Census Releases New Business Capital Spending Survey Results

The Annual Capital Expenditures Survey (ACES) is part of acomprehensive program designed to provide moredetailed and timely information on capital investment instructures and equipment by nonfarm businesses. Thedata are used to improve the quality of current economicindicators of business investments, as well as the quarterlyestimates of gross domestic product. The data alsoprovide facts about trends in capital expenditures usefulfor identifying business opportunities, product development,and business planning.

In 2004, U.S. businesses invested $1.05 trillion in both new and used capital goods. This spending level is up 7.4 percent from the revised 2003 total of $975.0 billion. This increase follows consecutive declines of 2.3 percent in 2003 and 10.0 percent in 2002. Spending on new structures and equipment in 2004 accounted for $956.6 billion or 91.3 percent of total expenditures, an increase of 8.1 percent from 2003. Expenditures for structures totaled $371.9 billion, with $327.0 billion (87.9 percent) spent for new structures. Investment in new structures increased 7.1 percent from the prior year. Expenditures for equipment totaled $675.6 billion, with $629.6 billion (93.2 percent) spent for new equipment, an increase of 8.7 percent from 2003.

Companies with employees accounted for $958.6 billion, or 91.5 percent of 2004 investment spending, an increase of 8.1 percent from 2003. These companies invested $338.6 billion in structures. Their investment in equipment amounted to $620.0 billion, an increase of 8.2 percent from 2003. Of the 135 industries published in this report, 44 had a statistically significant increase in spending, 20 had a statistically significant decrease, and 71
spent about the same as the prior year.

Capital expenditures by companies without employees in 2004 totaled $88.9 billion, or 8.5 percent of total business investment. Approximately 63 percent of this spending or $55.6 billion was for equipment.

Fort Wayne Area Forms New Economic Growth Partnership

Five regional economic development groups are moving their headquarters to downtown Fort Wayne.

They will exist under an umbrella called the Economic Growth Partnership, designed as a convenience for the people and business its member groups serve

The five agencies that will comprise the center are:

-Community Research Institute (CRI) – Tracks economic and socio-demographic trends throughout the region and provides support services to economic and workforce development organizations.

-IEDC (Indiana Economic Development Corporation) regional office – Indiana’s lead economic development agency, established in 2005 to replace the former Department of Commerce.

-NIWIB (Northeast Indiana Workforce Investment Board) – Services include workforce training, grants, job-profiling, skills-gap assessments, job fairs and recruitment information and other services needed to help businesses tap into the skilled workforce in northeast Indiana.

-Northeast Indiana Regional Marketing Partnership – Coordinates multi-county efforts across northeast Indiana through a collaborative branding initiative.

-TQM Network – Provides learning experiences in critical business areas such as quality, training, lean manufacturing, human resources.

Interview with Louisiana Dept. of Economic Development Head, Michael Olivier

Here is an interesting interview on what it is like to be an economic developer in Louisiana with Katrina and its aftermath. Good one. Mike is a friend by the way. I wish him well.

When Louisiana Economic Development Secretary Michael Oliver initially accepted the much- desired job as head “job hunter” for the State of Louisiana, never in his dreams would he have expected a solid one-two punch of Katrina and Rita. Now that shadow of Katrina is over six months long, the annual Governor’s Economic Development Conference is upon us and it’s time to look to the future and to hopeful opportunities.

Bayoubuzz presents an interview with LED Secretary Michael Olivier to provide an idea of the state of affairs in the state of business and an inside look at what we can expect at the Governor’s Economic Development Conference which starts Monday.

Read the interview details here.

Experts: Blame the Growing Trade Gap on Income-Strapped Consumers

The U.S. trade deficit widened to a record in January, the government reported Thursday, as the strengthening U.S. economy attracted a surge of imported cars, household goods and petroleum products.

Americans imported $68.5 billion more in goods and services than they exported at the start of the year, up 5.3 percent from December, the U.S. Commerce Department said. The previous record monthly deficit was in October, when it swelled to $67.8 billion.

A 3.5 percent jump in imports in January appears to reflect the sharply higher consumer spending during the month and rising price of oil and other energy products.

Automobile and car parts imports increased 5.3 percent, and petroleum- based imports increased 4.3 percent.

Exports rose 2.5 percent from December, with soybean shipments doubling and airplane sales up 44 percent.

The trade deficit was larger than the $66.5 billion that economists had forecast, and analysts said they expected the gap to narrow somewhat in the coming months because oil prices have retreated after soaring early this year on concerns about Iran and Nigeria.

The Labor Department reported earlier that the price of petroleum imports jumped 6.4 percent in January after falling 0.4 percent in December.

Many experts expect a slowdown in U.S. consumer demand after the sharp increase during an unusually warm January, and as the Federal Reserve continues to raise interest rates.

Read more here.

More Billionaires

The number of billionaires surged this year, as did their collective pile of cash, according to Forbes magazine's annual billionaire list.

The magazine said the number of billionaires worldwide increased by 102 people in 2006 to 793, a record number, largely due to bullish global stock markets. Their total net worth jumped 18 percent to $2.6 trillion.

Microsoft founder Bill Gates is still the world's richest man, the magazine said, marking his twelfth consecutive year in the No. 1 spot.

Famed investor Warren Buffett again takes second place, and this year the gap between the two moguls is even wider, the magazine said.

Three new people moved into the top 10: France's Bernard Arnault at No. 7, Canada's Kenneth Thomson and family, ranked ninth, and Hong Kong's Li Ka-Shing in the No. 10 spot.

With 371, the U.S. is the country with the most billionaires, followed by German with 55, the magazine reported.

Read more here.

And may I ask: If the number of billionaires can grow worldwide, why can't we seem to jumpstart income growth and wealth formation for average American citizens in places line Cleveland, Ohio, Wichita Falls, Texas, and Meadville, Pennsylvania?

A Short Look at Econometrics

This is a subject that economic developers should have at least a basic understanding of. Analytical reasoning is important to our business. We under-use these abilities in our work at the current time.

Econometric techniques are usually developed and employed for answering practical questions. As the first five letters of the word “econometrics” indicate, these questions tend to deal with economic issues, although applications to other disciplines are widespread.

The economic issues can concern macroeconomics, international economics, and microeconomics, regional and industrial economics, but also finance, marketing, and accounting. The questions usually aim at a better understanding of an actually observed phenomenon and sometimes also at providing forecasts for future situations. Often it is hoped that these insights can be used to modify current policies or to put forward new strategies.

For example, one may wonder about the causes of economic crises, and if these are identified, one can think of trying to reduce the effects of crises in the future. Or, it may be interesting to know what motivates people to donate to charity, and use this in order to better address prospective donors. An economic developer mght want to understand the investment behavior of certain industries in relation to geography. One can also try to understand how stock markets go up–and, particularly, how they go down–in order to adjust investment decisions.

The whole range of econometric methods is usually simply called “econometrics.” And anyone who either invents new econometric techniques, or applies old or new techniques, is called an “econometrician. ” That shouldn't surprise you, right?

One might also think of an econometrician as being a statistician who investigates the properties particular to economic data. Last I looked, economic developers are not even expected to know anything about statistics to become certified.

Econometrics can be divided into econometric theory and applied econometrics. Econometric theory usually involves the development of new methods and the study of their properties. Applied econometrics concerns the development and application of tools to solve relevant practical questions. This second area will be most useful to economic development in a local and state economies sense.

In order to answer practical questions, econometric techniques are applied to actually observed data. These data can concern: (1) observations over time, like a country's GDP when measured annually, (2) observations across individuals, like donations to charity, or (3) observations over time and over individuals. Perhaps “individuals” would be better phrased as “individual cases, ” to indicate that these observations can also concern countries, firms, or households, to mention just a few. Additionally, when one thinks about observations over time, these can concern seconds, days, or years.

Want to learn more? Read this fine book: A Concise Introduction to Econometrics: An Intuitive Guide. Contributors: Philip Hans Franses - author. Publisher: Cambridge University Press. Place of Publication: Cambridge, England. Publication Year: 2002.

Oregon Bioscience Companies Gather

Raising money remains a huge hurdle for Oregon-based life sciences companies. Yet, leaders of five up-and-coming firms who spoke Wednesday at the Oregon Bioscience 2006 Conference showed it's not impossible.

All have kept on track by doggedly focusing on technologies that fit an unserved need in the marketplace -- and by casting a wide net for angel investors, venture capital funds and government grants.

Leaders of the Portland companies shared notes on their companies' early-stage experiences at the annual networking event for the nonprofit association, this year at the Oregon Zoo. Some state leaders have high hopes that biotechnology and related firms can fuel economic growth in Oregon, but most growth in that industry so far has been confined to hotbeds elsewhere, including Boston and San Francisco.

Read more here.

Biodiesel Capacity Grows in Indiana

A French company plans to build a plant capable of producing more than 80 million gallons of biodiesel each year in northern Indiana, state officials announced.

Louis Dreyfus Agriculture Industries plans this spring to start building the $135 million plant, which would employ 85 workers, according to a news release from Gov. Mitch Daniels' office.

It will be the ninth biofuel plant in development in Indiana; the only one already in operation is the ethanol plant in South Bend. Biofuel plants use natural products such as corn to create fuel additives and other energy sources.

Read more here.

New Kia Plant Expected in Georgia

Kia Motors Corp. is expected to announce a $1.2 billion automotive assembly plant as soon as next Tuesday, and LaGrange, Georgia is its first choice, according to published reports.

The plant, which would be Georgia's first overseas automaker, would bring some 2,500 jobs to west Georgia. And it would score an economic win for a state that's learned in the past several months it is losing both its auto plants.

The plant would be the Korean automaker's first U.S. factory. It's parent, Hyundai, has a plant in Montgomery, Ala., allowing the two plants to share suppliers.

The Los Angeles Times, citing automotive industry Web site wardsauto.com, said southwestern Georgia is a leading candidate for the facility and an announcement could come March 14.

Chosun Ilbo, a daily newspaper based in Seoul, reported last week that Georgia is the probable site for the new plant. The paper quoted an unnamed official at Kia's parent company, Seoul-based Hyundai Motor Co.

Read more here.

PS: I remember working with scrappy Kia in Korea in 1983. Who would have ever thought they would be opening their first US plant in 2006?

Team NEO Gets New CEO

Team NEO recently announced the appointment of Thomas A. Waltermire as chief executive officer of the organization, a private-sector-led economic development organization that helps the region’s employers grow here and works to recruit medium to large companies to Northeast Ohio.

Waltermire, former chairman and chief executive officer of PolyOne Corporation in Avon Lake, currently serves as a board member of the Greater Cleveland Partnership; vice chairman of NorTech, the regional technology initiative; and a member of the executive committee of JumpStart, Inc., a Northeast Ohio entrepreneurship and investment accelerator. In addition, he was appointed by Gov. Bob Taft to the Third Frontier Advisory Board and is a member of the Business Alliance for Higher Education and the Economy. He also has been a board member of the Regional Business Council, the Greater Cleveland Growth Association, Cleveland Tomorrow and the Ohio Business Roundtable.

Greater Cleveland Partnership Gets New Leader

The Board of Directors of the Greater Cleveland Partnership (GCP) at its recent Annual Meeting of Members selected Frederick R. Nance to serve as chairman for a two year term. Nance replaces Alexander M. Cutler, president and CEO of Eaton Corp., who served two years as GCP's first chairman.

Nance, who previously served in the GCP Board of Directors as a vice chairman for advocacy, is the managing partner of the Squire, Sanders &Dempsey Cleveland office.

Read more here.

Florida Looks at New Economic Development Tools

According to a recent news article, Florida Gov. Jeb Bush has proposed an ambitious $630 million grab bag of economic-development goodies for just about any company threatening to leave the state or hoping to move here.

The biggest chunk — $250 million — is for an innovation incentive fund that would help Florida compete for major research and development projects. The projects would have to create a minimum of 1,000 jobs and provide $500 million in new capital on their own, and the state grant would have to be matched by the local community.

The governor also wants $75 million in tax credits to be used as guarantees against risk to help raise venture capital from investors. The fresh capital would be distributed to top venture capital firms that would filter the money down to smaller firms to invest in early stage, Florida-based start-up companies. The credits would be sold to reimburse investors if the companies fail.

Does Massachusetts Spend Too Much on Incentives?

That question was thrown in the midst of a recent Boston Globe article on why the Commonwealth needs to give more attention to workforce development as a part of its overall economic development strategy.

Here is the statement by Joan Fitzgerald: "For starters, too much of the state's focus is on providing incentives for firms to locate here rather than investing in the workforce that will keep them here once they go into manufacturing. In 2003, Governor Mitt Romney launched the ''Massachusetts, It's All Here" marketing campaign, whose first phase was to attract bio-manufacturing and medical device producers. Another Romney economic development initiative set aside $125 million in subsidies to attract bio-pharmaceutical and medical device companies that create manufacturing jobs."

How Will the AT&T Cuts Impact Your Area?

Telecom giant AT&T has said it expects to cut 10,000 jobs following its $67 billion takeover of rival BellSouth.

AT&T said the staff cuts would be made by 2009 in a move to reduce costs at the combined group.

The new cuts are in addition to 13,000 job losses over three years already announced by AT&T, following a previous US telecoms merger.

AT&T said on Monday that it would buy BellSouth, creating a US sector giant with a market capitalization of $165 billion

The deal also gives AT&T full ownership of Cingular Wireless, America's biggest mobile phone firm, catapulting the combined group ahead of its nearest US rival, Verizon Communications.

Read more here. While many areas will be concerned about the job cuts. The other issue is how will the merger impact telecom services in your area, either positively or negatively.

ED Futures Newsletter

Dear ED Futures Subscriber:

Lots of industry profiles. Check them out below. We are very busy in this area and you have indicated that they are helpful to you. So here they are. Don't forget to check in the archives. There are plenty more located there.

We have been doing some interesting work in the Greater Toronto area (Halton Regional Municipality) over the past couple of months. It is refreshing to work in an economic growth environment with strong global connections. The Canadians are doing many things right in economic development. US economic developers should be paying more attention to success stories in Canada.

If regional economic competitiveness issues are of interest to you, check out the Toronto-based Institute for Competitiveness and Prosperity. The institute has done some insightful analysis comparing Canadian and US locations.

Spring is drawing closer. In Cleveland, we love seeing more sunshine.

Best wishes,

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