Friday, December 31, 2004

Reflections on 2004

To say that this past year was probably one of my most memorable ones, is probably an understatement. It was memorable from a personal, professional and business standpoint. Milestones were set, not only by me, but also by a number of the key people that I’m with each day. It was an incredible year!

From a personal standpoint, everyone in my family is healthy. Our twin sons are both doing well as juniors in high school, even though girls are now a bigger part of the daily scene. My wife, Betinha, and I have transformed to living on Lake Sara for a full year. We love it, even if the winters get a bit long at times. I’m typing this as I watch dozens of geese and ducks in the midst of their annual migration, out on the water in front of my study. A fisherman just zoomed by. With temperatures in the 60s, it’s hard to believe that it is the end of December.

The publishing of Boomtown USA has exceeded my expectations. It is gratifying to see the stories and message of the book embraced by so many. When we were discussing doing this project at Agracel, I don’t think that any of us envisioned how well the book would be received. I’ve been overwhelmed with the reception that I’ve gotten as I’ve traveled around the country, touring towns, meeting economic development professionals, entrepreneurs and civic leaders and learning of the many wonderful steps that so many communities are making to create opportunities for their citizens.

Agracel has continued to grow and is setting new records in virtually every metric that we monitor. Team Agracel has stepped forward in their usual “Can Do” manner, not missing a beat with me being gone traveling around the country. They’ve continued to develop new building projects, creating job opportunities in the many agurbs® in which we work. I just hope that they have something for me to do when I get done with my travels, because it is very obvious that they are doing wonderful things without me. I hope that they are having as much fun as I am.

And, finally thanks to all of you who read this message. I’ve really enjoyed getting to know many of you during this past year. You’ve taught me a lot and I am very thankful.

It’s Better to Lose Your Job in America

Yesterday’s Wall Street Journal had an interesting editorial on the vibrancy of the U. S. economy compared to other 1st world ones. They gave interesting statistics on economic growth, unemployment rates, job growth and other key factors. The U. S. compared very well to the 27 other countries in the OECD, leading in most categories.

The statistic that really caught my eye was on long-term unemployment. If you lose your job in the U. S., 91.5% find a job within a year. In Britain only 76.9% do so; Japan 69.2%; France 66.2%; Germany 52.1% and Italy 40.8%. Huge differences!

So even though there are those who would have you believe that “the sky is falling” with our economy, as the WSJ said, “It’s nice to know that America’s “sluggish” economy remains a world-beater.”

Thursday, December 30, 2004

Offshoring Debate

I’ve gotten a couple of emails recently from people who question the political debate about offshoring. Here is my response to one of these who questioned my stand.

I initially was very concerned about the impact of offshoring upon our economy, particularly since my company is focused upon industrial development. With over 4 million sf under lease to manufacturers in the Midwest, South and Southeast I looked at the issue in great depth. I’ve read numerous studies on the subject and talked to researchers about their findings.

I’ve also traveled to over 100 small towns in 27 states over the past year. Some of these towns have gone thru dramatic changes, due to being dependent upon only one company or industry. Let me give you some examples of a few of the towns that I have visited in the last 3 months: Galesburg, IL (population 33,000) which is in the process of losing Maytag with 2,000 employees and Butler Manufacturing with 1,500; Ponca City, OK (25,000) which lost the headquarters of Conoco; Greenville, MI (7,800) which is losing Electrolux with 2,700 employees; and Mooresville, NC (population 11,000) which lost 5,600 textile mill jobs. I’ve also lived thru losing our major employer of 600 jobs (average wage of $40,000+) in my hometown of 12,000 about 4 months ago.

I’ve seen and felt the pain that these closings can cause in a town and my heart goes out to each of the people who have to find new jobs, often after working at the same company for many years. It is a difficult time for many of these people. Going back for retraining and looking for a new job is not easy.

But, with that said, it is a process that a capitalistic economy goes thru over and over. It occurred to us with shoes in the past 30 years, when there were over a dozen manufacturers within 50 miles of my hometown, employing thousands. All closed. But, today our economy is better than ever and virtually all of the former shoe makers found better jobs that paid more. Sure, it was tough to go thru at the time, but the end result was for the better.

All of the towns I mentioned above are going thru a great deal of pain or have already done so. I’m convinced that each will end up better and in some cases much better than when they were dependent upon only a single company or industry.

Let me tell you of the example of Mooresville, NC. They had virtually all of their jobs in textiles. The city fathers saw the risk of having “all of their eggs in one basket” and started a new industrial park. Today, they’ve replaced the 5,600 textile jobs with a new diversified industrial base of over 5,000 employees. They also have developed a medical base with over 200 doctors, from only 7 MDs twenty years ago. They’ve diversified with NASCAR race teams (49), which have encouraged 150 entrepreneurial companies to develop around this cluster. Last year Lowe’s moved their corporate HQ there because of the great quality of life they found in Mooresville.

Each of these communities recognized that changes are going to occur, you’d better plan on these changes occurring, and develop ways to prosper when those changes happen. Not every town will survive, but I’ve seen many that have made the changes that are needed, and are developing a more diversified economy. They are creating some wonderful opportunities for their citizens.

We can’t stop progress. Some jobs will move overseas. However, we are also seeing manufacturers expand in today’s economy. From what I’ve seen, I’m convinced that our best days lay ahead. And, I think that we will look back upon the offshoring debate a little like we look back upon the political debate of the 1960 presidential campaign, which was that robotics were going to destroy our manufacturing base in this country. It was a purely political and not economic concern. And, it didn't happen.

Wednesday, December 29, 2004

Giving Back to the Hometown

I had lunch yesterday with 40 year old dynamo Scott Molander, one of the many serial entrepreneurs that I am fortunate to have met during my travels this year around the country. Scott grew up on a wheat farm in Crosby, North Dakota, about 8 miles from the Canadian border. He graduated from Dickinson State University and got his first job with Footlocker. They put him in the inner city of Chicago. He vividly remembers the trip to Chicago, “I had never seen a toll booth before and didn’t know what to do.” As you’ll see, he quickly learned.

He worked for Footlocker for several years around the country, ended up in Indianapolis, when he and Glen Cambell (No not that one…this one is from Cape Girardeau, MO, one of my top 100 agurbs®) who was also with Footlocker, decided to start their own company. “We raised $110,000 from Angel investors back home in North Dakota. No one in Indianapolis would bite on our idea of selling sports hats.” George Berger, one of his Dickinson professors was the biggest investor and helped to bring in venture backing from Bluestem in Sioux Falls, SD, which turned a $7 million investment into $60 million.

They started on November 3, 1995 and had 5 stores by the end of 1996. They quickly grew their chain of Hat World stores to 110 stores by the end of 1999 and bought out their largest competitor, Lids, in 2001. Earlier this year they were looking to take the company public when a buyer matched their price of 7x EBITDA and they sold the company for $177 million.

Scott took six months off to be with his young family, but “six months was enough.” He is back on the entrepreneurial journey looking for great people with good ideas. He told me, “Number one is great people. If you have a great idea with average people you are in trouble.”
He is running with a new idea/company called Simple Furniture, which will sell a complete line of furniture which can be assembled without tools. He plans an upper end line for sale at Crate and Barrel, Pottery Barn and other high end retailers and also a lower end line for sale to students.

Scott is giving back to his hometown of Crosby, ND (population 1,312) in a number of ways. He is assisting a local company that exports peas and lentils; developing a Tech Center with some IBM retirees from the community and help from a Microsoft grant; and trying to figure out a way to fill a modern pasta plant coop that went broke. He also is helping Dickinson State University with a new entrepreneurial program they are initiating.

He’s on the move and I’m going to get to travel around North Dakota with him for a week in April, giving talks in various towns. With him as my tour guide I’m sure that I’ll have some wonderful stories to relay to you.

Tuesday, December 28, 2004

Ag Subsidies Retarding New Farmers

Here is a letter to the editor that I wrote today to the New York Times on a recent article they wrote about agricultural subsidies.

Dear Editor:

Your article “Big Farms Reap Two Harvests, With Subsidies a Bumper Crop” ignored four critical issues that are major impediments to the building of a healthy and innovative industry. These subsidies keep young people from becoming farmers, don’t allow them to achieve needed economies of scale and turn honest people into schemers.

1. Because so much of a farmer’s net income comes from government payments, they are often reluctant to retire and forgo a guaranteed check. Farmers have the second oldest average age of any profession in the country at 56 years of age. Young people aren’t able to begin farming as a result.

2. Government payments get translated into higher land prices, further erecting barriers for young people to enter the profession. Good land in my part of Illinois is selling for well over $4,000/acre. Without a government subsidy, it would probably be 20 to 40% less.

3. Because of payment limitations built into the government programs, farmers often have to enter into schemes involving family members and others to set up numerous “operating entities” to satisfy governmental regulations. I know of several good, young farmers who got out of farming rather than subject themselves to operating in this “grey area” of the law.

4. The current program helps farmers who have bumper crops more than farmers who might have a crop disaster. A farmer with 220 bushels/acre of corn typically got over $70/acre while one with only 60 bushels/acre because of weather problems received only $20/acre.

We need to return agriculture to a market based, subsidy free status. It would probably cause some short term pain, but would be better in the long term.

Monday, December 27, 2004

Space Needs Thru 2030

I just finished reading a new report from the Brookings Institute entitled Toward a New Metropolis: The Opportunity to Rebuild America, which looks at the demand for residential, commercial and industrial space over the next 25 years. They find that about half of the buildings in the country by 2030 will have been built after 2000.

I was particularly interested in their projections in the industrial arena where they see a need for 8.3 billion square feet of new space compared to the existing base of 12.3 billion sf. States with the highest percentage of new space built after 2000 are projected to be: Nevada, North Dakota, Utah, Wyoming and South Dakota. In raw square footage they are: California, Ohio, Michigan, Illinois and Indiana.

I’m sure that some of the states above shocked some people in Washington, DC but there are some compelling reasons why more rural states will thrive over the next several decades. The study acknowledges that modern industrial processes are best done in more rural surroundings stating, “It is conceivable that much of the 7 billion square feet in industrial space that will need to be replaced and the 1 billion in new square feet needed to meet growth will occur away from where they presently exist. The impact on communities beyond the suburban fringe may be significant especially considering spin-off development.

Agurbs® that have developed a plan for job growth, have spruced themselves up and offer a high quality of life are poised for great opportunities in this new century.

Wednesday, December 22, 2004

Branson’s Promise

I was reading the Branson Daily News last night, one of many small town newspapers that we subscribe to as part of our ongoing research, when a message from Ross Summers, President and CEO of the Branson Lakes Area Chamber caught my attention. He very well articulated a vision for Branson, which I feel is why a small town of 6,000 people can become the Live Music Capital of the USA.

The Branson Promise

We believe that a vacation is not an escape from reality but a connection to what is real. You. Your family. Laughter. Music. Pure fun. Doing the things you really want to do…together.

We believe you don’t have to go far from home to feel far from home. We believe you deserve to take a break from your regular life while preserving the security and comfort that comes from feeling right at home.

We believe that the best experiences are live and personal. They affect you – and you affect them. The most memorable experiences are always personal and unique. Spontaneous and unexpected.

We believe in families, and that vacations can belong to everyone in the family. While on vacation everyone can and should have a child’s sense of energy and enthusiasm – especially adults.

We believe in our American values and celebrate them every day. Respect for the individual, patriotism, faith, hope, optimism, family, courage, generosity and opportunity for all. We believe in the home. Homemade. Homegrown. Homespun. We believe that new people aren’t strangers, just friends who haven’t visited. We believe that every guest can be a part of our Branson family. From headline performers to the folks who sell the tickets, we invite you to become part of the fun we create every day as the families who built this community.

We believe that world-class entertainment doesn’t need to cost a world-class fortune!

We believe that money is hard-earned and respect the work that sits behind every dollar spent by our guests. We still think it’s possible to be surprised by how much money can buy, especially in Branson.

We believe in Branson, Missouri, nestled in the lakeside beauty of the Ozark Mountains. We’re proud of who we are and where we are going. We’d love to show you around because we love the ways in which we will surprise you. We’ve found what we want in Branson, and we know you’ll find what you want here too. Our doors are open – come on in.

Monday, December 20, 2004

Extreme Makeover—Town Sized

ABC’s “Extreme Makeover: Home Edition” has one town thinking of doing it for their entire downtown. Big Sandy, Montana (population 800) has decided that they need to remake themselves into Wild West theme. And they’ve taken steps to do just that.

Even though the show generally works on individual houses for struggling, deserving families, Marlys Bitz head of Big Sandy’s Chamber of Commerce and Agriculture is giving it a shot. Big Sandy like lots of small rural towns, is fighting for survival. There are empty buildings in the downtown area and three other businesses are for sale. Bitz said, “I was worried about the domino effect,” as she explained how towns lose their grocery store, then their doctor and finally, very slowly simply disappear. With a CAN DO attitude she said, “What is the worst thing that could happen? They don’t come.”

They’ve held art auctions, raised funds from the local Rotary Club, and tried other ways to put Big Sandy “back on the map.” Hopefully, Extreme Makeover will give them another boost.

Bitz and the citizens of Big Sandy again showed to me the determination, drive and pulling together of so many small towns.

Sunday, December 19, 2004

Place & Water—Keys for the Future

This week I talked with my favorite state head of economic development, Leland Speed of Mississippi. He is not a “typical” economic developer. He has started a couple of public REITs and comes to the job of economic development from a real estate angle. He has talked to me in the past about “curb appeal”, first impressions, and other terms common to that industry. He is working as head of Economic Development for Mississippi for $1 per year. He loves what he is doing!

“The sense of place is becoming more important. Look at Oxford, MS where single family housing within 3 blocks of the square sells for $300/sf compared to ½ that price on the outskirts of town,” he told me. “Or, Biloxi where high rise condos are selling for $350/sf, if they have a view of the gulf.”

He told me of how the importance of water and place could be more important for the future as people look at where they want to live. “Take the example of our state. The state is named for the Mississippi River which flows along the entire western edge of the state. Yet, there are only five spots where you can even see the river from shore. The rest of the great spots are blocked by levies. It is something that we’ve got to correct.”

And, knowing Leland, he’ll figure out someway to fully utilize this great resource that is underutilized today.

Saturday, December 18, 2004

Leveraging Their Natural Resources--Farmland

One of the speakers at last week’s Missouri Governor’s “Survive and Thrive in 2005 Conference” was Rand Fisher, President of The Iowa Area Development Group. This organization was set up in the mid 80s by the 85 coop and municipal utilities in Iowa to encourage economic development. The mid 80s were when 38 community banks in the state closed, there was a farm auction on almost a daily basis and one Iowa mayor told people to “turn off the lights” when the last person left Iowa. I was working in Iowa at that time and I can tell you that it was bleak.

And, there are still challenges. The farming population is aging quickly, partially due to the current farm programs and the huge subsidies being given to existing farmers. “The average farmer in Iowa is 59; 70% work off of the farm for part time income; 48% of the land is owned by someone over the age of 65 and 24% is owned by someone over the age of 75,” according to Fisher. He went on, “At one time we were concerned with corporate and foreign land ownership, but today the biggest issue is that over 20% of the land in Iowa is owned by an heir who lives outside of the state.”

With ag being such an important asset in Iowa, “if we don’t use it as a plus in our rural development strategies, it is like a baseball team not using their best player.” Fisher related two examples (egg production and dairy) of successfully revitalizing agricultural businesses in the state as an example of what can happen when you “connect people and resources to grow businesses and communities in Iowa.”

Egg production was always an important product on most Iowa farms, with the state the number 1 egg producer in the country. It was considered the grocery money for a farm family. But the industry changed and Iowa didn’t. By 1980 Iowa wasn’t even in the top 10 states in egg production. But The Iowa Development Group and others started promoting Iowa as a location for egg production because it is much cheaper to ship eggs than feed. The average laying hen consumes 1 bushel of corn and ½ bushel of soybeans/year and Iowa produces lots of each. Today, Iowa is #1 again creating 2,640 jobs. The other key numbers: $61 million in payrolls; $750 million in industrial sales; $160 million in personal income; $225 million in value-added and $10 million in state taxes.

Iowa has had the same problem with the diary industry, resulting in fluid milk and cheese plants closings. The economic impact of one cow is $13,737. But big dairy herds are returning to Iowa, with 13 having been set up with over 1,000+ head each in the past 10 years. Other ag industries with huge potential in Iowa are: ethanol (15 new plants built in the past 5 years); renewable energy (wind power); and specialty crops. Iowa is learning to utilize their major resource, land, creating jobs in the process.

Thursday, December 16, 2004

104th Talk of the Year—Bitten, Fogged In and Out of Gas

On Monday I gave my last talk of 2004 and 104th since my first one on February 1st in Washington DC. During the past 10 months I have traveled 86,500 miles to 27 states, getting a chance to tour some wonderful agurbs® and meet some incredible people. It has been one of the best experiences of my life and I have had a wonderful time. Thanks to all of you who have made this such a memorable experience.

Some of my memorable moments during that time included being on the program with three Governors (MS, NM & MO); running out of gas in OH; a speeding ticket (my only one of the year) in IN; getting bitten by a dog in KS; and getting fogged in at Sam Walton’s first store location in Newport, AR.

Most are surprised to learn that Sam Walton started in Newport, AR, not Bentonville, but the businessman who leased him space wouldn’t renew his lease at the end of the five year term. He wanted his son to take over the business, essentially kicking out Sam. The town hasn’t changed much since then, while Bentonville where Sam landed has been transformed.

I got the dog bite when I was given a tour of a honky tonk performing arts barn out on a farm. The barn was called the “Fun Barn”. Evidently they don’t get many tourists out there in suits. I told my wife back at the hotel, “I thought that the owner had trained his dog to attack anyone who might look like an IRS agent.” She responded back, “No, they’re just great judges of character.” I’m not sure that I’ll ever win that one.

I’m going to take some time off for the next several weeks and won’t be posting every day. I’ve got some stories that I’ve accumulated in my travels that I’ll want to share with you, but I won’t be doing them on any regular pattern. I plan to again post on a regular basis when I’m back on the road again in January.

Wednesday, December 15, 2004

Columbus, IN—Why a Japanese Manufacturing Hotbed?

Yesterday I wrote about the large concentration of foreign manufacturers in Indiana. Japan with 188 companies in Indiana leads the pack, with almost 10% of those in the town of Columbus. How did this top 100 agurb® achieve this percentage when they have less than 1% of the population in the state?

Larry Ingraham, who runs an economic development company focused upon Japan told me, “One of the reasons there are 15 Japanese companies located today in Columbus is that the former mayor, Bob Stewart, made 17 trips to Japan during his 12 years in office. During the 8 years Governor Evan Bayh was in office in Indiana he never went overseas and he did his best to avoid being seen with Japanese or other foreign investment. However, during this period of the Governor's "absence", Bob Stewart of Columbus was the most well known Indiana politician in Japan, and it was his personal leadership and direct appeals to Japanese executives that contributed to all of those Japanese firms selecting Columbus as their U.S. location.”

He also related to me the story of how DIAMET, a Japanese Company that manufacturers automotive parts from powdered metal, had an announcement ceremony in Columbus in the late 80s. One of those present was the president of Mitsubishi Materials USA. He developed an eye problem during the ceremonies and was diagnosed with a detached retina. J. Irwin Miller, who I wrote of in my book, arranged for his jet to take him to the best eye doctor at the Mayo Clinic that afternoon.

Ingraham told me, “The Japanese President (and his company!) was extremely grateful to Mr. Miller and to Columbus for this special arrangement that had been made for him in his time of need. This story was then told by the Mitsubishi Materials officials to other Japanese companies and helped to paint a most favorable image of the Columbus community which resulted in more Japanese companies visiting there to see for themselves what was so special about the city. I was there that day at the Mitsubishi Materials announcement for Diamet and I will always remember what Mr. Miller did for that man.”

Little acts of kindness and respect can have huge long term benefits for the agurbs® that have figured out what it takes to succeed.

Tuesday, December 14, 2004

Inshoring in Indiana!

Last week when I was touring NE Indiana, Gary Nielander, head of economic development in Steuben County, showed me a study and map that the utility company Cinergy had prepared on foreign investment in Indiana. The rather impressive map of these companies throughout Indiana is shown at

Indiana ranks as the 14th state in the USA with number of foreign companies with operations in the state. There are over 600 foreign companies, employing almost 200,000 people. The greatest number are Japan (188 companies); Britain (140); Germany (96); and France (47). But there were also companies from such countries as Brazil; Chile, Chine, Greece, India, Israel, Liechtenstein, Luxembourg, Malaysia, Mexico, South Korea, Taiwan and Yugoslavia. Indiana has the 3rd highest concentration of Japanese companies in the country.

Free trade has encouraged these investments. Free trade will continue to grow jobs in the US and around the world.

Monday, December 13, 2004

What If?

Have you ever thought about what might have happened if something had occurred or if you had done something differently? It is no different for a town.

In 1934, in the midst of the Great Depression, the 50 year old barber Hendrik Meijer decided to start a grocery store in the rental property that he owned next to his barbershop because he couldn’t find anyone to rent the property. Shaves and haircuts were considered luxuries during the depression and he was often paid with farm produce in the small farming community of Greenville, Michigan. He bought $338.76 worth of grocery items and started North Side Grocery. His 15 year old son Fred was the first employee.

That humble beginning has grown into the Meijer supercenters, which first introduced hypermarkets to the USA in 1974. Sam Walton often studied Meijer and was said to consider it to be one of the best retailers in the country. It wasn’t until Sam passed away that Wal-Mart started to compete head to head with Meijer, because of Sam’s tremendous respect for Fred Meijer.

In the late 60s Meijer moved their growing headquarters to Grand Rapids, 30 miles to the south. Today their 160+ stores, still privately owned by the Meijer family, are run from there rather than Greenville.

Fred Meijer, who celebrated his 85th birthday last week, has donated millions to his hometown. His store no. 1, which has been replaced with a new store on the outskirts of Greenville sits empty. Meijer has offered to sell the 140,000 sf centrally located store to the city for $1, hoping that it can be reused by the city or non-profits in the town.

Let me finish with some of the “what ifs” that went thru my mind as I toured Greenville last week. What if Hendrik Meijer had rented that empty space out to someone rather than starting a grocery store? What if he had decided to start a furniture store instead of a grocery store? What if Fred Meijer hadn’t moved the company headquarters to Grand Rapids? What if Sam Walton had moved out of Bentonville, Arkansas with his headquarters when he went public?

Sunday, December 12, 2004

Ice Boxes to Boxed Out—Picking up the Pieces

Not many of you probably remember “ice boxes”, where you put a block of ice into an insulated box to keep food chilled. Gibson Ice Boxes started in Greenville, MI because of the great oak lumber found in the area. It evolved into refrigerators and continued growing, but was sold several times: to White, then to Frigidaire and eventually to Electrolux, a Swedish conglomerate. The 1.5 million square foot plant located in Greenville is the largest single refrigerator plant in the world, turning out 1.6 million refrigerators/year. At one time 6,000 people were employed in the plant, but thru productivity enhancements today 2,700 are employed there. At least they will be until November, 2005.

On October 21, 2003 Electrolux informed the city of Greenville that they could build a new plant in Mexico and save $80 million per year. They gave the city until January 1st to see if they could match the savings to keep the plant in the town of 7,800.

The city went to work. They met with the local union, governor, federal contacts and even the CEO of Electrolux. George Bosanic, city manager of Greenville said, “We refused to give up. We put this together over this 70 day period which involved four holidays.” George pointed out to me that “deer season” is considered an unpublished holiday here, as it is in many rural areas.

They got $36 million/year in concessions from the UAW; $8 million in state and city incentives; 200 acres of land for a new plant; and a new efficient 800,000 sf plant that would be leased to the company. The new plant would allow Electrolux to reduce their workforce by 650, while keeping production at 1.6 million units/year. In all the incentives and cost savings amounted to $76 million/year.

But to Electrolux it wasn’t enough and they announced on January 10, 2004 that the plant would close in November, 2005. It was a blow to the town and national and international media picked up the story of how a small town tried to save their plant to no avail.

And, are they now giving up? Nope! The publicity has generated a lot of interest in the town. Bosanic told me, “I’m now working with 24 companies that are looking at us. My goal is to replace ALL of those 2,700 jobs by the time that they close down. We should be making an announcement in the next two months on two new companies that will hire a total of 800 jobs. More announcements will follow.”

With what I saw in Greenville last week, I’m convinced that the closing of Electrolux will be a rough patch in the road, but that they will look back on it as a turning point in the town. And a turning point for the better.

Saturday, December 11, 2004

More Jobs than Citizens

Two of the small towns in Steuben County, IN that I visited this week have more jobs than they have citizens. You don’t find one of these type of towns very often and it is the first time that I’ve found two in one county.

Ashley, IN is a town of 1,010 with 1,560 people working in the community. They have 8 manufacturing companies, each with from 10 to 500 employees. In 2000 they ONLY had about 1,000 people working there. They lost two manufacturers in the early 2000s, but both buildings are now occupied with internal expansions.

Fremont, IN is a town of 1,600 with 2,000 working in the town. They also lost a couple of manufacturers in the early 2000s, but have continued to grow their industrial base as the economy has grown in the past several years. One of their companies is doing a $30 million expansion that will add 50 new jobs to their base of 250.

The town also has a brand new $2 million library that is very impressive. You can tell that it is a community on the move.

I love these small towns that are showing all of the nay sayers wrong.

Friday, December 10, 2004

Manufacturing Growing?

I was in Steuben County, IN this week doing the keynote talk for their first annual economic development meeting. This is a new organization that is focused upon creating new opportunities in this most northeast county in the state. It’s led by Gary Nielander, an ED veteran who is enthused with the potential. His organization is supported by the 7 towns in the county, the county government, various chambers, and six local companies.

The county of 34,000 is blessed with over 100 lakes, one of which is the third largest natural lake in the state. There are nine golf courses in the county along with a gorgeous state park that I stayed at. Several of the golf courses are brand new championship caliber ones. The county “has been discovered” by city dwellers within 3 hours of this crossroads community like Detroit, Chicago, Toledo, Ft. Wayne and Indianapolis. Having interstates 80, 90 and 69 all crossing within the county is a huge advantage.

The county has a very strong manufacturing base with 91 different companies, one of the most diversified bases that I’ve seen in a county this size. These manufacturers account for 37% of the jobs in the county and have an average pay of $34,400. The county’s unemployment rate soared to 9.2% in the recession of 2001, but is now down to 5.8% as local companies have expanded.

One local company that announced an expansion at the annual meeting was Vestil Manufacturing Company which moved here in the mid 80s. Entrepreneur and CEO Ralph Trine is starting a $4 million expansion that will add 75 jobs to his base of 200 employees. He is a globally orientated executive with a manufacturing operation in China. But, he is expanding operations in Angola, fully knowing that not all manufacturing is going to move to China. I’m sure that this will come as a surprise to Lou Dobbs and several others in the media who prefer to only look at gloom and doom and not at what a resilient manufacturing base we have in this country.

Thursday, December 09, 2004

Fed up in the Holland Tunnel

He was a national marketing manager for Sony. She was advertising copy chief for Macy’s. They lived in New Jersey but worked in Manhattan. “After getting stuck for the 15th time in Holland Tunnel, I decided that enough was enough and we moved to Sandpoint, Idaho,” said he.

And so began a new business, one that no one noticed or probably even gave much chance of survival when it started from scratch in 1984 in the town of 5,000 in northern Idaho. Their first catalog had 18 items in it. By 1991 they were doing $11 million in sales. Today they do $500 million as a public company, but one that is still headquartered in Sandpoint. The company is Coldwater Creek and the founders, Dennis and Ann Pence, still run the company from the charming town on the banks of Lake Pend Oreille.
My wife and I visited their main store this weekend, which is built over the actual Coldwater Creek on an old bridge which used to link the town to the train station. The bridge/store is often featured in their catalog. When we were there, a group of Tibetan monks were doing sand art in the store, raising funds to help Tibet.

Having one nationally know company in a town this size is quite impressive. How about two? Also located in Sandpoint is Lighthouse Dressings, which started out of a local restaurant.

Schweitzer Ski Resort is a destination ski area that is located just outside of town. The town offers numerous music and arts festivals, the largest of which is in August when the football field is covered with a tent and musical groups from all over the country are brought in to perform. The average house in Sandpoint is under $150,000. The town has a small town, artsy charm.

You’d hardly know that the entire economy was at one time totally dependent upon timber milling. The timber mills all moved out by the mid 90s, but the new economy of entrepreneurs and artisans is going to be a much better one for great places like Sandpoint.

Many think that Sandpoint is the next Jackson Hole, Wyoming and that it has many of the same characteristics of that town in 1970.

Wednesday, December 08, 2004

The Dream of a Local Entrepreneur

Who would think of making a $60 million investment in a small town that “was out in the boondocks and had a reputation for being the center of Aryan Nation, a group of dangerous, vociferous right wing extremists?”

Maintain Local Control is one of the 7 ½ keys in my book. I found that it is often the local people who are willing to take risks for the betterment of their community that someone from the outside might not be willing to make. I found such a local person in Coeur d’Alene, a small town that once had the Aryan Nation reputation. But, largely because of the efforts of Duane Hagadone and his partner Jerry Jaeger, today Coeur d’Alene is developing a cosmopolitan reputation.

Duane Hagadone was born and raised in Coeur d’Alene which had a population of around 10,000 when he was growing up, the son of the publisher of the local newspaper owned by Scripps. Duane started working at the paper when he was 20 in advertising sales and Scripps named him publisher when his father passed away at the age of 49. He later bought out the Scripps and started buying other small town newspapers when he was still in his 20s, amassing a collection of newspapers in the northwest and Hawaii along with other businesses. But he had a dream…a dream to have a world class resort in his hometown, even though he had never owned a hotel.

The North Shore Motor Hotel, an old, two building, multi-storied hotel sat on the site that he coveted for this dream. Most of the rooms faced the parking lot, not the picturesque Lake Coeur d’Alene, but Hagadone who was in his late 40s got a right of first refusal if the North Shore was ever sold. The buyers decided to sell and he formed a partnership with Jerry Jaeger, 15 years his junior, an experienced hotel operator and also from Coeur d’Alene. He was born in Ritzville, WA (see my post of December 5th) that is known for being the birthplace of a number of Fortune 500 CEOs. Has anyone tested the water in Ritzville? He moved to Coeur d’Alene when he was in high school.

Hagadone’s dream was big, really big! He and Jaeger decided to build a showplace, destination resort with 338 rooms that resembles a Swiss Chalet or Bavarian Castle. The Coeur d’Alene, A Resort on the Lake opened on May 9, 1986. Idaho’s governor called it, “the biggest happening in Idaho since Averill Harriman built Sun Valley.” The “experts” predicted that it was in the wrong town, the hotel too big and that it would bring Hagadone/Jaeger to their knees. They were wrong.

The resort was an immediate success. Its location close to nature, next to a quaint downtown and only 40 minutes from an international airport (Spokane) quickly turned Coeur d’Alene into a destination location. Conde Nast’s readers voted it The Top Mainland Resort, one of many awards for the resort.

The Hagadone/Jaeger partnership has expanded into other resort and recreational locations, but they’ve continued to invest in Coeur d’Alene. One of their other notable projects in the town is the construction of The Coeur d’Alene, a world class golf course that features the first and only floating golf green. This green of 15,000 square feet, is 10 feet deep (5 below water), features 2 sand traps and 5 big trees, and weighs 5 million pounds.

A local entrepreneur…a dream….a transformation for a small town!

Tuesday, December 07, 2004

Agurbs® in “America’s Switzerland”

After doing my talk in Spokane WA on Friday, my wife and I were planning on going to Coeur d’Alene and Sandpoint, Idaho, two of my golden eagles or top 100 agurbs® in the country. But, the weather forecast was for a snowstorm of 12 to 14 inches of snow. We almost cut our trip short and headed home early. I’m glad we didn’t. The weather man was wrong and we had a great time.

Both agurbs® were unique in their own way, offered some fantastic natural beauty, and showed me some additional, wonderful examples of how local or transplanted entrepreneurs can transform a community for the better. One of these entrepreneurs you’ve probably never heard of. The other’s catalog is probably sitting on your coffee table.

The two towns, located in the northern panhandle of Idaho, are about an hour apart. This area of the country has often been called “America’s Switzerland” with beautiful natural lakes that sit at the foot of soaring mountains. It offers four seasons, but with a winter season that isn’t as brutal as you would imagine at its latitude.

Monday, December 06, 2004

Bed Burning

I’ve been preaching for sometime that a town can’t be just a bedroom community. It is a loser’s game. It’s impossible to win.

The reason? Research that I found when I wrote Boomtown USA done by the American Farmland Trust, on over 100 towns scattered all over the country, showed that residents in a town get $1.17 back in city services like fire, police, water, sewer, schools, etc. for every $1 they pay in property taxes. Commercial and Industrial firms get $0.27 back for every $1 they pay. One city manager in Arizona told me that they calculated it at $1.75 for every dollar that the residents paid.

Post Falls, ID is a town of 17,000 midway between Spokane, WA and Coeur d’Alene, ID. Some called it a bedroom community for these two booming communities. But Post Falls understood the ramifications of taking that path. They wanted to stress this to their residents. They held a bed burning party, actually burning a bed.

Burn your beds! Make sure that you have a diversified economy and don’t just depend upon people choosing your town because it is a nice place to raise a family.

Bring Back the Kids

John Larson is one of those serial entrepreneurs that are going to be cultivated by more communities in the future. He started out in the Lake Tahoe/Reno area, sold his business for millions and moved to the small town of Winthrop, Washington (population 350).

His new entrepreneurial endeavor is, a company that will take your home movies, digitize them and put them on the web so that you can share them with family and friends. The company has been written up in the New York Times, Washington Post, Newsweek, Parade and other publications. It is cutting edge!

Larson’s growing company is becoming a key employer in Winthrop and Larson is investing in fixing up the historic downtown area. Already he has spent over $1 million into this effort.

But, he needs more workers and he wants to encourage other entrepreneurs to start businesses in Winthrop. He has a new website that is focused upon doing just that. I love the first page of the website:

You know who they are…..
They used to live here, too

Now they only visit on holidays

Wouldn’t it be nice to have them home again?

Sunday, December 05, 2004

Tapping into Alumni’s Fond Remembrances

I found it! I finally found it! For years I have been preaching to economic development groups that they had a HUGE untapped resource that no one was tapping into. But various groups, all protecting their turf (I call it “silo mentality”), prevented towns from exploiting it. I hoped to find an example of someone who was mining this fantastic database, but searched in vain. Until today!

I was in Spokane, WA for the Inland Northwest Partners, a regional ED group in NE WA and Northern ID. Maury Forman, renowned author of numerous economic development books, coordinates the group. The theme of the conference was “Cultivating the Entrepreneurial Spirit & Reaping the Benefits”. One of the great benefits of traveling all over the country giving talks on my book, is being able to attend conferences like this and meeting some very passionate, dedicated economic development pros.

Spokane has figured it out and worked thru various egos to market their city to alumni of area universities. They are doing funky post cards that various ED groups in the city can use in this campaign ( They also are attending alumni events, profiling recent returnees in alumni magazines and promoting the city at sporting events around the country.

They sent a “With over one billion dollars invested in the Spokane region you may not recognize it…Relax, Dick’s Drive-In is still here” large post card to 300 local alumni in Washington, DC. They had 50 attend a reception, have already had one move back to Spokane and two others contemplating a move back.

A “Sure, 76 surrounding lakes may be a bit excessive, but you’ll have to take that one up with mother nature” post card aimed at Southern California had a firm with 4 partners in the financial services industry move to Seattle.

Their most popular post card is one that says, “I love traffic” on the front and points out that the average commute time in most major cities is about 45 minutes compared to 20 minutes in Spokane.

Ritzville, WA, a small town of 2,000 that is 60 miles west of Spokane, is doing a similar campaign with their high school grads. They have 3 former grads that are today Fortune 500 CEOs and hope to tap into them and other former grads fond memories of their hometown.

Why doesn’t every ED group in America do this?

A Rich Heritage from Architecture and Arts to Entrepreneurism

I almost bought a Frank Lloyd Wright house for $30,000 in 1988. As you could imagine, there was a catch. The house had to be moved because a local church in Mason City, IA had bought the property and unless someone moved it, they were going to tear it down. After I found out how much it weighed, I quickly lost interest. But a group of local preservationists bought the house, moved it a couple of blocks and restored it back to its old majesty. I’m glad they did.

Mason City is blessed to have numerous Wright creations including several houses, a hotel modeled after the Imperial Hotel that he designed in Tokyo, and a waterfall. Walter Burley Griffin, another Prairie School architect designed a very unique house that is built into the side of a hill. It looks like a rock jutting out of the cliff.

Today several banks and commercial buildings in Mason City are designed in the Prairie style. It offers a unique charm to this great agurb®.

Meredith Willson, who wrote The Music Man, was born and raised in Mason City and River City was modeled after his hometown. A few years ago a local foundation built the Music Man Square, a meeting center with an authentic indoor re-creation of River City from the movie. There also is a Meredith Willson Footbridge over the river.

However, a lesser known local might have an even greater influence on Mason City and the entire state of Iowa with his philanthropy. John Pappajohn, 78 years old, was born and raised in Mason City. He made his first fortune in insurance and his second in Venture Capital. Today he is funding Pappajohn Entrepreneurial Centers throughout Iowa, including Mason City. These centers, aimed at improving the entrepreneurial skills of Iowans could be a major springboard for the entire state in this new century.

Saturday, December 04, 2004

An Agurb® Moving from Bricks to Clicks

\ Mason City, Iowa is an old industrial city of 29,000 in north central Iowa. I first visited it in the early 80s and often stayed overnight in the town in the late 80s and early 90s. It always impressed me as being a very nice town. The people were friendly. The yards were well kept. It radiated a certain charm. But, I hadn’t been back since 1992.

I was surprised when I first drove back into town after 12 years by the expansion of retail in the town, which was incredible. There were half dozen new big box retailers, numerous smaller stores and a handful of new auto dealers at the main entrance to the city. Mason City’s unique downtown also seemed to be doing well.

I’d picked it as an agurb® for my book and I knew I’d made a good pick when I saw how Mason City has expanded and diversified their job base. Several of the old line industries that helped make the city the largest in the northern 1/3 of Iowa are long gone like the Armour packing plant and the brick plants, but their two cement plants are still going strong. They’ve added to that base with food plants like Kraft (Jell-O pudding cups); ConAgra (hot dogs, bacon and ham production); and Cargill (liquid eggs primarily for McDonalds). They’ve got some local entrepreneurial manufacturers, a new $400 million power plant, and a new $56 million ethanol plant that will use 15 million bushel of corn per year. There is a good diversity in their industrial base.

And Mason City is moving from their old bricks industries into a “clicks society” where knowledge trumps brawn. They are leveraging their strengths as regional financial, insurance and medical centers to create more white collar and high tech jobs. Their location along the interstates I35 and Avenue of the Saints (St. Louis to St. Paul) also offers them some opportunities in the growing distribution industry.

Friday, December 03, 2004

Iowa Tax Credits for Communities

Two new initiatives discussed at the Community Collaboration in Spencer, Iowa this week have the possibility to help transform small towns and counties throughout Iowa. And, they will be jump started with state tax credits, allowing local people to take some of their taxes to directly help their region.

The Regional Angel Investor Network ( will help regions in Iowa to fund entrepreneurs in their areas. As I’ve written before, I believe that the start-up and recruiting in of entrepreneurs will be the paradigm shift of economic development in the 21st Century. Iowa gets it and is doing something about trying to help fund entrepreneurs.

Another new program in the state is Endow Iowa ( which also uses state tax credits to help start Community Foundations like the one I was at in Winfield, Kansas a few weeks ago. We are going to witness the largest transfer of wealth in the history of the USA and communities that have the vehicle of a Community Foundation to recirculate these funds will be able to do good things forever for their local citizens.

Iowa understands the importance of “place” and is looking at ways to keep their small towns functioning and flourishing for decades into the future.

Regionalism on the Rise

Wednesday, I was the keynote speaker at Community Collaboration, a regional initiative for economic development in Spencer, Iowa. This northwest area of Iowa started to do economic development marketing on a regional basis in 1992. Today they are looking to expand their work geographically and the conference included several counties from SW Minnesota.

Why more regionalism? Entrepreneurs and companies looking to move to an area don’t care about boundaries, whether they are city, county or even state borders. They are looking for quality of life for themselves and their employees and cooperation and collaboration from the various entities in an area.

Regions that can come together to help develop their competitive advantage and use that advantage to create some critical mass and clusters will be the winners in the long run. There were several great examples of cooperation cited at the conference taking place in NW Iowa and SW Minnesota. With the enthusiasm and interest displayed by this group I’m guessing that it will grow and prosper in the future.

Thursday, December 02, 2004

A Revitalized Downtown….Priceless!

South Bound Brook, NJ changed the look and image of their small town by redeveloping the ancient GAF factory site, an old asbestos shingle manufacturing site. Having 20,000 cars/day driving by this dilapidated site created a horrible image for the entire town. Mayor Schubert and the city council worked diligently to get this eyesore turned into something they could be proud of.

It took a lot of work, but the hard work is paying off today. In the works on the site are 152 townhouses, a 25,000 sf retail shopping area and upscale apartments above the shopping area. Restoration of 1500 feet of the historical Delaware and Raritan Canal is also underway with a footpath along the canal connecting this project to the adjacent downtown area.

Today South Bound Brook is branding themselves with a canal barge and the mules that pulled the barges on it.

As Mayor Schubert said, “New Residential Townhouses $50 million; New Retail and Apartment Development $6 million; A Revitalized Downtown…..Priceless!”

Wednesday, December 01, 2004

True Leaders Come for Everywhere

At a NAIOP Conference in Edison, NJ this week one of the speakers was Jo-Anne Schubert, mayor of South Bound Brook, NJ. She wasn’t born in the town of 5,000 and in 1996 when she first ran against the two term mayor who had been born in the town--as she says, “I was still considered an outsider even after living there for 18 years.”

As she related, “The old mayor was comfortable with us being a bedroom town and we needed a vision and balance for the town. We had lost a major plant in the late 80s that took up 12 acres right in our downtown area and it was the death of the community. We had to do something to turn the town around. So I ran. My husband told me: “if you win, that’s great. If you lose we are moving.” She won big.

The factory site that needed to be cleaned up wasn’t any site. It was where asbestos shingles had been invented and had been an industrial site for over 100 years. It was the pits!

The process of changing the image of their town from “the town that no one wanted to admit they lived in, into a charming little town on the banks of the Raritan River” wasn’t easy, had major bumps in the road and didn’t happen overnight. A 100 year flood caused by Hurricane Floyd in 2000 almost derailed everything. As you could imagine, working through the environmental issues with the site were complicated. Mayor Schubert said, “I’d failed science in high school, but now I’m an expert on environmental issues.”

How did she accomplish such a turnaround? She met constantly with her council, sometimes every night of the week. She went to state and federal sources for funds. She got the citizens involved. The group chosen to do the redevelopment was vetted before 200 local residents in a public hearing where everyone had a vote. She was a dynamo!

Every town would do so well to have a mayor like Mayor Schubert who was told in high school that she wasn’t “college material.” Tomorrow: Redevelopment and Branding in South Bound Brook.