The western part of North Carolina has faced economic challenges for decades. Industries that once brought prosperity – tobacco, textiles and furniture manufacturing – have succumbed to globalization and health concerns. But a renaissance is in progress, thanks to an innovative approach to economic development that is catching on nationwide.
Tom Dempsey, CEO of SylvanSport, is one of the new breed of entrepreneurs in the region. With help from economic development agency AdvantageWest, Dempsey is one of several entrepreneurs building a regional cluster of outdoor equipment companies. His business is locally based, and it taps the recreational opportunities of the Blue Ridge Mountains. Yet at the same time, its customer base is not limited to locals and tourists. SylvanSport attracts customers from across the U.S. and is gearing up to compete on a national scale.
What is different about the North Carolina approach to development? Why is its approach succeeding while others have failed? The new style of economic development has four significant features: focusing locally and regionally, supporting local entrepreneurship, extending local supply chains and building connections within and across industries.
Focus on local growth first
As a largely rural region and home to the Blue Ridge Mountains, western North Carolina is not an easy place to develop new industry. Assessing their options, regional economic developers realized that it would be a mistake to rely solely on bidding wars with other locations to attract the next factory, distribution center or call center. The region would have to kick-start its growth by stimulating locally-developed business with an organic connection to the region. "Early on, we chased the next hot thing, for example nanotechnology," says Matt Raker, vice president of entrepreneurship at AdvantageWest, the region's economic development group. "Those efforts failed miserably. But once we focused on our local assets and local entrepreneurs, it's been working fabulously."
Follow your local entrepreneurs
AdvantageWest discovered ways to tap entrepreneurial enthusiasm already present in the region and craft programs that help local entrepreneurs succeed. One such program was to create Blue Ridge Food Ventures, an 11,000 square foot incubator and shared-use facility equipped to support a wide range of food and natural products businesses. This USDA- and FDA approved facility greatly lowers the barriers to food entrepreneurs. Since opening in 2005, more than 200 businesses have gotten started there and have produced more than $8 million worth of product. Within three years of starting, the facility broke even on an operating basis. It has since spawned several new businesses that have outgrown it to become significant employers in the local economy. AdvantageWest helps entrepreneurs in other ways as well: providing mentorship, strategic planning, startup loans and connecting entrepreneurs with investors.
Success breeds success: capture the whole supply chain
Once new entrepreneurial businesses get established, they create opportunities to extend their supply chains upstream and downstream in the region. This brings more economic activity to the region, strengthens the skills of the workforce, accelerates innovation and improves profitability by cutting shipping and logistics costs. For example, a cluster of beer breweries has grown up in and around Asheville, the region's largest city, which now hosts roughly 15 local breweries. With the breweries established, the brewing industry can support local upstream businesses in grain and malt production. Downstream, the brewery cluster has forged an alliance to take the spent grain left after brewing and provide it to local farms where it serves as a low cost, highly nutritious feed for livestock.
Ironically, even though the local business development team did not focus on attracting large national brands, the bigger brands have become interested. The Asheville region is now firmly established as a beer-making hub, and it hosts a work force skilled in brewery work and passionate about it. Sierra Nevada , New Belgium and Oskar Blues are opening facilities there, which will raise the region's output from 50,000 barrels per year to more than 800,000. "Once you get the local cluster going, you can create a competitive advantage," says Raker.
Forging connections between entrepreneurs in related industries has proven to be extremely important in promoting economic growth, particularly for smaller companies that cannot yet market themselves efficiently at a national scale. Dempsey of SylvanSport worked with AdvantageWest and others to create a local industry association, the Outdoor Gear Builders of Western North Carolina.
By collaborating, North Carolina's outdoor gear manufacturers can execute larger, much more compelling promotional events. Says Dempsey: "We all speak to the same consumer."
In addition, the outdoor gear builders have begun to share technical know-how and resources: For example, SylvanSport has capability in advanced metal fabrication; it collaborates with other local gear builders that bring capacity in plastic forming, textiles and other production processes. Working together, this regional cluster is manufacturing things locally that previously would have been outsourced to Asia. Re-shoring strengthens the local job base and incomes, and stimulates the local economy.
Development strategies like North Carolina's are supported and spread by BALLE, the Business Alliance of Local Living Economies. Raker of AdvantageWest is a fellow in a BALLE program that supports and provides resources to people like him who serve as connectors in the local economy. "BALLE Fellows are influencing hundreds or thousands of local businesses in their regions," said Leanne Krueger-Braneky, Director of Fellowship and Alumni at BALLE. "We believe that this network effect will shift and influence traditional economic development policy and practice in a much faster manner." BALLE is taking online applications through mid-December for the next cohort of the BALLE Local Economy Fellows that will start in 2014.
David Brodwin is a cofounder and board member of American Sustainable Business Council. Follow him on Twitter at @davidbrodwin.