Economic development is driven by desirability

Being an attractive community is the first step in attracting new business. It is important to enhance and promote your attributes.

Many people wonder what economic development is. Most commonly, attraction, retention and expansion are economic development functions in the classical sense.  Every economic development agency that hunts the big game will tell you that attraction is paramount in their everyday actions. Locally-based economic development groups will focus on retaining their existing businesses. And the more progressive economic development departments or agencies will try to enable expansion of firms with potential for new growth.

These sentiments are based on utilizing the physical and natural resources of a community, along with adequate human and monetary availability. Before industrialization, locations were chosen for ease of transportation of raw materials or to be near markets. That is why ports, rivers and the east coast rose to significance. With the advent of the rail system, manufacturing could take place closer to the raw materials to reduce weight before moving product to market. Pittsburg is a good example when you think of their coal, iron ore. Detroit, likewise, brought raw materials via the great lakes for both weight reduction and assembly. Road development after the turn of the last century, while still primitive, did offer alternative delivery routes.

Henry Ford was able to attract labor to his manufacturing facility by offering $5 per day, which was double the prevailing wage at the time. This served as a stimulus that led to folks migrating from surrounding rural communities and from the South. Manufactures recognizing the opportunities present in the Detroit area soon followed as well. As manufacturing techniques improved, so did the skill set necessary for the workers. This engineering and management of labor, made possible by creative thinking and the educational system, enhanced productivity.

In the mid to late 70s, improved road systems, reduced need for skilled workers and generous State tax incentives made it possible for southern economic development agencies to recruit expanding and new manufacturing facilities to their areas. The competitive advantages that cities like Detroit once had were no longer enough to promote expansion of local companies and, to some extent, weren’t even enough to retain existing companies.

Every community, like business itself, must continually reinvent itself and ask the question, “Just what is our competitive advantage?” Physical location, while static in nature, can be redeveloped with built infrastructure to be more attractive to business and their workers. Perhaps heavy manufacturing is no longer the prime driver of economic activity. A river that once carried away waste can become a recreational asset. Kalamazoo, Grand Rapids and South Bend are working on becoming great examples.

Becoming a true partner in regional economic development is essential for communities as they work to improve their economy. Communities that are targeted by national search firms have a much larger focus area than just the local community and search by region. A national search firm’s bulls-eye includes what would be a comfortable commuting distance for available talent, as well cultural amenities.

Michigan State University Extension educators work with communities to create a desirable location through their placemaking programs.

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