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State of the Industry 2012
, Jeffrey A. Finkle, CEcDPresident & CEO
International Economic Development Council (IEDC)
January 30, 2012
Methodology
Results of a 2012 online survey of our
members about 2011
Update on U.S Job Growth
Key Trends in ED
1. In comparison to 2010, how has your
organization's operating budget shifted?
3%9%
21%
42%
16%6% 4%
2011 Budget Shifts
2. Have you made the following changes in
your organization?
Decreased Spending
Laid
-off s
taff
Reduc
ed s
taff c
ompe
nsat
ion
or b
enefi
ts
Elim
inat
ed o
r re
duce
d pr
ogra
m s
pend
ing
Elim
inat
ed o
r re
duce
d ad
vert
isin
g sp
endi
ng
Elin
ated
or re
duce
d tr
avel
spe
ndin
g
12%17%
35% 35% 37%
2011 Responses: Lack of access to capital/financing
47% Declines in real estate development
39% City/County/State budget cuts
38%
2010 Responses:City/County/State budget cuts
52%Lack of access to
capital/financing 51%Declines in real estate
development 41%
3. What THREE issues have posed the greatest challenges to your organization’s economic development
efforts in the past year?
Lack of skilled labor 28%
Inadequate Infrastructure 23%
Business closures/downsizing 23%
Lack of political support for ED 21%
Industry restructuring 20%
Complicated permit process/regulations
15%
Taxes 10%
Other challenges:
Increased Decreased Stayed About the Same
Relocations 23% 45% 55%
Expansions 47% 17% 38%
Visits 32% 24% 38%
Prospects 38% 24% 35%
Real Estate Projects 20% 39% 34%
Infrastructure Projects 29% 21% 43%
Redevelopment Projects
20% 20% 44%
4. In 2011, has your organization seen an
increase in the following types of projects?
Prospects decreased by 24% in 2011, compared
to the decrease of 35% in 2010 Expansions increased to 47% in
2011, compared to 39% in 2010
RE projects decreased by 39% in 2011, an
improvement from the 55% decrease in
2010
Notable changes between 2010 and 2011
85%
15%
YES
NO
5. Have you entered in partnerships or combined resources with other stakeholders
in the community to enhance ED efforts ?
o Chamber of Commerce 54%o Local or State government 48%o Regional EDO 45%o Community college/vocational school 43%o University 39%o Another Local EDO 39%o Workforce Investment Board 37%o State EDO 33%o Private sector company 32%
6. With whom did you partner?
7. Has your organization taken a pro-active role to provide opportunities for the
unemployed in your community?
54%
46% YES
NO
Partner with community colleges to offer training programs focused on reducing
unemployment 61%
Act as an intermediary between employers &
job seekers 48%
Facilitate Real Estate redevelopment to
create job opportunities 28%
Partner with a private company for training
and job skills 32%
8. How did you take an active role for the
unemployed?
Hosted or co-hosted job fairs
Collaborated with local WIB
Started business incubators
Other way that EDOs helped the unemployed:
Notable increase in social mktg in
2011, with 34% using it - - it was not even among top
replies in 2010
Business retention was 65% in 2010, but
52% in 2011
Entrepreneurship & small business
development was 51% in 2010 and is
41% for 2011
Collaborating regionally remained steady
with 46% in 2010 and
47% in 2011
We note some shifts in strategy between
2010 and 2011
More business attraction 60%
More business retention 47% More entrepreneurship & small business dvpt.
36%
Engaging more in strategic partnerships 33%
Concentrating on a regional basis 20%
10. What will be your organization's
top objective for 2012?
Busin
ess Att
ract
ion
Entrep
& S
m. B
usin
ess
Stra
tegi
c Ptn
rshi
ps
60% 36% 33%
20% 15% 8%
Column1
2011
Changes in Objectives for 2012 as compared
to those of 2011
63%4%
33%
Better
Worse
Same
12. Compared to 2011, how would you rate your organization's outlook for ED activity
for 2012?
44%
54%
YES
NO
14. Do you consider your community or organization appropriately funded given
its size?
10% More =7%
25% More = 42%
50% More = 20%
Over 50% More = 24%
NA = 7%
15. If you think you need more resources,
how much more do you think you need?
41%
59%
YES
NO
16. Have local politics interfered with any incentive deals your organization
was promoting?
Positive expectations for
job growth in 2012, but for jobs at
the lower end of the pay scale
Expectations for consumer spending to remain flat
A desire to see more focused job training and retraining for workers and unemployed
to increase U.S. competitiveness
Jeff Finkle asked about job growth on LinkedIn
- December 2011 - Synopsis of Accompanying Comments
As of Nov 2011, 239 of
372 metros had employment greater than the
same time
in 2010*
However most metros are still far from their pre-recession employment totals
* According to the U.S. Bureau of Labor
Update on U.S Job Growth
Number of U.S. Metros By Employment Activity Year Over Year Change in Nonfarm Employment Source: BLS
* For Nov 2011, only 54 metros (15%) were at levels exceeding their
November 2007 totals**
* 310 metros are still below their pre-recession total
* On average, U.S.
metros are 4.9% below
their Nov 2007 levels**
** Analysis from Garner Economics LLC
2011 has proven to be a year of few breakouts
The average annual employment growth
rate among metros held at
around 0.7%
Update on U.S Job Growth
Only 34 metros exceeded their 2007 employment totals in all eleven months of 2011**
This group is comprised of
15 metros in Texas
4 metros in the Dakotas
2 metros in Alaska
Another 5 metros are home to military installations
**Analysis from Garner Economics LLC
Update on U.S Job Growth
Fundraising
Increased demand for accountability
A shift in the perception of ROI
A resilient economy long-term vs. # jobs & firms
Smart Mayors are increasingly reaching out to private sector for support
Shift in funding from public sector to private
Over 60% of funding is from private sector today
Key Trends in Economic Development
Changes in Public / Private Funding Since 1998*
Public72%
Private28% Public
39%
Private61%
* Based on Data from 98 NCDS client organizations (Local & Regional Chambers and EDCs) that receive funding from municipal govts. and local business community
Fundraising-Players
Traditional funders - i.e., utilities, banks - have diminished capacity
Today: a broader spectrum includes hospitals, cable companies, law firms, waste management firms
Key Trends in Economic Development
Fundraising-Challenges
Public EDOs often lack skills for engaging the private sector
Less public money available
Investors are streamlining funding
Pledges are no longer a given year to year, nor or they automatic
Key Trends in Economic Development
Strategy
Increase in mergers & consolidations
State level: shifts in ED delivery systems - moving towards PPPs
Developing strategic plans that focus more on Quality of Life issues OR that are product drive
QOL: harder to measure, more inspirational
Product driven: infrastructure, industrial parks
Key Trends in Economic Development
Hiring
There is increased demand for EDprofessionals at senior levels
Leadership crisis is forthcoming - - retirements at higher levels will increase
in next 5 years
Key Trends in Economic Development
Hiring
Collaboration & partnership skills
of the EDO are more important to private sector CEOs
There is more emphasis on “pay for performance” – using metrics to evaluate job performance
Key Trends in Economic Development
Hiring
New top level ED professionals will need to be more business savvy…and know how to raise money …and know how to work with private
sector & universities…and know how to start a company
New PPPs will pay more for the right leader with ED &
business experience
Key Trends in Economic Development
Lack of access to capital/financing is still a big issue
Declines in RE development persist
City/county funding declines hinder local ED efforts
Lack of skilled labor is growing problem
EDOs are engaging in more strategic partnerships
Regional collaboration is on the rise
BRE remains a key strategy, but many
looking to focus on attraction in 2012
Summary - State of the Industry
Most EDOs will need more money to achieve goals
Job growth still lags behind pre-recession rates
Shrinking public sector funds mean that more EDOs will look to private sector for funding
ROI criteria has shifted towards resiliency
Investor scrutiny is ever more stringent
Shift towards PPPs and consolidation of EDOs
ED professionals will need to be ever more deft, knowledgeable and adaptable in the future
Summary - State of the Industry