Industrial Development For A Small Rural Community
CRD-62, May 1995. V. Wilson Lee, Extension Economist Emeritus, Community Resource Development, Auburn University
Many rural community leaders think they need industrial development for a better quality of life for their community. But before making any definite decisions, leaders must determine if the citizens of the community agree that they can obtain a better quality of life through industrial development.

There are valid reasons for not wanting to bring manufacturing into a community. So before any rural community begins an industrial development program, leaders must consider just what the community's goals are for 20, 30, or 40 years from today. Such strategic planning is basic to any successful effort.

Planning begins with analyzing local resources. For example, can agricultural and natural resources be further developed? Does the natural resource base lend itself more to recreation and tourism development, retiree recruitment, industrial development, or all three?

A community has three options for development: First, do nothing; in all probability the community will then stagnate and eventually dry up. Second, try to maintain the status quo with no increase or decrease in population. Third, make a major effort to attract new jobs and new people to the area. What your community wants for its future should determine the route it will take.

If you decide to work for new jobs and new people in the community, you again have three options. One is to develop natural resources such as agriculture and mining; development of the recreational and tourism- or retiree-attraction industry is a second choice, and manufacturing is another. Many successful communities use a combination of all three.

A question that is often asked is, "Just what does a new manufacturing plant mean to a community?" A survey made by the U.S. Chamber of Commerce (1984) shows that 100 new factory workers in a rural town will mean:

The 64 new jobs in the non-manufacturing sector would be distributed as follows:
If your community leaders decide they want to expand the local economic base by attracting industrial jobs, citizens must be willing to meet the following conditions:
  1. Prepare to welcome new people and new ideas into the community.
  2. Provide the tax base and public support for buying land and providing public facilities and services that are essential for industrial growth.
  3. Build, finance, and staff an organization that can give the leadership necessary to attract new plants to the area and to encourage existing plants to remain and expand.
  4. Develop a positive community attitude that will be attractive to industrial prospects.

Both foreign and domestic firms are moving into the rural areas of the South in greater numbers than ever before. This trend is expected to continue in the years ahead. Many Alabama communities are actively seeking industry to improve local employment opportunities and tax revenue. Many have been successful, and many more can be successful in the future. However, since rural communities throughout the nation are seeking industry, local leaders must use initiative in getting ready to further their economic growth.

Organizing An Industrial Development Committee

The most important factor in any successful industrial development program is the effectiveness of the community organization. It can be no better than its members. Therefore, this group must consist of the community's leading citizens who are willing to do whatever work is necessary. No outside agency can do this job. It must be done locally. Hired staff can be helpful, but the decision to locate or not to locate a plant is often based on the attitudes of the local business owners and managers. Images created by elected officials cannot substitute for the impressions made by local bankers, plant managers, and other business and professional people. To be successful an industrial development organization must be active with plenty of community-wide, grass-roots support. Additional information relating to community organization may be found in Circular CRD-5, "Rural Industrialization."

Analyzing Community Assets And Deficiencies

Community leaders must realize that business firms exist for profit. All business decisions, from plant location to public relations, are based on some concept of short- or long-run profit. Therefore, local developers should emphasize the profit advantages available in your community. Community leaders should ask themselves how the profits of local firms compare with those in other locations and should make an honest evaluation of how local companies feel about the community from a business standpoint. Again, the importance such impressions play in attracting other firms can't be overemphasized. One of the first things a prospective firm will do is talk with local business owners and managers. If they give an unfavorable report on their profitability or how the community has supported them, the prospect will probably spend no more time considering your community. If the report from other industries is enthusiastic, then the chance of landing the prospect is much improved.

With many firms, the availability and quality of public services are significant factors in choosing a location. A prospective manufacturer will be encouraged by the suitable provision of electric power and water supplies, adequate refuse disposal facilities, fire and police services, good highway maintenance, satisfactory transport services, and other such support systems. If a locality has deficiencies in such services, the willingness and ability to remedy them quickly will be important.

For a community to be successful in attracting industrial growth, it must:
  1. Form a local Industrial Development Committee composed of leading citizens who are willing to devote extra hours to promote the community.
  2. Make a realistic analysis of the community's assets and liabilities. This analysis should reveal what is needed to enhance the community as a place to live and provide factual information required for an effective industrial development program.
  3. Seek assistance from the Alabama Development Office (ADO), the Alabama Department of Economic and Community Affairs (ADECA), the County Resource Development Committee and other groups that can help and support local industrialization efforts.
  4. Work toward the purchase and development of a tract of land that can be zoned and developed for possible industrial use. The site should be at least 50 acres but could be as much as several hundred acres.
  5. Organize a good promotion program with one or two officials who can make commitments for the community regarding what services or concessions can be supplied to the prospective industry. Develop educational programs that will make citizens of the community aware of the benefits and costs of industrial development.
  6. Clean up, tidy up, and, in general, encourage local citizens to project an image of a progressive, energetic community that would be a good site for an industrial prospect.

New business representatives know that water and sewer services can be delivered only where service mains of adequate size and reserve capacity are available. The community must be able to give accurate information on the cost and time involved in extending mains to a prospective site. Usually, plant location prospects can be satisfied when water or sewer utilities can be extended to a site within 45 days after its sale.

A prospective firm would consider its evaluation incomplete without a careful analysis of the essential supporting services needed to meet its specific needs. For example, prospects often want to know the names and locations of the following services:

Equally important for many firms is the availability of attorneys, accountants, and other professional and employment services. Such may be included in the firm's requirements. Community development leaders must present evidence that such services can be met locally or must know the nearest place where they can be found.

Seeking Assistance

Buying and developing the wrong land is expensive and will usually prove to be a liability difficult to offset. Before a community commits its resources for land acquisition, leaders should get professional assistance. Site engineers from the Alabama Development Office (ADO), in partnership with railroads and utilities, will meet with a development group and look over the various sites being considered. They will recommend the best choice and will furnish a complete report to be used in making final determination. This gives you the advantage of an evaluation prior to assuming the very considerable cost of site development.

A local site evaluation committee can do some preliminary industrial site evaluating using community residents and resources. The steps are relatively simple. Usually the only technical assistance required involves soil information, and any office of the Natural Resource Conservation Service that serves your area can help with this.

Results of a survey may vary; but properly conducted, it should reveal the high priority sites to purchase or develop. However, no final decision to option or purchase a site should be made until an evaluation has been made by site engineers from the ADO, your local utility, or the railroad serving the area.

Many communities do not realize the amount of preparation that must go into developing adequate water and sewage facilities to meet the industrial needs. Representatives from the ADO generally recommend that domestic water and sewage needs for plant employees equal 35 gallons per day per person. Additionally, enough water must be available for the manufacturing process plus maintaining adequate pressure to supply sprinkler systems for fire protection in present and anticipated firms.

To determine what your community will need, retain consulting engineers to make projections and design facilities large enough to meet the community's projected needs during the next 20 to 40 years. The ADO, electric utility firms, railroads, and others serving the community can help in making these decisions.

Selecting A Site

A firm planning a new plant typically needs a site suitable for both present use and future expansion. To back its efforts in attracting new industry, a local economic development organization must be prepared to supply information about individual plant sites in the area, point out the unique advantages of each, and make on-the-spot commitments.

The steps for a local site evaluation project include:
  1. Use U.S. Geological Survey topographic maps (where available) to locate parcels of land which would seem to be potential industrial sites.
  2. Determine which factors will have an impact on the development of the sites identified.
  3. Develop an evaluation system for potential sites.
  4. Compare each site against the others and make specific recommendations on each.
  5. Decide which site appears to have the highest potential for development and for acceptance by industrial plant locators.

This takes long and careful preparation, but it is worth the effort because it produces results. A manufacturer considering possible locations for a new or branch plant is not convinced by mere assurances of "many fine plant sites in town." The new business wants clear evidence that these sites exist and are available and suitable for the operation of his proposed plant.

To determine whether or not a site meets the firm's requirements, the manufacturer must be furnished information on where sites are located, their size, cost, topography, grading requirements, susceptibility to flooding, drainage characteristics, load-bearing capacity, depth to ground water, zoning designation, tax rate, adjacent land use, existing industrial buildings and other improvements, and the utilities and transportation facilities by which they presently are or definitely will be served by the time a plant would be in operation.

Most businesses readily agree that the availability of a good labor situation and an attractive plant site are prerequisites for evaluation of a community. But the average prospect will not wait for a situation where a community is selling an unimproved "back 40" for industrial sites. The law of supply and demand operates with certainty. Ready-to-use industrial sites are an absolute necessity in today's industrial development program.

Development of new sites, or the creation of an industrial park, will not ensure that industry will come to every small community. But it will be a big step forward in transforming a community into a better-than-average one for attracting industry.

Actions to prepare land are taken on private initiative by local development corporations and sometimes by local government. A recent study estimated that approximately 15,000 to 20,000 acres per year may be needed to accommodate nonmetropolitan industry nationwide. The community with ready-to-use sites will, without question, have the advantage.

Metropolitan areas are not suitable for industries that use large amounts of land. In a major urban center, it is not uncommon for a 30-acre site to cost more than $1.5 million. In a small town, the same amount of land may cost $60,000 or less. Land prices are a factor in the location decision. Because this is a plus factor for rural areas, every attempt should be made to minimize local speculation in land for industrial sites. Speculation can drive industry away. It is almost pointless to show an industrial prospect land that does not have a stated and fixed price. Many communities or local development groups own or option land to protect the community interest.

One of the most widely used industrial development techniques is the establishment of publicly owned industrial parks. An "organized" or "planned" industrial park or district is a tract of land which is subdivided and developed for the use of a group of firms. Streets, railroad tracks, and utilities are installed before sites are put up for sale.

A checklist of the attributes of a good industrial site include the following:
  1. Land should be fairly level to reduce site preparation costs. Soil should be of such composition that it can bear foundation loads or can be made to bear foundations with a reasonable financial outlay. Soil should be of sufficient depth to facilitate underground access for services.
  2. The land should be well drained and free from flooding.
  3. The site should be located so that it can be served by utilities. This means that lines for water, sewage, gas, and electric services must be nearby, if not on the site.
  4. The land should be served by highways or all-weather roads and, if possible, located near rail service.
  5. The site area should be large enough to be broken into complementary parcels to accommodate various-sized plants and their parking requirements.
  6. The land should have a fixed price and be in a range that is reasonable compared with other land in the immediate area. It should be firmly established that the land will be available when a buyer appears.
  7. Industrial sites should be protected by zoning laws to prevent incompatible neighbors and possible future restrictions to industrial expansion. Sites should be free of encumbrances such as separately held mineral rights or easements that may restrict their use.

In analyzing potential industrial park sites, several basic factors must be considered. Among these are total site size, usable area, purchase cost, and basic development costs such as roads, water, sewer, and gas. Detailed soil maps must be prepared on each site to analyze soil types. The amount of grading required for plant sites must be considered. A prospect can better visualize his plant on a site if all usable land is open and can be viewed easily. Many companies want their plant located close to a main traffic artery so that it can be viewed by the public. And accessibility to airports, main highways, and to existing water, gas, and sewer lines is important in holding down the overall development cost.

A comprehensive plan provides for adequate control of the area and buildings through restrictions and zoning to protect the investments of both developers and resident firms. The community should draw up a covenant of rules and regulations covering the basic requirements firms must meet to reside there. (A sample of a covenant is in Circular CRD-5, "Rural Industrialization.")

Industrial parks or districts offer advantages to prospective occupants as well as to the communities in which they are located. Community advantages stem mainly from the economy of providing services to a compact area and from the social benefits of compatible land uses. Convenience and reduced risk are probably the primary advantages for industry. By choosing an industrial park location, a manufacturer or distributor is assured that needed facilities and conveniences will be there when he moves in. He expects to be spared zoning problems and the possibility of indignant meetings with abutting residential property owners.

Industrial parks can supply the increasing demand for locations away from traffic congestion, restricted parking, and otherwise cramped sites. Most companies want more space for functionally designed one-story plants, off street parking and loading docks, employee cafeterias, recreational facilities, and future expansion. Furthermore, they may want to be assured that their investment will be protected, and that they will have compatible neighbors and desirable services. A location in an industrial park generally meets these requirements.

Large companies often have in-house plant location experts, engineers, and other specialists who can completely investigate locations, labor, taxes, and utilities, but most smaller manufacturers would like to avoid these surveys. From the viewpoint of this group in particular, the industrial park can be the answer to many location problems.

The park developer may even provide a "package" or "turnkey" type of service. In this case, an architect and contractor will carefully supervise the design, construction, and maintenance of the new plant according to the manufacturer's specifications and consistent with building codes and established restrictions in the district. Financial assistance may be part of the package as well. The terms would probably be reflected in the profit or nonprofit objectives of the group controlling the district.

Promoting Industrial Development

There are various facets of a well-organized promotional campaign. The relative importance of each aspect depends on local situations, such as organizational budget, size and experience of staff or volunteer group, scope of responsibility, etc. However, it is important for even the smallest organization to understand all aspects of promotion since it can be scaled down to fit the most modest development effort.

The ways information and ideas are transmitted during a promotional campaign can be categorized as internal, local, and external.

      Internal promotion is communication--the constant education of the members of the commission or board, directors of the foundation, corporation, or Chamber of Commerce and public officials of your community or area.

      Local promotion is the communication of the program to the citizens of the community or area for whom the program is being developed.

      External promotion is communication to the general public and particularly to those businesses and industries to which the program is being directed (South Central Alabama Development Commission 1976).

It is through evaluation of alternative ways of presenting promotional campaigns and the subsequent follow-through techniques that you identify the tools suited to your particular organization.

Preparing Your Community To Welcome Prospects

If you are in a community of 20,000 or less it would be to your advantage to get involved in the Alabama Prepared Cities/Counties Program. This program is sponsored by the Alabama Department of Economic and Community Affairs (ADECA) and is an excellent process to go through for those communities who are committed to developing a successful program in economic development.

For more information, call your county Extension office. Look in your telephone directory under your county's name for the number.
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