The Rebirth of Older Industrial Regions: New Opportunities for Private Sector Investment Barry Bluestone Northeastern University The American Assembly The Tri-State Alliance Rockville, Illinois April 29-30, 2009. Fundamental Proposition.
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New Opportunities for Private Sector Investment
The American Assembly
The Tri-State Alliance
April 29-30, 2009
Regions have the ability to create their destiny, but they can benefit from having sophisticated partners who can help them develop tools and information to compete successfully.
Due to rapidly changing market conditions in the global economy, municipal leaders in older industrial regions often lack complete, up-to-date information regarding the specific location needs of particular industries and the recruitment efforts of competing locations. As a result, they are not always fully prepared to assist firms in a timely and effective manner, helping to overcome obstacles to local investment.
“When I have to send a manager overseas for six weeks, and they drink bottled water and eat peanut butter crackers they bring from home they don’t like it. If I offered to send them to Chelsea, Holyoke, or Lawrence, they’d take it in a minute.” -- IT executive
Business decision makers have well-defined “cognitive maps” – perceptions or expectations—about the attributes of and opportunities in older industrial regions that can adversely affect the way they think about locating in these locations.
“We were in Lawrence when it was the arson capital of the U.S. For a while, being there meant that we couldn’t always recruit our first choice for a position. However, we don’t have that trouble any longer. Lawrence is coming back.”
Specific site deficiencies can add excessive costs to doing business in older industrial communities.
“The mills were built when people walked to work. There is no parking and no room to create it.”
Specialized Industrial Cluster Focus
Mixed Use Development
High Performing Schools
Public Safety Operations
Strategic Workforce Investment
State and local review processes can add excessive costs to doing business in older industrial communities.
“Once a product has passed its Phase III trials, we want to get the new product into production before another company does. Speed is so critical that we start building the production facility before the product is approved. “ – Biotech Executive
Traditional public sector financial tools such as tax abatements, tax credits, and subsidies, while often strategically important as a deal closer, are not sufficient to attract high value business investment if previous deal breakers are not overcome.
“From our perspective, time is money. We may actually be able to make a deal work more effectively if we can receive expedited permits and infrastructure enhancements, than by factoring in a tax subsidy into our pro forma.” – Developer
NAIOP (National and Massachusetts Chapter)
General Industrial 40.0%
Commercial / Profess. 38.8%
R& D Facility 5.0%
Office / Headquarters* 68.5%
R&D Facility 2.8%
Distribution / Warehouse* 1.9%
Project type selected
Middle Atlantic 28.0%
West South Central 21.4%
East North Central 20.5%
South Atlantic 19.6%
New England 19.6%
West North Central 15.8%
East South Central 15.8%
Middle Atlantic 18.9%
South Atlantic 18.9%
East North Central 8.8%
East South Central 6.3%
West North Central 6.3%
New England 5.0%
West South Central 5.0%
Geographic area in which do most of work **
* Question asked in NAIOP survey only. **Question asked in CoreNet survey only.
In our analysis of factors that are deemed “ very important” and “important” in our survey of developers and site location specialists, the city of Springfield does very well, relative to its peers in the following areas:
In other factors, less important to market actors, Springfield also does very well, compared to other cities in the study. These include:
In our analysis of factors that are deemed “very important” and “important” to developers and site location specialists, the city of Springfield does not do as well, relative to its peers, in the following areas: