The Vroom in the Prairie’s Boom

Corporations continue to discover the multiple advantages of siting in rural areas and small towns. Hint: It’s the can-do attitudes and the ability to leverage resources.

When Plumrose USA, a meat processor, wanted to expand its slicing operation in Booneville Miss., the company approached local economic development officials to assist in the project. The state and local community awarded the company a $400,000 grant to buy the adjacent 2 acres of property next to the existing plant, which would allow it to conduct site preparation for the new facility, as well as for fencing it in.

By Rachel Duran Business Xpansion Journal

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The existing facility is 110,000 square feet and company officials say they will add an additional 40,000 to 50,000 square feet in the expansion.

The company will increase its size by 25 percent and add a pasteurization area, a shipping dock and additional slicing lines. The expansion is expected to result in 100 to 125 new jobs.

“We needed the space badly, and food-safety-wise, we need to introduce more safety precautions in our operations in the future,” says Freddy Mortensen, senior vice president, Plumrose USA in Booneville.

Mortensen says that in addition to being able to acquire the nearby land, which also offers the company an opportunity to expand again. Plumrose USA kept the facility in Booneville because of its workforce rather than looking for a new site.

“The workforce is familiar with what we are doing, food-safety-wise,” Mortensen says. “And food safety is priority No. 1 because this is our customer we are talking about, and it is extremely important. It takes a long time to make up a culture that understands how important it is to do it right.”

Can Do

A can-do attitude, like that found in Booneville’s leadership and workforce, is a leading component companies should search for when selecting a rural area or small town as a place to do business. “The attitude of the people is by far the No. 1 component,” says Jack Schultz, the author of Boomtown USA: The 7-1/2 Keys to Big Success in Small Towns, published by the National Association of Industrial and Office Properties. “We cite this as a can-do attitude.” Schultz is the CEO of Agracel, Inc., an industrial development company based in Effingham, Ill.

In his book, Schultz says: “In small towns, the people who are energized by challenges and thrive on problem solving can influence the whole community; they can pull others along with them.”

Schultz also says companies should look for rural areas or small towns that understand how to leverage their resources. “Has the community been able to use funding from the state and federal agencies to build an infrastructure and get things ready for development?” he asks.

He shares the example of Tupelo, Miss.’s efforts decades ago. The local newspaper owner realized in order for his paper to be successful, it depended on the entire community being successful. So with 16 investors lined up, a bull was purchased to create more cows and the community recreated the dairy business in that area.

“With that success the community raised $25,000 from 151 local businesses and started an economic development initiative in 1948,” Schultz notes. “Those efforts continue today as Tupelo went from one of the poorest areas in the state to the second wealthiest county in the state.” Schultz adds that the county has 52,000 jobs in a county of 72,000 people.

The Tupelo example also ties into a third component companies should look for when siting in rural areas or small towns: entrepreneurship. “What we have found in our research is the more entrepreneurs in a community, the more vibrant the community and the more willing it is to take risks and move forward and develop into a better community,” Schultz says.

In Virginia, six counties recently came together to form the Virginia Heartland Partnership, Inc. “Virginia had a regional competitiveness act that provided a venue for unification for counties,” says Scott Frederick, executive director of the organization. “The fund from the act helped get the organization off the ground.”

Through the organization, member communities combine their resources to create a total package — a strategic location with all the infrastructure, sites, a skilled and educated workforce, and other assets necessary to support existing industry expansion and new business attraction.

“Companies will find cooperative government entities and proactive industrial development authorities in this six-county area,” Frederick says.

Lake County, Fla., part of metro Orlando, is a county moving forward in developing an emerging industry, agrotech, to leverage the region’s ideal climate, soil and native plants. The county is developing this industry, which combines crop-growing and high-tech processes, for advances in everything from industrial food ingredients, cosmetics, pharmaceuticals and plant reproduction.

Derieth Sutton, director of the Lake County Regional Office of the metro Orlando Economic Development Commission, says the soon-to-be built Lake Eustis Institute will play a role in how agrotech will evolve in the region. The institute will also offer educational opportunities in other arenas.

“Our community is a hidden treasure in Metro Orlando because there are things that are operating that no one else is doing, or don’t realize these processes are occurring here,” Sutton says. She says the city, county and regional governments put a seamless process in place for companies, and that once companies arrive, they will have an ongoing relationship with officials.

Among its agrotech network supports, Lake County is home to the University of Florida’s Institute of Food and Agricultural Sciences. It also features the largest freshwater research facility in Florida. Researchers are working on solutions for a virus affecting largemouth bass, among other projects.

Agrotech organizations on a regional basis include the University of Central Florida’s tobacco research, which could aid in curing Anthrax and create other health-related solutions. Nearby Orange County has examined the potential of developing a research park dedicated to agrotech activity.

Stanislaus County, Calif., is another location exploring its agricultural assets to position the area for emerging developments. “Some of the new developments will be in more technical aspects,” says Doug Sweetland, director of economic development, Stanislaus Economic Development and Workforce Alliance. “One of the ideas is to have lab or research type businesses that relate directly to the ag industry.”

Sweetland says there are a significant number of small labs or research firms that conduct ag-related research, although not exclusively. “That is a growing issue relative to what they are doing,” he says. “They are looking at more technical aspects that can meld into the industries we have.”

Stanislaus County also uses byproducts from the industry for other parts of the industry. For example, using byproducts to create cattle feed for the diary industry.

Additionally, air-quality issues that affect the ag industry will provide Stanislaus County with opportunities to look at companies whose focus is on improving air quality.

Sweetland notes these emerging avenues are beginning to open up and will take some time to develop. “While not directly related, they will have an overall impact on the ag industry.”

Stanislaus County features the cities of Modesto Turlock, Ceres, Oakdale, Riverbank and Patterson, among others. The single largest economic engine for the county is the dairy industry. Food processing is also a leading industry. The area has seen recent expansion activity from Del Monte Foods and E&J Gallo Winery, and will possibly see a proposed expansion by Frito-Lay.

You Can Get There From Here

While it is clear rural areas and ag-dependent areas are proactively planning for development and furthering their industries, they still have to overcome the “middle of nowhere” perception.

“The biggest myth companies have about rural areas and small towns is that they won’t have some of the same resources available to them that they would find in a larger city,” Schultz notes. “They quickly find this is not the case in terms of Internet connectivity, suppliers, access to transportation, etcetera.”

Schultz says Agracel, Inc. commissioned a study three years ago, conducted by Iogistics, which looked at a distribution center from a packaging standpoint. The study compared east-central Illinois to Reno, Nev., and seven metro areas in the Midwest. The study found that if a company was shipping 5 million packages it was a $5 million to $35 million cost advantage to be located in a rural area because of those cost factors.

Schultz also likes to point out that Wal-Mart Stores, Inc. “has decided the rural distribution model makes more sense then the urban model from a cost standpoint and efficiency in distributing its product.”

He notes that of Wal-Mart’s 90 distribution centers, 67 of them are in communities ranging from 5,000 to 50,000 in population. Fifteen are located in communities ranging from 5,000 and under in population. Only four are located in communities of more than 150,000 in population.

Sulphur Springs and Hopkins County, Texas, offer distribution advantages as well. Located on Interstate 30, the area is within an hour’s drive of the Dallas/Fort Worth metro area. The area also is within 50 miles of Oklahoma and within 100 miles of Arkansas and Louisiana. The county was formerly the dairy capital of the United States and is the current capital of the dairy industry in the Southwest. “While there has been a decline in the number of smaller dairy farms, the work has gone to larger dairy farms, which are producing more quantities of milk than in the past,” says Randy Thomas, executive director, Sulphur Springs/Hopkins County Economic Development Corporation.

Vital Educational Training and Networks

Rural areas and small towns are home to well-educated workers, with better work ethics, which leads to less turnover, says Schultz, based on what businesses tell him.

“In terms of workforce, we have a workforce, albeit not totally skilled, but a workforce that is familiar with and used to working in the ag industry, whether it be growing or processing,” Stanislaus County’s Sweetland says.

He says ag-industry workforce development in his area is emerging. Discussions will be held to address what types of educational training are needed, whether at a four-year, two-year or even vocational institution. “At this time we are gathering information from the companies about their needs,” Sweetland says.

Lake County’s Sutton says the higher-education system is a key player in developing the agrotech industry in Lake County. She says Florida Food Products has conducted research with the University of Florida and vice-versa. “Our companies and educational institutions have a connection and collaborate on efforts,” she says. “This will become more formalized with the Lake Eustis Institute.”

In Sulphur Springs, a technical center, which is a joint effort of Paris Junior College and the economic development corporation, provides customized training. The community is also located within 18 miles of Texas A& M University-Commerce.

Sulphur Springs can also draw from a labor pool of 300,000 in a 40-mile radius.

In addition to educational advantages, communities with networking organizations also boost the business climate in rural areas. The Stanislaus Economic Development and Workforce Alliance has recently created an Ag Sciences Advisory Board consisting of group leaders from the dairy, poultry, growers, processors and other components of the ag industry.

“The purpose is to provide input into trends, regulations and issues that impact the ag industry as a whole, or more specifically, in each one of those components,” Sweetland says.

He says the community recognizes the value of the ag industry but also knows it can be expanded significantly to vendors and suppliers, not just to growers and processors. The group will strengthen the community’s solicitation of and response to interested companies on legislative trends, for example.

“If we are visiting with a company that is related to dairy, for instance, and they are talking in technical terms, we can call on someone on our advisory board to meet with the company and talk in those technical terms,” Sweetland says. “The advisory board is a way to pull together representation to help us, and hopefully, us help them to further business interests.”

Another region bringing its ag industry together is the Yakima Valley in Washington for its wine industry. In January, two existing organizations formed the Wine Yakima Valley for wine grape growers and the wine industry to put forth a unified voice in getting out the industry’s message. The organization will market the product to consumers and grape growers will market their grapes to wineries.

The wine industry in Washington is growing rapidly and two or three new wineries at one time have been in development simultaneously for the last couple of years, says Barbara Glover, executive director, Wine Yakima Valley.

“Because the area is doing so well people are taking an interest in the quality and see a place to relocate to and a place to develop a new business,” Glover says. “We are developing a team of industry pros who are working together to help site vineyard locations and winery locations in central Washington.”

Low Costs and Than Some

Ag-related areas and small towns offer available spaces for companies to grow, at reasonable costs.

Sutton says Lake County’s Eustis Commerce Park supports the emerging agrotech industry. “The park focuses on ag-, food- and pharma-related products and technologies,” Sutton says. “Any company that would be interested in those, or if they are a supplier or user of those items, would be a good complement.”

Sweetland says the land available for development in Stanislaus County is still relatively inexpensive in comparison with other areas in the state.

Sulphur Springs’ Thomas notes that companies are looking for spec buildings as well as greenfield sites. “They are looking for locations near not only their suppliers and producers but also to their customers,” he says. “They want to be strategically located and we fit that bill — a rural community outside of a metro area.”

In the Virginia Heartland Partnership’s six-county region, the counties are vested in the development of the 403-acre Heartland Business Park, located on Highway 360. The park is located 90 minutes from the Richmond International Airport. The infrastructure is being developed at this time and one site has been graded. “The park is a direct result brought together by the formation of our organization,” Frederick says.

Rural areas and small towns also offer lower costs of living and conducting business, Boomtown’s Schultz notes. “In one of the studies, we looked at the cost of living in Chicago, New York City and the Silicon Valley,” he says. “If you earned $100,000 in those three cities, you could have the same standard of living earning $45,000 in the ‘agurbs.’” Agurbs are defined as a community that has an agricultural link and a location outside of an MSA.

In terms of utility savings, Stanislaus County features some of the lowest power rates in California for industrial processing plants. Modesto, Turlock and Oakdale feature irrigation districts. “The combination of all of those providing electric power supplies the bulk of the county,” Sweetland says. “That has been a huge advantage because in some instances, the rates generated here are half of the competitive rates in other parts of the state.”

For ag-related businesses or those considering siting in rural areas or small towns, the leading siting criterion is to look for can-do attitudes. Search for communities that understand how to leverage governmental and other resources. Determine if they are willing to take risks, move forward and look for emerging opportunities.

It is a myth that rural locations won’t have the same infrastructure as metro areas. Remember the Wal-Mart-distribution-center model in terms of market access. Also consider the lower costs, and sometimes significantly lower costs, of conducting businesses and living.

For complete details on organizations and companies featured in this article visit:

Boomtown USA, http://www.boomtownusa.net

Lake County Regional Office of the Metro Orlando Economic Development Commission, http://www.orlandoedc.com

Plumrose USA, http://www.plumroseusa.com

Stanislaus (Calif.) Economic Development and Workforce Alliance, http://www.stanalliance.com

Sulphur Springs/Hopkins County (Texas) Economic Development Corporation, http://www.sulphurspringstxedc.com

Virginia Heartland Partnership, Inc., http://www.virginiasheartland.org

Wine Yakima Valley (Wash.), http://www.wineyakimavalley.org

Top States for Agribusiness/Foods

Based on number of establishments

New Branches

1. California

2. Texas

3. Georgia

4. Florida

5. North Carolina

6. Pennsylvania

7. Minnesota

8. Illinois (tie)

8. Wisconsin (tie)
10. New York

Startups

1. Florida

2. California

3. Texas

4. Michigan

5. Washington

6. Georgia

7. Ohio

8. New York

9. North Carolina

10. New Jersey

Data include the following SICs:

Crops 100.xxxx

Livestock 200.xxxx

Agricultural Services 700.xxx

Food Products 2000-2900.xxxx

Source: Since 1990, BizMiner has built its reputation on quality research in the

fields of economic and business development. The company tracks more than 11

million U.S. businesses annually, developing vitality benchmarks

for more than 18,000 lines of business and every U.S. county, MSA and state.

Measures include business retention, entrepreneurial activity, new branch

attraction, business relocation trends and concentrations of high-growth

firms. Visit http://www.bizminer.com for access to more than 1 million local and

national marketing research and financial analysis reports.

Enterprise Facilitation Opens Doors to Opportunities

The June 2002 four of the poorest counties in southeast Kansas came together to raise money, matched by the state, to implement enterprise facilitation, a grassroots effort to facilitate ideas from the entrepreneurial community.

The Quad County Enterprise program includes Chautauqua, Elk, Greenwood, Woodson and, most recently, Wilson Counties.

Jack Newcomb is the facilitator of the enterprise facilitation efforts in southeast Kansas. He was trained at the Sirolli Institute, which spearheads the enterprise facilitation concept.

He says the Quad County Enterprise works within existing economic development channels and acts as a conduit to make it easier to obtain services for the client. The services are free and confidential.

“The facilitator is available to anyone in the communities that have an idea or want to expand or start a business,” he says. The Quad County Enterprise does not have money to loan or grant, but rather offers management counseling and a facilitation process to put entrepreneurs in touch with the small-business development centers that are already in existence, or programs that are already available to develop strong business plans.

“This is different from typical economic development where someone comes in and says we can recruit this business with these tax abatements,” Newcomb says. “We help communities work with what they have got. They have the ideas and the abilities they just don’t have the confidence or the knowledge of how to get it started. Or they were intimidated by the process.”

Newcomb says that the Quad County Enterprise has assisted in creating or retaining 73 jobs since the program began through the end of January 2004. Fifteen new businesses were started in that time frame as well.

“We don’t just concentrate on new businesses,” Newcomb says. “We helped a couple of others to expand and assisted in the acquisition of five businesses, which helped them to expand or diversify their existing business.”

Newcomb notes that there are some challenges to doing businesses in rural areas, such as dealing with smaller, conservative banks in terms of financing. “However, we have found if an entrepreneur has a well-presented and though-out business plan, banks will be receptive,” he says. “We pursue all financing possibilities and are not limited to working with banks in our area, although that is our first choice. To date, I haven’t had any large businesses that required a lot of capital.”

There are also some constraints in the telecom arena, but those concerns are being addressed readily, Newcomb says.

He notes that advantages of rural areas include the availability of buildings to rent, plenty of land to build on, and a lower cost for labor compared with larger cities. He also notes the quality of life and the ability to live on 5 to 400 acres or more.

For complete details on the enterprise facilitation process conducted by the Quad County Enterprise visit http://www.enterprisefacilitation.net/quadcounty.

Visit http://www.bizminer.com for access to more than 1 million local andnational marketing research and financial analysis reports.