07 Jul 2010








Industry Targeting and Scope in Economic Development

Mr. Monzon co-founded GIS Planning Inc., one of the fastest-growing 5,000 private companies in the United States, according to Inc Magazine. As developer of the first GIS-based website for economic development, Mr. Monzon is an entrepreneur, innovator and technology professional. With over 15 years of experience developing location-based applications and GIS based websites, he has received multiple awards in both the field of Economic Development and Geographic Information Systems. His work has appeared in The Wall Street Journal, CNN, NBC News, and numerous GIS-related publications. Mr. Monzon has lectured about Internet GIS in Europe, the United States, and Latin America. Prior to GIS Planning, Mr. Monzon worked for Vectiv, an online GIS site selection company focused on the retail industry.

Any marketing program needs a clearly defined audience. An economic development organization should define the reach of its audience in terms of both geography and range of industries.


Survey respondents in the market research for 2008 book, Economic Development Marketing: Present and Future, as shown in Figure 3-1, tended to represent organizations that were at the city or county level. Only 4% were larger than statewide organizations. When asked to describe the geographic scope of their marketing efforts, however, the most frequent response was global at 29%, followed by nationwide at 27%. Clearly, the average economic development organization is responding to the forces of globalization and expanding the size of its target market area far outside the boundaries of its service area.


The changing nature of the global economy has had pro- found impact on the field of economic development and the industries it targets for future growth. Eva Klein writes, “We have entered a transition from the industrial economy to the global knowledge economy... a transformation as great as the one our society underwent about 200 years ago, when parts of the world’s ubiquitous agrarian economy entered the industrial economy.” Within this shift to a knowledge economy in the United States, economic developers continue to focus on manufacturing as a targeted industry.


Economic developers were asked to name the five industries they spend the most time targeting, and site selectors/corporate real estate professionals were asked to name the five industries for which they most often need to locate space. Table 3-1 lists the top ten in- dustries selected by economic developers and compares the ratings to those given by site selectors. 73% of economic developers selected manufacturing as one of their top five targeted industries, over 20% more than information technology/high-technology, the next most targeted industry. These results are surprising in light of the overall employment decline of the manufacturing sector nationwide, where employment dropped 20% from 1985 to 2005 (see Figure 3-2). This priority may be due to the political concerns in communities of keeping high-paying blue collar jobs in the midst of the national transformation to a service economy, which is highlighted in Figure C-3 in the book's appendix. It should be noted, however, that declining employment does not equate to a dying industry. “Manufacturing employment has fallen 25 and will likely continue to fall, but that does not mean investment will continue to fall,” says Mark Sweeney of McCallum Sweeney. “For manufacturing to be competitive, it must be efficient with capital investments that are labor-saving. The investment to job ratio has increased. It is not unusual to have $1 million in investment per job, roughly double the ratio of ten years ago.”


Less than half of site selectors reported manufacturing as one of the top five industries for which they located space, though it still ranked as the number one source of clientele. The survey did not specify whether projects were within or outside of the United States. It should be noted that not all companies needing to locate business real estate utilize the services of site selectors, as site selec- tion consultants and corporate real estate professionals tend to serve companies that are large employers, are making a large financial investment, or have a high financial value. In particular, small businesses often lack the financial resources to hire a site selector. Industries that include a large share of small businesses may therefore be underrepresented in a site selector survey.

Many site selectors personally interviewed were hopeful about the future of manufacturing in the United States. “You look at the statistics and it’s still by far the most active sector [for site selection consultants],” says Deane Foote of Jacobs Carter Burgess. “Overall it still has more projects than any other sector. Even though you read about it all going overseas, it’s just not true.” The nature of manufacturing in the United States is certainly changing. “Low-cost manufacturing will continue to leave North America,” explains Don Schjeldahl of the Austin Company, “but what’s happening is that new technologies are leading to new markets, and a lot of these technologies require sophisticated manufacturing, customization, time sensi- tive manufacturing, or all those things, and you need highly skilled people.” Many site selectors interviewed pointed to alternative energy as a key source of new investment. Even many traditional manufacturers are realizing the benefits of staying local, such as just- in-time shipping. Dennis Donovan of the Wadley Donovan Group says that freight sensitive businesses, such as battery manufacturers,
are expanding less overseas due to high transportation costs. He ´┐╝explained that within the United States, manufacturing is locating in smaller communities because of lower operating and labor costs.


Site location is also a far more important decision for manufacturers than for most other industries. “Unlike retailers who can locate on every corner, manufacturers only site a new facility once in a great while,” says Tim Monger of Colliers International. “There’s more at stake for manufacturing than for any other industry, because they’re investing a significant amount of money. It’s quite a roll of the dice in setting up a new location and making sure you have a good location and labor pool.” This may further explain why experts in site selection are so involved in the location of manufacturing facilities. As a corollary, it is very possible that the focus of the site selectors owes more to manufacturing’s highly complex logistical requirements than to the total amount of site selection decisions that companies are making in the different industries.


While economic developers focused more attention on manufacturing, information technology, and sciences, site selectors placed more emphasis on finance/insurance and call centers. The survey participation of rural economic developers may help explain why finance and insurance were not targeted by economic developers as much as they were the focus of site selection professionals. 

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