Seeking the Right Balance

I take no glee in the suffering of others. Indeed, the older I get, the more compassion I have for those who find themselves in difficult circumstances. Yep, I’m a real softie.

So I couldn’t help but feel a bit sorry for four economic developers who I met with a few weeks ago at a restaurant near my home here in Plano, just north of Dallas.

You see, they were from California.

Now let me say from the outset that they should be commended for making the trip to meet with site selection consultants. That shows gumption on their part, and I admire that.

The fact is I meet with economic developers all the time who make the trek here to meet with companies and consultants. I’ll be meeting a group from Ohio later this week.

But I can tell you that the California Central Valley Economic Development Corp., encompassing an eight-county region, is the first group that I’ve ever met from the Golden State. And I’ve met with a lot of ED groups in my time.

Now that in itself should tell you something.

Hang in There

About halfway through our conversation, it dawned on me that I had never met with a group of economic developers who were almost apologetic for being from where they were from, although I will tell you now that they have achievements to point to.

They freely acknowledged that California’s business climate is not up to par because of both high taxes and over-regulation. And they know that some companies have picked up stakes and moved out of state as a result.

(Where we were meeting in a restaurant in Plano was about one mile from the construction site of Toyota’s new North American headquarters, soon to vacate Torrance, Calif. I don’t think I mentioned that to them. I may have.)

But the point is that I really felt for these folks. I really did.

I almost wanted to put my hand on a shoulder and say, “It’s Ok. Things are going to get better. Hang in there.”

Most economic developers are an optimistic, even cheerful lot, who have sold themselves on the idea that their communities are special if not worthy of just about every capital investment project under the sun.

Actually, most don’t believe that, but there is this matter of appearances, especially when local politics come into play. Sometimes economic developers have to play along to get along to keep their jobs.

An Oasis in the Desert

If there was any solace, the group from California assured me and consultant Tim Feemster, who was also present, that the Central Valley was a virtual oasis, a business friendly place surrounded by a man-made hostile environment, as in laws and regulations.

And they had an impressive list of projects in all eight counties that they could point to in which companies had announced, broken ground, bought or leased space thus far in 2015.

And when I say impressive, I mean top names like Cargil, Tesla Motors, Google, Amazon, FedEx, and a whole bunch of others, some of whom I know and some of whom I don’t.

Clearly they could show that business investment was happening at a pretty good clip in their region.

We talked a bit about the water situation in California, and there wasn’t much encouraging news on that front, so we let it drop. It is what it is.

Not Happy Campers

I got that same sentiment – a resignation to a harsh reality — a week later, after the California economic developers had returned home, during telephone conversations with aerospace manufacturing execs in Southern California. As a group, they were not happy campers, but it is what it is.

One, the president of a manufacturing concern near Los Angeles, used the word “sick” and “onerous” to describe the local business environment. He said many of the regulations that his company complies with “don’t make sense,” but the cost of moving lock, stock and barrel was deemed to be prohibitive.

I almost said, “It’s Ok. Things are going to get better. Hang in there.”

But I didn’t.  I only hope that it does.

I Talk and Sometimes People Listen

I also did a little speechifying in Louisiana last week. I gave a 30-minute presentation to stakeholders of the Central Louisiana Economic Development Alliance on the digital evolution/revolution that is happening in manufacturing.

The title of my presentation: “Coming to a Factory Near You.”

But before I could address my audience in Alexandria, La., I gave two separate interviews with the local television stations, which obviously were hard up for anything that smelled remotely like news.

Boiling a 30-minutes talk that was in my head into a sound bite, which was all the TV folks really wanted, was a bit challenging. I had to quickly get my thoughts in order, all the while knowing that a brain can lock up in the harsh lights of a television camera.

From experience, I was aware that I could come across as a babbling fool. The last thing I wanted to do was to embarrass my host, CLEDA, which was paying me to be there.

The Coming Robots Wars

So I came up with my story line, which was that robots were going to kill us all. Just kidding. I didn’t say that.

What I did say was that a future wave of robotics will put some people out of work, while creating jobs for others. A mixed bag as it is for most things.

Now if you want me to speak in your community, I am willing and able. Just know that my speechifying for does not come for free, especially if TV cameras are present to tax my brain.

A Different England

Before my talk to the stakeholders in Alexandria, I got a very worthwhile tour of nearby England Airpark, which was created with the closure of England Air Force Base in December 1992.

A scant three years later, it is operationally self-sufficient under the England Authority, an economic development organization charged with transforming the base into a commercially viable place to do business. It’s essentially a big industrial park.

And to date, the England Authority has a string of wins under its belt starting with commercial air service in 1996. Then Union Tank Car opened in 2005 (650 jobs there), followed by the opening of three separate terminals in 2006 (commercial); 2007 (military); and 2008 (a fixed base operator.)

In all, about $200 million in improvements have been made at Alexandria International Airport, which I found to be aesthetically pleasing with its architecture and user friendly.

As impressive to me is the fact that England Airpark has two certified sites, and two others in the process of being certified, with the ability to assembly a mega-site of 1,500 acres if that is what is required.

A Mega-Project on the Horizon

But what is on everybody’s mind is the prospect of announced project coming into being in Pineville, right across the Red River from Alexandria.

There is where American Specialty Alloys says it will build its first production facility manufacturing aluminum alloy for the automotive and aerospace industries, a $2.4 billion investment.

ASA says it will break ground on the former site of an International Paper mill later this year, with a targeted completion date in 2020. The facility is expected to employ 1,450 people at an average salary of about $70,000, and create 2,000 construction jobs.

Leave it to say, there is optimism right now in Central Louisiana, even if been dark clouds hovering statewide concerning the state’s budget.

Cuts Will Come

With tax revenue from the oil industry falling short of projections, Louisiana’s deficit has swelled to $1.6 billion for the fiscal year that starts July 1.

State lawmakers have been scrambling and the situation remains murky. But if I am reading the tea leaves correctly, cuts will likely come across public health care services, state parks, museums and agricultural services. It won’t be pretty for some.

Still, I must say that I have a much higher opinion of Louisiana’s business climate today than I did in the past. It wasn’t that long ago when there appeared to be an almost in-your-face atmosphere of public corruption.

That’s not the case today, as the state has pretty strong disclosure laws on the books. Which tells me that lawmakers can make a positive difference if they are not in somebody’s back pocket.

Good Attracts Good

I have always believed that good government and good business practices can coincide in the same place and at the same time.

Too little regulation, and you get bad actors doing bad things. Witness Wall Street 2007. Too much regulation, and companies flee. Witness California today. There’s got to be a balance.

A special thanks to my hosts in Alexandria — Jim Clinton and Rick Ranson with CLEDA, and Jon Grafton and David Broussard with England Airpark.

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. He can be reached at dbarber@barberadvisors.com or at 972-767-9518. If you liked what you read here, invite him to speak at your next meeting.

Reinventing Michigan

Let me begin by stating that I am by nature a cynical man. Years of being an observer of politics have rendered me so.

A 20-year career in journalism buttressed a belief system that politicians are by and large an inferior class, a self-serving, self-promoting bunch who rarely follow through on promises.

In truth, I would like to believe, I hope to believe, that most elected officials actually do want to do the right thing if they could only recognize it.

And here is where I get cynical again, as I believe most of them “couldn’t hit a bear in the ass with a handful of sand,” as my father, an avid outdoorsman, used to say.

So it almost pains me to acknowledge that I am impressed with an office holder, but it does happen on a rare occasion.

I have already proclaimed in past blogs that I believe Gov. Rick Snyder of Michigan to be the finest economic development governor in the country.

In my opinion, he follows in the footsteps of some former great economic development governors – that of Haley Barbour in Mississippi, Bob Riley in Alabama, Mitch Daniels in Indiana, all of whom are now out of office.

A Problem Solver

Snyder insists, and I actually believe him, when he says that he does not view himself as a politician, but rather a problem-solving pragmatist who just so happens to have an extensive background in business.

I met Gov. Snyder last week, courtesy of the Michigan Economic Development Corporation, to which he was the first chairman back in the late 1990s, proof that he was interested in economic development well before he became governor.

I was among a group of site selection consultants invited to meet with the MEDC off its home turf in New York City. During a sit-down session, we were urged to give our impressions of Michigan and suggest how the state could become more competitive in winning investment projects.

Afterward, we met the governor at a Shinola watch store in Manhattan. Shinola watches are made in Detroit. Now this is a great product and a great story that I have told several times, so will not repeat it here again.

To learn more, read my earlier blog DETROIT VS EVERYBODY.

To start, Snyder believes in his role as that of a public servant.

“Anyone doing business in my state is our customer. And that is the simple view of the world that I have. The citizens and the businesses of our state are who I work for. People are excited when they see the governor, but the way I see it, I’m here to serve you. You are who I work for.”

About 400,000 jobs have been created in Michigan since Snyder took office in 2010 and today, the unemployment rate is about half of what it was five years ago. Of course, it doesn’t hurt for a governor to be in office in Michigan when the auto industry is at its highest level in eight years.

More Than a Fix Needed

Still, Snyder preached a different message on his way to winning the governorship.

“I saw a lot of politicians running back in 2009 and 2010, and they talked about fixing Michigan. Fixing Michigan was not good enough. We needed to reinvent our state,” said Snyder.

“We are a great state but we had lost our way. When you talk about finding your way back, it’s not just about changing laws and regulations. It’s about changing the culture.”

Certainly the culture or at least the business climate was radically changed with the passage of laws that cut business taxes and literally shocked the world when Michigan became a right-to-work state.

Detroit Comes Back from the Brink

Snyder then set his sights on Detroit, where decades of mismanagement, corruption and decline characterized a city on the brink of total collapse. He pushed for bankruptcy as he viewed it as “an exercise in solving problems.”

“And so we used it effectively and it was very constructive. We rallied everyone,” Snyder said. “Now street lights are being turned back on, trash is being picked up, and public safety has improved dramatically.”

Detroit also became one of four cities in the state where one of Snyder’s brainchild pilot programs called Community Ventures was initiated. It is designed to help the structurally unemployed find jobs.

“The reason I wanted to do it is because I represent these people. I work for these people that haven’t been able to find a way to work.

“And I wanted to reach out in any way that I could to constructively and intelligently help them. Not wasting resources but to do something, because if they are working, we all win. They win. We win. Everybody wins.”

Getting to the Root Cause of Joblessness

Snyder said he believed a myriad of federal programs were not working well addressing joblessness.

“There are 45 different federal workforce programs. I think they should all be restructured. My view is they were doing too much at keeping people more dependent. They were too narrow in their scope and they were not getting at the root causes as to why these people were not successful at finding work.”

Snyder’s Community Ventures program, initiated in four cities and about to go statewide, put aside $10 million a year starting three years ago with no federal constraints and in Snyder’s words “total flexibility.”

“We’re going to do what needs to be done. So after these three years or so, we’ve placed 3,000 people into jobs with about a 70 percent retention rate after one year which is very high for a program like that. Average wage is about 11 ½ dollars an hour and 14 in the Detroit area, so it is well above minimum wage.”

“If you think about it, this addresses an issue that a lot of people talk about and don’t do anything about at the national level. One, we are growing the economic pie by this program, and, two, we are dealing with the income disparity issue. Three, we are actually reducing the cost of state government over the long-term because now you have successful people versus people using programs.

“Four, we have addressed the root cause instead of the symptom and we have really helped people. Because it gets down to the human level ultimately. Have you really made a difference in someone’s life?”

I have to wonder if a program like Community Ventures were in place in a big way in West Baltimore if we would have seen the violence take place there. I have to think economic opportunity, or the lack of, was the root cause for that riot.

See last week’s blog, Smoldering Ground.

A Role for Government

In short, Snyder is a reformer by nature, believing that there is a role for government but that it can do better.

“I think how government delivers services is messed up, so we’re going to step back and do it at a much more people-focused level that focuses on root causes and focuses on measuring success,” Snyder said. “It’s not so much about the government spending money but a community coming together to help people.”

Unlike many Republican officeholders who refuse to acknowledge of a growing wealth gap in this country, Snyder, a former chairman of the board of Gateway Inc. and a former CEO and co-founder of Ardesta LLC, a venture capital firm based out of Ann Arbor, says wealth disparity and the lack of economic opportunities is our big problem.

“You solve by growing the pie and creating more opportunity,” he said.

Talent is the Future

Snyder said his top priority for the future is developing Michigan’s talent pipeline.

“The major distinguishing feature of who is going to be successful and who is not from an economic point of view is who has the best talent with the right skills sets. And we’re going to lead the nation, particularly in the area of bring back the skilled trades.

“We have a broken system in our country when it comes to skilled trades. We’re re-establishing it here in Michigan, because that is a fundamental competitive advantage that we have over the rest of the country and a sustainable one.”

FIRST Robotics, a national program designed to create competing teams of high school students to build robots, has taken root in Michigan in a big way, with the support of the governor.

“We now have 348 teams. We have more teams than any state in the nation. We created 77 teams last year, more than all the other 49 states combined. And we are shooting for 500 teams. So this the kind of pipeline of talent that we are developing,” Snyder said.

FIRST Robotics will hold its annual championship in Detroit and Houston in 2018 through 2020.

Now I have long believed that presidents and governors get more credit and more blame than they probably deserve when economies turn for the better or for worse. But perception is reality in politics.

Still, occasionally you get a leader who takes it upon himself or herself to affect change that makes a difference in people’s lives. I think Snyder has been that change agent in Michigan. He is actively trying to reinvent Michigan.

As governor, he will not get everything that he wants, nor probably should he. But he now has a real record of success, and I stand by my earlier assessment that he is the best economic development governor in the country. I pity his successor.

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. He can be reached at dbarber@barberadvisors.com or at 972-767-9518. If you liked what you read here, invite him to speak at your next meeting.

Smoldering Ground

Last year when I was in New York, I spent a lot of time walking in neighborhoods that used to be pretty rough places back in the 1970s, places like Harlem and the Meatpacking District.

In a blog that I subsequently wrote, The Center of the World, I marveled how gentrification had transformed these once desperate and dangerous places into high-demand, high-rent places, where crime had pretty much evaporated.

What I wrote was accurate, but looking back, I think I had blinders on to some degree. I wasn’t really seeing the big picture, or at least the whole picture, even if I thought that I was. And that’s a problem for all of us.

In hindsight, I now believe I have a more accurate picture of big city America because of the events that transpired last week in Baltimore, where poverty, crime, and hopelessness, is juxtaposed against renovated waterfront homes, tree-lined streets,  sparkling waterfront views, trendy bars and restaurants.

A massive breakdown of civil order in our cities is a rare thing, but what is not rare is this tale of two cities, and I’m not just talking about Baltimore, although it is very extreme in Baltimore.

I submit there are there are two New Yorks, two Philadelphias, two Los Angeles, two Atlantas, two Chicagos and two Houstons. And the list goes on and on, our biggest and best cities, where disparity of wealth continues to grow. (There’s even two Planos where I live.)

Now even the most casual observer realizes and could rightfully point out that there have been rich and poor neighborhoods in cities big and small throughout this country and throughout our history. The haves and have nots have lived cheek by jowl for a long time.

But what may not be so evident, and that which concerns me in my role a consultant to businesses and economic development organizations alike, as a keen observer of places, is the tenacious grip that chronic poverty has on certain neighborhoods, particularly in our bigger cities.

In 1970, 38 census tracts in Baltimore had a poverty rate of about 30 percent; by 2010 it had risen to 55 census tracts. Indeed, according to a City Reports study in 2014 called “Lost in Place,” three-quarters of 1970 high-poverty urban neighborhoods in the U.S. are still poor today.

What’s more, three times as many urban neighborhoods have poverty rates exceeding 30 percent as was true in 1970 and the number of poor people living in these neighborhoods has doubled.

I just watched a snippet from a documentary film made in 1967 about Baltimore. The language is archaic by today’s standards, but the observations are just as true now as they were then.

NARRATOR: “Today, few whites enter the ghetto. Most of them are aware that the black ghetto is a place to be avoided, as a place where there is likely to be trouble. Negroes insist that there will be trouble in the ghetto so long as they have inadequate housing, poor schools, high unemployment and no money.”

The year after that documentary was aired, Baltimore exploded into a firestorm with the assassination of Dr. Martin Luther King. It was 1968 and the Maryland National Guard was called in and a city-wide curfew imposed. Before the mob violence had run its course, six people had died and more than 1,000 businesses had been looted.

Nearly 50 years later, I am watching television news and hearing the older residents of Baltimore say how their neighborhoods had never fully recovered from the maelstrom of 1968. Fifty years later and the effects were still with us.

Last week’s wave of violence resulted in more than 200 businesses destroyed, most of them minority owned and most of them without insurance.

How many of these small businesses will rebuild is uncertain. The fact that some will not be able to is almost a certainty, just as it was nearly 50 years ago.

The sad fact is that the number of high-poverty neighborhoods in the core of metropolitan areas has tripled and their population has doubled in the past four decades.

Most of the increase is due to “fallen stars”— neighborhoods that in 1970 had poverty rates below 15 percent, but which today have poverty rates in excess of 30 percent.

A new study finds that poor children who grow up in some cities and towns have sharply better odds of escaping poverty than similar poor children elsewhere. Among the nation’s largest counties, the one where the children faced the worst odds of escaping poverty is in Baltimore, the study found.

The findings suggests that geography and neighborhoods matter in determining which poor children are able achieve what we like to think of as the American Dream, which is based largely on the concept of upward mobility.

But clearly, many people are frustrated and anxious about trying to get ahead or just being left behind. And just as clearly, the approaches we have used to eradicate pockets of poverty have failed miserably.

You don’t have to be a social scientist to recognize that. Just get in your car and take a look.

I cannot tell you the last time I heard an economic developer tell me that his or her community was taking measures to tackle the problem of poverty in some form or fashion. I certainly wasn’t thinking in those terms when I was an economic developer.

But I think that is going to have to change.

We’re going to have to come up with new ideas on how to address what has become a permanent underclass in this country.

Last week, I listened to Joe Scarborough, a former Florida congressman and now host of a morning talk show on MSNBC, go on a rant that I think was justified.

“Republicans think if we just give everyone tax breaks, everything will be great. Democrats think that if we just start a new federal program, everything will be great.

“Trickle down liberalism, where we count on the government to do everything, doesn’t work. Trickle down conservatism, where we just cut taxes for big businesses, doesn’t work. We need to look at this permanent underclass and come up with new ideas.”

Well, that is easier said than done, but Scarborough is right in that we need to rethink this thing anew. The old ways are broken.

I believe that until we give people the tools and the means by which to escape poverty, most (not all by any means) will lead lives of entrapment in broken neighborhoods. And the multi-generational poverty cycle that snares lives will not be broken, as it has not been broken in most American cities.

Now I’m not telling you this as a liberal or a conservative. I’m just making a cold-eyed assessment by looking at the facts on the ground in some neighborhoods in some cities, some of which we would think of as prosperous.

In too many places, where upward mobility has been thwarted, we see smoldering ground, either where a single incident can be a flashpoint or from ashes in the aftermath of a riot.

Nearly 50 years after Watts, Detroit, and Baltimore, America still faces the same reoccurring crisis of providing economic opportunity to those living in impoverished neighborhoods.

Upward mobility does not constitute welfare or handouts. But it does constitute opportunity and I think it has to start with better schools and a culture shift of having goals that go beyond being a player in the local drug trade.

If we as a country devise a better way to provide opportunities, a better chance for upward mobility and to escape poverty, then we will have extinguished the embers. There will be no more smoldering ground.

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. He can be reached at dbarber@barberadvisors.com or at 972-767-9518. If you liked what you read here, invite him to speak at your next meeting.