Welcome to the Monday Business Briefing for June 9.
This is your private business intelligence briefing with Insider Louisville staff and contributors vetting tips collected during the past few days, hours and minutes before we post.
A reminder: Insiders Meetups is taking a hiatus and will reconvene later this month with a special economic-development panel at Harvest restaurant. Details to follow.
Wow, was it only a week ago that we posted about Todd Blue leaving Louisville for Houston? Since then, Our Fair City seems divided in two camps: The Todd Blue is Right Camp, and the Support the Cards No Matter What Camp.
Was Todd Blue right?
Last week, Louisville businessman Blue told MBB he’s leaving, citing Louisville’s lack of growth and business opportunities. In doing so, Blue started a long-overdue conversation: Most of the direct comments IL staffers received were positive, though some dismissed Blue’s comments as misleading.
A number of readers pointed out that our gross metropolitan product (yes, there is such a measure, tracked by several federal agencies) has increased since the Great Recession. Which is true.
But this is something of an exercise in sophistry. The GMP of nearly every Top 50 American city has grown since the Great Recession.
Increased economic activity, while welcome, isn’t the same as growth.
Comparing Louisville to itself seems the thing these days. Comparing Louisville to cohort cities such as Raleigh, N.C., isn’t nearly as popular. It’s so unpopular, in fact, the Greater Louisville Project stopped doing it after Raleigh moved on to a higher growth ranking as measured by household incomes, college degrees and other measures of growth.
Raleigh’s projected economic growth rate from 2011 through 2016 is 3.7 percent. (We couldn’t find an exactly comparable projection for Louisville. Economist Uric Dufrene, executive vice chancellor for Academic Affairs at Indiana University Southeast, projects payroll gains will exceed 2.5 percent year-over-year, with Louisville adding 20,000 jobs in 2014.)
Raleigh’s population is projected to grow about twice as fast as Louisville’s – by 4 percent, to about 1.5 million from 1.21 million. Household median income is $64,000, almost 33 percent higher than Louisville, at $49,000. Houston is on another planet in terms of economic growth, with a $72,000 median income and an economy growing too quickly. Civic leaders are worried the city’s 2013 rate of job growth is unsustainable and unsupportable through infrastructure.
Blue was especially pointed in criticism of the University of Louisville and its president, James Ramsey. In a series of stories, IL has found that – counter to the claims of Ramsey and other U of L officials – the university ranks below its regional peers; and U of L is far behind economic development dynamos such as the University of Texas at Austin, which produces thousands of engineers and STEM jobs each year.
According to Forbes Magazine’s latest list of fastest growing economies, that’s translated into Austin becoming a destination for the nation’s most desirable companies.
Austin now boasts some 4,000 technology companies which represent about 35% of the area’s total payroll. Athena Health is bringing 607 jobs to Austin, and San Francisco-based Dropbox is expanding there. As for keeping its edge, Austin has collected over $40 million from the private sector to keep recruitment efforts up.
The Research Triangle Park between Raleigh and Durham – a public/private/university project – has more than 170 companies, including IBM, GlaxoSmithKline, and Cisco.
Almost all the companies coming to Louisville are fulfillment operations such as Gazelle, or call centers. The last homegrown, publicly traded company of any heft was Vencor. Founded in 1985 – a year after Papa John’s International – Vencor was a bit of a bottle rocket, rising spectacularly, then fizzling out by 1999. Vencor emerged from bankruptcy in 2001 as Kindred Healthcare.
Blue also noted that most other cities have major downtown construction projects underway, which is true.
In terms of physical growth, or “built environment,” as Mayor Greg Fischer has taken to calling it, Louisville has several downtown hotels under construction or planned. But neighboring cities have multiple mega-projects already up or coming out of the ground. The $120 million Dunnhumby Center in downtown Cincinnati is scheduled to be complete this year. Dunnhumby is a London, U.K.-based retail data analysis giant.
The Great American Tower, a $321 million project, was completed in downtown Cincy in 2011. A $1 billion mixed-use project called The Banks is under construction between the Cincinnati Reds stadium and the Cincinnati Bengals Paul Brown Stadium, and includes parks and retail.
In Nashville, if you want a nice hotel room, a growing number of choices are around Vanderbilt University. When was the last time someone built a hotel next to U of L?
IL reader Haven Harrington may have said it best in the comment section of a Todd Blue post:
In the end what this really speaks to is Louisville’s lack of economic dynamism. We are running in place. Yes, we have a booming hotel/convention sector, but that doesn’t exactly create a lot of high paying jobs. We could have a promising tech sector, but we don’t have the educational institutions to sustain it. We are a logistic powerhouse, but once again most of those are just low wage warehouse jobs