- 401 Frederica Street, B-203
- Owensboro, Kentucky 42301
- (270) 685-2652 | FAX (270) 685-6074
How do we grow from here?
Owensboro-Daviess County leaders regroup, redefine, and recharge toward a more effective economic development mechanism
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Owensboro lags behind other similar-sized Kentucky cities on some economic development measures, an Advocate examination has revealed.
Community leaders seem to recognize this and to turn things around they are changing Owensboro's approach to economic development. The first change came in March with the removal of Eric Davis as president of Greater Owensboro Chamber of Commerce and Economic Development Corporation, the organizations which are largely responsible for the community's approach.
The change was expensive, costing about $77,429 in taxpayer money to buy out Davis' contract.
Community leaders justify it by saying that Owensboro must fundamentally re-think the way it recruits new employers as well as the kinds of employers it pursues.
"I think that over the years we've had a sole focus on . . . 'big box' industry, looking for that big hit . . . the Scott Papers, the Toyotetsus," said Todd Inman, chairman-elect of the Chamber of Commerce board. "They're valuable members of our community, but those hits only come around once every five years or so."
"Competition (with other communities) is just too great . . . Just as easily as you can get a 300-job plant, you can lose that plant. . . . Those who live by the sword die by the sword. You can't hinge your sole economic development effort on that."
At the same time, Owensboro is at a chronic disadvantage in attracting large manufacturers because it is not located near a major interstate and is too far from such major cities as Nashville, Cincinnati, and Lexington to get much "spin-off" business from their big companies. Thus it can't rely on the traditional economic development strategies that are still working reasonably well for communities such as Bowling Green and Hopkinsville.
Inman and others say that Owensboro must become more aggressive in seeking out and supporting entrepreneurs, technology and niche companies, and small businesses. Often such companies start out with only a few employees, but over time create more and better-paying jobs than the manufacturing and service sectors, they say.
But changing a community's entire approach to job development is a complex task, especially when community attitudes must change along with staff members and organizational structures. Here's a look at how Owensboro has fared in economic development in recent years and its tentative plans for adding more good-paying jobs to the local economy.
Job comparisons with other cities
The Advocate compared the results of Owensboro's economic development efforts over the last three years with seven other mid-sized cities across Kentucky. It found that:
- Owensboro ranks seventh of the eight in total number of manufacturing and service-sector jobs gained since January 1, 2002, based on figures from the Kentucky Cabinet for Economic Development. Bowling Green, Elizabethtown, Hopkinsville, Paducah, Pikeville and Richmond all landed more new jobs. Only Ashland trailed Owensboro.
- None of Owensboro's 551 new jobs came from companies relocating to Owensboro, according to the cabinet's website; all came from expansions by 23 companies who were already here. At least one new employer had relocated in each of the other seven cities, including Ashland. In general, about two-thirds of new jobs in the eight communities came from expansions of existing employers while about a third came from new employers. In addition, about three-fourths of the new jobs came from manufacturers, about one fourth from the service sector.
- Owensboro's financial commitment to economic development, about $344,000 last year, was mid-range compared to other cities. However the cities which had higher job gains also had larger economic development staffs. Also, the Daviess County community contributed a higher percentage of public money to economic development than most other communities, where the private sector contributed more.
Bowling Green was by far the most successful of the group. It gained 2,668 jobs, a third of the jobs gained by all eight cities combined. The jobs were also spread among all categories – from new companies as well as expansions of existing employers; and from both the manufacturing and service sectors.
| Over the last three years, none of Owensboro's 551 new jobs came from companies relocating to Owensboro ... all came from expansions of 23 (local) companies. |
Bowling Green benefits from its location on I-65 and its proximity to Fort Knox, Mammoth Cave National Park, Louisville and Nashville. So does the effectiveness of its chamber of commerce, which Communications Director Brandon Jones says is one of only three in the state to achieve four-star accreditation from the national organization. Beyond that, the presence of Western Kentucky University gives the city many ancillary amenities that, some experts say, are especially important to workers in knowledge-based businesses and their families.
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How much is Owensboro spending compared to other communities?
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The numbers show a wide variation in spending on economic development among the eight cities – but the numbers alone may be misleading. In general, it appears that Owensboro's $344,000 investment is par for the course. Bowling Green is spending about the same amount, $369,000; Elizabethtown, which has added the next highest number of jobs, is spending $200,000, all of it from the private sector.
Cities which are spending at high and low extremes tend to have reasons for doing so that are specific to their communities. Paducah, for instance, is spending more than $1 million this year, but that is likely driven by the imminent closing of the Paducah Gaseous Diffusion Plant that has long been a mainstay of the McCracken County economy.
Ashland's $500,000 figure may be similarly inflated because it reflects the joint effort of two counties, both still scrambling to fill the hole left by their loss seven years ago of Marathon Ashland Petroleum, a Fortune 500 company that employed 2,500 people.
Also, $95,000 of the $400,000 figure shown for Hopkinsville goes directly to the Chamber of Commerce for rent and administrative support. (The Hopkinsville Chamber of Commerce shares its building with the Economic Development Council and the Convention and Visitors Bureau.)
At the other extreme, the $45,000 reported by Pikeville omits enterprises funded by the coal severance tax, a major factor in the community's total effort. That's because local authorities in Pikeville can propose projects for support with those funds, but their proposals must be approved and monies advanced by Frankfort.
Where is the money coming from?
The Advocate found that the balance of public versus private spending on economic development in the eight communities depends on several factors, including how well economic development is proceeding without taxpayer money and the philosophy of community leaders about the recruiting industry.
Owensboro spends a higher percentage of public funds on its economic development efforts than most other cities, and reported that cooperation between public and private sectors rates about a 5 on a scale of 1 to 10. Most cities' economic development officials reported high levels of coordination between governmental and private sectors in their communities and said they valued that coordination highly.
The Advocate asked them to rate coordination on a scale of 1 to 10, 1 meaning no coordination at all and 10 meaning a lock-stop unitary effort.
Mayor Tom Watson's rating of 5 for Owensboro is similar to the evaluations given by officials in Hopkinsville and Elizabethtown. Watson said he is intent on raising that number "to an 8, at least."
Elizabethtown receives no public funds, but benefits from the city's location on I-65. In both Elizabethtown and Hopkinsville, officials said it's important for their private economic-development organizations to be able to negotiate with prospective employers out of the public eye. Kim Schippers, associate director of the Economic Development Council in Hopkinsville, values the council's flexibility.
"If we are in negotiations and we're getting down to the wire and we need to make a commitment, our private sector industrial foundation will make that commitment, and we don't ask government at that moment.
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"We have to get them involved . . [when we] have things that have to go through government. There's times when we're down to a 1 [on the 10-point scale] and times when we're up to an 8. We're never a 10."
In Ashland, only about 15 percent of the economic development budget comes from the public. That gives the recruiters more flexibility to make decisions without waiting on government agencies', said Purgeson of the Ashland Alliance, but he also regretted not having more public funds to work with. A raise to about 25 percent public money, he opined, could facilitate their work without subjecting them to open records laws and other legal encumbrances.
All the other communities rated their public/private sector coordination at 7 or higher. Several stressed that this was due to personal and professional relationships of the individuals involved, rather than their specific organizational structure.
Comparisons with other cities' strategies
The numbers from the Economic Development Cabinet generally reflect how communities are doing in traditional economic development efforts – they don't include the "new economy" jobs that Owensboro also wants to attract to improve its economy.
So are these other communities also focusing on new-economy employers, as Owensboro is considering?
The Advocate asked economic development officials in each community to rate, on a scale of 1 to 10, how much they are pursuing traditional companies (starting at 1) versus "new economy" companies.
Owensboro must become more aggressive in seeking out and supporting entrepreneurs, technology and niche companies, and small businesses. - Todd Inman Chairman-Elect Greater Owensboro Chamber of Commerce |
The ratings fell close to the middle of the scale. Richmond, Hopkinsville and, to a lesser extent, Elizabethtown still seem largely committed to the traditional model. Others, such as Ashland, Pikeville and Paducah, are moving slowly toward new-economy pursuits or less traditional ways of developing the economy.
Bowling Green, for instance, is aggressive at pursuing "new economy" companies in spite of its success at luring more traditional employers. The community is creating an umbrella group to connect several organizations in the community that are working with technology. One of them is the Central Region Innovation and Commercialization Center, one of several such centers across Kentucky. Bowling Green's center recently opened a Small Business Incubator/Accelerator program within Western Kentucky University's Center for Research and Development.
Ashland is also trying to expand its reach. Jim Purgeson, president of the Ashland Alliance, explained that his 6 rating was his community's actual focus, not his preference. "I would like to see it an 8 or 9," he said. Among other things, Ashland has established a downtown arts center – it rents studio space to 20 artists and expects that number to grow substantially -- that it hopes will eventually attract tourists. Ashland officials note that downtown revivals have helped spark economic development in cities such as Baltimore, Md., and Greenville, S.C.