Sunday, October 31, 2004

The Next Paradigm Shift in Economic Development

I was in Branson to give the keynote talk to the Fifth Annual Fall Partnership Meeting of the Ozarks Regional Economic Partnership, a ten county region that is centered in Springfield, MO. This group was set up by the Springfield Chamber five years ago together with 68 member cities, counties and other partners in the region to promote sustainable development opportunities. Allen Kunkel, their executive director says, “All economies are regional.”

One of the speakers at the conference was Dennis Robinson, of the University of MO-Columbia in the Community Policy Analysis Center who talked about entrepreneurship in rural counties. Some stats that he shared:
*Small, high growth companies account for 70% of US Economic Growth

*Fortune 500 companies have lost 5 million jobs since 1980, but 34 million jobs have been added in the US, primarily from small and entrepreneurial companies

*As many as 8 out of 100 Americans are attempting to start their own business, the highest rate in the world.

Keep your eyes on the growth of entrepreneurism. It has the potential to become the next paradigm shift in economic development.

Saturday, October 30, 2004

You Can’t Ride One Horse Forever

What would you do if you were the mayor of Branson, a town of 6,000 that has developed into the “Live Music Capital of the U. S.”? This $1.4 billion revenue generating cluster brings in over 7 million tourists/year to Branson. Those tourists stay an average of 3.9 nights, spend $710/trip, have an average income of $50,487 and are 56.4 years old. Little Branson ranks as the 16th top location in the country for overnight leisure stays.

Branson recently passed a $300 million TIF district along Lake Taneycomo adjacent to their historic old downtown area, which was hopping with shoppers when I toured it at 3 pm. This new project is projected to bring in an additional 1 million visitors into Branson annually.

Most towns would be willing to sit back and “let the good times roll”. But, not Branson! Their mayor, Louis Schaefer, told me “We’ve seen here in Branson that shows don’t last forever and that you can’t ride one horse forever. Two years ago we decided that we needed to diversify our base, so we started an office of economic development to help us do that.”

This is one neat town that isn’t sitting on its laurels and understands that if they stand still, you will slowly start to die. Branson is taking the positive steps of diversifying their economy when the times are good. Smart people, very smart people!

Friday, October 29, 2004

Branson--An Incredible Story

I was in Branson on Wednesday, Tulsa on Thursday and Caruthersville, MO today. I’ve been on the run and had some computer problems but hope to catch up this weekend with details of what I found on the trip.

Branson was incredible. While I’d been there before, this was the first time that I got a “behind the scenes” tour. I also spoke to an eleven county economic development group. Each of those counties, some over 50 miles away have been positively impacted by the live music cluster of Branson.

Branson has 49 theaters with 56,000 seats (more than are on Broadway). It has 17,000 hotel rooms (more than in Kansas City). It brings in 7 million tourists per year. They are doing a $300 million TIF district that will include a 220,000 sf convention center, a 260 room upscale hotel, and a Bass Pro store. This booming agurb® of 6,000 has 1,000 members in their chamber. There is a real entrepreneurial spirit in the town.

More tomorrow on Branson.

Tuesday, October 26, 2004

Tired of Mudslinging

I’m sure that many of you are as tired of this election season as I, especially those of you in “swing states”. I’ve been avidly following the various races, especially those in my home area. But, today I was sickened with how ugly campaigns can become.

In my hometown we have two very prosperous business people running for the job of state rep. Each of the state organizations has poured over $500,000 into each campaign, a huge amount for a seat like this!

Today I listened to one of the candidates berate the other for being “greedy”. Amount his numerous offenses, cited by his opponent, was his being awarded $7 million in state contracts to the construction company he is a part owner of. He neglected to mention that these contracts were won via bid and that they provided tens of thousands of days of work

That a supposed “business friendly” candidate would make this type of charge is very disappointing. There is enough suspicion of business from the uneducated who don’t understand economics and often want to believe the worst, without it being flamed by a supposedly “pro business” candidate. Shame on him!

I’m off to Branson, MO tomorrow to give the keynote talk at the Ozarks Regional Economic Development Conference, a regional economic development event. I should be in a much better mood after I get a tour of that great agurb®.

Monday, October 25, 2004

A 10 mile long downtown

I was in Belleville, IL today doing a talk to their Chamber leaders along with some Chamber execs from nearby Swansea and O’Fallon. We had some great conversation about taking a more regional approach, which all of the professionals seemed to be in favor of. I wish that it was that easy, but there are too many people wanting to stay in their “silos”, resulting in less progress and wasted opportunities for many areas.

Belleville has a 10 ½ mile downtown that stretches from the east to west side of town. That has to present unique problems of promotion and logistics. First one that I’ve seen that long!

Sunday, October 24, 2004

A Photography Cluster? In High Point, NC?

High Point, NC’s photography cluster wasn’t the first thing that came to mind when I visited there recently. Furniture for sure! And, fabrics made sense also. But photography? In High Point? How could a furniture cluster lead to a photography cluster?

I found out and boy was I shocked! I learned that High Point, with a population of less than 100,000, has more square feet devoted to photography than any other city in the entire country. More than even New York or Los Angeles!

The furniture cluster started it, but the tremendous cost advantages of a location like High Point have allowed this cluster of businesses to expand tremendously. High Point counts 11 studios with over 100,000 sf and several with over a quarter of a million sf. Employment in this high paying industry is over 600 and growing.

Saturday, October 23, 2004

Manufacturing—Hope Even in Apparel

A recent BLS study highlighted at NAIOP forecasts that 54 of the 87 manufacturing industries that it tracks will lose jobs from 2002 to 2012. Manufacturing industries projected to grow in that period are: Plastics; Animal Slaughtering; Pharmaceuticals; Special Wood Products; Furniture; General Purpose Machinery; Concrete Products; and Metalworking Machinery. These ten industries are forecast to add 683,000 jobs during the next ten years.

The worst industries in their forecast are: Apparel; Textiles; Tobacco; Leather; Computers; and Pulp & Paper. Apparel is projected to lose 69% and Textiles 47% of their workforces.

Even commodity type products like apparel can survive, but require more speed and resourcefulness. One Los Angeles manufacturer of casual wear can fill orders of up to 160,000 units in less than 24 hours. It has become a “build-to-order” producer and uses its flexibility and speed to compete with China’s five-month lead times.

Friday, October 22, 2004

Off-shoring Concerns are Bogus

Both of the first two speakers at the NAIOP Meeting in San Diego on Thursday talked about off-shoring of US jobs. Susan Hudson Wilson called it “a bogus political issue, which is not even a factor when you look at the raw numbers.”

David Pearce Snyder cited a recent Bureau of Labor Statistics report which showed that approximately 20,000 jobs would be off-shored in 2004 compared to a normal 15 million jobs per year that are eliminated thru automation, info-mation, mergers, domestic outsourcing and business failures.

Putting these numbers into days, A Off-shoring Worry Free Day would end at about noon on January 1st. It continues to amaze me how many politicians play upon voter’s fears with this issue.

Thursday, October 21, 2004

Typical October Pre-Election Swoon

I’ve noticed that our inquiries for new plants, site selection work and even decisions on moving ahead on projects seemed slow down in the past month. We had seen a marked increase in these inquiries over the past year and were hopeful that this up tick in activity would continue.

This same type of slowdown started in October, 2000 just prior to that election. Remembering back those four years makes me less concerned. I believe that there is a natural tendency caused by uncertainty for companies to delay and slowdown major projects until after a close, major election.

But, everything that we see in the expansion market indicates that 2005 should be a very active year for plant expansions and new construction.

Wednesday, October 20, 2004

Another cost advantage of the agurbs®

I’m out in San Diego at the NAIOP (National Association of Industrial and Office Properties) Annual Meeting. This is a wonderful trade organization of 15,000 professionals, mostly from large metro areas. Thank goodness that Ed Hulbert from Colusa, CA (population 5,000) is here or Agracel’s President Dean Bingham and I would be from the smallest community (population 12,000).

A Colliers International Study shows that warehouse space in San Diego costs $7.60/sf compared to $4.60/sf in Chicago and $4.30/sf in Indianapolis. Colliers doesn’t have Effingham, Colusa or any other agurbs® listed, but if they had the rent would have been from $2.50 to $3.50/sf. That’s quite an annual savings when you’re renting 50,000, 100,000 200,000 or more square feet.

Colliers defines warehouse space as over 50,000 sf with less than 15% office and ceiling heights of 18 to 30 feet with docks for loading.

San Diego had gone 182 days without rain, until Dean and I got here. It hasn’t stopped raining.

Long Term US Productivity

Our economy is the envy of the world because of its flexibility and ability to adjust to market changes very quickly. This flexibility helps generate increased productivity and more output for every dollar of labor.

Since 1979, our productivity as a country has increased by an incredible 67%, even while over 40 million new jobs have been added.

One needs to only look at the rigidity built into the French and German systems to see the resulting lower productivity, less jobs created, and much lower GDP growth. Our company has benefited from European companies locating new manufacturing facilities in the U. S. as a result of this more protectionist behavior.

Tuesday, October 19, 2004

Outsourcing: Politics or Economics?

The issue of outsourcing has become a big issue in this campaign season. It has been a particularly hotly discussed subject in certain industries like textiles, furniture and appliances. I’ve fielded a lot of questions on the subject at my talks over the past six months.

I was initially alarmed when I began looking at various studies on the subject. Are we at an inflection point in manufacturing in the U. S.? Or was this just another wall of worry that capitalism climbs constantly?

Several weeks ago at the IEDC Annual Meeting I heard a great presentation on outsourcing by Dr. Ned Hill of the Cleveland State University. He started out researching the subject, thinking that it was a terrible trend for our country. However, his research shows that its negative impact on the U. S. economy is minimal. And, the positive contributions are tremendous. His power point presentation is at Of particular note is p. 33 of the presentation which shows a 19% cost advantage for a manufacturing operation in Covington, KY compared to Shanghai, China.

Every other economic study that I’ve seen shows the same thing. I’m convinced that we will one day look back on this debate about outsourcing much like we look back today at a similar controversy in the 1960 election on the dangers of robotics to our workforce.

Monday, October 18, 2004

Cost Comparison

On a panel at a NAIOP Conference on Boomtowns around Charlotte, NC one of the speakers related the cost of parking. Their son lives in New York City where the cost to park a car is $18/hour. In Charlotte it is $15/day. In the small boomtowns around Charlotte it is zero.

For a 250 day work year that is a cost of $36,000/year in NYC; $3,750/year in Charlotte; and still zero in the boomtowns.

Sunday, October 17, 2004

A question that keeps me searching

As I worked on my notes from the road this weekend, I was struck by how a few very visionary people can have such a huge impact upon a community and an entire region. In the cases of both High Point and Mooresville, NC they have gone from being “one industry” towns into diversified, booming towns.
Mooresville had all of its jobs concentrated in the textile industry. The town leaders saw what was happening and started diversifying away from this dying industry. Today it is a much diversified industrial, racing, recreational, medical and retailing center. It has growing clusters in racing and with Lowe’s vendors. The best days of Mooresville lay in its future.

High Point had two clusters from the turn of the 20th Century, furniture and hosiery. They turned one of these into the International Home Furnishings Market, which literally doubles the size of the town for two weeks/year.

Not resting on their laurels, High Point has continued to forge ahead continuing to diversify its base. Today it has growing clusters in furniture, fabrics, photography and bio tech. Like Mooresville, High Point’s future is very bright.

The question that continues to roll around in my mind is: What allows some towns like this to have such a clear vision, taking their community to a higher level and thus creating tremendous opportunities for many of its citizens?

Saturday, October 16, 2004

A Favorite “Can Do” Agurb®

I returned to one of my favorite agurbs® on Thursday. Mooresville, NC is a vibrant, can do community that realized that they had to reinvent themselves from being a one industry town, did so very successfully, and today is a booming town with tremendous potential. I sat down with five of the citizens who engineered this restructuring in the 80s and discussed how they accomplished so much.

In the early ‘80s Mooresville, with a population of 9,000, had 7 textile mills that employed 5,600 workers. The hospital was failing, losing $500,000/year and was down to only 7 doctors. Mayor Joe Knox and the other 4 local citizens decided that they needed to diversify their industrial base. They bought some farmland on contract to turn into an industrial park. They thought they would be lucky to get anyone to buy the failing hospital but found a for-profit hospital group that paid them $5 million. They used the funds from the hospital to pay for the industrial land and infrastructure. Today they have over 5,000 new industrial jobs even as the textile mills all closed with the last one closing its doors in 1999.

Meanwhile, a NASCAR race team moved to town along with a few auto racing suppliers. They branded their town “Race City USA” and actively recruited in race teams. Today 49 teams call Mooresville home and over 150 other racing related businesses have sprung up or moved to town. Racing related investments in Mooresville have totaled $40 million + over the past five years, creating over 600 new jobs in 2 million sf of space. Dale Earnhardt’s “Garagemahol” HQ alone employees 250 people and brings in 230,000 tourists/year. What a wonderful cluster for a town!

Last year Lowe’s did a nationwide search for a new HQ location for their company. They were no longer able to recruit in executives to their small town because of the poor school system. The final straw was when the community refused to pass a bond referendum to begin to fix the problems. “A world class company won’t stay in a community with a second class educational system” said Melanie O'Connell Underwood, Mooresville dynamic head of economic development. After their nationwide search, Lowe's choose Mooresville NC as their HQ hometown.
I loved what Steve S. Robinson, one of those original five said about their success, “Through care, planning, volunteer team spirit, energy, persistence, and great good fortune, we "pulled ourselves up with our own bootstraps. We were young, hungry, and had a sense that we could accomplish anything if we set our minds and will to it. Mostly we just wouldn't take no for an answer that was acceptable. We believed we could achieve, and did!”

Wednesday, October 13, 2004

High Point Reinvents with Clusters

Today I toured High Point, NC a town of about 90,000 (too big to be an agurb®, but still an interesting story) that is famous for being the furniture capital of the world. They have two shows/year when they have 80,000 buyers from around the world into the town for a full week.

It is estimated to bring in over $1.1 billion and is the largest economic development event in the state each year. In addition to having a furniture cluster in High Point, they also have a fabric cluster and even a photography cluster. They have 14 photo studios and have more studio sf than ANY other city in the USA.

High Point has had to reinvent itself over time. They used to have 15 hosiery mills, employing many thousands. Today they have only 2 mills left. However, High Point decided to diversify their base 17 years ago with the development of a new 1100 acre business park 3 miles north of town. Today, this diversified park hosts numerous companies (60 international ones) with a strong emphasis in the burgeoning bio-tech industry.

High Point is another great example of a community that has had to reinvent themselves, did so, and became a better town.

Tuesday, October 12, 2004

Looking Internationally for Development

I’ve had some interesting conversations recently with economic developers who are attempting to develop closer relationships with foreign countries, cities and companies. Several Universities are doing more work in this area also.

I was impressed with what I saw Moses Lake, WA doing in developing numerous Asian companies in their community. They also have been very proactive in developing sister city relationships with overseas communities.

I was told yesterday that Rome, GA has done some great things in the international arena, even though there are not exactly on the beaten path.
Recently, a Chinese appliance manufacturer announced plans to build a factory in SC. Our research shows that this will be a trend that economic developers will want to monitor closely.

Monday, October 11, 2004

Why I'm Doing a Blog

In the past six months I’ve given almost 100 talks in over 20 states on my book Boomtown USA, talking about why the trend of people out of the rat race toward the agurbs® (agurb®- a prospering rural town with a tie to agriculture and a location outside an MSA) is one that will lift many small towns upward. It is a message that has resonated with many people and I’ve gotten a chance to talk and email numerous people.

My hope is that this blog will enhance those discussions and allow many more people to begin to discuss this trend and discuss ways that their towns can take advantage of it. I’m hopeful that a dialog on new ideas for economic development will allow many more communities to move into the ranks of the agurbs®, creating unique new opportunities for many people in every community.

Let me know what you think. I’d love to hear from each of you.

Wednesday, October 06, 2004


Welcome to the BoomtownUSA blog. Enjoy.