Quality Defined

"Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not quality because it is hard to make and costs a lot of money, as manufacturers typically believe. This is incompetence. Customers pay only for what is of use to them and gives them value. Nothing else constitutes quality." --Peter Drucker

Reconnect with Your Deeper Values

"Out of 5.8 billion people in the world, the majority of them are certainly not believers in Buddhism. We can't argue with them, tell them they should be believers. No! Impossible! And, realistically speaking, if the majority of humanity remain nonbelievers, it doesn't matter. No problem! The problem is that the majority have lost, or ignore, the deeper human values - compassion, a sense of responsibility. That is our big concern." --His Holiness The Dalai Lama

Practice Courageous Leadership

"To see what is right and not to do it is want of courage." --Confucius 551 B.C. - 479 B.C., Chinese philosopher.

On Ethics in Business and Economic Development

"Commerce is as a heaven, whose sun is trustworthiness and whose moon is truthfulness." --Bahá'u'lláh 1817-1892, Persian nobleman and founder of the Baha’I religion.

Alabama Sees Good Economic Gains

Not all states are suffering equally with their economic situations. For one, Alabama is seeing good growth. Led by expansions in its fast-growing automotive assembly trade, Alabama added nearly 25,000 jobs last year, a torrid pace that should continue in 2006, state economists said Tuesday at an annual forecasting summit.

Alabama, once distinguished by a poor, uneducated work force, "is on the cusp of magnificence," transforming itself into a state known for high-paying, high-skilled jobs, particularly in auto manufacturing, according to Carl Ferguson, chief economist for the University of Alabama's Center for Business and Economic Research.

"This is the kind of forecast I've been waiting 30 years to give you. Our state economy is vibrant. It is dynamic and it is growing," Ferguson told about 150 state business leaders at the Alabama Economic Outlook Conference in Montgomery.

Read more here.

New Jersey Makes Gains as Biotech Center

The state of New Jersey has been named one of the five major geographic growth areas for biotechnology in the world, according to a special report published by FierceBiotech, an internationally recognized email newsletter for the biotechnology industry. The report profiles the top five regions in the United States and abroad that have shown the most promise and commitment to investing in the biotech sector.

FierceBiotech evaluated dozens of domestic and international initiatives to identify the five regions that are best positioned as hotbeds of biotech innovation. Along with New Jersey, the other four regions are California, Maryland's I-270 Tech Corridor, Singapore Biopolis and Wisconsin.

"New Jersey is truly the perfect location for emerging companies and research initiatives, as the growing number of biotech companies located here have already realized," said Debbie Hart, president of Biotechnology Council of New Jersey (BCNJ). "With strong and creative government backing and support, close proximity to some of the nation's finest educational and research institutions, and access to the world's top pharmaceutical companies, New Jersey is poised to realize its full potential as an important location for biotechnology and life sciences on the world's stage. This recognition is evidence of that potential."

According to BCNJ, the number of New Jersey biotechnology companies grew from 80 in 1998 to 124 when last officially measured in 2003. A study currently being conducted by BCNJ in partnership with Ernst & Young is expected to demonstrate dramatic new growth since the last study, continued Hart.

Read more here.

New State Economic Climate Rankings Released

Massachusetts and Minnesota have the best economic climates in the United States, according to a comprehensive assessment of state economies released yesterday. The two were the only states to earn straight "A" grades this year on the 2006 Development Report Card for the States -- which found they consistently rank among the top states in the vitality of their businesses, the performance of their economies for workers and their positioning for future economic growth.

Connecticut, the only state to receive top grades on the last assessment (released in December 2004), slipped to a "B" on its Development Capacity due to infrastructure concerns and high energy costs. Yet the state maintains its position on the report card's "honor roll," along with Massachusetts, Minnesota, and the states of Colorado, New Jersey, Virginia, and Wisconsin. Each of the states on the honor roll earned an "A" or "B" on each of the Report Card's three indexes.

The yearly assessment, released since 1987 by the nonprofit Corporation for Enterprise Development (CFED), grades each state on how well its economy is doing for its people, how well the economy is doing for the state's businesses, and how well the state is preparing for its future. The report card uses 68 measures in the areas of Performance (e.g., employment, income, quality of life measures), Business Vitality (e.g., business competitiveness, entrepreneurial energy), and Development Capacity (e.g., infrastructure, financial resources, human resources).

"The states with the strongest economies are those that continue to invest in their own resources and people during good times and bad," said CFED President Andrea Levere. "Too often economic development is defined solely as business recruitment. The purpose of the Development Report Card has always been to show that there are a wide variety of areas in which states and businesses can invest in their future."

States that earned a "D" or an "F" in each category include Alaska, Arizona, Mississippi, New Mexico, and West Virginia.

For more information, analysis, and access to grades for each state for the Development Report Card for the States, visit: http://www.cfed.org/go/drc

In addition to the state grades, this year's Report Card includes an essay on the use of tax incentive packages to lure businesses into states. While roughly $60 billion is spent each year by states and localities on such incentives, the essay questions the wisdom of many incentive investments, noting some cases where the cost per job attracted was as high as $8.8 million. The Development Report Card for the States originated in 1987 as a protest against escalating use of tax incentive packages and has emerged over time as a widely regarded index and the most comprehensive assessment available of the health of state economies.

"Economic conditions are continuously changing and states can't afford to stand still," said David Buchholz, research director for CFED. "Each state is different and must react to the opportunities that present themselves. But for long-term growth, the smart money will always be on education, infrastructure, technology, and entrepreneurship."

Now in its 19th edition, the Development Report Card for the States has provided policymakers and businesses a comparative measure to assess each state's business climate. Through this annual assessment, CFED has helped to redefine the elements of a "good business climate." Today, the DRC is recognized as the most comprehensive measurement of the health of each state's economy and serves as a model for dozens of other state and local evaluation tools. Each year, state officials, journalists, and advocates turn to the DRC for a comprehensive evaluation of the economy.

Don's Leadership Presentation at the IEDC Summit

I gave the keynote speech at the International Economic Development Council (IEDC) Leadership Summit in St. Petersburg, Florida on January 23rd. It was extremely well received. The speech talked about my new book, Creating Leadership Advantage for Economic Development, which will be available in late April.

Download the presentation here. (PDF version) I would appreciate hearing from you by phone (440.449.0753) or by email (dtia@don-iannone.com).

Automotive Scenarios from an Economic Development Standpoint

"When big guns such as General Motors Corp. and Ford Motor Co. reorganize, restructure, close plants or plan to close plants based on the reality of their market share in North America, it affects suppliers -- from Tier 1 down." Source: Industry Week

News such as this has flooded the media over the past several months. It's like the plague, spreading from community to community across the U.S., Canada, and other parts of the world. What are we going to do about this situation? I would urge you NOT to waste your scarce incentive dollars on trying to prevent the inevitable. So, what do we do?

I would urge economic developers to adopt a proactive, forward-thinking perspective of the situation. I suggest we engage in some scenario building exercises. The process begins with an identification of the "right" questions to be asked and hopefully answered by the scenarios. I have my ideas, but want to see if you are really listening. What questions would you ask?

Click here and here to read about and learn more about scenario building.

Ford to Cut 30,000 Jobs

That was the word on Monday. Listen to the company's webcast here. Here's some of the details.

Ford put its restructuring in high gear this week, announcing it will close 14 manufacturing facilities and eliminate as many as 30,000 jobs over the next six years under CEO William Clay Ford Jr.'s plan to end North American losses in 2008.

The company will cut at least $6 billion in annual costs by 2010, Ford said in a conference call yesterday. Executives pledged to create bolder designs, develop vehicles faster and build them more efficiently to ensure that every one is profitable.

The cuts are aimed at restoring profit in Ford's North American auto operations, the company's largest auto unit. The plan, called "Way Forward," is the second effort at revitalizing the unit since 2001, when Ford became CEO of the company founded by his great-grandfather. The region is Ford's largest market and accounts for the bulk of the company's automotive revenue.

"The capacity reduction is big, and it's going to happen," said Burnham Securities analyst David Healy. "The other part is more touchy-feely and hard to evaluate." Ford's move to change its corporate culture is "awful hard to do with an organization under stress."

Assembly plants in Atlanta and St. Louis will close this year, and Wixom, Mich., will shut down next year, its 50th in operation. Atlanta makes the Taurus sedan, which Ford is phasing out. St. Louis is one of two plants that make the Explorer mid-size sport-utility vehicle, whose sales fell 29% last year.

Two more plants will close by 2008, followed by two others in 2012. An Ontario, Canada plant next year will drop to one shift from two, where the Crown Victoria and Grand Marquis cars are made.

Don's Comment: It ain't over. Watch for more.

Sources: Various news services

Toyota to Up U.S. Production

Boy, this sounds a lot like the late 1970s and early 1980s. Just about the same thing happened in the auto industry during that period. History does repeat itself!

Just as Ford has announced the planned closure of 14 production facilities in North America and production cuts of 1.2m vehicles a year, Toyota has declared an increase in its US production plans.

It's a relatively small increase, but one which shows how the Japanese brand - now the world's second-largest carmaker, behind only GM and gaining fast - has stealthily stolen market share from America's domestic carmakers on their home turf.

Toyota is to expand the capacity of its plant in Baja, California, by 20,000 units to make up to 50,000 vehicles and 200,000 truck beds a year. The investment of $37m will bring additional job vacancies, though the plant currently only employs 800 people, mostly Mexicans from nearby Tijuana and Tecate, to make the Tacoma pick-up.

Toyota is also building a new plant for its Tundra pick-up in Texas, and a further plant to build SUVs in Canada. More here: www.thecarconnection.com

DaimlerChrysler Plans Major Job Cuts

Yet another major carmaker is slashing jobs. This time DaimlerChrysler is cutting 6000 positions to save more than $1 billion a year.

The cuts trim one fifth of the company's management and administrative workers over the next two years. Daimler announced 8,500 production job cuts last year.

DaimlerChrysler's cuts follow recent announcements by larger rivals Ford and General Motors that they are slashing tens of thousands of workers and closing two dozen factories and other facilities. DaimlerChrysler is the world's fifth-largest carmaker, and it is based in Germany and the United States.

Intensified competition from Asian automakers is forcing European and U.S. companies to slash costs and search for greater efficiency.

ED Futures Newsletter

Dear ED Futures Reader:

Our attention remained focused on the history of businesses and industries in places during the last week. The experience was a learningful one for me, and hopefully for each of you as well.

It's good to know the "stories" of companies, industries, and economic places. It gives perspective to what we are trying to accomplish today. These stories point to how economic life is both born and dies in geographic places. These stories underscore the importance of people who make things happen. They remind all of us that the real power we have is in making good use of the "present;" no matter what point in history we visit.

As you recall, ED Futures started the year with a series of outlooks for the future. Not to my surprise, economic developers are far more interested in futurism and "here and now-ism" than what happened in the past. For the reasons listed in the previous paragraph, history is important.

If I had one recommendation from my historical research, it would be that the economic development community invest in a serious and honest study of the field's history, and of course offer a series of future perspectives based upon these reflections. Documentation is important, especially to the future generations of practitioners. They deserve to know who their ancestors were and the stories their work and lives told.

Have a wonderfully successful week. Look for a story or two in the coming week about economic development leadership, which is where my attention is focused at this very moment.

As always, we look forward to hearing from you.

Sincerely,

Don Iannone
ED Futures Publisher
Email: dtia@don-iannone.com
Phone: 440.449.0753