Economic development

Outsourcing comes home

Submitted by acohill on Mon, 11/28/2005 - 11:17

This article suggests the tide may be starting to turn on the loss of manufacturing jobs to overseas factories. A Wisconsin cookware company is starting to bring jobs back to the Midwest because of rising labor costs overseas and drastic increases in the cost of shipping.

The change also highlights the need for economic developers to roll up their sleeves and talk to every company already in their region, because most of the new jobs will be coming from those existing companies, rather than from relocating businesses. Some of the questions that economic developers should be asking:

Counting the microenterprise

Submitted by acohill on Wed, 10/19/2005 - 10:43

In New Hampshire, economic developers did a study of business ownership and found that 18.5% of all private, non-farm employment in the state was tied to microenterprises. A microenterprise is defined as a business that employs between one and five people, including the owner, and requires no more than $35,000 in start up capital (Business NH Magazine, March 2005).

So in New Hampshire, a fifth of the economy is based on companies with less than five people!

So here is a homework assignment. Go back to your local economic developers and elected leaders (who usually appoint the economic developers), and ask them these questions:

  • What percentage of jobs do these businesses account for?
  • What programs are in the current economic development plan to help existing microbusinesses grow?
  • What programs are in the current economic development plan to help local entrepreneurs start microbusinesses?
  • What programs are in the current economic development plan to attract entrepreneurs from other areas that want to relocate and start a microbusiness?
  • What amenities, services, and community attributes do relocating microbusiness entrepreneurs look for, and do we have a plan in place to get them and market them?

    If you do not get satisfactory answers to these questions, your region may be ignoring the fastest growing source of jobs in the United States, with a 600% increase over the last decade in the microbusiness category.

  • Redundant cable paths

    Submitted by acohill on Fri, 09/02/2005 - 12:18

    I have been talking to communities about the importance of redundant cable paths for years. If you don't have at least two entirely separate cable paths into your community for telecommunications, your community, and especially your businesses, are at risk.

    The most mundane risk is having a cable cut by a contractor digging somewhere. But as a painful example of what can go wrong, one of the primary fiber cable routes into New Orleans was across the Pontchartrain bridge, which suffered enormous damage.

    Telecom companies are trying to patch other routes together to get Internet and phone service back into the city, but it is a sober reminder that we have to plan for disasters--the routine ones, like a wayward backhoe, or something much worse.

    A question for your economic developers

    Submitted by acohill on Wed, 08/03/2005 - 10:11

    Lately, I've found a very simple way to find out if the economic developers in a community or region are staying current with job and employment trends. I ask them just two very simple questions.

    Question one: How many people in the United States make a full time living from eBay?

    Question two: How many people in your region make a full time living from eBay.

    The answer to the first question is easy. Currently, about 724,000 people make a full time living from eBay, up from a half million last year.

    If your economic developers don't know the answer to the first question, your region is in trouble, because it says your economic developers are not keeping their eye on microenterprise trends and the ability of microenterprises to contribute significantly to the local economy.

    Designing an ecommerce Web site that works

    Submitted by acohill on Mon, 07/25/2005 - 09:45

    Jakob Nielsen is an expert on Web usability, and he has a short, very readable article about how to design a business Web site.

    Nielsen looks at Amazon and provides an interesting critique of how that ecommerce giant clutters their pages with stuff--on one page he counted 259 links to other information and sites. Although Nielsen says that works for Amazon, almost no other business should be doing things the way Amazon does.

    Friedman's The World is Flat

    Submitted by acohill on Sun, 07/24/2005 - 11:30

    I was initially skeptical of the heavy hype that this book received in the maintstream media. Friedman writes a column for the New York Times, and it seemed that the praise for the book was a bit over the top. But I finally picked up a copy, and while I still believe Friedman has over-simplifed some ideas and concepts, the book is worth reading.

    Friedman is an excellent writer who is able to identify key trends and write about them clearly. His previous book, The Lexus and the Olive Tree also stretched a good idea a bit too far, but nonetheless had valuable insights. The World is Flat is particularly valuable for Friedman's list of "ten forces that flattened the world." It is this list, and Friedman's cogent explanations, that make the book particularly valuable for economic and community developers. Communities across America, and especially in rural areas, are struggling to adapt their local economies to the shifting power of the global economy. Friedman talks about, and explains lucidly, global marketplace concepts like outsourcing and offshoring. Friedman's analysis of offshoring and how to deal with it should be a must read for community leaders struggling with the loss of local manufacturing jobs.

    Perhaps the most important, read between the lines message in the book for communities is that all the change and upheaval brought about by the end of the Manufacturing Economy and the rise of the Knowledge Economy offers incredible opportunities for small and medium-sized businesses that want to grow. A half day workshop for local businesses based on this book should be an essential activity for economic developers to offer to area businesses.

    For more recommended books on community and economic development, visit the Design Nine Book of the Month page.

    South Korea builds a Digital Media City

    Submitted by acohill on Mon, 06/20/2005 - 09:59

    I write a lot about what is happening in other countries, but some of my citations are just statistics--useful to a point, but sometimes you want more detail. Here is some great information about a single project in South Korea that probably dwarfs many other technology park efforts in the United States, and an indicator of how serious some other countries are about passing the U.S. in technology.

    This Digital Media City project appears to be well-focused and well-financed, and is not just a local effort--read down the page to see the "Rental Housing for Foreigners." The project is planning from the ground up to attract overseas investment, and to make sure the right kind of housing is available. How about business parks in your area? Does your plan address the needs of international firms to this degree?

    This is the competition.

    America still has an edge in the Global Economy

    Submitted by acohill on Thu, 06/16/2005 - 10:15

    Although I think U.S. communities have to work much harder on their economic development because of overseas competition that simply did not exist even fifteen years ago, we still have a valuable edge. This blog reprints an op-ed piece on some of the problems businesspeople in India face. Red tape, bureaucratic foot-dragging, costly permits, intrusive rent control, and antiquated labor laws make it very difficult to start a business in India.

    By contrast, it is dead simple in the United States, and usually just involves paying a small fee to register your business with the local government. I don't think it is coincidental that the low barriers to starting a business track nicely with the fact that as many as 90% of new jobs in the U.S. are created by small businesses.

    Ohio economic development strategy

    Submitted by acohill on Wed, 05/25/2005 - 14:38

    Pat Valente, the Deputy Director for the Department of Development of Ohio, spoke at the Ohio CDC Technology conference about the state's strategy for economic development. Here are the key points:

    What is most interesting about Valente's remarks is what went unsaid. There was nothing about industrial recruitment or giving lavish tax breaks to big companies. Ohio is probably still doing some of those things, but the emphasis on entrepreneurs and support for innovation is refreshing. The state is also headed in the right direction by identifying assets and competencies already in the state and trying to leverage those, rather than just imitating what has worked elsewhere or just trying a lot of stuff and hoping something sticks.

    As examples of this strategy, Valente mentioned a focus on fuel cells as an alternate power source. The state is funding research to use biomass as a feedstock for fuel cells, leveraging the state's agricultural industry. It is also funding the development of new polymers (plastics) from soybeans rather than fossil fuels, because the state is a big soybean producer.

    If Ohio sticks to this plan, it will have an advantage over many other states that don't have the same level of focus. I thought only one thing was missing--a statement of intent to ensure that every business in the state has affordable broadband. If Ohio is serious about competing in the global economy, you can't leave this to chance.

    Has the economy turned a corner?

    Submitted by acohill on Fri, 05/06/2005 - 09:36

    This article (via InstaPundit) says online advertising has passed the levels seen during the dot-com era. That's interesting, because advertisers want to see a return on their marketing expenditures--if ads don't turn into sales, they don't keep throwing more money into a particular medium.

    What's a big driver? It's broadband, which as I noted recently, has pulled even with dial up in terms of households using it. Broadband connections make ads less annoying because they download faster and don't slow down the display of a Web page the way they do on dialup. And broadband enables newer, richer kinds of ads with embedded movies and other multimedia widgets that don't work at all on dialup. And finally, Internet ads provide incredible feedback to advertisers, compared to the "black hole" of traditional media, where it's often quite difficult to determine who saw and ad and if they were interested in it.

    All the advertising also means people are buying more....a sign of a strong economy.

    Digital Cities: PacketFront talk

    Submitted by acohill on Mon, 04/18/2005 - 14:39

    PacketFront is a vendor of network equipment designed specifically for community broadband projects. Matt Wenger, an expert in communitywide broadband and senior analyst for the company, gave the talk.

    Wenger strongly advocated a services orientation for community broadband projects. His thesis throughout the talk was the current connection-based model used by the telcos and the cable companies discourages innovation and use of broadband.

    Wenger spoke at length at the connection between broadband and economic development, and said, "If you don't have a broadband strategy, you don't have an economic development strategy." He went on to show the connection between small business job growth and the potential for broadband to increase small business jobs in the community.

    Wenger had some good case studies that led to his proposition that a focus on services is most likely to be successful. He advocated letting a particular service (like VoIP or video on demand) determine bandwidth needs and quality of service, and those two factors in turn determine price. A wholesale model encourages innovation and service growth, and revenues go up for the network owner (the community) with a service-based model. Wenger illustrated how revenues tend to go down using a connection-based model.

    Broadband and the public good

    Submitted by acohill on Tue, 04/12/2005 - 16:03

    The Free Press has released three useful reports on broadband that ought to be required reading for any citizen's group trying to convince public officials and economic developers that something needs to be done.

    Connecting the Public: The Truth About Municipal Broadband
    This paper makes a thoughtful case of public investment in broadband. Among the data presented is the fact that the number of private sector service providers goes up in communities with public broadband, contrary to some reports. An excellent position piece to provide to appointed and elected officials who need more information about the subject.
    Telco Lies and the Truth about Municipal Broadband Networks
    A carefully researched paper that compares telco statements about several community broadband projects in the U.S. to the actual outcomes and impact of the projects.
    Broadband and Economic Development: A Municipal Case Study from Florida
    Lake County, Florida experienced 100% greater growth than surrounding counties because of the public investment in a communitywide fiber system.

    U.S. prosperity at risk

    Submitted by acohill on Tue, 04/12/2005 - 12:30

    The IEEE (Institute of Electronic and Electrical Engineers) has issued a new white paper stating that "U.S. prosperity is at risk" if it does not become a national goal to invest heavily in Gigabit networks. The organization went on to say this:

    Failure to act will "relegate the U.S. telecommunications infrastructure to an inferior competitive position" and undermine the future of the U.S. economy.

    The IEEE is a fairly staid body that rarely gets involved in political issues, so when this group speaks out, it's worth paying attention. How about your community? Are your local leaders and economic developers paying attention to this?

    New handouts in the library

    Submitted by acohill on Tue, 03/29/2005 - 20:32

    We've added two new handouts to the Design Nine library. Ten things a community needs to compete summarizes a column from a few months ago about what amenities a community needs to attract businesses to the area.

    Community broadband step by step compares community broadband development to the construction of a new building and the development of a new water or sewer system. It's easy to see that broadband development follows exactly the same processes that communities have successfully been using for years on much more expensive projects.

    Giving your region an edge

    Submitted by acohill on Thu, 03/10/2005 - 10:38

    One definition of insanity is doing the same thing over and over again and expecting different results.

    I still see many regions continuing to build shell buildings designed for manufacturing. It used to bring jobs to the area, so why not just keep doing it? The problem is that kind of strategy is competing for fewer and fewer jobs (as few as 10% of all new jobs) against more and more regions willing to throw enormous tax incentives at manufacturers. Meanwhile, more and more manufacturing is going to other countries.

    How about trying something different--something that will really give your region a marketing edge, for about the same price as a shell building? What if you could provide this resource to businesses by the hour, so that you don't have to find a single business to lease the whole facility for a long time?

    How about a supercomputer?

    Add Bowie State to the growing number of colleges and universities that are building supercomputers, both for their own academic research but also for use by local businesses. Virginia Tech's "Big Mac" project led the way, but other areas are beginning to do this as well. Here is the key information from the article:

    The initiative is expected to increase grant opportunities and attract business partnerships. In the near future, Bowie State will generate revenue by selling and negotiating cycle time.

    Wouldn't you like to be able to advertise to businesses that you have one of the 100 fastest supercomputers in the world? Doesn't that sound a little better than saying, "We've got a nice, drab metal shell building just like about 10,000 others in the U.S.?"

    Guess what? They both cost about the same. Which one is most likely to project an image of being connected and being part of the global Knowledge Economy?

    The iPod economy

    Submitted by acohill on Fri, 03/04/2005 - 08:18

    One of the big flaws in the whole telecom debate is a chronic focus on the past. The telecom companies and the FCC both tend to rely on looking backward, and by extension, it's a problem at the state level because the incumbent providers have been much better at getting their message to state legislators than purchasers of telecom services.

    Here's a concrete example of what I mean. The Times-Picayune has a story today on the fast-growing "iPod Economy," which is the exploding market for iPod accessories. According to one researcher, iPod owners spend half as much as the cost of their iPod on accessories. With most iPods selling for between $200 and $300, that's a lot of money. And iPod sales itself grew 525% last year. By some estimates, iPods account for as much as 80% of the total portable audio player market.

    So what's the point? The point is that very few people could have predicted this three years ago. Technology innovation is creating incredible business opportunities. If you browse through the companies selling accessories, none of them are "big name" companies, and many of them are garage start-ups, especially those that make protective sleeves and cases for the iPod.

    The telecom discussion tends to be framed by what is called the "triple play," which is voice telephony, video, and (Internet) data. I've seen a lot of business cases that "prove" that communities can't recover their costs using a triple play model. I think the reports are right, but for the wrong reason (which makes them wrong overall).

    It's really a quadruple play, with voice, video, data, and what I call "advanced services." Advanced services are anything that will be delivered via the Internet that we have either not thought of yet or just are not including. My favorite example is network backups. Knowledge Economy startups like Data Ensure are growing rapidly by playing in the Advanced Services arena, and Data Ensure, in particular, is creating jobs in a remote part of southwest Virginia. They just happen to be in a vertical business incubator with fiber in the basement--part of a regional fiber project.

    New York Times comes out against communities

    Submitted by acohill on Sun, 02/20/2005 - 10:13

    The New York Times (registration required) has a very biased article about Philadelphia's plan for citywide wireless broadband. The paper interviewed mainly opponents of the plan, and seemed to go to great lengths to interview those opponents, while trivializing successful community projects. Worth a read just to understand the anti-community sentiment out there.

    It's unfortunate that the MSM (MainStream Media) is unwilling to make the effort to report both sides of the issue. I'm not arguing that the Times should be in favor of community technology projects, but rather that their reporting should strive to present both sides of the issue fairly.

    Great Plains communities are starting to "get it"

    Submitted by acohill on Wed, 02/09/2005 - 09:00

    Run, don't walk, to the nearest store and pick up a copy of USA Today. If you live in a rural community and are involved with economic and community development issues, you need to read the cover story today.

    Small towns in the Great Plains are finally starting to give up "elephant hunting" and instead are using an "economic gardening" strategy. This is exactly what I have been saying in our Knowledge Economy Roadshow for the past several years.

    Elephant hunting refers to traditional industrial recruitment....trying to bag a big company with lots of jobs. But small rural communities are finally starting to realize that if that is the only strategy they have, it does not work any more.

    What is working? Just what I've been recommending: recruit entrepreneurs and families, not businesses. In Kansas, they are giving away free land to families that move to town, and even making cash payments to help with down payments on mortgages. They are helping the head of the household to find a job. It is still economic development, but cast in an entirely different way.

    You really need to read the entire article. These communities are getting results, and are beginning to turn things around.

    Where the customers will come from

    Submitted by acohill on Thu, 02/03/2005 - 09:47

    This CNet article says that businesses are realizing the value of dark fiber, and are willing to pay for it.

    Here is the money quote:

    "....Ford [Motor Company] found that it would cost less to lay its own optical fiber lines than to subscribe to a service from the local phone company."

    Bingo. That's exactly right. As more and more businesses require more bandwidth beyond one or two T1 lines, the high prices from incumbents are tipping the tables in favor of community projects. Medium and large businesses in your community can become anchor tenants for a community digital transport system (aka duct, fiber, and wireless). Ford is building their own, but it would be cheaper for them to join a community project.

    Good news? Not if your state is one of several that have anti-municipal legislation pending that will take the right of communities to decide their own future away from them.

    This article shows how wrong-headed that legislation is. Let's see....our state will outlaw efforts to lower business costs, and force our biggest employers to buy overpriced services from near monopoly providers. That's a great Knowledge Economy strategy.

    Get your legislators on the phone, invite them to lunch, and give them a copy of this article. It's a good first step.

    Sun rents out supercomputer

    Submitted by acohill on Tue, 02/01/2005 - 09:56

    Back on October 31, 2003, I wrote about supercomputers as the economic development infrastructure. I suggested that regions that wanted to have a real marketing edge invest in a modest supercomputer cluster and rent it out to businesses that wanted occasional access to such equipment but could not justify the cost of owning it.

    Today, Sun Computers had a full page ad in the Wall Street Journal advertising their supercomputer cluster for hire, at a rate of $1/hour/CPU. That's a good bit higher than what some universities like Virginia Tech are charging for business access to their supercomputer facilities, but it shows that there is a market out there.

    How about your region? Are you still building steel-sided shell buildings that are sitting empty, or are you ready to enter the Knowledge Economy with some investments that businesses really want?

    Syndicate content

    A Broadband Properties top 100 company for 2013
    A Broadband Properties top 100 company for 2012
    A Broadband Properties top 100 company for 2011

    Design Nine has been selected as a Broadband Properties / Broadband Communities top 100 company from 2008 to 2015.

    Smart 21

    Designed by Design Nine, the nDanville fiber network has won the Intelligent Community Forum's Smart 21 award for 2010.

    Design Nine provides visionary broadband architecture and engineering services to our clients. We have over seventy years of staff experience with telecom and community broadband-more than any other company in the United States.

    We have a full range of broadband and telecom planning, design, and project management services.