Loading...
9.0. EDSR 03-11-2002 Itemit 9 City of Elk - -1 River MEMORANDUM TO: Economic Development Authority I� • FROM: Heidi Hall, Economic Development Assistant DATE: April 8, 2002 SUBJECT: 2002 Business Retention & Expansion Survey Report Attachment • 2002 Business Retention & Expansion (BRE) Survey Report, which includes the Elk River BRE Summary Communication Piece and the 2002 BRE Survey Form • Background Approximately every three years, the Economic Development staff completes a Business Retention & Expansion (BRE) Survey. The purpose of the survey is to assist in the fulfillment of the City's goal to retain and grow existing businesses and industry in Elk River. Staff conducts the survey through site visits to the City's industrial facilities, which often includes a tour of the facilities to gain a better understanding of each company's products or services. At the conclusion of the survey, staff prepares a summary report, which is then submitted to the EDA, the participating industrial companies, and the Chamber of Commerce. In March of 2002 staff completed on-site interviews at twenty of the thirty-seven industrial companies located in Elk River. • • Overview of Issues The 2002 BRE Survey generated the following main responses: • Participating companies included companies associated with machining, plastics, concrete, cabinet making, refuse derived fuel, battery technology, electronics testing equipment, and precision motors. • Business owners surveyed do not feel that the area's students are well prepared to work in Elk River's industrial companies. • Business owners provided the following main suggestions for improvement: 1) Allow more space to be zoned light industrial 2) Provide more financial incentives for industrial companies to locate in Elk River and 3) Educate Elk River residents on the importance of industrial business. Staff Recommendations One of the action steps of the 2000-2003 Economic Development Strategic Plan mentions the creation of an economic development newsletter. This action step was implemented in the summer of 2001 when a Development Update newsletter was sent • to Elk River's industrial firms. One business owner surveyed mentioned that the newsletter was much appreciated since he likes to keep updated on the economic development within the City of Elk River. Staff recommends that future newsletters be provided to Elk River's industrial companies since this is an easy way to keep the communication lines open on a periodic basis. Staff recommends that a new format be used to conduct the BRE Survey. During each visit, business owners seemed more comfortable casually conversing rather than answering the fourteen technical questions currently used in the BRE Survey. Perhaps a three-question qualitative survey would suffice for future BRE surveys. The three questions would cover industry trends, the labor force, and company suggestions, similar to staff's past surveys. Since the EDA is a decision making body, unlike staff, more business owners might participate in future BRE surveys if they received a letter from the EDA when staff begins work on each future survey. Although the 2000-2003 Strategic Economic Development Plan makes it apparent that the EDA is committed to business retention and expansion, perhaps a letter from the EDA, reiterating its commitment to business retention and expansion would provide industrial companies with a more personalized sense that their voices will be heard. • Finally, three business owners discussed the importance of providing general education to the public on the importance of industrial businesses. Staff recommends that . economic development marketing efforts include communication pieces that educate the public on the importance of industrial companies. Perhaps this would help industrial companies feel more valued by both the residential and business communities of Elk River. Also, this may portray an image to potential companies that the City as a whole truly values its industrial companies. The above recommendations are points that should be discussed when the EDA updates the Economic Development Strategic Plan in 2003. Related Communication Piece Included in the 2002 BRE Survey Report, you will find a BRE communication piece that was recently developed by staff and designed by Tammy Miller of Tammy Miller Design. The layout style is similar to the style used in the City's industrial marketing packets. The piece was developed as tool to promote the City of Elk River's business retention and expansion efforts. • City of Elk -� River • Business Retention & Expansion Survey 2002 Summary • • Introduction One goal of the City of Elk River's 2000-2003 Economic Development Strategic Plan is to retain and grow existing business/industry (see Exhibit A). Growing already established businesses is more cost effective than attracting new firms to the community and it creates a pro-business environment that attracts additional investment to the area. One of the ways in which the City hopes to achieve its goal to retain and grow existing business and industry is to complete a Business Retention & Expansion (BRE) Survey. A BRE survey can help a community to better understand its local economy and guide it in developing policies and strategies that promote both private and public investment. Approximately every three years, the Economic Development staff completes a BRE Survey. Staff conducts the survey through site visits to the City's industrial facilities, which often includes a tour of the facilities to gain a better understanding of each company's products or services. At the conclusion of the survey, staff prepares a survey summary report, which is then • submitted to the EDA, participating industrial companies, and the Chamber of Commerce. Copies of the report are also available to the public by request. The EDA will consider the results of the report when updating the Economic Development Strategic Plan in 2003. Methodology In March 2002 the Economic Development staff conducted on-site interviews at twenty of the thirty-seven industrial companies located in Elk River. Five of the company owner(s) or officer(s) chose not to participate in the survey while twelve of them were unresponsive to staff's attempts to schedule an appointment for an interview. Interviews were conducted using a questionnaire developed by staff in 1999. The following information was sought in the survey (see Exhibit B): • Trends and experiences of customers and suppliers in the marketplace of each industry (such information is a indicator of each company's future struggles or growth) • Each company's employment level and experiences with today's labor market (such issues are a critical component to the local economy) • Comments and suggestions on the ways in which the City can improve upon its economic development efforts to better assist each company • Industries • Seven companies are associated with the machining industry, some of which provide products for the computer, defense, and aerospace industries. • Six companies surveyed are associated with the plastics industry (four companies manufacture molds, and two companies provide packaging equipment). • Three companies manufacture products that are associated with high-tech industries. These products include batteries, electronic testing equipment, and precision motors. • Two companies are associated with the concrete industry. • One company produces refuse derived fuel. • One company produces custom cabinetry. I. Trends • A. Suppliers The majority of companies receive their supplies from the Minneapolis/St. Paul area, however many use suppliers from around the country. Eight companies have sister facilities (most are located in the Midwest region but one is in Germany). Examples • One business owner mentioned that his two major lumber suppliers have gone out of business, however the company is willing to pay higher prices for their supplies in order to provide a quality product. • One company official mentioned that the prices of aggregate have risen since there is a shortage of aggregate. • • B. Customers Most companies have customers in the Minneapolis/St. Paul area, however many have customers nation-wide. One company has customers in Canada and Mexico and two have customers in Germany. Examples • One business owner mentioned that housing design trends have recently become more elaborate. This has had positive effect on his business since the company manufactures machine parts for the wood and plastic industries. • Three companies that manufacture products for the defense industry mentioned that September 11th had a positive effect on their product output. • One company president mentioned that he has seen a slow-down in the electronics industry, which negatively affects his business. Another business owner stated that the recession is more extreme today than it was several years ago. C. Competition Most business owners surveyed stated that competition among similar companies in the area is a non-issue. One business owner stated that he has an unspoken understanding with his competitors that they do not "steal" clients from one another. D. Forecasting When asked about the most significant trends facing their industries in the next five years, the majority of respondents cited market and labor force demands (or lack thereof) as their primary concern. Some examples of these demands are: • Increased demand for products or services associated with national defense, wireless communications, high technology, high income housing, and energy conservation • Decreased demand for commercial products (i.e. electronics and travel packages) • Increased demand for worker productivity • Decreased demand for workers (machines replace people) One company official is hopeful that residents will continue to send their refuse to facilities that convert waste into energy. Not only would this benefit his business, it would also • benefit the environment. • II. Labor Force A. Employment Levels Employment levels among Elk River's industrial companies range from 2 to 322 employees. Nearly all employees work full-time and are provided a health insurance and retirement package. Tuition reimbursement for work related training is also common. Employment levels have generally remained stable over the past twelve months with the exception of two of the surveyed companies. B. Employee Recruitment and Retention Business owners were asked to rate their employee recruitment and retention efforts as "easy, moderate, or difficult". Most business owners stated that it is easier to retain their employees than to recruit new ones. Most business owners noted that they prefer to train or retrain their new employees. • C. Education & Employees Most companies find that the area's secondary and post-secondary schools are not preparing students to adequately perform job duties at Elk River industrial companies. Business owners were asked to rate the students' preparedness as "poor, adequate, or well". • l/ of the surveyed business owners rated students' education as "poor". • 1/4 of the business owners gave an "adequate" rating. • 1/ of the business owners gave no rating. Business owners stated that the area's students lack in the following areas (number of respondents in parenthesis): • Work ethic (4) • Math skills (3) • Reading skills (3) • Vehicle mechanics (1) • Communication skills (1) • Grammar skills (1) • Discipline (1) • Goal setting (1) • • The following are additional comments made by business owners as to why they are dissatisfied with the area's students: • Applicants are not on time to interviews (1) • New workers are unable to use basic cabinet making tools (1) • Applicants and new workers have bad attitudes. One business owner stated, "trade school or college graduates think they are worth more money than they deserve". Another comment was, "nowadays, employees wonder what their employer can do for them, not what they can do for their employer". (2) Ill. Business Climate A. Company Comments I. Assets Access to the metro area was cited as Elk River's primary asset, according to the business owners surveyed. Highways 10, 169, and 101 allow businesses to reach customers, vendors and other suppliers easily. Many companies prefer the "small town" feel of Elk River while still enjoying the accessibility to the metro area. 2. Company Suggestions • Give industrial companies tax relief. (5) • Make it easier for smaller businesses to locate in Elk River by allowing less expensive buildings in areas that are zoned light industrial. (4) • Provide business subsidies to companies in need, such as Tax Increment Financing or Tax Abatement. (4) • Educate residents on the importance of small industrial businesses. (3) • Improve planning/zoning efforts for future industrial development. (2) • Improve the education of the workforce. (2) • Make permitting procedures easier. (2) • Work more closely with the School District. (2) • Recruit more industry to increase the tax base. (2) • Improve general traffic issues and access to the old industrial park. (2) • The City Council should work together with the community. (1) • Decrease transportation costs. (1) • Provide industrial companies with more local vendors. (1) • Take risks on new companies. (1) • Consider the input of industrial companies in the Comprehensive Plan Update. (1) • Work to increase the labor pool. (1) • Provide residents with a community center and a fine dining facility. (1) • Support light rail. (1) B. Expansion Plans Seven of the business owners surveyed plan to expand their businesses. Most prefer to expand within the City of Elk River but are willing to relocate if a better financial package if offered by another nearby community. One business owner feels that the business climate of nearby communities is comparable to Elk River due to accessibility issues to the Minneapolis/St. Paul metro area. However, another business owner made the comment that Elk River's reputation in itself would be good reason for his company to sustain an Elk River address. Staff Recommendations One of the action steps of the 2000-2003 Economic Development Strategic Plan mentions the creation of an economic development newsletter. This action step was implemented in the summer of 2001 when a Development Update newsletter was sent to Elk River's industrial • firms. One business owner surveyed mentioned that the newsletter was much appreciated since he likes to keep updated on the economic development within the City of Elk River. Staff recommends that future newsletters be provided to Elk River's industrial companies since this is an easy way to keep the communication lines open on a periodic basis. Staff recommends that a new format be used to conduct the BRE Survey. During each visit, business owners seemed more comfortable casually conversing rather than answering the fourteen technical questions currently used in the BRE Survey. Perhaps a three-question qualitative survey would suffice for future BRE surveys. The three questions would cover industry trends, the labor force, and company suggestions, similar to staff's past surveys. Since the EDA is a decision making body, unlike staff, more business owners might participate in future BRE surveys if they received a letter from the EDA when staff begins work on each future survey. Although the 2000-2003 Strategic Economic Development Plan makes it apparent that the EDA is committed to business retention and expansion, perhaps a letter from the EDA, reiterating its commitment to business retention and expansion would provide industrial companies with a more personalized sense that their voices will be heard. Finally, three business owners discussed the importance of providing general education to the public on the importance of industrial businesses. Staff recommends that economic development marketing efforts include communication pieces that educate the public on the • importance of industrial companies. Perhaps this would help industrial companies feel more • valued by both the residential and business communities of Elk River. Also, this may portray an image to potential companies that the City as a whole truly values its industrial companies. The above recommendations are points that should be discussed when the EDA updates the Economic Development Strategic Plan in 2003. r • . Exhibit A Elk River Business Retention & Expansion • Communication Piece Z Q 0- X X City of LIJ Elk River O 13065Rivet N 5533ay Business Retention and Elk Rivett MN 55330 Expansion "' Goals 47) One of the goals of the City of Elk River's 2000-2003 Economic Development Strategic Plan is to retain and grow existing business/mdustry. The City hopes to achieve this goal by addressing °° the following: •Complete Business Retention&Expansion(BRE)Survey and distribute final results to the City Council,Economic Development Authority(FDA),industrial companies,and the Chamber of Commerce(BRE Survey highlighted below) •Create local industrial business publicity program—consider quarterly feature stories written on industrial firms in a economic development newsletter •Utilize business round table discussion approach to gauge business's attitude toward developing policies and projects •Distribute marketing materials to local industry and promote incentive programs •Ads—Continue to feature local firms in Twin Cities Business Monthly,MN Real Estate Journal, etc...and explore local advertising opportunities •Utilize DTED's Manufacturer's Week to showcase existing firms •Create opportunities for interaction between business owners and elected/appointed officials •Involve local industries in a major marketing event •Maintain database of industrial businesses Business Retention & Expansion Survey Approximately every three years,the Economic Development staff completes a Business Retention& Expansion Survey. Staff conducts the survey through site visits to the City's industrial facilities,which often includes a tour of the facilities to gain a better understanding of each company's products or services. Staff obtains the following information during the site visits: •Trends and experiences of customers and suppliers in the marketplace of each industry •Each company's employment levels and experiences with today's labor market •Comments and suggestions on the ways in which the City can improve upon its economic development efforts to better assist each company At the conclusion of the survey,staff prepares a survey summary report,which is then submitted to the FDA,industrial companies,and the Chamber of Commerce. Copies of the report are also avail- able to the public by request. The FDA will consider the results of the report when updating the Economic Development Strategic Plan in 2003. Phone:763.441.7420 Fax:763.441.7425 www.ci.elk-rivermn.us • Exhibit B 2002 Business Retention & Expansion • Survey Form i •City of Elk,>'("1/1" ., River 2002 Business Retention & Expansion Survey Interview Date Business Name Name of Person Interviewed Title Address Phone Fax E-mail Web Site Note: All information in this survey is confidential and will not be published in its raw form. 1. Please describe your company's products and/or services. What is unique about your products and/or services relative to other companies within the industry? 2. Do you have a sister facility producing similar products? 3. Where are your suppliers located? What changes or trends are they experiencing in their industries? • s 4. Who are your top customers and where are they located? 5. Who are your competitors (or potential competitors)? Where are they located? 6. What are the most significant trends influencing your industry over the next five years? How will they impact your company? 7. How many of your employees work full time, part time, and seasonally? • a. How many employees did you have one year ago? b. What is the current average wage? c. Do your employees receive health and/or life insurance, retirement plans, tuition reimbursement, or other types of benefits? d. How many employees would you like to hire within the next year? e. How many employees do you actually expect to hire within the next year? • • 8. What has been your experience recruiting or retaining the following employees? Recruiting Retaining Easy Difficult Easy Difficult Professionals 1 2 3 1 2 3 Sales 1 2 3 1 2 3 Skilled Labor 1 2 3 1 2 3 Unskilled Labor 1 2 3 1 2 3 9. To what degree are the local secondary and post secondary schools preparing students for work (poorly, adequately, or well)? • 10. What assets does the Elk River area provide your business? 11. What services are not available to your business in Elk River? 12. In the next five years, do you believe your business will expand, relocate, shut down, or remain in its current facility? a. If you were planning to relocate, would you choose to stay in Elk River? 13. Have other cities, counties, or state solicited your company to move or expand? 14. What is the most important thing Elk River can do to satisfy your business needs? •