Nothing gets an economic developer’s blood boiling quite like learning that a local business is relocating to another city or state, or that a local company, while deciding to remain in its present location, has selected another community for an upcoming facility expansion.
Everybody gets upset, and rightly so.
After all, jobs are lost, constituents are thrown out of work, and a good chunk of local tax revenue disappears. Clearly, for economic developers and the elected officials who hire them, moments like these are every bit as painful as the current BRAC process is to those communities with bases targeted for closure.
However, unlike the BRAC process, which is largely beyond the control of local officials, there is something that communities can do to influence the decisions of local businesses to relocate or expand elsewhere — that is, improve the local business climate.
Sure, it’s a lot easier to blame it on [pick a state]’s generous incentives, or on the abysmal lack of loyalty of a company that simply packs up and leaves a town after several generations of local townspeople have given the best years of their lives to make that company prosperous.
| A company decides to choose another location for a future facility for business reasons that impact their bottom line. That’s why appeals to loyalty, while emotionally powerful, almost never seem to work. |
While those points may well have some validity, they do nothing to change the company’s decision to move, nor do they do anything to dissuade other local companies from doing likewise in the future.
The real problem is that sometimes we’re all a little tone deaf. We don’t always listen to what companies are telling us when they chose another community over ours’.
Heck, sometimes we don’t even ask. We’re so taken aback by their decision to look elsewhere that we don’t really even ask them why. Sure, we might engage them in a superficial debriefing, not unlike when a significant other “dumps” us — we kind of want to know why, but we really don’t. It’s much to painful.
Instead, we would rather speculate as to the reason(s), and, even then, we’re often not honest with ourselves.
I can’t think of a single instance in my decade-plus as editor of Expansion Management where a company decided to move because of the incentives offered by another community. Maybe there are such cases. I don’t know, but I’ve never talked to a single corporate executive or site consultant who has told me that it was the incentives that caused a company to decide to move.
That’s not to say that incentives might not influence where a company eventually goes, but never if they move.
No, a company decides to choose another location for a future facility for business reasons that impact their bottom line. That’s why appeals to loyalty, while emotionally powerful, almost never seem to work.
So, what should a community do to avoid future hearbreak?
Easy. Go out into your community and talk to your local businesses leaders, especially those who have indicated that they are, or might be, leaving the city for a new location.
I realize that this is Common Sense 101 and that everyone knows this obvious pearl of wisdom. The problem is that most economic development organizations are so swamped they simply don’t have the time to do this. Many are way too busy bailing water to take the time to look for the hole in the boat.
Make the time to talk to them. I can promise you that they’ll tell you things that you probably don’t want to hear, and almost all of it will be negative. Most will require time, as well as political consensus, to change. Some things you may well not want to change, even if so doing will cost occasional businesses to leave.
They’ll tell you, among other things, about high taxes, inadequate or crumbling infrastructure, work force quality and quantity, onerous regualtions, government red tape, congestion, high costs, work stoppages, community activism ... well, you get the picture.
What they tell you will almost never have anything to do with where they are going. No, this will be about why they are choosing another city over your’s, despite the fact that they may have been in your community for many years.
Sure, it’ll be painful, but the only way it will ever get better is to confront it head on. Still, listening is the easy part. The hard part is doing something about it.
That’s where many communities fall short. Rather than lower taxes, or streamline regulations, or spend extra money on roads and bridges and schools, they prefer to shoot the messenger.
Businesses are not all that complicated. They operate on a profit-loss basis. As long as they can make a profit, they can remain in business, and thereby provide jobs and tax revenue. In order to make a profit, they need to remain competitive. If they can do that in your town, great. If not, wave goodbye.
Unfortunately, at its heart, it’s as simple as that.
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