I met Ana Liss on a Rochester Chamber of Commerce panel about smart development and was immediately impressed by her approach. I asked her recently to give a synopsis on her experience at the TrustBelt 2018 conference, which focuses on the redevelopment of our “Rust Belt” states. Thank you Ana, for sharing this incredible wealth of information with us!
Ana Liss is Managing Director of Business Development at Greater Rochester Enterprise, where she helps to facilitate business growth in the 9-county region in partnership with the public and private sectors as well as colleges and universities. Previously, Ana served the Office of Governor Andrew Cuomo as an Empire State Fellow and policy advisor, worked for Cornell University in corporate relations, and worked in news media as a journalist in the Southern Tier and in Rochester. Ana holds a Master’s in Public Administration from the University of Pennsylvania and a B.A. in Journalism from Ithaca College. She is a Rochester native and passionate about the future health and prosperity of this community.
Ten Lessons from Trust Belt 2018
I work in the field of economic development, which does not qualify as a standard-issue “industry,” per se, and is also the subject of much attention and criticism. Remember #HQ2? I worked on that for the Greater Rochester region, in collaboration with the Buffalo-Niagara region. We even developed an interesting new concept as part of the effort: the “Buffalo-Rochester Metro Corridor.” Big and small project opportunities come and go every day, rarely getting the national attention that Amazon’s did. But they consistently offer glimpses of hope that a vacant manufacturing facility will come back to viable use, that a corner of a town or city in need of new development will see a parcel return to the tax rolls, or that a few hundred people and their families will see new sources of income, supportingRochester area households, municipal services, and small businesses.
Just as #econdev, as the field’s social media mavens refer to the practice, is not a standard-issue industry, it is not an exact science. It’s more of an art form, a business of relationship-building and cultivation. That’s why I was excited to have the opportunity to attend a conference this past November in Detroit, MI, called the “Trust Belt Corporates & Consultants Forum.” The annual event is hosted by Atlanta, GA-based Conway, Inc., an economic development consultancy that also produces industry publication Site Selection Magazine. Networking with and learning from leaders from 16 states and their unique regions similar to ours sparked abundant inspiration that I took home to Rochester.
For practitioners like myself, this presented a chance to learn all that is new and developing in the world of economic growth and development in the inland regions, among which Rochester is a constituent. To quote Conway, Inc. Executive Vice President Ron Starner, “there’s a reason [event organizers] coined the term ‘TrustBelt’ five years ago to describe the American Heartland. It’s the place business leaders trust to get the job done, and to get it done right.” He goes on to emphasize that the Midwest is “still the Factory Belt of the country,” further stating that “Western Pennsylvania and Western New York – two regions planted squarely in the TrustBelt – contribute heavily to America’s factory jobs.” Yes – you read that right. Our region is more Midwest than it is East Coast.
For readers, it is important to recognize that you’re as much a part of the #econdev landscape as I am. If you’re an Uber driver, a barista, a teacher, a chef, a lawyer, or a machine operator, you are part of the consideration set that factors into companies’ decisions to locate – or not to locate – to any particular geography. Let’s say a CEO comes to Rochester to scope it out for an expansion and hops in an Uber and the driver maligns about potholes – not good PR. Or enjoys a delicious cup of coffee and delightful ambiance at a local café or restaurant – great PR! More below. Anyhow, here are my #TrustBelt18 top ten takeaways, which I plan to integrate into my plans, professional goals, and philosophies in 2019 and beyond (and, you, dear reader, take heed, as well!):
1) You know this already, but – talent is king. Keep it. Develop it. Invest in it.
A prominent site selector at a closing panel asked the audience, made up of economic development professionals and business owners and academics from throughout the 16-state region, “who among you here has a regional unemployment rate of over 4%? If so, see me.” With unemployment at an all-time low nationwide since pre-2008 and an expanding economy, businesses are struggling to onboard the highly-skilled talent they need to compete on a global scale. Tre Sasser of Rural Sourcing, a leading provider of outsourced IT talent in the U.S., remarked, “when we go through our site selection process, access to talent is Number 1.” Economic incentives are ancillary to that, but it’s all about access to skilled labor, especially now.
Skilled labor is in short supply. Expert site consultants at Trust Belt suggested that regions must be razor-focused on talent retention and workforce development. Further, universities can partner with economic development organizations to track and measure the shares of their graduates remaining in-region – Ohio State University is an example of an institution already doing this, proudly noting that 65% of OSU graduates stay in Columbus after commencement. Across the “Trust Belt” geography, relative health of the talent pipeline is not the issue. States in the mega-region have the highest birth rates anywhere in the U.S., and degree programs and academic institutions here are producing the readiest engineering and technology talent anywhere in the world. That is undeniable, because students come here from across the globe to attend college and university. The problem is retention. These regions must focus on keeping families and young people, young professionals, college students and graduates in place.
Expanding on this point, when asked what a growing tech firm like Electronic Arts, a giant in the game development industry headquartered in California, needs from communities when looking to expand, Craig Hagen, Senior Director of Government Affairs for EA, remarked that incentives and bureaucratic red tape are no longer issues. “We want to know: what are you doing relative to the development of your workforce?” Reaffirming the issue’s importance, one site selection consultant in a later panel discussion declared emphatically, “we can’t find engineers!” Fittingly, another suggested that economic developers factor veterans workforce and attraction programs into their talent pipeline calculus – what is your region’s long-term plan on attracting, housing, and employing these disciplined, mature, experienced individuals? Another creative approach is studying “underemployment.” How much of your community’s skilled workforce is employed in low-skill occupations or working part-time? How many people with master’s degrees or certified machinists are working in restaurant and retail?
On an expert panel titled “Where Companies Are Expanding & Why,” light was shed on the mounting notion that workforce programs of today – if they should remain relevant in the future – must speed up or retool their curriculum. Jose Gaztambide, Chief Operating Officer of Interapt, an innovative technology-driven workforce training platform company, said that he has observed a dangerous gap between what employers are demanding and what educational programs are providing as curriculum. The formal education sector is not the “natural owner,” in Jose’s words, of fast-moving technology development. Institutions must go through a lengthy process — sometimes two to three years — to get new programs approved. They are, thus, outdated – if datedness is to be measured by efficacy. Jose identified a two-and-a-half-year delay between what technical training is provided today, particularly in AI/software, and what skills are needed in today’s technology workplaces.
The focus on education and training must start earlier, too. States with the most corporate headquarters also dedicate the most capital spending on K-12 education. The early movers on the Pre-K movement are outperforming those late to adopt such programs, and communities that start teaching physics earlier end up graduating the most STEM talent.
2) High-quality, shovel-ready sites are right up there with talent in terms of ratcheting up your competitiveness.
John Longshore, a Senior Consultant with Global Location Strategies, a leading site selection and incentive negotiation firm for manufacturing and industrial companies based in South Carolina, called upon economic developers at the Trust Belt conference to “please stop giving your good sites to distribution centers.” Citing Ohio as a good example of where critically-needed large industrial sites are often being offloaded to low-job-creating distribution projects, he advised listeners to “be aware of the vision for your community. Put the funds in to create the sites needed [for large manufacturing projects].” Such necessary investments go beyond shovel-ready sites to include basic things like high-performing roadways, modernized airports, broadband, and healthy bridges. Susan Arledge, President of Site Selection and Incentives with Texas-based ESRP Real Estate, pointed out that “if you keep ahead of your infrastructure, it’s easy to attract more business.”
Of course, the “field of dreams” mentality is quite necessary to site development. Significant upfront investment and commitment are critical to developing the sites that will give rise to your community’s future competitive economic edge.
3) There is no “Next Silicon Valley.” Regions that build on unique strengths are where future growth is headed.
In the aptly-titled “Building the Next Silicon Valley” panel discussion, Chris Thomas of the Detroit Mobility Lab, an organization dedicated to helping Detroit – a legacy automobile manufacturing city – become one of the world’s foremost future mobility ecosystems, called upon economic development professionals and regional booster organizations to “focus on your own local strengths. Start there.” He added that, while many regions think they should be like others (such as Silicon Valley), “Detroit needs to be Detroit. The Mobility Lab is an extension of that.” Essentially his point was that future-focused innovation in cultivating industry-higher education partnerships and retooling workforce training can shore up core advantages that a region already possesses. His focus is to more rapidly modernize the traditional processes and infrastructure supporting the automotive industries in Detroit so that the region remains at the top of the heap for generations to come in that sector.
4) Automation isn’t the enemy.
Discussing “AI, Automation & the Future of Manufacturing” at the conference, Tom Kelly of Automation Alley, a nonprofit manufacturing and technology business association, warned the audience: “don’t view automation as the enemy in your community. It’s not a job-stealer.” It is becoming increasingly important in the short-term to leverage artificial intelligence (AI) and automation technologies to optimize your workforce, especially in a tight labor market.
Businesses, by and large, are not using automation to shrink their payrolls but instead to enhance performance. Collaborative, light-weight robots – referred to in shorthand as “cobots” – are tools now being used more and more in manufacturing to augment worker productivity and create new efficiencies not possible before. Considering takeaway number one, the importance of talent, it seems that automation technologies may provide a solution. Indeed, the ongoing need for improvements and additions to these types of tools creates an industry and industries in and of themselves.
5) We have a lot to learn from “Southern Charm.” There’s room for creativity in business development, outreach, and after-care.
This simple offhand statement really had me, an Upstate New Yorker, thinking: while remarking on what Southern states are doing better than their peers in the Midwest and the Northeast vis-à-vis business attraction, prominent geopolitical strategist and author Peter Zeihan asserted, “you’re too damn honest. You guys need to learn to drink more.” He went on to describe how some Southern economic development professionals and their partners in government and industry will, say, fly to Seoul, Singapore, Beijing, or London, for instance, armed with cases of bourbon, deliver a presentation and have a deal signed by nightfall. By contrast, Zeihan observed that economic developers in the Midwest and Northeast instead often adopt a “field of dreams” mentality, in an “if we build it, they will come” approach.
While checking a case of bourbon with your luggage and hopping on a plane to Singapore may not be realistic for many practitioners in the field, simple friendliness and engagement is free and easy. It is also trackable during the “big data” age, as pointed out by Kim Moore, a Managing Director with Newmark Knight Frank in their site selection practice in Texas. Among many other factors, she said, site selectors today are ranking cities on the involvement and engagement of economic development organizations in projects over the long-term. Companies desire “after care” – for a community to, essentially, have their back – so that they succeed 10-20 years down the line. Economic developers are as much in the field of customer service as they are sales and marketing.
Community engagement is also critical – not just the relationship between the EDO or local government and the firm. “We can put data around culture,” said Susan Arledge of ESRP Real Estate, referencing things like social media engagement and community cohesion. As proved by BrewDog, a multinational brewery and pub chain based in Ellon, Scotland. When the company sought to expand to the U.S. from Scotland, leaders were scoping out Columbus, Ohio versus Charleston, South Carolina during the final chapter of their site selection process. A unique factor played in one city’s favor: just before flying out to visit Columbus, CEO James Watt took to his phone to tweet “where should I go for a pint in Columbus?” Almost immediately, he received 100 responses. He did the same just ahead of a stop in Charleston, and only one person tweeted back. In the end, the company chose to establish their U.S. headquarters in Columbus.
6) Don’t be so quick to dismiss data center projects!
Patrick Fiel, Head of Corporate Development and Initiatives at EdgeConneX, an international data center builder and provider, deals exclusively in data centers. His clients are the five largest market cap firms in the world. These firms – tech juggernauts – are geographically agnostic. Patrick is cognizant that data center projects do not equate to big jobs numbers. But he makes the deft point that such projects generate significant tax returns for regions, in rapid fashion.
Fiel emphasized the necessity of data centers. “They enable us to do what we need to do,” he said. Without them, processes and technologies we use every day at work and at home cease to function. Jessica Michaels Johnson, site consultant with Cincinnati-based Blue J Group, added an interesting idea in the form of a paradigm shift: “think of [data centers] as infrastructure. Communities that have them are more competitive in attracting other business projects.”
7) How “future-proof” is the state of your regional economy?
Of several key growth sectors making headlines in business journals and trade publications on a global scale, author and economic trend analyst John Manzella posited in a panel “Rebooting the American City” that “if you’re not on the cutting edge, you’re on the losing end.” These high potential industries include green technology, cloud storage, energy, 3D printing technology, nanotechnology, biotechnology, and AI. Communities like Rochester, New York do, in fact, score highly on all, particularly AI, cloud computing, and Nano, but must make retention and development of those clusters more of a priority. In fact, Rochester and Buffalo in Upstate New York ranked among slower-growing metropolitan areas in 2018. Imagine how swiftly these cities could land on the top ten list of cities for growth when such sharp emphasis is placed on emerging technologies in economic development as it is on nurturing expansion and survival of existing large firms.
Interestingly, agriculture – another leadership category for New York State – is also a critical industry category of the future. Peter Zeihan pointed out his observation that “the U.S. is entering an agricultural boom we haven’t seen since the early 1800s. That’s our future. If you’re a farmer, you’re part of the 2nd fastest-growing segment of the economy in over 70 years.” Followed Courtney Dunbar of Omaha, Nebraska-based Olsson Associates, a nationally-recognized engineering services firm, “agriculture is absolutely a part of the primary economy of the United States and should enter our conversations in the same way as manufacturing.”
8) Creative incentives ideas and high-level involvement can lead to wins
To sweeten the pot in business attraction negotiations, your community is not necessarily limited to what programs and incentives are baked into statute. Working with government, you may be able to offer company executives and their employees in-state tuition for their families immediately upon signing a deal. You can build into agreements that you will not initiate claw backs if a company cannot find adequate talent. Sit down with your state and local government partners to throw ideas around to see what can be worked out.
On the talent front, because it is so key, bring college and university presidents to meetings and discussions. Susan Arledge of ESRP noted that the President of Jacksonville University is always available for such meetings and tours in Jacksonville, Florida. It shows compelling commitment from a key talent source, which can move the needle on projects.
9) Stop spending so much time selling quality of life and cost of living. Focus on metrics. Build a human relationship with the site consultant with whom you’re working.
Companies are looking for great places where they can hire, not where current employees can live a great quality of life and raise their families, pointed out Ann Harts, Executive Vice President of Site Selection and Incentives with ESRP Real Estate. Quality of life is not necessarily quantifiable, and consultants’ matrixes require quantitative inputs. “Things that you can attach a formula to – that’s how we build our heat maps,” said Ann Peterson, Senior Director in Cushman & Wakefield’s Business Incentives Practice, sharing that site decision-making today is less “site selection” and more “site elimination” as 900+ metropolitan areas get loaded onto a weighted matrix file. And when your metropolitan area may not make it to the short list based on that data, you should actively work with the site consultant to produce data that may allow them to go back into the ring and fight for you. “Never underestimate the power of human relationships. I want a compelling human being, a business person who is experienced, qualified, can speak to issues,” she continued. By the same token, “exit interviews” with consultants are not just recommended, they are encouraged. “If you don’t do exit interviews with site consultants on projects you lose, you should,” she added.
Big city amenities, however, are increasingly important – they are quantifiable, too, in terms of the numbers and concentrations of coffee shops, breweries, museums, number of daily flights to key markets, etc. Also critical: do you have an answer to the question “what is your minority mix”? Data shows diverse teams outperform less diverse teams. Companies today prioritize diversity.
10) Globally-competitive companies have dozens of departments and functions. Maybe engineering and R&D stays in San Francisco, but accounting and legal can move to, say, Rochester for cheaper rent?
An article published in another #econdev trade publication, Business Facilities, on January 16th broadcast an interesting headline: “Most DC Tech Workers Would Quit For A Job At Amazon,” it proclaimed. As someone who is thirsty to grow regional prosperity in Greater Rochester, I see an opportunity there. #HQ2 will cause a talent crunch for firms in Washington, D.C. during an already-tight employment market. Rochester offers real estate costs and payroll costs up to 60% less expensive than those of the coastal tech juggernaut markets – we can absolutely accommodate companies that lose workers to Amazon, offering them thousands of newly-minted graduates in technical fields, a 20% higher concentration of technical talent than the national average, and much lower costs. Let’s say a small tech firm in D.C. loses dozens of software developers to #HQ2 – why not lease some space in the Downtown Rochester Innovation Zone and recruit a few dozen recent RIT graduates to stem the tide, while maintaining your headquarters presence in your home city.
This came up at #TrustBelt18. Peeling off some executive offices and back-office functions and relocating them to mid-tier cities can lead to bottom-line success for companies with heavy presence in higher-cost coastal markets, according to many site selectors. Such areas likely have good schools, a lower cost of living, and a ready source of talent to fill positions like customer service and accounting functions. In instances like this, quality of life and cost of living do factor highly. Come to Rochester – safe from natural disasters, affordable, fun, and rife with talent!
There was so much discussed, and so many ideas proposed and picked apart at Trust Belt 2018, that I could not possibly distill them all into a top ten list. Here are some random nuggets of information not covered above:
· Peter Zeihan predicted that growing millennial consumer activity will keep the U.S. out of a recession for at least seven (!) years. Who knows? Anyone can make a prediction.
· When you consistently track WARN notices (see: Worker Adjustment and Retraining Notification Act of 1988) and link them to NAICS (stands for “North American Industry Classification System”) codes, you have a sound and interesting new tool to track jobseekers. Bring that data to a site consultant in discussions about talent. Also, track and measure the unemployed and underemployed and their credentials.
· Macro issues including the opioid crisis, immigration, and federal trade issues, even Brexit, impact your regional economy in real-time, so track them and work with partners to advocate for policies that will serve your community better.
· Arguably, career prep is more important than college prep in K-12 institutions. Workforce development thought leaders are working to bring that focus back to the classroom.
· We are an “experience” culture now. Companies are looking for an experience when they come to your communities. What is the experience they’re getting? If you can’t clearly answer that question, you’re not doing it right.
· Despite its age, rail will remain relevant. It’s 200 years old and yet the most efficient way to move goods while simultaneously being environmentally-efficient – you can move a ton of weight 500 miles on one gallon of diesel.
· “Wow factor” offices are a requirement, now, not just a nice-to-have. Roger Nesti, Director of International Real Estate with the Kellogg Company, pointed out that things that were important to boomers are not important to today’s 23-year-olds. Getting them to move to Michigan was next to impossible. Therefore, the company doubled down on modernizing its offices and amenities to attract the workforce they needed. It worked.
· Don’t devalue or diminish liberal arts education when measuring your workforce strengths. Critical thinking is more important than ever, and it isn’t taught as comprehensively in engineering programs as it is in philosophy or literary analysis courses.
It is more important today than ever to identify, track, and foster your own local strengths in regional economic development. Start where you are and build upon it. Future economic growth in the U.S. cannot depend solely on Palo Alto or Pittsburgh. Just like Detroit must be Detroit, not the “next Silicon Valley,” Rochester must be Rochester. With the help of technology and the rising cost of living and doing business in talent cluster markets on the West and East Coasts, smaller communities and mid-tier cities are more visible and accessible and networked than ever before. However, companies that are logistically located in talent clusters do better, and clusters can’t exist in isolation or just be created in an instant. Communities like Rochester can build a virtuous cycle around developing talent by funding the right initiatives, proactively serving companies and connecting them with higher education and other training programs, focusing on placemaking initiatives, and tracking data.
What can you, or the collective “us,” be doing to promote our home base(s) as the best place to attract business? As an economic developer, get to know your region’s companies and the talent that powers them forward. Engage with them, stay ahead of their labor and other needs. Focus on developing an agile, resilient workforce capable of accommodating changing skills needs. If you are a member of the Greater Rochester talent pool who is teaching young minds in a classroom, serving up delicious nourishment in one of our many dining establishments, transporting workers and neighbors to and from their destinations, developing a marketing campaign, selling agriculture equipment, or advising a small business on their growth strategy (I could go on…), remember how important you are to our community’s future growth. Just as you would a friend or family member, love Rochester without expecting anything in return and it’ll pay you back in spades. Believe in your community, and brag about it however you can in your travels and at the office. There’s so much to be proud of here, and such tremendous opportunities for future expansion and success.