Prosperity Strategy S*W*O*T Analysis

Don Son
Daphne Eldridge
Nick Kulyk
Justin Maher

Economics 309, Spring 2003 (Prof Hackett)

Strengths:

There is much strength within the Prosperity Strategy. Many issues, such as the FTZ, and approval for an Extended Enterprise Zone designation are being addressed. Thinking in terms of value-added products will lessen income leakages. For instance, there are many ideas for value-added manufacturing. Two that might be viable are boat building and wooden surfboard manufacture. The wood could come from local sources. Our natural resource base gives Humboldt County an edge that many communities of relative size don’t have.

Humboldt County has the ability to capitalize on human capital. It is able to produce a highly trained and educated workforce. This comes about through its many vocational programs as well as the University and Community colleges.

Continuing to hold Technology and information fairs for businesses, such as the one this weekend at Redwood Acres will be important. These fairs give local businesses the opportunity to see what they are missing out on in terms of greater efficiency.

There are great things being done in the area of tourism, as seen by the many events held each year throughout the county. Looking forward it will be important to implement changes that allow for easier access to older folks (retirees) that come to our area and spend their dollars. Advertising and marketing needs to become a bigger priority. Package deals that involve hotels, events, shuttles, meals, etc. could be an appealing way to entice more travelers to the area. Old town in Eureka, as well as many other places in and around the county hold great historical significance. Doing more to capitalize on these areas would also draw more visitors. It is important, at the same time, that the area be keep clean and free of trash and graffiti. Humboldt has great civic pride. Most believe in giving back to the community and spend countless hours volunteering. More programs similar to beach clean-up day and ‘Sophomores in the Streets’ (Eureka H.S.) could be brought about to beautify the area with little or no cost. Areas such as the old Montgomery Ward building are eyesores. Coming into Eureka for the first time and seeing that building in such disrepair doesn’t do well for the image.

Weaknesses:

Creating an official economic development plan has some inherent weaknesses because economic development plans inevitably create the possibility for collusion. While the Prosperity plan was created by a diverse collection of community members, business leaders and educators there exists a level of exclusion regarding businesses and industries not addressed or participating within the plan. The regular meeting of a small group of business leaders representing profit maximizing firms, has the opportunity to provide funding, support and benefits which may promote certain businesses more than others.

A problem inherent with economic base theory is the reliance on external markets; this creates a problem when attempting to plan economic development for the long-term. Reliance on non-local market demand requires development strategy that is capable of adjusting to dynamic trends in external markets, the data needed to fulfill this is often unavailable. The Prosperity document is mostly emphasis improving the opportunities for base industries and focusing less on import substitution. To develop a sustainable local economy emphasis on import substitution should take priority over base cluster development. Concentrating on import substitution would allow for a more consistent local economy relying less on the condition of external markets.

Communication is a major component of implementing an economic development plan, because the plan must be capable of adjusting to the dynamic nature of local economies. During an informal meeting with Georgiana Wood from the Arcata Economic Development Corporation, it was made clear that a lack of communication is one weakness of Prosperity. Creating a reliable avenue for communication among participants and community members is a very challenging task, given the depth and dynamic attributes of our economy. The Prosperity plan addresses the need for reliable communication through the formation of cluster advisory groups, Internet based communication, and the creation of referral networks among support services although these goals have not yet materialized.

Opportunities:

There are many opportunities to bolster our local economy. The first such opportunity is to increase our tourist attractions. One way to add local tourist attractions would be to provide tours through a dairy. Witnessing first hand the lush pastures and healthy North coast dairy cows may encourage the purchase of milk produced in Humboldt County. An increase in the number of dairies would also help. There is a plan to put a new dairy in Miranda. Demand for milk is high right now because of the “Got Milk,” campaign. This is one way we can capitalize on it. Tourists like to take memorabilia home with them to remind them of where they have been.

A “made in Humboldt County,” store would be a good way to sell visitors these types of things which could include T-shirts, collector spoons and thimbles, things made of redwood, burls, redwood seedlings, etc.

Continuing and expanding our local import-substituting products and services is another way to help our local economy. We could expand upon the production of locally grown fruits and vegetables, locally raised meats, and locally harvested seafood (such as oysters, crab, fish, and kelp). This would allow for both sectors of base economic theory to come into play, export and non-export. Humboldt County could easily gain a reputation for quality organic food.

Providing higher wages for a qualified educated workforce allows consumers to spend their earnings in local business. Thus, as the money stays here, it will cause the multiplier effect.

With the colleges and vocational training in place, the employee base becomes more educated and skilled. If there is a greater focus placed on this area the so-called

“brain drain,” can be eliminated.

A high quality of life and access to raw materials will attract businesses to Humboldt County. It is important to continue a path of sustainability and renewable resources. While at the same time, working to leave as small an ecological footprint as possible.

Threats

Regulations and certain industry practices threaten the ability of Prosperity to fulfill its five common goals. For instance, there is a move towards “sustainable harvested” wood products being spearheaded by Home Depot ® that may change the face of the retail timber industry. The pioneering of such new practices can be seen as both an opportunity and a threat to the North Coast’s timber industry, which accounts for 75% of the county’s total manufacturing income. On the one hand, it is a chance to capitalize on land that was logged and replanted, which will be ready to harvest in the next 15 years. But the once strong and now fledgling industry rides on the brink of insignificance as it spends about $2 million per month to purchase logs from other states and countries. A threat like this may very well be the straw that breaks the camel’s back. In regards to the manufacturing cluster, companies may be hesitant to do business in the area due to the local fee structures and interpretation of rules and regulations being more expensive and strict than when compared to the rest of the state. Adding to the mix are onerous zoning laws, new overtime laws, and different permitting requirements for each jurisdiction. The common thread throughout this portion of the discussion is that rules and regulations can be stifling by two-fold: first, in and of themselves; secondly, in their interpretation.

Transportation affects virtually all the base industry clusters within the North Coast’s economic foundation. Which is to say, it affects them adversely in the following ways: 1) within the timber industry, competitive edge diminishes in lieu of dependable rail service while trailer length restrictions limit the number of logs that are available for transport. 2) Manufacturing firms face high transportation costs as well as lack of dependable service. 3) The Passenger Act, which restricts consecutive port calls to U.S. ports by foreign flagships, imperils local tourism because ships are limited in their ability to stop in Humboldt Bay.

The notion of “buy-local” persists in many communities throughout the U.S., as evidenced by the rise in popularity of industry-based cluster strategies. Nonetheless, consumers everywhere remain price sensitive. The ability of a huge corporation like Target ® to come in and steal market share because it can offer lower prices poses another major threat. Niche products like redwood, specialty agriculture, customized services, and the region’s natural capital are but a few ways to counter this threat and for the North Coast to remain economically viable.

The threat of Humboldt County’s workforce being rendered technologically illiterate is high. With the exception HSU and CR, there are currently no state-of-the-art training facilities to accommodate local talent. What little intellectual capital does exist often falls prey to the “brain drain” phenomenon, whereby workers leave the local economy in search of better-paying jobs. Furthermore, the local infrastructure lacks the telecommuting networks required for high-tech businesses. It is imperative that the North Coast addresses this issue, especially since technology-based business offers vast opportunities and continues to be a high-growth sector.

The values and beliefs expressed within the Prosperity Strategy are essentially a reflection of the local practices and norms. Hence, “cultural prosperity” somewhat tends to be favored over economic prosperity as a measure of success. This is perhaps the most dangerous threat above all for it acts much like a self-fulfilling prophecy. As if to say, “be careful what you wish for because you just might get it.” In this case, that is all one will get. Inevitably, this raises controversy in a community between its local business owners and price-sensitive customers.