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BBA Economic Digest: Big Shift

The Big Shift

A "tectonic shift in global supply chains" is now occurring, according to a new survey of analysts who cover more than 3,000 companies from Bank of America Securities.

What's more, companies in about half of all global sectors in North America declared an intent to "reshore" or move business back to North America, which should be music to the ears of economic developers engaged in industry recruitment.

"This was particularly true for high-tech sectors and industries for which energy is a key input. If borne out, this could represent the first reversal in a multi-decade trend," BofA's global research team said in the note.

Companies in more than 80 percent of 12 global sectors, representing $22 trillion of market cap in North America, Europe and Asia-Pacific (excluding China), have "implemented or announced plans to shift at least a portion of their supply chains from current locations."

Companies say tariffs and the U.S.-China trade war have helped prompt this reassessment, but it's largely based on automation, which has made the labor-cost benefit of outsourcing and offshoring less attractive. Automation was cited as a key enabler of shifting supply chains by 90 percent of respondents.

The Dream is Alive

One of the things that I like to talk when I speak to economic development groups is the contribution immigrants have historically brought to the U.S. economy.

While certain uninformed politicians blather hateful, anti-immigration rhetoric, research shows that children of poor newcomers to the U.S. have had greater success climbing the economic ladder than poor children born here.

Immigrants immigrants and their children have founded 45 percent of U.S. Fortune 500 companies, amassing $6.1 trillion in annual revenue last year, according to research by the New American Economy Research Fund.

U.S. Fortune 500 companies founded by immigrants employ 13.5 million people and, on average, employ 11 percent more people than the median Fortune 500 corporation founded by a non-immigrant.

Over 27 percent of U.S. entrepreneurs are immigrants despite being only 13.5 percent of the population, according to the Kauffman Foundation. The fact that they uprooted themselves from their home country proves they are risk takers.

Immigrants know what they are running from or escaping, and are determined to overcome obstacles. They typically live very modestly but have a work ethic that is unparalleled. Keep in mind that in some underdeveloped countries, it is normal to work 12 hours/6 days a week.

And they are thankful to be in this country. I tell the story of the owner of an Ethiopian restaurant here in Dallas where I live. He was a judge in Ethiopia, a place where he said corruption was the norm. His love for the U.S. was deep and true. In fact, he was about the most patriotic American I've ever met.

My advice to economic developers: Embrace immigrants. They will add to and not detract from your community. They more than anybody believe in the American Dream.

The Miners and Their Communities

There are always winners and losers when an economy transitions. As the world moves to cleaner forms of energy, we should think about our nation's coal miners and the communities that depended on that industry as their lifeblood.

I've talked to economic developers in Kentucky and West Virginia, where entire communities have been devastated by what is a dying coal industry. The truth is that most coal miners don’t migrate when they’re laid off.

A report last month in the Environmental Research Letters journal sought to answer whether renewable-energy jobs could be created in coal mining communities. It concluded that it’s just not windy enough in most coal-mining regions for wind energy to be a viable replacement.

Nearly two-thirds, however, of coal-mining areas in the U.S. are suitable for solar power. But to ensure miners in those areas could transition to solar, 143 gigawatts of solar power — or nearly three times America’s current capacity of solar — would have to be built out.

My take: It will be years before the U.S. builds the solar energy infrastructure that would employ displaced coal miners in large numbers. In the meantime, we should look at other industries and other skill sets to train them for. No easy solution here.

My Litmus Test

Every industry has its "show dogs." They look good, talk good, and initially come off as being knowledgeable and sharp. But when you take a closer look, scratch the surface, sometimes you'll find there's not a whole lot of there there. Why do I mention this?

As famed business consultant Peter Drucker said, the purpose of any business is to find, really create customers. To that end, there are only two primary functions -- marketing and innovation.

If an economic developer, especially the top dog in an organization, does not think in terms of marketing, then I have to wonder, "What are they thinking? How do they intend to get results? What have been their results to date?"

It may sound trite, but having a significant presence on LinkedIn, where there are 300 million active business users, is not a bad litmus test. If I meet an economic developer who is not on LinkedIn, it's hard for me to take that person seriously.

Pictures Do Tell a Story

When communicating, it's not unwise to think visual as well as the words you choose. Keep in mind that Generation Z, those born in the mid to late 90s, has never known anything other than an instantly connected world primed for short bursts of visual communications.

Studies show that gen-Z and millennials, who are after all the future leaders of corporate America, favors platforms that prioritize visuals. Their use of sites like Snapchat, Instagram, and YouTube outpaces time spent on more text-based platforms like LinkedIn and Facebook.

Their belief: Why describe in words what you can show with video and pics instead?They see email is a relic from a bygone era, an absolute last resort if efficient communication is required. It's their version of the fax machine.

At some point, I hope to do an abbreviated video version of our weekly BBA Economic Digest, essentially a vlog. My problem is that I have a face for radio.

Creating engaging content has always been my thing, dating back to my newspaper days. Our Marketing Monday for Economic Developers posted weekly on LinkedIn has been well received, and for that reason, we've added a new "product" to our suite of services to economic development organizations.

BBA Marketing Makeover quite simply is designed to produce results. An EDO at its heart is a marketing organization with a mission of changing lives. Among the things we help you do:

• Develop a Mission Statement

• Know Your Customers

• Leverage Social Media

• Develop Consistent, Distinctive Content

• Understand The Power of Stories

• Think Visually

• Website Review

Learn from Stories

Ron Kitchen's book "Uniquely You: Transform Your Organization by Becoming the Leader Only You Can Be" is memorable, because it provides life lessons with stories, some of which are frankly a bit gut-wrenching. Anyone who aspires to leadership and wants to make a difference in other people's lives should read it.

The last time I saw Ron a few months ago in Charleston, S.C., he said he had already started work on his next book. Then he proceeded to tell me stories, to which I blurted several times, "Oh, you got to include that one in your book." They were great stories, and the kind we all would remember and learn from.

Now whomever this Dean B fella is quoted above, about the only thing I can say is that he knows a good book or two.

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