Monday, December 03, 2007

Best Utility ED Organization

In the 20+ years that I’ve been involved in economic development, I’ve seen an incredible change in how the business is conducted, the speed with which it moves, and the size of projects decrease dramatically. As with any endeavor, it is a constantly evolving process.

When I first entered the field in the late 80s, I found that the electric utilities dominated the business. It was obviously in their best interests to find new, heavy electric-load customers for their business. And, they could wrap their economic development activities into their utility rate. In fact, if it wasn’t for the ED efforts of Central Illinois Public Service (CIPS), which took me under its wing, I’m not sure that I would have ever made it in industrial development. But, when they were sold and started to downsize their ED efforts, I hired their best Todd Thoman, and we’ve never looked back.

Deregulation of utility rates changed the utility industry model and most utilities started downsizing and downplaying their ED departments. Many have been gutted. But, the TVA, which covers all of TN and parts of six other states (80,000 square miles), has continued to emphasize the importance of economic development and developed into the premier ED group in the nation in the opinion of Team Agracel.

I was at their 2007 Customer Service and Communications Conference to learn more about some of their many successes.

Amy Bunton, GM for ED at TVA, spoke on the changing nature of business and why retention is growing in importance, “In 1982, 11 of the top 25 companies in the Fortune 500 were manufacturing based. Today it is only 5! We have 11,325 manufacturing companies in the TVA territory that account for 666,000 jobs. Of the total jobs in rural areas, 32.7% are in manufacturing in the TVA, compared to only 16.9% in our urban areas.”

In addition to the direct manufacturing jobs, Bunton estimated that there were another 815,000 jobs within TVA that supported those manufacturing jobs and that it was a lot less expensive to spend time and money on retaining those jobs rather than recruiting in a new company. She explained, “We estimate that it costs $1,000 to $50,000/job to recruit in a new business but only $200 to $4,000/job to retain one.”

You do the math!

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