The Value of Community Strategic Plans in Corporate Location Decision-Making

CDFS-1578
Community Development
Date: 
12/08/2020
Godwin Apaliyah, PhD, Educator, Community Development, Ohio State University Extension, Fayette County

Strategic planning is the ability to act early to avoid challenges in the future when they become harder to manage. Strategic planning offers the opportunity to make decisions that follow a vision. It also creates a path for planning and increases options for influencing improvements. This process is similar to community stakeholders who examine ways of increasing economic gains for communities and their residents. 

Most rural communities with access to interstate highways are identifying sites and developing them as green fields to attract business investments. This is taking place at a time when corporate businesses are changing the way they make decisions about where to locate and expand. These business decisions have an implication for communities as they try to market themselves in an unstable and competitive environment. Some businesses may decide to visit and negotiate for community incentives, while others may want to know what communities are doing to improve the business climate. However, these incentives alone may not secure a relocation or expansion project for a community. As companies consider investing in communities, they are also looking for  strategic plans. This fact sheet highlights how community strategic planning plays a major role for business location decisions.

Community Strategic Plans Take Spotlight in Businesses Location Decisions

Local economic development practitioners are continually reassessing how to attract new businesses into their communities. They realize that expansions and relocations of new projects have become a major trend for corporations. In their effort to attract business investment in their communities, economic development practitioners are creating community strategic plans to use as a bargaining chip. To the corporate community, the presence of community strategic plans demonstrates a community understands what it takes to become efficient, progressive, and competitive in the global marketplace. While the existence of a community strategic plan in a potential community might not seem crucial to some corporations, it can help inform them about the profile of the community and more importantly, could expedite the site selection decision-making process. Vital elements in a community strategic plan that boosts corporate relocation decisions include a business attraction and retention program, and a community workforce readiness and availability program. Another element to consider is integrating the strategic plan with community development programming. Economic development professionals may want to carefully consider these areas when deciding to create, review, and/or update their strategic plans. 

The Business Retention and Expansion (BRE) Element

Designing and implementing an ongoing community business retention and expansion (BRE) program is important when corporations are considering relocation or expansion. BRE is an economic development strategy designed to positively connect with existing local businesses to understand their operations, needs or concerns and how to resolve them. BRE initiatives are a promising indication that local economic development organizations have a detailed plan to achieve the aspiration of corporation’s concerns in the area (Uminski, 2017). The program can also encourage existing businesses to expand their current sites and facilities and create job opportunities. BRE also could attract new businesses to the community. Although attracting new businesses is a common economic development strategy, research indicates that about 80% of all changes in a community’s industrial base occur in its existing businesses, rather than in new businesses (Morse, 1990).  

A BRE program requires annual visits to offer businesses the necessary support to flourish. This might include linking companies to local, state, and regional economic development partners, government entities and other community partners. A community BRE does not have to focus on the retention and expansion of existing businesses alone. As much as communities work to hold onto existing businesses and encourage expansion, they should also have plans for attracting new businesses. In attracting new business, a strategic plan could include development of green sites or industrial parks. These green sites should have built-in infrastructure, such as transportation and an electrical system, a robust communication network, sewage, and water. These systems have a propensity to be capital intensive and high-cost investments, yet are critical for a community’s operations, economic development, and prosperity. 

The Workforce Development Element

The U.S. economy does not have enough skilled workers. Campbell (2019) stated there is a shortage of workers, especially in the retail and restaurant industries. Most businesses have more open jobs than the number of people demanding work. Uminski stated that many companies and corporations are finding it difficult to locate communities with the workforces they need, because modern careers require new and different skill sets. 

Companies are also looking for people with skills in cutting-edge manufacturing and automation businesses. It is not surprising that corporations may use this as a criterion in determining where to invest. It is vital for communities to take stock of their human capital needs, workforce readiness, and develop career pathways to prepare young people with skills and knowledge for future jobs. There is a greater need for them to work with local educational institutions and local businesses and have a conversation about how to prepare young people for jobs.  

The term workforce development is broad and difficult to define. Casually, workforce development is explained as the ability to prepare workers with the skills and knowledge required for a certain type of job. However, the concept is often far more complicated than it appears. According to Haralson (2010) the term is an important component of community economic development spheres. It describes a wide variety of actions, plans, and programs to construct and retain a sustainable labor force to boost existing and potential businesses. He argues that workforce development can be approached at an individual level, where the focus is on a mixture of public services, community supports, employment preparation, and training that can position the person for success in the workforce and in society. At the society level, it is thought of as an “initiative that educates and trains individuals to meet the needs of current and future business and industries in order to maintain a sustainable competitive economic environment.” 

These observations suggest how important workforce development has become, especially to rural communities that may struggle to retain high school graduates. A community’s strategic plan for workforce development should be one that employs a multi-faceted approach, where residents, education stakeholders and public and private partners are involved in determining an efficient and practical program(s) for the community. 

Integration of Community Development in the Strategic Plan

It is essential for a community strategic plan to show that the community realizes the interplay between its economic development and community development programs. Considering this, the strategic plan could include approaches and policies regarding social development initiatives such as affordable housing, education, and healthcare and a broader inclusion of community stakeholders. This includes residents, public and private agencies, and community-based organizations working in partnership to resolve community challenges. This element could potentially focus on the community’s infrastructure, such as roads, utilities, and broadband at green sites. Uminski (2017), argued that the community development element helps answer questions such as, “Does the community have the necessary infrastructure to bring in (and retain) the diversity of businesses necessary to build a formidable tax base? Is the infrastructure regularly monitored to guard against deterioration? Is it up to date from a technological standpoint? For instance, does the community have a fiberoptic network?” 

The integration of strategic plans with community development could assist in efficiently managing inadequate resources in the community to achieve overall improvement. Companies often have corporate social responsibility initiatives in communities where they are located. They may want to know how community and economic development strategies concerning social and economic issues such as affordable housing, education, healthcare, and cultural diversity are incorporated into a strategic plan to foster social and economic prosperity. They also want to see how community stakeholders, with representatives from different groups including its residents, community-based groups, public and private organizations, work together to promote residents and community quality of life (Quimbo et al. 2018). 

The benefits of developing community strategic plans for rural areas cannot be overemphasized. Strategic plans provide community stakeholders with foresight to develop short and long-term social and economic development strategies and implement them to improve quality of life and prosperity for residents and the overall community. Community strategic plans could also provide companies considering relocations a useful tool for assessing prospective sites. 

Conclusion

Community strategic plans can be an important tool for business attraction decision- making. The essential elements in community strategic plans with the potential of attracting prospective companies’ attention to relocate are the community’s business retention and expansion (BRE) program; workforce development program; and integration of community development programs. An ongoing community BRE program is important because it shows local economic development organizations have a detailed plan to support existing corporations in the community. Communities must take stock of their human capital needs and workforce readiness to alleviate companies’ concerns about  a future workforce and develop appropriate career pathways for residents and especially high school students. More importantly, community and economic development agencies should seek to work with local educational institutions and businesses to design vocational courses that prepare students for future jobs.  

Companies often have corporate social responsibility initiatives in communities where they are located. They may want to know how a community strategic plan can address social and economic issues, such as affordable housing, education, healthcare, cultural diversity, roads and railway development, and utilities. The integration of  community development in a strategic plan with will foster social and economic prosperity. Community stakeholders and economic development organizations will benefit by developing and implementing a strategic plan, because it provides short and long-term economic growth. Such plans also have the potential of providing companies considering relocations useful tools for assessing prospective sites.

References

Uminski, Dean J. (Q4 2017). The Importance of Community Strategic Planning in the Location Decision, Area Development Online, Halcyon Business Publications, Inc. areadevelopment.com/corporate-site-selection-factors/Q4-2017/importance-of-community-strategic-planning-location-decision.shtml

Parilla, Joseph & Liu, Sifan. (March 2018). Examining the local value of economic development incentives: Evidence from four U.S. cities, Metropolitan Policy Program at Brookings. brookings.edu/wp-content/uploads/2018/02/report_examining-the-local-value-of-economic-development-incentives_brookings-metro_march-2018.pdf 

Haralson, Lyn E. (April 1, 2010) What is Workforce Development?, Louis Federal Reserve’s Bank. stlouisfed.org/publications/bridges/spring-2010/what-is-workforce-development

Quimbo, Maria Ana T., Perez, John Erinorio M., Tan, Francisca O. (2018), Community development approaches and methods: Implications for community development practice and research, Journal of the Community Development, vol 49 (5), pp 589-603. tandfonline-com.proxy.lib.ohio-state.edu/doi/full/10.1080/15575330.2018.1546199

Soliz, Adela. (2016) Preparing America’s labor force: Workforce development programs in public community colleges, The Brookings Institution. brookings.edu/research/preparing-americas-labor-force-workforce-development-programs-in-public-community-colleges/

Jones, Dennis & Kelly, Patrick. (May 2007) The Emerging Policy Triangle: Economic Development, Workforce Development and Education, Western Interstate Commission for Higher Education, National Center for Higher Education Management Systems. cpec.ca.gov/CompleteReports/ExternalDocuments/Emerging_Policy_Triangle_May2007.pdf

Morse, George W. (1990). A Conceptual Model of Retention and Expansion Business Visitation Programs, George W. Morse (Ed.), The Retention and Expansion of Existing Businesses: Theory and Practice in Business Visitation Programs (3–16). Iowa: Iowa State University Press.

Campbell, F. Alexia. (Mar 18, 2019). The US is experiencing a widespread worker shortage, Vox Online, Vox Media. vox.com/2019/3/18/18270916/labor-shortage-workers-us

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