Coined by campaign strategist James Carville, the phrase “It’s the economy, stupid” was posted in a “war room” to help Carville and his staff stay focused on the task at hand: putting Bill Clinton in the White House.
Nearly 20 years later, with a U.S. economy saddled with high unemployment and low consumer demand, economic developers nationwide are turning inward and focusing their efforts on existing businesses.
For them, the catchphrase should be, “It’s the relationship, stupid.”
In my opinion, and this is typically not well understood by many oversight boards, the single most important thing that a local economic development organization can do is to focus on bringing value in some form or fashion to existing industry.
That’s where the money is. That’s where the jobs are.
I am speaking about the art and science of business retention and expansion, which thankfully is a growing field within economic development. The good editors of Site Selection magazine recently asked me to write on “BR&E”, and because I like you, here’s the link: http://www.siteselection.com/issues/2011/nov/business-retention.cfm
Now keep in mind that my background in economic development was almost totally focused on recruitment. I was lucky enough to be sent all over the world to meet with automotive and aerospace companies about establishing new operations in North America. And I had some pretty good success along the way.
But that was then and this is now. And the now is a harsh reality, one which many economic development organizations have not adapted to well.
Because the ugly truth is that many if not most parts of the country will not see net job growth for the foreseeable future. Some pockets will experience net job growth, but most will not.
Still, despite the realities on the ground, the primary focus for many remains recruitment. That’s what gets the headlines. That’s what makes certain blowhard elected officials, who campaign on ludicrous promises of job recreation and yet have no understanding of basic tenants of economic development or even business, happy.
You know what I’m talking about. Mayor Foghorn Leghorn: “Well, Hell’s bells, Harry, just go out there and recruit us up some industry. We got us a damn fine community here. By God, you can do it, Harry. I got all the confidence in the world in you.”
And, of course, when Harry does not “recruit us up some industry,” he gets fired. And the community begins a search for someone who can bring them the golden goose. Often, in order to get the job, Harry’s successor has to show or promise that he or she can be successful at recruiting.
Well, good luck. If that’s where you want to concentrate you efforts, by all means, have at it. But I’m telling you right now, and this comes from a fellow who has been on both sides of the recruitment process (as an economic developer and a site selection consultant), you’re missing out.
Now, I am not suggesting that local economic development organizations abandon recruitment, even if regional and state organizations are better suited for that function. Rather, I am only suggesting that BR&E should be the primary focus for most communities. The reason is obvious. Most jobs are created by existing industry.
True story. I was in what will be an unnamed community that had a golf ball manufacturer. I learned that the only time the company ever heard from the local economic development organization was when it (the ED organization) wanted golf balls for an annual tournament. That same community was stunned, taken totally by surprise, when a Japanese manufacturer announced it would close operations to consolidate in a neighboring state.
The point is that this local economic development organization did not reach out to existing industry; was largely ignorant of business conditions among local firms; did not try to establish meaningful relations with existing employers. No, their focus was to “recruit us up some industry.” As such, they were clueless about the state of the companies in their own backyard.
Think about it for a moment. As a site selection consultant, would I want to take a client company to a community where, after the announcement was made, they will be largely forgotten and ignored?
Or should I take my client company to a community where a robust BR&E program is in place, where the local economic development organization promises to stay in touch and be a problem solver whenever possible? Which would you choose?
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Smart communities, savvy economic development organizations understand how they can leverage BR&E to be a strong component or tool to the recruitment process. Not only are they calling on headquarters of companies with plants in their jurisdictions to ask how they can be of better help, but they are also probing to identify possible suppliers to that company.
The goal for the local economic developer should be is to have a deeper understanding of the corporate assets within the community, thereby having a better understanding of skills of the available workforce, thereby knowing who you should target for future recruiting efforts. In short, BR&E and recruiting should intertwined, joined at the hip.
Of course, this is all predicated on developing relationships with senior management and owners of existing industry, which is not always easy. But worthwhile things seldom are. No doubt, there will be certain companies that will be reticent and suspicious. But developing trust comes with time and again is a prerequisite to developing knowledge of what you have in your community and what you can have.
And at the end of the day, there is no greater voice in terms of making your case in terms of recruitment than existing industry. Behind closed doors, when the local economic developers are outside the room, they will tell the truth about the business climate of the community and whether the prospective company would be welcomed and how it could fare in attracting a good workforce.
If you, the local economic developer, have been a valuable problem solver for existing business base, chances are you will get a favorable review, even if there are certain drawbacks to your community.
But if you have been disengaged with your existing industry base, well, watch out. In my business, with a little bit of digging, the truth will come out.
Some years ago, I remember sitting in a friend’s office in Birmingham, Ala. He was high-ranking manufacturing exec in metal pipe making operation. He knew that my job was recruiting industry to the state of Alabama, but he was none too happy with my efforts.
“You all are going out there recruiting and then subsidizing our competition with all sorts of incentives, and you have completely forgotten about us. We’ve been here 100 years. We create jobs.”
And he was absolutely right. Little attention at that time in Alabama was given or provided to existing industry. It’s better now, but probably as not as good as it could be or should be. And, mind you, that is true for every state in the union.
And while great strides have been made in the past 10 years in BR&E, many economic development organizations only give it lip service or at the very least a secondary role. Often, the assignment of BR&E is given to junior staff members and the newly hired. Big mistake.
These 25 years olds are sent out, with clipboard in hand, to survey business owners and senior plant managers, with a prescribed list of questions. Now, who do you think that turns off?
“The function typically gets relegated to the newbies or those people who do not have gravitas and can walk into a business and go toe to toe with the decision maker,” said Laith Wardi, president of ExecutivePulse, a BR&E consulting firm.
“So immediately, we are setting a tone with the company that this is a function being performed by somebody who is in a lower level of the organization. Essentially, you got fresh meat going in armed with a paper survey, which tips the decision maker off that this is nothing more than an exercise in data gathering.”
My recommendation: Don’t do that.
In writing this story for Site Selection magazine, the more that I delved into BR&E, the bigger the subject matter got. Communities are finding new and creative ways to provide value to existing businesses.
One of my favorites was Stokes County, NC., where the local economic developer there – Alan D. Wood — happened upon the idea of building free websites for local businesses.
“I would say 95 percent of our jobs that are created are either going to come from startups in the community or existing businesses adding additional workers,” said Woods. “Now, you can chase all the buffalo you want to, but chances are you are going to lose. But if you spend your attention on the companies that you already have, give them a little bit of nourishment, good things will happen.”
I would agree with Alan. If you dance with the one that brung ya, chances are that good things will happen.
Need a partner in results-oriented site selection? Contact me, Dean Barber, at 972-890-3733 or at
email@example.com Barber Business Advisors, LLC, is a site selection and economic development consulting firm in Plano, Texas. Please visit our website at www.barberadvisors.com