Thursday, June 26, 2008

Economic Development: Abq Journal & HP

An article tucked in the back of today's Albuquerque Journal began with gratuitous editorializing of the sort that makes more difficult the job of economic developers. The article, by staff writer Andrew Webb,began, "The planned opening of a Hewlett-Packard call center in Rio Rancho may come at a cost to 800 employees in Colorado Springs, highlighting the often ephemeral nature of incentive-driven business recruitment."
I'm confused. HP's Rio Rancho facility, plus another new one set for Arkansas, will indeed cost the Colorado Springs employees. That's because the Colorado Springs operation is going to close. Together, the two new operations will eventually employ 2,500, more than three times the employment in Colorado. I have zero information about HP's decision process, but to start, the increased employment suggests that HP decided to expand the tech support operations. The question, then, becomes, "Where?"
Colorado Springs was in the game. That the choice went elsewhere suggests HP liked the labor force better in New Mexico and Arkansas. There may have been complications with the existing site as well. And other things.
Economic developers, consultants and companies will tell you that the answer comes from a technical analysis that probably starts with labor force availability, quality and cost. Incentives—job training, industrial revenue bonds and the like—may sway the decision at the margin but only at the margin. That means there is no such thing as "incentive-driven business recruitment."
To be sure of the meaning, I looked up "ephemeral." It mean fleeting or of very short term effect. In the context the implication is that firms receiving incentive packages may move again quickly. The trouble with that logic is that moving is really, really expensive. Even if that happened often, which it doesn't, there was nothing in the story to back up the "ephemeral" cheap shot in the lead.
Last Tuesday, June 24, the Colorado Springs Gazette reported that HP offered present employees a moving allowance to come to Albuquerque. This seems to me a good thing, though that wasn't the tone of the news reports. Home prices in Albuquerque are a bit less than in Colorado Springs. The geography of the two cities is similar.

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