Sunday, April 16, 2006

Economic Changes

Taylor publishing announced they are closing their San Angelo plant. They have been here for 60 years, but with the changing business climate and increased competition, they need to do things differently. The money we paid from the sales tax to build a new plant and bribe them to keep jobs was not enough to overcome the cost difference of doing business from here instead of Dallas or El Paso.

It would be easy to blame the loss on lack of an interstate and high fuel prices, which I am sure contributed to the decision. It's also tempting to think that maybe they would have stayed if we had only given them more "economic development" money from the sales tax. Realistically if that would have made a difference, the COSADC would have made it happen. In the end, Taylor came to the same conclusion that other companies have: Manufacturing as usual is not a good fit for San Angelo. That's not as bad as it sounds.

The world economy is changing. Business possibilities are growing and the older businesses make up less of the total economy. It has been that way in every economic change or revolution.

Primitive societies spent almost all their time searching for food, with the rest of their time spent on keeping from being food. The whole economy was based on just staying alive. With the invention of agriculture, food gathering took much less time. People could build permanent shelters and spend time developing tools. With the domestication of draft animals and invention of the wheel, people could easily move food and other goods from place to place. They could build toys, art, and even build massive cities and monuments such as the pyramids. With the invention of ocean going ships, goods could come from great distances. Every major economic change has been a combination of better, or at least cheaper, ways of doing old businesses and brand new types of businesses that no one had thought of before. Many of these new businesses grew out of combining old business products with new inventions and ideas to increase the total value. Paint and glazing increased the value of simple pottery. Ships allowed that pottery to be traded for exotic foods, cloth, and other items. The cycle continues today.

San Angelo and the Concho Valley needs to get creative. We have a lot of resources, but not those needed to grow the old "business as usual." Many businesses are moving offshore to places like China and India which have low wages and few regulations and taxes. We can't compete for basic manufacturing jobs with places like Bangalore, India or even Gary, Indiana. We need to add extra value to whatever we do.

We have excellent communications infrastructure. This gives us an edge in any business that is dependent on information. We have a good university that is trying to grow. With encouragement, support, and incentives, they could fuel innovative new business ideas. We might even get some manufacturing jobs here, but only if we can show that we can add more to the mix than low wages, cheap rent, and economic development bribes. Competing just on price is a losing strategy. The Surprise in Surprising San Angelo needs to be how much value we add to the businesses that are here.

Taylors move does leave us with an empty building on a thinly populated industrial park. It would be nice to fill it, but that needs to be a secondary priority. We need to build on our strengths and create and innovate to the point that our slogan can be "San Angelo - Because Nobody Does Business Better."

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