County has elements to make economy flourish: Fruth
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“All I see is opportunity here,” said Fruth during a presentation yesterday at the Warren County Administrative Offices. “You have an airport. You have land. You have easy access to interstates. You’re in much better shape than other communities I’ve studied.”
Fruth is a noted economist who has personally analyzed over 600 local economies across the nation, and delivered presentations in 30 states. The Palm City, Fla., resident was hired to study Warren County’s economic trends over the past 30 years by the Industrial Development Board and city and county governments.
For his evaluations, Fruth classifies communities in two areas: metropolitans, which are cities with populations over 50,000, and micropolitans, which are cites with populations between 10,000 and 50,000. McMinnville falls into the micropolitan category.
Regardless of size, Fruth said the key to having a thriving economy is to have several sources generating income within the area.
“The weakest economies are the ones where one main industry is bringing in all the money,” said Fruth. “Then you know what happens when that industry leaves. If you want to avoid volatility and have consistency, you must have several different disciplines bringing in money.”
Manufacturing is by far Warren County’s largest source of income, generating close to $350 million payroll dollars in 2000. Service-oriented businesses were a distant second with around $150 million.
Even with the abundance of local nurseries, farming ranked seventh with under $50 million in income.
The most impressive local statistic was the county’s economic growth in the ’90s. Beginning in 1991 and ending in 1999, the county’s average salary increased at the same level as the top 10 micropolitan areas in the nation.
More than anything, Fruth says the average salary of an area determines the quality of its growth.
“There’s the misconception that creating any type of new job is a good job,” said Fruth. “And that’s not the case. When a county loses high-wage jobs and replaces them with low-wage jobs, there aren’t enough low-wage jobs to sustain the economy. It’s a dilution of quality.”
To illustrate his point, Fruth gave an elaborate example of a baseball team. He said you wouldn’t want to replace your .400 hitter with two players that both hit .230. You would have one more player, but your team batting average would be less.
He said the same theory applies to local economies. If you replace a $40,000 a year job with two jobs that pay $23,000 a year, the average salary suffers. And if a $40,000 a year job leaves the area and isn’t replaced by anything, the average really slides.
Fruth touted the importance of nurturing existing industries and helping them expand. He said this is an easier, and more successful, way of creating jobs than trying to recruit new industry.
“Nothing is more important than taking care of your existing industries,” said Fruth. “A lot of the time this isn’t given top priority because mayors and county executives don’t get to go out and cut a ribbon if a company adds 10 new jobs. It’s not the same as announcing Sony is locating here.”
When it comes to recruiting outside industries, Fruth said this is a highly competitive area. And nowadays, companies look outside the United States first.
“If a company can locate outside the U.S., it will because of all the baggage in this country,” said Fruth. “It’s hard to do business here. And it’s not just the cost of labor. It’s total operating costs. You have people suing for carpal tunnel and you have companies going to court for a lawsuit because someone looked at an employee cross-eyed. The legal fees are out of control.”
Fruth also stressed the importance of having an actual site waiting for a business when trying to recruit. He said in today’s business world, representatives want action in a matter of months, not a matter of years.
“To sell a site, you have to have a site,” said Fruth. “Companies don’t want to hear, ‘I can work a deal to get you five acres.’ They want to see the five acres. They want to have water and sewer ready to go. They want it to be zoned properly.”
Fruth will provide a more in-depth analysis when he returns June 8 for what he is calling an economic development summit. That’s when he will detail the five most important things this community needs to do to improve the size and quality of the economy.
Economic hotbeds
Bill Fruth has ranked 573 micropolitan areas in the U.S. Here are the top three along with others of local interest:
1. Concord, N.H.
2. Hilton Head, S.C.
3. Edwards, Colo.
45. Cookeville
87. Crossville
123. Tullahoma
237. Shelbyville
258. McMinnville
Note: For metropolitan areas, Nashville ranked seventh in the nation. Charlotte, N.C., was No. 1.
Economic Development Summit
Bill Fruth will return to Warren County June 8 to give a presentation about the five most important things this community needs to grow. He is hoping for a large turnout to receive as much feedback as possible. The presentation will begin around 8 a.m. and run until the afternoon. Lunch will be provided.