Month: April 2016

Career and Technical Education Advantages

From the IEDC Journal

It has long been known that there are many benefits to pursuing higher education, including higher salaries and lower rates of unemployment. Because the benefits are so great, the return on investment for a college education has been so consistently high that there has been a push to get every student “to and through” a bachelor’s degree. College enrollment rates are high, having had a 24 percent increase from 2002 to 2012. However, according to Brookings, college education is not evenly distributed, as only 14 percent of children from the lowest third of the income distribution will attain 4 year degrees. As the benefits of higher education clashed with the cost and difficulty of traditional 4 year degrees, many began to take another educational path.

The Association for Career and Technical Education (ACTE) has long been championing career and technical education (CTE) programs that provide benefits of a non-academic education. CTE programs are offered through high schools, community colleges, technical schools, as well as universities.  ACTE boasts that high schoolers who participate in CTE programs are more likely to graduate and pursue post secondary education. They also claim that those who go on to complete technical or applied science degrees out earn bachelor’s degree holder by more than $2000 annually.

CTE programs and technical degrees have been proven to be a viable alternative for those who might not fit into the traditional university education model. The administration has been putting an increased emphasis on CTE programs and apprenticeships, because in addition to increasing the wellbeing of those who earn the degree, investment in CTE programs yields a positive return for taxpayers. In 2015, President Obama proclaimed the first National Apprenticeship Week, and in the FY2017 budget request, the White House requested more than $5 billion in funding to expand apprenticeships and CTE programs. The Higher Education Act and the Perkins Act (which specifically funds CTE) are both up for reauthorization this year. They have both been operating without authorization, with both authorizations expired in 2013. Technical education has often been overlooked in favor of a 4 year degree, but now more and more people are taking notice and using it as a way to increase their human capital, and by proxy, their salaries. Technical education is also a tool that can provide the upskilling of the workforce that is going to be required in coming years to keep the American economy competitive.

Ashtabula County: Build the Education Pipeline, Let’s Learn from New Mexico

From IEDC Journal

If You Build an Education Pipeline, the Employers Will Come

By Savannah Jermance, New Mexico Partnership

It’s been said that economic development is a team sport, requiring the cooperation and coordination of many groups to be successful. Often, this is reflected in multiple levels of jurisdiction involved in attracting new companies to your area: community, county, state, federal agencies, et cetera.

But in addition to this public-sector support, it’s also important to count your educational programs and institutions as powerful allies in winning projects.

How training made a difference

The NM Partnership was initially contacted by RSI in May 2015. The company was experiencing unprecedented growth, spurring the search for its next three expansion sites. After we provided some initial analysis and site options, the company’s chief financial officer, Jeff Stewart, and vice president of human resources, Margaux Kaynard, visited Albuquerque a few months later.

The NM Partnership worked with the regional economic development group, Albuquerque Economic Development, to create a captivating itinerary for the pair. They met with New Mexico Governor Susana Martinez, Albuquerque Mayor Richard Berry, and attended a meeting of the Albuquerque Game Developers Guild (hosted by Etsy founder and Albuquerque-based entrepreneur Jared Tarbell).

But one of the most impactful introductions was a tour by the RSI team of the STEMulus Center at Central New Mexico Community College (CNM), which recently launched a Deep Dive Coding Boot Camp. The visitors got to see students learning and producing, and spoke with the STEMulus Center’s leadership at great length.

“Introducing RSI to the CNM STEMulus Center really impacted our decision to open in Albuquerque,” said Margaux Kaynard. “Seeing CNM’s commitment to the Deep Dive Coding Boot Camp program and the courses that the STEMulus Center teaches, their applicability to our work and the number of graduates, made a strong impact.”

The Deep Dive Coding Boot Camp, launched in August 2014, is a 10-week, full-time course that teaches the fundamentals of modern web development and coding to build successful websites, software, and apps. Eight cohorts have completed the program through CNM. During the meet-and-greet with RSI, CNM’s leadership described their understanding of the interdependence between employers and training programs. They noted that the program was started in alignment with the city of Albuquerque’s desire to retain and attract a high-tech workforce and the employers who would hire them. The city and CNM understand that employers aren’t going to come to a location before an adequate workforce exists; educational institutions must create the workforce of tomorrow in order to bring the employers of tomorrow.

Preparation pays off

In September of 2015, after multiple follow-up visits to Albuquerque from RSI’s executive team, the company announced the opening of its newest center in the downtown corridor. Welcomed by Governor Martinez, Economic Development Cabinet Secretary Jon Barela, and Mayor Berry, RSI outlined its plan to hire 125 software developers and technologists in the coming year.

“The Albuquerque community has been very welcoming and helped answer our questions at every point in the process,” said RSI’s Kaynard, noting that the STEMulus program staff in particular have affirmed their commitment to RSI’s success. Kaynard also cited the value of access to the University of New Mexico’s computer science program, which closely aligns with RSI’s work. “The contacts we met there…were open and offered us a glimpse into what a partnership with the school would look like,” she said.

At the end of March 2016, RSI employed 19 in its Albuquerque facility. RSI has been particularly impressed with the number of former Albuquerque residents who moved away for a high-tech job – many of whom attended CNM or UNM – and who are now applying for positions that would allow them to move back.

Count them in

Educational programs and institutions are usually “counted in” as resources and partners for business retention and expansion, entrepreneurial encouragement, small business development and more – but they are not often perceived as partners in business attraction and recruitment.

As the world becomes more and more labor-constrained and nearly every employer complains that they can’t find the qualified workforce they need, economic development organizations should be very close allies with the educational programs in their area. It makes all the difference in building the clusters an area is hoping to encourage: After all, employers will locate where they can find a plentiful, qualified workforce already in the hopper.

These are the kinds of partnerships that can’t be quantified in Excel or entered into a site selection algorithm – the “other” factors that are recognizable only with a site visit. So if you’re looking to encourage a new industry, start with the educational institutions that can create the workforce. Build it, and the employers will come.

Savannah Jermance is business development director for the New Mexico Partnership and a member of IEDC’s Higher Education Advisory Committee.

Online Retail Growth, A Much Bigger Factor

This is relevant to the retail situation in Ashtabula County. If county shoppers are like those elsewhere, a greater share of their purchases are made online.

According to PWC Consulting, Since 2000, fully three-quarters of retail sales growth has occurred through online channels. That’s an eye-catching statistic, yet not quite the whole story. The online channel now accounts for about 8 percent of total retail sales. But three sectors have been largely untouched by e-commerce: cars, gasoline stations, and groceries. Because these categories are significant, responsible for almost half of total retail sales, online’s penetration of its “addressable market” — in other words, its available pool of revenue — is close to 16 percent. And it is expanding rapidly, at an annual pace of about 15 percent, well beyond the traditional retail, “GDP-like” growth rate. Read the complete report here.

Retail Contractions Continue, Bob Evans is Next

The economy is weakening. Consumer spending continues to be cautious. The retail trade sector is fragile, especially in overbuilt areas, or those with too much retail, and in areas with slack demand.

Bob Evans Farms, Inc. is closing 27 restaurants, according to streetinsider.com, but it’s not yet known if Northeast Ohio patrons will be affected. The company has not yet released a list of closures, but the Columbus Dispatch reports that one is in Dayton and one in Toledo. CBS news revealed the entire list, which did not include additional Ohio locations. This is the second big wave of downsizing. Last year, the company closed 20 locations, but none were in Ohio, the company’s home state

Putting the Announced Ashtabula K-Mart Store Closing in Perspective

To put the recently announced Ashtabula K-Mart store closing in perspective, the Growth Partnership conducted an analysis of changes in employment in the total retail trade sector and the department store sub-sector in Ashtabula County during 2005-2014. The county’s total retail trade sector lost 874 jobs during the time period. Department store employment declined by 580 jobs in the county in 2005-2014, which represented over 66% of the total loss in retail trade sector. See the table immediately below.

We also looked at the change in the location quotient (LQ) values for the total retail trade sector and the department store sector in 2005-2014. Location quotients (LQ) are basically a way of quantifying how concentrated a particular industry (retail trade or department stores) is in a area (county) as compared to the nation. An LQ value of 1.0 means the industry is equally concentrated in a local area as it is nationally. An LQ value of over 1.0 means the industry is more highly concentrated in the local area than the nation, and an LQ value of less than 1.0 means the industry is less concentrated locally than nationally. The LQ values for both retail trade and department stores in Ashtabula County dropped in the 2005-2014 time period due to the local employment losses in both sectors. The sharpest LQ decline occurred in the local department store sector, which fell from 1.95 (almost twice the national concentration) to .75 (only 75% of the national concentration).

By comparison, Lake County lost 1,927 retail trade jobs in 2005-2014, dropping from 14,639 to 12,712. Lake County lost 260 department store jobs in the same period, dropping from 2,037 to 1,767.

Ashtabula County Retail Sector Changes
Variable 2014 2005 2005-2014 Change
NAICS 44-45 Retail trade employment 3,456 4,330 -874
NAICS 4521 Department stores employment 226 806 -580
NAICS 44-45 Retail trade % Total employment 13.49% 15.21% -1.72%
NAICS 4521 Department stores % total employment 0.88% 2.83% -1.95%
NAICS 44-45 Retail trade location quotient 1.02 1.1 -0.08
NAICS 4521 Department stores location quotient 0.75 1.95 -1.2

What are the factors causing the employment and location quotient declines in retail trade and department stores in Ashtabula County. The key drivers are: 1) the recession’s lingering impact on employment and personal income in the county; 2) population loss in Ashtabula County, whose 2014 population was estimated at 99,175, a loss of about 2,300 (2%) since 2010. Population losses have been the result of significant net out-migration which has averaged 500 per year since 2003; and 3) restructuring of the retail trade and department store industries in response to a more sluggish economy, reduced consumer spending, and greater competition from the online retail sector.

Akron and Cleveland on the Rebuild According to Recent Crain’s Article

According to a recent Crain’s Cleveland Business article, despite having been ravaged by the Great Recession, many Northeast Ohioans agree that Cleveland and Akron are on an upward trajectory. Both cities have seen some of their long-forgotten neighborhoods reinvigorated with fresh development. Young professionals are eager to live in the cities’ downtown districts. The idea of Cleveland and Akron collaborating for the betterment of the region is no longer a foreign concept but a real possibility.
In this Crain’s special report, we explore what it will take to maintain and ultimately accelerate that momentum.

While I agree both cities have made some headway, the challenges ahead are enormous. Deep-seated challenges like failing school systems and growing poverty remain even though those with economic means have made a difference in both cities’ downtowns and neighborhoods.

Ashtabula County has not been so fortunate since the recession’s end. Read my earlier article on the Growth Partnership blog.

Read the complete article here.

Ashtabula’s Super K-Mart to Close

The Super K-Mart in Ashtabula County is scheduled to close. One hundred people will likely lose their jobs. See the Star Beacon article here and the Plain Dealer article here.

It saddens me when people lose their jobs. I know what it feels like since my father lost his job when I was a sophomore in high school. Business closings and job losses create hardship and anxiety for people.

Ken Kister and other investors have been working very hard to strengthen the Ashtabula Mall, which employs at many local residents, and the Mall provides essential shopping amenities needed by community residents. At the same time, retail trade is a dependent sector of the economy, and not a driving sector like manufacturing, financial services, transportation, and agriculture.

Can anything be done to prevent the K-Mart store closing at the Ashtabula Mall? It’s unlikely since the store closing is a part of a larger corporate downsizing/rightsizing decision. Sears is struggling to survive! Sears, who owns K-Mart, has been ailing for a long time. There is a major shakeout occurring in the national and international retail sectors.

The retail sector is adjusting to lower consumer spending levels and an economy that is hanging on by a thread (in my opinion). If you are interested in what is driving the retail decline, please read this article and this article and then this article. Want to do a deep dive into the retail sector? Click here to download a recent national study of the retail trade sector.

What drives retail trade? Personal income, consumer confidence, and interest rates drive retail demand. The profitability of individual companies depends on efficient supply chain management and effective merchandising and marketing. Large companies have advantages in purchasing, distribution, and marketing. Small companies can compete effectively by selling unique merchandise, providing superior customer service, offering a distinctive shopping experience, or serving a local market.

While large companies dominate some retail sectors (such as mass merchandisers and grocery stores), other US sectors (such as auto dealers and convenience stores) are fragmented. Many specialty retailers are single-store operations. Imports are a significant part of the US market for many retail categories, including apparel, shoes, computers, electronics, toys, and cut flowers. Due to low labor costs, manufacturers in Asian countries, such as China and India, play an important, and sometimes controversial, role in the supply chain for many retailers.

The Internet and increasing consumer connectivity are transforming the retail sector, with physical stores losing market share to online operators. In 2015, total US e-commerce sales were estimated at $341.7 billion (7.3% of total retail sales), an increase of nearly 15% from 2014.

Ashtabula County is feeling the effects of the shifting sands of the national economy. The most vulnerable industries, companies, and institutions are the first to “go under” when economic pressure mounts. The coal industry and therefore the railroads transporting coal are suffering. This explains the N&S coal dock closing in Ashtabula and the planned contraction by CSX. It also explains the threatened re-sizing of the Coast Guard station in Ashtabula. And it explains the Super K-Mart store closing at the Ashtabula Mall. It also explains why a number of planned local business expansions have been delayed — Business owners and managers are not confident about the future of the overall economy.

Stay tuned. We will be providing additional insights and advice on the “new economic phase” we have entered.

The Racial Gap In Entrepreneurship Is Costing the U.S. Economy Billions

Minority businesses could boost the economy by as much as $300 billion. How? A new study from the Center for Global Policy Solutions titled, “The Color of Entrepreneurship: Why the Racial Gap Among Firms Costs the U.S. Billions,” analyzed business owners by race from 2007-2012 and found that firms owned by people of color have contributed to the economic recovery. The research was based on the U.S. Census Bureau’s Survey of Business Owners (SBO), which comes out every five years.

Read the complete article here.

Wineries: Industry Opportunities

Wineries are important to the Ashtabula County economy, especially the tourism sector. We have 21 wineries located in the county. More are expected in the future. What are some of the industry opportunities for wineries. Here are some opportunities identified by First Research, a national industry research company:

Export Growth – Industry associations and individual wineries show commitment to expanding exports through advertising and promotion abroad. The Wine Institute, for example, has set a goal of reaching $2 billion in California wine exports by 2020. Many wines from California have a strong international reputation and compare favorably with French wines at blind taste tests. The annual export value of all US-made wines increased about 85% from 2009 to 2014.

Internet Sales – Wine e-commerce and other direct-to-consumer sales are growing quickly. Small wineries can potentially reach a much wider audience for their wines through the Internet. State laws have so far prevented most such sales, but consumer pressure is likely to increase the number of states (including California and New York) that allow Internet wine sales.

A New Generation of Wine Buyers – Millennials, the newest generation of consumers reaching legal drinking age, are a significant market for the wine industry. Often defined as the generation born between 1977 and 1994, millennials make up about 30% of wine drinkers in the US, making them the industry’s second-largest demographic after baby boomers, according to the Wine Market Council. While they tend to buy mostly lower-priced wines, millennials are high-volume drinkers — they account for nearly 35% of US wine consumption by volume, a slightly smaller share than the baby boomer cohort. They are also more likely to try new products and drink a wider variety of beverages compared to other age groups.

Healthful Wine Effects – A number of medical studies in recent years have demonstrated healthful effects of drinking wines, especially red wines. Although the exact mechanism is not yet clear, wines may help prevent cardiac disease. Such effects may encourage consumers to switch to wine from other alcoholic drinks.

Consumption Patterns – US wine consumption per capita is still relatively small compared to that in other countries, suggesting room for growth. Annual wine consumption per person is less than three gallons in the US, much lower than in many European countries, according to the Wine Institute. Croatia, France, Portugal, and Switzerland, for example, each consume more than 10 gallons of wine per capita. Interest from younger generations is expected to fuel future growth in US wine consumption.

Sparkling Wines – Sparkling wine is the fastest-growing category in the US wine industry, as producers introduce more low-cost products to appeal to consumers seeking affordable luxury. US sales of champagne and other sparkling wine increased about 25% from 2009 to 2014, according to Mintel. Italian prosecco and Spanish cava are gaining ground on French champagne, but domestic sparkling wines still own the largest share of the American sparkling wine market. Although low prices have played a large role in driving the segment’s growth, producers are steadily raising prices in response to growing demand.