Monday, August 01, 2005

Quality Should Trump Cheapness in Memphis' Economic Development Efforts

Well, if nothing else, we’re consistent.

When faced with how to sell Memphis to a group of International Paper Company executives accustomed to the high quality of life that their current Stamford, Connecticut, headquarters gets them, what do we do?

We tell them how cheap it is here.

Just think, these are executives who earn enough money to live in any city in the world. They have chosen to work and live in one of the most expensive super-regions in the U.S. They live there because it has some of the highest-performing school systems in the country. They pay higher taxes because they get higher livability in return. They live there because they have the cultural riches of New York City within reach. They live there because they have more professional sports teams within their grasp than the total in the entire South.

But somehow, our best argument is that these highly-paid executives will want to move to Memphis because we’re cheap. Their groceries won’t cost as much as it does in Connecticut. And if that doesn’t excite them enough, they won’t have to pay state income tax, they are told.

None of this is new. When the 70th largest U.S. company decided not to move its headquarters to Memphis at the time it relocated its entire operational center here, the executives at the home office said that they preferred the amenities, the lifestyle options and the cachet of the New York region to Memphis.

In other words, it was never about money, and it won’t be this time. It will be decided on how these executives answer the simple question: Do I think Memphis can offer me the kind of lifestyle that I want – enjoyable, enriching and professionally advantageous?

It’s not about statistical analyses. It’s not about financial equations. It’s not even about their IRS forms. It’s about quality of life. And the truth is that these are the people running a Fortune 100 corporation, and they have already done their homework about Memphis, chiefly from the people already working here for I.P.

The water cooler talk in Stamford is that I.P. isn’t expected to move to Memphis unless the governor of Connecticut bungles his negotiations with the company. Here’s hoping that he does, but regardless of what happens, I.P. points up to the bigger issue about the strategies that we are using to recruit new businesses and support existing businesses.

There are times when it seems that Memphis can’t get its economic development strategies into the 21st century, a knowledge economy in a global marketplace. Our economic development strategies have a 1960’s quality to them, and they have adjusted little to the new realities of economic recruitment and growth. That’s also why selection of the new president of the Memphis Regional Chamber is such a watershed event in the life of our city, because that person needs to take a fresh look at the way we conduct our recruitment, that person needs to have some experience in dealing with technology and knowledge-based companies and that person needs to have the courage to reinvent the Chamber as we know it.

Memphis’ economic development programs are caught in the commodity trap. It stems from our background as an agricultural center and continues with our pride in being a distribution center. We sell products that tend to be seen as commodities, to a consumer making a decision based on the lowest price. Commodity economic development plans are forever in a race to the bottom to offer the cheapest prices (which of course puts pressure on employee wages to go lower).

Because our heritage is in businesses with thin profit margins, our economic development culture is one with an aversion to risk-taking, which in turns devastates innovation and entrepreneurship. Cities with commodity mentalities think they can grow their economies with low wages, low land costs, low utilities, low taxes. In a commodities world, these are seen as the factors that must be controlled to keep prices down. But when we are competing with workers in Southeast Asia, Mexico and Bangladesh, it is an approach doomed to inevitable failure.

Most devastating of all is that cities that are accustomed to a commodity approach to economic development are at a huge disadvantage in attracting and retaining knowledge workers, the so-called “creative class.” It is not merely a coincidence that companies like FedEx report constant problems in attracting young, professional, mobile workers to Memphis.

Rather than sell the importance of investments in the intellectual infrastructure that will be our competitive advantage for knowledge-based companies, Memphis continues to sell the infrastructure of the industrial age, at the same time that its last remnants are vanishing before our very eyes.

So, somewhere in all of these charts and graphs for IP executives about our cheap way of life, here’s hoping that the Memphis Regional Chamber is also selling Memphis as a quality place to live. In fact, that’s exactly what former Memphis Mayor Dick Hackett and former Shelby County Mayor Bill Morris did the first time when this community recruited and won the battle for IP’s operations headquarters.

Both mayors went to the heart of the beast – IP’s Manhattan offices -- and explained why Memphis could offer a quality of life just as authentic and personally fulfilling as Manhattan. Yes, of course, they mentioned cost of living, but as a footnote, not the main story. Rather than selling cheapness, they sold quality – time to be with families, accessible outdoor recreation, no long commutes and the small things that just make live more bearable on a daily basis.

Revolutionary in its simplicity, It was a risky strategy, but it paid off.
And more than a few of the executives lured here back then commented later that the reality matched the sales pitch. They did find a better rhythm to their lives in Memphis.

And selling it chiefly on the basis of its cheapness only cheapens what we have to offer in the first place.

3 comments:

TT BOY said...

The CA had a front page story last week highlighting the Chamber's effort to woo IP. Part of that effort, according to the story, is showing off Broadway plays at the Orpheum, the city's museums, the booming Downtown, the Grizzlies, the Zoo and more. They are also highlighting the economic benefits of moving to Memphis.

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www.mueblesennavarra.com said...

This won't truly have success, I think this way.