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Recruiting on a shoestring: Chamber of Commerce's $300,000 budget pales in comparison to cities of similar size.

The senior vice president and director of economic development for the Mobile, Ala., Area Chamber of Commerce recently returned from a three-week business trip to Asia.

Mobile can afford such recruiting efforts.

Paul Harvel, president of the Greater Little Rock Chamber of Commerce, smiles when he hears of the Asian outing.

Then, he tells his own favorite chamber story.

Take a look at the chamber in Columbia, S.C., a city comparable in size to Little Rock, Harvel says.

Columbia's chamber has a full-time staff member whose only responsibility is to chase white-collar jobs. Another staff member devotes all of his time to international recruiting.

Little Rock's chamber, with a staff of 11 and an annual budget of about $400,000, has two full-time staff members involved with economic development and industrial recruitment.

Nolan Fleming is the director of economic development. Kim Pruitt is his researcher.

So busy is Fleming that he did not have time to sit down for an interview for this story.

When Jim Fram of Harrison takes over soon as executive vice president, Harvel will shift his attention to economic development.

Still, the chamber's staff size and budget pale in comparison to other cities.

Is it affecting industrial recruitment in central Arkansas?

"Clearly, our budget for industrial recruitment is lower than other cities our size," says Walter Smiley, the founder of Systematics Information Services Inc. and president of the development group Fifty for the Future. "But the chamber does a good job for its size."

To a point, Harvel concedes.

More money and a larger staff obviously would mean better recruiting.

How It Stacks Up

"Comparatively speaking, Little Rock has done well," says Del Boyette, director of industrial development at the Arkansas Industrial Development Commission. "You look at Babcock & Wilcox, Arkansas Aerospace and the expansions taking place. How can you say Little Rock has done badly?"

Comparisons speak volumes, though.

In Austin, Texas, which has a population of about 500,000, the chamber devotes an annual budget of $700,000 and seven of its staff of 45 to industrial recruitment.

It has paid off.

Among recent expansions have been Apple Computer Inc. (about 300 jobs) and American Airlines (about 300 jobs).

Officials at Motorola Communications & Electronics Inc. are considering an expansion that would result in several thousand jobs during a period of several years. Motorola already has 5,500 employees in Austin.

Also, Applied Materials Inc. is looking at Austin as a site for an expansion that would mean several thousand jobs, according to John Myers of the chamber's economic development team.

"|Industrial recruitment~ is a priority," Myers says. "The state has its own efforts, but the chamber is the No. 1 economic development group."

How has Austin done it?

Like many chambers, it embarked on a drive to raise money for economic development.

"The regular operating budget is not sufficient," Myers says.

Thus the fund drive.

"If its goals are on target and you're real specific, the business people respond," Myers says. "Particularly for chambers in communities the size of Little Rock, |fund drives~ are not uncommon at all."

Several years ago, Little Rock's chamber had the Doubleday Fund drive. Interest from money raised is used by the chamber.

Barnett Grace, chairman, president and chief executive officer of Little Rock's First Commercial Corp., is also chairman of the Greater Little Rock Chamber of Commerce.

Grace warns against a dependence on fund drives.

"When there has been a specific industry that needed the money, so far we've been able to meet those needs," he says. "I like our plan better. If I give to a fund, it's going to be managed as part of a fund. But there are a lot of contributors around here when the need arises. That's the approach we're taking now.

"Our contributors say, 'Let us manage the money until you need it. Then, come to us, and we'll make a contribution.'"

Where The Money Comes From

The chamber derives its economic development funds from three main sources -- the city of Little Rock, the Doubleday Fund and Fifty for the Future.

The city gives the chamber $100,000 annually for economic development if the chamber raises $2 for every $1 the city donates.

The Doubleday Fund, Fifty for the Future and money raised from special projects and promotions provide that $200,000.

"Last year was the first time all that was defined," Harvel says. "Now, we can do some things."

Still, a $300,000 budget for economic development does not go far.

Jay Garner, senior vice president and director of economic development for the Mobile Area Chamber of Commerce, says a successful recruitment effort cannot be launched on a shoestring.

"You can't," says Garner, fresh from that trip to Asia. "You simply can't, not when you're competing against more than 19,000 communities.

"You must stand out in the crowd."

For the longest, Mobile, with a population of about 200,000, did not stand out.

Five years ago, the chamber there began a program dubbed "Tell The World."

It was an effort to market Mobile to corporate investors literally around the world.

Of course, the chamber needed money.

A four-year fund drive began. It raised $4 million for the project.

Chamber recruiters hit the road. New businesses trickled in. Industry became interested in Mobile.

First, a Sears Roebuck & Co. telemarketing center located there, creating 2,400 jobs.

Last year, Singapore Aerospace found the city, the first manufacturing investment from Singapore in the United States. The $13 million investment meant more than 1,000 jobs.

Shortly thereafter, World Omni Financial Corp., a services company that handles financing for Toyota dealerships, consolidated its 10 southeastern U.S. offices in Mobile. That meant another 300 jobs.

"We were ranked in various publications as being one of the top 10 industry locations in the United States," Garner says.

The "Tell The World" program ended last year.

In its place is another fund-raising effort called "Show Business Mobile."

So far, $3 million has been raised from 750 private-sector investors.

"We had to have commitment from the private sector and the public sector -- city and county government -- to support one well-funded economic effort," Garner says. "Without them, we couldn't accomplish this."

Recession Hits

In Shreveport, La., which has a population of about 200,000, a chamber staff of 25 spends most of its time on industrial recruitment and economic development.

Mike Philpot, manager of business recruitment for the chamber, says staff members are assigned to existing business support, expansions, relocations and government procurement assistance.

Although Philpot would not divulge the annual budget, he says a recent four-year economic development campaign raised $2.5 million.

The chamber is in the process of another four-year campaign. Almost $1.5 million has been raised.

Mike Rosa is the director of research for industrial recruitment for the Fort Worth, Texas, Chamber of Commerce.

He says Fort Worth, with a population of 447,619, operates with a slightly smaller budget and staff than most cities of the same size. Four staff members concentrate on industrial recruitment.

"It's not any more important than business expansion," Rosa says.

Like many cities, Fort Worth is feeling the effects of recession and the effects of Department of Defense spending reductions.

Industrial recruitment has been slow.

"The success rate is always terrible when compared with the number of prospects you work with," Rosa says. "One out of 100 is considered wonderful. American Airlines was our last big, big, big one.

"A lot of our growth, things a city such as Little Rock would consider big wins, comes from local business expansion."

For instance, Burlington Northern Air Freight is headquartered at Fort Worth. It plans to build an expanded facility, which could mean another 1,000 jobs.

"It's seasonal," Rosa says of industrial recruitment. "It could be 20, 30, 40 prospects a month. A lot depends on the U.S. economy. When things are uncertain, companies are more unwilling to spend large amounts of money on capital, and capital is what a new plant would require.

"Now that the Persian Gulf War is over, things have picked up."

The Memphis, Tenn., Chamber of Commerce, which serves a population of 610,333, has an annual budget of $670,000 for economic development. Seven full-time staff members work as industrial recruiters in partnership with Memphis utility companies.

Louisville's Example

The Greater Louisville, Ky., Economic Partnership broke off from that city's chamber in 1989. It is a separate, non-profit corporation.

The Economic Partnership recently concluded a four-year fund drive that raised $10.2 million for recruiting companies to a seven-county area that includes three counties in southern Indiana.

According to Greg Wathen, director of public affairs for the Economic Partnership, 20 percent of the funds come from the public sector and 80 percent come from the private sector.

"Our budget on average is more than $1 million per year |including a $240,000 marketing budget~," Wathen says. "... It's unusual for a city and county to give up responsibility for new business attraction to a corporation. But it's impossible as an agency to work in both states |Indiana and Kentucky~ without being private."

Grace cautions that comparing budgets from one chamber to the next is often an apples-to-oranges exercise.

"You need to know what they're putting in those budgets," he says. "It could be city money, county money, chamber dues, special foundation money."

"There are really multiple kinds of money used in industrial development," Smiley says. "Money used for managing a prospect, money used to buy rights of way, money used to pay for land improvements."

Still, Harvel states flatly, "We need a larger amount to be competitive. We have something to sell -- the |Little Rock Regional~ airport, the port. We need money to call on other cities, to market."

He suggests several options for increasing the budget:

* Increase the principal of the Doubleday Fund.

* Increase the amount of city funding.

* Begin a fund drive specifically for economic development.

Again, Harvel brings up Columbia's chamber with its recruiting director, assistant director and full-time staff member to deal with existing industries, not to mention "a marketing budget that makes ours look like peanuts."

The Columbia chamber has more than 40 employees.

The Tulsa, Okla., Chamber of Commerce has more than 50 employees.

The Oklahoma City Chamber of Commerce has more than 70.

Mobile has 11 staff members on the economic development team alone.

Little Rock has 11 chamber employees.


"We need to take another step," Harvel says.

Port Of Possibilities

With Two Prospects, Things Are Looking Up At The Little Rock Port Industrial Park

Former Mayor J.W. "Buddy" Benafield was not a happy man six months ago.

He was several months into his job as a Little Rock Port Authority board member.

He knew the port, the slack-water harbor and the industrial park along the Arkansas River had much to offer industries and distribution centers.

He also knew the complex was not pulling its weight.

"We should have an easier job than anybody in the state marketing ourselves to industry," Benafield told Arkansas Business in March. "We're the capital. We're the largest city. We're the center of commerce. I can't imagine why we haven't been more successful.

"My biggest disappointment upon leaving the |Little Rock Board of Directors~ was the inability of Little Rock to attract industry."

Benafield was a member of the city board from 1982-90. He was mayor in 1983 and 1984.

Now, his attention has turned to the Little Rock Port Authority.

He wondered why the port had not attracted more industries and jobs.

He wondered why there was not a heavier emphasis on marketing.

Finally, he is getting his answers.

New Recruits

Benafield greets a visitor to his 12th-floor penthouse at the Centre Place building in downtown Little Rock with a port update.

He points to a section of the report headlined "Prospects."

In conjunction with Arkansas Power & Light Co., the Arkansas Industrial Development Commission, the Greater Little Rock Chamber of Commerce and the city, the Port Authority reportedly is close to landing two major prospects. They are:

* A plastics manufacturer that would consolidate four facilities in the United States and Mexico into one large headquarters and manufacturing facility. Such a facility would mean almost 500 jobs.

"That one in particular we feel will make a final decision by the end of the year," Benafield says. "It could mean a great deal to the port. We expect them to give us an answer soon. I believe most of the demands have been met."

* A company that would invest about $100 million and employ between 125 and 200 people. It would use rail and water transportation services available through the port's railroad and the general stevedoring company at the port's terminal facility.

Benafield says the port is one of two sites the company is considering. He expects a decision by early next year.

Besides the two prospects, Benafield points with pride to the expansion of the Interstate Highway Sign Co. The company is constructing a 169,000-SF facility that will employ 175 people.

There are about 1,300 employees in the Port Industrial Park with a potential for an additional 3,000 to 4,000 jobs.

Marketing The Port

Still, there are problems.

Benafield says the economy has a lot to do with the Port Authority's inability to attract more tenants.

"Everything is subject to the recession," he says.

Six months ago, Benafield said marketing was another problem. He said marketing the port should be the city's "No. 1 priority."

He still feels that way, but he thinks a cooperative effort between the port, the chamber, utilities and the University of Arkansas at Little Rock will pay off.

Another marketing tool is the new Little Rock Property Association, which Benafield says makes port property owners ambassadors in bringing new industry to Little Rock.

"An aggressive marketing team will make a difference," he says.

As will the completion of the Montgomery Point Lock and Dam, near where the White River empties into the Arkansas River in southeast Arkansas.

Benafield believes that until the $170 million project is completed, industry prospects that must use the river will be wary. The proposed project by the U.S. Army Corps of Engineers is heavily opposed by environmentalists.

"That must be resolved in the near future," Benafield says. "For those who ... want to use the river, that's a point of contention. It must get done.

"When it does, that will be a great selling point."

And Buddy Benafield will be a happier man.
COPYRIGHT 1991 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:includes related article on former Mayor J.W. 'Buddy' Benafield and Little Rock Port Authority; Greater Little Rock Chamber of Commerce
Author:Webb, Kane
Publication:Arkansas Business
Date:Nov 4, 1991
Previous Article:Arkansas business directory of directors.
Next Article:Mr. Clean: North Little Rock's Harvey Cobb tries to clean up with his secret stain-removal formula.

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