Economic development

Outsourcing and economic development

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:

The Knowledge Economy pharmaceutical company

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).

800 communities are building their own networks

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.

Is your community open for business?

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:

Wired says Idaho is hot

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.

Broadband saves $6000/month

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.

Connected cities

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.

Last chance to save money on RuralTelecon conference

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.”


For more info and to register visit

Supercomputers for hire: the new ED infrastructure

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.

RuralTelecon Conference one of the best

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.

Why USAir is nearly broke

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.

The changing economic development landscape

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.

Map your hotspots

Submitted by acohill on Wed, 08/25/2004 - 07:33

Dave Winer, who in many ways invented blogging, is on a coast to coast road trip. Guess what his number one complaint is? How hard it is to find hotspots at night so that he can get online and take care of work.

Everyone I've talked to in the past couple of months has laughingly agreed that they no longer care about hotel chains, frequent traveler points, or the quality of the breakfast buffet. One road warrior summed it up this way: "I'll sleep on the floor in a sleeping bag, but I want broadband."

Hotels are catching on, and many chains now advertise their broadband access heavily. But others don't, and Winer's complaint is that it is too hard to find public hotspots. He wants local and regional maps he can pull up on the Web that identify where WiFi is available.

How does your community portal measure up? Can visitors quickly determine where the hotspots are in your community? How about your economic development Web site? Can your out of town relocation prospects find broadband access locations easily on your Web site?

A robust community portal, designed to meet the needs of visitors and economic development prospects, sends a strong message that your community "gets it." I still visit too many communities complaining about their lack of jobs and lack of economic development activity, but a quick check of the Web often reveals the following: no county Web site or a very limited one that looks like it was last updated in 1998; no community portal or a mediocre "tourist brochure" approach that is mostly pretty pictures and little information. Or the worst of all--dueling Web sites that all claim to be the "official" community portal. The latter situation is a clear signal that the community lacks leadership and direction.

The community portal is the world's window into your community. How your community portal portrays your schools, your civic organizations, your recreational activities, and the business life of your community counts.

Concrete and indium

Submitted by acohill on Mon, 08/09/2004 - 09:25

Indium sounds like one of those made up compounds, like Intel's "Itanium" or Volkswagen's "Turbonium." but indium is a little known metal that is essential to the manufacture of LCD panels. The Wall Street Journal reports on a potential shortage of the transparent, conductive metal. It's refined from the tailings of commodity metals like zinc and lead.

The problem is that only a few hundred tons mark the entire world production, and the price has been rising rapidly. Even with the price increases, so little is sold that it's hardly worth it to the big zinc and lead producers to bother refining it. So while supplies are adequate right now, the exploding demand for big screen TVs and LCD panels suggests shortages may develop.

Cement is also creating a slowdown in the world economy. Paradoxically, the global Knowledge Economy is suffering from the high prices created by, of all things, cement. It's a useful reminder that for all the hype, the IT business is not the major driver in the global economy. It's a driver, but not the primary one (if there even is one). Businesses around the country, even in rural areas, are feeling the effects of the cement shortage because of demand in China and Iraq....proof positive that we can't ignore the interconnected, increasingly complex world beyond the borders of our own county and community.

Broadband is a "necessity"

Submitted by acohill on Wed, 07/28/2004 - 08:33

A Ziff-Davis news article chronicles a series of new broadband projects and applications using broadband, and calls broadband a "necessity."

Big Stone Gap, Virginia is keeping some employers in town and attracting new ones with the help of their fiber network. Led by Skip Skinner of the Lenowisco Planning District, the region has been laying fiber in Emtelle microduct for the past year, building a regional fiber backbone and making fiber available to downtown businesses in Big Stone Gap.

Design Nine has been working with Skinner and Lenowisco Planning District since early spring on a telecom master plan for the entire region, and of course, the fiber buildout is a cornerstone of future plans.

Broadband use soars in the United States

Submitted by acohill on Fri, 07/23/2004 - 08:30

There are still plenty of community leaders and elected officials who are not taking broadband seriously. Bluntly put, it's a critical economic development issue. Ignore it at your peril.

This article that summarizes recent growth in broadband use in the U.S. is a must read for economic developers. If your community is behind in broadband use compared to the general population, you have a serious problem that demands immediate and continuous attention.

Wondering how to get your community leaders more interested? How about taking one out to lunch next week and reviewing this data with them?

Broadband everywhere?

Submitted by acohill on Mon, 07/19/2004 - 09:40

We just rented a beach house for a week, and the contract had a list of amenities. To my surprise, broadband Internet access, a computer, and WiFi comes with what is a very moderately priced beach rental.

It's one more signal that your region, to be competitive in the global economy, needs to be working with your local hospitality, recreation, and travel businesses to make sure they understand this is what travelers want and expect.

If your local businesspeople are saying they don't understand it or don't think it's worth it, then you have an education and training challenge to help them identify what they need and why they need it (they need to keep customers coming). And your region needs hotels, motels, restaurants, and recreation spots to have these services. It's no longer some esoteric marketing's become part of the base services package, like electricity, water, and sewer.

A rural advantage for high tech businesses

Submitted by acohill on Thu, 07/08/2004 - 11:11

An article in today's Wall Street Journal (B1) details the success of Hutchinson Technology, a company with four plants in southern Minnesota. Hutchinson manufactures most of the world's supply of the support arms used to hold the read/write head in hard drives. Most of its output is exported to Asia, where most hard drives are manufactured now.

Hutchinson relishes its remote location in rural Minnesota, and uses it as a competitive advantage. Hutchinson's products are highly sophisticated, and the company's leaders have considered moving some parts of the business closer to customers, but recognized it would also mean exporting their manufacturing processes and techniques. Their view is that they do not want to train workers in other countries on how they manufacture their products, as those workers could then quit and take that knowledge to other companies. Locating the business in rural Minnesota makes it much more difficult for brain drain and technology leaks to occur.

Muncipal WiFi a worldwide trend

Submitted by acohill on Fri, 06/25/2004 - 08:42

An article in The Register provides a nice synopsis of the worldwide trend for municipalities to offer public WiFi. It's happening most often in the big cities first, where businesspeople congregate in public spaces more and expect Internet access.

The new mesh network WiFi equipment is making it much easier to create WiFi zones at less cost (there are some very good Open Source mesh network WiFi solutions). Mesh networks provide some redundancy and eliminate the need to have wired connectivity at each access point.

If rural and smaller communities want to attract microenterprise businesses and entrepreneurs who are making relocation decisions based in part on lifestyle choices, WiFi zones throughout the downtown area in these smaller communities is one inexpensive way to help get on the short list of relocation sites. If two communities both have good schools, a slower pace of life, and good recreation options, the community that is planning for technology and offers WiFi zones is much more likely to appear attractive to a relocating business. Public WiFi is an indicator of a progressive community that understands the needs of business. How does your community rate?

Spokane wireless to drive economic development

Submitted by acohill on Fri, 06/25/2004 - 08:21

The City of Spokane has rolled out a new wireless zone that covers most of the major downtown area (more than 100 square blocks). Rather than leaving the growth of WiFi entirely to the private sector, which typically leaves lots of dead zones in an urban downtown, the city mapped its own antenna sites and was able to cover the entire area with just ten antennas--a much more efficient design that provides virtually 100% coverage.

The city estimated the cost as a very affordable "$50,000 to $75,000." Meter maids and police in the zone will use WiFi-enabled devices and laptops to improve their efficiency, which over the long term should pay back the entire investment. The city also made the investment to attract more businesses to the downtown area.

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