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Economic Developers Must be Proactive in Gaining and Retaining Employers
February 19, 2006
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Seven years ago, Richard Nachtman wondered whether his job would continue or he would have to relocate his wife and children to a city away from their lifelong base in northeast Iowa.
Then four members of Henderson Manufacturing’s management team bought the Manchester company, which had been on the sale block, and saved 156 jobs. Henderson, which makes snow handling equipment and truck bodies for customers nationwide, now employs 280 workers.
‘‘Everybody was on edge,’’ says Nachtman of Manchester, a welder in those days. Now at 45, he is a leader on the production floor. ‘‘A lot of people were older and didn’t want to find another job at their age.
‘‘I’ve lived all my life in Manchester and my wife is from Strawberry Point. We didn’t want to leave.’’
The company remains a strong employer in Manchester thanks in part to the work of Joe Raso, who was executive director of the Delaware County Economic Development Commission. In 2000, he left that post to become president of the Iowa City Area Development Group.
At the most personal level, the work of small-town economic developers influences whether families remain in a community or leave.
They save jobs, bring new jobs to a community and help businesses create new jobs.
Proactive economic developers
steer prospective business owners to lending sources and government financial
aid. They open doors to city and county governments when businesses need
They match available properties to businesses with special requirements and can lobby for legislative decisions. They visit the corporate headquarters of their local employers, seeking what is needed to retain plants and expand employment.
Economic developers ‘‘are very helpful if they do their work,’’ says Randy Smedstad, president and co-owner of Henderson.
But in some cases, economic developers are blind-sided by a business closing.
Such was the situation with Tyson Foods/Iowa Ham Processing in Independence and Oelwein. On Jan. 13, Tyson officials walked into the office of Alan Johnson, Independence city manager, and handed him a letter announcing the plant would close March 17.
The announcement also surprised management at the plant.
That places Greg Halverson, director of Buchanan County Economic Development, in a reactive position. His immediate focus is helping Iowa Workforce find new jobs or retraining for many of the 371 people employed at the plants. Finding another company that can use Tyson’s building will follow.
Halverson says he would have preferred to be in the proactive mode, working with Tyson to meet the company’s changing needs as it finetuned production to capture a better share of the processed meats market.
‘‘This was out of the blue. They had made investments in cooling and expanded the building. They were hiring people over the summer. I had a meeting scheduled with the plant manager for the following week,’’ Halverson says.
The ‘‘out of the blue’’ notice of a closing does not surprise Mary Cole Laub, community development manager with Alliant Energy, based in Madison, Wis.
‘‘These are large industries not locally owned. We see this frequently. A lot depends on the size of the plant and where corporate headquarters are. The more global the industry, the more likely it is to happen to smaller plants,’’ Laub says.
Bruce Kepner, an economic development manager with Alliant, says large corporations make decisions quickly about a plant’s operation. A plant may be closed within 90 to 120 days following a negative quarterly report.
‘‘It’s not a reflection on the community,’’ he says. ‘‘It can be a decision not to upgrade or an over capacity in that product.
‘We’re seeing cases where they don’t tell the local managers, to prevent leaks. They want to keep production up that could drop if employees are doing hand-wringing about their jobs.’’
One way to anticipate a closing is to watch the industry and other plants in the area that produce similar products, Kepner says.
As an example, three weeks after Tyson announced the closing of the ham processing plants in Independence and Oelwein, ConAgra said it would sell its Armour Swift Eckrich plant in Mason City, with 280 employees. The company is selling off its refrigerated meats business.
Christine McCracken, an industry analyst with FTN Midwest Securities Corp. in Los Angeles, says processed meats is a commodity in a volatile market providing thin profit margins.
Large corporations, such as Tyson or ConAgra, can easily move existing capacity to other plants and cut costs by selling small plants, she says.
‘‘These (smaller) businesses would be better off in someone else’s hands with more time to run them better,’’ McCracken says. ‘‘If a plant is older, that weighs against it. There’s nothing a local community can do to affect it.’’