Taking the Mystery Out of Economic Development
by Otis White

According to consultant Otis White, many cities and towns focus their economic development efforts on encouraging relocations. Instead, time and money would be better spent on fostering the growth of local businesses. Includes Sidebar, "What Businesses Look For."

If you've ever felt that dealing with economic development projects was difficult, consider this. Hodding Carter Jr., was a Pulitzer prizewinning editor in Mississippi in the 1950s and 1960s who wrote editorials favoring civil rights. For that, he lived under constant political attack and, from time to time, threats of physical attack.

Yet for all his courage, there was one subject, Carter said, that he dared not write about: Any suggestion that his hometown, Greenville, Mississippi, wasn't the best place to locate a business.

That's the way it is in many places. Economic development is a form of local patriotism, a source of new jobs and, potentially, a great deal of money for some in your community. No wonder it's such a difficult subject.

But it need not be a mystery. In essence, economic development is about three things: companies moving to your community, companies starting in your community, and companies expanding in your community.

What makes economic development mysterious -- and difficult for planning commissions -- is that all the attention is focused on only one of the three, companies that move to your community. Why? Because "relocations" tend to make a big splash. The news media pay attention, chamber of commerce executives get bonuses, and politicians cut ribbons when a new plant comes to town. Nobody notices when a new company is created -- and few pay attention when an existing company adds more jobs.

But it's important for you, as a planning commissioner, to keep the other two in mind. First, new and expanding businesses provide many more and, often, better jobs than relocations do. Second, they don't cause nearly the planning headaches.

The Headache of Relocations

The reason relocations are difficult is because frequently they require rezoning. This isn't always the case -- some new companies want to be in your community's industrial park or an older, industrial part of town -- but many don't. They want to be on the edge of town, in an undeveloped section. And the neighbors often aren't happy.

Why do manufacturing and distribution companies, in particular, want these "greenfield" locations? For one thing, land assemblage is usually easier on the edge of town than in already developed areas. But more important, they want speed. Much of American industry today is built for speed -- speed in bringing in parts, speed in assembling products, speed in delivering the finished goods to the customer -- and greenfield locations offer greater opportunities for designing a plant around speed.

How intense is this need for speed? An executive told me that his company decides where to locate based, in part, on "gear downs." Every time a driver gears down his truck for traffic or stop signs, he explained, it costs his company money. So he was interested only in sites directly on interstate highways and in uncongested areas. ...

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