Chapter 7.1

Recruiting Isn't Needed to Sell State
(The Oregonian, March 28, 1995)

By Richard Carson

Does the state of Oregon need an Economic Development Depart- ment? I was stunned when I read that the Legislature had asked the question. It was not that the question was such a revelation. It was the fact that anyone even had the mind to ask it.

The recent misadventure that precipitated the question  namely the business recruitment trip to the University of Oregon's Rose Bowl game  is not what the Economic Development Department should be about. However, it represents the types of abuses that can occur when business recruitment is sanctioned as a legitimate public policy. In the world of economic development there are four basic strategies.

- Assist new small businesses to start up.
- Help growing businesses expand.
- Work to retain existing businesses that are in trouble.
- Recruit existing out-of-state businesses.

I have worked for more than 20 years in the private and public sectors in property development and economic development. I spent six of those years in the state's Economic Development Department working for both Governors Vic Atiyeh and Neil Goldschmidt.

Experience taught me that there is always a group of people, in and out of government, who believe that they can sell anything to anyone. All they ask for is plenty of money for lavish gifts and expensive dinners, the occasional limousine or helicopter for visiting executives, and an airplane ticket to anywhere outside of Oregon.

I believe Oregon doesn't need to do business recruitment. What we do need is an economic development preparedness policy through which we build new infrastructure, a skilled labor pool and access to capital. This is what attracts industrial investment.

Consider what happened in Washington County. It is the most successful of Oregon's counties in the high-stakes business investment game. The reason is that the Sunset Corridor Association, a private-sector organization, created a variety of industrial sites that had the infrastructure in place and were ready for development. There is no county economic development program.

Take the example of the tremendous Japanese investment in Washington County. They were not lured here because this state had a far-reaching policy of recruiting Japanese industry. In fact, the policy of establishing international trade offices in Asian economic capitals came as a reaction to the Japanese investment. I know this because I took the first telephone inquiry from NEC America. I worked with the executives from NEC, Fujitsu and Epson to build their plants here.

Why did the Japanese come? They found cheap land, a quality labor force, a receptive business community and government, the shortest travel time to Japan and a time zone that allowed them to talk with the home office during working hours. One thing is certain, we didn't recruit them.

Those states whose economic development policy is based on smokestack chasing and recruiting branch plants are extremely vulnerable to economic trends. The executive director of the Phoenix Economic Growth Corp. voiced his concern because as of the late 1980s about 70 percent of Arizona's high-tech workers were employed by 14 companies, only one of which is headquartered in the state.

Contrast Oregon with Arizona. Oregon is a state of small businesses. Our business profile mirrors the national economy. David Birch, author of The Job Generation Process, found that more than 80 percent of the total jobs generated in the United States came from small businesses.

So why is Oregon giving away millions of dollars in property-tax abatement for out-of-state branch plants such as those recently given to Intel?  The answer is that announcements of big new plants, with hundreds of jobs, get media attention.

You don't get your name in the paper for helping the average citizen start a new business. The people who do that job at the Economic Development Department are the real unsung heroes. They help save jobs in rural Oregon, they cut through the red tape for existing businesses and they work to bring innovative Oregon products to the national and international marketplace.

Oregonians have succeeded in defining themselves. We are not swayed by what others think we should be. We have worked hard to create a quality-of-life that attracts investment.

The bottom line is that the Oregon Economic Development Department should not be abolished. It does a lot for Oregon's companies. However, it is time to retire the recruiters.

Richard H. Carson, the director of Oregon City's Community Development Department, formerly worked for six years in the Oregon Economic Development Department and is author of "Locating the Factories of the Future" (Industrial Development Research Council, Atlanta, Ga., 1986).

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Common Sense
by Richard H. Carson