Homegrown entrepreneurs key to Newton’s future

Homegrown entrepreneurs key to Newton’s future
Date November 11, 2005
Section(s) Local News

AP Business Writer

AMES — Rural states like Iowa can no longer rely on large manufacturing plants to drive their economy and provide jobs, an economist said Thursday.

Instead, rural areas must develop homegrown entrepreneurs and regional economic strategies to survive a changing global economy, said Mark Drabenstott, vice president of the Federal Reserve office in Kansas City.

“Iowa’s assets may be a whole lot more than topsoil that runs three feet deep,” Drabenstott told students, bankers and businessmen at Iowa State University. “It may be about your culture, your topography, your access to Chicago and Minneapolis markets.”

Traditional economic development meant attracting businesses with money and other financial incentives, but that model doesn’t work in a global environment, much less in other countries, he said.

“What makes you think the cost of business is any less than it is in 500 other places that will give them tax breaks for the next 10 years?” said Drabenstott, who is also director of the Center for the Study of Rural America.

An example, Drabenstott said, is the Maytag Corp. The company grew to an international appliance manufacturer from a small operation started in the late 1800s by Fred Maytag, a local entrepreneur who perfected the washing machine.

State and local officials are increasingly concerned as Maytag appears closer to closing its laundry appliance factory, which provides 1,000 jobs. The corporate headquarters with hundreds of white-collar jobs also could be in jeopardy if the purchase by rival Michigan-based Whirlpool Corp. is successful.

Maytag has been a key driving force in the economy of Newton, a town of 15,600.

Instead of chasing after another large company to replace Maytag, central Iowa should consider a long-term approach to economic development, he said.

“Do we really believe that Newton is going to recruit a Fortune 500 company to replace Maytag? How much better it might have been if Newton had 15 medium-sized companies, two of which decided to leave,” he said.

He said rural areas need to establish educational systems that encourage entrepreneurs to develop local businesses.

“Regions need to grow lots of them because we can’t predict which one of them will grow into Maytags,” he said.

The first step is for areas with logical links and common ground to come together. That process, he said, requires leadership provided by a college, a nonprofit or philanthropic organization.

The regions must be formed locally and not from state or national governments, he said.

“It must be from the bottom up, not from the top down. There’s not enough wisdom in Des Moines to sort this out. There’s not enough wisdom in Washington to sort this out,” he said.

The next step for the regional leaders is to identify the local assets and determine how they can be developed and marketed.

Drabenstott said the tools for conducting that analysis need to be developed. University research can be drivers of innovative ideas that could lead to more local businesses. However, the state must do a better job of funding entrepreneurs’ ideas.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: