Utilities have historically focused their economic development efforts primarily around issues of physical sites and buildings (products): site identification, site preparation, site marketing, facility reuse, etc. This makes sense, utility economic development groups are more directly linked to the end user than other stakeholders, and the physical site is the most direct link to that future user.
The landscape of economic development is changing however. “Megaprojects” are less common, expanding at existing locations is often more attractive than the risk inherent in finding a new location, and off site or “outside-the-four-walls” factors are of paramount importance. How should utilities respond? Is a focus on product still the right approach? To be sure, many utilities have already moved into other areas of economic development, but it doesn’t hurt to examine the topic again.
Core Economic Assets
Businesses make a location decision – expansion, relocation, consolidation, etc. – based in part on how well a local economy can support their operational success. A headquarters facility may be primarily concerned with quality of life and surrounding universities, a manufacturer will be interested in labor availability and transportation network. A location’s economic assets are the inputs they have to satisfy those requirements – talent, infrastructure, business environment, costs, etc.
Available sites and buildings are economic assets, but, the importance of those assets comes only after a location that can support the other factors has been identified. A great site can’t make a bad labor pool good; but, a great labor pool can make a marginal site work. In other words, there are numerous other factors upstream of a site that have to be in place in order for your site to have value. Utilities can maximize the future use value of sites by getting involved in developing those other core assets:
• Talent – if not the most important factor for virtually every business, one of the top three. Utilities should treat labor development like they do infrastructure. Invest in the foundation now – training programs, community colleges, internships – and reap the benefits for years to come.
• Capital Networks – because we aren’t just talking about the big industrial users, it is important to recognize the needs of small businesses who could be big future users. A barrier almost all first and second stage companies have is access to capital. The more partners involved in funding and maintaining capital networks, like venture funds, the better.
• Community Development – quality of life matters to the future generation of workers. The importance of building great places to live and raise a family will have significant impacts on long-term economic development success.
• Organizational Strength – at the end of the day, a great economic development entity can close a deal. Maybe the lead organization is the utility; maybe it is some other regional or state group. Regardless, the utilities should stay intimately involved and support the broader economic development mission.
This list is certainly not exhaustive, and none of the other activities should come at the expense of preparing and marketing sites and buildings. The product is important, but utilities could play an increasing role in helping support a comprehensive economic development strategy focused on all core assets.