Marketing Alberta CommunitiesMarketing Alberta CommunitiesRegional Economic Development Regional Economic Development

WorkshopsWorkshopsMarch 14 to 18, 2005March 14 to 18, 2005

Module 3 – Targeting for Economic DevelopmentModule 3 – Targeting for Economic Development

Presented by:Presented by:

Targeting Your Economic Targeting Your Economic Development ProgramDevelopment Program

Without “targets” your economic Without “targets” your economic development program is “aimless” and development program is “aimless” and ultimately ineffective.ultimately ineffective.– The choice of target sectors should be based The choice of target sectors should be based

on your community’s inherent “competitive on your community’s inherent “competitive advantages”.advantages”.

Economic Base AnalysisEconomic Base Analysis– Which sectors are strong and growing in your community Which sectors are strong and growing in your community

or region – which are under-represented - why???or region – which are under-represented - why???

Economic Base AnalysisEconomic Base Analysis

What is it?What is it?– A set of analytical toolsA set of analytical tools to profile the local economy. to profile the local economy.

Location Quotient AnalysisLocation Quotient Analysis - measures the - measures the concentration concentration of of each industry in the local economy.each industry in the local economy.

Shift/Share AnalysisShift/Share Analysis - measures the - measures the relative growth or relative growth or declinedecline of each industry during the study period - compared of each industry during the study period - compared to a reference area (usually the province).to a reference area (usually the province).

Employment by IndustryEmployment by IndustryData SourcesData Sources

Two sources of data for the analysis:Two sources of data for the analysis:2001 Census – 2001 Census – used for Location Quotient Analysisused for Location Quotient Analysis

– Statistics Canada used S.I.C. (Standard Industrial Statistics Canada used S.I.C. (Standard Industrial Classification) to record industry data. In 2001 they switched to Classification) to record industry data. In 2001 they switched to NAICS (North American Industrial Classification System). As a NAICS (North American Industrial Classification System). As a result we can’t use Census data to measure changes. result we can’t use Census data to measure changes. HoweverHowever it is the most accurate profile of the local economy. it is the most accurate profile of the local economy.

Labour Force Survey – Labour Force Survey – used for Shift/Share Analysisused for Shift/Share Analysis– The Labour Force Survey (also by Statistics Canada) provides The Labour Force Survey (also by Statistics Canada) provides

consistent and comparable data (using NAICS) back to 1990, consistent and comparable data (using NAICS) back to 1990, allowing us to measure changes in the economy. Unfortunately allowing us to measure changes in the economy. Unfortunately it is available only down to the it is available only down to the “Economic Region”“Economic Region” or “ or “Census Census Metropolitan AreaMetropolitan Area”. ”.

Location Quotient AnalysisLocation Quotient Analysis

Ratio of Ratio of ““Sector EmploymentSector Employment” ” to to ““Total Total EmploymentEmployment”” in local economy compared to a in local economy compared to a reference area (province).reference area (province).

LQ = 1.00LQ = 1.00 – same ratio as the reference area.– same ratio as the reference area.

LQ < 1.00LQ < 1.00 – sector is under-represented in the local – sector is under-represented in the local economy – implies leakage to another market.economy – implies leakage to another market.

LQ > 1.00LQ > 1.00 – sector is more concentrated than the – sector is more concentrated than the reference area – bringing new $ to the local economy – reference area – bringing new $ to the local economy – implies that the community has a “competitive advantage” for implies that the community has a “competitive advantage” for this industry. this industry.

Location Quotient AnalysisLocation Quotient AnalysisCalgary & Edmonton – 2001 CensusCalgary & Edmonton – 2001 Census

0.25

0.5

0.75

1

1.25

1.5

1.75

Calgary Edmonton

Calgary’s StrengthsLegal and Accounting ServicesFinancial & Information Services564,000 Total Employment

Edmonton’s StrengthsPublic AdministrationHealth & Education Services527,000 Total Employment

Shift/Share AnalysisShift/Share Analysis

Measures the Relative GrowthMeasures the Relative Growth of each sector of of each sector of the economy compared to the reference area.the economy compared to the reference area.– Reference Area Growth EffectReference Area Growth Effect – the net change in – the net change in

employment attributable to overall growth/decline of the economy in employment attributable to overall growth/decline of the economy in the reference area (the reference area (business cyclebusiness cycle))

– Industrial Mix EffectIndustrial Mix Effect – the net change in employment – the net change in employment attributable to the overall growth/decline of the industry (attributable to the overall growth/decline of the industry (growth growth industries vs. sunset industriesindustries vs. sunset industries).).

– Differential Shift EffectDifferential Shift Effect – the net change in employment – the net change in employment attributable to local factors.attributable to local factors.

Is the sector growing more quickly in your community than Is the sector growing more quickly in your community than elsewhere in the province or is it losing share?elsewhere in the province or is it losing share?

– This shows real growth vs. apparent growthThis shows real growth vs. apparent growth

Sample Shift Share AnalysisSample Shift Share AnalysisKitchener/Waterloo CMAKitchener/Waterloo CMA

Source: Labour Force Survey 98/02Source: Labour Force Survey 98/0298 / 02

Net ChangeReference

AreaIndustrial

Mix Differential

INDUSTRY SECTOR – NAICS CODE Employment Growth Effect Effect Shift Effect

Agriculture, Forestry & Fishing -2,000 421 -1,537 -884

Mining, Oil & Gas        

Utilities        

Construction -900 1,263 1,504 -3,667

Manufacturing 8,300 5,748 1,467 1,084

Trade 5,400 3,148 823 1,430

Transportation & Warehousing 3,400 758 -116 2,758

Finance, Insurance & Real Estate -1,200 1,674 -713 -2,161

Professional, Scientific & Technical 800 1,127 704 -1,031

Management, Administration & Support Services 2,500 716 761 1,023

Education Services 4,300 1,453 -180 3,027

Health Care & Social Services 2,300 1,621 -281 960

Information, Culture & Recreation 1,500 674 523 303

Accommodation & Food Services 500 1,284 -224 -560

Other Services (except public administration) -1,900 1,116 -1,516 -1,500

Public Administration -1,900 737 -549 -2,088

Total 20,600      

Net Change EmploymentNet Change EmploymentKitchener/Waterloo CMAKitchener/Waterloo CMA

Source: Labour Force Survey 1998-2002Source: Labour Force Survey 1998-2002

-2,000

-900

8,300

5,400

3,400

-1,200

800

2,500

4,300

2,300

-1,900

500

1,500

-1,900-2,500

0

2,500

5,000

7,500

10,000

20,600 Net New Jobs added in 5 years40% of which were Manufacturing jobs

Shift/Share AnalysisShift/Share AnalysisKitchener/Waterloo CMAKitchener/Waterloo CMA

Source: Labour Force Survey 98/02Source: Labour Force Survey 98/02

-884

-3,667

1,0841,430

2,758

-2,161

-1,031

1,023

3,027

960

-1,500

-560

303

-2,088

-4,000-3,500-3,000-2,500-2,000-1,500-1,000

-5000

5001,0001,5002,0002,5003,0003,500

Differential Shift Effect

Shows Relative Growth/Decline Compared to the Province

Comments - Shift/Share AnalysisComments - Shift/Share Analysis

Manufacturing SectorManufacturing SectorNot only is manufacturing highly concentrated in the Not only is manufacturing highly concentrated in the Kitchener/Waterloo region, it is growing faster than Kitchener/Waterloo region, it is growing faster than elsewhere across the province.elsewhere across the province.

– 8,300 net new jobs added in K/W during the 5-year study 8,300 net new jobs added in K/W during the 5-year study period = average growth rate 2.6% per year.period = average growth rate 2.6% per year.

Commercial ServicesCommercial ServicesFinance, insurance, real estate, professional services (legal, Finance, insurance, real estate, professional services (legal, accounting, management consulting) and government offices accounting, management consulting) and government offices are all under-represented in Kitchener/Waterloo area and are are all under-represented in Kitchener/Waterloo area and are declining relative to provincial growth rates.declining relative to provincial growth rates.

– Net loss of 2,400 jobs in the Finance, Insurance, Real Net loss of 2,400 jobs in the Finance, Insurance, Real Estate, Professional Services and Public Administration Estate, Professional Services and Public Administration during the study periodduring the study period

Ranking Economic PerformanceRanking Economic Performance

Two economic models to rank the performance Two economic models to rank the performance of each sector in the local economy.of each sector in the local economy.– Both use the Economic Base Analysis.Both use the Economic Base Analysis.

Carvalho Model – Carvalho Model – developed by Dr. Emanuel Carvalho, developed by Dr. Emanuel Carvalho, University of WaterlooUniversity of Waterloo

McLean/Voytek Model – McLean/Voytek Model – from “from “Understanding your Economy: Understanding your Economy: Using Analysis to Guide Local Strategic PlanningUsing Analysis to Guide Local Strategic Planning” - Mary ” - Mary McLean & Kenneth Voytek, 1992McLean & Kenneth Voytek, 1992

Carvalho ModelCarvalho ModelRanking Economic PerformanceRanking Economic Performance

Developed by Dr. Emanuel Developed by Dr. Emanuel Carvalho – Univ. of WaterlooCarvalho – Univ. of Waterloo– Asst. Director EDAC/U of W Asst. Director EDAC/U of W

Economic Development Economic Development ProgramProgram

Considers 3 individual Considers 3 individual measures to rank each measures to rank each sectorssectors::– Concentration LocallyConcentration Locally

Location QuotientLocation Quotient– Strength of Overall IndustryStrength of Overall Industry

Industrial Mix EffectIndustrial Mix Effect– Local Growth FactorsLocal Growth Factors

Differential Shift EffectDifferential Shift Effect

HighHigh

Location Location QuotientQuotient

Industrial Mix Industrial Mix EffectEffect

Differential Differential Shift EffectShift Effect

1212 > 1.25> 1.25 PositivePositive PositivePositive

1111 0.75 – 1.250.75 – 1.25 PositivePositive PositivePositive

1010 < 0.75< 0.75 PositivePositive PositivePositive

MediumMedium

99 > 1.25> 1.25 NegativeNegative PositivePositive

88 0.75 – 1.250.75 – 1.25 NegativeNegative PositivePositive

77 < 0.75< 0.75 NegativeNegative PositivePositive

66 > 1.25> 1.25 PositivePositive NegativeNegative

55 0.75 – 1.250.75 – 1.25 PositivePositive NegativeNegative

44 < 0.75< 0.75 PositivePositive NegativeNegative

LowLow

33 > 1.25> 1.25 NegativeNegative NegativeNegative

22 0.75 – 1.250.75 – 1.25 NegativeNegative NegativeNegative

11 < 0.75< 0.75 NegativeNegative NegativeNegative

McLean/Voytek ModelMcLean/Voytek Model

What’s Next??What’s Next??

Once you’ve selected your targets?Once you’ve selected your targets?– Get to know as much as you can about:Get to know as much as you can about:

– The industry sector in generalThe industry sector in generalIndustry leadersIndustry leadersIssues of concernIssues of concernLocations of significant clustersLocations of significant clusters

– Local firms in this sectorLocal firms in this sectorCorporate AftercareCorporate Aftercare

– Processes usedProcesses usedTraditional and Emerging TechnologiesTraditional and Emerging Technologies

– Up & Down Stream IndustriesUp & Down Stream IndustriesSuppliers & CustomersSuppliers & Customers

Corporate Aftercare ProgramsCorporate Aftercare Programs

Simply visiting your companies is Simply visiting your companies is the most powerful of all economic the most powerful of all economic development programs.development programs.– It is now generally understood that between It is now generally understood that between

70% to 85% of all new foreign direct 70% to 85% of all new foreign direct investment is actually follow-on investment investment is actually follow-on investment by multinational companies already by multinational companies already established in Canada.established in Canada.

– ““You can leave your passport at home and You can leave your passport at home and still have a strong business attraction still have a strong business attraction program.”program.”

– Matthew Fischer, CED, Ec.D.Matthew Fischer, CED, Ec.D.

Available for DownloadAvailable for Download

These 3 Power Point PresentationsThese 3 Power Point Presentations

IEDC Template in ExcelIEDC Template in Excel

Guide to Researcher on how to complete Guide to Researcher on how to complete the IEDC Templatethe IEDC Template

MMK Report on IEDC TemplateMMK Report on IEDC Template

Guide for a Corporate CallGuide for a Corporate Call

Performance Measurement ArticlePerformance Measurement Article

Maxims of Economic Maxims of Economic DevelopmentDevelopment

Maxims of Economic DevelopmentMaxims of Economic DevelopmentLook Inward for GrowthLook Inward for Growth

1. Existing businesses will generate as much as 1. Existing businesses will generate as much as 90% of the growth in your community.90% of the growth in your community.

Moreover, the vast majority of all new jobs are created by Moreover, the vast majority of all new jobs are created by small entrepreneurial firms.small entrepreneurial firms.

2. 70% to 85% of new Foreign Investment is 2. 70% to 85% of new Foreign Investment is actually follow-on investment by foreign-owned actually follow-on investment by foreign-owned companies already in Canada.companies already in Canada.

““You can leave your passport at home and still have an You can leave your passport at home and still have an effective foreign investment attraction program.”effective foreign investment attraction program.”

Maxims of Economic DevelopmentMaxims of Economic DevelopmentImportance of PlanningImportance of Planning

3. Be Strategic - There will always be too many 3. Be Strategic - There will always be too many opportunities competing for your time and opportunities competing for your time and budget.budget.

Prioritize - strategically select a manageable number of Prioritize - strategically select a manageable number of projects to focus on and build a broad base of support in the projects to focus on and build a broad base of support in the community for their implementation.community for their implementation.

4. Without well defined “targets”, your economic 4. Without well defined “targets”, your economic development program is “aimless”.development program is “aimless”.

Ensure your targeting is based on a solid foundation such as Ensure your targeting is based on a solid foundation such as an Economic Base Analysis.an Economic Base Analysis.

Maxims of Economic DevelopmentMaxims of Economic DevelopmentMarketing TechniquesMarketing Techniques

5. If companies can’t “Google” your community 5. If companies can’t “Google” your community you’re not in the game.you’re not in the game.

Over 90% of short lists in site selection are based on internet Over 90% of short lists in site selection are based on internet research - without you even being aware you were research - without you even being aware you were considered.considered.

Also, because basic information is already available on the Also, because basic information is already available on the web, your first contact with a client becomes much more web, your first contact with a client becomes much more critical requiring higher level information.critical requiring higher level information.

6. Personal contact is still the most effective 6. Personal contact is still the most effective means of communicating with your client.means of communicating with your client.

Choose face-to-face contact before any other form of Choose face-to-face contact before any other form of communication (advertising, trade shows, direct mail, etc.)communication (advertising, trade shows, direct mail, etc.)

For further information contact us at :For further information contact us at :

182 Willow Ridge Road, RR #3182 Willow Ridge Road, RR #3

Ilderton, ON N0M 2A0Ilderton, ON N0M 2A0

Tel: (519) 666-3668 Fax: (519) 666-3670Tel: (519) 666-3668 Fax: (519) 666-3670

Email: mfischer@execulink.comEmail: mfischer@execulink.com