State of the Industry 2012

, Jeffrey A. Finkle, CEcDPresident & CEO

International Economic Development Council (IEDC)

January 30, 2012

Methodology

Results of a 2012 online survey of our

members about 2011

Update on U.S Job Growth

Key Trends in ED

Survey Results

1. In comparison to 2010, how has your

organization's operating budget shifted?

3%9%

21%

42%

16%6% 4%

2011 Budget Shifts

2. Have you made the following changes in

your organization?

Increased Spending

23% 23% 21%20%

16%

2. Have you made the following changes in

your organization?

Decreased Spending

Laid

-off s

taff

Reduc

ed s

taff c

ompe

nsat

ion

or b

enefi

ts

Elim

inat

ed o

r re

duce

d pr

ogra

m s

pend

ing

Elim

inat

ed o

r re

duce

d ad

vert

isin

g sp

endi

ng

Elin

ated

or re

duce

d tr

avel

spe

ndin

g

12%17%

35% 35% 37%

We see improvements in 2011 over 2010

0.23 0.35

0.17 0.47

Col-umn1

2010

2011 Responses: Lack of access to capital/financing

47% Declines in real estate development

39% City/County/State budget cuts

38%

2010 Responses:City/County/State budget cuts

52%Lack of access to

capital/financing 51%Declines in real estate

development 41%

3. What THREE issues have posed the greatest challenges to your organization’s economic development

efforts in the past year?

Lack of skilled labor 28%

Inadequate Infrastructure 23%

Business closures/downsizing 23%

Lack of political support for ED 21%

Industry restructuring 20%

Complicated permit process/regulations

15%

Taxes 10%

Other challenges:

Increased Decreased Stayed About the Same

Relocations 23% 45% 55%

Expansions 47% 17% 38%

Visits 32% 24% 38%

Prospects 38% 24% 35%

Real Estate Projects 20% 39% 34%

Infrastructure Projects 29% 21% 43%

Redevelopment Projects

20% 20% 44%

4. In 2011, has your organization seen an

increase in the following types of projects?

Prospects decreased by 24% in 2011, compared

to the decrease of 35% in 2010 Expansions increased to 47% in

2011, compared to 39% in 2010

RE projects decreased by 39% in 2011, an

improvement from the 55% decrease in

2010

Notable changes between 2010 and 2011

85%

15%

YES

NO

5. Have you entered in partnerships or combined resources with other stakeholders

in the community to enhance ED efforts ?

o Chamber of Commerce 54%o Local or State government 48%o Regional EDO 45%o Community college/vocational school 43%o University 39%o Another Local EDO 39%o Workforce Investment Board 37%o State EDO 33%o Private sector company 32%

6. With whom did you partner?

7. Has your organization taken a pro-active role to provide opportunities for the

unemployed in your community?

54%

46% YES

NO

Partner with community colleges to offer training programs focused on reducing

unemployment 61%

Act as an intermediary between employers &

job seekers 48%

Facilitate Real Estate redevelopment to

create job opportunities 28%

Partner with a private company for training

and job skills 32%

8. How did you take an active role for the

unemployed?

Hosted or co-hosted job fairs

Collaborated with local WIB

Started business incubators

Other way that EDOs helped the unemployed:

9. In the past year, how have you altered

your organization’s strategy?

52%47% 45%

41%34%

Notable increase in social mktg in

2011, with 34% using it - - it was not even among top

replies in 2010

Business retention was 65% in 2010, but

52% in 2011

Entrepreneurship & small business

development was 51% in 2010 and is

41% for 2011

Collaborating regionally remained steady

with 46% in 2010 and

47% in 2011

We note some shifts in strategy between

2010 and 2011

More business attraction 60%

More business retention 47% More entrepreneurship & small business dvpt.

36%

Engaging more in strategic partnerships 33%

Concentrating on a regional basis 20%

10. What will be your organization's

top objective for 2012?

Busin

ess Att

ract

ion

Entrep

& S

m. B

usin

ess

Stra

tegi

c Ptn

rshi

ps

60% 36% 33%

20% 15% 8%

Column1

2011

Changes in Objectives for 2012 as compared

to those of 2011

46%

54%

YES

NO

11. Does your organization plan to revamp

its strategic development plan in 2012?

63%4%

33%

Better

Worse

Same

12. Compared to 2011, how would you rate your organization's outlook for ED activity

for 2012?

54%

16%

29%

2%

Safe

Not Safe

Very Safe

N/A

13. How safe do you think your job is today?

44%

54%

YES

NO

14. Do you consider your community or organization appropriately funded given

its size?

10% More =7%

25% More = 42%

50% More = 20%

Over 50% More = 24%

NA = 7%

15. If you think you need more resources,

how much more do you think you need?

41%

59%

YES

NO

16. Have local politics interfered with any incentive deals your organization

was promoting?

Jeff Finkle asked about job growth on LinkedIn

- December 2011

Positive expectations for

job growth in 2012, but for jobs at

the lower end of the pay scale

Expectations for consumer spending to remain flat

A desire to see more focused job training and retraining for workers and unemployed

to increase U.S. competitiveness

Jeff Finkle asked about job growth on LinkedIn

- December 2011 - Synopsis of Accompanying Comments

Update on U.S.Job Growth

As of Nov 2011, 239 of

372 metros had employment greater than the

same time

in 2010*

However most metros are still far from their pre-recession employment totals

* According to the U.S. Bureau of Labor

Update on U.S Job Growth

Number of U.S. Metros By Employment Activity Year Over Year Change in Nonfarm Employment Source: BLS

* For Nov 2011, only 54 metros (15%) were at levels exceeding their

November 2007 totals**

* 310 metros are still below their pre-recession total

* On average, U.S.

metros are 4.9% below

their Nov 2007 levels**

** Analysis from Garner Economics LLC

2011 has proven to be a year of few breakouts

The average annual employment growth

rate among metros held at

around 0.7%

Update on U.S Job Growth

Only 34 metros exceeded their 2007 employment totals in all eleven months of 2011**

This group is comprised of

15 metros in Texas

4 metros in the Dakotas

2 metros in Alaska

Another 5 metros are home to military installations

**Analysis from Garner Economics LLC

Update on U.S Job Growth

Key Trends in Economic

Development

Areas of Focus:

Fundraising

Strategy

Hiring

Key Trends in Economic Development

Fundraising

Increased demand for accountability

A shift in the perception of ROI

A resilient economy long-term vs. # jobs & firms

Smart Mayors are increasingly reaching out to private sector for support

Shift in funding from public sector to private

Over 60% of funding is from private sector today

Key Trends in Economic Development

Changes in Public / Private Funding Since 1998*

Public72%

Private28% Public

39%

Private61%

* Based on Data from 98 NCDS client organizations (Local & Regional Chambers and EDCs) that receive funding from municipal govts. and local business community

Fundraising-Players

Traditional funders - i.e., utilities, banks - have diminished capacity

Today: a broader spectrum includes hospitals, cable companies, law firms, waste management firms

Key Trends in Economic Development

Fundraising-Challenges

Public EDOs often lack skills for engaging the private sector

Less public money available

Investors are streamlining funding

Pledges are no longer a given year to year, nor or they automatic

Key Trends in Economic Development

Strategy

Increase in mergers & consolidations

State level: shifts in ED delivery systems - moving towards PPPs

Developing strategic plans that focus more on Quality of Life issues OR that are product drive

QOL: harder to measure, more inspirational

Product driven: infrastructure, industrial parks

Key Trends in Economic Development

Hiring

There is increased demand for EDprofessionals at senior levels

Leadership crisis is forthcoming - - retirements at higher levels will increase

in next 5 years

Key Trends in Economic Development

Hiring

Collaboration & partnership skills

of the EDO are more important to private sector CEOs

There is more emphasis on “pay for performance” – using metrics to evaluate job performance

Key Trends in Economic Development

Hiring

New top level ED professionals will need to be more business savvy…and know how to raise money …and know how to work with private

sector & universities…and know how to start a company

New PPPs will pay more for the right leader with ED &

business experience

Key Trends in Economic Development

Summary

Lack of access to capital/financing is still a big issue

Declines in RE development persist

City/county funding declines hinder local ED efforts

Lack of skilled labor is growing problem

EDOs are engaging in more strategic partnerships

Regional collaboration is on the rise

BRE remains a key strategy, but many

looking to focus on attraction in 2012

Summary - State of the Industry

Most EDOs will need more money to achieve goals

Job growth still lags behind pre-recession rates

Shrinking public sector funds mean that more EDOs will look to private sector for funding

ROI criteria has shifted towards resiliency

Investor scrutiny is ever more stringent

Shift towards PPPs and consolidation of EDOs

ED professionals will need to be ever more deft, knowledgeable and adaptable in the future

Summary - State of the Industry

Thank You!Questions?

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