Dean Barber

Archive for February, 2015|Monthly archive page

Your Economic Development Website is Not All That

In Corporate Site Selection and Economic Development on February 22, 2015 at 7:58 am

Conventional wisdom holds that an economic development organization must have a good if not exceptional website if it is to attract the attention of a site selection consultant or some CEO sitting up late in his or her pajamas who is scouring the internet for location information.

Now who am I to argue with that logic? Besides, this past week, I provided a community that I have been working with a list of web designers who specialize in economic development websites.

So for the record, let me state that if your community does have a substandard economic development website – devoid of information that you think site selectors might find useful – then you should do something about it. Upgrade to the new 9.0 version.

But here’s where I do part with conventional wisdom, which is, after all, rather conventional. Contrary to what most economic developers have been told, I am not going to eliminate a community in the site selection process simply because I am underwhelmed by its website.

Forming the Dreaded RFI

To understand why is to understand what we do. If my firm is engaged by a company to do a location analysis project, we begin the process by going through systematic steps by which to establish certain criteria by which a place must meet to be considered.

This initial pre-phase search period can be a tedious time as this is when real corporate strategic thinking is delved into and questioned, and different people within any organization often have different ideas.

Our job here at BBA is to collate those ideas and information into precise marching orders, which we do in form of the dreaded request for information. You may think of it as a request for proposal.

Now when we go about publishing our RFI, we typically will not send it out to any Tom, Dick or Harry community. Or Thelma, Louise or Gertrude community, either.

We usually limit distribution to a confined area that we have defined during our pre-phase work. Furthermore, we direct this RFI, which is in essence a questionnaire with instructions, to state and regional economic development organizations and often to ED departments of regional utility companies.

While there are exceptions, we typically will not send RFIs directly to individual communities.

Now this is how we do it. I’ve given you very brief glimpse of our process. Other consultants, other organizations do it differently, which is fine and something I really don’t dwell upon.

Last Year’s Pumpkin Queen

But let us go back to the issue of your embarrassingly bad website, which featured last year’s pumpkin queen on the cover page. From my standpoint, that’s really irrelevant if your community has provided the requested information as provided in the RFI. At that point, your website really doesn’t factor into the situation.

If we have any additional questions, trust me, you’ll hear from us. The point is this: The RFI, or rather a community’s response to it, is the gold standard from which we operate. It is not your website.

Go Ahead and Ask

So our position is that a community can have a deficient website and still make the final cut if it provides the requested information in the RFI, which is typically a rather extensive document asking all sorts of questions, to which economic developers typically find annoying and baffling.

Note that I always welcome telephone calls to clear up such matters.

“Hi Dean. We’re looking at this RFI. Can you please shed some light on where we might be able to find data on the bovine methane gas levels as emitted from dairy farms in the county?”

In short, if you are answering the questions on the RFI in a complete fashion, there is probably no need go to your website seeking answers. At this stage in the game, if we have additional questions, you’ll hear from us.

Now I know that this is not what you have been told. You have been told that you must have a good website or you will be eliminated from consideration. That is not how we operate.

Elimination by Circumstance

The truth is that communities are initially eliminated by the criteria and search guidelines that we develop during the pre-phase, and then by state and regional ED groups who serve in umpire/referee/editor roles in response to the RFI.

They know not to snow us with too many sites that don’t fill the bill. And then we the consultants further eliminate sites and communities during the culling process.

And again, for the record, I am all in favor of good websites that provide a plentitude of information. But it is the RFI, or rather a community’s response to the RFI, that holds supreme for us when we do our work and not a website.

For it is quite conceivable that a community with a lousy website may have all the attributes on the ground that make it a good fit for the project. And we typically recognize that by wading into RFI responses as well as our own data base investigation/confirmation process.

So there you have it. I am not saying that our approach to site selection is unconventional, but it is contrary to what many economic developers have been told about the role of a website. In our approach to site selection, websites do not play a role in the winnowing process. But that is not to say that economic development organizations should not strive to improve their websites. Indeed, they should/

Connecting Via Consultant Connect

The week before last, I was a guest of Consultant Connect, a very worthy and good traveling road show that literally connects economic developers to site selection consultants. It’s the brainchild of my friends Andy Levine, with Development Counsellors International (DCI) and Ron Kitchens of Southwest Michigan First.

We met at Southern Methodist University in Dallas, and I enjoyed myself, meeting the economic developers and listening to the other consultants and how they go about their work. And it was apparent to me that other consultants do their work somewhat differently, which is perfectly fine and to be expected.

There are probably some consultants who don’t use RFIs at all and rely almost exclusively on websites, and that’s Ok if they have devised a system that works for them, a point that I made to our audience.

The bottom line is that there is no corporate site selection school. This we know. But there is a school of hard knocks and experience, which I have found to be the greatest of all learning institutions.

Generally speaking, consultants fall within two major camps. You have real estate people, and their focus, not surprisingly is real property, be it buildings or sites. And then you have tax people, and you don’t have to be overly brainy to know where their focus is.

Now real estate and taxes are certainly core areas that are to be explored and analyzed in any and all site selection projects as these are important cost factors to be sure. But there are so many other factors that typically weigh heavily. What I like to think of as the quality and the quantity of the labor/talent pool transcends virtually all industry groups in importance.

The Science of Logistics

My friend, Tim Feemster, one of the site selection consultants who attended the SMU sessions with Consultant Connect, is an expert on logistics, which is a huge and important cost for any company moving freight.

A few hundred miles can means millions of dollars difference in operating costs, and Tim knows that and can spell that out in detail. But too often, transportation costs are never factored into a site selection process, but they should be, particularly for manufacturers. Energy is another important cost factor for most manufacturers.

Many, if not most costs, a community cannot do much about. They are just there, to be documented and to be lived with.

Blessed are the Deal Makers

But that is not to say that economic developers cannot have a profound effect on their communities. They can and frequently do improve the business climate of their communities by weighing in on issues of permitting, infrastructure, taxes, and even quality of life.

Truly experienced economic developers and sometimes even elected officials are people who can make a difference, which is why I like to get to know these folks.

Whether it is helping an existing company expand or a new company transition into a community, the best economic developers serve as great enablers to their communities. I see them as deal makers and problem solvers.

They are, in fact, my community brand, and they’re what I am looking for. (In addition to that completed RFI.)

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Plano, Texas.

If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help.http://www.barberadvisors.com

If you liked what you read here, invite me to speak at your next meeting.

© Unauthorized use is prohibited. Excerpts and links may be used with permission.

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Take Me to the River

In Site Selection on February 9, 2015 at 11:20 am

Many people, a surprising number of them being economic developers, believe that financial incentives provided to companies that invest in certain places amount to nothing more than corporate welfare, and is therefore a practice that should be abolished.

Nothing I can say will change their minds on that score. Nothing.

Frankly, I find the debate about incentives now quite tiresome and will seldom wade into an article about it.

But I will tell you this, if I’m working for a company on a location analysis project and a community views our interest with a degree of disinterest, we will duly note that.

Nice to Be Wanted

It’s only human nature that you go where you are wanted. That doesn’t mean that we go to the highest bidder. Far from it. Business reasons, not incentives, rule on location decisions.

But we do want to be invited to the dance, and we do want to dance with dealmakers who fundamentally understand that we seek a partnership with a community.

There are those economic developers and elected officials who get it and those who don’t. Now whom might you think that we prefer to work with?

Sometimes an incentive or a package of incentives just gets a community on equal footing with the competition.

Bad Land to Good

Back in 1993, the state of Alabama offered Mercedes Benz what appeared to be an ugly 1,000-acre site of up and down goat hills off Interstate 59/20 near Tuscaloosa.

Despite the challenging topography, the state assured the German carmaker that it could and would grade the site and transform it into one that would work for the company.

I don’t know how much was spent on earth moving, but it was part and parcel of an incentive package worth $250 million.

Since 1997, Mercedes’s original $400 million investment has grown to more than $4.4 billion. Thousands of people owe their job to the simple fact, among others, that bad land was turned into good. In hindsight, that $250 million incentive package was a pretty good deal for everyone concerned.

Don’t Forget Your Existing Companies

When we think of incentives, we tend to dwell on the dollar value by which a company is getting rather than the end stream result. And that can cause some resentment.

I’ve talked to more than a few senior executives who believed that a newcomer, sometimes even a competitor (certainly a competitor for labor), was being given special consideration in their community while their own company was being largely ignored.

I think there is real legitimacy to that notion, which is why all communities should never short shrift business retention and expansion. Always remember that it is your existing industry that creates the most new jobs. You take those companies for granted at your peril.

I’ve also talked to people who have been hurting – either unemployed or underemployed – and they openly wonder if they have real shot at a job for a new company that is coming to their community. They are discouraged and cynical, and view incentives as solely benefiting the owners of capital.

And there is some legitimacy to that notion, too. Too often, economic development efforts seem to concentrate on target industries rather than target constituencies.

Which makes the Community Ventures program as offered by the Michigan Economic Development Corporation a different kind of animal, at least one that caught my attention.

A River of Opportunity

It is the brainchild of Gov. Rick Snyder, who was the first chairman of the MEDC well before becoming governor. A Republican and a former venture capitalist, Snyder wondered how he could get people jobs who were considered high risk and with few employable skills. Jobs, he figured, would be the best antidote to crime and poverty.

Before I go into the details of this two-year old program, I want to tell you about Snyder’s “river of opportunity” speech that he gave last month to state lawmakers in his fifth State of the State address.

Snyder spoke of helping Michigan’s poorest and most disadvantaged residents get into the “mainstream” of the economy and society. He said he wanted to expand programs that put social service counselors inside schools to help address student absenteeism and help low-income parents get assistance and job training opportunities.

And this is the heart of Community Ventures, a $10 million a year program currently being offered in Detroit, Flint, Pontiac, Saginaw, where poverty is systemic. The idea is to link the habitually unemployed with companies that need low-skilled labor.

“It’s about creating an opportunity for success, not facilitating dependency,” Snyder said. “Let’s ramp up these programs.”

Companies Taking  a Chance

Under the Community Ventures program, companies are essentially paid a cash grant, an incentive to be sure, to take a chance on a person that they would normally not view as employable.

“We flipped the idea of workforce training around by going directly to the employers and asking them to take a chance on some of these folks. And when I say take a chance, we’re going to help de-risk it by giving you some cash,” said Michael Finney, senior advisor to the governor and former head of MEDC.

Companies are paid up to $5,000 for an employee hired under the program and who remains on the job for at least one year.

The focus of the program is to enable a person to essentially become an employee, making them job ready by addressing their needs, which previously stifled their ability to find work. Providing ransportation and child care usually heads the list.

“We try not to judge any shortcoming that an individual has – whether it is a criminal record, lack of education, lack of work experience – we don’t judge. But we try to provide support so that they can get employed and stay employed long term. And it is working,” Finney said.

Not a Hard Sell

While the numbers are not yet big, the potential of success seems real, which is why Snyder is pushing for the program to be expanded. About 2,600 people have been hired to date under Community Ventures, with about 70 percent reaching their one-year anniversary on the job at an average wage of $12 an hour.

“We expected it to be a hard sell to the companies but it hasn’t,” said Finney. “We thought we would be inundated with people and struggling to find employers who would be willing to take them. The reality is that as of last count, we have over 100 employers participating in the program.”

Saginaw Township-based Morley Companies, a call center operation, has hired more than 250 employee that have been pre-screened and pre-qualified by Community Ventures, with a retention rate of 83 percent.

“We’re also finding that they’re quite dedicated and loyal because they’re having a second chance at a job, a full-time job with benefits, at Morley,” said Dick Mott, vice president and chief financial officer, in a November interview with the MLive Media Group.

A state economic development program aimed at giving struggling people a second chance at a sustainable job through cash grant incentives awarded to companies. Some purists might contend that’s not a proper role for government.

But the way I see it, a full-time job gives a person a greater degree of independence, allowing them to pursue their dreams and be less dependent on social services.

Now why wouldn’t we want to see everyone swept up into such a river of opportunity? If a little prompting of companies is necessary, so be it.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Plano, Texas.

If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help.http://www.barberadvisors.com

If you liked what you read here, invite me to speak at your next meeting.

© Unauthorized use is prohibited. Excerpts and links may be used with permission.