6. Economic Development SWOT & Competitive …...Koochiching County & International Falls Economic Adjustment Strategy 6 SWOT Analysis Opportunities Improving educational systems and

6. Economic Development SWOT &

Competitive Assessment

Koochiching County & International Falls Economic Adjustment Strategy 2

Location SWOT and Competitive Assessment

The purpose of this section is to assess the business and economic competitiveness of Koochiching County. NGKF has used four different methods:

1. SWOT: We use a common consulting methodology called SWOT, which when applied to economic development examines the Strengths, Weaknesses, Opportunities, and Threats that could help or harm a state, region, or community. In this instance, the evaluation criteria we used for the county SWOT included the consulting team’s own thoughts and critiques plus the ideas provided by community members in their answers to the four questions responses from our first on site visit as well as the community responses to the Voyage Forward Four Questions.

2. Operating Environment Assessments: We examined a group of location decision factors in Koochiching County and decided whether each is a disadvantage or an advantage for economic development. We then placed the various factors and local assets in a 2x2 evaluation matrix for easy review and assessment.

3. Peer Community Comparisons: We directly compared Koochiching County along multiple location criteria to four other communities in and out of the State of Minnesota that are each in their own unique way a competitor location for new business growth and investment. By looking at these peer communities, Koochiching County has four separate benchmarks for judging itself.

4. Site Selection MCDA Evaluation: Lastly, relying on years of economic development experience and site selection knowledge gleaned from investigating communities for corporate clients, we built a Multi Criteria Decision Analysis model to once again compare Koochiching County against its four competitor locations and provide a score.


SWOT Analysis


SWOT Analysis

Strengths

� Pristine beauty and serenity of the natural environment

� Quality and abundance of natural and wildlife resources (water, timber, lakes)

� Hunting, fishing, and outdoor recreational activities

� Available land for commercial & industrial development

� Transportation: Railroad

� Transportation: Air

� Utilities: Water

� Utilities: Wastewater/Sewer

� Voyageurs National Park

� Canadian border proximity

� Rainy River Community College

� Cold weather testing

� Foreign Trade Zone

� PCA/Boise paper mill

� Involvement of the Community (i.e. Voyage Forward Initiative)

� PCA employees are happy with their work environment


SWOT Analysis

Weaknesses

� Community brand as “Icebox of the Nation”

� Lack of economic development policies and incentives

guidelines

� Wetland constraints on growth & costs to remediate

� Transportation: Trucking (high cost, few options)

� Size and contraction of local labor force

� Lacking of education & skills of local labor force

� Geographic location & distance from major cities

� Declining and aging population

� Lack of local government cooperation

� Lack of trust in governmental leadership

� Community dysfunction is on public display

� Lack of government speed of action

� Lack of economic growth & new job creation

� Climate & weather

� Limited water/sewer/telecom infrastructure in Island

View and rural communities

� Lack of resources/funding to support economic and

infrastructure development

� Lack of diverse, quality housing options at all price points

� Lack of economic diversity

� Influence of largest employer on labor market

� High timber pricing

� 85% of county land are designated wetlands

� Lack of retail offerings

� Work ethic in service industry and secondary job market

� No ready-to-occupy, existing & available commercial and

industrial buildings

� Not welcoming to outsiders and racial/ethnic minorities

� High tax jurisdiction (business and personal)

� Lack of incentives for development (“war chest”)

� Lack of quality hotel options

� Shortage of appropriate job skills training

� Lack of regulated/licensed, flexible child care options

� Inconsistent broadband and cellular coverage

� No maintenance personnel within a 3 hour radius of Falls

International Airport amplifying delays and missed

connections


SWOT Analysis

Opportunities

� Improving educational systems and learning options

� Voyage Forward initiative & resident support of

economic development and diversification

� Entrepreneurship

� Tourism (athletic events, wayfaring signage)

� Stargazing/Research Telescope

� Arts / Culture / Icebox Radio Theater

� Community Events & Activities

� Quality water & establishing tiered water rates

� Cross border partnerships & activities / events

� A resource-based (timber) economy that could support

a wider variety of businesses

� Improving customer service and employee training

� Nurturing existing local businesses

� Increase programs at RRCC, especially Vo‐Tech, such

as law enforcement, cosmetology, and welding and

explore the possibility of four year programs

� Encourage better collaboration between school districts

and RRCC and Workforce Development for soft skills

� Business exports to Canada (products and services)

� Diversification of jobs, skill levels and union/non‐union jobs.

Suggestions included casino, prisons, a brewery, outfitters,

water bottling, and Internet cafes for outlying areas,

aquaponics, cold weather businesses, data entry centers,

spa, plasma gasification, skidoo, greenhouses, Polaris,

fisheries, amusement park, splash park, water park, music

and theater, nightclub, etc.

� Increased year-round entertainment options for all ages,

including youth, families, young adults and seniors

� Improve healthcare facilities and availability of services

such as nursing home, dementia care, orthodontics,

dialysis, dermatology, mental health, obstetrics, radiation

and cardiology

� Better and increased promotion of VNP and the other great

resources already available, summer and winter

� Additional Canadian retail sales

� Cold weather testing (non-automotive applications)

� Professional development in economic development

� Education of leadership and efficiencies of process to allow

for working at the speed of business

� A robust business retention program that includes working

with the workforce center/board to enhance workforce

development and planning for existing employers

� Improve organizational structure and communication

procedures in economic development


SWOT Analysis

Threats

� Contraction or loss of PCA and the associated satellite

industries

� Wage disparities between PCA and everyone else

� Loss of hunting and fishing as well as other

opportunities for outdoor recreation (natural disasters,

poor management, disease, etc.)

� Canadian currency exchange rate fluctuation

� Loss of tourism

� Loss of essential air service subsidy and downsizing of

Falls International Airport services

� Lack of policy or funding support from State of

Minnesota and federal government

� Aging population (natural aging plus loss of youth

population)

� Lack of diversity in industry and business

� Health and sustainability of the wood basket (forest

fires, pests, poor management, natural disasters, etc.)

� No change or harmful changes to State forest

management practices


Operating Environment Assessments


Operating Environment AssessmentAdvantageDisadvantage

Business Environment Factors Comments

Existing manufacturing industry wants stronger technical focus in secondary schools.

Good quality but very small. Shift focus from liberal arts toward technical and soft job skills required locally.

Average to very good quality of local secondary schools.

Need a unified vision and strategy to set priorities, improve productivity, and create better working conditions among stakeholders.

State programs below average. Local programs are negligible.

Lack of consistency of engagement between local and State economic development personnel.

Development permitting and approval processes are slow, cumbersome, and expensive; likely a fatal flaw for most attraction and some expansion projects.

Corporate taxes are less competitive nationally.

State & Local Training Programs

University & Community College

Secondary Education

Community/City/County Cooperation

State/Local Cooperation

Corporate Taxes

Incentive Programs

Local policies State policies

Ease of Permitting

Assessment


Operating Environment Assessment

Cost of Living

Housing Quality & Affordability

Culture / Entertainment

Family Recent Grads

Diversity Index

Image/ Reputation

Internal External

Visual Appeal

Climate

Crime

Quality of Place Factors Comments

Low cost of living but advantage is offset by low average incomes.

Family friendly location with great outdoor seasonal activities but little to attract and retain young people.

Very little racial, ethnic, cultural, or social diversity.

Reputation is generally tied to being a mill town, a recreational “sportsman” town, and a retail border town. Self-image as a “nice place to live” inhibits ambition.

Highly variable across waterfront, Voyageurs National Park, forests, rural landscape, downtown, and Mill.

Bitter cold winters are the general imagery of northern Minnesota nationally. A hindrance to investment and personnel attraction.

Not a significant issue throughout the county.

AdvantageDisadvantage

Assessment

Limited options for quality housing at variety of price points; an ongoing issue for relocating employees.


Operating Environment Assessment

Energy

Electric Gas

Water/Sewer

Telecom/ Internet

Highways/Roads

Building Quality/Availability

Sites Quality/Availability

Airports

Public Transit

Infrastructure Factors Comments

No major issues; employers generally satisfied with service and reliability.

Adequate capacity and quality. Water rates are flat; will require lower tiered pricing for large industrial users.

Broadband and cellular coverage is inconsistent throughout the county.

Roads are generally adequate for need; border crossing and Customs Plaza can cause delays.

Public and private sites are adequate for realities of slow growth. Multi Modal site is now certified as Shovel Ready. Development timetable still uncertain.

Easy access to Falls International Airport. Very limited scheduled daily flights.

No public transportation available.

Building quality is to rural standards; lacking any speculative development and permitting and constructing new facilities is time consuming and expensive.

AdvantageDisadvantage

Assessment


Quality & Availability

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Uncompetitive Very Competitive

Market

Access

University/VO-Tech

Presence & Quality

Direct Labor

Quality

Work Ethic

Direct Labor

Availability

Air Access

Business

Climate/Regulations

Local Pro-Business

Attitude

State Pro-Business

Attitude

Cost of Living

Weather/

Climate

Transfers

Locals

Quality of Life

Nat’l Recruiting

Quality of Life

Recreation

Physical Infrastructure

Utility Services

Rail Access

HWY Access

Telecommunications

Competitive Asset Mapping

Availability of

Housing

This 2x2 matrix is another way of evaluating the quality and availability of operating environment factors within Koochiching County.

Factors have been arrayed on the asset map along two axes:

� Competitiveness

� Importance

Economic developers and community stakeholders will sometimes over-inflate the importance of a local attribute and think that they are competitive when in fact they are not.

The relative importance of location factors will also change depending on a company’s industry and specific operational needs.


Cri

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Very Competitive

Costs

Manufacturing LaborW/O Heavy

IndustryW/ Heavy Industry

Electrical Power

Incentives

Local

Property

Taxes

Construction

Costs

Corporate Income Tax

Logistics Cost

Worker’s

Compensation

Uncompetitive

RegionalDistribution

NationalDistribution

Competitive Asset Mapping

This 2x2 matrix is another way of evaluating the costs of operating environment factors within Koochiching County.

Factors have been arrayed on the asset map along two axes:

� Competitiveness

� Importance

Economic developers and community stakeholders will sometimes over-inflate the importance of a local attribute and think that they are competitive when in fact they are not.

The relative importance of location factors will also change depending on a company’s industry and specific operational needs.

State


Rainy River Community College

The smallest of 57 colleges in the State of Minnesota system, this school of 207 full-time and 59 part-time college students is a critical educational asset for the county.

The college is shifting its focus from liberal arts to technical training programs like Industrial Technology, Nursing, Health, Fitness, and Trucking. The college has 76 student athletes, many of whom are drawn to the community from other parts of the country and 10-20% of the students come from Canada.

Being named one of the “Top 150 Community Colleges” in the U.S. by the Aspen Institute in 2014 is a credit to the 45 full-time and part-time faculty and staff. The school provides direct and indirect local employment and spending, and represents a unique institutional presence to help International Falls and Koochiching County become more creative, innovative, and forward looking while also strengthening the community brand outside the state.

Local Asset Highlight: Industry & Talent Development


Voyageurs

National

Park

One of the younger and the least visited national parks in the National Park system, Voyageurs National Park (VNP) is a critical natural and economic asset for the region.

The 100% water-access park drew nearly 240,000 visitors in 2014, employed 44 permanent staff and 53 seasonal workers, and created an estimated 225 indirect jobs outside of VNP. That means that for every 1,000 additional visitors another job is created locally.

VNP provides an extraordinary outdoor amenity for local residents and a unique opportunity to promote the region to the rest of the country. Since national parks are not allowed to spend money on marketing, promotion by other local interests is of vital importance.

Local Asset Highlight: Tourism Development


Peer Community Comparison


Peer Communities

The Site Selector process usually entails a detailed comparison of communities across demographic, labor and cost of operation indicators. For this evaluation, competitive communities were chosen based on each one’s status: (B) was chosen as an in-state location alternative; (C) as a border community; (D) as a recent project competitor; and (E) as a community in the southeastern U.S. that is a commonly sought after region.

Sources: US Census, 2010


Peer Comparisons: State Level

Koochiching County

Bemidji, MN Port Huron, MI Grand Forks, ND Hickory, NC

State Workers Compensation

(1= Best/Lowest)32 32 18 1 25

State Corporate Income Tax Rank 44 44 10 19 25

State Corporate Income Tax Rate 9.8% 9.8% 6% 1.48 - 4.53% 6%

Overall State Business Tax Climate

Rankings47 47 13 25 16

State Unemployment Insurance Tax

Rankings29 29 47 16 11

For businesses conducting a national analysis to identify the most strategic location for their new or relocating operation, the first step is to identify which states offer the most advantageous economic and business climate.

In a relative comparison to other states, Minnesota does not offer favorable corporate income tax rates, workers compensation rates and unemployment insurance tax obligations as well as ranks poorly for the State’s overall business tax climate.

In comparison, other states across the country offer more favorable economic and business climates, particularly in the southeast and western regions, which have seen steady and significant new investment project opportunities.

1) Economic Research Institute Salary Survey (2015)

2) Oregon Department of Consumer & Business Services: 2014 Oregon Workers’ Compensation Premium Rate Ranking Summary

3) Tax Foundation: 2014 State Business Tax Climate Index


Peer Comparisons: Demographics

Compared to the peer communities, Koochiching County has a greater proportion of its population ages 45 to 85+ years old. This is likely an indicator of an increasing retirement resident population coupled with lack of retention of its younger population.

Sources: US Census, 2010

0

5

10

15

20

25

30

0 - 4 5 - 9 10 - 14 15 - 24 25 - 34 35 - 44 45 - 54 55 - 64 65 - 74 75 - 84 85 +

2015 Population by Age

Koochiching County

Bemidji, MN

Port Huron, MI

Grand Forks, ND

Hickory, NC


Peer Comparisons: Demographics & Selected Costs

� Typical location screening attributes are shown, highlighting relative best (green) and worst (red).

� Koochiching County does not compare well.

1 2 3 4 5

Koochiching , MN Bemidji, MN Port Huron, MI Grand Forks, ND Hickory, NC

Population 2014 13,184 13,754 29,231 54,716 40,234

Population Growth Rate 2014-2019 -0.1% 0.52% -0.47% 1.19% 0.16%

Median Age (2014) 47.6 28.3 36.5 29.4 39.5

Civilian Labor Force 6,227 7,789 14,154 30,452 20,067

Diversity Index (2014) 14.1 36.3 37.7 26.5 54

Drive Time to Work (Mins) 15.1 18.7 18.6 12.8 18.3

% Pop (Age 25+) w/ HS or Higher 89% 90% 85% 93% 83%

% Pop (Age 25+) w/ Bach Deg or Higher 18% 30% 13% 35% 28%

ERI Cost of Living Index (considers rental costs and tax burden)

114.2 93.9 103.3 104.3 95.6

ERI Salary Index(vs US avg. of 100) 94.8 90 104.6 90.3 89.1

Median Home Value $113,119 $123,884 $82,875 $209,866 $164,233

Median Household Income $43,905 $33,778 $30,360 $43,837 $38,811

Workers Compensation (1=Best / lowest) 32 32 18 1 25

Corporate Income Tax Rate 9.8% 9.8% 6% 4.5% 6%


Site Selection MCDA Evaluation


Multi Criteria Decision Analysis

For site selection studies, a Multi Criteria Decision Analysis (MCDA) model is used to compare places against each other. In this case, a basic model was used to compare Koochiching County with its four peer locations and provide an overall score for the assessment.

Typical Location Screening Criteria

� Demographics

� Labor Availability

� Education

� Cost of Living

� Housing Availability

� State Business Climate

� Existing Industries

Koochiching County & International Falls, MN Economic Adjustment Strategy - Peer Evaluation

Importance Goals & Objectives Importance Data Variable Total Weight

(weight) (weight)

20% Population 2014 5.00%

25% Popultion Growth Rate 2014-2019 6.25%

20% Median Age (2014) 5.00%

20% Civilian Labor Force 5.00%

15% Diversity Index (2014) 3.75%

20% Unemployment Rate 4.00%

5% White Collar 1.00%

3% Management/Business/Financial 0.50%

10% Professional 2.00%

3% Sales 0.50%

5% Administrative Support 1.00%

3% Services 0.60%

20% Blue Collar 4.00%

10% Farming/Forestry/Fishing 2.00%

3% Construction/Extraction 0.50%

3% Installation/Maintenance/Repair 0.50%

10% Production 2.00%

7% Transportation/Material Moving 1.40%

25% % Pop (Age 25+) w/ HS or Higher 3.75%

25% % Pop (Age 25+) w/ Bach Deg or Higher 3.75%

25% SAT Scores by state 3.75%

25% ACT Scores by state 3.75%

33% Cost of Living (vs US avg. of 100) 5.00%

33% Median Home Value 5.00%

33% Median Household Income 5.00%

65% # Renter Occupied Housing Units ('15) 3.25%

35% # Owner Occupied Units ('15) 1.75%

35% Workers Compensation (1=Best / lowest) 3.50%

65% Corporate Income Tax Rate 6.50%

33% Construction 3.33%

33% Manufacturing 3.33%

33% Transportation/Utilities 3.33%

100% 100%

10% Industy

State10%

Cost of Living

Housing Availability

15%

5%

Labor Availability20%

Education15%

25% Demographics


Critical Location Score

Using the weighted criteria outlined on the previous page, data collected for each peer community were modeled and an aggregate score developed. Koochiching County came last out of the five communities reviewed.

Peer Community

Ag

gre

gate

d L

ocati

on

Sco

re

-

0.020

0.040

0.060

0.080

0.100

0.120

0.140

0.160

0.180

0.200

Koochichihing , MN Bemidji, MN Port Huron, MI Grand Forks, ND Hickory, NC

Note: Weighting of criteria will vary depending on the

needs of a client considering your community. This is

only an example based on commonly held priorities.


Industry Specific Location Criteria

Typical weighting of location screening criteria are shown for Manufacturing and Back Office Services businesses. Factors are weighted based on their importance to that industry sector, and are subject to change from company to company. These nuances must be considered when developing economic development strategies, policies, rates, and target industries and companies.

30%

25%

15%

15%

5%

Demographics

Labor Availability

Education

State Tax Climate

Transportation

Manufacturing Back Office Services

20%

20%

15%10%

15%

20%Demographics

Labor Availability

Education

State Tax Climate

Transportation

Utilities


There’s Always Another Ranking


Competitive Assessment:

Before showing NGKF’s assessments of Koochiching County, it is worth highlighting another location evaluation that identified Minnesota as the best place to do business in the country. This is a great honor to receive from a highly visible and often-quoted news source. The top 5 states for 2015 are shown below.


Competitive Assessment:

It is important to emphasize that every evaluation tool and ranking must be reviewed and assessed on its merits. Caution must also be used if trying to apply state-level findings to a local jurisdiction.

The CNBC study states that Minnesota was evaluated in part based on its strengths in Finance, Medical Devices, Healthcare, and Headquarters, and placed a heavy emphasis on higher education and high-value add occupations. These are not Koochiching County’s strengths and so the CNBC study should be kept in perspective, despite the good news for the State of MN overall.

In this case, some of the state economic climate scores do not transfer or apply to Koochiching County. These items are crossed out in the table to illustrate that while those factors may be strengths for Minnesota or for Minneapolis-St. Paul, they are not necessarily local strengths.

In short, CNBC is still good for marketing but not local economic development policy.

Documents

6. Economic Development SWOT & Competitive …...Koochiching County & International Falls Economic Adjustment Strategy 6 SWOT Analysis Opportunities Improving educational systems and