TECHNOLOGY-LED ECONOMIC DEVELOPMENT Mark Lautman Connect Your Economy Summit December 15, 2016

New  •  Paradigm  •  Process  •  Data  •  Business  models  •  Approaches  

Why  Are  We  Here?  

Why  Are  We  Here?  

E > P P

Economic Development

Hierarchy of Job Creation Programs

9  

Economic Development

Jobs Money

Things  You  Have  Going  for  You  

1.  You  have  a  real  crisis.    2.  You  have  leaders  that  get  it.    3.  You  have  a  plan  and  are  execuGng  on  it.  4.  You  are  innovaGng.  5.  Your  people  have  a  strong  work  ethic.  6.  They  have  extended  families  with  roots.    7.  You  have  bandwidth  coming.  8.  You  have  nimble  higher  educaGon  insGtuGons    9.  Growing  job  opportuniGes  from  network  dynamics.  10. You  have  a  strong  congressional  delegaGon  and  the  

sympathy  of  the  federal  government.      

Reasons You Will Misscalculate

Labor Starvation Scenario

Dependents  

Qualified  Workforce  

Dependents  

Qualified  Workforce  

Unqualified  Workforce  

               Re$rement  

old  

young  

         Failing  Schools  

Unqualified  Workforce  

The Phantom Workforce Cliff Effects Skills Mismatch

The Reversal of Chi Economic Development

Talent Attraction

Community Development

REPLACEMENT How many economic base jobs are you losing?

Higher Attrition Rates

LIFE CYCLE Companies don’t last as long; globalization and new business models.

ARTIFICIAL INTELLIGENCE Computers that talk, think and create.

AUTOMATION Machines doing the work of humans.

The Shift to Solowork

Increasing Speed and Uncertianty

Rising Costs Lower Returns

Less Government Largess More Accountability

Leadership Crisis

Failure to

Plan

We  need  a  more    comprehensive  and  rigorous  system    

for  planning,  accounGng  and  reporGng  of  our  economic  development  program  efforts.  

The Planning Continuum

Discourse  Assessment  

Strategy  Plan  

Organization  Ramp  

Report  Results  

Execute  

Think Plan Do

A New Planning and Accounting System

1.  Clarity  2.  Consensus  3.  UnderwriGng  4.  InnovaGon  5.  Decision  making  6.  Leadership  development  7.  Stakeholder  confidence  8.  Pubic  image        

New  Framework    New  Process    

Coherence: Agree on the theoretical construct,

nomenclature and process

Economic Predicament:

Agree on the number of new, economic-base

jobs that must be created

Economic Sector

Selection: Agree on a ranked list of the sectors with the highest

potential for generating the economic-base

jobs

Geographic Distribution &

Resource Gaps:

Agree on areas of the state in which

the new, economic-base jobs are most

likely to be created

Policy and Program

Implications: Agree on job

creation program and policy

initiatives needed to deliver the job

numbers

CELab Clinical Consensus Process

Write  plans  for    Major  Program  

Theaters        

 Prescribe  AcGonable  SoluGons  for  each  Factor  of  ProducGon  

Gaps      

AucGon  local  responsibility  for  each  major  

program  component.  

 Revise  plan  for  any  shor^all.  

 Form  organizaGons,  raise  funds  and  

seat  governance  board(s)        

 

Staff  Up,  execute  and  

Report  

Planning  to  Doing    

Lautman  Economic  Architecture  LLC  

Clinical  Consensus  Method  

A New Taxonomy - Program Theaters

Theater Activities Employer   Recruiting, expansion and retention of employers

Federal Government   BRAC efforts, Health, Education, transfer payments  

Film and Digital Media   Film, TV, games

Start Up   Starting new enterprises that will have employees

Solos   Enterprises with no employees, remote work  

Visitor Driven   Tourism, hospitality, transit services  

Retirement   Affluent retirement strategies

Agriculture   New crop development  

Extractives and Energy   Mining, oil & gas, power plants, wind, solar, bio  

Import Substitution   Produce locally instead of importing

 

New Mexico Elevated Effort

Over by 44,592 Jobs

E-Base Jobs Potential: 191,769

New Mexico Business As Usual

Short 10,826 Jobs for break even

Short 26,779 Jobs for full employment

Short 69,981 Jobs for 244,779 new population

A New Taxonomy

Theater Job Estimates Activities Employer 43,944 Major employer Recruiting, retention & expansion

Federal 38,035 Federal agencies, healthcare, higher education

Visitor Driven 38,035 Tourism, hospitality, transit services

Retirement 21,000 Affluent retirement strategies

Extractives & Energy 11,689 Mining, oil & gas, power plants, wind, solar, bio

Solos 11,920 Freelancers, 1099 contractors, independents

Film & Digital Media 11,281 Film, TV, games

Start Up 8,771 Innovation to Enterprise, start ups, tech transfer

Agriculture 4,739 New crop development, food processing, forestry

Import Substitution ??? Produce locally instead of importing

Total Jobs Estimated 151,461 Total Jobs Needed 139,690 Difference +11,771

Community  Exemplars  

Economic Base Job Creation Potential

Program Theaters Potential Biz as Usual Implied Action

Employer 52,789 32,260 Overhaul & Elevate Federal Government 29,327 21,995 Strategy and Plan Solowork 21,000* 7,140 Pilot - Fund Extractives and Energy 21,862 21,862 Strategy Retirement 21,000* 10,500 Plan Development Visitor 16,671 0 Overhaul & Elevate Start up 9,515 2,855 Strategy & Plan Agriculture 4,720 2,360 Strategy & Plan Film and Digital Media 3,500 0 Expansion Plan

*Estimates refined based on Jobs Council initiatives

Factor of Production Gaps

Marketing & Sales Real Estate Workforce Business

Climate

Research Building Inventory Qualified Workforce Leadership

Lead Generation Land Inventory Workforce Housing Planning

Sales Utilities Education & Training Organization

Deal Structuring Bandwidth Community Quality Tax & Regulation

Completion   Transportation

Capital

Strategic Implications

Annual growth capacity by level of effort

Factors of Production – NM 2014

166,661  

100,000  

80,000  

60,000  

40,000  

20,000  

Jobs

At R

isk  

Capi

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Publ

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Band

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Tran

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Road

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Drain

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Pow

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Gas  

Wat

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Sew

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Tran

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Qua

lified

Wor

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Tax

& Re

gulat

ory  

Land

Inve

ntor

y  

Hous

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Mkt

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Lea

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Sales

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Lead

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Build

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A Real Plan

1.  Comprehensive 2.  Prescriptive 3.  Time-Scale Descriptive 4.  Organization - Governance 5.  Funding – Staffing - Management 6.  Causal Accounting - Reporting 7.  Iterative

New  •  Paradigm  •  Process  •  Data  •  Business  models  •  Approaches  

 

New Mexico Job Creation Plan

Program Theater

Definition 10 yr E-Base Job potential

Status Priority/Rank The Plan Major Factor of production Gaps Proposed Solutions

Employer Focused on procuring economic base jobs by attracting new companies and helping existing companies survive and grow. Jobs in this theater take place in commercial office and industrial facilities, and the employees are hired as W2 employees. • Sectors Included: Back Office, Exported Services, Integrated IT/Cyber,

Manufacturing • Key Players: EDOs, NM Partnership, NMEDD, DWS, HED, Chambers

Total 52,789 Program reliant 44,871

Underfunded and Understaffed

Potential Impact: High-1 Rural Impact: High - 4 Influence: High - 4

Marketing and Sales 1.1 Overhaul and 2x the employer program apparatus (restructure partnership and NMEDD) -Establish a comprehensive planning and accountability system - Raise the state marketing spend from 300K-3M - Triple state and local sales caseload - Dramatically increase number of seasoned pros. - Scale state‘s incentives and closing resources to —but for“ demand Hard Assets -3,700 acres of land, 2.65M sqft of industrial space Workforce -Establish an integrated workforce placement education and training system focused on gaps -Focus state higher education scholarships on gap career fields -Elevate technical cognitive skills programs in grade school curricula.

- Staff Shortage - Qualified lead shortage - Insufficient Workforce - Building shortage - Housing Shortage - Broadband shortage - Lack of planning/accountability

- Accountability Act - Limit incentives with —but for“ test - Formula for LEDA replenishment - EDO Staff Augmentation - Econ Dev Training Program - EDO Marketing Funds - Property tax abatement - Deregulate local LEDA for Broadband - Restructure Partnership - Reorganize NMEDD for other theaters - Workforce gap analysis - HED scholarship rule change

Federal Gov't

Increasing the number of jobs paid for by the federal government. This includes general schedule (GS jobs), private sector federal contractor jobs, jobs generated by federal grants and loans, and jobs in healthcare and higher education created as a result of expansion of federal funds and programs. • Sectors Included: Federal Government, Health and Social Services, Higher

Education • Key Players: Congressional Delegations, EDOs, STC, Nat‘l Labs

Total 31,867 Program Reliant 23,900

Limited Activity, Unorganized

Potential Impact: High-2 Rural Impact: Moderate/high-6 Influence: High-5

- Establish a senior manager within NMEDD to plan, organize and execute statewide program to recruit, expand, and initiate new missions/jobs across all federal agencies and their primary contractors.

- No Program/planning - No mapping - Transportation - Housing Shortage - Gross receipts tax

- Map Job Levels - Stand Alone Fund - Healthcare Construction - Student Debt Forgiveness - Office of Federal Entrepreneurship - Fed Gov focused EDO Consortia

Solo A solo economic base worker performs work full time from a home office, workshop, studio or mobile platform. While they may work for a corporation, they do not work in a centralized workplace. They must also be a resident of the state and a taxpayer. The qualifier for economic base is that a job brings in 51% or more revenue from out of state. The level of income generated by a solo economic base worker should exceed 200% of the federal poverty rate. • Sectors Included: All industry and service sectors, commuters to out of state jobs • Key Players: SBDCs, Incubators, Accelerators, Coworking spaces

Total 21,000* Program Reliant 7,140

No Program Potential Impact: High - 3 Rural Impact: High - 1 Influence: High-3

- Establish a statewide SoloWork Center program scaled to create 20,000 jobs over ten yrs funded at $3,500-5,000 per job post-performance by EDD and DWS programs. (JTIP, Rapid Response, WIOA)

- Build out local bandwidth capacity.

- No Program/plan - No state brand - Broadband shortage - Business Services - GRT

- Solo Pilot Program - Broadband P3 - JTIP Rule Change - Adapt SBDC to solowork strategy - Change LEDA rules to cover broadband

infrastructure

Energy & Extractives

Creating jobs in two primary areas of the export economy; the extraction and processing of raw materials from the land for export and the production and transmission of energy for export out of the state. • Sectors Included: Energy and Extractives • Key Players: EDOs, NMOGA

Total 21,862 Program Reliant 18,583

Active but unorganized

Potential Impact: High-4 Rural Impact: Moderate-5 Influence: Low-8

- Attain regulatory parity with neighboring states. - Build new transmission infrastructure to out of state

markets. - Recruit value added production and refinement facilities. - Convert transportation fleets to natural gas.

- Assistance from NMEDD - Rail access - Affordable housing - Qualified Labor - Conflicting political environment - Regulatory environment

- Rail Subsidy - Local Funding for Housing - Lift Export Restrictions - Worker Relocation - Interdepartmental Cooperation

Retirement Recruiting economic-base retirees who have a combination of net worth and retirement income in excess of 200% of the federal poverty guidelines. Because their investment and retirement income are from outside the state, they will have the same impact on the local and state economy as the creation of a new economic base job. • Key Players: Real Estate Brokers, Home Builders, Tourism Dept

Total 21,000 Prog Reliant 10,500

Unorganized but programmable

Potential Impact: Moderate-5 Rural Impact: High-3 Influence: Moderate-7

- Build an affluent retiree recruiting program onto the state‘s tourism efforts.

- Provide state match to local public/private recruiting and fulfillment efforts. (Avg $3M/yr for yrs 1-5, $5M/yr for yrs 6-10)

- No Program/planning - Broadband - Lack of suitable housing - Lack of rural Healthcare - No community rating

- Retiree Income Tax Break - Healthcare Worker Rural Incentive - Retirement Community Rating - Web/App based marketing

Visitor Jobs with salaries paid from the local sale of goods and services to visitors from out-of-state.  Although most job creation activities in this theater fall can be defined as tourism -- any journey for business or pleasure more than 50 miles outside your community in which you spend more than one night away from home -- the IJC process would exclude journeys for business or pleasure by New Mexico residents. • Sectors Included: Hotel, Hospitality, Food and Beverage, Transportation, Events • Key Players: Tourism Dept, Tourism Assoc. CVB, Hotel Assoc., State Parks,

Chambers, Lodgers Tax Boards, Realtors Assoc.

Total 16,674 Program Reliant 8,337

Well Organized Potential Impact: Moderate-6 Rural Impact: High-2 Influence: High=2

- Increase tourism promotion budget by $2M per year ($23M/yr in yr 10).

- Expand tourism program to include matching call to action-fulfillment functions. ($2M)

- Expand tourism department focus to include long term leisure, long-term and short-term business travel and transit.

- Limited Data - Low repeat visits - Low promotion of attractions - Poor local representation - Nonstop flights - Highway access - Broadband/Cell service - Hospitality training - Insufficient product improvement - No local planning

- Tourism Incubator - Tourism call to action marketing - P3 for Tourism Marketing - Trucker Advertising - Cell Service Improvement - Hospitality Training - Tourism and DoL Collaboration - Liquor License Stock Split - B&B Taxation

Startup The focus of this theater is entrepreneurs. The mission is helping community members turn their business ideas into enterprises with economic-base employees. Program activities: increasing rate and quality of ideas, innovation and IP that can be converted, conversion of ideas into viable enterprises, helping them grow. • Sectors Included: All industry and economic sectors • Key Players: Incubators, Accelerators, SBDCs, Venture Capitalist, SIC, STC, Nat‘l

Labs

Total 9,515 Program Reliant 6,661

Active, Growing but unorganized

Potential Impact: Moderate-7 Rural Impact: Low-8 Influence: Moderate-6

- Establish a coherent planning, accountability and reporting system.

- Establish a position in NMEDD to plan, organize and execute startup job creation efforts statewide.

- Improve tax and regulatory parity with surrounding states

- Lack of Venture Capital - Broadband - Qualified Labor - Too much focus on tech transfer - Low awareness of existing services - Lack of leadership/planning

- Planning and accountability system - Incubator Demand Gauge - Out of state investment Tax Credit - Opportunity fund - SIC Aid - Capital Gains Reduction - Tax and Revenue Data Sharing - Return to Sender Tax Credit - Tax Break on Rollover Investment

Agriculture Procuring economic base jobs by attracting, expanding and creating enterprises that grow, process and distribute food and fiber. • Sectors Included: Agriculture • Key Players: Dept of Ag, Major Producers, Ag Extension service, NMEDD, Local

Gov

Total 4,720 Program Reliant 2,360

Active but unorganized

Potential Impact: Low - 8 Rural Impact: Moderate-7 Influence: Moderate-9

- Task secretary of agriculture with establishing a statewide job creation strategy by region and industry sector.

- Reaching international markets - Natural Resources - Low value crops - Encroaching urbanization - Lack of planning

- Right to Farm - Water Rights - Incentivize High Value Crop

Film/ Digital Media

Recruiting and developing the production of feature films, independent films, television, regional and national commercials, documentaries, animation, video games, webisodes, mobile applications and post production work intended for commercial exploitation and exhibitions out of state. • Sectors Included: TV Series, Video Games, Feature Film Production • Key Players: NM Film Office, NMEDD, Local Studios

Total 3,500 Program Reliant 3,500

Well organized Potential Impact: Low - 9 Rural Impact: Low-9 Influence: High-1

- Establish a private sector investment fund to supplement the state incentives cap. (combined total of $100M investment in yr 10)

- Marketing Capacity - Incentive Capacity - Broadband - Qualified Labor - Lack of Planning

- NMFO Staff Increase - Game Incubator/Accelerator - Stand-Alone Finance Program - Raise Incentive Cap - Site Selection Guidelines

Totals 180,284

Organizational Chart

-  Business Retention, Expansion

-  Recruiting -  Federal Gov’t -  Agriculture -  Energy

-  Short Term leisure visits

-  Snowbirds -  Drive by visits -  Retirement

-  Solowork -  Solopreneurs -  Startups

Consortium Cognoscenti Group

Metrics/ Accountability

EDOs Tourism Entrepreneurs

Factors of production gaps Team

Marketing/Sales Real Estate, Infr. Capital

Workforce, Housing, Community

Leadership, Org, Bus Climate

Land-Based

-  Agriculture -  Oil and Gas -  Mining -  Forestry

Solowork Center

A community supported program platform to create, advance and retain

new economic base jobs.

Solo W2 Workers Recruit, Screen

Train, Place Support

Solopreneurs who own their business have no centralized workplace or onsite employees.

Solopreneurs Recruit, Plan

Incubate or Convert Support

W2 Solo workers employed by an economic base employer and allowed to work from home or the Solowork Center.

Solowork 3.0 Economic Base Job Creation

New Solo Workers Recruit, Screen

Train, Place Support

New entrants to the solowork workforce, i.e. students, hard to employ, & chronically poor candidates.

Mining    Talent  From    Your  

Hard  to  Employ    Sector    

www.MarkLautman.com    

@marklautman

Mark Lautman Page

Mark Lautman, Lautman Economic Architecture