Convention Keynoter Likes Small Towns

(from Maine Townsman, August 2005)
By Douglas Rooks, Freelance Writer

Manufacturing is not dying in this country. Small towns can compete in the global marketplace. The most important factor distinguishing the success of one community from another is local leadership.

Jack Schultz certainly challenges the conventional wisdom about economic development and community well-being. But the lunchtime speaker on Wednesday at the MMA annual convention has opinions based on long experience, and he certainly practices what he preaches.

Schultz founded his own real estate development company in Effingham, Illinois, 20 years ago. He started with three employees, and now has 50. As his company grew and became more successful, he found that the national media weren’t very attentive to the stories he saw all over the Midwest, and now in a national context.

“What people were writing about wasn’t necessarily what was happening,” he said in a phone interview from his office at Agracel, where he directs operations that involve site selection, market research and product advice, along with the more usual functions of real estate development. So he took the next logical step: to tell the story himself.

The book that resulted, Boomtown USA: The 7 1/2 Keys to Success in Small Towns, was supposed to take six months to produce but instead took three years. Since it was published last year, Schultz has been on extensive book tours that have now settled into speaking engagements in 35 states, so far. Boomtown USA, published by the National Association of Office and Industrial Properties, is in its third printing, with a fourth scheduled.

While Schultz has a positive message, it is certainly not pie-in-the-sky. He emphasizes the virtues of hard work, sound planning, and thinking ahead. Local leadership is perhaps the most important point, countering the message that small towns are at the mercy of forces beyond their control. But the way Schultz defines leadership is unusual.

Leadership, he writes, is not enforcing one’s will on someone else. He recalls Martin Luther King’s example, and says, “True leadership is about serving. A leader serves the town by sacrificing what’s good for just one person or group to attain the best for the entire community.” And then he performs a twist on this idealistic conception: “The lazy view of leadership is that someone else needs to do it.” Only when someone steps forward, he says, do communities begin to move in a new direction.

Schultz got his own experience in the need for change and adaptation when his hometown of Effingham hit the skids in the severe recession of the early 1980s. By the end of the decade, several industries had shut down entirely, and at meetings of community leaders, including Schultz, the message was that there was little that could be done, that “others,” namely large corporations, would decide whether to locate in town.

That turned out not to be true. Diversification and thinking small turned out to be the ticket for revival in Effingham, and Schultz is convinced that’s true in small towns everywhere.

“There are 39,000 economic development agencies chasing 200 ‘elephant’ projects, as I call them. That’s all that Toyota, IBM and other big manufacturers will build this year,” he said. But there are thousands of smaller expansions and relocations that small towns can compete for. After the “fall off the cliff” in 2000, when manufacturing starts virtually came to a halt, business is again good at Agracel. “Just this morning we signed the papers for a new 75,000 square foot manufacturing facility,” he said. “That where most of the opportunity is.”

Schultz sees economic development differently than most state governments, chambers of commerce, and some business leaders. Asked about Maine’s situation, he referred to Boomtown and also provided brisk, concise answers to what is often perceived as Maine’s business climate malaise.

State tax burden, the most frequently cited problem, is simply not the primary reason why manufacturers decide to locate in a particular community, he said: “Taxes are usually sixth to eighth on the list of important factors.” If he hears from a potential client that’s looking for the biggest tax breaks as the deciding factor, “We run a mile in the opposite direction.”

The primary cost of doing business is hiring and training a labor force, and a community with reasonably priced employees who have the necessary skills can out-compete larger communities – a factor he said should benefit Maine in attracting new manufacturers.

Schultz’s definition of “boomtowns,” which show faster population and economic growth than major metropolitan areas, is different from the concepts of both urban and suburban development. “What we’ve found is that the worst fate in the long run is to be a bedroom community only,” he said. In one community he advised, organizers brought out a bed into the town square and set it afire to dramatize the need for a different approach.

In the book, he refers to these growing communities as “agurbs,” reflecting the relatively recent transition from agriculture to industry in much of the upper Midwest. Translated to the Maine scene, what he’s talking about sounds much like the concept of “service centers,” the employment and public service magnets that are scattered all over the state, some of them quite small.

Part of the reason why the book took so long to prepare is that Schultz and his research team looked at 15,800 small towns, ultimately producing a list of 397, and then 100 potential “boomtowns.” Eight of them are in Maine: Belfast, Blue Hill, New Gloucester, Camden, Rumford, Sanford, Waterville, and Wiscasset.

Schultz points out that the eight Maine communities he picked are a greater number than he found in Arizona, South Carolina, or several other fast-growing states. In fact, it’s more than in any other New England state.

Schultz’s 7 1/2 keys sound simple, and indulge the American fondness for lists. They are: 1) Adopt a can-do attitude. 2) Shape your vision. 3) Leverage your resources. 4) Raise up strong leaders. 5) Encourage an entrepreneurial approach. 6) Maintain local control. 7) Build your brand; and 7 1/2) Embrace the teeter-totter factor.

Most of the list depends on good leadership, but the last one might require some explanation. What he means is that there are inevitable ups and downs is pursuing any new community direction. The peaks and valleys shouldn’t put one off course, despite the inevitable nay-saying. Leaders are probably one in a hundred, if not one in a thousand. He says they are worth more than any comfortable consensus, people “who are just kind of interested in what’s going on.”

Like any good speaker, Schultz has lots of good stories to illustrate his points. In the case of his hometown, success came after a $50 million investment in a new industrial park, among whose tenants is now a major Krispy Kreme plant. He ruefully notes that, although Effingham is a major producer of baked goods, with 12,000 residents it’s still too small to have a Krispy Kreme retail store.

Other communities have found different formulas to move ahead. For Columbus, Indiana, it was its 19 th century architectural heritage, which has led it to be ranked the 6 th “most architecturally significant city” in the U.S. For Cape Giradeau, Missouri, it was close collaboration with its major employer, Southeast Missouri State University. In Branson, Missouri, it was a local auditorium called Jim Owen’s Hillbilly Theater. Branson ultimately attracted 46 theaters to a town of 6,000, with more seating than Broadway and the ultimate accolade: locals now call Nashville “Little Branson.” And in Lebanon, N.H., the local hospital, Mary Hitchcock, became the center for medical research and services in a three-state region.

Beyond finding a niche and employing a small town’s natural advantages, Schultz cites a number of developments that can help towns bridge the development gap with better-known cities. Among them are burgeoning air travel networks, development of new telephone and Internet services, deregulation of other economic sectors, quality of life, and lower cost of living. A $45,000 salary in a small town can literally equal $100,000 in Silicon Valley, he said.

Addressing the Wal-Mart factor, the big box boom that some small communities find overwhelming, Schultz counseled against resistance. “Communities and states that try to keep out Wal-Mart generally fall behind,” he said. Instead, small towns should take advantage of the customers the big stores attract to build their own offerings that locally-owned shops can provide.

Schultz is tightly focused on his message that small towns can succeed, and that states like Maine are making a mistake in envisioning a complete transition from manufacturing to generally lower-paying service jobs. At one recent stop, he said flatly, “We are seeing a major resurgence in manufacturing today.”

Along the way, leaders will have to deal with the “curmudgeons,” people who find reasons why any new venture can’t succeed, he said – “the CAVE people – Citizens Against Virtually Everything.”

You never know when the next opportunity will occur. He tells the story of the “Greatest Curmudgeon of All,” a man named P.K. Holmes, who cancelled a lease on his small town store in Arkansas so he could offer the space to his son. The man he kicked out was Sam Walton, who went down the road to launch his Wal-Mart empire in Bentonville, Ark. No one recalls the name of the town he left behind.