News & Views

Episode 53: Gray’s Anatomy…Examining The Top 5 Issues Of 2018

Earlier this month we traveled to Nashville for the Economix Conference. It’s run by a group called Consultant Connect and a gathering of 250 economic developers and site selection consultants — terrific content and great networking opportunities.

One of the sessions that stood out was a presentation made by Gray Swoope of Vision First Advisors. Gray previously headed up economic development in the states of Florida, Mississippi and Arkansas. His session was titled “The Ten Big Issues of 2018.” For today’s podcast, we asked Gray to trim this down to the “Top 5 Issues” of the past year. Here’s the countdown from #5 to #1:

5) Trade

4) Disappearing Workforce

3) Disruption

2) Incentives Under Attack

1) Amazon HQ2

Special thanks to Gray for the chance to reflect back on the past year in economic development.

Dennis Fraise (Develop This): You’re probably expecting to hear from Andy and Patience with The Project. But before you do, this is Dennis Fraise.

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Dennis: And now, time to hear from Andy and Patience with The Project.

Andy Levine (DCI): Earlier this month, Patience and I traveled to Nashville for the Economics Conference. It was a great conference, terrific content, great networking opportunities as well.

Patience Fairbrother (DCI): So, one of our favorite presentations was one by Gray Swoope of VisionFirst Advisors. And it was titled, “The 10 Big Issues Of 2018.”

Andy: So, for today’s podcast, we’ve trimmed this down just a bit to the top five issues of 2018 and it’s a great way to end our year.

Patience: So welcome to Episode 53 of The Project: Inside Corporate Location Decisions.. I’m Patience Fairbrother of Development Counselors International.

Andy: And I’m Andy Levine also with DCI and Patience’s co-host of The Project.

Patience: So, Andy, can you give our audience just a little bit of background on Gray Swoope.

Andy: Gray has an amazing resume, really quite some career in economic development. He’s headed up economic development for three different states. For Arkansas, for Mississippi, and finally for the state of Florida. In the state of Florida, he was Secretary of Commerce as well as the President and CEO Enterprise Florida from 2011 to 2015.

Patience: Wow. That’s quite a resume. So, only 47 more states to go then.

Andy: Yes. A small little record to go on. In 2015, he started his own firm. It’s called VisionFirst Consulting, which has been enormously successful over the past three years. So, here’s Gray’s take on 2018. Gray, we’re delighted to have you as a guest on The Project podcast this morning. Welcome to The Project.

Gray Swoope (VisionFirst Advisors): Thank you, Andy.

Andy: So, we last saw each other in Nashville where you addressed the Economics Conference and you did a presentation that I heard called “The Top 10 Issues Of 2018.” It was a great presentation. And what we’re going to do is distill that down to the top five issues of 2018, just to make this a little more timely. Are you ready to get started?

Gray: I am. Looking forward to it.

Andy: Okay. Issue number five, trade.

Gray: Well, I think we, in economic development, as we talk about trade. You know, for the most part in economic development, I think we have a very global view. We’ve been worldly thinkers in how free trade, how trade works, and how it should be fair, balanced, and work through that. I think, you know, the discussion in the last year trade with tariffs, moved more to protectionism, reworking NAFTA. It left us with a lot of uncertainty. And I think as, we, in economic development know, capital investment flows as the ability to mitigate any risk. And the risk with trade questions is definitely something that impacts what we do. I worry about unintended consequences. And so, if you see, and look, and track foreign direct investment, you see that it has really, in this year, has really started slowing. And a lot of that I think is just because of the conversation of trade, the protectionism moves, and, you know, where is the United States going. And so we definitely have that’s impact.

I look at the impact of automotive. I look at states like South Carolina and other automotive strong states and the impact that it has on the cost of U.S. made vehicles in other markets. And can they remain competitive because, you know, if you look at like BMW, they’re in Greenville, South Carolina and over 100,000 exports of the vehicles to the European market, and the impact that it has from a cost competitiveness. It has an impact.

Andy: Last week, the “Wall Street Journal” came out with a survey of the nation’s top economists and their number one issue for 2019 the U.S. economy was trade wars. It was the biggest threat that they thought in terms of concerns to the U.S. economy. Let’s move on to number four. Number four, you had disappearing workforce.

Gray: Yeah. I think there’s no doubt that all of us, whether you’re on the corporate side looking for a location, or expanding in a location, or retaining a facility in a location, labor, workforce, is the number one issue. So, I think what we’ve seen is participation rates at historic lows. I do remind people though, when you talk about that, we have a national participation rate of around 63% now. The highest that it’s ever been since it’s been tracked is 67%. So, I always give that as a benchmark, but it’s still historic lows. And so if you look at participation rates, you look at the impact that it’s had in rural America, some of the rural counties today, they have participation rates in the workforce of some of just a little over 40%. And, you know, there are a lot of reasons for that. Is it they’re discouraged because there’s no opportunity? Is it issues with, you know, opioids? Is it other issues that are causing that locally that causes the participation rate to drop out?

If you look at, just in general, where labor is growing, the only in the last decade, the growth has only been and continue to be in the workforce is in the baby boomers. So, you know, age group 55 to 64 seeing growth and then the growth in the 65 and older. But what’s interesting to note in those two groups is that you’ve seen a higher participation rate in women in the workforce. Like, for instance, in age group 55 to 64, there’s been an 8% increase in women entering the workforce in that age group. And then 65 and older, it’s just a little over 7%.

Andy: It was interesting to me when you were making your presentation keying in on this workforce participation rate, which is a statistic I normally don’t hear people talk about. Has that been on your radar as an important statistic for a while now?

Gray: It is. And I think when you start looking, Andy, at a labor market and how do you get people that that have for whatever reason no longer participate. I think that some of the untapped resources for finding labor. So if you’re in a market that you’re having a hard time finding labor, I think you have to look at why is that participation rate so low.

Andy: So, it was interesting on number three when you were starting your presentation, I started to write down and tried to guess what you were gonna talk about in terms of your top issues. And number three was not on my radar at all, and number three is disruption. Talk about that, Gray.

Gray: Well, I think it has to be. And again, I think we just take it for granted. But, you know, last year we celebrated the decade anniversary of the iPhone. And what I really think about that is, you know, 11 years ago, there was no such thing as an app. Only app we talked about was going to a restaurant and getting your appetizer. It wasn’t an economy. But today, the app economy is $1.3 trillion. It’s something that didn’t exist a little over a decade ago. And if you look at where it’s predicted to go by 2020, it’s gonna be over a $6 trillion economy, or industry, I should say. And so, this continued disruption and trying to understand how to build strategy. What businesses are going to be relevant? What new businesses are potential for our community?

So you have to think about in your strategic planning, how to build a flexible plan that can adapt to these new technologies, that can look at ways to take advantage of that. You know, one of the things that I saw that I think is just, is the scariest thing, and this study is getting a little dated now, but Dell did this technology study on workforce, and what it would look like in 2030. And the people that were participating in it basically said they felt like that by 2030, that 85% of the jobs then do not exist today. And so that’s total disruption. And how do you plan a workforce, how do you plan a system supported that’s around something that doesn’t exist today.

Andy: When you were talking about disruption at the conference, you used a, I guess, a story from Albert Einstein. Do you just wanna share that quickly with us?

Gray: Oh, yeah. It’s one of my favorites. So, you know, like me, I’ve been around this business a long time. And, you know, there’s the whole story of Einstein when he was a professor. His students, you know, they came to him and said, “Professor, the questions of this year’s exam are the same as last year’s.” And Einstein replied, “True, but this year the answers are different.” And so I think about that in economic development that, you know, the questions remain the same, but each year, the answers are different. They’re very different. And so, for us to be effective in an economy that’s ever changing, that’s exponentially changing, then I think we have to really dive down and look at these questions and continue to figure out what are the new ways to answer them. And I think it’s the only way that we in economic development are gonna be able to, you know, continue to do our job, is if we look at things like that.

Andy: All right. Let’s move on to number two. And I got the feeling this was a bit personal. This is incentives under attack. And just by way of background, you served as the Florida’s Secretary of Commerce from 2011 to 2015. You had an amazing track record, 728,000 jobs created. But you came under attack quite a bit by the media, by detractors, and incentives was part of that attack. So talk about incentives under attack in America.

Gray: Well, I think that, you know, and especially when it started in the Great Recession of 2008 and people looking at public spending and saying, “Why are we spending money on these type deals?” And so, the deals that didn’t live up to their milestones or benchmarks became kind of the poster child for failure of incentives around the country. And so it was a conversation we had in Florida quite often about, it always evolved around, you know, this is corporate welfare. We’re not interested in government picking winners and losers. And I think, we, as economic developers, really failed at being able to articulate what we were doing. And so, if you look at just at Enterprise Florida as an example. You know, if you look at the total track record of incentives since the program started over two decades ago, it’s still somewhere around 2% failure rate of just a total loss. I mean, and if you look at those…it’s very low. And so, and if you look at how it’s measured, if a company let’s say was…had $100 million investment, was supposed to create 100 jobs, but, you know, invested $130 million and then only created 99 jobs, then it was deemed as a failed incentive in the way it was measured.

And so, a lot of that was our own fault by not looking at how we were being measured and how that was being put out for public consumption. And I will say this, one, there has to be accountability. It needs to be transparent and if companies are going to be involved in some type of incentive, then there is a right to understand how it’s working. I have no problem with that. But where it kinda got off track is, is that people would start looking at large numbers of tax breaks and totaling up that number, and just the image was that we’re just writing checks for companies for millions and millions of dollars. And then headlines start coming up like, “Oh, you’re gonna throw $20 million at a project.” You know, the visual of that is, here’s your $20 million, when in fact it may be all public infrastructure. Roads, training, tax credits, and not any cash distributed.

Andy: Yeah. No. I think there’s this perception that when a announcement comes out and it’s $20 million in incentives that, you know, sort of this Brinks truck backs up to the company headquarters and drops off all this cash. And the reality is, of course, most of these incentives are only given when the jobs are actually created. But we’ve done…I think we’ve done a really poor job as an economic development professional sort of telling that story.

Gray: I agree. And we don’t talk enough about payroll. The disposable income that’s put in to a market because of incentives, or the capital investment. You know, folks that are close to me and that I’ve been around always talk about all too often, we just report on the transaction and we don’t talk about the transformation that happened in the community.

Andy: Let’s move on to number one and that was Amazon HQ2.

Gray: Yeah. I think it’s been the most visible economic development project probably in my entire three decade career. So, it’s been fun to watch, you know, as 234 cities from around the country decided to submit proposals and narrowed it down to 10, and then you get to the final down to what we thought was gonna be two, and it really turned out to b one, and turned out to be two and really a half. So, congratulations to New York, Virginia, and even Tennessee in Nashville.

Andy: So, is what Amazon did here, is this an outlier that is done just because it’s Amazon and they’re so huge and so innovative or are we going to see other public processes like this in site selection? I guess, is this an outlier that won’t be repeated or are we gonna see more of those in the years ahead, do you think?

Gray: Well, look, I think that you’re gonna have some that are gonna try to go out there and do that. But I think few will have the ability to do something like Amazon. I mean, this is a mega project. I mean, you’re talking about 50,000 jobs to start with, with $150,000 average wage. You know, I think there’s many folks that said there’s no way that could happen. And you have a logical and very laid out plan and how they’re gonna get there and do that. And so, you know, I think as far as companies in the future, I think there’s lessons to be learned here. Certainly from Amazon Plus side, think of all the ideas and different approaches on how to approach a large employer like that integrating into a community from an impact of, you know, the workforce, and the public transportation, and the housing, and ideas of how that’s going to work. I think that’s, you know, for years to come and those examples of those 234 to the final 10, you can look and learn. And so, I like that about that.

From the down side, I think it goes back to the number two about incentives under attack. I think that’s gonna continue to just be used for fuel to talk about, why is government picking winners and losers. But at the bottom line, this is where people are forgetting this. If you just look at the wage impact that this will have. And so, in 10 years, if you have 25,000 people that are employed at whether it’s New York or Virginia. At $150,000 a year, that’s $3.75 billion of income, income into a region. And so if you look at the U.S. household medium, you know, household wage, it’s just a little over $61,000. That’s a lot of money. That’s a lot of economy that’s going to just drive small business growth. And, you know, I just think it’s a great opportunity. Even in Nashville, 5,000 jobs, that’s $750 million a year additional income into the community.

Andy: Okay. Let’s just quickly review here. So the top five issues of 2018 by Gray Swoope. Number five, trade. Number four, disappearing workforce. Number three, disruption. Number two, incentives under attack. And number one, Amazon HQ2. Now, I’m gonna leave you with a final question which is, trying to look forward to 2019. I’m curious what’s at the top of your radar for 2019 in terms of a emerging issue that you’re seeing?

Gray: So, as we go to that list and we talk about everything from, you know, number one to number five, they all speak to the relevance of economic development. And what is our role? And so, as we move forward into 2019, I think we, in the economic development community, have to figure out, what is our relevance? You know, just maintaining status quo is not going to be effective. In fact, I mean, it could be like you’re gonna become the yellow cab of the economic development world when you want to be more of the more modern ride share type company. And so we think about where is our role. How do we fit in, you know, communicating incentives. How do we fit in looking at workforce? What are we doing to help our companies from a retention standpoint, on impacts of trade? And what does it mean for foreign direct investment in our communities. And at the same time, I think we’re gonna have to be more accountable, we’re gonna have to be more transparent in showing that, you know, what we do has economic impact, that’s a positive return and a value proposition from a fiduciary responsibility to taxpayers.

Andy: Gray, I think that’s a great note to close things out on. I just wanna say, first of all, this will be our final episode of 2018. It’s a great way to end things for the year. And I just wanna thank you for fitting us into your schedule. I know you’re traveling all around the country and really appreciate you making the time to do this for the listeners of The Project.

Gray: Well, thank you, Andy. And I hope you have a Happy New Year. All the best.

Andy: Same to you, sir. Thank you very much, Gray.

Gray: Thanks.

Andy: So that is a wrap on Episode 53 of The Project as well as our 2018 series.

Patience: We’re looking forward to 2019 and we’d certainly encourage any of our listeners that have interesting projects in the year ahead to give us a telephone call or drop us an e-mail. We’d love to explore profiling your company or your community’s latest projects.

Andy: The Project is sponsored by DCI. We’re the leader in marketing places, and have served over 500 different cities, states, regions, and countries. You can learn more about us at

Patience: We hope you will keep listening. There are many more projects to come.


Written By

Andy Levine

Andy Levine is Chairman of DCI. Since joining DCI in 1991, he has worked with a broad range of places from “A” (Alabama, Asheville, Australia) to “W” (Wales, Wichita Falls, Wyoming).

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