Comprehensive Economic Development Strategy (CEDS) for PTRC

I was the consultant and principal author of the Comprehensive Economic Development Strategy (CEDS) for the Piedmont Triad Regional Council (NC – 12 counties, 1.6 million population)

Comprehensive Economic Development Strategy

Final Report – Adopted February 19, 2014

project logoTriad Tomorrow, the Piedmont Triad Comprehensive Economic Development Strategy (CEDS), serves as the foundational economic development element of our region’s sustainable communities planning effort, Piedmont Together. The CEDS is designed to help stakeholders form partnerships to leverage existing resources that will revitalize the communities of our region. Building on existing regional and local economic development plans, Triad Tomorrow strategies focus on supporting collaboration among local and regional stakeholders within the economic development community, private industry, educational institutions, local government, foundations and the private sector. The CEDS is a responsive and flexible five-year strategic economic development plan, designed to be easily adjusted to meet the changing needs of communities throughout the region.

The Piedmont Triad Regional Council undertook development of Triad Tomorrow as part of the statewide NC Tomorrow Initiative, which aims to create a more uniform, coordinated approach to economic development planning across our state. In this initiative, led by the North Carolina Association of Regional Councils, regional CEDS are developed by each of the 16 regional councils across the state, with the ultimate goal of combining them to create a statewide strategic plan. This CEDS will benefit communities in our region in three important ways:

  • The CEDS is to be combined with those of the other regional councils across the state, and then submitted to the Economic Development Administration (EDA) for approval. Upon approval, organizations in our region will be eligible to compete for assistance under EDA’s public works program, economic adjustment program, and many of its planning programs.
  • The CEDS highlights key priorities on which the region can work together to achieve significant results. By marshaling resources and fostering collaboration, local communities and regional organizations can make progress in these critical areas.
  • The CEDS identifies important regional interests. Communities seeking to advance projects in these identified areas can use the CEDS to demonstrate that their projects are not just of local concern, but support broader regional interests.

Triad Tomorrow outlines the region’s four priority economic development focus areas:

  1. Competitive Advantage & Leverage – Sectors of the Piedmont Triad’s regional economy vital to our economic mix which are growing or emerging, and/or unique to the region. These include market clusters, entrepreneurship support systems and our quality of life. The primary goal related to competitive advantage and leverage is to build on and improve the economic sectors that are authentic to the Piedmont Triad region.
  2. Regional Infrastructure – Fixed assets of the region including transportation, utilities, support systems, broadband and the natural environment. The primary goal related to infrastructure is to build on and improve the fixed assets of the region.
  3. Vibrant Communities – The characteristics of communities with a high quality of life, including local leadership, housing stock, and community amenities. The primary goal related to vibrant communities is to provide resources that support a high quality of life in the region.
  4. Talent – The human assets of the region, including our workforce, education and healthcare systems and access to capital. The primary goal related to talent is to invest in the region’s human assets and support systems.

Retail Woes Excerpt from “Pardon the Disruption. The Future You Never Saw Coming”

Retail real estate and sales trends excerpt from my book “Pardon the Disruption. The Future You Never Saw Coming”, published in November, 2013.  This abbreviated section describes the change agents that have disrupted retail sales to do and the impact social trends and rapidly advancing technological changes will have on the sector in the future.


d. Retail

Months ago, I took a drive up Battleground Avenue in Greensboro. Battleground Avenue is a major retail corridor that includes auto dealerships, restaurants, strip center retail and some small offices and residential spaces. It’s not much unlike any four-mile stretch of five-lane commercial development across the United States. Battleground Avenue is just an easily accessible example to illustrate my point. Several new retail buildings (especially on cross streets) have been built recently, providing a reasonable mix of old and new structures.

What I found amazing was the extremely high number of properties for lease and sale, with many spaces never having been occupied after being on the market for months. No doubt there are hundreds of retail opportunities on this stretch (including cross streets), but I counted 60 empty storefronts and buildings along my route. Since that time, several spots have been filled, but inevitably the silent killer that is vacant real estate will take its toll.

At face value it doesn’t look much different than past downturns.  Stores have closed before – or spaces never occupied – for a variety of reasons.  People have experienced cyclical recessions, and they understand that sometimes unfortunate things happen in tough times.

I contend that we are currently seeing something different.  This isn’t about a temporary real estate imbalance.  This isn’t about a nice city like Greensboro and a significant business corridor.  It isn’t all about poor management (poor stocking, wrong layout), a city in decline, a new transportation corridor rerouting traffic from the area, a shift in the economic or demographic composition of the area, or general economic malaise.  But because those are about the only reasons we have ever known for a stretch of empty stores to stand as these do, these old reasons are the only historical vantage points to guide our assessment of the principal cause.   And it has changed the business of retail and retail real estate values forever.

The disruptive technology here is simply the growing impact of internet sales on America’s commercial landscape.  It took years for online retailers to reach the scale of business they needed to make this new means of retailing viable.  A critical mass of Americans needed to be online, online shopping carts had to be developed, shipping costs had to fall, and, probably most importantly, there had to be a trustworthy, secure means of payment that gave shoppers confidence they wouldn’t suffer nightmarish repercussions from their shopping experiences.

Though intellectually people understand that more products are being sold on the internet, it is very difficult to visualize the extended impact that those sales have on real estate.  The cause and effect seems somehow clouded, so we throw traditional explanations at the question to provide the answers.

The technologies that made internet sales possible, and a lack of awareness of these trends as they were emerging, have converged to create a retail real estate bubble that the US may not overcome for decades – if ever. currently represents a sales juggernaut that is the online equivalent of Walmart – yet still in a high-growth mode. US retail sales are growing at a 0-2% annual rate. Internet sales are growing at 10%. It’s clear that all of the growth, and a growing percentage of existing sales, are being done online.

Buyers’ abandoning the only means of acquiring things they’ve ever known was no accident.   Traffic and parking hassles, poor customer service, and a perceived lack of security are less tolerated in a world where comparative shopping, immense selection and preferred pricing are only a click away.

Pair that with the massive overbuilding of retail spaces in the US, especially big box stores, and there’s a real estate bubble – with the concomitant bust and depression – in the making. In my small world, I have seen malls once filled with department and specialty stores close and even be leveled. Of the four malls that once stood in Guilford County, North Carolina, a county of 500,000 people, one was sold to a church, one to a private college, one has been razed, and one is still in operation.  General Growth Properties, the owner of Greensboro’s Four Seasons Mall (the one still there) and nearly 200 other mall properties, filed in 2009 for Chapter 11 bankruptcy protection on over $27 billion of debt, its stock price having fallen 97% from the previous year.

Remember Circuit City? Borders? Ames? Zayre’s? Service Merchandise? Montgomery Ward? Any Kmarts or CompUSAs nearby? Sears? Toys “R” Us? Blockbuster Video? Talbots? Pier 1 Imports?  And now Best Buy has announced the closing of 50 stores and its majority stockholder is taking the company private. Think America’s buying habits have changed?

All of this is not terribly surprising because not only is America migrating to online purchasing, but the overbuilding reflected in all the preceding is only the tip of a very ominous iceberg. An apples-to-apples comparison of US retail spaces to those of other countries is difficult because the measurements come in “retail space” and “shopping center” formats and are not in a consistent, measurable format.

According to the 2007 Economic Census, there were 1,122,703 retail establishments in the United States, and a total of 14.2 billion square feet of retail space. That equates to approximately 46.6 square feet of retail space per capita in the U.S.  Undoubtedly the depressed economy took its toll on the amount of operating retail space and the distinction between retail and shopping center measurement may be in play.

But according to The New Rules of Retail by Robin Lewis and Michael Dart, the US contains 22 ft.² per person in operating retail real estate. Number two in the world is Sweden, with 3 ft.² per person. Internet sales are growing; sales at retail sites are not. The U.S. has over seven times the per capita square retail footage of the country in second place.  This trend is headed one way – and it’s not towards increased retail real estate sites or construction.

Technology has changed the way we buy in other ways, too.  Time was, we did our shopping at local stores – the proverbial Main St. retail district with a hardware store, a department store, pharmacy, and so forth.  The advent of suburban strip centers and shopping malls shifted where we made the same types of purchases.  When there were more options, we did a simple price comparison among a couple of options and tended to make the cheapest choice.

Now, when we consider a purchase, we do what first?  Most of us don’t consider even a modest purchase of an unfamiliar item without checking the internet for pricing and availability.  The development of this trend has had a huge impact on the retail trade.  Once upon a time, we walked into Sears or a local department store and bought what we needed.  We were cognizant of the price – certainly looking for the best deal and keeping an eye peeled for sales – but true comparison shopping on a large scale was virtually impossible.  Retail margins were much higher under that system, which made retailing a much more profitable industry.  Blanket consumer ignorance of the best prices made us less knowledgeable shoppers.  Profit margins were boosted by that.  The stores listed above, which have now closed or are under duress, used to be “price busters.”  When price became the only purchasing decision differential, and people became empowered to find the lowest price, margins fell under siege – and that led to company and store closures.  In short, when Walmart beat Kmart on price, Walmart won.

Now, electronic retailers like Best Buy and Fry’s Electronics are regarded as “showrooms,” where shoppers check out the product and pricing at the store, occasionally buying on the spot, but mostly using a smartphone app or internet search to comparison shop for the best price.  Store traffic hasn’t dropped considerably, but the percentage of store visitors who leave with a purchase has.

As a futurist, I am trained to look beyond the obvious and search for other possible contributions to any outcome from other sources and must take them into account.  From the perspective of local government, there remain calls for increased retail building among town councils and county commissioners (small towns especially like the addition of fast food and chain restaurants).  These buildings and their operations provide a bump in property tax revenues and one of the few new sources of sales tax. But a greater desire for more buildings and retail sites to build a tax base will never successfully intersect with declining demand for retail space.

As a Certified Economic Developer (CEcD), having developed Guilford County’s Economic Development Strategic Plan as well as its Economic Development Policy, and having handled dozens of economic development projects involving financial incentives, I have a good handle on what the impact these projects have on local economies.  In March of 2009, the Chairman of the Guilford County Board of Commissioners proposed that the County give 100% tax rebates to anyone who built any commercial real estate improvements – new, expanded or upfit.  The intent was to invigorate the local economy through investment in real estate development by removing the local property taxes on those structural improvements for the first three years.  It was such a sweet gesture for developers and builders – and oh-so-wrong on so many levels.

First, North Carolina, though it allows economic development incentives, statutorily prohibits tax rebates.  The Commissioners themselves could possibly have been held personally liable for these rebate payments. Secondly, the incentive went to the builder and developer – not any lessee who might rent any property.  So it was no help to the small businesses that it was intended to attract.  Thirdly, the concept of subsidizing the development companies who might build the big box stores that put small retailers out of business was abhorrent.  Lastly, the glut of office and retail space that exists today already existed then.  Piling more office and retail space into an already oversaturated market would drive down rents, push builders, developers, and site owners into bankruptcy because of the lack of tenants and low lease rates, and perhaps even threaten the solvency of local lenders.  No legal counsel from any level of government would green-light the proposal, a point I repeated in a guest editorial for the News & Record.  The concept died a quiet death.

“The fundamental terror that capitalism exploits is that we might not want anything” – Adam Phillips

One other macroeconomic factor that has been largely overlooked but will meld compatibly with sections later in the book is this: Up to 70% of the US GDP has been based on consumer-based spending.  70%!  That is a fundamentally flawed and patently unsustainable economic model.  People are now figuring out – outside of a lousy economy – that it just doesn’t make sense to spend money the way we have in the past.  Until 2008, savings rates declined for decades as we spent and borrowed our way into acquiring more junk than we could ever use.  Families have yard sales every year to cash out on all the stuff they’ve bought, and use the proceeds to take a vacation or simply buy more stuff for next year’s yard sale.  Can you imagine your grandparents spending money that way?  Hardly.  Consumption bling is out; frugality is coming back in.  Not good news for retailers.

As I said before, on-site retail sales are not growing.  Except for neighborhood pockets of need or opportunity, only in rare cases have new stores not meant the demise of others.  Open one; close one.

Another new frugality mindset is going to land in other industries as well.  Somewhere along the line, Americans fell into the emotional trap of keeping up with the Joneses, for example owning automobiles that far exceeded basic, reliable transportation needs.  In one of the greatest behavior-changing value-system-altering marketing perversions in history, we bought into a mindset that ignored common sense – going into debt to make purchases in the second largest category of expenditures in our lives, financing a household asset that we know ahead of time will depreciate rapidly, lose utility, and, in time, become worthless.

Financing a high-priced new automobile knowing full well it will depreciate to near worthlessness is the near-equivalent of planning a $15,000 funeral and fretting over the style, quality, and price of a casket – gotta have the satin lining.  But funerals at least have a huge emotional investment and deep personal attachment associated with them, and for that we may somewhat forgive the extravagance.  But cars?  A commodity that loses $5,000-$10,000 in value the minute you drive it off the lot?  And $2,000-$5,000 lost in depreciation every year?  And two or three of them in every driveway?  For mostly casual use of less than two hours per day?  In the new world of frugality, we’ll bury this concept and regain our financial senses –because we’ll need to.

One off-topic observation:  Has anyone else noticed that where there were once two to four gas stations at every major intersection, there are now two to four chain drugstores?

Lower sales on an absolute basis, causing regular store closures, in a low-growth/lower-wealth local economy where purchasing decisions are shifting to the internet is not a formula for success on retail properties or investment.

A concept has evolved that dovetails nicely with this more frugal era we’re entering. It is the idea of “enoughness.”  Enoughness represents the thinking that once I have achieved what I need to support my family and myself, when I am happy in absolute terms with that things I have, when I’ve provided for what I believe is a reasonable retirement nest egg, I don’t need to make myself miserable to get more. I don’t need that 15th sweater or 40th pair of shoes. I don’t need to keep up with the Joneses for a larger house, a second house, two new cars sitting in the driveway, and the bragging rights of belonging to more clubs than I could ever visit. Enoughness means I can spend time with my family and do the things that are really important rather than work 18 hours a day to acquire things that truly aren’t important.

Enoughness, a new era of frugality, and a large, steady migration away from fixed-site stores in an over-built environment will continue to put severe stress on retail sales and retail real estate.

Real Estate Extra:  Just because the near future of retail real estate doesn’t look very cheery doesn’t mean that migrating to another area of real estate development will be any more profitable. The Great Recession also brought about the Great Homecoming. Elderly parents who were being challenged by health and aging issues, and finding their financial resources had dwindled in stock market drops, pension challenges, and increased healthcare and retirement costs, are increasingly moving back in with their kids. The recession also brought to light that huge numbers of Millennials, unable to find work, are moving back in with their parents. Today’s re-entanglement of the nuclear family took three households and melded them into one.  Increased apartment construction to handle those displaced by the Great Recession itself has been a hot market in some places, but at some point the risk of building more units appropriately diminishes the willingness to do it. With all that said, the outlook for single-family housing on a broad scale is not great.

Office space will be equally challenged. Time Warner Cable ran a series of ads not long ago that said “you don’t need an office.” And in many cases, they are right. Small companies without great need for storefront exposure are making money the old-fashioned way: by significantly reducing costs, in this case by moving the office home.

Next we’ll cover industrial space, but suffice it to say that new projects following the old industrial footprint model with plants exceeding 200,000 ft.² are going to become a rarity.



Jobs Excerpt from “Pardon the Disruption. The Future You Never Saw Coming”

Jobs excerpt from my book “Pardon the Disruption. The Future You Never Saw Coming”, published in November, 2013.  This abbreviated section describes the complete disconnect between government – at all levels – and the private sector in the efforts to create jobs.



Somehow, with all this intense focus on the economy, employment, and jobs, analysts suffer a total blindness to any causative factor other than a traditional recession. And the measures undertaken today to counteract a slowed economy and massive joblessness are little different from the WPA program implemented by Franklin Delano Roosevelt in 1935. The theme plays over and over again: pump enough money (and cheap credit) into the marketplace, and the multiplier effect of the stimulus will reinvigorate the American economy.

Every generation has seen disruptive technology enter the marketplace and disrupt industry sectors, dissolving related jobs. It just seems to be happening faster now (again, the exponential effect of Moore’s Law). Masses of telephone operators, secretarial pools, the elevator operator, the full-service gas station attendant, the milkman, home ice delivery, chimney sweeps – all eliminated from the economy by some form of technological advancement (and some operational advances in business that promoted self-service when possible).

A central theme throughout the economic section has been that technology – whether it be robotic, 3-D printing, internet connectivity and retailing, Artificial General Intelligence, advances in medical science, or something else – will destroy both industry and jobs.  History has always confirmed that, as new technologies come along, older ways of doing things (and the associated labor) diminish or disappear.  But history has also taught us that as the older classes of jobs disappear, new jobs arise with the new technology that replace – and sometimes even increase – the level of employment.  It’s always worked this way, and whenever it seems that technology has overtaken the capacity of humanity and the economy to recover, economists assure us that this round will be like all the others and we’ll be fine.  A whole new realm of employment opportunities will appear in the replacement industries, and the economy will move on.  And again, it always has.  Until now.

Here’s why it’s different now.  It all comes back to the aforementioned concepts of Moore’s Law and exponential growth. Linear growth explains things that are on an absolute (or projected) increasing path at the same rate.  It can show a rising age or any other numeric progression and generally rises as a straight line at a 30-45 degree angle.  That is where we have been throughout history – again, until now.  For most of the path of exponential growth, the slope resembles that of linear growth.   Then it curves upward, rising from the straight line at a sharper and sharper angle. We are entering the last period of the exponential curve, before its slope becomes almost vertical.  This is a phenomenon we have never experienced.  This growth in technological advancement – Moore’s Law playing out – changes the game.  Today’s economists, pundits, and soothsayers refer to the old paradigm where the next generation of jobs seemingly just materializes at the demise of the old order.  Proven right time and again, there is an arrogant confidence that it will happen again.  But when computers, robots, AGI, and other technological advancements can self-replicate, self-generate, and create on their own, the game has changed.  They no longer need our input into the economy at the levels to which we’ve grown accustomed.  There is no “next job” for us to migrate towards; they are already filled by an entity that can do it better, faster, cheaper and more reliably.  That is the big difference.  Ray Kurzweil’s technological Singularity is playing out.

_ _ _

It is shocking to see how poorly government understands the mindset of the private sector. Harder still is figuring out whether government gets its opinion from the citizenry or vice versa, because both groups consistently cite job creation as today’s most important economic and political issue.

So let’s set the table. Most reasonable people believe there is good reason to have public sector employees. We believe we should have teachers and firemen, police and the military. The vast majority of our public sector employees fit one of these categories. The cuts to these groups as well as to other public sector employment have had a measurable effect on joblessness in the US.

Most reasonable people also agree that long-term employment – long-term productivity – is centered in the private sector. This is where the vast majority of us should be interacting with the economy. So, politicians and the public are both chanting Jobs! Jobs! Jobs!  But they don’t seem to see this from a potential employer’s perspective. Politicians keep trying to induce potential employers to take on laborers that they don’t want or need, and the public keeps blaming the politicians for not having successfully done so.

Please, do not equate the loudness of speech or the apparent depth of sincerity about addressing unemployment issues with the ability to do so in any politician, business leader or private citizen.  I will say it another way: Government has spent out.  They don’t have the money to hire directly.  Unless and until government – at any level, against the private sector’s will and to the detriment of its bottom line – can force the private sector to hire people,  or induce hiring at an outrageous cost, substantial progress to place people in “jobs” will not succeed.  And, of course, economists – you know, the ones sitting in the captain’s chairs that completely missed the call on the Great Recession – are chiming in: Jobs! Jobs! Jobs!

_ _ _

“Economics is a highly sophisticated field of thought that is superb at explaining to policymakers precisely why the choices they made in the past were wrong.    About the future, not so much.”

  • Ben Bernanke, Princeton Commencement Address, 2013


“… ‘Do we economists know anything?’ And it is a very legitimate question. Because if you don’t know enough to capture the most extraordinary event, economic event, in all of our lifetimes, what in the world do we really know?

  • Alan Greenspan, on economists. CBS Sunday Morning October 20, 2013


Many theorists admonish local business and government leaders to take an active role in curing local shortcomings in economic development – and this provides all the confirmation that politicians need that they can have a dramatic impact on the economy.  Doing “something” is certainly more acceptable than sitting idly by. Too often, in those collective aggressive attempts to do “something” – to have more entrepreneurs, more creative class members or successful industry clusters, more Jobs!  – the natural response is to try to induce them through sheer willpower and determination. But pushing the rope of artificially creating entrepreneurship, a creative class and cluster development is not working. The eternally-failing Global TransPark near Kinston, North Carolina is a glaring example of doing “something,” by encouraging the development of a cluster with little thought to the ultimate outcome. As evidenced by that project, over-aggressive efforts to do “something” may lead to bad mistakes and can be very expensive.

To my surprise, former North Carolina Governor Bev Perdue has shown a fuller understanding of the true reality of productivity than most elected officials.  At the North Carolina Economic Developers Association conference in March 2009, the newly-inaugurated governor was a featured speaker.  She expressed supreme optimism about the areas of the economy that she believed would be central to North Carolina’s economic future: green industry, the military, and aeronautics.

Then she went on to display an understanding of the economy that very few of our leaders possess.  (Paraphrasing)  “I believe the textile industry in North Carolina can still thrive,” she explained.  “They might have to cut the workforce to increase efficiency and profitability, but…”   WHOA! She said it!  She said what every business in America has said for the last five years.  Workers, with their rising healthcare and other costs; workers, who represent a huge percentage of business costs and unproductive overhead during tough times; workers, who are the human measure of these “jobs” elected officials fall all over themselves talking about; workers, who represent the biggest cost to virtually every company; yes, workers may have to be cut in order for the company to survive and prosper.  Businesses are charged with making profits (and in this economy, surviving).  Their disposition toward creating jobs is:  “You’ve gotta be kidding.  I’m trying to stay in business.”

I’ll give you an example of what I mean. In your next thoughts about job creation, try a little word exchange. I want you to replace the word “jobs” with the term “payroll expense.”  Because isn’t payroll expense exactly what those jobs mean to a potential employer?  Try it and see how it feels to say this: “We need more payroll expense!” or “Why haven’t you created more payroll expense?!” It sounds weird, doesn’t it?  But, again, isn’t that what a “job” represents to a company struggling to make it?   That’s what’s truly relevant because that’s how a potential employer sees the labor force. Her company is in survival mode in this economy; increased profitability is by comparison a lofty goal of secondary importance. Nowhere in our free-market economy or in any company’s set of goals is the objective to simply create jobs.

This disconnect between governmental attempts at job creation and retention through spending and other stimulus – and the virtually opposite goals of those who are expected to do the heavy lifting that solves the unemployment problem (the private sector) – is undoubtedly the most confounding economic enigma today. And it has not been even remotely discussed.

I can’t emphasize this enough.  The public sector – all the politicians from President Obama to Congress to Governors and state houses to local mayors and council members – all identify “job creation” as their highest priority.  The public at large agrees and holds the officials responsible for addressing the high unemployment rate.  And none of the above believe that the best means to do this is to undertake yet more deficit spending to hire a meaningful number of citizens in government jobs.  So the efforts at “job creation” and lowering unemployment are left to the private sector.  And the last thing the private sector wants to do is to add more payroll expense.  Guess what?  It’s not working.  Go figure.

Governments Confront Their Pension Deficit Disorder

My article, published in the November-December, 2013 edition of The Futurist magazine, the official publication of the World Future Society. The article highlights the threats to local and state governments from persistent deficits and debt from every source.

What Does Moore’s Law Mean for the Rest of Society?

My article, published in the July-August, 2014 edition of The Futurist magazine, the official publication of the World Future Society.  I presented from this article at WorldFuture 2014 in Orlando, FL.


My article on the fallacy of wishful thinking based on memories of the past as a planning tool for the future.


The NC Rural Economic Development Center recently issued a new report entitled “Our Manufacturing Future”, highlighting the historic prominence manufacturing has had in North Carolina and projecting its importance in the future.  Newspapers and other media statewide covered the release of the report, giving positive coverage to the hopefulness of a manufacturing resurgence. The report, presented in a most colorful and eye-appealing manner, provides a geographic dispersion of manufacturing types by region, gives the numeric ratings of each manufacturing area’s strengths, and outlines plans to promote manufacturing in North Carolina moving forward.

Manufacturing truly has been a cornerstone of North Carolina’s economy and it provided the first (and largest) opportunity for many workers looking to avoid the vagaries of agricultural life.  The NC Rural Economic Development Center represents the 85 (of the state’s 100 total) non-urban counties in the state and works to provide more economic opportunity for its citizens.  According to their website: “Our mission is to develop, promote and implement sound economic strategies to improve the quality of life of rural North Carolinians. We serve the state’s 85 rural counties, with a special focus on individuals with low to moderate incomes and communities with limited resources.”  A plan to improve opportunities in manufacturing certainly fits within the mission of the organization.

The report was developed by an economic development consultancy called Center for Regional Economic Competitiveness out of Arlington, Virginia.  The focal point of the plan is based on an economic development concept popularized twenty-three year ago known as “cluster” economic development.

Promoted best by Harvard professor Michael Porter in his book “The Competitive Advantage of Nations” in 1990, cluster theory advances the ideas that industries best thrive in two scenarios: 1) when companies have the benefit of many or all of the related components of what they use nearby, raising efficiencies and synergies among industry suppliers and, more so, 2) when they are surrounded by like companies, creating a level of shared, yet competitive, expertise and an ever-evolving higher level of competence in that industry.

In many cases clusters are considered the core of the economy in whatever geographic location is being analyzed and it may take decades for a cluster to fully develop.   A cluster strategy is generally applicable to most areas, and economic developers across the U.S. recognize and practice cluster development when it is suitable.  The downside to an aggressive cluster focus is what we in North Carolina are going through right now.  The clusters of furniture, tobacco, textiles and apparel – manufacturing in general – all witnessed a comprehensive, concurrent collapse.

Aggressive promotion of cluster identification and development can produce another set of downsides.  In their zeal to engage in the cluster arena, Greensboro’s economic development organization conducted a series of studies beginning in year 2000.  Over a six year period, five cluster evaluations were performed by a variety of consultants and third-party assistants.  These six studies came up with 24 separate and independently recognized industries to pursue.   The meaning of cluster concentration got a little fuzzy.

Related to the concept of cluster economic development is the measurement of each industry (in this case, manufacturing subgroups) level of size and activity versus others.  The authors of the study used the term “Relative Concentration” to denote the strength or lack of a competitive presence of industries – and in this case focused specifically on the employment strength of 25 different sectors within the manufacturing arena.  “*Relative concentration reflects the percentage of a region’s cluster employment compared with the cluster’s total employment nationally. A value over 1.0 indicates a concentration higher than the national average.”  In other economic development circles, the term “Location Quotient” is used to reflect these values.  By either name, the intent is to identify and measure one’s areas of strength in areas that are growing.  Those areas are often adopted as preferred clusters to develop further.

But as we will soon discuss, times have changed.  Unless the manufacturing that is being pursued involves the well-honed crafters that certain rural areas can proudly call home – like hand-made quilters and Appalachian dulcimer makers – this location quotient /“relative concentration” is merely a reflection of past economic activity and may have absolutely no impact on future manufacturing capacity.  Except for the information expressed on the pages indicating the history of the data collected, this report could very well have been written twenty years ago, right after Dr. Porter’s book was issued.

The report the NC Rural Center released was “Part 1: Findings”.  Part 2 is scheduled to be released in the near future “with recommendations for expanding opportunities for North Carolina manufacturers, including small firms and those located in rural communities.”  However, this report did include one piece of guidance:  “One overarching recommendation, however, merits immediate attention: establishment of a high-level North Carolina Manufacturing Council to develop and oversee a cohesive, statewide manufacturing policy agenda”.   (Doesn’t this sound familiar?  Perhaps another “strategic plan” to go with it?)


The Rules Have Changed


Over the last thirty years that manufacturing has been in an unevenly spaced decline in the U.S., the American South, and North Carolina in particular (most noticeably in the last fifteen years), thousands of families whose livelihoods depended on the mill or plant operating lost their means of supporting themselves.  Due to no fault of their own, the game changed.  Some saw it coming and never adapted and many were blindsided.  The progression of disruptive technologies marched on and we are seeing another tipping point of change.  The same thing is happening now – with a mix of both opportunity and threat to the status quo.

The report cites the turnaround in manufacturing – that for the first time in fifteen years there was employment growth in manufacturing – and that this gives cause to redouble our focus on this resurgent industry.  So, after fifteen years of employment losses, 400,000 in total (going back several more years with 90,000 in the Piedmont Triad region alone), a gain of 3,000 manufacturing jobs in one year is deemed a signal of a turnaround.  A more appropriate name after a one year gain on the heels of fifteen consecutive years of losses, using old stock-brokerage terminology, would be a dead-cat bounce.  (The term was used when describing a market rise after a prolonged decline – “dropped from enough altitude even a dead cat will bounce”).

This abundantly obvious trend is what makes the information that this report was based on so confusing.  The purpose of researching and exploring the “relative concentration” of these industries is to identify where you might have a comparatively stronger position in any of the sub-categories.  But the key element is that the analysis is structured to only focus on areas of growth; clusters in decline are not even eligible for discussion.  A one year blip on the radar of manufacturing improvement hardly qualifies as a growth trend.  In other words, doing a relative concentration study would clearly indicate that North Carolina has a strong position relative to other states in manufacturing.  But because of the substantial decline in manufacturing, one would never pursue that industry – it is not in a growth mode.  The cluster you pursue – by definition of this type of study – is a growth industry, not a declining one.

The predetermination that manufacturing was going to be aggressively pursued is the subject for another article.  But if the basis for that pursuit is related to the results of this study it missed the mark because there is no foundation.  It makes more sense logically to simply say “we like manufacturing a lot” as the basis for trying to re-create a manufacturing resurgence than what was contained in this report.  We could just have easily said “we like newspapers a lot”, do the same relative concentration study, find that North Carolina has a strength there, and focus our efforts on rebuilding this declining industry.

Nevertheless, manufacturing may not be as dead as recent history would indicate – but for different reasons.  As stated before, the rules – the economy – has changed.  Old style manufacturing will always be with us at some level.  But most of our collapse in manufacturing employment has gone and is not coming back.  It is the new methods of manufacturing that will provide the bulk of the growth moving forward.

Robotic participation in manufacturing has been around for years, but the robots have been extremely expensive and difficult to program.  Rethink Robotics (the company created by Rodney Brooks, who previously created the company iRobot, which makes the Roomba autonomous robotic vacuum cleaner) has just introduced its newest creation in the marketplace.  Named Baxter, this $22,000 robot is simple to program, can do most any rote task, and the price makes access to this productive efficiency available to even the smallest manufacturing operation.  The cost of mass-produced products can be substantially reduced utilizing this technology.

The other significant disruptive technology that is becoming mainstream is 3-D printing.  Most of the printers are no bigger than a table-top paper cutter and prices have fallen to as low as $1,000.  Those who attended the recent Institute for Emerging Issue forum on manufacturing held in February got a glimpse of this technology.  Among the presenters giving us a look at the future was Chris Anderson, formerly editor-in-chief at Wired magazine and now a 3-D manufacturer (and the subject of the article “Why I left Wired – 3D Printing Will Be Bigger Than The Web”).  There are many credible reports that the migration of manufacturing from today’s methods to new technologies is beyond simple training with a new apparatus.  The emerging Do-It-Yourself (DIY), Maker movement and Hackerspace models will require more technical training in Computer Aided Design (CAD) and other formats to reach a tipping point of being fully market-ready.  But currently, there seems to be little or no movement in training in that direction.

And this is another place where the report with its recommendations fails.  This plan presumes that very little has changed in rural North Carolina (which is arguably true), but completely ignores the fact that the world outside has changed.  (Note to report authors: It has.)  These new manufacturing techniques are game-changers and need to be aggressively pursued.

The report and plan totally missed robotics and 3-D printing – the two technologies that will dominate manufacturing in the not-too-distant future.  And the beauty of these new technologies is that they can be placed anywhere – especially the 3-D printers.  The good news is that 3-D printing, for the most part, does something to benefit rural areas that all of this “relative concentration” view of history doesn’t.  With the exception of specialized situations such as printing biological objects (like organ replacement) that take unique skills and access to high-tech lab operations, 3-D printing democratizes production.  In as little as a spare bedroom or as big as one of the thousands of unoccupied factory and warehouse buildings that are equal-opportunistically dispersed across the state, there is plenty of room to manufacture in the new paradigm.


Education and Training are Critical


Community colleges have a significant role to play in how this plays out.  For generations these schools have provided the training and education for tens of millions of Americans to better their lives.  To the community colleges’ credit, if an existing business or a possible business relocation or expansion needs specific training, every community college I have ever encountered goes through walls to make it happen.  They fulfill those requests admirably.

However, community colleges have the notoriety for being re-active to requests for training – or simply teaching the same curriculum they have always taught.  (Excerpted from “Pardon the Disruption. The Future You Never Saw Coming” ©2013 – in publication process):   “We are teaching today the same message in much the same style as we did when Dwight Eisenhower became president. The style of learning and the content of what is being taught are largely preparing our youth for jobs that have now disappeared.  (Continuing…)

… someone with an eye on the future will realize that robots will be doing most of the assembly and distribution work inside five-eight years.  Are they teaching an intro to robotics course?  Robotics repair?  Anything?  3-D printers are now priced between $1,000 and $2,000 dollars.  Cost is no barrier to entry for getting the equipment to teach students how to use one.  Businesses will be adding them and there is room for entrepreneurial opportunity.  Anyone can get in the business.  Do you see any courses on 3-D printing in their course catalog?  Hardly.”

Are our friends at the community colleges up to the challenge?  We’ll see.

The NC Rural Economic Development Center has done great work in the past to encourage opportunity in the less populated, less developed parts of the state.    In manufacturing’s heyday, these industrial jobs provided opportunities for workers to provide a steadier, more predictable source of income.  Because it worked once, there is some wistful look backward to try to recreate the past.  That is what this report seeks to promote – by evaluating a segment of the economy based on its present and, more so, its past stature.  It’s analogous to evaluating the opportunities in agriculture based on the current number and location of plows and mules.

Because there are still manufacturing operations being sited and expanded with the old operational lift and tote mentality, we don’t notice the rapid changes in this sector.  The future for manufacturing in rural areas will only be marginally based on the old evaluative model of “location quotient” or “relative concentration”, and more so on education and training – in areas that our education system has yet to accept – much less, deliver.  The undeterminable timeframe to close the gap of knowledge that can be applied to manufacturing work and jobs in these new areas is the challenge before us.  And this report has us looking in the wrong direction.

Let’s look to the future and build our rural economies with the tools of growth and productivity as opposed to simply trying to re-create our past.  The infrastructure is in place: we have the physical structures with our high schools and community colleges; we have extensive enough broadband to access that which we don’t have on the ground.  If there is enough of an aim to grow this area as to create a Deputy Secretary of Commerce for Manufacturing (as proposed by Governor McCrory) and the will to create a North Carolina Manufacturing Council, then maybe we could expend some level of effort in finding capable instructors to teach these new technologies.  I cast my support for more direct capacity-building education over two new suggestions for well-intentioned, but increased, bureaucracy.  The proud heritage of the NC Rural Economic Development Center can lead the way.


Rob Bencini, MBA, is a Certified Economic Developer (CEcD) and an Economic Futurist.  He may be reached at  or @robbencini.

Say Goodbye to News at 6:00

My article published in September-October, 2013 edition of The Futurist magazine, the official publication of The World Future Society. The issue was dedicated to “Disappearing Futures.”


As our choices for how we source electronic news and entertainment evolve, we, the marketplace, will choose a series of winners and losers.  The trends are evident: we are more and more getting our news online.  Newspapers and traditional television news are rapidly losing market share.

Most Americans migrated to cable television from broadcast television but now many are cutting the television cord altogether, opting to watch what they want on their personal preference schedule using Hulu or Netflix – and watching their choices on laptops, tablets and smartphones.  Gen Y, the next future of viewership, is proving they have little desire for any mass media product that is not delivered wirelessly on a handheld device.  Network television, with its age-old lock on original programming, is watching this paradigm fail as Netflix and others are producing network-quality shows that compete on even terms with the legacy companies.  Advertising dollars that used to go to the networks are now going to social media delivered over mobile devices.

With their extensive news organizations and the capital to bid on live sports (which still commands a unique position in the viewing marketplace), the big three (plus Fox) networks will likely survive – most likely as a subsidiary of one of the social network juggernauts (Google, facebook, etc.), much like ABC network is part of Disney-ABC Television Group.  What becomes expendable – and will disappear – is the string of local affiliates of the networks.

These outlets are largely repeater stations of their affiliated overarching network.  Little they provide, except morning and evening newscasts, is substantially different than the network’s product.  And now their news delivery timing – that which used to be their strength because they were ahead of the newspaper – is behind that of virtually every other means of communication.  The nearly 900 local TV affiliates just aren’t needed in the new mass communication marketplace.   And despite how essential they seemed for all these decades, when they finally go away their collective presence will hardly be missed.

The concept of television as we know it may undergo vast changes by 2030.  YouTube style internet stations may supersede traditional programming.  Televisions themselves may be rendered a tabletop generational throwback by Google glass pull-down optical shades that create a viewing experience like watching Avatar IMAX 3-D with your headset.  But the first casualty, before TVs and networks, will be the local TV network affiliates.


The End of Mediocre Private College

My article, published in the March-April, 2013 edition of The Futurist magazine, the official publication of the World Future Society.


On May 18, 2012, the President of Chester College in Chester, New Hampshire announced that the small arts-oriented college was going to close for good at the end of the semester. Last-ditch fundraising efforts and finger-pointing at the school’s administration were natural parts of the school’s final days as the reality of poor finances and low enrollment finally took its toll. Nearby colleges of similar educational types graciously (but eagerly) welcomed Chester’s student transfers, generously offering “the same tuition, board and fees” as the closing college.

The title of this article is not intended to cast aspersions toward the academic quality of Chester. It would take more than some Monday-morning quarterbacking to properly assess all the factors that led to the closing. However, in most cases (and it appears to be the case with Chester College), the biggest obstacle to overcome is financial. Being cash-poor and deep in debt is harder to cure than creating an academic revival.

The lack of both short-term and long-term financial sustainability has become pervasive in the ranks of small colleges. The “mediocrity” related to poor finances, once achieved, is very difficult to overcome. In many other situations, the mediocrity is truly academic and that aspect puts those schools at a competitive disadvantage related to trends that are now coming into play. Either or both of these factors threaten the existence of hundreds of private colleges across the U.S. But since the onset of the economic slowdown four years ago, the weak signals that were emerging have become full-blown trends that will soon have huge ramifications for higher education in the U.S.

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