regions charting new directions: metropolitan business planning

Robert Weissbourd

Regions Charting New Directions:

Metropolitan Business Planning

Milwaukee 7 Regional Economic Development Collaboration

June 7, 2012

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

0%

100%

200%

300%

400%

500%

600%

$s lbs

% C

han

ge

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

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%

GR

P G

row

th

Firm Starts and Closures (Churn) as % of All Firms

Churn and GRP Growth by MSA

-- and Global

Serv

ice E

xp

orts

75%

U.S

. Air C

arg

o W

eig

ht

79%

Airlin

e B

oard

ing

s

92%

Po

pu

latio

n

66%

Gra

du

ate

Deg

rees

75%

Ven

ture

Cap

ital F

un

din

g

94%

Pate

nts

78%

Win

d +

So

lar E

nerg

y E

mp

loym

en

t

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

Gro

ss P

rod

uct

73%

…and Centered in Metropolitan Areas

Gross Metropolitan Product, 2005

Driver’s of the Next Economy

Agenda





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?

What Makes Metropolitan Regions more Productive in the Next Economy?

Economic Geography

Institutional Economics

New Growth Theory

8

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

Leverage Points

for Sustainable and Inclusive

Prosperity

DeployHuman CapitalAligned with

Job Pools

Create EffectivePublic & Civic

Culture & Institutions

EnhanceRegional

Concentrations/Clusters

Increase Spatial

Efficiency

DevelopInnovation-

EnablingInfrastructure

Five Market Levers Drive RegionalEconomic Performance

10

-.2

0.2

.4.6

Wag

e G

row

th (

19

90

-20

00

)

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

Wages Move in Tandem

Correlation = 0.77, significant

City

Sub

urb

s

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

New Approaches for the Next Economy


Agenda





Metropolitan Business Planning: A New Way of Doing Business

Grounded in Economics and Business

Comprehensive, Actionable Strategies

An Ongoing Enterprise

Enables “New Federalism”

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


Regional Economy Mission and Vision

Market Analysis

Identify Strategies and Goals

Specify Products, Services and Policies

Operational Planning

Financial Planning

Performance Monitoring

Pilot Metro Business Planning Regions

Northeast OhioPartnership for Regional Innovation Services in Manufacturing ( PRISM )

Metropolitan Business Plans in Action

Metropolitan Business Plans in Action

Puget Sound (Seattle)Building Energy-Efficiency Testing and Integration Center (BETI)


Agenda



Getting to Ground in Milwaukee Region


Understanding the Milwaukee Region’s Economy

The 7 County Region

Source: BizStarts Milwaukee

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)

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.

Insuranceservices

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

Loca

tio

n q

uo

tie

nt

20

10

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

Cluster Dynamics and DriversRegional 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

Status, Attraction and Retention

Sources: U.S. Census Bureau, American Community Survey, 2010 Estimates.

0%

20%

40%

60%

80%

100%

High SchoolDegree

Some Collegeor Associate's

Degree

Bachelor'sDegree

AdvancedDegree

Percent of Population with at Least Each Level of Education

0.0%

20.0%

40.0%

60.0%

80.0%

Foreign BornPopulation as

% of Total,2010

Growth inForeign BornPopulation

% of ForeignBorn

Population w/Bachelor's +

% of ForeignBorn

PopulationSpeaking

Fluent English

Immigrant Attraction

-10.0%

0.0%

10.0%

20.0%

30.0%

25-34 yearolds with

bachelors+ as% of total

% change in25-34 yearolds, 2000-

2010

35-44 yearolds with

bachelors+ as% of total

% change in35-44 yearolds, 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?

26%

54%

20%

31%

46%

23%

Skills Match and Labor Market Efficiency

Sources: Wisconsin’s Forgotten Middle-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,measurementchallenges?

Opportunities for targeted retraining, credentialing?

What dynamics might explain potential high-level mismatch?

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;…

Innovation PipelineRegional Status: Some R&D and HC Strengths; Limited Commercialization, New Business Growth

University/Industry driveninnovation

Research

▪ Universities

▪ Centers of excellence

▪ Industry

Commercialization Start-upGrowth

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

MilwaukeeMSA

All Metros

USA

18.1

23.5

MilwaukeeMSA

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.

Cluster-Based Innovation

Well-organized clusters(e.g., water, food and beverage, WERC)

Leveraging design andtechnology (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?


Innovation Ecosystem

Extent & natureof university-industryconnections?

Presence ofspecializedfinance?

Networks for cross-sector and inter-disciplinary connections?

Regional Status: Many Pieces but Lacking Integration; Climate?

Innovation Ecosystem

MarketResearch

Marketing

Manufac-turing

Finance

R&D

Research

Partners

Urban Growth Form: Density & Mixed UseRegional 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

Connectedness and MobilityRegional 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 coveragerate

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

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?

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?


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, …?


Assets

Challenges &

Opportunities

Illustrative Strategy Development:Cluster-Based

Concentrationin 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

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

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


Agenda




Key Lessons, Institutional Capacity and Next Steps

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

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 committeeDay-to-day (staff-level) working teamsExpert/business/practitioner teams for specific strategies and

initiative developmentStrategy is coordinated; Implementation is distributed

Next Steps

Continue deepening fact-gathering and market analysisBegin answering open questionsEngage 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

DISCUSSION

Robert Weissbourd

Regions Charting New Directions:


Milwaukee 7 Regional Economic Development Collaboration

June 7, 2012

regions charting new directions: metropolitan business planning

Economy & Finance