As world economies continue to adjust for COVID-19, Economic Development Organizations (EDOs) need to identify new ways to serve potential investors. This article describes one approach and how OCO can help.
By recognizing how corporate location investment decisions are changing, and by focusing on strategic initiatives that will continue despite economic recession, EDOs can create new deliverables and opportunities for investors. The idea centers around industry mapping and subsequent marketing for high potential opportunities (HPO).
What follows describes current realities for U.S. EDOs, current strategies for U.S. EDOs and some examples of strategic initiatives for states to consider that will continue despite the economic recession. Finally, the benefits to EDOs for adopting this approach, as well as the changes in approach that they should consider are presented.
CURRENT REALITIES FOR U.S. EDOs
In light of the shuttering effect of the coronavirus on U.S. states’ economies, broad-based business recruitment activities (across multiple sectors) have been put on pause. Many EDOs are adopting a domestic focus to address existing business disruptions. Reductions in state budgets are also beginning, with business recruitment seen as non-essential. We are also seeing a rise in interest and opportunities for reshoring, particularly in key sectors such as medical.
Strategic initiatives will continue due to prior commitments and alignment with the future economy, but states will need to re-imagine and re-message their business recruitment programs.
The economic development profession has regularly and successfully evolved to providing new services in order to remain relevant to constituent communities, be it states or localities, but COVID-19 requires another transformation. The challenge is to find opportunities to which the EDO brings value.
CURRENT STRATEGY BY MOST EDOs
The reality is that EDOs that target 5 or more industry sectors in their business recruitment programs, include such a wide spectrum of the economy that it means that they are not being strategic in their approach. In the post COVID-19 world, EDOs will not have the resources to market as widely, nor will results be as evenly distributed, to allow continuation of non-strategic marketing.
Even in good economic times, some EDOs realize that they lack clear strategies that target high potential sectors and high potential projects.
The opportunity for EDOs lies in mapping the supply chains for one, or more, of a select few industries. This map could then be used by EDOs in their business recruitment efforts for attracting both U.S. and international sources.
HIGH POTENTIAL INITIATIVES
In January 2020, the President asked Congress for $1 trillion in infrastructure investment, including:
- $2 billion for projects that relieve congestion in freight networks, including interstates, freight rail, and ports.
- $300 million for a competitive highway bridge program. This program will incentivize states to repair or replace rural bridges in poor condition using contract bundling, a more efficient way to deliver projects.
- $300 million for two innovative approaches to fund water infrastructure investments
In April, the House of Representatives announced they want to enact a massive infrastructure package upgrading the nation’s broadband, road and water systems in the next installment of Congress’ effort to help the country weather the economic damage inflicted by COVID-19. House Speaker Nancy Pelosi said the measure would be in the $2 trillion range.
The opportunity for EDOs lies in mapping the opportunities of a massive infrastructure building program, and to deliver these to U.S. and non-U.S. companies.
HOW WE CAN HELP
OCO can help EDOs in three ways:
- Support you in mapping supply chains under the strategic infrastructure initiatives taking place in your state
- Support you in the follow-on marketing support to the supply chains in the strategic initiatives
- Matchmaking for the international supplier with constituent companies in your state within the strategic initiatives
CONSIDERATIONS FOR EDOs
Doing initiative-specific work such as this will require a shift in an EDO’s marketing. Marketing will need to be messaged around sector and state expertise in addition to traditional FDI lead generation. An example, or two, of prior mapping projects will be needed to demonstrate the EDO’s competencies. The EDO may need to contract with sector experts for portions of the mapping project, in order to obtain high-quality, and fast, supply chain mapping.
But the benefits of this work are clear. It positions the EDO as thought leader for strategic initiatives at state level, it differentiates the EDO among the pool of potential investors from competing states, and it can be replicated internationally (mapping and marketing an EU strategic initiative to U.S. trade agencies for example). OCO stands ready to help.