GE Relocates to Boston and Collects Millions

By Jim Vaughan, Senior Fellow
 

Did Owen tip the scales for Boston in the competition for General Electric’s new headquarters?

Owen is the geeky young programmer featured in the self-deprecating advertising campaign promoting GE as a 21st century digital industrial company.

In the ads, when Owen says he will be “writing a new language for machines so trains, planes, even hospitals can work better together,” his classmates respond with condolences and baffled stares. Such is the challenge when you’re trying to transform a company that traces its history back to Thomas Edison and the first light bulb into a “digital industrial company.”

In reality, engineers, coders, programmers and designers are increasingly the jobs GE is trying to fill —“building the software and analytics to bring together the power of machines, big data and people”—and that makes Boston, with 55 colleges and universities, a preferred location.

Plus Massachusetts spends more on research & development than any other region in the world, and Boston attracts a diverse, technologically-fluent workforce focused on solving challenges for the world.

“We want to be at the center of an ecosystem that shares our aspirations,” said CEO Jeff Immelt. So the 123-year-old company is moving from its 1970s corporate campus in Fairfield, Conn. to “the dynamic and creative city of Boston.”

It’s a good bet that Owen and the millennials he represents are more likely to be found in or attracted to Boston’s Seaport District—a dense, vibrant, walkable city center—than to suburban Connecticut. So look for GE to be more competitive for top talent.

But in spite of all of the reasons that made Boston GE’s top choice, GE sought and will receive incentives and subsidies from Boston and the Commonwealth of Massachusetts to the tune of $145 million! This to a company that is valued at more than $250 billion.

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Boston recently landed another headquarters facility. Silicon Valley software design giant Autodesk is moving its architecture, engineering and construction division from Waltham, Mass. to a new location in the Seaport District. 

Autodesk is a smaller company—No. 862 on the Fortune 1000 while GE is No. 8—and it’s bringing 170 jobs against 800 for GE. But landing Autodesk was a good deal for Boston.

According to Boston officials, Autodesk is not receiving any incentives to move to the city.

 

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In a CityLab column from The Atlantic, Richard Florida concluded, “The reality is that these incentives are a drop in the bucket for a company like GE. In fact, GE turned down reportedly bigger incentive packages from states like New York. Ultimately, all these incentives really do is take money out of the pockets of Boston and Massachusetts taxpayers—money that could and should be used to reduce poverty and improve education in the city and state’s many disadvantaged neighborhoods.

“Perhaps it’s finally time for the federal government to step in and stop the incentive madness. In the meantime, GE could always do the right thing and give the taxpayers back their money. For a company that wants to be seen as both cutting-edge and a good corporate citizen, such a move would set an important precedent.”

I’m with Florida on this one.

The Big Issue at Year-End 2015

By Jim Vaughan, Senior Fellow 

Last year, in December, I posted a blog entitled, Nuggets of wisdom, interest, and of possible value in which I included quotes gleaned from my electronic clippings file that I thought might be of interest to economic developers and city builders. 

I planned a similar wrap-up for this year. Except that one item seemed to overshadow all the others. 

The Paris Climate Accord. 

This agreement is so important that economic developers and city builders must both understand the key elements of the global deal and help develop local plans to support our national climate goals. Going forward, Market Street Services will help our clients develop strategies to capitalize on the new reality of an economy in the post carbon era. 

* * * 

This is not my first post on this subject. I have written three blogs on climate change (Sorry Candidates, Climate Change Is Not a Hoax; Can We Still Do Big Things; and Climate Change: It’s No Laughing Matter) each making the case for action. Today’s post celebrates action. 

Here’s how I see it:

1. There is consensus to act. 196 countries approved the historic climate agreement

“The Paris agreement on climate change is a monumental success for the planet and its people.” — U.N. Secretary-General Ban Ki-moon

2. The agreement provides a broad foundation for meaningful progress

"Anyone who suggests this is a success or a failure is only speaking based on ideology, not reality. Only 10 to 20 years from now, when we look at the implementation of all this, will we really know." — Robert Stavins, director of the Harvard Environmental Economics Program

3. New technology has changed the rules

“Many people still seem to believe that renewable energy is hippie-dippy stuff, not a serious part of our future. The reality is that costs of solar and wind power are close to competitive with fossil fuels even without special incentives. (So) the cost of sharp emission reductions will be much less than even optimists used to assume.” — Paul Krugman, The New York Times, Dec. 14, 2015

4. Businesses are preparing for opportunity

Chief executives of blue-chip companies like Coca-Cola, DuPont, General Mills, HP and Unilever all expressed support for an ambitious deal. BP, the British oil giant, called the Paris agreement a “landmark climate change deal” and pledged to be “a part of the solution.” — Clifford Krauss and Keith Bradsher, The New York Times

“We have the technologies, we have the business incentive, and we have the responsibility. Now all we need is the commitment.” — Joe Kaeser, CEO of Siemens

5. The climate accord provides confidence for investors

“Investors … will now have the confidence to do much more to address the risks arising from high carbon assets and to seek opportunities linked to the low carbon transition already transforming the world’s energy system and infrastructure.” — Stephanie Pfeifer, chief executive of the Institutional Investors Group on Climate Changer

6. This is big, but it’s just a start

“Make no mistake, the Paris agreement establishes the enduring framework the world needs to solve the climate crisis." — President Barack Obama

* * * 

On behalf of everyone at Market Street, here’s to a prosperous 2016! We look forward to following your successes in the New Year, and encourage you to follow us on Twitter for the latest thought-provoking community and economic development quotes, news, best practices, and innovations.

Sorry Candidates, Climate Change Is Not a Hoax

By Jim Vaughan, Senior Fellow

When the U.S. Senate votes 98-1 that “climate change is real and not a hoax,” and the Pope issues an Encyclical Letter on the topic of man-made climate change, one might assume that the issue is settled.

But as TV sports analyst and prognosticator Lee Corso says, “Not so fast!”

As long as there are political points to be made from challenging the science of climate change, there’s a good chance that the subject will be front and center in the presidential campaign.

Here are some examples of what I mean.

The top candidate in the polls for the Republican nomination for president said, flat out, “I’m not a believer in man-made global warming.”

This in spite of scientific consensus—Ninety-seven percent of climate scientists agree that climate-warming trends over the past century are very likely due to human activities, and most of the leading scientific organizations worldwide have issued public statements endorsing this position.

Another candidate, arguing against America taking leadership action on climate change, said, “One nation, acting alone, can make no difference at all.” (See Katie Couric’s Yahoo! interview at 33:10.)

David Roberts, writing for Vox.com, challenged the position that America can make no difference. “One nation, acting alone can make a difference, by doing something that's worth doing anyway. And refusing to do it would be a gross abdication of moral leadership.”

A third candidate worries that action on climate change will make America a harder place to create jobs. “We're not going to pursue policies that will do absolutely nothing to change our climate.”

In response, Eric Holthaus, a meteorologist who writes about weather and climate for Slate’s Future Tense, said action on climate change would in fact lead to jobs growth. “The growth of renewable energy is already a huge job creator in the United States,” he said.

Candidates (and their followers) who deny climate change do so at their peril because they ignore—or worse, prevent—the benefits that would accrue to our economy. For example—

Siemens is committed to cut its global carbon footprint in half by 2020 and to make its global operations carbon neutral by 2030. The company will eliminate a vast majority of its carbon emissions, while also supporting projects that reduce greenhouse gas emissions outside of Siemens, known as carbon offsets. Its net CO2 emissions will be zero. Imagine the return on investing in a smaller carbon footprint and how net zero CO2 emissions can help address climate change.

Employment in the solar sector grew by more than 20 percent, and it is now adding jobs at a rate that exceeds the oil and gas industry, and there are twice as many solar workers as coal miners. Imagine the return on investing in solar and how solar can help address climate change.

Google signed a 20-year agreement to buy half of the energy produced at a soon-to-be refurbished wind energy facility to power the company’s sprawling Googleplex headquarters. Imagine the return on investing in wind and how wind can help address climate change.

Apple is accelerating efforts to build an electric car, designating it internally as a “committed project” and setting a target ship date for 2019. Imagine the return on investing in electric vehicles and how electric vehicles can help address climate change.

LED lighting is a new industry category that will enable consumers to help reduce energy consumption. Energy.gov predicts that by 2027, LED lighting could save the equivalent annual electrical output of 44 1000-megawatt power plants and result in a total savings of more than $30 billion at today's electricity prices. Imagine the return on investing in LED lighting and how LED lighting can help address climate change.

LEED[i] buildings are responsible for diverting over 80 million tons of waste from landfills. Compared to the average commercial building, LEED Gold buildings in the General Services Administration’s portfolio consume a quarter less energy and generate 34% lower greenhouse gas emissions. Imagine the return on investing in LEED buildings and how LEED can help address climate change.

* * * *

The 5 Most Important Points of Pope Francis’s Climate Change Encyclical man-made climate change are simple and profound—

1. Climate change is real, and it’s getting worse.

2. Human beings are a major contributor to climate change.

3. Climate change disproportionately affects the poor.

4. We can and must make things better.

5. Individuals can help, but politicians must lead the charge.
Now the Pope has come to America where he challenges us to act on climate change.

Some will cheer while others will be very uncomfortable. But climate change will not go away.

America should lead on this issue. But if it doesn’t, American businesses and cities can.

Addressing climate change is a good thing for the planet, for the people and for our economy.




[i] LEED: Leadership in Energy and Environmental Design is a program of the U.S. Green Building Council.

One Path Among Others Not Taken

By Jim Vaughn, Senior Advisor

After reading the good news from Washington that the Senate approved a highway bill on a vote of 91-4 (the bad news is the stopgap measure will finance federal highway and transportation projects only for three months!), I came across these interesting approaches from the states— 

Iowa Makes a Bold Admission: We Need Fewer Roads

Iowa DOT chief Paul Trombino said nobody is going to pay to rebuild the state’s roads. It’s not affordable. Iowans will have to figure out which roads “we really want to keep” and let the others “deteriorate and go away.” 

Texas to Convert Some Roads to Gravel

Converting 83 miles of roads from paved to unpaved is an unintended consequence of prosperity in Texas. The affected roads have been so heavily damaged by truck activity related to oil and natural gas exploration that they have become safety hazards, said TxDOT Deputy Executive Director John Barton. 

So what if Iowa and Texas are on to something? What if we can’t afford a lot of the roads we’ve got? What if the best solution is to plow them under? And what if we change our priorities on building and rebuilding our roads and highways? 

Of course we have to repair and build roads because we chose to build car-dependent cities back in the 1960s. But did we? University of Virginia historian Peter Norton says “the car-dominated city wasn’t the inevitable path of progress, but one path among others not taken.” 

In her excellent Washington Post Wonkblog post, The Myth of the American Love Affair With Cars, Emily Badger quotes Norton to tell the history that has been lost about how automobiles came to own the road: 

Americans’ love affair with the car “is one of the biggest public relations coups of all time,” Norton said. “It’s always treated as folk wisdom, as an organic growth from society. [But] everyone forgets it was invented as a public relations campaign.” 

This “love affair” was coined, in fact, during a 1961 episode of a weekly hour-long television program called the DuPont Show of the Week (sponsored, incidentally, by DuPont, which owned a 23 percent stake in General Motors at the time). The program, titled “Merrily We Roll Along,” was promoted by DuPont as “the story of America’s love affair with the automobile.” 

The show aired at a time when cars were facing steep criticism, as plans for the new interstate system threatened to destroy or disrupt neighborhoods in many U.S. cities. Highways were on their way to remaking Detroit, Cincinnati and St. Louis. Interstate 95 would ultimately raze entire black neighborhoods in Miami. In Washington, a grassroots group called the Emergency Committee on the Transportation Crisis was protesting “white men’s roads thru black men’s homes.”

In New York, urbanist hero Jane Jacobs had gone to battle against a proposed road through Washington Square in Greenwich Village that would have replaced a public park with a thoroughfare for speeding cars. 

The “love affair” story, Norton says, was a response to all this protest, and it successfully helped seed two ideas that have been entrenched ever since: that we’re bound to cars by something stronger than need, and that people who challenge that bond are just turning up their noses at their fellow Americans. 

In the half century since then, we have largely rebuilt American communities to accommodate this love, retrofitting cities to make space for cars, bulldozing old buildings so that we can park them, constructing new communities where it’s not possible to get around without them. 

This isn’t to say that there aren’t people who love their cars. The phenomenon of sports cars, weekend cars and collector cars is real. So, too, is the allure for many people of road trips, scenic highways or weekend drives through the country. Rather, the story Norton disputes, which he has written about in the book “Fighting Traffic: The Dawn of the Motor Age in the American City,” is the history that says that we’ve built car-dependent cities and suburbs because that’s what Americans wanted, the story that says all our surface parking lots and spaghetti interchanges are a pure product of American preferences. 

Now, about 86 percent of Americans get to work every day in a private car – a statistic that’s often interpreted to mean that the vast majority of us chose to travel that way. 

This conclusion conflates preferences with constrained options. “I actually drive most of the way to work,” Norton admits. “I do it because the choices stink.” To extract from today’s ubiquitous parking garages, drive-through restaurants and busy roads a preference for cars ignores all the ways that public policy, industry influence and economic incentives have shaped our travel behavior. 

“If you locked me in a 7-Eleven for a week, and then after the end of the week unlocked the door and you studied my diet over the previous seven days, then concluded that I prefer highly processed, packaged foods to fresh fruits and vegetables, I would say your study is flawed,” Norton says. 

We make the same mistake, he says, with the history we tell of the car. And this popular story of that past makes it hard for us to envision alternative futures before us. 

So in three months, when the stopgap highway bill expires, what are we going to do about our transportation infrastructure? 

If Norton was right—that the car-dominated city wasn’t the inevitable path of progress, but one path among others not taken—it stands to reason that continuing to build and rebuild freeways and highways is but one path today. 

Imagine passing a long-term, balanced and sustainable transportation bill that leads to significant public and private investment in cities designed for people and not just for cars. That’s a bill that could result in a real love affair: an American love affair with cities.

Sustainable Development — Economy, Ecology and Equity

By Jim Vaughan, Senior Fellow 

When I was president of the Chattanooga Area Chamber in the 1990s, our chamber, economic development organization, community leaders and elected officials developed a community growth strategy based on sustainable development. 

Sustainability was a new term for cities and my friend and city councilman Dave Crockett, an early leader in the movement, helped position Chattanooga as a national leader among sustainable cities. 

In 1994, we hosted the first national meeting of the President’s Council on Sustainable Development where Vice President Al Gore called Chattanooga “an environmental success story, not only for the United States, but for the world.” 

As a native Tennessean, Gore’s declaration could be viewed as a play to the home folks except that Chattanooga was making quite a name for itself— 

•  It cleaned up its air, meeting all federal standards, just 20 years after legendary CBS News anchor Walter Cronkite said Chattanooga had the worst air quality in America; 
• It engaged thousands of citizens in a public planning process to envision Chattanooga as the “best mid-sized city in America” and attracted the public and private resources to realize its dreams; 
• It constructed the Tennessee Riverpark—walking and biking trails along the Tennessee River, six fishing piers, public art throughout, and including active and passive destination parks; and 
• It opened the world’s first and largest freshwater aquarium in 1992 as the lynchpin of the transformation of the city’s downtown. 

Fast forward 21 years and today, almost every leading city in America has embraced sustainability and is committed to prosper with a stronger economy and through environmental excellence. 

____________

But sustainable development includes three elements—economy, ecology and equity. How are we doing on the equity front? 

Not so good. 

Between 2000 and 2013 every state has seen its share of middle-class families shrink, according to a Pew Charitable Trust report. 

The current federal minimum wage, $7.25 per hour, has not been increased since 2009. And even though 29 states have minimum wages above the federal minimum, none would qualify as a “living wage” which is typically $10.00-$14.00 per hour. 

Workers aren’t benefiting from their increased productivity. From 1948 to 1979, net productivity rose 108.1 percent, and hourly compensation increased 93.4 percent. But from 1979 to 2013, according to Economic Policy Institute, while productivity rose 64.9 percent, hourly compensation rose only 8.0 percent. 

Sociologist Tali Kristal has documented that the share of revenues going to wages and benefits in manufacturing has declined by 14 percent since 1970, while the share going to profits has correspondingly increased. 

CEO-to-worker pay-ratio was 20-to-1 40 years ago, according to the AFL-CIO. Today it’s 354-to-1. 

Scientific American, in a March 31, 2015 article, “Economic Inequality: It’s Far Worse Than You Think,” paints a pretty bleak picture of America in the 21st century when it says, “We may not want to believe it, but the United States is now the most unequal of all Western nations.” 

The article also references an infographic video on wealth income inequality in America that went viral and has been watched more than 16 million times. It’s worth looking at right now. 

____________

More than 100 years ago, Henry Ford roughly doubled his workers’ wages to $5.00 a day. “No one loses anything by raising wages as soon as he is able,” Ford said. “Low wages are the most costly any employer can pay.” 

“The new wage rate set off seismic shifts in American society,” wrote John Galagher in the Detroit Free Press. “A tidal influx of job candidates from the South and around the world flowed into Detroit. Factory jobs became prized, helping turn America into the world’s industrial colossus.” 

In 2015, Walmart raised its minimum wage to $9.00 per hour. Hardly a seismic shift, but the world’s largest retailer is running television ads to say they are “investing in the most important part of our company, our people, because a raise in pay raises us all.”
President Obama has called economic inequality “the defining challenge of our time.” But even if it is just one of the defining challenges we face, it’s time for chambers and economic development organizations to remember that sustainable development is about economy, ecology and equity.

Nuggets of wisdom, interest, and of possible value

By Jim Vaughan, Senior Fellow

What better way to end 2014 than by scanning the clippings file and tagged emails in search of nuggets of wisdom, interest, and of possible value. Here are five random but thought provoking quotes you can use right away to make the case for making your city a great city: 

1. On the importance of investing in arts, culture, transit and the like, my associate Alex Pearlstein shared this quote by Calgary Mayor Naheed Nenshi from a City Lab piece by Richard Florida—
   
   “When we make investments in arts and culture and sports and recreation, in vibrant public spaces, and even great public transit, those are hard-nosed economic development decisions.”
   
   
2. On higher minimum wages, the states aren't waiting on Congress to act. Twenty-one states are set to raise minimum wages in 2015 benefiting more than 3.1 million workers. CBS News puts the increased earnings into perspective—
   
   “Those wage increases should translate into more than $838 million in new economic growth, according to EPI, as workers spend more money.”
   
   Meanwhile, Paul Krugman makes the case that we can pay fast-food workers higher wages. In a Business Insider interview he said—
   
   “When the minimum wage is as low as it is in the United States, there is hardly any cost in raising it. Almost all minimum wage workers in the United States are employed in non-tradable industries—production can’t move to China. We can raise these wages without losing a lot of jobs.”
   
   
3. On pinpricks of change that enrich city life. When I was president of the Chamber in Chattanooga, a local IBM executive and future City Councilman, Dave Crockett, attended the 1992 Earth Summit in Rio where countries adopted a blueprint for sustainable development. He came back singing the praises of one of the leaders he met at the conference, Jaime Lerner, the mayor of Curitiba, Brazil.
   
   An October 22 article in Next City tells about Lerner’s book, Urban Acupuncture: Celebrating Pinpricks of Change That Enrich City Life and it’s packed with low-cost, low-impact solutions to problems not unlike those he advanced in Curitiba in the 1970s and ‘80s.
   
   I've made it a practice of saving mentions of Lerner over the years and here is the latest clip from my Jaime Lerner file—
   
   “We make the mistake of saying that something is not worth it if there is no proof to it. In fact, our obsession with measurable results has killed many a good idea. If only cities had fewer peddlers of complexity and more philosophers!”
   
   
4. On does design matter? James Howard Kunstler’s The Geography of Nowhere is a critique of the post-World War II built environment in America that led to everyplace looking like no place in particular. So what would our cities and suburbs look like and how much better would they work if we built as if design matters?
   
   Darius Sollohub, director of the New Jersey School of Architecture at the New Jersey Institute of Technology, writes about the importance of good design in transportation in Intransition magazine—
   
   “Does design matter? Of course it does. When design succeeds, it can boost the economy and provide a distinct style recognizable to future generations. And when we design exceedingly well, we build classics that deflect the wrecking ball to become timeless.”
   
   
5. On finding a place to park. Baylor University in Waco, Texas opened its new on-campus, riverfront football stadium in September to much acclaim. The only criticism of the 45,000-seat stadium was that only 2,500 on-site parking spaces were available. Fans could park on campus and downtown and walk or ride shuttles to the game.
   
   “I was wanting to show you pictures of massive traffic problems, but there were none,” said Police Chief Brent Stroman.” As expected, the inventory of parking in downtown and on campus was more than enough to accommodate the capacity crowd. The Baylor-Waco experience is just the latest example that parking is not the problem it’s made out to be. Project for Public Spaces says, “The hang-up on parking is an indicator that a community has no broader vision for itself.”
   
   “The current obsession with parking is one of the biggest obstacles to achieving livable cities and towns, because it usually runs counter to what should be our paramount concern: creating places where people enjoy spending time. As long as the myth persists that economic prosperity depends on parking, local governments will continue to waste public money and distort the public planning process.” 

On behalf of everyone at Market Street, here’s to a prosperous 2015! We look forward to following your successes in the new year, and encourage you to follow us on Twitter for the latest thought-provoking community and economic development quotes, news, best practices, and innovations.

Can we still do big things?

By Jim Vaughan, Senior Fellow.

The news that the U.S. and China have set goals to cut net greenhouse gas emissions and increase the production of energy from clean sources should be welcomed across the globe — especially after the dire warning from the United Nations that climate change may soon be “irreversible.”

• For our part, President Obama announced an ambitious 2025 target to cut U.S. climate pollution by 26-28 percent from 2005 levels.

• China’s President Xi Jinping said his country would increase the non-fossil fuel share of all energy to around 20 percent by 2030.

One would think the agreement would silence critics who have opposed U.S. action on climate change unless and until other countries also agree to act (so much for American leadership). But now the two biggest climate polluters in the world have agreed to act. The U.S. and China account for more than a third of global carbon dioxide emissions.

The reality is, we are not alone in addressing the problem. The European Union committed last month to cut its emissions 40 percent by 2030. And there are indications that the world’s next-biggest emitter—India—might be feeling the pressure. As reported by the Associated Press on Nov. 12, a former India official said, “the international community will now expect India to make some firm commitments.”

So it would appear that there is momentum on the side of acting to reverse climate change. The New York Times went so far as to say the announcement “has fundamentally shifted the global politics on climate change.”

But as Lee Corso would say on ESPN’s College Game Day, “not so fast.”

Opponents immediately slammed the climate deal. One said it would “ensure higher utility rates and far fewer jobs” and another called the agreement “hollow, not believable (and) a non-binding charade.” The bottom line, they said in a variety of ways, “Our economy can’t take a war on coal that will increase the squeeze on middle-class families and struggling miners."

Really? America can’t take action on what may be the biggest economic and environmental challenge of our time? Opponents to the far-reaching agreement apparently believe that the only way forward is to keep doing what we’ve been doing.

News this month from three iconic businesses suggests otherwise. 1) A retailer with declining market share, is reinventing itself by capitalizing on its vast real estate holdings; 2) The manufacturer of the best selling truck in America is changing the very material from which the vehicle is made “to get a jump on its rivals in the pickup wars;” and 3) Another car maker is introducing an emissions-free vehicle that runs on fuel that is not readily available and will initially be more expensive than gas.

• Sears, Roebuck and Co.— on a long, slow contraction since 1989 when it was America’s largest retailer—is closing stores and leasing space in some stores to other retailers in an effort to turn the chain into a leaner, focused and more profitable company that one day may be better known as a real estate firm.
  
  The Miami Herald reported on Nov. 10 that Sears would redevelop its 12.3-acre site at a suburban Miami mall into the Esplanade at Aventura, “an open-air village featuring retail, restaurants, offices and a hotel.” The existing 192,000 square foot Sears store will be replaced with a smaller-format store at just 20,000 square feet.
  
  Who wants another Sears store? But what American city wouldn’t welcome a contemporary, open-air shopping and entertainment village on the site of one of its underperforming stores?

• Ford Motor Co. is betting its future on its most fuel-efficient pickup ever, the aluminum-body F-150. The new design saves up to 700 pounds and Ford is shooting for a 20 percent increase in fuel economy.
  
  New government rules require Ford and other manufacturers to achieve a fleet average of 54.5 miles a gallon by 2025. Since Ford’s F-series pickups have been the best-selling trucks in America for 37 consecutive years, buyer acceptance of the lighter and more efficient F-150 can help the company reach the mileage goal.
  
  “Is this a risk? Yes,” William Clay Ford Jr., the automaker’s executive chairman said. “But it’s a risk worth taking.”
  
  One could say the new truck is the result of the government regulation. But with 850 new jobs and a $359 million renovation of the company’s Rouge assembly complex in Dearborn, “job-killing regulations” is a label that won’t stick.

• Toyota Motor Corp. is entering the unproven but potentially lucrative market for emissions-free, hydrogen-powered vehicles. The company announced on Nov. 18, that it would begin selling fuel cell cars in Japan on Dec. 15 and in the U.S. and Europe in mid-2015.
  
  “Besides the relatively high cost, buyers will have to contend with finding fuel,” the Associated Press reported. “Only a few dozen hydrogen filling stations have been built worldwide, though governments are subsidizing the construction of more.”
  
  “Asked if it's a risk, Yoshikazu Tanaka, deputy chief engineer for Toyota's next generation vehicle development, said yes, but Toyota views it as a challenge. Likening it to a chicken and egg situation, he said if you say it's too risky and don't move forward with production, the number of filling stations will never grow. Toyota faced a similar scenario with its gasoline-electric hybrid, the Prius, which now sells in big numbers."
  

Can we still do big things?

The cry from climate change deniers and opponents of the US-China agreement suggests that we can only address big global challenges and new opportunities if we don’t have to change the way we are doing business today.

Fortunately, companies like Sears, Ford and Toyota—and large and small firms in the cities and regions where Market Street Services is working—are proving that we still can do big things. And in the process, proving that we can create good jobs that pay living wages, guarantee a quality education for our children, and provide affordable health care and housing for everybody.

Politicians and other critics are free to oppose the fight against climate change. But their excuse can’t be because it will kill jobs and hurt the economy. In fact, there’s nothing like a big challenge to bring about a better future. Just ask the shopper at the Esplanade, the guy driving that new Ford truck and the first owners of the emissions-free, hydrogen-powered Toyota.

Who really benefits from incentives?

By Jim Vaughan, Senior Fellow.

Now that the latest economic development project-of-the-century has been sited—this one so big it’s called a “gigafactory”—questions are being asked again about who really benefits from the incentives that governments are giving to attract or retain businesses and industries.
 

Regardless of your position on the subject, it’s a fact that the playing field on which communities compete for jobs and investment tilted toward Nevada when the Silver State gave $1.25 billion in incentives to the electric vehicle manufacturer, Tesla, and Panasonic to make lithium-ion battery cells in Reno.

Tesla may be a good deal for Nevada and for America—only time will tell—but the cost to compete for new projects just went up for every city, county and state including Nevada.

Incentives are nothing new
During my career, incentives have included free land given to companies from up north to come down south, workforce training for employees of new companies, building roads and infrastructure, and abating taxes for up to 10, 15 and now 20 years. But instead of a sweetener to close a deal, incentives today are often the starting point when presenting a community to a prospect.
 

In my first post on the Market Street blog on December 21, 2012, I wrote about the pushback from a New York Times series on corporate incentives and suggested that it could affect one of the tools in the business recruitment and retention toolbox.

The Times identified 48 companies that received more than $100 million in state grants since 2007. The leader, General Motors, got $1.77 billion through 208 grants for projects in 16 states. Now comes Tesla receiving $1.25 billion for one project in one state!

I could make a case for the Tesla deal based on it being in the national interest that we make cheaper and more efficient batteries for automobiles. Battery powered cars, after all, will help America reduce greenhouse gases that contribute to global climate change. But the Tesla incentives aren’t based on their value to the nation. Instead, they’re coming from a state to influence the location of the plant.

What’s the return?
After the announcement, Richard Florida, a critic of incentives in the aftermath of the NY. Times series, again made the case that “incentives play little if any role in companies’ location decisions. They are based on more fundamental factors like labor costs, the quality of the workforce, proximity to markets and access to suppliers,” he said.

Florida said companies have “learned to game the process” and that certainly seems plausible in the Tesla case. The company broke ground in June for the plant in Reno even as reports suggest it continued to negotiate with Arizona, California, New Mexico and Texas officials for an even better deal for another three months.

While the Times and Florida question whether incentives influence location decisions, a Lincoln Institute of Land Policy report went even further. “There is little evidence that tax incentives are an effective instrument to promote economic development (even as) they cost state and local governments $5 to $10 billion each year in forgone revenue,” the report said.

Questions we should be asking
Can we have a serious, national discussion about who really benefits from the incentives that governments are giving to attract or retain businesses and industries? The questions that should be asked include, 

• Why are cities and states subsidizing profitable companies with incentives and tax breaks?

• Do incentives really influence location decisions?

• If incentives are gravy for businesses receiving them, how can they be stopped?

• What if incentives are a good deal for the local community but are a zero sum game for the U.S. overall?

• Is this an issue that should be addressed nationally?

Market Street has helped its client communities develop holistic strategies for sustainable growth and development based on measurable improvements in education and workforce development; a competitive business environment; 21st century transportation and infrastructure; and a superb quality of life.

Our strategies are framed in terms of “people, prosperity, and place.”

Maybe with the right strategy, you won’t need to offer incentives.

Chamber Executives Association Celebrates 100 Years

By Jim Vaughan, Senior Fellow

Early in the 20th century, chambers of commerce were known generally as “commercial organizations” and their executives were called “secretaries.” So when two regional associations met in Cincinnati in 1914 to approve a merger, the name chosen was National Association of Commercial Organization Secretaries.

NACOS became the American Chamber of Commerce Executives in 1948 and the organization has been known as ACCE ever since although the acronym will now stand for Association of Chamber of Commerce Executives.

The titles of the members of the association have also changed—from secretary, to executive secretary, to executive director, to executive vice president, to president—as their roles and responsibilities have been increased.

But one thing hasn’t changed. That is the association’s commitment to assist the executives of local and state chambers of commerce improve the communities they represent.

Mick Fleming, ACCE’s President, calls it an inspiring story of our shared heritage.

“The history of chambers, the growth of the modern economy and the building of viable communities—it’s all one story—a moving tale of courage, imagination, relationships and persistence,” Fleming said.

Chamber of commerce professionals from across North America gather in Cincinnati on August 12-15 to celebrate the 100th Anniversary of ACCE and to begin the organization’s Second Century. As the National Economic Development Sponsor of ACCE, Market Street Services is again presenting programs and serving on panels at the convention:

• Quality of Place as an Economic Driver with Market Street’s Mac Holladay along with panelists David Brown, President and CEO, Greater Omaha Chamber and Brad Lacy, President and CEO, Conway Area Chamber; and

• Tapping the Entrepreneurial Culture featuring Christa Tinsley Spaht together with Sean Kennedy, Greenhouse Manager, St. Petersburg Area Chamber; Michael Dalby, President and CEO, Columbus Chamber; and Penny Lewandowski, Vice President of Entrepreneurship, Edward Lowe Foundation.

Many of our past and present clients are also presenting or serving as panelists at the conference:

• Growing Diverse Businesses with Nika White, Vice President, Diversity and Inclusion, Greenville Chamber alongside Crystal German, Vice President, Economic Inclusion, Cincinnati USA Regional Chamber.

• Put Your Foundation to Work featuring panelist Ralph Schulz, President and CEO, Nashville Area Chamber of Commerce along with fellow panelist Tim Sheehy, President, Metropolitan Milwaukee Association of Commerce.

• You’re Certifiable presented by Ben Haskew, President and CEO, Greenville Chamber of Commerce together with Robert L. Quick, President and CEO, Commerce Lexington Inc.

• Cultivating Diverse Leaders with Valerie Patton, Vice President, Economic Inclusion, St. Louis Regional Chamber and Harold Boone Sr., Vice President, Minority Business Development, Montgomery Area Chamber of Commerce. They will be joined by Sonya Hughes, Vice President, Inclusion and Community Leadership, Grand Rapids Area Chamber.

• And more!

Market Street is proud to support ACCE at the convention and throughout the year and we appreciate the business relationships we enjoy with so many ACCE-member chambers.

If you’re attending the convention, come see us at booth #206 to see how we can help you help your community.

Celebrating Life, Liberty and the Pursuit of Happiness

By Jim Vaughan, Senior Fellow.

On April 17, 2013, I wrote a post about Santa Fe, one of America’s great and unique cities, in which I asked the question, “Why don’t I live here?” Today, I’m writing this post as a new resident of Santa Fe. After ten years in Waco, Patty and I have moved to “The City Different” for a year that we are calling “our great adventure.”

We arrived in Santa Fe just before Independence Day—a holiday that will be celebrated here and across the nation with fireworks, parades, speeches, picnics and promotions. Some events are worthy of the great day, some not so much.

MSNBC has been running promos by Chris Matthews leading up to the 4th of July that have put the holiday into perspective for me.

“It took twenty-two months of men debating … to achieve the Declaration of Independence,” Matthews said, reminding us that progressive change takes time. “Abolition would take a great civil war but it came. Woman’s suffrage would take a crusade but it became part in parcel of our democracy. Voting rights have taken a brutal fight as will the case for marriage equality and equal pay for men and women.“

Not everyone will come to Matthews’ conclusion that “liberalism always wins eventually.” But chamber of commerce and economic development professionals know that significant change does occur in America because we have affected change—sometimes significant change—in the cities and states where we work.

Matthews notes that it took the Continental Congress almost two years to write and adopt the Declaration of Independence.

On this 238th anniversary of our nation’s Independence, let’s celebrate the Declaration and the Congress that adopted it. And remember that while change takes time, it also takes leadership and advocates.

Here’s to the leaders and advocates for change in the communities where Market Street is working.