Sunday, July 31, 2005

Not So Sweet

Passage of the Central America Free Trade Agreement (CAFTA) this past week will open up six Central American countries for an increase in trade. It will result in more products being produced in those countries from goods made in the USA and continue the push for more free trade that has lifted the living standards in the USA and many other countries. One of the fiercest opponents to CAFTA has been the US sugar industry.

Sugar was first protected during WWII and like most governmental programs it has been difficult to kill. We still have a federal telephone tax that was put in place during the Spanish-American War as a luxury tax when telephones were only used by the rich. It is no different for the sugar subsidy. It is time for it to go.

Every time that you buy a candy bar or consume any other product which contains sugar you are paying a 140% tax. The world price for sugar is under 9 cents/pound but we pay around 22 cents/pound in the USA. CAFTA would open up imports of sugar over a 15 year period to only 1 percent of all US production, but the sugar industry doesn’t want ANY imports.

They have been greedy and tried to stand in the way of freedom in opposing CAFTA. I’m glad that freedom triumphed.

Saturday, July 30, 2005

Locational Modeling—Following Wal-Mart’s Lead

Moberly, MO (population 11,945) is 30 miles to the nearest interstate and 150 miles to a major airport, which would have put it out of consideration for many “big-city centric” logistical decision makers. But, as our studies of Wal-Mart’s 109 DCs have shown, not only can you operate out of smaller cities but you can build the biggest company in the world from them. The data on the location of their DCs and the example that Wal-Mart is setting in the logistical industry is starting to have an impact, as evidenced by Goodyear.

Goodyear’s decision to locate their industrial and automotive belts and hoses inventory in Moberly followed a “gravity analysis” of its seven US manufacturing plants and thousands of customers against its inbound and outbound freight matrix. Not only did Moberly offer a much more economical location for the 286,000 sf facility, but Goodyear cut one day off of delivery time to 40% of its customers. The rural workforce was also able to reduce order-to-ship time to 24 hours for most shipments from 48 hours at their previous larger city location.

Friday, July 29, 2005

Love for Her Hometown

“I only missed 2 times in the 25 years that I delivered the mail,” was how Dorothy M. Jamnick of Aurora, MN explained to me her dedication to her job. “Both times the mail never made it to town. If it got here we got it out.”

Dorothy and I met on the plane ride to Duluth yesterday, where I was going to give a talk to the Northwest Wisconsin Economic Development Professionals Conference in Cable, WI. She is spry for her age at 80, although she needs a cane or wheel chair to get around. She enthralled me with her tales of the weather in Aurora, like “we thought nothing of being 40 below zero or snowstorms of several feet of snow.” Aurora is only 14 miles from Embarrass, one of those funny named towns that I wrote about last week, and often the coldest spot in the continental USA.

Her father and mother both immigrated to the USA from Slovenia, her dad, Ludovik Drobnick, in 1922. He set up his own blacksmith shop in 1928 in Aurora, evolving into engine repair. Dorothy lived away from Aurora for only 10 years when her husband did construction work around the country.

She was on her way back from visiting her only daughter, a retired teacher, in Flint, MI, who always sponsors the annual pie eating contest in Aurora for the kids. Aurora celebrated their 100th anniversary in 2003 and Dorothy is going to send me their Centennial book.

We had a wonderful conversation during our too short plane ride as she told me about Aurora and her love for the town. She wouldn’t tell me her name at first, so I asked her, “Are you in the witness protection plan?” She softened up a bit then and gave me her name and let me take her picture, after a bit of pleading with her. It’s people like Dorothy that make this such a wonderful journey, in my search of Boomtown.

Dorothy M. Jamnick; Aurora, MN Posted by Picasa

Thursday, July 28, 2005

Part Time or Unemployed?

One of the advantages of the USA is our more flexible labor laws when compared to most European countries. It is much easier to hire/fire people here and as a result companies are able to ramp up much quicker during growth spurts, knowing that if a downturn occurs they will be able to shed unneeded workers fairly easily. It is not so simple in countries like Germany, the Netherlands, France and others. One of the first reforms that Ireland instigated, leading to their remarkable surge to highest per capita income in Europe, was to make it easier to fire people without having to pay them severance. A remarkable thing occurred. When companies found that it was easier to fire people, they tended to hire more…resulting in long term gains for everyone.

The result of this difference in policy can be seen in unemployment rates. Whereas the USA currently has an unemployment rate of only 5.1%, most of the European countries are in the double digits.

Another indicator of the impact of this policy of rather open employment is the percentage of workers who are part-time. In the USA it is 13% compared to 35% in the Netherlands, 24% in Britain, 21% in Norway, 20% in Germany and 13% in France.

Our economic and fiscal policies continue to shine when compared to other industrialized countries.

Wednesday, July 27, 2005

Close-up of Jacobson Bakery sign under counter in store--Note last line Posted by Picasa

You Know You’re in a Small Town

Galva was established as a Swedish Railroad Town, located near Bishop Hill, a historical Swedish communal town that brings in dignitaries like the King of Sweden for special events. It is like a lot of small towns that I visit. People are friendly. They pitch in when needed and care for each other.

To show the special spirit of a town like Galva I could have written about the two devastating tornadoes that they’ve had in the past ten years, the latest of which in 2003 resulted in over 6,000 truckloads of brush being hauled away in a two week period. I could have written about how Galva has four big parks, totaling over 50 acres, probably more park land/capita than most towns. Or I could have reported on how the town welcomed back their 120 unit National Guard unit from Iraq earlier this year.

But, the one thing that really impressed me when I visited Galva was a very small bakery on the main street. Jacobson Bakery started in Galva in the 1930s as a wholesale bakery selling to area stores. It specialized in rusks, a Swedish hard toast sweetbread. They bake their breads, coffeecakes and rusks early in the morning. Then for the rest of the day the front door is open for customers to pick up their baked goods, leaving money in the cash box under the counter. Check out how they explain it on the sign under the counter.

It could only happen in a town like Galva. I hope to get back to visit soon.

Mayor Hagaman & I in front of Jacobson Bakery; Galva, IL Posted by Picasa

Paying for my rusks--check out sign below my picture Posted by Picasa

Tuesday, July 26, 2005

In front of Garden of Eat-N in Galva, IL Posted by Picasa

City of GO! Full of Entrepreneurs

I was impressed with the number of entrepreneurs I met in my brief visit to Galva, IL last week. I always try to meet as many of my audience prior to my talk and I found Galva to have a much larger percentage than I typically find. I asked Mayor Hagaman why.

“We just seem to be a very entrepreneurial town. And it seems to be snowballing for us. We seem to be attracting more all the time to Galva.”

We ate great barbeque at The Garden of Eat-N, which was started by Jim Doherty in an 1840’s church that still is full of stained glass windows. He is an amateur cook and also runs EPR, which manufacturers and sells emergency products. He recently developed an inflatable car seat that was chosen as the Child Safety Product of the Year. He hopes to expand sales from emergency service groups to grandparents to store in their trunks for when their children come to visit. Neat idea!

A new foundry opened one year ago when their plant burned down in a neighboring town. Mayor Hagaman knew the owners, who had grown up in Galva. “I called them up and told them that when they rebuilt their plant to think of their hometown. And they did! We sold them the land they needed for $1 and took the utilities out to the plant. They are already up to 15 employees and are out of room.”

Galva has a new dog food plant, a casket accessory manufacturer, and several other locally owned firms. It’s a town on the GO! Mayor Hagaman’s brother-in-law probably said it best, “I wish that I could bottle up the energy that I find here and take it back to my hometown.”

Signing a book for State Senator Rissinger Posted by Picasa

Monday, July 25, 2005

USA Competitiveness

One of my favorite weekly email newsletters comes from Mike Harvey of Winfield, KS. "Flourishing" is a summary of the current financial markets along with Mike’s assessment of current factors affecting the economy. Here is Mike’s evaluation of our competitiveness compared to China.

“Contrary to what you may have heard on the nightly news, Chinese competitiveness vs. American manufacturers is eroding. Their wages and other input costs are rising. Their transportation sources and energy supplies are sporadic. Most importantly, their lack of a modern, global financial system puts them at a competitive disadvantage. Last week’s 2% revaluation of their currency will hurt Chinese exports, raise prices to U.S. importers and consumers, and do nothing for U.S. manufacturers. (It might help manufacturers in other parts of the Far East.) That’s not the end of the story, of course. The Chinese economy is being transformed from a Maoist ideal (abject poverty, humiliation, and death) to a capitalist powerhouse with democratic values. But, they still have a long way to go.“

“At the same time, American manufacturers continue to increase their productivity and cut costs. In June, the Federal Reserve’s industrial production index hit an all-time high. Never in history has our manufacturing sector produced more goods.”

I’m convinced that we will view the current Chinese competitive threat much like we once feared OPEC in the 70s, the Japanese in the 80s and Mexico in the 90s. All were perceived as major affronts on our American economy, but quickly faded from the headlines.

The City of GO!

“Our motto is: The City of GO!!!” was how Mayor Don Hagaman explained the many progressive projects that I saw when I toured Galva, IL (population 2,758) with he and City Administrator David Dyer on Thursday. This northwest Illinois town is not sitting still, waiting for things to happen to it. They have very proactively gone out and helped to create economic development activities themselves.

“We did our own city subdivision to get more new houses built. The first house was built in 1998 and now the subdivision is full. There was a lot of skepticism when the city first did that project.”

Justin West, a factory worker at Mitsubishi Motors in Normal always dreamed of having his own drive-in movie theater. He read about how progressive Galva was towards entrepreneurs, came up to visit and worked out a deal with the city to build the first, if not only double screen drive-in in the USA built for several decades. “They show two double features on Friday, Saturday and Sunday evenings. It holds 250 cars and has been full several weekends. It only costs $5/person to get in, popcorn is $2 and drinks are $2 with refills at half price. It is a great bargain,” Mayor Hagaman told me as we toured the drive-in.

A group of coops and grain elevators in the region wanted to do a unit train loading facility on the BN mainline to take advantage of very favorable shipping rates. They approached Galva, which went to work assembling the land by trading tracts with local farmers to assemble 160 acres in a single plot. The new Lincolnland Rail facility can load out 110 car unit trains (4.4 million bushels/unit train), but more importantly it now offers Galva a wonderful new industrial park. The town is studying biodiesel, ethanol and other possible synergistic businesses. I wouldn’t have expected less from them, after I saw what a “city of GO!” could accomplish.

Galva AutoVue with Mayor Hagaman Posted by Picasa

Sunday, July 24, 2005

Always Reinventing Yourself

This past week Hewlett-Packard and Kodak announced major restructurings and job cuts of 14,500 and 10,000 respectively. This follows previous cuts that have occurred in the past several years of tens of thousands of jobs. How could two corporate icons lose their way, resulting in massive layoffs like this? Are there lessons for agurbs® here?

Both companies were known for their innovation and as great places at which to work. Both of their stocks were considered “Nifty Fifty” stocks, a group of 50 stocks that you could buy and just put away. But both companies lost their way, are struggling mightily and might not survive as independent companies.

I was in Rochester, NY last year to give a talk and tour the town. Rochester was the corporate headquarters for Kodak, Xerox and Bausch & Lomb. During the past twenty years each of these corporate giants has suffered and Rochester has been hit badly.

Kodak was of particular interest when my tour guide related to me that Kodak’s VP of Technology was a neighbor. He had relayed to him at a party that Kodak had developed digital technology at least 10 years before everyone else, but decided not to pursue it because they felt that it would cannibalize their very lucrative film business.

What would have happened if Kodak had developed this “leapfrog” technology, instead of letting other companies like Cannon and Sony take the lead? Instead of their current 20% market share, they probably would have the market locked up and be adding new employees rather than laying them off.

The lessons for the agurbs®? You can’t sit on your laurels. You’ve got to constantly be reinventing yourself and looking at how you can innovate as a town to continue moving your community forward.

Gotta Keep Fishin!

One of the frustrations of working the area of economic development is far and few between actual projects can be. At Agracel we compare it to looking for a needle in a haystack. There just aren’t enough projects for all of the ED groups that out there looking. I recently saw a study which showed that there are only 200 projects/year with over 200 new hires. There obviously are going to be more losers than winners in this game, if you just look at the numbers involved.

But, to be successful you’ve got to continually be out there fishing, with your line in the water, hoping that a big fish or project will snag onto your line. Ponca City, OK (population 25,919) has impressed me with their program of economic development. Here is how they summed up their past fiscal year, which ended on June 30th, “For the fiscal year, PCDA contacted 316 new companies, had 566 meetings with existing companies, 162 with consultants, 158 with regional partners and 269 with government officials. At the beginning of July, PCDA had 15 open projects and four open leads with a potential job count of 1,951, most in one of the leads.”

The ED game is not for “one shot wonders”, it is a long term, continuum of constantly being on the lookout for expansions and new projects. You’ve got to keep your line in the water and you’ve got to have a lot of patience.

Earlier this week Ponca City announced that Host Analytics, a fast growing software company is opening a North American Center of Excellence in the community. The 50 person operation will include customer service, sales and testing operations. It’s a nice fish for them to land!

Saturday, July 23, 2005

What is it with Winthrop?

Why is the tiny town of Winthrop, WA such an entrepreneurial hotspot? That is a question that continues to intrigue me, ever since Maury Foreman told me of the town. After all, Winthrop only has a population of 349.

I reviewed some case studies on the town from the Center to Bridge the Digital Divide ( this past week. John Larson’s ( started this entrepreneurial shift and is detailed in one of the case studies. He also started a project with local support called “Bring Back the Kids” which he describes as, “I want to reach out to people in the community with kids who have graduated high school and moved away. If we are going to see the kind of economic growth we want here, we need these kids, with their skills, experience and love of the community back in Winthrop.”

Another entrepreneurial start-up in Winthrop is NC Teleserve (, started by George Dale and his wife. He had worked for the past 25 years in call center development and consulting. He fell in love with Winthrop, raised funds from investors and began operations in his new home. His firm is dedicated to a mission of lowering call center expenses while improving customer service. Winthrop’s rural location and superior workforce allow him the opportunity to do both.

Larson is building a new conference center in Winthrop that he hopes to lure Seattle and other large city based companies to use for retreats and conferences. I’m guessing that with Winthrop’s early entrepreneurial success, you’ll be hearing a lot more of this tiny town. How many other Winthrop’s are there out there in the USA? How many could/should there be?

Friday, July 22, 2005

Why Muslim Countries are Upset

There are 46 countries with a combined population of 900 million, with over 50% of their population being Muslims. They range in population from Qatar with 180,000 people to Indonesia with 161 million. The combined GDP of these 46 countries is $1.9 trillion.

Comparing this to the USA, their combined population is over 3 times ours but their GDP is 1/6 of $11.6 trillion GDP. Three of the eight regions of the USA (Southeast, Mid-East, and Far West) have a greater GDP than these 46 countries combined.

Most of these Muslim countries are rich in oil, but virtually all of them are ruled by decree rather than by the vote. They are all “Command and Control” economies that in many ways resemble the old USSR. It didn’t work there and it won’t work in these Muslim countries.

Only thru liberation of their economies and liberation of their vote will these countries be able to achieve what is commonplace in dozens of countries in the world. Until they choose freedom, they will be mired in regimes of repression, discontent and underachievement of their full potential.

Let Freedom Ring!

Thursday, July 21, 2005

More Funny Named Towns

I received several emails in response to my blog on funny named towns earlier this week. Here are some other names that people suggested:

Snowflake, AZ
Hell, MI
Paradise, MI
Gay, MI
Climax, MI
Hodunk, MI
Mesick, MI
Crump, MI
Maybee, MI
Nimrod, MN
Embarrass, MN—record low temps.

The Curse of Oil

There is considerable hand-wringing about the high price of oil and its impact upon our economy. During the 1970s there were many who thought that eleven country coalition of OPEC would end up dominating the world economy because of their vast oil reserves. Just as these countries never reached their full potential then, I’m convinced that they will continue to lag in the future due to their repressive regimes and unwillingness to open their markets.

The eleven countries of OPEC have a combined population of 525 million and combined GDP of $887 billion. Compared to the USA that is almost twice our population but 1/13th of our GDP. We have 3 states alone (CA, NY and TX) that have more of a state GDP than these eleven have combined.

The largest GDP of the group is Saudi Arabia with $211 billion. We have Wisconsin and 18 other states that individually have a larger state GDP than Saudi Arabia.

Of particular note is that 10 of the 11 countries of OPEC are over 50% Muslim countries. Venezuela is the sole exception. I’ll have stats on the Muslim countries tomorrow.

Wednesday, July 20, 2005

Best Days Lie Ahead

Occasionally I’ll get a rather negative question from the audience about immigration and its impact upon the agurbs®. My response is that we stand to gain greatly if we can encourage immigrants to settle in our communities. It is not unlike what occurred when my forefathers emigrated from Germany to the USA in the mid 1800s.

Just as we are currently in a third wave of migration from the suburbs to the agurbs®, with the first two waves being the waves from the farms to the urban areas and the second from urban to the suburbs, we are in the fourth wave of immigration in the USA. The first was from Europe during the founding; the second was in the mid 1900s when we began to industrialize; and the third was the Ellis Island phenomenon of the first two decades of the 20th century when almost one million immigrants/year were landing on American shores.

This fourth wave, which started in the early 80s, has been almost as dramatic as the earlier three waves. Over 20 million immigrants have chosen to make the USA their new home in the past 25 years—in fact one in eight in the USA are here by choice, not by birth. They’ve come here because of the unique opportunities found in the USA that are a beacon to the rest of the world.

And, have we as a country benefited from this influx? In the past 25 years our assets have quadrupled in real terms, the fastest period of wealth creation in the history of the USA. Unemployment has fallen from during this period from high single digits to only 5.1% today, the second lowest rate of industrialized countries in the world. And, Richard Vedder, labor economist from Ohio University, has shown that those states with the greatest influx of immigrants have generally had the lowest, not highest unemployment rates.

It is a case of a rising tide lifting all boats. Granted some have risen more than others, but generally our policy of open immigration has been beneficial to the USA in the past and will continue into the future.

Tuesday, July 19, 2005

AZ Trip Observations

I’ve been out in AZ for the past five days, doing college visits with my son. We also headed down to Porto Penasco (Rocky Point) for the weekend. In the past six years thousands of condos have been built on Sandy Beach. That little town is on its way to becoming another Cancun as investors from CA and AZ scoop up everything built.

On Monday we drove from Porto Penasco thru Why, Gunsight, Sells, Covered Wells, Tucson, Red Rock, Tempe, Sedona and ending in Flagstaff. It was a full day, covering over 600 miles with visits to two colleges.

We were at a U. S. Forestry visitor’s center in Oak Creek, AZ getting maps and information when lightening hit on the hill across the road. Within minutes flames were shooting out of the hill. We were amazed at how quickly a fire can develop in this country. The forester said that she had never seen a lightening strike like that. We wasted no time in leaving as the fire trucks and aerial spotters were converging on the area.

Sedona (population 10,192) is very unique place to visit. The red rock formations there are incredible. It’s a place that you ought to see sometime in your life.

Flagstaff (population 52,894) has done a wonderful job of resurrecting their downtown area. There were numerous small shops, restaurants, etc. with virtually no vacancies. I was very impressed with Heritage Square, which has become a natural meeting place for young professionals at night. They’ve obviously taken a lot of care to develop their own special sense of place. And it is working.

I was hoping to drive up to the Grand Canyon prior to our last college visit. “It’s only an hour and half up there. We could leave really early in the morning and make it with ease,” was my argument to Betinha and James. They pointed out to me that our other son Joseph would love to see it also and my plan would involve a Clark Griswold moment from the movie “Vacation” of viewing the Grand Canyon. “Yep, yep, that’s the Grand Canyon. Let’s get rolling.” We’ll do that trip some other day. Undoubtedly, it will yield some memorable tales.

I wrote this bouncing in the backseat of a cab that was streaking from Flagstaff to Phoenix when American West cancelled our flight this afternoon. Fortunately, they agreed to ferry us to Phoenix to catch our connection. Wireless internet is wonderful, even if the hub and spoke air system isn’t.

An ancestor made good in Flagstaff Posted by Picasa

Heritage Square, Downtown Flagstaff, AZ Posted by Picasa

Downtown Hotel in Flagstaff, AZ Posted by Picasa

Me in Sedona, AZ Posted by Picasa

Community Owned Banks—Key Factor for Agurb® Success

“Small businesses with fewer than 500 employees account for approximately three-quarters of all new jobs created every year in this country,” was said by the Vice Chairman Reich of the FDIC recently in testimony before the US Senate. He went onto say, “The data indicates that community banks with less than $1 billion in assets, which hold only 14 percent of industry assets, account for 45 percent of all loans to small businesses and farms.”

One of the key factors that I look at in every agurb® that I visit, is the ownership of local financial institutions in the community. I’m found it to be a critical, determining factor between that teeter-totter of failure and success. Often, it is the local banker who is willing to financially back the entrepreneur starting a new business or the farmer expanding their operation that can help take a town to new levels of economic performance.

Oftentimes a banker will make a loan to a new entrepreneur, not based upon their net worth or collateral, but because they have seen them grow up in the town. They’ve observed how they’ve handled adversity, their integrity and general approach to life. It’s called “Character” and it used to be one of the most important, if not MOST important, criteria that a banker used to make a loan. Many small town bankers still do, but someone who is grading a loan proposal from an ivory tower for their branch bank can’t ever get a feel for that important C word.

Reich went onto say, “The loss of community institutions can result in losses in civic leadership, charitable contributions, and local investment in school and other municipal debt. I have a real concern that the volume and complexity of existing banking regulations, coupled with new laws and regulations, are increasingly posing a threat to the survival of our community banks.”

Monday, July 18, 2005

Funny Named Towns—Why, Why?

Today I was in Why, AZ, not a very impressive or big town, but definitely a uniquely named town. I’m collecting names of such towns as I travel around the USA.

Here are some that I’ve found so far: Elephant Butte, NM; Cheapskate, TX; Fertile, MN (why only 900 residents?); Arab, AL; Pumpkintown, SC; Cut-N-Shoot, TX; Tightwad, MO; Hot Coffee, MS; Pie Town, NM; Panic, PA; Knock-em-Stiff, OH; Gays, IL (celebrated their 150th sesquicentennial this past weekend); Hell, MI; and Ho-Ho-Kus, NJ. I’ve got dozens of others on my list and expect to add to it as I continue my travels. If you’ve got others, email them to me at

If I was Why, I think that I’d change the sign a bit rather than as is shown on the following photo. What do you think?

Why Why, AZ? Posted by Picasa

Saturday, July 16, 2005

Making it in Rural America

On April 10th I wrote about Dakota Cabin Quilts (, which is located in the small town of Hettinger, ND (population 1,300). This is the largest town for a 40 or 50 mile radius and you wouldn’t expect to find a world wide retailer there. But you would be wrong, because of the vision and determination of a young couple, Laura Walker and her husband Wes Cvach. They started a quilting company out of Laura’s hobby and today sell quilting supplies all over the world.

My wife just bought one of their “Oh My Stars” quilt kit. She has done dozens of quilts over the years and commented to me on the efficiency of dealing directly with Dakota Cabin thru their website.

Dakota Cabin Quilts is a great example of how entrepreneurs in rural USA are transforming business and doing it on a global basis.

Friday, July 15, 2005

Offshoring Numbers

“What are we going to do about all of these manufacturing jobs going overseas?” is probably one of the most frequently asked questions that I get after my talks. It is an emotional issue in many communities.

Here are the latest numbers that I’ve found in my research. We used to manufacture more than 90% of goods that we consumed in this country. Today it is down to 75%, still a fairly high percentage.

In the past year the USA economy added 15 million new jobs, while eliminating 13 million jobs for a net gain of over 2 million jobs. In the past five years from 135,000 to 250,000 jobs have been offshored each year. Doing the math, that is from 1 to 2% of the jobs that are lost each year. Not a very high percentage, unless you are one of those 1 or 2%.

China is often viewed as growing its manufacturing base at the expense of the USA. The two million American manufacturing jobs that have been lost are cited. Never mentioned is that China lost fifteen million manufacturing jobs during the same period of time.

The USA economy is a vibrant one. It creates new jobs and eliminates old ones. This vibrancy is what makes our economy the best in the world.

Thursday, July 14, 2005

Business Week Interview

I’m featured on Business Week Online today. Be sure to check out my interview at

Team Agracel is having some fun with the “Prince of Hamlets.”

Hard Work U

A school that graduates 100% of their students without any college debt? We visited one of the places that make this possible on a stop for fuel on my trip to Bentonville.

The College of the Ozarks in Point Lookout, MO was founded in 1906 as a place that promoted the value of honest labor in conjunction with a good education. Anthony Ashley, a sophomore in Psychology and Travis Burgard, a senior who wants to become a missionary pilot, took care of us at the College’s airfield and FBO.

Anthony explained to me, “We work 15 hours/week during the semester, which pays for all of our tuition. It is required of everyone at the college. We work in landscaping, custodians, food service and other places. If we want we can work another 40 hours/week during the summer, which pays for all of our room and board.”

It is a different approach, but one that gives hard working students a way to get a great education and work experience without putting themselves into long term debt.

Wednesday, July 13, 2005

Bentonville’s Sense of Place

Bentonville has one of the nicer downtowns that I’ve seen in my travels. It houses Walton’s 5 & 10, Sam’s first dime store, right on the square. Arvest Bank, the Walton family’s bank holding company has redone the north side of the square with a small town feel for their headquarters.

Despite the success of their downtown, Bentonville started a Main Street program two years ago to continue to revitalize it. The Compton Gardens, a botanical garden project conceived and donated to the town by a family doctor in Bentonville who undoubtedly bought Wal-Mart stock early on, lies adjacent to the downtown. Earlier this year, Alice Walton, Sam’s only daughter, announced plans for Crystal Bridges, a multi-million dollar art museum. The Compton Gardens/Crystal Bridges complex will occupy 150 acres of land next to the downtown and improve an already impressive area.

My talk took place at NorthWest Arkansas Community College, a vibrant place that was only started in 1989. With 5,000+ students, it is already the second largest community college in the state. It offers typical community college classes but also specialized ones aimed at Wal-Mart employees and vendors.

This is not a town resting on its laurels. They are constantly pushing the edge of the envelope to continually make themselves a better town.

Tuesday, July 12, 2005

Reaching Out! To Regionalism!

Why would a booming town like Bentonville want to reach out to the surrounding area, is something that Rich Davis, Economic Development Director for the Bentonville/Bella Vista Chamber, is often asked. But Bentonville understands the importance of regionalism and is even going into the neighboring State of Missouri (McDonald and Berry Counties) to develop a regional approach.

It makes a lot of sense to me. Bentonville has an incredible economic engine that is sucking up workers at a rapid pace. Unemployment is less than 2%, an unheard of number for a town the size of Bentonville.

There are wonderful opportunities to tap into such new companies as contract manufacturing, warehousing and others that might not want to be directly in Wal-Mart’s backyard, but might want to be close by.

Bentonville first showed the power of cooperation when it joined with the Bella Vista Chamber to form a regional chamber. Now it is doing the same thing in economic development.

Smart town! But what would you expect in Sam’s hometown?

Monday, July 11, 2005

Stock Option Magic

What is the biggest change in Bentonville since Sam passed away in 1992, was a question that I asked to several people there during my talk and visit. To a person they all mentioned how there is more of a show of wealth, with new mansions being built, expensive cars purchased and other expenditures. “Sam would have never wanted that,” was told me by several.

And, if you look at the numbers you can understand how Wal-Mart has brought so much wealth to the small town. Sam was notorious for paying low wages but freely giving stock options to virtually everyone. The associates bought into the plan and hundreds, if not thousands reaped the rewards.

If you had bought stock in Wal-Mart at the time of their IPO in 1971 and held it to today, you would be a very wealthy individual. A $1000 investment would have purchased slightly over 60 shares. In the next 34 years the stock has split two-for-one eleven different times, which would have resulted in approximately 124,000 shares, worth $6 million.

I was told of former Wal-Mart employees who cashed in their stock options to buy houses, cars, etc. The most interesting was a fellow who bought a riding lawn mower with his options. He still has the riding lawn mower, but kicks himself today as the stock would be worth several million dollars. That is an expensive lawnmower!

Sunday, July 10, 2005

Google Search Shows Bubble

I’m sitting in a hotel room in rainy Atlanta this afternoon, catching up on my reading. I’ve been away from home a lot and have a big pile of items to read. I appear to be losing the competition as the piles at the office and home continue to grow. I caught up on some of the more important items on this trip.

One of my continuing concerns with our economy is the growing bubble that I see taking place in real estate. Several markets like LA, SF, Las Vegas, Phoenix and others have seen values increase dramatically. Today 31% of the total value of real estate in the USA is in the top 10 markets, compared to only 20% ten years ago. It reminds me of the mid 80s when the real estate under the Imperial Grounds in Tokyo had more value than the entire state of California. It didn’t make sense then and I don’t believe that the values in some of these markets make sense today.

I got on Google to do a couple of searches to see if there was some evidence of hype in real estate. When I typed in real estate I got 109,000,000 hits compared to 78,900,000 for sex; 61,000,000 for God; and 43,100,000 for stock market. Doesn’t that sound like a bubble to you?

Boomtown USA, at 243,000 hits on Google, lagged far behind those words, but we smoked exurbs at 29,400; boonyacks at 284; agurbs at 224 and supercalifragialistic at 5. No bubble yet for Boomtown!

Reminisces of Sam

Ed Clifford, Executive Director of the Chamber, started working for Wal-Mart as a buyer in 1984 when the company had $4 billion in sales, compared to $285 billion today. At the time Wal-Mart only had 2 Distribution Centers.

Sam Walton personally recruited him from Tulsa where he was working for a competitor. At the time Wal-Mart had 21 buyers and as Ed said, “Sam, would have liked to only have one. He hated overhead.”

He went onto tell me, “Sam hated technology but knew he had to use it. He never used a calculator. If he couldn’t do a calculation in his head, it wasn’t of importance to him.” It is ironic that Wal-Mart’s use of technology has been such a key driver in their growth. “Sam understood the importance of technology. He just didn’t like it. He wanted to open one store at a time and get a chance to meet everyone at the stores at least once a year.”

Saturday, July 09, 2005

Wal-Mart’s Hometown

I’ve been in Bentonville, AR, Wal-Mart’s hometown, a number of times in the past several years, but I’m always amazed at the growth that I see taking place, the new businesses opening their doors and the people moving to the area. Thirty years ago, Bentonville was an unknown little town that was considered “out in the middle of know-where.” Wal-Mart put it on the map and is still the driving force of growth, but others are being attracted to, the community. I spoke with several at my talk.

Jim & Michele Rinella lived most of their working lives in CA, working in agribusiness. They lived their last 11 years in Palm Desert, next to Palm Springs in the Coachella Valley. It is a faming, tourism and retirement area. Ag was always the backbone, but the influx of new residents drawn by the 100+ golf courses and other amenities were big plusses.

Even though they could have retired in Palm Desert or even in WA where they owned a second home, they did a nationwide search, researching retirement communities and traveling all over the USA. They concentrated their search in CA, AZ, WA and TX but read about AR. Jim did his military basic training at Ft. Chaffee in Ft. Smith, AR but hadn’t been in AR since those days. They routed one of their search trips thru AR and when they got to Bella Vista (right next to Bentonville) they fell in love with the area.

I asked them about adjusting to life in small town Arkansas. Jim told me, “It was tough at first. Retirement was a new thing for me. I didn’t get that adrenaline rush every morning like I did when I was running a business. But we’ve quickly adjusted.”

Michele explained, “We seemed to lack better dining options and shopping when we first got here, but it’s gotten a lot better in the five years that we’ve lived here. We used to make a lot of trips to Kansas City or Tulsa for our ‘big city fix’, but we don’t do that as much as we did at first.”

Lisa & Steve Lockwood are more recent Bentonville residents. They decided about a year ago that they wanted to move their space-planning consulting business ( from Minneapolis to a better climate location. “We were looking for a four-season location with plenty of outdoor activities. We also wanted a town that had a ‘sense of place’ and with a great quality of life,” Lisa told me.

Steve explained how they researched where to move to, “We got on the website to compare various locations. We could do 3 comparisons at a time, so we used Minneapolis as a base and then started comparing various towns that we were researching. We looked at KY, TN, NC, SC and AR. It was a great way to narrow down the field.”

Neither the Rinellas or Lockwoods are in Bentonville because of Wal-Mart, but they are exactly the type of people that you’d love to have in your community. In talking with them it showed how having momentum from a phenomenon like Wal-Mart can have additional benefits for a small town.

Bentonville, AR--Population 3,000 when Sam Walton started Posted by Picasa

Walton's Original 5 & Dime--Now a Museum on the Square in Bentonville Posted by Picasa

Wal-Mart’s Distribution Model

I just spent two days in Bentonville, AR, Wal-Mart’s hometown, giving a speech on BoomtownUSA, focused upon our research on the importance of small towns in the Wal-Mart distribution model. I believe that we are one the few, if only groups, that have done a complete analysis of their distribution model from a locational standpoint. And, it is their distribution and information technology models that have differentiated Wal-Mart from the competition for the past 20 years. In fact, I’ve heard it said by more than one retailing expert that Wal-Mart is an average retailer but the top of class as a supply chain manager and global buyer.

We first started researching the location of Wal-Mart’s DCs when I returned from a NAIOP conference that had focused upon their world class model and how other companies were going to copy what Wal-Mart was doing in the future. I naively raised my hand and asked, “You know I don’t know where all of the Wal-Mart DCs are located, but the ones I know are located in the agurbs®, not in the big cities where everyone else at this conference is from.” I got laughed at, which made me mad so I decided to find everyone of their locations. It wasn’t easy. Wal-Mart considered it a company secret.

We completed our first study when they had 54 DCs, they had 89 when we did the book and today are up to 109. The first study showed the concentration of DCs in towns of a population of from 5,000 to 50,000 and this most recent study has only reinforced that early finding. Of their 109, 76 (or 70%) are in towns of 5,000 to 50,000 with 20 (18%) in towns of less than 5,000.

Stay tuned as other companies learn from the Masters of the Supply Chain. It is happening in the agurbs®, not the big cities.

Friday, July 08, 2005

Illinois River Trip

It was my second river trip. My first was two years ago on the Mississippi River, from IL to MN, where we had a great time until we hit Lake Pippin with a 40 mph headwind, which kicked up huge waves, way too much for my small 20’ deck boat. One local told me that Lake Pippin is where the Mighty Mississippi meets the Great Lakes. We were humbled by the experience, humming the Titanic’s “Nearer Thy God to Thee” in the roaring waves.

This week’s trip up the Illinois River, from Peoria to Chicago was not quite as eventful as that adventure and with only 163 miles and six locks to traverses, it looked pretty simple. The weather forecast showed clear skies and mild temperatures. We thought that we would make the first leg from Peoria to Joliet in about 6 hours, doing so at a leisurely pace, and then shoot up the Des Plaines River, Chicago Ship and Sanitary Canal and finally the Chicago River. The signs on the Sanitary Canal warned us not to touch the water. Touch! The Water! No wonder we only saw one other pleasure boat on it.

The locks on the Illinois River were rebuilt in 1933 and don’t appear to have been markedly upgraded since then, compared to those on the Mississippi River. We cruised thru those in between 15 and 30 minutes. The Illinois River locks took us from an hour to three hours each. Our planned six hours turned into eleven hours, with the last six running full-out. With the sun down, running 45 mph and a slight wind in our face, it got downright cold. My crew, my wife and sons, were not happy campers.

Virtually every boater that I know suffers from “Twofootitis”, a desire to get a new boat that is two foot longer than the present one. After this trip, my crew not only doesn’t think that I need a longer boat, but questions whether we need a boat at all. Their question is, “What river is he going to put us on next?”

I was disappointed with the activity on the Illinois River compared to the Mississippi. Other than at Peru (one of my agurbs®), Peoria, Joliet and Henry, we didn’t see much to entice boaters off of the river. I think that most of the other towns are missing an opportunity to create a special “sense of place” along the river.

Family on boat on Chicago River Posted by Picasa

Shipping Changes

At one time, three Seattle shipping companies operated 20 cargo ships between WA and Alaska. When we were making our WA tour, the second of the three announced that they were closing down, leaving only Coastal Transportation with a fleet of eight boats to service the small Alaska fishing villages. Changes in the way that fish are caught and distributed directly to worldwide customers rather than being distributed through Seattle, left Western Pioneer with plenty of outbound freight but little return business.

Peter Strong, owner of Coastal, will add some of Western’s communities to his stops but, “federal shipping rules effectively prevent Coastal from continuing service to three villages in southeast Alaska.” Gustavus (population 429), Pelican (163) and Tenakee Springs (104) will be left without regular service, having to depend upon air or sporadic smaller boats.

It’s another example of the Law of Unintended Consequences. I’m sure that some law was set up years ago to protect someone, but the result in 2005 is that three small, struggling towns will be left in the lurch.

The Ports—Angeles and Townsend

I was hoping to visit an additional two of my nine Washington agurbs® on our last day, but my 17 year old sons were wanting to get to some sites in Seattle, so we only briefly drove thru Port Angeles and didn’t get to see Port Townsend. We’d already driven 1000 miles in four days, so I didn’t press them on making a 50 mile side trip.

I believe that my sons are typical of many who grow up in small town America. At 17, the world is their pearl and they can’t wait to get away from home to the “big city.” I was just like them, never contemplating ever moving back to my hometown. I was off to see the world.

But, what I’ve found in my travels and research is that there often is a homing system that kicks in when you get to be 30 that makes the old hometown appear more compelling. It doesn’t happen with everyone, but when you start to look at where you are going to settle down and raise a family, the serenity and quality of life of the old hometown doesn’t sound too bad.

Back to my trip--Port Angeles impressed me. They’ve got a thriving downtown that sits right along the water. You could tell that the agurb® had a certain vibrancy as I drove thru it. I was particularly impressed with their murals and a small downtown park that I stopped long enough to get some pictures.

I hope to get back to both of my WA Port Agurbs®--Port Angeles and Port Townsend, in the future.

Port Angeles, WA downtown sculptures & mural Posted by Picasa

Port Angeles, WA downtown mural Posted by Picasa

Thursday, July 07, 2005

Industrial to Destination?

On my way up the coast of Washington, I stopped in Hoquiam, WA (Hoquiam, population 9,097, is an Indian word for “hungry for wood”) to talk with Mayor Jack Durney. He is a rather unique individual in that while he has been mayor of Hoquiam for a year and a half, he was previously mayor of neighboring Aberdeen 20 years ago.

Both Hoquiam and Aberdeen sit at the end of Gray’s Harbor, about 15 miles from the Pacific Ocean (25 miles by road). They were great sites for industrial operations. Timber, sawmills, paper production and ship building (Johnny Carson’s $12 million yacht was built here) were all important industries in the past. However, each has seen its better days and blue-collar towns like Hoquiam have to continue to reinvent themselves.

I asked Mayor Durney how he was approaching this challenge, “We have to figure out how to transition from a resource based economy based upon pulp and wood, into redeveloping our waterfront. I’d love to see it be a vibrant mixed use area with condos, businesses, marinas and housing developments. We’ve started a Main Street program, modeled after successful ones in Centralia, Port Townsend and Walla Walla.”
The mayor has rallied 300 local citizens for a series of strategic planning sessions on Sunday nights to establish a common vision of what Hoquiam will look like in the future. They’ve discussed the need to tie the waterfront together with a river walk, trying to get the people driving thru the town on their way to the ocean to stop by the town.

One of his comments really made sense to me, “We want to attract younger people to our community because of all of our attributes and then have them look for a job.” Mayor Durney has a vision of how he wants to transform his town, creating that special “sense of place” that I continue to search for in towns. I hope, for the sake of the citizens, that he is able to do so.

Wednesday, July 06, 2005

Giving Back & Investing in the Future

I was only in Astoria, OR for a couple of days but really came away with warm feelings for this agurb®. Everyone I met went out of their way to be helpful. Outsiders are cleared welcomed and accepted, as evidenced by my earlier posts, but what of the native Astorians?

I quickly learned of Chester Trabucco’s work at renovating the Elliott Hotel. He spent several years and over $4 million to resurrect a grand old hotel to its elegant past.

Across the street is the redone Liberty Theater, a 1925 Vaudeville/motion picture palace which took four years and almost $2 million to bring back to its former opulence. Steve Forrester, local owner and publisher of The Daily Astorian newspaper, led those efforts.

Last month, the town celebrated its one millionth dollar of scholarships with a $7,000 package to a local student from the Astoria High School Scholarships, Inc., a local organization. Over 1,000 students have benefited since the program was started in 1976. Today the foundation has a corpus of $3.6 million and will benefit/invest in the youth of the community for generations into the future.

Astoria is a town with a wonderful historical past but an even more brilliant future. Put it on my list of favorites.

Hotel Elliott; Astoria, OR Posted by Picasa

Tuesday, July 05, 2005

Fireworks for 4th

The following photos were taken this weekend at our lake lot by a very accomplished photographer who is also an orthopedic surgeon, Dr. Frank Lee.

Grand finale Posted by Picasa

Neighbors at sunset Posted by Picasa

Two friends on beach Posted by Picasa

Sparklers on dock Posted by Picasa

Fireworks from boat dock Posted by Picasa

What One Woman Can Do

“You have to go see what is going on in our Tapiola Park” was told to me by more than one person as I toured Astoria, OR. So, after having dinner at Baked Alaska we explored the town, with hopes of finding it along with other sites. We found it just as it was getting dark and I knew as soon as I saw it that I would have to come back in the daylight to see and talk to the visionary person behind the new Tapiola Park Playground (

I was told to look up Wendy Berezay at the site, expecting to find one of the old-timers typical of most small towns. What I found was a surprise.

“We moved from Montana two years ago so that my husband could take over the State Farm agency. I was back home in Florence, MT when I saw a very unique playground and came back here and started talking it up to everyone I met, whether it was on the street or in the grocery store. Our old playground had collapsed here several years ago because of all of the rain and moisture we get, just rotted it away.” Wendy told me. She is the mother of 5, aged 5 to 22.

“Within a month we had about 60 people who were interested in doing something. We looked at different ways to fund it, thinking that it could either be a tourist draw or only for the community. We did a presentation to the Parks Board and the City Council in October, 2004. We had our first community wide meeting in December. We decided that we would do it all with donations, because by law, we couldn’t use any public funds or we wouldn’t be able to use volunteer labor. (Jack’s note: Another of those ridiculous laws that are used to protect a class of people to the detriment of all. Also another Law of Unintended Consequences that ends up preventing projects from taking place that could benefit a community….Ok, ok…I’m getting off of my soapbox).

“We ended up with 18 people who were willing to sacrifice a year of their life to make this project happen. We met every week or two for the past nine months with this core group. We’ve raised over $200,000 in donations and grants and had over 3,000 volunteers working to build this. If you took their labor into account, this would be a $700,000 project.”

“One of the first things we did was to get the kids involved. We sat down with them and asked them what they would want if they could have the best playground in the world. We had to discard some of their ideas like hot tubs and bungee cords, but came up with a design that reflected the historical treasures of the town. We’ve got a Liberty Theater, the trolley, a boat, the Astoria Column, a Lewis & Clark cabin, a pilot boat, a whale, the bridge, and other notable objects from Astoria. There is a climbing wall with a mural of the Peter Iredalle, a famous shipwreck near town, that will give them a feeling like they are climbing on the ship. The whole project is handicap accessible on multi-levels.”

I was inspired and awed by the sight of hundreds of volunteers working feverishly on this project in a sprint, as Wendy said, “From dirt to done in six days.” It’s great that there are so many Wendy Berezay’s in the agurbs®,

Astoria Playground Posted by Picasa

Astoria Playground  Posted by Picasa