Economic diversity at core of plan

The local Columbus economy is strongly tied to the state of the diesel engine and automotive supply markets, which means the city’s workforce suffers when those markets are in decline.

That’s why, according to Columbus Mayor Jim Lienhoop, the city needs to put more efforts toward diversifying the local economy in order to maintain a strong workforce, even when the local automobile manufacturing industry is in a downturn.

Along with Jason Hester, executive director of the Columbus Economic Development Board, which serves all of Bartholomew County, Lienhoop presented a plan to the Columbus City Council on Tuesday to funnel more money to the board for stronger efforts toward diversifying the economy.

Lienhoop has proposed increasing the city’s dues to the board from $14,000 to $150,000 annually over the next three years for stronger economic development efforts.

The board would use the additional $136,000 — which would come from the city’s Economic Development Income Tax (EDIT) fund — to attend more trade shows, increase economic marketing efforts and create a talent attraction campaign to bring more workers to the city.

The money would be concentrated toward attracting businesses and workers to Columbus in three specific areas:

  • Pharmaceutical manufacturing
  • Engineering research and development
  • Administrative support

Targeting trade shows

Nearly half of the city’s new funds to the board would be used to attend more trade shows and site visits and to launch a new talent attraction campaign.

The board will focus much of its efforts on increasing the city’s presence at trade shows, both within the United States and internationally in countries such as Germany, China and Japan, Hester said.

For now, the city plans to attend as many trade shows as possible, Hester said. But eventually, the board will visit fewer shows, but have a larger presence at the shows it does attend, he said.

Among the trade shows the city will have a presence at is the Hannover Messe industrial technology fair in Germany, the largest industrial trade show in the world, Hester said.

Aside from increased interactions with prospective businesses at trade shows, Hester said talent attraction would also be a key component of the mayor’s economic development plan.

District 4 councilman Frank Miller asked Hester how the additional dollars for the board would be used specifically to attract more talent.

Because the local unemployment rate is so low — about 3 percent — the existing businesses in Columbus are struggling to find enough workers to fill their open positions.

Hester said his long-term plan is to conduct a talent summit with the board’s partners, local employers and human resources representatives to gather their input on the best ways to address the needs of the local economy and attract new workers to Columbus.

The economic development board will be able to measure the success of Lienhoop’s economic plan based on the number of trade shows it is able to attend and the number of workers it attracts to Columbus, Hester said. The ultimate indicator of the program’s success, however, will be the number of businesses who choose to open new operations in Columbus.

Two members of the audience, Joe Swaim and Ken Fudge, said they had some reservations about the proposed plan, especially considering the fact that existing employers are struggling to find enough workers now.

Hester acknowledged that issue, but said his organization would exert a great deal of effort toward attracting new talent. He also assured Swaim and Fudge that he would give regular updates to the council on how the money for the economic development plan was being spent and how effectively the board’s efforts were working.

Lienhoop and Miller each sit on the Columbus Economic Development Board, so they will be actively involved in monitoring the board’s use of the city’s contribution, they said.

Hester also emphasized that results would not be seen overnight. The plan calls for a three-year funding increase, and the results likely won’t be evident until late in the game, he said.

Diversifying economic base

To demonstrate the need to diversify the local economy, Hester presented the council with data that showed a direct correlation between the city’s unemployment rate — currently about 3 percent — and the sale of North American light vehicles, including cars and trucks.

When vehicle sales were up across the country, the local unemployment rate was low. However, when sales fell, such as in the aftermath of the recession in 2009 and 2010, the unemployment rose sharply, at times more than 9 percent.

While the future of light vehicle sales is still uncertain, Hester said the worst-case scenario shows sales falling by 33 percent in the next few years, raising the local unemployment rate back up to 6 or 7 percent.

If that prediction comes true, adding businesses in the pharmaceutical manufacturing, research and development and administrative support industries could help stabilize the unemployment rate by providing a wider range of jobs for residents seeking work, Hester said.

Lienhoop told the council the economic development board has a proven track record of attracting businesses to Columbus, so he believes funneling extra money toward the board is the most effective way to amp up local economic development initiatives.

“We’ll be putting the city’s money to work from the start,” Lienhoop said.

If the city were to hire an employee to oversee economic development efforts, salary and benefits alone would cost $75,000 to $100,000, plus the budget needed to support the work, Lienhoop said.

While the economic development board has been able to fund about 92 percent of its budget through private funding, Hester said the $14,000 the city currently pays the board is significantly less than the public support other economic development boards are given.

In some cases, cities and counties half the size of Bartholomew County are outspending the local board two-to-one, he said.

In a survey of 14 local economic development boards in cities or counties with populations between 40,000 and 120,000 — with Bartholomew County’s population of 80,000 in the middle — the Columbus Economic Development Board currently has the ninth lowest budget, $372,750.

Of the eight cities with larger budgets than the local economic development board, six have smaller populations than Bartholomew County. However, the additional $136,000 will boost the local economic development board to the sixth largest budget, $508,750.

“We’re pleased to get at least in the middle of the pack,” Hester said.

The council passed a resolution at its Feb. 16 meeting to amend the $1.87 million EDIT fund in the city’s 2016 capital improvement plan for the new economic development efforts.

The amendment included a $90,000 reduction in equipment spending for the Columbus Fire Department and $145,668 in savings on a citywide radio project. The combined savings on those projects — $235,668 — was moved to a line item called miscellaneous grants, later renamed “Refund to EDIT.” Those are the dollars Lienhoop plans to use for his economic development plan.

The council only discussed the economic development plan Tuesday and did not take any official action. However, the proposal must receive approval by the Columbus Board of Works.

Breakdown of the dollars

The city of Columbus plans to contribute an additional $136,000 to the Columbus Economic Development Board for stronger economic development efforts. 

Trade show/site selector events: $41,000

Talent attraction: $22,000

Marketing materials: $19,000

U.S. prospect recruitment: $14,000

International prospect recruitment: $8,000

Promotional items: $7,500

Website marketing updates: $5,500

Business expansion efforts: $5,500

Hosting international delegations: $4,000

Pharmaceutical manufacturing initiative: $3,750

Regional cooperative marketing: $3,000

Print advertising: $2,500

Direct mail follow up: $750

Total increase: $136

On-going support: $14,000

Total city funding: $150,000

Author photo
Olivia Covington is a reporter for The Republic. She can be reached at ocovington@therepublic.com or 812-379-5712.