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Economic Update
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Quarterly
Economic Report — March 2001
LOCATION QUOTIENTS SHOW A DIVERSIFIED REGIONAL ECONOMY
By Robert M. Lewis
and Jason W. Hensley
Development Strategies, Inc.
The St. Louis economic climate is potentially more resilient to
recession threats than most of our peer regions such as Atlanta
or Denver. Though growing more slowly than those, St. Louis has
nevertheless been very successful in job diversification—or minimizing
dependence on a particular economic sector or two. In short, St.
Louis has its most diversified economic base in at least 30 years.
This has come with the strains of losing some companies and gaining
others. But this is still the 10th greatest concentration of Fortune
500 companies. Like a gardener, St. Louis has been cultivating
and pruning its economic base for 20 years, since the “heavy manufacturing
recession” around 1980 and with a strong regional leadership program
generated by the “defense-based recession” of the early 1990s that
evolved into the Greater St. Louis Economic Development Council
staffed by the RCGA. Not only is that garden in healthy bloom, it
is also in an excellent position to weather the next storm—or as
the Fed might prefer to call it, the next “light shower.”
The “R” word is being discussed openly again, though probably prematurely.
A few naysayers think that the country is heading toward an actual
recession in 2001. But the consensus seems to be that we’re in for
a “growth recession” where we continue to grow, just not at a 5%
or 6% annual clip. If either prediction comes true, St. Louis is
in pretty good shape according to location quotients—handy little
measurement devices used to show how a region reflects the nation
as a whole. As the table demonstrates, all but the very smallest
private sector categories (agriculture and mining) have location
quotients very close to 1.00. Numbers close to 1.00 reflect a similar
percentage of jobs in those sectors as in the entire national economy.
What this means for St. Louis is something similar to a well-diversified
portfolio. While all employment segments are important, their proportions
are not out of line with national patterns and the region does not
overly rely on any one for an inordinate share of income.
For instance, an LQ of 2.00 would indicate a reliance on an industry
of twice as much as the nation for employment and other sectors
would have too little importance. Atlanta, Ga., for instance, has
a 1.49 location quotient in the transportation and utilities sector,
indicating a much heavier than average reliance on that sector.
St. Louis has a 1.17 in this sector.
Another picture of how well the region is doing is the “spread”
between the highest and lowest location quotients. The graph shows
that St. Louis (dismissing agriculture and mining) has the smallest
spread of any of the compared metropolitan areas (note that short
bars are good). Moreover, St. Louis’ spread over the past 30 years
has steadily declined, indicating less and less reliance on any
one sector. Contrast this with the large and increasing spreads
in Atlanta, Denver, and Memphis—rapidly growing economies that risk
inordinate hard times if an economic downturn overly affects their
high location quotient sectors.
St. Louis should be proud of its accomplishments over the past three
decades. Adding more than 100,000 jobs to the region since 1995
was not only a major achievement in St. Louis terms, it was done
within the orchestrated goals of assuring diversification. The RCGA’s
new Campaign for a Greater St. Louis initiative for another 100,000
additional jobs by 2005 will continue to help the region ride out
whatever the economic winds decide to throw. Whether it’s a good
old fashioned Midwestern thunderstorm or a milder spring shower,
St. Louis is in a better position than its sisters to keep the garden
in order.
Rawlings Sporting Goods Company Consolidates Distribution Function
in Washington, Mo.
The Rawlings Sporting Goods Company, Inc., headquartered in Fenton,
Mo., has leased a 450,000-square-foot building in Washington, Mo.
Rawlings plans to consolidate its distribution function into the
building, which was the former Edison Brothers distribution center.
The company anticipates that 125 employees will work at the facility
by the end of 2001. The Washington distribution center will house
Rawlings’ basketball, baseball, football and spring protective equipment.
There will be limited production, including packaging of its football,
basketball and soccer product lines.
Madison County Lands Huge Procter & Gamble Distribution Center
An 806,400-square-foot warehouse (the size of 17 football fields)
is under construction in Pontoon Beach, Ill. When complete in August
2001, the $23-million warehouse will store and distribute soap and
other products made by Procter & Gamble. The distribution center
will employ 130 workers in supervisory, forklift, packing and other
shipping jobs. TriStar Building Communities is building the warehouse
at its Gateway Commerce Center, which straddles Pontoon Beach and
Edwardsville in Madison County. In addition to other P&G products,
the warehouse will distribute throughout the Midwest all the soap
manufactured at Procter & Gamble’s plant in the city of St. Louis,
which makes all the Mr. Clean products for North America.
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