What is Business ‘Recruitment’ Anyway?

Local economic development agencies don’t actively recruit companies

There is a major business “recruitment” project going on right now in our community, it’s called Project Titan, and I have absolutely no clue about who or what it is. Oh, I’ve tried, well, sort-of tried, to find out. I asked around, here and there, even chatted with a former colleague of mine. But regardless of who it is, it will play out the same, in secret meetings behind closed doors, out of public view. 

If I had to guess, I’d say Titan involves the purchase of the former Hynix site in west Eugene.  But it could be something else entirely. What I do know is that it is not the new Amazon headquarters. I also know that Greater Eugene, our local economic development agency, most likely had almost nothing to do with finding the buyer. There is really nothing that a local economic development agency could do to find a buyer for that site.

That notion furthers the myth that local economic development agencies actively recruit companies to relocate here. They do not. 

The phrase “business recruitment” is really just a name for any new business that moves into our community. No one locally actually went out, located them, and recruited them to come here. It’s just not economically feasible for a community to do that. 

When local promoters like the Chamber of Commerce talk about the need to go out and “recruit” businesses to move to our community, please know it is baloney. 

It’s totally unrealistic to think that any community like ours is going to market itself in any meaningful way to find firms looking to move, and then convince them to locate here. At least not without a marketing budget that would far exceed any local community’s ability to fund it, and even then, justify it with results. 

The honest desire for new companies to move here from somewhere else, to create and grow new jobs here, is valid. These companies represent jobs we would not have otherwise. That is not a bad thing; in fact, it’s vital in order to keep a local economy healthy and diverse. Businesses go through cycles; they do not last forever. There is always a need for fresh new businesses to enrich the local economy, and to avoid over dependence on any one industry sector.

So, how does recruitment happen? How are these new businesses recruited and who does it? 

Business recruitment is primarily done at the state, not the local level. The state of Oregon, through its economic development department, actively promotes Oregon as a good place to do business. When the state gets the attention of a recruitment prospect, it works to find them a site in Oregon. 

The state acts as an agent for the firm, creating a code name, like Titan, and sending out a list of criteria the firm needs for their facility. Communities that can meet those criteria respond to the state. In the case of the Hynix site, it is probable that one or more potential purchasers approached the state to test the water for state and local incentives, prior to actually bidding on the property. It’s likely they were represented by a private site selection consulting firm. Site selection firms represent large companies wanting to remain anonymous, seeking a location for a new facility, and they like to work at the state level. 

The immediate job for a site selection consultant is to reduce the number of site options for the client company to a manageable number, maybe two or three. So the initial challenge for a community is to just stay on the list. This is where the issue of incentives emerges. Site selection consultants are often paid based on the level of incentives provided by state and local governments. So, staying on the consultant’s list requires significant local incentives, like enterprise zones. Site consultants love enterprise zones because, with three to 15 years of property tax waivers, the value of the incentive package gets big fast. 

What does make sense is for our community to prepare itself by being the kind of a community that people want to live and do business in — and to be ready to show that when they do come knocking. The actual business recruitment function of a local economic development agency is to do just that: to organize and manage the local sales job when they do come.

One of our best business recruitment agencies is Tracktown USA. Events like the Olympic Trials showcase our community to the world in a positive light, more effectively than any local economic development agency ever could. Business recruitment is about being a community where people want to live. It’s about good schools, affordable housing and good public transportation. It’s about a healthy environment and quality of life. 

I don’t know what Project Titan is, or who bought the former Hynix site. But one thing that I do know is that Greater Eugene, our local economic development agency, played a very small, if any, role in it. So, if Greater Eugene does little or nothing to actually “recruit” businesses to create jobs in our community, what does it do? 

Well, that’s a very good question.

Bob Warren retired in 2012 as the regional business development officer for Business Oregon for Lane, Lincoln, Linn and Benton Counties. Prior to that he was a political advisor to state and federal offices.