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Wednesday, 29 May 2013 12:59

Moving the chips of economic development in Haywood

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fr chamberstuffAn exploratory committee of Haywood County business leaders will examine in the coming months whether to reshuffle the county’s economic development arm for the second time in a decade.

 

Traction is building to move the Haywood County Economic Development Commission under the auspices of the Haywood County Chamber of Commerce. Both are separate entities now — the chamber is run by private business leaders and the economic development commission is run by county government.

But both presumably have a similar goal: to improve commerce, bolster the economy and grow jobs.

The task force will examine whether those goals would be better served if the county’s economic development commission was brought into the chamber of commerce’s fold. 

The county would continue to fund economic development efforts, but they would be carried out in closer concert with the chamber on a day-to-day basis. The possible configurations run the gamut from simply sharing the same office building to the chamber directing economic development activities.

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The conversation was kickstarted two months ago at the suggestion of County Commissioner Chairman Mark Swanger and is just now getting underway in earnest.

“We thought it would be beneficial to look at it with no preconceived notions or opinions, but just to see if this model that we have is working as well as it should in today’s economic climate,” Swanger said. “We just don’t know that now.”

Swanger said the county is obviously interested in whether it would be more cost efficient to have a combined model. But the larger question is whether it would be more effective.

“One of the reasons we are undertaking this study is to get a better handle on that,” said Charles Umberger, a chamber board member and president of Old Town Bank. 

Those on the task force claim the jury is still out.

“This is study and evaluation rather than jump in and start arranging it,” Umberger said.

Waynesville Mayor Gavin Brown, a member of the economic development commission, hopes that is indeed the case. If there is a preconceived plan, then the process is pointless in a way.

Swanger assured there wasn’t.

“There is no preconceived notion. I am very open on this. I feel we have the obligation to examine how we are doing things every so often,” Swanger said.

Swanger said the days of the “buffalo hunt” for big manufacturing employers has passed. The county retooled its economic development strategy a decade ago to adjust to the new reality, but with that philosophical hurdle cleared, could it be taken one step further?

A combined model with the chamber of commerce wasn’t considered 10 years ago, largely because the chamber wasn’t a tour de force in the business community like it is now.

“The chamber then is not today’s chamber,” Swanger said. “Ten years ago it was not a viable option. Today, I think it is.”

Brown pointed out that in rural communities, however, a combined model is not as prevalent. Local government can often bring more resources to the table and serve as a liaison to job creation and recruitment more effectively.

In the corporate world, there are three primary drivers in a merger, Brown said. One is efficiency from a cost standpoint. There’s less duplication, functions are consolidated and overhead can be shared.

Another is synergy. Together, more can be achieved than separately. “One and one is three,” Brown said.

A final reason for a merger is to grow the footprint and increase market share or dominance.

When weighing the pros and cons of a combined model, Brown will be most interested in the concept of synergies.

At the very least, housing the economic development commission under the same roof as the chamber of commerce makes sense, Brown said.

“I have always been a fan of co-location,” Brown said. “Somebody walking in, we can quickly get them into the right box.”

Both entities could cross-reference resources more easily yet still keep their own focus.

Mark Clasby, the director of the economic development commission, said he spends the majority of his time working with existing large employers to ensure Haywood County is still an optimal place for them to do business so they don’t leave. 

The chamber, meanwhile, is the bastion of small business and the go-to network for small-scale entrepreneurs breaking in to the business community.

“The chamber has made a real effort over the past number of years to really focus on small business and really support small business and entrepreneurial communities,” said Umberger. 

 

What it might look like

Haywood County’s economic development model — essentially as a function of county government — is similar to most rural counties in the mountains.

In larger cities, however, economic development functions are often housed under the chamber of commerce.

“There are a variety of ways it could be nuanced. But speaking generally, you either have a government-based function or a public-private partnership,” Swanger said.

CeCe Hipps, the executive director of the Haywood County Chamber of Commerce, said she is accustom to the combined model in the larger communities where she worked before coming to Haywood seven years ago.

As part of the study phase, Hipps researched the structure in 10 communities that use a combined model.

“There probably are a lot of pros and advantages,” Hipps said.

The most common model is a simple “outsourcing” of economic development functions. The county contracts with the chamber to house an economic development officer under its umbrella. But the economic development side has its own board of directors and a separate budget funded largely the county.

“They are governed by separate boards and have different funding mechanisms but they are very closely aligned,” Hipps said.

Chamber of commerce members comprise the majority of the study task force, since the chamber needs to assess the feasibility from its standpoint of taking on economic development functions.

But the task force also includes two county commissioners and three representatives from the economic development commission.

When the study period concludes later this year, county commissioners will have to decide what to do with the economic development commission — and the chamber would then have to decide whether to accept a larger role if asked by the county to take it on.

 

Savings – or maybe not

One question being studied is whether a combined model could save money.

The county budgets $240,000 annually for economic development, a function with two fulltime employees. The chamber of commerce has a budget of $226,000 with three fulltime employees.

Swanger said the county was naturally interested in whether it could save money by contracting with the chamber of commerce to run economic development.

Clasby isn’t so sure. Right now, all the “back office” functions of the economic development commission are carried out by the county, from payroll to grant processing to bookkeeping. Even phone and internet service are wrapped in with the county’s overall phone and internet fees, amounting to a fraction of the total pie. As for office space, the county pays just $200 a month including utilities for its economic development office.

Since those back-office and overhead costs are either minimal or folded in with the county’s overall volume, outsourcing it to the chamber might not be any cheaper for the county.

For its part, the chamber may hope to offset its own office expenses in exchange for housing the county’s economic development functions. 

Meanwhile, the county may hope to save money if the chamber subsidizes some of the operating costs of economic development.

So which entity, if any, will see a financial benefit remains to be seen.

“That is something that has to be studied,” Clasby said.

Hipps said financial factors will not be a big part of the decision-making process.

Instead they will focus on what model will be best for the goal of economic development.

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