Adjusting to the New Economy

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Although the term “New Economy” has been around for much longer than the COVID pandemic, the economy certainly has changed in the past few years. The perception of the New Economy has changed and rural communities should put themselves into a position to take advantage of it.

The new economy is about doing away with the old ways of doing things, but not letting go of your roots. It is about flexibility and diversification. It’s about individualism yet shared goals. It can be about finding your community’s unique, and boldly different purpose. We’ll look into each one of these aspects individually.

Change the Old Ways

Stop Chasing Smokestacks! Yes, the concept of smokestacks is quite old as you don’t see many industrial sites anymore with stacks spewing out clouds of smoke. But it still relates to desperately chasing any business just to add to your economic base.

Cities throughout the country have spent massive sums to lure businesses in. Not just manufacturers, but major retailers like Walmart and now Amazon to get them to locate nearby. But unfortunately, there’s no loyalty to your community when you bring in a new business from the outside.

As an example, a community in Nebraska helped land nearly $500k in forgivable-repayable CDBG loans a decade ago for machinery and equipment to a business from Europe. Where’s that machinery now? Just down the road in a neighboring city. They moved just five years after receiving the incentive.

The sad thing is, smokestack chasing is still happening today, it’s just evolved. It’s microchip chasing now. We’re clinging to catchy terms like “silicon prairie” in hopes that big tech companies will be drawn by the low costs and other amenities of the Midwest.

Look at the high-stakes microchip chasing that is happening throughout the country. Virginia has committed $750 million to Amazon to bring a campus to Northern Virginia. Does anyone want to take bets on how long Amazon stays in Northern Virginia beyond the end of their agreement with the state?

I’m not saying to close your doors to new businesses from the outside, but don’t mortgage your future when one comes knocking.

Smokestack Chasing

Chimney Sunrise, by Philippe Alès; Wikimedia CC-BY-SA-4.0

But Don’t Let Go of Your Roots

We need to concentrate on what we have. Not just concentrating on keeping them, but concentrating on them. What makes your community….your community? It’s the people! Get to know your local businesses. What makes them tick? What can help make them grow?

At the same time, you need to think of these businesses like trees. A carrot is, in essence, a root. It’s a relatively big thick root. But it’s one root. One that can be somewhat easily pulled out. At the same time, look at a tree, there are many smaller roots that tie back into that main root. Find out what businesses provide the inputs for your main employers. The businesses that make the transistors or the antennas that go into the radios being made at your main employer. Lure those support businesses in and it will be less likely that your main employer will leave as their input prices will go down. The roots of that main employer just drew deeper and wider.

Expand the Roots of Your Economic Base

Walk across the Hulshorsterzand/Hulshorsterheide, by Dominicus Johannes Bergsma; Wikimedia, CC-BY-SA-4.0

Diversify Your Economic Base

Talk to any banker or other type of financial advisor for any length of time and they will eventually bring up the diversification of your economic portfolio. In short, they mean don’t put all your eggs into one basket. Like, don’t invest all your hard-earned money in Blockbuster or Radio Shack. Diversifying your investments in multiple directions provides you with more financial stability as one fund or stock struggles, another may thrive. The same goes for economic development.

Maytag is a globally known brand name of appliances that for a long time was headquartered in Newton, Iowa. Maytag started building washing machines there in 1893. As the company grew, Newton grew as well. It was part of Newton’s identity. Essentially, the city of Newton could’ve been considered as meeting the definition of a “company town”. Residents were proud of that fact, boldly claiming that the community was the “Washing Machine Capital of the World.”

However, that marriage dissolved abruptly in 2006. Rival manufacturer Whirlpool bought out the financially struggling Maytag in April of that year. By May, Whirlpool announced that they would be closing down the Maytag headquarters and manufacturing plant based in Newton.

This was a big blow to Newton considering the closure resulted in the layoff of 2,000 workers out of a town of just over 15,000 total residents. That’s a dagger to the heart of many communities. It’s nearly impossible to lose a single business of that size and move on as if nothing happened. It is exponentially harder to do so in a community of only 15,000.

But this wasn’t the case for Newton. Immediately after the announcement, the Mayor formed the Newton Transformation Council (NTC). Business and community leaders, as well as other vested persons from not just Newton, but across the state, agreed to join the council. They weren’t targeting that home-run employer that would replace all 2,000 jobs. Newton was looking into a number of ways to lure multiple smaller employers. Creating a more sustainable economic base.

In 2008 TPI Composites constructed a new 316,000 square foot facility in Newton to construct blades for their wind turbines. They are now trucking out 27 of the 187-foot blades a week. TPI has also expanded in Newton and is now considered Jasper County’s largest employer, providing over 1,000 jobs in Newton. Then Trinity Structural Towers (now Arcosa Wind Towers). Trinity renovated 300,000 square feet of the former Maytag Two manufacturing plant to construct the tubular base structures for wind towers. Additionally, Global Fiberglass is working towards starting operation in a 100,000-square-foot portion of the former Maytag manufacturing plant. Since Maytag left, they’ve also added:

Each of these are much smaller in relation to Maytag, but not all their eggs are in one basket. One may leave town, but another may expand operations.

In the fall of 2016 a Grinnell businessman gifted former Maytag Corporate Campus to Des Moines Area Community College (DMACC). The addition of the former Maytag buildings added more than 480,000 square feet of building space to DMACC’s real estate portfolio. But DMACC didn’t have plans to use the entire campus for their own educational activities. Through adaptive reuse of the former manufacturing buildings, DMACC looked to lease out much of the remaining space to businesses with an eye toward partnering with the college.

For more on Newton’s resurgence, check out Star Communities: Newton, Iowa

Embrace Remote Workers

One of the most important aspects that we are now seeing in this new economy is the evolving mindset of those who live in your communities. As much as nobody likes to talk about COVID, it actually had changes to the economy that can positively impact Nebraska communities IF, and I restate IF, communities choose to take advantage of the changes. It used to be rare that you saw jobs on the marketplace that were hybrid or completely remote. COVID forced the economy out of cubicles and into homes. Many employees are no longer tethered to corporate office buildings in the big city. As such, they’re realizing they don’t have to get up at 5 a.m. to start an outrageously long commute in a smog-ridden city, paying exorbitant amounts for lunch, transportation, and housing.

People are becoming more experiential. The lure of being able to live in a beautiful, affordable community with good schools and fast internet service is becoming more prevalent. The small town life is becoming an amenity to many who want to escape the hustle and bustle of the city. It is important to embrace those who work remotely and can move to your community. As they work remotely, they don’t add to your rush-hour traffic, but they still visit shops and restaurants.

Some are moving to small towns, but others are more transient. One of my nieces works remotely, earning a good income, while moving from town to town in an RV. She’s experiencing many of the great communities that dot the countryside.

Individualism yet Shared Goals

I regularly state that communities need to “Be Different”. They need to stick out amongst a crowd of 100s of towns that are similar in size and characteristics across the Midwest. Each town needs a level of individualism that sets them apart from others. A different aura that is quite noticeable after just an hour in town.

But nearby communities should also have shared goals. They should also work together towards those goals.

The cities of Papillion and La Vista in Nebraska have a long history of feuds that have gone back several decades. But in recent years the two communities have worked together to become better. The two communities now share the same fueling island and salt storage facility. La Vista residents now enjoy shorter response times from EMS due to a contractual agreement with Papillion Fire Department to take over EMS duties from the volunteer firefighters in La Vista.

The proximity of the two communities (they abut each other) makes these actions ideal. But it happens in rural areas too where city and county governments share facilities or services.

Yet other communities further away from each other have worked together on tourism and economic development. One example is the Chisago Lakes area of Minnesota. Five communities in that region have come together to form the Chisago Lakes Area Chamber of Commerce. The Chamber is an entity dedicated to tourism and economic development activities in an area that covers six cities in central Minnesota. The communities in this area have their own unique identities, but common goals for tourism and economic development.

Know Your Unique Purpose

Every community should have its own unique, and boldly different purpose. A central focus for the community to unite around (other than the local school district).

You should be able to answer these questions: What makes your town noticeably different from the other similarly-sized towns in your region? Is that difference obvious after a relatively short time in your community? Is it something that your community can, or has, rallied around?

Once you know these answers you can become more aware of how your community can fit into the new economy.