As published in the April 1, 2005 issue of Toledo Business Journal.

 

 

Reducing inter-region
jobs battles

Private sector businesses in Philadelphia playing critical leadership role

 

A battle is currently under way between the City of Toledo and Perrysburg to win the headquarters of Fortune 500 company Owens-Illinois. The City of Toledo and Lucas County announced plans to provide a $9 million incentive package to keep Owens-Illinois from moving to Levis Park in Perrysburg. A counteroffer was made by Perrysburg officials estimated to be worth $6 million to lure the firm to the Wood County site. Behind-the-scenes efforts are continuing and the final incentive packages are still being developed.

Will other area companies seek similar incentives to remain in their current locations? Can the region afford to use its limited economic development resources for the purpose of retaining existing businesses? What impact does this use of resources have on efforts and funds available for attracting new companies from outside the area? What role can leadership from the private sector play in such issues?

There are major changes taking place in the Toledo area involving private sector leadership of economic development. Area business leaders are moving quickly to raise private funds for the Regional Growth Partnership (RGP). There is an expectation that the private sector will play a much stronger leadership role in future economic development efforts in Toledo and Lucas County and around the region. There is an opportunity to change the way economic development is organized and performed in the region. For the past two decades and longer, public sector leaders have controlled the majority of economic development funds in Toledo and Lucas County. And for the past two decades and longer, battles have taken place between cities and counties within the region competing for existing businesses and jobs that generate needed tax revenues.

Communities around the country are facing this issue of inter-region competition for jobs. They are faced with the issue of using scarce resources to keep existing jobs at the expense of efforts to attract new businesses with new jobs.

One city, Philadelphia, and the surrounding region, is currently addressing this difficult issue. This issue is being addressed as a result of strong leadership from the private sector. This decades old practice involving inter-region jobs competition has been cited by leaders of the Greater Philadelphia Chamber of Commerce as one of the major factors behind the region’s growth stagnation.

Efforts to create new jobs in greater Philadelphia provide a glimpse of a region that is experiencing significant success in organizing the way it performs economic development.

During 2003 and 2004, the greater Philadelphia area was involved in organizing a new regional job-creation program. This program is bringing public and private sector leaders together throughout the region surrounding Philadelphia.

In the past, economic development efforts in the greater Philadelphia area relied in part on a fragmented approach under the leadership and control of various local and county government agencies.

The new program is being organized by the CEO Council for Growth and its parent, the Greater Philadelphia Chamber of Commerce. A $4 million annual budget has been established for this economic development effort. Over 88 percent of the $16 million needed to fund the first four years has already been pledged. Pledges of $14.1 million have been received and over $4 million has been collected by this campaign that started a little over one year ago.

In an interview with Toledo Business Journal, Karen Hanson, senior vice president of regional growth strategies, CEO Council for Growth, shared major issues about the economic development efforts in the greater Philadelphia area. Hanson explained that the program is still relatively new, staff is still being recruited, and key elements of the strategy are still being developed. “We are currently conducting a national search for a president. We want one of the best in the country. We expect this individual to be on board by mid-year or sooner,” Hanson stated.

Perhaps the most important element of the program has been the efforts to obtain the active involvement of leaders from the private sector. Hanson explained that quite a few of the region’s CEOs and other private sector leaders have become actively involved in the growth efforts. The business community is now leading economic development in the greater Philadelphia area, with government leaders providing critical support and playing the role of a partner.

“Our goal is to put business out front, where it belongs, in the effort to attract business and create jobs,” stated Bill Sasso, past chairman of the board of directors of the Greater Philadelphia Chamber of Commerce in an interview with the Philadelphia Inquirer.

“Business leaders who are making expansion or relocation plans want to talk to their peers, not government bureaucrats,” stated Sasso.

Hanson also discussed the importance of a regional approach to economic development. “When you are competing globally, it is necessary to do so with a regional approach. This allows you to take advantage of the full strength and resources of a broader geographic entity. It provides a much more diversified product to offer to business customers,” explained Hanson.

Greater Philadelphia’s regional economic development program involves 11 counties in three states. Five counties in southeast Pennsylvania, five in south New Jersey, and one county in Delaware make up the region. The current president of the Greater Philadelphia Chamber of Commerce is Mark Schweiker, former Pennsylvania Governor.

Cluster Approach

During the first year of the program, several industries have been identified that are already strong in the region and have future growth opportunities. These industries include biotechnology, healthcare, pharmaceuticals, and information technology. The CEO Council is implementing a cluster strategy approach where resources will be targeted and coordinated in an attempt to significantly grow the life sciences and other selected industries in the region. The Philadelphia area has a strong base of pharmaceutical and other life sciences companies.

Cooperation instead of rivalry

One of the objectives of this program is to avoid putting energy and resources into competing for jobs across state and county lines within the region.

According to the Greater Philadelphia Chamber of Commerce, one element of the new program involves a study that was conducted to examine the interdependence of the economies in this 11 county region. The Journey-to-Work Study was commissioned by the CEO Council for Growth to explore regional interconnectedness by examining the commuting patterns of workers in the greater Philadelphia tri-state region of Pennsylvania, New Jersey, and Delaware. The study tested a CEO Council hypothesis that the region has long been operating as an integrated area which, in theory, the council believes should drive regional coordination instead of competition. The study was intended to gauge the economic impact of people traveling to work across county lines and the value of wage flows.

The results of this analysis showed that intercounty and interstate wage flows across the 11-county area were substantial. Total wages for commuters within the region were over $100 billion in 2000. Intercounty wages were $32.5 billion and interstate wages (a component of intercounty wages) were $8.3 billion. The data shows that the region is economically integrated and counties and municipalities have been economically interdependent for at least a decade.

There is significant evidence that counties surrounding Toledo in northwest Ohio and southeast Michigan also have significant economic interdependence. There is also a belief in the private sector that significant additional opportunities exist for coordination and cooperation among the cities and counties in northwest Ohio and southeast Michigan.

Hanson discussed a number of efforts that have been initiated to get economic development personnel in each of the cities and counties to reduce competition within the region and to focus efforts and resources on bringing in new jobs from other areas.

At the beginning of this regional economic development program, the Governors from Pennsylvania, New Jersey, and Delaware came to a State of the Region event and pledged to work together to assist in reducing competition across state borders within the region.

The program has recently gotten the economic development directors from cities and counties within the region to begin to meet and work together along with personnel from the CEO Council for Growth.

Hanson explained: “There is still internal competition, but over time we will be successful in reducing it. The objective is to operate under a regional umbrella. There is so much momentum now that just didn’t exist before.”

An article in the Courier Post confirmed Hanson’s issue concerning the importance of cooperation across county lines within the region. The article summarized that in Philadelphia, the CEO Council for Growth has taken a strong position that cooperation instead of rivalry in the 11 county area is the only way the region can escape the lackluster growth it and, in particular, Philadelphia, has experienced in the past couple of decades.