The Baton Rouge Business Report examined the challenges facing the Baton Rouge area in an excellent article published this week. The city has lost several corporations such as Amedysis, the Shaw Group, and Albermarle. BRBR asks whether cities such as Baton Rouge can even compete against "first-tier" cities. Keep in mind the city has a major university downtown and an major airport that is one hour away. This article should be required reading for all business and political leaders in the Jackson metro area. Some excerpts:
In mid-August, Albemarle Corp. confirmed what had been rumored for months: that it was relocating its corporate headquarters from Baton Rouge to Charlotte, North Carolina, where the company promised to create 120 new jobs and invest $12.9 million by the end of 2016.Airports. Did someone mention airports? Don't think for one second an airport is an economic driver. One problem with the Jackson airport is too many people in this area see it as a honeypot for themselves and not as a tool used to advance the Jackson metro area. BRBR tackles this issue:
The announcement came as a blow to leaders at Louisiana Economic Development and the Baton Rouge Area Chamber, who had worked closely together all summer to come up with an incentive package to keep the company here. The deal they had crafted was remarkable, both in its size and scope...
More troubling, second- and third-tier cities like Baton Rouge across the country are losing corporate headquarters to a handful of major markets, where wealth and power are increasingly concentrated. These big cities have the two key ingredients that are critical in the competitive battles for the corporate office: access to talent and international assets, which is a fancy way of saying lots of highly educated professionals and a major airport.
Can Baton Rouge and Louisiana compete for these headquarters, and is it even worth trying? Or is it good enough to be home to a company’s regional base of operations? These questions carry deep implications for the future of economic development in south Louisiana.....
As a result of the recent departures, Baton Rouge no longer boasts the headquarters of any Fortune 1000 companies, and the state has just three: Entergy in New Orleans, Pool Corp. in Covington and CenturyLink in Monroe.
If it’s any consolation, Baton Rouge isn’t alone. Global corporations across the country are relocating from the mid-sized cities where, in some cases, they have been based for decades, to large urban areas with international airports and diverse talent pools.
These big cities are typically more expensive and don’t always offer the best incentive packages. But they don’t have to. Companies are flocking to them anyway because it’s increasingly difficult to manage corporate operations in smaller markets, Sweeney says.
“It’s not that those smaller cities are bad,” he says. “But the companies have evolved, and it’s difficult for them to continue doing business in those smaller markets.”....
Why is it difficult doing business in a smaller city, and what do Charlotte and Nashville have that Baton Rouge doesn’t?
The answer to both questions is talent. Smaller markets don’t have enough of it. Larger markets—and even Charlotte and Nashville—do.
“There is a huge push for talent,” says consultant Didi Caldwell with the site selection firm Global Location Strategies. “It’s at the top of everyone’s list. Everyone is asking, ‘Where can we recruit and retain the best talent?’”....
If talent is No. 1 on the list of must-haves for a corporate headquarters site, proximity to a major airport is No. 2. In today’s global economy, corporate executives want—and even expect—to be able to fly to Europe or Asia with relative ease and efficiency.
Sweeney talks to clients about it all the time. When he’s drawing up a list of potential new sites for a company, cities that aren’t near an international or, at least, a hub airport don’t even make the long list, much less the short list, of finalists.
“We screen cities on all sorts of things, but the one we see the most is international air service,” he says. “If a company has to have it, they have to have it and they’re not willing to compromise.”...
Part of the problem is that cost-conscious airlines are cutting back on service in general, not adding it. Market size is also a problem. It’s difficult to get airlines to add more service to a market like Baton Rouge because the numbers, from the airline’s standpoint, don’t make sense. It costs an airline roughly $10 million to add a single new daily flight to this market, which means the airline is going to demand that the flight is full.
As a way of offsetting costs, the airport offers incentive packages that waive landing fees and provide marketing assistance. But federal regulations prohibit the airport from outright offering incentives in the form of passenger guarantees, like the one LED offered Albemarle. Only third parties can legally do that.... Rest of the article.
Meanwhile, local businessmen in our area yelp for contracts from the airport yet don't say anything about how to use the airport to improve the community or the state. There is much more to read and it is all worth reading. One challenge Baton Rouge does not face that the Jackson metro area does: A major city and a bunch of neighboring cities fighting each other over the same pie. Baton Rouge is similar in size to the Jackson area. However, the media and community leaders are talking about how to attract and keep corporations while Jackson and the burbs fight over a Costcos and Best Buys.
Note: Keep the comments focused on the post. The usual crap over Jackson v. Madison won't get approved unless it is substantive. That also goes for the Whole Foods jokes. They were funny the first 100 times.