Twin Cities getting better, still too smug

Times could be better in the Twin Cities area.

Job openings are way down from a year ago. Big employers are slashing their payrolls. State legislators are grappling with a gargantuan budget shortfall.

DAVE BEAL
Pioneer Press Columnist

Yet the Great North Alliance, which issues a competitiveness report card annually as part of its "Opportunity Forecast" for the area, has just given the region a big upgrade from a year ago.

In its third annual report card, to be released Monday, the group assigns an overall "B" grade to the area. Only two of the 12 regions the alliance scrutinized did better.

Last year, the region earned a "C," putting it in a three-way tie for seventh place among 11 areas ranked.

What gives?

The alliance grades on a curve, explains Great North CEO Douglas Petty. And five regions that fared as well or better than the Twin Cities a year ago — Denver, Atlanta, Phoenix, Raleigh-Durham and Salt Lake City — did significantly worse this time.

But grades aren’t everything. The alliance, formed four years ago by Twin Cities business, government and civic leaders, thinks people here are too complacent — perhaps even smug — about the very successes reflected in the group’s new report. Its leaders view their report card as just a starting point for much broader discussions about the area’s future.

Curt Johnson, secretary of the coalition and chairman of the Metropolitan Council from 1995 to 1998, says one of the group’s principal goals is to galvanize leaders to think and act together more as a region. Only then, he argues, can the area deal effectively with mounting environmental problems, growing traffic jams, homeland security issues, development disputes and a host of other issues.

Too often, he believes, residents here have come to assume that the achievements of today are permanent fixtures.

When founders launched the alliance, he says, "We were absolutely certain we shouldn’t be as comfortable as we seemed."

The alliance has an annual budget of about $250,000. It has no employees.

But its tasks are a full-time job and more for Petty, an independent contractor who works out of his home in St. Paul’s Highland Park area.

Petty is constantly in touch with the alliance’s leaders: Johnson, retired Cargill chairman Whitney MacMillan, public relations executive Kathy Tunheim, retired 3M international head Ron Baukol and others on its 22-member board.

Much depends on Petty — on the home stretch of the initial report card, he had to slow down for three weeks due to an appendicitis attack. That first year, the Twin Cities got a C-, putting it in a tie for the cellar.

He collects and crunches the numbers for the report card, speaks to community groups about the alliance’s work, pulls together focus groups and peruses "benchmarking" studies comparing regional economies.

Lots of studies.

Petty is neck deep with benchmarkers’ products from Philadelphia and Pittsburgh, Chicago, the District of Columbia, Seattle, Denver, Silicon Valley, central Indiana, northeast Ohio, Cincinnati, overseas regions.

Johnson traces the benchmarking boom to Silicon Valley in the early 1990s. Soon, leaders in more and more regions got into the game. All of them want to know how well their territories are competing in the global economy.

Petty examines 58 indicators from a dozen "high-performing" metro areas: Atlanta, Austin, Boston, Chicago, Dallas, Denver, Orange County (California), Phoenix, Raleigh-Durham, Salt Lake City, Seattle and the Twin Cities. He lumps these measures into four categories, then grades each category.

"Our region’s relative competitiveness has improved somewhat over previous years,” this year’s study says. "Entrepreneurial energy is experiencing a revival" and the Twin Cities is attracting a relatively larger share of resources from financial markets.

But the study also warns that the region’s share of people with bachelors’ degrees slipped, as did the share of people in high-skilled occupations. Income opportunities for average workers also fell and so did overall productivity.

Toby Madden,an economist at the Minneapolis Federal Reserve Bank, questions parts of the study’s methodology. He says using so many indicators means the alliance must rely on more assumptions and judgments than if it did a more focused study.

Madden suggests a more in-depth look at the fundamentals that have led to economic success here, then an examination of whether the basics are deteriorating.

Petty replies that the alliance’s study is not a traditional economic forecast, based mostly on factors such as gross domestic product, inflation and employment. Rather, it’s an attempt to gauge the ability of the economy here to innovate and remain competitive.

So who topped the Twin Cities this year? Seattle and Boston, which both got As.

That might come as a surprise to some in Seattle. Boeing layoffs, traffic snarls and Washington’s huge budget shortfall have stirred much angst there these days.

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Douglas Petty

THE GREAT NORTH ALLIANCE

P.O. Box 15715

Minneapolis, Minnesota 55415

Telephone: 651-699-0542 or 612-348-7474 (voice mail)

Telefax: 651-695-1401

e-mail: [email protected]

website: http://www.thegreatnorth.com

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But grading is never easy, even when you do it on the curve.
Dave Beal can be reached at [email protected] or (651) 228-5429.