JoDaviess

Carroll

Whiteside

Green Rock

Stephenson

Ogle

Lee

Jones

Cedar

Jackson

Clinton

DubuqueDelawareWinnebago Boone

HenryBureau

Scott

Rock Island

Lafayette

Grant

Iowa

Business Trends in Northwest Illinois

Norman Walzer and Brian HargerPresented to

T‐CEDA Board MeetingThomson City Hall

December 19, 2013

Background

• The TCEDA region has had nearly four decades of demographic and economic transformation characterized by a stable but aging population and a shift away from agriculture and manufacturing as the primary sources of job and income opportunities and growth of the services sector.

• The last recession officially ended in June 2009 but, employment in the TCEDA region has not returned to pre‐2008 levels and continues to decline.

• This presentation shows recent trends in economy of the TCEDA region (Carroll, JoDaviess and part of Whiteside counties). 

• It also examines opportunities for future growth and what could be done to take advantage of them.

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-1.2% -1.0%

1.0%

-4.3%

-7.3%

4.2%

6.5%

-0.9%

-4.6%

-2.0%-3.1%

-15.2%

1.3%

16.7%

-20%

-10%

0%

10%

20%

Under 18 Years 18 to 24 Years 25 to 34 Years 35 to 44 Years 45 to 54 Years 55 to 64 Years 65 Years & Over

Perc

ent C

hang

e

Percent Change by Age GroupTCEDA Region*

2000-2013

2013-2020

Population TrendsTCEDA Region*

*The TCEDA Region consists of Carroll, JoDaviess and Whiteside counties in Illinois.Source: Woods and Poole Economics, Inc., 2013.

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Economic TrendsPer Capita Gross Domestic Product

Being mostly rural, the TCEDA region has a lower GDP than Illinois as a whole.

Per capita GDP and the rate of growth are average for non‐metro counties in Illinois.

In the past four decades increasing urbanization resulted in a widening disparity in economic growth between cities, suburbs and rural areas.

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*The TCEDA Region consists of Carroll, JoDaviess and Whiteside counties in Illinois.Source: Woods and Poole Economics, Inc., 2013.

$18,640

$29,855

$16,992

$30,397

$23,874

$50,320

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

1970 1980 1990 2000 2010 2013 2020

PerCap

ita GDP Co

nstant (2

005) Dollars

Per Capita GDP (1970-2020)TCEDA Region*

TCEDA Region

Non-Metro Counties

State of Illinois

Economic CompositionGross Domestic Product by Industry, 2011

Manufacturing is about 12% of employment in the region but generates 21% of Regional GDP.

The Finance, Insurance and Real Estate sector is a major contributor, but represents only 7% of employment in the TCEDA Region.

Although Agriculture represents only 7.5% GDP, it supports other sectors such as manufacturing (farm machinery, food processing), wholesale trade and transportation.

AgricultureMining

& Related7.5%

Construction4.2%

Manufacturing21.0%

Wholesale & Retail Trade

13.0%

Transportation Information, &

Utilities6.9%

Finance, Insurance & Real Estate

19.3%

ProfessionalScientific

& Technical Services

4.4%

EducationHealthcare

& Social Services5.8%

Other Services7.5%

Public Administration

10.4%

Gross Regional Product by Industry, 2011TCEDA Region

Source: IMPLAN, 2011.5

Total Regional GDP$3.24 Billion

Business VitalityNorthwest Illinois

The surge in new business starts in 2010 and the drop in the following years reflects a national trend.

Not clear is whether this was caused by an upturn in business activity following the end of the recession or was in response to some anticipated change in tax or regulatory policies.

Nevertheless, business starts as a proportion of total business firms in the TCEDA region have lagged behind state and national averages. 

6

*The TCEDA Region includes Carroll, JoDaviess and Whiteside counties in Illinois.Source: Woods and Poole Economics, Inc., 2013.

371

642

365

291

470

857

435

698

525

570

1,314

277

399

6,172

6,161

6,399

6,465

6,419

6,551

7,162

7,433

7,946 7,495

7,764

8,086 7,594

0

2,000

4,000

6,000

8,000

10,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Num

ber o

f Est

ablis

hmen

ts

New Business StartsTCEDA Region*

Total Establishments

New Startups Establishments

Area Name Business Starts Business Start Rate (% 2004 Firms)

Business Starts per 1,000 Population

Carroll, Jo Daviess, and Whiteside Counties 177 3.5% .45

Illinois Non‐metro Counties 2,947 4.0 1.74

Iowa Non‐metro Counties 3,783 4.6 2.81

Wisconsin Non‐metro Counties 1,605 6.1 3.12

Comparison of Business Starts2004‐2007

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Source: The Brandow Company, BizMiner, 2010.

7.8%JoDaviess

7.2%

8.9%Carroll

7.5%

9.3%Whiteside

7.2%

6.4%Green

2.3%

8.4%Rock1.7%

9.4%Stephenson

9.4%

10.8%Ogle9.2%

9.3%Lee8.2%

5.7%Jones2.4%

4.5%Cedar

1.7%

5.7%Jackson

2.5%

6.1%Clinton

6.1%

4.8%Dubuque

4.0%

4.4%Delaware

2.9%11.4%

Winnebago0.1%

11.6%Boone

2.5%

7.4%Henry0.2%

9.5%Bureau

5.7%

6.4%Scott2.1%

7.8%Rock Island

1.3%

5.6%Lafayette

1.6%

5.8%Grant

0.7%

6.2%Iowa1.6%

Employment TrendsNorthwest Illinois

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LEGEND

Illinois = 8.9%0.7%

Iowa = 5.2%0.6%

Wisconsin = 6.9%0.4%

U.S. = 8.1%2.9%

Source: U.S. Bureau of Labor Statistics.

Top Figure: 2012 Unemployment Rate

Bottom Figure:Percent Change in

Non-Farm EmploymentJuly, 2009 – August, 2013

Lower unemployment rates in the past 3 years mainly reflect declining labor force participation rates. 

Non‐farm employment  has continued to fall in most of the region since the end of the recession. 

Employment TrendsEmployment by Industry

Manufacturing, a major contributor to GDP, has continued to decline as a major employer. 

This decline reflects global competition, corporate mergers and acquisitions, and labor saving technologies (e.g. robotics).

Local factors, such as business costs, aging infrastructure, and labor supply also play a role.

Service sector jobs have replaced many  jobs lost in manufacturing, but pay less.

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10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

1970 1980 1990 2000 2010 2013 2020

Perc

ent o

f Tot

al E

mpl

oym

ent

Employment by Major Industry Sector TCEDA Region

Manufacturing

Services

Government

Source: Woods & Poole Economics, Inc., 2013.

Services33.2%

Manufacturing10.9%

Government13.7%

Income Trends, 2013Earning by Industry (in constant dollars)

Manufacturing jobs have higher employee  compensation than other sectors.

Despite a steep decline in employment, earnings per job in manufacturing are still more than 1.5 times the regional average for all sectors.

Although the service sector employs more people, earnings per job are 29% below the regional average and the rate of earnings growth has been relatively weak.

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$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

1970 1980 1990 2000 2010 2013 2020

Earn

ings

per

Em

ploy

ee

Earnings per Employee by Industry Sector TCEDA Region

Manufacturing

Services

Government

Government$52,738

Services$25,786

Manufacturing$61,401

Source: Woods & Poole Economics, Inc., 2013.Note: Figures are in constant (2005) dollars.

Opportunities for GrowthTCEDA Region

• Proximity to urban growth centers (e.g. Dubuque, Quad‐Cities & Chicago)

• Former Savanna Army Depot with additional investments in infrastructure

• Federal prison facility in Thomson offers business opportunities for suppliers and increased housing and retail markets

• “Re‐shoring” of manufacturing activities offers job creation potential

• Local food movement increases markets for agri‐business firms 

• Proximity to Iowa and Wisconsin provides access to other markets 

• Looming demand for workers to replace retiring “Baby Boomers” will be the primary source of job openings in the next decade 

• Higher level of training and skills will be required to work with complex technologies (robotics, 3D printing and nano‐manufacturing). 

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Where Do We Go From Here?

• Promote and support business startups and expand 2nd stage  companies.

• Focus on more skilled and high‐paying job opportunities.

• Expand training opportunities to replace retiring workers (“Boomers”).

• Meet the demand for healthcare and other services for the elderly (especially housing, travel and recreation).

• Promote and market quality of life and regional assets.

• Use quality jobs to attract and retain residents (especially youth).

• Leverage growth opportunities in Tri‐State area (e.g. IT in Dubuque, farm machinery mfg. and food processing in Clinton and Quad Cities, aerospace, construction machinery mfg. and auto mfg. in Rockford & Peoria).

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For More Information, Contact

Brian Harger, M.S., EDFPResearch Associate

Center for Governmental StudiesNorthern Illinois University

DeKalb, Illinois

E‐mail: bharger@niu.eduLinkedIn: http://www.linkedin.com/pub/brian‐harger/2/a47/705

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