Bacon's Rebellion

James A. Bacon



 

That's using your noggin!

Rethinking Richmond

 

Greg Wingfield wants to shift Richmond’s economic development focus from corporate investment to human capital. The strategy will require a drastic shift in regional priorities.


 

The Greater Richmond Partnership has earned its spurs as one of the top regional economic development groups in the country. Between 1994 and 2001, the organization assisted 270 companies investing some $6 billion in the Richmond area. Despite extensive downsizing by old-line industries, the metro region saw employment surge by 72,000 jobs over the same period. The Partnership has won numerous kudos from Site Selection magazine and other site location publications.

 

“If it ain’t broke, don’t fix it,” would be the motto of most groups with a track record like that. But you won’t hear those words from President Gregory H. Wingfield. Rather, he sounds the alarm. “The old economic development model,” he says candidly, “isn’t working anymore.”

 

Last year was a bust. A handful of manufacturing expansions – Philip Morris, Waco Chemical, noodle maker Maruchan – kept the economy afloat, but the yield from new companies recruited to the area was meager. Says Wingfield: “At the end of the day, without the local expansions, we would have been sucking wind.”

 

An optimist might write off last year’s poor performance to a prolonged downturn in capital spending after the 2001 recession. But Wingfield questions whether outside investment will snap back when the economy picks back up. He fears that powerful economic forces are rechanneling the flow of corporate investment. Companies aren’t making the wholesale moves they used to, he observes. Recruiting industry to central Virginia will only get harder. To prosper in the future, Wingfield says, Richmond needs to rely more upon its own resources.  

 

It’s a lesson that all regions of Virginia should take to heart. As Bacon’s Rebellion has argued since its inaugural edition, the United States economy is warping and buckling as the economies of India and China, containing some than 2.3 billion people, are integrated into the world trading system. China is morphing into the world’s manufacturing workshop while India transforms itself into the world’s back office. To keep their cost structures competitive, U.S. businesses are outsourcing business functions wholesale to these two emerging giants.

 

In this new world order, the business functions in which the U.S. remains most competitive are those requiring a high level of education and training: R&D, product development, branding, marketing, finance, deal-making and coordination of global activity. Increasingly, U.S. regions like Richmond will prosper only to the extent that their companies, their entrepreneurs and their workforces are capable of moving to ever higher levels of productivity, creativity and managerial sophistication.

 

The global economy poses much the same challenge to every U.S. community. But each region must develop its own strategy, built on its unique mix of assets. By assets, I’m referring not to hard infrastructure like roads, airports, water lines and fiber-optic cable – mere entry tickets into the economic development carnival – but to its industry clusters, human capital and supporting institutions such as universities and research centers.

 

Wingfield sees the Richmond region scaling back its traditional emphasis on recruiting outside corporate capital and doing more to support existing business, stimulate entrepreneurship and upgrade the skills and education level of its workforce. That means paying more attention to general business conditions and quality-of-life issues than ever before. “As we move forward,” he says, “we’ll be looking more inward.”

 

The first step is developing a consensus among Richmond’s civic leaders on a new approach to economic development. The Greater Richmond Partnership held a retreat a couple of months ago in which the board and investors endorsed the need for change. Later this month, Richard Florida, author of The Rise of the Creative Class and a leading theoretician of the new economic-

development model, will address the Greater Richmond Chamber of Commerce’s 6th annual economic outlook conference, exposing an even broader audience to the new way of thinking.

 

Long-term, Wingfield hopes to retool the region’s economic development for the 2005-2009 strategic plan. The process of rethinking priorities and strategies is only beginning, but it’s clear that focus will shift from luring corporate capital to developing human capital. A region with a creative and entrepreneurial population, Wingfield argues, will create its own businesses and prove attractive to outside companies.

 

Austin, Texas, was one of the top-performing economies in the country in the 1990s, and it achieved its growth with very little economic-

development outreach. The region offered an inviting quality of life and openness to a diversity of lifestyles that attracted bright, creative people. It got great “buzz,” Wingfield says. The region didn’t have to convince business to locate there – companies wanted to be there.

 

That’s what Wingfield wants for Richmond – good buzz. And he really thinks Richmond can get it.

 

I agree with Wingfield’s prognosis, and I think Richmond can make the leap to a human capital-driven model of development. But it won't be easy, and it's not a transition that we can take forgranted. I say that as a resident of Richmond for nearly 17 a years, as someone who loves the area and proudly calls it home. If the solution were as easy as upgrading workforce skills, stimulating new business creation and building Virginia Commonwealth University into a world-class research institute – any one of which would be a significant achievement -- I would have no doubts.

 

But moving towards a human capital-driven strategy entails more than raising money and cobbling together public-private partnerships. It requires a massive reordering of community priorities – and perhaps even a rethinking of fundamental values. The process will meet disbelief, incomprehension and outright resistance.

 

In The Rise of the Creative Class, Richard Florida explains the economic-development syllogism at work today. Regions prosper in the United States by stimulating entrepreneurial activity and new-business creation. Entrepreneurial activity arises largely from the energy and ideas generated by the so-called “creative class” – researchers, educators, artists, techies, professionals, managers and others who grapple with complex issues.

 

Members of the creative class are drawn to regions – San Francisco, Boston, Manhattan, Austin – that are open to newcomers, tolerate a diversity of cultures and outlooks, and offer the kind of amenities, from biking paths to a vibrant music scene, that cater to their lifestyles and workstyles.

 

In Florida’s economic development model, communities need to create an environment hospitable to the artists, techies and others who drive the economy forward. If Richmond can nurture a climate attractive to these people, they will settle here and create their own business activity. They will generate new ideas, launch new ventures and find expansion capital. Eventually, the big corporations will locate here to be near the action.

 

Richmond has many of the attributes that the “creative class” values. Core city neighborhoods like Church Hill, the Fan and Jackson Ward have history, architectural integrity and what Florida calls “authenticity” – a deep-rooted and distinctive sense of place, in contrast to the bland uniformity of suburban development. For a midsized city, Richmond also has a vibrant arts and cultural community and a competitive cadre of professional services.

 

But Richmond’s greatest attractions for luring human capital are barely acknowledged as economic-development pluses for economic development at all. Repositioning the Richmond region as a hip, creative place begins with recognizing the region’s unique assets and building on them, a process that has not yet begun. I will list a few that spring readily to mind.

 

The Virginia Commonwealth University School of the Arts. With programs in dance, theater, photography, painting, graphic art and more, this highly regarded institution brings a host of creative young people to Richmond, many of whom settle here and contribute to the vitality of the arts scene and the local advertising profession. By raising the incidence of tattoos, spiked hair and nose rings, the School also adds a diversity of lifestyles to an otherwise button-down region.

 

The music scene. Richmond supports a netherworld of musicians – a number of them with a following around the U.S. and even in Europe -- that’s all but invisible to the power brokers along Main Street. Richmond can hardly claim a distinctive “Richmond sound” comparable to Seattle and punk, but it does have a vibrant music scene, which, as Richard Florida observes, does far more to attract young creative professionals to the region than heavily endowed symphonies and operas.

 

Shockoe Bottom. Most of the city’s nightlife can be found here. The “Bottom” is rude, it’s rowdy, but it’s got character and critical mass – Richmond’s answer to Washington’s Adams Morgan. It’s a place where young singles congregate after midnight to interact with others like themselves. No city has a prayer of being hip or happening without a nightclub district like this.

 

Carytown. People just love Carytown, with its eclectic but family-friendly mix of restaurants and boutiques and its vibrant street traffic. Remarkably, this poor man’s Georgetown enjoys a great word-of-mouth from as far away as Washington, D.C.

 

The James. Richmond has one of the greatest urban rivers in the country. The James has white water. It has islands. It has wildlife. Cutting a swath of green riverbanks and churning water through the middle of the city, it has the potential to become one of the great urban recreational amenities of the U.S. Quality development along the visually arresting riverfront also could create one of the truly coolest places in the Eastern U.S. to live and work.

 

These lifestyle assets are a far cry from the airports and highways, the convention centers and baseball stadiums, that usually preoccupy the thoughts of civic boosters and consume the resources of philanthropists and taxpayers. But they are the features that make a region attractive to creative, entrepreneurial people. Unfortunately, the Richmond region seems committed to a pattern of low-density, subdivision/strip mall development that extinguishes any recognizable sense of place from its fast-growing suburbs. Richmond's myopic view toward the pattern and density of development will have to change or the cool urban core will be swamped by suburban sameness.

 

Richmond has other challenges to surmount. The region has an enduring reputation as a stuffy, insular, old-South city. Admittedly, the national media has hyped the image by playing up race-tinged controversies over symbolic issues such as the Arthur Ashe statue and the Robert E. Lee floodwall portrait. But there’s an element of truth to the stereotype as well. Marketing gurus frequently use Richmond as a test market for new product roll-outs: If a new product can be introduced successfully in a region so conservative, it can be sold anywhere!

 

It’s tough for outsiders to break into the nexus of power and influence of this closed community. It takes years for most newcomers to insinuate themselves into the informal networks through which business relationships are maintained. Furthermore, with its conservative social values, the region is not especially hospitable to gays and other bohemians who, in other cities, contribute disproportionately to urban vitality. The very social cohesion that makes Richmond so comfortable once you’ve become a part of it makes the region forbidding to outsiders.

 

“Openness” is not an attribute that can be created by floating a bond issue or launching a fund-raising campaign. It goes to the heart of how a community defines itself and what its citizens value. The question that Wingfield and the Partnership board must ask themselves: How far is the region willing to go to transform itself into a center of creativity? By embracing cultural and intellectual diversity to make the region welcoming to outsiders, will Richmonders lose what they value most?

 

It's a tough question. Wingfield is a brave man for jettisoning the old economic development formulas at which he excelled to seek a new vision for the region's future. Richmond's answer to the challenge he raises will tell the tale of its growth and prosperity in the 21st century.

 

-- January 20, 2003

 

Bring Home the Bacon

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Richmond Region

6th Annual Economic

Outlook Conference

 

The Greater Richmond Chamber’s 6th annual Economic Outlook Conference will feature a keynote address by Dr. Richard Florida, a professor of economic development at Carnegie Mellon University and best-selling author. Florida's groundbreaking book, The Rise of the Creative Class,  discusses how the values and priorities of the "creative class," comprising one-third of the workforce, influence which companies and cities succeed and fail. Join the Chamber for a discussion about the growing influence of this group, as well as national and regional economic forecasts.