TARGETED ECONOMIC DEVELOPMENT: TOOLS AND TECHNIQUES Mike D. Woods Oklahoma State University February...

TARGETED ECONOMIC DEVELOPMENT:

TOOLS AND TECHNIQUES

Mike D. Woods

Oklahoma State University

February 2003

Lincoln CountyLincoln County Targeted Economic Targeted Economic

DevelopmentDevelopmentResultsResults

Table of Contents

• Introduction– Definitions– Applications

• Study Area• Results• Weighting System• Lincoln County Response• Site Selection Factors• State Target List• How to Use the TED List

Introduction

•Definitions

•Applications

What is Targeted Economic Development (TED)?

• A systemized approach to analyzing a community or regional economy to identify potential options for creation, attraction, retention, or expansion of job/income opportunities and economic growth.

• Analytical tools and community planning tools are utilized to enhance community decision making and incorporate local desires and ideas.

Targeted Economic Development (TED) Includes

Several Methodologies Including:

• Target Industry Analysis

• Cluster Analysis

• Community Assessment and Planning

What is Target Industry Analysis?

• A method of local community economic analysis which produces a list of business sectors which have a moderate-to-strong likelihood of containing companies that might be interested in expanding and/or locating in the community under study.

Source: Doescher

Target Industry Analysis Techniques

•Econometrics (probability)Leatherman-KansasBarkley-South Carolina

•Location QuotientsBradshaw-California

•Input-OutputLamie-VirginiaJohnson-MissouriHolland-USDA

What is Cluster Analysis?

• Industrial clusters are defined as interconnected sets of firms in a region that have national or global competitive advantage because they share common infrastructure including university research, labor market, specialized suppliers, and collective marketing.

Source: Bradshaw, 2000

What is Community Assessment and Planning?

• Community assessment and planning is an organized process to follow through community assessment, development of a strategic plan, community involvement, implementation of the plan, and evaluation of results.

(2)Engage the

Community and Legitimize

the Process

(1)Begin/ Continue

the Process(10)

Create an OngoingProcess

(8)Evaluatethe Effort

(3)Form an

Organized Structure

(6)Seek CommunityFeedback and Commitment

(5)Develop a

Strategic Plan

(9)CelebrateSuccess

(4)Conduct

CommunityAssessment(s)*

(7)Implementthe Plan

Community Development

* One tool to accomplish this

is Targeted Economic

Development

How is Targeted Economic Development (TED) used?

• Target industry analysis can be used in both business recruitment AND retention or expansion of existing business.

• Success depends on the way your community uses this information in their economic development efforts.

Households

Basic Industry

LocalStores

Labo

rG

oods & Services

Goods & Services

$

$

$

$ $

$

Your Communit

y

Your Communit

y

Study Area

Lincoln – Pottawatomie County Study Area

Lincoln County Population

27,500

28,000

28,500

29,000

29,500

30,000

30,500

31,000

31,500

32,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Source: ODOC

Lincoln County Aggregated Employment

Source: IMPLAN

Agriculture15.67%

Mining1.73%

Construction8.76%

Manufacturing7.97%

TCPU6.30%

Trade20.06%

FIRE7.57%

Services18.73%

Government12.49%

Other0.71%

Lincoln County Top 10 Employers

Hay and Pasture19%

Motor Freight Transport and Warehousing

13%

State & Local Government -

Education12%

Insurance Agents and

Brokers12%

Eating & Drinking

11%

Ranch Fed Cattle

7%

Fluid Milk7%

Wholesale Trade7%

Food Stores6%

Miscellaneous Retail6%

There are 12,037 jobs in Lincoln County. The top 10 employers account for 5,497 jobs, 45.7% of all jobs in the region. All other employers

account for 6,540 jobs, 54.3% of all jobs.

Lincoln County Per Capita Personal Income

02,0004,0006,0008,000

10,00012,00014,00016,00018,00020,000

Year

$

Source: ODOC

Results

Targeted Strategies for Economic Development

• Export Enhancement

• Import Substitution

Export Enhancement

Households

Basic Industry

LocalStores

Labo

r

Goods & Services

Goods & Services

$

$

$

ProductsProducts

$

Your Community

Your Community

$ $Retail Goods Retail Goods

& Services& Services

Export Enhancement is expanding the volume of goods and services

your region sells to the rest of the world.

Export Enhancement is expanding the volume of goods and services

your region sells to the rest of the world.

Export Enhancement

• Community Exports– Domestic Exports – Foreign Exports.

• Export base includes all goods and services that are sold to businesses or persons outside the region.

Lincoln – Pottawatomie County Top 10 Exports

IMPLAN SectorExport Value,

$MRank

264 Copper Rolling and Drawing 160.60 1

220 Miscellaneous Plastics Products 156.42 2

065 Fluid Milk 110.16 3

072 Flour and Other Grain Mill Products 59.69 4

038 Natural Gas & Crude Petroleum 45.69 5

454 Eating & Drinking 44.83 6

124 Apparel Made From Purchased Materials 31.66 7

230 Glass and Glass Products – Exc Containers 30.21 8

460 Insurance Agents and Brokers 29.91 9

378 Electronic Components – N.E.C. 28.66 10

Import Substitution

Import Substitution is replacing items

purchased outside the

region with local production

Import Substitution is replacing items

purchased outside the

region with local production

Households

Basic Industry

LocalStores

Labo

r

Goods & Services

Goods & Services

$

$

$ Your Community

Your Community

$ Supplies forSupplies for

Local BusinessesLocal Businesses

InputsInputs

$$

Family GoodsFamily Goods& Services& Services

Import Substitution

• Commodities produced in one region often use goods and services (inputs) imported from outside the region.

• “Import Substitution” refers to replacing imported goods and services with goods and services produced in the local community.

Lincoln – Pottawatomie County Top 10 Imports

IMPLAN SectorImport Value,

$MRank

447 Wholesale Trade 123.05 1

001 Dairy Farm Products 59.95 2

260 Primary Copper 55.01 3

459 Insurance Carriers 48.46 4

492 Hospitals 38.28 5

441 Communications – Except Radio and TV 36.42 6

490 Doctors and Dentists 34.03 7

384 Motor Vehicles 33.13 8

220 Miscellaneous Plastics Products 30.56 9

191 Plastic Materials and Resins 30.00 10

Weighting System

Evaluation Criterion for Export Industries

• What is important to your community?– Total Employment– Total Employee Compensation– Direct Compensation per Employee– Employment Growth

Total Employment

• Total number of people employed directly by the initial industry, as well as those employed indirectly due to the multiplier effect.

Total Employee Compensation

• Total payroll for all persons employed directly by the initial industry, as well as those employed indirectly due to the multiplier effect.

Direct Compensation per Employee

• Average wage paid to each direct employee.

Employment Growth

• Percentage change in the number of people employed in the United States from 1996 to 1997.

Lincoln – Pottawatomie Community Exports with Equal

WeightsIMPLAN

Exports

$MRank by Total Employment

Rank by Total Employee

Compensation

Rank by Direct Compensation per Employee

Rank by Employment

Growth

Cumulative Weighted

Rank

220 Miscellaneous Plastics Products

156.42 3 1 7 23 34 1

435 Motor Freight Transportation and Warehousing

21.52 37 2

264 Copper Rolling and Drawing

160.60 38 3

352 Fluid Power Pumps & Motors

16.37 48 4

447 Wholesale Trade 5.25 54 5

378 Electronic Components – N.E.C.

28.66 61 6

474 Personnel Supply Services 8.36 64 7

056 Maintenance and Repair Other Facilities

13.05 65 8

454 Eating & Drinking 44.83 67 9

230 Glass and Glass Products- Exc Containers

30.21 71 10

Weighting SystemAssign each criterion a value based on the following scale. You may use each value more than once.

0 = Unimportant- A criterion that the community feels has no value to their development objectives.

1 = Some Importance- A criterion that the community feels will contribute only a small amount to achieving the community objectives.

2 = Moderate Importance- Experience and judgment slightly favor this criterion over the others.

3 = Essential or Strong Importance- Experience and judgment strongly favor this criterion over the others.

Change Weighting

Total Employment .24

Total Employee Compensation .32

Direct Employee Compensation per Employee

.30

Employment Growth Rate .14

Lincoln–Pottawatomie Community Exports with Community Weights

IMPLANExports

$M

Rank by Total Employment

Weight=.24

Rank by Total Employee

Compensation

Weight=.32

Rank by Direct Compensation per Employee

Weight=.30

Rank by Employment

Growth

Weight=.14

Cumulative Weighted

Rank


156.42 0.727 0.318 2.121 3.220 6.4 1

264 Copper Rolling and Drawing 160.60 7.7 2

352 Fluid Power Pumps & Motors 16.37 9.1 3

435 Motor Freight Transportation and Warehousing

21.52 9.9 4

447 Wholesale Trade 5.25 12.7 5

378 Electronic Components – N.E.C.

28.66 15.2 6

523 State & Local Government – Non Education

25.60 15.6 7

454 Eating & Drinking 44.83 15.9 8

230 Glass and Glass Products - Exc Containers

30.21 16.0 9

056 Maintenance and Other Repair Shops

13.05 16.4 10

Evaluation Criterion for Import Industries

• What is important to your community?– Total Employment– Total Employee Compensation– Direct Compensation per Employee– Employment Growth

Lincoln – Pottawatomie Community Imports with Equal

WeightsIMPLAN

Imports, $M

Rank for Total Employment

Rank for Total Employee

Compensation

Rank for Direct Compensation per Employee

Rank for Employment

Growth

Cumulative Weighted

Rank


30.56 3 2 8 19 32 1

264 Copper Rolling and Drawing

15.94 33 2

441 Communications – Except Radio and TV

36.42 40 3

490 Doctors and Dentists 34.03 40 4

447 Wholesale Trade 123.05 49 5

522 State & Local Government – Education

21.45 54 6

454 Eating & Drinking 7.21 55 7

455 Miscellaneous Retail 10.23 58 8

475 Computer and Data Processing Services

23.70 59 9

492 Hospitals 38.28 62 10

Lincoln County Response to Community

Preparedness Checklist

Lincoln County Response Diversity and Participation

YE

S

NO

Bla

nk Does Lincoln County have…?

7 1 11. An existing local organization for promoting development efforts.

7 2 0

2. Widespread community participation in the development effort representing social/economic segments of the population.

7 1 1 3. Public and private sector cooperation

Lincoln County Response Resource Availability

YE

S

NO

Bla


7 1 14. Adequate resources to support some level of local activity.

5 3 15. Willingness to invest those resources in local plants.

6 3 0

6. An inventory of financing sources available from local, state, and federal agencies as well as the private sector.

Lincoln County Response Networks and Information

YE

S

NO

Bla


6 1 2

7. Good coordination among local agencies and organizations promoting community/economic development.

9 0 08. Working relationships with state and federal sources of assistance.

8 1 09. Support and involvement of the local media.

Lincoln County Response Public Infrastructure

YE

S

NO

Bla


7 1 1

10. Adequate public infrastructure to support business activities and provide for local quality of life.

8 1 0

11. Community services and facilities to support the needs of existing and potential residents.

5 4 0

12. A capital improvements plan to inventory existing public infrastructure and anticipate future needs.

Lincoln County Response Human Resources

YE

S

NO

Bla


7 1 1 13. A well-trained workforce.

8 1 014. Capabilities to provide training and skills when needed.

9 0 0

15. Local leadership with the vision and desire to build a community plan for the future.

Site Selection Factors based on a National

Survey

Combined ratings of 1999 site selection factors are percentages

and are all the total of “very important” and “important” ratings

of the Area Development site selection survey.

Combined Ratings of 1999 Site Selection Factors

Availability of skilled labor 95.8

Highway accessibility 94.6

Labor costs 93.8

State and local incentives 90.3

Occupancy or construction costs 87.5

Tax exemptions 85.9

Energy availability and costs 85.2

Availability of telecommunications services 85.1

Source: Area Development, 1999


Availability of land 85.0

Cost of land 80.9

Low union profile 79.5

Environmental regulations 79.0

Availability of unskilled labor 77.3

Nearness to major markets 75.6

Right-to-work states 67.7

Availability of long-term financing 64.2



Worker/technical programs 63.7

Nearness to suppliers 59.3

Raw materials availability 58.7

Accessibility to major airport 57.2

Near technical university 31.1

Railroad services 31.0

Waterway or ocean port accessibility 13.2


Combined Ratings of 1999 Quality-of-Life Factors

Low crime rate 79.9

Ratings of public schools 72.4

Health facilities 70.4

Housing availability 70.1

Housing costs 69.1


Combined Ratings of 1999 Quality-of-Life Factors

Recreational opportunities57.6

Climate58.8

Cultural opportunities52.5

Colleges and universities in area 52.4


Oklahoma State Target List

State Targeted Industries

• Aerospace• Motor Vehicles

Parts/Accessories• Business Services

(Finance, Insurance, Dot.Com/Internet)

• Communications/Telecommunications (Fixed/Wireless)

• Electronics/components and related high tech industry

• Food Processing• Plastics and Rubber• Distribution &

Warehousing• General Manufacturing• Health

Source: ODOC, 2000

How to Use the TED List

How to use the Targeted Economic Development List

1) Identify local organization and local contact person.

2) Complete “Community Preparedness Checklist” and confer with community development professionals from OCES.

3) Review targeted industry list and confirm region of study.

4) Review targeted list of industries. Do they make sense? Do you have questions?


5) Evaluation criteria include: jobs, wages, wage rates, and employment growth rates. How do you rate these criteria?

6) Begin to identify the top 10 industries to focus on for recruitment efforts.

7) Begin to identify the top 10 industries on focus on for retention/expansion efforts.

8) Consider in-depth analysis of these industries. Utilize the U.S. Industrial Outlook and others.


9) Build a recruitment program including:– Target List– Marketing Material– Mail Campaign– Personal Contracts


10) Build a retention/expansion program including:– Visitation– Appreciation Efforts– Expansion Needs– Local Support


11) Remember the key role of your allies and resources!

12) Build your strategy for development with CARE. Balance optimism with realism and insure you have the resources to accomplish the goals you set.

Thank you!

Lincoln CountyLincoln County Targeted Economic Targeted Economic

DevelopmentDevelopmentResultsResults

Tuesday, April 18, 2023

TARGETED ECONOMIC DEVELOPMENT: TOOLS AND TECHNIQUES Mike D. Woods Oklahoma State University February...

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