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Regions Charting New Directions: Metropolitan Business Planning


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Regions Charting New Directions: Metropolitan Business Planning

  1. 1. Robert Weissbourd Regions Charting New Directions: Metropolitan Business Planning Milwaukee 7 Regional Economic Development Collaboration June 7, 2012
  2. 2. Drivers of the Next Economy Agenda “Metro-Economics” Metropolitan Business Planning (from theory to practice) Getting to Ground in Milwaukee Institutional Capacity and Next Steps
  3. 3. 0% 100% 200% 300% 400% 500% 600% $s lbs %Change GDP Growth, 1950-2000 • Human Capital • Information technologies • Product innovation; flexible customization • Firm, consumer and knowledge networks • Increasing returns; divergence The Global Economy is Undergoing a Fundamental Transformation, Driven by Knowledge Assets Source: “Greenspan Weighs Evidence and Finds a Lighter Economy,” Wall Street Journal 3
  4. 4. 0 20 40 60 80 1920s 1990s Years Spent on the S&P Index As a Result, the Economy is More Dynamic Sources: Newsweek,Manyika, Lund and Auguste, “From the Ashes,” 8.16.2010;Brookings Institution 18.3% US Global GDP (2015) 25.8% BIC Countries 20.2% US 21.4% BIC Countries Global GDP (2010) 0% 20% 40% 60% 80% 100% 15% 20% 25% 30% 35% GRPGrowth Firm Starts and Closures (Churn) as % of All Firms Churn and GRP Growth by MSA -- and Global
  5. 5. ServiceExports 75% U.S.AirCargoWeight 79% AirlineBoardings 92% Population 66% GraduateDegrees 75% VentureCapitalFunding 94% Patents 78% Wind+SolarEnergyEmployment 76% Top 100 Metros Share of U.S. Total Sources: Brookings analysis of US Census Bureau, FAA, BLS, NIH, NSF, and BEA data; Brookings, ExportNation, 2010 (2008 data); Forthcoming research from Brookings and Battelle GrossProduct 73% …and Centered in Metropolitan Areas Gross Metropolitan Product, 2005
  6. 6. Driver’s of the Next Economy Agenda “Metro-Economics” Metropolitan Business Planning (from theory to practice) Getting to Ground in Milwaukee Institutional Capacity and Next Steps
  7. 7. How Metro Economies Grow Metro economy = total value of goods and services produced in the region Growth is inherently business sector growth (number, size and profitability of firms) Business sector grows through firm creation, growth and location decisions (retention and attraction) Firm creation, growth and location depend upon increases in efficiency and productivity (of firm and system, including product innovation) Core Question: What attributes of the region increase efficiency and productivity, leading to business sector growth?
  8. 8. What Makes Metropolitan Regions more Productive in the Next Economy? Economic Geography Institutional Economics New Growth Theory 8
  9. 9. Metros Can Enable People and Firms to Concentrate and Achieve Efficiencies Act Comprehensively – The Whole is Greater than the Sum of the Parts. Develop Institutional Capacity and Intentionality. Customize and Build on Distinctive Assets. Economic Geography Institutional EconomicsNew Growth Theory 9
  10. 10. Leverage Points for Sustainable and Inclusive Prosperity Deploy Human Capital Aligned with Job Pools Create Effective Public & Civic Culture & Institutions Enhance Regional Concentrations/ Clusters Increase Spatial Efficiency Develop Innovation- Enabling Infrastructure Five Market Levers Drive Regional Economic Performance 10
  11. 11. -. WageGrowth(1990-2000) 0 .1 .2 .3 .4 Poverty Rate (1990) - 10,000 20,000 30,000 40,000 50,000 60,000 0 10,000 20,000 30,000 40,000 50,000 60,000 WagesMoveinTandem Correlation= 0.77, significant City Suburbs Equity and Growth Go Hand in Hand Leverage Points for Sustainable and Inclusive Prosperity The sub-systems and geographies succeed or fail in context.
  12. 12. 12 New Approaches for the Next Economy
  13. 13. Driver’s of the Next Economy Agenda “Metro-Economics” Metropolitan Business Planning (from theory to practice) Getting to Ground in Milwaukee Institutional Capacity and Next Steps
  14. 14. Metropolitan Business Planning: A New Way of Doing Business Grounded in Economics and Business Comprehensive, Actionable Strategies An Ongoing Enterprise Enables “New Federalism”
  15. 15. Business Planning: A Proven Discipline for Comprehensive, Effective Action  Identify regional assets/opportunities  Develop customized strategies  Turn strategies into concrete actions  Build institutional capacity  Execute Metropolitan Business Planning Regional Economy Mission and Vision Market Analysis Identify Strategies and Goals Specify Products, Services and Policies Operational Planning Financial Planning Performance Monitoring
  16. 16. Pilot Metro Business Planning Regions
  17. 17. Northeast Ohio Partnership for Regional Innovation Services in Manufacturing ( PRISM ) Metropolitan Business Plans in Action
  18. 18. Metropolitan Business Plans in Action Puget Sound (Seattle) Building Energy-Efficiency Testing and Integration Center (BETI)
  19. 19. Driver’s of the Next Economy Agenda “Metro-Economics” Metropolitan Business Planning (from theory to practice) Getting to Ground in Milwaukee Region Institutional Capacity and Next Steps
  20. 20. Understanding the Milwaukee Region’s Economy The 7 County Region Source: BizStarts Milwaukee
  21. 21. The Big Picture: Shaking Out; Redeploying? Source: Bureau of Economic Analysis; Bureau of Labor Statistics $65,000 $70,000 $75,000 $80,000 $85,000 2001 2003 2005 2007 2009 Productivity (Output per Worker) $30,000 $35,000 $40,000 $45,000 $50,000 2000 2002 2004 2006 2008 2010 Average Wage Milwaukee MSA USA All Metros 90 95 100 105 110 115 2000 2002 2004 2006 2008 2010 Employment (Indexed to 2000) 100 104 108 112 116 120 2001 2003 2005 2007 2009 Real GRP/GDP (Indexed to 2001)
  22. 22. Current Concentrations Source: Bret Mayborne, MMAC, based on data from EMSI and BLS Electrical equip. mfg Machinery mfg. Fabricated metal prod. Printing Data processing Management of companies Computer & electronics mfg. Primary metal mfg. Plastics mfg. Educational services Food mfg. Insurance services 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 Locationquotient2010 Projected national output growth 2010-2020 (GAGR) Projected all sector output growth (CAGR) = 2.9% Diverse economy, undergoing restructuring Active in water; food and beverage; power, automation, controls and energy; design and technology What are Milwaukee region’s “legacy” and “bet” clusters? Regional Status: Already Building on Strong Clusters
  23. 23. Cluster Dynamics and Drivers Regional Status: Still Much to Learn About Dynamics/Drivers & Emerging Opportunities  Further defining clusters  What industries and occupations make up the clusters?  What parts of the clusters do you have (e.g., headquarters, final assembly, component manufacturing, R&D, etc.)?  What shared inputs, activities, infrastructure and other factors contribute to efficiency/productivity of each cluster? 12.3% 10.1% 11.4% Milwaukee MSA All Metros USA Export Intensity  Understanding cluster dynamics/drivers: human capital, technology, infrastructure, etc.  Getting beyond the data: what are challenges, opportunities and trends in specific clusters? Export opportunities?  What do specific clusters need in order to increase productivity and grow jobs and firms? Sources: Brookings Top 100 Metros Metrics
  24. 24. Status, Attraction and Retention Sources: U.S. Census Bureau, American Community Survey, 2010 Estimates. 0% 20% 40% 60% 80% 100% High School Degree Some College or Associate's Degree Bachelor's Degree Advanced Degree Percent of Population with at Least Each Level of Education 0.0% 20.0% 40.0% 60.0% 80.0% Foreign Born Population as % of Total, 2010 Growth in Foreign Born Population % of Foreign Born Population w/ Bachelor's + % of Foreign Born Population Speaking Fluent English Immigrant Attraction -10.0% 0.0% 10.0% 20.0% 30.0% 25-34 year olds with bachelors+ as % of total % change in 25-34 year olds, 2000- 2010 35-44 year olds with bachelors+ as % of total % change in 35-44 year olds, 2000- 2010 Highly Educated and Mobile Milwaukee 7 City of Milwaukee USA Regional Status: Average Human Capital Levels; Lagging Growth in Key Demographics  Slow growth in young/educated: Brain drain? Declining production? Some of both?  35-44yo moving to non-MSA counties?
  25. 25. 26% 54% 20% 31% 46% 23% Skills Match and Labor Market Efficiency Sources: Wisconsin’sForgottenMiddle-Skills Jobs, The Workforce Alliance, 2008 Low-Skill Workers Low-Skill Jobs Middle-Skill Workers Middle-Skill Jobs High-Skill Workers High-Skill Jobs Wisconsin’s Skills Match: Jobs and Workers Regional Status: Large Middle-Skill Job Pool Promising; Potential Skills Mismatches?  Projected job growth/loss, retirements by occupation and industry?  Match of existing & projected labor force skills (detailed segmentation)?  Finding, measurement challenges?  Opportunities for targeted retraining, credentialing?  What dynamics might explain potential high-level mismatch?
  26. 26. Opportunity and Mobility Regional Status: TBD  Identification of entry-level and middle-skill occupations, career ladders/pathways  Presence & success of targeted, employer- driven training opportunities; retraining for displaced workers; staged and “stacked” credentials?  Preconditions: K-12 public education system;…
  27. 27. Innovation Pipeline Regional Status: Some R&D and HC Strengths; Limited Commercialization, New Business Growth University/ Industry driven innovation Research ▪ Universities ▪ Centers of excellence ▪ Industry Commercialization Start-up Growth company Patent applications per 1000 workers, 2001-2010 VC Investment Per $10,000 GDP, 2003-2008 Midsize Establishment Births per 10,000 Employees University Research Expenditures Per 1000 Population, 2008 ($’000s)  University research specializations?  Dynamics of firms’ investment in R&D?  University “push” vs. industry “pull” model?  Role of capital? Systemic barriers to business start- up (regulatory, cultural, capital, etc.)?  Origin of start-ups (e.g., spin-offs from existing firm, university start-up, etc.)?  Trends and high-impact opportunities by types of new businesses?  Characteristics of VCs that invest in Milwaukee? Availability of earlier-stage funding? $40.42 $170.52 $147.65 Milwaukee MSA All Metros USA 18.1 23.5 Milwaukee MSA All Metros $0.29 $2.04 $52.56 Milwaukee 7 Wisconsin USA 7.7 10.4 Milwaukee MSA All Metros Sources: Innovation Index , Stats America; Brookings Top 100 Metros Metrics.
  28. 28. Cluster-Based Innovation  Well-organized clusters (e.g., water, food and beverage, WERC)  Leveraging design and technology (functional) cluster (e.g. MiKE)?  Legacy industries lagging in productivity that need to redeploy assets and innovate? What are new opportunities, and what’s needed to capture them?  Emerging industries with high potential? What’s needed to support emergence/growth? Regional Status: TBD
  29. 29. Innovation Ecosystem  Extent & nature of university- industry connections?  Presence of specialized finance?  Networks for cross-sector and inter-disciplinary connections? Regional Status: Many Pieces but Lacking Integration; Climate? Innovation Ecosystem Market Research Marketing Manufac- turing Finance R&D Research Partners
  30. 30. Urban Growth Form: Density & Mixed Use Regional Status: Concentrated Population – and Poverty; Decentralized Jobs 63 Source: Center for Neighborhood Technology, Housing + Transportation Index  Relative locations of job and residential centers by cluster, occupation, skill level, wage level?  Rate of change in residential density & job dispersion? Specific fast-growing areas/nodes?  Opportunities for in-fill development? Residential Density Employment Density Median Household Income
  31. 31. Connectedness and Mobility Regional Status: Globally Connected; Transit Coverage Uneven; Relatively Good Access to Jobs (MSA only)  National and Global Connections  Port of Milwaukee  General Mitchell International Airport  Union Pacific, Canadian Pacific, Canadian National and Wisconsin & Southern Railroads  Interstates 94 and 43  Enhance connections beyond MSA?  Address targeted jobs-housing mismatch?  Opportunities for transformative infrastructure (next gen. energy, IT, public transit, PUDs)?  Level of coordination across jurisdictions? Average travel time to work = 22.3 minutes (US = 25.3) 2010 Congestion Rank = 33rd 604 600 700 Milwaukee 7 Wisconsin USA Broadband Density, 2009 0% 10% 20% 30% 40% 50% 60% 70% Transit coverage rate Job access rate - all jobs Job access rate - low-skill Jobs 41 810 # = rank among top 100 metros Sources: Innovation Index , Stats America; Brookings Top 100 Metros Metrics
  32. 32.  147 municipalities  93 school districts  More local governments per capita than 2/3rds of major metros; more special-district governments than 1/3  Some service sharing; history of failed cooperation on transit and other infrastructure Government Fragmentation and Coordination Regional Status: Fragmented What services/initiatives might be efficiently coordinated, streamlined?
  33. 33. Tax & Regulation/Value Proposition  Heavy reliance on property tax (base & rate vary widely across region); highly dependent on State for revenue (unable to levy significant local sales tax)  What is the total tax burden in the region and how does it compare to competing metros?  What public goods and services are most important to regional businesses, residents? What’s their quality?  How onerous are regulatory processes (permitting, licensing, inspections, etc.) for businesses? Regional Status: TBD
  34. 34. Governance  Milwaukee 7, MMAC, GMC, cluster and other organizations reflect positive trends  Degree of alignment of ED programs, organizations?  Govt 2.0: engaging firms and citizens, transparency, flexibility, use of public data for economic growth, …? Regional Status: TBD
  35. 35. Assets Challenges & Opportunities Illustrative Strategy Development: Cluster-Based Concentration in Power, Automation, Controls and Energy (PACE) Growing export market for energy & power products Existing cluster leadership/organization Need for new technology deployment to improve productivity Shortage of CNC machine operators & other skilled occupations Create PACE Center of Excellence (advanced technology & training) Potential Strategy
  36. 36. Assets Challenges & Opportunities Illustrative Strategy Development: Innovation Concentration of workers with IT & design skills Highly ranked engineering school (MSOE) Relevant university research activity (MSOE & UWM) Strengthen entrepreneurial support and ecosystem Strengthen university- industry connections commercialization and firm innovation Innovation Accelerator (catalyze technology commercialization, support new & existing firm growth) Potential Strategy
  37. 37. Challenges & Opportunities Assets Illustrative Strategy Development: Place-based Regional concentrations in “opportunity-rich” clusters Vacant land in urban core with transit & highway access Underutilized local workforce (needing short term up-skilling) Predevelopment barriers (assembly, infrastructure, etc.) Develop targeted, employer-driven workforce training Creation of mixed-use district with cluster firms, training center, housing & retail/services Potential Strategy
  38. 38. Driver’s of the Next Economy Agenda “Metro-Economics” Metropolitan Business Planning (from theory to practice) Getting to Ground in Milwaukee Key Lessons, Institutional Capacity and Next Steps
  39. 39. Global, Knowledge Economy Specialization and Dynamism Build on Your Assets Coordinated, Cross- Sectoral, Flexible, Adaptive, Open, Information-Rich, Inclusive, Entrepreneurial Compete on Value-Added (not low-cost) Intentionality Economic Development in the Next Economy
  40. 40. Developing Institutional Capacity Steering Committee Strategy 1 Team Initiative 1AInitiative 1B Strategy 2 Team Initiative 2A Strategy 3 Team Initiative 3A Strategy 4 Team Initiative 4A Initiative 4B Engage stakeholders across public, private and civic sectors Iterate analysis/strategy and institutional development High-level (e.g., C-suite) leadership group/steering committee Day-to-day (staff-level) working teams Expert/business/practitioner teams for specific strategies and initiative development Strategy is coordinated; Implementation is distributed
  41. 41. Next Steps Continue deepening fact-gathering and market analysis Begin answering open questions Engage partner organizations in market-lever working groups Identify high-priority strategies Begin surfacing potential cross-lever initiatives Focused further market analysis, product and services specification, etc. to create initiative business plans Organize, capitalize, launch, implement! Monitor performance and periodically update analysis and strategies
  42. 42. DISCUSSION
  43. 43. Robert Weissbourd Regions Charting New Directions: Metropolitan Business Planning Milwaukee 7 Regional Economic Development Collaboration June 7, 2012