Chesterfield-Daleville Alliance Linking Local Economic Analysis to Economic Development Strategies Economic and Real Estate Development Kyle Van Klompenburg Anastasia Meurer Joel Mynsberge
Table of Contents 2
Table of Contents Executive Summary... 4 Agglomeration Strategies and Decision Tree... 6 Strategies for Developing Local Economies... 16 Appendix... 24 3
Executive Summary 4 Executive Summary The economic base of Chesterfield-Daleville is primarily the Leisure and Hospitality and the Education and Health Services industries. More specifically it can be attributed to the communities food services and educational establishments. The major providers to the community in these industries are the fast food establishments centered around the I-69 exit 34 and the Daleville Community Schools. The fast food and automobile service stations clustered around exit 34 have experienced sprawling growth and while it does not visually enhance the community, it does export base commodities to travelers along the interstate, thus luring in an outside customer base. Likewise, the Daleville Community Schools have experienced a rapid increase in the number of students transferring from outside the school district. This increase is mainly due to the decline in number of Anderson Public Schools and families looking elsewhere for K-12 education. Inside the I-69 Corridor Regional Economy there are two polar market contributors. In the Madison and Delaware Counties Sub-Regional Economy the economic base is centered around the Education and Health Services and the Leisure and Hospitality industries. This is largely attributed to the presence of multiple colleges and universities including: Ball State University, Anderson University, and Ivy Tech Community College. These colleges and universities supply both industries with their education services and their student housing and food services. The other half of the I-69 Corridor is the Hamilton County Sub-Regional Economy. Its economic base is comprised of the Financial Activities and the Professional and Business Services industries. These are a major factor in the county because of its outrageous growth in the past decade. Local financing and real estate establishments have provided their services to foster the growing number of professionals moving to the area. New developments have sprung up everywhere in the county and could potentially continue to grow along the I-69 Corridor into Madison and Delaware Counties, and potentially Chesterfield- Daleville. The agglomeration of various businesses in Chesterfield-Daleville is a key economic development strategy for each industry of all performance levels. Chesterfield-Daleville has existing businesses clusters in the downtowns, along the White River, in rural areas, and around Exit 34 of I-69. The for-sale commercial lots near Exit 34 offer huge potential in the economic development of the area. Businesses can benefit greatly from either vertical or horizontal integration based on their level of production. Chesterfield-Daleville can benefit greatly by
increasing exchange of information and goods between businesses. Chesterfield-Daleville can also benefit from community development by increasing the overall quality of life through entrepreneurship by local residents. Local leaders and business coalitions should seek to attract people to the area through an involved community with quality schools, neighborhoods, parks, government, and services. The community can create a desirable sense of place by working to retain and expand local businesses. Removing barriers to individual businesses by providing tax credits, expansion grants, business assistance, and awards for expanding local jobs can help the economic strength of Chesterfield-Daleville. Chesterfield-Daleville can grow economically by focusing on local businesses through producing basic needs locally, such as food, water, and energy. This will keep more of the money in the local economy and allow for more goods to be exported from the area to make more of a profit. The local government can offer various incentives to promote exports and to substitute imported goods with locally produced goods. There are various forms of subsidization the can provide financial assistance to lagging, constrained, poor, and start-up businesses as well as offer marketing and promotion solutions to local businesses. Marking and promotion can be used to promote the entire community and invest in the local community. Chesterfield-Daleville can help declining industries by replacing poor performing business and providing retraining. The community can utilize area educators such as Ivy Tech for retraining and creating a bettereducated community. By investing in education, Chesterfield-Daleville will be investing in the future workforce. 5
Agg. and Decision Tree 6 We are the Chesterfield-Daleville Alliance (CDA) and the following are our links between local economic analysis and economic development strategies. In this research we redefined our local economies and they now consist of Hamilton County, Madison-Delaware Counties, and Chesterfield-Daleville municipal area. This allows us to separate the success of Hamilton County from the declining economies of Madison and Delaware Counties and focus on the I-69 Corridor as an economic opportunity. To identify industry clusters, we examined the type of industry, size of business, area that is served, and cluster location. We established the determinants for small businesses and from that point, we were able to verify the Chesterfield- Daleville economy consisted of mostly small local businesses that were not clustered in a particular area. This is because the small businesses in the municipal area do not rely on local traffic, but traffic from Exit 34 on I-69. In Downtown Chesterfield, there is a small cluster that serves the directly local residents. One of the major employers for the Daleville community is the Daleville Community School District. This school district has had an increase in student enrollment and creates a cluster in Downtown Daleville. These downtown areas have the promise for connection of the two communities with the amount of development that is happening around Exit 34. Agglomeration Strategies and Decision Tree The economic base of an economy is the makeup of industries that are the most crucial to local economic growth. The industries that help local economic growth are those that produce goods and services that are exported outside of the local economy. This is found by comparing the local economy to our reference economy, the state of Indiana. This comparison is called a location quotient. Industries that we focused on are those with extreme growth (a location quotient greater than 1.25) or extreme decline (a location quotient of less than 0.75). Hamilton County had many industries that supported their economic base; whereas, Madison-Delaware Counties and Chesterfield-Daleville had few industries that supported their economic base. The industries that we identified are: Construction Education and Health Services Financial Activities Information Leisure and Hospitality Manufacturing Natural Resources and Mining Other Services Professional and Business Services Trade, Transportation, and Utilities
With these industries and the location quotient identified, we were able to create a decision tree, which present a quick reference and summary of each of the three economies we identified. Within each category of performance there are sub-categories that further describe the performance of each industry in the economy. This break down gives us the economic bases of each economy and indicates what is missing from the economic bases. Industry Clusters During our analysis of industry clusters we examined the type of industry, business size, area served, and cluster location. Small companies were determined to have less than 10 employees, medium as 11-75 employees, and large as 75 or more. The majority of companies in the area qualified as small businesses. The majority of these small businesses had 3 or fewer employees. Clustering strategies are based off business in the similar or dependent industry sector located in the same area. Horizontal clusters often share physical or knowledge-based resources. Companies with vertical clustering strategies locate in the same area to combine levels of production on the supply chain. Others are geographically clustered based off of location, such as near a highway or a downtown area. The Chesterfield-Daleville economy consists mostly of small local businesses. The majority of these businesses are not clustered in a particular area. Many small businesses seem to not have a clustering strategy with other businesses because they act as contractors that operated out of trucks. Other small construction and manufacturing companies are located in downtown Chesterfield. The few medium and large sized businesses are mostly clustered around Exit 34 on I-69. A few are located in rural areas or along the White River. Historically, industries have located along rivers because they serve as means of power and transport. The largest employer in the area, Prairie Farms Dairy Inc., is located along the White River. Some of the industries rely on natural resources, such as the logging and timber industries in our economy. These companies most likely based their location based on natural resources and not based on an agglomeration strategy. Many small businesses also rely on traffic from Exit 34 for business. Others are clustered in the downtown areas to serve mostly the residents of the area. These businesses are mostly in the service sector, including finance, information, hospitality, professional, food, and other services. One of the major employers in the area, Daleville Community School District, is clustered in Downtown Daleville. It seems the clustering of businesses is based off location and whom the businesses serve. Chesterfield has a large number of small local businesses, while Daleville has larger businesses that serve a larger area. There is little correlation of industries in the area that base their location based off of a direct relationship with other businesses. One direct symbiotic relationship we found was between Econoway Motor Coach and Overland Tours in Daleville. Econoway provides the means of transport for the tours offered by Overland. The symbiotic relationships between other businesses are less direct and are through the clustering of industries. The most evident agglomeration strategies are seen through the industries in Daleville around Exit 34 and in the Downtown areas of Daleville and Chesterfield. The availability of existing infrastructure and forsale land in Daleville along Commerce Road near Exit 34 offers opportunities for business agglomeration strategies. This area offers potential to unite our economy base based on the acquisition of new businesses. Also, vacant lots in downtown areas such as the one identified in or Plum Street site offer opportunities. The sites identified during our Qualitative Analysis were based off our perception of where available land with development potential were located next to existing infrastructure and businesses. In order to develop promising strategies for development we plan to analyze the external trends for industry clusters in our reference economies identified in our Economic Condition and Performance Study. We plan on analyzing development strategies used in other areas especially in Hamilton County and Pendleton. We are also comparing to the reference economy of Indiana. We are basing this analysis off of the success, location, and similarity of these economies. Economies by Industry The economic base of an economy is the make up of industries that are the most crucial to local economic growth. The industries that help local economic growth are those that produce goods and services that are exported outside of the local economy. These industries create the income that is crucial to sustain the local-serving sector of the economy. In other words, the economic 7
Agg. and Decision Tree 8 base industries of a community introduce outside sources of income that helps sustain the nonbasic sector of the local economy. Outside of contacting each of the businesses in the local economy and obtaining their percentage of exported goods and services, the most accessible data set for analyzing the local economic base characteristics is the location quotient. A location quotient for an industry is the percentage of employment compared to a larger reference economy. The location quotient data in this analysis is based off the state of Indiana as a reference economy. The industries we are interested in are those with extreme growth, location quotient greater than 1.25, or extreme decline, location quotient less than 0.75. The industries that fall between 0.75 and 1.25 are the sectors that for the most part produce enough goods and services to meet the local demands, but most likely do not sell goods outside of the local economy. The industries with a location quotient greater than 1.25 are the sectors most likely to export base components. In the I-69 Corridor economy these industries that have a location quotient above 1.25 and are part of the economic base include: financial activities and professional and business services in the Hamilton County subeconomy, and education and health services and leisure and hospitality in the Madison and Delaware Counties sub-economy. On the opposite side there are industries that are underperforming locally and have the potential for import substitution opportunities. These industries are those whose location quotient is less than 0.75 and include: natural resources and mining, manufacturing, and education and health services in the Hamilton County subeconomy, and natural resources and mining, manufacturing, and information in the Madison and Delaware Counties sub-economy. In the Chesterfield-Daleville Economy, the only industry considered part of the economic base with a location quotient greater than 1.25 are leisure and hospitality, which includes food services. The education and health service industry barely missed the cut off with a location quotient of 1.22. These industries are the only two with current potential to export base components outside of the local economy. There are multiple industries in Chesterfield-Daleville that have a location quotient less than 0.75 including: public administration, natural resources and mining, information, and other services. These industries have potential for import substitution. Inside each industry heading listed below is how the two regional economies and one local economy compare to the reference economy. Complete shift share analysis tables are available in the Appendix for each of the three economies employment growth relative to the state of Indiana as a reference economy. The descriptions of each industry are as classified by the Bureau of Labor Statistics. Construction The Construction sector of the economy is engaged in the construction of buildings or engineering projects such as the construction of highways and utilities. It is a sub-sector of the goods-producing industries super-sector group. The location quotient for the Construction industry in Madison and Delaware counties is significantly less than one. It is considered a poor performer, limited overall because there has been no employment growth in the larger economy. This limits the amount of growth that this industry can have locally. It employs a high percentage of people from these counties, but there are fewer jobs than people who are employed in this industry. In Hamilton County, the location quotient for the Construction industry is greater than significantly greater than one, however it is not quite enough to be considered part of the counties economic base. The construction industry for Hamilton County is considered a strong performer and currently has strength in the economic base of the area. This county has more employment growth in this industry than Indiana s economy, which has no growth. This gives Hamilton County an opportunity in local growth. Chesterfield-Daleville s Construction industry has a location quotient greater than one. The construction industry has however been experiencing a decline in employment and its local factors are declining faster than Indiana s industry mix. For these reasons, the construction industry for Chesterfield-Daleville is a poor performer, declining in both absolute and comparative terms, and limited by its local weakness. Education and Health Services The Education and Health Services industry is broken down into two sub-sectors including: Educational Services and Health Care and Social Assistance. The Educational Services sector provides instruction and training through
establishments such as schools, colleges, universities, and training centers. The Health Care and Social Assistance sector is comprised of three types of establishments: those providing exclusively medical care, those providing both health care and social assistance, and those providing exclusively social services. The Education and Health Services industry is a subsector of the service-providing industries supersector group. The location quotient for the Education and Health Services industry in Madison and Delaware counties is greater than one and is part of its economic base. Nonetheless, Education and Health Services industry is still considered a lagging performer because it is not growing as quickly in the local economy as in larger economy of Indiana. There has been employment growth in this industry from 2002 to 2008; however, the growth has been relatively small compared to growth in Indiana. In Hamilton County, the location quotient for the Education and Health Services industry is less than one. Even though its location quotient is less than that of the reference economy, this industry is considered to be a strong performer. This industry has emerging strength because of the new development that has arisen between 2002 and 2008. Chesterfield-Daleville s Education and Health Services industry has a location quotient greater than one. It has also been growing in employment size since 2000 at a faster rate than that of Indiana. The education and Health Services industry has been growing locally and exceeding growth in the larger reference economy; it has established itself as a strong performer in Chesterfield-Daleville. It has current strength in the local economy and is a part of the municipalities economic base. Financial Activities The Financial Activities industry is broken down into two sub-sectors: Finance and Insurance, and Real Estate and Rental and Leasing. The Finance and Insurance sector is primarily engaged in financial transactions and/or facilitating financial transactions. The main components of the Real Estate and Rental and Leasing sector are real estate lessors industries, equipment lessors industries, and lessors of nonfinancial intangible assets. The Financial Activities industry is a subsector of the service-providing industries supersector group. The location quotient for the Financial Activities industry in Madison and Delaware counties is less than one. However, this industry has emerging strength because of the employment growth locally. This local employment growth is exceeding growth in the larger economy and this give Madison and Delaware counties a head start compared to the rest of the state. In Hamilton County, the location quotient for the Financial Activities industry is far enough above one to classify as part of the county s economic base. The Financial Activities industry is a current strength and a strong performer in Hamilton County s economy. The employment growth in this industry is exceeding the employment growth in the state s economy. This high employment growth rate is most likely due to the amount of new development in this county. Chesterfield-Daleville s Financial Activities industry has a location quotient greater than one, however it is not high enough to be considered part of the economic base of the local economy. The Financial Activities industry has been experiencing a gradual growth in employment at a faster rate than statewide. Even though its location quotient is not high enough to be considered part of Chesterfield-Daleville s economic base, the Financial Activities industry has still been growing locally and exceeds the growth in the reference economy. All things considered, this industry is a strong performer with current strength in the local economy. Information The Information industry is made up of establishments that engage in the following processes: producing and distributing information and cultural products, providing the means to transmit or distribute these products as well as data or communications, and processing data. It is a sub-sector of the service-providing industries super-sector group. The location quotient for the Information industry in Madison and Delaware counties is less than one. Because of its weak local base, the Information industry is a constrained performer and is considered to be shrinking. The Information industry is declining locally more quickly than it is declining in Indiana. This industry is constrained by its weak base in these counties and by external factors of the decline of the Information industry in the state of Indiana. 9
Agg. and Decision Tree 10 In Hamilton County, the location quotient for the Information industry is greater than one. This industry in Hamilton County is a strong current performer; it is has an employment growth that is increasing as much as the state s employment growth is shrinking. This is an asset to Hamilton County s economy because it is a current strength and exceeding the growth in the larger economy. Chesterfield-Daleville s Information industry is a poor performer in the local economy. It is declining in both absolute and comparative terms, and is limited overall. The Information industry has a location quotient of only 0.15 and has been experiencing the fastest decline in employment of all the local industries. It is also declining drastically more locally than compared to the reference economy. Leisure and Hospitality The Leisure and Hospitality industry is broken down into two sub-sectors: Arts, Entertainment, and Recreation, and Accommodation and Food Services. The Arts, Entertainment, and Recreation sector is comprised of establishments that produce, promote, or participate in live performances and events, establishments that preserve and exhibit objects and sites of historical, cultural, or educational interest, and establishments that provide recreational activities, hobbies, and leisure-time interests. The Accommodation and Food Services sector is comprised of establishments that provides lodging and/or prepares meals, snacks, and beverages for immediate consumption. The Leisure and Hospitality industry is a sub-sector of the service-providing industries super-sector group. The location quotient for the Leisure and Hospitality industry in Madison, Delaware, and Hamilton counties is greater than one and is considered part of the economic base. Madison and Delaware counties, has a slightly greater employment growth in this industry than the Indiana. Similar to the Education and Health Services industry, the Leisure and Hospitality industry part of the economic base and a lagging performer because it is growing locally, but it is underperforming in the local economy. This places the Leisure and Hospitality Services industry at a high priority level to preserve the employment growth that it has in these counties. In Hamilton County, the Leisure and Hospitality industry is a stronger performer and is current strength to the local economy. This industry has an employment growth that exceeds the economy of Indiana. This industry probably thrives from the local growth that attracts many people into Hamilton County. Chesterfield-Daleville s Leisure and Hospitality industry is a strong performer with current strength in the local economy. It is growing locally and exceeding the growth of Indiana. The Leisure and Hospitality industry has the highest location quotient locally and is the strongest industry in the municipalities economic base. The industry has been experiencing employment growth over the past decade and has a greater local factor compared to the industry mix of Indiana. Manufacturing The Manufacturing industry comprises of establishments that provide mechanical, physical, or chemical transformation of materials, substances, or components into new products. This industry is a sub-sector of the goodsproducing industries super-sector group. The location quotient for the Manufacturing industry in Madison and Delaware counties is greater than one. Madison and Delaware counties may have a higher location quotient than Indiana does in the Manufacturing industry, but the Manufacturing industry is decreasing across the United States. This industry has an employment growth that is declining much faster at a local level than at a state level. This is further limited by local weakness. In Hamilton County, the location quotient for the Manufacturing industry is less than one. It is considered a constrained performer in this locally economy; it is affected by a weak base of industries and certain external factors, like the overall decline in manufacturing. There has been no employment growth in this industry in Hamilton County and imitates Indiana s economy, which has had a decline in employment in the Manufacturing industry. Chesterfield-Daleville s manufacturing industry is a constrained performer, limited by a weak base and external factors. This industry is declining locally but not as rapidly as the rest of Indiana. The industries local location quotient is less than one and has been slightly decreasing in strength over the past decade. In the same fashion, it has been steadily decreasing in total employment, however not as fast as statewide trends.
Natural Resources and Mining The Natural Resources and Mining Industry is broken down into two sub-sectors: Agriculture, Forestry, Fishing and Hunting, and Mining, Quarrying, and Oil and Gas Extraction. The Agriculture, Forestry, Fishing and Hunting sector is comprised of establishments that grow crops, raise animals, harvest timber, and harvest fish and other animals from a farm, ranch, or their natural habitats. The Mining, Quarrying, and Oil and Gas Extraction sector is comprised of establishments that extract naturally occurring mineral solids, liquid minerals, and gasses. The Natural Resources and Mining industry is a subsector of the goods-producing industries supersector group. The location quotient for the Natural Resources and Mining industry in Madison, Delaware, and Hamilton counties, as well as Chesterfield- Daleville, is less than one. In all three economies, the Natural Resources and Mining industry is an overall poor performer limited by the lack of natural resources and mining areas. There are very few employment opportunities in this industry that are in this three county region. Within those few job opportunities, the employment in declining. Other Services The Other Services industry is comprised of establishments that provide services not specifies elsewhere in this classification system. These tend to be establishments that work with equipment and machinery repair, promoting or administering religious activities, grant-making, advocacy, providing dry cleaning and laundry services, personal care services, death care services, pet care services, photofinishing services, temporary parking services, and dating services. This industry is a part of the serviceproviding industries super-sector group. The location quotient for the Other Services industry in Madison, Delaware, and Hamilton counties is less than one. Other Services industry in Madison and Delaware counties is a poor performer because of the lack of other services provided to citizens; there has been no employment growth in this industry between 2002 and 2008 on the state level and on a local level employment growth has been declining. In Hamilton County, the Other Services industry has been a strong performer and an emerging strength because of the amount of development that has happened in that county between 2002 and 2008. Similar to the Madison and Delaware Counties sub-economy, Chesterfield-Daleville s Other Services industry is a poor performer, limited overall. This industry has been experiencing decline in both absolute and comparative terms. Professional and Business Services The Professional and Business Services industry is comprised of three sub-sectors: Professional, Scientific, and Technical Services, Management of Companies and Enterprises, and Administrative and Support and Waste Management and Remediation Services. The Professional and Business Services industry requires a high degree of expertise and training. It is a part of the serviceproviding industries super-sector group. The location quotient for the Professional and Business Services industry in Madison and Delaware counties is less than one. This industry has had some employment growth, but is limited by the weak base and declining competitiveness of the two counties. This decline could be caused by the growth in the neighboring Hamilton County that draws people away from the local businesses in Madison and Delaware counties to the employment and retail opportunities there. In Hamilton County, the location quotient for Professional and Business Services industry high enough to be part of the counties economic base. This industry has experienced employment growth and is a current strength within the local economy. The amount of new development, especially high priced retail development, has attracted many new residents to this county. The amount of employment growth for this area has almost increased 100%, which dwarfs the amount of employment growth in Indiana s economy. Chesterfield-Daleville s Professional and Business Services industry is a poor performer, limited overall. It is declining in both absolute and comparative terms. The Professional and Business Services industry has a location quotient less than one and has been experiencing a decline in employment growth since 2000. Trade, Transportation, and Utilities The Trade, Transportation, and Utilities industry is broken down into four sub-sectors and include: Wholesale Trade, Retail Trade, Transportation and Warehousing, and Utilities. It is part of the service-providing industries super-sector group. 11
Agg. and Decision Tree The location quotient for the Trade, Transportation, and Utilities industry in Madison and Delaware counties is greater than one. Even though the location quotient is higher than that of Indiana, this industry is still considered a poor performer. It has not had employment growth and is limited by the weak local economy. In Hamilton County, the location quotient for the Trade, Transportation, and Utilities industry is less than one. It is an emerging industry. The Trade, Transportation, and Utilities industry in Hamilton County has more employment growth than that of Indiana, which has had no employment growth in this industry. The Trade, Transportation, and Utilities industry is growing locally and considered an emerging strength, especially since the county is situated next to the large city of Indianapolis. Chesterfield-Daleville s Trade, Transportation, and Utilities industry is broken down further into Wholesale Trade, Retail Trade, and Transportation and Utilities. Both Retail Trade and Transportation and Utilities are poor performers, limited overall, where as Wholesale Trade is a strong performer with current strength in the local economy. The Wholesale Trade industry has grown locally, and is also exceeding the growth of Indiana. Decision Tree The decision trees presented here are a quick reference and summary of each of the three economies described above: the Hamilton County sub-economy, the Madison and Delaware Counties sub-economy, and the Chesterfield-Daleville local economy. There are two types of decision tree charts, the ones here are organized with regards to the comparative growth of each industry as sorted into four categories: strong performers, lagging performers, constrained performers, and poor performers. Within each category of performance there are sub-categories that further describe the performance of each industry in the economy. A second table for each economy is provided in the appendix that lists each industry with regards to the three factors that contribute to why an industry is a specific type of performer. Later in the document are development strategies focused on aiding in the economic development of the four types of industry performers. 12
What does it all tell us about the economy? Chesterfield-Daleville Local Economy The economic base of the Chesterfield-Daleville Local Economy consists mainly of the Leisure and Hospitality and the Education and Health Services industries. Of these industries, the most relevant sub-sectors of each economic base industry to the local economy are Accommodation and Food Services and Educational Services. In addition to serving the needs of locals, these sectors export base components to sources outside the local economy as part of the economic base. Most of the businesses that are attracted to I-69 exit 34 are accommodation and food service sector, mostly those in the fast food industry hoping to service commuters either heading down I-69 to Hamilton County and Indianapolis, or traveling along SR 67 or SR 32 between Muncie and Anderson. These businesses are tapping into the customer base of the two sub-regional economies profiled below that make up the I-69 Corridor Regional Economy (Hamilton, Madison, and Delaware Counties). The Educational Services sector has very few establishments within the limits of the local economy. Even though it is the smaller of the two towns, Daleville has its own school system. The Daleville Community School District has two schools, an elementary school, and a Junior- Senior High School. An article in the Indiana Economic Digest states that in the last year alone 759 students previously enrolled in Anderson Public Schools have transferred to new schools. This includes 81 students who transferred to the Daleville Community School District. This may not seem like a large number, but for a school district with only 730 students enrolled ( 09-10), 81 students account for 11% of their enrollment. Also, keep in mind that this only accounts for the students from Anderson who transferred in the last year. Since 2000, the only industries in Chesterfield- Daleville to have consistent yearly grow in employment totals are: Leisure and Hospitality at 6.38%, Education and Health Services at 3.15%, Whole Sale Trade at 2.78%, and Financial Activities at 1.08%. These four industries are also the four with the highest location quotients and the only industries to locally out perform the state s industry mix, aside form manufacturing, which declined in local employment but not as rapidly as Indiana as a whole. Every other industry in the Chesterfield-Daleville Local Economy is tagged as a poor performer and is experiencing decline in both absolute and comparative terms. The Financial Activities industry in Chesterfield- Daleville is focused around the sub-sector, Real Estate and Rental and Leasing. Along SR 67, especially by I-69 exit 34, there are a large number of lots for sale listed for commercial use. The Financial Activities Industry is a strong performer with current strength because it is growing in the local economy and at the same time exceeding the growth in Indiana. However, it does not have a strong enough location quotient to be a major exporter of base components. It is currently only sufficient enough to meet the local demand, but the industry has been experiencing a steady growth in its location quotient since 2000. Madison and Delaware Counties Sub- Regional Economy Similar to Chesterfield-Daleville the economic base of the Madison and Delaware Counties Sub-Regional Economy consist of the Education and Health Services and the Leisure and Hospitality industries. It is important to remember that Chesterfield-Daleville is included in this subregional economy and thus has an influence on the reasons for the economic base economies to be what they are. However, Chesterfield- Daleville accounts for less than 3% of the total employment in the sub-regional economy. Hence other prevalent factors exist for the reasoning behind the economic base consisting of the Education and Health Services and the Leisure and Hospitality industries. 13
Agg. and Decision Tree 14 The sub-sectors of importance for the Madison and Delaware Counties Sub-Regional Economy are Educational Services and Accommodation and Food Services. These industries are a part of the economic base can be placed on the unmentioned sub-sectors due to the difference in scope between Chesterfield-Daleville and Madison and Delaware Counties. However, the abovementioned sub-sectors are still the major role players in the sub-regional economy. Both the Education Services and Accommodation and Food Services sectors can attribute their importance as the economic base to the presence of Ball State University, Anderson University, and Ivy Tech Community College (in both Anderson and Muncie). The Education Services sector is an easy connection simply because of the existence of so many higher education opportunities. The Accommodation and Food Services sector can also be partially attributed to the universities because of the new housing and dining presence fed by students. There is a massive influx of out of economy students, or students coming into the local economy from all around Indiana and other states. Each year these students need living accommodations and food services while enrolled in the local universities, bringing in money that would otherwise not be present in the economy. These industries, while part of the economic base, are not strong performers; they are lagging performers with high priority. Both industries have a strong location quotient and are experiencing growth in the local economy. They are underperforming with regards to the growth of Indiana s Education and Health Services and Leisure and Hospitality industries. The only strong performer in the Madison and Delaware Counties Sub-Regional Economy is the Financial Activities industry. It does have current strength in the economy because of its lack of a strong location quotient. The Financial Activities industry is showing emerging strength because of its employment growth that is exceeding that of Indiana and its yearly growth in location quotient since 2002. Of the poor performers in the Madison and Delaware Counties Sub-Regional Economy, Manufacturing has taken the hardest hit in the past decade. Multiple plants have closed their doors in both Anderson and Muncie, including: GM, Borg Warner, and Chrysler. In 2002 Manufacturing was part of the economic base of Madison and Delaware Counties, but since the loss of the plants, it has experienced the largest decline in employment at -7.97% each year. Its location quotient is currently 1.08, but was a staggering 1.55 in 2002. Indiana s manufacturing decreased in the industry mix by -11.4% compared to its local factor decrease of -37.6%, meaning Industry is being limited by its local weakness. Hamilton County Sub-Regional Economy The economic base of the Hamilton County Sub-Regional Economy consists of the Financial Activities and the Professional and Business Services industries. Hamilton County is one of the fastest-growing counties in not only Indiana, but also the United States. This extreme period of growth can help explain what its economic base consists of and why. New development starts with real estate and financing, which is conveniently the economies industry with the highest location quotient. Likewise, the other half of the economic base is the Professional and Business Services industry, which is the industry that operates and manages the new businesses. It also accounts for most of the firms needing a high level of expertise and training. Both of these industries are strong performers, along with nearly every other industry in the economy. However strong the Financial Activities Industry of Hamilton County may be, it has also experienced the greatest decline in location quotient. In 2002, its location quotient was an extraordinary 2.12 however it has dropped down to 1.75 since then. It is still the highest location quotient in the economy, but if it continues this trend it will soon lose its strength. One explanation of this drastic decline in location quotient is simply, because of the economies extreme growth over the last
decade every project has needed to utilize both new real estate and financing. But, as the number of businesses increases, so does the availability of new real estate. Another explanation could be because the location quotient was so drastically high, the market was merely unable to sustain such patterns and it is now returning to a more sustainable level, which is still high. One area of lost potential for the Hamilton County Sub-Regional Economy is the Education and Health Services industry. With all of Hamilton Counties growth, 59% of the counties population has some sort of post-secondary degree, however the county does not have any major university. This has been a wonderful sight for Madison and Delaware Counties who happen to have a plenty of higher education. This Industry is on the rise in Madison and Delaware Counties. It has been able to keep pace in employment growth with the Professional and Business Services industry at 14.5% each year. Indiana s Education and Health Services increased its industry mix by 14.4% but Hamilton County has increased its local factor 71.7%. 15
Development Strategies The main purpose our Qualitative Analysis and Local Economic Condition Analysis was to provide the information to create a strategy for a healthy and prosperous economy in Chesterfield- Daleville. The overall strategy consists of a variety of individual strategies including clustering, agglomeration, subsidization, retention, import substitution, community development, entrepreneurship, marketing, promotion, exportation, and retraining strategies. These individual development strategies are applied to businesses that are strong, lagging, poor, and constrained performers as appropriate. Our economic development strategy focuses on attracting new relocated and start-up businesses to the area as well as working with existing local businesses. When we began to develop ideas for our strategies for developing the local Strategies for Developing Local Economies economy, we looked at existing strategies used by other areas. We planned on either adapting these strategies for our economy or determining a new strategy that would be appropriate for Chesterfield-Daleville. We utilized our research of the economies of Indiana, Hamilton County, and Pendleton to help shape the strategies for Chesterfield- Daleville. Theses reference economies have existing strategies for economic development that can be utilized or adapted by Chesterfield-Daleville. Each strategy offers various programs and organizations that can with development. A creative combination of each of these strategies will create our overall development strategy. These strategies must be utilized along with ideas and innovation provided by members of the community to create the vision of the residents. 16
Clustering Strategy Chesterfield-Daleville offers different geographic clusters of businesses in the downtown areas, near Exit 34, along the White River, and in rural areas. These businesses operate based on symbiotic relationships built on their location and specific industry. Clustering is more convenient for customers, clients, and suppliers; making the strategy profitable for each party. Based off our analysis and assumptions, the majority of businesses in Chesterfield do not exchange goods or information with another. Chesterfield- Daleville would benefit by an increase in exchange of goods and knowledge between local businesses. There are some companies in each industry and industry sector that could benefit from horizontal or vertical integration of businesses. Horizontal and vertical integration can increase the exchange of goods and information between firms in Chesterfield-Daleville and help foster growth. Horizontal integration allows for businesses of the same stage of production to combine forces, while vertical integration combines companies of different stages of production under the same management. There are a few businesses in Chesterfield- Daleville based off the logging industries. These companies could benefit from horizontal integration in order to expand the companies share of the market and give the combined companies a greater presence in the logging market. Another industry sector currently present in Chesterfield-Daleville that could benefit from horizontal integration is the trucking and transportation industry. Various companies in the area offer general and specialized freight trucking to the local area. The trade and transportation industries are strong performer in Chesterfield-Daleville. It is the decision of these firms weather or not to integrate based on what they feel is most beneficial. Horizontal integration is a strategy that can benefit businesses of all performance levels in the economy. In most cases, other businesses on the same supply chain are not located in the area or cluster. In addition to offering logging companies in Chesterfield-Daleville, there are a few millwork companies and 17
Development Strategies 18 contractors that could use the products of the logging industry for their businesses. In this case, vertical integration may benefit the companies. Vertical integration can integrate the supply chain and provide more efficiency through shared management. It can also reduce production and management costs. We have limited information on the various businesses and their specific role in production in Chesterfield-Daleville thus the decision to integrate levels of production is up to the individual firms. Even if companies do not integrate or increase exchange between each other, they can benefit by creating geographic clusters. Clustering businesses can allow Chesterfield-Daleville to reinvent the downtown, interstate, and rural areas. By reinventing these areas and improving the economic climate, the overall quality of life in the community will increase. Community Development and Entrepreneurship The key to successful community development in Chesterfield-Daleville is to increase the overall quality of life. Increasing the quality of life attracts businesses to the area and encourages existing businesses to expand and stay in the area. An exceptional quality to life is what attracts startup businesses and encourages relocation of existing businesses to the area. The high quality of life in Hamilton County has attracted many corporations. The quality neighborhoods, school system, public services, government, and corporate environment make the county a desirable place to work and live. Madison and Hamilton must strive to create an environment similar to Hamilton County s to attract businesses. Chesterfield-Daleville currently offers a smalltown feel with a low cost of living for residents and a low cost of operation for businesses. The Indianapolis and Anderson metropolitan areas have lows costs of corporate business operation because of the low cost of land acquisition, construction, leasing, utilities, operations, and others. Chesterfield- Daleville must advertise these key strengths to get the attention of businesses. Our reference city of Pendleton, Indiana offers a retail association that works to promote all of city. A similar business coalition in Chesterfield-Daleville could help advertise the key strengths of the area. In addition to advertisements, Chesterfield-Daleville must offer incentives for new businesses such as tax abatements and other money saving incentives from the city, county, or State. In order to create a high quality of life, Chesterfield-Daleville must promote its strengths and work on improving its weaknesses. This includes increasing walkability and making the area more pedestrian friendly. Chesterfield-Daleville must emphasize existing amenities such as Mounds State Park, and increase the amount of public park space. Key services such as Daleville Community Schools, Chesterfield and Daleville Police department, and emergency services must work to improve and exhibit their existing strengths. Both Chesterfield and Daleville have strong involved communities that can provide improvements that will attract businesses to the area. Chesterfield-Daleville can experience economic growth if it draws people from affluent areas such as Hamilton County. Drawing people to the area will provide a skilled and educated workforce that can innovate the way to the future. The solution to increasing innovation and encouraging development is to have a strong creative class. The creative class provides entrepreneurial skills that create new ideas and enterprise for communities. This can help expand strong businesses, improve lagging or poor performing businesses, and create new ones. The creative class is seen in the Chesterfield- Daleville economy in a variety of industries and occupations. Some of the businesses in the area are part of the super-creative core, consisting of skilled artists and designers that provide problem solving skills and innovative ideas. The creative class also consists of Creative Professionals who have knowledge based jobs and high levels of education. Both parts of the creative class can provide new business ideas to lead to a successful economy in Chesterfield-Daleville.
Chesterfield-Daleville should focus on attracting more professionals with high levels of education to the area. Currently, Chesterfield-Daleville has a lower level of educational attainment than the I-69 Corridor, especially Hamilton County. Acquiring a diverse and talented set of worker skill sets to the area will lead to innovation, diversity, and economic development in Chesterfield-Daleville. Utilizing the ideas of existing entrepreneurs in the area can create and attract more entrepreneurs in the area to provide development and success. Business Retention and Expansion The existing businesses in Chesterfield- Daleville are one of the most important assets to the community. Local businesses provide character, employment opportunities, and revenue for the community. These existing businesses must be the top priority when developing the economy of Chesterfield- Daleville. Local businesses help keep money in the area and benefit residents. Chesterfield must focus on providing strategies for all businesses at each level of performance. The key piece of the economic development strategy is retaining and expanding existing local businesses. It is much easier to retain and assist existing local business than to recruit new firms to the community. Local businesses have a long-term commitment to local economy and contribute to the area s tax base and employment. Local businesses help improve the quality of life in Chesterfield-Daleville. Entrepreneurs and successful local businesses provide a good image of the community. Chesterfield-Daleville should work to create a program to assist community leaders in removing barriers local businesses face, especially for poor performing and lagging firms. In order to succeed a task force or community group should conduct a survey of businesses to understand local conditions. It should focus on determining businesses that have problems, wish to expand, or are at risk of downsizing or leaving. The survey should be analyzed to create strategies for the local economy to survive and expand. Appropriate strategies should be created for individual businesses. The individual strategies for each business need to improve relations with other partners in the community and promote locally owned businesses. Much of the strategy for retaining local business is to reduce the cost of doing business through local incentives, exemptions, and business loans. Businesses should have a competitive advantage by being located within Chesterfield-Daleville. Business retention and expansion programs can provide access to these programs for local business owners. Specific strategies for individual businesses can provide help with web site development, computer, merchandising, customer service, accounting, inventory, and advertising Tax credits and relocation and expansion grants can be provided by the cities of Chesterfield and Daleville to local businesses. Chesterfield-Daleville can also provide awards for businesses that retain or expand local jobs. As a part of the retention and expansion plan, complementary businesses should be attracted to the area to help with existing businesses. By recruiting complementary businesses, Chesterfield- Daleville can improve business clustering and synergy between businesses. Import Substitution The production of local goods is an important economic growth of Chesterfield-Daleville. In order to improve the economic health of Chesterfield-Daleville can implement the strategy of import substitution. This strategy focuses on replacing goods and services produced outside of the local or regional area with locally produced goods. It is best utilize when it focuses on basic needs such as food, water, and energy. This strategy causes residents generate and spend money locally, which ensures money stays in the local economy. This creates a local multiplier effect by circulating money closer to where it is spent and increases local spending and profits. 19
Development Strategies 20 By promoting local goods, Chesterfield- Daleville will encourage residents to shop locally which provides jobs and workers locally. It also creates economic independence and a more stable economy. It can also get Chesterfield-Daleville to become more engaged and have a higher sense of community. The cities of Chesterfield and Daleville can help promote import substitution by providing incentives for locally grown agriculture or set up a program that utilizes vacant or underutilized lots for agriculture. The local government can also work to subsidize local material and various strategies to reduce imports. Another way for the community to become more independent through import substitution is to promote energy independence and efficiency. Chesterfield- Daleville can work to decrease dependence on imported energy by promoting efficiency in the home and on the road through awareness campaigns. The community should also analyze the feasibility of various clean renewable energy sources such as wind, solar, and geothermal. These forms of energy can be acquired locally and help boost the economy while being more environmentally friendly. Chesterfield-Daleville can become a leader in sustainability by promoting local goods, services, and energy. Another way of achieving this goal is to attract start up or the relocation of clean technology firms in industries such as recycling and renewable resources. The local governments can also inform local businesses of how to reduce waste and import fewer goods. Sustainable innovation can provide a competitive advantage to Chesterfield-Daleville and increase the community s quality of life. Export Promotion The exportation of goods from Chesterfield- Daleville is a large portion of the revenue acquired in the area. Similar to import substitution, Chesterfield can offer incentives for local businesses to export goods. This includes tax exemptions, subsidies, and special lines of credit. Local authorities can also help with trade visits and foreign representatives. Chesterfield-Daleville should work to help create business strategies for local business to export their various goods. A key for successful exportation is the creation of unique, new, and innovative products that have high potential for success in other markets. Exporting goods can help expand local businesses and create regional, national, and international ties. Export promotion allows businesses to integrate with the larger market to efficiently allocate resources. The creation of a local authority in Chesterfield- Daleville can provide various strategies for local businesses. This authority can help businesses identify the market local businesses with to target as well as how to efficiently produce and ship their products to these markets. The various businesses in Chesterfield- Daleville must analyze the costs and benefits of an exportation strategy. If not successful, a failed exportation strategy can be costly. Companies shoe research the success of their product in various markets and create a strategy for the most profit. Exportation can work in cooperation with the import substitution by exporting any excess goods produced after fulfilling the community s needs. Chesterfield-Daleville can focus on producing locally grown agricultural products and export any excess for an increased profit. The community can export excess manufactured goods and extend local services to the regional area. Subsidization In order to create a strong economy, Chesterfield-Daleville must find creative and efficient ways to provide money and incentives to local businesses. Subsidization is a form of financial assistance paid to a business or economic sector. Most subsidies are made by the government to producers or distributors in an industry to prevent the decline of that industry or an increase in the prices of its products or to encourage it to hire more labor. This applies to lagging, constrained, and poor performers and
startup businesses in Madison and Delaware Counties, our economy. Chesterfield- Daleville can implement subsidies from the local, state, and national levels. Subsides can provide the greatest benefit to lagging or poor performing firms in the area. They can also help expand constrained and strong performers. Lagging performers are classified either as a high priority target or as limited by a weak base and declining competitiveness. These two classifications differ because a high priority target has a high location quotient and a performer that is limited by a weak base has a low location quotient. The government should especiall subsidize the industries that are categorized into the lagging performers, and especially those that are a high priority target. This would provide these industries a chance to economize on their growth within a local economy and add to the local economic base, and possible expand. Constrained performers in our economy are declining locally, but not declining as rapidly in Indiana s economy. Because these performers are declining locally as well as declining in the reference economy, a weak base and external factors limit them. These performers are not so easily saved, as would a lagging performer. Although the growth in Indiana is not declining rapidly, local growth is declining. Subsidizing these industries may help them to revive themselves; which could lead to an increase in consumption if they grow beyond the reference economy. Poor performers are declining in both absolute and comparative terms. These performers do not have a place in the economic base in our economy or in Indiana s economy. The industries that are classified as poor performers are limited by local weakness and also limited by the overall industry decline in the reference economy. These performers are declining and limited overall, both locally and elsewhere. Subsidizing these industries would take a great deal of funds and may not be in the best interest of the local economy to revive them. The local government should focus on theses businesses the most since they are limited by local weaknesses. Chesterfield-Daleville can work to convert local weaknesses to strengths and hopefully outpace the State economy. Startup businesses have limited operating history and are new to the market. These businesses need encouragement to stay within the local economy. Subsidies can encourage these new companies to stay in the economy by providing relief from operational or labor costs. Chesterfield- Daleville offers many sites for new businesses near I-69 and wished to expand in this area. The local development strategy should focus on this area as a catalyst to attract people to the cities of Chesterfield and Daleville. The Implementation of our subsidy plan would need to target certain areas within sectors that effect major economic players in the local economies of Madison and Delaware Counties as well as target major industries in the Chesterfield-Daleville area. Subsidization could highly enhance declining sectors in the manufacturing sector and also help expand industries that are performing well. Offering subsidies to companies that cooperate to produce a good or service that will benefit the local economy would encourage companies and businesses to do so. This local cooperation could provide jobs to local residents and increase the local economic base. Marketing and Promotion In order to increase a positive community image and attract people and foster economic growth, Chesterfield-Daleville must work to promote the community. A marketing and promotion is a strategy can be used to boost sales and income for an industry or business. This strategy is the communication link between sellers and buyers for the purpose influencing a buyer s purchasing decision. Marketing and promotion is a common strategy that is used from a small-scale corner store, to multimillion dollar enterprises. It is encountered in daily life, and should be applied throughout the Chesterfield-Daleville community. 21
Development Strategies 22 A marketing and promotion strategy is useful for strong and lagging performers in a local economy. A strong performer is an industry that is part of the economic base of an area, has employment growth, and is growing faster than the industry sector in the reference economy. A lagging performer may or may not be part of the economic base, but is experiencing growth locally. This strategy can be useful for these types of industries because these industries are growing and they need help to be recognized on a market level. There are three basic objectives of promotion: to present information to consumers as well as others, increase demand, and differentiate a product. Chesterfield-Daleville can provide local businesses with strategies to market and advertise their product in an efficient manner to increase profitability and help the overall economy. WITSA, or World Information Technology and Services Alliance, is a group that helps to strengthen national industry by sharing knowledge, experience, and information. They have a network of national associations that help with the exchange of information and help its members interact and learn from one another. Within this alliance the information that is most commonly shared are best practices, news, public policy, grant programs, and market reports. Chesterfield- Daleville can work with organizations like these to help local businesses. Attracting strong performers in our local economy and forming an alliance that would promote them to outside of Chesterfield-Daleville and outside of Delaware and Madison Counties. This promotion campaign could bring attention to the lagging performers and through the associations and network revive themselves to strong performers in the local economy. This type of association and cooperation could attract the attention of companies or firms that are searching for a place to relocate. Relocation of firms into the local economy would add to the economic base. The cities can also work to market an overall strong image for the community through a community branding campaign. This campaign should focus on the assets of the community to advertise the image of the area as a quality place to live and work. Replacement and Retraining Chesterfield-Daleville must focus on creating a strong workforce and attracting strong businesses. Replacement of industries or businesses is the process of taking a failing industry or a vacant industry in a local economy and replacing the industry with a business that is or will be prosperous. When this happens, there may be local residents that are out of work because the industry failed. Chesterfield-Daleville should work on helping constrained or lagging industries so that they do not fail. Retraining local residents to the new industry is important, because it secures a work force that is educated in the replacement industry. The strategy of replacing an industry is applicable to poor performers in the local economy. The weak base locally and the declining growth in the larger economy limits these poor performers. It is usually not in the best interest of the local economy to revive or save the performer unless there is a strong possibility of reviving these businesses. Chesterfield-Daleville should focus on providing strategies for businesses so that they do not fall into this category. The Washington State Board for community and Technical Colleges, or SBCTC, created a worker retraining program in response to dramatic changes in their economy, including layoffs of workers in major industries and long-term need for training programs for citizens of the city. This legislation was passed in Washington and has extended out to other cities through colleges that created Worker Retraining programs that have served over 116,000 unemployed and dislocated workers in Washington. The law greatly expanded training that thousands of jobless workers needed. Some of the colleges that now have Worker Retraining programs are: Seattle Central, Seattle Vocational, Tacoma, and many more. There is financial aid available for these programs. Implementing a retraining program, like Washington State s program, would take
regional collaboration from the educational facilities at the municipal level and at the county level. The Chesterfield-Daleville area is fortunate because of the access to Ball State University, which is the fourth largest public university in Indiana, in Delaware County. There are many other colleges in Muncie as well as in Anderson. Identifying key industries and clusters is a component to making sure these colleges and universities know what classes and training to offer. This strategy also helps create links with the regional area to foster development. Funding for this type of program would be given directly to the universities either by determining the amount through census data or determining the amount to previous funding for the program. Invest in Local Social Infrastructure In addition to focusing on attracting new businesses to the area, Chesterfield-Daleville should focus on investing on the local social infrastructure. Investing in social industry should be part of the community development strategy. Development should focus on local neighborhoods and existing businesses instead of new firms. This strategy should focus on helping low income areas by providing job training that will benefit local firms. By focusing investment on existing residents and providing means of empowerment, Chesterfield-Daleville can also invest in the future. This strategy should also empower lowincome residents by offering transit options. Chesterfield-Daleville can partner with non-profits and Community Development Corporations to focus inward and promote local entrepreneurship. Child care programs can provide means for parents to go to work, which promotes the education of children at local schools, leading to the development of future workforce skills. Other programs should be implemented to create affordable housing and goods to provide affordable living and help residents succeed. Programs like these create a family-friendly local environment and can create a stronger community in Chesterfield- Daleville. 23
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