Economic development

Galen Updike, with the State of Arizona, opened the Digital Cities Expo this morning, and told of speaking to a woman who was trying to run a business out of her rural home.

She said, "You know, I can do without public water--I can have my own well. I can do without public sewer--I can put in my own septic system. I can do without a paved road to my house. I can even do without electricity--I can generate my own. But without Internet access, my business will fail."

A new report by the Kaufmann Foundation indicates that 465,000 new businesses are being created every month in the United States. This probably represents a million jobs or more being created by small businesses every single month. The growth in start ups demonstrates why a community or regional economic development strategy has to include not just business attraction as a strategy, but also business creation.

Here is an interesting analysis done by Stuart Mease, who works for the City of Roanoke, Virginia. Mease's job is trying to recruit young people to live and work in the Roanoke area. He has provided a cost of living comparison between Roanoke and some of the bigger towns and cities that are more likely to attract younger workers.

Here is an article about how Northrop Grumman is moving jobs to small towns and cities. The company reports that labor savings can be more than 40%--a substantial amount that pays off year after year, and more than covers the initial cost of moving facilities. One of the locations cited is the small Virginia town of Lebanon. Lebanon is a small town located deep in the heart of the Blue Ridge mountains, a good 30 minute drive from the interstate.

In yet another indication that quality of life is increasingly affecting economic development, a HUD newsletter had the following snippet:

I was in another meeting with economic developers, and there was a growing recognition that broadband and power are the new water and sewer. In the Manufacturing Economy, it was water and sewer capacity that often made the difference when trying to attract manufacturing plants to a region.

I spent a good part of the day with a group of economic developers in a major northeastern state. We had some businesspeople in the meeting as well, and listened as two business owners described their frustration with the lack of connectivity outside of major metropolitan areas. In one case, the business owner had moved his staff and business headquarters from the New York metro area to a small city with a lower cost of living and great recreational opportunities near by (relocation based on quality of life issues, not water and sewer availability).

Morning keynote speaker Rex Nelson, who is the alternate Federal Co-chair of the Delta Regional Authority, delivered a lively, tough love talk this morning at the 10th Annual Rural Telecommunications Congress. Nelson said that too many rural communities have economic development programs that are "stuck in the fifties and sixties," with strategies that amount to little more than trying to sell "pastures....with water and sewer."

The Northwest region of Pennsylvania has started a great blog on broadband. And some folks in Roanoke, Virginia have started a terrific blog on news and issues of interest to business people in the area.

Efforts like these move a community up in the rankings of search engines, help promote and support local economic development initiatives, and project a "modern" image to the rest of the world, where there are always businesses and entrepreneurs looking for a great place to relocate.

Roanoke
In a great example of collaboration, a wide range of economic development groups and two local governments are sponsoring a workshop on starting a business or expanding an existing business. Part of a series of entrepreneur workshops being held around southwest Virginia, the October 5th workshop includes advice and materials from local, state, and national resources, a panel discussion led by successful entrepreneurs, and personalized break out sessions.

This article from the New York Times (registration required, link may disappear) is an excellent discussion of how quality of life is, more and more, driving relocation decisions not just of businesses but of workers, especially younger workers.

Affordable, high capacity broadband does not replace the basics. Roanoke has a small regional airport with the second highest landing fees in the country; lousy, overpriced coffee; poor food service; and extremely high ticket prices. That's not a formula for attracting businesses to the Roanoke and New River Valley regions.

If I was an economic developer in any state but California, I would be preparing a new marketing strategy that includes touting my region's reliable and affordable electric power. And I would be talking to my local electric utility about making sure every business park in my region has redundant electric feeds from two different substations.

It is every economic developer's nightmare. On the front page of today's USA Today (no link online), there is a list of the five states with the slowest broadband in the country. Who wants to be on that list?

The Wall Street Journal (page B5) reports today that the number of workers who have to commute 90 minutes or more each way to work has doubled since 1990. That adds up to three hours or more in the car every day. It takes a toll on job satisfaction, personal life, and family life.

The Internet has not made travel obsolete. Despite the eventual ability to make high quality video "phone" calls as often as we make voice calls today, the need to travel for business is not going away.

Three trends are converging that could be very good news for rural regions that are far-sighted enough to take advantage of them.

Greenways, bikeways, and rails to trails projects can be a money maker for a community or region when combined with a long range plan to build open service provider broadband roadways throughout a community. Greenways and trails not only provide recreational opportunities for existing residents, but they also help attract younger people to a community. By combining recreation with economic development, these greenways can be a net generator of revenue for a town or region.

Broadband is not the only fuel of the Knowledge Economy. Rural leaders often discount the importance of having good places to eat in smaller towns. Microbusinesses and entrepreneurial start ups do a lot of business over breakfast and lunch, and one of the key quality of life factors that drive relocation decisions for enterpreneurs is the right kinds of restaurants--along with good coffee. Small town restaurants don't have to be fancy, but they have to be clean and comfortable, with excellent food and great service.

For the second year in a row, no American city made the list of the world's "Intelligent Cities," which is compiled by the Intelligent Community Forum. This highlights the longstanding regulatory and leadership problems we have in the U.S. when it comes to telecom. Some state and Federal regulators and legislators still think re-monopolizing the telecom industry (well under way with the re-forming of AT&T) is the answer to the country's long term economic development challenges.

BusinessWeek has an article on outsourcing that has some useful insights in it. The good: Outsourcing does not always save time or money. As many of knew when the outsourcing craze began to heat up, it is a lot of work to manage workers on the other side of the world who are 10 or 12 hours out of sync with your own office hours. In India, where IT outsourcing has helped fuel the economy, rapidly rising salaries and very high turnover (often above 50% a year) is driving U.S. businesses away.