Greater Cleveland Tomorrow: Some Critical Steps

Plans have not been completely finalized, but the Greater Cleveland Growth Association and Cleveland Tomorrow will join to form Greater Cleveland Tomorrow. Joe Roman, the current Executive Director of Cleveland Tomorrow, will serve as the new $21 million organization's President and CEO.

While cost-savings were cited as a factor in the Plain Dealer article describing the situation, I see something more important at work, which is that the region needs a much sharper focus on economic development with an increased ability to accomplish things of scale. Greater Cleveland and NE Ohio's competitive position for economic development will not change appreciably over the next 5-10 years unless we adopt a more powerful strategy that is strategic investment-driven. Hopefully that is what Greater Cleveland Tomorrow can help us accomplish.

What is my take on this situation?

1. I think the merger makes sense for the sake of Greater Cleveland economic development. An improved alignment of economic development efforts focused on business and job development and those aimed at strengthening the regional business climate is essential. Hopefully the merger will accomplish this alignment objective.

2. The new organization should focus on "projects and strategies of scale" that will catalyze and synergize economic growth in the region's major industry sectors, including manufacturing, bioscience, travel and tourism, health care, and finance and insurance, entrepreneurship, technological innovation, development financing and marketing.

3. The job of working with companies to make new facility investments in Greater Cleveland should be handled by Team NEO through a well-defined networking plan with local county and community ED organizations. If done properly, this approach could increase and strengthen the "local" role in economic development. The capacity of local communities to do this job needs to be strengthened. They must have the resources (funding, skills, programs, information and knowledge) to do the job effectively.

4. It sounds like the new organization's geographic focus will be the Greater Cleveland metro area, suggesting that strategic relationship development will need to be accomplished with the Akron, Canton and Youngstown metro areas to offer a more seamless overall NE Ohio regional economic development approach. Team NEO provides one new bridge among these metros.

5. An integrated regional marketing strategy is needed to support future economic development efforts undertaken by Greater Cleveland Tomorrow, Team NEO and local counties and communities in the Greater Cleveland area. I would argue for a new approach to marketing that is focused primarily on "strategic relationship development" with businesses and other economic development stakeholders. I would avoid the usual old glitzy brochure approach. Instead, marketing efforts ought to focus on building effective access to business, government, educational and community decision-makers and investors. A new high-quality Internet-based information system to support that new marketing system is needed. I would avoid the endless debates about "branding." The branding issue can be handled by developing a series of clear value propositions that speak to the value that economic development will provide to the areas six major ED stakeholder groups; business, government, education, funding sources, workers and citizens, and ED allies. Let's focus instead on using marketing to gain access to the people, financial capital, media, and other resources needed to get things done.

6. The new Greater Cleveland Tomorrow organization needs to be highly performance-based, with clear goals, objectives and performance measures to guide management efforts. Economic development has entered the "age of performance," and we need to be more convinced than ever than we can measure our success. Go here to read my October presentation on how this new model can be accomplished. In addition to job retention and growth, we need to track business starts, innovation, job enrichment, educational attainment, creativity growth, financial return on investment, global market penetration and a host of other measures that reflect the broader impacts and value of economic development.

7. Finally, a clear plan to involve government and to engage Greater Cleveland citizens about their economic future is essential. People must understand what they must do for themselves and what they can do together to increase personal and community prosperity. This focus should be inter-generational in nature and should focus on all age segments of citizens in the region. We should listen to our young people, and we should listen to the old. Both have a stake in the region's economic future and both need to be heard. Let's start with a something called Greater Cleveland's Intergenerational Fund for Economic Prosperity. Let's give local citizens an opportunty to invest in economic development and make some money in the process.

Oregon Tribes Try to Play Big

Oregon tribes want a casino in downtown Portland.

The Confederated Tribes of the Grand Ronde first dangled a $350 million baseball stadium in front of Portland as bait for a downtown casino. Now the tribes are trying to entice the city by offering to pay for a $130 million convention hotel.

According to the Oregonian Newspaper, "The ante is getting smaller, not larger. Next, we'd half expect the tribes to come back with an offer to pay the $75 million cost of capping the water reservoirs at Mount Tabor -- only, of course, if they get a downtown casino in exchange."

Still, like the earlier baseball stadium, this latest offer has some appeal to Portland decision-makers. Portland has long sought a convention hotel. With the Grand Ronde's help, a 600-room hotel that would propel Portland into the major leagues of the convention business could be built without public subsidy and without shifting tax dollars from other needs.

An editiorial in today's Oregonian newspaper says the deal is not a good one for Portland. Is this a good or bad deal for Portland? In my assessment, it comes down to whether Portland wants to roll the dice with downtown gambling.

I find it quite interesting that the tribes are making a big play here. Of course, there is Foxwoods Casino in Connecticut, which is clearly the largest one out there. All this points to the fact that the tribes have come a long way as economic development players. They are working on projects of scale now. I recall the 3-year Indian economic development project that I worked on during the late 1990s -- things have changed in a major way in how tribes are approaching economic development.

Go here to read more.

Comments on the Boeing Decision

Here is a cross-section of comments on the Boeing decision picked up by the Seattle Times.

"It's not over, it's not over."
-Gov. Gary Locke

"This was never a contest. I get the impression that this whole thing was a way to put pressure on Washington, and it seems to have worked."
-Richard Aboulafia, an aerospace analyst with the Teal Group

"I have had personal discussions with Boeing leadership, and I know for a fact that no final decisions have been made. I think it is important to respect the integrity of Boeing's internal decision-making process."
-U.S. Sen. Maria Cantwell, Washington Democrat

"I am, in keeping with the season, in gleeful anticipation of a decision and that our hard work will benefit this region and the state."
-Snohomish County Executive Bob Drewel

"We did not solicit Boeing and we are not trying to steal anybody. ... We're not raiders. We've got people lining up to come here. If they stay (in Everett), God bless them."
-State Sen. John Kerr of North Carolina, one of the states still vying for the Boeing 7E7 plant

"I don't think it was a slam-dunk in many ways. I think costs are driving a lot of decisions these days. If we can be cost-competitive, we can keep Boeing and attract other businesses as well."
-Don Brunell, president of the Association of Washington Business in Olympia

"I am not going to get my hopes up about the 7E7 landing here. ... I hope that it is. I am No. 10 to get a recall from the company for my job category. (Boeing CEO Harry) Stonecipher would be wise to choose to stay here, as there could be labor-relation problems if he decides to pull the plug and go somewhere else."
-Jane Robins, of Arlington, laid off from Boeing's Everett plant in April

Boeing Says It's Everett, Washingon

After an eight-month-long nationwide search, Boeing's 7E7 executive team has concluded that the new jet should be built in Everett, according to an insider familiar with the details. To most of us following the search, this is no great surprise. The details are interesting to those who gave it a shot and others who want to learn how much it costs to land a big fish like this.

Thomas Downey, vice president of communications for Boeing Commercial Airplanes (BCA), said last night, "No decision has been made and no decision will be made until the results of our site evaluation are fully vetted with our board of directors." Downey declined to comment on whether a recommendation from BCA to the Boeing board in Chicago had been finalized.

The Boeing insider, who has provided accurate information about key 7E7 decisions in recent months, said Everett was chosen over three other finalists, all in the Southeast: Kinston, N.C.; Charleston, S.C.; and Mobile, Ala. The source spoke on the condition of anonymity.

The 7E7 team's analysis showed that the cost of operating in Everett, though higher than in the other cities, was competitive because of the $3 billion 7E7 tax incentive passed by Gov. Gary Locke and the state Legislature in June.

With that incentive package, the difference in cost between Everett and Kinston, the lowest-cost city, narrowed to about $300 million over 20 years, a number dwarfed by the estimated $7 billion to $10 billion cost of developing a new airplane

Go here to read the details. (Registration with Seattle Times required.)

St. Louis Makes Another Biotech Move

How about St. Louis' latest biotech move? This is one you will want to read.

Washington University unveiled plans today for a $300-million initiative to speed the transfer of laboratory advances to medical treatments. The initiative, named Bio Med 21, includes plans for a $150 million, 250,000-square-foot research building to be built in stages at the center of the university's medical campus. A parking garage at Children's Place and Euclid Avenues now stands on the site of the proposed research facility.

The university plans to hire 50 new faculty members to staff the center. Private gifts, federal grants and the university's own funds will pay for the new center. The aim of the push is to help scientists engaged in basic research apply their work to therapies and treatments for patients, said Chancellor Mark Wrighton. The initiative will draw in basic scientists in fields such as chemistry, computer science and engineering, in addition to biologists and other scientists working on the medical campus he said.

The effort could position Washington University at the head of the class of institutions hoping to capitalize on data generated by the Human Genome Project. Federal research dollars could help drive the creation of new jobs in the region. The U.S. Department of Commerce estimates that 29 jobs are created in the local community for every $1 million of funding granted to a university in Missouri. At the heart of the new initiative is $130 million grant to the Genome Sequencing Center at the university.

Go here to read more.

Travel and Tourism Picture

Total U.S. tourism industry sales increased 3.0 percent (seasonally adjusted annual rate) to $712.9 billion in the second quarter of 2003, according to preliminary estimates by the U.S. Bureau of Economic Analysis. Total tourism sales are now 7.8 percent higher than their fourth quarter 2001 trough of $661.6 billion, but remain 5.1 percent below their pre-September 11, 2001 peak of $751.3 billion. In the first quarter of 2003, revised total tourism industry sales show a decrease of 3.3 percent, 0.1 percentage point lower than BEA’s June estimate.

Direct tourism industry sales increased $2.9 billion to $382.2 billion, which is 3.5 percent of current dollar GDP. Direct tourism sales are sales by tourism industries to out-of-town visitors. Examples are sales by airlines and restaurants to leisure and business travelers. Direct sales of hotel and lodging places grew 5.6 percent in the second quarter to $111.3 billion, and sales of eating and drinking places grew 7.9 to $66.1 billion. Partly offsetting these increases was a decrease in air transportation of 4.7 percent to $88.2 billion.

Indirect tourism industry sales increased $2.3 billion to $330.7 billion. Indirect tourism sales are sales to tourism industries by the chain of industries that supply them. Examples are sales of fuel to airlines and oil to the fuel refineries supplying the airlines, and sales of bread to restaurants and grain to the food-processing industries supplying the restaurants.

What is happening with tourism in your region and state? Hopefully you are ready for gthe expected uptick expected in 2004. It's coming.

Go here to read more.

How Economic Developers Can Help Manufacturing Survive and Thrive in the New Global Economy

"Prince USA, Made in China." That is the label on the shipping crates sitting on Prince USA's loading dock in Carol Stream, IL.

With a new plant in Shanghai, a factory in Carol Stream, IL crammed with ultramodern equipment and a commitment to change, Prince USA President Greg Roskuszka dismisses gloomy talk of the disappearance of U.S. manufacturing. "There's a lot of crying-in-your-beer stuff going on" because of China, lost jobs and other pressures, he said. "But you (manufacturers) have to change. ... Manufacturing is hitting another level of evolution. You can't produce things the way you used to."

I agree that US manufacturers need to change how they do business. I also think it is important that US manufacturers not lose hope that they CAN make it in the new global economy. This is especially important for smaller companies that have been too busy trying to make their handful of existing big US customers happy to ask important long-term questions about their own economic future. It is especially important for small companies to play smarter in the global arena. What can they do? They need to form international partnerships to strengthen their own ability to survive. They need to develop an international customer base and diversify their market base beyond the local GM, Ford or Chrysler plant. Are these actions going to be easy? No. Can they be done? Absolutely, with the right attitude, strategy and resources.

Global manufacturing changes have claimed their share of job victims in Illinois and most other states. This is the sad news. Machine-tool makers, circuit-board makers and small tool-and-die shops, and the employees and towns who depended on them, are among those that have been knocked down or out. They need "next-gen" strategies to compete in the future.

But companies such as Prince - a contract manufacturer that makes or assembles precision metal products - have managed to prosper by adapting quickly to the changes and switching strategies, products, locations or even entire business models. There are some things to learn from Prince--not all is good news by the way for US jobs. Many US manufacturing (and service) jobs will be lost due to offshore outsourcing. Outsourcing will continue to eliminate US jobs that do not "add enough financial value" to businesses. If a job costs more than the value it creates, it's a "goner." The key is to start re-designing work and re-writing job descriptions now to make more US-based jobs larger value-adders. If we help them, American workers can make the shift. They have done it before, and they can do it again!

According to Prince USA officials, those companies which are most successful saw the tides shifting while the good times were still rolling in the 1990s, and began retooling. The point is that if you just saw offshore outsourcing as a reality in the last 2-3 years, you are ten years behind the curve in understanding where the future is headed.

The Prince USA and Carol Stream story is an all too common one in many U.S. communities. Globalization is a challenge for all manufacturers, but especially those doing contract manufacturing of parts and components. The Cleveland-NE Ohio area has been hardhit by this new global trend line. The question is: how should the local and state economic development community respond?

Read more about Prince here.

Here are my recommendations to the U.S. economic development community:

1. Economic developers across America need to do a better job of looking ahead to understand where the economy and important sectors like manufacturing are headed. We need to extend the timeframe we look at in our strategic plans. We need to give special attention to how technological innovation and globalization will play out in the form of future business strategies in important industry sectors. In this case, we need to know what the smartest of the smart corporations know.

2. We need to improve public communication with citizens, workers, small business owners, elected officials and other community-based groups about what we see in the future. Balanced communication that is factual, grounded in reason, and oriented to action is needed. The opinionated hand-wringing and whining must stop. I continue to see too much of this in the media across the US. This is a time for positive and realistic "can-do" thinking. Don't get entangled in the political churn that is aimed at only one thing--either staying in office or ousting an incumbent.

3. Identify how "big picture" technology shifts and globalization will impact businesses, jobs and communities in your area. Localize the big picture. Globalization is in your own backyard--It always has been. It's not just what is happenig in China or Mexico. This is where skill and knowledge are required. Find out how your local companies plan to design work in the context of new global realities. That is a key issue in ensuring that jobs in your area remain connected to global opportunities.

4. Build collaborative partnerships with economic developers in competing regions (in the US and abroad), labor unions, education, and other groups that can help create the "extended network" your community will need to survive and thrive in the global economy.

5. Be careful which, if any, state and federal legislative proposals regarding globalization and trade you support. The Republicans and Democrats will each produce a dozen new proposals on what to do about global competition. The truth is that these proposals will have differential impacts on states, regions and communities across the nation. One public policy solution will not help all areas equally. Beware of the many faces of protectionism. It is embedded in both liberal and conservative thinking circulating around the country. The key questions in any discussion of market protection is "what and whose interests are to be protected," and "is this action good for American companies, jobs and consumers?" Tell your federal legislative delegation that a local economic developer, or someone representing the interests of local economies, should be added to the World Trade Organization (WTO) board. That could help enormously.

6. Work on stretching your understanding of the international world. We lost touch with the international community in the 1990s because we were too self-absorbed as a nation. This is a time to fashion some really innovative approaches to trade and foreign direct investment (FDI) development. And yes, remember that trade is a two-way (multiple-way) street and FDI is about cross-investment in global industries (autos, steel, polymers, finance, etc.).

7. Finally, workers need to go to school on globalization. They need to fully understand what will impact their current jobs and future career path. This is something that every worker needs to understand. It is not enough to just do your job and hope for the best. American workers must develop new skill sets that prepare them to collaborate with workers in other US and international business operations. If you operate a machine in a plant in Cleveland, you need to know how your job connects to other jobs in the plant and how that plant connects to your employer's overall domestic and international production chain. Only jobs with a "high global multiplier" will survive in the new age of global business and work. Working smarter in the future means working in a more globally-connected way.

I think we stand a fighting chance of helping local economies, industries and jobs compete and survive globally if we are successful in doing these seven things. This is where local and state economic developers can make the biggest difference in the next 1-3 years.

Vermont Loses One to Canada

Consolidation pressures are huge in many manufacturing industries, even as plant production is picking up in manufacturing.

Here is an example from Vermont of how plant closing decisions are made. There is a lesson here. Know how local facilities are connected to the company's larger production system and its supply chain.

Go here to read more.

Trouble in Boeing's Executive Ranks

You may want to change the name on the envelope containing your final incentive offer to Boeing.

The Boeing Company, its reputation tarnished by charges of ethical misconduct and its share of the aircraft market falling, said yesterday that its chief executive, Philip M. Condit, had resigned. The company, the world's largest aerospace company, called Harry C. Stonecipher, who led the McDonnell Douglas Corporation into a merger with Boeing six years ago, out of retirement to become its new chief executive. Mr. Stonecipher, 67, said his No. 1 priority would be to "restore credibility" with the Defense Department and Boeing's civilian customers.

Go here to read more.

U.S. Factories Humming

The Institute for Supply Management said its manufacturing index jumped to 62.8 in November, the highest since December 1983, from 57.0 in October. That easily beat the forecasts of Wall Street economists. Even the China View from Beijing carried the story.

With growth so strong and new orders flooding in, factories hired workers for the first time in 37 months, according to the survey. The ISM figures also suggested little slowdown ahead, with factory owners struggling to meet demand for goods.

That good news means government data to be released on Friday could show an even bigger rise in November payrolls than the 135,000 gain forecast by economists, after an increase of 126,000 in October.

My take is that this is welcome news indeed. Local economies across America need this boost, but we are not out of woods just quite yet in terms of competing for manufacturing jobs globally. We still need a long term competitive plan.

Go here to read more.

State-Tribe Collaborate

The Oklahoma Dept. of Commerce and the American Indian Chamber of Commerce of Oklahoma are meeting to identify new ways to work together. More states with tribes should do the same. Go here to read the article.

Top 12 Actions to Build a Skilled Workforce

Everybody wants to know "What actions will help build a better skilled workforce for the future?" Here are a dozen important actions that you might want to consider in the future:

1. Connect workforce development to economic needs.

2. Work with networks of firms in leveraging investment and spreading training benefits among employers.

3. Build a stronger education pipeline for trainable graduates.

4. Strengthen math and science skills at all levels.

5. Reform schools to improve student performance.

6. Direct resources to postsecondary education based upon performance.

7. Encourage partnerships across the educational spectrum (K-12, K-14, and K-16).

8. Develop industry and industry cluster-based workforce strategies.

9. Increase the use of community colleges for workforce training.

10. Support e-learning and other innovative delivery systems.

11. Enhance workers' ability to manage their own careers. Stress lifelong learning and continuous improvement.

12. Use available state and federal resources and incentives to promote workforce development and educational reform.

Charter Schools and Educational Reform for Economic Development

A recent reader asked about charter schools and educational reform.

Charter schools have been embraced in 41 states that I know of. Many economic development organizations, like the Indiana Chamber of Commerce, have adopted education reform agendas to strengthen the educational foundation for workforce development. Here is a little background on charter schools for those with an interest in them.

What are charter schools?

Charter schools are secular, tuition-free public schools that are freed from many of the regulations governing traditional schools. They control their own curriculum, staffing, organization and budget. In exchange for this freedom, they must maximize student potential and meet and exceed Indiana’s new academic standards.

Are charter schools considered “public” schools?

Yes. A public school is defined as a school that is open to the public, funded by the public and accountable to the public. Charter schools meet all three tests.

How do charter schools differ from traditional public schools?

Charter schools differ from traditional public schools in that they are established by teachers, principals, education experts and/or parents, and are exempt from many state and school district regulations, making them essentially autonomous in their operation. Also, students who attend charter schools do so by choice; likewise, educators who teach at charter schools do so by choice. Finally, charter schools can be closed for producing unsatisfactory results.

Can anyone attend a charter school?

Yes. Like other public schools, charter schools must be open to every child regardless of race, religion, disability or academic ability. However, many charter schools have specific educational purposes focusing on particular topics or students with particular needs.

One final point to keep in mind. There are no silver bullets in education reform. Many have found charter schools to be a useful innovation, but they do not solve all problems in the public education system.

Go here to identify contacts related to charter schools in 41 states.