Entrepreneurship in the Rural South

Rural Entrepreneurship is fast becoming a top economic development strategy. The Southern Rural Development Center just released a report on the trend in the south.

One of the “stars” mentioned was Tupelo, MS (population 34,211) with their new Renasant Center for IDEAs (Innovation, Development, Entrepreneurship in Action), a 28,089 sf. Business incubator. I’ve been to their facility twice in the past six months and continue to be amazed at how economic development has elevated Tupelo into a world-class town. Tupelo is on the leading edge of turning entrepreneurship into the next ED tool for their town.

Don't Give Up

Yesterday’s blog on Cambridge, MN resurrecting a closing plant generated the following response from Larry Paine, who writes a wonderful blog in Concordia, KS where he is city manager.

Your blog comments today reminded me that a few years ago as the City
Administrator of Jerome, Idaho, I was part of a team that responded to to the
announced closing of the Moore Business Forms plant. A working group of
State HR folks, the regional ED organizations (Twin Falls and Jerome) and the
business worked to do the things that the Cambridge folks are
doing.

As we worked with the Moore Business Forms folks we learned
that the Jerome plant was the most productive in the product group. Who
knows why they made the closure decision - probably internal politics. As
we learned about their productivity we went to the State Department of Commerce Director who was able to call the Moore CEO and diplomatically ask why they were closing a productive plant. After 4-6 months of raising the question, Moore reversed their decision.

Cambridge’s Manufacturing Focus

When I first toured Cambridge, MN (population 5,520) in 2005 I was impressed with their manufacturing diversity and Tom Willett’s, head of ED, aggressive approach to expanding his manufacturing base. I was not surprised when I learned of Cambridge’s recent successes.

Earlier this year St. Louis-based Leggett & Platt Inc announced that they were going to close their Cambridge plant. Willett marshaled resources in the community including almost $5 million in local financing and helped to find a new buyer for the business to secure 84 local jobs in Cambridge.

Other successes in Cambridge this year include Mape USA, an Italian manufacturer of integrated systems (connecting rods, crank shafts and cam shafts) for firms like Polaris, Artic Cat and Mercury Marine new plant, an expansion by U. S. Water Services, a water treatment company, Adventure Publications and Schlagel (grain handling equipment).

It is a good time to be fishing for manufacturing expansions. The fish are biting and if you have your line in the water like Tom Willett in Cambridge, MN you’ve got a good chance of pulling in some nice ones.

Protect Us!

I always try to listen to the local radio stations as I’m traveling around the country in search of boomtowns. It was about an hour and a half drive from Green Bay to Antigo, WI and I got a chance to listen to numerous stations. All of the local announcers were talking about Raj Bhandari in nearby Merrill, WI (population 10,146) who had developed a $50 shopping card for the local youth hockey program. In exchange, customers got 3 cents off every gallon of gas they bought. Bhandari also offered his senior citizen customers a 2 cent discount. Everyone should be happy, right?

The Wisconsin auditor sent Bhandari a letter demanding that he stop selling fuel at a discount. Wisconsin has a minimum mark-up law which requires gasoline retailers to sell their fuel for at least 9.2% above their wholesale price, and Bhandari’s discounts pushed his prices below that margin.

Really! Do we need the government telling us what price to sell our products for? Don’t they have enough things to worry about, rather than customers getting a discount on their gas while helping the local hockey program?

Antigo Turnaround

“We have such a shortage of qualified workers that we’ve started offering a $2,000 bonus for new employees to move into Antigo. They have to live in the city though to collect their bonus. We started the project earlier this year, have had 75 apply and since then 15 hired. We’re running ads in the upper peninsula of Michigan and other spots where they’ve had factories close.” Dale Soumis told me as I toured the town of Antigo, WI (population 8,560) of his preparations for 400 to 600 new jobs that are going to be needed as local manufacturers are gearing up production.

About 22% of the workforce is in the manufacturing sector in Antigo, with no one company dominating the market. Most of the 48 manufacturing companies hire less than 100 employees, in a wide range of industries. There is everything from bowling pins to nuclear submarine bearings made in the town.

At the community event I was talking at, Mayor Mike Matousek reported that these manufacturing companies have collectively invested over $100 million into new equipment and facilities in the past three years.

Antigo also has a wonderful plan to tie Lake Antigo, Springbrook Creek and their downtown together with trails, water features and other amenities. It is an ambitious project but one that will continue to make Antigo a preferred destination for new residents and tourists. You can view this plan on their website. They hope to leverage this plan into branding the community and area as the “Community of Trails.”

Antigo is a town on the move. I hope to return in the future to witness its progress.

Auto Parts Manufacturer in Alabama

Last week was a busy week for Team Agracel. Not only did we do a ground breaking in SC, which I wrote about yesterday, but we also broke ground on a new manufacturing plant in Alabama. I was on my way to a talk in WI, so I couldn’t join in the festivities in Scottsboro, AL (population 14,762).

Scottsboro had a vacant spec building which they built in the spring of 2006. This spec building lured KTNA, a joint Japanese/French auto parts supplier, to make Scottsboro a finalist for the company’s first U.S. manufacturing facility. Agracel was brought in on the project in the summer of 2006 to assess the feasibility of purchasing the facility, up-fitting the spec building, and then leasing it to KTNA. After assessment, KTNA, Agracel and Jackson County Economic Development Authority determined that it was more cost effective for KTNA to do a new build-to-suit project and then lease the facility back from Agracel. Agracel purchased 7.6 acres in the Jackson County Industrial Park to develop the new manufacturing facility.

The new 36,000 sf facility will house the manufacturing of floor carpet, underlay acoustic parts, dash insulators and floor mats for Nissan Motor Company. The target date for moving machinery & equipment into the facility is October of 2007. Operations will commence with 25 employees with plans to expand, over the next three years, to 72,000 sf and 70 employees.

We have been very pleased with the activity we are seeing in the expansion of manufacturing companies. It is a good time to be doing industrial development with a focus upon the manufacturing sector. It also is a good time for communities to look at spec buildings, using them as a lure to bring in new firms.

Spec in SC

I was in Camden, SC (population 6,682) for the groundbreaking of our first spec building in six years. We have built six spec buildings over the years and have had great success with our programs until the downturn of 2001. Too many empty buildings became available and the demand for new spec buildings declined.

We weren’t necessarily looking to build new spec space as the demand for our existing space and new build-to-suit projects has our development team at Agracel on the go a great deal. However, several compelling factors motivated us to partner with the local Kershaw County Economic Development Office, the local utility company Progress Energy and a local engineering company.

South Carolina has impressed our team with their very progressive approach to economic development and Camden is a charming town with great potential. The town has had their previous two spec buildings snapped up by German filter manufacturer Hengst USA and Forgitron, an Ohio-based maker of aluminum wheels, both in 2005. It was time to build a new one, a 75,000 sf building that is expandable to twice its size.

Nelson Lindsay, head of the local EDC, told me of recruiting in Haier America, the giant Chinese appliance manufacturer. “They were looking at moving their U. S. production to either Greenwich, CT or Orlando, FL. We got in the mix when one of the Americans on the project, mentioned to us that they were looking. We got Camden in the mix and the Chinese quickly realized that it made a lot more sense to locate here.”

We are right across the street from Haier America’s USA headquarters and hope to use our new building to bring another international company into Camden.

Scary for Urban Areas

“It’s official. City working has had its day. Half of UK bosses, based in an urban environment, are dreaming of escaping the rat race to find their own small slice of rural happiness.” This was the finding of a research project by Cornwall Pure Business in the UK. I was alerted to it by Becky McCray from rural Oklahoma who writes a wonderful blog at Small Business Survival.

The really astounding part of the research was that 64% of those who are seriously considering relocating, intend to do so in the next one month to five years.

The reasons for such a move were:
· Creating a better environment for family and personal well-being 75%
· Attaining a better work-life balance 71%
· Reduce commuting time 45%

The trend that we documented in BoomtownUSA toward a more rural lifestyle seems to be spreading to other countries.

Free Entrepreneurial Tuition

I’ve studied and written numerous times about the Kalamazoo Promise, which has been copied by Newton, IA and El Dorado, AR. It is a program to pay the college tuition for anyone who goes to the local schools in those towns. I see it as a huge economic development tool, focused upon the future.

The Michigan Spirit of Entrepreneurship Initiative is a proposal to offer free tuition to students of any age who take a college course in entrepreneurship and offers grants to encourage students to participate in programs like Junior Achievement, aimed at high school students.

Every town might not be able to offer free tuition to every student in their schools, but I’m guessing that everyone should be able to figure out a way to do so for entrepreneurial education.

Imagine the impact that this could have in the development of new businesses for the future. New businesses in your hometown!

Big Offices?

At the Industry Trends Committee Meeting at NAIOP last week, I suggested that with rapidly rising construction costs (we’ve seen a 47% increase in the past five years) combined with the falling costs of telecommunications, computer technology and video conferencing it might make more sense for companies to look at the rapidly expanding growth of homesourcing. Jet Blue is the most famous company to use homesourcing, doing all of their reservations from homes in Utah.

I probably shouldn’t have been surprised that a group of office builders might not like the thought that their big office buildings might become technologically obsolete. They didn’t laugh me out of the room, but no one thought this was something we should look into further.

This week’s Business Week magazine has an article “Rolling Out the Instant Office: Why maintain empty cubicles? Companies are gaining flexibility with on-demand office space.” Several items in the article caught my attention.

“About 60% of the office space that companies pay so dearly for is now a dead zone of darkened doorways and wasting cubes. Imagine if a factory had a utilization rate of only 40%.”

“Mark Golan (VP of real estate for Cisco Systems Inc.) says technology is enabling companies to move more and more of their real estate portfolios anywhere. Not to mention that office outsourcers usually deliver superior services in backwaters. It’s hard to justify rolling out the works for five workers in the middle of nowhere.”

In my travels around the USA, I am increasingly meeting people who are living a more tranquil life in rural America, while maintaining their existing work via telecommunications and video technology. I think that we will see this trend continue to grow as babyboomers either take early retirement or move to locations that they want to live in for quality of life issues.

Will office buildings in central cities continue to be the preferred location for employment growth or will office jobs become more dispersed throughout the country? What do you think?

Devastated Greensburg, KS

The photos of the devastation from Greensburg, KS are incredible. Take a look at this website. http://www.kansas.com/static/slides/050507tornadoaerials/

Non-Mobile Manufacturers

Other than a piece that we did last month on immigration into the USA, last week’s Agurban on the non-mobility of manufacturers has generated the most comments that I’ve seen. And, every one of the comments and emails has indicated that what we found in our research at Agracel was the experience of others.

Our "Why We Love Manufacturers" Agurban looked at the 52 projects we at Agracel have done over the past 15 years in 13 states. We found that only 5 of the 52 left us, with 90% staying in their buildings and continuing to offer jobs in their original towns.

I was at a semi-annual National Association of Industrial and Office Properties (NAIOP) this past week, meeting with other industrial developers from around the USA. Several mentioned our Agurban and indicated that they have had the same experience that once they get a manufacturer into a building, most tend to grow in the space rather than move out.

NAIOP was intrigued by our findings and would like to study it further on a national basis. If you know of someone who has done or could do some research in this area, please let me know.

My guess is that people like Lou Dobbs aren’t going to like what we find out about in this research. It doesn’t fit with their political or journalistic agenda.

Awesome Altoona!

Recreational land and outstanding outdoor amenities are becoming increasingly important for a growing number of Americans. Towns that are within driving distance of major metro areas have an opportunity to attract day tourists who can turn into second home buyers and eventually into full-time residents. I was in such an area last week when I was doing a talk in Altoona, PA (population 49,523).

Altoona was a major railroad town on the east side of the famous Horseshoe Curve, built to traverse one of the more difficult Allegheny Mountain passes of the Pennsylvania Railroad. Opened in 1854, Altoona quickly grew into a major railroad and industrial town.

Today Altoona is reinventing itself as a high tech, job creating engine. Its wonderful setting in the midst of the Allegheny Mountains and close proximity of less than a four hour drive to Pittsburg, Philadelphia, Washington DC, Cleveland and New York, afford wonderful assets for Altoona.

Another quality of life attribute is the Blair County Ballpark, built in 1999, which is home field for the Altoona Curve, a Class AA farm team of the Pittsburg Pirates. The Curve regularly draw 6,000 to 10,000 fans. I had a great time at the game I attended against the Bowie Baysox, an affiliate of the Baltimore Orioles.

French Lick is Back!

French Lick, IN (population 1,941) used to be an easy place to get to in the days of railroads and that is why its natural springs were a favorite destination for many famous families in the early 1900s. Two renowned resorts were built within months of each other in 1901 and 1902. The West Baden’s six story atrium was the world’s largest free-span dome until the Houston Astrodome was built in 1965, quite an engineering feat for the early 1900s.

During the Prohibition Era, French Lick boasted 13 casinos, all of them illegal. One was owned by Indiana’s Democratic Party Boss and another by its Republican Party Boss, protected by both sides of the political aisle in Indianapolis. In 1949 the last of these illegal casinos was shut down by a reformist governor and French Lick slowly spiraled down into obscurity.

The town’s “15 Minutes of Fame” occurred when native son Larry Bird achieved basketball fame at Indiana State and with the Boston Celtics as the “Hick from French Lick.” Bird still maintains a modest home in the countryside a couple of miles outside of town.

In 2003, Bill Cook of nearby Bloomington, who achieved billionaire status (estimated by Forbes at $3.2 billion) with his medical device manufacturing company that he started with his wife at their dining room table, bought both of the old resorts and began the painstaking task of renovating them, along with building a new casino. My wife and I visited the French Lick Springs Resort after our trip to Paducah to see the $382 million makeover. We were disappointed that the West Baden Springs resort won’t reopen until June, but were amazed by the makeover of the French Lick Springs, a property we had visited a dozen years before.

During a spa treatment, my wife learned that Mr. Cook paid the 400 employees of the resort their full salaries during the reconstruction. Since reopening, employment has increased to over 1,000.

A trip to French Lick is well worth the drive. Seeing what someone like a Bill Cook can do is amazing.

Bankers as Heroes

Bankers as heroes? You’re probably wondering where I’m going with this blog today. Bankers aren’t usually known for their heroic efforts but rather as the person that you have to go plead with for a loan. But, in the past week I’ve met two who have altered their communities with their efforts in Gulfport, MS and Paducah, KY. Please read their stories on April 25th and May 1st.

My experience is that bankers tend to be risk adverse. You don’t tend to get ahead in the business by doing risky things like both George Schloegel or Joe Frampton did, but because of their actions and commitments both Gulfport and Paducah are much better communities.

I’d like to report on other bankers who have made heroic decisions like those two. If you know of such cases, would you mind emailing them to me at jschultz@agracel.com.

Another Local Bank Hero

“None of what I’m showing you would have happened if it weren’t for the local bank. Joe Frampton, its CEO, used the book “Good to Great” as his guide and understood that for this project to succeed he was going to have to stick his neck out. Sometimes he was lending 300% of appraised value to make this program work. He really took a chance.” Renee Nunez was explaining to me how the transformation of the Lower Town area from crack houses to artist’s studios was accomplished in the past six years.

Mark Palmer, one of the first artists in the program told me, “The bank lent me $220,000 to redo my place but when we were completed it only appraised for $150,000. Today, five years later, it’s probably worth over $350,000.”

Wow! It is bankers like that who can really make things happen in a town. I knew that I had to go meet him. After my tour I walked down to the Paducah Bank and even though it was already 4:30 on a Friday afternoon, Joe Frampton agreed to meet me. Whoever makes comments about “banker’s hours” hasn’t met Joe.

Joe explained to me about his bank, “We are a $400 million bank with five branches, all located here in the county. We are the only locally owned bank in the entire region. We committed $1 million to the program because we knew the history of the Lower Town area and took pride in what it once was. We’d seen it deteriorate into a horrible place of absentee landlords, a nice phrase for slumlords, that was filled with transient residents. It was unstable and unsafe. The property was deteriorating quickly as drugs, noise, crime and prostitution had moved in.”

He went on, “The mayor came to see our president Wally Bateman and I and said, ‘We’ve got this crazy idea for revitalizing the Lower Town. What can your bank do?’ We were so impressed with what they wanted to do that we committed to them that day for the $1 million. We told them we will do it at market rates, but we will get very creative on longer terms, appraisals, etc.”

“The artists started coming in and frankly we’ve been very pleasantly surprised at the financial capacity and quality of them. We originally thought we were going to get a bunch of hippies. But we found that we got some very high quality folks. One of our first one was an M. D. from the east coast.”

You would normally think that with this type of program that you’d have some significant write-offs but Joe told me that they’ve yet to take a write-off to date, even though the program has grown to over $10 million invested in Lower Town. The bank is assisting the city with a similar program, but not arts related, in another historic part of town, committing another $1 million.

I asked him about how the Artist Relocation Program has worked out compared to what he envisioned. He told me, “We thought we would be lucky if we got 90% back on that first $1 million commitment. But, it has been wildly more successful than we ever imagined. We’ve grown our business as a result, both in the Lower Town area and in the community because people saw our commitment to the town.”

“For the community it has been a big boost. The artists who have come in are well educated, creative, diverse and have a tremendous intellectual intensity that wasn’t here before. Our tourism has grown greatly. Coffee shops have sprung up. We are now making plans to start an art school here which could completely dwarf everything that we’ve done with the Artist Relocation Program.”

If you get a chance, be sure to visit Paducah and see what they’ve accomplished in only six short years with this program. And, all because one banker took a big chance.

Arts as an Economic Development Tool

“This area was full of crack houses and prostitution. It was one of the oldest parts of town and also the most run down. My boss, Tom Barnett, who is director of planning for the city, and Mark Barone, a local artist, got together and convinced the city to try to turn this part of town into an artist’s colony.” Renee Nunez, the head of Paducah, KY’s Artist Relocation Program was explaining to me how in only six years Paducah (population 26,307) was able to turn an abandoned part of town into a bustling, model of urban renewal.

She went on, “The city started to strictly enforce building codes and began buying up some of the worst buildings. They worked out a plan with a local bank and started marketing to artists as a location that was affordable. They thought that initially they might be able to get five or ten to relocate to Paducah. In only six years we’ve gotten in over 70 from 15 states. It has been wildly more successful than anyone imagined.”

As Renee walked me around the neighborhood, I was shocked at the transformation. We stopped in a half dozen studios and saw incredible before and after photos of the transformation in the area.

Our first stop was at the studio of Deb Lyons who moved from Chicago in 2005 into a home built in 1886 that had been converted into a four unit apartment complex. It was on the city’s demolition list when she bought it for $1, contingent upon her having the building redone within 18 months. She and her husband were early retirees, looking for a new career in art. She was an art professor and he was a submarine chief.

Mark Palmer was the fifth artist to make the leap in 2002. He moved from Washington, DC from a career in hotels, always living in large cities. He told me, “My Dad always told me, ‘You are going to get three big chances in your life. Be sure you take them.’ This was one of my three and I’ve never regretted it. It has been much better than I ever thought.”

Deb and Mark’s comments were what I heard from other artists in the area. Paducah is having their fifth annual artist’s festival May 25 to 27th. In addition to the 70+ local artists there will be an additional 40 juried artists, 10 bands and 12 restaurants at the event. According to Renee, over 13,000 people attended last year’s event. I hope to get back for this year’s festival.

Reeling in Toyota

On our trip back home, we stopped in Tupelo, MS (population 34,211) so that I could show our group one of my model towns for economic development. Even though Toyota was due in town the next day for the groundbreaking for their $1.3 billion plant, David Rumbarger, head of the Community Development Foundation, met with us for an hour to talk about Tupelo’s efforts to land Toyota.

David started with a bit of the history of their economic development efforts, “We were considered the poorest county in the poorest state in the early 1900s. We were hit hard in 1932 when a tornado literally wiped out the town and 265 people died. But things started to turn around when George McLean moved to town to buy a bankrupt newspaper from a bankrupt bank. He got people to thinking together and to focus upon economic development.”

“In 1948 he got 18 different business associations in the area to combine into the Community Development Foundation so that we could hire a full time manager. He went down main street, literally with his hat in his hand to raise $500,000 to bring in a Rockwell plant and $150,000 to bring in Morris Futorium, a furniture manufacturer from Chicago. We have over 20 companies that trace their roots back to Futorium’s plant, which ended up being built in neighboring Union County because they had an existing building.”

Those efforts helped to turn Tupelo into the Furniture Capitol of the South and developed a strong manufacturing base in the area. The Community Development Foundation has grown into a staff of over 20. David commented on Tupelo’s efforts compared to other towns, “I’ve seen too many towns that think that they can do economic development with a budget of $150,000. They are out of their league and not in the game.”

Last year another economic developer with one of the major utilities we work with compared it to C-Leaguers trying to play in the Major Leagues. Unfortunately, I found that too many towns take that approach and as a result never get the chances like Tupelo has gotten and taken advantage of.

David went on, “We first competed for a Toyota plant in 2002 when they decided to locate outside of San Antonio. But, we didn’t have the land assembled and didn’t have everything ready, like we did this year. We put together three counties into an alliance to promote this site and did over $500,000 in studies on it to make sure that we were ready if they or another big company showed up.”

“I’m convinced that to be successful in this game, you’ve got to figure out how to eliminate risk for the company and find your niche. We have a 33% density in manufacturing because of all of our furniture manufacturers. That compares to only 7% in San Antonio, 5% in Atlanta, 12% in Princeton, IN and 13% in Georgetown, TN.”

“Our governor, Haley Barbour, made a huge difference in getting them here. He became personally involved and made a number of trips to Japan to help lure Toyota to Mississippi. He got special legislation passed to take care of a couple of problems we had on the site and was one of the main reasons they are coming to Tupelo.”

If you’d like to hear the Tupelo Story, I’m helping to bring David Rumbarger to a regional ED annual meeting in Effingham, IL on May 17th. I’d love to have you attend and hear the remarkable story.

Vote for Flesor's Candy Kitchen!

We received this notice this morning and wanted to pass it along. Flesor’s Candy Kitchen is one of my favorite places!

“Please watch CBS Evening News Friday, April 27th! Assignment America by Steve Hartman will have one of his choices for a story about our very own Flesor's Candy Kitchen. BUT....we have to make sure they get the most votes for him to come to Tuscola and do a story about them!!!”

What a great story this will make! Please cast your vote for Flesor’s.

Assignment America

If you are ever near Tuscola, IL, it is worth the drive.
www.flesorscandy.com

Lost Everything, but Better For It.

We asked George Schloegel, CEO of Hancock Bank, about Katrina and its aftermath in our tour of the Gulf Coast. He told us, “I’ve got four grown children and three of them lost everything that they have. But today they are better off than at anytime in their life. They understand that material things are not so important. Their characters have been deepened.”

“At Christmas time I asked my grandkids what they wanted for Christmas. They told me, ‘Grandpa, we don’t need anything.’ They realize that material things aren’t so important. It has been a valuable lesson for our entire family.”

“This is America….We have problems…We learn to deal with them.”

George talked about how people in Mississippi worked together to start the rebuilding process. “Our governor, Haley Barbour, didn’t stick around here for photo-ops. He was in Washington D. C. making sure that we had funding for our recovery. He got $4 billion for Mississippi and $13 billion for New Orleans.”

“President Bush has been here on the ground 14 times and Laura 12. They have been very visible symbols of our rebuilding.”

George also talked about New Orleans, where he has a branch, “The problems in New Orleans aren’t the Federal government’s fault. It falls squarely upon the people of New Orleans. They have been spending money in the wrong places. They’ve been getting money for 50 years for their levies but putting the money in other places.”

I’ve now been to the Gulf Coast four times since Katrina and am always amazed at the resiliency and determination of the people there. They are rebuilding and making some wonderful progress in getting their lives back on a more normal keel.

SD TIF Vote is Yes!

The voters in Aberdeen, SD approved a new TIF District for a new beef packing plant by a 2 to 1 margin yesterday. I had written about the vote a week ago on my blog. Ken Blanchard from Aberdeen wrote this morning about the controversy surrounding this vote. Here is my favorite quote from his blog, "managing growth is hard, but managing decline is horrible."

I’m glad that Aberdeen is going to continue to move forward. It is a wonderful town with a tremendous future.

http://southdakotapolitics.blogs.com/south_dakota_politics/2007/week17/index.html#entry-33291506

Do Right. Public Will be Loyal to You.

“We gave out over $3.5 million to people who we found out didn’t have accounts with our banks. But, we got all but $300,000 back,” said George Schloegel, CEO of Hancock Bank in Gulfport, as he was explaining his post-Katrina actions. And, he was boasting about it! A banker bragging about having lost $300,000 wasn’t like any other banker I’ve ever met. I had to learn more and soon wished that we had more like him.

He went on, “We knew that we had to get money back into people’s hands after Katrina. Even a couple of hundred dollars was going to make a big difference for many of these people who had lost everything. We opened our bank the day after the storm. One of our employees had evacuated to near Atlanta. We had him load $30 million into his car at the Atlanta Fed to bring back home.” That is not a typo—Thirty Million Dollars!

“Our tellers were in the building working with flashlights and we set up a line outside with a senior officer of the bank to screen everyone who went in. All of our computers were down and we had no way of knowing what people’s balances were. But, we hoped that everyone was good for at least $200. We just did what we thought was right.”

“We washed money. We ironed it. We did everything we could to get money back into circulation.”

The public noticed what George’s bank did. And, that is why only $300,000 was lost in his heroic effort to get cash into survivor’s hands. He told us, “Within a month we opened 13,000 new accounts. People noticed what we did. This bank was started in 1899 but in the five months after Katrina we grew more in assets than what we had grown in the first 95 years of our existence.”

George rebuilt the bank in Gulfport, spending twice what he spent to build it originally because he rebuilt it to international hurricane specs. He rebuilt the bank without ever getting a building permit, telling the local authorities, “You check it afterward and if there is something you don’t like we’ll change it.” His competitor, an out of state bank across the street still is out of business.

George went on, “We will reopen our branch in Pass Christian in June at a cost of $1.5 million. Bay St. Louis (shown in picture) will also reopen shortly at a similar cost. We’ll never make those investments back, but we are a symbol to people on the coast of recovery.”

I just love it when local people like George Schloegel do what they know is right and are rewarded for it.

God’s Katrina Kitchen

We stopped for lunch at God’s Katrina Kitchen during our tour of the rebuilding of the Mississippi Gulf Coast. The tent kitchen was set up on September 14, 2005 shortly after the catastrophe as a totally volunteer operation without any governmental assistance.

Vicki Weesner, her husband and teenage children moved down here to assist in the clean-up and have stayed. Vicki runs the kitchen along with a host of other volunteers. They live in an RV across the street from the Kitchen.

She told me, “We’ve served over 1 million meals, three times per day, seven days a week since we started. It costs us about $1,000 per day and we’ve done it all with donations.”

If you do the calculation, that is about $0.50/meal served, an incredibly efficient operation. Could you imagine what it would have cost/meal if the U. S. Government was serving those meals?

The USA is an incredibly giving country and meeting people like Vicki and others only reinforces that feeling. Don’t you just love what we can do, when we set our minds to it?

It's Not the Buildings...It's the People!

“It’s not the buildings that make a town. It is the people!” Tish Williams was relating something that one of her 10-year-old twin daughters told her after seeing the devastation of Hurricane Katrina. Tish is head of the Hancock County Chamber of Commerce in Bay St. Louis, MS (population 8,209 in 2000 census, but probably about ½ of that now as it rebuilds).

I was in Bay St. Louis doing another tour of the Mississippi Gulf Coast. It was my fourth time back since Katrina. I continue to be amazed at the resiliency and spirit of those who are rebuilding after seeing virtually everything destroyed. Tish and her daughters are a great example.

Tish was born and raised in Bay St. Louis but went out east for a career. She was working as an executive in a non-profit in Baltimore, MD. She moved home when her twins were 3 because of the better quality of life for her daughters.

Bay St. Louis is a wonderful artist town. Over 200 artists lived in the town prior to Katrina and many of them are making their way back home. Bay St. Louis is rebuilding and from what I saw will be better than ever.

eBay’s Rural Advantage

The growth of rural entrepreneurship is a booming wave that is going to have long term positive ramifications for many small towns in the USA. The ease of doing business online is one of the key drivers of this trend and the eBay business model is turning many would-be entrepreneurs into the real deal. Last year over 750,000 Americans made their living buying and selling things on eBay.

eBay did a study of the location of their greatest number of buyers/sellers and found that the largest concentration was in Lumberton, NJ (population 12,424). They ranked their top 10 locations and seven of those ten were in towns of under 20,000 population. Only Nashville, TN; Henderson, NV and Las Vegas, NV were metros in that top 10.

You can go to the eBay website, enter your zip code and see how your town compares. My hometown of Effingham ranked 5,956 with 6,259 eBay members, more than I would have ever guessed for a town of 12,000.

Entrepreneurial States

The Kauffman Foundation recently published their 2007 State New Economy Index, a benchmarking of economic transformation in the USA. It is an interesting compilation of data and trends from number of patents issued to venture capital funds dispersed.

A study on entrepreneurial activity in the report highlighted the five most entrepreneurial states as a percentage of entrepreneurs within the population. All five were the very rural states of: Vermont (0.46%), Colorado (0.44%), Oklahoma (0.43%), Montana (0.41%) and Idaho (0.41%). They compared to a national average of 0.30%.

The top five states that are online are also all largely rural: Alaska (72%), New Hampshire (70%), Utah (70%), Minnesota (69%) and Wyoming (68%). The USA national average is 59%.

What are you doing to encourage an entrepreneurial spirit in your town?

Chicken Dance Trail

As I was rushing through the Phoenix airport earlier this month, a series of ads for Toyota caught my eye and now I wish that I had slowed down enough to at least have snapped a picture of them. They were touting the numbers of people in various categories, comparing it to the number of Americans employed within Toyota. One of those was 200,000+ Nebraskans who are bird watchers.

I’ve been in several Nebraska towns and have seen a growing interest in bird watching both for local Nebraskans and as a tourist draw for the national and international bird watchers. As I told them at the time, “Bird watching is the fastest growing spectator sport in the USA. Towns that are now focused upon birdies in golf might be more interested in other birds in the future.” It is a trend that we are actively studying.

Two sisters, Nancy Herhahn and Betty Sayers recently started a website dedicated to birds in SW Nebraska. They call it the Chicken Dance Trail, named after the unique mating dance of the Great Prairie Chicken in which males raise their ear-like feathers above their heads and inflate orange sacs on the sides of their throats. The sisters also host another website focused upon a rural Nebraska lifestyle at Nebraska Rural Living.

If you aren’t looking at bird watching as a tourist attraction, you should be.

Grasping the Big Opportunity

I try to keep up with towns that I’ve toured through Google Alerts and recently Aberdeen, SD (population 24,658) has been generating a lot of news because of a proposed beef packing plant. I was in Aberdeen last September and was very impressed with what was going on in the town.

I decided to weigh in on this project and proposed TIF with a letter to the editor of the local newspaper. My letter was rejected for being too wordy for their 250 word limit (not the first time I’ve been accused of being wordy—nor probably the last!) and their op-ed section was already spoken for. The newspaper did, however, interview me for one of the many stories they are doing on the issue.

Voters will decide the issue next Tuesday, April 24th. I hope that they make a wise decision. Here is the letter I wrote.

Dear Editor:

I have spent the last 20 years of my life trying to recruit manufacturing
businesses into towns like Aberdeen all over the USA. In that job I’ve seen towns that have excelled and others that have floundered, which led me to research and write the book BoomtownUSA: The 7 ½ Keys to Big Success in Small Towns. I researched 15,800 towns, identifying 397 special places in 45 states that I felt had outstanding potential. Aberdeen was one of those 397.

In the past three years since publishing my book, I’ve visited and toured over 250 towns in 42 states. One of those trips was to Aberdeen last September. My research findings about Aberdeen were reinforced when I visited and met many passionate people interested in the economic well being for their town and creating opportunities for their children and grandchildren. More than one expressed concern about developing the types of opportunities and jobs that would entice their children and grandchildren back home to Aberdeen.

I have found that communities have perhaps six to ten really big opportunities over the seventy or eighty year life of a normal citizen. Some communities take advantage of those opportunities and others let the opportunity slip through their fingers.

I feel that Aberdeen is facing such an opportunity today. I have followed the debate from afar over the internet and although I don’t have a “dog in this fight” and am a completely independent outside observer, decided to weigh in because of the very unique and momentous chance that I feel you have to create not only new jobs but also new satellite businesses around the proposed new beef packing plant.

The American Farmland Trust has done detailed studies on over 100 rural communities scattered all over the country. What they found is that for every $1.00 paid in property taxes, industries like Northern Beef Packers only get back $0.27 in the way of services from the community. Residents, on the other hand, get back $1.17 for every dollar that they pay in property taxes. That is why towns are so anxious to bring in companies like Northern Beef Packers.

If Aberdeen votes against the proposed new TIF district for this plant, my guess is that Northern Beef Packers will move onto another town and Aberdeen will lose a very unique opportunity to capture additional tax revenue and grow its economy. But more importantly many good paying jobs will move onto that other community. If the new TIF is passed, a portion of the property taxes from the new plant will be invested into the community in the form of infrastructure, a win-win for both Aberdeen and Northern Beef Packers.

Aberdeen is at a crossroads in its history, one of those very unique opportunities that few towns have. Will you as a community vote for growth and progress or will you turn your back on your kids and grandchildren?

Give Us a Break!

Today most of us will file our 2006 tax returns, having had to hire a professional tax preparer who we hope knows their way around the 67,204 pages of the tax code. According to the non-partisan Tax Foundation we will pay those tax preparers $300 billion on top of the $1.5 trillion we will actually pay in taxes. That is an additional 20% tax!

Wouldn’t it be easier and much more productive to embrace the simple flat tax proposed by Steve Forbes and others? Not only would we save virtually all of that $300 billion we pay to tax preparers, but it would also greatly reduce the power of lobbyists who have helped to create most of those 67,204 pages of the tax code.

Archeological Niche

What hobby can you turn into a plus for your community? I’m sure that Milo McCowan didn’t start out thinking that when he bought 270 acres of land adjacent to Kanab, UT (population 3,564), located on the Arizona border in southern Utah.

He discovered 5 acres of ruins that belonged to the prehistoric Virgin Anasazi Indians with a time period from 100 B.C. to 1200 A.D. He is setting up a 20 acre buffer around the site, hoping to attract in amateur archaeologists into his development.

A similar project is located on the 1,200 acre Indian Camp Ranch near Cortez, CO. That project allows property owners to excavate sites on their own land but only under the guidance of an approved archaeologist and with an agreement that they will preserve the dig and submit archaeological reports on their findings. All artifacts found must be donated to an on-site museum upon their death.

I was in Great Falls, MT earlier this year, learning of some communities hoping to capitalize upon numerous dinosaur locations near their towns. Is there a niche here that some towns with these very unique assets could use for economic development purposes?

Sleeper with Potential

“Quaint, historic 1700s town nestled in the Alleghenies, on the gently flowing
Juniata River and near the 118 miles of shoreline of Raystown Lake.
Juniata College is a wonderful liberal arts college in the town and just 40
minutes away is a world class engineering college.”

That is the ad I would write for Huntingdon, PA (population 6,918).

The town sits in a wonderfully scenic valley surrounded by the Alleghenies, with the natural beauty and outdoor activities you would expect of such a location. On the outskirts of town begins the 29,000 acres of the Raystown Lake Army Corps’ project, a lake that stretches for 28 miles south and west of the town. Tim Schrack, a local realtor and one of my three tour guides almost sold me a $90,000 lake view lot, which I considered to be an incredible bargain.

Juniata College is what you want a college to look like….beautiful buildings with plenty of green space and on rolling hills with a wonderful view of the surrounding countryside. The college of 1,400 students is known for its pre-med program and recently started an entrepreneurship program and business incubator.

The business incubator is in a remodeled elementary school with plenty of room for growth. Juniata also offers a Student Seed Capital Fund, having funded 10 different student based companies in the past year. Juniata’s work in this area is going to pay big dividends in the long term.

Penn State is only 38 miles away, offering a great pool of engineering graduates and students. I’ve said before, that I’d prefer to have an engineering-rich manufacturing company 20 to 40 minutes outside of an engineering campus rather than right in the town. Huntingdon would fit that picture perfectly.

The other major asset that holds great potential is the downtown. There is an incredible array of historic buildings, anchored by Mutual Benefit, a local insurance company with 200 white-collar employees. Mutual Benefit recently completed a beautiful four story office building that is built to look like it has been there for a hundred years and fits into the downtown look.

State of Mind

The Great Flood of 1993 was the most devastating ever in the history of the Mississippi River. Approaches to the many bridges that cross the Mighty Mississippi were cut off. You couldn’t go from the IL side to the IA or MO side from the Quad Cities down to St. Louis. Normal business and trade along the river slid precipitously.

Community leaders along the river saw the impact and began meeting on a regular basis to discuss the things that the 35 counties in western IL, northeast MO and southeast IA had in common with each other. Their initial efforts led to the construction of a number of highway projects that have greatly improved infrastructure in the region, including the construction of the Avenue of the Saints, a new interstate from St. Louis, MO to St. Paul, MN that cuts right through the region.

I was there for their Tri-State Development Summit, pulling together 450 people interested in their regional approach. Current efforts include regional initiatives in entrepreneurship, agriculture, housing, tourism, rivers, workforce, media and transportation. Each area offers some unique opportunities to work together for the betterment of the entire region.

Calling themselves the State of Mind, their new mythical state of 35 counties with 18,815 square miles is larger than the states of RI, DE, CT, HA, NJ, MA, NH, VT and MD. And with almost 700,000 people it would exceed the populations of WY, VT, AK AND ND. Yet, this area is represented by five U. S. Congressmen and six U. S. Senators, giving it much more clout than any of the 20 states shown in red.

This idea of regionalism is brilliant and a major wave of the future that I see developing throughout the USA. Most regionalism efforts stop at state borders because of natural rivalries, silo-thinking mentality and the hassles inherent in working in multiple states. However, the people in the State of Mind (I love that name!) have conquered those barriers and are positioning themselves for great things in the future.

What barriers do you need to tear down to be working more on a regional basis, like the State of Mind?

Other States are Watching

This morning’s blog on our governor’s new business tax has already generated a number of phone calls and emails. Here is part of an email from a good friend in OK, where I’ve given almost a dozen talks.

On another issue, I saw your piece this morning on the GRT proposed by Governor Blagojevich. We saw the Quincy story last week and have been pricing ads in business pages from Springfield to Chicago. No one feels good about poaching but if the businesses flee, our view is that we would like some of them to flee here. Our working ad copy is something along the lines of “Our Governor likes business,” subject to change and professionalism of course.

Let him know other states are watching. I’d rather grow Oklahoma businesses than steal Illinois businesses but if they need to move…

Doesn’t our governor realize that companies are just like people? If you tax them to death and make them feel that you are ungrateful for the jobs they are creating, they will vote with their feet.

Can’t be Worker Friendly while being Business Unfriendly

I thought that maybe the bus drivers were staying at the Hampton Inn in Quincy, when I saw Governor Blagojevich’s bus sitting in the front parking lot. He was on a bus tour around the state of IL promoting his Gross Receipts Tax (GRT), which would put a 0.5% to 3.0% tax on virtually every medium sized and larger manufacturer and service business in the state. I firmly believe that such a non-means based tax is the most business unfriendly one possible, especially for commodity type businesses that are working on low margins.

I asked the front desk clerk where the Governor was staying and a guy standing next to me said, “He’s staying here.” I asked him, “Are you his bus driver?” I quickly realized it wasn’t one of my better moments, when he said, “No, I’m Rich Miller of Capitol Fax.” Rich is the best known political commentator in the state. He willing agreed to hand deliver a letter I wanted to write to our governor and later wrote a funny blog about my question.

Here is the letter that I hand wrote to Governor Blagojevich that night and gave to him with one of my books.

Governor Blagojevich:

I am staying at the Hampton Inn in Quincy tonight and saw your bus out front of the hotel. I asked a person in the lobby if you were staying here and learned
that he was Rich Miller of Capitol Fax who confirmed that you were. I
asked him to personally give you this letter as you drove from Quincy to the
Metro East in the morning.

I am in Quincy to do the keynote address at the Tri-State Development Summit in Canton, MO on Wednesday morning. I will be talking about my research and book BoomtownUSA: The 7 ½ Keys to Big Success in Small Towns. I do about 100 talks/year around the USA on the subject of economic development in rural America.

I am a small business owner and have been involved in trying to recruit in
manufacturing and high tech companies into small towns. We started in Effingham and have expanded to over 12 states, having done over 50 projects and helping to facilitate approximately 5,000 jobs, many of those in Illinois. We currently have manufacturing and distribution projects under construction in Effingham and Taylorville that will employ 300 people.

I am extremely concerned with the direction the state is taking with the Gross Receipts Tax. We already encounter great difficulty in trying to recruit in new businesses to Illinois because of our much higher workers compensation, state fees and other costs of doing business in Illinois. This new tax will be devastating in trying to recruit in new businesses and I’m afraid, will cause an exodus of small businesses from the state.

One example, is a company that we have been working with for over six months to move a manufacturing plant to Illinois. They were looking at buying an existing building for $1 million, creating about 50 new jobs, mostly in the areas of welding and assembly. However, they calculated that this new tax would cost them $200,000 per year and are now reevaluating such a move.

Unfortunately, this is one of many such examples that you could find around the state. I urge you to not implement this new tax for the good of the citizens of Illinois. If you have any questions, please feel free to contact me at anytime.

Sincerely,

Jack Schultz

The next day I delivered the keynote address at the Tri-State Development Summit (more on their great group tomorrow) and when I got to a point in my talk where I was talking about the impact of 100 new manufacturing jobs, I told them of my writing the above letter to our governor and asked them why anyone would come to a state with new jobs when it was going to cost them an extra $200,000/year to do so. I was interrupted with thundering applause when I mentioned the letter, something that happens rarely in my talks. Evidently, I had hit a raw nerve with others from the region.

During the summit I met an economic developer from the neighboring state of IA who told me she was being inundated by companies looking to flee IL because of the prospects of this new tax. Just as people can vote with their feet, so can companies which are being over-taxed.

In talking with small business people around the state, they are particularly concerned about the precedence of this new tax. They are concerned about the initial proposal and the longer term ramifications of continuing to raise the tax rate and lower the thresholds for implementation (original proposal was $1 million in sales, current version is $2 million with higher rates). The general feeling is that it will be a lobbyist’s field day and the larger, better represented firms will find loopholes around the new tax. Already the Chicago Board of Trade and Mercantile Exchange are exempted, even though the governor has touted the tax on big business. They don’t get much bigger than the CBT and Merc in Illinois!

Politicians like our governor have to realize that you can’t be worker friendly by being business unfriendly.

Keeping the Hometown Grocery Store

Wimbledon, ND (population 237) impressed me when I toured and talked in the town a couple of years ago. I’ve subscribed to their monthly town newsletter ever since. This month they had an article on three other towns that have saved their hometown grocery stores.

I’d written earlier about how Wimbledon sold stock for $100/share to keep their grocery store in town.

Westhope, ND (population 533) had 50 investors/shoppers who each invested from $600 to $30,000 to provide low-cost financing to a grocer. The investors get $50 off of their grocery bill, hoping to repay the loan over a year.

Binford, ND (population 200) lost their grocery/hardware store to a fire in July, 2006. Local residents and school alumni donated $85,000 which was matched with government grants and loans to rebuild a 7,300 sf grocery store. An operator from a nearby town will open in the space by summer.

Truman, MN (population 1,259) had a 17 year-old high school senior step forward to re-open their closed grocery store. I’d blogged on this January 29, 2007. Community support for buying locally has been growing.

When someone tells you it can’t be done tell them about these small towns where local, committed, passionate people stepped forward and said, “If it is to be, it’s up to me!”

Booming Small Town

“We did a new census in 2005 because of all of the growth taking place. We grew from 8,000 in the 2000 census to almost 14,000.” Claude LeMere, head of economic development for the village of Antioch, IL was telling me about the incredible growth going on in this town just south of the WI border. Several major home builders (Pulte and Neuman) have developed 2,000+ home subdivisions and the big box retailers are starting to move in.

LeMere went on, “We’ve got a 200 acre industrial park on the east side of town about to break ground and 150 acres in new retail coming on. Our new Wal-Mart was one of the quickest stores to reach $100 million in sales. The new Menards opens in April and both Target and Kohls are also coming. The village has set some strict zoning requirements for these big boxes, which are drawing in shoppers regionally.

The downtown is a very picturesque one with tremendous potential coming from all of these new shoppers to Antioch. LeMere went on, “When I first came here we had a 45% vacancy in the downtown, but now its practically full.”

The downtown sports a new band shell, sledding hill, outdoor ice skating rink, walking trails and 10 restaurants. One of the larger stores is a 30,000 sf locally owned home décor store. When I asked its owner Don Marski about the impact of the new Wal-Mart, he replied, “It hasn’t affected us much at all. We’ve seen quite an impact of new customers from areas we haven’t traditionally seen before.”

Antioch has wonderful signs in their downtown area, some of the best that I’ve seen and a kiosk out by the big boxes to show the shops in their downtown area. Both are things that could and should be copied by other towns. They also take ¼ of the sales tax generated to help promote and assist their traditional downtown retailers.

Antioch is a wonderful town that is changing, hopefully for the better without losing its small town charm.

Inventors Congress

Bob Starr thought that there was an opportunity to harness the creative talent of local farmers and tinkerers in the Redwood Falls, MN area, hoping to be able to keep young people at home. He started the Minnesota Inventors Congress (MIC) 50 years ago in 1958 to help bring together inventors, manufacturers, marketers and the general public. This year’s annual event will be held June 8, 9 and 10th in Redwood Falls. It is the oldest annual inventors convention in the world.

In 1976 MIC added a Minnesota Inventors Hall of Fame, honoring over 50 inventors from the state who have changed life for everyone for the better. An exhibit of these inventors is located in the Redwood Area Community Center that I wrote about yesterday.

I asked Deb Hess, Executive Director of MIC, what had been the local impact of bringing thousands of inventors to Redwood Falls each year. She was quick to point out Carl Oja who first exhibited at the Inventors Congress in 1964, “He came here with what he called the Quad Cane, a four pronged cane. He moved here with his family in 1967 and his company Activeaid, Inc. employs 38 people here today.”

I loving hearing of innovative ideas like this as I travel around the USA. It inspires me to learn of different ways that people are trying to reinvent their communities to be able to keep their young people home.

Out of the Silo

The first place that Julie Rath, head of the Redwood Area Development Corporation, took me was to the Redwood Area Community Center. She told me, “We built this facility in 2000 as a partnership of the City of Redwood Falls and the local school district. It cost $9 million to build. The Parks and Recreation Department runs it.”

The facility includes an ice skating rink that doubles as a civic center in the summer, a conference center that can seat up to 500, a field house with a track and up to four basketball/volleyball courts, and a fitness center. Future plans are to add an aquatic center.

I was amazed at how a town of 5,459 in rural Minnesota was able to put such a project together. Plans started in 1995 when a feasibility study was contracted for. From March, 1997 to February, 1999 a group of 100 local citizens started meeting to brainstorm and visited over 30 similar facilities. Taking on a $9 million project was, I’m sure very daunting but here is how they broke it down into smaller bites and brought various groups into the project. I call it “tearing down the silos”, or getting various groups, often with conflicting interests to work together.

The Redwood Area School District funded $4 million; the City of Redwood Falls $2.8 million; State of Minnesota $1 million; Tax Referendum $0.9 million; private donations $0.25 million and Mighty Ducks grant $0.25 million.

What are you doing to tear down the silos in your town? What project could you do, if those silos fell?

Final Four Scoreboard

When you watch the Final Four tip-off tonight, look behind the ref with the ball at the name of the scoreboard being used at center court in the Georgia Dome. It says Daktronics on it and the company’s newest manufacturing plant is in Redwood Falls, MN (population 5,459). I was there last week, touring the town and doing a talk.

Daktronics started up production in Redwood Falls earlier this year with 100 employees. They took over the plant of a power supply maker which had once won the Malcolm Baldridge award but which closed up shop last year. Daktronics installed millions in new equipment and shipped their first product at the end of February.

Another company, RVI (Rural Values and Integrity), started up earlier this year as a spin-off from the original company. They do power supply repairs for many of the high tech companies, starting with 43 employees and hoping to grow.

Daktronics is one of my favorite companies. Dr. Kurtenbach and Dr. Duane Sander were professors of electrical engineering at South Dakota State University who were frustrated at the lack of local job opportunities in Brookings, SD. The two professors started out trying to manufacture medical devices but weren’t able to afford the insurance nor to outlast the lead time-to-market for such products. They switched to scoreboards when the SDSU wrestling coach complained to them of the need for a wrestling scoreboard.

Dr. Kurtenbach told me last year, “When people become rich, they tend to give things away. We in South Dakota must be some of the richest in the country, because we keep giving away the great minds of our young people. The saddest day of the year for me is graduation day at South Dakota State University, when I see $2 million in lifetime payrolls walking across the stage to get their diplomas, and then moving out of state.”

Daktronics is striving to slow that out flow. Today, 2,900 Daktronics’ employees in SD and MN ship products all over the world, more than 100 countries at last count. Their scoreboards are in most professional stadiums, sales exceed $300 million per year and they are still located in Brookings, SD.