CR goes it alone for a win

CBJ Editorial

There had been tacit agreement that the region should collaborate on three priorities: business recruitment, workforce development and regional marketing. That was the very basis of the regional economic development joint venture called ICR Iowa formed in 2017.

That tacit agreement no longer remains.

The problem with that tacit agreement is that business recruitment, and to some extent business expansions, and the corresponding ‘three Cs’ – cash, credit and control – has never been fully relinquished by city officials across the region. It is still seen as a zero-sum game, which is based on the amount of property tax incentives that local governments will provide to attract or keep businesses.

This was laid bare when it was revealed through incentive requests last week that BAE Systems and Ryan Companies have reached a tentative deal with the city of Cedar Rapids to develop a $139-million classified defense GPS manufacturing, office and development facility in that city.

The project looks to preserve 650 well-paid Corridor jobs within the GPS business that BAE Systems is in the process of acquiring from Collins Aerospace, and position it for future growth.

The city of Cedar Rapids got the credit for making this deal, having apparently done all the local work. City Manager Jeff Pomeranz said in a news report that a team effort by city staff working through the COVID-19 pandemic helped secure the deal to proceed with one of the largest projects in city history.

ICR Iowa, the regional joint economic development venture, and the Cedar Rapids Metro Economic Alliance were not in the picture, other than some innocuous comments from Economic Alliance Executive Director Doug Neumann celebrating the good news.

While this is deal is being characterized as business recruitment, it can just as easily be seen as business retention. It is technically a new employer, with a new facility, but will produce much the same line of products with the same employees in the same region.

The best recent comparison is when Transamerica reached a $2-billion deal in 2018 with Tata Consultancy Services (TCS) to administer the company’s United States insurance and annuity business lines, leasing two Transamerica buildings, and taking on 882 former Transamerica employees. The big difference is a $139-million new facility.

Make no mistake, this is a great deal that only keeps jobs and technology that have grown here, but involves a large investment that will lead to construction jobs and position the GPS business for growth

We expect that cities like Cedar Rapids will continue to have a me-first approach to business recruitment and retention and that investments in other economic development entities doing similar work will be pared down as tax revenues continue to be challenged. “The city will continue to work to bring these types of key projects to our community,” Mr. Pomeranz said in a statement to the CBJ.

The BAE deal was more important than ever with a pandemic and recession in full swing. It’s a win for Cedar Rapids, but the entire Corridor will benefit from the employment and supply chain opportunities it will provide. CBJ