South Carolina Recommends Aggressive Two-Year Plan For Developing State Economy
Thriving in Today’s Market: A Public/Private Action Plan for Enhancing the South Carolina Economic Development Delivery System 2006-2008
| Sponsored by: South Carolina Chamber of Commerce South Carolina Manufacturers Alliance South Carolina Economic Developers’ Association with the support of Duke Energy |
Prepared by: Ticknor & Associates Economic Development Consultants January 12, 2006 |
| Read the complete study (pdf, 900 KB). | |
Executive Summary
Call to Action
Because economic development is highly important to all South Carolinians, the South Carolina Manufacturers Alliance, the South Carolina Chamber of Commerce, and the South Carolina Economic Developers’ Association, with the strong catalytic support of Duke Energy, have sponsored this two-year Action Plan.
Quality economic development creates good jobs and builds the tax base to pay for education, transportation, health care and other necessary public services. It raises our standard of living to support a better quality of life. Yet our per capita income lags behind other Southeastern states—it is only 82% of the national average. We have lost 83,000 manufacturing jobs since 2000. Our November 2005 unemployment rate was 7.1%, compared to 5.0% for the nation as a whole. It is increasingly difficult to meet state and local budgets. And Standard & Poors recently cut the state’s bond rating, citing mainly economic concerns. We need to focus our best efforts on enhancing the South Carolina economic development delivery system.
We base the Action Plan on best practice analysis of our Southeastern competitors and recommendations from economic development professionals within the South Carolina Department of Commerce and throughout the state. Three fundamental conclusions drive the plan.
- The state is the natural leader of the statewide economic development delivery system.
- The South Carolina Department of Commerce is no longer the effective competitive force that it once was when it had greater
resources and a better ability to sustain cutting-edge business services programs. - There are a number of important steps that South Carolina can take to implement critical, relatively inexpensive, high benefit/cost Commerce initiatives and to build a stronger statewide public/private economic development partnership.
The Problem of Resources
Commerce is a lean agency. South Carolina has cut recurring Commerce program and operations funding from $14.5 million in fiscal year 2000/01 to $9.1 million today. Controlling for inflation, this is almost a 50% decrease. Although South Carolina has reported several good years in terms of job and investment creation and average wages/salaries among projects that Commerce has influenced, cuts have been too deep to maximize results in today’s economy. South Carolina is not gaining economic development market share. There are too few Global Business Development staff members—their current project load has risen from 10 to 25 or more. There is no longer a research staff to adequately support website development and gathering key business intelligence. South Carolina has not sustained proactive economic development marketing to support prospect development and business expansion. The state has virtually eliminated program staff to work proactively with South Carolina businesses.
Economic development is a highly competitive business where the benefits of well-managed strategies clearly outweigh the costs. Most other Southeastern competitors are doing more to stimulate quality job creation than South Carolina is. States such as North Carolina, Georgia, Virginia, and Alabama are working harder and more effectively at key parts of economic development delivery than we are. But the good news is that we have an efficiently run agency to build upon.
Ten Key Action Plan Initiatives to Strengthen the SC Economic Development Delivery System
- Galvanize the Statewide Public/Private Economic Development Partnership & Sustain Economic Development Leadership
- Implement Statewide Public/Private Economic Development Strategic Planning
- Strengthen Commerce Global Business Development Capabilities
- Build DOC Business Development Sales & Marketing Support Capabilities
- Maintain a World-Class Economic Development Website
- Sustain Comprehensive Proactive Business Development Marketing
- Strengthen Customer Service through Upgraded Human Resources Systems
- Deepen Site Certification and Megasite Funding
- Build Retention & Expansion Services for Existing South Carolina Businesses
- Improve Business Incentives and Create a New Project Closing Fund
Expected Benefits
These recommendations will cost the state $5.8 million dollars in annually recurring DOC program and operating costs, plus $15 million appropriated for the Closing Fund. Closing Fund appropriations will only be expended if there is specific need for projects that meet State Budget Control Board benefit/cost requirements and support quality job creation. Future Closing Fund appropriations would depend upon project need.
These competitive enhancements will yield a significant performance boost, especially after recommendations are fully in place in 2007/08. Metrics indicating better results will include:
- Increased regular marketing contacts to 1,050 or more targeted companies
- Increased DOC economic development customer website utilization by 60%
- Quadrupling the number of proactive location consultant and qualified prospect calls outside the state
- Output-based direct business development calling on approximately 2,000 South Carolina companies, prioritized in terms
of industry cluster potential and growth records - Reaching 95% customer satisfaction ratings among allied economic development organizations and business clients.
Even if they only increase Commerce-influenced global business attraction and competitive business expansion projects by 15% per year, a very conservative estimate, economic benefits to the state will be substantial:
| Annual Benefit at Full Implementation | 2006-2015 Benefits | |
|---|---|---|
| Direct Jobs | 1,800 | 17,460 |
| Wage/Salary vs. SC Average | >125% | >125% |
| Direct Investment | $300,000,000 | $2,910,000,000 |
| Total Jobs | 4,000 | 38,800 |
| Net State Tax Benefit (10-Yr. NPV) | $75,000,000 | $721,825,000 |
The risk of doing nothing is far greater than that of being proactive and falling short of these conservative estimates of gain.
Where Do We Go from Here? A Time for Leadership
The best economic development systems have two critical traits: sustained leadership and strong bi-partisan support to maintain competitive programs; and strong public/private leadership to set the strategic agenda and ensure effective delivery capabilities.
Plan sponsors thank the public officials who have contributed to this effort. Secretary Faith, Chief of Staff Dangerfield, the Governor’s Office, and key leadership within the General Assembly have provided key input to this process and are critical for moving forward.
Sponsors also wish to acknowledge the important sustained contributions of the Action Plan Task Force.
- Not only have they played a fundamental role in shaping this plan.
- They and their organizations are now stepping forward as leading advocates for state funding and to form the new statewide public/private economic development partnership to help to achieve successful Action Plan implementation.
We ask for your help in enacting this agenda. Working together, we can make a real difference.
Read the complete study (pdf, 900 KB).
