economic development best practices for rural communities mike kirchhoff, cecd

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Practices for Rural Practices for Rural CommunitiesCommunities

Mike Kirchhoff, CEcDMike Kirchhoff, CEcDPrincipal, DPI GroupPrincipal, DPI Group

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Practices for Rural Practices for Rural CommunitiesCommunities- Marketing/Business Attraction Approaches- Marketing/Business Attraction Approaches

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Why Is Attracting Business Why Is Attracting Business Important?Important?

Economic base jobsEconomic base jobs Community wealthCommunity wealth Property valuesProperty values Property tax baseProperty tax base Sales tax revenueSales tax revenue Multiplier effectMultiplier effect Linked industriesLinked industries Construction jobsConstruction jobs Quality of lifeQuality of life ““Service after the saleService after the sale””

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Successful CommunitiesSuccessful Communities

Know their productKnow their product Know their targetsKnow their targets Are ready to respondAre ready to respond

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Know the ProductKnow the Product

Study the area – to identify strengths to exploit Study the area – to identify strengths to exploit and weaknesses to strengthenand weaknesses to strengthen

Prospect perspective is key to this processProspect perspective is key to this process Community leaders must be willing to be self-Community leaders must be willing to be self-

criticalcritical Plan to prepare/positionPlan to prepare/position Assemble key information about the areaAssemble key information about the area

(Labor costs, workforce quality & availability, and commute (Labor costs, workforce quality & availability, and commute shed; community data & demographics; site & building data, shed; community data & demographics; site & building data, maps, & photos; utility information; tax information; financial maps, & photos; utility information; tax information; financial assistance & incentives; major employers; and MORE!)assistance & incentives; major employers; and MORE!)

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Be Ready to RespondBe Ready to Respond

Not OptionalNot Optional Current data - timely, accurate, and appropriateCurrent data - timely, accurate, and appropriate Adequate real estateAdequate real estate Effective programsEffective programs Professional presentationProfessional presentation Web presenceWeb presence

OptionalOptional Target industry business caseTarget industry business case CEO testimonialsCEO testimonials Community “viewbook”Community “viewbook” Video/CD/data diskVideo/CD/data disk

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A Unified Message…A Unified Message…

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……Not an Inconsistent MessageNot an Inconsistent Message

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E.D. Marketing ToolkitE.D. Marketing Toolkit Web PageWeb Page Other Web-Based ToolsOther Web-Based Tools Direct MailDirect Mail NewsletterNewsletter Blast e-mailBlast e-mail TelemarketingTelemarketing AdvertisingAdvertising Article PlacementArticle Placement Referral ServicesReferral Services Direct Sales CallsDirect Sales Calls Trade ShowsTrade Shows Association MarketingAssociation Marketing

/e-Newsletter/e-Newsletter

Consultant/Broker OutreachConsultant/Broker Outreach

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Other Web-Based ToolsOther Web-Based Tools

Location One Information System (LOIS) – Owned by Location One Information System (LOIS) – Owned by KCPL, DCEO is a subscriber (KCPL, DCEO is a subscriber (www.locationone.com))

www.fastfacility.com – Created by Area Development – Created by Area Development MagazineMagazine

Economic Development Directory – listing of Economic Development Directory – listing of economic development organizations by state and economic development organizations by state and region (region (www.ecodevdirectory.com/))

GIS Planning/Zoom Prospector (GIS Planning/Zoom Prospector (www.zoomprospector.com))

LinkedIn, FaceBook, TwitterLinkedIn, FaceBook, Twitter

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www.ecodevdirectory.com

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Marketing StrategiesMarketing Strategies

Regional Marketing ApproachRegional Marketing Approach Individual Marketing ApproachIndividual Marketing Approach Target MarketingTarget Marketing Ally MarketingAlly Marketing

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Regional Marketing ApproachRegional Marketing Approach

Most cost-effective approach Most cost-effective approach Leads from regional program are shared with Leads from regional program are shared with

regional partners regional partners From a site selector perspective, a region can From a site selector perspective, a region can

generally demonstrate critical mass better than a generally demonstrate critical mass better than a single areasingle area

As an example, JREDC partners with the Western As an example, JREDC partners with the Western Illinois Corridor CouncilIllinois Corridor Council

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Individual Marketing ApproachIndividual Marketing Approach

Best suited for areas where a regional effort is not Best suited for areas where a regional effort is not practicalpractical

Success depends to a great degree on the Success depends to a great degree on the knowledge base of the organization’s staff and knowledge base of the organization’s staff and leadershipleadership

A solely independent approach is less likely to A solely independent approach is less likely to generate interest among prospects and allies generate interest among prospects and allies unless the organization represents a large urban unless the organization represents a large urban areaarea

Not as cost-effective as a regional approach; a Not as cost-effective as a regional approach; a blend of individual and regional marketing can be blend of individual and regional marketing can be very effectivevery effective

Only the best-funded independent organizations Only the best-funded independent organizations are able to use the more sophisticated tools due to are able to use the more sophisticated tools due to cost and logistics issuescost and logistics issues

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Target Marketing PreparationTarget Marketing Preparation

Target business segments identified based on a Target business segments identified based on a strategic analysis of the areastrategic analysis of the area

Segment-specific research to understand the Segment-specific research to understand the nature of each segmentnature of each segment (market structure, (market structure, competitiveness, products, cost structure, business linkages, competitiveness, products, cost structure, business linkages, etc.)etc.)

Developing a business case for each target based Developing a business case for each target based on business advantages in the regionon business advantages in the region

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Ally Marketing ProgramAlly Marketing Program

Partner with DCEO/IDC at CoreNet Global national Partner with DCEO/IDC at CoreNet Global national events and participate in Chicago Chapter eventsevents and participate in Chicago Chapter events

Chicago CoreNet Chapter sponsorChicago CoreNet Chapter sponsor Partner to participate in Industrial Asset Partner to participate in Industrial Asset

Management Council (IAMC) conferenceManagement Council (IAMC) conference Arrange and conduct meetings with targeted Arrange and conduct meetings with targeted

entities in Chicago and St. Louisentities in Chicago and St. Louis Conduct an annual allies event, either locally or Conduct an annual allies event, either locally or

on-site in Chicago/St. Louison-site in Chicago/St. Louis Regular meetings with key allies, including state, Regular meetings with key allies, including state,

utilities, railroads, site selection consultants, utilities, railroads, site selection consultants, corporate realtors, etc.corporate realtors, etc.

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Ally Marketing ComponentsAlly Marketing Components

NewsletterNewsletter Other Direct MailOther Direct Mail Office VisitsOffice Visits Community ToursCommunity Tours Association ParticipationAssociation Participation Special EventsSpecial Events Joint Marketing EffortsJoint Marketing Efforts

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Practices for Rural Practices for Rural CommunitiesCommunities- Existing Business Retention/Expansion - Existing Business Retention/Expansion ApproachesApproaches

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The Importance of Existing The Importance of Existing IndustryIndustry

Economic base jobsEconomic base jobs Community wealthCommunity wealth Property valuesProperty values Property tax baseProperty tax base Sales tax revenueSales tax revenue Multiplier effectMultiplier effect Linked industriesLinked industries Construction jobsConstruction jobs Quality of lifeQuality of life ““Service after the sale”Service after the sale” IDENTICAL to the reasons for attraction, but often IDENTICAL to the reasons for attraction, but often

easier and less expensive!easier and less expensive!

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Typical Program GoalsTypical Program Goals

Build goodwill and relationships with business Build goodwill and relationships with business clientsclients

Improve company’s familiarity with/perception of Improve company’s familiarity with/perception of the economic development organizationthe economic development organization

Gather data about the status of the local economyGather data about the status of the local economy Serve as early warning system – company or Serve as early warning system – company or

community problemscommunity problems Assist companies at risk of downsizing or leavingAssist companies at risk of downsizing or leaving Assist companies seeking to expandAssist companies seeking to expand Identify potential opportunities for inter-firm Identify potential opportunities for inter-firm

collaboration, expansion, or attraction activitiescollaboration, expansion, or attraction activities

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Existing Industry Program Existing Industry Program ElementsElements

Recognition activitiesRecognition activities Educational workshops/seminarsEducational workshops/seminars Industry linkage programsIndustry linkage programs Targeted technical assistanceTargeted technical assistance Company visitation programsCompany visitation programs The “next wave”The “next wave”

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Recognition ActivitiesRecognition Activities

Industry SpotlightIndustry Spotlight Industry of the YearIndustry of the Year Newsletter recognitionNewsletter recognition Media assistanceMedia assistance Other activitiesOther activities

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Educational Workshops & Educational Workshops & SeminarsSeminars

Based on needBased on need Targeted subjects/audiencesTargeted subjects/audiences Financing workshopsFinancing workshops

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Industry Linkage ProgramsIndustry Linkage Programs

New Managers ReceptionNew Managers Reception Industry IndexIndustry Index Services IndexServices Index CEO RoundtablesCEO Roundtables HR Managers GroupHR Managers Group Industrial AllianceIndustrial Alliance Buyer/supplier relationshipsBuyer/supplier relationships

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Targeted Technical AssistanceTargeted Technical Assistance

Needs are frequently identified during Needs are frequently identified during SynchronistSynchronist visitsvisits

Customized, confidential assistance to clientsCustomized, confidential assistance to clients Referral to SBDC, IMEC, IDES, other alliesReferral to SBDC, IMEC, IDES, other allies

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Synchronist Visitation ProgramSynchronist Visitation Program

Questionnaire focuses on industry, management, Questionnaire focuses on industry, management, products, satisfaction, and community connectionproducts, satisfaction, and community connection

Detailed data/trend analysis – analytical and Detailed data/trend analysis – analytical and reporting capabilitiesreporting capabilities

Identification of red flagsIdentification of red flags High quality, predictive dataHigh quality, predictive data Enables proactive programmingEnables proactive programming EDC acts as an opportunity catalyst (market, EDC acts as an opportunity catalyst (market,

cluster, joint venture, partnership, linkage cluster, joint venture, partnership, linkage opportunities, etc.)opportunities, etc.)

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Corporate HQ Visitation ProgramCorporate HQ Visitation Program

More general in natureMore general in nature Strategic discussionStrategic discussion No set questionnaireNo set questionnaire Company-specificCompany-specific Visits arranged in Visits arranged in

partnership with local partnership with local plant managerplant manager

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The “Next Wave” Sophisticated The “Next Wave” Sophisticated ApproachApproach

Business model approach to existing industry Business model approach to existing industry developmentdevelopment

Adapted from “Rocketing out of the Twilight Zone: Adapted from “Rocketing out of the Twilight Zone: Gaining Strategic Insight from Business Retention Gaining Strategic Insight from Business Retention (Blane, Canada)(Blane, Canada)

Local companies as “clients”Local companies as “clients” New vocabulary: “service delivery, business drivers, New vocabulary: “service delivery, business drivers,

accounts”accounts” Extensive use of diagnostic toolsExtensive use of diagnostic tools Portfolio management approachPortfolio management approach Maximize return on investment – consciously direct Maximize return on investment – consciously direct

resources toward high value and high growth resources toward high value and high growth opportunities (and away from risk)opportunities (and away from risk)

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Is Proactive BRE Important? Here’s Is Proactive BRE Important? Here’s Why…Why…

The CYBERTEK The CYBERTEK DealDeal

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Company HistoryCompany History

CYBERTEK has been located in Jacksonville for CYBERTEK has been located in Jacksonville for more than 70 years in one form or anothermore than 70 years in one form or another

Founded as Central National Life InsuranceFounded as Central National Life Insurance Purchased by John Deere in 1985 (150 Purchased by John Deere in 1985 (150

employees)employees) John Deere sold policies to Reassure America in John Deere sold policies to Reassure America in

1995; CYBERTEK was created by PMSC to service 1995; CYBERTEK was created by PMSC to service the policies (50 employees)the policies (50 employees)

PMSC leased the facility and equipment from John PMSC leased the facility and equipment from John DeereDeere

In 1998, PMSC sought to build a new 50,000 s.f. In 1998, PMSC sought to build a new 50,000 s.f. facility and expand by 200-300 employeesfacility and expand by 200-300 employees

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The ProblemThe Problem

PMSC asked to extend their lease for an additional PMSC asked to extend their lease for an additional two yearstwo years

John Deere said “buy it or get out”John Deere said “buy it or get out” PMSC had no interest in owning the building and PMSC had no interest in owning the building and

began seeking interim space in the region around began seeking interim space in the region around JacksonvilleJacksonville

Space was identified in SpringfieldSpace was identified in Springfield The company planned to construct the new The company planned to construct the new

building in whichever community its interim space building in whichever community its interim space was locatedwas located

Lease expired December 31, 1998Lease expired December 31, 1998

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The EDC Gets InvolvedThe EDC Gets Involved

With six months remaining on the lease, PMSC With six months remaining on the lease, PMSC approached the EDC for helpapproached the EDC for help

By mid-October, no suitable space had been By mid-October, no suitable space had been found in Jacksonvillefound in Jacksonville

The EDC suggested an alternative…why not make The EDC suggested an alternative…why not make the current space the interim space?the current space the interim space?

Perhaps the City or the EDC could purchase the Perhaps the City or the EDC could purchase the existing building and extend the lease to allow existing building and extend the lease to allow CYBERTEK to complete it’s new facilityCYBERTEK to complete it’s new facility

PMSC, John Deere, the EDC, and the City of PMSC, John Deere, the EDC, and the City of Jacksonville began building negotiations on Jacksonville began building negotiations on November 20, 1998November 20, 1998

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Crafting a Creative SolutionCrafting a Creative Solution

A variety of scenarios were examined – City purchase; A variety of scenarios were examined – City purchase; EDC purchase; John Deere donation of the building to a EDC purchase; John Deere donation of the building to a 501 (c) 3501 (c) 3

A City purchase would mean that the ultimate A City purchase would mean that the ultimate disposition of the building would be restricted by disposition of the building would be restricted by government requirementsgovernment requirements

A purchase by EDC was a problem because of a lack of A purchase by EDC was a problem because of a lack of fundsfunds

Jacksonville Main Street, the best choice for the 501 (c) Jacksonville Main Street, the best choice for the 501 (c) 3 donation option didn’t yet have it’s IRS status3 donation option didn’t yet have it’s IRS status

Negotiations left the problem unresolved, and time was Negotiations left the problem unresolved, and time was running out – CYBERTEK’s lease was due to expire in running out – CYBERTEK’s lease was due to expire in less than 45 daysless than 45 days

A deal was completed by phone the following weekA deal was completed by phone the following week

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An EDC PurchaseAn EDC Purchase

Purchase price $375,000 ($100,000 down) – 8 ½ % Purchase price $375,000 ($100,000 down) – 8 ½ % interest (imputed)interest (imputed)

Funds for the down payment came from the City, which Funds for the down payment came from the City, which purchased two parking lots near the building for purchased two parking lots near the building for $50,000, and…$50,000, and…

CYBERTEK, which agreed to purchase the building CYBERTEK, which agreed to purchase the building contents for $50,000, subject to the EDC’s repurchase contents for $50,000, subject to the EDC’s repurchase at the end of the lease for $25,000at the end of the lease for $25,000

CYBERTEK also agreed to lease the building through CYBERTEK also agreed to lease the building through December 31, 2000 for $24,000/monthDecember 31, 2000 for $24,000/month

The EDC sold the building and first-floor equipment in The EDC sold the building and first-floor equipment in August, 2000 (negotiated August, 2000 (negotiated downdown from full- price offer; from full- price offer; PMSC saved $95,000 in rent expense)PMSC saved $95,000 in rent expense)

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Everyone Won!Everyone Won!

John Deere sold its buildingJohn Deere sold its building CYBERTEK/PMSC (now CSC) was able to extend CYBERTEK/PMSC (now CSC) was able to extend

its lease without relocating during construction its lease without relocating during construction of its new 60,000 s.f., $10,000,000 facilityof its new 60,000 s.f., $10,000,000 facility

The City retained the company, and is The City retained the company, and is benefiting from an increased employment base benefiting from an increased employment base and (ultimately) an increased property tax baseand (ultimately) an increased property tax base

The EDC sold the building, retained ownership The EDC sold the building, retained ownership of $25,000 in equipment and furniture (later of $25,000 in equipment and furniture (later sold), and netted $232,000 during the 18 sold), and netted $232,000 during the 18 months it owned the building!months it owned the building!

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Today – A Downtown DestinationToday – A Downtown Destination

The first floor has been redeveloped to include a The first floor has been redeveloped to include a premier fitness center and various retail shopspremier fitness center and various retail shops

The second floor (more than 16,000 s.f.) is now The second floor (more than 16,000 s.f.) is now the finest banquet hall in Jacksonville, the finest banquet hall in Jacksonville, comparable to hotel facilities in nearby comparable to hotel facilities in nearby SpringfieldSpringfield

The three banquet rooms can accommodate a The three banquet rooms can accommodate a total of up to 600 peopletotal of up to 600 people

During its first year, the popular facility During its first year, the popular facility exceeded projected bookings three-foldexceeded projected bookings three-fold

The Jacksonville Rotary Club, EDC, Chamber of The Jacksonville Rotary Club, EDC, Chamber of Commerce, and other groups use the facility Commerce, and other groups use the facility extensivelyextensively

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Lessons LearnedLessons Learned

NEVER GIVE UPNEVER GIVE UP when negotiating a BR&E or when negotiating a BR&E or prospect dealprospect deal

Think “out of the box” and use creativity to find Think “out of the box” and use creativity to find a solution where none appears to exista solution where none appears to exist

Work diligently and proactively to retain and Work diligently and proactively to retain and expand existing companies; it’s easier (and expand existing companies; it’s easier (and much less expensive) to retain and expand the much less expensive) to retain and expand the companies already in the community than to hit companies already in the community than to hit a home run and attract others to relocate to the a home run and attract others to relocate to the communitycommunity

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Contact InformationContact Information

Mike Kirchhoff, CEcDMike Kirchhoff, CEcDPrincipalPrincipal

1212 NE 941212 NE 94thth Terrace TerraceKansas City, Missouri 64155Kansas City, Missouri [email protected][email protected]

economic development best practices for rural communities mike kirchhoff, cecd

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