Editors’ Location Picks 2008
These gems didn’t just catch our eye with a quick flash. Their consistent economic development sparkle earned them front-and-center display in our annual showcase.
Each year, the Business Facilities editorial team is exposed to a tsunami of marketing brochures, press releases and data from locations throughout the country that are vying for their place in the economic development spotlight. We attend the major conferences that are magnets for development specialists, and try to visit as many states as we can squeeze into a jam-packed schedule.
With about 250 Metropolitan Statistical Areas (MSAs) to choose from, there always are tough decisions to make about coverage. Inevitably, there are some gems that catch our eye along the way but do not make it into our showcase.
That’s why, beginning last year, we created an annual cover story that we call Editors’ Location Picks, which gives us an opportunity to revisit some special places that drew our attention during the previous months and give them the attention we feel they have earned.
This year’s choices reflect the evolving diversity of economic development initiatives, and each had different strengths or strategies for growth that drew our attention: in Greater Philadelphia, it was an innovative approach to attracting new projects; Salt Lake City, UT is reaping the benefits of several years of workforce training and educational initiatives; Oklahoma City, OK has become a vacation destination after a decade-long effort to establish OKC as a cultural Mecca.
In today’s economy, it makes sense to take a look at how some locations, like Midland, TX, have become recession-proof, and others, like Wichita, KS and Minneapolis/Saint Paul, MN, have continued to accelerate growth in industries that already have produced mature clusters in their regions. And with the emphasis on natural resources drawing more attention these days, we think you’ll find it interesting to see how Syracuse, NY has been marketing its abundant water supply to great success.
Innovation in economic development marketing is what keeps MSAs from losing jobs and businesses. It takes something really special to keep an area growing in a sluggish economy. Here are some regions that are doing just that.
Salt Lake City, UT
For anyone who’s been keeping up with economic news, it should be no surprise that we chose the Salt Lake City MSA as one of our editors’ picks.
Utah ranked third for business climate in Business Facilities’ annual Rankings Report in July, and the state was named second in Forbes magazine’s “Best States for Business” for the second year in a row. Utah also finished third overall in a CNBC list of “2008 America’s Top States for Business,” and the American Legislative Exchange Council ranked Utah number one in the nation for overall future economic outlook, based on 16 important state policy variables. Here are some of the reasons for these high marks.
“We are one of today’s emerging economies [due to] our amazing workforce,” explains Jason Perry, executive director of the Governor’s Office of Economic Development.
“We have the youngest workforce, with an average age of 28. They also are the most well-educated workforce, and are mostly bilingual with a one of the highest percentages of bilingual capability in the U.S. We have a pilot program going on right now in the grade schools and high schools with more kids learning to speak Chinese than any other state. We’ve also had one of the lowest unemployment rates in the U.S. for the past year and a half, with lots of new talent moving here every day.”
This skilled workforce is one of the reasons Procter & Gamble says it chose Box Elder County, just outside of Salt Lake City, for it’s first new U.S. facility in 30 years. The company broke ground early this year on a $540-million project that will provide a projected 1,000 jobs.
“We are very excited about the beginning of this long-term relationship with the state of Utah and Box Elder County,” Matthew Donthneir, human resources manager for the new site, said in announcing the project. “We anticipate great opportunities to leverage the local work force and culture, to provide superior products to our customers in the Western U.S. This is a partnership where we will both win big.”
Procter & Gamble was so focused on finding a location with a great workforce that, according to Perry, they even did a little “mystery shopping” in Salt Lake City by walking the streets anonymously and speaking to people to get to know what their prospective future employees were like.
When officials in Utah choose industries to target, they mean business. At least five new expansions announced in 2007 came from the seven industries targeted by Governor Jon Huntsman Jr. and his economic development team. They include: Barnes Aerospace, which expanded to add 474 new employees; Goldman Sachs, which doubled its workers to 700 in Salt Lake City; Thermo Fisher Scientific, Inc., a life science company, expanding to add 196 new jobs; Fiber TEK choosing the state to manufacture its energy-efficient building materials; and Smith Sports Optics, an outdoor products manufacturer expanding its facilities and adding 64 new workers.
Midland, TX, located in the western part of the state and just south of Lubbock, is a relatively small city in terms of size, but huge in terms of its impact in the energy market. In today’s economic climate, that means Midland is not only recession-proof, it’s experiencing economic expansion at a time when few other metropolitan areas are growing. This explains why Midland shot up ten places to the number one slot on Inc. magazine’s list of top small cities in which to do business.
“We’re an oil and gas energy cluster here,” says Mike Hatley, vice president of economic development for Midland. “That means we have a lot of talent, such as engineers, geologists, management, experts in drilling. Every kind of employee you need for this industry is right here.”
With the exception of Houston, TX, no other area in the U.S. plays a more important role in the nation’s energy industry than the cities of Midland and Odessa, Hatley says. There are more than 2,300 firms in the Midland/Odessa MSA that are directly involved in oil and gas operations. The region supplies more than 60% of all oil and gas produced in Texas.
Midland is the administrative, management and development headquarters for oil and gas exploration and production of the Permian Basin. The city is home of many oil- and gas-related support businesses, including finance, legal, accounting, data processing, marketing, and engineering services. And, in Midland, there’s still plenty of room to grow.
“The demand for more energy is going to keep going,” says Hatley. “We now have India and China demanding more and that’s not going to lessen over time, so there’s more room for growth in this industry.”
Midland claims the lowest rate of unemployment in the state and the nation, a major advantage in its aggressive effort to convince people to move there.
“There are people who’ve been laid off all around the country, and we want them to know that Midland can afford to give them a doggone well-paying job,” Hatley declares. “We’re recruiting people of all skill levels because everything here has grown along with the energy cluster, including the retail and housing markets. So we need people who can do everything from welding to building houses to doing accounting work. Plus, your dollar will go further here than anywhere else in Texas. The cost of living is pretty low and the quality of life is great.”
Even in the midst of their booming oil economy, the city’s economic development team also has been working on diversifying their industry base by targeting professional services, health care, logistics and aviation. Midland College has a certificate program in aviation mechanics and a four-year degree in engineering, which is a draw for aviation companies. The University of Texas Permian Basin is a four-year college with technology programs relevant to several industries. Hatley says his team also can develop training programs with either college for new industries looking at locating in Midland.
The northeastern U.S. is a great place to do business, but, more often than not, it’s also a very expensive place to do business. So when Syracuse, NY came in as the sixth most affordable place for business in a ranking developed by Regional Financial Associates, an independent provider of economic research, we thought we should take a closer look.
“What we emphasize most as one of our strengths is that Syracuse has a big-city feel without being a big city,” says Greg Hitchin, business development manager for the Syracuse Economic Growth Council. “In other words, we have all of the amenities without all of the expense of a big city.”
Syracuse also has something that increasingly is a rare and valuable commodity: an abundant supply of fresh, potable water!
Natural resources are at a premium right now, and not just energy resources. That’s why the Syracuse Economic Growth Council’s (SEGC) new marketing initiative creatively promotes Central New York’s ample supply of potable water. At a time when the southeastern U.S. is experiencing devastating drought conditions that are affecting industry as well as individuals, Syracuse, located next to Lake Ontario, has access to eight million gallons per day of high-quality, low-priced water.
“For a beverage or food-processing company, where water is vital to the manufacturing process, this is as good as it gets,” says Hitchin.
Managed by the Onondaga County Office of Economic Development, it is part of the SEGC’s ongoing strategy to promote Central New York’s proximity to markets, world-class universities, outstanding workforce, superior quality of life, and much more, to companies looking to expand or build new businesses.
This latest campaign-which dovetails strategically with the Onondaga County Industrial Development Agency’s (OCIDA) efforts to market Clay Business Park, an infrastructure-ready, 250-acre greenfield just nine miles northwest of Syracuse’s Hancock International Airport-hits home in a big way for many food and beverage processors, and other high-tech industries.
In addition, according to Hitchin, Clay Business Park is fully ready for industrial development. “Its environmental and engineering studies are completed, it’s adjacent to redundant power feeds and close to every mode of transportation. It’s ready to go!”
Hitchin also says that Syracuse has been showing growth in all of its industry sectors with the exception of manufacturing. In particular, the financial services sector is showing significant growth with Bank of New York going from zero to 600 employees in just five years.
Syracuse’s manufacturing sector is about to get a boost as well. In February, BITZER Scroll, Inc., a large independent manufacturer of air conditioning and refrigeration compressors, announced that it had chosen a former General Motors facility just outside the city for its new plant location. The company will create close to 300 high-end engineering and manufacturing jobs at the site.
“Central New York has a wealth of resources that made it a great fit for our new scroll compressor business,” said Richard Kobor, president of BITZER Scroll Inc., at the announcement. “We believe that we can, and will, utilize the knowledge of the workforce to overcome any challenges we may face.”
While BITZER has about 3,000 employees worldwide, the new Central New York location will be just the second U.S.-based manufacturing facility for the company. BITZER chose Central New York based on a number of factors, including incentives, local workforce expertise in compressor design, and regional strengths in energy and environmental systems.
Greater Philadelphia is a rather unique MSA in that it actually includes three separate states: the 11-county Greater Philadelphia region encompassing southeastern Pennsylvania, southern New Jersey and northern Delaware. Greater Philadelphia overall is the second largest region on the East Coast in terms of employment, population and income. With a combined 2007 population of 6.1 million people and employment in 2007 of three million jobs, the region is a major economic force. Greater Philadelphia also is a large and thriving mega-market generating $1.3 trillion annually, with 46.1 million people living within 200 miles of Center City Philadelphia. Taking into account total income and income per person, along with cost of living, the area’s residents have larger amounts of money to spend on products and services than people in most other markets. In 2007, the average income of households residing within the 200-mile market area was $76,900-the second highest among the 12 largest U.S. metros.
These are all some pretty impressive numbers, but the real reason we’ve chosen this region as an economic development hot spot is the way Greater Philadelphia is marketed. Lots of MSAs have a chamber of commerce, but this region has a “CEO Council for Growth” that was so determined to create a high-powered entity to market the region it raised $16 million four years ago to establish a business marketing organization called Select Greater Philadelphia, whose job is to be a single source of regional information. But they didn’t stop there: the 425 leaders continue to make themselves available as advocates and ambassadors for the region by meeting with companies that are interested in locating there.
“One thing that we do very well is that we receive a great deal of help from our business community,” says Tom Moore, president of Select Greater Philadelphia. “So when companies are looking at locations, we have senior executives in their industry available to meet with them. We had two companies recently that told me they were worried about finding the people they would need to hire if they moved here. We were quickly able to set them up to speak to 22 human resources executives to answer all of their questions. Because when business leaders are there to give them the good, the bad, and the ugly, it’s so much more credible.”
The region, once the heart of the Industrial Revolution, has reinvented itself many times and recently completed another transformation. While there’s still a fairly large manufacturing sector, it’s now a high-tech manufacturing sector building such things as helicopters and large, high-powered ships.
“Now 74% of the workforce here are in the service sector, primarily the knowledge-driven sectors such as our most dominant sector, life sciences,” says Moore. “This is our core strength, pharmaceutical, bioscience, and hospitals. We have the history for it here. This area had the first public hospital, the first pharmaceutical school and the first medical school.”
The region is also well positioned for future growth, with 7,000 students graduating each year and fueling the workforce from 92 colleges and universities.
Oklahoma City, OK
One of the things that impresses us about locations is an innovative approach to attracting new industries and corporations. What could be more innovative than taking the steps necessary to create a whole new industry in your city? That’s exactly what Oklahoma City did a little over a decade ago; now the city is reaping the benefits in a big way with an industry-hospitality-that is now one of its fastest growing sectors in job creation.
“In the 1990s our economic development team was doing what everyone else in the country was doing and that was going after large projects by trying to use only tax incentives to get companies to come here,” explains Roy Williams, CEO and president of the Greater Oklahoma City Chamber. “We were not successful, and at that point the leadership here made a strategic decision to concentrate instead on making this a better place to live. We called it the Metropolitan Area Program (MAP), and we asked the voters for a temporary one-cent sales tax that would last for five years. This paid for $350 million worth of improvements we made to the metro area.
“We built a canal, put dams in the river, built a Triple-A baseball stadium and the Ford Center, a sports center built to NHL and NBA standards-even though we did not have those teams at that time. We built a trolley system, a convention center and a new library for downtown as well. We renovated the performing arts center and our fairgrounds,” Williams says. “It was an investment in the city that paid off wildly. We’ve had $3.4 billion in corporate investment pour into the city as a result. Our fairgrounds host 14 major national and international horse shows and bring in $250 million annually. And because the Ford Center was built to NBA standards, we are now getting an NBA team here. We also now have a $150 million American Indian Cultural Center that’s part of the Smithsonian being built here.”
All of that work launched Oklahoma City as a tourism destination for the first time in its history. But that’s not why Forbes just voted it the “most recession-proof metro in the country.” That ranking is due to an industry that’s been part of Oklahoma City’s economy for decades-the oil drilling industry. The metro area has several large corporations that specialize in drilling for oil and natural gas. Devon Energy and Chesapeake Energy were both launched in and headquartered in Oklahoma City. Chesapeake employs 3,000; Devon has a workforce of 1,500. Most importantly, both companies have continued to grow with Chesapeake, adding about 30 to 50 employees a month, according to Williams.
The OKC Chamber is committed to continuing to diversify the metro’s industry base as well by targeting some high-growth sectors such as bioscience, information technology, and aviation/aerospace.
“Our biggest strength is our workforce. We have 17 universities in the metropolitan area. That’s an average of 120,000 college students and 20,000 college graduates every year, holding degrees in every field from energy to IT to the arts,” says Williams. “We also have Tinker Air Force Base, which has 26,000 military personnel. Many of them retire in their 30s and 40s with 20 years of technology experience under their belt. So that’s a huge talent pool ready to be tapped right here. In fact, Dell looked at 126 cities and they’ll tell you that they picked us because of our talented, concentrated labor pool.”
Minneapolis/Saint Paul, MN
If you wanted proof that an MSA has a business-friendly environment that ensures success for the businesses that are located there, what criteria would you consider? We think a great way to figure that out is to focus on the businesses that are located there and how successful they are-this is what drew our attention to the Minneapolis/Saint Paul, MN MSA. Minnesota is home to 19 Fortune 500 companies, giving it the highest per capita total among the states, and 18 of those 19 are based in Minneapolis/Saint Paul. Not only that, these companies represent industries running the gamut from food products to insurance, logistics to chemical manufacturing, and medical devices to financial services; so there’s plenty of stability.
In 2006, Minneapolis/Saint Paul ranked first among U.S. metropolitan areas in employment in the medical device industry (more than 26,000 workers), surpassing other top areas such as Los Angeles (25,715), Miami (8,674) and Boston (8,075). Minnesota has nearly 600 FDA-approved medical device manufacturers. Between 2003 and 2007, Minnesota had 2,337 patents in medical devices, ranking second among all states.
The medical device stronghold in Minnesota began in 1957 when Earl Bakken invented the world’s first wearable pacemaker in his Minneapolis garage. That invention gave rise to industry-leader Medtronic, and other small and large medical device companies. The medical products field continues to grow in this region.
Switzerland-based Nestle Corporation recently purchased Minneapolis/Saint Paul-based Novartis Medical Nutrition. The company designated Minneapolis/Saint Paul as the U.S. headquarters for its new business unit, named Nestle Health Care. Nestle merged part of its operations in Glendale, CA into the new company, bringing job growth and new investment to Minnesota. Nestle also considered California, Wisconsin and New Jersey as potential locations.
“Nestle conducted a national search for this expansion,” notes Kevin McKinnon, director of business development at the Minnesota Department of Employment and Economic Development.
“The company chose to locate in Minneapolis because of the highly skilled and educated labor force, and because of the strong infrastructure available to support bioscience-related companies. In addition, the health and wellness lifestyle in Minnesota fits well with Nestle Health Care’s core mission,” McKinnon says.
The company will retain 500 employees and add a significant number of jobs. Nestle is investing in a manufacturing facility in Minneapolis (St. Louis Park) and a 60,000-square-foot headquarters.
The possibility for economic growth is often tied to which industries are located in an MSA and whether or not those industries are in a growth mode, and whether the region’s economic development team is doing anything to foster that growth. This is why Wichita, in south central Kansas, showed up on our radar screen as a fast-emerging economy.
The Wichita MSA is a hotbed of aviation activity. In 2007 aerospace sales growth broke records for the fourth year in a row according to the Aerospace Industries Association, making it one of the target industries on economic developers’ lists. But Wichita already has a great aviation cluster in place. In fact, the south central Kansas region is one of the largest centers of composite aircraft component design and fabrication. Companies such as Boeing, Cessna and Hawker-Beechcraft have utilized these materials in aircraft for more than 25 years, and recent technological advances are increasing the use of advanced materials and polymers in commercial and general aviation manufacturing. The growth in composite structural aircraft is estimated to be 14% per year over the next 20 years. This is keeping the Wichita MSA pointed in the right direction for economic growth.
And the community in Wichita is doing what it needs to do to accelerate this growth. For example, Wichita State University now ranks third among all U.S. universities in aerospace engineering research and development. According to the most recent National Science Foundation data, WSU has improved its ranking and now stands above academic leaders like the Massachusetts Institute of Technology. Wichita State’s No. 3 rank is largely due to the research and testing programs at the National Institute for Aviation Research (NIAR). This significant growth is due in part to the support of the local and national aviation industry, the state government and numerous federal agencies.
“This ranking is a demonstration of the commitment from our federal congressional delegation, Kansas legislature and the surrounding aviation industry to support additional research to help ensure the United States and Kansas will remain strong in aviation pioneering,” says NIAR executive director Dr. John Tomblin.
NIAR has grown at a steady rate for the past 10 years, increasing its operating budget from $10 million in 1997 to $35 million in 2007.
The result is that Wichita continues to attract aviation projects. It’s most recent development came from Cessna Aircraft Co., which announced in April that it will assemble the Citation Columbus plant in Kansas, creating more than 1,000 jobs and making an $800 million investment in the state.
“The Kansas Legislature’s quick response to this project has cemented our decision, and Cessna is proud to call Kansas home for the Citation Columbus,” said Cessna Chairman, President and CEO Jack J. Pelton at the announcement. “With their quick action, the Legislature’s leadership has shown the world that Kansas will compete for aviation jobs.”
With this new project, Cessna will create 1,010 direct jobs with an annual payroll of $74 million. Research shows that each aviation job creates an additional 2.9 jobs, which means a total of nearly 4,000 new jobs will be created in Kansas as a result of the new plant.
Cessna had publicly said their preference was to locate in Kansas, especially because of Wichita’s skilled workforce, its hosting of the National Institute for Aviation Research and the new technical training school at Jabara Airport.