This is the second part of our 5-part series. You can read the first part here.
What’s the first thing you do when making a cake? You might begin by looking for a recipe, but very soon after this you will need to go and check what ingredients you have. Let’s say you’ve found a recipe for banana cake, but when you go over to the fruit rack you find it full of apples, with not a banana in sight. What would you do? Carry on trying to make a banana cake? Not the best idea. Chances are you would ditch your original plan, and instead start looking at recipes for apple cake.
What’s the point of this illustration? It is that familiarising yourself with what you’ve got to work with — playing to your strengths — is vital to a successful outcome. We could think of a number of scenarios where this is true. For example, a military strategist needs to know where his army’s strengths are before committing a battle plan. A football manager needs to assess where his team’s major assets lie before he can come up with team tactics. A board of directors needs to analyse what strengths the organisation has before committing to a business strategy. All this is to say that a general principal of success is that you work with what you’ve got, not with what you haven’t got.
The point of playing to existing strengths being vital to a successful outcome can be extended to the task of attracting inward investment. For example, let’s say that a region has a particularly strong building of ships and floating structures industry, but a tiny digital technology sector. Which industry would it make more sense to base an inward investment strategy on: digital technology or building of ships and floating structures?
In one sense the answer to that question seems obvious: both digital technology companies and shipbuilders are clearly more likely to relocate to areas where there is already a high proportion of the industry in the area. However, this is admittedly a somewhat simplistic approach and there may of course be numerous reasons why seeking more investment in a specific industry is not viable, even if your region happens to be particularly strong in that sector. What then?
Actually the need for uncovering the strengths of the local economy remains exactly the same, but the question of what those strengths actually are needs fine tuning a little. We would argue that in modern economies, the primary strength any area possesses is not so much in its existing industries, nor in its infrastructure, its raw materials, or its supply chain etc, important as these all are. Rather, we would argue that the principal strength of a region lies in its people and their skills. If this is true, what it means is that any economic developer that can understand where the skills strengths in its region are, can not only attempt to attract inward investment into existing industries in the region, but also from other industries that require similar skills.
A great example of this can be seen in the city of Detroit. If you were asked to name a couple of things about the Detroit economy, you might well mention the car industry and general economic decline. But although these answers are both right, they’re by no means the end of the story. In recent years, the city’s developers have been attempting to reverse the region’s decline, and one way they have attempted to do this is by unpicking the city’s skills strengths.
What they have found is that although the car industry has indeed been in decline, the people within that industry and those who lost their jobs possess a wealth of skills, some of which can transfer reasonably well to other industries. Two such industries are the aerospace and defense industries, and the last few years has seen big investment from these sectors, with 33% of the global top 100 aerospace companies now having a presence in the Detroit region, and over $4.7 billion in defense contracts being awarded to the region’s defense-related businesses in 2012 (you can read about this in more detail here).
All of the above leads to a couple of questions. Firstly, how can economic developers go about uncovering their region’s industrial strengths? Secondly, how can they then uncover their region’s skillset? We believe that the most effective way of doing this is by using granular local industry and occupation data, and in the next two parts we will be demonstrating how this can be done, firstly looking at how local and regional data can be used to establish a region’s niche industries, and in the following part seeing how data can be used to uncover a region’s niche skills.
For more information on how our granular data can help encourage inward investment in your area, contact Martyn Gerard at email@example.com.