Indy Partnership helps spur job growth above Midwestern norm

For the last half-decade, Indianapolis has shown greater job gains than any other large city in the Midwest. Local officials are understandably thrilled.

During the same period, the Indy Partnership has been responsible for the area's economic development. Few business leaders are willing to give it sole credit for Indianapolis' strong performance–but they're equally certain it's no coincidence.

"We've made great strides, and a lot of people are noticing that we're doing a good job," said Indy Partnership Interim CEO Gordon Hendry. "We're out there hustling for business."

Last month, the Federal Reserve Bank of Chicago released a letter titled, "Looking for diamonds in the rust: Midwest cities and job growth." Between 2000 and 2005, it reported, 12 Midwestern cities saw job gains above the national average. Iowa City, Iowa, and Madison, Wis., led the pack. But Indianapolis was the largest city to beat the Fed's expectations, outpacing major metropolises like Chicago and Detroit.

"Indianapolis was the only large city to experience job growth and exceed its expected growth rate," wrote Michael Munley, senior business economist for the Chicago Fed. "Indianapolis offers a strong competitive environment for many of its major industries, including … pharmaceutical manufacturing and insurance."

Last week, the Indy Partnership released its 2005 annual report, taking credit for spurring 23,122 new jobs and retaining another 41,907 in the last five years. Those jobs had a combined five-year payroll of $2.3 billion. Their employers invested $3.2 billion in the region.

Some question whether anyone local can claim responsibility for such gains.

Richard DeKaser, the Cleveland-based chief economist for National City Bank, pointed to macroeconomic trends that affect everyone. During the past half-decade, he noted, the entire U.S. economy experienced a recession and subsequent growth.

And the cities east of Indianapolis that saw more sluggish job gains are more closely tied to the American auto industry, DeKaser added. Detroit, Toledo and Cleveland are more likely to sink or swim based on the performance of domestic car companies, he said. Indianapolis has aligned itself more closely with Japan.

"It's been the combination of a buoyant national economy and the Indianapolis area's industry mix," DeKaser said. "You can't really escape the national economy. It's like the sun. It's got this gravitational pull."

Still, the Indy Partnership's efforts clearly aren't hurting. With 16 employees and an annual budget of $2.7 million, the Indy Partnership is primarily a nexus of local business information. It provides answers to a ledger's worth of expansion or relocation questions, speeding executives through the process of site selection, work-force assessment and incentive negotiations. It toils in conjunction with elected officials and parallel economic development organizations, such as the state's Indiana Economic Development Corp.

To attract attention, the Indy Partnership spends much of its time telling the Indianapolis story. Sometimes its employees travel to conventions and trade shows around the nation. At other times, it hosts delegations of consultants at swanky receptions in conjunction with major local events, such as the Final Four or the Indianapolis 500.

Perhaps its greatest contribution is its ability to eliminate parochialism. The Indy Partnership is responsible not just for the city, but for the whole central Indiana region, including Marion County and all its doughnut counties. Last year, the organization added Monroe and Tippecanoe counties to its efforts.

"The regional approach is critical. We are very much a partnership. One of the great successes of the Indy Partnership is that its collaborative spirit has put an end to the raiding of existing businesses across county lines," Hendry said. "A region sinks or swims together. By unifying our efforts … we are really putting our best foot forward."

Jason Tolliver, director of economic development for Indianapolis Power & Light Co., confirmed those sentiments.

"At one point in time, there was a fear it was going to be an Indianapolis-only organization, and it's not," he said. "When you look at the numbers, they're going in the right direction."

Take for example a recent win, specialty tool manufacturer Festool USA. Long based in Santa Barbara, Calif., Festool was ready to expand. It also wanted to consolidate warehousing from two separate facilities leased on opposite coasts to one central location it could own. Seeking information, Festool contacted Indy Partnership–as well as its equivalents in four other states.

Indy Partnership was the quickest to respond, said Festool CFO Brian Goldthorpe. It provided a wealth of data on land and labor availability, then explained how the state's tax restructuring would affect Festool's bottom line.

The payoff exceeded expectations: Festool is locating the warehouse here, but it's also moving its headquarters and 25 employees to Lebanon. In exchange for tax abatements, it expects to add 31 local jobs.

"If it wasn't for the help of the Indy Partnership, I'm not so sure we would have had such a positive image of the Indianapolis area," Goldthorpe said.

Results like that have convinced Indy Partnership's investors their money is well spent. Hoosier corporations provide nearly three-fourths of its income. The rest comes from the city of Indianapolis and the economic development budgets of each area county the partnership represents. Indy Partnership's annual reports show it has raised $15.2 million over the last half-decade, with expenses of $12.8 million.

Although that leaves a $2.4 million surplus, it won't sustain Indy Partnership for long. That's why a new capital campaign is being prepared. When asked, previous investors will likely pony up.

"It's awfully important we have that kind of effort out there. The city and region need to be competitive nationwide and beyond," said Ed West, senior vice president of corporate communications for WellPoint Inc. "You have to knock on doors to generate visibility. Put in the shoe leather and sweat equity to tell your story, and keep telling it. You've got to be enthusiastic and excited–you can't let down."

The only snag on the horizon for Indy Partnership appears to be the question of who's at the helm. Although local business leaders have nothing but praise for Hendry, he's the Indy Partnership's third leader in five years. What's more, the Indy Partnership hasn't removed the "interim" from his title.

Charlie Podell, senior vice president for Duke Realty Corp., is a member of the Indy Partnership's executive selection committee. He said a field of 80 potential candidates has been narrowed to about four. He hopes Indy Partnership can name its permanent CEO by the fall, to excite investors about the capital campaign.

"The leader drives the train," Podell said. "If you're throwing money in, you want to feel something good's going to happen."

Even if the Indy Partnership can match its previous performance, more of the same won't be enough to keep Indianapolis ahead of other Midwestern cities. The Chicago Fed's Munley warned there's still much work to be done.

"Most of [Indianapolis'] major industries have not been strong national performers, which might limit the city's potential," he wrote. "There are some factors, such as its climate, that the Midwest can do nothing about. But there are others–such as resolving issues related to legacy costs [such as police and fire pensions] and educating the work force to attract more businesses or different industries–that it can and will change over time."