BBA Economic Digest

July 28, 2019

 

When an economic developer gives me a tour of his or her community, invariably they will show me their best -- the assets that they would want a company to see that is considering investing in operations there.

 

But then I throw them for a bit of a loop: "Ok, now that I've seen your best, now show me your worst, the other side of town."

 

I've never been refused. To get a more complete picture, I want to see a place from all angles.

 

Chris Arnade left his position as a bond trader at Citibank in 2012. He was wealthy enough to not seek another Wall Street job but instead devoted his time to documenting "poverty and addiction." He drove all over the country, going into the parts of town people told him he "shouldn't visit" – taking photographs and writing about what he saw.

 

In short time, his work started to attract attention. His photos and essays were featured in the Wall Street Journal, the Guardian, the New York Times, and the Atlantic. And now, seven years after leaving Wall Street, his work has been compiled into the book "Dignity: Seeking respect in Back Row America."

 

"It's all over. It's not certainly not a red or blue thing. It's a lot of neighborhoods in New York City, it's in Appalachia, it's in California, it's in Chicago, it's everywhere," Arnade said.

 

 

Gone Tomorrow

 

Nearly 9 of every 10 Fortune 500 companies in 1955, the year I was born, have either gone bankrupt, merged with (or were acquired by) another firm, or if they still exist have fallen from the top Fortune 500 companies (ranked by total revenues).

 

Only 60 companies of the Fortune 500 of 1955 remain today, meaning that less than 12 percent were still on the list 62 years later in 2017. Said another way, 88 percent have fallen by the wayside.

 

Tom Siebel, founder an artificial intelligence firm and author of the new book "Digital Transformation," says we are currently living during a very critical time for current Fortune 500 companies. Those that move quickly to adapt to the new age of AI and robotics will be toast.

 

"We are in a mass extinction event," Siebel said.

 

Joe Kaeser, CEO of Siemens, recently told Axios that a digital revolution in manufacturing will force the world's biggest companies to focus only on products or services in which they truly excel.

 

"Traditional conglomerates have no future. On average, they are average. And today, average means mediocrity, and that's the target of the Fourth industrial revolution," Kaeser said.

 

 

A Community Nest

  

When Massey-Ferguson shut down operations in Batavia, N.Y. in 1956, it left behind a vacant complex of buildings. A local family purchased the property and soon learned that it could not find a single tenant.

 

And so the Batavia Industrial Center was born, becoming the world’s first business incubator.

 

Since then, thousands of business incubators have been formed. The movement gained real footing in the 1980s when colleges decided to launch business incubators to offer students better employment prospects.

 

I've learned in my travels as an economic development consultant that no two incubators are exactly alike. and that some are more successful than others.

 

And while incubators are no cure-all for new business formation, they do provide an assortment of  services -- ranging from market research and analytics tools, access to accounting, access to loan facilities or grant programs and legal advice -- that can help a new business grow and become viable for the long term.

 

I recently did a SWOT analysis for a rural community that was a regional center. There was no incubator or for that matter much of any infrastructure to help with small business formation. Naturally, I pointed that out.

 

Looking back, I've been in many places where business startups have been more or less an afterthought. It doesn't have to be that way. It shouldn't be that way.

 

 

A Community Nest

  

When Massey-Ferguson shut down operations in Batavia, N.Y. in 1956, it left behind a vacant complex of buildings. A local family purchased the property and soon learned that it could not find a single tenant.

 

And so the Batavia Industrial Center was born, becoming the world’s first business incubator.

 

Since then, thousands of business incubators have been formed. The movement gained real footing in the 1980s when colleges decided to launch business incubators to offer students better employment prospects.

 

I've learned in my travels as an economic development consultant that no two incubators are exactly alike. and that some are more successful than others.

 

And while incubators are no cure-all for new business formation, they do provide an assortment of  services -- ranging from market research and analytics tools, access to accounting, access to loan facilities or grant programs and legal advice -- that can help a new business grow and become viable for the long term.

 

I recently did a SWOT analysis for a rural community that was a regional center. There was no incubator or for that matter much of any infrastructure to help with small business formation. Naturally, I pointed that out.

 

Looking back, I've been in many places where business startups have been more or less an afterthought. It doesn't have to be that way. It shouldn't be that way.

 

Amazon Expands in Ohio

 

There were less than 50 Amazon employees in Ohio in 2015. By the end of this year, there will be about 9,000.

 

The jobs boom is due to a string of warehouse openings. Amazon now has seven distribution centers in Ohio — two on the sites of former malls — and it is building an air hub near Cleveland.

 

In all, Amazon says it employs more than 125,000 people in some 100 U.S. warehouses. Superstar cities on the coasts continue to vacuum up most of tech jobs while other metros are often left mostly with warehouses or data centers.

 

"Thousands of fulfillment jobs, which will likely be susceptible to automation in the coming years, aren’t what will change the geography of tech and smooth over the nation’s imbalances," said Mark Muro of the Brookings Institution.

 

But, but, but: Amazon’s announcement that it will invest $700 million to retrain 100,000 employees—a third of its U.S. workforce—in new technologies is the latest reminder that the much-heralded future of work is well underway.

 

 

This Place Got It Going On

 

 I welcome receiving emails from economic development organizations celebrating project wins. You should toot your own horn when circumstances permit.

 

But when an EDO can show multiple wins over a relatively short period of time with both relocations from outside the immediate area and expansions of existing industry, well, that tells me "they got it going on."

 

Over the past nine months, 28 companies have relocated or expanded in Palm Beach County, creating about 1,700 salaried jobs, including 350 in life sciences. The announced projects represent about $187 million in additional corporate investment, according to the Business Development Board of Palm Beach County.

 

Way to go BDB.

 

Great Paying Jobs

 

 Steel Dynamics will build a new steel mill in Sinton, Texas, 30 miles north of Corpus Christi, creating 600 new jobs for the area.

 

Most workers at the plant are expected to make between $75,000 and $80,000, according to the Corpus Christi Regional Economic Development Corp. Bonuses could boost that figure near $100,000.

 

The project will generate $113 million to $223 million a year between 2021 and 2035, Steel Dynamics said in a filing with the Texas Comptroller of Public Accounts. Construction is slated to begin early next year, and operations are expected to start in mid-2021.

 

(I'm somewhat familiar with Steel Dynamics, now the third largest steelmaker in the U.S., having visited its corporate headquarters in Fort Wayne, Ind.)

 

The site in Sinton provides access to three markets where the company believes demand for steel will grow: northern and mid-central Mexico; the West Coast; and Texas, Arkansas, Oklahoma and Louisiana.

 

About 30 percent of the mill’s products will be shipped to Mexico, where flat-roll steel consumption grew 40 percent between 2013 and 2018. The site is a 2,000-plus-acre sorghum field. The ample acreage means companies that use Steel Dynamics products could move nearby.

 

 

No, These Guys Aren't Site Consultants 

 

Mega music hit "Old Town Road" by Lil' Nas X and Billy Ray Cyrus has become one of the longest-running No. 1 songs on the Billboard charts — yet perhaps of even larger significance is how the song was made: with internet beats purchased for $30.

 

In lieu of hired music producers, some artists are finding their beats on online platforms like BeatStars, which itself has 340,000 active sellers hawking their rhythms. Lil Nas X wrote “Old Town Road” using a beat he bought for just $30 on the online platform BeatStars.

 

These gig economy producers are upending the traditional creative process, while potentially giving emerging talent an inexpensive way to compete. Another example of disruptive technology being, well, disruptive.

 

Now all I have to do is come up with a low-cost online platform for companies to find best sites. Talk about disruption.

 

  

 

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