions in the Canadian economy, focuses on companies in ICT and science-based industries, innovative sectors associated with the growth of the New Economy.

Here are just two of the many findings from the study:

* The rapid growth of the technology sector is a central characteristic of the New Economy. From 1987 to 1997, real GDP in the ICT sector almost doubled (+96%). This was more than three times the rate of growth of 28% for industries outside the ICT and science areas.

* Companies in the ICT sector employed 44% more workers in 1997 than in 1981, while employment outside the ICT and science industries rose by only 24%. At the same time, long-run multifactor productivity gains in the ICT sector averaged 1.7% a year, about four times the rate of growth of 0.4% for industries outside the ICT and science areas.

We need more of this type of research on a national level to understand the overall effects of local and state tech-based ED initiatives. It's important to know what it all adds up to.

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NC Business Tax Credit Performance Reporting

You may want to see how North Carolina approached performance reporting on its Business Tax Credit program. Many states operate these programs and reporting requirements are common in most, if not all. It makes sense to compare and contrast performance assessment methods and data used by different organizations. This will strengthen your approach.

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New Sustainable Infrastructure Institute in Regina, SK

Regina, SK is set to become a national center of excellence for work on sustainable communities with a five-year, $30-million investment in the new Communities of Tomorrow partnership.

The Communities of Tomorrow partnership will develop, demonstrate and commercialize technologies and management practices for sustainable communities. It will bring together the facilities, capabilities and capacities of the National Research Council, the University of Regina and the City of Regina in a unique "community environmental laboratory" to test and assess the applicability of existing, new, and emerging technologies and applications to sustainable community development.

The new NRC Center for Sustainable Infrastructure Research is key to the partnership. The February 2003 Federal Budget provided $10 million over five years for the NRC to establish the Center for Sustainable Infrastructure Research. The research program will serve as a catalyst for the growth of a technology cluster in the region, focusing on the theme of sustainable infrastructure and environment that builds on local industry, and research and development capacity. The new centre will be closely linked to regional and national research facilities, and will be supported by NRC's Institute for Research in Construction.

This is an important development that could advance sustainable infrastructure in many communities in Canada and elsewhere around the world.

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Regionalism Grows in Arkansas

The formation of the new 11-county Central Arkansas Economic Development Alliance was announced recently. The region includes Pulaski, Saline, Faulkner, Garland, Jefferson, Lonoke, White, Grant, Hot Spring, Perry and Conway counties.

"A regional approach has worked for northwest Arkansas, Nashville, Tenn., and the Research Triangle of North Carolina," Hugh McDonald, Chairman of the new group said.

Central Arkansas ED Alliance website.

This is yet another example of how regional approaches to economic development are taking hold.

Northern Kentucky's New Economy Initiative

Northern Kentucky is taking the new economy seriously and it is building the capacity to create more economic opportunities related to it. Northern Kentucky Tri-ED has worked with Kentucky's Office of the New Economy and other partners to set in motion an impressive list of initiatives to help companies innovate, modernize and grow. This list includes:

Here are some of the 28 programs invested in by the Office for the New Economy.

* Madison E-Zone -- the Covington-based ICC in Northern Kentucky runs programs for technology companies seeking investment capital.
* Kentucky First/Union Springs II -- this venture will create a "pharmaceutical cluster" in Northern Kentucky.
* Northern Kentucky Emerging Technology Commercialization Triangle -- the proposed privately funded development will focus on attracting technology companies by leveraging Northern Kentucky University as a resource partner.
* iNET -- The Institute for New Economy Technologies at NKU will connect the high-tech companies moving into the region with the technological, human and programmatic resources of the university.
* Northern Kentucky New Economy Marketing Program -- the Tri-County Economic Development Corp. will launch an extensive marketing program to assist in the attraction, retention and expansion of new and existing New Economy companies in Northern Kentucky.
* Technology funds -- awarded $2.1 million in Commercialization Investment Funds to 47 companies.
* New Economy company creation -- the ICCs have interviewed over 200 entrepreneurs and are currently dealing with 36 companies throughout the state.
* Private fundings -- six ICC companies have received private equity fundings for just over $4.5 million.
* Investor network -- the ICCs have recruited over 50 investors to review investment-grade companies via the K-Net.

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International Costs of Doing Business

While the list of advantages for doing business abroad continues to grow, one major risk has many companies worried. That is the risk of terrorism, which is much, much higher in many other countries than here in the United States. Moreover, insurance companies realize this risk is higher and companies are paying more to cover these risks. In fact, they are paying a lot more. That is the message in a recent article in the Houston Business Journal. While it relates mostly to oil companies, the same risks apply to any type of company.

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New Technology Business Incubator Report Released

The Technology Administration of the U.S. Dept. of Commerce has just released a new benchmarking study report on technology business incubators. The study was undertaken by the National Business Incubation Association (NBIA).

The study focused on these important questions:

• What is the range of client performance outcomes across a national sample of technology business incubation programs?

• Which technology incubators could be identified as exemplary and which as low-performing?

• What ranges of business assistance services and organizational and management approaches are used by technology incubators?

• What relationship exists between best practices and performance outcomes?

• How these results can help improve incubator operations?

What were the chief findings of the study? The major findings of the study include:

• Forty-eight percent of the technology incubators were focused on information technology and electronics, compared to 24 percent focused on biotechnology and biomedical applications and another 28 percent involving a mix of client company technology concentrations

• Forty-four percent of incubators focused on companies that primarily had product-oriented business strategies, compared to 18 percent focusing on service-oriented strategies and 38 percent on clients with a mix of strategies.

• The clients of incubators with a greater biotech/biomedical client focus had raised more money, obtained more research support, held more patents and in-licensed more technology than their peers.

• Biotech/biomedical-focused incubators’ clients had slower revenue growth than IT/electronics and mixed technology incubators’ clients and fell behind mixed technology incubators in employment growth. In other words, they grew but growth was based on investment capital.

• Service-oriented incubator companies grew faster both in terms of revenues and employment than product-focused incubator clients.

Although the research yielded no strong direct statistical relationships between incubator business assistance practices and primary outcomes (e.g., sales and revenue growth), it did reveal a predictive relationship between the business assistance practices and the secondary business outcomes (e.g., equity investment, patents, research grant support, copyrights, and licensed intellectual property) that are important precursors to the primary outcomes.

Click here to download the full report.

Future Commercial Development Havens

The results of a new study by Jones, Lang and Lasalle, a leading real estate services company based in Chicago, might interest you.

The study says that large cities in China and India, and midsize cities in Europe and the United States are the next hot spots for commercial real-estate development. Moreover, it says that dozens of cities that were overlooked by investors in the past decade will become hubs of commercial development because of economic growth, the re-emergence of technology and the desire of companies to be based near tourist destinations.

Jones, Lang and Lasalle officials said any city attempting to improve its urban landscape and attract tourists will also see a commercial real-estate boom. Barcelona, Spain; Copenhagen, Denmark; Calgary, Alberta; and South East Queensland, Australia, top this list.

According to the study, the key drivers will be:

* Technology (despite the IT bust).
* Environment (quality of life will matter more).
* Leisure & Recreation (places to play will become more important).
* Economic Integration (Europe, Asia and the Americas).

This is an interesting read. On one level, it tells us what we already know, but it offers some new insights about where future growth is likely to occur.

Download the report at the company website under News. Click here.

Conscious Living Launched

I have started a second blog called Conscious Living (CL), which is not directly related to economic development, but says some things some of you may find interesting. CL focuses on "matters of the heart" as they relate to everyday life. It provides insights about both how and what we are to ourselves and other human beings.

Initial feedback by those viewing the site has been quite positive. If you get a moment, take a look and let me know what you think. Thanks.

Just click here. You can find it under Links on ED Futures as well.

Want Tech Jobs? Read and Heed

Tech jobs are moving offshore. Not new news you say. True. But do you know the possible extent of this trend? The research firm Forrester estimates that 3.3 million service-sector jobs will leave the United States for countries such as India, Russia, China and the Philippines by 2015, including about 473,000 positions in the computer industry.

What does this mean for tech meccas like the Silicon Valley. "It's no longer economic to do low-end software development in Silicon Valley," said AnnaLee Saxenian, a professor of regional planning at UC Berkeley who has studied Silicon Valley's development. The valley will continue to grow, she said. But "we will not see employment growth on the scale we saw in the 1970s, 1980s and 1990s."

Is this just a short-term blip, or a long-term trend? "Offshore is going mainstream," said Frances Karamouzis, an analyst with Gartner, a Connecticut technology research firm. "Companies are jumping on the bandwagon."

Is cost part of the problem? Yes. In Silicon Valley, salary and benefits for a programmer with a few years' experience run about $75 to $80 per hour. A third-party provider in the United States charges about $125 per hour for the same service, according to Karamouzis. Leading Indian firms, such as Wipro, ask only $20 to $25 per hour, she said. And second-tier Indian companies can be found that will do the work for as little as $15.

Observers say that the financial pressures created by the recession have prompted a big acceleration in the flow of technology jobs offshore. In India, big U.S. tech companies are rapidly expanding existing operations.

Not all agree that this is a permanent shift. Despite the current rush overseas, experts say moving technology operations offshore frequently doesn't make sense. "There's just a fad mentality now," said University of Southern California business school Professor Ravi Kumar.

Where does this leave community, regional and state efforts to bolster their tech economies? It squarely pits them against their international competition. Prior to the the 2000 recession and the events of 9/11, many areas like Boise, Phoenix, Salt Lake City, and other places were seeing a nice flow of new tech companies. Now, these areas suddenly find themselves trying to compete against regions in India, China, and Singapore that they had never heard of before. My recommendation is to get out your world atlas and go to school on what these areas have to offer. Also, explore the potential to "partner" opportunities with these emerging centers across the world--just make sure you cut a deal that you can live with in the long term.

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Outsourcing of Economic Development to Private Sector

Why would a city outsource its economic development function to the private sector? In a nutshell, to reduce political swabbling about development projects. That is what some Canadian cities are beginning to do.

Two cases in point are London, Ontario and Halifax, Nova Scotia. John Kime from London shares his thoughts. "The reason for London's success in attracting industrial development, Mr. Kime suggests, is a new model that essentially takes the role of economic development out of the hands of politicians and the political process and lets private sector investors deal with a private sector agency." About 2,000 kilometers away, Halifax has developed a similar private sector model of economic development that it is using to sustain and develop its life sciences, energy, and information technology and communications industries.

In the London model, LEDC operates as an independent, not-for-profit company that has a contract with the city to provide economic development services on its behalf. LEDC is strictly focused on attracting new investment and jobs to the city and helping existing London businesses grow. It determines the customers' needs, provides detailed information to assist in their investment analysis, and then shows them all available property that meets their needs. It is not involved in the sale of land. The customer purchases the land directly from the owner, whether it be the city, a private owner or a developer.

Mr. Kime says this model eliminates the inherent conflict of interest that can occur if city-run economic development departments attract investors but then show or sell them only land that is owned by the city.

What are the barriers for cities to move in this direction. One is the political benefit that elected officials get from running the ED show. The second is how to achieve accountability without direct control. Both are legitimate reasons--the second is the more important of the two.

We have a lot to learn yet about making economic development more performance-based and accountable. Many cities, counties, regions and states across the world are working on the problem. Stay tuned for more insights into this area in future articles.

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Barbados Looks to Creative Economy

According to a recent guest editorial by Thom Cross, the creative sector in Barbados has shown that it has genuine potential for generating income and creating jobs, especially within the all-important youth segment of our population. Designers, singers, artists of all descriptions, new media people, writers, craftsmen abound in Barbados with talent and potential. Cross cites the late Professor Stan Reid, who estimated that in 1995, gross revenue for Barbados from entertainment and cultural industries exceeded Bds$25 million.

Cross says that a growing new niche in Barbados within the creative sector is the production service provider. Entrepreneurs like Norman Barrow of A&B Music Supplies, DB Productions and others, provide high quality production facilities from stages to props, sound and lights and special effects. These services are also exported. Other services within this growing industry are specialist accountants, lawyers, costume makers, recording studios and arrangers, publicity creators (including graphic artists) and an array of associated merchandise producers.

But, as Cross states, there are gaps that must be filled to take Barbados' creative sector to the next level. One major one is the human talent to make it happen--a point that Richard Florida reminds us to address in our creative sector plans and strategies.

Cross makes 3 recommendations on how to strengthen Barbados' creative sector:

1. In the context of the redevelopment of Bridgetown and in celebration of its anniversary, consideration should be given to the development of a Creative Industries Zone. This zone could provide space for artists, producers and craftspeople to develop. Create a place to make and a place to sell, with shared administrative and marketing services.

2. Establish within the Barbados Investment and Development Corporation/National Cultural Foundation a Creative Industries Development Unit to help creative people turn their talent into viable businesses. Marketing support, training and advice and perhaps some funding would be made available.

3. Enlightened private sector involvement is critical; not merely as sponsors but as active entrepreneurs, investors and partners.

Thom Cross is a director of Bowie Cross Advertising Inc and a dramatist.

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