For years the major employer in your community has enjoyed steady market success. Most of the people in your community either work directly for the Company or are dependent on the Company and its employees as customers. People are content and their children are planning to follow in their parents’ footsteps and work for the Company. Life is great! Then the unthinkable happens. The Company is acquired and its operations are consolidated to another location. Few employees are asked to transfer to the new location and 8,000 of your citizens are laid off in an efficiency effort to reduce costs. A once optimistic community is on the fast track to extinction.
Does this scenario seem far-fetched? Unfortunately, it is all too common. In fact, this particular scenario is part of the story of my hometown – Utica, NY. In the mid-20th century, Utica had recovered from the southern migration of the textile industry and had become a major manufacturing center for radios. General Electric was the major employer, and Utica became known as the “Radio Capital of the world.” That is, until General Electric moved its radio manufacturing to the Far East and then sold its Light Military Electronics operation to Lockheed Martin. Lockheed Martin then consolidated operations in another location. The net effect of both events was the loss of 8,000 jobs. Utica Per capita income is reported to be $15,248. This is a far cry from it’s hey day when General Electric was the Company that catalyzed economic prosperity.
Utica is not unique. Other communities across the nation find they too are unprepared when their major employer closes its door for whatever reason. In an interdependent global economy, change is the only constant. Corporations make daily decisions on rationalizing operations to ensure their costs are minimized and their products are competitively priced.
But, communities do not have to simply accept that at some point their economy is doomed. Effective reapplication of portfolio management strategies used in the private sector to help ensure their product lines grow, can help communities proactively manage their economic future.
Two Core Concepts
To apply economic portfolio management, it helps to understand two ideas.
Current Image – The perception of your current community promise. This is what your community stands for in the minds and hearts of its citizens and potential capital investors. Generally speaking, your community image will be a matter of correct perceptions and misperceptions.
Desired Identity – The promise your community would like to make. Because it is “desired”, by definition there is a gap between what your community is today and what you would like to make it. Remember, just like your community’s current promise, your future promise needs to be relevant, competitive and authentic.
Simply put, closing the gap between your community’s current image and desired identity is the job of a good economic portfolio management plan. Conceptually it really isn’t any harder than that. However, as you might expect, the devil is certainly in the details.
Here is a presentation that provides you an overview of the primary steps involved in creating an economic portfolio management plan. I hope you find it a helpful guide.
After you understand the process flow, if you want to create a plan for your community I would recommend you consider engaging a professional facilitator. There are a number of consultants who can lead your public and private sector leadership through the exercise. But, if you have a large employer in your community, consider asking the CEO to loan you an executive familiar with strategy design and deployment. Share this blog post with the executive so he/she can get a quick understanding of what you would like to accomplish. There are a number of similar processes that will lead to a successful outcome. Just like a BMW provides a different ride than a Buick, fact is both are capable of taking you to your destination.
Since I used my hometown as a negative example, I would like to counter balance by acknowledging a couple positive things about Utica, NY. For perspective, my Grandfather emigrated from Bari, Italy to Utica. I grew up in the Italian neighborhood of East Utica. I fondly remember playing bocce with my grandfather on Oscar Street and picking grapes from his arbor. If you ever have an opportunity to visit Utica, consider stopping at Florentine Pastry Shop and order my absolute favorite – chocolate pusty (pastichioti) and an espresso. Then try dinner at Chesterfield’s Restaurant and order the escarole (Greens Morelle) as an appetizer. Everything on the menu is amazing. Add a glass of the house Chianti and you’ll experience a day filled with a few of my most cherished memories.
Pay it Forward
Please leave a comment with your thoughts. As a community, we will undoubtedly be able to help each other achieve our goals.