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BBA Economic Digest: The Simple Reality


The Simple Reality

Job skills were changing even before the pandemic, but will be accelerated because of it.

By now I must truly sound like a broken record to my economic development friends, but I cannot emphasize enough that digtal skills really matter. Communities that adapt to the new reality will win. Those that do not will not. It's that simple.

This is capacity building in its purest form.  Here's the deal: Eighty-five percent of companies recently surveyed by McKinsey said they had accelerated digitization. Employees are not only going to need to be comfortable using digital technologies, ranging from collaboration software to videoconferencing, but they’re also going to need to accept its role in evaluating metrics. This becomes all the more important as employees work remotely and workforce management can be more challenging.

Microsoft CEO Satya Nadella says his company has benefited from accelerated adoption of digital capabilities such as cloud computing and Teams, its workplace collaboration offering. Teams now has more than 115 million daily active users, up from 75 million in April.

"The next decade of economic performance for every business will be defined by the speed of their digital transformation," Nadella said on a call with analysts last week.

Wrote Alan Murray, CEO of Fortune: "Tech’s effect on business continues to grow at exponential rates. It’s just that “tech” has moved from being an industry to being a competency … of pretty much any successful business today."


Whoppers

Nestlé Purina PetCare said it will build its first new American factory in 45 years in Clermont County, Ohio, that will employ 300 workers. Construction is set to begin shortly and the $550 million plant will become operational in 2023. It will become the 10th American facility producing dry pet food. The 1.2-million-square-foot facility will become the company’s 23rd overall plant in the U.S. Ohio and local officials have agreed to provide a package of at least $6.8 million tax incentives to secure the project. Clermont County is part of the Cincinnati metro area.

CBRE in Dallas

CBRE Group Inc., the world's largest commercial real estate services and investment firm, is moving its headquarters from California to Dallas. CEO Robert Sulentic confirmed the move Thursday in an interview with the Dallas Business Journal.

CBRE's employee count in North Texas has grown dramatically since 2012, rising 67 percent from 1,890 employees to about 3,150. Dallas is now home to 11 Fortune 500 headquarters. 

Sunrider in Midlothian

Sunrider International, a global health and wellness brand based in Torrance, Calif., has begun construction on a new 1 million-square foot plant in Midlothian, Texas. The $56-million facility is expected to be completed by mid-2022 and will create at least 210 jobs. The company will be the first to build in the Midlothian Business Park in Ellis County, which sits within the DFW metro area. 

Cannon Automotive Solutions in Cleveland, Tenn.

Cannon Automotive Solutions, a maker of metal auto parts, has begun construction of a new plant in Cleveland's Spring Branch Industrial Park located off Interstate 75.

The company bought a 41-acre tract for its 231,000-square-foot plant at 

Cannon, a division of Canada-based Electromac Group, is initially investing $58 million and creating 110 jobs. Over the next four years, Cannon plans to invest about $114 million and employ 197 workers within five years of opening the facility.

U.S. Corrugated in Dover

U.S. Corrugated said  it will build a new 457,000-square-foot manufacturing facility in Dover, Delaware, creating 159 new jobs. The company will receive a job performance grant of $450,000 and a capital expenditure grant of up to $2.73 million for building its new $80 million box-manufacturing “super plant." The company anticipates breaking ground in November on a 37.4-acre site.

Nova Steel in Bowling Green

Canadian-based Nova Steel, will locate a $70 million to locate a tube manufacturing facility in Bowling Green, Kentucky The project is expected to create 110 full-time jobs in the coming years. The company purchased a 108,000-square-foot building with plans to expand an additional 100,000-square feet in the KentuckyTranspark.


For the Greater Good

Every community has multiple organizations touching economic development in some way. As such, there are bound to be silos -- an us vs. them mentality that impedes communication and cooperation between groups. I am finding this in a city where I am currently doing a virtual SWOT analysis, interviewing community stakeholders. A silo mentality is a natural tendency that economic developers should try to fight whenever possible. The truth is that some organizations -- even if they are fairly competent at what they do -- don't always play well with others. But to be most effective, economic development organizations need allies and cooperation and collaboration among its allies to get things done. Seldom do we think of our own organization as not cooperating with others. Typically, it's always the other guys. And while I'm finding that my client EDO has a good reputation when it comes to collaborating with other organizations, some of those other players don't see themselves as being in the same boat. By the way, this is a common thing in many if not most places, but again it hampers economic development. Suggestion: Take a bigger view. See yourself as working for the good of your community and not just your organization.

No Such Place

Word of advice for economic developers: When it comes to marketing, please don't say your community is the "perfect location." A) There is no such place, unless it's heaven. (Which makes me wonder, because I hear that in heaven there is no beer.) B) It sounds amateurish and means virtually nothing. The truth is there are better places for capital investment but they are based on the needs of companies, and those needs can and do vary greatly. Remember, it's about the customer's needs, and not about you. Advice: Tell compelling stories illustrating why your community is different and how it could possibly be a good fit for certain targed industries. Claiming you're the "perfect location" is just a throwaway phrase that means nothing. Ditch it.

Fund Drives Tech Growth

After launching a fund aimed at attracting tech startups, the McKinney Economic Development Corp. in Texas has brought more than a dozen new or expanded workplaces to the city. The most recent is Alanna.ai, a title and land industry-focused software startup, which plans to more than double its workforce, reports the Dallas Business Journal. The MEDC Innovation Fund is geared toward helping tech companies and startups grow within the city. With requirements like having a minimum number of employees and keeping the business in McKinney for at least three years, the MEDC wants to create a innovation ecosystem in the city. The fund recently invested in its largest company to date, announcing grant funding in October to MyTelemedicine, which plans to expand in the city and add nearly 40 new positions in the next three years.

The fund has also been used to lure companies in recent months, including healthcare software startup Invene and the Italian tech firm EnginSoft.


Where We are Now

Over the summer, the U.S. economy grew at a stunning 33.1 percent annual rate. On the face of it, that's great news. But that's just half the story. But, but, but: The big reason the U.S. posted record GDP this quarter is because there was a record decline in the prior quarter. The US economy declined at a 31.4 percent annual rate — the deepest downturn on record.

So while the third-quarter growth was the fastest on record, the U.S. economy is still well behind where it was before the crisis. And fresh restrictions in the fall and winter because of the worsening pandemic (Chicago and Connecticut are recent examples) could stall or reverse early progress, economists warn.

The U.S. had its worst week yet for coronavirus cases, recording more than 500,000 new cases. Cases, hospitalizations and deaths across much of the country are the highest they have been during the pandemic.

I believe new social distancing rules are inevitable as coronavirus cases spike. The latest surge is pushing total infections in the nation toward 9 million with at least 228,675 deaths. The seven-day average of infections also hit an all-time high of 74,183, a 24 percent increase from a week ago.

So the intensifying pandemic and probable lack of another round of fiscal aid this year will almost certainly dampen economic activity to close the year and to begin 2021.

Meanwhile, the economic pain persists. Restaurants are seating only about half the diners they seated in early March. Travel is still down more than 50 percent from a year ago. Hotel occupancy is down 31 percent from a year ago. Employers slashed 22 million jobs in March and April, and the economy is still down more than 10 million jobs over the course of the pandemic.


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