Economic Development During the Pandemic - aka increasing STEAM and entrepreneurial talent to ensure economic growth using the "Elon Musk strategy"
Is it economic development, as normal, during the pandemic?
Article contains anecdotal evidence of how some rural communities are missing out on opportunities, while others are capitalizing on it. Even neighboring communities in the same state.
Note: Please stay with article until New Economic Development, Conclusion, and Addendum sections. It's OK, if and when you get bored just skip to them.
In recent headlines in – Harrison Daily Times and Arkansas Democrat Gazette (online versions) – I failed to see pandemic urgency in the local economic development strategy. Similar to how the newspaper people ignored digital until it was too late.
Council OK's Chamber's $40K
Staff Report [email protected]
“The Harrison Regional Chamber of Commerce has proposed an economic development agreement that would see the city pay the chamber a minimum of $40,000 in 2021 in exchange for a variety of services delineated in the agreement. The council adopted a resolution Thursday night that would allow Mayor Jerry Jackson to enter into the agreement.”
The resolution states that the $40,000 would be paid in quarterly payments.
In exchange, the chamber shall utilize such funds for general economic development of the area which includes, but is not limited to, industrial and business recruitment and location, improvement and expansion of industry currently located in or near Harrison, general improvement of business and economic conditions in the affected area, improvement and expansion of transportation and utility resources, development of legislative and gubernatorial relationships and contacts and all other functions that may be related to the expansion and development of the economy in or near the city.”
Harrison, Arkansas ACTION PLAN FOR ECONOMIC DEVELOPMENT
THOUGHTS
- It’s good to see economic development activity with the understanding there is a need! I missed finding the urgency (threats and opportunities) created by the coronavirus.
- Boone County Quorum Court approved $7,500. Not sure message?
- Obviously the devil is in the details.
- If details cover “old” or “general” economic strategy, its value is problematic.
- Rewards to Chamber for developing new business, and penalties (?) for businesses who move or shut down.
- The old model for economic development means more of the same:
Build Industrial Parks - Woo Large Businesses - Provide Tax Incentives
- Northwest Arkansas has just announced that it will pay new (out-of-state) technology residents $10,000 to move to an area that is known as one of the best places to live in America. Obviously some Walmart money, but makes the local $40K look paltry. But their ploy got mention in Forbes Magazine worth millions – “This U.S. Region Will Pay You $10,000 To Move There (And Give You A Bike, Too) Laura Begley Bloom senior Contributor Forbes Women”. Covered later in New Economic Development section.
- When I don’t see broadband, type of technology businesses, and quality of life mentioned, just manufacturing and industrial recruitment; I’m flooded with negative economic thoughts that keep me up at night.
- Boone County Business & Technology Park was mentioned in action plan along with tech corridor. Zero chance of developing with current racist image, and past handling of technology companies. I have spent a year documenting the issues, why it won’t happen, and what has to be done. It’s from the viewpoint of someone who has been there and done that!
Largent: New businesses coming to town
Staff Report [email protected] Dec 17, 2020
“We’re fortunate the Northwest Arkansas Economic Development District put in for us some 10 months ago a grant that allows four of us in the community to go through a yearlong retail academy. This is by the largest retail recruiter in the US called Retail Strategies based out of Birmingham, Alabama. They are the world recognized retail recruiter. Retail means, from Target to the hot dog stand. You name a retail category, they are the experts,” Largent said.”
THOUGHTS
- Is Retail Strategies of Birmingham, Alabama already obsolete due to coronavirus issues? Old strategies that no longer work?
- Failure to address pandemic impact on retail, and what’s changed permanently.
- Retail is being changed forever – now with companies, such as Hobby Lobby, paying a minimum of $17/hour nationally, there will be new and different challenges. I grew up in a time when cheap retail labor came from the immediate family, and relatives.
- Rules for remaining open during lock downs, and partial shutdowns will favor chains and big box, since they have the resources (and best lobbyists).
- Noticed that “no funds paid by the city shall be used directly or indirectly for lobbying, political activity”. Understand restrictions, but getting key subsidies in place for small businesses and ability to take advantage means lobbyists and survival.
- Much like self-service gasoline, self-serve shopping, and ATM’s have become the norm locally, on-line ordering and local delivery are becoming the norm. Obviously local companies will have to develop hybrid models, and provide great customer care to compete.
- Locally owned independent businesses are becoming extinct. Liabilities with employees and customers are becoming too high a risk, when uncontrollable national and global events can create new liabilities and (virus prevention) operating expenses. See them partnering with larger companies. They’ll need help with that.
- Hard to discuss new retail businesses, while many of the local retailers are in survival mode.
- Large chains and well-funded restaurant groups have the resources to ride out a protracted shutdown, but the independent restaurants that make up about two-thirds of the American dining landscape — noodle shops, diners and that charming urban restaurant that always had a line out the door — may not survive.
Arkansas Democrat Gazette Arkansans’ incomes drop 20% in 3Q
NOEL OMAN ARKANSAS DEMOCRAT-GAZETTE Fri Dec 18 2020
“Arkansas’ personal-income decrease — 20% — was double the national decline.
Only in Montana, North Dakota, Michigan, Oklahoma, Kentucky and West Virginia was the personal-income drop steeper, according to the bureau. The percentages ranged from 20.5% in Montana to 29.9% in West Virginia, which had the steepest fall in personal income.
The personal income in two states bordering Arkansas fell less than the national average.
Personal income fell 8.8% in Texas and 9.6% in Tennessee over the same period covered in the report. Personal-income declines in Louisiana, 13.8%, and Missouri, 15.3%, were smaller than the decline in Arkansas.”
Poverty in Arkansas
Poverty level in Harrison is 22.8% and Harrison is ranked 11th in food stamps (recipients as a percentage of all households) falls below many retail company’s business development requirements.
Click above to get the US Census Bureau Quickfacts - check Income and Poverty Topics to validate.
For those with socialism concerns, and wanting to keep things the way they are, might be surprised how fast Harrison has dropped in relation to surrounding communities over past 20 years.
THOUGHTS
- Mentioned that Chick-fil-A will not be coming to Harrison or Arkansas.
- “Largent said there are a lot of comments such as why not call and get a Chick-fil-A here. He said the chamber has been in contact with that company for two years. “Chick-fil-A is not coming to Harrison. They are going to two locations in the United States — south Florida and south Texas. They will not allow any franchisee to come into Arkansas. That’s a fact,” Largent said.”
- Lot of reasons – recent lawsuit by Chick-fil-A against Tyson (and other Arkansas based poultry companies for price fixing is a starter).
- The poverty level in Harrison is 58% higher than the national average.
- Mountain Home and Rogers, Arkansas poverty levels are in 10-11% range, over 50% less than Harrison.
- Doesn’t have the economic base to attract most national retail companies. Not a tourist destination. E.g. Branson, Missouri has an equally high poverty rate, but is offset by tourists’ spending their discretionary funds on shopping, motels, restaurants, camping, youth athletic events, leisure time sports, and entertainment in the Branson area.
- Having the undeserved title “most racist’s town in the US” is the silent killer. Worst part is all the current business relationships that still exists with the Robb family. Otherwise KKK chief counsel and KKK new name (Knight’s Party) headquarter address wouldn’t be located in downtown Harrison; between City Hall and County Courthouse.
- Diversity and Inclusivity Committee – Mayor Jackson said, "I believe this will be the most important committee that Harrison has ever had. So far, committee recommendation missing in action? Thought their recommendations were coming by the end of 2020?
“Largent said, “Just hold on to your seat. I think we are going to explode,” he said. But not just with retail. “You can’t get retail without a real industrial-manufacturing job to support it and we are working heavily on two major activities.””
THOUGHTS
- Bringing in companies that will job poach current company employees and artificially raise payroll rates temporarily have to be avoided. Driving around town there are companies in the industrial-manufacturing category looking for employees at this time.
- Unemployment Rate Rankings for Arkansas Counties October 2020 Boone County is 4.5% ranked one of the lowest in state (8 out of 75).
- Risk of creating reasons for longtime companies to leave area will be a big mistake.
- Industrial-manufacturing category not enough reason to attract former residents to come back (or keep home the locally tech trained and educated from greener pastures).
- When I hear industrial-manufacturing jobs I think of blue collar employees in a similar salary range buying property in the same price range. Nothing wrong with it, other than getting too much of same thing.
- Jeff Pratt, Harrison city clerk, owner of Jerry Jackson Realty and a member of the Harrison Board of Realtors, agreed the housing market in the area is an issue.
- Pratt said the Board of Realtors’ multiple-county coverage area listed 136 residential properties for sale last week, about half of which were in Boone County.
- A couple of years ago, that cumulative number would have been 600.
- “Our inventory is gone,” Pratt said.
- Houses selling for under $200,000 tend to leave the market almost as soon as listed.
- Median price range homes are well below North Arkansas and Southern Missouri.
- Middle to high net worth individuals are disappearing. It may come from FedEx Freight retirees leaving area, taking early retirement and moving to another opportunity, movement to corporate headquarters.
- Successful local entrepreneurs, professionals, and doctors moving to Mountain Home, Branson, Little Rock and Northwest Arkansas.
- In most cases replacements are receiving substantially less.
New Economic Development
THOUGHTS
- Many of the obvious benefits of the “big city” have been negated over past 9 months with close living quarters and extended lockdowns. Quality of life has disappeared.
- The pandemic has changed the landscape. "The coronavirus has forced cities across the world to rethink patterns of work and home life, with telecommuting catching on as never before.
- Japanese architect Kengo Kuma, said the virus has revealed the weaknesses of outdated urban concepts. "Cramming people into steel boxes like skyscrapers and factories was an efficient way to work in the early days of industrial capitalism," "This doesn't suit the new ways of working created by IT" - coronavirus has opened our eyes.
- Tech Jobs / Data Centers
- Working at Home
- The Service Sector
- Plan to attract and keep digital nomads, people who are location-independent and use technology to perform their job. NW Arkansas is directly targeting those individuals with $10K offer.
- If they like living in an area, they will let their network know. It's word of mouth at warp speed.
- Digital nomads work remotely, telecommuting rather than being physically present at a company's headquarters or office.
- Excerpt from Forbes Magazine "The timing couldn’t be better. Trends show that people have been fleeing the hectic pace of major U.S. cities in search of greater work-life balance, more flexibility and other opportunities—and the numbers have been skyrocketing during the coronavirus pandemic. Arkansas was recently ranked the sixth most popular state to move to right now."
- “The pandemic opens up great opportunities for smaller places to attract remote workers in particular with families [who] now have the ability to locate further afield than a nearby suburban,”
- “They can leapfrog the suburbs and go to more affordable metros and places that they believe offer higher quality of life, like Northwest Arkansas
- “Northwest Arkansas has one of the fastest growing economies in the country, but we must increase our STEAM and entrepreneurial talent to ensure economic growth in the future,” STEAM is an educational movement to add the Arts (A) into STEM (Science, Technology, Engineering, and Math) curriculum and careers.
- From HDT article below - former mayor, “Jeff Crockett said the people renting (U-Haul) trucks and trailers in other locations from diverse states — California, Colorado, Florida, North Carolina — are moving to the area. No return trip is booked.”
- "People say they want to get away from the big cities. The COVID-19 pandemic has taught them something: They can work from anywhere with internet access and no longer need to live within driving distance of the office building where they went every day.”
- Another missing piece in local economic plan - NW Arkansas has already qualified them being worth $10K, what, if any, is the local strategy? Too small, waiting to hit a home run?
Point is opportunities are coming at no charge, but as long as we think they are less important than finding another industrial-manufacturing company, it's easy to determine the winners and losers.
Note: Having a MS in Math from University of Arkansas, I understand the STEAM strategy!
Recently I wrote a couple of articles
- Are Rural Smart Cities the Answer? (Unlikely billionaire partners Elon Musk and Johnny Morris think so)
And
- The Entrepreneurial Skills Required to Survive and Innovate in a Pandemic World - Rev 11/02/2020
Conclusion
At this time Harrison would be unable to check enough boxes to be considered for opportunities described above. Doing the same thing over and over again and expecting different results is a nonstarter.
Addendum
Ironies in the following announcement:
Pace Industries, LLC CEO to Keynote 2021 Chamber Annual Meeting | ... David Morton, Equity Bank CEO, said, “We’re honored to have Donald Hampton Jr. keynote our Chamber’s annual meeting in January. Pace is a longstanding centerpiece of the community’s industrial focus and having their CEO update us and look ahead for the business will be enlightening. We look forward to his insight and how Pace and the community can collaborate for mutual success.”
Pace is Harrison's poster child for industrial-manufacturing jobs. Currently Pace is in need of employees with signs posted outside its buildings offering stay (?) bonuses of $1,100. Starting at $15/Hour -- We are hiring. Note: "A stay bonus is a tool used to retain and motivate senior management and key employees during a sale process. They are more common when the company is being sold due to poor financial performance or insolvency and the number of buyers is limited." That opens up another can of worms. Many might mistake it for a signing bonus.
When I sold my technology company to a California company, keeping employees and management was part of the agreement. Value of company could have been directly impacted by key people leaving early. We didn't pay anyone to stay, but there wasn't local competition for technology professionals either.
Another interesting point is not the fact that the new Pace CEO, Donald Hampton Jr. is black. As it turns out, not a big deal locally; but always intrigues the outside media whether mainstream or social. It's how do you explain trying to attract more competition (additional industrial-manufacturing companies focus of economic development) for his (Pace) workforce?
Hampton was hired by East Coast (NYC) and West Coast (LA) - TCW Group and Cerberus Capital Management, L.P. investors so his job is to right-the-ship for sale, make as few waves as possible, more interim less long-term management decisions. Just a conjecture based on experience with investment firms, when they hire the CEO.
No guarantee when Pace gets new owners that Harrison will survive. Probably not, if there is lack of stability from profit generated by artificial short-term low pay based bonuses.
