From the Ground Up
by Phil Hardwick
Published: March 30,1998
Sometimes it helps to stop and think about the odds when attempting to land that big economic development project.
Last week, I had an opportunity to hear a presentation by Roy Williams, a partner in The Economic Development Group Inc., Phoenix, Ariz., and an experienced economic development strategist. He put forth some interesting facts to show how competitive the business of economic development has become and how hard communities must work to be successful.
He pointed out that this year there will be approximately 2,500 major projects that create primary jobs. That sounds like a lot of opportunity until one considers that there are some 25,000 economic development organizations in the United States.
Therefore, the overall odds of success for each organization are one in 10. However, the odds change depending on location. He said that 75% of those projects will locate in urban areas. Now the odds change to three in 40 for an urban area and one in 40 for a rural area. Stated another way, in an urban area a new primary jobs facility will be located in the vicinity every 13 years. In a rural area, it will occur every 40 years.
He went on to say that 90% of the projects will employ less than 100 employees.
Thus the odds of a major employer (more than 100 employees) locating in a particular urban area are three in 300, or every 133 years, and one in 400, or every 400 years, in a rural area.
A community can increase its odds by doing several things. It can do research and planning on its workforce, market area and strategic advantages so that it can target companies and expanding industries likely to match the community’s characteristics.
For example, a community in south Mississippi is going to have an easier time recruiting a lumber mill than a snowmobile manufacturer. It has nearby forests; it does not have nearby snowmobile buyers.
It can also construct appropriate speculative buildings on good sites. It is very important to an expanding company to be able to get up and running as quickly as possible. An available building shortens the start-up time.
Next, it can have financing programs in place available to the company. Relocating companies do not place much stock in a community that tells them that it will change laws to make the deal work. The laws should have already been changed and the financing incentives already in place.
The community must also market itself. It cannot expect the world to seek it out. A community that does not market itself and prospect for new companies is going to get just what it asks for — nothing. Its odds become astronomical.
Finally, and this is really the first thing, community attitude must be business-friendly and welcome new industry. As someone who did site selection work for several years, I can personally testify that a company will not go into a community that does not want it to be there. Successful communities realize that they must overcome local turf battles, racial problems and inept government if they are to compete in today’s environment.
How important is community attitude? According to Williams, community attitude is not only the first thing, it is the most important factor that a community can do to overcome the odds.
Given the above odds, one would think that Mississippi doesn’t have too much of a chance. After all, it is primarily a rural state with few urban areas. But Mississippi is doing something right. The March 1998 issue of Site Selection magazine ranked Mississippi fourth in the nation in new jobs per million population during the 1995-1997 period. During that time there were 11,904 new jobs created per million residents.
Mississippi is beating the odds.
Phil Hardwick’s column on Mississippi business appears every other week in the Mississippi Business Journal. His e-mail address is email@example.com.
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