Transcript Economic Development Best Practices for Rural Communities Mike Kirchhoff, CEcD Principal, DPI Group 10/19/11

Economic Development Best
Practices for Rural Communities
Mike Kirchhoff, CEcD
Principal, DPI Group
10/19/11
Economic Development Best
Practices for Rural Communities
- Marketing/Business Attraction Approaches
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Why Is Attracting Business Important?
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Economic base jobs
Community wealth
Property values
Property tax base
Sales tax revenue
Multiplier effect
Linked industries
Construction jobs
Quality of life
“Service after the sale”
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Successful Communities
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Know their product
Know their targets
Are ready to respond
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Know the Product
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Study the area – to identify strengths to exploit and
weaknesses to strengthen
Prospect perspective is key to this process
Community leaders must be willing to be self-critical
Plan to prepare/position
Assemble key information about the area
(Labor costs, workforce quality & availability, and commute shed;
community data & demographics; site & building data, maps, &
photos; utility information; tax information; financial assistance &
incentives; major employers; and MORE!)
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Be Ready to Respond
Not Optional
 Current data - timely, accurate, and appropriate
 Adequate real estate
 Effective programs
 Professional presentation
 Web presence
Optional
 Target industry business case
 CEO testimonials
 Community “viewbook”
 Video/CD/data disk
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A Unified Message…
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…Not an Inconsistent Message
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E.D. Marketing Toolkit
Web Page
 Other Web-Based Tools
 Direct Mail
 Newsletter
 Blast e-mail /e-Newsletter
 Telemarketing
 Advertising
 Article Placement
 Referral Services
 Direct Sales Calls
 Trade Shows
 Association Marketing
 Consultant/Broker Outreach
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Other Web-Based Tools
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Location One Information System (LOIS) – Owned by KCPL,
DCEO is a subscriber (www.locationone.com)
www.fastfacility.com – Created by Area Development
Magazine
Economic Development Directory – listing of economic
development organizations by state and region
(www.ecodevdirectory.com/)
GIS Planning/Zoom Prospector (www.zoomprospector.com)
LinkedIn, FaceBook, Twitter
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www.ecodevdirectory.com
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www.ecodevdirectory.com
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www.ecodevdirectory.com
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Marketing Strategies
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Regional Marketing Approach
Individual Marketing Approach
Target Marketing
Ally Marketing
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Regional Marketing Approach
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Most cost-effective approach
Leads from regional program are shared with regional
partners
From a site selector perspective, a region can generally
demonstrate critical mass better than a single area
As an example, JREDC partners with the Western Illinois
Corridor Council
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Individual Marketing Approach
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Best suited for areas where a regional effort is not
practical
Success depends to a great degree on the knowledge
base of the organization’s staff and leadership
A solely independent approach is less likely to generate
interest among prospects and allies unless the
organization represents a large urban area
Not as cost-effective as a regional approach; a blend of
individual and regional marketing can be very effective
Only the best-funded independent organizations are able
to use the more sophisticated tools due to cost and
logistics issues
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Target Marketing Preparation
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Target business segments identified based on a strategic
analysis of the area
Segment-specific research to understand the nature of
each segment (market structure, competitiveness, products, cost
structure, business linkages, etc.)
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Developing a business case for each target based on
business advantages in the region
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Ally Marketing Program
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Partner with DCEO/IDC at CoreNet Global national
events and participate in Chicago Chapter events
Chicago CoreNet Chapter sponsor
Partner to participate in Industrial Asset Management
Council (IAMC) conference
Arrange and conduct meetings with targeted entities in
Chicago and St. Louis
Conduct an annual allies event, either locally or on-site
in Chicago/St. Louis
Regular meetings with key allies, including state,
utilities, railroads, site selection consultants, corporate
realtors, etc.
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Ally Marketing Components
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Newsletter
Other Direct Mail
Office Visits
Community Tours
Association Participation
Special Events
Joint Marketing Efforts
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Economic Development Best
Practices for Rural Communities
- Existing Business Retention/Expansion Approaches
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The Importance of Existing Industry
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Economic base jobs
Community wealth
Property values
Property tax base
Sales tax revenue
Multiplier effect
Linked industries
Construction jobs
Quality of life
“Service after the sale”
IDENTICAL to the reasons for attraction, but often
easier and less expensive!
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Typical Program Goals
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Build goodwill and relationships with business clients
Improve company’s familiarity with/perception of the
economic development organization
Gather data about the status of the local economy
Serve as early warning system – company or community
problems
Assist companies at risk of downsizing or leaving
Assist companies seeking to expand
Identify potential opportunities for inter-firm
collaboration, expansion, or attraction activities
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Existing Industry Program Elements
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Recognition activities
Educational workshops/seminars
Industry linkage programs
Targeted technical assistance
Company visitation programs
The “next wave”
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Recognition Activities
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Industry Spotlight
Industry of the Year
Newsletter recognition
Media assistance
Other activities
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Educational Workshops & Seminars
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Based on need
Targeted subjects/audiences
Financing workshops
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Industry Linkage Programs
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New Managers Reception
Industry Index
Services Index
CEO Roundtables
HR Managers Group
Industrial Alliance
Buyer/supplier relationships
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Targeted Technical Assistance
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Needs are frequently identified during Synchronist visits
Customized, confidential assistance to clients
Referral to SBDC, IMEC, IDES, other allies
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Synchronist Visitation Program
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Questionnaire focuses on industry, management,
products, satisfaction, and community connection
Detailed data/trend analysis – analytical and reporting
capabilities
Identification of red flags
High quality, predictive data
Enables proactive programming
EDC acts as an opportunity catalyst (market, cluster,
joint venture, partnership, linkage opportunities, etc.)
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Corporate HQ Visitation Program
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More general in nature
Strategic discussion
No set questionnaire
Company-specific
Visits arranged in
partnership with local
plant manager
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The “Next Wave” Sophisticated Approach
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Business model approach to existing industry development
Adapted from “Rocketing out of the Twilight Zone: Gaining
Strategic Insight from Business Retention (Blane, Canada)
Local companies as “clients”
New vocabulary: “service delivery, business drivers,
accounts”
Extensive use of diagnostic tools
Portfolio management approach
Maximize return on investment – consciously direct
resources toward high value and high growth opportunities
(and away from risk)
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Is Proactive BRE Important? Here’s Why…
The CYBERTEK Deal
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Company History
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CYBERTEK has been located in Jacksonville for more
than 70 years in one form or another
Founded as Central National Life Insurance
Purchased by John Deere in 1985 (150 employees)
John Deere sold policies to Reassure America in 1995;
CYBERTEK was created by PMSC to service the policies
(50 employees)
PMSC leased the facility and equipment from John
Deere
In 1998, PMSC sought to build a new 50,000 s.f. facility
and expand by 200-300 employees
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The Problem
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PMSC asked to extend their lease for an additional two
years
John Deere said “buy it or get out”
PMSC had no interest in owning the building and began
seeking interim space in the region around Jacksonville
Space was identified in Springfield
The company planned to construct the new building in
whichever community its interim space was located
Lease expired December 31, 1998
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The EDC Gets Involved
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With six months remaining on the lease, PMSC
approached the EDC for help
By mid-October, no suitable space had been found in
Jacksonville
The EDC suggested an alternative…why not make the
current space the interim space?
Perhaps the City or the EDC could purchase the existing
building and extend the lease to allow CYBERTEK to
complete it’s new facility
PMSC, John Deere, the EDC, and the City of Jacksonville
began building negotiations on November 20, 1998
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Crafting a Creative Solution
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A variety of scenarios were examined – City purchase; EDC
purchase; John Deere donation of the building to a 501 (c) 3
A City purchase would mean that the ultimate disposition of
the building would be restricted by government requirements
A purchase by EDC was a problem because of a lack of funds
Jacksonville Main Street, the best choice for the 501 (c) 3
donation option didn’t yet have it’s IRS status
Negotiations left the problem unresolved, and time was
running out – CYBERTEK’s lease was due to expire in less than
45 days
A deal was completed by phone the following week
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An EDC Purchase
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Purchase price $375,000 ($100,000 down) – 8 ½ % interest
(imputed)
Funds for the down payment came from the City, which
purchased two parking lots near the building for $50,000,
and…
CYBERTEK, which agreed to purchase the building contents
for $50,000, subject to the EDC’s repurchase at the end of
the lease for $25,000
CYBERTEK also agreed to lease the building through
December 31, 2000 for $24,000/month
The EDC sold the building and first-floor equipment in August,
2000 (negotiated down from full- price offer; PMSC saved
$95,000 in rent expense)
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Everyone Won!
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John Deere sold its building
CYBERTEK/PMSC (now CSC) was able to extend its
lease without relocating during construction of its
new 60,000 s.f., $10,000,000 facility
The City retained the company, and is benefiting from
an increased employment base and (ultimately) an
increased property tax base
The EDC sold the building, retained ownership of
$25,000 in equipment and furniture (later sold), and
netted $232,000 during the 18 months it owned the
building!
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Today – A Downtown Destination
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The first floor has been redeveloped to include a
premier fitness center and various retail shops
The second floor (more than 16,000 s.f.) is now the
finest banquet hall in Jacksonville, comparable to
hotel facilities in nearby Springfield
The three banquet rooms can accommodate a total of
up to 600 people
During its first year, the popular facility exceeded
projected bookings three-fold
The Jacksonville Rotary Club, EDC, Chamber of
Commerce, and other groups use the facility
extensively
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Lessons Learned
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NEVER GIVE UP when negotiating a BR&E or prospect
deal
Think “out of the box” and use creativity to find a
solution where none appears to exist
Work diligently and proactively to retain and expand
existing companies; it’s easier (and much less
expensive) to retain and expand the companies
already in the community than to hit a home run and
attract others to relocate to the community
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Contact Information
Mike Kirchhoff, CEcD
Principal
1212 NE 94th Terrace
Kansas City, Missouri 64155
317.554.9660
[email protected]
www.dpigroup.biz
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