Thursday, July 16th, 2009
Indianapolis is among the top performing Midwest cities on a number of measures. For example, it has the fastest population growth of any metro area over one million people and it is also among the best performers in terms of employment. It can be tempting to view this as a product of good circumstances or good luck – state capital, center of state, only large city in state, Eli Lilly, etc. And all of those are important to the city’s success to be sure. But I think it misses a lot of the flat out good decisions that good execution that have contributed, particularly in the economic development space.
I’ve highlighted some of these before, but I thought I’d start out another mini-series with more good examples.
First, I recently noted how many cities mistake real estate development for economic development. Indy hasn’t been immune to the lure of the large publicly subsidized real estate project. But when Indy has done it, it has generally been in the service of some greater strategy that paid off, such as amateur sports and events, not just a random series of “next big thing” projects.
This strategy created the Wholesale District, probably the best such revitalized multi-use district of any Midwest peer city and one of the top in the country. The city has a mall, an arena, stadium, convention center, and 4-5,000 hotel rooms all in a small area, combined with tons of restaurants and bars, along with some offices, residential space, and other destinations like the Mexican Consulate. Everything feeds on each other synergistically. This environment has been very attractive to events, creating a business that, as Gov. Daniels recently noted, is a “cash cow” for the state.
Just as one specific example, the new Lucas Oil Stadium. The Indy Star ran a recent article on all the events that it booked (as well as some challenges). What I found amazing about this is that notorious stadium critic Prof. Mark Rosentraub at the University of Michigan actually had some decent words to say about it. “In this economy, to be honest, I think Lucas is doing an amazing job.” And, “This was an investment in human capital to use the Downtown as a linchpin to attract highly skilled workers for Eli Lilly, banks, insurance companies, the kinds of workers we will need in the 21st century. When the economy is in good shape, these facilities will work.” This is from the guy who literally wrote the book on why stadiums are a bad investment.
Moving on, I wanted to go out on a limb and highlight something I think is a good strategy even though it is just getting started and hasn’t paid dividends yet. That is the new Energy Systems Network, the new economic development initiative focused around green tech.
I’ve long criticized the “me too” economic development strategies every single city and state seem to have in the hot sectors du jour: life sciences, high tech, green industry, and advanced manufacturing. It’s not so much that these are bad sectors to go after, but a completely generic, undifferentiated and unfocused strategy for a location with no competitive advantage just isn’t going to cut it. Alas, that’s what most of these are.
But when you look at this Energy Systems Network, a few things stand out. Once, it is largely a private sector led iniative. It’s another project of the Central Indiana Corporate Partnership. Now that, in itself, is not unusual as most cities have such a corporate vehicle that is the main backer of economic development. But here it looks like most of the investment is going to be coming from private companies pursuing actual products, not a government boondoggle fund.
The ESN is focused, looking at a few specific subsectors: wind and solar power, hybrid/plug-in vehicles, second generation biofuels, distributed power generation, and systems integration. Now, lots of people are chasing wind and solar, but for that one, so what? Power generation using those technologies is not a winner take all type industry like so many others that feature major clustering effects. And Indiana is doing well. Where nominally progressive states like Wisconsin are slow out of the gate with wind power, Indiana something like 14th in the country in it, and was number one in increasing its wind power capacity last year, with many more projects in the pipe.
As for vehicles, local companies have joined forces to collaborate on two initiatives. The Hoosier Heavy Hybrid group is looking at building more efficient trucks and something called Project Plug In is looking at a large scale pilot for plug-in vehicles and smart grid technology in Central Indiana. Could both of these fail? Of course. Entrepreneurial ventures frequently do. But that’s ok. And at least these guys are looking at specific things they want to do, not just a bunch of pie in the sky dreams. And there is a base of expertise to work from.
I do think corn based ethanol is bad energy solution, but given that Indiana has a large agricultural base, excluding that probably would have been politically impossible.
On the whole however, you see something here that is reasonably focused and looks at where Indiana can apply its expertise not to take over the world, but to get its fair share of the pie. And they are trying to do it with actual products. Compared to the marketing based initiatives you often seen in the econdev world, the contrast is clear.