Economic Development

Texas Launches Ad Campaign Targeting Chicago Companies

Texas Gov. Rick Perry announced that the state has launched a week-long mixed media ad campaign in Chicago tailored to encourage Illinois-based companies to relocate to Texas.

Texas ad campaign in Chicago

Texas ad campaign in Chicago (photo – texaswideopenforbusiness.com)

The $38,450 ad buy is paid for by the TexasOne public-private partnership which markets the state as a business destination.

It will include week-long print and web ads on Crain’s Chicago Business Journal and their website chicagobusiness.com.

Specifically, Texas is getting a two-day takeover of the website, ads through email marketing, and a full page ad in the Monday print edition of Crain’s Chicago Business Journal.

If anything, these Chicago ads are even more scathing than the similar California ad campaign a couple of months ago.

You can see the ad graphics if you visit chicagobusiness.com. One says “Get Out while There’s Still Time and Come to Texas.” The other one says “The Escape Route to Economic Freedom Leads to Texas.”

The detailed text in the print ad (pdf) expands on the “escape from Illinois” theme and compares companies in Illinois to people stuck in a burning building about to collapse.

“With rising taxes and government interference on the upswing, your situation is not unlike a burning building on the verge of collapse. if you’re thinking of “just riding it out” you might want to reconsider. There is an escape route to economic freedom… a route to Texas.”

This exit/escape theme is further hammered home if you click on the ad link and visit the page created for Illinois on texaswideopenforbusiness.com, where it says “To start your escape to Texas, contact us at 512-655-EXIT (3948) or exit@texaswideopenforbusiness.com.”

It’s just a $38,450 ad buy and it will be history in a week, but as California found out the hard way, the free media coverage of these Texas ads goes a long way. Gov. Perry told Site Selection magazine last month that the $24,000 ad buy in California and criticism of the ads by state officials had earned Texas $4 million worth of free media.

If Illinois wants to escape this kind of free media heat, state officials need to entirely ignore the campaign, or at the very least downplay its impact without being overly critical of Texas.

Montana Relaunches Innovate Portal as Entrepreneur Resource

The Innovate Montana Project was launched in Sept 2010 as a public-private partnership to market the state to entrepreneurs and out of state startups as a good place to work and live and grow their businesses.

Innovate Montana

Innovate Montana (photo – innovatemontana.com)

The huge semi-trailers wrapped with Innovate Montana ads rolling around in Seattle, Washington last year were an interesting part of the $150,000 marketing campaign.

But the core of the project was the website (InnovateMontana.com), which has a lot of useful information and tools, including a step-by-step process guide for companies looking to relocate or start a business in Montana.

It also has a GIS-based site selection tool with a searchable database of suitable properties. This statewide tool is linked to similar site selection tools used by many communities in the state, so that users can switch over to the community-specific tool for more detailed information about properties in that community.

This site selection tool was developed for the campaign by Missoula-based GCS Research and the Montana Economic Developers Association (MEDA).

This information and the community profiles are not just available on the website, but also have been distributed in flash drives by the Governor’s Office of Economic Development at trade shows and events.

The campaign also had other innovative elements, including 60-second television ads featuring business leaders in Montana talking about the advantages businesses have in Big Sky Country. The ad was used at Montana airports and in online publications in targeted markets.

The Montana Governor’s Office of Economic Development announced that this website has now been relaunched, and will continue to be a resource for entrepreneurs and innovative businesses.

The website also includes a job board and section which showcases success stories and business profiles. One of these profiles features Billings, Montana native Jeremy Kessler, who founded the online photography showcase and portfolio building platform Gallery Cloud when he was 26.

The website includes social components, and has an active and engaged community of around 3,000 members.

Governor Steve Bullock said that he was looking forward to the collaboration and growth opportunities that Innovate Montana will generate.

Commerce Department FY 2014 Budget Seeks $320M for EDA

The U.S. Department of Commerce unveiled its $8.6 billion FY 2014 budget request. This is a billion dollar increase on its FY 2012 funding level (2013 funding was maintained through a continuing resolution).

Dept. of Commerce budget

Dept. of Commerce budget (photo – commerce.gov)

U.S. Deputy Secretary of Commerce Rebecca M. Blank said in a statement that the FY 2014 budget reflects a commitment to core priorities such as driving growth in exports, supporting innovation through research investments, and revitalizing the manufacturing sector.

Relevant highlights from the Commerce budget:-

- $113 million for creating the Investing in Manufacturing Communities Partnership within the Economic Development Administration (EDA), in partnership with other federal agencies.

- $1 billion for establishing the National Network for Manufacturing Innovation (NNMI), a project for which funding was initially sought in the FY 2013 budget.

- $25 million for launching Manufacturing Extension Partnership Manufacturing Technology Acceleration Centers (M-TACs) to help support smaller manufacturers with tools and expertise.

- $21 million for the Advanced Manufacturing Technology Consortia (AMTech), a public-private partnership to support manufacturing research and early-stage technology development.

- $12 million for the EDA to create a Regional Export Challenge to help communities develop export growth plans.

The FY 2014 Commerce budget seeks a total of $320.91 million for the EDA, including $38.91 million in salaries and expenses, and the remaining $282 million for economic development assistance programs (EDAP).

This is $62 million more than the $220 million for EDAP in the FY 2012 budget, with the salaries and expenses going up by around $1.18 million from last year.

For the last year or so, the EDA has also been able to dip into the additional $200 million in disaster relief assistance and economic recovery funds that were appropriated to the agency in 2012. Some of that is still available and will add to the regular funding and assistance programs.

You can see the full U.S. Dept. of Commerce FY 2014 budget request here (pdf file). The EDA budget begins on page 31.

NY Kicks Off IT Consolidation With New SUNY Data Center

New York State will be housing a new data center at SUNY’s College of Nanoscale Science and Engineering (CNSE) in Albany. The project will be a partnership between CNSE and several state agencies.

CNSE Data Center event

CNSE Data Center event (photo – cnse.albany.edu)

For the last decade or so, New York has been trying to find a feasible solution for consolidating more than 50 data centers operated by state agencies in separate locations.

The cost for building a new data center from scratch which would be capable of consolidating all this was estimated to be around $250 million. This spending will now not be required since the state has signed a 15 year lease for use of the facilities at CNSE.

In addition to that, consolidation of the state’s IT infrastructure is expected to result in another $100 million in annual savings on reduced rental space. The new CNSE data center alone will be responsible for half of these savings.

The total estimated savings over the next two decades from this consolidation process is expected to be around $500 million. CNSE additionally estimates that private contractors and companies setting up shop to support state employees working in the data center will create between 500 to 1,000 jobs over the next five years.

CNSE is setting aside 10,000 square feet in the NanoFab Xtension Building for the state. Another 30,000 square feet will be available in an adjacent building currently under construction, in addition to 10,000 square feet of collaborative space in a third location.

For all this, CNSE will be working with the New York State Office of Information Technology Services. ITS was created in 2012 with the aim of concentrating the state’s IT expertise and resources into a single agency. One of its mandates is data center consolidation.

Governor Cuomo said this partnership with CNSE and the data center would usher in a new era of IT efficiency and security, as well as “maximizing economic development and innovation opportunities.”

He added that the data center project was an example of how New York State is leveraging technology for improving government operations.

Massachusetts Tops Milken State Technology Index

The non-profit Milken Institute released its 2012 State Technology and Science Index, which showed that Massachusetts is still the best destination for hi-tech companies, jobs and careers.

Milken Institute State Technology and Science Index

Milken Institute State Technology and Science Index (photo – milkeninstitute.org)

This index evaluates each state’s capabilities in the science and tech sectors based on 79 unique indicators, including the state’s ability to leverage these assets for attracting companies and high-paying jobs.    

Milken has published this index every two years for the past decade, and Massachusetts has been on top every single time. In fact, Massachusetts with a score of 86.40 has actually widened the lead this year over Maryland which scored 79.41 and retained its second place showing.

Kevin Klowden, senior economist at Milken and co-author of the report, called Massachusetts the “indomitable state” with a critical mass of research centers, hi-tech firms and universities.

California (75.70), which had been in fourth place in the 2010 index, jumped up one place to push Colorado (75.07 ) down to fourth place. Here’s the list of the top ten states in the Milken State Technology and Science Index.

1. Massachusetts

2. Maryland

3. California

4. Colorado

5. Washington

6. Virginia

7. Utah

8. Delaware

9. Connecticut

10. New Hampshire

The 79 indicators the index is based on are categorized into five groupings under technology and science work force, technology concentration and dynamism, human capital investment, risk capital and entrepreneurial infrastructure, and research and development inputs.

The state which surged the most in the rankings this year was Tennessee, which jumped from its 41st spot in 2010 to 35th in 2012, thanks to huge gains in the risk capital and entrepreneurial infrastructure category, which means the state saw a lot of growth in companies getting venture capital or cashing in with public offerings.

Virginia likewise jumped two spots to a 6th place ranking based on a stellar performance in the risk capital category. Rhode Island cracked into the top 20 with a 17th place ranking due to its gains in the technology and science work force category.

Klowden says the index shows how important innovation is for state economies. States such as California with a traditionally strong science and technology sector have been able to claw their way back out of the recession by riding on the backs of a comeback in the tech sector.

Read the full Milken Institute 2012 State Technology and Science Index – Download (pdf) 

Illinois Initiates Social Impact Bond Program

The State of Illinois is launching a Social Impact Bond (SIB) program with help from the Rockefeller Foundation, Dunham Fund, and the Harvard Kennedy School’s Social Impact Bond Technical Assistance Lab (SIB Lab).

Social Impact Bonds

Social Impact Bonds (photo – public domain/wikimedia)

The Social Impact Bond concept was first tried out in the U.K. in 2010, and then by New York City and Massachusetts in 2012.

These “pay for success contracts” involve investments made by a private investor or foundation through the state.

This private entity assumes the risk of the upfront costs of tackling pressing social issues such as recidivism or homelessness, which if solved would actually create savings for the government.

The investor gets returns only if the program works, and the state can then safely reinvest the extra savings on expanding the tested and successful programs.

The Kennedy School’s SIB Lab was established with support from the Rockefeller Foundation, which has been at the forefront of bringing SIBs to the U.S.

One of the important functions of the SIT Lab is to provide pro bono technical assistance to local and state governments that want to implement pay-for-success contracts.

They will be helping Illinois now, with an initial $275,000 assist from the Dunham Fund, which is one of the biggest private foundations in the Greater Aurora area.

The SIB Lab will be putting out an RFI (Request for Information) in the coming weeks, seeking potential projects that could be ideal for a social impact bond-based solution. Targeted policy areas include reducing recidivism rates among ex-offenders, improving school graduation rates, reducing hospital readmission rates, and bettering outcomes for at-risk youth.

Judith Rodin, president of The Rockefeller Foundation, said that it was win-win-win proposition – no tax dollars required by the government for a proven intervention, programs initiated by local organizations can be brought up to scale, and investors can get social as well as financial returns.

New York City tried this last year on a program called ABLE (adolescent behavioral learning experience) which had an aim of reducing chances of incarceration. It was managed by the non-profit MDRC, with funding from Goldman Sachs and a grant from Bloomberg Philanthropies.

At a time when Illinois is facing unprecedented financial challenges, Gov. Quinn said that the social innovation model was unique in that it would generate investments for community priorities “without dipping into the pockets of Illinois residents.”

Utah, Virginia Team up to Offer East-West U.S. Expansions

Companies entering the U.S. or expanding their presence often have to deal with choosing a location on one coast without completely giving up on the other one. That may not be a problem for much longer, if Utah and Virginia have their way.

Welcome to California sign

Welcome to California sign (photo – Twam/wikipedia)

Utah Governor Gary Herbert and Virginia Governor Bob McDonnell are undertaking a joint trip to California, where they will be co-marketing Utah and Virginia to companies looking at expanding in the United States.

This does have shades of the recent campaign undertaken by Texas to entice California companies, but CA Gov. Jerry Brown is in China on a trade mission and unable to provide free publicity to interlopers with a colorful remark.

The only official California response so far has been from Riley Ray Robbins, deputy director of Go-Biz, the California Governor’s Office of Business and Economic Development, who thanked the governors for their “double-occupancy contribution” to the Golden State’s tourism industry.

But the real news here is about the joint effort by the two states, which is an original concept since it works specifically because of their vast geographical separation. Virginia officials apparently cooked up the idea of teaming up with Utah to offer an East-West expansion strategy so that they can jointly provide more options for companies looking to expand in either the Mountain West or on the East Coast.

They choose Utah as a partner for this effort because the governors have gotten to know each other, and Utah and Virginia are the top two states for doing business, as per the annual Forbes rankings.

Governor McDonnell, talking about the 16-day economic development trip he is undertaking to California and Asia starting April 10, 2013, said in a statement issued by his office that “we will have the unique opportunity to partner with Utah and get in front of California-based companies looking to expand their national footprint.”

In California, the two governors will be jointly hosting a luncheon and receptions. They have arranged their schedules to make room for joint stops in San Francisco, Silicon Valley and Orange County. After the California trip (April 10-12), Gov McDonnell will head for China (April 14-22) and Japan (April 23-25).

Virginia is promoting its agriculture and tourism industries during this three-leg trip, and the Governor is accompanied by senior officials from the Virginia Tourism Corporation, the Virginia Economic Development Partnership (VEDP) and the Virginia Department of Agriculture and Consumer Services, among others.

Iowa Hi-Tech Demonstration Fund Impact Study

Iowa Governor Terry E. Branstad released a study on the economic and fiscal impact of the state’s Demonstration Fund.

Iowa Innovation Corporation

Iowa Innovation Corporation (photo – iowainnovationcorporation.com)

This fund provides technical and financial assistance for small and medium scale companies in the IT, advanced manufacturing and biosciences industries to turn prototypes and conceptual stage ideas into commercial products.

The report, authored by Econosult Solutions Inc., was commissioned by the Iowa Economic Development Authority (IEDA) in partnership with the Iowa Innovation Corporation and Iowa Innovation Council.

Econosult collected data to determine how large the funded companies were now, and compared this data with historical data from the pre-investment stage. All companies funded in between 2007-12 were included in the study.

The Demonstration Fund handed out $13 million through 127 investments in between 2007-12. Since 13 firms received two awards from the fund, four others rejected it and nine have shut down, the total firms left to study were 101.

Out of the 101 companies still in operation, 79 responded to an Iowa Innovation Corporation survey. These 79 received a combined $8.7 million from the Demo Fund.

Highlights of the ROI (24 percent) for Iowa, as per the study:-

- The number of jobs has grown from a combined pre-investment headcount of 596 to 1,262 at present.

- Annual revenues have grown from a combined $86.60 million to a current total of $167.10 million.

- $2.1 million in combined tax revenues were generated in 2012 alone by the 79 survey respondents.

- Economic Impact on the state of $153 million, which created another 1,074 jobs and $49 million in earnings.

Chris Nelson, a board member of the Iowa Innovation Corporation and president and CEO of Kemin Industries, said that they quickly learned the real value of the fund to applicants was the mentoring they received, with the dollars as a close second.

Governor Branstad said it important for the state to have the tools required to support high-growth innovation-based companies succeed, and the Demo Fund was one of these tools. He added that the report quantifiably proves that the state is getting a return on its investment.

Read the full Iowa Demonstration Fund impact study – Download (pdf)

North Carolina to Create Public-Private Economic Development Partnership

During a visit to the Copland fabrics plant in Burlington, North Carolina Governor Pat McCrory announced that the state is undertaking plans to create a new non-profit “Partnership for Prosperity.”

NC Dept. of Commerce

NC Dept. of Commerce (photo – thrivenc.com)

This public-private entity will take over all of the economic development functions currently under the purview of the NC Department of Commerce.

New legislation will be introduced for restructuring the Dept. of Commerce to carve out a new public-private entity in charge of everything from small business development to FDI, import/export, entrepreneurship, and travel and tourism.

Governor McCrory said the plan would unleash the state’s economic potential with a new approach for retaining and recruiting business.

He said the state was losing projects to South Carolina, Tennessee and other states across the nation, and the new system would take all this into consideration.

N.C. Commerce Secretary Sharon Decker went the other way, talking about the importance of local level engagement at the city and county level. Both Decker and Gov. McCrory said the restructuring would ensure these local stakeholders would be integrated under the umbrella of the new public-private partnership.

Rep. Tom Murry said the state’s current approach to economic development lacked focus, and involved duplication of efforts by multiple agencies and wasted state resources. Decker had said last month that some existing regional partnerships may be eliminated as part of the impending restructuring.

Decker added that the state needs to move fast on this proposal, especially with regards to job recruitment. The legislation required will be introduced this week, and should be approved and signed into law by the end of the year.

The plan apparently is to get the private sector more involved, and reduce the amount of state dollars being used up by the North Carolina Dept. of Commerce and other non-profits for economic development projects.

The details, including the Partnership for Prosperity budget and organizational structure, will be developed over the next 45 days, along with a clear timeline for implementation of the restructuring.

Bill Elmore, vice chairman of Coca-Cola Bottling Co. Consolidated, will be heading up this review process that will come up with a clear plan for the new public-private partnership.

Commercial Jet Announces $12M Dothan Facility Despite FAA Closure

State and local officials came together in Dothan, Alabama to make an announcement about Commercial Jet’s $12 million investment to open a facility at Dothan Regional Airport.

Commercial Jet

Commercial Jet (photo – commercialjet.com)

Commercial Jet will be taking over the old Pemco facility at the airport, and will create hundreds of new jobs.

With this new 400,000-square-foot facility, the Miami, Florida-based company will be able to triple its capacity to provide aircraft repair and maintenance (MRO) services, along with freighter conversions.

John Schildroth, vice president and general manager for the Dothan facility, said they were already receiving a steady flow of new orders to be undertaken at the new facility, and expected to begin operations as early as May.

They will be hiring hundreds of trained aircraft maintenance technicians over the next few years.

This particular project must seem like an especially sweet win for Dothan, which had been on the ropes after Pemco declared bankruptcy and shut down their aircraft refurbishment facility which had been operational at the airport for 50 years.

To make matters worse, the FAA decided to shut down the Dothan control tower as part of the austerity measures triggered by the sequestration.

State and local officials had started talking to Commercial Jet immediately after Pemco shut down the facility and laid off 230 employees. Commercial Jet has been provided with an incentive package worth millions of dollars, which includes renovation of the facility to make it more suitable for Commercial Jet.

The Dothan Houston County Airport Authority is handling the construction, which will be completed in stages until Oct.

AL Governor Robert Bentley, who had come down to Dothan for the announcement, said the state was proud to have played a key role in creating hundreds of new jobs for the city and the Wiregrass area.

This announcement was originally scheduled to be announced a month or so before, but was delayed because Commercial Jet was worried about the impact of the FAA’s closure of the control tower.

As it turns out, the bad timing may actually have been a blessing in disguise. With Commercial Jet’s decision hanging in the balance, Dothan decided to take over the control tower after the FAA turns out the lights on May 5, 2013.

Dothan will now have to find a private contractor to operate the control tower, which is easier said than done with $300,000 to $400,000 in annual labor costs.

But if they succeed, it will be an impressive feat and a triple win for the city and Alabama – landing the Commercial Jet project, replacing the lost Pemco jobs, and keeping the control tower open with the help of the rent and new revenues generated by the new facility.

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