Submitted by acohill on Tue, 12/21/2004 - 07:34
The Roanoke region recently competed for a Dell manufacturing facility, and lost out to North Carolina, which offered Dell a whopping $242 million in tax credits. That's an awful lot to pay for just one firm that could easily pick up and leave after a few years. Imagine what a few hundred small businesses with good business plans could do if given ten or fifteen years of tax relief.
But that's not the story today. In today's Roanoke Times, an article says that one of the issues with Dell was access to an airport that could handle long range 747 freighters--one of the biggest commercial airplanes made. Not only does Dell get parts from suppliers worldwide, they ship their computers all over the world.
This is a good example of how the global marketplace is changing things. Forty years ago, it was rare to make goods in one country and ship them to another. Most manufacturing plants made things for regional or national consumption. You can tell how much things have changed when ordinary items like paper towels and batteries come with packaging printed in three or four languages.
Geography is still important, but not the way we think. You no longer have to be close to markets, because the entire world has become a single, large marketplace. But while many products and services can be delivered via the internet, not everything can, so regions have to consider transportation facilities in a new way. In Roanoke, airport capacity was, according to the newspaper, not on the list. You can bet it is now.
Submitted by acohill on Wed, 12/15/2004 - 14:41
The online site Human Events chronicles what it calls a "cynical" backroom deal that Congress made with the IT industry to allow more foreign IT workers in the country on work visas in the coming year.
Not surprisingly, Oracle was apparently one of the industry "leaders" behind this kick in the pants to American workers, and by extension, to American communities where those workers live. I just wrote about Oracle and it's lack of innovation. Instead of retraining perfectly capable American workers, these companies are bringing in workers from overseas, who are happy to work for half to two-thirds less than their American counterparts.
Another part of the problem was also created by the IT industry itself, during the drunken orgy of escalating IT wages during the dot-com bubble. Fueled by venture capital funds, Internet startups, over a period of three years or so, ran IT wages up to ridiculous levels. Many of those overpaid and underqualified workers were eventually laid off, but the damage was done--the average IT wage remains higher than ever.
So the companies and industry that happily inflated its own wage structure now won't take its medicine and restructure wages or find ways to use perfectly capable American workers, of whom there are plenty. Instead, these companies have run to Congress for a handout.
This kind of thinking is going to continue to depress the future of IT innovation in the U.S., and the industry itself will slow atrophy as parallel universe efforts like the Open Source movement simply eliminate the need for whole chunks of the IT industry (Oracle's problem is that it is increasingly irrelevant).
In the Knowledge Economy, you have to be either very big (e.g. Walmart, Fedex, etc.) or as Schumpeter would put it, small and beautiful (e.g. Open Source). And you have to be flexible and innovative.
Submitted by acohill on Wed, 12/08/2004 - 10:22
This CNet article describes what corporate America wants from its workforce. Surprise--it's not necessarily tech-savvy youths with oversize thumbs from playing video games and keying text messages on cellphones the size of chiclets.
What corporate America wants is workers who can read and write--especially writing. Our kids are growing up and entering the workforce without the vaguest notion of how to compose a complete, grammatically correct sentence, and it's driving bosses everywhere crazy.
Email is a particular problem, as the informal style of email messages has encouraged ever more casual communication, to the point of being incomprehensible, if you look at the examples of corporate "writing" included in the article.
This reinforces the article I mentioned a couple of days ago about the study that showed that kids that spend a lot of time on the computer are dumber. Playing video games, typing code in instant messenger (r u ther, lol), and surfing the Web is not preparing our kids for the workforce.
Step one is for parents and educators to take control and stop repeating the fallacy that, "Our kids know a lot more about technology than we do." The fact that my daughter can rack up a much higher score on Super Mario Brothers does not make her smarter or more tech savvy than me. Nor do high scores on video games or the ability to send text messages on cellphones prepare them to enter the Knowledge Economy workforce.
How well do the schools in your community do in preparing your youth for the Knowledge Economy? Is there a concerted effort to make sure they can read and write at appropriate grade levels. Are you holding regular meetings with economic developers, local business leaders, and school administrators to make sure the schools are emphasizing the right stuff?
Submitted by acohill on Tue, 11/30/2004 - 09:55
It is being widely reported that Internet shopping over the Thanksgiving weekend jumped dramatically, especially on Thanksgiving Day. Apparently, while everyone was waiting for the turkey to cook, twice as many people as last year went online to do a little shopping. Friday also saw a big increase (about 50% more).
The big loser was Walmart, which did not see the big increases expected. Other stores, like Target, apparently did better. There are all sorts of theories explaining various aspects of the holiday shopping--that Target offers a nicer shopping environment and better quality, that Walmart shoppers bought from Walmart.com instead of going to the store, and so on. All the explanations probably have some truth to them.
I'm more interested in the implications for smaller and rural communities. One interesting fact is that half of broadband users were apparently shopping online, by one estimate. That's a big number, and I think the reason is that you really need (and want) broadband for online shopping. Browsing an online catalog by dialup is painful. You might as well get in the car and drive to the shopping center.
For rural communities, affordable broadband and the willingness to shop online means people living in these towns and regions have much the same shopping alternatives available to them as people in the suburbs and big cities. But you have to have the affordable broadband.
It also means that small towns and communities may want to think differently about their approach to retail. In many of the towns and regions in which I work, there is much worry and discussion about the lack of retail. Maybe this is not the problem we think it is--if your residents have affordable broadband. It may be that money spent on retail initiatives might be better directed at quality of life issues that will attract entrepreneurs and businesspeople to the community, who know they can shop online, and instead want a Main Street that supports small businesspeople (lawyers, accountants, copy services, coffee shops, good restaurants, etc.). Finally, the change agent is affordable broadband. Instead of putting new street lamps on Main Street with the hope of reviving retail stores there, invest in a public broadband infrastructure that will bring broadband providers to town--thereby letting people shop online.
Submitted by acohill on Thu, 11/04/2004 - 10:18
There is the old joke that goes like this:
"There are two kinds of people in the world--those that divide people into two groups, and those that don't."
At the risk of self parody, there are two kinds of people in the world (and I'm broadly overgeneralizing, of course)--those that use eBay and those that don't.
For those that don't, the eBay phenomenon is a bit of mystery. From a certain distance, EBay is cluttered with junk, trivia, excess, and silliness. But it also is a terrific business transaction mechanism, for both formal and informal business.
I just bought a part for my breadmaker. The manufacturer has been out of business for four years, and parts are no longer available through "normal" channels--that is to say, the Manufacturing Economy manufacturer--distributor--dealer supply chain.
But I found the part I needed for $9 (new cost was $15 when it was available) from a guy in Nebraska whose machine had burned up. Instead of throwing it in the landfill, he's selling usable parts from it and making a few extra bucks. It's not only reducing the amount of waste going into landfills (parts of his machine and all of mine), he's profiting from it, and I'm able to keep a perfectly good machine working.
It's amazing when you think about it. A scant ten years ago, the notion of linking a buyer for a very obscure machine part in Virginia with a seller in Nebraska was inconceivable. Today, we take it for granted.
Many small businesses are now using eBay as a strategic part of their business, putting both normal stock and overstocks there for sale. It's a cheap and easy mail order strategy that has virtually no downside.
Does your region's economic development strategy include workshops to help businesspeople learn how to use eBay? I bet not, and business growth opportunities are being missed.
Submitted by acohill on Tue, 10/26/2004 - 09:27
About this time last year, Virginia Tech, right here in rural Appalachia, made world news with a dirt cheap supercomputer that ranked number 3 in the world in terms of speed and processing power.
The university did some thinking out of the box and discarded the conventional approach to building supercomputers (typically using a lot of custom hardware). Instead they bought 1100 off the shelf Macintoshes, wired them together with more off the shelf hardware, and wrote a small amount of software to turn the Macs into a monster supercomputer.
Since then, the university has swapped out all the older G4 processor-based machines for much smaller Macintosh Xserve industrial servers based on the much more powerful G5 processor. The floor space needed for the machine shrunk, the heat output was reduced, and speed was increased by 19%.
I remain convinced that a regional supercomputer facility should be regarded as essential economic development infrastructure. Microenterprise businesses and other small businesses increasingly need access to supercomputing facilities, and this is no different that sewer and water was forty years ago.
The good news is that putting a supercomputer together is pretty easy. Apple will build you a turnkey G5 cluster so you don't need a research university. And for a rural community seeking an edge in the global economy, I can't think of a better calling card. A modest supercomputer facility would not cost as much as a shell building, and would be a perfect complement to a business incubator.
Submitted by acohill on Fri, 10/22/2004 - 14:29
Outsourcing of U.S. jobs to other countries, depending upon who you believe, is wrecking the country or no big deal. Based on data developed by business experts like Peter Drucker, who says three U.S. jobs are created for everyone that is outsourced, I'm inclined to believe that it is not a major concern as a national issue.
As a local issue, if your area has been losing jobs, it's certainly a big deal, hence the confusion about outsourcing--it is a matter of geography. Nationally, we are creating jobs. But in some localities, real jobs are being lost and workers and their families affected materially.
The real question is what to do about it. Hence, insourcing. Insourcing is looking through the other end of the telescope. Instead of bemoaning the loss of jobs, take a look at insourcing, or the jobs and companies that are coming to the United States. If Drucker is right that 3 jobs are being created for every job that leaves, then the real opportunity is to figure out to be attractive to those international companies coming to the United States.
This site is a gem, and worth bookmarking. The Organization for International Investment has compiled state by state statistics on insourcing. In Virginia for example, I found that there are 146,000 insourced jobs, which is a 25% increase over the past five years. In Illinois, 268,400 jobs that represent a 39% increase. In New Hampshire, it's a stunning 38,400 workers with a 43% increase over five years. Insourced jobs provide more than 7% of all jobs in New Hampshire, and the state ranks 4th in the country in terms of per capita insourced jobs.
How do you get insourced jobs? You can bet that those international companies are relying heavily on the Web to do their research. Your community, government, and economic development Web sites need to be attractive, vibrant, well-designed, and professional. They need to tell a good story. One suggestion: create "Welcome" pages in some of the dominant languages of trade (Spanish, French, German, Japanese, and Chinese) would be a good start. It's not expensive, and it will project that your community embraces the global economy.
Submitted by acohill on Fri, 10/08/2004 - 11:21
The U.S. Dept. of Labor has announced they are going to revise the way they count jobs. In the past, the emphasis was on the Payroll Survey. In this survey, employers are called and asked how many employees they have. Payroll jobs have been shrinking, hence a lot of political heat and smoke about whether the economy is improving or not. But Labor has also been doing what's called the Household Survey, in which households are polled about who is working in the household. Job counts based on the Household Survey have been increasing rather dramatically, but the government has not really factored those jobs into the "jobs" number that typically gets published and discussed widely.
If you have a self-employed husband and wife, both fully "employed" in their own businesses, those jobs never show up on the Payroll Survey. They would on the Household Survey.
This is an important issue for communities trying to measure the impact of new and diversified economic development efforts, like investments in getting affordable broadband and small business training and development. If economic developers are being rewarded for increases in payroll jobs, the community is losing out big time--that's not where the growth is.
Not only that, a factory floor payroll job is not necessarily equal to a self-employed job. A prosperous microenterprise owner with a gross business income of $150,000/year and take home "pay" of half that has a much larger impact on the economic health of the community than a $12/hour full time hourly worker, and it's probably much more than just a simple 3x factor. One economic developer I talked to thought that the impact of a single self-employed professional in the community might be worth as much as ten shop floor jobs, because of the indirect effect. Self-employed professionals are spending some of their business income on local businesses--attorneys, accountants, copy services, and other professionals in the community, lifting all of them.
Submitted by acohill on Mon, 10/04/2004 - 09:07
An op-ed piece in the NY Times (registration required) provides another data point to show that outsourcing jobs to other countries is not the national crisis the mainstream media has tried to make it.
The author provides data that shows the U.S., as other studies have suggested, is actually showing net gains from outsourcing. That is, outsourcing low pay, low skills jobs creates other business opportunities that more than offset the direct job loss.
As the author notes, this data is not a great comfort to a region that has lost those jobs. Factory floor workers who have had their jobs outsourced need training and help to be able to compete for the higher wage, higher skill jobs that are being created.
For rural communities, it's another indicator that business as usual just won't work. The Old Economy jobs being lost cannot be replaced by more aggressive industrial recruitment, better brochures, or a new logo--all things I've seen promoted as "proof" of a revitalized local economic development program.
What does work? Here are some things that are important in the Knowledge Economy:
Submitted by acohill on Mon, 09/27/2004 - 08:10
I met a scientist and researcher a few days ago who is putting together a pharmaceutical startup in a very rural community. He owns several patents and putting together an operation to manufacture and market the new drugs. Size of the company? Approximately ten highly paid scientists, researchers, and marketers. Virtually all other operations will be outsourced.
This businessperson chose where he lives based on two criteria: great quality of life and the availability of broadband.
This story is being repeated over and over again across the country. Here's the question for rural communities: Do your economic development efforts (marketing, services, Web site) provide the information that businesspeople like this one want to make a relocation decision? How do you assess "success" in your economic development efforts? Do you have a formula that considers the value of microenterprises in your community? For example, are you still just counting heads as a measure of success?
By that, I mean if you don't have a way of considering the financial impact of ten scientist/researcher jobs on your community compared to ten factory floor jobs, you are in trouble (my guess is that one scientist/consultant/professional job could be worth as much as ten factory floor jobs).
Submitted by acohill on Thu, 09/23/2004 - 11:39
According to an article in USA Today, more than 800 communities in the United States are building their own networks. There is some fascinating stuff in this article, which highlights a high speed fiber network and MSAP (Multimedia Services Access Point) in Danville, Virginia.
A high speed fiber network and MSAP for the Danville area was first proposed by me in a 1999 document study I did for Virginia's Center for Innovative Technologies, which was encouraging Danville to "think big" as they designed and built a business incubator.
Here are some of the other highlights from the USA Today article.
"We used to have to beg businesses to locate here. Now our phones are ringing off the hook," Hamlin (Mayor of Danville) says, beaming.
"This was never a case of 'Build it and they will come,' " says Hamlin, the Danville mayor. "This was a case of, 'If you don't build it, you know they won't come.' "
...nDanville paves the way for a raft of possibilities: advanced college placement courses, home-based instruction, teacher-parent meetings via the Internet and videoconferencing galore.
"If you want to recruit high-tech, you have to be high-tech," says Locker, adding: "Nobody moves to Danville without first looking at the schools."
In the Knowledge Economy, as they have found out in Danville, it's more than just infrastructure that makes a difference. Good schools, quality of life, and support for entrepreneurs all contribute to success in economic development.
Submitted by acohill on Mon, 09/20/2004 - 06:01
I visit a lot of rural communities. Most of them are trying to chart a path for themselves in the Knowledge Economy. But there is still a lot of stovepipe thinking going on. Economic developers are rarely talking to town planners. Town planners are rarely talking to business people. Hardly anyone is talking to work at home businesspeople.
No one cares about broadband. Let me repeat that. Businesspeople that are engaged in the new economy don't care about broadband. What they care about is being able to meet their customers needs and expectations. Broadband is needed to do that, but broadband is not really an issue for them--what they are able to do with it is an issue.
What I'm trying to say is that broadband is simply one part of a bigger picture for communities, and the bigger picture, for the entrepreneurial, microenterprise businessperson (remember that small businesses are creating 75% of new jobs), is that they need a bunch of amenities and services in a community to be able to meet their customer needs and expectations. It's never just one thing (like broadband).
What are some of those things? Here's my list:
Submitted by acohill on Mon, 09/13/2004 - 19:52
A few years back, Idaho set its eyes firmly on the future, and the effort is beginning to have a major impact in the rural state. Idaho is not only not on the way to anywhere, it does not come to mind quickly as a hotbed of technology companies and entrepreneurs.
But it is. Wired's story is worth a read to see what can happen when a region sets a vision for the future and sticks to it long enough to see results. Idaho did not go after the quick fix. The state took its time, invested patiently, and kept it's eye on the ball.
Submitted by acohill on Mon, 09/13/2004 - 12:06
MuniWireless has a story about Scottsburg, Kentucky and the importance of broadband to the future of the community.
Scottsburg is a rural community of 6000 north of Louisville. The problem they were facing there is common to rural communities: a T1 line in metro Louisville cost $300/month, and in rural Scottsburg it was $1300/month--that's the difference between a thriving business sector and and an economic disaster.
A modest investment in wireless allows Scottsburg residents and businesses to get broadband for $35/month, and a full T1 (via wireless) costs only $200/month--cheaper than Louisville.
The school system estimates that it saves $6000/month in telecom costs (that's taxpayer dollars!), and several businesses have been able to stay open, including the local Chrysler dealership, where 60 mechanics who use laptops to repair cars were told by Chrysler to get better broadband or close down.
When the local garage needs broadband to stay open, the whole "value of broadband" issue is closed to debate. If your community still has elected officials and economic developers who are not taking this seriously, show them this article. Ask them if saving $6000/month in taxpayer funds is important, and if not, ask them to please explain why.
Broadband saves jobs and money. It's just that simple.
Submitted by acohill on Fri, 09/10/2004 - 08:21
Over the past couple of weeks, three major cities in the U.S. have announced ambitious plans to extend connectivity of one kind or another. New York and Philadelphia are moving forward with plans to create wireless blankets over most of each city.
New York's plan is more ambitious. The city is looking at making virtually every lamppost available for WiFi and cellular telephone access. Part of what is driving this is money. Even at the modest fees the city says it will charge for the right to mount antennas, it represents new income to the municipal government. What is less clear is if the plan will succeed. Some elected officials and citizen groups have raised concerns about the amount of additional EMF radiation that will be propogated by the plan. Not everyone is keen to have 24 hour/day gigahertz frequency radiation emanating from an antenna just a few feet from their second floor apartment window.
Philadelphia's plan is to create a WiFi blanket throughout the core area of the city, to make the place tech friendly. Both cities will rely on the private sector to spend the money to do the work, and will simply put the ordinances and fee structure in place that will allow those companies to place antennas and equipment on public property.
The third city, Chicago, is planning to put 2000 remote control surveillance cameras throughout its neighborhoods and city streets, with the dual aim of curbing crime and providing better coverage of potential terrorist targets. The system will be tied directly into the 911 system, which will allow 911 operators to pull up real time video of a crime, fire, or accident in progress. In Chicago, some groups have raised concerns about the potential privacy issues related to such comprehensive surveillance. In the end, the city will probably have its way, as we have no constitutional guarantee to privacy in public places.
All these initiatives are mixed news for smaller and rural communities. On the one hand, these initiatives not only raise the bar for what kind of infrastructure is expected in our communities (i.e. WiFi blankets), but as this kind of infrastructure becomes commonplace, smaller communities especially lose any competitive advantage they may have had from early investments. That is to say, instead of touting public WiFi as an economic development advantage that other places do not have, public WiFi is now going to be increasingly seen as part of the base, required infrastructure--imagine trying to promote your community without a public sewer system in place.
Submitted by acohill on Tue, 09/07/2004 - 09:10
If you have been thinking about attending the Rural Telecommunications Congress 8th Annual Conference, Friday is the last day to save $100 on early bird registration. If you are a vendor, it is a great place to meet the representatives of community and regional broadband projects from around the country. If your community is interested in broadband, it's a great place to hear about what has worked and worked well.
For the past eight years, RuralTeleCon – the annual conference of the Rural Telecommunications Congress – has been the premier venue for understanding the issues surrounding the deployment and use of advanced telecommunications in rural communities. Each year, the event focuses on a critical issue facing rural communities and rural residents as they use telecommunications for community and economic development. This year’s theme is “Putting Broadband to Work.”
Dane A. Deutsch, President and CEO, and Pete Adams, COO, DCS Netlink – Meet “Bobby Blackhat” and learn why we need to take Internet security seriously today and tomorrow.
Plus more Speakers and Panels including experts on telehealth, e-commerce, entrepreneurship, education, e-government, deploying and maximizing the broadband infrastructure, and economic and community development, all focusing on rural issues.
For more info and to register visit www.ruraltelecon.org.
Submitted by acohill on Tue, 09/07/2004 - 08:38
Almost a year ago, I wrote enthusiastically about Virginia Tech's low cost, high powered supercomputer, and suggested that supercomputers for hire were a way of attracting businesses into a region, just as water and sewer were attractors forty years ago.
This Slashdot story describes Lord of the Rings director Peter Jackson's latest venture--a supercomputer for hire in New Zealand.
Jackson's 500 node machine is relatively modest, ranking only 77th among the top 500 supercomputers in the world. A modest cluster can be assembled for a lot less than some regions are spending on shell buildings out by the interstate, and as a marketing tool for Knowledge Economy businesses, even a small supercomputer cluster is more likely to get your region on the short list for a relocation than a shell building.
Submitted by acohill on Fri, 09/03/2004 - 11:17
Early bird registration for the 8th Annual Rural Telecommunications Congress Annual Conference is still available through September 10th.
If you live in a rural community and are interested in economic development and broadband issues, this is one of the best conferences going. The RTC conference works hard to keep the sesssions focused on best practice, lessons learned, funding opportunities, and solid, practical information.
If you are interested in funding opportunities and national policy issues, some of the most important Federal and private agencies will be in attendance, with staff and speakers, including the Appalachian Regional Commission, the USDA, NTIA and the Technology Opportunities Program (TOP), and RUPRI.
The conference is being held in Spokane, Washington, with affordable downtown hotel rates, lots to do after hours, and of course, the conference is a tremendous opportunity to meet vendors, network in the hallways, and get valuable information for your community. Disclaimer: I'm on the RTC Board of Directors, but I agreed to join the Board because I was so impressed by the RTC conferences.
Submitted by acohill on Tue, 08/31/2004 - 09:46
The news is full of stories about USAir's financial woes, which they blame on the airline pilots. Their labor costs are probably too high. But I think there are other contributing factors. I just had to book a flight to Pittsburgh (round trip from Roanoke, Virginia). USAir has a hub there, and direct flights from Roanoke. The other three Roanoke airlines fly you through one of their hubs before getting to Pittsburgh.
You would think USAir would have a natural advantage, since businesspeople don't want to waste time in airports--a nonstop flight is always preferrable to one that requires a stop. Except when the nonstop flight costs two-thirds more! USAir is going broke because they are charging $800 for a single flight segment when all their competitors will fly two legs for under $500. Not only that, the times of the USAir flights are lousy, so I don't really lose that much time with the extra hop.
Another airline got my business, and USAir lost out because of absurd pricing coughed up by hideously complex pricing schemes generated by computer programs that only a bean counter could love. It's obvious that NO human being has ever looked at the Roanoke-Pittsburg pricing and asked, "Does this make sense?" If they had, the prices would be different, and USAir would be making money instead of losing it. Applied over their whole flight network, it's a wonder they have lasted this long. And it explains why the pilots are reluctant to make concessions--why should they if the real problem is not being fixed. Your costs could be zero, but if your prices drive your customers to another airline, it won't make any difference.
In part, this is a natural consequence of the Knowledge Economy. In the old days, travel agents worked mysteriously and invisibly to come up with ticket prices. They had special access to airline fee schedules, and we did not. So we took pricing more or less for granted. We had no information with which to make an informed decision. Today, I can hop onto Orbitz or Expedia and see every price from four or five airlines, and the pricing insanity that USAir calls a "business" is patently obvious.
Submitted by acohill on Fri, 08/27/2004 - 10:25
There is a mildly partisan op-ed piece in yesterday's USA Today about how jobs are and are not being counted in the U.S. Whichever side of the political fence you happen to be on, it's well worth a read. It does a nice job of summarizing the differences between the Payroll Survey (the traditional measure of jobs growth) and the Household Survey.
Briefly, the growing problem with the Payroll Survey is that it measures Manufacturing Economy growth (or lack of it). It measures only payroll changes. But in the Knowledge Economy, more and more workers are self-employed, and have little or no payroll. Many of these self-employed, if they expand, hire other self-employed workers on a project by project basis. This means that while they are providing employment for others, they are not adding to the Payroll Survey.
The Household Survey tries to take these other employment measures into account. Contrast the results of the two surveys in July of this year. The Payroll Survey reported an anemic 62,000 jobs added to the economy. The Household Survey reported a stunning 629,000 jobs added to the economy.
For communities, it is critical to understand the difference between the two and to adjust your economic development strategies appropriately. These numbers are nonpartisan statistics gathered by the Department of Labor. If you are measuring the success of your economic development program by the local growth of payroll jobs, you are missing (potentially) some 90% of the new jobs being created, based on the July numbers.
Are your economic developers shifting course and reallocating resources to better foster growth locally of self-employed workers, microenterprise businesses, and small business? If not, your region is at a major disadvantage--just look at the numbers.
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