Nanoo Nanoo and Now Let’s Get Small

I might be an old dog, but I honestly try to learn new tricks or at least something new every day.  And the more I learn, the more I realize that I really don’t know much of anything. Now some people would say that confirmation that you are dumb is actually pretty smart. I am not going to give myself such credit.

I do know this much — the advances we are making in science and technology can easily put me in a state of shock and awe.

Such has been the case this past week as I have been working on a story for Site Selection magazine on nanotechnology, which I have learned is here to stay and potentially a game changer for so many industries.

No doubt you have heard the term “nanotechnology” before, but let’s go over it again so that you, too, can speak with authority on a subject that you know absolutely nothing about. Now if you can do this with a straight face, you, too can become a consultant.

Hold on for the Ride

First thing you should know is that we’re talking small. I mean really, really small. Nanotechnology involves the creation and manipulation of particles at the nanoscale, that is, particles that range in size from 1 to 1,000 nanometers (nm), where 1 nm equals
1 billionth of a meter. If you are like me, trying to understand that fact alone is challenging.

So now we are at the point where we can actually make new materials at the nanoscale – nanoparticles and nanomaterials. It usually entails, at least initially, a smattering of PhDs in the room, most of whom should have foreign-sounding names.

New techniques in nanomaterials growth and nanoelectronics currently appear in the microprocessor powering your computer. Tiny transistors with insulators just one nanometer thick and lengths of just about 20 nanometers are currently in production. Leveraging these tiny size scales allows incredibly large numbers of devices to be integrated on a chip, and permits them to operate faster than their predecessors.

Companies have realized the potential of nanotechnology and are researching, designing and building new products all the time. So the very small translates to very big business. The National Science Foundation expects nanotechnology to be a $1 trillion industry
by the year 2015, with the potential to revolutionize fields ranging from health care to manufacturing. General Electric is developing nanoparticles to treat cancer and heart disease.

“Nanotechnology is where it’s at,” says Darrell Brookstein, managing director of Nanotechnology.com, an online news and information source for nanoscience and nanotechnology. Brookstein also runs The Nanotechnology Company in San Diego, Calif., which helps investors and businesses involved in nanotech. “All of the industries that everyone is familiar with: alternative energy, solar, green technology, drug manufacturers, computer technology, advanced materials, specialty chemicals — all of these things are advanced from now on by nanotechnology.”

Nanoparticles are currently used in hundreds of products on supermarket shelves. This new technology is prevalent in nutritional additives, stronger flavorings and colorings, and antibacterial agents for food packaging and kitchenware. And that spooks some
people.

Itsy Bitsy and Some Say Risky

Earlier this month, “leading experts” – I don’t know who they are leading but I trust they must have some sort of following – gathered at the National Press Club in Washington, DC, for a policy forum titled “Nanotechnology: the Huge Challenge of Regulating Tiny Technologies.”

I think it would be safe to say that these experts were probably of the opinion that nanoparticles could pose a danger, and thus a guiding hand from government is needed. (It is my belief, for what it’s worth, that nanotechnology, which entails actually making
something, represents a far lesser risk than Wall Street speculators, who make nothing but came within an eyelash of taking this country down. But I digress.)

Scott E. Rickert, the CEO of Nanofilm, Ltd, in Valley View, Ohio, says we are currently living in a period of fear and paranoia, sparked by the recession. He said the polymer industry faced corresponding challenges on to environmental safety in the 1970s, but is now widely accepted.

“We are going through right now a anti-technology, anti-materials backlash in the United States and Europe as well,” Rickert said. “People are asking if nanomaterials are safe and this is to be expected in a recession. But once people are confident that the recession is finally over, they will start to appreciate the development of nanomaterials.”

Connecting Business and Science

We are already past the tipping point, Rickert said. Nanotechnology is here to stay, as it has entered into a second foundational phase that will see a ten-fold increase in the value of nano-enabled products.

As of March 30, 2011, the NanoBusiness Alliance got a new identity and became the NanoBusiness Commercialization Association, signaling the industry’s commitment to a more direct connection between science and business.

Now instead of only labs and researchers, manufacturers are also looking for answers. And virtually every trade show now features nano products.

Rickert said his company, which develops and manufactures nanotech films andcoatings, serves as a “technology scout” with a business model that typically partners with larger companies that do not have research capabilities in nanotechnology but yet still want nano-enabled products.

“Companies like ours fill a niche. There are companies that are formulated like us who will come in and work with universities and learn what they are doing and then translate it into a product. That seems to work well with our partner model — we find the value that can then be sold through a bigger company. So we don’t have or want a huge sales force. On the other hand, they don’t have what we have.”

Nanofilm has patented formulations and commercialized thin film coatings for use in optics, transportation, energy, housewares and other industries, but it has never been able to break into the bio-medical field until recently. It happened with the announced a partnership with SDG, Inc., a spinoff from the Cleveland Clinic Foundation.

SDG has commercialized nanomaterials to be carriers for drug molecules for therapeutic treatments as well as diagnostic imaging agents, nutraceutical ingredients, and consumer products, including fragrances, conditioners, and sunscreens.

Rickert said future nano products may be born by the simply having the research staffs of both companies work closely together.

“We at Nanofilm didn’t have the medical research staff, as we are more of the polymer materials engineering and science. But these guys at SDG do and that’s all they do. And so when we put our research people with theirs, suddenly, our people are thinking about
medical issues, and their people are thinking along the lines of polymer people, and we’re developing some pretty innovative stuff.”

Innovative stuff. And that’s what nanotechnology is really all about. Converging physics, chemistry, electronics, biology, chemistry and materials science to come up with ways on how to build a better mousetrap  …  or ray gun.

Some day, we might see automobiles made of super-strong, ultra-light material that is stronger than steel and lighter than plastic. Some day, nano-particles released into the bloodstream will search and destroy cancer cells throughout the body, to which Gomer Pyle would say “Shazam!”

Yep, like my dear old pappy always used to say – it’s hard to keep a good man down when he is working with individually controlled trapped atoms.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm in Red Oak, Texas — www.barberadvisors.com

 

This is Not Your Father’s Railroad

Freight can be a good barometer of economic activity. Simply stated, the movement of goods indicates commerce.

I just finished writing a story for Site Selection magazine, soon to be published, about GE Transportation choosing Fort Worth, Texas,  as the site for a new $96 million plant to build locomotives. On May 12, the same day that GE announced the future plant in Fort Worth, the company also said it would hire an additional 250 workers at its  Erie, Pa., plant, which has been the only place where GE has built locomotives for more than 100
years.

Leave it to say, GE would not be building the new plant in Fort Worth and expanding its workforce in Erie were it not for increased demand for locomotives by an industry once considered almost comatose. But it is pretty clear that our nation’s railroads have made an impressive comeback.

An Admitted Pet Peeve

Please bear with me on this aside, but one of my pet peeves is the pompousness frequently exhibited by “experts” in business and academia, who have a penchant for trying to complicate things far more than they need to be. They do this by speaking in opaque terms so as to impress others that they are endowed with some special knowledge.

But more often than not, you can cut through the clutter and the jargon, and recognize that these puffed-up experts are talking about something that is not all that complicated. Now it may have taken research, study and grunt work on their part to arrive at a conclusion, to which they deserve credit, but please, speak to us in plain English.  It really is a wonderful language.

And now I step off my soapbox to return to my original point — as the economy improves the demand for rail and truck shipments will continue to rise. To which you will rightly say, “No kidding Sherlock.”

You Want Numbers, I Got Numbers

But I will provide you some numbers to make my point and so that you, too, can bore friends and family. So here’s some facts and figures for you to ruminate on.

U.S. rail volumes excluding grain and coal shipments rose 7.9 percent to 4.6 million carloads in the quarter ended March 31, according to data compiled by the Association of American Railroads (AAR) in Washington. It was the second-highest increase in a first quarter, after last year’s 9.3 percent advance.

Locomotive demand is climbing, too. GE Transportation’s first-quarter backlog was about $4.1 billion, 40 percent more than a year earlier, GE Chief Financial Officer Keith Sherin said in an April 21 conference call. First-quarter orders for rail cars, which GE doesn’t make, rose to the highest since 1997.

Investment by railroad operators for product and service improvement is far ahead of other transportation industries. Very few U.S. industries can match the railroad operators with respect to high capital investment rates. Fiscal 2010 witnessed a record breaking $10.7 billion capital investment, and AAR has reported that the freight railroads will spend a record high of $12 billion in 2011 for manpower recruitment, installation of new rail tracks and other capital projects. The railroad industry is expected to hire 10,000 new employees in 2011.

On the trucking side, where a majority of America’s freight is moved, the American Trucking Association, predicts that freight tonnage will grown 24 percent by 2022 with revenue ticking up even more – 66 percent.

“The trucking industry continues to dominate the freight transportation industry in terms of both tonnage and revenue, comprising 67 percent of tonnage and 81 percent of revenue in 2010,” ATA Chief Economist Bob Costello wrote in his forecast.

Some Reasons Why

Whether it is by rail or truck, there are reasons for the pickup in freight movement. They include:

1) Increasing worldwide demand for coal in power generation means that U.S. coal exports to Europe and other Asian countries are likely to remain buoyant in the near future. This is especially important for rail as coal makes up approximately 37 percent of total U.S. railway carloads in 2010.

2) Industrial production in the U.S. is expected to grow more than 3 percent in 2011, particularly with the rebound of the automotive industry. Intermodal traffic, mainly consisting of containers and trailers, is growing at a whopping rate. In the first quarter of 2011, intermodal shipment volume upped 8 percent year over year.

3) The U.S. government has taken several measures to boost American manufacturing and raise its exports. Indeed, President Obama has announced a goal of doubling U.S. exports over five years. His reasoning, which I believe is valid, is that that “Ninety-five percent of the world’s customers and fastest-growing markets are beyond our borders.”

New export orders for US manufacturers in March rose to their highest level in more than 20 years, according to the Institute of Supply Management.

From the customers’ point of view, rail transport is cheaper and more fuel-efficient than truck and ship transport. As a result, railroads are gaining market share from other means of transport. Several truck operators went bankrupt during the peak recessionary period that helped railroads to become default freight  transporters for mid-to-long distances. 

Some industry observers predict rail activity could double by the midpoint of the century, when our country’s population is expected to grow by more than 100 million people.  North American rail-freight rates are predicted to continue to be the lowest or one of the lowest in the world, and the industry is expected to finance most or all of its capital requirements without public support.

Holding Their Own Future

Railroads probably hold their own future by their choice of future investment, Francis P. Mulvey, a commissioner of the Surface Transportation Board in Washington, told the Wall Street Journal.

“Whether the railroads can increase their share of truck-competitive traffic will depend on railroad pricing and service policies, and on the railroads’ willingness to invest in capacity. Capacity investment, in turn, will depend on perceived profitability of those investments. If new rail capacity is dedicated to higher-speed passenger operations or commuter-rail services, the railroads might not be able to handle much more freight business.”

The fact of the matter is that shipping by rail is for the most part less convenient than by truck. But in an era of scarcity and pressure on costs, there has been a growing focus on efficiency. The best thing railroads have going for them is their inherent efficiency, be it in land usage or energy consumption or cost of moving a ton mile of whatever needs to be moved. That plays into railroads’ strength.

In the past, railroads have not been known to put a lot of emphasis on customer service. For years, the attitude of railroad industry was one of arrogance — “You get what you get, take it or leave it.” As a result, there was little emphasis on improved transit times and providing consistent reliability.  Some shippers, who felt they were captive to a single railroad, even have feared that complaining would somehow put them at risk of having to pay higher rates.

Today, the once dying industry is far more responsive to customer needs and that’s good for everyone. Railroading remains a complicated, network business. And while it lacks the flexibility to be as responsive to sudden changes as trucking, it would appear that we are building an innovative rail network than can compete globally.

And that, my friends, is a good thing. This is not your father’s railroad. This is something much, much better.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm in Red Oak, Texas — www.barberadvisors.com

Learn to Drive the Tractor First and Then the Lamborghini

Most of us have been wincing at the gas pumps lately. After filling up your tank, you probably have a better understanding how the cost of fuel eats into your household budget and erodes your ability to buy other things.

 And for the unemployed – hey, don’t forget our nation’s unemployment rate stands at 9 percent — high gas prices can actually inhibit their ability to move about and seek work.

 But there might be another equally important story that is looming on the world stage, one you don’t hear much about. I’m talking about food inflation and ultimately food shortages.

 Compared to other parts in the world, food inflation has not been so bad in theUnited States, where food prices are expected to climb about 3 percent this year.  But in the developing world — home to more than three quarters of the globe’s 6.9 billion people – soaring food prices have been a huge concern.

 The U.N. Food and Agriculture Office’s index of global prices for meat, cereals and dairy foods has surged 37 percent in the first three months of 2011. Just this past weekend, U.S. Secretary of State Hillary Rodham Clinton addressed a meeting of the United Nations Food and Agriculture Organization (FAO), warning that global food shortages and spiraling prices could lead to widespread social unrest and political and economic destabilization.

 Food prices were up 20.7 percent in April in Egypt, compared to the same month last year. Surging food prices were widely seen as a key trigger for the mass uprisings that ousted Mubarak in February.

 The Old Blueberry Factor

 In China, the second largest economy in the world, prosperity and a fast-growing middle class have cultivated more sophisticated and exotic tastes. Luxuries such as blueberries, avocado, and asparagus, recently unattainable to all but the wealthiest, are now widely available in China’s big cities. And it is the big cities, particularly the coastal cities, where farm workers have flocked by the millions to seek factory and service jobs.

 This rising affluence and dwindling rural labor poor has resulted in a supply pinch that sent food prices up 11.7 percent in March in China from the year before, adding to months of steep increases.

 A host of other factors are also blamed for food prices hikes worldwide, including rising oil prices and shrinking land for cultivation because of pollution and encroachment by industry.

 Now what does this mean to me?

 So why does this matter to you in Philadelphia or to you in Atlanta, or to me in Red Oak, Texas? What it means to you is always a good question. And it just wouldn’t be right to leave you hanging.

 So let me answer that question by quoting veteran investor Jim Rogers, who made some very interesting comments last week to CNBC.  Mr. Rogers predicts that in the long term rising commodity prices are about to make a group of people in the United States very wealthy.

 “If I were you I would think about becoming a farmer. You buy land and learn how to farm,” said Rogers. “In my view it’s going to be a spectacular way to make money … This is where the great fortunes are going to be made in the future.”

 Rogers said the world may experience gigantic food crises in the next few years, because we are facing shortages of everything, including farmers.

  “The average age of the farmers in state “X” is 58. In 10 years, they’re going to be 68 if they’re still there. This is happening all over the world. In Japan, there are vast fields that cannot be farmed. The Japanese government has just started to go, “What are we going to do?”  They started to even bring in Chinese farmers as an experiment to farm the fields,” said Rogers.

“So farmland worldwide is going to go up in price, certainly inAmerica. And agriculture is going to be one of the most exciting professions in the next 10, 20 years. It’s going to be the farmers driving the Lamborghinis going forward, not the stock brokers.”

 Lamborghinis in Red Oak. Now that will be a sight to see. Maybe I should learn how to drive a tractor. And here’s why:

 The FAO projects of an increase of 2.3 billion in the world population by 2050 – to more than 9 billion. Nearly all of that growth is expected to come from developing countries. This population growth will require a 70 percent increase in global food production, with needs in developing nations nearly doubling.

Given the dwindling availability of arable land, meeting this exploding food demand will require new farming techniques, new crop technologies, new types of seeds and fertilizers, a whole new approach to agriculture. The FAO estimates private investment of $209 billion a year will be needed just to keep the percentage of the world population that goes hungry at current levels.

Get Your Story Straight, Dean

 In my last two blogs, based on an interview by Bruce Katz with the Brookings Institution and a February study by that same group, I have subscribed to the belief that it is the metropolitan areas of this country that hold economic sway over this nation. Without going into the numbers yet again, which absolutely substantiate this, I still believe that is true.

 Some readers couldn’t wrap their heads around the fact this is not an either/or proposition and that I am not talking about quality of life. You see, I am quite optimistic that economic growth can and will take place outside the metro areas, especially now with rising commodity food prices. It’s just that metro areas have more varied investment resources and opportunities. In short, it’s where most of the marbles are and will be.

 This whole notion of metro areas has confused some of my friendly readers, and for that I should take much of the blame. I am not just talking about big cities (there are 366 metro areas in the U.S.) These metro areas encompass small towns, suburbs and rural areas.

 Red Oak, population 6,200, is a perfect example. I could take you to nearby working farm and point to Dallas skyscrapers 25 miles away. Whether I like or not (I don’t know why I wouldn’t), I am part of that Dallas-Fort Worth metro engine. And yet if I don’t watch where I step, I might have cowpie on my boots. (You shouldn’t have worn those penny loafers out here.)

But again, economic growth can and should take place both in and outside metro areas. So in essence, you can get thee to the city and you can get thee to the farm (which may or may not be within a metro area) and seek thy fortune.

 There are ways to invest in agricultural commodities markets, but I don’t even play a financial adviser on TV, so we are not going to go there. Leave it to say, there are people who are eager to take your money and tell you how to invest in agricultural commodities markets. Just be careful.

 I still prefer the idea of learning to drive a tractor … and then maybe later that Lamborghini.

 Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm in Red Oak, Texas — www.barberadvisors.com

Rediscovering Our Mojo: A Conversation with Bruce Katz, Part 2

Revolutionary War patriot Paul Revere was known as a talented silversmith who made, among other things, flatware – knives, spoons and forks.

Today, flatware is no longer made in the United States. The last factory producing flatware quietly closed about a year ago in Sherrill, N.Y, in the foothills of the Adirondacks. Sherrill Manufacturing CEO Greg Owens said his company had “run into a brick wall as far as orders and competition from China.”

And of the 80 people who lost their jobs, he said, “They’ve been great employees and they’re very hard working and they’re very dedicated. Quite honestly, none of them deserve any of this but it’s just a sign of the times.”

A sign of the times, indeed.

No Longer Made in America

There are many things no longer made in America. Televisions, cell phones, laptop computers, Levi jeans, stainless steel rebar, vending machines, incandescent light bulbs are not made in America. Neither are Rawlings baseballs, Mattel toys and Radio Flyer’s Red Wagons.

But manufacturing is not dead in America. There is even some talk of a resurgence – a “re-shoring” trend, although that has yet to materialize in a big way. Still, economic activity in the manufacturing sector expanded in April for the 21st consecutive month. Representing 11 percent of the U.S. economy, manufacturing industries are likely to remain at the forefront of the recovery.

But manufacturing is not the dominant force that it used to be. Millions of manufacturing jobs have been lost in the past decade, some due to offshore competition, some due production efficiencies.

Some fear, and I think with good reason, that with the loss of manufacturing  jobs can come a loss knowledge and innovation.

A Conspiracy of Elites

“I think our policymakers have talked down manufacturing for three decades,” said Bruce Katz, with the Brookings Institution. “It’s been a conspiracy of the elites who talk about having a knowledge economy, where we are all going to have four-year bachelors degrees and be employed in the services sectors and the country will move forward. I think that is absolute nonsense.”

In short, we will innovate less in the U.S. if we do not produce more, according to Katz. And on that particular point, your humble blog writer will take the prerogative of saying: “Damn straight.”

“We must make things again in the United States. It is time to rediscover our innovation mojo in our vocational and tech schools, on our factory floors, in the tradable goods and services sectors that drive wealth creation and sustainable growth,” said Katz.

Moreover, the U.S. must be the world’s “innovation nation,” a hothouse not just of ideas and invention but a platform for advanced production.

The iPad and the iPhone, developed by Apple in the U.S., are made in Asia. The fear is that engineers and factories in Asia will come up with the next innovations precisely because they are making these technological devices now.

“To stimulate innovation, we need advanced manufacturing right here at home, so that the U.S. does not outsource the production of every idea we generate,” said Katz. “There is a long tradition of Americans being tinkerers, working with their hands and making stuff. I think we got to get back to that tradition.”

If you believe that innovation and manufacturing feed on each other as I do, and as Bruce Katz does, then here is a question to ponder. Can we as a nation produce future thinkers/tinkerers to the likes of Henry Ford, Thomas Edison or Steve Jobs if our children are no longer thinking in terms of making things?

A Need to Get Real Smart, Real Fast

And while I am an optimist that the U.S. can remain a hothouse for ideas, invention and production, here is a sobering fact: We place 45^th out of 93 countries in the share that science and engineering degrees make up of bachelor’s degrees.

“In the decades ahead, upgrading the education and skills of our diverse workforce is no longer just a matter of social equity, it is fundamentally and issue of national competitiveness and national security,” Katz said.

To successfully compete, the U.S. needs to “get real smart, real fast.” Because the U.S. is diversifying radically, so too is its workforce. Soon 40 percent of the nation’s workforce will be African-American and Hispanic.

But educational attainment among minorities lags. Only 18 percent of African Americans get bachelor’s degrees. Bachelor’s degree attainment for Hispanics is even lower at 13 percent.

Still, the U.S. is “demographically blessed” to compete, said Katz.

“I think we have the perfect mix of demographics to compete globally in this century. Unlike Europe or even China, we are constantly replenishing our labor supply from both natural births and from immigration. Our challenge is education.”

The Power of Metro Engines

The overwhelming majority of minorities live in metropolitan areas, and it is Katz’s belief, another one which I share, that the next economy will be largely metropolitan in form and in function.

“Our 100 largest metropolitan areas constitute only 12 percent of our land mass, but house two-thirds of our population and generate three-quarters of our gross domestic product. These metros from a new economic geography, seamlessly enveloping cities and suburbs, exurbs and rural towns. And they pack a powerful punch,” said Katz.

So powerful in fact that in 47 out of 50 states, metropolitan areas generate the majority of state economic output, according to a Brookings study released in February. These metropolitan areas include even those states often considered to be “rural,” such as Idaho, Iowa, North and South Dakota and West Virginia.

In Arizona, California, Maryland and New York, metro areas generate at least 95 percent of state GDP. Only in Montana,Vermont, and Wyoming does a majority of economic activity occur outside metro areas, according to the Brookings report.

“The bottom line is that there is no national economy. Rather, the U.S. economy is a network of powerful metropolitan economies and metropolitan economies are powerful precisely because they bring together networks of large firms, small entrepreneurs, skilled labor, advanced research, colleges and schools, business associations, and, yes, government.”

If the U.S. is to become that innovation nation, driven by “metro engines,” it will almost by necessity be driven by exports, technological, high-value products that the world will want.

Matching Words and Action

And President Obama announced a goal of doubling U.S. exports over five years, he reasoned correctly that “Ninety-five percent of the world’s customers and fastest-growing markets are beyond our borders.” New export orders for US manufacturers in March rose to their highest level in more than 20 years, according to the Institute of Supply Management. But surprise, surprise, words and actions don’t always line up, especially if the words emanate from Washington.

Last month, Obama appointees at the National Labor Relations Board sought to punish Boeing Co., which created $30 billion in exports in 2009, for expanding 787 Dreamliner production in non-union South Carolina, to which I must say, “what are these fellows smoking?”

Still, I remain an optimist and I’m not smoking anything. There was a time when we lost our way, when we seemed to value financial chicanery over real innovation and production. I think those times are coming to an end.  My gut tells me that we are about to get our innovation mojo working.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm in Red Oak, Texas — www.barberadvisors.com

Get Thee to the City: A Conversation with Bruce Katz

I will be the first to acknowledge that I do romanticize small town America.

There will always be a soft spot in my heart for the fictional town of Mayberry, NC. (Who couldn’t like Andy, Aunt Bee, Barney, Otis, Floyd, Gomer and Goober?)

I pick up my mail in Red Oak, Texas, population 6,200, where a few weeks ago the post office was echoing the sounds of highly disturbed chickens that were about to be shipped off somewhere. And I like driving back roads near Red Oak (Never mind that I am 25 minutes from downtown Dallas) with my black lab Corbin in the back of the pickup truck. I mean, ain’t that America?

Well, yes it is, and hopefully there will always be a special charm to small town America and rural places. And while people and businesses can and do prosper in the hinterlands, we have to realize that it is our big cities that hold our nation’s economic clout and future.

“Go West, young man” was a saying about America’s Manifest Destiny popularized by 19^th century American author Horace Greeley. For the 21^st century, Bruce Katz, a vice president at the Brookings Institution, would advise that young men and women seek their future in our cities.

According to Katz, it is in our our larger metro areas where we “are able to concentrate all the assets that really matter to grow a modern economy, whether it is innovation or infrastructure or human capital.”

Our Prejudice Against Big Cities

Now many of us have a prejudice against big cities. They are congested with traffic and crowded with people, many of whom we perceive as being quite different from us. There is crime and homelessness. No wonder that Jonah in the Old Testament wanted to avoid the “great city” of Nineveh, even after getting his marching orders from high above.

Still, we cannot avoid the facts. While we may not act like one, may not think like one, the United States has become a metropolitan nation, said Katz, with 83 percent of our population living in metro areas, accounting for 90 percent of the nation’s gross domestic product.

 “We may be nostalgic about small town America, but it is metropolitan America that drives our national economy and determines national prosperity, said Katz, who regularly advises federal, state, regional and municipal leaders on policy reforms that advance the competitiveness of metropolitan areas

Step one in formulating an economic policy for the nation, says Katz, is to simply recognize that the metropolitan areas are the true economic engine drivers.

A Very Magical Mix

“If the US is going to prosper and compete in this century, we finally need to understand that we are a powerful economy, because we are a network of metropolitan economies. And these metros are powerful because they really do connect up assets,  this very magical mix of advanced research institutions, global companies, small and medium size enterprises, and then all the institutions, whether they are community colleges or workforce providers, all of which help and extend the competitiveness of these places.”

Step two is to recognize that cities are very different from each other and then plan accordingly.

“The most important thing we have to do as a country is to allow our big metros to recognize their special strengths and special assets and build from them. Because we have had this economy that is so intensely consumption oriented, as opposed to production and export oriented, it allowed metros to think that they were basically similar to each other, because a Wal-Mart is a Wal-Mart is a Wal-Mart, whether it is in suburban Phoenix or suburban Pittsburgh,” said Katz.

“But Phoenix is a very different exporting economy than Pittsburgh. The challenge for the US in general is to recognize that we are a metro nation but then to move in such a way that every metro is really enabled to build upon their distinctive strengths.”

Enable. I like that word. It means that we not only allow something to happen, but we also encourage it to happen, which often means sinking resources into it. We plant the seed to enable it to grow.

The Big Rub is Politics

And therein lies the big rub. Just about everyone and their brother wants to be enabled. We live in a democracy where fair play is part of our national consciousness. It is our body politic and as a result, resources are typically allocated because of the political market and not the real economic market. Remember Alaska’s “Bridge to Nowhere” in the 2008 presidential campaign? Thankfully it was never built.

 “When the president and Congress allocated money for high-speed rail funding, they decided to give a little to Wisconsin. Let’s give a little to Ohio. Let’s give a little to Florida. And then let’s give a little more to the places that could really use it like California and on the East Coast,” Katz said.

So in essence, our politics water down and get in the way of our chances for success.

In China, with no pesky democratic institutions to thwart top-down decision making, the decisions on making structural investments in the cities are made with the cold and steely eye of a bureaucratic regime that is thinking “what is it going to take to make this place grow.”

And it goes beyond that, Katz said. China is now designing, building and operating the infrastructure to keep its cities, with different strengths and focal points, connected to each other.

“The Chinese are taking the approach, ‘Let’s build our cities in a way that they are technologically enabled so that we become the vanguard of the next wave of technology innovation.’ That is what the Chinese are doing. They are doing things with an eye toward capturing markets and they are doing it in a way that reflects and leverages the distinctive assets of different places.”

Answering the Challenge

To answer the challenge, the metro areas in the U.S. should purposely strive to be centers of innovation, relying on their own particular features and strengths.

“Every metro should get focused and disciplined and purposeful and deliberate about their growth. If they do that, over time it will affect state policy, federal policy,” Katz said. “And if the government is not up to the task, it will attract private investment. … So my answer is for metros to get smart and to get aggressive. Be strategic in design and intelligent in action.”

Strategic in design and intelligent in action. Gosh, that has a nice ring to it. But it really is good advice, and not just for big cities but for small town America, too, where there certainly is a future for economic growth.

To economic develop organizations in big cities and small towns, I have long advised that you play to your strengths, be cognizant of your weaknesses, and do not make the common mistake of claiming or worse yet believing that you are right for every business investment under the sun. Know your strengths and put them to use.

Bruce Katz strikes me as an original thinker. He certainly gets me thinking. Next week, I will offer up a second helping from this futurist. But now I got to go see a man about a horse.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm in Red Oak, Texas — www.barberadvisors.com