So how do we start building Wise Economies? Grow Your Native Species

Q: What is this  flower?

A: An apple blossom.  It’s also the state flower of Michigan.

 

Q:  What’s this second flower?

A: A Hibiscus.  It’s also the state flower of Hawaii

 

Have you ever tried to grow these things in the Midwest?  I have. When I lived in Green Bay, Wisconsin (about the same latitude as Traverse City, Michigan), I had one scraggly apple tree in my backyard that an old-timer estimated to be about 50 years old.  The thing was uuuuugly… gnarled branches, sort of bent over to one side, very unsymmetrical.  And we did nothing to take care of it.  But every spring, that tree put out a drift of blossoms over its scraggly branches, and every fall it produced apples…which tasted awful, but they were apples, nonetheless.  On a recent return visit, we drove by the old house and peeked in the backyard, and there was that same old ugly tree, laden down with fruit.

I don’t have an apple tree when I live today in Cincinnati, but I do have a hibiscus tree.  It’s actually our second hibiscus– my husband keeps bought a second after the first one finally limped to its demise.   We have to keep it in a pot because it can’t survive the winters, we have to stake it up in the pot because it doesn’t have a deep enough root system to keep it upright in even a little bit of wind when we do put it outside in the summer.  It goes through random periods where it drops leaves all over the place, and when it’s inside it attracts swarms of little white bugs.  It’s got lovely blossoms, when it blossoms, but the rest of the time it’s a pain in the neck.

To grow an apple tree in this region takes very little effort.  To grow a hibiscus in this region takes a huge amount of effort.  If the goal of your gardening is to produce flowers (ignoring the fruit for a moment), growing an apple tree is going to be a more efficient, less labor-intensive way to meet that goal where I live than growing a hibiscus.  They don’t look the same, and the one that isn’t from here is always going to look more exotic and enticing.  But they are both flowers, and one produces the results we want in this location much more easily than the other.

Conventional approaches to economic development put a huge amount of emphasis on trying to grow exotics in places where they do not naturally grow.  We send economic development professionals on trade missions all over the world, we bleed ourselves to be able to announce that we have the lowest tax rates, and we pour millions of dollars into incentives to recruit businesses – or retain them after they are here.  But unless a business needs what we uniquely have to offer, we will never have confidence that they won’t just pull up and move to the next cheaper place when this load of tax incentives run out.  Recent stories about even as midwestern a stalwart as Sears are driving that point home.

There are two truths of economic development that we don’t often talk about.    The first is that very, very, very few businesses relocate in a year, and fewer now than in years past.  All of the chasing after site selectors that economic developers often do, all of the money and effort and travel spent trying to land that big businesses, is going after  a big payoff with extremely long odds.  Much of that money will see little, if any, return.  To a great extent, big business recruitment is a bet on the Powerball: fantastic if you hit it, but hardly what you want as your retirement savings strategy.

The other truth of the matter is that most businesses do not primarily choose a location on the basis of tax incentives.  When most businesses do go in search of a new location, they choose based on their business’s needs – regional location, workforce skills, access to transportation, ability to recruit key talent, etc.  They will ask for tax incentives because that’s part of the dance, and they will threaten to go somewhere else that has better tax breaks because it’s in their best interest to get a little more if they can.  But communities seldom win business that they would not otherwise get through tax breaks. Most business’s needs are much more complex than that.

Given that betting on the exotic requires so much additional effort for such long odds, I argue that the communities and regions that focus on cultivating and fertilizing the businesses and economic opportunities that grow naturally in their area have a much better chance of long-term economic health and resilience.  Your native businesses are the ones that are adapted to your social, cultural and economic environment from the start, and they are the ones who are in the best position to anticipate and adapt to changes in the world surrounding them.  They may be humble, even boring, compared to the unusual and flashy from Somewhere Else, but they are your safest bet for long-term growth.

What’s so great about local businesses?  This topic gets a lot of play lately, with debates over which types of small businesses are creating the most jobs and how to get them growing .   All important , but let me give you a different argument in their favor, and a long-term Wise Economy-type perspective.

Once upon a time, nearly 200 years ago, a couple of men started making candles in a little shop in Cincinnati.   Places with lots of pigs being good places to get cheap candle-making equipment, so this was a business that was a natural outgrowth of the primary industry in the town known as Porkopolis.   The company later added soap (also made from pork by-products), and gradually, gradually expanded production – employing more people, building bigger buildings, and adding additional products.  Today, that company is one of the largest in the world, and their products include Tide, Crest, Pampers and Swiffer.  And despite the fact that Procter & Gamble does not have factories in Cincinnati anymore, they are one of the largest employers, a major local taxpayer and a key funder of everything from youth summer programs to the United Way and the Cincinnati Symphony Orchestra.

P&G started in Cincinnati because of what Cincinnati uniquely had to offer at the time, and it stayed as it grew because of the business and personal connections.  Today it is helping create a new economy in the region – Greater Cincinnati was recently named a center of Consumer Marketing expertise, which includes disciplines ranging from package design to surveying and social media.

Look at the stories of the Fortune 500 companies, and you’ll find lots of stories that follow a similar outline.  Very few corporate headquarters relocate out of their home region (unless they merge or get bought by someone else).  If you want to create a stable long-term economy, if you want to build an orchard that will last,  you need to be growing your P&Gs today.

3 thoughts on “So how do we start building Wise Economies? Grow Your Native Species”

  1. Della, this is a great reflection and growing local business is the only way to build sustainable economies. What I observe, however, is that the push to grow local business is only reaching a small portion of the population; namely, those who have access to resources or privaleged network. In this space, it is the middle class, upper middle class and upper class that come with more naturally accumulated assets to attempt new business start up.

    The truth is — every man and woman standing in line for Food Stamps possesses a dream. Every transitioning single mother possesses skill and talent. Emerging young people are bursting with creative ideas. Every unemployed worker spins ideas of small business development in their mind. And all early-retired adult holds visions of productivity unfulfilled.

    THESE are the people that comprise the true fabric of community – not those select few developing biotechnology businesses. And whether it is expressed or not.,….these are the people that are quickly growing to represent a majority. Sadly – banks are not lending to them, support services are short sighted, and contuing education / re-adjustment education is only an answer for a very small percentage.

    Wise economies embrace the wisdom that each of us in endowed with a pathway, a purpose, and special skills — all of which can be articulated into small business. To believe that only a handful of us possess dreams and business potential – is an outdated belief system of a autocratic society.

    Imagine the spirit of hopefulness that rises from this foundation upon which revitalized communities could stand; the only foundation which is sustainable in the long term and TRANSFERABLE to the next generation.

    Then again, my heart may simply be too big.

  2. Della,

    I really like the plant analogy. I would almost take it a step further. Think about where you may have first seen a hibiscus. It may have been in a beautiful picture or movie showing a picturesque scene, or maybe you have actually seen them in Hawaii. Regardless, imagine taking that beautiful Hawaiian plant and placing it right in the middle of your garden. Nice flower, yes, but It just doesn’t look like Hawaii, does it?

    Why we continue to do the same things here in economic development is beyond me. We send our marketers far afield to trade shows and roundtables to talk up our communities. But, here is what I don’t understand. If I am a widget maker and I decide to move my operations; my move is going to based on things to make me more profitable. I am going to want to be close to my suppliers and my customers. I am going to want a dependable work force that I can keep and retain. There are so many things that I want that wait for it…..the local economic development organization can not do anything about. Sure the local EDO can tell me stuff, but if I am really on top of my game, I probably new a lot of these things already.

    When I think of the community I am in, most of our development has come from those solid companies that have been here for a long time that reinvesting in the community. They have weathered this storm, they are smaller, but healthier and no they are ready to move to their next phase. Yet, we still dutifully send our team all over the nation (and the world) to encourage a fewer number of available businesses to come to our community while the costs of these encounters just go up and up.

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