Puerto Rico ED Update

I like this quote by Economic Development & Commerce Department (EDCD) Secretary Jorge Silva :

"We need to create a multicompetent economy, so we won’t have to depend on just one industry or business sector. Puerto Rico has a lot to offer in many areas, not only in manufacturing and tourism, and local enterprises haven’t had a chance to develop to their maximum potential," Silva added.

Multicompentent = Good at many things! (Ok, diversified, but good at whatever it does.)

Here to read more.

Dems Say Bush Needs to Reform Federal ED Role

There is plenty of room for improvement in how the Federal Government helps local economic development. The role has been less than adequate under both Republican and Democratic administrations that I can recall.

What can I say? The Federal Government's role has always been, at best, piecemeal--but then again, isn't that what the states and local areas have wanted and helped to create? By the time everyone extracts their pound of flesh from Washington, the Federal Government's role in economic development looks like a postmodernist painting. (Don't get me wrong. I actually like some postmodernist art.)

Read this article and see what you think. My suggestion: The Federal Government should start by adopting a new way to think about local and state economies. See the connections globally among and between these economies. Create a policy framework that advances people (human capital) in the rapidly emerging global workforce. Create policies and incentives that help American businesses advance through strategic collaborations around the world. And yes, it's high time the Federal Government brought the states together and talked with them realistically about how to put an end to the abusive use of business incentives. To do that, we need to make some major changes in our tax policy system affecting people and businesses.

Most of all, I believe we need to put an end to the "small thinking" that profilerates in economic development at all levels. We're all small cogs in one big wheel. We are nothing if we destroy the wheel!

Hampton Roads, VA Consolidation Update

We wrote about this story earlier, but here is an update you might find interesting. Go here.

NW-MW Institute ED Report

For anyone out there who needs reminding that the public sector HAS a role to play in economic development, I suggest that you download and read this report.

Cost of U.S.-China Trade Deficit

The United States' trade deficit with China increased twenty-fold over the last 14 years, rising from $6.2 billion in 1989 to $124 billion in 2003, and displacing 1.5 million jobs. So, what does this have to say about our future economic development potential in the next couple of years.

Take a minute and hear what the Economic Policy Institite (EPI) has to say. (Ok, so this is a "D" policy research center that the Bush Administration doesn't listen to. It's still worth hearing what they have to say.)

More here. (Report downloads)

Brookings Study on Convention Centers

Here are the three major findings of a new Brookings study on convention centers:

* The overall convention marketplace is declining in a manner that suggests that a recovery or turnaround is unlikely to yield much increased business for any given community, contrary to repeated industry projections.

* Nonetheless, localities, sometimes with state assistance, have continued a type of arms race with competing cities to host these events, investing massive amounts of capital in new convention center construction and expansion of existing facilities.

* Faced with increased competition, many cities spend more money on additional convention amenities, like publicly-financed hotels to serve as convention "headquarters."

My view: Exercise caution in your convention center investments, no matter what the convention center consultants tell you!

Here for more.

More Work Ahead on Native American ED

Tex Hall, president of the National Congress of American Indians, said the country's approximately 4.2 million Indians have made progress but still lag other residents in wages and education, and access to housing, technology and health care. Here to read more. This is a special interest area of mine, having spent 3 years working with tribes on these issues.

For the ED Executive Changing Jobs

The First 90 Days: Critical Success Strategies for New Leaders at All Levels, by Michael Watkins.

I read this one and it's great. Here's the review:

"Fully a quarter of all managers in major corporations enter new leadership roles each year. Whether their assignments involve leading a work group or taking over a company as CEO, they face very similar challenges--and risks--in those critical first months on the job. How new leaders manage their transitions can make all the difference between success and failure. In this hands-on guide, Michael Watkins, a noted expert on leadership transitions, offers proven strategies for moving successfully into a new role at any point in one's career. Concise and practical, The First 90 Days walks managers through every aspect of the transition, from mental preparation to forging the right alliances to securing critical early wins. Through vivid examples of success and failure at all levels, Watkins identifies the most common pitfalls new leaders encounter and provides tools and strategies for how to avoid them."

Buy the book here.

Book Review: Bad Leadership by Barbara Kellerman

"How is Saddam Hussein like Tony Blair? Or Kenneth Lay like Lou Gerstner? Answer: They are, or were, leaders. Many would argue that tyrants, corrupt CEOs, and other abusers of power and authority are not leaders at all--at least not as the word is currently used. But, according to Barbara Kellerman, this assumption is dangerously naive. A provocative departure from conventional thinking, Bad Leadership compels us to see leadership in its entirety. Kellerman argues that the dark side of leadership--from rigidity and callousness to corruption and cruelty--is not an aberration. Rather, bad leadership is as ubiquitous as it is insidious--and so must be more carefully examined and better understood.

Drawing on high-profile, contemporary examples--from Mary Meeker to David Koresh, Bill Clinton to Radovan Karadzic, Al Dunlap to Leona Helmsley--Kellerman explores seven primary types of bad leadership and dissects why and how leaders cross the line from good to bad. The book also illuminates the critical role of followers, revealing how they collaborate with, and sometimes even cause, bad leadership. Daring and counterintuitive, Bad Leadership makes clear that we need to face the dark side to become better leaders and followers ourselves. Barbara Kellerman is research director of the Center for Public Leadership and a lecturer in public policy at the Kennedy School of Government, Harvard University."

Buy the book here.

Executive Reading Levels

Now here is an interesting issue. I just read this article that talks about the reading level of various self-help and do-it-yourself books for the "busy" business executive. I would add "Who isn't busy?" This one hit a nerve with me.

What is the "real" issue here? Is the problem that authors (including consultant authors) are dumbing down to some less than stellar "executive reading level," or is the problem that the hard-core academic writers are upset that nobody wants to read their convoluted texts? Or is the issue something even more devious. There are other possibilities. Read on.

First of all, is this issue relevant to economic development? I think it is. I hear this issue raised from time to time. Economic developers and their public and private sector leaders working on projects often ask the consultant to simplify, simplify, and then again simplify. As a consultant, I am usually more than willing to oblige. After all, my job is to ensure that people understand complex issues, plan proposals, etc. I am all for effective communication. No problem there.

There are times however, when I must respectfully decline to simplify any further. Why would I do that? Well, believe it or not, people often seek to "impose" clarity where it simply does not exist. And yes, leaders seek at times to edit out differing ideas, any signs of dissention, and all sorts of things from reports because they are unable to work together to achieve a "real" shared understanding and consensus on how to move forward. Sometimes it is easier to ask the consultant to just make it appear on paper that a shared understanding and consensus exist.

Surprised by that? You shouldn't be. It's the art of storytelling and we do a lot of that in economic development. Don't we? Maybe that is why we come so unraveled when a journalist presents an opposing view of an issued consulting report.

Thunderbird International

If you don't know about the school in Glendale, AZ, you should. Click here to learn more.

Greeenboro, NC ED Update

For those of you wondering whether recent ED reorganization efforts are bearing fruit, click here to read a recent article describing the status of economic development efforts serving the area. While much work lies ahead, the article indicates progress is being made on some fronts. I will add: It's not easy in this highly competitive economic development environment.

Kalamazoo ED Update

'Things are happening at the zoo" -- at Kalamazoo actually. Click here to read about recent project activities in the area, including some new aircraft-related jobs expected to develop locally.

Missouri Governor Wants Review of Development Projects

The situation facing Missouri is not unlike that faced by some other states. Click here to read more.

Economic Development Institute, Phoenix

Just a reminder that EDI will be conducted during the March 21-25 timeframe in Phoenix this year. It promises to be a great session, and the weather won't be too shabby either! See you there.

More Questioning of Incentives

You may find this article about the use of incentives in Charlotte, NC to be of interest. I observe increased discomfort about using these programs in several places across the country. Yesteday's article about Alabama is another illustration. Is this a phase, growing pain, or are incentives headed for disaster?

More here.

Insightful Paper on Industrial "Gatekeeping"

Here is one directly from SSTI. Thanks for calling our attention to this one! It's a good one for all of you who are doing the industrial district thing. I will leave it at that...

"A Review of Morrison, Andrea. 2004. "Gatekeepers of Knowledge" within Industrial Districts: Who They Are, How They Interact. Working Paper 163. Centro di Ricerca sui Processi di Innovazione e Internazionalizzazione (CESPRI). by Jerry Paytas, Ph.D., and Donald Smith, Ph.D.

Morrison's (2004) analysis is an important contribution to our understanding of the limits and dynamics of clusters and the role of leading firms in the dissemination of knowledge. As Markusen (1996) demonstrated, there is more than one kind of cluster and the different dynamics of cluster types can determine the impact of a cluster on regional growth. More simply, all clusters are not created equal. The analysis of the sofa triangle focused on the two leading firms in the Murgia Industrial District, a cluster with a total of 121 firms and less than 6,000 employees. The study concluded that the leading firms are not effective transmitters of knowledge, particularly the tacit kind that is a key component of cluster development. The analysis does show, however, that these firms act as nodes in less important information networks.

The researcher concludes that caution is required in attracting leading firms to anchor a cluster. There are two fallacies in this conclusion. The first is the assumption that the "transmission of technical know-how" is the only reason for recruiting a leading firm, when in reality there are a variety of reasons. For example, leading firms can act as magnets for talent and for other firms. Tacit knowledge may be transmitted when employees leave these leading firms - a mechanism for transmission that was not captured by the study's methodology. Leading firms can also be generators of spin-out companies that not only transmit knowledge but grow the cluster, as in the case of Fairchild Semiconductors in Silicon Valley and Hybritech in San Diego.

The second and most critical fallacy is that there is nothing to suggest that these results can be generalized to other regions or industry clusters. The sofa triangle is an established, but not very large cluster. It may be that characteristics of this specific cluster or the furniture industry influence the transmission of knowledge. The analysis also demonstrated differences in the knowledge networks of the individual leading firms. The employees and departments at Calia appear to play a more central role in the knowledge network than their counterparts at Natuzzi. This suggests reason for caution when recruiting a leading firm as not all "leaders" provide the same benefits.

Morrison (2004, 30) provides an appropriate caution in her conclusion that "public interventions supporting individual leaders, intended as engines of growth for local systems, should be implemented cautiously." In fact, there are many reasons for caution when implementing an attraction strategy, not the least of which are the balance of costs and benefits.
SSTI's summary of the study may have overstated the evidence provided in the study, which does not suggest that attracting leading firms won't work for any cluster in any region.
"Gatekeepers of Knowledge" within Industrial Districts: Who They Are, How They Interact is available at: http://www.cespri.it/papers/WP163Morrison.pdf."

$129,615 Per Job

Public sector incentives to be used to bring a Louisiana-Pacific wood products plant to Clarke County, Alabama are expected to amount to $129,615 per job; putting the offer on par with the state's successful bids for automakers. The per-job cost for the expected 130 positions is more than that involved during the Honda and Hyundai deals, but less than that of Mercedes-Benz in 1993.

That strikes me as a lot of money. The M-B and Honda deals have worked out for Alabama. The question is whether Louisiana-Pacific has the same potential to stimulate economic growth. communities everywhere are being asked to pony up with big bucks. I advise all my clients to exercise caution in this arena these days, given the court pressures mounting in Ohio and others to curb the use of these programs

More here.

Toledo Area Political Leaders Agree to Work Together

It's a start--getting city and county political leaders working together. More here.

Ohio Economic Development Association

I vividly recall my days as President of what used to be the Ohio Development Association back in the mid-1980s, which has grown and matured nicely, and now is to become the Ohio Economic Development Association, through a merger with the Ohio Economic Development Council. The group will also have a division, called Team Ohio, which will help promote Ohio for new business investment and jobs.

My sincere congratulations to all concerned for a job well done!

Click here to read more about the new organization and here to visit its website.

Information for the "Long View"

Many historical census documents and volumes of the Statistical Abstract of the United States are now online at the U.S. Census Bureau’s Internet site as the agency moves toward its goal of posting all of its publications online.

The initial rollout consists of results from the first census in 1790 to the 1860 census. Statistical Abstracts from 1878-1936 and 1953-56 also are online. Missing census reports and Statistical Abstracts will be added as the Census Bureau finishes scanning paper copies of the historical documents.

The historical documents are image files that are not searchable, but do include indexes and tables of contents.

To access the files, users should go to the U.S. Census Bureau home page at <http://www.census.gov> and select the “Publications (PDF)” link on the left side of the page.

Barry Broome's Last Words on Kalamazoo

Barry Broome, the President and CEO of Michigan Southwest in Kalamazoo is headed to Phoenix to run the Greater Phoenix Economic Council (GPEC).

Many folks in the ED profession by now have received this news. To some economic developers, Barry's selection as the new GPEC CEO was a surprise (maybe a shock to some) because of Barry's relatively young age and the fact that he has not worked in the business as long as many others aiming at the job. I must say that Barry got some important things done in Parma, Toledo, and SW Michigan. He worked on things that were important. That is a hallmark of a good economic developer in my book.

The world is full of surprises. Economic development is full of surprises. For example, who would have guessed five years ago that offshore outsourcing would be economic development's single greatest challenge?

In my view, there is plenty of room for youth, energy, and new ideas in economic development. Approaching 30 years in this interesting and wonderful business, I can attest to the fact that as a profession, we have plenty of room for these things. I can also attest to the fact that economic development needs more wisdom, long-term thinking and planning, and systematic approaches to the issues it seeks to address. Economic development, especially in fast-growing states like Arizona, requires greater balance with Mother Nature, and it needs to work on the qualitative transformation of the Arizona economy.

In Barry's parting comments about Kalamazoo, he says that the area has "something to offer." I agree with him on that point. Qualitatively, Kalamazoo is a different type of economic place than Phoenix, and should be treated as such. Hopefully Barry's successor in Kalamazoo will quickly come to terms with the unique and valuable qualities of the Kalamazoo and help area businesses, communities, and workers to make the most of those assets.

I wish Barry well in Phoenix. I would urge him to consider the "chemistry" of the place and its people as he starts his new assignment. Economic developers have always been part alchemist from what I can tell.

Pressures on the Texas Enterprise Fund

Some Texans are saying that the Texas Enterprise Fund should be better guided in the future. I interpret that to mean they are looking for greater signs of accountability and performance measurement. More here.

State and local incentives programs--everywhere--can stand to improve in this arena. Too many marinally significant projects receive support, only because the money is there and any company meeting the loose criteria used can tap the money. That's not right.

Incentives are under increased scrutiny nationwide. Trust me. Economic development professionals and their leaders should be paying a lot more attention to making these programs performance-based and aligning them with their strategic plans. I am not aiming this advice solely at the Texas program, rather I believe all managers and keepers of these funds need to make improvements.