You Should Know the Economic Impact

How often have you. . .

  • Heard a company press on a city or county to make a decision based on their economic impact locally, but without any data?
  • Considered incentives for an economic development deal without knowing more than the number of jobs and total investment as given by the company?
  • Lacked specific information on the projects your economic development group helped support?
  • Had a developer tout the economic benefits of their proposed speculative building, but not have data to back it up?

In every case, it is important to have this data:

  • To help prioritize how to invest your resources
  • To ensure incentives are based on a ROI to your community
  • To prove the effectiveness of your EDO

Our firm helps our clients (cities, EDOs, companies) with the analysis of the economic impact.  Relying on RIMS II multiplier data from the BEA, we can help you analyze and determine the direct, indirect and induced impacts of a project (or projects) on jobs, economic output and wages.

Contact us and let us help you determine the impacts of your next project.

 

4 Tips for Community Readiness for Layoffs and Closures

Even with all of the optimism in the economy right now, there are places where industries are struggling and jobs are still disappearing.  Worse yet, it could happen to you and your community.

Are you ready?

Take for example yesterday’s (March 2, 2017) big announcement.  Impacted by a declining passenger jet market, Boeing indicated in December layoffs and cost cuts were coming.  The result is the aircraft giant announced 1,800 layoffs in the Puget Sound, approximately 2.5% of its 71,000+ workforce.  [Note: On March 23rd, Boeing announced more layoffs]

It’s a reminder of the economic risks facing all communities, especially the smaller and more rural ones,” said David Toyer, founder of Toyer Strategic. “It reminds me of Webster City, Iowa in 2009 – a city of 8,000 people that was given the news Electrolux was leaving for Mexico and taking with it 1,000 jobs.”

What is your community’s strategy to identify risks early and prepare for bad news?

Here are 4 tips for community readiness:

  1. Have a formal business retention and expansion strategy.  Regularly meet with plant management or local owners (where applicable) and track information and ‘body language’ over time.  Not only does this help with identifying risk factors early, it also will help identify opportunities where you may be able to help your businesses expand.  And when you identify a big risk, don’t be afraid to work with your state and plan a visit to the company’s headquarters, especially if that headquarters is not local.
  2. Start diversifying your industry segments.  If your like Webster City and 12.5% of your workforce is directly employed by a single company, you should be spending your time trying to attract new industry and grow other businesses in your community.  Better yet, look for counter-cyclical industries that can stabilize the economy when your other industries are down.
  3. Know what you can offer.  You’ve got incentives to attract new projects.  But do you have incentives to keep the project’s you have?  As blues artist Buddy Guy sang, “It’s cheaper to keep her.”  Some communities and states dislike ‘retention’ incentives and fear the political fallout.  We advise communities to deal with the fallout associated with saving jobs as opposed to the fallout of standing down and letting those jobs go without a fight.
  4. A dislocated workforce (forcefully unemployed) is an opportunity, don’t waste it.   Go anywhere in the U.S. and pick up a trade publication or newspaper and you’ll find stories about a lack of workforce.  Whether it be a lack of skills or just a lack of people, industries are struggling to find the talent they need.  Many communities experiencing layoffs act ashamed about what’s happening to them.  DON’T fall into that trap!  Instead, analyze and be ready to talk about the ‘transferable skills and experience’ of your dislocated workforce.  The dislocated workforce becomes your greatest asset in attracting new industry.

You Want to Succeed, You Need to Own It

pexels-photo-131616-1Is your community hungry for economic development?  Then you need to own it.  You need to pick your target (existing or new) and then take bold steps of leadership to own it.  Success can’t be leased.

  1.  Picking the Target – this is the process of understanding exactly what assets your community already has and what assets it’s willing to create.  Do you have an abundance of water and sewer capacity?  A high unemployment rate due to a factory closing?  Or an industry that has organically clustered in your community because of certain advantages that may not be readily apparent?  Picking your target is understanding what you have, what you are good at and how you can leverage it.
  2. Leading to Own – Now that you have the target(s) and you know what you bring to the table, you need a higher level of leadership, investment and commitment to truly compete and own the space.  Take Iowa for example.  They are #1 in corn, #1 in soy, #1 in ethanol and #2 in biodiesel.  They are awash in biomass.  Perfect.  And now they are primed to lead the nation in bio-renewable chemical production.  Why?  Because they knew that by being the first in the nation in biomass added to being the first in the nation to offer a tax credit to use it in the production of other bio products equals ownership of that space.

Another good example?

Michigan Steps Up.  Michigan isn’t the auto juggernaut it used to be.  However, it’s significance in the auto industry and its supply chain is still at the top of the food chain.  Realizing that they should be at the fore front of new automotive technological developments and the resulting production, they’ve stepped up to do what no other state has, approving legislation that allows (a) for the testing of vehicles that are autonomous/driver-less, (b) for the operation of driver-less ride-sharing services and (c) clear rules for how self driving cars can be sold publicly once tested and certified.

The move, which is impressive, comes on the heels of announcements last week that Uber bought an artificial intelligence company (to help with driver-less vehicle development) and Silicon Valley’s continued pursuit to be the hub for autonomous vehicle development by ‘tech’ companies like Google (Alphabet).  Thus, not only was Michigan’s action a bold attempt to block others from their attempt to take the space Michigan has owned for decades.

And a cautionary tale. . .

Washington On Notice?  Washington State has been not only synonymous with Boeing, but with the aerospace industry as a whole.  Yet, despite being leaders that that arena, they’ve not been without heavy challengers in recent years.  South Carolina took a piece of their turf  with the opening of Boeing’s second 787 line in 2011.  And Airbus selected Alabama for its first U.S. production facility a few years later.  All of this has been followed up in the last few years by some in the public, the media, and the state’s legislature questioning the $8.7 billion tax incentive package it provided the industry. The question now is whether they still own the space.  Or, are they leasing it while the industry transitions elsewhere.  The future?  Slightly uncertain.  While Washington State can control it’s own destiny, it needs to recognize the serious challenges ahead.

[Bloggers note: this post was initially made prior to Boeing’s announced slow down of the 777 line on 12/12/2016]

 

How Tech is Disrupting Planning & Economic Development

49798788 - technology future network architecture concept image of devices.In the past several weeks we’ve devoted a number of blog posts to technology – artificial intelligence, gene editing, touch sensory robotics, machine learning and more.  Why?

Simple.  Disruptive technologies are evolving faster than our current systems and mindsets.  In other words, things like community planning, small business strategies and economic development primarily use old methods and are ill prepared to embrace growth opportunities.

Not convinced?  Let’s take a look at how Lowes is using technology and then we’ll talk about what this means for small business strategy, community planning and economic development.

Lowes Home Improvement  

When we think of Lowes, we think home improvement store.  A big box that’s part retailer, part warehouse and a quasi-online shopping experience.  What we don’t think about is that Lowes has it’s own research and development program called Lowes Innovation Labs (LIL).  And if you think they are focused on drone deliveries, redesigning check out stands and retail displays, you’re sorely mistaken.

Lowes is emerging as a major player in embracing disruptive technologies and its about to change your customer experience.  Let’s look at three of the most significant changes:

  1. Virtual & Augmented Reality – So you like the design but you just aren’t sure how it will look in your kitchen? Lowes is going to take you there.  Gone are the days of 360 degree virtual videos you watch; replaced by augmented reality (AR), which can spatially take you into your kitchen to see exactly how it will look with what you’ve picked out.  Fantastical?  Consider that “Holo Room” was launched in 19 Lowes stores a year ago.
  2. Robotics – In 2014 Lowes deployed OSHbot in a single San Jose Orchard Supply Hardware.  The bots, designed to greet customers as they come in were capable of speaking back to the customer in their language of choice to directing them to where they needed to go in the store.  Fast forward two short years and Lowes is now launching LoweBot in select stores.  Not only will this robot greet you and direct you to what you’re looking for, it will also take you there and be able to answer simple questions.  Gone will be the days of pressing that button and listening to the ding followed by “Customer Service needed in the Paint Department” over and over until an agent from the plumbing department tries to help you.
  3. 3-D Printing – Lowes is investing in 3-D printing technology development and deployment to bring to the customer “manufacturing on demand” as a solution.  Scan and print your own ideas; scan and repair a broken part; or even replicate a family heirloom (see Bespoke Designs).  That’s not all.  Lowes made history early this year as it partnered with “Made in Space” to install the first 3-D printer in space that can be used by the occupants of the International Space Station.  Lowes and Made in Space are also working on the ability to up-cycle plastic waste to be used as its 3-D printer filament.

Cool Stuff, But What’s the Big Picture Here?

Toyer Strategic Consulting will help you build the solution one piece at a time.

Toyer Strategic Consulting can help you build the solution one piece at a time.

  1. Small Business Strategy.  Small business has to up its game in order to compete.  For the small main street retailer, it’s no longer a competition centered only on who’s got the lowest price and the most inventory.  It’s price, speed of product to customer and most importantly the customer’s experience.  The small main street retailer always had a slight customer experience advantage.  How can your business exploit these changed, adapt and get back ahead of the curve?  For the job shop, smaller manufacturer – this “on-demand” print manufacturing focus is going to directly compete with your small jobs casting, molding and tooling repair parts and other small batch orders.  Are you ready?
  2. Community Planning, Zoning & Economic Development.  The discussion points for cities and local community development organizations will be centered on infrastructure, innovation and incentives.
    • Infrastructure.  The roll out of these technologies in new big box developments right off the highway is easy, as its typically where the biggest investment is already being made in fiber availability.  But those communities that want their existing businesses to be viable must start considering investments in fiber and connectivity.  Small businesses are going to need both access and ‘bandwidth’ to link up to Internet of Things (IoT) and benefit from and share their own new innovations.
    • Innovation.  The availability and wider use of 3-D printing technology is about to explode.  The focus mustn’t solely be on how your large, existing manufacturers find new business opportunities.  It must also look at how you can support new entrepreneurs and innovators that are working their regular job and tinkering around with bringing their ideas to life.   This is the opportunity for your community to grow jobs from within and shift commuting patterns that currently take people out of your communities to jobs elsewhere.
    • To grow businesses are going to need permission and a pathway to scalability.
      • Permission.  First, its time to rethink ‘home based business’ zoning restrictions.  They should support and encourage technological innovation, non-hazardous research and development, and small manufacturing/production operations.  Doing so can lead to home grown manufacturing businesses.
      • Scalability.  Second, local government and community economic development groups must look at public and private investment in shared use innovation labs and manufacturing spaces.  Similar to “makers” spaces, co-work space and incubators, this is the next advancement in providing infrastructure to allow disruptive technology companies and new era advanced manufacturers the space to support the scaling up of these activities.  This is critical to those home based start-ups that run out of space and goodwill in their garage, but aren’t big enough or well capitalized enough to lease space (for 5-10 year terms) or build new facilities.  These spaces could come from  stand-alone shared spaces or working with existing manufacturers to monetize use of their technology during times when the technology is currently not used – a benefit to all parties.
    • Incentives.  None of these things are going to happen by themselves.  Communities are going to need to look at incentives.  Some options include:
      • Simple, clear and accessible permitting information so that these small start-ups are clear on what they can or can’t do (needs to be a single sheet, oversized postcard and/or prominently displayed online).  Nothing could be worse than to be forced to shut down a new business venture over permitting.
      • Property tax abatement or exemptions for the value added in cases where home values could increase because of modifications to support home based businesses or where shared innovation space is being created.
      • Tax increment Financing, late-comers agreements or public matching funds to support the expansion and connectivity of fiber.
      • Education is a key element of workforce skills development.  It’s also a critical factor in propelling innovation and providing small business with a pipeline of talent.  Community colleges and high schools are going to need to look at new ways to create skills based learning that is not just another title for hands on learning.  A good example of this is Iowa Big in Cedar Rapids, Iowa.  They have brought the classroom to the shared work space and broke new ground in letting high school kids prove competency in “core” standards while working on real business projects.

Toyer Strategic Consulting is well versed in helping businesses and communities tackle these opportunities.  Let’s talk about how we can help you plan, implement and succeed!