Key to Success In Industrial Development
|
EXISTING INDUSTRY Key to Success In Industrial Development |
|
| CRD-22, March 1994. V. Wilson Lee, Extension Economist Emeritus, Community Resource Development, Auburn University, and John Hawthorne, former Director, Alabama Prepared Cities Program, Alabama Department of Economic and Community Affairs (Deceased), Alabama Power Company | ||
Often after the announcement of a new plant, community leaders forget about it and start looking for another one. If this is the case in your community, perhaps a look at your industrial development program is in order. Most new plants are designed to be at least doubled in size. Thus the new industry in a community brings with it a "built-in" opportunity for additional new jobs. A company that has been treated well in a community is likely to consider expanding its existing plant should the need arise. The company that has not been treated well will probably leave. And, a new industrial prospect will always want to talk to local industrial managers (usually behind closed doors) before deciding to locate in a community.
Expansion of existing industry has the same benefits as the attraction of new industry and is an important aspect of a truly comprehensive industrial development program. An expansion does not (usually) absorb as much in community resources (water, sewage, roads, etc.) as a new industrial plant. Thus expansion is doubly attractive. To encourage expansion, viewpoints and problems of existing industry should be identified through interviews and meetings with plant managers. Programs for assisting in local problem solutions should then be undertaken.
A team of two or more should visit each manufacturing plant and major business to gain management's awareness and support for the community's effort to promote economic development. It is important also to offer assistance in problems of a local nature faced by existing industry and business. The visitation list should include those firms normally associated with a town, even if they are not inside the city limits. An example of a Business And Industry Visitation Form is shown at the end of this document.
Communities foster good will and good communications by recognizing a company's contributions to the community. Some possible strategies for involvement include the following:
An adequate supply of labor is essential to a successful industrial operation. Community development organizations expand the local labor force by the following strategies:
Most local industrial development organizations allocate a significant amount of their resources to obtaining and developing industrial sites and buildings. Industrial building and site needs do not end with the initial location. The following program strategies recognize this reality:
Lack of sufficient capital is a major problem for many businesses. In many cases companies would expand operations if acceptable financing could be arranged. Following are ways local industrial development organizations have on occasion been able to help:
Complying with governmental regulations is increasingly becoming more difficult for industry. The regulations always require industry to deal with local and state governments. Local industrial development organizations involved in this process have developed the following programs:
Smaller industrial operations may fail because of their limited ability to resolve technical problems. Following are a number of technical services local industrial development organizations have been able to provide to businessmen:
Creation Of New Jobs
Since most new manufacturing jobs created in many communities come from expansions of successful existing businesses, improving the probability for success of a local firm will usually lead to creation of new jobs.
Influence On The Economy
Successful industrial production, payroll, and investment stimulate local business and form the base of the community's economy. These successful local manufacturing firms will help to stabilize and expand the local economy and guarantee a flow of outside resources into the community, securing the basic economy of the locality.
Influence On Industrial Prospects
Successful local industry suggests a positive business climate. The local development group will find no better sales point for its industrial prospects than to be able to show successful, expanding local industry. If some firms have found your community to be a profitable location, it could prove to be a profitable location for others.
Attracting New Firms To The Area
Local business owners and managers can be excellent allies in bringing industrial prospects to the community. An unsolicited endorsement of a community by a hometown businessowner will occur, however, only when he or she is convinced that the business climate is positive. Additional manufacturing firms are advantageous to local industry only if those who locate prosper, become reliable suppliers and customers, and do not excessively compete for scarce resources.
Successful existing industry programs are characterized by the willingness of development groups to visit with and listen to local plant managers and to try to understand their problems.
Assistance programs and techniques that are appropriate and useful in one community could be useless in another. Such programs are time-consuming and will require a significant share of a local development group's resources. It is best not to begin to provide assistance until the group is willing to do so on a continuing basis.
Organization To Implement The Program
The development group generally assigns responsibility for an existing industry program to a committee or individual within the organization. An individual assigned responsibility for the existing industry program should be supported by a representative committee. However, effective programs are rarely developed by one individual who does all the work and excludes the committee.
Committees seem to function best when limited to six or fewer carefully chosen members, including representatives of utility companies, banks, government, and manufacturing. The duties of the committee should be broadly defined by its leadership and by representatives of the manufacturing sector.
Meetings should occur at least monthly to report local problems identified and actions taken to resolve problems.
Identifying Existing Industry
To open lines of communication with firm managers, the group should assemble a file on the business firms in the area. The file should include managers, locations, and products of the plants. This file may be useful to both local and incoming industry by identifying businesses that might provide needed services.
Visiting Industry
Because successful existing industry programs are based on personal contact, a visitation program to establish an atmosphere of trust between management and the development group is important. Effective visitation programs involve frequent, regular, and brief visits to all firms. Problems identified are referred to appropriate groups or individuals for resolution and noted in appropriate files.
Periodic group meetings with local industrialists in the community may also be effective. Such meetings are best when conducted informally without speeches, publicity, or outsiders in attendance. The only business on the agenda should be to make industrialists aware of the development group's services and its willingness to help.
Personal visitation or meetings will be effective only if there is adequate follow-up and prompt attention to requested assistance. Prompt response will demonstrate the development group's sincerity in helping enhance the local business climate.
Sometimes management may greet the initial visits with suspicion or outright hostility. Thus, the representatives must be able to convince management that the organization is genuinely concerned about the success of the company. On the first visit the development group representative might listen to the industrialist's assessment of the local business climate. Subsequent visits must be made to demonstrate interest, identify evolving local problems, and report any progress attained in solving those previously identified.
A clear definition of who is authorized to discuss the company's future plans should be made. With smaller operations, contact may be made directly with the president or owner. With larger firms, contact may be with department heads or managers.
Maintaining Lines Of Communication
Communication can be maintained in a number of indirect ways. One popular method is a "Manufacturers' Club," sponsored by the local development group. The club provides an opportunity for local industry leaders to meet informally and share mutual successes and concerns. The success of the club depends upon a sense of trust among those participating, and the effectiveness of the club depends upon strictly limiting membership to local industry decision-makers.
Sponsoring Local Recognition Or Appreciation Day
An Industry Appreciation Day encourages recognition of local industry and illustrates the community's appreciation. Such an event may be jointly sponsored and financed by the city and county governing bodies, chambers of commerce, and the industrial development organization. A recognition committee including representatives of all sponsoring organizations should be formed to coordinate activities. This recognition committee would be responsible for the following:
Plant tours provide an opportunity for local citizens to see the manufacturing operations that contribute to their prosperity. Obviously, such tours provide a valuable public relations outlet for many firms and may also be promoted by the firm. A well-planned plant tour might include the following:
The effectiveness of a plant tour depends on timing and publicity. Schedule the date and time to minimize conflicts with other events or holidays. Send announcements and invitations well in advance of the tour and set a time limit for responses. Notify the news media and have a photographer present on the tour to supply photographs to the news media and to visitors.
Sponsoring An Industrial Showcase
A successful industrial showcase must have cooperation between the sponsoring development group and industrial firms. A public display of products manufactured locally may be used. Exhibits provided by local firms are often effective. Armories, courthouses, gymnasiums, city halls, and other centrally located public buildings are often used for this event. The development group should arrange for a location to house the exhibits.
The development group is responsible for inviting all local firms to participate in the industrial showcase and for soliciting their suggestions. The organization can help firms prepare displays if needed. Schedule the showcase to coincide with other crowd-attracting events, such as a sports event, and advertise the showcase before and during the event. Eye-catching, informative exhibits will explain the participating firms' relationship to the community. Exhibits might include products manufactured locally, photographs of work activities, employees, and graphs and charts of production records, finances, and health and safety information. Management should help install and dismantle the exhibits and provide people to work the exhibits. Participating firms might give industry related prices or other information.
The development group should prepare a portable display depicting all products manufactured in the community to exhibit at statewide industrial showcases and at local community gatherings. Chamber of Commerce buildings, hotel or motel lobbies, banks, shopping centers, airport terminal buildings, and other spots frequented by the public could house this community display, which should be changed or rotated regularly to attract attention.
Holding Industry Appreciation Dinners
Annual appreciation dinners for firms are a traditional form of recognition and can be held as part of an industry recognition day. To prepare for an appreciation dinner, the development group completes an invitation list including company officials, members of the industrial development organization, and community leaders. Plan a menu, program, and social hour. After setting a date and location for the dinner and making reservations, mail invitations and carefully record responses. The speaker for the program might be a local or outside person, depending on the topic. If the speaker is local, the speech could be a summation of accomplishments within the year and goals and objectives for the coming year. If the speaker is an outside person, the topic could be motivation, current events, national or regional development, trends, etc.
The development group arranges for decorations, media coverage, and certificates of appreciation to be presented to all firms at the awards dinner. In many communities it is traditional to make awards to specific firms for such things as "Outstanding Firm of the Year," "Best Community Relations Program," 'Outstanding Employer," and "Most Successful New Product." The merits of presenting such specific awards should be evaluated in relation to the negative effect that may result if some firms believe they were qualified for an award but did not receive one. An alternative is to have a banquet to honor all firms in the community rather than to single out a few.
As every industrial development group knows, a community in which the existing industry is expanding indicates to potential firms that the community is growing and thriving. Nothing exerts more influence in the location process than demonstrated success.
When a successful existing industry program is developed, it will be based on information gathered through personal contact and by provision of requested assistance in such areas as recognition, labor, government relations, financing, buildings, and sites.
Whatever program strategies are used, it is clear that existing industry should be recognized for its contribution to better living in the community and for its part in fostering the economic well being of local people. Industry has a need for respect and appreciation for actions of value to the community.
A successful local industry program must be able to allocate sufficient resources to effectively work with firms on difficult local problems. As the examples illustrate, difficult problems require a significant expenditure of resources. When the problems are resolved, profits are enhanced, jobs protected, and expansion plans will likely be announced.
Those who object to the major reallocation of resources involved in adopting this kind of program strategy should be aware that it makes little sense to attempt to influence firms to move into the community if local firms have been neglected or inadvertently mistreated.
The development group that does not follow through with its announced plans to assist local industry runs a high risk of earning the title of a "lip service organization" and creating a feeling of isolation among industry management. Where management feels that it must "go it alone," expansion plans are unlikely. Development groups should not initiate efforts to offer assistance unless they are absolutely committed to following through in a responsible manner.
Extension recommends that those industrial development organizations that have a significant industrial base seriously consider reallocating their resources to develop and implement an existing industry program. Such a program must first establish a program strategy that will place the development organization in a position to develop personal trust with plant management. It should also include an assessment of industry needs and provision for recognition of the value of existing industry to the community.
Once the lines of communication have been established, the next step is to begin the process of solving the problems identified. It must be emphasized that the development group's resolve to follow through on the problems addressed must be unwavering. Failure to follow through can create a negative relationship that will jeopardize the possibility of future expansion plans. Development groups should take seriously the warning being issued from communities experiencing declining manufacturing employment. Such warnings indicate that failure to deal with the difficult problems of existing industry signals an unattractive business climate and a feeling of isolation from the community by management. This feeling will be communicated to many potential industrial prospects and contribute to a declining situation.
On the other hand, the industrial development group that is committed to assisting existing industry in practice and not just in theory will be placing the community in the best possible position for seeing both expansion of existing industry and establishment of new plants.
Business And Industry Visitation
| Date firm began operations in city | |
| Products manufactured or type of business | |
| Number of employees | |
| Name and title of company official contacted | |
| Date of contact | |
| Could the community assist with any growth op expansion plans? | |
| What kind of employment opportunities do you feel the community needs most? | |
| Does your company support the community's efforts to attract further economic development? | |
| Are there problem areas in your company's operations that the community could assist in solving? | |
| Skills needed by company: | |
| Does your company have out-of-state suppliers that you would like to see located in Alabama? | |
| Are there problem areas in the community that the community could assist in solving? | |
| MEMBERS OF VISITATION COMMITTEE: | |
| | OWNER OR MANAGER OF FIRM |
| | |