A plan for boosting local economic development

The past ten years have not been good for Economic Development in Columbia and Boone County. The retail/commercial sector has been strong, but this segment has not delivered the better paying jobs our community requires. I think we can all agree on this analysis, but we may also differ about the reasons for the current situation.

I believe there are several reasons why we failed to live up to expectations during this period from 1997 to 2007. First, one of the most obvious reasons is the national trend for companies to out-source production to overseas locations to reduce production cost. There was a dramatic drop in manufacturing locations nationwide. However, even with this nationwide decrease, we still should have had more good manufacturing companies relocating to our area during the ten-year period.

I believe the remaining reasons we failed are all locally centered. During the period from 1973 to 1987, we were able to compete using only state incentives with little or no monetary input from the community. Columbia Foods/Kraft located here only because Ray Beck was able to use city, state and federal funds to build two miles of sewer line to the site. During the late 1980s, Quaker and Textron located facilities here on sites that were nearly shovel-ready, however very few sites became available after their move to Columbia Boone County.

We now have little, if anything, to offer prospects, and we are competing with cities in both Missouri and other states that are able to offer major incentives such as low-cost buildings and land, shovel-ready sites, industry-adjusted utilities and bond financing. Regarding utilities rates, we are not competitive in the area of industrial rates for large users, which is a serious problem for many of the high-tech industries we seek, such as data centers and semiconductor manufacturing.

Second, Columbia and Boone County lack shovel-ready building sites. Much of the available land along Route B is taken, and the remaining properties are not priced to sell or are not priced at all. Concorde Industrial Park developers took a huge risk to develop the park and build several spec sites, and they were aggressive and very helpful in locating companies there during the late 1970s and ‘80s. However, as Concorde begin to fill up and the developer became involved in other projects, activity slowed there as well.

A third major factor for reduced job creation was lack of an adequate marketing budget. Prior to the creation of REDI, the city’s Economic Development budget in fiscal year 1986 was $209,657 annually, which included 1.15 FTE (70 percent of my time and some planning staff); about $55,545 was personnel. However, after REDI was formed, that budget was used almost entirely for salary and administrative costs with little directed at sales and marketing of the community to outside entities who could be lured to Columbia and Boone County. If you adjust the $210,000 for inflation, you can see we are far from where we should be at this time and with these goals.

For unknown reasons, the leadership of the City of Columbia and the Chamber of Commerce did not recognize these problems, or did not address them adequately. Since I was not directly involved during this period, I can only respond with what I now see, and hindsight is always much clearer.

That is a brief overview of the bleak situation regarding the past as it was. Now I’d like to turn to the future, which we hope to be able to change – and change big.

Primarily, the community has come to recognize that job growth and high-tech jobs are important, yet it does not need to be a slash-and-burn type of growth. Perhaps most importantly, MU has made Economic Development its fourth mission.

There now is a commitment at all levels of the university to commercialization of ideas from faculty and staff, along with the idea that a close relationship between the community and the University can be very beneficial to both.

Another important change has been the great effort by members of Columbia’s Chamber of Commerce, MU, and REDI who wish to step up and seek solutions to problems of the past. The ideas and plans listed below are mostly those provided by others that I have listened to over the past two years.

The Plan

We can and should support, strengthen, and continue to build upon the new improving and growing relationship with MU and with the economic development initiatives of REDI and the Columbia Chamber of Commerce.

We can do this in part by structuring our marketing plan around the University’s “industry relevant research core competencies”.
After the consultant has compiled an industry list for each of the core competencies, we must determine which products are most likely to be able to be manufactured locally.

When the list of relevant companies is complete for each area, the next step is developing a mini marketing plan for each targeted company. Steps for this marketing plan will include:

• discovering if they have local contacts or relationships apart from the primary researcher;
• examining the business and determining what advantages Columbia/Boone County can provide them to locate here;
• determining the appropriate contact person within the company to schedule a visit.

We should also solicit and keep informed those local entrepreneurs, angel investors, and venture capitalists to promote the ideas and products coming from the researchers. We will require major incentives for the companies acquiring the patents to ensure the work remains local. To be successful, we will also need the assistance of the researcher and MU

Technology Transfer officials

Obviously, the more immediate successes will come from companies that seek us out, those that have been referred by DED or consultants to whom we have previously marketed, those companies that expand from the Life Science Business Incubator, or from successful companies already existing or participating in our community.

However, as a caveat, we should most decidedly not put all our eggs in the university basket as there are still many good companies out there looking for great communities.

An example of this was a Fortune 100 food processing company recently looking at our community which made us aware that we had no large shovel-ready sites. All those involved in the site visit felt the company would have located here if a suitable site had been available. There were also data center prospects for which we might have made their short list if appropriate sites had been available.

We can accomplish locating new businesses here after we have solved the site, incentives, REDI budget, infrastructure and utilities rate problems. The State Department of Economic Development will still be marketing for companies, while not to the extent they were in the past. The new CORE group will also be marketing the 12 county area including Boone County, and should have some prospects for us. In addition, we should continue reaching out to site location firms and using the reverse site location visits to market the area.

As Assistant City Manager/Economic Development Director, I often served as an ombudsman for developers, home builders, and businesses. The City Manager and I did not make everyone happy but they felt that they had someone on the inside to whom they could express their side of the story and to help them seek alternatives. I would suggest that the person serving existing industry interests be located within the City Manger’s office.

One area that is critical to our success with prospects and existing industry is the provision for infrastructure. In the case of Columbia Foods/Kraft above, and with all of the Data Center prospects, our ability to promptly put in the needed infrastructure was very important. Creating a fund for adding such infrastructure on short notice would go a long way in making us successful.

Which all brings us to the bottom line: Budget. We will only accomplish what the budget affords us to do, and we are way behind in this area! In the present budget, we need to work towards a marketing annual budget of $250,000. Obviously it can not all be changed this year, but some effort must be made if we are to compete with other university cities our size.

My suggestions for staffing and making the above plan work would be as follows:

• To recruit high tech prospects, create a science based sales position with the title of President of REDI. It is important for them to have this title on their business cards when meeting with CEOs of companies.
• Create a second position of executive vice president that deals with all administrative items, budgets, board meetings, committee meetings, community meetings, community development issues, proposal packets, and the myriad other duties which must be completed for a first rate economic development organization.
• Establish an inventive-based pay system for the REDI sales force.
• What we need to do
• Change the marketing plan to better capture spin-offs from MU.
• Change the budget to have marketing funds of at least $250,000 as soon as possible.
• Change the staffing to include a science-based super-sales person.
• Continue to market to firms with well-paying jobs with benefits.
• Create a position within the city manager’s office to assist local existing industry.
• Create an infrastructure fund for economic development projects.
• Adjust utilities rates for large users.

Bob Black

Bob Black, a former assistant city manager, is chairman of the Regional Economic Development Inc. board and an executive with Sircal Contracting.