Metro Pulse/Insights/Knox Economic Development

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by Joe Sullivan

Editor's Note: Last week, Joe Sullivan laid out some of the turf wars and obstacles facing local economic development efforts. This week, he weighs some possible solutions.

The prospective closings of Levi Strauss and Plasti-Line plants in Powell reinforce the need to strengthen Knox economic development efforts. That's not to say that any amount of exertion by our local government(s) or their developmental extensions could save the 900 jobs at Levi's or the 200 lost at Plasti-Line in particular. But the hard fact is, as addressed in this column last week, that we have been falling down in attracting and keeping employers and employment opportunities more generally.

In part, our failings reflect lack of collaboration among the entities that now share responsibility for recruiting and meeting the needs of businesses looking to locate or expand their facilities here. Underlying that, however, are a lack of leadership and a lack of any one person (or body) giving overall direction to our economic development efforts

The infusion of all of the above has to start with top elected officials. Without casting further aspersions on our present office holders, it is heartening to note that in Knox County's case at least, a new county executive will take office in September. The man almost certain to be elected to that post, Mike Ragsdale, brings abundant fresh energy and attaches top priority to: "One, retaining the businesses we have; two, being relentless in our efforts to recruit new ones; three, growing new jobs across the board; and four, promoting tourism."

Yet it's anything but clear whether he will have the authority to get the county's economic development apparat marching to his drum. By "new jobs across the board," Ragsdale says he means everything from industrial, high-tech and research operatives to rank-and-filers in distribution centers, call centers and the like. "It would be very shortsighted to focus just on manufacturing. I'm equally excited with distribution centers and call centers, with jobs for all our people," he asserts.

However, the Development Corp. of Knox County that controls the county's business parks is primarily focused on locating manufacturers. Auto parts makers Daikin and PBR got free land and a lot of site preparation from the Development Corp., but other types of business aren't offered any incentives to locate here if they are accommodated at all. A majority of the board of directors of this privately incorporated entity is comprised of estimable businessmen headed by Hank Bertelkamp. While County Executive Tommy Schumpert (along with three county commissioners) also serves on the board, he figuratively sits at the foot rather than the head of the table.

On the Development Corp.'s tests for measuring returns on its site investments, only manufacturers with lots of high paying jobs seem to get passing grades—but very few of them have come along of late. Moreover, its board is concerned about unfairly competing with private developers of office buildings, warehouses and the like. This philosophy has also clashed with the recruitment efforts of the Knoxville Area Chamber Partnership, which are also broader gauged.

Clashes between the sales arm and the operations arm of an enterprise may be common, but in most businesses there's a CEO to resolve them. The same goes for personality clashes, such as the long-standing rift between the Chamber's president, Tom Ingram, and the Development Corp.'s executive director, Melissa Ziegler.

The lack of anyone to resolve them here may be our biggest single problem. Although the former chair of the Chamber, Sharon Miller, also serves on the Development Corp. board and continues to hold "back porch" meetings at her home aimed at collaboration, she was conspicuously omitted from the list of directors from either side included in conflict resolution sessions now being conducted by a TVA facilitator.

All of this raises the question whether a restructuring is needed to converge all of the presently divergent interests. In Blount County, the heads of its chamber of commerce, its industrial development board and its tourism bureau all report to the president of what's called the Blount County Partnership, Fred Forster. Forster, in turn, is said to work very closely with the Blount County executive and the mayors of Maryville and Alcoa. One has to wonder how much this structure had to do with Blount County's capturing the corporate headquarters of Clayton Homes and Ruby Tuesday, along with a Marriott financial center.

There are sensitive legal reasons why the Development Corp. is organized the way it is and has the degree of autonomy it does. It's not permissible for Knox County to sell land to prospects below its market value, whereas the Development Corp. can do so. This constraint is what nixed a last-ditch effort to keep H.T. Hackney from relocating its distribution center to Roane County by contributing the county owned Farmers Market site to Hackney, which would have continued operation of the market.

Given the constraints and the need to make Knox competitive in attracting and keeping employers, it could make sense to make the Development Corp. the "one roof" under which all economic development activities are domiciled. This would mean transferring the Chamber's development specialists, starting with Jim Breitenfeld and Rhonda Rice, to the Development Corp. where they could be teamed with its specialists in acquiring and preparing business parks. Such a move would have the added advantage of segregating the funding that the Chamber gets from the city and the county for economic development. This six-figure funding is comingled with the money the Chamber now employs for all its other purposes, including lobbying the very local governments that are covering part of its costs.

For such a construct to work, however, there needs to be greater accountability to top elected officials both in establishing the entity's mission and governing its performance. "I plan to focus on results," says Ragsdale, who's not proposing a restructuring at this point. But he goes on to say that, "If we continue to lose companies that want to locate in Knox County, we're doing the entire community a disservice. We've got to do what it takes to be competitive, which starts with good working relationships, responsiveness and tailoring packages for individual companies."

UT's former president, Joe Johnson, was fond of saying, "Structure doesn't make things happen, people do." But the people responsible for economic development in the Knoxville area aren't working well together, and that has got to change.