A city’s reliance on national economy can prove dangerous when a national player jilts the town that wooed it. 

The Tennessee city of Clarksville is stunned to learn that Hemlock Semiconductor is laying off 300 workers — three-fourths of its staff — just before starting production at a $1.2 billion factory. A slowdown in the federally subsidized solar industry prompted the Clarksville delay, similar to one that has hit Wacker Chemical in Charleston in Bradley County. That $1.5 billion plant is delaying production until the middle of 2015.

The arrival of a national or global player in one’s hometown stirs up other spending and investment that may be shoved aside. Tennessee state government spent F$6.4 million for a training facility for the company which consists of several joint venture companies owned by Dow Corning Corp., Shin-Etsu Handotai and Mitsubishi Materials Corp. 

Clarksville is in the northwestern part of Tennessee. What about the Southeast part of the state — Chattanooga? It has spent millions to lure giant companies into town, and for now the economic outlook for Volkswagen and Amazon appears strong. But what happens with global financial crises hit or fashions change, affecting the auto market? What happens when smaller rivals eat into Amazon’s monolithic enterprise and good service? 

The common thinking of the day is that economic growth for a city is found by luring in new companies. That puts in the back seat efforts to develop, nurture or assist existing companies that are local. The bad news about Hemlock does little to affect the paradigm in Clarksville: “Our entire staff, the Industrial Development Board, and our mayors are unified in our efforts to continue growing career opportunities for our citizens. In fact, (IDB Executive Director) Mike Evans and I will be traveling this week to the World Automotive Congress to market Clarksville-Montgomery County to suppliers in the automotive industry,” [James] Chavez [of the Clarksville-Montgomery County Economic Development Council] added.”

Counting on smaller players for prosperity

The localist orientation for “economic development” pays less attention to paving the way for giant economic combines to land in the old hometown. Instead, its focus is on developing the internal economy and making small and medium-sized local businesses more serviceable to more people, and hence more prosperous. 

Here are ways to help build a localist economy, according to Michelle Long, head of Business Alliance for Local Living Economies in San Francisco.

— Think about local procurement. If you believe local economy needs to be strengthened, encourage the big local consumers, namely government and “anchor institutions,” to buy local. “ These entities represent an enormous sector of the economy, and tapping into this demand could represent millions, or even billions, of dollars of income for local businesses in your community.” 

--- The necessity for measurement and data will help make the localist argument. New ways need to be developed to measure the well-being of people in an area. Such a study was published in October 2012 by the American Booksellers Association and a group, Civic Economics, that researches the local-vs.-chain distinction. Here’s a summary:

“Independent, locally-owned businesses of all types and sizes recirculate a substantially greater proportion of their revenues in the local economy than do their chain competitors. Small business owners don’t just live in the communities where they do business, they rely on a healthy local economy for their own success. Moreover, as independent business alliances have proliferated in the last decade, the message has reached business owners and consumers alike. Today, shopkeepers and restaurateurs place greater emphasis on sourcing local goods and services, supporting other local businesses, and building the local economy from within. And consumers are repaying that effort with a reciprocal dedication to the small businesses that make their communities unique and vibrant places.” 

— David Tulis writes for Nooganomics.com, which covers local economy and free markets in Chattanooga and beyond.

Sources:

http://www.theleafchronicle.com

“Hemlock laying off workers[;] Production delayed at West Tennessee polysilicon plant,” Chattanooga Times Free Press, January 15, 2012

Indie Impact Study Series: A National Comparative survey with the American Booksellers Association, October 2012.  http://www.civiceconomics.com/aba-study-series

Michelle Long, “Top Five Ways to Build a Localist Economy in 2013.” Bealocalist.org