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BBA Economic Digest: There Will Be Blood


There Will Be Blood

While some economic development organizations continue to be obsessed solely with business attraction, small businesses, which are the backbone of their communities, are struggling to survive.

It's almost obscene and I wonder if a reckoning will come as a result.

Warren Buffett urged Congress to extend aid to small businesses as they continue to struggle through the pandemic.“It’s an economic war,” Buffett told CNBC’s “Squawk Box,” speaking alongside Goldman Sachs CEO David Solomon.

Specifically, Buffett asked lawmakers to extend the Paycheck Protection Program.“I think the country owes it to the millions of small-business people … just renew the PPP and get us to the end of the tunnel,” Buffett said. “When we went into World War II, a lot of industries were shut down; everything went to defense production. Well, we’ve shut down a lot of people in this particular induced recession and others are prospering.”

Solomon said more than half of business owners weren’t taking a salary to keep their operations afloat.

“This is a huge employment engine for the economy and they’re suffering right now. They need capital, liquidity to bridge them. They can see light at the end of the tunnel.”

In response to The Wall Street Journal asking what Congress could do to help small businesses:

R. Richard Hayes, Michigan: "Other than PPP, there could be direct payments to small businesses to cover other expenses. There should be no constraints on how this money is spent, so it can cover rent, payroll, capital improvements, and even taxes."

Bea Kelley, Florida: "The current package needs to exclude aid for states and concentrate on small business. States that are in need are notorious for squandering funds and ensuring their cronies receive money; the little guy is the backbone of this country, so help him and stop the political games."

BNSF Site Certification

BNSF Railway Company last week awarded three new locations its Certified Sites designation. All three new sites will bring their respective state’s total count to two in Kansas, Missouri, and Texas. To be considered for the designation, sites must undergo a thorough analysis which includes an evaluation of environmental and geotechnical standards, available utilities, site availability, and existing and projected infrastructure. The newly-designated Certified Sites feature hundreds of acres ready for industrial development. All certified sites are served by direct rail by BNSF.

New Century AirCenter Business Park, New Century, Kansas – Adjacent to Interstate 35, the 667-acre site is located in unincorporated Johnson County.


Wildwood Ranch, Joplin, Missouri – Located southeast of U.S. Highway 66, Wildwood Ranch comprises 503 acres divided into two main areas that extend into both Jasper and Newton counties.


Gateway Industrial Park, Gainesville, Texas – Located in northwest Gainesville and near Interstate 35, the 126-acre site is ready for rapid development of rail-served industrial sites.

Certified Sites are a part of BNSF’s Premier Parks, Sites, and Transload program, which addresses the increasing demand for customer site locations by developing various types of facilities across BNSF’s network.

Businesses looking to locate at any of these properties could save six to nine months of construction time as a result of this analysis. BNSF Certified Sites are reviewed by an industry expert in order to ensure accurate, reliable data.

The goal of the program is to provide an inventory of rail-served sites that are available for immediate development. It should be noted that BBA is advising and working with BNSF on its certified sites program.

The Year That Was

Reflection shows wisdom. Economic development organizations look back on 2020 as a year that we will all remember. "I look back on 2020 and see how the Colorado Springs’ region demonstrated its dedication and ability to bring relief and enhance resiliency for our entire business community," wrote Cecilia Harry, chief economic development officer with the Colorado Springs Chamber & EDC. "As trying as this pandemic has been, we are honored to show our existing businesses that we’re here for them and can work creatively with partners across the region to provide support and opportunity during a challenging

time."

"The fact that 2020 didn't go as planned is an understatement to be sure. This is a year that stretched many of us to our limits, and yet I am in awe of how resilient and creative businesses have been in the Santa Clarita Valley and beyond," wrote Holly Schroeder, president and CEO of the Santa Clarita Valley EDC. Brian Crowe, director of business attraction for Iowa City-Cedar Rapids, said this about 2020: "As we close out the books on an unprecedented year, we know that 2020 has taken its toll on many families, communities, and businesses. We were not immune in Eastern Iowa. We have had our fair share of disruption and turmoil from covid, social, and political unrest and we experienced a derecho storm that wreaked havoc on many of our communities. But still, through all of it, we can take comfort in knowing that our friends and neighbors stepped up, our communities and businesses stepped up, and have the opportunity to come together and rebuild our new normal."

Different Tribes

I have an idea. Let's give economic developers the power to lock educators and employers into a padded room to force them to talk. Do you think I'm joking? The primary roadblock to economic opportunity is the vast and growing distance between employers and colleges. It’s no exaggeration to say that employers and educators are from different tribes speaking different languages. Relationship problems are often rooted in poor communication between the producers and consumers of talent. If they are to form a partnership, they must pick up on the other’s cues. Bridging the communications gap is key with responsibilities to both sides.

Colleges and universities should build and administer standardized assessments to measure and report on a range of cognitive skills that are important to companies in the hiring process. It means that educators can also no longer remain isolated from and ignorant of job descriptions or labor market data. They should understand how graduates from their schools launch their careers (or fail to do so) and build a network of relevant hiring managers with local companies. It also means employers need to reach out to educators to impress on them their needs. Sadly, that's not happening in most communities.

Culture Matters

When a community has a large segment of its population living in poverty, a potential investor -- let us say it is a manufacturer looking for a future plant location -- may believe a lack of skills or even work ethic is to blame. That company may want to immediately dismiss such a place from further consideration. But if I were advising that company, I may say, "Hold on there. Let's take a closer look to see if there are some opportunities here for us. We just might come away surprised." The truth is that I have seen some very sophisticated manufacturing operations sited in historically poor areas and it is not only for the reason of labor cost savings. There very well exist a culture with a hunger for work, translating into a workforce that will be loyal and eager to learn new skills with an entrepreneurial mindset. Such a place might be a good bet after all.

Testimonials Matter

I hate to say it, but when it comes to business attraction, many economic developers act like used car salesmen. They strain themselves to make a sale, which I think is a wrong approach. A better approach is to act like a fisherman, which means you have to have the right bait. My advice: Think of your existing businesses as your ambassadors to the world, your best bait, which is precisely why a robust business retention and expansion program is needed. It forms valuable relationships. When an existing employer speaks of their experiences in a community in a compelling way, it can intrigue a prospective investor to want to learn more. "Look, I am here. This is how it is." Your goal is to get that fish on the line. Through their compelling stories, your incumbent businesses serve as wonderful bait. Worms work pretty well, too.

With Deep Meaning

In advising an economic development organization, I am looking at its original mission statement and another one that is proposed. To tell you the truth, I don't like either and will tell my client as much. (They are, after all, paying me to tell them the truth as I see it.) Peter Drucker, known as the “father of modern management,” said the mission should "fit on a T-shirt," and yet not be a slogan. It is a precise statement of purpose. Like the mission statement of the International Red Cross -- "To serve the most vulnerable" -- they come right out and say something that in its brevity and simplicity gives it power. Wrote Drucker: “It must be clear, and it must inspire. Every board member, volunteer, and staff person should be able to see the mission and say, ‘Yes. This is something I want to be remembered for.’” A mission statement cannot be impersonal but must have deep meaning and be something you believe in. A fundamental responsibility of leadership is to make sure everyone -- staff, board members, and volunteers -- knows the mission, understands it, and lives it.


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