St. Louis has come a long way from its rust-belt reputation. Yet unbelievably, just 14 years ago the region had gone over a decade with absolutely no net job growth. According to Dick Fleming, president and CEO of the
St. Louis RCGA, one key reason was at that time the region’s economic development was very fragmented.
“We were going our separate ways,” he says. “And absent the capacity to think and act like a region, we were competing with one another. That’s why we developed our first 5-year economic development initiative. We were in the midst of a big run up of the U.S. economy. We needed to get our regional act together so we could get our share of that job growth.”
By the end of the campaign the St. Louis region had added about 112,000 new jobs, and everyone agreed working together as a region made sense. The next logical step was to concentrate on building a firm foundation on which to grow. From 2000 to 2004, the region’s economic development efforts focused on improving the St. Louis “product” and identifying its strengths.
“We looked at some of the aspects of
St. Louis that were either unfulfilled potential or actual problems, like building the elements for a transit system, a congested Lambert Airport, and the fact that downtown, in part, was looking like Beirut,” says Fleming. “Then, we set out to improve the product.”
Five Industry Clusters/High Potential Growth Sectors for the St Louis Region
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With help from Harvard’s Michael Porter, they also identified 5 cluster industries in the St. Louis region on which to focus business recruitment and business expansion: advanced manufacturing; financial services; transportation, distribution and logistics; information technology; and plant and medical sciences.
“Prior to this time, no one had ever considered plant and medical sciences an industry. Of course, now it’s become the BioBelt,” Fleming comments.
To maintain the region’s upswing, business leaders again joined through the RCGA in 2005 through Greater St. Louis Inc., the region’s new 5-year economic development plan. This public/private partnership today includes nearly 150 corporate and civic investors. Its focus is to grow the regional economy by attracting new businesses, expanding existing ones, and helping start-ups. It’s governed by a 23-member Board of Trustees, including major private sector investors, four chief elected officials from throughout the region, and the volunteer chairs of the RCGA, Civic Progress, Regional Business Council, Partners for Progress, and Leadership Council of Southwestern Illinois, reporting to the RCGA’s Board of Directors.
“We felt it made sense to create a Board of Trustees under the egis of the RCGA Board because of the substantial revenue level we now have for this program,” Fleming explains.
Previously, about $2.3 million per year had been invested in the region’s economic development. But when it was learned that Omaha and Louisville, and other smaller communities, were investing $4 million per year, the RCGA set and raised its funding to match or exceed this amount, thus assuring the region’s ability to compete. In fact, nearly $5 million per year was committed to capitalize the new St. Louis 5-year campaign. In addition, the RCGA created a detailed set of performance metrics to both monitor progress and measure the success of the program. Renewed energy was also put behind the Regional Economic Development Network that was created in 1995. The main emphasis of the new campaign, and a critical one, has been on branding, marketing and deal-making for the region.
In economic development, as in many things, image matters. St. Louis’ business climate had definitely undergone a major transformation over the years. The problem was that we were the only ones who realized it. According to the International Economic Development Council, for any given business relocation or expansion, an estimated 15,000 cities, regions or communities are in contention. With this kind of competition it was important for
St. Louis to put aside its Midwestern modesty and start raising its profile among lead business decision makers to position the region as a top U.S. market for major corporations, entrepreneurs and new residents. Branding the region—creating a cohesive, fresh new way of communicating St. Louis’ strong and dynamic identity—was the first step toward this. After six months, 700 interviews with national and local C-level executives, site selection execs and real estate heads, plus one-on-one focus groups, and dozens of meetings with the region’s economic development, government and business leaders—and professional work by Fleishman-Hillard—St. Louis’ new brand was born: St. Louis: Perfectly Centered. Remarkably Connected.
With the brand in place, St. Louis was ready for the national spotlight. Soon, full-page ads featuring local business leaders could be found in magazines such as CEO Magazine. Articles began appearing in The Wall Street Journal, Forbes, Los Angeles Times, Boston Globe, New York Times, Entrepreneur, Architect, and the Associated Press. And radio spots ran on NPR’s All Things Considered, as well as on XM and Sirius Satellite radio broadcasts of CNN, CNN Headline News, CNBC, ESPN Radio, ESPN News and Fox News. To date, an estimated 20 million positive placements of the St. Louis brand message have been placed.
“Our spots on NPR gave us high visibility,” says Linda Leonard, vice president of economic development. “And, to this day, we are the only economic development ads that are running on satellite radio and in CEO Magazine. Ultimately, the measure of success of the branding is whether or not our region is landing deals. Are we on decision-makers’ dashboard?” See chart of current deals below:
Steve Johnson, RCGA’s senior vice president of economic development says the answer is yes.
“From the start of the campaign we have tripled the amount of serious looks we’ve been getting,” he says. “We track everything through a sales pipeline. At the beginning of this campaign the number of deals in that pipeline was in the high 20s. We closed the books this year with 66. That’s 66 deals that we’re actively competing for.”
But these pipeline deals didn’t just happen because of St. Louis’ national branding blitz. There’s also a whole process dedicated to keeping St. Louis uppermost in the minds of the people who advise the companies national site location consultants and real estate brokers. These advisors work with companies to develop a list of criteria and regions for a move or expansion. Then they look at all the metropolitan areas around the country to see who best meets those criteria.
Jim Alexander, RCGA vice president of business recruitment, says these consultants can literally whittle down the prospects from as many as 360 metropolitan areas to four or five.
“When we’re in that last group, that’s when things get serious,” he says. “To make it into that group, we have already developed a strong relationship with the consultant.”
One way is through event-based marketing—special events which provide opportunities to showcase the St. Louis region’s cultural highlights and the advantages of operating a business in the region. These include attending and exhibiting at conferences such as the CoreNet Global Summit. CoreNet is the world’s premier association for corporate real estate professionals and the industry’s opinion leaders.
“We also capitalize on the St. Louis image when it travels to another city,” says Alexander. “We’ve done some memorable events at Carnegie Hall when the Saint Louis Symphony Orchestra visited there. In 2008, we held a special event in Atlanta when the Cardinals were playing the Braves. There are many site consultants and corporate real estate executives in Atlanta. We conducted several one-on-one meetings, as well as hosted 25 or 30 prospects for the game.” Similar events have been held in New York, Chicago and Los Angeles.
Although these events produce good results, Alexander says it’s really the one-on-one meetings that prove critical.
“Over each of the last four years, our team has travelled to 18 or 20 regions in the country. We’ve arranged 130 meetings on average with key contacts,” he says. “It’s really the most effective way.”
“When working with a prospect company or meeting with a site location consultant on one of our marketing trips, they most often already know the St. Louis region offers a low-cost environment and a highly skilled workforce. It’s fun to see the surprise look they have when we share all the amenities and quality of life factors St. Louis offers that are important to them and their clients, dashing their preconceived notions. It’s as though I can feel their excitement about their new discovery. Selling St. Louis just got easier,” says Director for Business Recruitment Lori Becklenberg.
There’s an old saying among economic development professionals: “We do a lot of the things that people think just happen.” Steve Johnson couldn’t agree more.
“I don’t think many people realize what’s going on behind the scenes. It’s a lot of very detailed and very complicated work,” he says. “And when we are out there making those quick two-day trips to do face-to-face meetings, or when we’re doing industry-specific events, they are in a way establishing a beachhead for St. Louis. The marketing, brand messages, website, and media relations, that’s all air cover. But it’s the relationship building that gives us the opportunity to compete. And we do that very well.”
Of course, in these tough economic times one has to wonder if economic development initiatives such as these could be wasted efforts. Jeff Finkel, president and CEO of the International Economic Development Council, says an emphatic “no!”
“Now more than ever, investment in economic development is critical to maintaining a community’s short-term and long-term health,” he says. “If you don’t stay invested, you lock in your losses and miss out on the rebound. If you stay invested while others cut back on marketing and promotion, you’ll have less competition and more opportunities for business attraction or building international trade relationships.”
Johnson agrees success depends on sustainability.
“It’s unbelievably competitive out there and getting more so all the time. We’re no longer competing with just other metros across the country, but global operations.
The most successful economic development programs have made marketing and recruitment a priority. I know of some that have done it for 30 years. You don’t want to stop, especially in this economy, because it will come back. And you don’t want to have to start over.”
Finding the Best Fit Site Location Consultants Delve Into the Region
By Christine Imbs
Today, many companies considering a move or expansion use site location consultants to help them find the communities which best fit their needs. In fact, about 40 percent of the projects in the St. Louis region’s economic development sales pipeline come from site location consultants. They are an important source of leads for the region. As much as we may depend on them to consider St. Louis when searching out locations for a client, they depend on us as well.
Darin Buelow of DeLoitte & Touche, who has worked with the region’s economic development team on behalf of clients, says for them to do their job they need to be knowledgeable about a region’s strengths and weaknesses.
“We need to relate to our clients what a region like St. Louis might have to offer, say in terms of labor market advantages, tax advantages, logistics, infrastructure, and relative costs compared to other locations,” he explains. “So we rely very heavily on our relationships with the economic development community. And in
St. Louis we’ve got a very deep and healthy relationship. They’re in the marketplace and making themselves and the region relevant.”
Buelow adds that there are a few major cities that don’t have an organized effort or the maturity and resources that the
St. Louis development team has.
“Just selling the community isn’t very valuable to us or our clients,” he explains. “We want a conduit to objective information. So what’s helpful to us in our relationship with the St. Louis group is they know what we’re looking for. I can place a phone call into any member of their staff and they know what to do. They realize we don’t want to see the fluff and they avoid it. So they’re consultative in their approach. It’s a relationship that’s been built up over the years to be very productive and streamlined.” |
Pipeline Summary (thru 01/01/09) |
Prospect Ranking |
Total Prospects |
Combined Employment |
Combined Investment |
A (Active - 0 - 6 mos) |
12 |
8,197 |
$139,250,000 |
B (Active - 6 - 12+ mos) |
9 |
1,127 |
$736,000,000 |
C (Preliminary) |
19 |
1,970 |
$42,000,000 |
D (Holding/Inactive) |
26 |
7,096 |
$1,563,060,000 |
TOTALS |
66 |
18,390 |
$2,480,310,000 |
The Network
By Christine Imbs
One of the first priorities of RCGA’s Greater St. Louis Inc. was to strengthen the Regional Economic Development Network. Originally created in 1995, Network members include some 100 public and private sector economic development professionals from throughout the bi-state region. Working with the RCGA economic development team, Network members collaborate on national marketing and outreach, responses to prospect information requests, and site evaluation tours. And of course once the selection process gets site specific, their role becomes even more critical.
“They’re incredibly involved in making the deal happen,” says Steve Johnson, RCGA senior vice president of economic development. “They have to be, because a part of the incentive package will typically be at the local level. Their role is crucial. If the local partners don’t hold up their end of the deal, it’s not going to get done.”
Mike Kearney, manager of economic development for Ameren and the Network chair, agrees.
“Economic development really is a team sport, and we have to rely on all of our partners if we’re going to be successful,” he says. “So in this game of economic development, it’s going to be those who can work collaboratively who are going to win.”
Still, Kearney admits the process can sometimes be difficult.
“Sometimes communities within our region are competing for the same opportunity,” he explains. “We don’t deny the fact that there will be competition. We just want to make sure potential companies know the best that each community has to offer.”
Kearney adds that he believes the Network is a valuable resource for the region and its individual communities.
“We share a lot of the competitive advantages throughout the region,” he says. “One community may not have everything a particular business may be looking for, but it is here within the region. In a sense whatever community gets a project, we all benefit.”
Leadership Institute
The Leadership Institute was created by RCGA to help strengthen the Regional Economic Development Network. Each year the Institute holds a series of six programs bringing local economic developers face-to-face with top industry leaders to discuss pressing issues. Topics for the 2009 series include:
• Sustainability
• Workforce issues
• Incentives
• Logistics and how fuel cost plays a role
2008 Events
• Economic Development Network Guiding Principles
Led by: Jim Alexander, Vice President for Business Recruitment, RCGA
• Best Practices—Branding the Region
Led by: Fleishman-Hillard
Guest Speaker: Jack Farmer, Senior Vice President & Partner, Fleishman-Hillard
• Best Practices—Effective Regional Economic Development
Led by: Bob Marcusse,
President and CEO, KCADC
• Best Practices—Case Studies of Successful and Lost Projects
Led by: Members of the Economic Development Network
• Best Practices—Future Trends in Economic Development
Led by: Network Steering Committee
Guest Speaker: Mark Arend, Editor-in-Chief, Site Selection magazine
2007 Events
• The Regional Economic Development Value Chain
Speaker: Don Iannone, President & CEO, Donald T. Iannone & Associates
• An Insider’s Look at the Site Selection Process
Speaker: Robert Ady, President,
Ady International
• How to Structure and Negotiate an Effective Economic Incentives Plan
Speaker: Julia Hoffman, State &
Local Tax Services, Ernst & Young
• What You Need to Know to Prepare and Execute a Successful Site Visit
Speaker: Mark Sweeney, Principal, McCallum Sweeney Consulting
• Working and Winning with Prospects... the Right Way!
Speaker: Jay Garner, President, Competitive Strategies Group
• What it Means to be an
Economic Development Professional
Speaker: Rick Weddle, President & CEO, Research Triangle Foundation
of North Carolina
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The Deals
By Christine Imbs
Whether it’s marketing, media relations or face-to-face meetings with site advisors and real estate brokers, the key to a region’s economic development is “good relationships.” No where is this more important than when that call comes in saying, “Your region is seriously being considered.”
“When site advisors call, they want to do a deal and they want to move fast,” says Jim Alexander, RCGA vice president of business recruitment. “They may want to look at six sites in Missouri and six in Illinois. With us, they know they only have to make one phone call.”
That one phone call sets in motion an elaborate process involving members of the RCGA’s economic development team, as well as members of the Regional Economic Development Network, a coalition of over 100 individuals representing the 16 counties of the bi-state region. Together, they determine all of the options available in the region, gather the complex regional data necessary to make the case for the area, and develop a detailed business plan for the prospect.
“These are multi-million-dollar deals, but as with anything, it’s people dealing with people. And people want to deal with people they trust,” says Alexander. “We work very hard to provide exceptional service.”
Alexander adds that the site selection process is a process of elimination. One way to get eliminated is to be unresponsive. When that call comes in, we’ve got to respond quickly and as a regional team if they’re going to get in the game. The following three examples not only show how good relationships and marketing bring the deals into the sales pipeline, but how exceptional service and teamwork can bring it home.
Brown Shoe
In April 2008, Brown Shoe announced that it would not only keep St. Louis as its headquarters, but would bring an additional 650 new jobs to the region through a $568 million expansion consolidating all of its divisions in one place.
Obviously the news for St. Louis was good. But there was a period of time when the region could have lost not only the 650 new jobs, but Brown Shoe completely, along with the 650 jobs currently held by
St. Louisans. The issue surrounded the Famous Footwear division located in Madison, Wis., and Brown Shoe’s desire to create one connected footwear company. The St. Louis contingent had to convince Brown Shoe executives that consolidating the division into the St. Louis region would not only be beneficial to them, but that it could be done in a way that met the company’s growth needs.
Strategies began to take shape almost immediately after Brown Shoe CEO Ron Fromm, contacted the RCGA in July 2006. A non-disclosure agreement was signed and the economic team began developing data and in-depth information necessary to make the best possible case for the region.
In August, six weeks after the initial call, RCGA’s team met with its economic development partners including leading representatives of St. Louis County, St. Louis County Economic Council, City of Clayton, and Missouri Department of Economic Development to put together a detailed business proposal, including an initial state & local incentive package. The team met with the Brown Shoe executive team, including CEO Ron Fromm, and presented an extensive case for St. Louis, including a custom-produced video directed to the 400 current employees at Famous Footwear in Madison. See video at:
www.stlrcga.org/lifestyleDVD.xml
Throughout the fall of 2006, information was gathered and exchanged. Meetings also took place with Brown Shoe and its site location consultants, Deloitte. By early 2007, Brown Shoe asked the economic development team’s help in developing request for proposals for developers. Toward the end of 2007, Clayco and U.S. Equities were chosen as developers, and the St. Louis team learned that the Dallas region also had joined the competition, offering Brown Shoe an attractive incentive package to move the 650 St. Louis HQ jobs and the Madison jobs to Texas.
Now competing against two regions, the
St. Louis group began a series of meetings with the developers to determine what hurdles might prevent the development and how to overcome them. These continued until April 2008 when Brown Shoe made its final decision, sealing 1,250 jobs for the
St. Louis region.
Abengoa Bioenergy
A chance meeting in January 2006 between Abengoa executives and a member of the RCGA economic development team led to a new $200 million cutting-edge ethanol plant in the Tri-City Regional Port District in Madison County.
Although Abengoa Bioenergy, a subsidiary of the company and its North American headquarters, was located in Chesterfield, they admitted not once had they considered the St. Louis region as a possible location for the new plant.
“We were at the right place at the right time,” says Alexander. “So, we planted a seed for St. Louis.”
Meetings were set up with Abengoa to begin constructing a business plan for the region. It was learned the company needed between 60 and 80 acres of land, access to railway and a nearby port. Over the spring, the RCGA worked with its partners in Missouri and Illinois to identify sites that met these criteria, and escorted Abengoa executives on site visits. By June, Tri-City Port became the focal point.
From this point until the beginning of 2008, RCGA and its partners—the State of Illinois, Madison County, Ameren, and Tri-City Regional Port District—worked to address various concerns. There were roadway needs to be met, as well as railway extensions, and internal and external railway improvements to be made. Electrical issues were worked out, and in July 2007 an air permit was granted. The State of Illinois issued a $4 million renewable fuels development grant for the project to go forward. Then, in early September 2008, almost three years after that chance meeting, construction on the site began.
“This is a $200 million project,” says Alexander. “A company is not going to make that kind of investment unless they are absolutely sure. Our partners did a wonderful job understanding Abengoa’s needs and responding to them.”
Air Products
Not every project takes years to complete. A case in point is the recent decision by Air Products to build an expansion for its full line of PRISM® membrane products. Because of this product, the company was experiencing growth at a rate of 20 percent per year. Even though they had just completed a substantial expansion of the facility in Maryland Heights, it became necessary to start planning the next one.
The first indication of this expansion was a phone call from Susan Reber, Air Products’ real estate manager. It was April 2008 and Reber said NAI Global, a national real estate firm Air Products contracts with, was already looking at sites in Missouri.
Throughout June and July, the RCGA team and its partners worked with Reber providing information on sites identified by NAI, advised her about available incentives, and arranged discussions with the State of Missouri. By July, they had narrowed it to the City of Saint Charles. From that point until the formal announcement in October, they finalized all arrangements with the City of St. Charles and Fountain Lakes Commerce Center, and closed on the property.
“This is a good example of how important it is to develop strong working relationships,” says Alexander. “Susan picked up the phone and called us because she knows us and trusts us.”
Basically, the world is open for companies like Air Products, Brown Shoe and Abengoa. So competition is tough and what’s more, it’s global. You must work harder and smarter than your competition. And you must have strong partners who are willing to commit to a project. That’s how you win your share of deals and
then some.
Timing for the Deals
Brown Shoe
The Challenge: How to keep 650 jobs held by St. Louisans. The issue surrounded the Famous Footwear division located in Madison, Wis., and Brown Shoe’s desire to create one connected footwear company. The St. Louis contingent had to convince Brown Shoe executives that consolidating the division into the
St. Louis region would not only be beneficial to them, but that it could be done in a way that minimized any disruption.
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2
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0
6 |
July
Strategies take shape after Brown Shoe CEO Ron Fromm, contacted the RCGA. A non-disclosure agreement was signed and the economic team began compiling information to make the best possible case for the region.
August
Six weeks, after the initial call, RCGA’s team
met with its economic development partners including leading representatives of
St. Louis County, St. Louis County Economic Council, City of Clayton, and Missouri Department of Economic Development to begin putting together a detailed business proposal.
Fall
Information was gathered and exchanged. Meetings also took place with Brown Shoe and its site location consultants, Deloitte.
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2
0
0
7 |
Early 07
Brown Shoe asked the economic development team’s help in developing request for proposals for developers.
End of 07
Clayco and U.S. Equities were chosen as developers, and the St. Louis team learned that Brown Shoe executives had added Dallas, Texas into the mix. Now competing against two cities, the St. Louis group began a series of meetings with the developers to determine what hurdles might prevent the development and how to overcome them.
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2
0
0
8 |
April
Brown Shoe announced that it would not only keep St. Louis as its headquarters, but would bring an additional 650 new jobs
to the region through a $568 million expansion consolidating all of its divisions in
one place. |
Abengoa bioenergy
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2
0
0
6 |
January
A chance meeting between Abengoa executives and a member of the RCGA economic development team happens.
Spring
The RCGA worked with its partners in Missouri and Illinois to identify sites with between 60 and 80 acres of land, access to railway and a nearby port, and escorted Abengoa executives on site visits.
June - Beginning of 08
Tri-City Port became the focal point and RCGA and its partners—the State of Illinois, Madison County, Ameren, and Tri-City Regional Port District—worked to address various concerns. There were roadway needs to be met as well as railway extensions, and internal and external railway improvements to be made. Electrical issues were worked out.
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2
0
0
7 |
July
An air permit was granted. Finally, the State of Illinois issued a $4 million renewable fuels development grant for the project to go forward.
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2
0
0
8 |
Early September
Almost three years after that chance meeting, construction on the site began for the new $200 million cutting-edge ethanol plant in the Tri-City Regional Port District.
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Air Products
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2
0
0
8 |
April
A phone call from Susan Reber, Air Products’ real estate manager indicated that Air Products needed to build an expansion for its full line of PRISM® membrane products. Because of this product, the company was experiencing growth at a rate of 20 percent per year. Even though they had just completed an expansion of the facility in Maryland Heights, it became necessary to start planning the next one.
NAI Global, a national real estate firm Air Products contracts with, was already looking at sites in Missouri.
June
The RCGA team and its partners worked with Susan Reber providing information on sites identified by NAI, advised her about available incentives, and helped set up discussions with the State of Missouri.
July
They had narrowed it down to the City of Saint Charles.
October
They finalized all arrangements with the City and Fountain Lakes Commerce Center, and closed on the property and made a formal announcement.
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2005 to 2008 Economic Development Campaign Project Successes
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