Tuesday, June 29th, 2010
[ Here’s another installment in my series of city profiles, in which a blogger in a city I don’t write much about showcases their town and blog for you. Today’s entry is about Milwaukee, and comes to us from Dave Reid of UrbanMilwaukee – Aaron. ]
“A Great Place on a Great Lake.” That’s how Milwaukee’s catch line used to read, and its actually more true today than it has been for a long time in Milwaukee. Like any city, Milwaukee has its share of problems, pockets of crime, including too much poverty, struggling schools, and unfortunately segregation. And like all former “rust belt” cities, it has seen decades of de-industrialization decimate its inner city. But Milwaukee is seeing signs of life, and it is evolving into New Milwaukee. This evolution leans on Milwaukee’s natural resources, its neighborhoods, and has been driven by urban, environmental, and historical movements within the city.
Milwaukee’s lakefront, its greatest natural resource, is a gem that is utilized by all residents, and unlike other cities its lakefront is in a large part free of significant commercial development. Literally, acre after acre of parkland lays out a beautiful front door to the city. In 2001 the Milwaukee Art Museum opened the iconic Quadracci Pavilion, designed by starchitect Santiago Calatrava.
The Calatrava wing at the Milwaukee Art Museum
The MAM, as it is often referred to, has become the iconic symbol of new Milwaukee, and has been regularly featured in TV commercials from Porsche to Lipitor opening up the world to new Milwaukee. The lakefront is also home to Summerfest, the world’s largest music festival, which energizes the entire region during the ten day festival. Recently, efforts to recognize and capture the value of the water in Lake Michigan have bubbled up as a potential new direction for Milwaukee’s brand and economy. Milwaukee’s place on Lake Michigan has always been a resource for residents, but now may play a role in Milwaukee’s future direction.
High rise on Milwaukee’s East Side
Along the lakefront lie many of Milwaukee’s most popular, and vibrant neighborhoods. Just northeast of downtown, the East Side has long been a center of culture and entertainment. It is the home of the University of Wisconsin-Milwaukee, multiple nightlife districts, condominiums, single-family housing, and affordable apartments. It truly is a mix of wealth and youth. East of downtown, East Town, saw multiple high-end lakefront condominium developments built in recent years, and has a high density of residents through apartment and condominiums. It is also home to the Milwaukee School of Engineering, is one of the most walkable parts of the city, and has a vibrant upscale nightlife scene. Southeast of downtown, the Third Ward, despite being cut off from the lakefront by I-794 and the Summerfest grounds, has transformed itself from a warehouse district that had seen years of decline into Milwaukee’s high-end shopping, nightlife, and entertainment destination.
Renovated warehouses in the Third Ward
Numerous warehouses were redeveloped into condominiums and apartments, and multiple mixed-use buildings were added to the district. Despite the recession, the Third Ward is one of the few areas that still has on-going construction of new housing. This neighborhood is home to the Milwaukee Institute of Art & Design, which has played an important role in the area’s rich gallery and art-related boutiques.
This is just a small sampling of Milwaukee’s near-downtown neighborhoods. There are numerous great neighborhoods all across Milwaukee, from Bay View to Riverwest and Sherman Park to Silver City that each bring an uniqueness to Milwaukee. Beyond Milwaukee’s great neighborhoods, a slow but steady movement has pushed Milwaukee forward over the past twenty years.
New Urbanism, or more aptly the back to the city movement, got rolling in Milwaukee under former Mayor Norquist’s leadership, and has played a significant role in downtown Milwaukee’s rebirth. Milwaukee was able to remove an aging freeway spur, the Park East Freeway, that served few, and blighted all of downtown. The removal of the Park East, which was controversial at the time and remains a point of contention today, was supposed to spark redevelopment of the vacant land, and although it has been slow to develop projects such as the Aloft Hotel, the North End Phase I, and The FlatIron condominiums have been built in the redevelopment corridor.
Additionally, Mayor Norquist pushed forward the downtown Riverwalk project which has slowly been built-out ever since.
Section of the Milwaukee Riverwalk
Along the Riverwalk spots of vibrancy and urbanity have sprouted up helping to bringing people and life back to Milwaukee, particularly in the Third Ward. Milwaukee’s downtown population has seen such strong growth that it now has 15,000 residents, which is higher than many similarly sized cities. This growth, and the growth of many near-downtown neighborhood’s was in part due to the application of New Urbanist principles in Milwaukee.
Milwaukee, like most former “rust belt” cities, has vast acres of land siting largely vacant with decaying industrial facilities scattered about that are filled with toxins and unknown substances limiting redevelopment opportunities. The redevelopment of these sites, referred to as brownfields, is a challenge to any city and certainly has been for Milwaukee, but the city has had award-winning, nationally-recognized successes in this area. Just north of downtown along the Milwaukee River the area known as the Beerline B used to contain tanneries, breweries, coal piles, and other industrial uses, while today an entire new neighborhood has sprung up on the former brownfield site. The nationally recognized redevelopment of the Menomonee Valley, the former Milwaukee Road Shops site, took a blighted, toxic, 140-acre site, and has returned it to the tax rolls, brought new jobs to Milwaukee, and cleaned up a polluted site in the middle of Milwaukee. Company’s such as Derse, Charter Wire, Ingeteam, Helios, Palermo Villa have taken up residence and, entertainment options such as the Potawatomi Casino, the Harley-Davidson Museum and Miller Park also lie within the valley.
As part of the redevelopment, Chimney Park, the Hank Aaron State Trail, and significant storm water retention systems were constructed, which create a curious juxtaposition between industry and parkland. Today the next major brownfield site being redeveloped in Milwaukee is the 30th Street Industrial Corridor. This is a critical site for Milwaukee because at one time it was the center of jobs for the inner city, and today is a mostly abandoned, decaying industrial site. The city has acted quickly and has already landed its first tenant, Talgo, who will build high-speed rail cars for cities across the U.S. and bring 125 jobs to Milwaukee. The redevelopment of sites like these is key to Milwaukee’s future, and has already begun to reshape its landscape.
The adaptive reuse of existing building stock plays a role in brownfield development, but it is also important within the historic preservation and green movements in Milwaukee. Milwaukee is actively involved with preservation and green efforts in its partnership with local development firm Zilber Ltd to redevelop the former Pabst Brewing site, just west of downtown, into a new mixed-use neighborhood. The project, known as The Brewery, is attempting to be one of the earliest LEED-ND certified neighborhoods in the country.
Renovated Building #10, formerly the Boiler House, at the Pabst Brewery
Not only is the intent to save and re-use as many of the existing structures as possible, but it is also to achieve as high a green certification in the process. The district has already seen the opening of the Blue Ribbon Lofts apartment building, Best Place tavern, a Cardinal Stritch University facility, and Zilber Park. Both the green and historic preservation movements are in a real way adding a new neighborhood to Milwaukee.
Another urban concept that is beginning to shape the face of Milwaukee is urban farming. On Milwaukee’s northside Will Allen’s Growing Power has become a national model in urban farming. Growing Power provides high-quality affordable food to the community, and a learning experience to Milwaukee’s youth. This concept has spun off businesses such as Sweet Water Organics Fish Vegetable Farm, and sparked a renewed interest in neighborhood gardens throughout Milwaukee. Looking to literally take it to the next level Will Allen is proposing to build a 5-story vertical farming building, that would be a groundbreaking effort in its own right.
It’s not to say that Milwaukee has become the new Portland of the Midwest, far from it really. In fact downtown Milwaukee still has far too many acres of surface parking lots, lacks a truly regional transit system, and retail still struggles to make it in the core. But Milwaukee is in the slow process of evolving from its post-industrial collapse into a new Milwaukee.
Highlights from UrbanMilwaukee
For more on Milwuakee, visit UrbanMilwaukee. Here are some highlights from the archives:
- Grand Avenue Mall – A New Implementation
- Miller Park vs. Busch Stadium – Milwaukee vs. St. Louis
- Rethinking and Expanding Milwaukee’s Frontier Airlines Center
- A Complete Street Makeover for 2nd St.?
- The Park East Disaster? No
Dave Reid is the co-owner of UrbanMilwaukee.com, sits on the board of directors of the Friends of Lakeshore State Park, and works to encourage the living an urban lifestyle. UrbanMilwaukee.com’s goal is to “Champion Urban Life in the Cream City” and we strive to do so each and everyday.
Sunday, June 27th, 2010
It hurts. When a bigtime Harvard economist writes off your city as a loss, and says America should turn its back on you, it hurts. But Ed Glaeser’s dart tossing is but the smallest taste of what it’s like to live in place like Buffalo. To choose to live in the Rust Belt is to commit to enduring a continuous stream of bad press and mockery.
I write mostly about the Midwest, but whether we think Midwest or Rust Belt or something else altogether, the story is the same. From Detroit to Cleveland, Buffalo to Birmingham, there are cities across this country that are struggling for a host of historic and contemporary reasons. We’ve moved from the industrial to the global age, and many cities truly have lost their original economic raison d’etre. Reviving them requires the hard work of rebuilding and repositioning them for a new era, a daunting task to be sure.
But beyond their legitimate challenges, these cities also face the double burden that they are unloved by much of America, and all too often by their own residents. They are forlorn and largely forgotten, except as cautionary tales or as the butt of jokes.
These cities aren’t sexy. They aren’t hip. They don’t have the cachet of a Portland or Seattle. The creative class isn’t flocking. They are behind in the new economy, in the green economy. Look at any survey of the “best” cities and find the usual suspects of New York, Austin, San Francisco. Look at yet another Forbes “ten worst” list and see Cleveland and Toledo kicked again when they are down. They are portrayed as hopeless basket cases with no hope and no future.
But I reject that notion. I do not believe in the idea that these cities are beyond repair and unworthy of attention—or affection.
Someone asked me once why I bother. Why does it matter that these cities come back? Why not just let nature take its course? Why not let Buffalo die, and its people scatter to the winds?
It’s because it doesn’t just matter to a few proud people in Buffalo, it matters to America. The idea of disposable cities is one that is incompatible with a prosperous and sustainable future for our country. Fleeing Rust Belt cities for neo-Southern boomtowns is nothing more than sprawl writ large. Rather than just abandoning our cores, we’ll now abandon entire regions in the quest for new greenfields to despoil. We can’t have a truly prosperous and sustainable America with only a dozen or so superstar cities that renew themselves from age to age while others bloom like a flower for a season, then wither away. An America littered with an ever increasing number of carcasses of once great cities is not one most of us want to contemplate.
But beyond that, it’s because I believe we can make it happen. Look closely and the change is already in the air. Globalization taketh away—but it also giveth. Cities like Buffalo or St. Louis now have access to things that even people in Chicago didn’t not that long ago. Amazon, iTunes, and a host of specialty online retailers put the best of the world within reach. Where once you couldn’t get a good cup of coffee, there are now micro-roasters aplenty. Where once your choices were Bud, Miller, or Coors, an array of specialty brews are on tap, often brewed locally. Restaurants are better, with food grown locally and responsibly. Slowly but surely the ship is turning on sustainability, with nascent bike cultures in almost every city, LEED certified buildings, recycling programs, and more. House by house, rehab by rehab, neighborhoods in these cities are starting to come to life.
Where once moving to one of these cities would have been likened to getting exiled to Siberia, it’s now shocking how little you actually give up. And for every high-end boutique or black tie gala you miss, you get something back in low-cost and easy living. The talent pool may be shallower, but it’s a lot more connected.
Let’s not get ahead of ourselves. There’s still a long and hard journey ahead. And not every place is going to make it, particularly among cities without the minimum scale. We have to face that reality. But more of them will revive than people think.
That’s because a new generation of urbanists believes in these cities again. These people aren’t bitter, burdened by the memories of yesteryear and all the goodness that was lost. The city to them isn’t the place with the downtown department store their mother used to take them to in white gloves for tea. It isn’t the place full of good manufacturing jobs with lifetime middle class employment for those without college degrees. The city isn’t a faded nostalgia or a longing for an imagined past. Most of them are young and never knew that world.
No, this new generation of urbanists sees these cities with fresh eyes. They see the decay, yes, but also the opportunity—and the possibilities for the present and future. To them this is Rust Belt Chic. It’s the place artists can dream of owning a house. Where they can live in a place with a bit of an authentic edge and real character. Where people can indulge their passion for renovating old architecture without a seven-figure budget. Where they have a chance to make a difference—to be a producer, not just a consumer of urban life, and a new urban future. Above all, these people, natives or newcomers, have a deep and abiding passion and love for the place they’ve chosen—yes, chosen—to live.
Still, it can get lonely, and often depressing. It so often seems like one step forward, two steps back. Making change happen can seem like pushing a rock uphill, like you are up there on some far frontier of the country alone, fighting a quixotic battle. Every historic building demolished, every quality infill project sabotaged by NIMBY’s, every massively subsidized business-as-usual boondoggle, every DOT-scarred transport project is a discouragement.
But Buffalo, you are not alone. It’s not just you, it’s cities and people across across this country, from St. Louis to Pittsburgh to Milwaukee to Cincinnati to New Orleans to Birmingham, fighting to build a better future. There’s a new movement in all these cities, made up of passionate urbanists committed to a different and better path. Sometimes they are few in number, but they are mighty in spirit— and they are making a difference. Together, they and you can win the battle and make the change happen.
It won’t be easy. The road will be long. Some, like the great cathedral builders of Europe, may never see completely the fruit of their labors. But the long-ago pioneers who founded these great cities never got to see them in their first glory either. We’ve come full circle. We are present again at the re-founding of our cities. This is the task, the duty, the calling that a new generation has chosen as its own, to write the history of their city anew.
Go make history again, Buffalo.
This article originally appeared at Buffalo Rising.
Friday, June 25th, 2010
Ed Morrison wrote the above about Cleveland, but he could have been describing any number of other cities. Why is it that so many cities have turned to large real estate projects to attempt to restart growth, turning away from strategies that previously made them successful?
The answer possibly lies in structural economic changes resulting from the nationalization and globalization of industry. Up until the 1990’s, many businesses, such as retailing, utilities, some manufacturing, and especially banking operated on a regional or local basis. The meant that the civic leadership of a community was heavily dominated by businessmen, again, especially bankers, whose success was dependent on the overall macroeconomic health of the particular city or region they were located in.
But with banking deregulation, we saw large numbers of hometown banks merged out of existence. Industry after industry was subjected to national or international level roll-ups as changes in the economy and regulatory environment gave increasing returns to scale.
Why is it that “real estate interests” dominate in a local economy like Cleveland? Because, to a great extent, they are among the only ones left. Consider the local industries that were not as subject to roll-ups. Principal among these are real estate development, construction, and law. This means the local leadership of a community is now made up of executives in those industries, and they bring a very different world view versus the previous generation.
Consider the difference between a banker and a lawyer. Banks make money on the spread between what they pay for deposits or wholesale funding, and what they charge for loans. This means the CEO of a bank is making money while he plays golf at 3. He’s got a cash register back at the office that never stops ringing.
By contrast, lawyers get paid by the hour for work on specific matters and transactions. The law partner is only making money on the golf course if he is closing a deal. It’s similar between many other “operational” businesses that were previously prominent in communities, and the “transactional” businesses that are now often dominant.
Additionally, even where the hometown bank or company did not get bought out, it likely escaped that fate by getting big itself and making large numbers of acquisitions or otherwise expanding. This means those institutions are less dependent on the health of the particular local market they happen to be headquartered in than they are overall macroeconomic conditions. While no doubt they want the headquarters town to be successful, not least of which so they can effectively recruit talent, they can afford to take a portfolio view of local markets.
Not only has the drying up of local and regional operating businesses led to a business leadership community unbalanced in favor of transactionally oriented firms, the loss of those local and regional operating businesses robbed many of the transactional companies such as law and architecture firms of their principal local client base. Large national businesses employ national firms for advertising, law, architecture, etc. If they use local firms, it is in a subsidiary role. (Or, if a smaller firm is fortunate enough to land a contract, it is servicing a client on a national, not local basis).
Richard Florida described this in his Atlantic Monthly article on the financial crash. “As the manufacturing industry has shrunk, the local high-end services—finance, law, consulting—that it once supported have diminished as well, absorbed by bigger regional hubs and globally connected cities. In Chicago, for instance, the country’s 50 biggest law firms grew by 2,130 lawyers from 1984 to 2006, according to William Henderson and Arthur Alderson of Indiana University. Throughout the rest of the Midwest, these firms added a total of just 169 attorneys. Jones Day, founded in 1893 and today one of the country’s largest law firms, no longer considers its Cleveland office ‘headquarters’—that’s in Washington, D.C.—but rather its ‘founding office.'”
Where then is the source of transactions these firms can turn to in order to sustain their business? The public sector, of course.
I would hypothesize that many local transactionally oriented services companies have seen the public sector take on a greater share of billings than in the past. With the old school bankers and industrialists mostly out of the picture, the leadership in our communities consists increasingly of the political class and a business community dominated by transactional interests.
When you look at the composition of this group, it should come as no surprise that the publicly subsidized real estate development is the preferred civic strategy. Politicians get to cut ribbons. Cranes always look good on the skyline. Local architects, engineers, developers, and construction companies love it. And there is plenty of legal work to go around.
This is not to say these people are acting nefariously. And nor were old school bankers and industrialists always acting purely altruistically. Rather, the difference comes from the world view and “theory of change” that people steeped in transactionally oriented businesses bring with them. But regardless of intent, their personal interest and long term community health are no longer so strongly linked. Which is why where once local business/civic leaders put money into the community, today they are more likely to be taking it out via these types of projects.
With the current financial crisis, bigness, as a strategy, is out of favor for the moment. Also, the gimmicky financial transactions that underlie much of the crisis are calling the entire transactional model into question. There’s an increasing alarm at the precipitous decline of manufacturing, particularly the auto sector. And people are questioning whether we as a country can survive simply through services, or whether we need to revitalize the concept of the operational business and actually making things. Plus, real estate deals are tougher to get done because of tight credit, and it seems unlikely that the go-go days of recent years are coming back soon.
We’ll see where this leads. But if we see more local and regional scale operating businesses start to emerge again, then perhaps the urban development pendulum will start swinging the other direction again. In the meantime, large scale real estate development will likely continue to be preferred.
This article originally appeared on July 12, 2009.
Thursday, June 24th, 2010
Last Friday I posted a link to and a sample of Eric Fischer’s locals vs. tourists maps of geotagged photos. If you missed it, here’s another sample, this one of Chicago:
Someone posted a comment that Fischer was from Indianapolis, and this got me thinking a bit. I can’t confirm where Fischer is from. He doesn’t seem to list it anywhere that is easy to find. I’m guessing most people would probably assume San Francisco, since virtually all of the people who wrote about this project linked the same San Francisco map. We’re lazy like that.
This is a bit of an opportunity lost for Indy or wherever Fischer is from. A lot of people’s positive perception of a city’s brand is based on the cool things that happen there or are based there. Some of those cool things can be buildings, events, natural amenities and so on. But many of them are things done by people, often easily identifiable people. This image series that went viral is a small but interesting example.
It made me think immediately of a straightforward extension of Brand Territory Matrix.
Instead of cities thinking about how they can link corporate brands to their place, or leverage the intersection thereof, we can also think about personal brands in the same way.
Think about Chicago. Its image as a city is tightly linked with various people who are associated with it. Most famous of all, particularly overseas, is Al Capone of course. But you can also think about Michael Jordan or Oprah. The latter is particularly of interest. Oprah’s show isn’t really Chicago inspired, but she’s known for being in Chicago (for now, at least). Thus some of her popularity and positive image burnishes the city brand. Or think about all those celebrity chefs on Food Network. Or all those architects designing buildings around the world like the Burj Dubai. Or the indie musicians who make Chicago’s scene one of the world’s most respected. Consciously or not, clearly all of those people are ambassadors for Chicago’s civic brand.
It strikes me that as with corporate brands, cities should do a market scan of their town and build an inventory people there like Fischer who are doing really cool stuff. Then you try your best to promote them, following the principle of “first do no harm” of course, and also encourage them to associate themselves with the city in some way, so that people at least know where they are from. Then if something cool like these maps goes viral, the city can pick up a bit of cred along the way. Most cities have lists of all the famous people who are originally from there. Wouldn’t it be nice if they were equally or more so focused on those who are still around that are doing cool stuff today? Done right, and in a non-heavy handed way, this could potentially be a win-win.
Tuesday, June 22nd, 2010
A recent article in The Buffalo News, citing a study of downtown parking, offers some interesting blog fodder. The Desman Associates study asserts that the parking situation in Buffalo is a mess, and requires better management.
The report recommends hiring a “parking czar” at $140,000 salary to consolidate parking management. As I recall, Desman previously produced studies in 2001 and 2006 which basically said the same thing, minus the “parking czar” baloney. The Buffalo News’ take on the Desman study does get it generally right, however: “The dominant theme in the report is that too many entities are involved in city parking, creating ‘shortsighted’ and disjointed management.”
This much is true. But one quote in particular stands out: “‘Downtown can’t begin to compete with suburban office parks without convenient and affordable parking,’ said Schmand, whose nonprofit agency represents the interests of downtown stakeholders and residents.”
To the uninitiated, this may sound reasonable, except for one thing. Downtown can never compete with suburban office parks on the basis of convenient and affordable parking. To compete successfully on that basis would mean the destruction of all of downtown’s remaining (and emerging) value.
By definition, downtown can never out-compete the suburbs on suburban, automobile-based terms. By necessity, parking takes up a tremendous amount of land, creating lots of dead, open space, which the suburbs have plenty of. In fact, that’s the suburbs’ main asset: lots of open space. A city’s main amenity is not open land, but density, walkability, a diverse mix of uses, and the quality of the streets and other public spaces. These are the areas in which the suburbs cannot out-compete downtown. These are things cities like Buffalo need to focus on to be successful.
So, if it is evident that an urban environment can never offer as good a “suburban product” as the suburbs can, then why do we continue to play that game? Clearly, the prevailing value system is upside-down. The city’s current strategy is irreconcilable with what downtown currently is, and what the community wants it to become. We’ve got to find a way to break out of this vicious cycle and change this self-defeating paradigm. This requires leadership.
If anything, this simply demonstrates how shortsighted and incoherent our public discussion has become on such issues. If city leaders think that parking is the main asset—and don’t recognize the many natural urban advantages downtown has over the suburbs—then the whole exercise is guaranteed to fail. This strategy will simply end-up undermining the value of the city, leading to a dead downtown like the one we’ve got. Like many other mangled cities, we’ve been trying this strategy for decades and failing, as the condition of our downtown attests. We can’t keep playing this self-defeating game. Who has the guts to finally stand up and stop this nonsense?
Also, there’s my old saying, which I’ve oft repeated: Like all cities, we really have one essential choice; we can have a vibrant downtown where everyone complains about parking, or we can have a dead downtown where everyone complains about parking. If you think about it, that’s the only choice. Really.
For years, I’ve been involved with The New Millennium Group, a local community activist organization dedicated to progressive planning, economic development, and revitalization. In 2003, NMG did a downtown parking survey that showed over 50% of the land area of downtown Buffalo dedicated to surface parking.
In the six years since, the city situation regarding parking, planning, and transportation hasn’t really changed. So to repeat NMG’s original take on the issue: Buffalo doesn’t have a parking problem, it has a parking management problem. (In truth, it’s a transportation management problem, but that’s a topic for another post.)
The fresh angle is this: the city doesn’t need to add another high-priced manager and yet another layer of bureaucracy. We can get much better management of downtown transportation/parking assets if we better utilize the resources we’ve already got. Private companies routinely reorganize management structures to adapt to changing conditions, so why can’t the city? We’ve already got a planning department that studies and understands these issues (and the many related issues, too) and has the expertise to effectively manage parking by putting it in its proper context—which is the problem to begin with.
Chuck Banas is an urban planning consultant and community activist in Buffalo, New York, and chairs the SmartCode Committee at the New Millennium Group of Western New York.
This post originally appeared at Joe the Planner. Reprinted with permission of the author.
Sunday, June 20th, 2010
Crain’s Chicago Business ran a major story assessing the Daley administration’s track record in Chicago last week. The title, “Mayor Daley runs up big debts building his global city; what about the rest of Chicago?,” implies a negative piece, but it has a lot of positive things to say too. The piece includes a quote from a previous major post of mine on the city, talking about how I want Chicago to be less of a generic world city, and find more of its own niche in the world.
I want to expand on that notion today. Some of these thoughts are the beginnings of a major project I have in mind called “The State of Chicago.”
A friend of mine emailed me after seeing the piece and suggested that most of the negatives identified by Crain’s were not unique to Chicago, but were true of almost any global city, thus Daley really can’t be blamed for them. Richard Longworth takes up the theme, agreeing with this, but seeing it in a less sanguine light, asking, “Can Global Cities Work?”
I agree with this. The guy at the top always, fairly or unfairly, gets the credit or the blame for what happens on his watch. In a sense, the principal role of the executive is simply to be accountable. But if the President of the United States can’t control the economy, why would we believe the mayor of a city can? As I argued in my previous piece, Chicago’s transformation is principally the result of macroeconomic forces and structural changes in the global economy. The fact that its transformation is far from unique and is broadly shared by most global similar global cities argues as much. Like the collapse of the Rust Belt before it, the rise of global Chicago and its attendant downsides is part of a macro-phenomenon. In that light, Daley shouldn’t get as much blame as he’s frequently assigned, but likewise less of the credit.
In assessing Chicago, there are two main distinctions we need to make. The first is the entity we are looking at. In assessing the mayor’s job, Crain’s looked mostly at the city, as that is what is under the mayor’s nominal control. But the real Chicago is a regional, metropolitan economy, as Brookings and others have pointed out. To really evaluate Chicago, the best way to look at it is as a region. Of course, the city is a major part of that and a healthy core is part of how you grade most regions, but fundamentally looking just at the city (or the greater Loop) isn’t enough.
Second, cities fundamentally ought to be measured not just against their own past, but against peers as well. This is just like how a fund manager should have his performance judged not only on an absolute basis, but versus a market benchmark like the S&P 500. You can appear to be doing well while falling behind on a relative basis. So to really judge Chicago, you should compare it against other tier one global cities. My comp list is New York, Boston, San Francisco, Los Angeles, and Washington, DC, the last of which I’ll admit is somewhat debatable.
There are a huge number of broad similarities between those cities in terms of their transformations, but I’d like to focus today on one area where Chicago is very different, one that illustrates what I mean by a niche.
At GE, Jack Welch famously only wanted to be in a business if he could be #1 or #2. He recognized that when you are the top player, you can reap enormous competitive advantage and extract the greatest value. This plays into Michael Porter’s cluster theory. Places that establish themselves as the top location for an industry cluster are able to create what Warren Buffett calls a “wide moat” business, one that is hard to unseat and which can again extract higher returns.
To that end, I’ve suggested that cities should not try to become the next hub of generic super-sectors like high tech, life sciences, or green tech that are being targeted by everybody. Rather look for more focused segments within these areas where you can carve out a dominant position, or find other industry specialties to own. This is the “microcluster” concept of which I’ve given many examples, such as motorsports in Indianapolis.
How does Chicago stack up here? Ok, I think. I haven’t done the full research, but others have suggested it has dominated some specialties. The futures exchanges are an obvious example. Saskia Sassen noted that despite the fact that most global cities have many jobs in financial and producer services, they aren’t necessarily directly competitive. Rather, they specialize in different things. Chicago specializes in these services for industries and areas related to its argo-industrial heritage. As she put it, “A steel factory, a mining firm, or a machine manufacturer that wants to go global will go to São Paulo, Shanghai or Chicago for its legal, accounting, financial, insurance, economic forecasting, and other such specialised services. It will not go to New York or London for this highly particular servicing.”
For a city the size of Columbus, Ohio, a collection of microclusters and niches might work. But what about a region of nearly 10 million people like Chicago? The jobs losses in the last decade suggest not. Chicago may have a lock on steel globalization, but how many jobs do this and other similar niches require? The city’s own Central Area Action Plan has a base case scenario of job growth of 3,500 per year, a drop in the bucket for a region with four million jobs. Between 3Q08 and 3Q09 alone, Chicago lost 270,000 jobs. Just that one year loss would take 75 years to recoup at the plan’s growth rate. And the plan says that to hit the number, the central area needs to grow its regional market share.
This gets to the heart of one major difference between Chicago and these other cities. They all have niches. But those peer cities are also the home of one or more of those key 21st century macroindustry super-sectors I mentioned earlier. The reason I advise against trying to compete in those in a generic way is that there are already entrenched competitors, and those competitors are often other tier one global cities.
Consider the following list. It isn’t based on quantitative analysis, but I think foots to conventional wisdom:
All of these cities are the epicenter of something both large scale and important. What about Chicago? You could argue that it is the #2 financial center, and clearly the exchanges are a powerful asset. But that is the exception that proves the rule – and in my view is not something that reaches the level of these other things.
One important difference between Chicago and other US global cities is that Chicago is not the epicenter of any important 21st century macro-industry. This makes Chicago in the global age very different from Chicago in the industrial one.
Some might say, “So what?” and in fact tout this as an advantage. Chicago is one of the most diverse economies in the country, and diversity is often viewed as good. Plus, the fate of Detroit suggests that being a one trick pony isn’t always a good thing. So let’s look at some implications of this.
One implication might be that Chicago, since it isn’t the wide moat center of one of these industries, creates and extracts less value than its tier one piers. So let’s see if that’s true. The basic measure of economic activity is gross domestic product. The federal government reports this on a metro area basis, with the most recent release being 2008. Here is how those cities stack up on a real, per capita basis:
Metro Area Real GDP Per Capita in 2008 (in 2001 chained dollars)
Source: US Bureau of Economic Analysis
Due to the way the feds define metro areas, the Bay Area and Greater LA are split into two metro areas, so I include both. The Riverside-San Bernardino metro is the so-called “Inland Empire” area that is basically exurban sprawl. It doesn’t really belong on the list, but I’m including it so that I can’t be accused of cherry picking.
As you can see, Chicago’s economic output per person is lower than any of these except the aforementioned Riverside area. In fact, it’s materially lower, except compared to Los Angeles. Even the SF metro, which doesn’t include Silicon Valley, is much higher. Chicago is simply generating less economic output per person than these other places. Now the metro GDP numbers are relatively new, and some people don’t like the data, but this is a real federal statistic.
Let’s also look at the growth in GDP per capita over time. The maximum data series available is 2001-2008. Here’s a plot of these areas over that time, with 2001 set equal to an index of 100:
Real Per Capita GDP 2001-2008, Index with 2001=100
Source: US Bureau of Economic Analysis, Urbanophile, LLC analysis
This is a little difficult to read, but Chicago is the bright yellow line near the bottom. It is in again in last place, save for exurban Riverside-San Bernardino. So Chicago has lower economic output, and is growing it at a slower place.
This is one clear example of the consequences of being a diversified business center. Chicago will generate less economic value than other tier one global cities because it doesn’t have that calling card industry it dominates and from which it can extract super-normal returns.
This shouldn’t come as any surprise. There’s an axiom in finance that concentrated positions build wealth, diversified positions preserve it. Chicago’s great boom period, where it became large, wealthy, and important, was the agro-industrial age, and Chicago specialized in that field. Chicago was the epicenter. It was its beating heart. But no more.
Chicago has been transformed by globalization, but it is under-performing in terms of economic output, and probably will indefinitely on its current course.
That’s not to say that the other side is perfect either. Detroit is one example, but perhaps a better one is the San Jose/Silicon Valley area. Their problem is that they are too successful at creating wealth. Four quick stats easily demonstrate. Between 2001 and 2008, San Jose’s: a) real GDP per capita increased by 20.8% b) total real GDP increased by 25.9%, c) real GDP per job increased by 39.6%, BUT d) total employment declined by 9.4%.
San Jose/Silicon Valley is like a gigantic tower that keeps growing higher and higher into the sky while its base shrinks. As we all know, that’s not a stable situation to be in. San Jose is caught in a cycle that is long term unhealthy. It is in progress a modern manifestation of what Jane Jacobs called the “self-destruction of diversity.”
Of course, Chicago is not immune from this just because it isn’t the epicenter of a major super-sector. It exhibits the exact same phenomenon, albeit on a smaller scale. There is actually a certain logic in this. In the Crain’s piece, Tracy Cross says that Chicago fundamentally had no choice but to go upscale and focus on upscale businesses and consumers. I agree that was the logical choice, a point I made in my article that I linked earlier and elsewhere.
But just because it’s logical doesn’t mean it takes you in a long term good direction. I’m reminded of a piece Ryan Avent wrote on disruptive technologies and how that dynamic applies to cities. In it he quotes Clayton Christensen via Tim Berners-Lee talking about how incumbent firms react to disruptive innovations:
Generally, they found it difficult to improve profitability by hacking out cost while steadfastly standing in their mainstream market: The research, development, marketing, and administrative costs they were incurring were critical to remaining competitive in their mainstream business. Moving upmarket toward higher-performance products that promised higher gross margins was usually a more straightforward path to profit improvement. Moving downmarket was anathema to that objective.
There’s an obvious analogies to cities. Avent takes it in a different direction, but you can also see how it applies to global cities. Rather than trying to beat Dallas and such at their own game – a daunting proposition – they go upscale. This works for a while, but generally in industry the incumbents end up totally displaced as their market asymptotically evaporates to nothing as it narrows. The specific example in this case was Digital Equipment Corporation – and we all know where they and pretty much every other microcomputer manufacturer ended up. Only IBM – the New York or London of incumbents – survived.
I won’t pretend I’ve thought through every implication and come up with a preferred course of action for Chicago. But neither has anyone else. My own sense of civic pride wants to see Chicago at the top of the league tables, not the bottom. My gut sense is that it requires not a choice of specialization or diversity, but rather diversity of specializations. Chicago will need to both maintain and enhance its diverse mix of headquarters, general business services, and niche industries, but also complement that with a new 21st century calling card to replace heavy industry. It needs to be a city that is known for something again.
Chicago is clearly in a situation where it both is trailing other tier one global cities in generating economic output, and is to some extent exhibiting the taller but narrower syndrome. Right now, that’s been the outcome by default. I will state again that Chicago has been transformed by outside forces. It is the artifact, not the architect. It’s a passenger, not the driver. It might have a first class ticket in many respects, but that doesn’t mean it’s controlling where it is going.
I think it’s time for Chicago to step up and take a hard a realistic look at itself and its aspirations as a city. It’s time to get out of the back seat, and step up and grab the wheel and try to take charge of its own destiny. But I’m not seeing that happen.
And this is another way Chicago differs from these other global cities. It is in its smug complacency about its transformation and how great it is. Perhaps that’s because it is in a region where so many cities have been all but destroyed, hundreds of miles from next nearest peer, Chicago looks around and feels like it is the big winner. I talk to people in lots of cities, and generally they will admit to quite a few of their shortcomings. I may not see eye to eye with them on everything, but they are at least thinking about what they need to do different. I don’t get that sense in Chicago, outside a handful of areas like reducing corruption and fixing the state’s fiscal situation. The people I talk to in Chicago, often outsiders who don’t have positions that require them to be boosters, are nevertheless almost total cheerleaders for the city. Its challenges and deficiencies are blown off or even celebrated. Like a lot of lakefront types many of them hate Daley – who again is not responsible for where Chicago is today economically – but they sure don’t see many serious problems with Chicago.
Other global cities aren’t taking anything for granted. Andy Grove wrote a famous book called Only the Paranoid Survive. Other cities seem a lot more paranoid than Chicago. Silicon Valley knows it has problems. As a report by their leaders put it, “Silicon Valley has entered a new era of uncertainty, with a set of vulnerabilities that could compromise our long-term prosperity. Our continued ability to import and develop talent, fund innovation, and rely on state government for overall support are seriously in question. We are a region at risk.” Concerned about losing ground to London and other global financial centers, New York City commissioned McKinsey to help it figure out how to retain its leadership position.
But Chicago? Other than Longworth and a handful of others, I’m not seeing anything along these lines. In an every more complex, rapidly changing, globalized, competitive world, not only is Chicago not seeking the answers, it isn’t even asking the big questions.
For an index to my Chicago-related postings, click here.
To download the data behind these charts in Excel format, click here.
Friday, June 18th, 2010
Next American City: Who Says What’s Livable? – Vincent Valk explores the issue of livability in transportation planning.
NYT Magazine: The Freegan Establishment – A very interesting look at squatters in Buffalo trying to live without using money by choice. There is definitely some creative ferment going on in that area.
WSJ: Rivals Secretly Finance Opposition to Wal-Mart – As it turns out, a lot of the “grass roots” opposition to Wal-Marts is really astroturf.
James Sanders/Design Observer: Adventure Playground: John V. Lindsay and the Transformation of Modern New York – Long, but very interesting take on the transformation of New York from gritty workshop to glamorous playground.
Locals vs. Tourists
Eric Fischer, using the geocoding information on Flickr, created maps of photographs loaded by locals vs. those loaded by out of towners, presumably tourists. Here’s the San Francisco one:
World and National Roundup
Egypt Today: Downtown Cairo’s Extreme Makeover
Jim Russell: The best talent escapes gravity
Ryan Streeter: City State
Politico: Pols turn on labor unions
NYT Economix: Saving money by slashing prison spending
The Atlantic: Gentrification and Its Discontents
True Economics: Organizational systems and uncertainty
Michael Hicks: An education-related economic model
Terry Teachout: The Pasadena Symphony and the Zero Option – Do regional orchestras still make artistic sense?
Brain Pickings: A (Type)Face for Every City in the World – some very cool typographic logo designs.
NYT: Licensed and Illegal Vans Fight It Out in New York – sometimes literally!
Incredible pension craziness from New York state: State wants to borrow from pension fund, to pay the pension fund
Technology and the City: Minneapolis about to surpass Detroit as the Midwest #2 metro economy
A UIC study shows that intersections with red light cameras in Chicago have more crashes than those without.
Detroit News: Suburbs struggle with industrial blight
Joshua Jamerson: Who controls Detroit’s image?
Lastly, here’s a trio on demographic change in our cities: Atlanta: Minority populations make strides in metro Atlanta demographics; Dallas: ‘Black Flight’ Changing the Makeup of Dallas Schools; Detroit: Black flight is the new worry for Detroit
More City to River
Daron over at St. Louis/Elsewhere takes a look at the idea of removing I-70 through downtown St. Louis to reconnect downtown with the Gateway Arch and the Mississippi River. To show the absurdity of having I-70 in that location, he asks us to imagine Chicago cut off from its lakefront parks by an interstate viaduct on Michigan Ave. It’s ain’t pretty.
Of course Chicago does have Lake Shore Drive…
Gorgeous Chicago Travel Video
Signal vs. Noise linked to two phenomenal videos about Chicago. Dating from 1948 and shot in gorgeous Technicolor, these were part of an MGM series of shorts called Traveltalks. Here’s one of them. (Click the previous link if it does not display for you).
Apparently ABC is going to be running a new series in the fall called Detroit 187. Time’s Detroit blog posted the trailer for this thoroughly embarrassing concept. (If the video doesn’t display click here).
Julio the Sewer Guy
BLDGBLOG pointed me at this very interesting interview with a Mexico city sewer diver. Apparently, Mexico City has a group of these guys who dive into the sewers to clean them out and do repairs. Yes, there are photos:
I was recently privileged to take part in a VIP architecture tour of Columbus, Indiana, which I’ll note in the interest of full disclosure was partially sponsored. For those who don’t know, Columbus has one of the most important collections of modern architecture in the world, including six National Historic Landmarks. While there I got to see a preview of one of them, the Miller House and Garden. It was acquired by the Indianapolis Museum of Art and will open to public tours next year.
Alas, photography is still not allowed at the Miller House yet, but I can share in the next few Urbanoscopes a few interior and other photos of spaces not generally open to the public. Here is one of the First Baptist Church, designed by Harry Weese, also a National Historic Landmark:
Thursday, June 17th, 2010
Constantin Gurdgiev is an economist based in Ireland who writes at True Economics. He recently posted a story exploring Dublin’s weight in the Irish economy. It contained the following very interesting graph, which is a mashup of metro % of national population vs. metro % of national GDP:
This graph is a bit difficult to parse. The % population vs. % GDP are the axes, and the size of the circle for each city supposedly represents the ratio of the two values, though they look off to me. The larger the circle, the bigger the city’s economic share relative to its population share. (Full data below)
A few things stand out. One is obviously that Dublin is overwhelmingly dominant in Ireland’s economy. It has almost 40% of Ireland’s population and almost half its GDP. It’s really hard to separate the Dublin economy from the Irish economy, which I believe is the point Gurdgiev was making. A national economy strategy will to some extent be a Dublin economic strategy. That’s an important lens to bring to the discussion.
You also see the same high influence in other primate cities like Seoul, Brussels, Budapest, Lisbon, and to a bit lesser extent Paris and Mexico City.
This chart also shows the incredible overall power of the United States. New York, arguably the ultimate global city, only accounts for 8.5% of the US economy, and 7.8% of its population. That 1.1 ratio means that not only is New York a comparatively small part of the US population, it does not have economic impact that is particularly out-sized relative to that. Only Sydney has a lower ratio in this group of cities.
The general pattern from this data is that in most developed countries you see fairly low multiples of % GDP to % population. That makes some sense as development is more evenly spread in these places. In fact, the ratio is below 1.5 for all developed nation cities except Brussels (4.4), and is below 2.0 in nearly-developed places like South Korea and Hungary. Even mighty Paris is only a 1.3. (I wish London were on this chart). Meanwhile, Shanghai is 7.1, Mumbai 3.3, etc. Clearly in developing nations major cities is where the action is. In this light, 1.1 for New York probably says more about the advanced state of the US economy than it does about New York itself.
I’d love to see a more complete version of this analysis to see if the trends hold up more broadly. In the meantime, here’s the data for the above chart:
Tuesday, June 15th, 2010
[ I’ve touted Jarrett Walker’s Human Transit site before. If you haven’t checked it out yet, it is definitely worth a look. Jarrett has some of the best and most unbiased writing on transit out there, from a professional in the field. Here’s a sample of what you’ll find – Aaron. ]
Los Angeles Mayor Antonio Villaraigosa's campaign to accelerate the construction of rail transit in his city is deservedly in the news, not just for his own persistence but also for the excitement it's generating in the Obama administration, in Congress, and in other cities who would love to see a precedent-setting response. But it's also very useful and inspiring to transit planners working overseas, like me.
Image via The Transport Politic
When I talk about North American public transit to people here in Australia or New Zealand, I don't talk much about New York or Boston or other old cities where the depth of urban history approaches that of Europe; Australians and New Zealanders already know Europe better than most Americans do. I talk a bit about Portland, because of its land use laws, extensive light rail, and special downtown. I talk about Vancouver, becuase of SkyTrain, and its growth management, but above all because of its dramatic densification over the last few decades.
But when I really want to surprise them, and shift their thinking, I talk about Los Angeles. Educated Australians, like educated Europeans, have mostly been there as tourists, and they remember it with the kind of fascinated delight that could just as well be called horror. Even if they haven't been there, they know it as the car capital of America, the city they'd least think of as the next great transit metropolis.
Los Angeles may still seem hopelessly car-dominated today, but it's fortunate in its urban structure, in ways that make it a smart long term bet as a relatively sustainable city, at least in transport terms. Two things in particular: (a) the presence of numerous major centres of activity scattered around the region, and (b) the regular grid of arterials, mostly spaced in a way that's ideal for transit, that covers much of the city, offering the ideal infrastucture for that most efficient of transit structures: a grid network.
Because Los Angeles is a vast constellation of dense places, rather than just a downtown and a hinterland, it's full of corridors where there is two-way all-day flow of demand, the ideal situation for cost effective, high quality transit. In this, Los Angeles is more like Paris than it is like, say, New York. Much of the core area between downtown and Santa Monica is covered by a braid of major boulevards, all with downtown at one end and the naturally dense coastal strip at the other, every one a potentially great transit market given appropriate protection from traffic. Near the coast, the massive dense nodes of Westwood/UCLA and Century City (and to a lesser extent Santa Monica and Venice) offer further anchoring to the western end of these markets. On a smaller scale, similar anchors are found throughout much of the region. While gathering people to a transit stop will still be difficult, it will be especially easy to grow an everywhere-to-everywhere network in Los Angeles, becuase of these patterns.
The low-end but extensive network of frequent limited-stop buses, the Metro Rapid, grew from this geography, and someday, the busiest rail transit lines in the American West will prosper from it. One of the most interesting long-term questions about Los Angeles is how to fit high-quality transit to a city of great, wide boulevards — another crucial feature in which the city resembles Paris. Sooner or later, most of these boulevards will need to give over two lanes to crowded and efficient transit services, which will move far more people per hour than car lanes do. But there is much fun and quarrel to be had working out the details. (Light rail or buses? Side lanes or center lanes? Stations configured how, in what relation to the streetscape? Local or rapid stops? The questions abound.)
Densities in many places are lower than ideal, but Los Angeles, more than any city in the world, has a virtually inexhaustable supply of infill opportunities, even if typical middle-class and wealthy suburbs are set aside. If a divine hand prohibited the paving of one more square inch of California, the Los Angeles region would keep growing without a pause.
Finally, of course, Los Angeles has built a strong consensus about the desperate need for transit, and this is the story that impresses foreigners. Every television viewer in the world has seen images of Los Angeles and what life is like there. And one thing they've all been shown, over and over, is that this is a city for cars, a place where cars mean freedom, and your car is your most important fashion statement. When I tell them that the popular mayor of Los Angeles is spending major political capital on a campaign to accelerate transit development in his city, to the point of demanding a complete rethink of how the Federal government funds transport projects, eyebrows shoot up. It's one of those little jolts that can change our notion of what's possible, wherever we are.
If I ended there, Los Angeles transit advocates would ask me why I don't talk about everything that's still wrong. Do I tell people that Los Angeles still struggles with institutional tangles between the countywide MTA and the cities, especially the municipal bus companies? Do I even make clear that Mayor Villaraigosa doesn't control the transit agency, and has nothing like the presumptive powers that Ken Livingstone wielded in London? Do I go into the ways that the Los Angeles transit system, while deeply dependent on connections, still charges for transfers on single-trip rides (though not on same-day round trips), a petty legacy of security problems around transfer slips? Sometimes, for audiences who want to delve, I do go into those details.
But most great cities look better from a distance. The compromises and hesitations built into the Metro Rapid diminish but don't erase the importance of the Rapid as a precedent for creating a lot of new mobility fast. The unfortunate transfer penalities don't contradict the wisdom and efficiency of the grid system. The compromised alignments of some light rail lines don't undermine the case for rapid rail investment, nor for the balance between heavy rail, light rail, and busways in the region's plans. There are very few inspiring transit services, anywhere in the world, that don't look more problematic to the locals who deal with them every day.
The big-picture Los Angeles talking point is still an inspiring one: The most aggressive mayoral transit advocacy in America is coming from the nation's most car-oriented big city. And because film and television will always tell this city's story to the world, the rise of transit in Los Angeles will be a globally resonant event. Is anyone studying how film and television images of how people travel in Los Angeles are evolving over time? Those things really matter.
This post originally appeared in Human Transit. Reprinted with permission of the author.
Sunday, June 13th, 2010
A couple of recent articles I posted drew some curious reactions that I wanted to address head on. In response to Richard Herman’s piece on immigrants and Cleveland, people said:
I’m dubious that any reasonable “pitch” could be made to a desired immigrant population under the present status-quo. I think a strong case that a vibrant economy causes immigration – not the other way around…..Agree with [the above]. How do you “attract immigrants” exactly? Do these policies work in Detroit and Philly, or were these cities already immigrant magnets anyhow? How do we know that these policies make a difference?……It would seem to me that the best ways to attract immigrants and immigrant entrepreneurs are the same ways to attract American born people. Good paying jobs, good infrastructure, good schools, less crime and less red tape in creating and running a business…..the rhetoric behind getting immigrants to come to cities with negative job growth sounds similar to paying retailers or to build sports arenas for struggling downtowns.
And some comments on my talent disconnect piece included:
If “talent” was enough to turn around a local economy, I’d still be living in my hometown of New Haven, CT, which is filled with educated people. You need to recruit specific companies first…..If all a city does is recruit “talent” without finding constructive (and well-paying) uses for said talent–what’s the point?
I sense in these comments a couple of things. First is a fatalistic approach to talent. That is, talent comes or doesn’t come of its own accord, because general local conditions or the availability of jobs. Recruitment doesn’t affect things. The second is what I would characterize as a “jobs-centric” worldview. That is, people follow jobs, jobs don’t follow people. The implication of that is that human capital is a semi-irrelevant to economic development. Get the jobs and the people will follow.
Is Talent Recruitment Effective?
The first matter is one of whether it is possible to affect people’s decision on where to live by recruitment, that is, by marketing and selling your city to people. The arguments above suggest that what really attracts people is a good economy, quality public services, and efficient government.
Now I’m a free market kind of guy. I certainly don’t believe that government can conjure up economic growth or wave a magic wand and get people to show up. There is a competitive market out there and product quality, such as the factors above, are clearly very important.
But sticking with our free market analogy, let’s ask ourselves a question. How do profit motivated businesses approach the problem of getting people to buy their product? The logic of the skeptics suggests that the only thing that matters is the quality of the product, the price point, availability and similar matters. But clearly that’s not the case.
Can you imagine the VP of Marketing and the VP of Sales at a major corporation walking into the CEO’s office and having this conversation? “Mr. CEO, I know you asked us go out and flog our company’s product. But you know what? To tell you a secret, sales and marketing don’t work. It’s all about the product and the price. So we think you ought to just shut down our departments and put all those millions straight to the bottom line.”
In real life, as we know, corporations spend gigantic sums on sales and marketing. Clearly they wouldn’t do this if it didn’t work. That’s not to say that every dollar spent on these activities is effective. Clearly much of it isn’t. That’s not to say that product and price aren’t important. Clearly they are critical. But it is also critical to build awareness of your product in the marketplace, to effectively communicate its brand promise and value proposition, and to induce someone to make a buying decision.
If this is true for pretty much every for-profit enterprise, why wouldn’t the civic sector of a community – government, non-profits, and business organizations – want to apply the same tools and techniques to their city and region? Clearly, a huge number of cities in America have very low levels of awareness in the marketplace about what they are and what they have to offer. If anything, they’ve got a superficial brand awareness that is neutral to negative.
Clearly, cities and states do recognize the power of marketing and sales when it comes to traditional economic development – i.e., luring firms. All of them employ full time people who are out selling the community every day. They are taking site selection consultants on VIP tours. They are showing up at conferences. They are putting deals together. They are buying advertising. But what are these cities doing on the people side?
I would challenge any region to do a compare and contrast of the types of activities they undertake on the “firm” side of economic development and the “people” side. I think you’d find major activity gaps on the talent side of the equation, even if that’s not reflected in the total dollar spend.
Just like every business, every city needs to be aggressively getting its message about about what it has to offer as a place to live, not just as a place to do business. Cities should take advantage of every touchpoint with a non-resident to make sure that the message about the attractiveness of place is driven home at some level. It doesn’t have to be pushy, but it ought to happen.
Job-Centricity vs. People-Centricity
Whether people follow jobs or jobs follow people is one of those chicken and egg matters I don’t think anyone has fully figured out. But they do seem to move in tandem. Clearly, if people are pouring in and there are no jobs, you end up with a situation like Portland, which isn’t good.
On the other hand, it’s also clear that one of the first questions any business asks when deciding where to set up shop is whether there’s an appropriate labor force that meets their needs in the location in question. Yes, things like taxes, regulatory environments, the local business culture, proximity to customer and suppliers, transportation access, etc. all factor in. But labor force is huge.
I can speak to this from personal experience. When working as an IT director I was part of mobilizing an offshore delivery center in Latin America. We ended up choosing Buenos Aires as our location, but only after a seriously long look about whether we could recruit the technical skills we needed there at scale. It’s a huge city but that didn’t mean there were enough people with the right skills. BA worked out great – I was particularly impressed with the caliber of people and the work ethic there, and the time zone can’t be beat. But there is a limit to how large you can scale BA. There’s a reason why huge numbers of tech companies have set up shop in India despite its terrible time zone, horrible infrastructure, and significant wage inflation. It’s because that’s where you can find the hundreds of thousands of skilled people these companies need.
Some other commenters on my posts suggested that what cities really needed to do is focus on specific niches or segments. I agree. I think it is pretty hard to differentiate yourself in generic supersectors like high tech, life sciences, or green industry. Everybody and their brother is chasing these. Instead, you need to look at what the specific segments are where you believe you can create competitive advantage and what Warren Buffett would call a “wide moat” business.
But that’s not limited to business. The same is true of talent. Chasing a generic “creative class” is no more going to pay off than generic high tech. The question is what specific types of people can you attract to your city.
And of course the industries and the people need to match. American cities need to have the right labor force for their target industries, and the right target industries for their labor force. I model it like this:
You’ve got competitively advantaged industry segments and human capital segments. Some of it is legacy, i.e., what you have today. For example, existing residents and natives are likely to have a high degree of rootedness. But you can also look at what newcomers you can attract, because having some level of outsiders is a good thing. Your sweet spot for both is where they overlap. The areas where they don’t overlap is the potential opportunity area for civic change or improvement that might broaden the sweet spot.
In short, yes, jobs matter. But talent also matters. And as we transition to a more knowledge oriented economy, including higher skilled, more technical manufacturing, having the right human capital in your community is only going to become more important. It’s time to start believing it for real.
PS: I should note education is also hyper-critical, so don’t think it is all about raiding other people’s talent pools. That’s a topic for future posts, however.