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BBA Economic Digest: Commitment Proves Value

Commitment Proves Value

Something that I tell all economic developers: To be effective and relevant, you must be committed -- committed to the future, committed to the customer, committed to your mission and committed to a process of continous improvment. Commitment proves the value of your economic development organization in changing lives, which is what the profession should be all about. And it is value that gives life to an EDO. It prompts your customers to tell stories about you, for you, which is powerful, powerful stuff. My advice: Instead of telling customers how great you are, address their triggers, motivations, wants, and needs. Demonstrate how your organization provides a solution. If you do that for existing employers -- who I think of as the primary customer -- and for secondary customers -- companies outside your community considering a future capital investment in it -- you are on your way. Whenever possible, showcase the work you’re most proud of. Case studies can be very effective in that regard.

Reimagining the Workplace

More than two-thirds (68 percent) of large company CEOs plan to downsize their office space, according to a survey released last week by KPMG. The pandemic is proving employees don't need to work in cubicles to be successful, which is raising questions about the value of expensive office space in high-priced cities like New York and San Francisco. "This is a longer-term trend. It's here to stay. Companies are focused on reducing real estate footprints," KPMG CEO Paul Knopp told CNN Business. Even when a vaccine becomes a reality, the shift to a more nimble virtual work model is not going away. Nearly three-quarters of the CEOs surveyed said they plan to spend more on the digitization of operations and the creation of a next-generation operating model. Two-thirds of the CEOs plan to invest more on increasing the use of automation and artificial intelligence alongside human workers. It also means that companies no longer need to exclusively hire people who live or are willing to relocate to major cities where their offices are. KPMG's survey indicates that 72 percent of CEOs said working remotely has widened their potential talent pool. "Where you live is not as important as it used to be," said Knopp.

Workers at JPMorgan will cycle between days spent at the office and at home, keeping the ability to work remotely on a part-time basis, according to Daniel Pinto, head of the massive division. “Depending on the type of business, you may be working one week a month from home, or two days a week from home, or two weeks a month,” Pinto told CNBC.

Most Want Back But has the pandemic killed the office? No, say Diane Hoskins and Andy Cohen, co-CEOs of Gensler, the world’s largest architecture firm. But it is going to be very different in the post-COVID future.

The firm’s research shows only 14 percent of workers want to stay home full time.“A majority are saying they want back. They have roommates, they have parents, they have dogs,” Cohen tells Alan Murray, CEO of Fortune.

The offices they return to will be more of “a hybrid kind of work environment, with some people at home, but many at the office. And it will be all about collaboration and innovation.”

“What’s the big AHA?“ asks Hoskins. “It’s that the ultimate value of the workplace is people. Why do people want to be there? At the end of the day we are there because of the other people that are there … Think of the workplace as a clubhouse.”

Unlike KPMG, Cohen and Hoskins don’t foresee a huge drop in demand for overall office square footage. While offices may have fewer people in them, those people will need more room.

And while remote work has been successful at many firms, most companies still have strong office cultures, which will not change.

Office leasing activity in the second quarter of 2020 was down 44 percent year-over-year, CBRE reports. But it appears to be bouncing back, led by the tech titans.

Amazon is adding 900,000 square feet of office space in New York City, Phoenix, Dallas, Detroit, San Diego and Denver. Facebook is expanding its New York footprint with 730,000 additional square feet.

Matthew Lock and Simon Pole, founder and global design director of Unispace, tell Murray that most companies are trying to reimagine the workplace for the post-COVID world. “There is dramatically increased market activity, rethinking space, rethinking everything,” says Lock. “Anyone who is taking space or looking at a lease expiration is looking at a major redesign.” Pole says that while work-from-home fatigue is setting in, the “cat is out of the bag on choice and flexibility. It’s going to be demanded.” Unispace predicts the percentage of office workers who want to work from home at least three days a week will settle at around 40 percent in January of 2022. With much of the “focus” work being done at home, the new office will increasingly be a place for “collaboration,” “social,” and “learning.”

The Big Shift

Back in 2008, the energy sector comprised 16 pcerntof the S&P 500 in 2008, when oil prices spiked above $140 a barrel. Today, the energy industry makes up a mere 2.5 percent of the S&P 500. So what happened? That shift reflects the transformation of the American economy in favor of technology with many tech companies, including Amazon, Apple and Zoom, thriving during the pandemic. By contrast, oil companies have been crushed by the crash in prices, which briefly went negative for the first time ever, and collapse in demand. Exxon is the best-known company in the fossil fuels industry at a time when investors would prefer to bet on solar, wind and Tesla. Although European oil companies including BP and Total have aggressively invested on renewable energy, Exxon's efforts have been far more muted. "It's a PR problem for energy companies," Ben Cook, portfolio manager at Hennessey BP Energy Fund, told CNN Business. "You can either part of the solution or be seen as part of the problem." But, but, but, even the most bearish analysts aren't predicting oil demand will vanish overnight. But a gradual shift away from crude does mean that only the best-run oil companies will thrive.

The Lifeblood of America

You may have heard the expression "new blood," referring to people brought into an organization to improve it by thinking of new ideas or new ways of doing things. I hold the same opinion of immigrants. In many ways I see them as the lifeblood of America. Keep in mind that almost 45 percent of Fortune 500 companies were founded by immigrants or their children, including Apple, Costco, and Intuit. Immigrant-started businesses grow at a faster rate and survive for longer when compared with businesses started by native US residents, so, yes, I believe in an "immigrant mindset" to achieve and succeed. They're just plain hungrier. In 2018, the labor force participation rate of foreign-born adults was 65.7 percent higher than the 62.3 percent rate for the native born, according to the U.S. Bureau of Labor Statistics. Some 27.2 million foreign-born adults, 63.4 percent of all foreign-born adults, were employed that year, compared to 59.8 percent of native-born adults Despite the anti-immigrant rhetoric coming from some, more than two-thirds of Americans state that current immigration levels are fine (36 percent) or should be increased (34 percent). As of June 2020, only 28 percent said immigration should be decreased, the smallest response since Gallup began asking the question in 1965.

Two Words: Talent and Infrastructure

A friend who is in the market for an economic development job was sent a questionaire to answer by an economic development organization. First question: "What do you see as xxxxx’s top 3 economic development challenges?" It's a bad question and should never have been asked as it would require time on the ground there to observe and ask questions of many people. (Essentially a SWOT analysis.) My friend can spend hours doing internet research and that's probably what this EDO wants to see, but chances are it will be largely wrong. Here's what all, and I do mean all, communities face in terms of challenges -- talent and infrastructure. Talent in terms of quantity and quality of the workforce (Size of the labor pool and the skill sets they have.) Infrastructure in terms of the physicality of a community. (Trust me, it can always be improved.) The third thing -- hell, go ahead and pick one out of the blue: Your community may have a dearth of roadside fruit and vegetable stands and go-cart racing facilities, which we all know inhibits economic growth. Then again, that goes back to infrastructure.

Success Without Work

The pitch came to me via a message on LinkedIn. "Have you ever thought about writing a book, but didn't want to spend months writing it? What if it only took you around 10 hours of your time from idea to finished, physical book in hand?" The "consultant" probably doesn't know that I put in a minimum of 10 hours a week writing my weekly BBA Economic Digest. As a former business editor of a daily newspaper, I can tell you that there is no magic button to producing good, readable content. It takes work. (It's why the Digest has an astounding 70 percent email opening rate as opposed to 15-25 percent which is the norm.) Will I write a book one day? Maybe, but if I do, I will do it the old fashioned way -- blood, sweat and tears -- to make sure the final product speaks to the reader. And I won't buy into the "10-hour book" hogwash that this fellow is selling.

Keep in Mind

Virtual conferences are real-time interactions that offer attendees a way to ask questions of speakers who act as though they have the right answers. On occasion, they actually do.

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