© Market Street Services, Inc. 2003 Reprints permitted with attribution Southwest Virginia Economic...

© Market Street Services, Inc. 2003Reprints permitted with attribution

Southwest Virginia Economic Development Summit

Facing Today’s Realities and Challenges

October 23, 2003Presented By:

J. Mac HolladayMarket Street Services, Inc.

www.marketstreetservices.com


Changing EconomyJobs and the New EconomySeptember 11, 2001Rural America TodayVirginia and the SouthNew Reality - 2003

What Do We Know?


Undergoing continuing fundamental changes in U.S. economy;

Until mid-2001, the U.S. experienced the strongest growth and development in history – record lows in unemployment and record growth in per capita income;

Fortune 500 companies made up 26% of nonagricultural workforce 30 years ago and those firms have lost over 12 million jobs; and

In the 1990s, medium and small companies account for all of the net job growth across the country.

Changing StructureOf The Economy


1. General Motors2. Exxon3. Ford4. Mobil5. Texaco6. Standard Oil – California7. IBM8. General Electric9. Gulf Oil10. Chrysler11. International Telephone

and Telegraph12. Standard Oil – Industrial

13. Atlantic Richfield14. Shell15. US Steel16. E.I. du Pont17. Western Electric18. Continental Oil19. Tenneco20. Procter and Gamble21. Union Carbide22. Goodyear23. Sun Oil24. Caterpillar25. Eastman Kodak

1979 Fortune 500: Top 25


1. Wal-Mart2. General Motors 3. ExxonMobil4. Ford 5. General Electric6. Citigroup7. ChevronTexaco8. IBM9. American International

Group10. Verizon11. Altria Group12. ConocoPhillips

13. Home Depot14. Hewlett Packard15. Boeing16. Fannie Mae17. Merck18. Kroger19. Cardinal Health20. McKesson21. State Farm Insurance22. AT&T23. Bank of America24. AmerisourceBergen25. Target

2002 Fortune 500: Top 25


1979 Manufacturing12 Energy 11 Communications 2

2002 Energy 6 Financial 5 Manufacturing5 Retail 3 Communications 2 Health 2 Insurance 2

Fortune 500: Top 25 – By Sector


Five Key Trends in Economic Development

GlobalizationTechnology & TelecommunicationsRegionalismSustainable DevelopmentWorkforce Development


Current Investments in ChinaCompany Operations Employees Investment

Coca-Cola 31 plants 20,000 $1.1 B

Kodak 5 plants; 8 outlets

5,000 $1.2 B

Motorola 2 plants 12,000 $3.4 B

Proctor & Gamble

5 plants 4,000 $1 B

Siemens 40 companies 21,000 $610 M

YUM Brands

800 KFC;

100 Pizza Huts

50,000 $400 M

Danone 50 plants 25,000 N/A


Imports - China Imports are soaring

Telecom Power making and transmission equipment Aerospace Computers Appliances Furniture

Estimated 900,000 U.S. jobs will be lost to China by 2010, with the worst loss in manufacturing

Contributed 31% of furniture imports in 2001, will double “in a few years”

Member of WTO – all tariffs are off in 2004

Source: Kiplinger Letter, September 27, 2002


“It is a knowledge and idea-based economy where the keys to wealth and job creation are the extent to which ideas, innovation, and technology are embedded in all sectors of the economy.”

The State New Economy IndexProgressive Policy Institute

Definition of “New Economy”


Emerged in last 15 years

Altered industrial and occupational order

High levels of entrepreneurial dynamism and competition

Dramatic trend towards globalization

Revolutionary advances in technology

TransformationTo The New Economy


In the 1990s, nearly 75% of all net new jobs are being created by “gazelle” firms (firms that have increased annual sales revenue by 20% for 4 straight years).

Americans now change jobs every 3.5 years; those in their 20s change every 1.1 years.

“Churning” is driven by new technology, increased competition, and increasing globalization.

“Job Churning”

Source: U.S. Bureau of Labor Statistics


0

10

20

30

40

50

60

70

80

90

100 %

1950 1990 2000

Professional

Skilled

Unskilled

60

20

20 2020

45

35

65

15


Required Job Skills are Increasing


Demand for skilled workers will only intensify; 42% of U.S. jobs in 2010 will require technical (vocational) or academic degrees, up from 29% in 2000.

8 of the top 10 business groupings that have the fastest wage and salary growth are in Services.

8 of 10 fastest growing jobs are in computers – not programmers but software engineers, support specialists, network administrators.

All told in 2010: 167.8 million jobs vs. 158 million workers. A worsening labor deficit. In 2000, 146 million jobs, 141 million workers.

What Kinds of Jobs are Coming



Fastest Wage and Salary Growth, 2000 - 2010

Business Groupings/Sectors Average annual rate of change in wages, 2000 - 2010

Computer and Data Processing Services 6.4%

Residential Care 5.0%

Health Services, not elsewhere classified 4.6%

Cable and Pay Television Services 4.2%

Personnel Supply Services 4.1%

Warehousing and Storage 3.8%

Water and Sanitation 3.8%

Miscellaneous Business Services 3.7%

Miscellaneous Equipment Rental and Leasing 3.6%

Management and Public Relations 3.6%



Fastest Growing Occupations, 2000 - 2010

Business Groupings/Sectors Education and Training Required

Computer Software Engineers, Applications Bachelor’s degree

Computer Support Specialists Associate’s degree

Computer Software Engineers, Systems Software Bachelor’s degree

Network and Computer Systems Administrators Bachelor’s degree

Network Systems and Data Communications Analysts

Bachelor’s degree

Desktop Publishers Postsecondary Voc Award

Database Administrators Bachelor’s degree

Personal and Home Care Aides Short-term on-the-job training

Computer Systems Analysts Bachelor’s degree

Medical Assistants Moderate-term on-the-job training



September 11, 2001


Rural America Today


The Rural Economy In October 2002, the rural economy was still

losing jobs, but at a rate below that of a year ago.

Rural job growth exceeded that of metro job growth.

However, wage growth has remained relatively stagnant.

From October 2001 to October 2002, only the Government and Services sectors experienced job growth in rural America.

Transportation, Communications, and Utilities and Manufacturing experienced the largest job losses over this period.

Source: Center for the Study of Rural America


Population Shifts In the 1990s, about 25% of nonmetro counties

lost population. Counties that lost population were

characterized by:1. Location away from metro areas2. Low population density3. Low level of natural amenities (i.e. climate, topography,

lakes and ponds)

From 2000-2001, the number of nonmetro outmigrants totaled 2.6 million.

Net nonmetro outmigrants totaled more than 1 million people.

Source: McGranahan and Beale. Understanding Rural Population Loss. Rural America, 17(4), Winter 2002.


The Rural Brain Drain

Rural communities across the United States are having difficulty keeping and attracting young and/or educated workers.

Even burgeoning rural areas, with tourist or recreation-based economies, are having difficulty attracting these types of workers, young ones especially.

Rural areas that have seen influxes of educated workers are primarily in the “exurban” areas of large metropolitan areas (i.e. the new suburbs).


Rural Income Inequality From 1979 to 1999, the gap between nonmetro

and central city areas in real median household income increased from $11 to $3,124.

Over that same period, the difference between suburban and nonmetro median household incomes rose from $13,771 to $15,984.

In 2000, rural earnings per worker averaged $23,242, about $13,000 less than metro earnings.

Additionally, the services sector, a lower paying sector, is becoming a larger part of the rural economy.

Sources: Novack, Nancy. The Income Divide in Rural America. The Main Street Economist; Center for the Study of Rural America: October 2002.

Mclaughin, Diane. Income Inequality in America. Rural America, 17(2), Summer 2002


Rural Regionalism Regional approaches to economic development are

increasingly seen as ways to combat some of the inherent comparative disadvantages in rural communities.

Types of regions that have been successful include: “Macro” regions = large multi-state regions often created by

Federal legislation, examples include the Appalachian Regional Commission and the Delta Authority.

Self-defined regions = can emerge from new business opportunities or other factors.

Economic regions = multi-county regions formed to help blur political boundaries in a common economy.

Natural resource regions = formed to protect natural resources such as watersheds or natural habitats.

Source: Drabenstott, Mark and Sheaff, Katharine. The New Power of Regions: A Policy Focus for Rural America – A Conference Summary. Center for Study of Rural America: Federal Reserve Bank of

Kansas City.


“Does anybody know how to play this game?”

Casey StengelFormer Manager,

New York Yankees & New York Mets


Virginia and the South


Decline of Manufacturing: Manufacturing Jobs Lost in the South2001 to 2002

Alabama: -25,900 Arkansas: -24,700 Florida: -45,000 Georgia: -48,400 Kentucky: -20,000 Louisiana: -8,300

Mississippi:

-18,600 North Carolina:

-79,600 South Carolina:

-39,300 Tennessee:

-40,500 Virginia:

-32,200 West Virginia:

-8,200


Total = -390,700


Decline of Manufacturing: Manufacturing Jobs Lost in the SouthJanuary 2003 to August 2003

Alabama: -7,900 Arkansas: -4,600 Florida: -10,000 Georgia: -11,400 Kentucky: -3,200 Louisiana: -1,800

Mississippi: -7,200 North Carolina: -15,800 South Carolina: -9,400 Tennessee: 100 Virginia: -7900 West Virginia: -500


Total = -79,600Source: U.S. Bureau of Labor Statistics


Net Job Change in the South2001 to 2002

Alabama: -35,000 Arkansas: -6,600 Florida: +72,200 Georgia: -123,100 Kentucky: +12,600 Louisiana: +9,500

Mississippi: -12,500 N. Carolina: -56,300 S. Carolina: -24,700 Tennessee: -24,600 Virginia: -58,800 W. Virginia: -10,900

Total = -258,200Source: U.S. Bureau of Labor Statistics


Alabama: -8,700 Arkansas: 0 Florida: 55,400 Georgia: 53,900 Kentucky: -23,700 Louisiana: -9,200


Mississippi: -4,300 North Carolina: -17,200 South Carolina: -30,900 Tennessee: 19,900 Virginia: 14,700 West Virginia: -2,200

Net Job Change in the SouthJanuary 2003 to August 2003

Total = +47,700Source: U.S. Bureau of Labor Statistics


Virginia Sector Employment Change:December 2001 to August 2003


-1.4%

-6.2%

0.0%

-11.4%

2.5%

-0.4%

7.1%

1.9%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%


Virginia Total Employment Change, 1991 to 2003 (August)


-45,100

45,900

81,30088,300

48,900

93,90088,000

98,900

89,500

100,500

-73,600

-2,100

14,000

-100,000

-80,000

-60,000

-40,000

-20,000

0

20,000

40,000

60,000

80,000

100,000

120,000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003


Virginia ranked 24th out of all 50 states, behind: Florida (5th) Mississippi (15th) Arkansas (18th) Kentucky (20th) South Carolina (21st) Tennessee (22nd)

Of all Southern states, Georgia (26th), North Carolina (29th), Louisiana (34th), Alabama (36th) and West Virginia (39th) ranked lower than Virginia.

Index of State EconomicMomentum: June 2003

Source: State Policy Reports


Small Business Survival Index: 2003 State Rankings(Ranked from the “Friendliest” State to the Least Friendly)

Virginia ranked 14th out of all 50 states, behind: Florida (5th) Tennessee (7th) Mississippi (10th) Alabama (11th)

South Carolina (16th), Louisiana (21st), Georgia (23rd), Maryland (24th), Arkansas (25th), Kentucky (28th), North Carolina (37th) and West Virginia (40th) all ranked lower than Virginia.

Source: Small Business Survival Committee


Virginia - #8, up from #12 in 1999

2002 1999 Maryland #5 #11 North Carolina #26 #30 Florida #18 #20 Georgia #22 #25 South Carolina #41 #38 Alabama #47 #44

2002 State New Economy Index

Source: Progressive Policy Institute


New Reality - 2003


“Consumer Outlook Hit by Job Worries”(Wall Street Journal, October 1, 2003)

“Economy Races Ahead, Leaving Jobs in the Dust”(USA Today, October 1, 2003)

“New Jobless Claims Slowly Decline”(Atlanta Journal-Constitution, October 17, 2003)

“Economic Recovery Gains Strength”(Wall Street Journal, October 17, 2003)

Recent Headlines


Organizations and institutionsEconomic development – strategy

and theoryCompetitive positions2003 – Where are we?

What We Know


Change in Organizations and Institutions “To survive and succeed, every organization will

have to turn itself into a change agent. This requires the organized abandonment of things that have been shown to be unsuccessful, and the organized and continuous improvement of every product, service and process within the enterprise. The point of becoming a change agent is that it changes the mindset of the organization.”

Peter Drucker, The EconomistNovember 1, 2001


Seven Guidelines for Local Economic Development

I. Know Your Economic Function in the Global Economy

II. Create a Skilled WorkforceIII. Invest in Infrastructure For InnovationIV. Create a Great Quality of LifeV. Foster an Innovative Business ClimateVI. Reinvent and Digitize GovernmentVII. Take Regional Governance Seriously

Source: Progressive Policy Institute


Economic Development Strategy Enterprise/Small Business Development Existing Business and Industry Services/

Procurement Tourism/Film Development/Product Development Downtown/Main Street/Historic Preservation International/Trade/Export Quality Recruitment/ Commercial/ Industrial Sports/Recreation/Culture Minority Business Development


What I See – October 2003• This is not the 1990s, and they will never be

back.• Regional economy continues to “struggle,” but

the “bleeding” is slowing.• Number and size of projects down sharply -

some projects in logistics, transportation, automotive, and financial services.

• Some signs of new business investment; further delays in final decisions. GNP numbers look better for 4th Quarter.

• Consumer confidence returned to its lowest level since October 1993 in September, dipping 5 points from August.


What I See – October 2003• Bankruptcies are up and small business starts are

down.• The stock market has lost approximately $6.0

trillion in value since January 2000.• In many areas, the job creation leader has been

the federal government.• State budgets will get worse; no real

improvement should occur this year.• The short-term question marks are the aftermath

of the war with Iraq, the Middle East and dealing with North Korea.


Actions for this Economy1. Concentrate on improving the quality of the workforce – it is

and will remain the #1 issue in economic development;

2. Nurture existing business – create technology-based system for growth companies/businesses…don’t waste time;

3. Support entrepreneurship in new ways – cultural issue;

4. Recruit carefully and smart, based on asset advantages and existing connections – clear strategy for each cluster or area of emphasis;

5. Look for “overlooked” assets and opportunities – multiple strategies are key;

6. Marketing reality –quality website and personal relationships are the necessities; and

7. Remember Quality of Life is very important and it is an individual choice.


“We are in uncharted waters. In what sector of the economy can we find a driver for recovery – and how do we make it happen? We are at a loss.”

Gary Shoesmith

Center for Economic Studies,

Wake Forest UniversityDecember 2002


“What do we really want? What kind of life – and what kind of society – do we want to bequeath to coming generations?

To purposefully address it we must harness all of our intelligence, our energy and most important, our awareness. The task of building a truly creative society is not a game of solitaire. This game, we play as a team.”

Richard FloridaThe Rise of the Creative Class


Southwest Virginia Economic Development Summit

Facing Today’s Realities and Challenges

October 23, 2003Presented By:

J. Mac HolladayMarket Street Services, Inc.

www.marketstreetservices.com

Date post:	30-Mar-2015
Category:	Documents
Upload:	janie-van
View:	213 times
Download:	0 times

© Market Street Services, Inc. 2003 Reprints permitted with attribution Southwest Virginia Economic...

Documents