GREDA conundrum

By Mike Kroll

The Zephyr, Galesburg

1/24/08

Last Thursday afternoon the Galesburg Regional Economic Development Association held another of its dog and pony shows in the Sanderson meeting room of the Galesburg Public Library to a near capacity crowd. The topic was GREDA's China Initiative, an effort to court Chinese investment in the Galesburg area economy that has been a major thrust of GREDA for at least three or four years. Greg Mangieri, president of GREDA, was joined by Andy Sze (GREDA's China consultant), mayor Gary Smith and two representatives of China's Chicago consulate, Chen Guowen and Liang Gang.

GREDA has been criticized in many quarters, including this one, for the group's mania for secrecy and lack of openness and public accountability. The stock retort from the group is always that successful economic development can only be conducted in near total secrecy. Of course, since neither GREDA nor it predecessor economic development groups have ever succeeded in bringing any significant new employer to the Galesburg area it could well be argued that such secrecy has served more as an attempt to deny critics ammunition. It has taken too many years for the leadership of GREDA to realize that they needed to respond more openly to the criticism and be more accountable for their activities if not the results.

These public meetings in the Library have been GREDA's answer to their critics. This is a positive step due in no small part to the fact that the group currently has its first leader who appears to be an honest, likable, stand-up guy as opposed to his con-artist predecessors. When Mangieri talks to you, particularly one-to-one, he is genuine and open and convincing as he tells you how he spends his time. I really do believe that Mangieri is actively attempting to be successful and working for the best interests of the community rather than just taking us for another costly ride. I also believe that mayor Smith and many of his colleagues on the GREDA board likewise want the group to succeed; in fact the mayor has essentially bet his office on such a positive economic development outcome.

The difficulty is that economic development is infrequently successful even when you know what you are doing and you have a compelling story to tell and realistic prospects to tell that story to. Unfortunately the staff and volunteers behind GREDA have yet to demonstrate that they have any real understanding about how to conduct economic development other than to offer any and all incentives available to any prospect at all regardless of that prospect's real interest or fit with Galesburg. The volunteers and leadership of GREDA mean well but haven't a clue what they are doing and until Mangieri arrived they were routinely played by one con-artist after another who spun a yarn until their lies and ineffectiveness caught up with them.

Don't get me wrong, the increased openness is definitely a good thing. Mangieri and Smith's instincts in this regard are good ones. It is also a positive sign that Mangieri and GREDA are actually showing evidence of real effort toward economic development. Most of us presumed the biggest reason GREDA was historically so secretive was to hide their lack of activity and incompetence. Today it is clear that Mangieri is really trying, although he will candidly admit he's a railroad guy rather that an economic development specialist. He doesn't really understand economic development beyond the current focus on bringing an intermodal facility to Galesburg.

One of Mangieri's limitations is that he is no public speaker. The two hour and fifteen minute presentation only seemed like six hours because of how ineptly it was conducted. Most of the time was spent providing brain-numbing details about the last China trip by reading word for word from an extremely long Power Point show and in a monotone to boot. It was clear that Mangieri and Sze were very busy during their trip, that they visited many cities and industrial locations in China and spoke with many Chinese government and business officials. A subtle but very real aspect of this presentation was how Mangieri systematically was working to diminish our expectations as to the magnitude of any Chinese success in Galesburg. He made it clear that they were talking with small to medium Chinese companies who might make a modest investment here sometime in the future but also that such things happened very slowly with the Chinese.

It also became painfully clear just how far our American manufacturing economy has fallen in the last decade or so. There were so many basic products being manufactured in China that used to be made in America but our greed, selfishness and lack of vision has led us to seek the cheapest labor cost possible and therefore America manufactures less and less every day. I personally found the Chinese economic activity illustrated in Mangieri's presentation very disheartening and depressing as an American.

On Friday night a person who follows such things closely and attended the Thursday GREDA presentation quipped to me that this meeting was exactly what I needed to prove once and for all how ineffective GREDA was: “They laid out name after name of the exact Chinese companies that they are wooing so all you have to do is wait a year and begin asking 'what happened with the discussions you were conducting with xyz?' This meeting provided enough specific information to finally hold GREDA accountable.”

The problem is I would rather cheer on success than bask in yet another failure of GREDA. While I have been among the group's most vocal critics I must confess I like and respect both Mangieri and our mayor and really want them to succeed in their China Initiative. But I just can't see how that will ever happen given our current strategy. While I believe that these various business and government officials are talking with them and saying nice things I also believe that Mangieri and Smith are being naive if they really believe there is a good case to be made for the Chinese to invest even modest dollars in Galesburg.

The Chinese' singular competitive advantage is an abundance of extremely cheap labor. They don't have the same level of technology as the U.S. nor do they have the international business network that so many American corporations have developed since World War II. The Chinese also operate in a largely unregulated manufacturing climate as evidenced by the numerous examples of dangerous or unsafe products manufactured there or the absence of meaningful environmental or labor regulations applied to their manufacturing operations. These are all signs of a mature and responsible government approach toward protecting the health and safety of both workers and the population at large and add to the cost of each item produced. By investing in Galesburg the Chinese would be giving up both sets of competitive advantage to gain what?

If the China Initiative is to be successful at all, it will not be through Chinese investment in Galesburg or the surrounding area.

There are only two ways I see a positive outcome from this China effort. First, if we can successfully develop a regionally-based market for local agricultural commodities in China. Selling corn and soy beans or processed versions of either and shipping them to China in all those otherwise empty containers making the return trip. Second, if we can convince American investors to invest in the Galesburg area in order to import inexpensive Chinese-manufactured products that they package, distribute and market across the U.S.

In both cases we take advantage of the same characteristics of Galesburg that we have been touting to others for years: our central U.S. Location, convenient access to rail, some of the most productive farmland in the world, and small-town Midwestern attributes that beats the hell out of raising a family in a large urban area like Chicago or St. Louis. By taking the approach I suggest, we offer a compelling market for Chinese goods and the opportunity for American investors to reap the rewards of value-added re-marketing of inexpensive Chinese products. For the Galesburg area this offers the prospect of creating many more and varied jobs than a simple Chinese-owned warehouse with a few forklift drivers. This would help attract and retain educated white-collar employees involved in management, marketing, and sales of the new products while simultaneously creating numerous opportunities for related spin-off businesses in the area. Best of all, since the principal investment would be American and probably fairly local the prospect of this enterprise being relocated in a few years is minimized.