Tuesday, May 31, 2005

2,236 Gallons of Water = 1 Bushel of Corn

“It takes 2,036 gallons of water to produce a single bushel of corn,” was the quote from an editorial this past week from the Grand Island Independent (http://theindependent.com/stories/052705/opi_letheby27.shtml) that looked at an increasingly scarce resource. Once I get west of the Mississippi River the number one issue of most governmental leaders I meet with is their long term water needs. It will become increasingly important in other parts of the country.


I met an interesting entrepreneur in Wellington, KS last week. Don Applegate is a farmer/rancher who has invented a new way to sell hay. He is repackaging it into smaller bales which he shrink wraps. He hopes to sell in convenience stores, big box retailers, grocery stores, etc. His website is www.hay-to-go.com.

Hay has probably been sold for hundreds of years, but until now the emphasis was on how to get bales bigger, not smaller. Here is someone who is looking at a traditional market in a completely new way. His focus is upon convenience and cleanliness rather than bulk and price. I love how entrepreneurs can find niches like this and develop innovative products for them.

The same principle applies to towns. Some are able to differentiate themselves and excel. Others do the same thing over and over that they’ve done for years and wonder why nothing changes. Which type town do you think most people want to live in?

Monday, May 30, 2005

Let the Trend be Your Friend

“The economies of most big cities are idling. The real entrepreneurial hotbeds are now on the periphery—where low costs make it possible to thrive in a tough global economy. The new economy didn’t disappear. It changed addresses.” This is how Inc. Magazine began their Annual Best Places for Doing Business in America 2005 in this month’s issue. And, while their research is focused upon MSAs (Metropolitan Statistical Areas), much larger than the focus of my research, their study points out this trend of people moving from the “rat race” cities to places with a better quality of life.

Inc pointed out that even in the midst of the dot com bubble, some of the biggest job gains among educated workers were taking place in out of the way spots, especially in the Sunbelt. They add, “The process has only accelerated since then. Cities like New York, Boston, and San Francisco still attract many of the best and brightest when they are in their 20s and early 30s. But as these people get older and start families, they tend to move to nearby suburbs or out of the region entirely.”

I’m seeing this movement in my travels and have become more convinced each day that the agurbs® that can create a special “quality of life and sense of place” for these young professionals, will be the ones that end up creating some very unique opportunities for their general population in the long term.

Making of a Great Nation

Peter L. Bernstein’s new book Wedding of the Waters: The Erie Canal and the Making of a Great Nation is a wonderful historical read that shows how a project of vision can transform a region and even an entire country. The early USA consisted of only 13 states all along the Atlantic, separated by the imposing Appalachian Mountains from the rich center of North America. Britain, France and Spain all looked enviously upon this virgin area.

From 1817 to 1825 the 363-mile canal was built from Lake Erie to the Hudson River, which connected to New York City. Prior to the opening of the Erie Canal a shipment of flour could only go 130 miles by road before 50% of its ultimate value was eaten up by freight costs. Via the canal it could be transported 2750 miles. The amount of grain transported to Buffalo increased by 10 times within 10 years, transforming it into the flour milling capital of the USA. Cities on the Great Lakes such as Cleveland and Chicago quickly grew also as a result.

New York City, which was in fourth place in trade behind Boston, Philadelphia and Charleston quickly catapulted into first place and also established itself as the young country’s financial center. It would never again be a horse race for domination. New York never looked back.

Railroads would eventually replace canals, but the demographic and trade shifts that occurred because of the Erie Canal changed cities and regions forever. What project is your agurb® working on that could transform your community?

An Entrepreneurial Town

Argonia, KS (population 534) kept getting mentioned when I was in Sumner County last week. This town has had a number of entrepreneurs who started their careers in this little town. I’ve often been intrigued by what causes some communities, like Argonia to be so entrepreneurial.

Two years ago four local individuals decided that their town needed a grocery store. They hoped to be able to do $700,000 in business. It ended up doing $2 million in its first year, generating a great deal of local interest and support.

The medium age of the community is 41 years of age compared to the national average of 35. It is a town aging in place, one that I see too often in my travels. I’ve been in some that are at 50+ years, way too old. Argonia still has a chance to turn this aging around.

Their strategy has been to build a lake in the town. The 24, one acre lots on the lake will be given away. That’s right, given away! They hope to recruit in families that want to raise a family, saving their local school district which is down to 180 students with this strategy.

That’s an entrepreneurial town for you! I hope to get back to study it in the future.

Sunday, May 29, 2005

Two Sides of Dependence

Being 35 miles away from an economic powerhouse is both a blessing and a curse. I witnessed the impact of Wichita upon Wellington (Sumner County) during a tour this week. Known internationally as the “Air Capital of the World”, Wichita is home to many airplane manufacturers and their many suppliers. It has some generated some of the highest paying jobs in the state of Kansas.

The blessing for Wellington is that it is close enough to Wichita that a number of its residents can commute into Wichita. Of the 11,535 workers who live in Sumner County, 4,836 are working outside, a very high 41%. But, this commuting pattern is one of the main reasons that the county has the 18th highest median household income in the state (out of 105 counties).

The downside is that those commuters tend to spend a big percentage of their paycheck where they are earning it. Debra Teufel, economic developer for the county, told me, “We only capture about 47% of the retail sales of our residents.”

The headline in The Wichita Eagle newspaper when I was there was “NOW WHAT?” Boeing had tentatively sold its commercial aircraft division in Wichita to Onex, a Canadian company. Onex notified 800 machinists on Saturday that they would no longer have a job and asked the remaining 4,500 employees to vote on a package of wage cuts, health care premium increases, stock ownership and a bonus plan. It was rejected by a 57 to 43% margin. There is concern that this major employer will close its doors, dramatically impacting the entire region.

Wellington and Sumner County are in a trap because of their dependence upon the Wichita economy and large manufacturers there, like Boeing. I hope that they are able to diversify their own industrial base and become less dependent upon their neighbor to the north.

Saturday, May 28, 2005

Wellington, NZ—The Next Hollywood?

Wellington, KS to Wellington, New Zealand is a half a world away. I was in the Kansas Wellington this week, but told them of the other Wellington during my talk. I suggested to them that I thought that the New Zealand version had similar characteristics as Branson, MO when it was just starting to emerge. I recommended that they attempt to establish a sister city relationship, while they are still a relative unknown. Here is the story I related to them.

No one would ever pick Wellington, New Zealand as the next Hollywood, but then again no one would have ever picked Branson, MO as the new live music capital of the USA either. But, today Branson refers to Nashville as “little Branson,” so perhaps it isn’t such a wild dream if you look at that example.

Peter Jackson, the Academy Award-winning director of the Lord of the Rings Trilogy, has established a permanent, state-of-the-art, sophisticated film making facility in his hometown of Wellington. He and his partners bought an abandoned paint factory and have completely redone it. They have been inundated with talent from all over the world wishing to work in what might have been considered an “out in the boondocks” place as little as five years ago. But the Rings success, wonderful scenery seen in the Rings movies and Jackson’s reputation is luring them.

Jackson lives in the place he was born in and wants to make his home, is able to recruit in the talent that he needs and is giving back to his hometown. It is a great combination. He is currently putting together a $150 million remake of King Kong in Wellington. What do you think it would have cost to film it in Hollywood?

Entice or Drive ‘Em Out?

“This bill directly threatens jobs and economic development in Maryland,” said Governor Robert Ehrlich when he vetoed a new bill this week that would have specifically signaled out Wal-Mart because of the number of employees it has in the state. It would have required the company to spend at least 8% of its payroll on health care benefits, at a time when the company is planning to build a distribution center on the south shore of Maryland. If the bill had passed, I’m guessing that Wal-Mart would have pulled up stakes, and we’d have had another one of the numerous examples of the Law of Unintended Consequences, when lawmakers pass one law which too often results in exactly the opposite affect. It’s happened too often, often with catastrophic ramifications.

Wal-Mart’s distribution center (DC) is being built in Somerset, a rural county on the south shore of the state. Our continuing research shows that this is a very successful strategy of the retailing giant. Part of their success is due to the fact that virtually all of their distribution occurs in lower cost rural areas. It is a tremendous advantage that the company has fully utilized, especially when compared to a company like K-Mart with its more urban DCs.

Princess Anne, the town where the DC will be located is a small town of only 2,313 in a county of 25,863. It has the second lowest population in the state but the highest poverty rate. The unemployment rate in Somerset is the 5th highest in the state. A Wal-Mart DC with 750 jobs would be a big economic boost for this rural community. Its average starting wages of $12/hour are more than $2.50/hour above the county’s current average wage.

Maryland’s ED Secretary Aris Mellissaratos probably said it best, “The legislature has flirted with economic disaster by passing this tax. This new business tax would have driven large companies out of Maryland.”

Friday, May 27, 2005

Energized by Entrepreneurs—Transforming Rural America

“I started out of my apartment, borrowing $600 from the babysitter of my daughter” is how Madolyn Johnson explained to me how she started The HomeMaker’s Idea Company (www.homemakersidea.com) in 1971. Today she has over 3000 dealers scattered all over the country, most in small towns. I had lunch with her yesterday and learned of her story.

“Our highest per capita sales are in South Dakota. We are able to offer entrepreneurial opportunities for many people in rural America. Most of our dealers are women but we have quite a few men.”

Madolyn grew up in Iowa, went to school at Iowa State to become a teacher and ended up in Chicago. She left teaching to help take care of her daughter who had hearing problems. She was named by Fast Company Magazine in their May issue as one of the “25 Top Women Business Builders”. Her 90 person company has won numerous other awards.

She is giving back to her Alma Mater, funding entrepreneurism scholarships. She told me of the Entrepreneurism dorm at Iowa State and how several students from the dorm have set up a coffee shop in the front lawn for students on their way to classes in the morning. “They brew it in a little closet in the dorm. It really is fairly sophisticated for being in such a little area,” she told me.

Entrepreneurs come from every walk of life. They are transforming rural America. I love meeting them and get energized when I get to spend some time with them.

Aviation Parts Cluster—Built By Entrepreneurs

“We’ve got a dozen aviation parts manufacturers here in Sumner County,” Debra Teufel Director of Economic Development told me on my tour of Wellington, KS (population 8,647) earlier this week. The largest of these is BAE Systems, a company that started in Wellington 50 years ago but is now owned out of Great Britain. BAE has 320 out of the 867 manufacturing jobs in the county, most of which are in the aviation cluster. These manufacturing jobs represent 15% of the workforce, but pay over 40% better than the county average.

The airplane parts cluster is an interesting one. It is high tech, high paying and specialized, all factors you would choose if you had your choice as an economic developer. A negative is its dependence upon Wichita, 35 miles to the north. More on my concerns of Wichita in a day or two.

Most of these aviation related companies started up in Sumner County out of local machine shops. There have been some tremendous success stories like Bill Meridith who eventually sold out for almost $100 million and is pouring funds into a new private Christian school in Wellington. He also donated the land for the new high school. Many of these entrepreneurs were born and raised in Argonia (population 534), 20 miles to the west. I hope to return to find out why.

The county bills itself as the “Wheat Capital of the World” because of all of the hard red winter wheat grown there and I was given a license plate that proclaims that fact by Shelley Hansel, Executive Director of the Wellington Area Chamber. Unfortunately, the only flour mill left in the county is going to be closed at the end of the month by Cargill.

Another major employer in the community is the BN train yard where crews are changed on the mainline from LA to Chicago. There are a couple of hundred engineers and conductors who base out of Wellington. When we drove by the yard we saw license plates from as far away as Texas. The problem is that the bulk of the workers are riding trains and don’t live in the community.

When they told me that the UP RR crossed the BN in town, I saw the potential for a shortline railroad like we were able to do in Effingham. Such a combination of the BN/UP would be far superior to our CN/CSX one. I hope that they can do something to capitalize upon their unique railroad location.

Wellington is an interesting community with some tremendous potential. They’ve got some unique assets and a great location but they have to continue moving forward as a community. When you have assets like their aviation parts cluster and proximity to Wichita, there sometimes is a tendency to become complacent. I hope that Wellington doesn’t fall into that trap.

Thursday, May 26, 2005

Cathedrals on the Prairie

I was speeding across the prairie in NW OK at dusk, rapidly approaching Enid. In the distance I started to make out the skyline of big city; a huge city actually. I looked at map and saw that their population was 47,045, a fair sized city for Oklahoma, but not a huge city by any stretch of the imagination.

As I drew closer I could see that I had been fooled. What I had thought was skyscrapers, were actually a half dozen enormous grain elevators. And, they were some of the largest elevators that I had seen in my travels. As I sped away, those “cathedrals on the prairie” slowly faded in my rear view mirror.

Wednesday, May 25, 2005

Enough Wind?

“What do you think of a plan to build a 100 turbine wind farm in SE Kansas?” was the question of the day on the Wichita radio station I was listening to this morning as I drove to the airport. The station was airing various responses to this question. There were several very good responses about renewable energy, added jobs, etc. However, there was one response that was very unique.

“Hello, this Earl and I just wanted to let you know what my Aunt Mabel thinks of this idea. She said that we’ve got plenty of wind out here in Kansas and we don’t need to be farming anymore.”

It took the two announcers almost 30 seconds to get the crux of the message. Perhaps it was a busy day for them.

A 30% Guaranteed Return—Where Do I Sign Up?

One of the selling points on the VAP project that I blogged on yesterday, was the fact that the State of Oklahoma offers a 30% tax credit for value added ag investments by farmers. It made it a much easier sell to raise millions of dollars for the new venture.

Oklahoma also offers the same tax credit for venture capital and angel investor investments. One of the challenges that I made to the group in Alva, OK was to put their heads together to take advantage of that tax break.

I told them, “How difficult is this going to be to sell? You’re giving them a 30% guaranteed return, right off the bat. Just think of how you might be able to transform your community, if you could team up and use funding from a number of individuals and companies to help transform NW OK into an entrepreneurial haven.”

I’ll be very disappointed if they don’t do something.

Tuesday, May 24, 2005

Who Would Have Thought?

GM to junk bond status and the US government subsidizing Viagra for sex offenders! I wasn’t sure which sounded more incredible as I watched CNN at the airport just prior to my flight to Wichita this afternoon for a talk tonight in Wellington, KS.

GM jumped ahead of Ford when Henry Ford wouldn’t change his Model-T. GM, under the leadership of Alfred Sloan, redesigned, reengineered and redefined the automobile industry in the teens and twenties. Their multiple brands, from Chevy to Cadillac, became the new style leaders and GM has been the undisputed top selling car maker in the USA ever since. In the 60s they commanded almost 60% of the domestic market, with their Chevrolet Division having as much market share alone as what the entire GM lineup has today.

GM was arrogant, made mistakes like their $1600/car medical and retirement legacy cost and thinking that their power position with pickups, SUVs and at GMAC would protect them in the long term. They were wrong and it might take a bankruptcy to stop the bleeding presently going on in Detroit.

I was stunned when I heard on CNN that something like 80% of registered sex offenders are receiving Viagra from government health programs. For free! Are we nuts? What is wrong with this picture?

The lessons for small towns from these examples? You can’t let yourself become arrogant like a GM. You’ve constantly got to be reinventing yourself because someone is always going to be breathing over your shoulder. And, don’t lose sight of common sense as you develop plans and programs that you hope will make your community a better place in which to live.

Value Added Ag

I often wake up early to explore the town that I’m staying in. I’ve found that I often stumble upon some interesting things in the early morning hours. Last week I was in Alva, OK (population 5,288) and as I drove around I was impressed with what a neat, clean town it was. There were a number of murals on billboards and walls in the downtown area.

On the north end of the downtown area there were a number of big grain elevators, more than I’ve seen in any town this size. There also was an abandoned flour mill. With all of the wheat that I saw as I had driven into town I could understand why someone had built a flour mill in Alva, but was saddened to see that it was no longer in operation, adding value to the locally produced primary agricultural product.

I later found a very interesting company called Value Added Products (VAC) on the south end of town, in what looked like an abandoned strip mall. I parked my car and walked in the door. Even though there were several cars in the parking lot, I couldn’t find anyone in the plant. I walked thru the entire plant shouting out, “Anyone here!” I was more amazed at the amount of equipment that was in this relatively new plant, than I was that the front door was wide open for visitors such as me to wander around. This is, after all, small town America where most people never lock their cars or houses. I wanted to learn more.

I told of my experience at my talk that day and asked if anyone knew anything about Value Added Products. Several raised their hands and I asked them to pull me aside at a break and explain to me what this company did and how did it happened to be located in Alva.

Mike Payne and Dwight Hughes of the Northwest Technology Center; Gary Bledsoe and Rick Maloney of the Oklahoma Department of Agriculture; Terry Ross of Community National Bank and Consultant Neil C. Doty sat down with me over lunch and explained how VAC (www.vapcoop.com) was started. Terry Ross, “We did a 2 day strategic planning session about six years ago with 35 or 40 area people. We wanted to do something in the value added area and elected a nine person board to push an idea of developing some core competencies in the area. We found that the gluten level of the wheat grown in this area is some of the best for making frozen dough for pizzas.”

Terry Ross, “We developed a plan, raised $20,000 locally and with help from the Department of Ag set out to raise $20 million for this project. We went out to 40 different groups all over the region doing “dog and pony” shows from August 31, 1999 to January 10, 2000. We raised $9 million in equity from 900 different people. They came in increments as low as $5,000 and to as much as $750,000.”

They combined those equity funds with IRB funds and the 3 local banks combining to do a USDA Rural Development 70% guaranteed loan. Payne said, “We’ve got 3 banks in Alva and all three worked together on this project. It was the first time that they have ever worked together. Ever!” They bought an old Wal-Mart anchored strip center for $850,000 and adapted it compared to the $5 million building they had in their original projections.

They are doing $9 million in sales and taking almost 10% to the bottom line. Most importantly they have created 70 new manufacturing jobs, a major employer in a rural community like Alva. They are currently studying doing a “topping facility” which would add the ingredients to the frozen pizza. Doty told me, “The crust is only 1/5 to 1/3 of the total cost of a frozen pizza. We could expand our sales to $25 million if we could start doing that. And, we raise virtually all of the topping components here in Oklahoma.” He didn’t say all toppings. In my 1000 mile journey I didn’t see any pineapples or anchovies.

They explained how they raised $9 million in equity, quite an accomplishment in rural America. “At the time wheat was only $2/bushel compared to $3/bushel now. The farmers had their backs up against the wall and this was a way for them to look at how they might be able to add value to their wheat production,” Maloney said. Payne added, “The other factor that really helped was that the State of Oklahoma offers a 30% tax credit for value added ag investments for farmers. We couldn’t have raised that much money without that tax credit.”

The ag tax credit is one that other states have used to their benefit. It is very similar to one in ND that helped to fund a pasta plant that wasn’t as successful. However, a success like VAP is encouraging other producers in OK to look at similar endeavors. Already there are plans being developed for ethanol, biodiesel and even canola processing. I was surprised to learn that OK has 17,000 acres of canola planted, a crop normally grown in Canada. It works as a wonderful rotation away from a continuous wheat crop, helping to alleviate some grasses out of the wheat.

Monday, May 23, 2005

With a Name Like Antlers, What Would You Do?

“With a name like Antlers, what could we be but the Deer Capital of the World,” Scott Pace, a local resident of Antlers, OK but also an economic development specialist with the OK Department of Commerce, told me at one of my Rural Economic Development Summit talks in the state. “We don’t necessarily have the best deer but we aren’t going to let that stand in our way,” he told me laughingly.

Antlers is a small town of 2,000, just over the Oklahoma border north of Paris, Texas (another town that has really played up their town name). On the first weekend of October they hold their Deer Capital of the World Festival. They first started it in 2001, bringing in 7,500 people. In only 4 years it has more than tripled in size and has become such an event that at last year’s event Cabelas, Stil, Bass Pro and other major retailers were there with booths and trailers. They have raised enough funds that they are now building a 3,100 sf Wildlife Heritage Museum. My guess is that this festival will grow into something that won’t recognize from their humble start four years ago.

It is a great example of a town fully utilizing their resources (third key in my book). What have you got in your town that you could utilize?

Sunday, May 22, 2005

Observations From the Four Corners of OK

For the past three weeks I’ve been taken part in full day rural economic development summits in the four quadrants of Oklahoma. I drove almost a thousand miles, crisscrossing the state, touring towns and meeting some incredible people from small towns from all over OK. It’s many different regions, topography and landscape are as varied as I’ve seen in any state.

Even though there were differences of opinion on top priorities for regionalism and economic development between the four regions, I found an almost universal interest in everyone I talked to at the events. Each wanted to figure out ways to make their communities more attractive, with improved economic opportunities so that their kids and grandkids would have a reason to possibly come back home. Their concerns in Oklahoma weren’t any different from what I’ve found from NJ to WA or ND to TX. The difference is that some communities and regions have taken a more proactive approach and as a result have been much more successful in creating more opportunities. I’m hopeful that my talks will inspire others to take a similar approach.

I was very impressed with what I found in OK. Kathy Taylor, Secretary of Commerce for the State, has developed a very proactive, pro-business approach. She is focusing upon a regionalized emphasis in rural Oklahoma, taking a very long term, strategic view toward economic development and job creation. The state has an interesting cluster analysis underway that is also very forward looking.

Keep your eye on Oklahoma. They are on the cusp of accomplishing some big things as a state.

Saturday, May 21, 2005

Oh For the New VLJs!

I was very frustrated earlier this week. I had a very bad experience flying thru DFW Airport on my trip to Wilburton, OK. I left home at 1 pm to drive to the St. Louis airport, flew thru the hub in Dallas, connecting thru to Ft. Smith, AR, where I picked up a car to drive onto my final destination. It took me 9+ hours to fly/drive there, almost exactly the same time that it would have taken me to drive the 590 miles. I averaged 65 mph flying/driving, actually better than the 57 mph that NASA showed on average for distances of less than 500 miles.

By point-to-point air service the distance is cut to 490 miles. If one of the new air taxi companies that I continue to research and write about had been operational I could have made the trip in less than 2 hours. Oh, for those new Very Light Jets (VLJs). They can’t come soon enough.

Following is an email that I wrote in frustration to my travel coordinator at Agracel. I reported on the events that occurred on that trip but perhaps exaggerated a bit on some of the people that I ran into along the way. I actually barely did make my flight. Here is my email:

It is always such a pleasant experience to get to fly thru DFW. My flight was on time (that is a first!) but we got to the gate and had to wait about 10 minutes so that they could get the gate ready for us. We arrived at the gate, got out of seats and were ready to get off of the plane when the air hostess announced over the intercom, “There is someone at the gangway, but she doesn’t seem to know how to operate it. However, we can see that she is on the phone and we hope that she is getting directions on how to get it to move toward the plane.”

Thank goodness she is not a pilot!

After patiently waiting for another 5 to 10 minutes, she figured it out and we deplaned. Hardly anyone noticed that there was about a twelve inch drop from the plane to the gangway. How far do you think you can drop a roller board without damaging a wheel?

“Could you tell me what gate the flight to Ft. Smith is leaving from?” I asked as I got to the arrival gate at C 28.

“Why yes hun (Yep, this is Texas!), you have to go to gate A-2-D”

Huh!!! A-2-D? Wasn’t that a robot in a Star Wars Movie, or something? Who has ever heard of gate A-2-D?

I didn’t lose my cool yet, “How do I get to A-2-D?”

“Why you just walk down to C-2 and get on the train and ride it two stops. You’re almost there then.” Famous last words.

Did I tell you that I only had 42 minutes from the time the plane landed until my flight left for Fr. Smith? And guess how many flights/day they have to Ft. Smith?

So I walk all the way from C 28 to C 2, which is twice as long as it takes in a “normal” airport. That is because DFW’s terminals are laid out in semi-circles. They were designed prior to security concerns, built so that you could drive right up to the gate and park right in front of your gate. The effect is that you have ½ of the normal gates in a mile and it seemed like a mile as I walked to C 2.

And, then I waited for the train. They have this message board above the train entrance that says, “Train arrives every 2 minutes.” Evidently, just like everything else in Texas their minutes are a big bigger than back home. I wish I had timed it, cause it seemed more like 10.

By the time that the train pulls up, there is a pretty big crowd waiting to get on the train. The first 3 get on the train and this voice comes blaring out of the loudspeaker, “The doors are closing. Please stand out of the way.”

Evidently, they had to make up for the lost time of not getting there within the two minutes that they advertise.

I sure hope that little old lady that I bumped as I lunged for the door didn’t break anything and was able to recuperate by the time the next train came in the advertised two minutes.

About 5 or 6 minutes later we arrive at the second stop. Are you keeping track of the time? Fortunately, I am the first one off of the train. There is some accounting principle involved: LIFO, Last in First out.

The train arrives at gate A 12. No sweat! I’ve still got about 12 minutes to get to A-2-D

Oh oh! You have to go DOWN an escalator to get to gate A-2. Surely D is around here someplace!

“Let me see your boarding pass!” She’s definitely not from Texas. Looks like a misplaced New Yorker.

“Get on the bus.”

BUS? BUS? I thought I was flying?

Bubba Billy Joe, the bus driver told us that he had a full tank of gas. I think that he was trying to make a joke.

It wasn’t. Not only was Bubba a frustrated NASCAR driver but I thought that he was going to drive us to Ft. Smith. I know that Texas is big, but I didn’t know that DFW was that big! We saw parts of the airport that I’m sure people in Dallas didn’t know existed.

We finally got to another building that had gates A-2 (A thru F). It is now 5 minutes past when my plane was supposed to leave for Ft. Smith, but the speaking gods were looking down on me and my plane was 20 minutes late leaving.

Please try not to book me thru Dallas in the future.

Your faithful traveler,

Friday, May 20, 2005

From SF to IN—Able to Retire 10 Years Early

“That price of $1 per square foot was the price that it sold for, not the rental rate!” Elizabeth McNeece told me as we drove by a good looking, solid 3 story building on a corner street on the main street in the downtown of Vincennes, IN. “And the roof is in very good shape.” McNeece owns a coffee shop (with a wi-fi hot spot) only a block away and is president of the downtown association. She and her husband Marc, who is president of the local chamber, were giving me a tour of the town prior to my talk at their annual chamber dinner.

“This is the Pantheon Theater which seated over 1,000 people. It could probably be bought for around $35,000 or $40,000. Red Skelton used to perform here.” He was born and raised here and is definitely a favorite son. Vincennes University is building a new $15 million Red Skelton Performing Arts Theater.

They showed me other incredible bargains in their historic downtown. Vincennes, built on the banks of the Wabash River, was the first capital of the Indiana territory and was the western front in the Revolutionary War, allowing the USA to become a much larger country than the original 13 colonies. They’ve got buildings that date to the 1730s. “We’ve got the largest historical district in the state with over 1200 homes in it,” Marc told me, “We had one couple from San Francisco who saw one of our old homes for sale on the internet for $90,000. They bought it, put another $90,000 into fixing it up, sold their home in California and moved here. They said that the savings allowed them to retire 10 years earlier than they thought they would be able to.” They are developing a mile and a half river walk that will connect the University to past the downtown area.

Vincennes is developing a plan to utilize their unique downtown and historical area, modeled after Paducah, KY another old river town. Paducah advertised their historical area to artists nationally, offering to loan them the funds to come in to fix up old buildings into studios and lofts. Within a couple of years they recruited in 44 new artists who invested over $11 million into the downtown area. Their tourism sales are up by $4 million. Makes sense! I don’t know why more towns like Paducah and Vincennes do something similar.

Vincennes is a sleeper. If my business was redoing old buildings, instead of industrial development, I’d be down there today buying buildings.

Thursday, May 19, 2005

Importance of Newspaper’s Approach

“We decided we were going to move somewhere in Washington and so we got several daily newspapers for six months before we made the final decision,” was how Kathy McGee explained to me how they decided to move to Ferndale, WA (population 9,300) from Kansas City. She was a secretary and her husband was a utility company manager. She had recovered from a cancer scare and they decided to make a new start in a new area. They had visited WA on their honeymoon, liked the state and decided early on to move there.

“It was a leap of faith to make that move, but we’ve not had any regrets,” she told me as we flew from St. Louis to Dallas. “We lived in suburbia in a big 4 bedroom house. We sold it, held an auction and made the move. We found a bigger house on five acres out in the country.”

“The first night was kind of scary as we just couldn’t get used to the coyotes howling in the night.”

She does wood carvings, which she showed me on the plane ride. Each one takes about a week to do and has its own story. You will be able to see them on her new website, which is under construction (www.impressionsbykat.com). It was a nice, chance encounter on a usually boring plane ride.

Her story impressed upon me the importance of the local newspaper in helping people and companies in deciding if they will move there. I’ve seen a strong correlation with a newspaper that is constantly negative, focusing upon all the bad things happening in a town and low or negative growth for the community. Compare that to one that, while reporting on everything, seems to find good things happening in the community. That town seems to have a different approach and better growth prospects. Which one would you prefer to live in?

Most Millionaires/Capita to Down & Out—Can They Come Back?

“During the 1920s and 1930s we had more millionaires/capita than any other place in the entire country,” Dale Young II, Executive Director of the Okmulgee, OK Chamber of Commerce told me on my tour of the community. You could tell that something special happened here at one time when I drove thru the downtown. But other than a 1921 Vaudeville theatre restored into a movie theater, the Creek Council House Museum and a few other retrofitted buildings the downtown needs lots of help. It has lots of potential, probably more than I’ve seen, but it will require a great deal of effort.

Okmulgee boomed when oil was first discovered near there. Frank Phillips who founded Phillips Petroleum had his start there but moved to Bartlesville. Waite Phillips, brother of Frank, stayed in Okmulgee, made a fortune in oil and diversified into ranching, real estate and banking. He was one of many millionaires who made their homes in Okmulgee. However, he and the other millionaires’ children often moved off to greener pastures.

The town has a beautiful new $2 million swimming pool and a wonderful YMCA. The funds were raised locally and from some of the foundations of those original millionaires’ heirs who now live in other areas. It is great that they continue to give back to the town of their source of wealth.

Brandon Branch, a local restaurant owner told me, “We have typical small town problems but our main problem is that we are too close to Tulsa. People tend to go there to buy their big items, even cars. Over 40% of our workers go to Tulsa for work. The wages are better there but it costs over $3000/year for them to commute there.” Tulsa is only 40 miles away on a four lane highway. It is real tough to only be a bedroom community, especially when much of your retail dollars also end up in the “job magnet” town.

An old Phillips refinery, closed in the early 1980s, is being redeveloped into a first class industrial park at great cost by the Okmulgee Area Development Corporation with help from ConocoPhillips and the OK Department of Environmental Quality. I hope that they can use this new park to catapult Okmulgee back into a more prosperous future. With 24.1% of their population living below the poverty level, they need to get it going soon.

Wednesday, May 18, 2005

Manufacturing Clusters in OK

“From a job’s standpoint, manufacturing is the second most important sector in total number of jobs, and also has the highest average wage,” said Kathleen Miller, head of research for the Oklahoma Department of Commerce. She was talking about NE Oklahoma at the Rural Economic Summit that I talked at last week in Okmulgee, OK.

With 64,105 jobs at an average wage of $39,602 and over 60 firms that have more than 200 employees, the manufacturing sector is a key reason why NE Oklahoma is such a vibrant region. Recent passing of a Right To Work (RTW) Law, improving worker’s compensation legislation and increased emphasis in economic development all are poising Oklahoma and in particular NE Oklahoma for an increase in manufacturing in the state.

Oklahoma has identified and qualified a number of sites for mega projects, like auto assembly plants. I told the audience that while I didn’t really care for a mega project in a small town because they suddenly became the “800 pound gorilla” that can be wonderful when times are good, but create havoc when times turned bad. However, if Oklahoma could recruit a big project like an auto plant to Tulsa or Oklahoma City the spin-offs for the smaller towns could be tremendous. I cited the example of Mississippi which recruited in a Nissan plant that has resulted in over 20 smaller parts manufacturers locating in small towns all over the state.

Miller pointed out a number of manufacturing sub-clusters in the region including: Valve & Hose Fitting; Oil Field Equipment; Sporting Goods; Plastic Pipe; Plastic Film; Pumping Equipment; and Power Boiler. Keep your eye on NE OK.

Tuesday, May 17, 2005

From Old Industrial Plants to Multi Million Dollar Housing

Many people might look at a place like Bergen County and think that this is a place that has few worries. Here are some stats for the county compared to the national average: % with High School diploma 86.6% (80.4% in USA); Bachelor degree or greater 38.2% (24.4%); Per capita income $52,867 ($21,587); and Families below poverty level 5.7% (9.2%). But just like the poorest, most remote county in the USA, Bergen County has issues that keep people awake at night.

After my talk Kevin O’Connor, chair of the planning commission for Edgewater, NJ (one of the 70 towns in Bergen County), showed me around his community and talked about how Edgewater has transformed itself. As you could imagine from its name, Edgewater sits on a major waterway, the Hudson River. You can look across the river and see the Empire State Building. The town stretches for about 3 miles along the Hudson, but is only 2 to 3 blocks wide.

Historically Edgewater was a major industrial town with companies like Alcoa, Ford, Celetex and others having major manufacturing plants in the community. Their plants were built along the river affording them an easy and cheap shipping mode. The German, Irish and Polish immigrant workers lived near the plants, walking to work. All of that changed in the 1960s and 1970s when the manufacturers shut down their plants one after another. Edgewater was hit with a body blow and was on the ropes. Its population dwindled to around 3,000 people.

Fortunately, Edgewater’s location near Manhattan has allowed the town to reposition itself from an industrial town into a residential and retailing one. Many communities aren’t so fortunate. But having a view of a river like the Hudson and the skyline of Manhattan are wonderful vistas that command tremendous premiums in the residential marketplace. Multi-million dollar homes, condos and townhouses are situated on virtually all of the old industrial land in the town. Traffic issues today are one of the major concerns as the population has soared to over 8,000, but it has been a nice rebound for an old industrial town.

Monday, May 16, 2005

“Toto: This isn’t Kansas!”

“What can the most populous county in NJ have in common with the many, much smaller counties that I constantly visit,” I thought as I rode in the cab from the Newark airport to Tenafly, NJ. And even though it is called the Garden State, I didn’t see any farm fields in my hour ride. I’m sure that I passed thru at least a dozen towns or more on the ride, but there was no discernable difference from community to community as we sped by the towns.

I’m always a bit apprehensive when I go to larger, more metropolitan areas like this, wondering if my message will resonate. What I’ve always found and found out again this week in Bergen County, is that while the towns might be bigger and closer together the dreams, concerns and problems are much the same all over this great country of ours.

First though let me tell you about Bergen County. This northern most NJ County is right across the Hudson River from Manhattan. The 2003 census showed a population of 884,118, but the county’s rapid growth is quickly pushing it close to 1 million. Put another way, if Bergen County were a state, it would have a population greater than six states (DE, SD, ND, AL, VT and WY). Most surprising to me was that there are 70 municipalities in the 239 square miles of the county. Some are less than 1 square mile in size.

Most of the towns in Bergen County are in the 10,000 to 20,000 population range, not unlike a lot of towns that I visit. In talking with the mayors, council members, planners, chamber execs and others at my talk I found that they have many of the same questions that similarly sized towns have all over the county. Issues that they raised were: traffic concerns, brain drain, housing costs, taxes, schools, etc. If I’d closed my eyes and just listened to the questions I could have been in Kansas.

Sunday, May 15, 2005

Revolutionary Jet Service

“It will revolutionize how we travel in this country,” is how Don Burr characterized his new start-up company, Pogo (www.flypogo.com), on a TV show I watched this morning. He was talking about the new company that he and Robert Crandall, former CEO of American Airlines, are starting with 150 Very Light Jets (VLJs). I wrote about the concept in BoomtownUSA, calling it one of the new technologies that would accelerate the move to the agurbs®.

Their planes will carry four passengers along with the two pilots, flying at around 400 mph. Burr expects to price the service at $6/mile for peak times and ½ of that amount for off-peak. Their ideal client will be flying around 400 to 500 miles. Their scheduling will be done in real-time via the internet, scheduling flights all over the country.

As an example of the advantages of their service, if I was traveling to Bentonville, AR, the distance driving is 435 miles or about 7 hours drive time from my home in Effingham, IL. If I was going to fly commercially it would take about 4 hours from the time I left home. With Pogo, the distance is 350 miles (you fly directly there), taking about 1 hour and costing about $500/person. Granted, the cost is a bit more than the alternatives, but what is your time worth? At around $50/hour, Pogo becomes a very viable alternative way to travel.

Sculpture Park Draw

This incredible sculpture park appeared in front of me as I was driving on one of the many back roads that I try to take as I am traveling around the country. I love to explore, finding out-of-the-way spots. The diversity and uniqueness of our country is incredible.

I had to stop, even though I was tight on time, and am glad that I did. I found the Franconia Sculpture Park (www.franconia.org) in Shafer, MN to have a wide variety of sculptures from various artists. The Park was founded in 1996 as a place where artists can exhibit their work, work on developing new pieces and meet other artists. There are over 75 sculptures on display on a rotating basis from local, national and international artists. They also host up to 25 visiting artists and provide internships for up to 15 new artists. Several symposiums, workshops and art festivals are held during the summer.

Why don’t other communities try to do something similar? Wouldn’t this be a great tourist draw to add to your arsenal?

Friday, May 13, 2005

Banding Together for Success

When the census shows the biggest town in a region is less than 6,000 economic development can sometimes be daunting, especially in the face of all of the much bigger organizations in the arena. And that is why it is always encouraging to see rural communities banding together, realizing that what is good for one town is good for the others in the long run.

I was at the Northern Technology Initiative’s Annual Meeting, a six county area to the north of the Twin Cities in MN. It is a group that brings together the local EDs, with the educators, area foundations, utility company EDs, and local Mille Lacs Band of Ojibwe’s efforts to reach out in the ED area.

One of the more interesting presentations at the conference was an effort to determine local content of area companies with the purpose of increasing local share and determining commonalities of content that could encourage new business development. It is a process that can only be done on a regional basis. If successfully implemented, it has tremendous potential for enterprise and job creation.

After the conference I toured several cities, including Cambridge, Pine City (one of my agurbs®), Mora and Hinckley. Cambridge is developing new industrial parks. Pine City, which sits on the picturesque Cross Lake and Snake River, has a wonderful downtown park and has innovatively converted an old coke factory, creamery and car dealership into condos and town homes on the banks of the river. Mora, a sister city of Mora, Sweden, holds the annual Vasaloppet Cross Country Ski Race (2nd largest in the USA) every year. A local in Hinckley is building the town a paved airport! It was a great tour! I hope to be back soon.

Thursday, May 12, 2005

Transforming Regular Dave into Famous Dave

"He was just Regular Dave until he came here" is how Martin Jennings, described Dave Anderson’s first endeavor at running a BBQ restaurant to me this week. Jennings is Director of Development of the Mille Lacs Band of Ojibwe Indians, which gave (now Famous) Dave a shot at their Grand Casino in Hinckley, MN. “He set up a circus tent and put picnic tables up and tested his idea for a BBQ place right here. It eventually led to Famous Dave’s BBQ Restaurants.” Today there are over 100 Dave’s Famous BBQs.

Dave is one of the 3,500 members of the Mille Lacs Band and I was intrigued with a new spirit of entrepreneurism that is bubbling up here. Jennings explained to me of how the Band’s Corporate Commission is reaching out to Band members, “We provide technical assistance; an equity like loan program; and micro, macro and expansion loans. We are reaching down to the high school and grade school level with entrepreneurial training. This summer we are setting up a business camp for the kids.”

He told me of other entrepreneurial successes from the Band. “Bob Dorr is doing government security work and has over 1000 employees. We’ve got 6 to 9 who are building contractors. There is a hair salon, a gallery, coffee shop, etc.”

I stopped by to talk with Carole Higgins who runs the hair salon. She told me, “In 1979 the tribe sent me thru beauty school and I started my business in my home. In the late 80s I moved to Las Vegas to work at Ballys and Circus-Circus, so that I could learn some things when the casino opened here. I’ve had my shop with several employees in the casino here since I opened in 1998.”

Entrepreneurism isn’t overwhelmingly common here yet. There aren’t any second or third generation entrepreneurs who can pass down successful hints on the subject. But with Jennings and the Band pushing and winning examples like Dave Anderson, Bob Dorr, Carole Higgins and others it is a movement that will grow. And, it will transform Hinckley and other communities.

Wednesday, May 11, 2005

Down & Out to be Featured in Southern Living

The roller coaster ride of some small towns makes some guys shy, while others like Elk City, OK pick up the pieces and find new ways to remake their communities. Elk City is a town that is located in western Oklahoma, right along I 40. Marilyn Williams, Head of City License and Permits for Elk City told me, “We are a small city that went from a small farm town, to a town busting at the seams when the oil boom of the late 1970’s hit, to a depressed economy when the boom went bust in the mid 80’s. It took several long years of hard focused work to get Elk City to where it is today. We have been fortunate to have city leaders that have always planned and set goals that focused on what would be best for Elk City."

The city has recently developed an industrial park with access to the interstate and railroad. With Oklahoma’s new Right to Work Law, I think that towns like Elk City are poised for excellent job creation possibilities.

One rather unique “quality of life” feature of Elk City is their preponderance of museums. They opened their first one in 1967 and have grown their museum complex into a tourist attraction right next to their major park. The town features an Old Town Museum; Old Town, Farm & Ranch Museum, National Route 66 Museum, and National Route 66 Transportation Museum. Southern Living Magazine featured the Route 66 Museum in their April, 2005 issue.

Tuesday, May 10, 2005

Oklahoma Dreaming

“OKLAHOMA DREAMING…may not be the actual name of the Beach Boys song but some younger Californians may be doing just that. The San Diego Transcript reported yesterday that most Californians make less than half of what they need to buy the average California home. The median home price of $488,600 requires an annual income of $113,920 to qualify for the standard mortgage, and the vast majority of Californians make well less than half that figure. So who is buying the costly homes? Repeat buyers using their new found equity to trade up. For young families seeking their first home, it can quickly become a broken dream and many such people are beginning to look elsewhere for affordable housing. For Oklahoma, which has long waited for its youth to return, this is called o-p-p-o-r-t-u-n-i-t-y.” Reprinted from the Ponca City Development Authority Weekly Update May 6, 2005.

I was at NAIOP’s semi-annual meeting last week where the urbanist Joel Kotkin talked about the cost of housing in San Francisco. The medium priced house there is $900,000 and only 10% of their workers can afford to buy a house. It is an unsustainable market condition.

An additional “quality of life” factor is drive times. In Los Angeles the average rush hour commute is at 35 mph and even in San Bernardino it is only 42 mph. Hours stuck in traffic average 58 hours/year in LA and 35 hours/year in San Bernardino.

If you have a list of former residents (high school and college alums), you should be marketing to them if they live in CA. Remind them of how much house they can buy in your community compared to what they could get in selling out in lofty CA.

Monday, May 09, 2005

Rural Tax Advantage

Rural areas have a big advantage when compared to urban areas from a property tax standpoint. The 50 State Property Tax Comparison Study from the Illinois Tax Foundation (January, 2005—Data for 2004) shows the difference.

For a $150,000 home the average tax is $2,130 in the urban setting compared to $1,954 in a rural one. In Oklahoma, where I’m spending a lot of time in May, the difference is even greater. In Oklahoma City the tax is $1,721 compared to only $1,080 in Hollis, OK.

For a commercial building ($1 million value with $200,000 of fixtures) the national average is $24,562 in the urban area compared to $19,722 in the rural area. Again Oklahoma is well below the national averages with that $1 million building paying $15,319 in Oklahoma City and only $9,373 in Hollis.

For an industrial building ($1 million building, $500k Machinery, $400k Inventories and $100k Fixtures) the average is $32,722 in the urban areas compared to $26,089 in the rural. Again in Oklahoma, their rates are below the national averages with Oklahoma City at $27,669 and Hollis at $15,469.

Sunday, May 08, 2005

Giving Back Again and Again

One of the wonderful attributes of many small town people who I meet is that they don’t forget from where they came. And, they tend to be generous in giving back. I got the following email today from Deb Dragseth of Dickinson State in ND today about such an act.


Jerome Strom, our Alumnus from California who sponsors the Entrepreneurship Conference every year (this was the 5th year) was very, very impressed with "his" conference (he had never been able to come before). The speakers (you and Scott), the audience (a record-breaking 450), the Western Edge Tour, the Manufacturer's Roundtable. All of it.

Anyway, last night, he announced that he is giving $1 million to the U. to help us pursue the Entrepreneurship Initiative. He told Dr. Vickers that the thing that impressed him was the display of Entrepreneurial spirit here at DSU. Isn't that awesome?

Faith, luck, hope, vision? I don't know which . . . or maybe it was all four, but we are well on our way!

Thanks for all that you did. You were certainly a central part of the conference and the energy that was generated here that week.


It made my day!

A Long Drive or Driven to Help Their Small Town?

When a chain store’s bankruptcy causes your only general clothing store to close, what would you do? If you’re like most people, you just drive the 20, 30 or 50 miles to the nearest town to do your shopping. But the people of Powell, WY (population 5,500) aren’t “like most people.” They didn’t like having to drive the 25 miles to the Wal-Mart in Cody or the 94 miles to bigger department stores in Billings.

They decided to do something about the 2001 store closing. They sold 800 shares at $500 a share, low enough to build widespread community support, in the Mercantile which started in 7,500 sf but has grown to 10,000 sf since its August, 2002 opening. First year sales of $500,000 were well ahead of projections and have been growing ever since.

Other communities have taken a similar approach including Ely, NV; Malta, MT; Glendive, MT; and Worland, WY. It a great example of how local people, working together can turn a bad situation into new opportunities for their small town.

Saturday, May 07, 2005

Denver Back Home to ND

The company name, GriZella (http://www.grizella.com), comes from an alien race once employed by Star Trek’s Captain Picard as a third party mediator. Its market is software for the trucking industry to help match up loads and trucks online.

The company started in Denver in 2001, but when co-founder Mark Draeb brought his partners to his small town of Hebron, ND (population 900) they loved the community and decided to move to the tiny town. All of the founders had been involved in previous high tech start-ups, but were looking for a place with a great quality of life. Draeb said, “I had a great childhood here. I think North Dakota is a great place to live.”

The company was the winner of the 2003 Governor’s Choice for Economic Development Award. They currently have six employees with plans to grow to 20.

It’s another great example of an entrepreneur moving back home and creating economic development in their hometown.

Friday, May 06, 2005

Land Rush Town

Perry, OK (population 5,400) is a “land rush” town, having been founded by history’s largest land rush on September 16, 1893. Wanting to escape the harsh winters of Maple Leaf, MN, Carl Frederick Malzahn soon moved to Perry and started the Malzahn Blacksmith and Machine Shop. His sons Gustave and Charles took over the business in 1913 when their father passed away.

Charles son, Ed Malzahn, invented the world famous Ditch Witch, the first compact trenching machine in 1949. Malzahn, now 83, still lives in Perry and has been making the machines there ever since. His granddaughter Tiffany Sewell-Howard, CEO of The Charles Machine Works, is the 5th generation of Malzahns to live and work in Perry.

Today the company employs 1,200 in the town, has helped other entrepreneurs to start related businesses (that cluster thing) and given back greatly to the community. I visited the Heritage Center, which includes a museum to the Ditch Witch and a community theater. Companies like Charles make such a big impact upon small towns like Perry.

Thursday, May 05, 2005

Disneyworld on the Kansas Plains?

Nita Jones excitedly showed me around her hometown. She gushed about the people who had moved to the community and businesses they started. We ate breakfast at the Green Door Restaurant, a legendary main street diner and had lunch at the Rack Shack Barbeque, a brand new one just west of town.

We started at the St. Charles one room schoolhouse, which also serves as the Chamber’s office, visited Bill Kurtis’ Red Buffalo Ranch (if you go be sure to see Prairehenge) and ended with a walking tour of downtown Sedan.

I was amazed by the number of entrepreneurs who had developed businesses in the downtown area. They included Kurtis’ Red Buffalo Gift Shop and Art on the Prairie Gallery. But the shops included several antique stores, a quilt shop, a gift and floral shop, a hunting equipment store, a stained glass store, hardware store, hunting guide service and several others. Kurtis has plans for an Art’s College, hoping to turn Sedan into an artist colony.

One of my favorite stores was the Lost Sugar Mine Confectionary, where I stocked up for the rest of my 400 mile trip that day. In the back of Alyce Youngblood’s store is an animated sugar mine tour that puts Disney’s Small World ride to shame. Alyce is a retired college professor who moved to Sedan from Tyler, TX. She was one of many who I met who moved here from around the country and have started or bought businesses.

The community recently raised $1.3 million to redo the old Bradford Hotel, a 32 room three story hotel that has been closed for 40 years. Beginning in 2006, Sedan will now be able to accommodate overnight bus tours. The 82 buses that visited last year were all day trippers. They hope to expand their bus tours and other visitors with the refurbished Bradford. Nita walked me thru the numbers of each bus, calculating that each busload of visitors spends about $3000, but would triple that amount if they stayed overnight.

Sedan is on a path of greater things. Keep your eye on them.

Wednesday, May 04, 2005

Bill Kurtis Comes Back Home

Within 10 years of their mid 80s start down the tourism road; Sedan had built up a tourist trade of around 30,000 people/year with their Yellow Brick Road attraction and the Emmett Kelly Museum, located in the former 1885 Sedan Opera House. Kelly was born in Sedan in 1898. The efforts of a handful of local citizens were starting to pay small dividends for tiny Sedan.

Their big break came in 1996 when Bill Kurtis of television journalism fame bought a large ranch, renaming it the Red Buffalo Ranch, a mile from Sedan after visiting his parents in nearby Independence and driving through the Flint Hills near the town. Kurtis said that the scenery reminded him of the plains of Africa, one of his favorite places.

The efforts of the SOS group to increase tourism and jobs in Sedan impressed Kurtis who began buying older, run-down buildings in the downtown and working with the group to increase tourism not only in Sedan but on more of a regional basis. Kurtis’ vision was not to just bring tourists into one town for a couple of hours but to make the region a destination location by combining tourist attractions regionally. It’s a strategy that too many towns don’t step back and look at like Kurtis.

Today Kurtis has acquired over 10,000 acres of ranchland including land that his parents and grandparents owned at one time. One of his holdings is the 3,000 acre setting that inspired Laura Ingalls Wilder to write the book, later made into a popular TV series, Little House on the Prairie.

Kurtis has purchased 14 buildings in Sedan’s downtown, fixed them up and rented them out for $1 for the first year to allow new entrepreneurs a chance to get a start in this burgeoning tourist town. He’s doing the same thing in Coffeyville and Independence, KS and Bartlesville and Pawhuska, OK. He’s investing millions of dollars into the region, brought great publicity to the region and given back greatly to his hometown region.

And, it might never have happened if a dozen local citizens in Sedan hadn’t sent out an SOS (Save Our Sedan) in 1988. Tomorrow, what you’ll find in Sedan.

Tuesday, May 03, 2005

Yellow Brick Road to Success

I toured Sedan, KS with Jeannie Walker, the Tin Man and Nita Jones, Dorothy, both from the Wizard of Oz. They were part of a group that called itself SOS, which stood for Save Our Sedan. And they saved their hometown first on the back of the Yellow Brick Road and later on other attractions. Theirs is a great story.

Sedan, KS (population 1,386) is the county seat for Chautauqua County, which only has a population of 4270. The county is roughly 30 x 40 miles so there are less than 4 people/square mile. It is 40 miles to a town of even 10,000 people. Chautauqua is a very rural county!

Its economy was built upon ranching and later oil. In the mid 1980s both collapsed. The year 1988 was probably the low point, when the Sedan State Bank, a 75 year old institution in the region, collapsed and 13 businesses on the downtown block closed their doors. Numerous ranches were foreclosed upon. It was a bleak period for the tiny town.

In many towns going thru these type of problems, people would have thrown up their hands, expressed frustration and then sat back to slowly watch their town die a slow, painful death. I’ve seen too many in my travels that have taken that approach. But, Sedan wasn’t like other towns, or at least it wasn’t because of a dozen local people. Jeannie, Nita, the local doctor and nine other locals started SOS—Save Our Sedan. They didn’t know what they were going to do, but they just knew that they had to do something. Jeane McCann, one of the dozen, watched the Wizard of Oz with her grandchildren and west to the SOS meeting with an idea of doing a Yellow Brick Road. The dozen talked with the city council and other people. Most thought it was a bad idea. There were after all similar roads in Liberal, KS and in Judy Garland’s hometown in NJ. But the SOS group persisted and got the city council to agree to let them try it at their November, 1988 meeting. What did they have to lose?

The city council still wasn’t too sure about this idea of a Yellow Brick Road in Sedan, so they made the group start their road in the middle of the block, not on one of the 2 ends of Main Street. Jeannie told me, “We thought that if we sold 100 to 200 bricks, it would be fantastic. In the first week we sold 400 at $10/brick. Now we sell them for $25/brick.” And from that start, they’ve now “sold 11,148 bricks (to people from every state in the USA and 28 foreign countries), growing the yellow brick road to 8 blocks in length, the world’s longest,” said Nita as she took my $25 so that I could be number 11,149.

And, from that start Sedan has slowly rebuilt itself and its economy. More on that tomorrow.

Monday, May 02, 2005

Oklahoma’s Regional Focus

I was in Chickasha, OK last week for a SW OK Rural Economic Development Summit. I was able to give my BoomtownUSA talk and my new talk entitled: Hometown Entrepreneurs: Your New Paradigm Shift in Economic Development. Oklahoma is a hotbed of economic activity since passage of their hard fought Right to Work Law and was coming to grips with workmen’s comp costs in the legislature when I was there. Secretary of Commerce and Tourism Kathryn Taylor has been pushing economic development in the state strongly for the past 2 years when she was appointed Secretary, coming from the private sector, always a strong combination.

Oklahoma is pushing regional initiatives, even providing financial incentives to communities that band together into regional efforts. We talked at the conference about the common problem of trying to put communities together into regional groups primarily because “we play each other on Friday nights.” It is unfortunate that this “Friday night” attitude spills over into too many towns. If they would only realize that they have more in common with area towns and that by banding together they can accomplish much more for everyone.

Secretary Taylor is on the right track. She uses a great analogy of a pie, talking about how to grow the pie bigger rather than worrying about your own small slice of the pie.

Sunday, May 01, 2005

World Class Manufacturer’s Challenges

This past week I toured Excel Industries, Inc., a world class manufacturer of turf equipment. This plant makes zero turn mowers that are shipped all over the world from Hesston, KS.

The first thing I saw as I entered the plant were state of the art laser fabricating machines, which take a sheet of heavy gauge steel and cuts it exactly into various sizes. The computer program that controls the operation minimizes the amount of scrap steel. Excel recently installed a new 10-stage powder coat paint system, which is also highly automated. Their bottleneck at the present time is in their welding department, where they hire 45 welders. They could use another 10, but can’t find them, despite the fact that welders make in excess of $30,000/year.

The Mullet brothers, majority owners of Excel, have been able to continually increase productivity in their plant thru innovations and new tooling. In the 1970s they produced $25,000 of sales for each employee. Today they are doing over $300,000/employee. They are doing 10 times more in sales volume with 100 fewer employees.

These productivity gains are why I continue to think that we as a country have a wonderful future in manufacturing. We continually are innovating and developing new ways of producing products. Because we can do it with fewer people (the productivity miracle), we are able to pay those producers more each year and it is why the manufacturing sector has some of the highest paying jobs in many communities.

The downside of being a USA manufacturer? It didn’t take long for me to guess what a major problem for them might be and the Mullets quickly expressed their frustration with our present legal system. Bob Mullet told me, “The contingency fee system raises legal costs for everyone. When we get a claim, we settle early if we can or we find that the meter runs up very high on these cases.”

One of their frustrations with these product liability claims is that while governmental sales account for only about 5% of their overall sales, it accounts for over 90% of their claims. Why would there be this discrepancy? The product is the same and you would have to assume that the skill set to mow a lawn is similar from the private to public sector. The only explanation I could come up with is that too many governmental employees are “gaming the system”, trying to qualify for workers compensation. It is a shame and raises costs for all of us in the USA.