Monday Updates: Controversy, Good News, and Un-Outsourcing

Here's a few links I've picked for you...they represent what I think are the most interesting or important news items in economic development over the past week. Let's start with controversy:

• The mayor of Richmond, VA isn't happy with the Greater Richmond Partnership, despite what appear to be its solid results. (The Greater Richmond Partnership is a economic development organization funded by the Virginia counties of Chesterfield, Hanover, and Henrico, plus the city of Richmond.) Richmond Mayor Mayor L. Douglas Wilder wants to pull out of the partnership, saying there aren't enough results, especially corporate relocations, to show for it. In fact, one of his deputies is quoted in the article as saying that there are no jobs at all to show for the efforts of the GRP. So I'm wondering, was the $300 million Philip Morris R&D center in downtown Richmond a couple years back the exception to the rule? One would think that 14 years of operation by GRP--producing $5.5 billion in investment through work with about 350 companies (according to GRP stats) would have produced benefits that justify the annual city contribution to GRP of $390,000. That comes to an average of $393 million of investment per year; divide that four ways for four partners, and you're still talking $98 million of investment per year for the city--a pretty good return (24,400%) on about $400k. Even if the returns are not evenly divided, the profit margin seems awfully good. Experience suggests these things are often a dispute between partners regarding how often a corporate project goes to one county versus another (or in this case perhaps, the counties versus the city). They say a rising tide lifts all boats, but I guess one can get jealous when it feels like the neighbors are upgrading to a yacht while you're still rowing a dinghy. (I'm not taking sides on this, by the way--just pointing out that the numbers presented in the article look favorable to GRP.) (Article courtesy inRich.com, Web site for the Richmond Times-Dispatch.)
  
• More controversy, this time in the San Diego area, as reported in commentary in the North County Times, a paper serving San Diego and Riverside counties in California. The question being debated is whether or not to allow use of a certain piece of land for a new stadium for the NFL's Chargers team. Interestingly, the concern isn't over taxpayers footing part of the cost--the team has committed to doing the project with only private money. The concern has to do with best use of the land. The author says:
  • "More than 20 years of academic research has failed to find a significant relationship between an investment in a sports stadium and significant job or income growth. In a 2000 article in the Journal of Economic Perspectives, researchers from Smith College and Vanderbilt University found that 'independent work on the economic impact of stadiums and arenas has uniformly found that there is no correlation between sports facility construction and economic development.'
    
    "In fact, stadiums can actually divert spending away from local businesses and increase expenditures on public safety and other city services. Other research has shown that stadiums inject very little new money into a city's economy; rather, they reshuffle the jobs and money already there."
• I can believe that it's typically very difficult to connect corporate relocations and expansions to the establishment or updating of a sports facility. I'm also certain that some cities have been bilked and have never seen an adequate return of any kind on their investment in a stadium. Yet I also believe that you could make the same case for the opera, the municipal park system, and a modern art museum (well, maybe not so much the bilking part). If you want to have the quality of life that attracts potential employees to an area (and keeps them there), these sorts of investments must eventually be made, even if it's impossible to show exactly how the city will profit. San Diego should feel lucky they're getting an offer to get a new facility without having to contribute any money. If the piece of land the Chargers want is literally the last place in town for other needed development like affordable housing, then putting a stadium there is probably a bad idea; if not, then the city should carefully consider its options. If it disallows a stadium based on the commentator's argument, it should act immediately to develop the land for a better use. It would be a shame to preserve the land for another use only to have it later become a mall under the watch of some future government with different ideals. (P.S. -- for further BF coverage of this topic, you might find our Feb. 2005 cover story on Sports Cities interesting reading.)
• No Controversy: Not too many people will argue with $5 million coming to them. The U.S. Dept. of Labor announced that 13 more regions across the country have been awarded $5 million each from the WIRED program. (That's Workforce Innovation in Regional Economic Development for those who don't know.) The title of the grant program makes it sound like it's money for going high-tech, but that's not really a requirement. It's good news, though, for the regions with ideas for new workforce development methods that won; the regions were in the states of New Jersey, Virginia, Kentucky, Mississippi, Wisconsin, Minnesota, Missouri, Kansas, New Mexico, Arizona, Idaho, Oregon, and Washington. Full release on the DOL Web site is here.
• Finally: Found this news item (courtesy ElectricNews.Net) to be kind of contrary to what we're used to hearing--finally, an Indian company is outsourcing to the West. In this case, the West is represented by Northern Ireland. Best of all, the 200 positions being created are for helpdesk workers--the very sort of thing the U.S. has (or had) been losing to India. (The helpdesk team to be created will serve customers in the European and U.S. markets. It would have been true irony if the center also served Indian customers.) Now there's no chance that workers in Northern Ireland are cheaper by the hour, in terms of gross wages, than Indian employees doing the same work. But the Northern Ireland workforce has been earning a reputation for being still a good value compared to other Western locations, and most importantly, it seems to be a place where nothing is sacrificed in terms of cultural communications and efficiency between the employee and customers in the U.S. and/or Europe. To wit: "The announced jobs bring the total number of people employed by Indian IT companies in Northern Ireland to 2,500."