The EDPro stories of 2003

Thursday, January 01, 2004

Like you, I am sitting on the eve of a New Year, so I thought that it might be useful to look back at some of the major stories of 2003.

A few of the major deals

Boeing needlessly dominates the headlines
Boeing stands out as the most publicized economic development deal, but it was far from the most significant. Some observers (I'm in this group) saw the Boeing deal as an effort by the company to create major concessions from the State of Washington. It worked.

Here's from EDPro Weblog on June 4: "The Boeing deal doesn't smell right. You've got a company that lost $478 million last quarter in an industry that is way over capacity. They are conducting a highly public search, and they have disclosed an unusual amount of information. It looks to me like a replay of an old game. Some years ago, McDonald Douglas -- now a part of Boeing -- pulled a similar ploy by threatening to build an airliner in Taiwan, all in an effort to get more concessions from the feds."

A week later, Governor Locke proposed $3 billion package. Locke is no dummy. (Disclosure: I'm biased; he was a classmate of mine at Yale.) He used the Boeing gambit to ignite a productive legislative debate on the state's business climate. Nevertheless, states flooded Boeing with proposals.

San Antonio lands Toyota truck plant
San Antonio won the site-selection contest for Toyota's $800 million truck plant, despite a local-and-state incentive package that was smaller than that offered by several other states. The plant will employ about 2,000 workers.

The $133 million in incentives pays for land, job training, a network of road improvements and site preparation, among other investments. Other states had offered incentives valued at $150 million to as much as $300 million. But Texas is the largest pick-up truck market on the planet, and marketing considerations worked heavily in San Antonio's favor.

Florida lands Scripps Research Center
In another significant deal, Florida lured Scripps to Florida with about $300 million in state incentives and $200 million in local incentives. After the deal was struck, the newspapers started questioning the deal. As one article noted, "[F]or the near future, Scripps' windfall of taxpayer money guarantees only 545 jobs by its seventh year of operation. And most of them will be filled ...[by] modestly paid research or administrative assistants who will earn salaries that hover around the county's current average of $37,000."

Texas holds on to Sematech
Like Washington, Texas woke to the fact that one of its major economic assets, Sematech, was "in play". Texas passed a $295 million Enterprise Fund for economic development. The purpose of the fund is to back various initiatives, including keeping Sematech in Austin. In response, Sematech indicated it will stay in Texas, even though it has moved one of its research programs to Albany.

Despite the economy, some states move ahead

If you look across the landscape, 2003 was a pretty good economic development year for some states. New York continued to build its technology strategy, and at the end of the year, it landed an important customer service center in Buffalo.

New Mexico's new governor, Bill Richardson, made important strides in improving the business climate. (Expect Richardson to run for the Democratic nomination in 2008.)

Other states, that made clear progress include Arizona, Tennessee, Indiana, Pennsylvania, Oregon, Illinois, Rhode Island, Maryland, North Carolina, and Iowa.

A handful of states started economic development strategies that may be having trouble moving ahead: Florida, Michigan, Missouri, Virginia, Mississippi, South Carolina, Wisconsin and Montana seem to fit in this category. Then, of course, in Alabama and Ohio, the voters defeated major initiatives in both states.

The same is true for cities

Arguably, cities are in worse financial shape than the states. Despite the weak economy, a number of cities moved ahead with some impressive strategies. Philadelphia, Tulsa, and Albany stand out.

Other cities are making some slow, but steady gains. Wichita is finally starting to move ahead collaboratively. Despite serious financial difficulties, Pittsburgh have launched some important initiatives. Buffalo scored an impressive win with the GEICO deal. Elkhart and Fort Wayne, IN are building new collaborations. San Jose, Providence and Winston-Salem have defined new strategies.

Austin and Atlanta, two cities we think of as major economic development engines, also started defining new strategies. Neither effort appears very impressive, though.

Rural entrepreneurship emerges as a force

When I look back on the year, one of the major trends that appears to be emerging that rural entrepreneurship is taking hold. 2003 was an important year. A conference by the Federal Reserve Bank in Kansas City was one of several important events in the year.

Branding takes hold

2003 will be marked as the year when economic development branding really took hold. Among the most notable efforts: Massachusetts, Pittsburgh, Little Rock, Detroit. Some of the most innovative approaches included Greater Georgia, Bay Area Houston, Florida's Great Northwest, Einstein Alley in New Jersey and Treasure Valley in Idaho.

Early childhood education is emerging as an economic development issue

Stimulated by numerous studies on the importance of early childhood experiences to later brain development, business leaders are starting to push for more attention to early childhood education. An important conference by the Federal Reserve Bank in Minneapolis underscores that these investments make sense. The business-led Committee for Economic Development last year called for improvements in early child care. (Download a summary.)

Universities become a real force in economic development

Colleges and universities are becoming major players in economic development. Indeed, most of the entrepreneurial energy for new approaches to economic development is centered on college campuses.

So, for example, in Arizona, the presidents of three state universities have unveiled a plan to build a joint biomedical campus in Phoenix. This is the type of Big Idea that has the potential change the economic landscape in the state.

Maryland has made technology transfer a centerpiece of the state's economic development strategy.

Arkansas and Ohio have moved forward with commissions on higher education.

There are other "grassroot" examples of innovation and collaboration.

The Central Michigan Research Alliance includes Middle Michigan Development Corp., Midland Economic Development Council, Saginaw Future, Inc., Central Michigan University Research Corp., Michigan Molecular Institute, and Saginaw Valley State University.

The University of Oregon, Oregon State University and Portland State University have formed the Multiscale Materials and Devices Center to compete for funds under the 21st Century Nanotechnology Act that Congress recently enacted.

The Ohio Valley Affiliates for Life Sciences includes four universities -- University of Cincinnati, University of Kentucky, University of Louisville, and Wright State University. They have joined together in a collaboration to build life sciences in a region that stretches on both sides of the Ohio River. It ties together four metro areas: Lexington, Louisville, Cincinnati and Dayton.

Global connections are on the rise

Universities are also part of another economic trend: the growing connection of local and regional economies to global partners.

Iowa is using Iowa State University as a lever to build a biotech business base with Korean companies.

Maryland is also focusing on South Korea. Recently, Maryland hosted about 45 companies from the state and South Korea to discuss ways they could develop partnerships. A Korean biotech company will occupy space in the Maryland Technology Development Center, a business incubator for high-tech companies.

Arizona State University is developing partnerships in Latin America and Canada that will help the state's economic development.

A Pittsburgh initiative is building connections with India.

The Port of Houston has signed a strategic partnership agreement with the Panama Canal Authority.

States experiment with using the web more effectively

Both Kentucky and Wisconsin have launched interactive web sites designed to assist business people solve problems. Florida launched a new site to encourage start-ups.

Pennsylvania unveiled an interactive map of the state's telecommunication infrastructure. The main purpose of the map is to encourage collaboration to improve broadband access in the state.

Oregon launched a new workforce site that is a model of clarity.

Local web sites get more sophisticated

My favorite local sites this year are from Preble County, OH; Alleghany County, MD; Fayetteville, NC; and Tempe, AZ.

GIS systems in local sites also have become more sophisticated. The best new ones are Chattanooga; Indianapolis; New York State; Oakland, CA; Fremont, CA.

My favorite is in Northeast Pennsylvania, developed by the MAP Center at King's College.

Creative economy ideas percolate

Stimulated by Richard Florida's book, a number of communities are trying to develop new approaches to attracting the "creative class". This year marked Florida's Memphis Manifesto, an effort to distill what all this means. Meanwhile communities and at least one state (Michigan) are pushing ahead with some interesting ideas.

Michigan has a "cool cities" initiative underway. Durham is developing a cultural master plan. Schenectady is implementing a number of initiatives, including attracting new immigrants to the city.

Greensboro, Cincinnati, Rochester, Philadelphia (and other cities, I'm sure) have launched web sites geared toward young professionals.

Rural wireless making headway

We are seeing a growing number of rural communities getting proactive in building their own wireless infrastructure. My poster child is Alleghany County, MD.

There are other examples. Glenville, WVA is a small dot on the map, but it will soon have wireless broadband. The Center for Appalachian Network Access is building a wireless broadband Internet network in the town, funded with $250,000 from the Benedum Foundation and the Appalachian Regional Commission.

Minnesota Wireless is leading the move to wireless communications in that state.

North Carolina probably has the most advanced rural Internet effort going.

Pennsylvania published a telecommunications map in order to encourage more discussions with wireless providers.

Manufacturing policy is disarray

Despite all the concerns about our declining manufacturing base, national manufacturing policy is in disarray. The Bush Administration wants to appoint a new head of manufacturing policy, but in the current appropriations bill, the one program that helps small and mid-sized manufacturers is being cut drastically. Go figure.

(To those EDPros who agreed to sign a letter protesting the MEP cuts, I am preparing that for early January. There's still time if you want to sign the letter. Learn more.)

Cool ideas

Last year saw a number of cool ideas in the EDPro Weblog. Toyota began providing classes to teachers in Northern Kentucky. The idea is to teach them team work and problem-solving skills.

Birmingham's Innovation Group continued its practice of taking annual field trips.

Alabama and Mississippi formed an economic development alliance to attract major economic projects to the rural counties of East Mississippi and West Alabama.

Business and education leaders in Flathead Valley, Montana developed an innovative model partnership to stimulate closer collaboration. The initiative goes beyond the simple minded and focuses on real career pathways, and it is becoming a model for the state.

San Antonio started a manufacturing academy.

Education leaders in Northeast Minnesota developed a plan for Tech North Prep Centers to house technology businesses focusing on software design. The centers would be developed in vacant stores across the Iron Range and in other parts of Northeastern Minnesota.

Kentucky's state workforce board is promoting an employability certificate.

EDPros in West Texas launched a hub and spoke incubator system.

The EDA agreed to fund an initiative in Connecticut to promote product development and process improvements among smaller manufacturers.

Bonehead moves

We've seen our share of bonehead moves in 2003, as well. Georgia went ahead to invest heavily in a site for a Chrysler plant that never got built. New Orleans provided $600,000 incentives to a company that was delisted from the American Stock Exchange.

Cincinnati's City Council negotiated an incentive package for Convergys Corporation, even though, when the deal was done, no one was quite sure what was in it. (After the dust cleared the total came to $52.2 million in tax expenditures and grants.)

My Bonehead of the Year award, however, goes to Senator Charles Grassley for stuffing $50 million into the pending omnibus appropriations bill for an indoor rain forest and aquarium in Coralville, Iowa. He calls it economic development. I call it a waste.

My guess is that the numbers behind this project are inflated. Besides, aquariums, science museums, and the like usually require huge public subsidies to operate on an ongoing basis. (Just ask, for example, Mayor Riley in Charleston, SC. His acquarium is not meeting its operating targets.)

Weird and funny stuff

And, of course, we have a fair amount of weird and funny stuff going on. Iowa's governor promoted a new technology strategy for his state, but it turns out that he cannot answer his own e-mail.

The mayor in Harrisburg, PA is moving ahead with plans to establish a National Museum of the Old West (in the middle of Pennsylvania).

Governor Bredesen in Tennessee wanted a new license plate slogan, so he opened it to the public. My favorite: "Tennessee -- Where fat lazy people have built a lot of damn roads" .

Puerto Rico added a news feed to its economic development web site. There's only one problem: the news feed includes stories on corruption and crime, which are both significant problems on the island.

Boeing's CEO of Boeing Commercial Airplanes commented publicly on Washignton's business climate, "I think we suck". That prompted a union leader to send out a blast e-mail with the subject line: "Washington--We don't suck". (All this happened after the governor proposed his $3+ billion package.)

Soap Lake, WA is still considering its 60 foot lava lamp as a tourist attraction.

But my favorite funny story of the year is ole' Baghdad Bob, the best spin meister on the planet and an inspiration to EDPros everywhere.

As troops were entering his city, he told reporters: "I triple guarantee you, there are no American soldiers in Baghdad." Later, when troops were confirmed in the city, he announced: "We blocked them inside the city. Their rear is blocked." Relentless optimism.

EDPro Weblog's leaders of 2003

Here is a list of my favorite places for economic development, places I see leading us into the future.

Philadelphia and Albany are good examples of older cities that have taken strong steps to redefine their economies. In the case of Philadelphia, a number of initiatives are underway to build innovative networks and keep bright people in the city. And Innovation Philadelphia stands as a model for metro economic development.

In Albany's case, the Center for Economic Growth has led a series of really well conceived initiatives. Albany also has an innovative site -- My Beanstalk -- targeted to young people.

With the GEICO project, Buffalo stands as an emerging example of where collaboration can pay off.

Hattiesburg, MS is a good example of where a university is guiding the transition to higher value manufacturing. The University of Southern Mississippi is a partner in an innovation and commercialization park to nurture and incubate new technology-based businesses in Hattiesburg.

Alleghany County, Maryland is my favorite rural county. They clearly get it that the world has changed. Their emphasis on wireless communications and high quality rural tourism is an excellent model for other rural counties to follow.

Howard County, Maryland is another favorite place. Howard County demonstrates that publicly led economic development can be very innovative.

Research Triangle Park also stands as a leader in my mind. Not content with past success, RTP has been engaged in a thorough and thoughtful strategic planning process in 2003.

Tulsa, following the example of Oklahoma City, shows that citizens are willing to make major economic development investments, if they are given a clear agenda of projects and a thoughtful presentation of facts. In September, Tulsa voters approved an $885 million community and economic development package. Now Wichita is trying to follow the models of Oklahoma City and Tulsa.

AdvantageWest (in western North Carolina) is also one of my favorite regions to watch. They are making some really smart moves to build an entrepreneurial climate in a rural region.

That's it for 2003. With the economy improving, 2004 promises some really exciting times.

posted by Ed Morrison |

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