Sunday, April 27th, 2014

Portrait of a Change Agent

My friend and occasional Urbanophile contributor Rod Stevens has suggested that communities should create “Dewar’s Profiles” of the people in their cities that represent the type of entrepreneur they’d like to attract more of. I think this is a good idea. It’s about thinking of the characteristics of people who have achieved success, and chosen to build that success in a particular place. What attributes do those people have? Once you know that, you can go out and find more of them.

Some of this is place specific but I want to apply this concept to the civic change agent generally, a person who has a powerful impact on the trajectory of a community for the better over the long term.

I want to look specifically at J. Irwin Miller in Columbus, Indiana. For those who don’t know Columbus, it’s a small manufacturing city that is almost the antithesis of Rust Belt decline. Apart from Big Ten college towns Lafayette and Bloomington, it’s the only small city in Indiana that can be said to be thriving – and it’s doing it with manufacturing. Columbus is home to Cummins Engine, a large diesel engine manufacturer, but also numerous other manufacturing concerns, including the largest concentration of Japanese owned firms in the state outside of much larger Indianapolis.

The success of Columbus can in part be traced to J. Irwin Miller (1909-2004). Miller took over leadership at Cummins, which his family had bankrolled. Not only was he the CEO of Columbus’ leading industrial firm, he also ran Irwin Union Bank, the original source of his family’s wealth and the town’s most important bank. Desiring to create a community that would be attractive to skilled engineers and other talent he need make Cummins succeed, Miller created a foundation that would pay the architectural fees for schools and other public buildings provided that the client picked an architect from Miller’s list. That list included a who’s who of modern architectural legends including Eero Saarinen, Harry Weese, IM Pei, and many others. Suffice it to say this was an offer the town fathers couldn’t refuse, the result of which is that Columbus has one of the world’s greatest collections of modern architecture, with six buildings classified as National Historic Landmarks, the US government’s highest designation. Columbus is literally an international architectural tourism destination. Beyond the architecture, Columbus also became somewhat infused with Miller’s progressivist ethos, though never without losing a certain bedrock Hoosier conservatism. The result is a high quality community that remains affordable, pro-business, and which has navigated the transition to the global economy to date in a way few other similarly situated cities did.

I find a few things of interest in Miller’s life, even out of what little I know. The most important is that he was not a self-made man. He was at least the second generation of wealth in his family. Born into total financial security and leadership of the undisputed first family and most important enterprises in Columbus, he had security of position and provision as close to that of a European aristocrat as we might find in America.

The best compare and contrast of the aristocratic and democratic man is of course found in Tocqueville’s Democracy in America. Tocqueville clearly had great admiration for America, but also understood the aristocratic virtues that it lacked.

When one was born into an aristocratic position, it came with utter security. That position could never be taken away except by war. This security of position I think is something those of us in America, where this is predominantly lacking, don’t full appreciate. And it has profound affects on the way people conduct their lives.

I have two former colleagues who came from a somewhat similar situation to Miller. One of them was the child of the president of a major corporation in Indianapolis. The other was the child of the president of a bank in a small Michigan city. Raised with elite status in their communities and financial security, both of them carry themselves with a certain ease and unself-consciousness that I could never muster. These are people, you can tell, who never had to fear that through some social faux pas or mistake or change of fortune, their careers or social standing would come crumbling down, or that they’d suffer material want.

By contrast, growing up poor in rural Southern Indiana, I am keenly aware of the fragility of any accomplishments I might have. I think that’s common and why self-made people who even manage to amass great wealth and success often still remain hungry for more. There’s an inherent insecurity of station in the character of the vast bulk of us that is so normal in America that we often don’t realize that some people don’t share it.

The fact that Miller was born into this absolute security of position and wealth gave him a freedom of action that those of us plagued with the curse of democratic insecurity don’t have by default. He was freed from the calculus of risk that infuses almost every decision or action the rest of us take.

But beyond simply security of position, Miller also had power. This was influence in the community as its leading citizen, but also responsibility to run his family’s business concerns, including a major, publicly traded corporation. This makes him very different from a trust funder that merely receives wealth without either power or responsibility. The latter condition is quite dangerous, as Tocqueville noted, saying: “There is nothing more miserably corrupt than an aristocracy that preserves its wealth while losing its power and which, though reduced to vulgar enjoyments, still possesses immense leisure. The energetic passions and great thoughts that formerly animated it then disappear, and one encounters scarcely more than a multitude of gnawing little vices that attach themselves like worms to a cadaver.” This is something which Miller was spared.

Also, as a child of privilege, he was fortunate to receive an elite education from an early age. I grew up listening to Lynyrd Skynyrd and went to a Big Ten school where I studied the practical art of business. Miller was raised in a highly enriched environment, attended Yale, then studied philosophy and other subjects at Oxford. I’m not sure where he acquired his interest in architecture, but I presume a thorough artistic education was part of his upbringing. (He later served on the board of the Museum of Modern Art). Clearly he would not have been able to select the architects he did if he lacked the education and discernment to do so. His education was similar to what the child of an aristocrat would have received.

Another attribute of the aristocrat that showed itself in Miller was an ability to think long term. As Tocqueville again noted, “Aristocracy is infinitely more skillful in the science of the legislator than democracy can be. Master of itself, it is not subject to getting carried away in passing distractions; it has long designs that it knows how to ripen until a favorable occasion presents itself. Aristocracy proceeds wisely; it knows the art of making the collective force of all its laws converge at the same time toward the same point.” While this was specifically legislative, we see that Miller stayed the course with his architectural commissions and plans for civic improvement in Columbus over the long term. This wasn’t a flash in the pan or a phase he went through. It was a lifelong pattern of behavior.

Lastly, and this one is not specifically related to aristocracy, he came from a strong religious tradition and was strongly influenced by his personal faith. Two of his grandfathers were pastors and he was a lifelong adherent to the Disciples of Christ denomination they hailed from. (Both First Christian Church and North Christian Church in Columbus, both National Historic Landmarks, were churches Miller attended). It’s clear this affected his views on the world. I can’t speak authoritatively on this, but he appears to have been very influenced by mainline protestant type social justice concerns around the greater public good. He welcomed the formation of a union at Cummins Engine. He was active in the civil rights movement. He was also a key leader in the ecumenical movement and the establishment of the National Council of Churches. He was obviously a very active philanthropist, and in addition to his own giving sat on the board of the Ford Foundation. He didn’t abandon Columbus. As the recent article “Welcome to Cummins, USA” in Forbes shows, his values still have a hold at Cummins the company.

Put these together had we have:

– Inherited security of position and wealth – secure from birth
– Actual power in the community combined with major management responsibilities
– Top level education cultivated from an early age
– Long term thinking and consistency
– Faith-based commitment to the greater civic good

When looking at who the potential positive change agents in a community are, it would be helpful I think to do a scan of those who have several of those criteria. It’s not clear that they can all be combined – and in the case of larger cities no one person is likely to have political clout in the way Miller had it in Columbus – but the more of them that are present, the more likely it is that someone has the potential for making a major positive impact on a community.

It’s easy to see how the lack of any of them can potentially sabotage a candidate. People without gut level security in their position are likely to be boat rockers. This implies political or business scions are potential candidates. But someone who has already had a major exit out of a huge startup might fit the bill as well. Tony Hsieh in Las Vegas immediately comes to mind.

Without some serious level of intellectual cultivation or gettitude, it’s unlikely a person would be able to chose the right course of action or even the right advisors to help find it. (As Machiavelli rightly pointed out, “This is an axiom which never fails: that a prince who is not wise himself will never take good advice…Good counsels, whencesoever they come, are born of the wisdom of the prince, and not the wisdom of the prince from good counsels.”) Similarly someone without a long term vision or plan will likely grow tired of the long term change game. We see the toll daily in our communities from people without real responsibilities and/or a moral compass and civic mindedness (faith-based or otherwise). They are the billionaires that bleed the public treasury dry. Unlike Miller, they’re not putting money in, they’re taking it out.

Nevertheless, even if you can’t get all five, at least getting part of the way there might suggest people who have the potential for major positive change in a community. I’m not claiming this is the only template of the change agent. It’s only one possibility. But it’s clearly an important case study. I’ll perhaps circle back and look at other models in a future post.

Friday, August 30th, 2013

Making the Link Between Quality of Life and Economic Development

A rather prosaic economic development announcement in Indianapolis provides an opportunity to hammer home in a concrete way the connection between quality of life investments and economic development. This is something I’ve long argued we urbanists do a poor job of. We tend to adopt a “build it and they will come” marketing approach to quality of life initiatives where the connection between cause and effect is tenuous. Additionally, these tend to focus almost entirely on and tell stories about “the best and brightest” which in a country dying for middle class jobs can rightly cause the majority of folks to ask: why would we support spending money on that? That’s why it’s critical to tell stories – to tell them loud and tell them often – that show the link between quality of life and economic development, and also how these relate to the average person on the street.

The announcement in question is the relocation of a company called American Specialty Health from La Jolla, CA to the Indianapolis suburb of Carmel. This will involve 300 initial hires, growing to 675. While the company will retain a California operation as well as one near Dallas, the headquarters will be in Carmel, IN and 50 top managers, including the CEO, are relocating.

Why is the company moving to/growing in Indianapolis? Central location and costs. Plus the CEO has a personal connection of sorts to Indiana. (He attended Culver Academy, an elite military boarding school, but one located in northern Indiana nowhere near Indianapolis and of which most Hoosiers have never heard).

Why is this relevant to the average person? There will be top executives and such relocating, as well as new employees added in high skill areas like IT. However, this is also a general operations center containing what appears to be every type of employee, right down to customer service and call center types. This enables people who aren’t elite techies or execs and who might not even have college degrees to potentially be hired on. While the company is an an upscale location, it’s easily commutable from more average places like Tipton County, and commuting will be made easier when US 31 is converted to a freeway (which is in progress).

Here’s the link to quality of life investment: how do you get these call center and IT and other jobs? You do it by convincing 50 people, including the CEO, to move from La Jolla, which if you don’t know is, to put it mildly, a nice place to live. The average home price is north of $2 million. The people who live there (or elsewhere in the San Diego region and commute in) aren’t there because it’s cheap. These are people with enough money to buy nice stuff and with choices about where to live. Like most of us they are probably interested in saving a buck, but not at the expense of moving to the equivalent of Siberia.

I have written extensively before about the major quality of life improvement initiatives in Carmel, IN. This is a validation that those improvements have tangible benefits. While Carmel has long been a destination for estate homes for the wealthy of Indianapolis, it was not really at that level nationally. Now it may be that some of the ops jobs could have been won without the headquarters, but certainly that HQ represents a huge commitment to the community. And I can tell you that a decade ago these jobs simply would not have been addressable in Indianapolis/Carmel. It wouldn’t have even been in the discussion. Today because of the quality of life improvements, there’s a much larger addressable market for economic development wins like this. Without that investment, had the ASH HQ moved from San Diego it probably would have ended up in Dallas.

Carmel’s quality of life investments have been controversial in many quarters, sometimes justifiably so. There definitely needs to be a debate on these things. But a more Tea Party aligned city council majority has clamped down in opposition to these things. While I think they have been right to criticize certain things, hopefully this will prompt them to understand the value of what’s been going on. And it’s to their credit that they were very collaborative in and supportive of winning the deal for this company. Incidentally, Indy Star reporter Dan McFeely says that while there are state tax incentives, there are zero local tax incentives for this move. That speaks for itself.

I also want to review a couple of other local examples I’ve already highlighted in the past. Medco opened a mail order pharmacy distribution center employing 1,300 in Whitetown, a suburbanizing area northwest of Indianapolis. Sprawl? Yes, but major distribution centers have to go somewhere and I don’t think the urban core is the best place.

Medco obviously employs a number of six figure pharmacists, but I can assure you the focus is doing as much as possible with machines and lower priced pharmacy technician labor. You can be a pharmacy tech without a college degree. Additionally, pharmacy tech jobs at Medco come with full benefits.

How did Indy win Medco? Reportedly for a few reasons. First, Indiana moved much faster than competitor Kentucky in getting the regulatory authorization in place. Second, proximity to the Fed Ex hub (not a distinguisher vs. Louisville, but a necessary attribute) and pharmacy schools at Purdue and Butler. But third was that Indianapolis had needed amentities that were beneficial to entertaining customers.

You have to take any claims in announcements with a grain of salt, but it’s obvious that all of these are prima facie valid. Whitestown is within easy commuting distance of lots of rural and small town Indiana areas in places like Clinton and Montgomery County. Why are investments not just in obvious items like professional schools and transport infrastructure, but creating an environment you can entertain the executives of your customers in downtown Indianapolis important? Well, if you’re a single mother with a high school diploma from Clinton County who can get a decent job with benefits at Medco, it’s obvious why it’s important to you. But that’s a story that doesn’t get told, making it easy to criticize downtown investments as simply catering to fatcats.

Similarly, just 45 minutes south of downtown Indy is the thriving small manufacturing city of Columbus, Indiana. It is hands down the best performing small city in Indiana despite having the second highest percentage of its jobs in manufacturing. It’s also the top recipient of Japanese foreign direct investment (as measured by the number of firms) in Indiana after Indianapolis.

Why do Japanese manufacturers find Columbus a good place to do business? Not only it is pro-business and low cost, it also has a focus on design quality, including a world-renowned collection of modernist architectural masterpieces by the likes of Eero Saarinen and I. M. Pei. The Japanese are famously design conscious and also focus on competing through high quality and engineering excellence, not just low costs. This is speculation, but I can’t help but think that the link between the Japanese ethos and that of Columbus created a values fit. And keep in mind that those foreign manufacturers have to convince their plant managers and such to relocate – with their families – to the community in question. Columbus’ approach made it easier to make the sale. Because if those Japanese executives didn’t want to live in Columbus, all those regular Hoosier folks working in the Japanese plants wouldn’t have jobs.

In any case, in a competitive world, only firms that deliver excellence as well as cost effectiveness can survive the brutal global competition. Which workers are more likely to produce excellent products, ones that demand excellence in their own communities, or ones who embrace mediocrity? How can any investor believe that residents who tolerate a run down, mediocre community for their own families to live in will suddenly start taking pride in the products coming off their employers’ production lines? It makes no sense at all.

Low costs, low taxes, and a business friendly environment are clearly important. In fact, if you don’t have some stunning advantage like Southern California’s climate or NYC’s unparalleled talent base, it’s almost the price of admission. But that’s all it is – table stakes. In an era where quality global labor is available at prices no American place can match, you just can’t win on low costs alone.

This is why the Tea Party mentality which treats government purely as a fiscal engine in which the only goal is to reduce the dollars coming in and going out is so destructive in the long term. Because competing purely on low costs only works if you are the low cost producer like Wal-Mart. And 95%+ of American communities have no basis to claim to be that.

You would think that in states that are struggling, policy makers would go look at the places that are doing well, find out what those places are doing right and then figure out how to get other places to start doing some of that. Some things can’t be replicated. There’s only one Indiana University, and it’s in Bloomington. But there are lots of strategies and approaches that are more broadly applicable. Sadly, not many leaders seem interested in that. In fact, many of them seem more interested in stopping anybody from doing more of what places like Columbus and Carmel have done.

Unquestionably there needs to be a debate about whether any particular expense makes sense. Without a doubt many proposals are boondoggles and should be rejected. Places like Indiana aren’t San Diego and absolutely need to keep low costs, a strong balance sheet, and a light regulatory touch. But that in and of itself is not enough to attract businesses. You might gain some low-wage table scraps that way, but not many jobs that pay decent wages for the average person.

Places that want to be competitive in the modern economy need an environment that is relevant to the 21st century, not the 1970s. But to make the case for that investment it’s important to start identifying how these make a tangible impact and really making the case and telling the stories about them.

Sunday, August 12th, 2012

Replay: The Columbus, Indiana Values Proposition

[ Columbus, Indiana has long been known as a special place. Which is too bad, since unlike most small industrial cities in America, it has actually been a success. Alas, despite its clear superior performance, few places show any interest in trying to replicate the things that made it successful.

National Public Radio recently ran a segment on Columbus’ famed architecture. In it was another telling quote from town patriarch J. Irwin Miller that sums it up: “Whatever you do in this world, you’ve got a responsibility and a privilege of doing it the very best way you can.” – Aaron. ]

This post originally ran on July 11, 2010.

“A mediocrity is expensive.” – J. Irwin Miller

I once provoked some heated responses on a Columbus, Ohio message board when I suggested that outside the United States, Columbus, Indiana actually has higher brand awareness than Columbus, Ohio. And that among a certain international set, a mention of “Columbus” means the one in Indiana.


North Christian Church, 1964. Eero Saarinen, architect. A National Historic Landmark.
Photo Credit: Wikipedia/Greg Hume

That’s true because Columbus, a small city of about 40,000 in south-central Indiana, has one of the finest and most significant collections of modern architecture anywhere in the world. Starting in the 1950’s, a foundation backed by J. Irwin Miller, president of diesel engine manufacturer Cummins Engine Company, agreed to pay the architectural fees for public buildings such as schools, provided that the community chose from architects on his approved list. He and his company, along with many other citizens and firms, also hired top architects for private commissions. The result is dozens of buildings by world-renowned masters such as Eero Saarinen, I. M. Pei, Harry Weese, and Cesar Pelli, six of which are National Historic Landmarks, the highest designation of historic site recognized by the federal government.

Barrett Crites, a huge mid-century architecture fan and proprietor of the blog Atomic Indy, arranged to have the Columbus Convention and Visitors Bureau sponsor a VIP architecture tour of city, including access to the interiors of many of these normally off-limits buildings and a special early-access tour of the Miller House and Garden, a landmark recently acquired by the Indianapolis Museum of Art. I was fortunate enough to be able to glom onto this trip, which was spectacular. It would be easy enough for me to make a huge number of blog posts about the architecture of Columbus.

But this is not an architecture posting. Or perhaps it is, but at a more fundamental level. This is a post about people – the people of Columbus and their character. Because cities are about people, not buildings. As passionate as I am about good design, and for all the true and legitimate importance of design excellence, great architecture doesn’t make a city great. Great architects don’t make a city great. A great city, that is, a great people, is what makes great architecture.


First Baptist Church, 1965. Harry Weese, architect. A National Historic Landmark
Photo Credit: Wikipedia/Greg Hume

J. Irwin Miller didn’t start his architecture program as an act of charity. It was also self-interested. He foresaw even back in the 1950’s the importance of being able to get talented people to want to live in his town. He needed to recruit not just factory workers, but executives and engineers to work at his company, and he knew it would be difficult to get them to want to come to his small city. He thought that this architecture, and particularly quality school buildings that would show his town’s commitment to education, would help differentiate Columbus.

Today Columbus is widely perceived as a different sort of place in Indiana. Chicago journalist Richard Longworth summed it up when he said of Southern Indiana:

Southern Indiana, from Indianapolis on south, is Dixie – hilly, scenic, with small farms and small towns, more akin to Louisville than Chicago. It contains two of the Midwest’s gems, Indiana University at Bloomington and the architectural mecca of Columbus, but both are cultivated outposts not typical of their region.

As a Southern Indiana native, from along the Ohio River where I guess I was one of the uncultivated ones, and a graduate of IU, this passage struck me. It’s totally fair to describe Bloomington as a different sort of place. The Dali Lama’s brother lives there – case closed.

But Columbus? All I remember about Columbus growing up is that my grandparents loved to drive up there to have lunch at the Holiday Inn, hardly an upscale diversion. I know about the architecture, but what else is there? Curious, I decided to take a look, comparing Columbus to other small cities in Indiana – Anderson, Bloomington, Elkhart, Kokomo, Lafayette, Marion, Muncie, and Terre Haute – to see what is different about it.

The big one – and it’s big, no doubt – is college degree attainment. Other than Bloomington and Lafayette (home to Purdue University), Columbus has far higher college degree attainment than all of the other cities at 27.6% Given the importance of educational attainment as a predictor of civic success, some might be tempted to simply declare game over at this point.


Source: Census Bureau 2006-2008 American Community Survey

But that misses the whole other side of the story, which is not about how different Columbus is from its state, but how similar. Any Hoosier visiting Bloomington will instantly know he’s in a different sort of place. But Columbus, architecture aside, feels much like any other Indiana town. This can be a huge disappointment to out of towners who come in expecting Aspen or Burlington, Vermont. For example, a Brooklyn snob by the name of Philip Nobel castigated Columbus for, among other things, its Wal-Mart and other chain retailers, saying:

Cruising those thoroughfares, predictably, one finds the rest of the town as it is actually lived in: the fast food, the Kohl’s, the Lowe’s—all the interchangeable parts of our interchangeable sprawl….Certainly it’s not the fault of the town’s great Modern buildings that Columbus has fallen prey to the same commercial and pharmaceutical scourges that have plagued less designerly burgs. But it does cast Miller’s vision, and the wisdom of the Cummins patronage system, into doubt.

Tom Vujovich, chairman of the Columbus Redevelopment Commission, put it directly, “This is a blue collar town.” If the sine qua non of blue collar status is manufacturing work, then Columbus certainly qualifies. In 2008 Indiana was the most manufacturing dependent state in America, with 18.2% of its employees working in that field. But in Columbus/Bartholomew County it’s an astounding 36.1% – higher than any of those other small cities except Elkhart.


Source: BLS Quarterly Census of Employment and Wages, 2008 Annual Average

Because of the way industry classifications work, white collar workers at Cummins probably count in these number, but there aren’t that many of those, and the many factories that line I-65 through town attest to the fact that this is a place where actual stuff is still made.

One of the people on our tour said she would love to live in Columbus “if you had a Trader Joe’s.” Vujovich told her bluntly, “It’s never going to happen.” Columbus may be a place where you can find world class architecture, but you’re not going to find gourmet food stores, independent cinemas, or high end boutiques. (They do have a farmers market, however).

In short, Columbus residents are mostly just normal Hoosier middle class folks. Someone could move there from Kokomo or Marion and feel right at home except for the strange buildings and the thicker drawl.

I happen to think that’s perhaps the most exciting thing about it. Because if it is really a successful town – and that’s a big if we’ll turn to momentarily – it offers a model of success similar Hoosier cities can imitate. And, what’s arguably more important, a model that fits the values of people who live in Indiana. Telling Terre Haute to act more like Portland – or even Indianapolis or Bloomington – is purest fantasy. But potentially they could aspire to be a lot more like Columbus.

Also, I’ve been skeptical of the ability of places whose size is below a certain critical scale to compete economically. Columbus would be, perhaps, a counter-example to show that it is possible, and how it can be done.


Irwin Union Bank, 1954. Eero Saarinen, architect. A National Historic Landmark.
Photo Credit: Wikipedia/Reywas92

So how is Columbus doing? I looked at the data – population growth, job growth, GDP, personal income, average wages, foreign direct investment – and there is no two ways about it. Columbus isn’t just out-performing these other Indiana cities, it’s total world domination. Columbus is even beating up on Big Ten college towns Bloomington and Lafayette on many measures. Let’s do a quick rundown on the numbers

Population Growth
Unlike many other small manufacturing cities in Indiana, Columbus actually experienced population growth in the last decade, albeit at a rate a bit slower than the national average.


Source: Census Bureau Mid-Year Population Estimates

Columbus also had strong net domestic migration during the 2000’s, with over 1400 more people moving in than moving out. That’s called voting with your feet. People are fleeing most of these other towns in droves.

Gross Domestic Product
GDP is a base measure of economic output. I don’t have it for all of these cities, since it is only reported at the metro area level and a couple of them aren’t big enough to make the cut for having an MSA, but most of them are there.


Source: Bureau of Economic Analysis. Data in 2001 chained dollars.

Not only is Columbus ahead of the pack, it is pulling away. As we’ve seen elsewhere in America, the people who are doing well, are doing well. And vice versa. Columbus was also number one for GDP growth.


Source: Bureau of Economic Analysis. Date range is the maximum available

Employment
Adding all the economic value in the world doesn’t help you if your job market is in bad shape. The Great Recession walloped America hard, and we experienced an overall “lost decade” of job creation. Small manufacturing cities got hit hard. Columbus has not been immune, but did far better than most other places.


Source: BLS Quarterly Census of Employment and Wages

On the unemployment front, I don’t think anyone would call Columbus’ numbers good, but they could be a whole lot worse.


Source: BLS Local Area Unemployment Statistics

Foreign Direct Investment
I don’t have dollar numbers on this, but the Indy Partnership did put together a map of foreign owned business operations by city in Indiana grouped by various countries. Columbus clearly has a huge cluster of foreign investment. For example, it has 17 Japanese owned operations alone, more than any city in the state other than Indianapolis. The next closest on my list of peer cities, Lafayette and Richmond, only have five Japanese operations each. Clearly, Columbus is the preferred location outside of Indy for Japanese investment in Indiana. And businesses from seven other countries are also located there.

Income
Hoosier incomes have long trailed the nation, and none of these cities reaches that level, but Columbus is closest at 95% of the US average. And with its low cost of living, that’s probably good enough.


Source: Bureau of Economic Analysis

I’m already on chart overload, but lest I be accused of leaving it out, Columbus does only rank in the middle of the pack on PCI growth during the last decade.

Lastly, let’s look at average weekly wages. Kokomo is famous for having some of the best wages in the country – it’s the number five metro area in the entire United States on this measure – because it has two large auto related plants that somehow managed to avoid getting closed. But Columbus is a close second here.


Source: Quarterly Census of Employment and Wages

Again, Columbus is in the middle of the pack on wage growth in the last decade.

Looking at the totality of the data, I don’t think there’s any dispute that Columbus is simply the best performing small city in Indiana economically. Bloomington is the only other one you could make an argument about. And it has a Big Ten university, putting it into the category of what Richard Florida calls “big government boomtowns.” While prosaic matters like jobs, income, and economic output may not impress East Coast aesthetes like Philip Nobel, these results suit the citizens of Columbus just fine indeed.


Mabel McDowell Elementary School, 1960. John Carl Warnecke, architect. A National Historic Landmark.
Photo Credit: Wikipedia/Greg Hume

Why is Columbus so different? Is it the architecture? Can buildings alone have such an influence on a city’s economy? It’s doubtful, at least not directly. I’ve yet to hear anyone argue the point. But you do hear several things posited.

Corporate Headquarters. Columbus is home to Cummins Engine, a Fortune 500 company, which clearly helps. But look closely and some of those peer cities have advantages too. Bloomington and Lafayette have Big Ten universities with over 30,000 students each and some of the world’s top minds. Muncie until fairly recently was HQ to Ball Corp, and the Ball family was as generous as the Millers to their town, even creating Ball State University, another major campus. Terre Haute is home to Indiana State University, a nationally elite boutique engineering school called Rose Hulman, and is the home base of the Hulman-George family business empire, whose assets range from the Indianapolis Motor Speedway to Clabber Girl baking powder. No one can doubt the Hulman-George family’s importance to Indiana. Kokomo has those two auto plants I mentioned, with top pay rates.

Columbus has no university. Cummins is still HQ’d there but probably has only about 50% of its peak employment. Another local company, auto parts supplier Arvin Industries, was bought out and closed its headquarters and laid off many workers. Columbus has not been immune from industrial transformation.

Educational Attainment. Clearly those college degree stats are important. But that just begs the question: why did all those college educated people choose Columbus, even without a university or a Trader Joe’s? It goes back a long way. Perhaps architecture did play a role here, and the recognition that talent was importance long before other places. Columbus understood the principle of the Talent Dividend 50 years ago, and how it is harvesting its crop.

Unionization. The last traditional explanation of Columbus exceptionalism is weak unions. As Longworth put it, “Southern Indiana is beginning to draw industrial investment, particularly in cars, but mostly for the same reasons companies invest in Alabama – no unions.” Except in limited circumstances, I think organized labor is overblown as an explanation for poor economic growth. Right to work is a red herring. Alabama is a right to work state, but that hasn’t saved Birmingham. Nor has being right to work and having no state income tax done much for Memphis.

I’m less familiar with these smaller cities, but in Indianapolis organized labor is with the program. Public sector construction with lots of union jobs is big there, with major projects like a new hospital undertaken in the recession timed partially as an employment stimulus. In return, you don’t see labor problems like what Wal-Mart experienced in Chicago, nor do you hear the complaints about work rules like at Chicago’s McCormick Place. I get the impression that Indiana labor unions are mostly pro-growth.

Also, Southern Indiana does have fewer unionized manufacturing centers than central and northern Indiana, but Evansville is a strong labor town, as is Louisville, Kentucky, which has much of Southern Indiana in its orbit.

I tried to get some facts around unions in Columbus. Cummins production workers are organized, but mostly by a company specific union called the Diesel Workers Union. The company characterized its relationship with its unions as “productive”.

Remembering that auto-parts supplier Arvin Industries used to be HQ’d in Columbus and still has a plant there, I thought maybe they would be a UAW shop. But when I called the UAW regional office in Indianapolis to inquire, they refused to speak with me at all. The UAW’s reaction to someone who was actually trying to debunk an anti-labor meme, I think, says more than any facts I could collect that Columbus probably is a weak labor town, and this, along with its educational attainment, does play a role in the city’s economic success at some level.


Miller House, 1957. Eero Saarinen, architect. Alexander Girard, interior designer. A National Historic Landmark.
Photo Credit: Indianapolis Museum of Art

Yes, all of these things play a role, but they don’t explain it all. There’s something else, something that underlies all of them at a more basic level. The real difference in Columbus is in the character of the people who live there, and the values they bring to bear on creating the city in which they live. Most places would claim to have a value proposition. But Columbus has a values proposition, and therein lies the difference.

What values do Columbusites hold that made them successful? They fall in three basic areas.

1. Bedrock Hoosier Values. Let’s not forget again that the people of Columbus are, above all, Hoosiers. And the best of Indiana values play a key roles in the city’s success. These include thrift, hard work, faith, patriotism, community, hospitality, modesty, family, and yes, that uniquely Hoosier orneriness. Urban sophisticates may mock these straightforward values at times, but they are many of the values that built America. They are ones that Columbus and Indiana can take pride in. Like Southern cities that shed off their previous torpor to become America’s great growth stories, Columbus positioned itself for the future, but it didn’t forget about the things that were really important to it. Its people didn’t forget themselves and their heritage. They know that a great city, a great people, like a great wine, has to express its terroir.

2. A Commitment to Excellence. Tony Moravec, owner of Blairex Laboratories, says he’s in Columbus “by choice, not by chance.” (I don’t know the entire backstory, but he appears to have moved the business there from Evansville). Why? He said he came to Columbus for two reasons. “One, it’s pro-business. Two, we do things first class here.”

As much as I love Indiana, I must repudiate its overwhelming tendency towards the active discouragement of the pursuit of excellence and improvement. This attitude is a disease that affects the entire Midwest, and does perhaps more than any single other thing to hobble it.

It’s a long standing condition. When my father came out of the service, he was berated by my grandfather for deciding to enroll part time in college. My grandfather thought it was a total waste. Thank goodness my dad had enough Hoosier orneriness to do what he wanted. Last year I ran across an old neighbor who went to my high school about a decade before I did. He recounted how, upon telling the guidance counselor he planned to attend university, he was told there was no way anyone from such a small school could ever make it in college and he should be a welder instead. Today he has a master’s degree and a significant professional position. I remember myself in school hearing a repeated refrain of how there were lots of people “with book learning but no common sense.” Admittedly, in my case that might have been true, but I think it shows an attitude that doesn’t just not value education, but actively despises it.

Fast forward to today and I think of all the discussions on sites like the Indianapolis Business Journal’s Property Lines blog. For every lousy to mediocre project that comes along, there are a chorus of people defending its merits. People who ask for better design – and keep in mind many of these projects have heavy tax subsidies – are told that they have no right piping in or, “it’s just student housing” or some other complaint that doesn’t just indicate a lack of personal concern with low quality urban development, but outright irritation at anyone who does. Try to ask for something better, for something truly worthy of a great city or town, and you’ll be told that we can’t afford any “gold-plated projects,” notwithstanding that good design can actually cost less than mediocre, even on up front costs. (It’s like Jaime Lerner said, “If you want creativity, cut one zero from your budget.”)

Indiana doesn’t just accept mediocrity, it actively embraces it and actually demands it of its people. Indiana and the Midwest require that anyone who lives there surrender his ambitions, or else be subjected to endless questioning, discouragement and ridicule.

But Columbus is different. In Columbus, excellence is not a byword. That’s not to say it is a luxury or high end community, because it is clearly not. But it is a place where choosing what you want to do, and then doing it well is valued. J. Irwin Miller could have simply hired some local politically connected architecture firms to churn out facsimiles of modern architecture. Instead, he sought out the world’s foremost architects for his project. He wanted Columbus to be the original, not the cheap imitation.

This spirit continues. Back to Moravec, he recently bought up an old turn of the century soda fountain called Zaharakos and restored it to pristine condition, including acquiring a rare collection of top quality antique soda fountains and self-playing musical instruments. The guy must have invested millions. Let’s just say the food and ice cream aren’t exactly gourmet, but the prices can’t be beat – he knows his Hoosier customers – and the place was mobbed when I was there. Moravec picked the battle he wanted to fight, then he went out and won it.

And it isn’t just something that affects architecture. You can see it in the way the tour guide from my very first architectural tour of Columbus some years back pointed with pride to the trees in the parking lot of the Wal-Mart, the result of a landscape ordinance designed to beautify the town. Or the first class playgrounds donated by citizens. Or the top quality design of the new Mill Race Park. This is a place with high standards for itself.

This pays huge dividends in the economic development sphere. In a competitive world, only firms that deliver excellence can survive the brutal global competition. Which workers are more likely to produce excellent products, ones that demand excellence in their own communities, or ones who disparage it? How can any investor believe that residents who tolerate a run down, mediocre community for their own family to live in will suddenly start taking pride in the products coming off their employers’ production lines? It makes no sense at all.

Also, I believe this belief in excellence played a particularly crucial role in establishing Columbus’ role as a hub of Japanese business. The Japanese are notoriously fastidious about quality. They certainly don’t compete on the basis of labor costs. I can’t prove this, but I’d also speculate that the architecture itself has affected Japanese investment decisions. The Japanese are hugely design conscious, and Japanese aesthetics have heavily influenced modernism generally.

Think about it. When a foreign company is deciding to open a major overseas operation, they’ve got to convince some of their executives to move there, usually meaning their families and children will be with them. I’ve got to believe that seeing the architectural and overall excellence of Columbus, the Japanese simply decided this was a great cultural fit for them. The people of Columbus shared their values and their passions. It was a place they believed would deliver good work, and where their families could find a home.

Today, of course, Columbus has a mini-community of Japanese residents, which creates a huge draw by itself. That’s the self-reinforcing nature of industry clusters. Today Columbus/Bartholomew County is 3.6% Asian, trailing only Bloomington and Lafayette, and its 2000’s growth in Asian population of 85% blows away any peer city.

Unfortunately, too many of the folks in this part of the country just don’t get it on this. J. Irwin Miller said that “a mediocrity is expensive.” For all too many Hoosier towns and families, the price of their embrace of mediocrity has been staggeringly expensive indeed.

3. A Broader Vision. Columbus just also seems to have a broader vision than the rest of the state. This goes back to Miller and his embrace of a modern architecture very different from Hoosier traditions. He knew what was going on in the world and was willing to embrace the new, something Columbus still does today.

Contrast with Kokomo. Economist Morton Marcus recently lamented Kokomo’s inability to convince factory workers there to live in town. Marcus actually has it wrong on his framing of the problem, but take it at face value and consider this. Kokomo’s mayor had to publicly pledge in the local newspaper not to consider a modern roundabout at a local intersection after a local uproar at the thought of one. Just 25 or so miles south by four lane highway, Hamilton County is the nation’s leader in embracing this new and better approach to intersection design. This difference in attitude tells you everything you need to know about why those high wage workers aren’t living in Kokomo, and why Kokomo is struggling while Indianapolis is thriving.

But you see it in other ways. Reading articles about Midwest towns, I’m frequently struck by the bitterness about NAFTA. Longworth has described NAFTA as a “code word” people use to talk about what’s happening to them. But NAFTA is yesterday’s news. The plants are now decamping from Mexico and heading to the Far East. The real competition isn’t just Mexico or Japan, it’s global.

Columbus gets that. Describing a new Cummins office building, Vujovich told me, “They could have put that facility anywhere. It could have gone to China or India.” Columbus knows it is competing on a global level. Too many Indiana towns think they are still competing against their high school basketball team’s next door arch-rival. Or, you’ll hear about competing against Michigan, Ohio, and Illinois.

This is easy to see in some respects. Indiana and Iowa are like the two best houses on a bad block. They are more pro-business and cheaper than places like Michigan. With a certain amount of inbound Midwest investment that will happen anyway, this leads of a mindset and economic development strategy of, “I don’t have to outrun the bear, I just have to outrun you.”

This is naive thinking. As David Waymire at Michigan Future put it:

The lesson from the Gateway job contraction is that even in South Dakota, the state with the lowest state and local tax collections per capita in the nation, the Gateway factory couldn’t survive. Ditto Tennessee. When Americans, no matter how “skilled” they may be in factory work, have to compete against $4 an hour labor overseas, they lose the competition.

I’m less pessimistic on industry that Waymire, but that’s a legitimate point. Columbus is actually overly dependent on manufacturing, but at least they get what’s going on out there. Too many other places don’t.

Nothing shows Columbus’ broader vision on this more than its approach to public sector expenditures. As Hoosiers, Columbusites are as thrifty as they come. But they take a life cycle view of costs. They look at things, as private sector businesses do, on a total cost of ownership basis. They know that their town isn’t going out of business tomorrow. They will still live there, and one day their children and grandchildren might still want to live there. And they think about what the long term implications are of decisions they make today, where it is taking them. They know that saving a nickel today can lead to higher costs down the road. They know it’s not a good idea to be penny-wise, pound-foolish.

They also get that their town is already cost advantaged versus regional competition, and that there’s little competitive marginal return to be gained through slash and burn economics. The places where they are at a cost disadvantage to, like China, are those where the gap can’t be closed in any material way. So Columbus has chosen to fight a battle on different fronts.

This can be summed up simply by the data in the following table. I could do an entire other series of charts on it – and someone should. But in the interest of space, I’ll just leave it in tabular form.

City Residential Property Taxes as a Percent of Income 2010 Municipal Property Tax Rate* 2009 City Spending per Capita** 2010 County Assessed Value per Capita
Columbus/Bartholomew County 1.21% (3rd lowest) 2.57 (2nd lowest) $2391.09 (2nd highest) $50,797 (highest)
Elkhart/Elkhart County 1.28% 3.28 $1,258.15 $26,369
Muncie/Delaware County 1.30% 4.23 $1,773.64 $42,306
Marion/Grant County 0.90% 3.34 $1,784.87 $30,129
Kokomo/Howard County 0.94% 3.07 $1,313.38 $44,710
Anderson/Madison County 1.38% 5.00 $1,430.92 $24,680
Bloomington/Monroe County 1.52% 1.90 $1,897.07 $46,113
Lafayette/Tippecanoe County 1.49% 2.40 $2,602.26 $38,722
Terre Haute/Vigo County 1.27% 3.60 $888.36 $34,042
Richmond/Wayne County 1.22% 3.46 N/A $33,885

Source: Indiana Department of Local Government Finance, proprietary analysis.
* Tax rate is unweighted average of reported municipal rates. District names were not always clear, but a best effort mapping was undertaken.
** 2008 data for Munice and Lafayette

It’s pretty clear. Columbus spends more – significantly more than the Indiana median of $827.89 – but its tax base is the biggest and its tax rates just about the lowest. Huh? How is that possible?

Alexis de Tocqueville said Americans practiced enlightened self-interest, not simply raw, naked self-interest. They understood the need for a system in which everyone could thrive together. Similarly, Columbus practices “enlightened fiscal conservatism.” While other Indiana cities and towns simply reduced the quality and quantity of services, or otherwise cut corners – such as through subpar designs that won’t stand the test of time – in a short term quest to save money in the now, tomorrow be damned, Columbus took a different path.

I am a fiscal conservative. Make no mistake about it, I think we’re spending too much money on too many bailouts in Washington. But I’ve also always said there are two separate questions: service levels, and efficiencies. You can’t confuse cutting service levels with efficiency gains. That sounds nice in theory, but can it work in the real world? Places that start growing public sector spending tend to turn into runaway trains. The risk of the targeted investments approach is that it will end up devolving into bloat, as a sort of incarnation of the “true communism’s never been tried” dilemma. But Columbus shows a real life example that it is possible. And perhaps Indiana is actually the ideal place for it, since the fundamental conservative nature of its residents will be a bulwark against excess in most cases.

The people who live in Columbus are as frugal as those anywhere else in Indiana. But they understand that the best way to keep their tax bills low is to keep general prosperity high. It goes something like this:

An aggressive, pro-business attitude +
A commitment to excellence +
High quality, efficiently delivered public services +
Competitive costs +
A rich awareness of the global world we live in +
Striving to create a community outsiders might choose to live in =
————————————————————–
Population growth
Economic growth (jobs, output),
High wages,
Tax base growth,
Quality infrastructure and services,
Low taxes

This is no secret formula. I talked about the exact same thing in suburban Carmel, Indiana. But since Carmel is a wealthy suburb, its approach can be seen as that of an outlier that isn’t more broadly applicable. But Columbus shows how a blue collar, workaday Indiana city can put the principles to work.

Other cities should be studying the Columbus example and taking good notes. I don’t suggest that anyone run out and just hire a famous architect or spend a bunch of money. In this recession, new spending programs are clearly not on the table.

But again, the real lesson of Columbus isn’t about architecture, or spending, or anything else on the outside. It’s about what’s on the inside, about the values that produced the results. It doesn’t take any money to engage in self-reflection. And unless there’s a transformation of people’s approach to civic development, and their thinking about what they want their community to be, simply aping the surface elements of someone else’s strategy would be money down the drain. The real change that needs to happen is the hardest change of all: changing ourselves.

Time will tell if Indiana and Midwest cities can pull it off. In the meantime, mediocrity and short term thinking will remain as stunningly expensive indulgences Indiana can ill afford.


First Christian Church, 1942. Eliel Saarinen architect. A National Historic Landmark.
Photo Credit: Flickr/pntphoto

The Urban State of Mind: Meditations on the City is the first Urbanophile e-book, featuring provocative essays on the key issues facing our cities, including innovation, talent attraction and brain drain, global soft power, sustainability, economic development, and localism. Included are 28 carefully curated essays out of nearly 1,200 posts in the first seven years of the Urbanophile, plus 9 original pieces. It's great for anyone who cares about our cities.

About the Urbanophile

about

Aaron M. Renn is an opinion-leading urban analyst, consultant, speaker, and writer on a mission to help America’s cities thrive and find sustainable success in the 21st century.

Full Bio

Contact

Please email before connecting with me on LinkedIn if we don't already know each other.

 

Copyright © 2006-2014 Urbanophile, LLC, All Rights Reserved - Click here for copyright information and disclosures