Tuesday, September 14, 2010

Development plan heavily focused on existing industries

By Joy Campbell, Messenger-Inquirer
Published: Sunday, September 12, 2010 12:01 AM CDT

Over the next five years, the Greater Owensboro Economic Development Corp.'s work to boost the economy will focus on three broad areas -- recruiting and retaining talent, supporting innovation and industry, and creating a quality place to live and conduct business.

Those three prongs are the basis for the EDC's 2010-15 strategic plan, and they're holding up a host of areas that offer opportunities to improve the region's economy.

"Existing industry will be a strong priority," said Nick Brake, the EDC's president and CEO. "Most jobs created in any given region come from existing employers."

The EDC's new plan builds on the 2006 blueprint, which Brake said was ambitious, long term and represented an enhanced approach to economic development in the Owensboro region. "We knew we were laying the tracks for the future," he said.

That earlier plan renewed the focus on existing companies and created from scratch a new focus on innovation through the eMerging Ventures Center for Innovation, Brake said, and the public has embraced that approach. "Some of the most stable companies we have in Owensboro today were started by local entrepreneurs," Brake said.

When the Kentucky Innovation Act of 2000 was enacted, several innovation and commercialization centers were created across the state, but Owensboro was left out. "We had to show that we had that support in place, too," Brake said.

The EDC now is part of that network as a Kentucky Innovation and Commercialization Center satellite. It receives some funding -- currently about $75,000 per year.

"In looking around the country, this plan demonstrates a strategy that progressive communities are using," Daviess County Judge-Executive Reid Haire. "The strong focus is on existing industries as well as those entrepreneurial-types of businesses that have the potential to be successful."

The plan is the EDC's attempt to be proactive in a highly competitive environment, according to Rod Kuegel, the EDC's board chairman. "In today's recruitment market, you can't hope you're going to get a manufacturing plant that will bring you 200 or 300 new jobs," Kuegel said. "This is forward-thinking and makes us proactive."

Owensboro must pursue the niches it has, Kuegel said.

"We won't draw the same people as Nashville or Louisville, but there are some opportunities out there," he said.

He also hopes the plan represents the ideas from the community that were offered during the planning process.

Stage II companies key in growth

The EDC will be paying much more attention to companies that employ 10 to 99 employees and have revenues of $1 million to $50 million. These are called Stage II companies, and data suggest that most new jobs come from this group.

The online database youreconomy.org reports that between 1993 and 2007, 38 percent of the jobs in Kentucky came from Stage II companies. Daviess County, however, "is almost seeing negative growth in those companies," Brake said.

"None of our new jobs are being created there; our jobs are being created by large companies," he said. "We probably don't need to put all of our eggs in that one basket."

Some companies might be at a point at which they could expand, but they don't have the time or money to even explore that. Others might be exploring it and need support.

"We want to figure out what those companies need. Is it access to markets? Is it access to data? Is it venture capital?" Brake said.

Phill's Custom Cabinets is an example of a local company on the cusp of a growth spurt.

Phill's recently was singled out for the Challengers Distinguished Achievement Award, the industry's top honor, at the International Woodworking Fair for its patent-pending process called Cabinotch. Owner Phillip Crabtree said last month that he expects the family owned business to get a boost in sales that will require more equipment and employees.

The region's leaders have been successful in retaining jobs, particularly compared to peer regions and the rest of the country, and the EDC will continue to support employers to help them prosper, Brake said.

"We hope to form a partnership with the chamber to work on this," he said. "We don't know who these Stage II companies are that may want to grow and need support."

Haire said he was glad to see the strong focus on these companies.

"That is so critical," he said. "Those businesses that are growing and on the verge of doing extremely well have to be so careful that they don't overextend themselves."

The strategy also includes formulating a plan to help small businesses turn into Stage II companies.

"We think there is a lot of potential there," he said.

Continue focus on retaining manufacturing jobs

Nationally, an average of 25 percent of the manufacturing jobs have been lost. Some of the EDC's peer communities have seen 30 percent to 40 percent of their jobs leave their communities.

"We've lost 7 to 8 percent over five years," Brake said. "Holding on to those jobs is critical."

New incentive programs are helping in that area, he said.

"We saw that with Swedish Match. They didn't add new jobs, but they are able to retool their plant and keep those jobs here," he said.

The Kentucky Economic Development Finance Authority approved Swedish Match for tax incentives up to $1.85 million through the Kentucky Reinvestment Act. The company is investing $3.7 million to upgrade equipment at the Owensboro tobacco products plant.

"We're also working in the aluminum industry to help companies retain those jobs," Brake said.

In addition to aging infrastructure, several companies also have an aging work force and are seeing a high number of retirements, he said.

"It's important to lead students into opportunities that will be here, and a lot of skilled jobs are available now," Brake said. "Companies are telling us they can't find the skilled workers they need."

Work force training will continue to be a big part of the strategic plan.

State is main source for new industry

Targeting and recruiting new industry also will continue to be a major focus in developing the region's economy, the EDC plan shows.

And that strategy is the one to which most residents relate.

"Eighty percent of new companies will come through the state," Brake said. "We've done a lot of work to ensure that Frankfort knows what we're doing here. The data is clear, though, that not as many industries are looking. And even if they are, because of the virtual capabilities, you may not know it until they're close to making a decision."

The EDC is part of a group within the state Cabinet for Economic Development that works to market and attract companies to Kentucky, and that group will go to Detroit this month to meet with companies interested in relocating to the state. "Owensboro is at the table for these discussions," Brake said.

A second mission also will take place this year, he said.

Part of the targeting and recruitment also includes continuing the partnership with Hancock County and the potential new industrial site along the river.

The Owensboro region's ability to attract new traditional manufacturing could be hampered by its air quality status, Brake said. The Environmental Protection Agency soon may list Daviess and Hancock counties as non-attainment areas.

"That means any industry we might attract that needs an air quality permit couldn't be guaranteed it would get one," he said.

That could steer the EDC to focus even more on the professional services/back offices and other cluster industries such as food processing and manufacturing; distribution and logistics.

Owensboro U coming soon?

Owensboro U is a new initiative for attracting and keeping talent listed in the plan, but the details won't be released until fall.

"We're working with all of the colleges on this," Brake said. "The logic is that two out of three college graduates end up living in the communities where they graduate. Here, we have several hundred graduates."

The initiative will work to brand Owensboro as a college town with a goal of having 10,000 undergraduates enrolled by 2020. "We want to get the students here and then look and act like a college town with the amenities they expect, and then keep them here," Brake said.

The EDC expects to have a plan in place at the end of the month for continuing the work of the P-16 Council/Greater Owensboro Regional Alliance for Education.

That group is a business/education roundtable that feeds projects for ensuring elementary, secondary and postsecondary education efforts are in sync and that work force training fits local needs.

"I was glad to see the education piece in the plan with a continuation of the focus on work force training," said Haire, who is co-chairman of the P-16 Council. "We're seeing jobs available now, but they require specialized training. We need to make that effort to match our work force with the companies' needs."

The plan also includes a continued focus on "placemaking," or creating a community with livability qualities and features that will attract new people.

Continued support of downtown revitalization is part of that.

Another aspect of placemaking in the EDC's blueprint calls for creating a master plan to develop the Interstate 64/Interstate 65 corridor in the east county near the new hospital site.

"That will be our exit from the interstate system, and we have one chance to develop it right," Brake said. "We're just starting that discussion."

More private funding needed

The EDC's total annual budget of about $600,000 comes from city, county, state and private funds with about half of that from public dollars. The private sector contributes about $150,000 to $200,000, and that has increased over the last five years, Brake said.

"We're a well-funded organization, but we're middle of the road in terms of other EDCs," he said. "Some of the initiatives we've identified will require some funding. We're not asking for any more public funding, but we will be seeking more private funding."

One of the EDC's peer cities is Dubuque, Iowa, which is similar in size, not on an interstate and not a capital city. The Dubuque EDC has an annual budget of $1.7 million, with much higher private funding, Brake said.

Brake said the EDC has never created a plan that has involved so much community input.

"We sought as much comment as we could with meetings with stakeholders, the EDC blog and Facebook page, and the newspaper wrote stories about the public meeting," he said.