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: ÒThey 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.Ó
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.