As Michigan’s industries have evolved over the years, so too have the roles economic developers play when it comes to helping businesses grow and expand in communities across the state.
While economic developers still focus their efforts on retaining existing companies, courting site selectors for corporate expansion projects and traveling overseas to win foreign investment, they’ve also broadened the scope of their services to work in smaller, rural areas across West Michigan.
Case in point: Southwest Michigan First Corp., a Kalamazoo-based economic development firm, last month completed a nearly two-year-long contract with the City of Marshall. Under the terms of the deal, Southwest Michigan First provided a host of services that were not typical for the economic development agency.
The partnership, which officially began in October 2014, put Southwest Michigan First at the helm of a consolidation effort to combine the city’s local development finance authority (LDFA), chamber of commerce, convention and visitors bureau, and downtown development authority under the banner of the existing Marshall Area Economic Development Alliance (MAEDA).
“We wanted to support them because we believe that standalone systems are not sustainable any longer,” said Ron Kitchens, president and CEO of Southwest Michigan First. “There aren’t the resources to have five leaders, five organizations, five different computer systems — five different everythings.”
Beyond working through the integration process of combining those organizations, Southwest Michigan First agreed to staff Marshall’s visitor center and administer its day-to-day programming. The economic development firm also worked with community stakeholders on projects ranging from installing streetscapes and signage and painting doors to organizing retail promotional outings and hosting a community calendar, he said.
“It was far bigger than a (typical) economic development contract,” Kitchens said. “It was really a complete startup of all these entities and merging their boards together and managing those other activities. … This was a big deal.”
When the contract ended on March 1, Southwest Michigan First transferred all operations over to MAEDA, which recently hired Scott Fleming as CEO to lead the newly restructured organization.
Southwest Michigan First’s partnership with Marshall underscores a larger trend of agencies increasingly focusing on more rural areas as part of a regional economic development service delivery model, sources said.
In 2011 under the leadership of Gov. Rick Snyder, the Michigan Economic Development Corp. (MEDC) announced a shift in Michigan’s economic development policy to focus on a regional service delivery model, rather than on a one-size-fits-all statewide strategy.
Some metropolitan economic development organizations had already collaborated with rural colleagues — for example, Grand Rapids-based The Right Place Inc. contracted for years to provide services to Newaygo County Economic Development Office — but the change in state policy has largely driven their attention shift to the rural areas.
Beyond the shift in state economic development policy, changing demographics also serve as a driver in how the agencies focus their efforts, according to industry sources. As more people — particularly millennials — move to large urban areas, corporations are making the same moves to better attract the talent they need to grow, said Dean Whittaker, president and founder of Whittaker Associates Inc., a Holland-based economic development consultancy.
“I call it ‘bright lights and big city’ syndrome,” Whittaker said. “It’s the drawing out of talent from those non-urban areas because younger people are moving into the urban areas. Unless you have a mass of resources to work with, you’re not going to have the critical mass to attract those projects.”
The need for more resources drove the Greenville Chamber of Commerce to contract with The Right Place to provide business attraction and retention services in the Montcalm County community of about 8,400 people located 35 miles northeast of Grand Rapids.
In September 2014, the partnership scored a major win when The Right Place helped attract Chinese wheel manufacturer Citic Dicastal Co. Ltd. to the former United Solar Ovonic LLC campus in Greenville. Construction remains underway at the facility, where the auto supplier projects it will create 300 jobs by 2018.
The Right Place has similar partnerships with the economic development agencies in Montcalm, Ionia and Newaygo counties.
“One of the interesting things that we have identified is helping the rural groups understand they are part of a larger region,” said Therese Thill, vice president of business development at The Right Place. “That’s everything from attraction to retention, and one of the big benefits that The Right Place can bring to the these rural communities is the resources of the region.”
Similarly, Southwest Michigan First maintains contracts with St. Joseph County and operates offices in both Three Rivers and Sturgis, Kitchens said.
“If you look at our state, it’s easy to focus on urban (areas),” he said. “That’s really important, but if we don’t focus on rural as well, we’re missing the boat and just not serving all of the people that need to be served.”
SELLING THE COST
In some cases, the shift to a more regional economic development model has been met with skepticism.
In Marshall, local groups criticized the two-year, $950,000 contract with Southwest Michigan First when the deal was first announced in September 2014. The contract included $250,000 in “in-kind contributions” to cover the lease and other expenses associated with maintaining Marshall’s visitor center.
By comparison, The Right Place charges between $125,000 and $135,000 annually for its partnership with rural communities.
Kitchens at Southwest Michigan First noted the disparity between the contract with Marshall and the typical cost of economic development services stemmed from the added programs it provided the community, including managing the city’s visitor bureau.
“We looked at the budget with them — it was a collaborative effort,” Kitchens said. “It was open-book management, and they saw what the costs were and it was less than what they were spending when we arrived.”
Even by contracting with Southwest Michigan First, the city was able to cut its expenditures by 10 percent compared to what it paid when it operated all five organizations prior to the restructuring, Kitchens said.
Although Whittaker was not familiar with the specific contract between Southwest Michigan First and the City of Marshall, the consultant said rural communities must spend on economic development services if they want to ensure their survival.
“I’m impressed they were investing that much in their community,” he said. “By itself, Marshall can’t make enough noise to be found. How do you make yourself known out there in this huge pool of economic development? How do you make enough noise to get noticed?”
A LARGER TOOL BOX
Industry sources said the best approach to rural economic development in a diverse state like Michigan includes leveraging a “large toolbox” of capabilities and expertise. Economic developers working in rural areas should be prepared to offer services such as placemaking and community planning that are typically outside their purview in larger metropolitan areas, they said.
While it may not have been in the organization’s repertoire to paint doors and organize community events, Southwest Michigan First’s services in Marshall reflected the scope of conducting economic development in a rural community, according to Kitchens.
“That’s what rural community development looks like,” he said. “But to do those things well, you really have to be deeply ingrained in (the community). In the long term, we wouldn’t be a good solution — that has to be local.”
Thill agreed that a successful rural economic development strategy requires agencies to form relationships with key members in the community. The Right Place often interfaces with local politicians, chambers of commerce, board members and other stakeholders, she said.
“I think even more importantly than with urban economic development, it’s essential to identify key strategic stakeholders that are able to help identify issues and move forward,” Thill said. “They are so engaged and excited about seeing growth in the area. They’re well-respected individuals on their own and then they come in with The Right Place economic development card behind them, and that really has allowed us to be very effective.”