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  Developing a Quality Life in Cedar County, Iowa  

Return on Investment

February 26, 2018

Often we are asked why we favor the do-it-yourself, incremental approach of economic community development.  Some will argue that this approach takes too long to see impacts - they want to see a more immediate return on investment. They will advocate that we should focus on recruitment of a large employer to build or relocate into our community.  This recruitment strategy looks like an easy fix to economic challenges and it is understandable why invested stakeholders would be attracted to that model.

 

Over the last 30 years, most local economic development efforts, or regional efforts among communities, have focused on business recruitment.  The focus of these efforts have generally been targeted to larger business recruitment projects.  In fact, the term “economic development” has become synonymous in many people’s minds with “industrial recruitment.”  While it is hard to argue that recruitment of a large employee can have significant positive effects on the area, the challenges of doing so is also significant.   The most significant is the cost.

 

It takes many things to attract a business into a community - a good location, quality infrastructure, affordable housing, quality amenities and recreational opportunities that make a community a place a business will consider.  It will also take money and increasingly the amount of needed to be successful is staggering. 

 

The latest example of this is in Wisconsin’s Racine County in the recruitment of Foxconn Industrial Group.  Foxconn is a world-leading manufacturer of products that include many of Apple’s iPhones and Mac computers.  The company has committed to create 17,000 jobs with an average salary of $53,000, most being in the $30,000 range. 

 

There is no doubt the impact of Foxconn will be a boom for Wisconsin. However, it is important to look at the other side of the “recruitment equation,” for the tradeoffs are significant. As published by the Milwaukee Journal Sentinel the company will receive an incentive package from the state of Wisconsin of over $3 billion dollars from taxpayers.  This works out to be about $200,000 per job. 

 

 

Will this big bet pay off in the long run?  It is difficult to say. What is clear is this strategy requires significant financial commitments.  At this level, it is difficult to see how our Cedar County communities could achieve though it does not mean we give up on development.  It reinforces the fact the investment on small strategic bets  that is not only doable but may actually be more successful.  A development strategy where we where we commit to incremental improvement and leverage our local assets has a proven track record across the nation and locally.

 

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