Smaller is bigger

All about small-business innovation: Asst. Secretary of Commerce John Fernandez speaks to the Southeastern Economic and Workforce Development conference. Fernandez and Asst. Secretary of Labor Jane Oates (right) both spoke of the importance of facilitating small business to regain jobs. photo by Jonathan Welch

When you think of Asheville's beer scene, you might not use the words "innovation cluster." But John Fernandez does. He's the U.S. Assistant Secretary of Commerce for Economic Development, and while on his way to give a keynote address in Asheville, he got a call from The Wall Street Journal. A reporter wanted economic information on the town's burgeoning brewery industry.

“Damn, why didn't I get here the night before?” Fernandez joked as he took the podium Aug. 16 for the annual Southeastern Economic and Workforce Development Conference, held at the Grove Park Inn. If he had arrived sooner, he could have sampled the beer market, Fernandez told the gathering of economic development professionals, business owners and government officials.

But there's more to the economy than brewing success. Both Fernandez and fellow keynote speaker Jane Oates pitched the need for government leaders to do better at revving up the economic engine. Small business, such as breweries — an "innovation cluster" — may be the key.

“I'm going to ask us for the next 16 [to] 18 months to talk about teamwork," said Oates. "Even though you've been working with great partnerships, we haven't put a dent in getting people back to work,” said Oates, the U.S. Assistant Secretary of Labor for Employment and Training Administration.

“We've come up against a block where employers are just not hiring," she said. Oates remarked that government and business leaders need to recognize that skilled workers are available and that the demand is there — "if they'd just ramp up and hire people and rebuild our local economies.”

To jumpstart the process, Oates said, the government has to go beyond its normal approach of just targeting larger businesses. The government needs to work with small startups and local companies — just the type that Asheville has in abundance.

“By small business, I don't mean under 500 workers, [the federal definition]. I'm talking about the businesses that … start by employing one, three, five people," Oates explained. "They haven't come to us. They're not the people we've reached out to,” she said. “We need to understand who those people are, what they need and get them services.”

Oates touted new initiatives involving community colleges, such as $2 billion in funding over the next four years to help those schools modernize. “Those grants could make [them] ready to meet the challenges of a 21st century workforce,” Oates said.

For his part, Fernandez touted innovation clusters like Asheville's brew industry, which has a wide impact on the regional economy. But there's a cluster of a different sort in Washington.

The former mayor of Bloomington, Ind., Fernandez noted, “I'm from local government. We get stuff done. … It's amazing how much common ground there is in Washington today, [but] we just can't get it worked out." Members of Congress, he said, need to take action, and "come here and enjoy the micro-brewing cluster."

The state of the economy is far from solid ground, he added, and local and state governments need to broaden their perspective. “This isn't a typical business cycle,” said Fernandez. “We can't take for granted that [the U.S. is] always going to be the most innovative, hottest place to be. The competition's real. We have to invest in our workforce and our infrastructure … Moving forward, it's not about Asheville competing with Greensboro or Charlotte. It's about this region competing against China, Finland and Brazil.”

In the end, he said, whatever the federal government does, “success will come from the bottom up,” from individual communities and businesses. "Our goal is to be a better federal partner in that process.”

Sam Powers, the city of Asheville's Economic Development director, provided an example of successful economic partnership between local and federal governments: the Grove Arcade.

Federal subsidies helped fund the building's renovation, with the completed project costing about $2.5 million, Powers explained. "The return on investment was a building that employs hundreds of people, is by far the destination for the community and the region, with a value that far, far exceeds the amount of money put into it,” he said.

However, the Arcade has not been without its troubles, including significant turnover in its retail spaces and, most recently, the failure of the arcade to meet its debt obligations to the city.

Despite the challenges on the ground, there are resources available for startup and existing businesses. Both Oates and Fernandez emphasized that business owners need to contact their “one-stop shops” for help on such matters as employing veterans and getting grants or other assistance for which they might be eligible. The officials also said that they hoped revised regulations would reduce red tape for both officials and users.

Taking questions from the audience, Fernandez added that he has tried to shift to highlighting innovative development models. “We're not turning our backs on places that need help, but we are trying to shine a light on things that are working well and help them go faster,” he noted. “Then other places can take those models based on their own strengths and use it.”

Recent federal job numbers seem to indicate that significant private hiring is being counteracted by cutbacks in state and local government, according to the Labor Department's jobs reports in recent months. When asked about that trend, Fernandez replied, “It's certainly having an impact. It's true that in many places in America there's more stress on the system. … But some states are starting to see increased revenues and look for new opportunities, so it's a mixed bag.”

So far, Asheville and Buncombe governments have mostly staved off major cuts. But, Fernandez added, “We're concerned about [layoffs and cuts] eroding the capacity of the community to do serious economic development.”

Still, there's room for hope.

Citing the disasters the Southeast has survived in recent months, such as the tornadoes that took lives and destroyed homes and businesses earlier this year, Oates observed, “This region gives resiliency a new definition.”

— David Forbes can be reached at 251-1333, ext. 137 or dforbes@mountainx.com.

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