In the years leading up to the Covid-19 pandemic, many—if not most—rural communities across the United States grappled with an unsettling and growing issue: population decline. Community culture dissipation, a dwindling workforce pipeline, and shrinking tax revenues, amongst a litany of other issues, all supported the 2020 Census finding noted by Dr. Kenneth Johnson, demographer at the University of New Hampshire, that for first time the U.S. experienced a decade-long rural population loss, from 2010-2020. (See Dr. Johnson’s article here.)
In the wake of this revelation, local elected officials and business leaders turned to economic development professionals to help turn the demographic tides affecting their populations. Many have seen early success, while others have more work to be done.
Upon the global pause in commerce in early 2020, local economic development professionals put their pencils down on new projects and pivoted to guiding existing industry in navigating both the deluge of state and federal assistance programs and often conflicting public health guidelines for business operation. As restrictions loosened and the gears of commerce spun back into motion, companies were faced with new difficulties in labor retention, supply chain reliability, increased costs, and skyrocketing consumer demand for goods.
Supply chain pressures also prompted a new wave of projects aimed to build resiliency by expanding or reshoring operations. Projects began competing for increasingly limited “shovel-ready” sites in ideal locations to build manufacturing and distribution facilities that needed to be operational as soon as possible. This has created headaches for both site selection consultants and company executives who are used to choosing from a buffet of “turn-key” existing sites. However, this new dynamic also created opportunities for rural communities, especially along major transportation corridors, to compete for projects in which their sites might have been second or third chair 10 years ago. Look no further than the rapid growth of speculative development by institutional investors in rural areas as evidence that rural communities offer a unique value proposition for today’s industrial market.
Aiding the labor pitch in rural communities and illustrating a potential turn from his earlier, more dour evaluation, a follow-up piece by Dr. Johnson indicated that after a decade of rural population loss, rural America gained population between 2020 and 2021. While this is a positive development for rural communities, it will be interesting to see whether this is simply a one-year deviation or a pivot from the trend established between 2010-2020, as well as how these communities are able to capitalize on this new momentum.
In the last five years, the Maxis Advisors team has conducted searches for clients in which several rural communities were strong contenders, including many chosen as finalist locations. While each project had its own nuances, there were several common factors that helped the winning rural community set itself apart.
The first and most important for a rural community, is providing the prospect comfort that their workforce needs will be met. Reaching full staff in a timely manner is critical for successful operation. Similarly, strong incentives packages are only as good as a company’s ability to fulfill their promises, which almost always include meeting hiring thresholds upon which the package was based. Even as states have created programs to enhance training opportunities and alleviate complex workforce issues in recent years, it is incumbent upon rural economic developers to be the liaison between both local and regional industry and technical schools, community colleges, and high school CTAE programs to help ensure a sustainable workforce pipeline. Having case stories helps, too: existing industry visits to discuss how the community is meeting the demands of an exceedingly tough labor market resonates with our clients. These visits provide a true third-party verification of how the community is filling existing gaps and competing compared to other markets.
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Inextricably linked with workforce development is an issue that will continue to grow with each new project and the accompanying headcount growth: workforce housing. For projects of all sizes evaluating rural areas, housing availability and affordability is a concern both in fast- and slow-growing markets. Clients with even modest sized projects are becoming wary of locations close to mega sites or other large project announcements, not only because of the increased workforce competition, but also the stress it places on local housing markets for their potential employees. Availability of workforce housing at a variety of price points is of great concern to companies looking to place a manufacturing operation. While it seems states are beginning to grapple with how to encourage growth in this area, it’s incumbent upon local governments and economic development to examine their long-term planning and zoning goals to ensure that their communities are positioned to meet the housing demands for projects that they are pursuing.
We view this as a space in which rural communities can be responsive and competitive due to their normally lower cost of living in comparison to their urban and suburban peers. Unfortunately, rapid growth and change can sometimes be a point of contention in rural communities, as there is sometimes fear that this growth will alter the community identity. To this end, it is the responsibility of all involved—consultants, economic developers, and the company—to evaluate community “fit” and ensure that if the prospect can be successfully integrated into the community and not viewed as a harbinger for fundamental change in community identity that many fear,
Especially along major transportation corridors, supply chain pressures have created an opportunity for rural locations to compete for projects in which their sites may have previously been second or third chair.
In this current environment, we see many reasons why a rural community can be a perfect fit for our clients. Rural communities offer a more relaxed quality of life, less intense workforce competition, often lower operating costs, and lower cost of living. Rural communities have an opportunity to set themselves apart from their peers on these merits but must also ensure they are prepared to handle accompanying issues such as impact to existing utility infrastructure, ability to meet workforce and housing needs, and ultimately whether that prospect size and use is a fit for their community.
Some rural communities are not a fit for every project, whether for logistical reasons, project size, or other factors, and that is certainly okay. More important to the future of these communities is having stakeholders assess what the community’s long-term goals are, accentuating the positives that set the location apart, and positioning themselves to be a competitor for those target projects. At the same time, it is a consultant’s responsibility to weigh the attributes and amenities these locations offer clients, ensuring they can be successful in whatever community they choose.