In "Unlimited Partners," Joel Kotkin identifies an important facet of the strategy for companies that compete in increasingly volatile and sophisticated markets. He could have gone even one step further.
In governors' and mayors' offices across the country, there is a growing sense of unease: The old game of aggressively recruiting new plant investment is no longer adequate to build a vibrant, competitive economy. Notable exceptions (like General Motors's Saturn project) notwithstanding, state and local governments are beginning to recognize that their economic development efforts should emphasize expansion from within. An important strategy in fostering such internal growth is the strengthening of subcontracting linkages.
Shreveport, La., has adopted perhaps the most aggressive approach to internal growth of any city of its size. It recently announced an economic development program that will establish, among other things, a warehousing complex to serve major manufacturers; a medical research foundation to spin off commercial ventures, which will subcontract with researchers at its medical school; an entrepreneurial development corporation to foster small businesses that are capable of serving larger, more established companies; and an advance manufacturing center to aid medium-size manufacturers in the development of new products and markets. All of these initiatives are intended to strengthen the bonds among competitive businesses in the region.
There is an important lesson here for public officials: Learn the competitive strengths and weaknesses of your area's businesses, so subcontracting can be strategically used as an instrument of growth.