Guest Column: Overcoming vulnerabilities in the local economy
It used to be harder to argue that there are vulnerabilities in the Columbia economy. After all, we were being listed in national magazines as having the lowest unemployment in the country and being lauded as one of the most desirable locations to live.
Today, however, concerns abound: layoffs at some of our major employers; reports of falling wages; gloomy projections of traditionally reliable sales-tax revenue; and the realization that interests elsewhere in the state (with no particular love for Columbia) can spoil the financial outlook for our great university. Some have argued that weakness in the local economy is a new phenomenon and that our economy was previously strong. I would argue that the vulnerability has been there all along and is now surfacing under stresses that have recently emerged.
A close look at our economy leads any objective observer to a huge appreciation for the positive impact of the University of Missouri (and its hospital). With no disrespect intended to State Farm, ABC Labs, Miller’s Professional Imaging, Mortgage Research Center, MBS, Boone Hospital Center and other major enterprises in our community, MU is where the majority of the quality jobs are, and MU is where most of the dollars circulating through our retail, real estate, restaurant and service sectors originate. Yet that is also the problem.
Columbia’s economy continues to be overly dependent on the University of Missouri.
Many people don’t see a particular problem with this and would argue that Columbia is just like other college towns. They are wrong. Columbia used to be like those other college towns, but today they are very different from us. Other college towns invested a decade and more ago in a strategy we now call “technology-based economic development.” As a result, they are reaping the rewards: hundreds of high-tech, private-sector employers and literally thousands of high-paying private-sector jobs providing balance and resilience in their economies.
“Technology-based economic development” is a term we will hear more and more often next year, not only in Columbia but also in Jefferson City and around the state. The term refers to an approach to economic development that has proven itself time and again in communities similar to Columbia that are home to major research enterprises, have an outstanding quality of life, and are passionate about the issues surrounding growth.
As one example, how can we not admire what West Lafayette and Purdue have accomplished with such a strategy? Several of our community and business leaders visited there recently to check it out. Here is what they found: 146 high-tech companies bringing new dollars to the local economy; all the benefits of having the home offices of those companies located in their communities; $80 million in payroll; and an average wage in those firms of $58,000. More than 50 of those companies originated through business incubators, and the others were attracted to the hive of entrepreneurial activity in their research parks.
The good news is that we too have embarked on this strategy; we are about three years into it in earnest. The strategy involves leveraging innovations at the University of Missouri, forming new technology companies here to commercialize those inventions, nurturing the companies through their earliest years of highest risk, and launching them into our business community. This is the essence of technology-based economic development.
Very few communities in the country have the option to pursue this strategy. It requires sophisticated infrastructure: (1) a research campus doing at least $200 million in research each year; (2) a source of early-stage investment capital to fund startup companies; (3) a business incubator to mentor and grow companies; and (4) a research park to ensure that when companies graduate from the incubation phase they take root right there.
The good news is that Columbia has: (1) MU; (2) Centennial Investors; (3) the business incubator; and (4) Discovery Ridge.
My heaviest involvement has been with the business incubator initiative. The purpose of the business incubator is to grow high-tech companies here. This is part of the technology-based economic development strategy to create high-paying private-sector jobs, bring new dollars into our economy, and increase the tax base that supports the quality of life we enjoy in Columbia. With $9 million raised, we were able to move forward with construction. There is excitement to see the steel being erected on our site fronting South Providence Road at MU’s Reactor Park. Our excitement is tempered, however, by the knowledge that it will cost $1 million more to completely fit out the building for emerging ventures.
Effective public-private partnerships were critical to successful initiatives around the country. In our case, $3 million has been contributed for incubator construction by the University of Missouri, $3 million by Federal agencies and $3 million by the private sector and the community. The private sector contribution includes a $2 million gift by Monsanto Company, and the direct contribution by area businesses, individuals and the City of Columbia, those who will benefit most from the initiative, stands at a relatively modest $1 million. That is why we are currently challenging ourselves to step it up a notch to complete the investment in construction of the incubator. To sit back and expect the university to pick up an even larger slice of the tab is to revert to a pattern of over-dependence on that most valued component of the area economy. That’s a habit we have to kick.
It is time to move from an economy that feeds off the University of Missouri to an economy that builds on the assets the university has provided us as the launch pad for our economic future.
Founding Contributors
Of the $9 million contributed for incubator construction, $3 million was received from the University of Missouri and $3 million came in the form of federal grants. The balance of the funds came from founding contributors, a list that the incubator projects hopes will grow in the coming months.
Monsanto Company $2,000,000
City of Columbia $150,000
Boone Electric Cooperative $150,000
Leggett and Platt $106,113
First National Bank $100,000
Boone County National Bank $50,000
Central Bank $50,000
Shelter Insurance $50,000
Soybean Association $50,000
Michael and Cheryl Kelly $48,000
John John $30,000
Gladys Seibert $28,150
Williams Keepers $25,000
Tom Meltzer $25,000
REDI $15,000
Mid-Mo BIO $10,000
Senniger Powers $10,000
All State Consulting (Ronnie Shy) $10,000
Virtual Reality $5,000
Gene Gerke $5,000
Dave & Nancy Griggs $5,000
Waddell & Reed $1,520
Grand Cru $1,000
Warren Prost $1,000
Bruce & Pam Walker $1,000
Kim March $1,000