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Better 'Ethics' In Economic Development?

Tue, 07/09/2013 - 3:26pm
Joel Hans, Managing Editor, Manufacturing.net

Not too long ago, I had the opportunity to visit northeast Indiana, home of the city of Fort Wayne, a large Amish/Mennonite population, and a great deal of manufacturing. While being shuttled between plant tours, with a few other journalists and officials from the area’s economic development agency, there was a lot of time for conversation. And along the way, I started chatting with a representative from Indiana Michigan Power (IMP), which works closely with the economic development agency (Northeast Indiana Regional Partnership; NIRP), about the competition between regions/states to draw in manufacturing jobs. Perhaps more critically, the ethics of such battling.

We had both heard a good deal of news about Texas Gov. Perry’s visit to Connecticut, where he tempted the state’s gunmakers with a move to Texas, which he says has better tax policies and a more business-friendly environment. And perhaps more controversially, he argued that in Texas, he wouldn’t stand in the way of a business providing the tools for citizens “to enjoy the freedoms that they can have.” It’s a bold statement, and one he knows would be tempting to companies worried about what kind of legislation might pass in the future.

Aside from the clearly politics-based pitches, it seems that every state, and every economic development committee within those states, is spending a great deal of time talking about what kinds of financial incentives they can offer, whether that’s in the form of tax abatements, cheap land and/or facilities, or loans for new investment. The NIRP says they don't think any of those tactics are all that necessary. They don't really feel the need to go out and advertise themselves, or try to poach from other regions, simply because the businesses interested in their region have already done their homework.

It was an extraordinarily fresh breath of air, for someone who hears about economic development (ED) on a consistent basis, and who has spoken to a quite a few professionals in the area. Instead, the NIRP people focus on bringing to the table the merits of manufacturing in that location, which includes a strongly-trained workforce, proximity to major industry centers and, of course, the recent passing of right-to-work legislation. Officials at the NIRP say all of these have attracted business alone, without the levying of teasing abatements and loans.

And on the note of right-to-work — the argument can be framed pretty easily in the way that's been handled by the NIRP. That effort was met with a formidable and predicted amount of resistance, as one would expect. The NIRP’s president and CEO, John Sampson, was a key player in that effort, and he told me that decision wasn’t based upon the politics of unions, in terms of different parties being “left” or “right” or any of the other political labels. It was simply a barrier to business, and it’s already led to more investment interest. Sampson was quick to point out that the right-to-work legislation hasn’t gutted all unionization in the state — and far from it, considering GM recently invested heavily to expand its operations there.

We're not about to see Sampson traveling around the most unionized states around the country while touting the business-friendliness of that new political climate. Their philosophy is that companies are smart enough to make those big decisions for themselves, and that there’s generally good reason for why they’re currently located wherever they are, and a lot of thought is being put into any expansion well before the company reaches out to a state’s ED people.

I think there’s real merit in that approach, even though I do understand that political situations can have an effect on business climate. The problem is that when politicians go about on the failings of one state against the merits of their own, the underlying pretext is more important than the business case. To me, there’s something to be appreciated in business that isn’t cutthroat and isn’t based solely upon politics. And instead of mourning over every missed opportunity, the people at NIRP are simply happy to see any company expand — even if it’s not in their region.

I’d like to see more states, or even regions within those boundaries, emphasizing with more depth the merits of their particular areas rather than disparaging others in order to attract some semblance of political gain. Economic development is a pretty cutthroat industry, sure, but it doesn’t mean it has to rely upon low blows and petty political bickering to get things done. In that respect, I think the people at NIRP are well ahead of the curve. They’re doing everything they can to create jobs, but they’re not about to stomp around the country touting the revival of their own recreational vehicle manufacturing from the remnants of areas even harder hit.

With that in mind, it’s important to note that despite being hit hard by the Great Recession, the Fort Wayne region has been bounding back with force. Its nearby counties have large numbers of people still employed in manufacturing, and everything from GDP to positive business dynamics (more hiring, less layoffs) is trending upward. Sampson himself described it as being “first in, and first out,” and attributed that to a number of local initiatives his people have been pushing, particularly in creating a highly-skilled workforce.

And in the end, despite all the state vs. state battling, any manufacturing expansion within the borders of the Lower 48 (not forgetting Hawaii and Alaska, of course, and Puerto Rico) is, simply put, good news for everyone. I think it would serve us best if we put a lot of this petty bickering behind us and focused on what really matters, which, generally, is the fact that American manufacturing is growing, but that it has a long way to go.

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