• Eugene Weekly Loves You!
Share |

What is Business 'Recruitment' Anyway?

Local economic development agencies don’t actively recruit companies

There has been a major business “recruitment” project going on in our community, it's called Project Titan, and I have absolutely no clue about who or what it is, or was. Oh, I've tried, well sort-of tried, to find out. I asked around, here and there, even chatted with a former colleague of mine. 

If I had to guess, I'd say Titan involves the purchase of the former Hynix site in west Eugene, which we now know was purchased by Corning. I also know that local economic development officials, most likely had almost nothing to do with finding the buyer. There is really nothing that a local economic development agency could do to find a buyer for that site. If anyone actually was involved in “finding a buyer” for the site, it was the state's economic development agency, Business Oregon.

It's a myth that local economic development agencies actively recruit companies to relocate here; they do not. The phrase “business recruitment” is really just a name for any new business that moves into our community. No one locally actually went out, located them, and recruited them to come here. It's just not economically feasible for a community to do that. 

When local promoters like the Chamber of Commerce talk about the need to go out and “recruit” businesses to move to our community, please know it is baloney. 

It's totally unrealistic to think that any community like ours is going to market itself in any meaningful way to find firms looking to move, and then convince them to locate here. At least not without a marketing budget that would far exceed any local community's ability to fund it, and even then, justify it with results. 

The desire for new companies to move here from somewhere else, to create and grow new jobs here, is valid. These companies represent jobs we would not have otherwise. That is not a bad thing; in fact, it's vital in order to keep a local economy healthy and diverse. Businesses go thorough cycles; they do not last forever. There is always a need for fresh new businesses to enrich the local economy, and to avoid over dependence on any one industry sector.

So, how does recruitment happen? How are these new businesses recruited and who does it? 

Business recruitment is primarily done at the state, not the local level. The state of Oregon, through its economic development department, actively promotes Oregon as a good place to do business. When the state gets the attention of a recruitment prospect, it works to find them a site in Oregon. 

The state acts as an agent for the firm, creating a code name, like Titan, and sending out a list of criteria the firm needs for their facility. Communities that can meet those criteria respond to the state. In the case of the Hynix site, it is probable that one or more potential purchasers approached the state to test the water for state and local incentives, prior to actually bidding on the property. It's likely they were represented by a private site selection consulting firm. Site selection firms represent large companies wanting to remain anonymous, seeking a location for a new facility. They usually work at the state level. 

The immediate job for a site selection consultant is to reduce the number of site options for the client company to a manageable number, maybe two or three. So the initial challenge for a community is to just stay on the list. This is where the issue of incentives emerges. Site selection consultants are often paid based on the level of incentives provided by state and local governments. So, staying on the consultant's list requires significant local incentives, like enterprise zones. Site consultants love enterprise zones because, with three to five years of property tax waivers, the value of the incentive package gets big fast. 

As for business recruitment, what does make sense is for our community to prepare itself by being the kind of a community that people want to live and do business in — and to be ready to show that when they do come knocking. The actual business recruitment function of a local economic development agency is to do just that: to organize and manage the local sales job when they do come.

However, our best local business recruitment is done by organizations like Tracktown USA and Travel Lane County. Events like the Olympic Trials showcase our community to the world in a positive light, more effectively than any local economic development agency ever could. Travel Lane County markets our community as a place to visit and highlights our many assets. Business recruitment is about being a community where people want to live. It's about good schools, affordable housing, and good public transportation. It's about a healthy environment and quality of life. 

I'm glad there is a new owner for the former Hynix site and that it is a company like Corning, a company with the capacity to invest in the site and create jobs. Kudos to everyone who helped make it happen. But I strongly suspect that Greater Eugene, our local economic development agency, played a very small, if any, role in finding the buyer. That said, if Greater Eugene does little or nothing to actually “recruit” businesses and create jobs in our community, what do they do? 

Good question.

Bob Warren retired in 2012 as the regional business development officer for Business Oregon for Lane, Lincoln, Linn and Benton Counties. Prior to that he was a political advisor to state and federal offices.