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Could a California city’s success offer lessons for Mississippi?

Much is unknown about the future of the U.S. economy, but any plan for recovery must start with an honest, yet visionary, assessment of the assets on which a local or state economy could be built.  This is the right approach under any circumstances, but recovering from an almost-total shutdown of the world economy offers both the challenge and the opportunity to do it right as we begin the long road to recovery from the COVID-19-related economic crisis.

An article in City Journal Magazine, written before the economic shutdown, describes the success enjoyed by Long Beach, California.

Despite its coastal location in Los Angeles County, Long Beach has remained a middle-class, blue-collar community, by playing to its strengths.

Long Beach has a population of about 480,000 people, but according to the article’s writers, Joel Kotkin and Alicia Kurimska, it “retains a sense of neighborliness rare in the increasing anonymity of Southern California… This is a place where people often know one another.”  In contrast to other coastal communities, “only 3 percent of Long Beach residents earn over $250,000.  More than 40 percent of the workforce earns between $50,000 and $150,000.”

Long Beach’s success is tied to its willingness to embrace its working- and middle-class identity.  Its economic development director says, “We see our role in economic development as playing on our existing strengths…We are building our future on what we already are…The talent is there; we just have to find new places for them to work and keep the ones we have.  What we need is to build on the entrepreneurial ecosystem that’s already here.”

Strengths

Mississippi and its local communities should use the following list of Long Beach’s strengths as mind-joggers to help them as they consider their own lists of strengths to build on.

  • Excellent weather, a large beach and interesting architecture that are intrinsic assets for recruiting talent and companies.
  • Roughly 8,400 immigrant entrepreneurs, whose companies the city works to promote.  These companies generated $162 million in business income in 2016.
  • Part of its blue-collar identity comes from its port, which the city enthusiastically embraces.  More than 20% of the jobs in the city are related to the port.  Ocean trade makes up 34% of U.S. exports and 46% of imports, making shipping ports vitally important.
  • Its current industries include trade, aerospace, and defense.  These have ebbed and flowed in Long Beach over the course of time, but prior to COVID-19, they had been on the upswing.
  • Aerospace employment, in particular, has been growing, with a shift from aircraft to drones, telecommunications satellites, and spacecraft. (Space-industry revenues increased to almost $385 billion in 2017 — a growth rate of nearly 7 percent per year over the previous 12 years — and are projected to grow to between $1.5 trillion and $2.7 trillion by 2040.  With Mississippi’s relationship to the space industry, we should seize the opportunity to be a part of that growth.)
  • As California has grown more and more hostile to business, Long Beach has worked closely with employers to help them navigate state regulations.  A Toyota executive said, “The state’s not so great, but at least the city seems on our side.”
  • Toyota partners with Long Beach City College on internships for maintenance and other manufacturing skills.
  • Long Beach’s educational institutions have developed programs that include training “rocket scientists” and design engineers as well as teaching technical skills at the high school and junior college level.
  • Long Beach City College (a two-year college) offers classes in cybersecurity programming, advanced manufacturing, and global logistics and supply-chain management through a port-sponsored initiative.

Challenges

While Mississippi communities can take cues from those strengths as they assess their own, they can also take note of the challenges faced by California businesses, both as a means of understanding what job-repelling actions not to take, but also as an invitation to recruit disaffected California companies that are looking to leave, as so many have already done.

  • Industries of all kinds struggle with California’s anti-business regulatory regime, and many companies have moved to other states. Mississippi’s business-friendly environment should be a major selling point to recruit California companies.
  • As aerospace has grown over the past decade, California has been outpaced by states such as Florida, Oklahoma, and South Carolina, which have picked up far more positions, per capita.  Could Mississippi be added to that list?
  • For emerging industries like aerospace, one executive said the biggest need is not tax breaks but assuring a supply of talent.  Mississippi colleges and/or universities, individually or cooperatively, could take the initiative in building that talent supply in aerospace-related fields that would attract companies to our state, or better yet, inspire the creation of such companies to be headquartered here.

With the inevitable vast reduction in tax revenue, Mississippi will not be able to rely on state-sponsored bribery (aka, economic development incentives) to draw companies to our state.  For sustainable, long-term growth, we must create ways to build on our existing strengths and talents.

The sooner we do that, the quicker our recovery will be.

 

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1 Comment

  1. Scott Reiber on May 10, 2020 at 2:30 pm

    Interesting — I used to work in industrial development in Tupelo, Ms Community Development Foundation. The paragraph following needs to be thought through “For emerging industries like aerospace, one executive said the biggest need is not tax breaks but assuring a supply of talent. Mississippi colleges and/or universities, individually or cooperatively, could take the initiative in building that talent supply in aerospace-related fields that would attract companies to our state, or better yet, inspire the creation of such companies to be headquartered here.” Tax breaks are not state sponsored bribery but a realization that Mississippi is competing with those other states mentioned in the article – ie Texas, Florida — or our neighbors Alabama and Louisiana. Why should a company come and locate here and invest millions rather than Baton Rouge, Houston, Huntsville? Besides basics like land, utilities, transportation— the human capital is vital. Do we have the skilled science, engineering people capital to supply such industries? Right now how many engineering and tech grads are moving to other states? Will our State and Local governments cut bureaucratic red tape to make building such industries here easy and financially promoted? Or like California will they run them out — as I read E. Musk is moving out?

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