EcDev Journal

Survey of US Economic Development Leaders Indicates Growth in Corporate Prospect Activity, but Slowing Project Announcements

Posted on Wednesday November 06, 2013
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Author:  Chris Engle, Vice President, Avalanche Consulting, Austin, Texas

 

A survey of 181 economic development organizations across the US by a Texas-based consulting firm shows that corporations continue to explore their expansion plans, but are announcing new projects at a slower pace than previous reports.

 

The Economic Development Activity Index is a bi-annual survey of U.S. economic developers conducted by Avalanche Consulting, Inc. to gauge changes in prospect activity and perceptions of the economy. While other surveys exist to measure sentiment of businesses or consumers, this survey is focused on economic developers, who have unique insights on the future of job creation in US communities. The latest survey conducted in July 2013 garnered qualified responses from 181 regions across the US.

 

“These are the chief economic officers for 181 cities and regions in the U.S., and they have their fingers on the pulse of what’s happening,” says Chris Engle, Avalanche Consulting’s Vice President. “They are talking to companies about whether they will grow and expand.”

 

Overall Prospect Activity Increases

 

 

Results of the latest survey show that leads, prospect visits, and expansion prospects increased for US economic development organizations (EDOs), but announcements and startups decreased.

 

Prospects are companies that are considering an expansion/relocation and are competitively evaluating multiple cities as part of their decision. Economic development organizations often assist these companies with their information needs, site and building search, workforce assessments, and/or financing and incentives.

The country appears to be splitting into two growth camps, with nearly 50 percent of US economic developers saying prospects increased and 50 percent saying prospects decreased. Very few communities indicated activity has been flat/same. “This bifurcation in the economy, with some communities advancing and others stalling, is an indication that much of the country continues to feel the grips of the past recession,” says Engle.

 

For the past two surveys, a sizeable shift of responses has occurred:  many of the economic developers who last year believed activity would “stay the same” now believe activity is going to decrease, as shown by the side chart.

 

Manufacturing Prospect Activity Increases

The leading industry for announced projects and jobs in US communities of all sizes was Manufacturing, illustrative of the continued national recovery of manufacturing jobs. The next most common project announcements were in Health Care Services, Education Services, and Mining / Extraction.

 

 

Germany is Top Source of International Prospects for the US, followed by China and Canada

 

US economic developers indicated that 17% of prospects came from foreign countries, the same share reported in 2011. The top 3 sources of international prospects are Germany, China, and Canada. Asian countries comprise a greater share of these prospects than two years ago. This reflects a slight drop in prospects from France and Spain, likely due to the uncertain economic situation in Europe, and a slight rise in prospects from Japan, Korea, and other Pacific Rim countries. The top two sources of international prospects, Germany and China, saw their share of prospect activity stay the same.

  

Perceptions of US National Economy Improve

 

Perceptions of the US national economy have improved since the previous survey in January.  Now, 34% of US economic developers believe the economy is good - double January’s 17% - and for the first time since the survey was started (Q4-2009), positive perceptions outnumber negative perceptions. This more positive opinion of today's economy continues into the future: 88% of economic developers believe that the US economy will be the same or better in 6 months.

 

“Today’s positive perceptions of the US national economy and the lack of negative expectations is a solid indication that the road to economic recovery has smoothed and will continue,” says Engle.

 

Negative opinions of US federal policies have tempered somewhat – in July, 62% still believed federal policies are currently poor, down from 73% in January 2013. The share that perceived local economic policies as good improved slightly to 57% from January 2013. Perceptions of state policies declined slightly, with the proportion of respondents praising their state policies as good fell from 37% to 34%.

 

 

 

Economic Developers Report Activities with Highest Marketing ROI

 

US economic developers also shared insights on marketing ROI. Marketing budgets are spread across a diverse set of activities – the top 3 being marketing missions, website/social media, and site consultant events. 

 

 

   

These top 3 activities were also selected as having the highest ROI for dollars spent.An EDO’s website is usually the first point of contact for a prospect to learn about a community and provides valuable real estate to communicate targeted marketing messages. Websites also have a lower cost compared to other marketing activities. Marketing missions and site consultant/real estate events provide valuable one-on-one communication with target audiences, making it another worthy investment for EDOs.

 

The marketing activities with the lowest ROI were advertisements and printed collateral. Advertisements tend to be very expensive and not highly targeted. Printed collateral is also costly and is losing popularity as more and more information becomes available online.

 

 

A large majority of local EDOs have at least one dedicated marketing staff member and a marketing budget under $100,000 a year. Only large communities (those with a population over 1 million) have marketing budgets above $1 million. In the past year, marketing budgets have generally increased, with 36% of EDOs reporting an increase and 18% reporting a decrease.

 

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Avalanche Consulting is one of the US’ leading economic development consultancies specializing in economic and workforce development, strategic planning, target industry analysis, workforce demand assessments and marketing plans.  Learn more at: www.AvalancheConsulting.com

 

The Economic Development Activity Index is a bi-annual survey of U.S. economic developers to gauge changes in prospect activity, job announcements, and perceptions of the economy. While other surveys exist to measure sentiment of businesses or consumers, this survey is focused on economic development leaders, who have unique insights on the future of job creation in U.S. communities.  The most recent survey was conducted July 15 – August 1, 2013.