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Mississippi can capitalize on rural assets

As I See It

Mississippi is excited about Nissan. The Japanese automaker’s plant, its recently announced expansion into a phase two, and the various suppliers setting up shop around Canton and throughout the state have been welcomed by communities battered by manufacturing job losses and an overall economic slowdown.

As the state becomes more urbanized, however, most Mississippians, and most of the world for that matter, still think of our state as rural. And wherever we might live, many of us relate to a rural culture with its own set of values, expectations and tendencies.

It’s a culture that Big Business finds attractive. What is the lure of rural America for businesses historically situated in metropolitan areas?

A May 2002 article in Business Xpansion Journal covered this development with a story by John Rockhold, “Coming To (Rural) America.” His piece examines the pros and cons of siting in rural America. For my purposes, I have customized the article to address the Mississippi business environment.

Advantages of siting a business in rural America include:

• Lower land and labor cost

• Strong community support

• In many cases, more centrally located to customers

• Better quality of life for employees

Disadvantages of a rural location include:

• Inadequate industrial infrastructure

• Fewer family entertainment options

• Inadequate skill level of workforce

• Access to venture capital

Coming to the Magnolia State

Communities in Mississippi are hungry for new jobs and are willing to go all-out to attract them. We have certainly proved that in the financial enticements given to Nissan to locate in Madison County. The investment, however, appears to be prudent. Experts have concluded that the State of Mississippi’s Nissan investment will be repaid through increased tax revenue by the end of the decade or thereabouts.

The primary concern of all businesses is making a profit. Nissan conducted an extensive site selection project and settled on Central Mississippi. Obviously, they found what they were looking for.

In the Business Xpansion Journal article, Rockhold writes, “Indeed, for businesses in search of inexpensive land, room to expand, solid work ethic from an existing labor pool and individual attention from communities, rural areas could be the perfect fit.”

Skilled workers here, but…

Will Nissan and other newcomers find an adequately skilled workforce in Central Mississippi to draw from?

Yes, they will.

I suspect that they will do so at the expense of existing business, however. Since Nissan is likely to pay more in wages than existing manufacturers, they will siphon off many of the best workers and those existing companies will be faced with the daunting task of replacing their top workers.

Such is the cost of progress, I suppose.

Finding the money

The subject of access to venture capital is problematic for rural America, including Mississippi. It seems that most venture capitalists are located on the coasts. Since there is a strong tendency to invest close to home, rural areas are at a disadvantage when it comes to raising venture capital, particularly for early-stage companies.

Jon Leafstedt, chief operating officer of Phytodyne, says, “While yes, there is more competition on the coasts for money, there is also more money. And often it likes to invest closer to home.”

‘Clustering’ around the state

Matching the skills of the labor pool to prospective employers is critical for successful growth. Mississippi is making some headway in targeting prospective industries that match our workforce capabilities.

The “cluster” concept indicates that Mississippi is ideally situated for high-tech development.

The Jackson area and the I-59 corridor from Meridian to the Gulf Coast seem to be ripe pickin’ for information technology companies. Northeast Mississippi is a huge success story in targeting an industry, furniture in this instance, and going after it with gusto.

What it’s going to take

Mississippi needs improvement in several areas to enjoy substantial, broad-based economic development.

Our labor force is under-skilled. This is not surprising considering that for decades we have been marketing ourselves as a place offering cheap, abundant, unskilled labor. Now that the global economy has opened doors to other countries, Mexico, Latin America and the Far East all offer cheaper, equally abundant, unskilled labor with which we can no longer compete. We must develop a niche that doesn’t depend on cheap labor or our future is very cloudy.

Continued, increased investment toward improving Mississippi’s workforce skill level is essential.

Smaller communities committing to investment in industrial parks with infrastructure like roads, water, and sewer available is another key ingredient in the race to land new, high-paying jobs.

We’ve got to undertake a substantial transition in order to capitalize on the good things rural America has to offer. The time is now and the place is here.

Thought for the Moment —

If opportunity doesn’t knock, build a door.

— comedian Milton Berle (1908-2002)

Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. His e-mail address is cpajones@msbusiness.com.

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