(Due to a population miscalculation, an earlier edition of this story mistakenly omitted the newly renamed Dayton-Kettering metro area from its No. 2 position in the Tier 2 rankings. — Ed.)
If you’re shooting for the biggest economic development prize of modern times, it helps to have the former U.S. Secretary of Commerce leading the charge.
That’s what happened in Chicago, when Penny Pritzker, who filled that post for the Obama administration until January 2017, was front and center as World Business Chicago, Mayor Rahm Emanuel and every business leader and organization in town worked to attract Amazon’s HQ2.
“Look,” she says in an interview, “Chicago has so many assets it is a natural. Who knows what went into the final decision. What I know is that Chicago was for sure on the serious short list, because of so many things — tech talent, transportation hub, universities, national labs, a can-do attitude.”
Pritzker led the private-sector effort as part of the mayor’s team of some 600 leaders from all segments of professional and community life.
“I helped show them around in a small team,” she says of Amazon’s visits. “They liked our sites that we offered. I thought we showed them what a phenomenal opportunity it was.”
Chicago didn’t make the cut. But after Amazon’s dramatic HQ2 pullout of the planned 25,000 jobs in New York on Valentine’s Day, who knows what could happen next for the Second City?
“It will be interesting to see what’s happened,” Pritzker said on the day the Amazon pullout was announced. “Hopefully they’d reconsider us.”
Return to Tech Glory
Maybe one reason Amazon didn’t come to Chicago was that so many other companies already have.
Greater Chicago once again has finished No. 1 in the nation in Site Selection’s annual Top Metros rankings, based on qualified corporate facility investment projects during the previous calendar year. The projects range from the massive distribution cluster in Will County populated by such firms as Diageo and IKEA to the office and manufacturing projects landing in such places as Arlington Heights, Wheeling, Bolingbrook, Elgin, Carol Stream and Naperville from the likes of Faber-Castell, IHerb, G&W Electric and Givaudan Flavors.
But the core of activity is in Cook County, where projects last year came from Facebook, Walgreens, Northrop Grumman and Komatsu, among others. Joining their ranks early this year (with a project to be counted toward the next year-end tally) was Ford Motor Company, which pledged to invest $1 billion and create 500 new jobs at its Chicago Stamping and Assembly plants that will bring total payroll to 5,800.
“A lot of great things continue to happen here, HQ2 or not,” says Pritzker, who today, alongside Ocient Co-Founder and CEO Chris Gladwin, leads an initiative to strengthen the area’s technology and innovation leadership called P33 — so named because the goal is to “reclaim” the technological discovery crown the city wore when it hosted the 1933 World’s Fair by the time of the city’s bicentennial in 2033.
“We plan to make Chicago a magnet for technology's next era of creators and generate opportunity across all industries for everyone living in our city,” Pritzker said at the organization’s launch in October.
Some would say the magnetism is already pulling in plenty: The 2018 Cyberstates report from the Computing Technology Industry Association (CompTIA) ranked Chicago No. 8 in the country in net tech employment and 13th in year-on-year tech job growth between 2016 and 2017. The estimated direct contribution of the tech sector to the Chicago economy is $43.4 billion, or 7.3 percent of the total.
Pritzker says the P33 strategy derives from a serious look in the mirror led by research from Accenture, Boston Consulting Group and McKinsey & Co., so that area leaders can know how the region stacks up against other cities and answer the question, as she puts it, “Where do we have an authentic right to dominate because of the assets we have?
“If you think about technology and why somebody chooses to put a company in various places, you choose it for many reasons,” she continues. “Talent. Both digital and physical connectivity. You need a welcoming place that is also interesting for people to live in, but you need a healthy technology ecosystem so if people want to make it their home, they and their partners have options for living and working. Industry 4.0, bioscience, food and agriculture, business technology — these are clusters Chicago has enormous strengths in. With P33, we bring universities, incubators, business leaders in pure tech and all kinds of companies, labs, commercialization organizations, training organizations and venture capitalists all together.”
In addition to hosting the second highest concentration of computer science graduates in the U.S. and ranking sixth in the number of STEM workers who live there, Greater Chicago startups lead the nation in venture returns, with an 8.5x multiple on invested capital. Some of that capital has come thanks to the efforts of venture capitalist and billionaire J.B. Pritzker, Penny Pritzker’s brother and the newly elected governor of Illinois.
“I am biased,” his sister admits. Asked about the challenges the state faces despite its biggest city’s shine, she says, “I think our new governor is trying to tackle some of the challenges not tackled by his predecessors — stabilize the pension system, make sure we’re investing in the education system. And he’s doing it in a transparent and authentic way, telling the people ‘Here’s what we need to do.’ I wouldn’t bet against us, because we’re a very resilient place, and on the upswing. Your magazine’s ranking is a recognition of all the hard work that’s already been done.”
Giving Back, Giving a Leg Up
As it happens, Mayor Emanuel just released the city’s 50 “Resilient Chicago” initiatives as part of the 100 Resilient Cities program led by the Rockefeller Foundation. Socio-economic inclusion and corporate social responsibility are high on the metro’s and state’s priority lists. And they’ve always been high on Penny Pritzker’s list too, starting with the Pritzker Traubert Foundation she founded with her husband Dr. Bryan Traubert.
“Inclusivity is so critical — it’s something that’s been a focus of mine since I was out of school,” she says. “Access to opportunity, education, soft skills training, mentoring. It’s critical to have a community work at all levels.”
Two recent examples highlight higher education connectivity. In December, Mayor Emanuel joined City Colleges of Chicago and global aerospace and defense aftermarket solutions firm AAR to announce the new Aviation Futures Training Center to train students in aviation sheet metalworking. AAR will partner with Olive-Harvey College to prepare students for in-demand jobs in aviation, heavy manufacturing, boating, automotive repair, and HVAC.
“The shortage of middle skills workers in aviation and manufacturing is at acute levels in de-industrialized cities in the Midwest, like Chicago,” said John Holmes, AAR president and CEO. “AAR is actively working with colleges to recruit and upskill workers to get them in the pipeline faster to address the short supply.” According to the Great Cities Institute at the University of Illinois at Chicago, there were 58,000 unfilled manufacturing jobs in Cook County last year, and one in three manufacturing workers in the metro area is over the age of 55.
Rosalind Franklin University of Medicine and Science (RFU) in North Chicago has received $2.5 million in expendable funding through federal new markets tax credits to support the development of its under-construction $50-million, four-story Innovation and Research Park. RFU intends to use a portion of these funds for community initiatives, including the development of bioscience-related job training and internship opportunities, and an expansion of its efforts to provide health services to the uninsured and mentoring and educational pathways to underserved students.
“This funding will help us discover and deliver new treatments and cures across the nation and the globe,” said RFU Interim President Dr. Wendy Rheault. “But its most visible and immediate impact will be in our own backyard, as we reach deeper into our community to offer opportunities that will improve the health of our people and local economies.”
Slated for completion in late summer 2019, the Innovation and Research Park is a public/private partnership among RFU, the City of North Chicago, Lake County, Illinois Department of Commerce and Economic Opportunity and not-for-profit developer TUFF, The University Financing Foundation.
‘A Welcoming Place’
Asked if she’s observed corporate social responsibility measures taking hold with the corporate leaders she’s encountered during her days before, during and after her time in Washington, Pritzker says, “First of all, it sure has taken hold among the corporate leaders in Chicago. And I’ve seen it more and more among the Fortune 500. I was just talking with Brian Moynihan on a panel at Davos. He has 200,000 employees at Bank of America — the responsibility starts with your employees, but also with the community you’re in.
“The companies I’m involved in get that,” she says. “I was on the boards of Hyatt, Microsoft, and Wrigley, and they all understood the importance of the kind of leadership a company can bring. It’s critical and it’s necessary. More and more mayors and governors recognize they need to listen to business leaders. And likewise, business leaders recognize they need to listen to the community. More and more CEOs recognize it’s not enough to just take care of your shareholders. It’s also the communities you do business in. That’s an expectation of your customers, and of the place you plant your flag.”
Pritzker planted her flag in the city when she moved to the area 34 years ago from San Francisco, and says she found the people warm and welcoming from the beginning. Moreover, they are creative, work hard and with a certain distinctive pride.
“I find it a phenomenal place to live,” she says. “And culturally, the place is on fire. Last night, I went to the world premiere of the ballet ‘Anna Karenina.’ It was masterful, phenomenal. I went to the theater last week. It’s a vibrant, exciting place, and it’s also diverse. Yet people have this natural affinity for working together. They care about the place, and want to make it a community.”
‘Reverse Talent Flow’
Among Pritzker’s observations about all sizes of cities from her career and her time as Commerce secretary is this: “I think mayors matter a lot,” from making the city run to growing a metro area’s population and tax base. A look behind the data also reveals that strong mayors, institutional and civic leaders are one factor behind these regions’ economic development prowess.
A glance at the top metros across all three population tiers this year reveals a preponderance of Midwestern places: Nineteen of the 30 metro areas are within a swath from just east of the I-75 corridor to the foothills of the Rockies. Five of them touch or wholly inhabit Iowa. Ohio hosts four. And Michigan, Kentucky and Nebraska host three apiece. But other regions stand out too: Four of the 30 Top-10 metros are in Georgia, while three are found in Texas.
James Fallows, in remarks to the annual conference of the International Economic Development Council in Atlanta last October, saluted civic and institutional difference-makers as he recounted the five-year small-plane journey he and his wife and co-author Deborah made back and forth across the country for their eye-opening book “Our Towns.”
“Everybody should see the country from 2,000 feet up,” he said. “The view is so rich: You see why cities are where they are.”
Once on the ground, the couple discovered more. Despite the souring national political climate, when they went from city to city and region to region they saw “people believing they are making positive advancement in addressing problems,” he said. They are “practical-minded, getting some traction and having some agency.” It’s a view most Americans have lost sight of and need to see again, he said. They may be outwardly downcast about the state of the nation, “but at the same time people’s views of their own communities have been going up and up.”
They also saw what they call “reverse talent flow,” i.e. the opposite of the usual trend where big cities just keep getting bigger, attracting more companies and more talent. Now some of that critical mass is beginning to trickle back.
“We were struck by how often people have worked in those places, but the overall picture for them was better in Sioux Falls or Sacramento or Redlands,” said Fallows. Once in those towns, the talent is finding what the authors found: a practical-minded functionality in local government and civic life that not only runs counter to the national narrative but may be ignoring it completely.
“Greenville, South Carolina, and Burlington, Vermont, are opposites on the political grid, but in their actual functioning, quite similar,” Fallows said. “We saw institutional experiments and innovation with schools, libraries and with community colleges, which we argue are the crucial part at this stage of America’s economic history.” Yes, research universities still can be the catalysts in many of this year’s Top Metros (see Lincoln, Nebraska; Lexington, Kentucky; Bowling Green, Kentucky; and Ames, Iowa). “But at this time of economic dislocation we were struck by the role that community colleges are playing,” said Fallows, in exposing students to new opportunities in skilled trades, and in training them for the occupations taking the place of those old jobs gone by the wayside.
Greater Omaha: Finance & Insurance, Data Centers and Record Low Unemployment
It’s always a good sign when your local chamber of commerce’s online resources includes a section titled “Groundbreaking and ribbon-cutting tips.” That’s what you’ll find at the Greater Omaha Chamber, the flagship group for the metro area ranked No. 1 in its population tier once again this year, followed by Dayton-Kettering, Ohio, at No. 2 and Des Moines-West Des Moines at No. 3.
The Greater Omaha Chamber's 2018 Economic Outlook Survey of 147 area CEOs found that around 60 percent said that their sales revenue increased in 2018, compared to 2017, and around 40 percent said their companies expect to increase the amount of capital investment and employment. Just under half expect to increase the number of employees in their company in 2019, and more than one-third (38 percent) plan to invest more capital in 2019 than 2018.
Judging by last year’s project count, that’s saying something, as Site Selection tallied major investments in metro Omaha from Facebook, MetLife, Mutual of Omaha, Yahoo, Elliott Equipment and VM Innovations. Some of the investors in Omaha and in No. 4 Tier-2 metro Lincoln are seeing support from five Nebraska Business Innovation Act programs that first went into effect after the 2011 session of the Nebraska Legislature and are designed to promote successful entrepreneurial firms by providing access to capital in early stages of product development.
A report on those programs’ economic impact published last year by the University of Nebraska Bureau of Business Research found that firms that provided data for the study reported receiving over $22.5 million in funding through BIA program, then raising $100.3 million in capital after receiving that support, equating to $4.46 for every dollar of state support. The study also found that participating businesses have already earned $100.6 million in revenue, which is equivalent to $4.47 in revenue for every $1 of state support. The firms also have added 630 new jobs in the state with annual wages of $32.6 million since initial participation in BIA programs. In this way, one state policy with civic-level, entrepreneurial impact is helping boost multiple metros’ economic development.
Both Nebraska metros also benefit, like Chicago, from a lower cost of living. According to the community cost of living indexes compiled for 268 U.S. urban areas by C2ER, Lincoln’s and Omaha’s weighted average composite value was well below the U.S. average of 100.0 at 94.8. Meanwhile, the state’s 2010 population was 1,826,341 (6.7 percent higher than 2000) and the Census Bureau’s estimate of the state’s 2017 population reached 1,920,076, or 5.1 percent higher than the 2010 Census.
Omaha and Lincoln would happily welcome more fast to help the state break the 2 million barrier, as unemployment is at record lows: In December 2018, it was 2.7 percent in Omaha and 2.3 percent in Lincoln, after the state added 12,525 non-farm jobs since the previous December. That makes new legislation under consideration in Lincoln all the more urgent.
University of Nebraska President Hank Bounds in February joined Mutual of Omaha Chairman and CEO James Blackledge and other business and education leaders to testify in the state capitol on behalf of the H3 Careers Scholarship Act, which would provide $10 million in 2019-20, $20 million in 2020-21 and $30 million annually thereafter for scholarships in high-skill, high-demand, high-wage areas as determined by Nebraska’s Department of Labor.
Current examples include nursing, engineering, software development and accounting. More than two-thirds of the state’s 35,000 projected H3 openings will require an associate’s degree or higher. But Nebraska isn’t currently producing the workforce those fields need. Nebraska will have 1,500 openings for registered nurses in the decade ahead, for example, 1,000 openings for accountants and auditors, and almost 400 openings for engineers. Additional scholarship support would make Nebraska more competitive in keeping the best and brightest talent in the state, Bounds said.
“Nebraska’s sons and daughters deserve opportunities to stay here,” he said. “The fact is that in every community I visit, Nebraskans tell me the same thing: ‘Our No. 1 need is workforce, our No. 2 need is workforce and our No. 3 need is workforce.’ “
“Businesses will go wherever the talent is,” said Mutual of Omaha’s Blackledge, even as the company just completed an expansion. “The implications of our continuing to lose a significant number of our best and brightest to other states are profound, lasting and perhaps irreversible. (Mutual of Omaha’s) demand for technology talent, and that of other companies in our state, cannot be met without strategic initiatives such as LB639 aimed at developing and retaining a talented workforce in Nebraska.”
In other words, as James Fallows told the IEDC audience in Atlanta, “Economic development matters more now, because the local and regional level is where the possibility is, where the leverage is, and where the action should be.”
Metros with Population over 1 Million
|4||2||Houston-The Woodlands-Sugar Land||Texas||165|
|6||5||New York-Newark-Jersey City||N.Y.-N.J.-Pa.||84|
Metros with Population 200,000 To 1 Million
|3||10||Des Moines-West Des Moines||Iowa||34|
Metros with Population Less Than 200,000
|1||1||New York-Newark-Jersey City||N.Y.-N.J.-Pa.||84|
|4||Virginia Beach-Norfolk-Newport News||Va.-N.C.||51|
|6||6||Miami-Fort Lauderdale-West Palm Beach||Fla.||40|
East North Central
|2||1||Houston-The Woodlands-Sugar Land||Texas||165|
|7||T7||San Antonio-New Braunfels||Texas||30|
West North Central
|5||7||Des Moines-West Des Moines||Iowa||34|
|7||4||Salt Lake City||Utah||5|
|1||1||Los Angeles-Long Beach-Anaheim||Calif.||46|
|5||T7||San Jose-Sunnyvale-Santa Clara||Calif.||13|