Rebchook on Site Selectors

Site selection, the process of businesses making location decisions, is the flip side of economic development where by geopolitical entities like regions or municipalities try to attract businesses and capital investments.     Long time Denver business and real estate reporter John Rebcook had an excellent story about the recent “Making the Cut: Factors Driving Today’s Site Selection Decisions,” conference for site selectors in Denver.   John does an excellent job of explaining the key role professional consultants play in guiding site selection decisions and disucsses the Denver region's competitive position.

Airline Developments and the Denver Regional Aviation Cluster

If you are a regular reader of this blog you will probably notice that I frequently discuss developments in the airline industry and at Denver International Airport. The reason for this emphasis is this industry serves a dual economic role in Denver. It is part of the local economic base, employing a higher than national average concentration of workers in Denver (See my blog from July 4, 2007 for a discussion of the Metro Denver economic base http://aviewoftherockies.blogspot.com/2007/07/analyzing-metro-denver-economic-base.html) and air transport is a vital part of the regional transportation infrastructure impacting the area’s overall economic competitiveness. Air transportation is particularly critical to Metro Denver given its spatial isolation from other large metropolitan areas and its lack of a water port. The aviation cluster, has been identified as a sector targeted for recruitment efforts by the Metro Denver Economic Development Corporation (MDEDC http://www.metrodenver.org/industries-companies/industries/aviation.html). According to the MDEDC, the cluster contains 240 companies which employ more than 14,000 workers in the nine county Denver Metro Area.

I want to blog about a couple of recent airline developments which could have big impacts on economic development in Metro Denver. Southwest Airlines announced over the next few months it will be adding18 new daily flights to six new destinations from DIA: Los Angeles; San Jose; St. Louis; Philadelphia; Raleigh-Durham; and San Antonio. This will bring the total number of Southwest flights in Denver to 79 from 0 a few years ago. On balance this should have a positive economic impact for the region as it will increase connectivity to important national business centers, help drive down travel costs for businesses and consumers and add new jobs.

However, Southwest’s expansion has put competitive pressure on Denver-based carrier Frontier Airlines. It would be an economic development loss for Denver if Dallas-based Southwest drove Frontier totally out of business, costing Metro Denver a corporate headquarters in the aviation sector. Additionally, the new Southwest fights do appear to validate DIA’s facilities expansion plans discussed in my blog from July 30, 2007 (http://aviewoftherockies.blogspot.com/2007/07/dia-expansion-fullfilling-vision.html ).

The other big airline-related piece of news is the continued speculation about a merger between United and Delta airlines. Denver is United’s second largest hub after Chicago-O’Hare but Delta uses Salt Lake City as its regional hub. If the merger goes forward, the key economic development question for Denver will be - “Can the 'Mile High City' maintain its hub status, concentration of flights and number of employees post merger?” Given the Denver Metro Areas’ central geographic location, high quality airport facilities and population size, I am guessing the answer to that question would be “yes” but anytime a merger occurs it opens up the risk of a negative outcome. If the merged Delta/United, reduced its presence in Denver and Salt Lake City took over Denver's hub role, that would be a serious blow to the Metro Denver economy.

Photos provided courtesy of Denver International Airport.

Third Annual Colorado Competitiveness Study Released

The Metro Denver Economic Development Corporation (MDEDC ) released its third competitiveness study - Toward A More Competitive Colorado - which benchmarks competitive factors related to economic growth and job creation (http://www.metrodenver.org/files/documents/news-center/research-reports/TMCC_III_FullStudy.pdf). This impressive report presents a comprehensive series of rankings showing Colorado versus the highest and lowest performing states and Colorado versus competitor states. Factors assessed include: economic vitality, productivity, innovation, taxes, business costs, livability, K-12 education, higher education, health, health care, quality of life, and infrastructure.

The report describes Colorado in the following way:

"In 2007, Colorado remained a competitive state for new job growth. The
state's citizens are healthy, productive, and innovative. Colorado is one
of the most highly educated states in the nation. Our natural environment,
and our willingness to retain it, lends itself to healthy lifestyles and out
ability to attract highly educated workers."(p. 10)

"Colorado is an affluent 'Island' in the middle of the country,
geographically distant from major trading regions. Ranked eighth in
the country in per capita income, Colorado is surrounded by states
that have lower wages and, often, lower business costs...To compete against
these lower- cost markets, Colorado must foster greater productivity and
innovation - creating jobs that pay higher wages but produce higher value
goods and services."(p. 10).

I would say the overall tone of the report is one of concern that the competitiveness of Colorado in the knowledge based economic sectors is at risk of slipping.

"We remain concerned with mediocre high school graduation rates, the
disconnection between the requirements of our high-technology employment
clusters and low funding levels provided for citizens to acquire these
skills. We remain particularly concerned with the ongoing low levels of
funding for higher education." (p.12)

"This year we are not certain that public sector investments in education
(particularly higher education), transportation, and our citizens' health
are sufficient to ensure our economy's long term competitiveness"(p. 13)

The report cited the Colorado Competitiveness Council, the Metro Denver WIRED Initiative, and the Metro Denver Health and Wellness Commission as tools to help address the concerns cited above.

The report profiles the MDEDC's six industry clusters targeted for recruitment efforts:

• Aerospace
• Aviation
• Bioscience
• Energy
• Financial Services
• Information Technology - Software

The report also profiles the MDEDC's three industry clusters targeted for retention and expansion:

• Beverage Production
• Broadcasting and Telecommunications
• Information Technology - Hardware

The competitor states used in the report were Texas, Georgia, Arizona and New Mexico. According to the report, Texas and Arizona are Colorado's most frequent economic development competitors. However, I would have liked to have seen a more detailed discussion of why all four of the competitor states were chosen. Based on recent competition with Chicago for aviation related headquarters (Boeing and United) and Milwaukee for the MillerCoors headquarters, I am thinking it would also be useful to have a mid-western state (Illinois or Wisconsin) on the list of competitor states.

Another methodological question that I would be interested in learning more about is why the ranking were done on the state level instead of the metro area level. It seems to me that the metro area as opposed to the state is the more appropriate unit of analysis for an assessment of economic development competitiveness.

Denver Office of Economic Development Podcasts

I wanted to devote a short blog entry to the Denver Office of Economic Development Podcast web page (http://www.denveroedpodcasts.com/). This is a great source information on economic development issues from key leaders in Denver. Podcasters include: Tom Clark, Metro Denver Economic Development Corporation (MDEDC), Mary Rose Loney, DIA Partnership (which is planning to merge with MDEDC and become a special purpose entity with a continuing focus on DIA development issues see http://www.denverpost.com/search/ci_6703391), Tom Gleason, Forest City Stapleton, Michael Hancock, President, Denver City Council, Sandy Bracken, Bard Center for Entrepreneurship at CU Denver, and others.

I thought Tom Clark's podcast did an excellent job of explaining the role of the MDEDC in supporting a cooperative regional approach to economic development in Metro Denver. I also found the other podcasts to be extremely informative. Here's hoping that the Denver Office of Economic Development continues to update this web page with additional information.