State Broadband Ranking

Looking for some guidance on how the states rank in terms of their support of broadband Internet and communications capabilities and supply? Look no further. A new report by TechNet andf Analysys ranks the states according to their broadband policies and capacity.

Here are the top ten states:

1. Michigan.
2. Florida.
3. Missouri.
4. Texas.
5. Ohio.
6. Washington.
7. Kansas.
8. Virginia.
9. Colorado.
10. Iowa.

The value of this report lies in its advice on how states can support the development of their broadband infrastructure. It provides some practical guidance on what states can do in this regard.

Again, like other rankings, it ranks what is measured. The most important level of detail in this arena is at the community and regional level. That is where the actual rubber hits the road in terms of the quality, availability and cost of various broadband services. That is where any business locating a facility is going to look in most depth.

Download the complete report here.

Ranking of Rankings Award

Expansion Management Magazine released a second ranking this month called the "Mayor's Cup Challenge." It is for all intent and purpose a "ranking of metro rankings." It includes rankings for education, health, quality of life, logistics, legislative environment, and knowledge work.

Here are the top ten metros from this listing:

1. Des Moines, Iowa
2. Kansas City, Mo.-Kan.
3. Omaha, Neb.-Iowa
4. Minneapolis-St. Paul, Minn.-Wis.
5. Seattle-Bellevue-Everett, Wash.
6. Cedar Rapids, Iowa
7. Lexington, Ky.
8. Fargo-Moorhead, N.D.-Minn.
9. Columbia, S.C.
10. Lincoln, Neb.

This ranking is totally different than Expansion's high-value labor market ranking.

The secret to understanding rankings and ratings is that they reflect exactly what you measure. A more important question that any company or economic devleopment organization must ask is: "What are the driving factors to the business investment and facility location decision?"

In that sense, a company locating a major facility must know which factors are key to its success if it intends to use rankings and ratings as a guide to facility location decision-making.

A time-honored wisdom in economic development is: "Avoid reasons for early elimination in the competition for a project." A time-honored wisdom of business facility location is: "Rule out as many places as quickly as possible to get to the intermeidate list of options that are worthy of consideration." Guess what? The two clash, which is central to most economic development marketing campaigns. This is a major issue in "branding" places for economic development purposes.

Download the Excel spreadsheet with the rankings here.

Knowledge Worker, Where Are You?

Expansion Management Magazine has just released a new analysis ranking metro labor markets in terms of high-value labor. The ranking is based upon patents, number of colleges and universities, science and engineering workers and R&D spending.

Which metro ranks number one? This will surprise a lot of folks, but it's Detroit, MI. Here is the top te list:

1. Detroit, MI.
2. Oakland, CA.
3. Boston, MA.
4. Houston, TX.
5. San Diego, CA.
6. Washington, DC.
7. Raleigh-Durham, NC.
8. San Jose, CA.
9. Orange County, CA.
10. Dallas, TX.

I think we often think in terms of having a lot of something. That's the quantity game, and in some cases that is what matters. More often though, I find in my consulting work that it is QUALITY that matters. The more important question is: "What are these areas really good at in the knowledge work arena?" In that sense, how would the metro labor markets rank if you assessed them in terms of the quality and importance of patents, higher education institutions, scientists and engineers in high-demand fields, and R&D related to strategically important industries. My guess is that a different ordering would appear.

The Expansion Management listinbg does tend to dispel the rumor that only a few places have scientific and engineering, research and educational resources. This ranking indicates there are lots of places that have lots of stuff.

Download the list in Excel format here.

Pittsburgh Loses London Nonstop Flight

Pittsburgh will lose its only direct flight to London. This is a sign of retrenchment for the entire airline industry, as all service providers make cuts in their flights. Earlier this week, I posted an article talking about American's cutbacks in St. Louis.

My friend, Ronnie Bryant, president of the Pittsburgh Regional Alliance, said the move will hurt the efforts of economic development officials to cultivate international investment in the region.

"We feel the elimination of this direct flight is detrimental to our international business development activities, because London is one of our key areas. We hope that in time, travel will pick up and the flight can be restored," he said.

Yesterday, the Regional Alliance announced that a British software company, Specialist-IT-Services Ltd., will be opening its first North American office in Pittsburgh. According to the Alliance, the U.K. ranks second behind Germany in the number of foreign-owned establishments in Western Pennsylvania, with 65 compared to Germany's 101.

In my view, many US cities will lose both international and direct flights over the next year, until the industry restructures and is able to pull itself back to the surface. The good news is that in many cases these flights can be restored if business resumes.

Go here for more information.

North Carolina's Biomanufacturing Training Initiative

I like the North Carolina Biomanufacturing training initiative, which is experiencing some funding difficulties, but the concept is a very good one.

The plan has three elements:

* A Biomanufacturing Training & Education Center at N.C. State, a manufacturing plant that would include state-of-the-art equipment to train community college and university students. The center could cost $38 million to $40 million to build, according to preliminary estimates.

* A Biomanufacturing Research Institute and Training Enterprise at N.C. Central, housed in a wing to be added to the university's planned science complex, would provide students lab training and education. NCCU would eventually develop new undergraduate and graduate degree programs at the institute. Facility costs are estimated at $23 million to $27 million.

* A "BioNetwork" at the N.C. Community College System that would offer training for workers at five or six community colleges.

University, community college and biotechnology industry leaders said Thursday that they have solidified their plan for a statewide training network for biomanufacturing jobs. Now they must find money to make it happen.

N.C. Central University would take on a larger role in the initiative, though the main bioprocessing plant still would be built at N.C. State University's Centennial Campus, according to the latest proposal by a consortium of industry and education leaders.

Go here to read more.

Japanese Investment Uptick?

Japan is showing signs of some stabilization, and the second half of 2003 looks promising, according to recent economic reports. Japanese trade is not going gangbusters, but neither is it imploding. During May, export growth decelerated to 4% year-to-year from 5% in the previous month. Export growth to Asian partners fell to 7% from 10%. The U.S. market is the real weak link here, as bilateral exports are down by approximately 5% over the year.

Also, Japanese businesses continue to ramp up spending on equipment and software. With shipments showing strong growth in two consecutive months, and the inventory to sales ratio near historic lows, businesses will meet additional demand with production, rather than from a stock of inventory. Improved output and profitability will then drive capital expenditures, which are already on the rebound.

Several Japanese business investment projects have moved forward in the US in the past 6 months. More may be headed our way, if things continue to improve.

Yawn, the Recession is O-v-e-r...

The National Bureau of Economic Research (NBER) has officially pronounced the recession that began in March 2001 as over, ending that November. That puts the recession’s length at eight months, exactly the length of the 1990-91 recession. It also makes it short in the context of postwar recessions, which averaged 11 months (excluding the 1990-91 downturn). This dating is controversial and could even end up being revised to yield a longer recession.

The NBER’s job was made more difficult by conflicting economic indicators. In short, while broad output (at least as measured by GDP) appears to have been rising since the last quarter of 2001, other key metrics, notably employment, have yet to turn up. It is sometimes said—incorrectly—that employment is a lagging indicator of economic activity. Employment is, in fact, the most timely measure of current economic conditions, and the divergence between employment and GDP performance was enough to give pause.

This is hardly news for a major celebration, but it is always good to get the official word that things are getting some better. We need all the confidence-building we can muster.

Economy.com (if you subscribe).

North Carolina Incentives Under Fire

A recent analysis of the firms receiving funds from the One North Carolina fund shows that the program, while being a catalyst for economic development, hasn't been working perfectly. On the other hand, no state and local incentive program does in our analysis.

The fund has distributed a total of $18.2 million statewide since its inception, according to a fund disbursement sheet provided by the state's Department of Commerce.

However, in a random sample of 50 businesses that received job creation cash under the One North Carolina incentives program from 1993 through 2002, nine of the firms -- or 18 percent -- are out of business or no longer operating in the state.

When added together, the state established goals for the 50 companies to create 11,175 jobs. Those companies today have an estimated employee count of 8,400, but that includes jobs that existed before the grants were awarded. No figures are available on the net new jobs created.

Read more here.

How Nonprofits Are Venturing

Shopping for a better idea on how to sustain your economic development organization's finances? This article might help.

Many of the country’s most innovative nonprofit leaders are transforming their organizations by creating new, unrestricted sources of funding. Through business ventures, cause-related marketing partnerships, and licensing agreements, nonprofits are generating revenue to support their services and grow to scale.

This new kind of wealth can be called community wealth because it is reinvested into the communities that nonprofits serve.

Creating community wealth is not right for every nonprofit, but it is right for more than are doing it now. Often the biggest stumbling block is cultural: a reluctance to engage in commerce that ranges from lack of interest to suspicion and downright disdain. One of the most frequently asked questions is “Are we at risk of selling out our values and losing our soul if we begin to engage in commerce?”

Some nonprofit leaders don’t have the appetite or inclination to create business ventures. Or, they may not have the skills or the capital to launch wealth-generating
ventures on their own.

This report is worthwhile reading for economic developers. There are lessons in it that can strengthen the EDO financial base and many other aspects of the organization.

Download it here.

Recent Business Developments

Columbus, OH--Bank One Corp. will add more than 200 jobs in Central Ohio as it consolidates its national credit and debit card production and statement processing to the region. The bank will invest about $8 million in Central Ohio facilities to accommodate the additional workers. Bank One was based in Columbus until 1998, when it merged with First Chicago NBD, although it still employs more than 9,500 in Central Ohio and 13,000 across the state. More here.

St. Louis, MO--American Airlines will cut St. Louis departures in half by November and will downsize its St. Louis hub, cutting daily departing flights from 417 to 207 effective Nov. 1, the airline said. More here

Dryden, ON--Weyerhaeuser Co. said it is closing its sawmill in Dryden, Ontario, and reducing the work force at the associated pulp-and-paper mill. The actions will result in the lay off of 330, the company said. More here.

Tax Shelters Help Corporations, Hurt State Budget Coffers

Big corporations are avoiding paying billions of dollars in state income taxes by taking advantage of tax-sheltering techniques like shifting income offshore, according to a new national study, and those losses are worsening state fiscal crises.

The Multi-State Tax Commission, a consortium of 45 states unveiled the study recently. It shows that states lost more than $12 billion to corporate tax-sheltering in 2001, 35 percent of their corporate tax collections that year.

Most U.S. businesses don't engage in tax-sheltering, according to the report. The majority of the losses come from such "exotic" but legal techniques as reincorporating in tax havens like Bermuda strictly for income tax purposes; shifting income between subsidiaries; and using complex interpretations of tax laws to classify some income as arising from no particular place, when actually it's from a state that charges taxes.

The new study says, "The lost revenue attributable to domestic and international income tax sheltering is adding to the size of state budget deficits while undermining the equity and integrity of state tax systems. ... It is apparent that various corporations are increasingly taking advantage of structural weaknesses and loopholes in the state corporate tax systems." California has the biggest losses, with the study identifying a $1.34 billion loss in 2001.

There are some important issues that economic developers should pay attention to in this report. Look for more pressure on incentive programs in the future.

Read more about the study here.

Southern Governors' Races Hinge on Economic Development

Expect economic development to receive more political attention as upcoming governors' races pick up steam in the near future. This could be an opportunity to strengthen programs in these states. On the other hand, politics being what they are, expect more foolishness as well.

Click here to read more.

China Adds Two Million New Jobs

A new report from the Chinese Development Research Center of the State Council (DRC) showed that China's labor supply had peaked in recent years.

In 2003, China saw over two million workers more than last year, the report said, adding that 70 percent of the new workforce in the past five years found their jobs in the service sector.

As the eocnomy continues to pick-up, expect these numbers to continue to grow.

Go here to read more.

Global IT Economy Rankings

Singapore, Finland, the United States, Hong Kong and the Netherlands rank highest in technology and e-commerce capabilities among 48 nations, according to the 2003 Global Information Technology-Economy Index (GITEI), released recently by Tech-Economy, an IT research firm.

* An unusually strong showing by Singapore this year dropped the United States down to an unprecedented third-place finish. Both Singapore and second-place Finland excelled in the "Visionary Government" category, utilizing high scores in "new legislation," "investment incentives," "real corporate taxes" and "government transparency" to beat out the U.S. in the overall results.

* Northern European countries continue their phenomenal showing on the global technological scene, with over half of the top 15 overall finishers from this region. These countries have been quicker to embrace technology and e-commerce than southern European countries.

* Asia produced varying results among different countries, but overall continued to emerge strongly on the world economic-technological scene. Japan's current economic woes weigh it down heavily in this year's index, with an uncharacteristically poor 31st place. As mentioned above, Singapore astonishes with a first-place finish this year. In addition, up-and-comers Hong Kong, Taiwan and Malaysia are well on their way to becoming major players on the global technology scene, and even China, despite a low overall finish, is making tremendous strides towards establishing a global presence.

Download the free white paper here.

Will the Next Nobel Prize in Economics Please Stand Up

Who has the best shot at getting the Nobel Prize for Economics? Here are the top two picks according to one economic blogger out there:

- Paul Krugman.
- Warren Buffett.

Are Things Reviving in Silicon Valley?

I wouldn't discount the prospect of a significant up-surge in the Silicon Valley. These are savvy people who have a way of enterprising their way back to the top. Yes, much of the tech sector is being outsourced to off-shore locations, but there is a lot left in the Valley. Moreover, look for the Valley's entrepreneurs to build new ties and partnerships abroad. It's international partnership time!

Check out these two clips from a recent Christian Science Monitor article.

"No, the nascent tech rally in the stock market is not the second coming of million-dollar stock options and all-expense-paid business trips to Fiji - at least not yet, most here say. But it may well mean that the worst times are past, and that technology will no longer inhibit the national recovery."

"Moreover, it is times like now, when scientists and entrepreneurs can fully turn their attentions toward a new generation of innovation, that the technological cornerstones for the next boom are laid. "Today, a lot of that noise [from the Internet boom] is gone," says Bill Ericson of Mohr, Daidow Ventures. "It is an environment of stability ... where you can work toward building up a good idea." Adds fellow venture capitalist Allan Thygesen of the Carlyle Group in San Francisco: "It is no different from the first half of the 1990s."

As Recession Fades, Manufacturers Disappear

The past three years have been especially tough on manufacturers. They need more help from the economic development community at this time, especially if we plan to hold onto those we have now.

A recent article in the Houston Chronicle describes how many manufacturers are deciding that as the economic skies clear, they need to move to China and other locations that are more cost-competitive. This tells me that we need to give more, and not less, attention to helping manufacturers, especially technology-based companies, to help them re-gear and grow here in the U.S.

Please don't allow the current situation serve as an excuse on why your community should give less attention to manufacturing. You may just live to regret it, if you do.

Click here to read manufacturing article.

Second-Home Market Boom

According to a recent analysis by American Demographics Magazine, the second-home market is worth $19 billion a year, which is up 46% since 1995. This market is expected to grow 5% annually over the next five years.

Who comprises this market? Second-home owners tend to be high-income, high-asset, middle-age or older couples, who have childen nearing adulthood or have no children living at home.

These homeowners are major contributors to local economies, which states like Florida, Arizona and others have realized for some time. While many second-home owners are driven to sunny and warm climates, a large number are seeking out smaller college towns offering a high-quality of life and reasonable cost of living. Places like Chico, CA, Boise, ID, and Bloomington, IN fit that description.

Source: American Demographics Magazine, June 2003.

Quality of Life Rankings

Expansion Management Magazine released its latest Quality of Life Quotient rankings in the May 2003 issue of its magazine. View it online by clicking here.

Who are some of the communities earning the Magazine's five-star quality of life award? They include:

- Bloomington, IN.
- Cedar Rapids, IA.
- Columbia, MO.
- Green Bay, WI.
- Lincoln, NE.
- Rochester, MN.
- Boise City, ID.
- Fort Walton Beach, FL
- La Crosse, WI
- Rapid City, SD

Where Should Ohio Focus Its Industry Development Attention?

According to a hard-hitting and insightful report by the Ohio Business Roundtable, five strategic industries or industry clusters should be given major attention in Ohio in the future. These include:

Advanced Materials

o High-performance materials for structural components: These materials have a relatively high strength-to-weight ratio, can transmit high mechanical loads dynamically or statically, or can effectively operate in harsh environments.
o Functional polymer-based materials: Functional materials have special properties beyond those of basic materials. Functional polymer-based materials -- holds high potential for application growth.

Biosciences

o Medical devices and imaging; translational and clinical services; cardiovascular, cancer, and child health; agriculture, pharmaceuticals and homeland security project: Ohio has strength on which to build in all of these areas.
o Intersections between complimentary, well-developed technology areas and bioscience: bio-informatics, bio-materials, bio-science targeted nano-devices and advanced manufacturing all hold promise for collaboration and commercialization.
o Emerging technologies: This includes regenerative medicine and cellular engineering, and other areas defined by entrepreneurs as growing in importance.

Information Technology

o Data management: This is a specific Ohio information technology strength that cuts
across all segments of industry.
o Support other technology focus areas: information technology is a crosscutting need that supports all of the other key focus areas. Ohio must invest in accelerating IT application and adoption in these areas.

Instruments, Controls, Electronics and Advanced Manufacturing Technologies

o Integration of computing, communication, measurement and control: An industry-
university center with this focus would help align needs with development.
o Technology transfer: Again, Ohio has an opportunity here to leverage university and research strengths.

Power and Propulsion

o Turbine technology: This directly impacts the aviation industry, where Ohio already is a leader. Spin-off technology benefits the entire power industry.
o Fuel cells: The quest for cleaner, more efficient power has sparked significant national interest in this emerging technology.

Download the report here.

World Future Society Conference This Week

For those of you interested in futurism, as I am, you might find the World Future Society (WFS) to be of interest. The 2003 WFS annual conference will be held, July 18-20, in San Francisco.

I like the WFS' ability to provide not only a futurist perspective of issues, but also its global understanding. So much of what we hear within the ED industry is the "same old same old" that simply reinforces our short-term bias. The World Future Society helps us break out of the box.

Download the program brochure, which is 72 pages long and full of valuable information and insights. It is an excellent resource in itself.

Download WFS annual conference program here.

Non-Residential Construction Forecast

Here are some numbers that you should pay attention to because they reflect how aggressively businesses may invest in new facilities and equipment over the next three quarters.

It is expected that nonresidential construction (business plus institutional investment) will grow by 2.7% and 6.5% in the third and fourth quarters of this year respectively. This is up considerably over the -4.2 to -5.9% rates that hovered throughout 2002 and the first quarter of 2003. By the first quarter of 2004, nonresidential construction is expected to grow at a 7.3% rate.

These are fairly respectable numbers and they indicate that more expansions deals are headed to American communities in the foreseeable future. Let's keep our fingers crossed.

Source: Economy.com. (If you are a subscriber.)