===================================================================== Center for Community Economic Development University of Wisconsin-Extension Community Economics Newsletter No. 300 October 2001 ===================================================================== A Newsletter from the Center for Community Economic Development; Community,Natural Resource and Economic Development Programs, and University of Wisconsin-Extension, Cooperative Extension Service ===================================================================== ATTRACT NEW BASIC EMPLOYERS by Glen C. Pulver* On this Community Economics, the previous two, and the following two, we are repeating the community economics numbers 112 through 116. We take this unprecedented step because as many of you start to wrestle with the economic development portion of smart growth/comprehensive planning it strikes us that what the late Glen Pulver said has relevance in terms of economic development planning. The attraction of new basic employers to a community will add employment and income directly. Through the multiplier effect, other jobs and income may also be added. Basic employers can include manufacturers, non-manufacturers such as tourist attractions, insurance headquarters, computer service bureaus, warehouses, and non-local government. Care must be taken not to overestimate the potential employment and income effect of new employers. Many of the jobs are apt to be taken by new immigrants or people who live in neighboring communities. Multipliers are seldom as high as those hoped for. Nonetheless, community leaders have a number of action opportunities: 1) New industries might be encouraged to come to a community by the development of local industrial sites and public services, and the provision of specific labor availability information. The ability to "set-up-shop" and start operating in a hurry is vital to all businesses once they have made a location decision. The availability of well prepared sites and facilities speed up the process. The community on the other hand, has to weigh the cost of the investment against the likelihood of attracting a new industry. 2) The development of community and regional facilities (e.g., transportation, recreation, communication, business services) necessary to attract new employers also benefits existing businesses and prospective entrepreneurs. Community attributes are moving even higher on the list of factors business people judge critical in location. Natural resource and market access are becoming relatively less important. Those conditions which make a community a nice place in which to live are growing in importance. Generally they are strongly influenced by public or quasi public governments. 3) Community assistance in the provision of capital resources is sometimes helpful in attracting new business. Reduced interest rates through revenue bonds and other incentives have become widespread. Large firms often look for this type of assistance as a way of reducing the cost of construction of new facilities. Give-aways or temporary tax reductions seldom play a significant role in location. 4) Targeted searches for firms which might be interested in developing a branch operation in a community are admittedly a "long-shot." Nonetheless, the process of becoming well prepared to seek out prospective employers will also likely help those businesses already in the community. The most desired types of employers can be identified through careful study. 5) Community leaders can also identify specific public programs, projects, offices, facilities, and/or other services which could be located in their area and help organize politically to secure them. State and national government are significant employers. Programs and facilities are constantly changing. They can represent a real growth opportunity. 6) Collective action through formal organizations such as industrial development corporations is vital to the success of attraction efforts. Local government involvement in these efforts is important, but the flexibility which can be provided by non-governmental organizations is often useful. For instance, an industrial development corporation may be able to take options on land more easily, or move more swiftly in building streets in an industrial park than the local government. In any case, it is important to remember communities must be careful about giving something to attract a firm that they would not want to give existing businesses. *There are five general strategies by which employment and income can be improved: (1) improving the efficiency of existing firms; (2) improving the ability to capture dollars; (3) attracting new basic employers; (4) encouraging business formation; and (5) increasing aids received from broader governments. This issue of Community Economics is one of five which focus on ways communities can improve their job and income prospects. *Professor of Agricultural Economics, University of Wisconsin-Madison and Community Development Specialist, University of Wisconsin-Extension. Ron Shaffer Community Development Economist Issued in furtherance of Cooperative Extension work, Acts of May 8, and June 30, 1914, in cooperation with the U.S. Department of Agriculture. Carl O‘Connor, Cooperative Extension, University of Wisconsin-Extension. University of Wisconsin-Extension, U.S. Department of Agriculture and Wisconsin counties cooperating. UW-Extension provides equal opportunities in employment and programming, including Title IX and ADA.