Micro-Lending Works

This is a strategy any community--large or small can adopt and make work.

Read the LA Times story here.

Economic Trouble Ahead?

The government reported a double dose of troubling economic news today: slowing growth and rising inflation.

The economy grew at an annual rate of only 2.5% in the second three months of 2006, the Commerce Department reported.

That is less than half of the 5.6% rate of the first three months of the year.

Economists had universally forecast a slowdown from the first three months, which got a boost from the recovery from Hurricane Katrina, but the consensus of the profession was 3%, half a point higher than the figure reported by the Commerce Department.

Meanwhile, the price index for personal consumption expenditures excluding volatile food and energy purchases registered 2.9% in the second quarter of 2006.

Read more here.

Raytheon Communities Pay Attention

Waltham defense giant Raytheon Co. yesterday posted a 54 percent jump in second-quarter earnings and said it may sell its largest non defense business, Raytheon Aircraft Co. of Wichita, Kan.

Raytheon said it had hired the Credit Suisse investment bank to "explore strategic alternatives" for its general aviation division, which builds business jets, turboprops, and piston aircraft for commercial markets and trainer aircraft for the Air Force and the Navy. Among its best known products are Beechcraft and Hawker business jets.

The alternatives could include selling all or part of Raytheon Aircraft to another company, spinning it off as a standalone business, or issuing stock to shareholders in an initial public offering. Company officials cautioned, however, that there may be no transaction.

Read the full story here.

Good to Hear!

Thommen Medical USA announced that they will locate its implantology business headquarters operations from Oklahoma to Northeast Ohio due to help from Team NEO, the City of Cleveland, and others, despite attractive offers to locate in other cities such as Boston. But, according to company officials, it was Northeast Ohio's cultural offerings that may have tipped the scale for this region over others.

Read more here.

Biofuels Update

Researchers gathered at a global biotechnology conference in Toronto recently to explore better methods of making biofuels out of everything from corn stalks to orange peels.

With oil prices above $76 (U.S.) a barrel, research and development into ethanol and biodiesel is reaching a feverish pitch in North America.

The search is on to find higher yielding crops and improved sugar extracting enzymes — both necessary for making biofuel production more economical and less disruptive to food and livestock feed markets.

Read the full story here.

Why We're Loing Businesses

Consider, if 1,000 businesses started in your city three years ago, only 200 are left today. Of these, only 10 percent will experience significant profits and growth (and even half of those will ultimately fail). Why is this happening? Here is what a researcher found: 90 percent of business failures are caused by a combination of three factors: inadequate financing or structure, ineffective marketing techniques and poor management practices. Let's consider each factor.

Read the story here.

Kauffman Foundation Once Again Shows Us How

In its continuing efforts to see entrepreneurship education become a common and accessible campus-wide opportunity, the Ewing Marion Kauffman Foundation announced its second Kauffman Campuses Initiative with a $35 million commitment to colleges and universities throughout the country.

The Kauffman Campuses Initiative was launched in 2003, when eight schools were awarded a total of $25 million to transform the campus culture by providing entrepreneurship courses and programs within liberal arts, engineering and other disciplines outside of the business school.

More here.

Binghamton Still Working Away at Its Plan

Consultants get hired all the time to help areas prepare economic development strategies. Some times they get implemented and some times they don't. Read how the Binghamton, NY area is doing in trying to implement its 2002 plan.

New EDO in San Marcos, TX

San Marcos, TX and neighbors joint together to create new EDO.

More here.

Chinese Making MGs in Oklahoma

But right in the heart of America — Oklahoma, actually, at Ardmore — China’s oldest carmaker says it will build an assembly plant to build MGs, the old English sports car brand.

Nanjing Automobile Corp. will establish a manufacturing facility and parts distribution center at Ardmore and make Oklahoma City its global headquarters for sales, marketing and distribution outside of Asia. A research and development facility will be housed at the University of Oklahoma at Norman.

Oklahoma, always considered one of the most conservative of states, to be the home of a company from a Communist nation? Who would have ever thought of that?

Nanjing bought MG Rover Group Ltd. last year and plans to invest more than $2 billion to reintroduce the car in China and Europe as well as build the Oklahoma plant.

More here.

More Venture Capital Coming

Venture capital is flowing again, to the tune of about $50 billion this year. That's still only a quarter of the seed money available in the peak year of 2000, but it's a big leap from the recent past. And it will be even more in 2007 as angels, VC firms and big businesses eager to expand take a chance on promising new projects.

Read the story in Kiplinger.

BMW's Accelerated U.S. Push

Incoming CEO Norbert Reithofer lays out a 300,000-car sales target and a likely expansion of Stateside production in 2008. More production in US!!!

Read the article here.

Business Coalitions: A Force for Regionalism

Here is a good one on regionalism by Rosabeth Moss Kanter. Click here.

California Regional Indicators

Community indicators are tools to measure a community's well-being. Quality of Life Indicator projects promote and monitor progress toward sustainable vitality, quality and inclusion for the economy, environment, and people (equity) across the 3 E's.

The indicators may range from the crime rate in an area to the soil drainage capacity, but all can help regions to track and prioritize their own distinct strengths and challenges. This data is also a catalyst for civic engagement, educating and mobilizing residents and policymakers to action in their communities.California's Regional Collaboratives (RCs) have been at the cutting edge of innovation in the emerging field of Regional Quality of Life Indicators.

Through a recent report (2.9 MB, PDF) documenting California's 14 projects and a network of practitioners, CCRL is working to build the capacity of current and new indicator projects.The report, titled Telling Our Story, Measuring Our Progress: California's Regional Quality of Life Indicator Projects, serves as a best practice and technical resource, documents what has been learned at a regional level, analyzes and compares data sets across regions, identifies emerging issues of policy importance through the development of new indicators, and lays the groundwork for a community of practice.

With the plethora of projects that have sprung up in California, there is much to be gained from working more closely together and sharing resources within the state. CCRL is working with CALCOG and some of California's regional Councils of Government to develop a region-based statewide indicators report, the first of its kind in California. CCRL is the final stages of assembling the funding for this project. Check this website and the CalRegions newsletter for future developments.

CB Richard Ellis on Cleveland's Downtown Office Market

"Cleveland’s Central Business District (CBD)continues to improve over the first half of 2006 after a solid performance in the second quarter. We are seeing encouraging increases in activity indicating Cleveland is experiencing moderate economic growth. With a number of signed leases over the first half combined with anticipated deals to take shape, the market is in position for a solid performance in the next 8 to 12 months."

Source: CB Richard Ellis

Don's Comment: Better than I would have thought, but I'm glad to hear some hopeful news.

Insights on the LA Convention Center

Joel Kotkin on LA's convention center: "Aided by Mayor Antonio Villaraigosa, downtown Los Angeles' boosters are poised to dip again into the pockets of taxpayers to help finance a splashy new project. The cost this time is up to $300 million in loans, tax breaks and fee waivers for a $750-million, 54-story complex — including a 876-room Marriott Marquis, a posh 124-room Ritz-Carlton and 216 luxury condos — across from the Convention Center.

The argument used to justify the handout is well-traveled in development circles: The project would create new jobs, higher tax revenues, more convention business, and it would further brighten the image of the city's central core. Taxpayers and L.A. business owners should be wary of such promises, however, particularly when it comes to the Convention Center.

Let's look at the record. The Convention Center has been a consistent money loser for years, costing the city $30 million annually in debt service. Even Villaraigosa calls it a "white elephant."

Don's Take: Go easy on the convention business. Be sure the market is what you think it is. Don't over-build, over-spend, and over-expect. It won't save your city.

What Folks Think of Houston

From the Houston Chronicle:

"Houston appears neither among the 20 cities young college-educated workers would most likely consider as a home, nor among the 20 where they'd least like to live. New York and Los Angeles, by contrast, appear high on both lists, indicating people have strong opinions about the nation's two largest cities.

"Houston is invisible," said Stephen Klineberg, the Rice University sociology professor who directs the annual Houston Area Survey of local attitudes and demographic traits. "People don't know about Houston. They don't think of Houston."

Nationally, the survey's most striking finding was that 64 percent of college-educated people ages 25 to 34 said they would first decide where they wanted to live, then look for a job in that area. This is a reversal from previous generations that tended to seek the best job they could find and considered location secondary.

"Every economic development strategy over the last 30 years has been built on the idea that if we attract jobs, we attract people," Coletta said.

The survey reinforces an idea that Houston's business and political leaders have embraced in recent years: In a knowledge-based economy, the cities that thrive will be those that offer the lifestyle qualities that are important to young, well-educated workers."

Don's Take: These issues are common to many cities. Houston is not alone. Branding can help--some, but don't over-rely on it. Young people first and foremost want a chance to give shape to a city. They want to feel a part of it. Go with that!

Why Economic Development Isn't Working in NE Ohio

The Cleveland Plain Dealer recently ran a story pointing to the inability of Team Northeast (NEO) to make a dent in the region's economic problems. In a related story, the newspaper suggested that other regional economic development efforts weren't doing too much better. Don't get me wrong; accountability is needed in economic development. It is very fair to ask what we're getting for our investments. Click here to read the series.

While the series makes some good points, in an overall sense it really misses the point. What did it miss? It failed to fully acknowledge the real reasons for our economic angst. Sounds like more "Quiet Crisis" stuff to me.

Here is my simple explanation why Northeast Ohio's economic development organizations can't seem to garner greater results:

1. The regional economy is the biggest culprit. It remains in an unraveling mode and will stay there until it finds a new balancing point (a much smaller and focused regional economy) in the global network of regional economies. Frankly, there is little directly that our ED organizations can do about this cause, other than anticipate it, steer around it, and help local communities and people to adjust. From an economic development standpoint, the "location product" is not as attractive as what the domestic and international competition can offer. How do I know? Things are different in Charlotte, Toronto, and Tucson/Southern Arizona where I am currently working. Mind you; there is no perfect economic place.
2. Corporate disinvestment has capsized the NEO economic ship. No major employer call program will fix this. The region's largest manufacturing employers continue to pick offshore locations for their work to remain competitive. Global competition is now applying growing pressure on our advanced service sector, including finance, insurance, healthcare, real estate, business services, and educational sector. If we're not careful, our advanced service sector could fall prey to the same demons.
3. Culture, values, and attitude weigh heavily on regional economic development results. We suffer from a deep-seated defeatist attitude. It becomes an immune system deficiency that undermines everything we do. We doubt ourselves on the deepest level. People here must restore their confidence in their ability to prosper here. Also, our regional economic development culture (that includes everybody and not just the faces and names in the Plain Dealer series) is combative, secretive, blaming, insular, and small-minded. We have to change the ideas we carry around in our heads. One way to make this shift is to stop trying to go it alone and start partnering nationally and globally. See my article from July 22.
4. Team NEO was birthed in the same "top-down corporate culture" that has been undermining the community for several decades. Should we be surprised that the current model isn't working? The GE model for economic development doesn't work anymore! Stop trying to apply outmoded business strategy to economic development. Be the changemaker and stop trying to copy what others are doing.
5. Leadership, collaboration, local community buy-in, and funding are real issues, but they are contributing factors and not driving causes. Team NEO is under-funded by about 33%. That's an easy one to figure out. City, county, and regional development groups should work together more as a richly linked network. We need a fresh approach to leadership that is based in stewardship and service.

Where do we start? Let's start with an examination of our attitudes and intentions. What are we carrying around in our heads that undermines our success? Moreover, what does success mean in the context of the people and place we call Northeast Ohio?

When all else fails, hire a shaman and have him perform a healing ritual for the regional economy. Just make sure the shaman you pick is from out of town and knows nothing about NEO.

Comments Re-Enabled

Dear Readers:

After a spell of problems with commenting on ED Futures, I have re-enabled them. Please feel free to leave us a comment.

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

Getting the Story Straight on Indiana Manufacturing

Here's a good one that every economic developer should read on manufacturing. The following text is from an editorial by Indiana economist Morton Marcus:

"It would seem easy to blame Indiana's poor job performance on the manufacturing sector. The truth, however, is that manufacturing in Indiana did very well from 2001 to 2006. Our decline in manufacturing jobs was 8 percent, while the national loss rate was 15 percent. Our share of the nation's manufacturing jobs grew more than that of any other state. In a declining sector, we excelled.

Where we did poorly was in the nonmanufacturing portion of the private sector. The nation grew at a 5.3 percent rate in these sectors, while Indiana advanced 3.3 percent (39th of the 50 states). Thus, manufacturing job losses were a drag on the state's economy largely because the balance of the Indiana economy was not keeping pace with a growing nation.

Before economic developers do something foolish or politicians devise some silly plan to encourage the nonmanufacturing sectors, remember this: Despite the fact that it is a manufacturing firm, Honda will do more for Decatur County and Indiana than would a flood of tourists to see the tree in the courthouse at Greensburg.

Yet of greater value would have been getting United Airlines to move their corporate headquarters to one of our cities rather than settling in downtown Chicago."

Read the whole article here.

Female Entrepreneurship in India

Women-owned business is gaining ground in India as more microenterprises take root.

Click here to read the story.

ED a Big Issue in Next Oklahoma Governor's Race

Economic development will be a driving issue in the upcoming governor's race in Oklahoma, according to recent news reports.

Click here to learn more.

Technology Jobs Not a Reality for Mexico Yet

A recent news article by the Houston Chronicle says that during the first half of 2006, more than 546,000 jobs were added in Mexico — the best showing during President Vicente Fox's six-year term. A closer look at the statistic reveals this growth is failing to provide many workers with jobs offering security and the potential for economic advancement. This is not terribly surprising even the long term pattern of economic development in Mexico.

The article goes on to sat that the strongest job growth was in construction and tourism, where many of the positions are seasonal, according to the Mexican Center for Analysis and Economic Projections, known as CAPEM.

What's the answer? Emphasize educational attainment number 1 and work on creating an innovation economy through strong linkages to technology centers worldwide. Start with the U.S., but don't stop there.

Read more here.