How many of you out there have listed biotechnology companies as your top target for business attraction? Come on, be honest, you can admit it.
It seems like most economic developers I’ve spoken with over the past year say they are focusing heavily on attracting biotech companies, and the reasons are pretty obvious. It’s an industry on the cutting edge of technology, meaning that it’ll probably be around for a while. It’s a generally “clean” industry, although once the company moves into production (i.e., manufacturing), that could change. The jobs are fairly well-paid and the potential tax revenues are huge.
What is there for a community not to like?
The rush to attract biotech companies reminds me a lot of the rush to attract a semiconductor manufacturing facility five or 10 years ago. Everybody, state governments included, wanted to be the next place to land one of these billion dollar bonanzas. The lure -- good paying jobs with a future, as well as enormous potential tax revenues -- was too sweet to resist.
How about corporate headquarters? Everybody wanted to induce corporations to locate their headquarters in their fair metropolis. If the corporation didn’t want to move its main headquarters, then a regional headquarters was almost as good. After all, in addition to the prestige afforded by having a major company plant its flag in your town, the jobs offered good pay, and the increased tax revenue was attractive, too.
Call centers, anyone? Five years ago, everybody was chasing call centers. The pay was decent and type of work seemed to match the people who needed the work at the time. Then unemployment rates dropped to the 2-3 percent level, and everybody started holding their nose when prospects inquired about bringing in a call center.
Auto assembly plants? Now there’s a prize that could easily rack up to the billion dollar plus range. And that was just for the assembly plant. The up- and down-stream businesses that attached to that plant would easily bring in three to five times that amount. Good paying jobs and a major boost to the community’s tax base.
Oh, and distribution facilities, especially the million square foot and above ones. It’s not as labor-intensive as it once was, so the jobs aren’t nearly as abundant, but the pay is decent, and the number of other companies that will come to you as a result of your warehouse and distribution cluster are significant.
Who knows what the next “New Thing” we’ll all be chasing will be? Nanotechnology? Nutraceuticals? The only thing for certain is that, whatever it is, we’ll all be chasing it at the same time.
Sometimes it seems like we in the economic development profession put way too much emphasis on attracting new business to our communities, and not nearly enough on helping our existing businesses grow. I’m sure it has a lot to do with how our board members evaluate our job performance.
New companies, new jobs, new capital investment -- it’s pretty easy to put a number to those categories. Plus, the headlines and photo opportunities that come with a major new business announcement are tough to beat. While it’s not hard to measure existing business growth, figuring out how much credit to lay at the feet of the local economic developer can be pretty subjective.
That doesn’t mean it’s right, though.
“If I only had a dollar to spend on economic development, I’d spend it on an existing business program,” says J. Vann Cunningham of Lockwood Greene, an experienced site consultant.
That’s where most, if not all, of your community’s economic growth is coming from, anyway. Imagine if you applied the same basic problem solving skills you use to attract new business to solving the growth-related problems of your existing businesses.
Companies new to your community are not the only ones needing help with the permitting process. Existing companies also run into bureaucratic snarls that could use the expertise of the local economic developer to untangle.
That’s only part of it. If you’re truly interested in attracting biotech companies to your region -- and you’re not located in San Diego, Boston, Baltimore, etc. -- you need to provide them with a reason to come to your city. Having a major university research facility is a good starting point, but the biggest draw is having lots of other biotech companies already thriving in your community’s nurturing business climate.
That takes time and a lot of patience. By time, I mean at least a decade or two before you can expect to really see some results. In an emerging industry like biotech, you’ve literally got to grow your own companies -- set up an incubator next door to the medical school, like they’ve done in Richmond, Va.
Create a climate of innovation and creativity, make sure that adequate resources are available, and then stand out of the way. And be patient. This is America, the epicenter of capitalism, and that’s how our system works.
Remember, places like Silicon Valley and the Research Triangle Park were not built overnight. Thirty years from now, you’ll be able to look back with pride as you gaze at the biotech fruits of your labors.
But, if you don’t have the patience for that, you can always join the pack and chase after the “industry du jour.” This week’s special is auto assembly plants … or is it call centers?
If in doubt, follow the crowd.
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