Interest in Spokane area growing – EDC agency now targets six industry clusters

Business recruiting leads improve, focus tightens, and more funds sought

Invigorated by new leadership and armed with new strategies for recruiting employers here, the Spokane Area Economic Development Council says interest in the Spokane area is on the rise.

By Paul Read

http://spokanejournal.com/spokane_id=article&sub=2125

A year ago, the EDC was talking with about six to 10 out-of-town companies that were at least receptive to the idea of moving to or expanding into Spokane, says Jon Eliassen, who took over as the economic-development organization’s president and CEO about then. Together, those companies held the prospect of adding a few hundred jobs here, Eliassen says.

“Today, we are working with about three dozen companies, and they represent about 2,000 to 3,000 jobs,” he says.

Additional leads also are flowing in from a relatively new regional business-recruitment effort in which longtime North Idaho recruiter Bob Potter is working to land new employers for communities throughout the Inland Northwest.

Though no big press conferences are slated with an announcement of a new, high-profile employer here, EDC officials nonetheless are energized by the increased activity and are envisioning an eventual payoff if business-recruitment efforts are boosted here.

“We are starting to see some positive changes,” Eliassen says.

He and Marty Dickinson, the EDC’s vice president for marketing and communication, attribute the renewed interest in Spokane to several factors:

•The EDC has adopted a sharper recruiting focus to target employers that do business in specific market sectors and are located in high-cost locales such as California and Western Washington.

•It is using CEOs here, in targeted mailings, to tell counterparts in their respective industries why the Spokane area is a good place to do business.

•It has bought new analytical software to help it make a solid economic case why businesses should move here or expand into this market. Additional new software helps the EDC understand the real effects that the addition, or loss, of a specific employer here has on the economy—a useful tool in sharpening its recruiting focus and in making a case to get recruting help from other organizations and government jurisdictions.

•It has been more aggressive about getting publicity elsewhere when something good about Spokane emerges, such as a favorable ranking in a national study.

•There’s better cooperation between economic-development organizations and governmental entities here.

•And “Spokane is beginning to have its own internal sense of pride again,” says Eliassen.

He warns, however, that business recruiting is a painfully slow process, and that seeds planted today might not bear fruit for several years.

Eliassen also is firm in his belief that the EDC can’t be successful in the long run at its current funding level, and he already is making the rounds with government officials here asking for far more money to fuel the agency’s efforts.

The EDC’s budget this year is about $800,000, well down from the $1.2 million in annual funding it had 12 years ago, Eliassen says. With its current budget, it can afford just two to three business-development people—the ones who recruit new employers. “To manage the deal flow, we need five to six people,” he says.

Eliassen is proposing that the EDC’s budget next year be $1.5 million, slightly less than the $1.6 million figure a consultant earlier this year told the EDC it needed to do the job right. He says he’s asking Spokane County and municipalities here to up their ante to play in the high-stakes game of business recruiting.

“I’m asking for $2 per resident,” says Eliassen.

The EDC already has asked the city of Spokane to increase its contribution for 2005 to $405,000, from $95,000 this year, and for the city of Spokane Valley to boost its share to $175,000, from $55,000 currently. The city of Liberty Lake is being asked to provide $11,000 in funding next year, compared with $3,000 this year. The EDC plans in the next month to make a request to Spokane County for $275,000 in 2005 funding. The county this year provided $200,000 to the EDC, plus another $75,000 for special projects.

Eliassen knows that those increases are a tall order considering the tight budgets local governments currently are operating under. The city of Spokane, for instance, cut 28 jobs this year to deal with an unexpected budget deficit. He contends, however, that the payoff for local government from bringing new jobs here is well worth the investment.

“If we add 8,000 jobs over the next six years and we put a conservative pay range on them of $35,000 per job, we will be adding a payroll here of about $490 million,” Eliassen says. Countywide, he says, that equates to increased tax revenues of between $10 million and $12 million annually.

“That’s the expected return on a $1.5 million investment,” he argues.

Eliassen says the EDC also expects to boost the EDC’s membership, bringing in more private funding, and says he won’t rule out a private fund-raising campaign. “We’ll also be looking for federal funding, and I’m not shy about asking the state for support.”

Currently, about 55 percent of the EDC’s budget comes from public sources, with the rest from private donations. Eliassen expects that the share from public entities will grow to about 60 percent.

He says that in the labor-intensive world of business recruiting, the biggest part of the EDC’s budget will continue to be labor—about $1 million of a hoped-for $1.5 million annual budget. The rest is overhead costs, as well as travel and marketing.

The EDC currently employs nine. At the higher budget figure it would employ 14 to 16, Dickinson says.

The EDC, says Eliassen, also is changing the way it recruits employers. Rather than using a shotgun approach, the agency now targets six industry clusters, and is putting its resources into finding willing recruits that fit into them. They include: financial services, advanced manufacturing, logistics (warehousing and distribution), information technology, health and biomedical, and higher education and research and development.

Also, the EDC no longer will seek companies that don’t provide living-wage jobs, he says. “We want to create a disproportionate number of higher-paying jobs … We need jobs that pay $20 to $30 an hour or more,” he says.

That’s not to say the EDC won’t leap into action when a company that pays less, or one that falls outside of those six sectors, comes to it with interest in moving here, Eliassen says.

The EDC’s primary focus these days is California, where Eliassen says it’s still very expensive to operate a company.

“People say we shouldn’t talk about Spokane as a low-wage town. What we should be saying is that Spokane is a lower-cost-of-living town,” he says. “We tell people in California that they can live a million-dollar lifestyle here for about $300,000.”

Western Washington also is a focus, though the EDC mostly is looking there for companies that might need a place to expand into, rather than relocate to. “I don’t necessarily want to steal from elsewhere in Washington,” Eliassen says.

The EDC’s new “CEO-to-CEO” program, meanwhile, is putting to work the persuasive skills of some of the area’s top executives, including Itronix’s Tom Turner, Inland Northwest Health Services’ Tom Fritz, and Itron’s LeRoy Nosbaum.

The EDC has compiled a list of 150 companies in the health-care, technology, and manufacturing sectors, and has had CEOs within those industries write letters to those companies encouraging them to consider Spokane. The letters were backed up with detailed cost analyses, showing the economic advantages of operating a business here versus the advantages where those employers are now.

About 75 such packets have been mailed so far, and from that the EDC has had discussions with several of the recipients and two have asked for additional information, says Dickinson. “That’s a really good response,” she says, adding that the average response in business recruiting is to get one interested party from 85 contacts.

In addition to that program, the EDC is working more closely with the state’s Department of Community, Trade and Economic Development (CTED), which Eliassen says has been more active in generating leads for the EDC. “We’ve been getting three to four a month now,” he says.

The EDC also wants to do a better job of building relationships with national site selectors, who are hired by companies to find locations for new operations, and with the corporate real estate officials of larger companies.

“The last three years, we haven’t had the staff to manage those relationships,” Eliassen says.

The EDC is getting some help from Potter, who led North Idaho’s Jobs Plus business-recruitment organization for 15 years before retiring last year. In that time, he recruited some 70 companies to Kootenai County.

Earlier this year, Potter came out of retirement to help recruit business to the region as part of a new organization called the Inland Northwest Economic Alliance.

So far Potter has generated about 20 leads, though it’s too early to tell what part of the region those prospective new employers might select, Dickinson says.

Last week, when the state’s CTED brought to Spokane a site selection team for an employer that was interested in the Spokane area, the EDC called in Potter, who had a longtime relationship with one of the site selectors.

“We’ll take advantage of anything we can,” says Eliassen.