Economic Resource Council

It's been awhile

I've not often gotten to this blog since I became the CEO of the ERC, but I hope that all of that can change.  Since January 1st there has been a lot of excitement around the ERC office, Chuck Neeley President and CEO for two and half years has left for other activities and the very able Barbara Campbell, ERC Executive Assistant, has mothered my through a steep learning curve.
So we are now ready to start utilizing this blog as part of our outreach communication concerning economic development news and information relative to Nevada County, the State of California, the nation and the global economy. 
The new ERC Web site is up and running and we invite you to check it out, then watch for us here for the latest news and events.

Could a Nevada County Business Incubator Succeed?

Russ Steele

I was looking for an other document in my Library, when I can across a report purchased long ago and put on my library shelf: Business Incubation Works.  From the stiffness of the pages, it looks like I never even read the report after buying it. It was published in 1997, and may have been on the shelf for a while. 

From part of the Executive Summary:

Business incubators are helping build healthy, lasting businesses and they are doing it for low cost and with a good return on investment to supporters. A very high percentage of incubated companies remains in their communities, confirming the goal of business incubators to build the business base and potential for job creation in their regions. This study - the most comprehensive one on business incubation to date - was conducted under a grant from the Economic Development Administration by the University of Michigan, National Business Incubation Association, Ohio University, and Southern Technology Council. Using a combination of surveys, focus groups, stakeholder panels, and regional macroeconomic analysis, the study found that:

• Business incubation programs help companies create many new jobs. In 1996 incubators reported, on average, that their firms had created 468 direct and 702 total jobs.

• Business incubation programs create new jobs for a low subsidy cost and a substantial return on investment. The estimated public subsidy cost per job created was $1,109.

• Incubator companies experience very healthy growth. For example the average annual growth in sales per firm was $239,535.

• Business incubation programs produce graduate firms with high survival rates - a reported 87 percent of all graduates are still in business.

• Most firms that graduate from business incubators remain in their local communities - an average of 84 percent.

• Most incubator firms provide employee benefits.

• Incubation programs contribute to their client companies' success and expand community entrepreneurial resources.

• Business incubation programs improve local community image.

• EDA-funded incubators perform better than or equal to non-EDA funded counterparts.

Macroeconomic research revealed wider impacts - in terms of wages, direct and indirect jobs, and local tax revenues - that incubator clients and graduates can have on their communities. Although the number of companies used in this part of the analysis was relatively small, the data revealed that incubator firms studied returned considerably more dollars to a community than it costs to subsidize the business incubator program.  [The rest of the summary deals with the conduct of the study]

Several cautions. This study was done in the go-go 90s and covered larger communities than we have in Western Nevada County. It would be good to read and study the whole report to see what lessons we can apply our local community.   

ERC launches updated web site

Russ Steele

Gil Mathew announced today at the annual Board Meeting, the up dated ERC web site is now full operational.  The new site includes some tool sets for people who want to start their own business. Check it out here!

Gil Mathew Joins ERC

Gil Mathew has joined the ERC as President and CEO. Gil was the founder and President of Benchmark Thermal, a Grass Valley export manufacturer, designing and manufacturing industrial heating elements and applications for a variety of industries from aircraft galleys to semiconductor tools. Benchmark grew from 2 employees to 60 employees over its 23 years under Gil’s direction. He sold the business with the caveat that it must remain in Grass Valley for a minimum of 7 years.

 

Latest findings on Consumer Behavior

Russ Steele

Annenberg School for Communication has been surveying Internet users and have published their lastest findings in  2008 Digital Future Project – Year Seven Report. They have published a summary of key findings on more than 100 major issues here.

The 2008 Digital Future Project found the following about Consumer Behavior:

Who Is Buying Online? -- The number of online purchasers has increased to the highest level in the history of the Digital Future Project, increasing 16 percent since 2006.
Purchasing On The Internet: Spending Per Month -- Sixty percent of Internet users age 18 and older bought online and spent under $100 a month, a large increase over 2006.
How Often Do Online Purchasers Buy Online? -- The average number of annual online purchases for those age 18 and above increased to its peak thus far in the Digital Future Project -- now more than 36 purchases per year.

How Does Buying Online Affect Traditional Retail Purchasing? -- A large percentage of online purchasers reported that their Web purchases have reduced their buying of similar items in retail stores. After a small decline in 2006, the percentage who said that Web purchasing reduced their local retail purchasing somewhat or a lot grew to 67 percent of online purchasers, up from 65 percent in 2006.

Browsing For Products: Retail Stores Vs. The Internet -- Large percentages of respondents report using both the Internet and retail stores for browsing and purchasing. Seventy-one percent of Internet purchasers said they sometimes or often browse in traditional retail locations and then buy online. Even higher percentages of respondents said they use the Internet as a merchandise browsing tool before buying in stores.

Privacy: Concerns When Buying Online -- Privacy and security online have been found to be major concerns in each of the seven Digital Future studies. Almost all respondents have reported concerns about the privacy of their personal information when or if they buy on the Internet. The percentage of all respondents who reported the highest level of concern increased in 2007, and overall concern was the highest since the first year of the Digital Future Project.

Privacy: Comparing Concerns Among Non-Purchasers Vs. Purchasers -- Although the percentage of all users who report the highest level of concern continues to be quite large, comparing Internet purchasers to non-purchasers shows that online buyers report much lower levels of concern.

Credit Card Information: Are Concerns Stabilizing? -- Concerns about credit card security when or if buying online continue to remain high among respondents in the Digital Future Project.
Although the percentage of those with the highest level of concern about credit card information increased slightly to 57 percent, the overall levels of concern have stabilized over the four most current years of the study -- and at a much lower level than when this issue was first tracked in 2001.

As the ERC struggles to develop an economic development strategy, they need to understand these changes in consumer behavior.  More people are going on line to chose what to buy and where they will buy products of interest. You can down load the full summary of the report here.

Open Thread to discuss the Siefel Economic Strategy Report

Russ Steele

I have opened a thread for people to comment on the Siefel Report: Western Nevada County Economic Development Strategy which can be down loaded here.

Home Construction Slows to 27-Year Low

Russ Steele

In a study done by Chico State Professor for the Nevada County Contractors Association in 2006, Construction contributed 17 percent to the local economy. The home construction industry has been severely curtailed in Nevada County and according to a recent report by the Commerce Department this week that new homes and apartments construction in 2007 was down 24.8 percent from 2006. I saw on KCRA last night that Nevada County's housing market was down only 15 percent while some of the valley counties it as down about 26 percent.  A declining market means fewer home starts.

Money News writes: For December, construction fell by a bigger-than-expected 14.2 percent. The drop in construction in December was bigger than economists had been expecting and reflected weakness in all parts of the country. Housing construction fell by 30.8 percent in the Midwest and was down 25.8 percent in the Northeast and 19.6 percent in the West. The decline in the South was a smaller 3.3 percent.

Many economists believe the housing sector will remain weak through 2008 before starting a rebound in 2009.

The important thing to remember as Nevada County crafts an economic recovery strategy, it that the Construction industry made up 17% of our local economy. That is a big chunk and it will take a while to recover, with not much chance it will get better real soon. When one of the SDA projects are approve over the next five years, it is unlikely that the construction will be done by local contractors, but by large out of town firm, just like the hospital expansion was and the Sierra College Expansion is now.

Data Bank Resources

Russ Steele

The Sierra Environmental Studies Foundation has a Data Bank where they post relevant reports on current issues being discussed by the public, or being evaluated by governments in Nevada County. Here are two examples:

Looking Beyond the Horizon: Investment Planning for the 21st Century - State of California Debt Affordability Report,  October 2007. Discussion of the the State’s debt and fiscal policy, has long term impact on local economic development planning.

Business Location Decisions and Employment Dynamics in California, 2007 by Public Policy Institute of California. Chapter Five covers intrastate relocations important to Nevada County economic development strategy.

New Downtown Association Web Site

Russ Steele

I got an e-mail this morning announcing the "Official" Grass Valley Downtown Association's web site. Check it out!

Career Technical Education: Creating Options for High School Success

Chuck Neeley

A recent article appeared from Bonnie Graybill from the State of California that I thought was of interest:

Citing an estimated 30 percent high school dropout rate in the state, the commission said it found 'encouraging evidence' that what is now called 'career technical education,' or CTE, properly focused, 'can deliver an alternative approach to learning that can keep students engaged, help improve grade-point averages and prepare students for both the work world and higher education.'  The commission recommends that CTE programs already proven to work be replicated around the state 'to build a long-term, evidence-based strategy that fully integrates academically rigorous career technical education into the general education programs.'  It wants partnerships between those running CTE programs and potential employers, and says serious attention should be paid to expanding the shrinking number of teachers with both the technical expertise in their fields and academic credentialing." 

Sacramento Bee (November 19, 2007) A3.

http://www.lhc.ca.gov/lhcdir/189/Report189.pdf