Economic Positioning Analysis

Economic Positioning Analysis Executive Summary
Executive Summary

A New Beginning

This executive summary briefly outlines the themes developed in the four chapters that make up the Economic
Positioning Analysis for Illinois Quad Cities.

Illinois Quad Cities is charting a new economic course for itself. After more than a century of relying on the twin
economic pillars of agriculture and manufacturing to employ its residents, global changes in those economic
mainstays have required the region to look for a new focus. Global competition has forced the downsizing or closure
of many of Illinois Quad Cities’ major manufacturing employers, including Case New Holland, Farmall and the John
Deere Company’s foundry operation in Illinois Quad Cities and J.I. Case and Caterpillar in the Iowa Quad Cities on
the other side of the Mississippi River.

Illinois Quad Cities has chosen to take an active approach to shape its economic future. Much of the region’s future
success will depend upon its ability to embrace change as it moves from a traditional manufacturing and agricultural
center to a knowledge-based, service-oriented economy. Residents and community leaders of Illinois Quad Cities
are meeting the challenge of economic change with characteristic spirit, attitude, and hard work. To help the
communities of Illinois Quad Cities to build a new economy, they have employed AngelouEconomics, a nationally
recognized economic development consultant from Austin, Texas, to assist them in drafting an economic
development action plan.

The Economic Positioning Analysis is the first component of the plan. This analysis consists of four chapters:

1. The
Economic and Demographic Assessment reviews and analyzes data in several key areas that
provide a snapshot of the current economic condition of Illinois Quad Cities.

2. The
SWOT Analysis provides an inventory of Illinois Quad Cities’ strengths, weaknesses, opportunities,
and threats (or “SWOT”) and assesses the degree to which they affect future economic development. Our
analysis is based on significant input collected at the local level during focus groups, interviews, surveys,
and discussions with staff.

3. The
Target Industry Analysis determines the specific industries that the Quad Cities should promote for its
future economic development. Our analysis is based on our evaluation of the community’s competitive
advantages and national site selection trends in industry.

4. The
Benchmarking Analysis reviews and analyzes the efforts of two types of communities: 1) role models
for regionalism and 2) communities that have successfully developed some of the target industries
AngelouEconomics is recommending for Illinois Quad Cities. The analysis also suggests lessons Illinois
Quad Cities can learn from the efforts of other communities.

Using these four components, the Economic Positioning Analysis provides a picture of where Illinois Quad Cities has
been and the direction it should take in the future to build a new economy. Following is a summary of each of the
chapters in the report.

Our next report, the Human Capital Analysis, will identify gaps between the current workforce skills and the needs of
the targeted employers. The gaps identified will be addressed in the Economic Development Action Plan.

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Economic Positioning Analysis Executive Summary
Current Conditions in Illinois Quad Cities

The Economic and Demographic Assessment and the SWOT (Strengths, Weaknesses, Opportunities and Threats)
Analysis are two methods of assessing the status of a community. While the Economic and Demographic
Assessment reviews and analyzes data to determine conditions in a community, the SWOT Analysis summarizes the
perceptions of a community’s residents. One of the purposes of this report is to paint a picture of the community
using both data and perceptions.

Based on the two report components, we have been able to paint a clear picture of both the community’s positive and
negative aspects: Illinois Quad Cities has a number of challenges facing it in the coming years, but the area also has
a number of strengths it can build on to improve its economic prospects.

Illinois Quad Cities has lost population and jobs over the past two decades. This population and job loss has
created a general community attitude of pessimism, reluctance to change, and a failure to dream big dreams
for the region. The data demonstrates that Illinois Quad Cities experienced a sharp population decline in the 1980’s
and only a sluggish growth rate of two percent during the 1990’s. During the 1980’s, the region also lost tens of
thousands of jobs, mainly in manufacturing and agriculture. Though employment rebounded somewhat in the 1990’s,
when overall MSA employment grew by 9.4 percent, it lost 6,200 between 2000 and 2003. The combined population
loss, job loss, and the accompanying loss of many major manufacturers in the area has beaten many Illinois Quad
Cities residents down and caused a growing sense of pessimism to take over. It is difficult to generate the
enthusiasm and “can-do” spirit essential to building a healthy economy when people are focused on the negative and
looking back at the past. Fortunately, attitudes are within a community’s control and can be changed. With the
Economic Development Action Plan the community is putting together with assistance from AngelouEconomics, the
region will have the means to change the economy in Illinois Quad Cities. Residents will have to supply the positive
attitude and the will to do so.

The demographics of the Quad Cities are changing, with Hispanic immigration offsetting some population
loss and adding younger population. However, ethnic and cultural diversity is still lacking in Illinois Quad
Cities. The data and perceptions of Illinois Quad Cities residents show that, while the population is gradually getting
more diverse, there is still very little ethnic and cultural diversity in the region. Hispanics are the largest minority in the
MSA. Since 1990, the area has seen an international migration of about 5,000 people, most of whom are Hispanic.
Why does this matter? The answer lies in the changing demographics of the workforce. The workforce, like the
overall U.S. population, is becoming more diverse. The U.S. Bureau of Labor Statistics (BLS) projects that the U.S.
civilian labor force will grow to 162.3 million by 2012, and more members of the labor force will be female and non-
white. By 2012, women will make up 47.5 percent of the workforce. By 2012, the Hispanic labor force will reach 23.8
million, the African-American workforce will reach 19.8 million, and the Asian-American workforce will reach 8.9
million. This increasing diversity of the workforce will require all communities that want to attract talented workers to
provide a community this workforce feels comfortable living in. A diverse workforce will want to feel welcome
wherever they choose to live, and part of making them feel welcome is a community that is diverse as they are.

The population and workforce of Illinois Quad Cities are aging, and the area continues to lose young people.
Fortunately, this trend is reversible. The data and perceptions show the same thing: The population and workforce
in Illinois Quad Cities are getting older, and there are fewer and fewer young people to replace them. Statistics show
the median age in Illinois Quad Cities has increased from 33.9 years in 1990 to 37.6 years in 2000. At the same time,
the younger population continued to shrink. Between 1990 and 2000, the 25-34 age group decreased from 15.6
percent of the total MSA population to just 12.8 percent, a net loss of nearly 9,000. The presence of a large
population in the 25 to 44 age range is one of the most important workforce factors businesses and site locators
consider when making location decisions. Not only does Illinois Quad Cities need young people for its workforce, it
needs more young people with a bachelors’ degree or higher. Only 21 percent of Illinois Quad Cities residents aged
25 to 44 have a bachelors’ degree or higher, compared to MSA’s such as Austin, where 35 percent have college
degrees, or Boston, where 40 percent have college degrees.
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Economic Positioning Analysis Executive Summary

While reversing this trend is a challenge for Illinois Quad Cities, it is possible. Communities all over the country have
made changes to become more accommodating and attractive to the younger population, revitalizing their economic
prospects in the process. The Human Capital Analysis and the Economic Development Action Plan will provide
Illinois Quad Cities with strategies for turning this negative trend around.

There is a perception of low-performing public schools in Illinois Quad Cities – a perception not supported
by the facts. However, Illinois Quad Cities schools and communities need to do a better job of changing the
perception. The perception repeatedly expressed by participants in focus groups and interviews was that public
schools in Illinois Quad Cities were of poor quality and did not do a good job of educating their students. Some
participants were quick to point out, however, that they felt this was more perception than reality. A review of existing
data shows that 1) student scores on college entrance examinations (SAT and ACT) exceed U.S. averages, and
2) high school graduation rates for Illinois Quad Cities students and percentages of graduates attending college are
both near state averages.

However, Illinois Quad Cities should not be satisfied with these statistics. Though the reality about Illinois Quad Cities
schools is much better than the perception, there are two important messages in this information. First, the
communities and school districts in Illinois Quad Cities need to do a better job of dispelling the image that their
schools perform poorly. Second, none of the communities in Illinois Quad Cities should settle for schools that are
merely ‘average’ or ‘better than average.’ While the schools are not as bad as they have been portrayed, they are not
as good as they need to be to attract businesses looking for a bright, well-prepared workforce.

There is a perception that Illinois Quad Cities has an affordable quality of life, which can be a major
attraction to the area. This positive perception is confirmed by the data. However, Illinois Quad Cities will
have to counter the image that the cost of doing business and the cost of government are high. One of the
most consistent perceptions of residents in Illinois Quad Cities is that their communities are a good place to live and
raise a family. They point to an affordable cost of living and a wide variety of cultural and recreational amenities that
make life here enjoyable. Based on the data reviewed for this report, they are right. However, the perceptions that
Illinois Quad Cities has a high cost of doing business and that the cost of government (i.e., taxes) is high. Though
some costs of business and government may be higher, in Illinois, Illinois Quad Cities can still be competitive.

There are several good examples of the area’s affordability. The first is the cost of housing. Single-family homes are
a relative bargain in Illinois Quad Cities. The median price of a single-family home in the MSA (which includes both
Illinois and Iowa Quad Cities) is $95,000; the median price in Rock Island County is even lower - $73,000. In
comparison, the median home price in Chicago is $220,900, 133 percent higher than the Quad Cities MSA; the
median price in Des Moines is $130,200, 37 percent higher than Quad Cities. Another advantage for Illinois Quad
Cities is that home sale prices in Illinois Quad Cities are less expensive than those in Iowa Quad Cities. The average
sale price of a home in Illinois Quad Cities is $101,400, compared to the average sale price of a home in Iowa Quad
Cities of $137,600, more than a third higher. The lower cost of housing means that, even though incomes are lower
than other areas, incomes can stretch further in the Quad Cities MSA and Illinois Quad Cities than they can in
comparable cities. That can be a significant attraction to potential workers and businesses.

The second indicator of greater affordability in the Quad Cities MSA is a relatively low cost of doing business in
several key areas. Though some business costs in Illinois Quad Cities may be higher (such as the cost workers’
compensation insurance and medical malpractice insurance), some costs such as electricity and real estate are
affordable. The cost of electricity is competitive with other communities in the region and with major regional
metropolitan areas such as Chicago. The cost of real estate is also competitive. For example, the cost of Class A
office space in central business districts in the Quad Cities MSA ($11 per square foot) is some of the least expensive
in the country, and a lease price of $1.50 per square foot for industrial space in Quad City central business districts is
very affordable.

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Economic Positioning Analysis Executive Summary
The third indicator of affordability is the cost of government. The perception is that the cost of government in Quad
Cities is high and can drive businesses to other, more affordable areas. Though there are quite a few governmental
entities to deal with (25 municipalities in the three counties making up Illinois Quad Cities, for example), Quad Cities
are still in relatively good shape. For example, the average Illinois Quad Cities property tax rate (2.93%) is lower than
the Iowa Quad Cities average, (3.25%), though it is still higher than ideal for business attraction. Moreover, although
Illinois laws and regulations are considered a burden to Illinois Quad Cities when compared to more favorable
conditions in Iowa, consider the following: The sales and use tax does not apply to services or manufacturing
machinery. While sales and property tax rates are higher than the national average, low corporate and personal
income taxes make Illinois very competitive. In addition, the overall tax burden in Illinois is not as bad when
compared to surrounding states. According to the Tax Foundation's State Business Tax Climate Index Illinois has the
14th lowest state tax burden in the nation, with 1 being the lowest and 50 being the highest. In comparison,
Wisconsin’s tax burden is ranked 28th, Iowa is 38th, Missouri is 23rd, Kentucky is 35th, and Indiana is11th.

Illinois Quad Cities residents should not take for granted its excellent central location and solid
infrastructure, which are strong selling points for the area. The perception and data both confirm what are strong
selling points for Illinois Quad Cities: a central location within a day’s drive of 35 million people, and strong, reliable
infrastructure, including excellent roadways, reliable air service, and the Mississippi River, still a major mover of
commodities and cargo of all types. Though Illinois Quad Cities will need to continue to maintain these resources so
they remain valuable assets, they are nevertheless strong selling points for the region now.

Illinois Quad Cities will need to establish a strong, clear image to market itself more effectively to the world.
Illinois Quad Cities clearly has a great deal going for it that it can build upon to enhance its economy and continue to
improve the area’s quality of life. One of the most important steps Illinois Quad Cities can take to market itself more
effectively to the outside world is to establish a clear “brand” that will be instantly recognizable. This lack of a clear
image is a significant barrier to building a new economy for Illinois Quad Cities. The key problem the area currently
has is not that it necessarily has a negative image, but that it has no image. Most people outside the area do not
know where Quad Cities is located, what it is known for, or what type of community it is. Fortunately, like many other
challenges facing the region, this is reversible. One of the goals of the Economic Development Action Plan is to help
the region establish a brand and market itself more effectively. These issues will be addressed with a series of
strategies in the plan.

Competition with Iowa for economic development will continue to frustrate local leaders in Illinois, as will
competition between individual communities in Illinois Quad Cities. Competition between Iowa Quad Cities and
Illinois Quad Cities has frustrated for leaders on both sides of the river, as Iowa has prospered in recent years while
Illinois has been frustrated by a stagnant economy and population loss. Just as frustrating has been the contentious
competition among Rock Island, Moline, East Moline, and other communities in Illinois Quad Cities.

First, it should be noted that while Iowa Quad Cities may have done comparatively well in some aspects of their
economy, Illinois Quad Cities also has advantages compared to Iowa Quad Cities it should capitalize on, such as
more affordable housing and an overall lower tax burden in Illinois compared to Iowa. Even more importantly,
however, the friction and animosity resulting from unhealthy competition in the Quad Cities area is not beneficial to
communities on either side of the river. This type of competition and animosity can prevent various communities from
collaborating to solve the region’s problems or working together to sell the region effectively to new businesses.
Competition can also discourage businesses from considering the area as a potential location.

Businesses do not tend to focus on individual communities until very late in the site selection process. They focus on
regions that meet their needs. While communities on one side of the Mississippi may currently have an economic
advantage, it is in the best interest of communities on both sides of the river to improve the entire region so the Quad
Cities area can compete for economic development. Illinois Quad Cities must address the fragmentation and
unhealthy competition among its cities and begin to think and act as a unit.

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Economic Positioning Analysis Executive Summary
On balance, Illinois Quad Cities has some challenges it will have to face if it wants to build a thriving future economy.
However, it also has a number of assets that can be capitalized on to make it very competitive for business. The
region can build on its considerable strengths to attract a number of high-impact industries.

Target Industries for Quad Cities

AngelouEconomics employs a combination of quantitative and qualitative analysis in selecting the best target
industries for a community. Target industries are a set of industries that best utilizes a community’s local assets and
promises new opportunities for growth in jobs, wages, and economic advancement. Industries that are selected as
targets are usually “basic”, or “primary” industries. These industries typically export their goods or services outside
the region, thereby support local industries such as retail, housing construction, and personal services through its
payroll and local purchases. Primary industries reflect an injection of outside money to the community and have a
high economic impact, sometimes creating 2 additional jobs elsewhere in the local economy for every job in the
target industry.

AngelouEconomics follows a selection process that starts with a long list of potential target industries and evaluates
each industry step-by-step for suitability in Quad Cities. The process is guided by the following questions:

1. What industries currently exist locally, and are they growing?
2. Are there local assets that give specific industries a competitive edge? What local weaknesses or
barriers will limit industry growth?
3. Does the community meet the requirements of the industry?
4. Does the industry match community goals?

Based on our full analysis of Quad Cities’ competitive assets and existing economic base, AngelouEconomics
recommends the following target industry list for Illinois Quad Cities:

Defense Manufacturing and Operations: Rock Island Arsenal gives Quad Cities an inherent advantage in
attracting defense manufacturers. The arsenal not only employs thousands of skilled workers but also allows private
firms to lease manufacturing space and equipment for private sector production. Quad Cities should target traditional
arms and equipment manufacturing, related research and development, as well as military logistics.

Food Processing: Quad Cities’ cluster concentration for food processors is extremely low and the potential to
develop this industry is high. Food processors are relocating from the Northeast to the Midwest to serve population
centers on both coasts more efficiently. The region’s significant agriculture inputs, distribution capabilities, and
abundant water are also key selling points.

Agriculture Technologies: As the agriculture industry continues to evolve, the technology that is driving the
industry is becoming more important to its success. While agricultural equipment manufacturing is still important to
the industry and Quad Cities, other sectors in agriculture will drive the industry’s growth – agricultural biotech and the
research and production of ethanol.

Business Services: As corporations continue to focus on core competencies, the relocation of support operations
(“Back Office” or “Business Services”) will grow. More and more corporate functions will be either relocated to lower
costs areas, either in rural American or overseas, and/or contracted to third party vendors who do the same. The
region may need to make some improvements to telecommunications infrastructure to fully capture this opportunity.

Warehousing & Distribution: This industry continues to grow nationally and regionally, and Quad Cities is situated
to capture this growth. Quad Cities’ cost structure is very competitive for distribution firms, with low land acquisition
costs and affordable wage rates. Access to multiple interstates, the local airport, and Mississippi River are all
competitive advantages as well.
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Economic Positioning Analysis Executive Summary

Industrial Machinery: Quad Cities has a significant local cluster of industrial machinery manufacturing in the form of
John Deere and as a result has a large, trained workforce in this industry. The region’s central location relative to the
nation’s midwestern manufacturing base creates opportunities for the region to import component parts for partial
assembly and distribution to OEMs.

Software: Software is one of the fastest growing industries in the United States and is primarily clustered in
technology metros such as San Jose and Boston. As the industry matures, more core functions have become
standardized and many software firms have opened development offices throughout the country. Software
development has become a back office operation that supports the technology infrastructure of a business, its
Internet presence, and its relationships with customers and vendors. For this reason, software is considered a
supporting target to other industries in Quad Cities.


For each target, AngelouEconomics provides a profile of the industry and its national trends, the industry’s
requirements in locating facilities, a review of Quad Cities’ assets and constraints in growing the industry, and some
early recommendations on how the region should promote its target industries.

Final strategies will be presented after a more thorough evaluation of the region’s best renewable resource: its
workforce. We will perform a detailed evaluation of workforce data in the Human Capital Analysis report, followed by
our Strategic Recommendations.

To provide some guidance to Illinois Quad Cities on effective ways to attract desirable industries to the region and
foster more of a regional approach to improving the area’s economy, AngelouEconomics has studied other
communities to determine how they improved their economies and turned challenges into successes. There are also
some opportunities for Illinois Quad Cities resulting from some of the difficulties in dealing with a major urban area
such as Chicago.

Benchmark Communities and Their Economic Success

The benchmark communities profiled here have many characteristics in common with the Illinois Quad Cities. Some
have similar industry composition and are experiencing similar economic trends. Others show how successful
communities position themselves through marketing, upgrading workforce skills, or leveraging strengths to attract
new companies. Others cooperate with neighboring communities to form regional marketing and branding efforts.

1) The Cedar Rapids / Iowa City Technology Corridor and Agricultural Technology

The Cedar Rapids and Iowa City metros form a regional economy of nearly 400,000 people that is quickly becoming
a center of growth in technology, entertainment, and food processing in the midwestern U.S. The corridor employs
225,000 and has a $19.7 billion economy. Its population grew 14% over the last decade to around 314,000 people
today. Over 34% of residents 25 and older have a bachelor’s degree.

Some of the biggest employers in the corridor Proctor & Gamble, Oral B Laboratories, Quaker Oats, and Ralston
Foods. Bio-agriculture is also a growth industry in the region, including Genencor, a leading producer of industrial
enzymes used in household items, and JRS, which is building a $23 million dietary fiber production facility to convert
oat hulls to oat fiber for use in foods such as low-carbohydrate bread. Electronics firms such as Rockwell Collins
make electronic communications systems for military and commercial jets, GPS (global positioning satellites), and
wireless technologies for logistics and distribution and communications.

The area thrived largely due to partnerships with higher education. The University of Iowa emphasizes biotechnology
and pharmaceutical research, with programs in genetics, hydraulics, speech and hearing, agricultural medicine,
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Economic Positioning Analysis Executive Summary
biocatalysis, biomedical engineering, and pharmacology. It has a biotech incubator and Center for Biocatalysis and
Bioprocessing. The State’s major universities consider economic development one of their key missions. The Iowa
Legislature last year allocated $25 million to state universities for business creation efforts. The Cedar Rapids/Iowa
City area brands itself the “Technology Corridor,” helping the region compete globally for companies using new
technologies.

There are several important lessons for Illinois Quad Cities in the Technology Corridor’s success:

1. Diversify your industry for sustained growth. Just as investors diversify portfolios to minimize
downturns and risk, so should communities.

2. Define your region and brand it. Companies not already located in the Midwest may not know where
Cedar Rapids or the Quad Cites are and which companies reside there. Defining your community will help
create more opportunities to compete and grow.

3. Build upon your economic history to create new industry growth. Cedar Rapids and Iowa City are
investing in research to add value to agriculture for agricultural technology and biopharmaceutical products.

Rochelle, Illinois and the Distribution Industry

Rochelle is a small town in central Illinois that has become a major distribution hub for the Midwest. The town, with a
population of 9,500, is synonymous with “trains”. Over 120 trains pass through town daily its Burlington Northern
Santa Fe and Union Pacific rail lines. Taking advantage of its central location and direct access to Chicago, Rochelle
invested in rail to capture a significant share of the state’s distribution industry. Congestion in the Chicago area
means more opportunities to relocate distributors to outlying cities such as Rochelle. The city received a $2.2 million
U.S. Economic Development Administration grant to support the investment by Union Pacific for a $181 million Inter-
modal Terminal & Reload Center. The Global III facility covers 843 acres at the intersections of I-88 and Illinois
Highways 38 and 251 and can handle 350,000 road and ocean containers annually. The facility allows one-day
delivery to 55% of the U.S. and strong participation from private sector developers. The city purchased land and rail
lines for $1.3 million and spent $2.5 million on connecting rail lines to its industrial park. Rochelle now has over 30
million square feet of refrigerated warehouse space and 2 million square feet in other warehouses.

The key lessons for Illinois Quad Cities in Rochelle’s success:

1. There is strong competition for rail-to-truck warehousing and distribution. While growth will continue to
occur in ocean container shipments to major metros like Chicago, communities such as Rochelle are receiving
massive investments.

2. Bigger is better in the distribution business. Thousands of acres are required to be a strong distribution hub.
Quad Cities must consider the land requirements of any future investments in distribution.

3. Continue to pursue federal funding opportunities for any infrastructure investments. Agencies like the EDA
evaluate grant proposals continually and look for projects that leverage the most additional local or private sector
funding.

4. Make any rail investments in Quad Cities in heavy rail. Federal laws have raised weight limits on railcars, but
few existing tracks support these heavier cars. While much of Union Pacific's system is approved for heavy axle rail
cars, the track structure – especially bridges – cannot adequately handle and distribute the excess weight.
Congestion and cost cutting drive firms to pack more material into rail cars. Research further where heavy rail exists
in the state and if rail lines into Quad Cities can be upgraded.
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5. Look for back haul opportunities for Quad Cities businesses. Rail companies and distributors are always
seeking backhaul opportunities. About 75% of containers from Asia return empty. Agriculture equipment makers
such as Deere are experimenting with ways to produce and ship agricultural equipment by container to distant
markets, and Union Pacific is making plans to expand its transport of ethanol to serve markets on the West coast.

Omaha, Nebraska and Back Office Operations

Omaha has built strong back-office operations including insurance, finance, and telecommunications. Omaha’s
strong economy is built on professional services and technology. Employment grew 28 percent between 1990 and
2002 to 368,000, compared to an 18 percent U.S. growth rate. Service firms employ 34 percent of Omaha workers;
when combined with trade it increases to 57 percent. The city is a hub for credit card processing, insurance, data
centers, and call centers. Nearly 30 insurance companies and two-dozen direct response/telemarketing centers are
headquartered there. Telecommunications and data intensive companies employ over 50,000. Omaha companies
process over one-third of all credit card transactions. The 1-800 phone number was first used there.

Omaha has one of the country’s most advanced telecommunication networks, reliable power, and innovative higher
education along with a low cost, pro-business environment. This is due to major investment from the Federal
Government, which developed an advanced communication network for the Strategic Air Command, which located in
Omaha during the Cold War, while local phone providers built a good local network. The region also offers a very
reliable power grid. Telemarketing firms moved to Omaha to take advantage of its telecommunications network and
low business costs. These strengths, along with low tax premiums on insurance, attracted insurance providers.
Financial service companies came to Omaha and later moved their data centers there to take advantage of the
telecommunications network and reliable electricity. Omaha data centers include ConAgra, Union Pacific, MCI, First
Data, Mutual of Omaha, Gallup, First National Bank, and Qwest.

Key Lessons for Quad Cities in Omaha’s success:

1. Regionalism is vital to compete. Consolidate economic development organizations and house them
under one roof. Omaha also cooperates with its Iowa neighbor, Council Bluffs to improve both economies.

2. Strengthen your external image. Awareness and a positive image help lure investment and jobs.

3. Use existing employers to sell. Omaha’s economic development group relies on existing employers to
help sell the community to prospects.

4. Involve young professionals in your economic development efforts. A member of the Young
Professional Council sits on the Economic Development Board of Directors.

5. Leverage contacts from existing employers. Like Omaha, Quad Cities has many companies that supply
domestic and international companies. Leverage contacts in these supplier companies to target the
companies they supply.

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Sioux City, Iowa and Food Processing / Value-Added Agriculture

Sioux City Iowa is noted for its agriculture resources and food processing. It has successfully retained and
expanded its existing employers and generated value-added agriculture operations. Sioux City is part of the
Siouxland tri-state region that includes Iowa, Nebraska, and South Dakota, and has a population of 145,000. Sioux
City is home to some of the biggest names in meat processing, such as IBP/Tyson, Cargill, John Morrell, Ag
Processing, ADM, ConAgra, Beef Products, and Wells' Dairy. Over the past 10 years, its non-farm employment has
grown by over 40%.

Sioux City attracted food processors seeking access to supplies of grain and cattle. The region has a good
transportation system, industrial parks, a skilled workforce, and utility infrastructure with excess capacity. After the
loss of hometown company Gateway Computer, the region diversified its economy through food processing. The
Siouxland region is also seeking biotech companies to locate their manufacturing facilities close to suppliers of key
ingredients, even traveling overseas to seek trading partners and new companies. Sioux City helps its existing
companies expand and stay competitive. Sioux City collaborated with MidAmerican Energy to construct spec
buildings for existing employers. The city also provides tax abatements, increment financing, and direct loans.

Key Lessons For Quad Cities in Sioux City’s success:

1. Food processors are savvy in their negotiations for incentives. Food processors operate with thin
profit margins. Therefore, they are highly cost sensitive and efficient. They will work to get the most
incentives possible. Larger companies are savvy with incentives and seek primarily tax abatements and job
training. Small companies are often lured by low interest loans.

2. Help existing employers expand and stay competitive. Sioux City actively stays in touch with its
employers. It collaborated with MidAmerican Energy to construct spec buildings for several existing
employers. The city also provides tax abatements, increment financing, and direct loans.

3. Don’t go at it alone. The Siouxland Initiative is a regional marketing group for the tri-state region.

4. Help local companies find new opportunities to add value to existing products. Explore whether
products are sent elsewhere for further processing, and work to relocate those operations to your
community.

St. Louis, Missouri and Regional Economic Development

St. Louis, Missouri and the surrounding metropolitan area in both Missouri and Illinois have been successful in
shaping a regional approach to economic development. The Greater St. Louis area, a 12-county area on either side
of the Mississippi River in both Missouri and Illinois, is home to more than 2.6 million people, making it the 18th
largest metropolitan area in the United States. The region is headquarters for 19 Fortune 1000 companies including
Anheuser-Busch Companies, Inc., Emerson, May Department Stores and Graybar Electric, ranking it seventh in the
United States as a headquarters location for Fortune 500 companies. Chief Logistics Officer Magazine ranks St.
Louis as the 10th “most logistics-friendly city” in the country and Business Facility Magazine ranks it as the 10th “most
wired city” in the country.

The St. Louis area has also dealt with a great deal of governmental fragmentation over the years. Not only is St.
Louis split by the Mississippi River and between the states of Missouri and Illinois, but the region also has a large
number of municipalities and other units of government within its borders. To bring a more regional approach to
economic development, the Regional Chamber and Growth Association (RCGA) created the Greater St. Louis
Economic Development Council to serve as the economic development arm of the regional chamber. It brought
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together business leaders, community leaders, small business owners, union representatives, and the area’s political
leadership to put a regional economic development effort in motion. Some of its greatest accomplishments include:

• It has become a “one-stop shop” for corporations and site selectors for information about communities and
business sites in the region.

• It works with communities and economic development organizations in communities to complete relocation
deals once a company has selected a site.

• Through the RCGA, it has conducted two five-year regional economic development campaigns since 1994,
raising $12 million in the first campaign and $15 million in the second, with a third five-year campaign being
planned.

Key Lessons For Quad Cities in St. Louis’ success:

1. Redevelopment benefits greatly by a unified, cooperative approach. Leaders in St. Louis discovered
that collaborative efforts make economic development much more focused and more likely to succeed. This
is particularly true of the cooperation between government and business.
2. Cooperation across government boundaries is increasingly important. Economic development does
not stop at the city limits. Generally, successful economic development involves and entire region, and that
usually cuts across artificial government boundaries. Neither businesses nor site selectors observe political
boundaries when selecting an area to locate a business. Political jurisdictions that put obstacles in the way
of business location can result in elimination of an area from consideration. It is in the best interest of
governments in a region to work together for economic success.
3. Collaboration among public, private, educational, and community organizations is essential.
Successful economic development efforts depend on the effective efforts not only of local government but
also the business community and other private sector representatives, public school and higher education
institutions, nonprofit organizations civic organizations, and any other entities that have a stake in economic
development and growth.

Chicago, Illinois and Regional Economic Influence

The third largest city in the U.S. with over 8.4 million people, Chicago is the commercial, financial, industrial, and
cultural center for the Midwest. The city is home to 30 Fortune 500 companies, and 107 corporate headquarters. It
has over 1,500 foreign firms, attracts over $46 billion in foreign direct investment, and has a regional gross product of
$350 billion. O'Hare International Airport is the second busiest in the nation, while its container port is the third
largest in the world. Manufacturing employs 465,000, though this sector is expected to shrink. Business services
employment grew by 82% in the 1990’s, the fastest in the U.S., with growth in information technology, staffing, credit
reporting and processing, equipment rentals, management, and public relations.

Chicago has benefited from its excellent location in the manufacturing belt and water access. A Chicago branding
study revealed Chicago’s key strengths to be its unique linkage of abundant business resources and livability, its
culture, location, diversity, infrastructure, natural beauty, and sense of community. Its growing job market attracts
workers from surrounding states as well as Hispanic immigrants. Its excellent quality of life attracts top talent.
However, distribution industry growth has strained the city’s aging transportation system. Over 1,200 trains arrive
and depart daily with containers of imported goods from Asia, requiring warehouse space until they can be shipped.
As increasing costs force closure of smaller warehouses and consolidate distribution, right of way issues for rail and
roads are major problems. Chicagoland Chamber of Commerce members rank transportation as their number one
issue.

Chicago and the Midwest have lost jobs to overseas markets and to the southern and western U.S. The loss of SBC
Ameritech, Amoco, Bank One, Quaker Oats, Heller Financial Inc. and Dean Foods has also affected business
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