Making the Most of Statewide Business Retention, Expansion, and Modernization Efforts

by Will Lambe and Bill Schweke, CFED

A proactive and coordinated BR&E effort can actually preserve public resources over the long-term and save good jobs from being outsourced. Photo courtesy of SEWN.

The practice of business retention and expansion (BR&E) is an art as well as a science. It involves orchestrating an ever-expanding range of private, public and nonprofit services while, at the same time, managing the delicate balance between being reactive (to what a firm says that it needs) and being proactive (anticipating and dealing with a firm’s problems before they become problems, as well helping an enterprise realize its potential for business success).

We argue that a state-led initiative to create a proactive BR&E system is both needed and possible. This article summarizes four proactive precedents and recommends ways to adapt elements from each when building a statewide, seamless and accountable “family” of services.

Obstacles to proactive BR&E

Developing a strategic and anticipatory retention, expansion and modernization policy is discouraged by two major factors. First, given the existing incentive structures within the field of economic development – and always limited human and capital resources – developers tend to focus on recruitment. Second, there’s a pervasive market mythology which tends to regard all shutdowns, relocations and downsizings as pre-ordained and rational. The widely held perception is that, for manufacturing at least, the handwriting is on the wall: The industry is only viable if it goes off shore, because we can’t compete with China’s wages. Furthermore, if a firm’s management cannot turn around their business, there’s no way a government program or nonprofit could pull this off, right?

Well, not necessarily. Firms shut down or relocate for lots of different reasons, and not all of them are hopeless scenarios. We are not calling for wasting professional and fiscal resources on firms that are poor candidates for either proactive or rescue services. There will be times to help a firm survive and times to write it off and get on with helping its workforce transition to new employment. However, a proactive and coordinated BR&E effort is often possible, can actually preserve public resources over the long-term, can save “good” jobs from being outsourced, and is worth the effort.

Most states and local or regional economic development entities devote some resources to the practice of BR&E. The most common challenge – and one that substantially limits the effectiveness of many BR&E programs – is the coordination of resources in a varied, multi-sector landscape. In today’s manufacturing climate, with vertically integrated supply chains and ultra-specific niche technologies, BR&E must be a sleek, contemporary and efficient operation.

From the state level, the questions that policy makers and practitioners ought to be struggling with are:

• How to maximize the effectiveness of BR&E programs across varied localities;

• How to create a system that is proactive enough to prevent unnecessary shutdowns;

• How to maximize subsidiarity, so that decisions are pushed to the lowest level able to manage them, or as close as possible to those who will ultimately benefit;

• How to bring all the relevant stakeholders together around the same table in a varied range of retention cases, and provide access to the specialized expertise that will be often required;

• And finally, how to create and sustain a system that’s politically feasible.

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