Iowa's Re-Envisioned Economic Development Roadmap

Iowas Re-Envisioned
Economic Development
Roadmap
Prepared by:
Battelle Technology Partnership Practice
December 2014
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TABLEOFCONTENTS
Page
ListofAcronymsandShortForms...............................................................................................................iv
Forward.........................................................................................................................................................1
ChargeFromtheIowaPartnershipforEconomicProgress..........................................................................4
TheContext:AdvancingaStrategicFrameworkforEconomicDevelopmentinthe21stCentury...............7
WhatAretheAppropriateMeasuresofEconomicSuccess?.................................................................10
WhatAretheIndustryclustersGeneratingEconomicSuccessinIowa?................................................11
WhatAretheEconomicProgramActivitiesNeededinIowa?...............................................................15
WhatAretheCriticalDevelopmentresourcesinIowaforIndustryClusters?.......................................17
KeyFindingsonIowasEconomicPerformanceandImplicationsforFutureDevelopment......................19
KeyFindings:IowasEconomicProgressOvertheLastDecade.............................................................21
KeyFindings:ThePerformanceofIndustryClustersDrivingIowasEconomy.......................................25
KeyFindingsonIowasEconomicFoundations......................................................................................32
KeyFindings:SkilledWorkforceDevelopment&BroaderPopulationDynamics..............................32
KeyFindings:InnovationandEntrepreneurialCulture.......................................................................39
KeyFindings:PhysicalInfrastructure..................................................................................................43
KeyFindings:BusinessClimate...........................................................................................................45
StrategicPrioritiesforAdvancingIowasEconomy....................................................................................47
FromStrategiestoActions..........................................................................................................................49
ProposedActionPlantoBuildontheCompetitivenessandGrowthofIowasIndustryClustersthrough
Innovation,RetentionandAttraction.....................................................................................................51
ProposedActionPlantoGenerateandAttractSkilledWorkforceinDemandbyIowasBusinesses....56
ProposedActionPlantoAcceleratetheDevelopmentofIowasEmergingEntrepreneurialEcoSystem
................................................................................................................................................................61
ProposedActionPlantoAdvanceIowasPhysicalInfrastructureandRegionalDevelopmentCapacities
toRealizeIowasEconomicPotential.....................................................................................................67
AppendixA:LineofSighttoIowasIndustryGrowthOpportunities..........................................................73
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LISTOFTABLES
Page
Table1: ListingofTwelveDistinctIndustryClustersDrivingIowasEconomy.....................................13
Table2: SummaryofResultsofAnalysisofEconomicPerformanceofKeyIndustryClusters.............30
Table3: MiddleandHighSkilledOccupationsandJobGrowthRelativetotheU.S.,2004
2013.........................................................................................................................................33
Table4: STEMrelatedPostsecondaryDegreeGraduatesfromIowaInstitutions,20092012...........35
Table5: PostsecondarySTEMrelatedDegreeMetricsforIowavs.U.S.andKeyComparison
States.......................................................................................................................................35
Table6: AchievementinMathandScienceforIowa8thGradersvs.U.S.andKeyComparison
States.......................................................................................................................................36
Table7: IowasStandinginGrowthandRelativeLevelofIndustryandUniversityR&DActivities
vs.U.S.andKeyComparisonStates........................................................................................39
Table8: IowasStandinginStatewideTechnologyTransferPerformanceAcrossAllResearch
Universities,ComparedtootherMidwesternStates,NormalizedbySizeofState
UniversityResearchBase,2012..............................................................................................40
Table9: IowasStandinginStatewideEntrepreneurialandNewCompanyFormationand
GrowthMeasuresvs.U.S.andKeyComparisonStates..........................................................41
Table10: IowasStandinginStatewideLevelsofInnovationCapitalvs.U.S.andKeyComparison
States.......................................................................................................................................42
Table11: InnovationActivitiesofIowasIndustryClusters....................................................................42
Table12: IowasStandinginFreightTransportationSystemvs.U.S.andKeyComparisonStates........43
Table13: IowaIndustryClusterEmployerInsightsintoBusinessClimateFactors,Synchronist
SiteVisits,20112013.............................................................................................................46
Table14: SelectedBusinessCostComponentsforIowavs.U.S.andKeyComparisonStates...............46
LISTOFFIGURES
Page
Figure1: StrategicFrameworkandKeyElementsforEconomicDevelopmentinIowa..........................9
Figure2: ComparisonofIowaandU.S.GrowthinEconomicOutput(RealGrossDomestic
Product),20072013...............................................................................................................22
Figure3: ComparisonofIowaandU.S.GrowthinTotalEmployment,20072013..............................22
Figure4: ComparisonofIowaandU.S.GrowthinEmploymentbyHigh,Middle,andLow
SkilledWorkforce,20042013................................................................................................23
Figure5: TrendsinAverageWagesinPrivateSectorIndustries,IowaandU.S.,20072013................23
Figure6: PerCapitaIncomeLevels,IowaandU.S.,20012013............................................................24
Figure7: NationalEmploymentProjectionsforIowasIndustryClusters,AverageAnnualJob
Growthfor20122022............................................................................................................28
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Figure8: NationalEmploymentProjectionsforIowasIndustryClusters,AverageAnnualJob
Growthfor20122022............................................................................................................28
Figure9: IdentifyingIowasGrowthOpportunitiesbasedonTargetProductMarketsandState
Core.........................................................................................................................................29
Figure10: EducationalAttainmentofthePopulationAges25andOver,2012......................................34
Figure11: DomesticInandOutMigrationofCollegeEducatedPopulationAges25to54,2007
to2012....................................................................................................................................36
Figure12: PopulationChangesbyAge,IowaandU.S.,20002012.........................................................37
Figure13: PopulationChangesforIowasHighGrowthRegions,20002012........................................38
Figure14: HowInnovationandEntrepreneurialCultureConnectwithGrowingIndustryClusters........39
Figure15: SummaryofRecommendedTacticsandStrategicDirections................................................50
FigureA1: LineofSighttoIowasGrowthOpportunities.........................................................................74
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LISTOFACRONYMSANDSHORTFORMS
BEST BusinessExpansionandStrategicTrends
BLS BureauofLaborStatistics
GDP grossdomesticproduct
GOALI GrantOpportunitiesforAcademicLiaison
IAM IowaAdvancedManufacturing
IDOT IowaDepartmentofTransportation
IEDA IowaEconomicDevelopmentAuthority
IIC IowaInnovationCorporation
IMF InternationalMonetaryFund
IPEP IowaPartnershipforEconomicProgress
ISU IowaStateUniversity
IWD IowaWorkforceDevelopment
JPEC JohnPappajohnEntrepreneurialCenters
NACE NationalAssociationofCollegesandEmployers
NAICS NorthAmericanIndustryClassificationSystem
ONAMI OregonNanoscienceandMicrotechnologiesInstitute
OSU OregonStateUniversity
PNNL PacificNorthwestNationalLaboratory
PPP PublicPrivatePartnership
QCEW QuarterlyCensusofEmploymentandWages
RUTF RoadUseTaxFund
SBA SmallBusinessAdministration
SBCTC StateBoardforCommunityandTechnicalColleges
SBDC SmallBusinessDevelopmentCenter
SBIR SmallBusinessInnovationResearch
STEM science,technology,engineeringandmath
TPP TechnologyPartnershipPractice
VIC VirtualIncubatorCompany
WIA WorkforceInvestmentAct
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FORWARD
PROPELLINGIOWATOTHENEXTLEVELOFECONOMICSUCCESS:KEYTHEMESOFIOWAS
REENVISIONEDECONOMICDEVELOPMENTROADMAP
IowasReEnvisionedEconomicDevelopmentRoadmapincludesacomprehensiveanddetailed
assessmentofIowaseconomicpositionandstrategicpriorities.Embeddedwithinthisroadmapare
severalkeythemesofeconomicprogressrealizedandpotentialeconomicsuccesstobeearnedinthe
yearstocome:
IowahasmadesubstantialeconomicprogressinrecentyearsdespitetheGreatRecessionandweak
nationalrecovery.IowahasoutpacedthenationinbothGDPgainsandtotaljobgainsfrom2007to
2013,andnowexceedsitsprerecessionlevelsinbotheconomicoutputandtotalemployment.
Iowastandsoutinrecordingeconomicgrowthwithquality.Overallgrowthmeasuresineconomic
activityandjobsalonedonottellthefullstoryofIowaseconomicprogress.Oneofthemostsignificant
challengesfacingstateandlocaleconomiesinlightoftheweaknationaleconomicrecoveryand
mountingglobalcompetitionisraisingthebaronthequalityofjobscreatedandincomesearned.Iowa
hassucceededonbothcounts:
Iowarecordedgainsinhighqualityjobgrowth.Iowahasoutshinedthenationinitsgrowthof
middleskilledjobsand,especially,highskilledjobs.Keepinmind,thesearenotjustjobopeningsin
Iowa,butactualjobsfilledinIowa.
Iowaalsooutpacednationalgainsinprivatesectoraveragewagesandhasclosedthepercapita
incomegapduringthepastdecadeandby2013slightlyexceededtheU.S.average.Thesegainsin
IowasstandardoflivingareconsistentwiththerisingworkforceskilllevelsinIowaandIowas
strongereconomythanthenation.
WhathaspropelledIowaforwardinrecentyearsistherobustgrowthofitsmajorindustryclusters
aidedbyastrengthened,multifacetedeffortineconomicdevelopment.
Iowasmajorindustryclustersdrivingthestateseconomyarerobust,diverseandhavestatewide
impacts.NotonlyhavethemajorindustryclustersdrivingIowaseconomygenerallyoutperformed
thenationintheirlevelofspecializationandjobgrowth,butstandoutintheirlevelofproductivity
akeymeasureofeconomiccompetitiveness.Togethertheyofferadiversesetofindustries,with
mosthavingabroadpresenceacrossthestateormultipleregionsofthestate.
Iowaseconomicdevelopmenteffortshavebeenretooledinrecentyearstoofferabalanced
approachfocusedoninnovation,retentionandattractionforgrowingitsindustrieswithanemphasis
onqualityjobs.Thestatesleadingbusinessretentionandattractionprogramofferingtaxcredits
anddirectfinancialassistance,theHighQualityJobsProgram,notonlysetsawageandbenefits
thresholdforbusinessestoqualify,butoffersasupplementalR&Dtaxcredittospurinnovation
alongwithotherinvestmentrelatedincentives.Iowaalsohasfocusedspecificallyoninnovation
withanumberofstateeconomicdevelopmentprogramstosupportthecommercializationof
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technologiesbysmallandmediumsizedcompaniesandsupportnewfirmformation.Thesestate
leveleffortsforinnovationcomplementthoseunderwayatIowascollegesanduniversitiesaswell
asamonglocaleconomicdevelopmentprogramstofurtherIowasentrepreneurialsupport
infrastructure.IowaalsohasplacedastrongemphasisonSTEMeducationwithtangibleresultsin
thefastgrowthofSTEMdegreesatthepostsecondarylevelalongwithdiscreteactionsto
strengthenconnectionsbetweenIowasfutureworkforceandindustrythroughinternships,
apprenticeshipsandincreasedtechnicaleducation.
PropellingIowatothenextleveltobeamongthemosteconomicallysuccessfulstatesinthenation
isthegoalofIowasreenvisionedeconomicdevelopmentroadmap.Iowasstrongtrendsinthelevel
ofitsperformanceonqualityjobsandincomesearnedstillleavesitoutsidethetopstatesinthelevelof
itsperformance.Inqualityjobs,Iowaisanationalleaderinitslevelofmiddleskilledjobsbutnothigh
skilledjobs,whereIowaisslightlybehindtheU.S.average.Similarly,inpercapitaincomeIowaranked
only23rdinthenationandinthelevelofaverageprivatesectorwagesIowaisstillbehindthenational
average.
TherearestrongheadwindsthatIowamustaddressifitistosustainitseconomicmomentumand
reachtheranksofAmericasmostsuccessfulstateeconomies.
Iowamustovercometheslowergrowthprojectedforitsmajorindustryclustersatthenational
levelandcontinuetooutperformthenationtosustainsignificanteconomicgrowth.
Iowacanalsoexpectthatthefastpaceoftechnologicalchangeandthegrowingcompetitive
strengthofdevelopingnationswillcontinuetoraisethebarforachievingeconomicsuccess.
ContinualimprovementsinIowaseconomicdevelopmentprogramswillbeimportant,butnotsufficient
topropelIowatothenextlevelofreachingthetopranksofAmericasmostsuccessfulstateeconomies.
ItiscriticalthatIowaalsopursuenewstrategicdirectionsforworkingwithitsindustryclusters,
universitiesandworkersandtheirfamiliestocompeteforgrowth,including:
Developfocusedpolicyinitiativesthatcapturethemostpromisingemerginggrowth
opportunities.Throughindustryledconsortiums,Iowashouldfocusonemerginggrowth
opportunitiestiedtotangibleresultsinpositioningIowaasaleaderinresearchand
commercialization,specializedworkforcedevelopmentandattractionofnewinvestmentto
Iowa.Iowaneedsareplicableapproachinvolvingclearcompetitiveselectioncriteriabywhichitcan
identifypromisingopportunities.PotentialopportunitieshavebeenidentifiedacrossIowasmajor
industryclustersinbiobasedproducts;precisionagriculture;nextgenerationbigdataapplications
forhealth,foodandfinance;energyefficiency;andadvancedmaterialsandmanufacturing
technologies,amongotheremerginggrowthopportunities.
CreateaK20industrydrivencareerdevelopmentpartnershipwiththeeducationcommunity.To
provideIowawitharobustandpredictableworkforcepipelineindemandbyIowabusinesses
requiresasystematicandproactiveindustrydrivencareerdevelopmentpartnershipwithK20
education.Thepartnershipmustfocusonandimproveuponthetransitionsofstudentsintomiddle
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andhighskillcareeropportunitiesthroughworkplacelearningfromtechnicaleducationand
apprenticeships(formiddleskillsjobs)toincreasedcapacityofcollegesanduniversitiestoprovide
careerawareness,experientiallearningandconnectionstoIowaemployers(forhighskilljobs),as
wellasretrainingopportunitiesforrecentgraduateswhowerenotwellservedinthepasttogain
theskillstocompeteforcareeropportunities.
EstablishnewapproachesforinvestinginIowasphysicalinfrastructureneedsforbroadband
speed/reliabilityandimprovedtransportationnetworkthatensuresIowascontinuedcapacityto
grow.Keystepsincludingsettingoutcomprehensiveincentivesforbroadbanddevelopment,
prioritizingcriticalpublicinvestmentsintransportation(includingtakingtrafficofftheroadsthrough
improvedshorthaulrail/intermodaldevelopment)andrecognizingtheneedforinnovative
financing,suchaspublicprivatepartnerships,sincepublicfundsarenotsufficienttoaddressall
needs.
Facilitatethetransferofuniversityresearchanddevelopmenttoindustrystartups.Thesizeand
qualityofIowasuniversityandfederallabresearchbaseissufficienttogenerateincreasedlevelsof
highqualitytechnologybasedstartups,butIowasentrepreneurialculturesimplydoesnotmatch
thatofEastandWestCoastlocations.Ratherthanreplicatingmanyofthevalueaddedservicesthat
arethefocusofexistingandplannedactivitiesoftheIowaInnovationCorporationfor
entrepreneurialmentoring,improvedduediligenceandcommercializationassistance,Iowahasan
opportunitytomoredirectlyadvancehighqualitystartupsfromuniversityresearchbyleveraging
thecapabilitiesofserialentrepreneurstoleadventuredevelopmentcorporations.Theseventure
developmentorganizationswillnotonlycollaboratewithuniversitiestoidentify,assess,and
validateuniversityresearchdiscoveriesabletosupportnewbusinessventures,butwouldhavethe
capacitytoactuallylaunchthenewcompaniesandserveasthemanagementteamleadingthenew
startupinitsinitialproductdevelopmentphase,includingraisinginitialangelandproduct
developmentcapital.Asthenewstartupreacheskeydevelopmentmilestones,thentheserial
entrepreneurleadingtheventuredevelopmentcorporationcanrecruitpermanentmanagementfor
theadvancingthenewbusiness.
Bringingtogetherthesemoresystematiceffortswithcontinuedimprovementstoexistingprogramswill
leadIowatoadvancinganextgenerationeconomicdevelopmentsystemthatcansustainitseconomic
momentumandpropelitseconomytothenextlevel.
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CHARGEFROMTHEIOWAPARTNERSHIPFORECONOMICPROGRESS
Nowisnotthetimetoshyawayfromthechallengesandtheopportunities.Nowisthetime
toembracethem,tobebold,tomoveIowaforward,toincreasethecompetitivenessofour
stateanditspeopletodayandforyearstocome.
GovernorBranstad,2014StateoftheState
Thisreportpresentstheresultsofayearlongefforttosetastrategicdirectionforeconomic
developmentinIowa.ThestudywasinitiatedandledbytheIowaPartnershipforEconomicProgress
(IPEP),anindustryled,CEOleveladvisoryboardestablishedbyGovernorBranstadin2011.The
mandateofIPEPistocontinuouslyidentifyandstudyeconomicdevelopmentissuesfacingIowaand
recommendsolutionsandpolicyalternatives.
Iowahaslongrecognizedthateconomicdevelopmentisanimportantpublicpurposeandthatboth
thepublicandprivatesectorshaveasharedinterestinfosteringtheeconomicvitalityofthestate.
IPEPmakesthatpartnershiprealbybringingtogetherindustryleadersinIowawithpublicofficials
responsibleforadvancingIowaseconomicdevelopmentefforts,includingtheGovernor,Lt.Governor,
theDirectoroftheIowaEconomicDevelopmentAuthority,andtheChairsoftheIowaEconomic
DevelopmentAuthorityBoardandIowaInnovationCorporation.Byinitiatingandleadingthisstrategic
planningeffort,IPEPembracesitsresponsibilitytoassistIowainadvancingthestrategiceconomic
developmentdirectionsneededtoforgeaneconomicfutureabletogeneratehighqualityjobsand
growingincomesforIowansinahighlycompetitiveglobal,knowledgebasedeconomy.
IPEPretainedathirdpartyexpert,theBattelleTechnologyPartnershipPractice(TPP),toprovidean
objectiveassessmentofIowasindustriesanddevelopmentassets,toserveasthefoundationforthe
IPEPBoardtoguidestrategydevelopment.BattelleTPPalsoassistedtheIPEPBoardinitsstrategy
deliberationsbringingitsextensivebestpracticesknowledgeaswellasexaminingIowasevolving
economicdevelopmenteffortsfocusedoninnovation,retentionandattraction.
BattelleTPPistheeconomicdevelopmentconsultingarmoftheworldslargestindependentnonprofit
researchanddevelopmentorganization.TheBattelleTechnologyPartnershipPracticealsobringsan
understandingoftheIowacontext.Inthe20042006period,Battelledevelopedasetofmoretargeted
roadmapsforthebiosciences,advancedmanufacturing,informationtechnologyandentrepreneurial
developmentthatsetthestageformanyofIowasrecenteconomicdevelopmentefforts.
Ininitiatingthisstrategicplanningeffort,IPEPsetoutkeyguidelinesforhowtoapproachthere
envisioningofIowaseconomicdevelopmentroadmap:
First,engageabroadrangeofeconomicdevelopmentstakeholdersfromprivateindustry,economic
developmentandhighereducationtoensurebroadbasedinput.AProjectTaskforcewasformedto
helpinreviewingtheanalysisBattelleundertookinvolvingtheIowaEconomicDevelopmentAuthority,
theIowaInnovationCorporation,regionaleconomicdevelopmentorganizationsfromacrossthestate
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andleadingstatewideindustryassociations.SeveralextensivemeetingswereheldwiththeProject
Taskforceoverthecourseoftheprojecttoreviewtheanalysisandprovideinputasitwasbeing
completed.
Battellealsoundertookextensivefieldworktomeetwithstakeholders,visitingawidenumberof
communitiesacrossIowa.TheseincludedsitevisitstoAmes,Burlington,CedarFalls,CedarRapids,
CouncilBluffs,DesMoines,Dubuque,FortDodge,IowaCity,MasonCity,QuadCities,SiouxCity,
Spencer,andWaterlootomeetwithregionalstakeholdersandconductspecificmeetingsatIowas
publicuniversities.BattellealsointerviewedandmetwithindustryleadersinvolvedwiththeIowa
BusinessCouncilandIowaInnovationCouncil.
BattellebenefitedfromauniqueandextensivesurveyofIowaindustryexecutivesontheirownbusiness
situationandassessmentofIowascompetitivecapacityandbusinessclimate,knownastheBusiness
ExpansionandStrategicTrends(BEST)ofIowa.BESTusestheSynchronistSystemsurveyinstrument,a
structuredexecutiveinterviewinstrumentthatincludes42questionsdesignedtodrawoutbusinessas
wellascommunityissuesthatcanimpactgrowthand/orbusinessstability.Thesequestionsareusedby
over700SynchronistusersacrosstheU.S.andCanadatoconductthousandsofexecutiveinterviews
everyyear,andallowsforcomparisonsofIowatootherplaces.In2012alone,Iowaseconomic
developmentcommunityconducted1,221executiveinterviewsin62countiesand160Iowa
communities.BESTofIowaisastrategicpartnershipofBlackHillsEnergy,AlliantEnergyIPL,IowaArea
DevelopmentGroupandMidAmericanEnergyCompanyincollaborationwiththeIowaEconomic
DevelopmentAuthority.
Second,completeacomprehensiveanalysisofIowasindustryclusters,developmentresourcesand
economicassets.Thestrategicplanningprocessneededtobeinformedbyanobjective,factbasedand
updatedassessmentofthetrendsandcompetitivenessofIowasindustryclustersaswellas
developmentresourcesandassetsthatbusinessesdrawupontosustaingrowthintodaysglobal,
knowledgebasedeconomy.
Finally,reviewandrecommendtheprogramsnecessaryforIowatostrengthenitsexistingindustry
clustersandcapitalizeonopportunitiesforgrowth.InassessingthestandingofIowasindustryclusters
itisimportantnotjusttoassesstheirrecentperformance,buttoconsidertheirpotentialtoadvance
andsustaineconomicgrowthinthefuture.Insettingoutstrategicdirections,whileitisimportantto
improveandcomplementexistingeconomicdevelopmentprogramsthatareworkinginIowa,itisalso
importanttoconsiderboldtransformationalinitiativesthatcanpropelIowaforward.
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IPEPBoard ProjectTaskforceMembers
DeeBaird,
IndustryMembers PresidentandCEO,CedarRapidsMetroEconomicAlliance
StanAskren, JayR.Byers,
President,HNICorporation PresidentandCEO,GreaterDesMoinesPartnership
MiriamEricksonBrown, AndrewConrad,
President,AndersonEricksonDairy SeniorProgramManager,InstituteforDecisionMaking
BillFehrman, DanCulhane,
PresidentandCEO,MidAmericanEnergy PresidentandCEO,AmesEconomicDevelopmentCommission
DebraJanssen, RickDickinson,
PresidentandCEO,CDSGlobal PresidentandCEO,GreaterDubuqueDevelopment
PatrickMeyer, Corporation
PresidentandCEO,PellaCorporation SteveDust,
TomPenaluna, PresidentandCEO,GreaterCedarValleyAlliance
President,CBECompanies TinaHoffman,
PaulSchickler, MarketingandCommunicationsDirector,IowaEconomic
President,PioneerHiBredInternational DevelopmentAuthority
SteveSchuster, JoeHrdlicka,
Owner,SchusterCompany ExecutiveDirector,IowaBiotechnologyAssociation
RogerUnderwood, KathrynM.Kunert,
RiverwoodManagement VicePresident,BusinessandCommunityDevelopment,
TomWhitson, MidAmericanEnergy
AmericanNationalBank MarkLaurenzo,
LarryZimpleman, Manager,BusinessDevelopment,IowaEconomicDevelopment
CEO,PrincipalFinancialGroup Authority
DavidMaahs,
ExOfficioMembers ExecutiveVicePresidentofEconomicDevelopment,Greater
DesMoinesPartnership
TerryBranstad,
GovernoroftheStateofIowa ChristopherMcGowan,
President,SiouxlandChamberofCommerce
KimReynolds,
LtGovernoroftheStateofIowa RandyPilkington,
ExecutiveDirector,UniversityofNorthernIowaBusinessand
DebiDurham,
CommunityServices
Director,IowaEconomicDevelopment
Authority MichaelRalston,
President,IowaAssociationofBusiness&Industry
LarryDenHerder,
Chair,IowaEconomicDevelopmentAuthority ElliottG.Smith,
Board ExecutiveDirector,IowaBusinessCouncil
RobertRiley,Jr., JohnStineman,
Chair,IowaInnovationCorporation ExecutiveDirector,IowaChamberAlliance
BrianWaller,
President,TechnologyAssociationofIowa
TimWhipple,
GeneralCounselandLegislativeAffairs,IowaEconomic
DevelopmentAuthority
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THECONTEXT:ADVANCINGASTRATEGICFRAMEWORKFORECONOMIC
DEVELOPMENTINTHE21 ST CENTURY
Fartooofteneconomicdevelopmenteffortsareconsideredinthecontextofshorttermupsanddowns
oftheeconomy.Thishasbeenespeciallytrueinrecentyearsgiventhedifficulteconomictimesposed
bythesevereeconomicrecessionandweaknationalrecovery.Whileunderstandable,thisreactive
approachtoshorttermconditionscanoverlookmoresignificantandlongerlastingchangesinthe
economythatarealteringwhatitwilltaketobecompetitiveandrealizesustainedeconomicgrowth
intothefuture.
Aneweconomicerahasbeentakingholdinrecentdecadesmarkedbyincreasingglobalization,thefast
paceoftechnologicalchange,andthegrowingstrengthofdevelopingnationsingeneratinghighly
educatedandskilledtalenttocompeteforeconomicgrowth.Asthe2013reportbytheNational
ResearchCouncil,RisingtotheChallenge,notes:
U.S.regionaleconomiesfacemountingglobalcompetitivechallenges.NolongerdoU.S.
statesandcitiesprimarilycompeteamongthemselvesfortalent,investment,and
entrepreneursintechnologyintensiveindustries.Theyalsocompeteagainst[foreign]
nationalandregionalgovernmentsthatareexecutingcomprehensivestrategiesthat
seektocreateinnovationclustersinmanyofthesameimportant,emergingindustries.1
So,inthemidstoftheupsanddownsoftheeconomy,whathascontinuedtoacceleratethroughthe
firstdecadeofthe21stCenturyistheriseoftheglobal,knowledgebasedeconomy.Thesenew
economicrealitiesareraisingthebaronwhatisneededtoachieveeconomicsuccess.Butwhilethe
competitionmayberising,theexpectedrewardsarealsoexpectedtobemuchhigher.Theeconomic
prosperityofagrowingglobaleconomywilloutpacegrowthexpectedintheU.S.economy,creatingan
opportunityforstatesthatpositionthemselveswelltoreapsignificantbenefits.Justlookingoverthe
nextfiveyears,theInternationalMonetaryFund(IMF)initsOctober2014WorldEconomicOutlookhas
theU.S.economygrowing27percentfrom2014to2019comparedtoworldwidegrowthof34percent,
whichwillresultintheU.S.shareoftheworldeconomydecliningfromjustover16percentin2014to
justover15percentby2019.2
Iowa,withtherightstrategiesforeconomicdevelopmentspecificallytailoredtoitsindustrygrowth
opportunitiesanddevelopmentassets,canbeabigwinner.Butsettingawinningstrategycallsfor
havingawidelysharedunderstandingorstrategicframeworkofwhatisrequiredtoadvance
economicdevelopmentintheemergingglobal,knowledgebasedeconomy.
InconsultationwithIPEPandothereconomicdevelopmentstakeholdersinIowa,suchastrategic
frameworkhashelpedguidethedevelopmentofthiseconomicdevelopmentroadmap,providingthe
1
CharlesW.WessnerandAlanWm.Wolff,Eds.RisingtotheChallenge:U.S.InnovationPolicyfortheGlobal
Economy.2012.TheNationalAcademiesPress,Washington,DC,page431.
2
Seehttp://www.imf.org/external/pubs/ft/weo/2014/02/weodata/index.aspxfordatafromIMFWorldEconomic
Outlook,calculationsbyBattelle.
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logicforunderstandinghowtheinterplayofindustries,assetsandeconomicdevelopmentactivities
resultinmeasurableeconomicoutcomes.3Throughthisstrategicframework,itispossibletoaddress
theimplicationsofthenewtermsofcompetitionaswellasincorporatetheemergingbestpracticesfor
advancingeconomicdevelopmentinanincreasinglyglobal,knowledgebasedeconomy.Thisstrategic
frameworkalsoprovidesthelensthroughwhichtoassessIowaseconomicdevelopmentpositionandto
identifyfuturestrategicdirections.
ThestrategicframeworkforIowaseconomicdevelopmentaddressesthefollowingquestions:
WhataretheappropriatemeasuresofeconomicsuccessforIowa?Inotherwords,whatare
theultimategoalstobeachievedbyIowaseconomicdevelopmentefforts?
WhataretheindustryclustersforeconomicsuccessforIowa?Howdoesoneassessindustrys
roleinadvancingeconomicdevelopmentinIowaanditspotentialtosustainfutureeconomic
growth?
WhataretheeconomicprogramactivitiesneededinIowa?HowcanIowabestadvance
innovation,retentionandattractiontogrowitsindustryclusters,whileadvancingdevelopment
resourcesneededforindustrytobesuccessful?
WhatarethecriticaldevelopmentresourcesinIowaforindustryclusters?Whatcapacitiesand
assetsfoundinIowaarecriticalforbusinesssuccessandcompetitiveness?
TheanswerstothesequestionssetthecontextforhowIowaneedstoassessitschallengesand
opportunitiesforadvancingeconomicdevelopmentandsettingafocusedcourseofstrategicactions.
Figure1presentsagraphicillustrationofthelogicofthisstrategicframeworkandthekeyelementsfor
Iowa.Whatfollowsexplainsthekeyelementsdrivingthisstrategicframework.
3
Logicmodelsareawidelyusedtoolforevaluatingstrategiesandspecificprograms.Formoreinformation,see
W.K.KelloggFoundationLogicModelDevelopmentGuide,January2004,page3,availableatwww.wkkf.org.
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Figure1: StrategicFrameworkandKeyElementsforEconomicDevelopmentinIowa.
A Higher Standard of Living for Iowa

Economic Drivers
Major Industry Clusters

Biosciences Information
Insurance Services Building &
& Financial Construction
Health Products
Services Services
Automation
& Industrial Primary
Agriculture Machinery Metals
& Food Avionics &
Electronics
Heavy
Renewable Machinery Transportation
Energy
& Distribution
Economic Development Activities
Attraction Innovation Retention

Economic Foundations
Physical Business Entrepreneurial

Workforce
Infrastructure Climate Culture
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WHATARETHEAPPROPRIATEMEASURESOFECONOMICSUCCESS?
EconomicsuccessisdirectlyrelatedtowhetherIowaseconomyisgrowingandthepaceofthatgrowth.
Butitisnotsimplyeconomicgrowththatmatters,buthowthatgrowthtranslatesintoeconomicwell
beingforIowans.AsMichaelPorter,athoughtleaderincompetitivestrategiesforindustryand
economicdevelopment,statesinhisseminalwork,TheCompetitiveAdvantageofNations:The
principaleconomicgoalforanationistoproduceahighandrisingstandardoflivingforitscitizens.
Traditionally,jobgrowthandwhetherworkerswereemployedorunemployedwasthekeyindicator
usedineconomicdevelopmenttomeasuresuccess.Thismadesensewhenhavingajobmeanthavinga
decentstandardofliving.Butintodaysglobal,knowledgebasedeconomytheabilityofajobto
generateadecentandrisingstandardoflivingisnowbasedontheskillsitrequiresandknowledge
workersbringtothejob.AstheOrganizationforEconomicCoOperationandDevelopmentexplains:
Employmentintheknowledgebasedeconomyischaracterizedbyincreasingdemandformorehigh
skilledworkersChangesintechnology,andparticularlytheadventofinformationtechnologies,are
makingeducatedandskilledlabormorevaluable,andunskilledlaborlessso.4InIowaandacrossthe
U.S.,fartoomanylowskilledjobsnolongergeneratedecentandgrowingwagesandbenefitsthat
affordadecentstandardofliving.Whileajobisbetterthannojob,withoutincreasingwagesitis
difficultforeconomicwellbeingtorise.
Soitisincreasinglyimportanttoconsiderawidernumberofmeasurestocaptureeconomicsuccess
ratherthanjobsalone.AnexampleistheeffortoftheIowaBusinessCouncilinitsannualIowa
CompetitivenessIndexwhichusesamixofmeasurestoassesseconomicgrowth,including:
Totalemployment,againthetraditionalmeasureofeconomicdevelopmentsuccess,witha
morefocusedlookatknowledgejobsrecognizingthegrowingsignificancethathighskilled
jobshaveintodayseconomy;
Growthinstategrossdomesticproduct(GDP),ameasureofthevalueofthegoodsandservices
producedinthestateseconomyanalogoustonationalGDPthatistrackedtomeasure
nationaleconomicactivitywithamoredetailedlookattheshareofmanufacturingactivity
givenitssignificantroleinIowaseconomy;
Percapitaincome,adirectmeasureofthestandardoflivingacrossallworkers,thoughit
includesinvestmentincome,SocialSecurityandothertransferpaymentsandincomegenerated
bybusinesses,suchasfarmincome.
Thisbroaderviewofeconomicsuccessisusedinthiseconomicdevelopmentroadmaptojudgewhether
ornottheeconomicfundamentalsofIowaareimprovingandataratefasterthanthenation.
4
OECD,TheKnowledgeBasedEconomy,Paris,1996,page7.
|P a g e 10
WHATARETHEINDUSTRYCLUSTERSGENERATINGECONOMICSUCCESSINIOWA?
EconomicgrowthinIowaisdrivenbytheeconomicperformanceofindustriesinthestate.Butnotall
industriesdriveeconomicdevelopmentinastate.Theindustriesthatdriveeconomicgrowtharethose
thatservecustomersandmarketsthatgobeyondlocalresidentsandbusinessesand,asaresult,
generateincomefromsourcesoutsideofthestateorsubstituteforproductsandservicesthatwouldbe
importedintoIowa.Theseindustriesdrivingeconomicgrowtharereferredtoastradedsectoror
economicbaseindustries.5Theytendtoincludemanufacturingindustriesproducingproductssold
outsideofIowa,distributionindustrieshelpingtomovegoodsproducedinIowa,insuranceandfinance
industriesofferingservicestocustomersnationwideandinformationtechnologyindustriesproviding
software,dataservicesandotherinformationservicestomarketsoutsideofIowa.Ofteneconomicbase
industriesserveamixofmarketsandcustomersbothinstateandoutofstate.
Bestpracticesineconomicdevelopmenthavelongrecognizedthatindividualtradedsectorindustriesdo
notstandalonewithinthestateanditsregionaleconomies,butarebetterunderstoodasbeingpartofa
broadercomplexofindustriesthatareinterrelated,itisimportanttoexaminethemasindustry
clusters.AsMichaelPorterexplains:
Clustersareastrikingfeatureofvirtuallyeverynational,regional,stateandeven
metropolitaneconomy,especiallyinmoreeconomicallyadvancednationsClustersare
notunique;however,theyarehighlytypicalandhereinliesaparadox:theenduring
competitiveadvantagesinaglobaleconomylieincreasinglyinlocalthingsknowledge,
relationships,motivationthatdistantrivalscannotmatch.6
Thereisnotastandardsetofprimaryindustryclustersdefinedforalllocalitiesandtheregional
economieswheretheyarelocated.Instead,identifyinglocallybasedprimaryindustryclustersrequires
analyzingthespecificlocalindustriesthatarefocusedoneconomicbaseactivitiesanddetermining
wheretherearelogicalconnectionsandinterrelationshipsinthelocalityandacrossitsregional
economy.InconsultationwiththeIPEPboard,theProjectTaskforceandmanyotherkeystakeholders,
BattelletookarefreshedanddetailedlookatthespecificindustryclustersdrivingIowaseconomy.
Battelleappliedarigorous,datadrivenprocessthatisusedto:
5
IndustriesthatarenoteconomicbaseindustriestypicallyfocusonmeetingthelocalneedsofIowasfamiliesand
businessesanddonotbringnewincomeintothestatetheseareoftenreferredtoasshelteredindustries.
Examplesofshelteredindustriesincluderestaurants,retailstores,drycleaners,andstateandlocalgovernment
services.WhiletheseshelteredindustriesarecriticaltothequalityoflifeinIowa,theyrelyonpurchasesfromlocal
residentsandbusinessesastheirprimarymarket,andsobenefitfromagrowingeconomy.
6
MichaelPorter,HarvardBusinessSchoolProfessor,ClustersandtheNewEconomicsofCompetition,Harvard
BusinessReview,NovemberDecember1998.
|P a g e 11
ExaminehowIowaseconomicbaseindustrieswereevolvingatthemostdetailedindustry
levels7tounderstandspecificeconomicbaseindustryactivitiesbasedonsize,relative
concentration/specialization,andrecenttrends,particularlyagainstnationalperformance;
ConsiderlikelysupplychainrelationshipsinIowabasedontheIMPLANinput/outputmodelfor
Iowatolearnaboutkeyinterrelationshipsbetweenthedetailedindustries.Input/output
modelsshowthepurchasesofgoodsorservicesbetweenindustries,whichenablesidentifying
thoseindustriesthatdobusinesstogether.IMPLANisoneofthemostwidelyusedmodelsinthe
nationandcustomizesthelikelysupplierchainrelationshipsbasedontheeconomicstructure
foundineachstate.
Refinetheanalysisbaseduponthespecificactivitiesofleadingfirmsineconomicbase
industries.Battelleaccessedinformationfromcorporatedatabases,visitingcompanywebsites,
andcallingcompaniestounderstandtheirproducts,services,andappliedtechnologiesand
wheretheyfitrelativetootherindustriesinthestate.
TwelvedistinctindustryclusterswereidentifiedasdrivingIowaseconomy.Table1summarizesthe
majorindustrycomponentsoftheseclustersandexamplesofleadingfirmsfoundinIowa.
7
Battelleexaminedindustryemploymentdataatthe6digitleveloftheNorthAmericanIndustryClassification
System(NAICS)usinganenhanceddatabasefromIMPLAN.ThesedataarebasedontheU.S.BureauofLabor
StatisticsQuarterlyCensusofEmploymentandWages(QCEW)supplementedbyCountyBusinessPatternsand
otherregionaldatasets.Employmentdatausedintheanalysisincludefulltimeandparttimepositions.
|P a g e 12
Table1: ListingofTwelveDistinctIndustryClustersDrivingIowasEconomy.
IndustryCluster TypesofIndustryActivities ExamplesofLeadingCompanies
AgricultureandFood AgriculturalProduction ConAgraFoods,Barilla,Heinz,GeneralMills,

Production FoodProcessing&Products BlueBunny,MuscatineFoods(KentCorp),
Packaging Nestle
Automation&Industrial Industrialmachinery VikingPump,ProgressiveToolCompany,EFCO,

Machinery Metalworkingmachinery&tools Seabee
Electricalequipment
Avionics& Search,Detection,&Navigation RockwellCollins;Goodrich;Honeywell

Communications Instruments International;Cobham
Electronics OtherAerospacerelatedIndustries
Biosciences AgriculturalFeedstock&Chemicals, ADM;BoehringerIngelheim;DuPontPioneer;

akatheAgbiosciences Cargill;Monsanto;Genencor;Novartis;Pfizer;
BiosciencerelatedDistribution IowaFertilizer;CFIndustries
Drugs&Pharmaceuticals
MedicalDevices&Equipment
Research,Testing,&MedicalLabs
Building&Construction Windowsanddoors(bothwoodand Pella,HON,Curries/AssaAbloy,OmegaCabinets

Products fabricatedmetals)
Kitchencabinets
Furniture;
Nonmetallicmineralproducts
includingconcrete,glass,stone;
plasticpipes
HeavyMachinery PrimaryAg&ConstructionMachinery JohnDeere;Caterpillar;SauerDanfoss;

Manufacturing Featherlite;WilsonTrailer;Vermeer;
VehicularParts&Components Winnebago
MobileHomes
HealthcareServices OutpatientCareCenters UniversityofIowaHealthCare,MercyMedical

HomeHealthcare Center,BlankChildrensHospital,Genesis
Hospitals MedicalCenter,UnityPointHealth,Covenant
MedicalCenter
NursingCare

|P a g e 13
IndustryCluster TypesofIndustryActivities ExamplesofLeadingCompanies
InformationServices, Software&ComputerServices CDSGlobal,DatavisionResources(Equifax),TM1

DigitalMedia& InternetServices&ECommerce Stop,Fiserv,Telligen,WebFilings,Lee
Technology MultimediaPublishing Enterprises,MeredithCorporation,Kendall
Hunt,Microsoft,Google,Facebook
Insurance&Finance Insurance PrincipalFinancial,AEGON/Transamerica,

CommercialBanking Nationwide,ING,Metlife,WellsFargo,Bankers
Securities,Commodities,&Other Trust
FinancialInvestments
PrimaryMetals Iron,Steel,Aluminum,Nonferrous SSAB(SwedishSteel);PMXIndustries(Copper);

Manufacturing andFoundaries SivyerSteelCorp;IowaAluminum;Alcoa
RenewableEnergy WindTurbines Siemens;GEWindEnergy;AccionaWindpower;

EnergyStorage TCE(Poet);HawkeyeEnergy;RenewableEnergy
Ethanol&Biofuels Group(REG)
Transportation, Wholesale PerishableDistributorsofIowa,LTD.(HyVee);

Distribution&Logistics Transportation RuanTransportationManagementSystems;
Warehousing&Storage SimonsTrucking;CRSTInternational;Jacobson
GlobalLogistics

|P a g e 14
WHATARETHEECONOMICPROGRAMACTIVITIESNEEDEDINIOWA?
Economicdevelopmenthastokeeppacewiththechallengesposedbyaglobal,knowledgebased
economybyfocusingoninnovation,retentionandattraction.AstheNationalResearchCouncilinits
2013reportonBestPracticesinStateandRegionalInnovationInitiatives:Competinginthe21stCentury
explains:Statesconfrontstarkeconomicchallengesintheglobalera...effortsatindustrialrevivalusing
traditionalpolicytools,includingindustrialrecruitmentandfinancialincentivestoindustryarenow
beingcomplementedbymoretechnologybasedindigenousgrowthstrategies.8TheNationalResearch
Councilcontinuesbynotingthat:Intheyearssince[late1970s]...stateandlocalindustrial
developmenteffortshavecontinuedunabatedwhileundergoingaqualitativeevolutionthatincreasingly
emphasizesknowledgebaseddevelopment...Inrecentdecades,however,innovationrelatedinitiatives
havemovedtothecenterofstateandlocaldevelopmentefforts.9
Inkeepingwiththebestpracticesinstateeconomicdevelopment,Iowahasadvancedanactive,
balancedandintegratedeconomicdevelopmentprogramthatfocusesoninnovation,retentionand
attraction.Inrecentyears,Iowahasretooleditstraditionaleconomicdevelopmenttoolstomeetthe
challengesofintegratinginnovation,retentionandattraction,whilealsocreatingnewtoolsfocusedon
spurringandnurturinginnovation.Forexample,thestatesleadingbusinessretentionandattraction
programofferingtaxcreditsanddirectfinancialassistance,theHighQualityJobsProgram,notonlysets
awageandbenefitsthresholdforbusinessestoqualify,butoffersasupplementalR&Dtaxcreditalong
withotherincentives.Iowahasalsofocusedspecificallyoninnovationwithanumberofmorerecent
economicdevelopmentprogramstosupportcommercializationoftechnologiesbysmallandmedium
sizedcompanies,promotecreationofventurefundsandassistbusinessesinpursuingthefederalSmall
BusinessInnovationResearchprogramnowadministeredthroughanewlyformedIowaInnovation
CorporationthatworkscloselywiththeIowaEconomicDevelopmentAuthority.
Inemphasizinginnovationalongwithretentionandattraction,Iowaisrecognizingthattechnology
andinnovationiscriticalforitsmatureandestablishedindustries,notjustnew,emergingindustries.
Thepopularimagesofinnovationarehavinginnovative,newstartupfirmsinvolvedinemergingareas
oftechnologyfrombiotechnology,nanotechnology,anddigitalmedia.But,infact,theimportanceof
technologyandinnovationisnotjustfornewlydevelopingindustries,butalsoisintegraltothe
competitivenessofexistingindustries.Wellestablishedindustriesinvolvedinagricultureand
manufacturingareatthecuttingedgeofapplicationsinvolvinguseofbigdata,InternetofThings,bio
basedproducts,advancedmaterials,additivemanufacturingandelectronicdesign.Considerthat
roughlysixoutofeveryteninformationtechnologyworkersareemployedoutsideofcomputerand
telecommunicationsindustries,withhighconcentrationsfoundinfinance,insuranceand
manufacturing.InIowa,thelargestemployersofITandengineeringprofessionalsincludeprofessional,
scientific,andtechnicalservices;computerandelectronicproductsmanufacturing;railtransportation;
insurance;banking;educationalservices;andcorporateheadquarters.
8
CharlesW.Wessner,Editor.BestPracticeinStateandRegionalInnovationInitiatives.CommitteeonCompeting
inthe21stCentury;BoardonScience,Technology,andEconomicPolicy;NationalResearchCouncil,2013,page11.
9
IBID,page28.
|P a g e 15
Emergingacrossstatesisanewpowerfulparadigmshiftthatbringstogetherthenotionofindustry
clusterdevelopmentandtheintegrationofinnovation,retentionandexpansion.Theideathatstate
andregionaldevelopmentisdrivenbyindustryclustersofgeographicallylocalizedconcentrationsof
firmsinrelatedsectorsthatdobusinesswitheachotherandhavecommonneedsfortrainedworkers,
infrastructureandtechnologygoesbackintheeconomicliteraturetothewritingsofAlfredMarshallin
thelate19thandearly20thcenturies.10Butindustryclusterdevelopmentasabestpracticeforeconomic
developmenthasonlytakenholdinthepasttwodecades.
Whatisdifferenttodayandispropellingthefocusonindustryclusterdevelopmentistheemphasis
placedontechnologyandinnovationasdriversof21stcenturyeconomicdevelopment.Foraparticular
statetosucceed,itneedstoidentifythoseindustryclusterswithstronggrowthopportunitieswherethe
stateisbestpositionedtodifferentiateitselfandbuildcorecompetenciesinspecializedareasof
expertisewhereitcanbeaworldleader.Corecompetenciesrepresentacriticalmassofknowhow
spanningindustryanduniversities/federallabs/nonprofitresearchinstitutesaswellasthetechnical,
managementandentrepreneurialtalentbasethey
U.S.economicstrengthdependsonthe
generateandattracttothestate,specialized
abilityofeachstatetocompetesuccessfully
facilitiesfoundinthestate,andventurecapital
intheworldmarketplace.Eachstatemust
sources.For21stcenturyeconomicdevelopment,
exploittheuniqueadvantagesithasrelative
advancingcorecompetenciesthatindustryclusters
tootherstatesandbuildonthestrengths
areabletogainacompetitiveadvantagerepresents
foundinitslocalclustersofinnovation
aunifyingthreadforeconomicdevelopment
distinctgroupsofcompetingandcooperating
efforts.Itisthesamecorecompetenciesthat
companies,suppliers,serviceprovidersand
informandguidebothastateseffortsinmore
researchinstitutions.
homegrowndevelopmentstrategiestoretainand
growemergingindustriesanditsoutreach NationalGovernorsAssociation,A
marketingtoattractindustriestolocateinthe GovernorsGuidetoTradeandGlobal
region.Bybeingguidedbycorecompetencies,state Competitiveness
effortsbetweeninnovation,retentionandbusiness
attractioneffortsarehighlycompatibleand
reinforceeachother.
10
Foradiscussionofindustryclustertheory,seeNationalResearchCouncilsreportonBestPracticesinStateand
RegionalInnovationInitiatives,pages3134.
|P a g e 16
WHATARETHECRITICALDEVELOPMENTRESOURCESINIOWAFORINDUSTRYCLUSTERS?
Developmentresourcesaretheassetsthatbusinessesdrawupontosustaingrowthintodaysglobal,
knowledgebasedeconomy.Ofparticularimportanceareworkforce,innovationandentrepreneurial
culture,physicalinfrastructureandbusinessclimate.
Workforcetouchesuponallaspectsofeconomiccompetitiveness.Itrepresentsnotonlythe
generalskillsofworkerstoproducetopqualitygoodsandservicesquicklyandefficiently,but
alsothespecializedcapacityfoundamongworldclassscientistsandengineerstoinvent,
advancediscoveriesanddevelopnewtechnologies.Foreconomicdevelopmentinthe21st
century,ahighqualityworkforceiscriticaltodefiningapositivebusinessclimate.Asthe
NationalGovernorsAssociationpointsoutintheirseriesonStateLeadershipintheGlobal
Economy:CEOsreportthattheavailabilityoftechnicallytrainedtalentistheirtoppriority
onethatoftendetermineswheretheylocatehighvalueinvestments.11
Innovationandentrepreneurialculturearecriticallyimportanttoregionaleconomic
development,becauseitdrivesindustrialcompetitivenessandoffersanewsourceofgrowth
throughnewbusinessformation.StartingwithDavidBirchsworkandvalidatedbytheOfficeof
AdvocacyoftheU.S.SmallBusinessAdministration(SBA)andfurtherrefinedbystudies
commissionedinrecentyearsbytheKauffmanFoundationandothers,itisclearthat
technology,innovation,andentrepreneurshipdriveeconomicgrowth.A2005reportprepared
fortheSBAsOfficeofAdvocacycomparingregionswithstrongandweakentrepreneurial
activityfoundthatthemostentrepreneurialregionshadbetterlocaleconomiesfrom1990to
2001comparedtotheleastentrepreneurial.Theyhad125percenthigheremploymentgrowth,
58percenthigherwagegrowthand109percenthigherproductivity.Thisgeneralfindingheld
individuallyforlarge,mediumandsmallsizedregionsbutwasmostpronouncedforlarge
regions.12WithafewnotableexceptionssuchasSiliconValleyandAustin,theentrepreneurial
climatenecessarytogeneratehighgrowthenterpriseshasnotdevelopedfullyandsustainably
throughmarketforcesalone.Itisoftenstatedthatentrepreneurshipisacontactsport,and
thebarriersandobstaclestobeingabletoscaleafirmissignificant,particularlyfortechnology
firms.Onesignificantchallengeforentrepreneurialdevelopmentisthelackofexperienced
managementtalent.Asecondchallengefacingentrepreneursisaccesstocapital.Entrepreneurs
requireaccesstocapitalateachstageoftheirdevelopment,fromearlystage,proofofconcept
andprototypedevelopmenttoSeriesAandBventurefinancing.Athirdchallengethat
entrepreneursfaceistofindcustomersandmarketsastheyseektogrowwhichisthestageat
whicheconomicdevelopmentresultsarerealized.
PhysicalInfrastructuremayseemlikeathrowbacktoanearlierera,butifanindustryistobe
competitiveinaparticularstateitrequireshavingaccesstoawelldevelopedinfrastructure.
AccordingtotheWorldEconomicForum,physicalinfrastructureisoneofitspillarsforeconomic
11
NationalGovernorsAssociation,StateLeadershipintheGlobalEconomy,2002.
12
TheInnovationEntrepreneurshipNexus:aNationalAssessmentofEntrepreneurshipandRegionalEconomic
GrowthandDevelopment.Powell,Ohio:AdvancedResearchTechnologies,LLC,April2005,page5.
|P a g e 17
competitiveness.Awelldevelopedtransportandcommunicationsinfrastructurenetworkisa
prerequisiteforcoreeconomicactivitiesandservicesintodaysglobaleconomy.Effective
modesoftransportincludingqualityroads,railroads,ports,andairtransportenable
entrepreneurstogettheirgoodsandservicestomarketinasecureandtimelymannerand
facilitatethemovementofworkerstothemostsuitablejobs.Economiesalsodependon
electricitysuppliesthatarefreefrominterruptionsandshortagessothatbusinessesand
factoriescanworkunimpeded.Finally,asolidandextensivetelecommunicationsnetwork
allowsforarapidandfreeflowofinformation,whichincreasesoveralleconomicefficiencyby
helpingtoensurethatbusinessescancommunicateanddecisionsaremadebyeconomicactors
takingintoaccountallavailablerelevantinformation.
BusinessClimateWhiletalent,innovationandentrepreneurialclimateandphysical
infrastructureallcontributetowardsahealthybusinessenvironment,itisalsoimportanttobe
mindfulofthecostofdoingbusinessandtheregulatoryenvironmentinastate.Placesthathave
highcoststodoingbusinessorpursueneededregulationsinaninefficientoradversarial
mannerstillfaceacompetitivedisadvantage.Lowcostsorabsenceofregulationsalonewillnot
spureconomicdevelopment,buthighcostsandpoorregulatoryenvironmentmaychokeoff
growth.Twowellregardedannualstatebystatebusinessclimatestudies,byCNBCandForbes,
developacompositemeasureforbusinessclimatethatbuildsacrossawholerangeoffactors
includingthecostofdoingbusiness;theoveralleconomyandgrowthprospects;infrastructure
andtransportation;workforce;qualityoflife;technologyandinnovation;businessfriendliness;
andaccesstocapital.Factorsgetvariousweightsattachedtothemtoemphasizeandembed
theirimportancetoindustry,andCNBCappliesthehighestweighttocostofdoingbusiness.Site
selectorsemphasizethatwhilebusinesscostsisnottheonlyfactordrivinglocationdecisions,a
competitivecostlandscapeforcompanieswillmoreoftenthannotgetyourlocationnoticed
andconsidered.
|P a g e 18
KEYFINDINGSONIOWASECONOMICPERFORMANCEAND
IMPLICATIONSFORFUTUREDEVELOPMENT
ThecomprehensiveeconomicdevelopmentframeworkprovidesafocusedapproachtoassessingIowas
recenteconomicperformanceanditspositionforfuturedevelopment.Bringingtogetherthekey
assessmentsacrosstheelementsofIowaseconomicdevelopmentframeworksuggeststhefollowing
highlevelkeyfindings:
Iowahasmadesubstantialeconomicprogressoverthelastdecade.ThetrendsinIowastopline
measuresarepositive,thoughIowaisnotalwaystheleaderinthesemeasures;itdemonstratesthere
aremanyopportunitiesforIowatocapitalizeonitsstrengths.
Iowasindustryclustersarerobust,diverseandhavestatewideimpacts.The12industryclusters
drivingIowaseconomyaregenerallyoutperformingthenationintheirlevelofspecialization,job
growthandproductivity.Togethertheyofferadiversesetofindustries,withmosthavingabroad
presenceacrossthestateormultipleregionsofthestate.
SomeoftheweaknessesinIowaseconomicfoundationsrequirefocusedattention.Acrosseacharea
ofIowaseconomicfoundationsworkforce,innovationandentrepreneurialculture,physical
infrastructureandbusinessclimatetherearepositivesthatwouldbeexpectedgiventhestrong
economicperformanceofIowaoverthepastdecade,alongwithweaknessesthatposeeconomic
challengesforIowaintheyearsahead.
Lookingtothefuture,Iowahasconsiderableeconomicmomentum,butthedetailedanalysisofits
industryclustersdrivingtheIowaeconomyanditseconomicfoundationssuggestssomespecific
challengestocontinuedeconomicsuccess.FourspecificchallengesforIowaemergeasstrategic
prioritiesfromthecomprehensiveassessment:
EnsuretheCompetitivenessandGrowthofIowasLeadingIndustryClustersthrough
Innovation,RetentionandAttraction
Iowamustovercometheslowergrowthprojectedforitsleadingindustryclustersatthe
nationallevelandcontinuetooutperformthenationtosustainsignificanteconomic
growth.Thisplacesaconsiderableurgencytofurtheringproductivitygainsandpursuing
highgrowthopportunitiesforIowasindustryclusters.
GenerateandAttractSkilledWorkforceinDemandbyIowasBusinesses
DespitegrowthinmiddleandhighskilledjobsinIowa,Iowabusinessesreport
continuedshortagesofskilledworkforce,whichwhencombinedwithmixed
performanceinscience,technology,engineeringandmath(STEM)educationandweak
growthinstatewidepopulationposeacriticaleconomicdevelopmentchallengefor
Iowa.
|P a g e 19
AcceleratetheDevelopmentofIowasEmergingEntrepreneurialEcoSystem
Recenttrendssuggestthatwhileresearchanddevelopmentactivitieshaverisen
stronglyinIowa,thetranslationofIowasR&Dbaseintothecommercializationofnew
productsandavibrantbaseofhighgrowth,emergingcompaniesisstilllagging.Onlyin
recentyearshasIowapursuedafocusedprogrammaticefforttoadvanceinnovation
andentrepreneurialdevelopment,andwhiletheseeffortsremainaworkinprogress,
theyneedtobepursuedmorevigorously.
AdvanceIowasPhysicalInfrastructureandRegionalDevelopmentCapacitiestoRealizeIowas
EconomicPotential
TheneedforcontinuedinvestmentsinIowasphysicalinfrastructuretoaddressneedsin
itsfreighttransportationsystem,uponwhichmuchofthestatesagriculturaland
manufacturingeconomydepends,aswellasinbroadbandcapacitytoprovidethe
criticaldigitalconnectionsrequiredofamodern21stcenturybusinessenvironment
standout.
TheremainderofthissectionexaminesthedetailsofIowaseconomicperformance,whilethenext
sectionexaminesIowaspositionforfuturedevelopmentinthecontextofthefourstrategicpriorities
andrecommendedtacticsforIowathataddresshowtoadvancethestateseconomicdevelopment
policiesinthenearterm,butalsoposestrategicdirectionsforthefuture.
|P a g e 20
KEYFINDINGS:IOWASECONOMICPROGRESSOVERTHELASTDECADE
Iowahasmadebroadgainsinrecentyearsevenwiththesevereeconomicrecessiontakingholdin2008
andweaknationalrecoverythathasfollowed.ToprovideinsightsintoIowaseconomygoingforward,
ourfocuswillconsidertheperiodof20072012/13,whichencompassesthelastyearbeforethe
recessionhitandthemostrecentyearforwhichdataisavailable.
Ineconomicoutput,Iowaby2013hadincreaseditseconomicactivitybynearly6percentinreal,
inflationadjustedtermsfrom2007prerecessionlevels(seeFigure2).Iowasgrowthineconomic
outputwelloutpacedthenationgrowing1.2percentagepointsfaster.
Intotaljobgrowth,Iowastandsoutinreachingabove2007prerecessionlevelsby2013,whilethe
nationstillhadnotreplacedallofthelostjobssince2007(seeFigure3).Still,Iowasjobgainshavenot
beenstellarreflectingthejoblessrecoverynotedinrecenteconomicpressaccounts.
Inhighqualityjobgrowth,Iowaoutshinedthenationinbothitsgrowthinmiddleskilledjobsand,
especially,highskilledjobs(seeFigure4).KeepinmindthesearenotjustjobopeningsinIowa,but
actualjobsfilledinIowa.ItsuggeststhatIowasgainsineconomicoutputwerereflectedinthe
workplacebyamorehighlyskilledworkforceabletogeneratehighvaluedproducts.
ItisalsoimportanttonoteanotherkeydifferencebetweenIowaandtheU.S.attheotherendofthe
skillspectrumforlowskilledjobs.Acrossthenation,lowskilledjobsrosesincethemid2000s,
suggestingmanyjobswerecreatedthatcannotsupportafamily,whilefamilysupportingmiddleskilled
jobsdeclined.InIowalowskilledjobsdeclined,astheskillspectrumoftheworkforceinIowashifted
upwardswithgainsinbothmiddleandhighskilledjobstakingplace.
Inaveragewages,Iowawelloutpacedthegainsmadenationallyinprivatesectorindustries(non
government)(seeFigure5).ThisisconsistentwiththerisingskilllevelsfoundinIowa,thoughitmayalso
representgreaterdemandforworkforcebiddingupwagesinIowa.
Inpercapitaincome,IowaclosedthegapwiththeU.S.overthepastdecadeandby2013slightly
exceededtheU.S.average(seeFigure6).Inthemorerecent2007to2013period,Iowaspercapita
incomeroseby22.5percentcomparedto11.9percent,soIowanearlydoubledthegrowthrateofthe
nation.
AkeygeneratorofIowasstronggrowthinpercapitaincomeswassoaringfarmpersonalincomes,
whichrose126percentfrom20072013andcomprised18percentoftheincreaseinIowapersonal
incomeoverthe20072013period.
Still,growthinnonfarmpersonalincomeinIowaincreasedfasterthanthenation(20percentforIowa
and14percentforUS20072013)andcomprised54percentofgainsinIowapersonalincome,
comparedto59percentnationally.So,whileIowaspercapitaincomeisstronglyinfluencedbychanges
infarmincomes,therehavebeenbroadereconomicforcesatworkthatareenablingIowatoclosethe
gapinpercapitaincomewiththenationalaverage.
|P a g e 21
Figure2: ComparisonofIowaandU.S.GrowthinEconomicOutput
(RealGrossDomesticProduct),20072013.
Source:U.S.BureauofEconomicAnalysis(NetChangeinRealGDP).
Figure3: ComparisonofIowaandU.S.GrowthinTotal
Employment,20072013.

Source:U.S.BureauofLaborStatistics,QuarterlyCensusofEmployment&
Wages(TotalEmployment;includesPublicSector).
|P a g e 22
Figure4: ComparisonofIowaandU.S.GrowthinEmploymentbyHigh,Middle,andLow
SkilledWorkforce,20042013.

Source:BattelleanalysisofBureauofLaborStatistics,OccupationalEmploymentStatisticsData.
Figure5: TrendsinAverageWagesinPrivateSectorIndustries,IowaandU.S.,20072013.
Source:BattelleanalysisofBureauofLaborStatistics,QCEWdata.
|P a g e 23
Figure6: PerCapitaIncomeLevels,IowaandU.S.,20012013.
Source:BureauofEconomicAnalysis.
ThesebroadandsubstantialgainsmadebyIowainmeasuresofeconomicsuccesssuggesttheprogress
beingmadeinIowaseconomyingrowingtheeconomywithhighqualityjobsthattranslateinto
growingfamilyincomesforIowa.
Still,itisimportantnottolosesightthatIowastillneedsfurthergainstobeamongthemost
economicallysuccessfulstatesinthenation.
Asof2013,evenwiththemajorgainsofrecentyears,Iowarankedonly23rdinthenationinper
capitaincomeperhapsthemostmeaningfulmeasureofhowastateseconomyisdoingin
generatingahighstandardoflivingforitsresidents.
Inhighskilledjobs,whileIowaisgrowingfasterthanthenationinrecentyears,itremains
behindtheU.S.averageintheoveralllevelofhighskilledjobs,with23percentofIowas
workforceemployedinhighskilledjobscomparedto26percentforthenationin2013.
Inaveragewages,reflectinginpartthelowerlevelofhighskilledworkers,Iowasaverage
earningsforprivatesectorworkersstoodat$40,489in2013comparedtoanationalaverageof
$49,700,soIowaisroughly23percentlowerthanthenation.
|P a g e 24
KEYFINDINGS:THEPERFORMANCEOFINDUSTRYCLUSTERSDRIVINGIOWASECONOMY
ThetwelveindustryclustersidentifiedaskeydriversofIowaseconomybringnewincomeintothestate
andsupporteconomicactivity.NearlyallofIowastopfiftyprivatesectorbusinesses,basedon
employmentsize,arefoundwithintheseindustryclusters,includingPrincipalFinancialand
Transamericawithininsuranceandfinance;RockwellCollinsinavionics;PellaandHNICorp.inbuilding
andconstructionproducts;JohnDeereandWinnebagoinheavymachinery;CRSTInternationalin
transportation,distribution,andlogistics;DuPontPioneerandCargillinthebiosciences;CDSGlobalin
informationservicesanddigitalmedia;andanumberofhospitalsandregionalhealthsystemswithin
healthcareservices.
GiventhesignificanceoftheseindustryclusterstoIowaseconomy,acomprehensiveassessmentofthe
economicperformanceoftheseclustersiscritical.Justasthemeasuresofeconomicsuccessarebroad,
soarethemeasuresofeconomicperformanceofanindustrycluster.Battelleconsideredmany
economicperformancemeasuresincluding:
RelativeconcentrationoftheindustryclusterThismeasureshowspecializedanindustryclusterisin
Iowarelativetothenation,andsogaugescompetitiveadvantagefortheindustryclusterinIowa
relativetothenation.Thespecificmeasurementofrelativeconcentrationisknownasalocation
quotient.AlocationquotientistheshareofIowasemploymentfoundinaparticularindustrycluster
dividedbytheshareoftotalindustryemploymentinthatindustryclusterforthenation.Alocation
quotientgreaterthan1.0indicatesahigherrelativeconcentration,whereasalocationquotientofless
than1.0signifiesarelativeunderrepresentation.Alocationquotientgreaterthanorequalto1.20
denotesemploymentconcentrationsignificantlyabovethenationalaverage,andisconsidered
specialized.
JobgenerationfortheindustryclusterAstraightforwardmeasureofwhetheranindustryclusteris
growingiswhetherithasbeengainingorlosingjobsinIowa.
RelativegrowthoftheindustryclusterAmeasureofwhetheranindustryclusterinIowaisgainingor
losingcompetitivesharecomparedtothenation.Itismeasuredasthedifferencebetweenthe
percentagechangeinemploymentinanindustryclusterinIowaminusthepercentagechangein
employmentinthatsameindustryclusterforthenation.
ProductivityComparingthelevelofproductivityofindustryclustersinIowatotheirnationallevel
providesinsightsintowhetherthestatesindustryclusterismoreorlessproductive,andtherefore
moreorlesscompetitive.HigherlevelsofproductivityinIowacomparedtonationallevelsmeanthat,
foreachjob,moreeconomicoutputisgenerated;thissuggeststhattheIowaindustryclusterisbetter
abletomakeuseofadvancesintechnologytoproducegoodsandservicesandisabletoproducemore
complex,highervalueproducts.Productivityismeasuredasthelevelofeconomicoutputperjob.
HighskilledjobscomparedtothenationalaverageThisisadirectmeasureofthequalityofjobs
offeredbyanindustrycluster.Bothhighskilledandmiddleskilledjobsareconsideredsinceeach
requiresmoretrainingand/oreducationthanfoundsimplyfromahighschooldegree.
|P a g e 25
AveragewagesoftheindustryclustercomparedtothenationAnothermeasurereflectingtheoverall
qualityofjobsfoundinIowasindustryclustersinIowaisaveragewagespaid.Averagewagelevelsare
measuredbytakingthetotalpayrollreportedbyemployersanddividingbythenumberofjobs.These
dataarereportedbyemployerstofederalandstateagencies.
Economicmultiplieroftheindustryclusterawaytoconsiderthebroadereconomicimpactofan
industryclusterseconomicactivityonIowaseconomy.Onecomponentoftheeconomicimpactofan
industryclusteristhepresenceofalocalsupplychainforthatindustry,oftenreferredtoasindirect"
impacts.Asecondcomponentisthelocalincomegeneratedbyaneconomicactivity.Businessespay
wagesandsalariestotheirworkers,whicharetranslatedintolocalpurchasesofproductsrangingfrom
housing,tomedicalcaretogroceries.Theselocalincomeeffectsaretermedinducedimpacts.Both
theindirectandinducedmultipliersforeachclusterwereestimatedusingtheIMPLANinputoutput
modeloftheinterindustrypurchasingandincomeeffectsthatoccuronthenationallevel.
ThekeyresultsofthisanalysisarepresentedinTable2attheendofthissection.Severalkeyfindings
standout:
Nineofthe12industryclustersrepresentindustryspecializationsinIowabasedonhavinga
significantlyhigherconcentrationofemploymentrelativetothenationalaverage.Thisreflects
thecompetitiveadvantagesthatIowaofferstheseindustryclustersrelativetothenationand
theirwellestablishedpresenceinIowa.
Eightofthe12industryclustershaveahigherlevelofproductivitycomparedtothatsame
industryclusternationally.ThissuggeststhatitisnotsimplyIowascentrallocationthatstands
outformanyindustriesanddrivesthestronglevelofindustryspecializationfoundinIowa,but
thatIowaoffersahighervalueaddedlocation.Competingonhighproductivityiscriticalin
todaysinnovationdriven,globaleconomy.Whatisparticularlyspecialabouttheindustry
clustersdrivingIowaseconomicgrowthishowextensivelytheyoutpacethenation,whilethe
averageproductivityacrossallprivatesectorindustriesinIowais90percentofthenation.
Eightofthe12industryclustersgeneratedeconomicmultipliersofmorethan$500,000for
everyadditional$1millioninoutputtheygenerate.Ledbyagricultureandfoodproduction,
whichhasanextensivefootprintacrossIowaanddeepsupplychain,therearemanyindustry
clustersinIowathathavesubstantialeconomicmultiplierimpactsonthestateseconomy.
Interestingly,theimportanceofhighwagescomesthrough,astheavionicsandcommunications
electronicsindustrycluster,withthehighestaverageannualwagesfortheindustryclustersin
Iowa,isalsoamongtheleadersineconomicimpactforthestate.
Nineofthe12industryclustersperformedbetterinjobchangesthantheU.S.averageforthat
industrycluster.ThisisanothersignthatIowasindustryclustersaremorecompetitivethanthe
nation.Butasoberingrealityisthatonlyfiveofthenineindustryclustersperformingbetter
thantheU.S.gainedjobsabovethe2007prerecessionlevel.Theotherfourindustries
outpacingtheU.S.jobgrowthfrom20072012,simplydeclinedlessinIowathanacrossthe
nation.
|P a g e 26
Still,Iowaisgenerallybehindthenationinthequalityofjobsitsindustryclustersgenerate
comparedtothosesameindustryclustersnationally.Intheshareofhighskilledworkersinthe
workforce,Iowaleadsthenationinonlyoneindustryclusterthebuildingandconstruction
productscluster.IowaisconsiderablyfarbehindtheU.S.averageshareofhighskilledworkers
5percentagepointsormoreinseveralindustryclusters,includinginformationservices,heavy
machinery,andtransportationandlogistics.Intheotherindustryclusters,Iowaiswithinoneto
twopercentagepointsofthenationalaverage.StillIowaslevelofaveragewagesislowerinall
industryclustersexceptthreeheavymachinery,buildingandconstructionproductsand
agricultureandfoodproduction.
Takentogether,therecentperformanceoftheindustryclustersdrivingIowaseconomyisquiterobust
andpositionsthestatetocontinuetoimprovethequalityofjobsacrosstheindustryclusters.
Intermsoffutureprospects,whilepastperformanceofIowasindustriesmatterinconsideringthe
prospectsforfuturegrowth,itisalsocriticaltoconsiderhowthenationalprospectsoftheindustry
clustersdrivingIowaseconomystand.TheU.S.BureauofLaborStatistics(BLS)preparesawell
respectedlongtermindustryemploymentprojectionofnationalaverageannualemploymentgrowth
overtenyearperiods.Thistenyear,longtermindustryemploymentforecastgeneratedbyBLShas
beenawidelyutilizedtoolforcareerguidance,educationalandtrainingprogramplanning,andstudying
longrangeemploymenttrends.Themostrecentperiodforwhichprojectionsareavailableisfor2012to
2022.
ThenewsforIowaonnationaljobsgrowthforitsindustryclustersisnotupbeat.Tenofthe12
industryclustersinIowaareexpectedtorecordaverageannualjobgrowthoverthe20122022
periodoflessthan1percentayearatthenationallevel(seeFigure7).Onlythegrowthofhealth
servicesisexpectedtobefastpaced,whilebuildingandconstructionproductsisexpectedtoexceedthe
nationalaveragegrowthfortheprivatesectoroverall.
ThechallengeforIowaistocontinuetooutpaceU.S.growthinitsindustryclustersintheyearsahead
togeneratestrongeconomicperformance.IfIowaweretogrowatthesenationallevelsfrom2012022
itwouldaddonlyslightlymorethan42,000jobsoverthenextdecade.Thisgainof42,000jobsacross
Iowasleadingindustryclustersislargelythepaceofgrowthoverthe20012012period,whichhadthe
mostsevereeconomicrecessionsincetheGreatDepression...sonotahighstandard.
Still,ifIowacanoutpaceU.S.growthacrossitsleadingindustryclustersatthesamehigherrateasitdid
overthe20012012period,itwouldbeexpectedtorecordatotaljobgainacrossitsleadingindustry
clustersofmorethan78,000sonearlydoubleitsexpectedlevelofgrowth(seeFigure8).
|P a g e 27
Figure7: NationalEmploymentProjectionsforIowasIndustryClusters,Average
AnnualJobGrowthfor20122022.
Source:BattelleanalysisofBLS,IndustryEmploymentProjections.
Figure8: NationalEmploymentProjectionsforIowasIndustryClusters,
AverageAnnualJobGrowthfor20122022.
|P a g e 28
TheimplicationsforIowaaresignificant.Iowamustsetitseconomicdevelopmentfocusonexceeding
thegrowthlevelsexpectednationally.Itcandothisbypursuingtwospecificobjectivesinadvancingthe
competitivenessofitsindustryclusters:
Oneobjectiveforhighergrowthistomaintainthemoresubstantialcompetitivenessofits
existingindustryclustersthroughmaintainingandgrowingIowashigherproductivitywithin
theseindustries.Thiswillnotbeeasyaseachoftheexistingindustryclustersareexpectedto
generatehigheroutputperemployeeby2022inthenationalBLSforecastssoIowahasto
increaseitsownpaceofgrowthinproductivitytooutperformtheU.S.
TheotherobjectiveforIowaistorealizeitspotentialingrowingandemergingmarketsforeach
ofitsleadingindustryclusters.ThisrequiresaforwardlookingassessmentthatconsidersIowas
currentandemergingstrengthsacrossdetailedproductmarkets,aswellasanassessmentof
coretechnologycompetenciesidentifiedinIowa,andhowthatalignswithpotentialgrowth
marketsineachindustrycluster(seeFigure9).ItistheseopportunitiesthatdifferentiateIowa
andestablishaplatformfromwhichIowacancompeteonanationalandevenglobalscale.A
highlevelassessmentofthelineofsighttogrowthopportunitiesispresentedinAppendixA.
Figure9: IdentifyingIowasGrowthOpportunitiesbasedonTargetProduct
MarketsandStateCore.
|P a g e 29
Table2: SummaryofResultsofAnalysisofEconomicPerformanceofKeyIndustryClusters.
Higher Share of Presence of

Industry Gained Large Economic High-skilled Higher Average Active in Patent Higher Productivity Emerging
Industry Cluster Specialization Jobs, 200712 Multiplier Workers than U.S. Wages than U.S. Generation Than U.S. Innovation Firms
Agriculture & Food

Production
Automation & Industrial

Machinery
Avionics & Comm.

Electronics

Biosciences
Building & Construction

Products
Health Services

Heavy Machinery
Info Svcs, Digital Media

& Tech
Insurance & Finance
Primary Metals
Manufacturing
Renewable Energy
Transp., Distribution, &

Logistics
|P a g e 30
Higher Share of Presence of
Industry Gained Large Economic High-skilled Higher Average Active in Patent Higher Productivity Emerging
Industry Cluster Specialization Jobs, 200712 Multiplier Workers than U.S. Wages than U.S. Generation Than U.S. Innovation Firms
Location Quotient of Number of Jobs Greater than Based on Iowa and Based on Iowa and More than 100 Based on Iowa and Based on having
Iowa industry Greater in 2012 $500,000 U.S. concentration U.S. total payroll by patents from 2009 U.S. total industry 10 or more
employment than 2007 impact for of employment in industry cluster to 2013 cluster output emerging
concentration every $1
high-skilled divided by total divided by total innovation firms as
relative to U.S. million
industry increase in occupations by industry employment industry identified from
employment direct industry cluster for for 2012 employment, 2012 venture capital,
Measurement concentration > 1.2 economic 2013 federal small
for 2012 activity, 2012 business
innovation
research and state
innovation (Demo
Fund, etc.) awards
|P a g e 31
KEYFINDINGSONIOWASECONOMICFOUNDATIONS
KEYFINDINGS:SKILLEDWORKFORCEDEVELOPMENT&BROADERPOPULATIONDYNAMICS
ThestellarperformanceofIowaingrowingmiddleskilledandhighskilledjobsisastrongreflectionon
howwelltheoveralleconomyhasperformedinrecentyears,despitethesevereeconomicrecession
andweakeconomicrecovery.Amoredetailedexaminationsuggeststhatthestronggainsarefound
acrossawidenumberofoccupationsatboththemiddleskillandhigherskilllevels(seetextbox).
Stillsurveysof395corporateexecutivesfromthetwelveindustryclustersreportsignificantconcerns
regardingworkforceavailabilityinIowabasedontheSynchronistsurveyfortheBusinessExpansionand
StrategicTrends(BEST)trackingeffortbyIowaseconomicdevelopmentcommunity.Acrossthetwelve
industryclusters,twooutofeverythreecompaniessurveyedareexperiencingrecruitmentproblems.
Furthermore,whilecorporateexecutivesinthetwelveindustryclustersrateworkforceproductivityata
healthy5.5outofascaleof1(low)to7(high),workforceavailabilityslipstoaratingofonly4.2and
workforcequalitytoaratingof4.8.Nationally,theaverageworkforceavailabilityratingis4.9,
suggestingjusthowmuchtighterlabormarketconditionsareinIowa.
ThispersistentconcernofemployersontheavailabilityofqualifiedworkerswasheardbyBattelleinits
fieldworkacrossthestate.ItsuggeststhatIowascurrenteconomicpotentialisbeingheldbackby
shortagesofqualifiedworkforce.EmployersintheSynchronistsurveyscommonlyidentifythefollowing
middleandhighskilledoccupationsinhighdemandwithtalentshortagesinthestate:information
technologyprofessionals,particularlyinsoftwareengineering,webdevelopment,andprogramming;
engineers;seniormanagement/executiveleveltalent;welders;andCNCmachinists.
IowaWorkforceDevelopment(IWD)conductsannualemployersurveystounderstandvacanciesand
workforceneeds.InauniqueHiringDemandIndexmetricdevelopedbyIWD,theyadjustvacancyrates
foremployeeturnovertobetterunderstandoccupationsinhighdemand.Thisindexidentifiesanumber
ofbroadhighandmiddleskilledoccupationalgroupswiththehighestunmetneedsforworkers
includingarchitectureandengineering;computerscience;personalcare;healthcaresupport;and
productionoccupations.13
ThekeyquestionishowwellisIowageneratingandattractingtheworkforcetomeetindustrydemand.
ThedatasuggestamixedpictureofIowasstandingovertime:
Iowabeganthe21stCenturyaheadofthenationinmiddleskilledlevelsofeducationinvolving
somecollegeandassociatedegreesofitsworkforce(forthepopulation25yearsandolder),but
behindthenationineducationalattainmentforhigherskilledjobsinvolvingbachelorsand
graduatedegrees.
13
IowaWorkforceDevelopment,WorkforceNeedsAssessment,April2013.
|P a g e 32
IOWASSKILLEDWORKFORCEMAKINGSIGNIFICANTGAINS
Iowassuccessesincreatingandfillingsignificantjobsforitsskilledworkersarewelloutpacingthenationalaverage,
asestablishedearlierinthisreport.Further,thesejobgainsinmiddleandhighskilledoccupationsarenotjust
amongahandfulofjobcategories,butareimpressiveintherangeofoccupationalgroupsandskillsetsthatare
demonstratinghighgrowthgrowinginIowaandoutpacingnationalgrowthratesoverthepastdecade(seeTable3
below).
Sowhatisconsideredamiddleorhighskilledjob?Battelleusesanapproachforidentifyingoccupationalskilllevels
basedonfederalclassificationsofminimumeducationalattainmentlevelsrequiredforentryintoindividual
occupationsandoccupationalgroups.
Middleskilledoccupations:Requiringsignificanteducation,experience,and/ortrainingbeyondhighschoolbutless
thanabachelors,*includes:
HighSchoolDiploma+ModeratetoLongTermOnthejobTraining
HighSchoolDiploma+Apprenticeship
Postsecondarynondegreeaward
SomeCollege,nodegree
AssociatesDegree
HighSkilledOccupations:Generallyrequiringbachelors&higherdegrees
Table3: MiddleandHighSkilledOccupationsandJobGrowthRelativetotheU.S.,20042013.
HighSkilledOccupationalGroups MiddleSkilledOccupationalGroups
IAGrowth IAGrowth
ExceedingU.S., ExceedingU.S.,
Occupations 200413 Occupations 200413
PhysicalScientists LegalSupport
LifeScientists HealthcareSupport
PostsecondaryTeachers OtherEducation,Training,&Library
HealthDiagnosing&Treating Sales
LifeScienceTechnicians Transportation&MaterialMoving
ComputerRelated Installation,Maintenance,&Repair
EngineeringTechnicians Arts,Design,&Entertainment
Management PersonalCare&Service
Arts,Design,&Entertainment HealthTechnologists&Technicians
Community&SocialServices HealthDiagnosing&Treating
Engineers Production
OtherHealthRelated Drafters&MappingTechnicians
K12Teachers ProtectiveService
Business&FinancialOperations Office&AdministrativeSupport
SocialScientists Construction&Extraction
Medical&ClinicalLabTechnicians
MathScience
PersonalCare&Service
Sales
OtherEducation,Training,&Library
Source:BattelleanalysisofBureauofLaborStatistics,OccupationalEmploymentStatisticsData;datashownfor
skilledgroupswithatleast1000jobs.
*Note:Battelletakesamorerefinedorfocusedapproachtoidentifyingmiddleskilledworkersbyrequiringthatthose
jobsrequiringaHighSchooldiplomaonlyhaveatleastarequirementforanapprenticeshipand/ormoderateorlong
termonthejobtraining;thosejobsrequiringaHighSchooldiplomaandshorttermtrainingonlyhavebeen
designatedaslowskilled.Thisisamorestringentrequirementthanthatusedinmanyanalysesofthemiddleskilled
workforce.
|P a g e 33
Overthelastdecade,Iowahasgenerallyraisedthelevelofeducationalattainmentofits
workforce,butcontinuedthispatternofoutpacingthenationingrowthinmiddleskilllevelsof
educationalattainmentandslightlylaggingthenationinthegrowthofhigherskilledbachelors
andgraduatedegreeholdersintheworkforce.
Theresultisthatby2012,Iowasoverallworkforceremainsstrongatmiddleskillededucationlevels
involvingsomecollegetoassociatedegrees,butcontinuingtofallfurtherbehindthenationinhigher
skillededucationlevels(seeFigure10).
Figure10:EducationalAttainmentofthePopulationAges25andOver,2012.
Source:U.S.CensusBureau,AmericanCommunitySurvey.
AcriticalfactorinthegenerationofaskilledworkforceishowwellIowaseducationalsystemisdoingin
generatinggraduates,especiallyforworkersinscience,technology,engineeringandmathskills,often
referredtoasSTEMfields.Iowahasmadesignificant,stronggainsinitsSTEMrelateddegree
graduates(up31percentsince2009,seeTable4).
|P a g e 34
Table4: STEMrelatedPostsecondaryDegreeGraduatesfromIowaInstitutions,20092012.
Changein Changein
STEMrelated STEMrelated Numberof STEMShareof
Degrees,2009 Degrees,2012 STEM AllDegrees,
Shareof Shareof related 20092012
#of All #of All Degrees, (Percentage
InstitutionType Degrees Degrees Degrees Degrees 200912 Points)
IowaTotal 6,172 100% 8,057 100% 31% 2.2%pts.
CommunityColleges 802 13% 872 11% 9% 1.0%pts.
PrivateColleges 2,212 36% 3,278 41% 48% 2.3%pts.
PublicUniversities 3,158 51% 3,907 48% 24% 1.3%pts.
Note:IncludesAssociatesdegreesandabove.Degreefieldsinclude:computerandinformationsciences;
engineeringandengineeringtechnology;biologicalsciences;physicalsciences;agriculturalsciences;mathand
statistics.
Source:BattelleanalysisofNationalCenterforEducationStatistics,IPEDSdatabase.
Againstthecomparisonstates,IowasgainsinSTEMrelatedgraduatesstandoutasoutstanding.The
growthiswellaheadofthenationalaverageof22percentandranksfirstamongthebenchmarkstates
whichaveraged20percentdegreegrowthsince2009(seeTable5).Still,thereisroomforimprovement
sincedespitethisstronggrowthinSTEMrelateddegreegenerationacrossIowaspostsecondary
institutions,IowaiswellbelowthenationalaverageintheshareoftotaldegreesawardedinSTEM
relatedfields.Iowahadonly10.1percentofitspostsecondarydegreesawardedintheseSTEMrelated
fieldscomparedtothenationalaverageof14.8percent.ThislevelrankedIowalastamongthe
benchmarkstates.
Table5: PostsecondarySTEMrelatedDegreeMetricsforIowavs.U.S.andKeyComparison
States.
IARankingvs.14
ComparisonStates
Measure Definition Iowa U.S. (1stto15th)
PercentofTotalDegrees
Postsecondary 10.1% 14.8% 15th
Awarded,2012
STEMrelated
ChangeinSTEMrelatedDegrees,
Degrees 31% 22% 1st
200912
BenchmarkStatesInclude:IL,IN,MI,MN,MO,NE,NC,ND,OH,OK,SC,SD,TX,WI.
Source:BattelleanalysisofNationalCenterforEducationStatistics,IPEDSdatabase.
AttheK12levelofstudentachievement,IowaremainsslightlyhigherthantheU.S.initsscoresfor
mathandscienceintheNationalAssessmentofEducationalProgress,butranksonlymiddlingcompared
tothebenchmarkstates(seeTable6).BenchmarkstatesthatconsistentlyoutperformIowainclude
Minnesota,Wisconsin,Ohio,NorthDakotaandSouthDakota.
|P a g e 35
Table6: AchievementinMathandScienceforIowa8thGradersvs.U.S.andKeyComparison
States.
IARankingvs.14
ComparisonStates
NAEPTests,8thGradeMath,Avg.
285 283 9th
K12Student Score2011
Achievement NAEPTests,8thGradeScience,Avg.
157 151 6th
Score2011
Source:NationalCenterforEducationStatistics,NationalAssessmentofEducationalProgress.
Anotherfactorshapingskilledworkforceavailabilityistheabilitytoretainandattractworkers.Aclose
lookatrecentpopulationdynamicssuggestssomeglimmersofhopeinpopulationmigration,buteven
greaterconcernsonwhetherIowahasthepopulationgrowthtogenerateneededworkforceinfuture
generations.
Inrecentyears,Iowahashadapositivenetinmigrationfromotherstates,albeitonlysmallnumbers.
Iowaisdoingespeciallywellinattractingnetinmigrationofworkerswithabachelorsdegreeorhigher
(seeFigure11).Thislikelyreflectsthestronggrowthinhighskilledjobsasamagnetforpopulation
growth.
Figure11:DomesticInandOutMigrationofCollegeEducatedPopulationAges25
to54,2007to2012.

Source:BattelleanalysisofU.S.CensusBureau,AmericanCommunitySurvey.
|P a g e 36
Oneothersourceofpopulationmigrationisfromforeignimmigrants.From2000to2012Iowawell
outpacedthenationalgrowth,thoughfromasmallbasethatin2012stillremainswellbelowtheU.S.
average.ForeignimmigrantstoIowafallontheextremesofworkforceskilllevelswith32percentof
thoseforeignbornadultsinIowahavinglessthanahighschooleducationand14percenthavinga
graduateorprofessionaldegree.
ThetroublingissueforIowaisitspopulationgrowth(seeFigure12).From2000to2012,Iowagrewa
scant5.1percentinpopulationcomparedwith11.5percentfortheU.S.AcrossallagegroupsIowa
declined,butperhapsthemosttroublingisthenearlyflatgrowthinpopulationamongIowasyoungest
populationgroup,24andyoungerwhichgrewameager0.5percentfrom2001to2012.Growinga
youngpopulationdependsuponretainingandattractingfamiliestoIowawhichgiventhepresenceof
agoodqualityoflifeandgrowingmiddleandhighskilledjobswouldseemtobeachievableforIowa.
Figure12:PopulationChangesbyAge,IowaandU.S.,20002012.

Yet,tworegionsofthestateshowitispossibleforIowatogeneratehighlevelsofpopulationgrowth.
BoththeGreaterDesMoinesregionandtheGreaterCedarRapidsIowaCityregionhavenotonlygained
populationinallagegroups,butoutpacedthenationalaveragegainsrecordedfrom2000to2012(see
Figure13).
|P a g e 37
Figure13:PopulationChangesforIowasHighGrowthRegions,20002012.
Thecombinationofindustryconcernsaboutskilledworkforceavailabilityandthepopulationgrowth,
especiallyamongyoungresidentsnotyetintheworkforce,suggeststhatIowahasbothaneartermand
longertermproblemwithgeneratingtheneededskilledworkforce.Whiletherearepositivesignsin
attractingskilledworkerstoIowaandingeneratingmoreSTEMrelatedgraduates,thescaleofthese
positivetrendsneedstobesignificantlyraisedandthereisstillroomforimprovementforIowa.
|P a g e 38
KEYFINDINGS:INNOVATIONANDENTREPRENEURIALCULTURE
Themeasuresofperformanceforinnovationandentrepreneurialcultureinvolvethekeyelementsthat
drivecommercialization,startingfromtheresearchanddevelopmentactivitiesofindustry,universities,
federallabsandothersthatgenerateintellectualpropertytoprototypingandadvancingnewproduct
developmenttolaunchingnewproductsandnewbusinessstartups,andultimatelyleadingtostronger
industryclusterswithgrowingexistingbusinesses,fastgrowingnewbusinessesandattractionof
outsidebusinessinvestmenttobenefitfrominnovationandentrepreneurialcultureassets.Figure14
illustrateshowthisprocessunfoldsandconnectstogrowingindustryclusters.
Figure14:HowInnovationandEntrepreneurialCultureConnectwithGrowingIndustryClusters.
Inrecentyears,Iowahasmadestronggainsinindustryanduniversityresearchgrowth.Since2009,Iowa
hassubstantiallyoutpacedtheU.S.growthinbothindustryanduniversityresearchanddevelopment
expenditures,leadingallofthebenchmarkstatesaswell.Inthetotalamountofindustryanduniversity
R&Dexpenditures,relativetothesizeofthestateseconomy,Iowastandswellabovethenational
averageinuniversityresearchactivities(seeTable7),buthastomakeupsomegroundtoraiseits
industryR&Dexpenditurestonationallevels.TherecentstronggrowthinindustryR&Dreinforcesthe
importanceofhavingaspartofthestatesHighQualityJobsProgramthesupplementalincreaseinR&D
taxcredits.
Table7: IowasStandinginGrowthandRelativeLevelofIndustryandUniversityR&DActivitiesvs.U.S.
andKeyComparisonStates.
IARankingvs.14
ComparisonStates
Expendituresper$10MGSP,2011 $151,801 $188,932 8th
IndustrialR&D
PercentChange,200911 52% 31% 1st
Expendituresper$10MGSP,2012 $45,828 $40,075 5th
UniversityR&D
PercentChange,200912 24% 14% 1st
SourceNotes:IndustrialR&DNationalScienceFoundation(NSF)BusinessR&DandInnovationSurvey.University
R&DNSFSurveyofR&DExpendituresatUniversitiesandColleges.
|P a g e 39
GiventhestrengthofIowainitsuniversityresearchanddevelopmentactivities,thisisclearlyanarea
whereIowacanreapasignificantadvantageifitcaneffectivelycommercializethatuniversityresearch
activity.TheoverallstatewidetotalsintechnologytransferfromIowastotaluniversityresearchbaseof
$784millionin2012aresizablewith216disclosures,160patentapplications,73licensesandoptions
executed,5startupsandlicensingincomeofmorethan$17million.EachofIowasresearchuniversities
canalsopointtospecificsuccessstoriesandgoodperformanceonindividualmetrics.ComparingIowa
asastatetootherMidwesternstates(seeTable8),normalizingforthesizeofeachstatesresearch
base,Iowaisnotthebest,norisittheworstonmostmeasures,exceptforonenoticeableoutcome
measureoftechnologytransferstartupbusinessesleveragingpatenteduniversitytechnologies.
Table8: IowasStandinginStatewideTechnologyTransferPerformanceAcrossAllResearch
Universities,ComparedtootherMidwesternStates,NormalizedbySizeofState
UniversityResearchBase,2012.
Activityper$10MofUniversityResearchConducted
Patent U.S. Licenses/ License
Disclosures Startups Applications Patents Options Income,Gross
State Received Initiated TotalFiled Issued Executed Received
IA 2.75 0.06 2.04 0.61 0.93 $221,164
IL 3.37 0.10 3.50 1.00 0.76 $758,190
IN 5.02 0.18 6.03 0.60 1.01 $97,423
MI 2.87 0.08 2.43 0.74 0.82 $87,544
MN 3.78 0.14 1.89 0.69 0.88 $537,236
MO 3.23 0.12 2.28 0.58 1.20 $127,189
ND 3.69 0.07 2.73 0.96 5.17 $157,441
NE 6.71 0.20 4.08 0.71 1.47 $241,168
OH 4.42 0.12 3.41 0.59 0.56 $97,471
SD 9.78 0.00 2.98 0.14 0.71 $519,992
WI 3.25 0.04 2.16 1.18 0.55 $296,753
Source:AssociationofUniversityTechnologyManagers,LicensingActivitySurvey.
HoldingbackuniversityeffortsincommercializingitstechnologyisthelaggingperformanceofIowain
newbusinessstartupactivity.Frommeasuresofentrepreneurialactivityinthepopulationtonew
companybirthratestojobcreationbynewbusinessestothepresenceoffastgrowingprivate
companies,Iowaiswelloffthenationalpaceandcomparespoorlytothebenchmarkstates(seeTable
9).WhilemuchworkhasbeendonetoadvanceIowasinnovationandentrepreneurialcultureacross
Iowasregions,universitiesandstateeconomicdevelopmenteffortsoverthepast10to15years,and
individualprogramresultsarepromising,theresultsareclearthatatthescaleofthestateseconomy
theimperativeforcontinuingtoadvanceIowasentrepreneurialcultureandsupportsystemsiscritical.
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Table9: IowasStandinginStatewideEntrepreneurialandNewCompanyFormationandGrowth
Measuresvs.U.S.andKeyComparisonStates.
IARankingvs.14
ComparisonStates
KauffmanFoundationsIndexof
Entrepreneurial EntrepreneurialActivity,
110 280 15th
Activity EntrepreneursPer100,000
Population,2013
AverageAnnualRateofNew
NewCompany BusinessEstablishmentFormation
8.4% 10.4% 13th
BirthRate asaPercentofAllEstablishments,
20072011
JobCreationby AverageAnnualJobCreationfrom
NewCompany NewBusinessEstablishments, 3.6jobs 5jobs 14th
Births 20072011
NumberofCompaniesontheInc.
PresenceofFast
5000ListofFastestGrowingPrivate 28 n/a 12th
GrowthCompanies
Companies,2013
Sources:EntrepreneurialActivityKauffmanFoundation;NewCompanyBirthRateandJobCreationbyNewBirths
U.S.CensusofBusinessDynamics;HighGrowthCompaniesInc.Magazine.
AssociatedwithIowaslowstatewidestandinginentrepreneurialmeasuresisitsweakperformancein
attractingsourcesofinnovationcapital.IowaiswellofftheU.S.levelofventurecapitalfunding
relativetothesizeofthestateseconomy,andrankspoorlycomparedwithotherbenchmarkstates(see
Table10).EveninattractingfederalSmallBusinessInnovationResearchgrants,whichsupport
technologydevelopmentandcommercializationeffortsofsmallbusinesses,IowaiswellofftheU.S.
averageperpopulationandrankslowamongthebenchmarkstates.TheonebrightspotforIowa
comparedtomanyotherbenchmarkstatesisthatitsscarcelevelsofventurecapitalaremore
concentratedintheseedandearlystage,whichiscrucialtohelpingtolaunchnewhighgrowthpotential
companies.Still,IowaiswellbelowtheU.S.averageinitsshareofventurecapitalfundinggoingtoseed
andearlystagefunding.
Consideringthepatternofinnovationactivitiesacrosstheindustryclusterssuggeststhatwhilethose
withahighshareofcompaniesengagedinresearchanddevelopmentandhavingapresenceof
emerginginnovationcompaniesisconcentratedinjustafewindustryclusters,thattheintroductionof
newproductsisafocusacrossnearlyalloftheindustryclusters(seeTable11).Socontinuingtofocuson
innovationandentrepreneurialcultureisaneedacrossalloftheindustryclusters.
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Table10: IowasStandinginStatewideLevelsofInnovationCapitalvs.U.S.andKeyComparison
States.
IARankingvs.14
ComparisonStates
VCInvestmentsper$10MGSP,
$19,825 $200,459 13th
2007Q3:2013
VentureCapital
VCInvestmentsinSeed&Early
Investments
StageCompaniesasaShareof 12% 18% 6th
Total,2007Q3:2013
FederalSBIR SBIRAwardsper10,000
$18,885 $72,343 14th
Awards population,Avg.20092012
Sources:VCBattelleanalysisofThomsonReutersThomsonOnedatabase.SBIRAwardsBattelleanalysisof
SmallBusinessInnovationResearch(SBIR)Federaldatabase(sbir.gov).
Table11: InnovationActivitiesofIowasIndustryClusters.
Synchronist: Presenceof Synchronist:Anticipated
Conducting Emerging NewProduct
IowaIndustryCluster R&DActivity* Companies** Development***
Agriculture&FoodProduction 52% 11 76%
Automation&IndustrialMachinery 53% 16 74%
Avionics&Communications
33% 8 73%
Electronics
Biosciences&HealthServices 57% 40 80%
Building&ConstructionProducts 37% 2 69%
HeavyMachinery 57% 8 60%
InformationServices,DigitalMedia
62% 40 89%
&Technology
Insurance&Finance 16% 2 64%
PrimaryMetalsManufacturing n/a 7 n/a
RenewableEnergy n/a 14 n/a
Transportation,Distribution,&
33% 0 65%
Logistics
Source:BattelleanalysisofSynchronistSiteVisitResponsesforIowaEstablishments.
*BattellecalculationfromSynchronistQuestiononwhethercompaniesconductR&D.
**BasedonBattelleidentificationofemerginginnovationcompaniesreceivingVCfunding,SBIRfundingorState
Demo/Accelerationfunding.
***SynchronistQuestion:Arenewproducts/servicesanticipatedinnexttwoyears?Sharerespondingyes
noted.

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KEYFINDINGS:PHYSICALINFRASTRUCTURE
ThetwoprincipalareasofconcernregardingIowasphysicalinfrastructureforeconomicdevelopment
aretheconditionofitsfreighttransportationsystemanditsbroadbandcommunicationsinfrastructure.
Infreighttransportation,Iowahasawelldevelopedsystem,withasignificantpresenceofinterstate
highwaysandsignificantrailaccessacrossthestate.Iowaparticularlystandsoutinitsstrongpresence
ofrailmilesandnumberofClass1railcarriers,andisslightlyaheadofthenationinpresenceof
interstatemilesgiventhesizeofthestate(seeTable12).Thisextensivenetworkforfreight
transportationisacriticalenablerforexportingIowasagriculturalandmanufacturinggoods,andhas
supportedthesizableandgrowingtransportation,distributionandlogisticsindustryclusterinthestate,
whichreachedanemploymentlevelinIowaof108,418jobsin2012.
Table12: IowasStandinginFreightTransportationSystemvs.U.S.andKeyComparisonStates.
IARankingvs.14
ComparisonStates
InterstateMilesper1,000sq.miles,
HighwayAccess 14.0 13.3 8th
2012
RailMilespersq.mile,2011 69 39 5th
RailAccess NumberofRailCarriers(Class
5/15 7/566 n/a
1/Total),2011
Sources: HighwayAccessU.S.DepartmentofTransportation,FederalHighwayAdministration.RailAccess
AssociationofAmericanRailroads.
DespiteIowaswelldevelopedfreighttransportationsystem,theSynchronistsurveyofindustry
executivesrevealsfrequentconcernaboutneedforhighwayimprovements.Itwasratedasoneofthe
mostseriouseconomicdevelopmentweaknessesfoundinIowa,justbehindtheavailabilityofskilled
workforce.Furthermore,theAmericanSocietyofCivilEngineersintheir2013reportcardforAmericas
infrastructurefoundthat46percentofIowasmajorroadsareinpoorormediocreconditioncompared
to32percentnationallyand21percentofIowasbridgesareconsideredstructurallydeficientcompared
to11percentnationally,basedondatafromtheU.S.FederalHighwayAdministration.
Turningtobroadbandadoptionandinfrastructurecapabilities,Iowacontinuestomakegainsin
adoptionofbroadbandbothforbusinessesandhomesacrossthestate.Recentsurveyresultsof
residentsandbusinessesbyConnectIowaprovideacurrentandindepthperspectiveonIowas
situation,whichisessentialinthisfastmovingarenaofbroadbandinfrastructure.Forbusinessesin
Iowa,broadbandadoptionhasincreasedfrom72percentin2010to81percentin2014.Forhomesin
Iowa,broadbandadoptionhasincreasedfrom66percentin2010to76percentin2013whichison
parwithnationalaverages.
Still,therearesignificantconcernsaboutthespeedandreliabilityofIowasbroadbandconnections.
ForbusinessesinIowathatusebroadband,themostfrequentlyusedaccessisthroughsloweraccess
DSLservice,involving38percentofIowasbusinesses.Bycontrast,only19percentofIowasbusinesses
|P a g e 43
accesstheirbroadbandfromfastfiberopticconnections.Thirtyonepercentofbusinessessurveyed
13,000businessesinallthatwanthigherbroadbandspeedscannotgetitattheircurrentlocations.
Evenmoredisconcertingisthatonly21percentofIowabusinesseshaveredundantservices,making
theirbusinessoperationsvulnerabletostoppagesduetodowntimeinservice.AmongIowashomes,
fastinternetspeedsof50to100mbpsfailtoreach29percentto40percentofIowahomesin2014.Ina
2012ConnectedNationreportonbroadbandreadiness,85IowacountiesreceivedagradeofCor
below,meaningthatlessthan70percentofthehouseholdscouldaccessspeedsof3mbpsin
downloading.
Businessleadershaveexpressedconcernsabouttheavailabilityofstateeconomicdevelopmentfunding
andincentivestotargetthebuildoutofbroadbandcapacitytoservetheexistingbusinessbaseofIowa.
Issuesfromincreasedbroadbandaccesspointstolastmileconnectionstoredundancyandreliabilityof
servicetoptheconcerns,notonlyforruralareasofIowawheremanyhighlyconnectedbusinessesare
located,butforIowaslargercitiesaswell.
Athirdareaofphysicalinfrastructureconcern,basedonBattellessitevisitstoIowassmaller
communities,aroserelatingtotheneedformorelivablecommunitiesforretainingandattracting
youngfamilies.Whileitisdifficulttoassemblestatewidedataonthisissue,economicdevelopment
stakeholdersinthemanysmallercommunitiesthatBattellevisitedexpressedconcernsthatdespitethe
availabilityofjobs,Iowassmallercommunitieswerenotabletoretainandattractyoungfamilies.These
economicdevelopmentstakeholderspointtothelackofquality,affordablehousingandamenities,such
asfamilyorientedservicesanddestinationretailservices,asholdingbacktheattractivenessofthese
communitiestoworkersandtheirfamilies.
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KEYFINDINGS:BUSINESSCLIMATE
Arangeoffactorscontributetoindustryperceptionsofastatesbusinessclimate.Someinindustrylook
solelytothegovernmentsapproachtotaxationorthecostofdoingbusiness,whileothersmayfocus
onregulationsthatdirectlyimpacttheirindustryorlineofbusiness,andstillothersmayformviews
basedonworkforceavailability,qualityoflife,oraccesstocapital.Thesefactorsandattitudesof
industryallcombinetoformhighstakesperceptionsregardingtheoverallbusinessclimate.
Intheanalysisandstatewidediscussionsconductedinthecourseofthisstrategiceffort,theoverall
businessclimatehasnotemergedasamajorconcernforIowa.Therehavebeen,however,certain
aspectsoftheclimateraisedasspecificchallenges,includingworkforceandtalentqualityandsupplyas
wellasphysicalinfrastructuredeficienciesthatleadtoasomewhatmixedsatisfactionarisingoutofthe
Synchronistsitevisitsanddiscussionswithstakeholders.Thesechallengesarebeingexaminedindepth
andaddressedasstrategicprioritiesforIowa,intheirownrespectivesectionsofthisreport.
TherankingsofcomprehensivestudiesonbusinessclimatesuchasfromCNBCandForbessuggest
Iowaisintheuppertierofstatesinitsbusinessclimate,withbothrankingIowa12thacrossallmeasures
ofbusinessclimate.Inparticular,Iowahasconsistentlyrankedamongthetop10statesforthecostof
doingbusinesswhichconsiderstaxburdensaswellasutilities,labor,andcommercialrealestatecosts;
andforbeingbusinessfriendly,ametricwhichassessestheregulatoryframeworkandlegal
environmentforbusiness.Still,itisimportanttonotethatIowareceivesmoremiddlingorlaggingmarks
foritsworkforce,infrastructure,technologyandinnovation,andaccesstocapitalallareasinwhich
thisstrategiceffortisaddressingthroughdistinctstrategiesandactions.PlusintheareaoftaxestheTax
FoundationratesIowaas40thinthenationoverallinits2014StateBusinessTaxClimateIndex,and49th
initscorporatetaxsubindex.ThestructureandratesofIowascorporateincometaxisthekeyreason
whyitfaressopoorlyonthecorporatetaxsubindex,sinceitaddscomplexityanduncertaintyon
businesstaxation.AseparatestudybyDeloitteConsultingLLPfortheIowaChamberAssociation
calculatedataxcomplexitymeasurebasedontaxstructureandratesacrossmajorstatetaxesand
foundthatIowawasamongthebottomtierofstates.Thisattributeoftaxcomplexitywasfoundtohave
amoderatecorrelationwithinvestmentandjobcreationmeasuresofeconomicdevelopmentsuccess,
socanimpactastatesbusinessclimate.
Justasindustriescompeteformarketshare,talent,andcapital,statesoperateinaverycompetitive
marketforbusinessattraction,retention,andexpansionandIowahasestablishedseveralkeypolicies
perceivedasbusinessfriendly,including:
Establishingasinglefactorcorporateincometaxbasedonlyontheshareoftotalsalesincome
withinthestate
Chargingnosalesorusetaxesonpurchasesofindustrialmachinery,equipment,andcomputers
usedformanufacturinginIowa
BolsteringinnovationbyofferingarefundableR&Dtaxcredit
Enactingrighttoworklegislationlimitingcollectivebargaining
Establishingarangeofeconomicdevelopmentprogramsofferingtaxcreditsandother
incentivesforworkforcetraininganddevelopment,forexpandingemploymentinhighquality
jobs,orforinnovativeproductdevelopment.
|P a g e 45
WhileobjectivemeasuresplaceIowaamongthetoptierswithrespecttobusinessclimate,Iowa
employersreportmixedsatisfactionwiththebusinessclimateinrecentsitevisitsandsurveys.Inthe
Synchronistsitevisitinformation(seeTable13),Iowabusinessexecutivesintheleadingindustry
clustersthatdrivethestateseconomyreportahighsatisfactionwiththeoverallbusinessclimateand
qualityoflifeinIowa;however,amajorityareconcernedabouthighercostsofdoingbusiness.These
viewsofIowasbusinessexecutivesintheleadingindustryclustersarequiteconsistentwiththoseofall
businessexecutivesinthestate.
Table13: IowaIndustryClusterEmployerInsightsintoBusinessClimate
Factors,SynchronistSiteVisits,20112013.
Viewedas Viewedas
Themes&Topics Positive/Favorable Negative
BusinessClimate 60% 40%
CostofDoingBusiness 36% 64%
QualityofLife 80% 20%
Source: BattelleanalysisofSynchronistSiteVisitSurveys;responseslimitedhere
toindustryclustercompaniesonly.
Counteringtheseconcernsregardinghighercostofdoingbusinessarefactsregardingloweraverage
utilityrates.CommercialandindustrialutilityratesinIowaarenotonlywellbelowtheU.S.average,but
verycompetitiveacrossthe14keycomparisonstates(seeTable14).Iowaemployersmay,however,be
concernedabouttheoveralltaxburden,consideredtobeamongthehighestacrossallstates.
Table14: SelectedBusinessCostComponentsforIowavs.U.S.andKeyComparisonStates.
IARankingvs.14
ComparisonStates
UtilityRates* CommercialRates,Cents/kilowatt
8.01 10.09 3rd
hour,2012
IndustrialRates,Cents/kilowatthour,
5.30 6.67 2nd
2012
TaxClimate StateBusinessTaxClimateIndex,2014
(1=lowestburden) 40th n/a 12th
Sources: UtilityratesU.S.EnergyInformationAdministration(*lowerratesgetahigherranking);Tax
ClimateTaxFoundation.
Overall,Iowasbusinessclimateisviewedpositivelyinbothquantitativeandqualitativeassessments.
Thereremain,however,specificaspectsofdoingbusinessinIowathatareclearchallengesandare
addressedasstrategicprioritiesinthisroadmapforIowa.
|P a g e 46
STRATEGICPRIORITIESFORADVANCINGIOWASECONOMY
Atatimewhenmanystateandregionaleconomiesacrossthenationhavestruggled,Iowaoverthelast
decade,andevensincethesevererecessionof20082009,hasdemonstratedsignificanteconomic
strengthsingrowinghighqualityjobsandraisingaveragewagesandpercapitaincomebasedonthe
diverseandcompetitivebaseofleadingindustryclustersdrivingIowaseconomy.Whilethiseconomic
successiswellearned,Iowacannotaffordtobecomplacentaboutitseconomicdevelopmentprospects
goingforward.StrongfuturegrowthofIowasleadingindustryclustersisnotguaranteedandIowas
developmentresourcesneedtobestrengthenedtomeettherisingperformancebarbeingsetacross
thenationtocompeteintodaysglobal,knowledgebasedeconomy.
Thefollowingfourstrategicprioritiesarecriticallyimportantforseizingtheopportunitiesand
addressingthechallengesthatIowaconfrontsingeneratingahigherperformingeconomyableto
generatearisingstandardoflivingforIowansoverthenexttenyears.
StrategicPriorityOne:BuildontheCompetitivenessandGrowthofIowasIndustryClustersthrough
Innovation,RetentionandAttraction.DespiteIowasleadingindustryclustersoutperformingthenation
intheirlevelofspecialization,jobgrowthandproductivity,thereareconcernslookingforward.Withthe
fastpaceoftechnologicalchangeandincreasedglobalcompetitionforhighvalue,highskilled
production,theperformancebarformaintainingindustrycompetitivenessisconstantlyontherisein
todaysglobal,knowledgebasedeconomy.MorespecificforIowaisthatitsmixofleadingindustry
clustersdrivingitseconomyarenotexpectedatthenationalleveltobestrongjobgeneratorsoverthe
nexttenyears.Tenofthe12industryclustersinIowaareexpectedtorecordaverageannualjobgrowth
overthe20122022periodoflessthan1percentayearatthenationallevel.SoforIowatogenerate
strongeconomicgrowthintheyearsaheaditwillbechallengedtocontinuetooutpaceU.S.growthin
itsleadingindustryclustersbycontinuingtoraiseproductivityandpursuehighgrowthmarket
opportunitieswherethereisalineofsighttoIowasexistingandemergingcorecompetenciesand
specificindustrystrengths.
StrategicPriorityTwo:GenerateandAttractSkilledWorkforceinDemandbyIowasBusinesses.In
todaysglobal,knowledgebasedeconomy,statesandtheirlocalcommunitiesareincreasingly
competingbasedontheirabilitytoeducate,train,andrecruitaqualifiedworkforcethatmeetsthe
needsofindustry.EvenasmiddleandhighskilledjobsgrowinIowa,theavailabilityofaskilled
workforceisamajorareaofconcerntoIowabusinesses.CombinedwithIowasweakpopulation
growth,thisworkforceproblemislikelytoplagueIowaformanyyearstocome.Whiletherearepositive
signsinattractingskilledworkerstoIowaandingeneratingmoreSTEMrelatedgraduatesatthepost
secondarylevel,thescaleofthesepositivetrendsneedstobesignificantlyraisedandthereisstillroom
forimprovementforIowa.
StrategicPriorityThree:AcceleratetheDevelopmentofIowasEmergingEntrepreneurialEcoSystem.
Advancingastatesoverallpositionininnovationandentrepreneurialcultureismorelikeamarathon
thanasprint.Iowa,likemanystatesintheMidwest,hastheresearchandtechnologicalassetsnecessary
foradvancinginnovationintodaysknowledgebasedeconomy,butlacksthedeeprooted
|P a g e 47
entrepreneurialcultureandsupportsystemessentialtorealizingthegrowthpotentialoftechnology
basedstartups.
Inrecentyears,Iowahasmadestronggainsinindustryanduniversityresearchgrowth.Mostnotableis
thatthesizeofIowasuniversityresearchactivitiesiswellabovethenationalaverage,controllingfor
thesizeoftheeconomy.GiventhestrengthofIowainitsuniversityresearchanddevelopment
activities,thisisclearlyanareawhereIowacanreapasignificantadvantageifitcanmoreeffectively
commercializethatuniversityresearchactivity.Currently,Iowasuniversitytechnologytransferand
commercializationactivitiesaresizable,butthereisroomforimprovementevencomparedtoother
Midwesternstates.
HoldingbackuniversityeffortsincommercializingitstechnologyisthelaggingperformanceofIowas
overallentrepreneurialculture.Frommeasuresofentrepreneurialactivityinthepopulationtonew
companybirthratestojobcreationbynewbusinessestothepresenceoffastgrowingsmallcompanies,
Iowaiswelloffthenationalpaceandcomparespoorlytobenchmarkstates.Whilemuchworkhasbeen
donetoadvanceIowasinnovationandentrepreneurialcultureacrossIowasregions,universitiesand
stateeconomicdevelopmenteffortsoverthepast10to15years,andindividualprogramresultsare
promising,theresultsareclearthatatthescaleofthestateseconomytheimperativeforcontinuingto
advanceIowasentrepreneurialcultureandsupportsystemiscritical.
StrategicPriorityFour:AdvanceIowasPhysicalInfrastructureandRegionalDevelopmentCapacities
toRealizeIowasEconomicPotential.Physicalinfrastructureremainsaprerequisiteforeconomic
development.TheconditionofIowasfreighttransportationsystemandbroadbandcommunications
infrastructureisraisingsubstantialconcernsacrossthebusinesscommunityinIowa.Thedeclining
conditionofIowashighwaysandfalloffinavailablehighwayimprovementfundingthroughtheexisting
gastaxisnowamongthetopconcernsofindustryexecutivesacrossthestate.Atthesametime,
significantconcernsaboutthespeedandreliabilityofIowasbroadbandinfrastructurehavebeen
identifiedthatdirectlyimpactindustry.NearlyonethirdofIowabusinessessurveyedbyConnectIowa
13,000businessesinallwanthigherbroadbandspeedsthatcannotbesupportedattheircurrent
locations.Evenmoredisconcertingisthatonly21percentofIowabusinesseshaveredundant
broadbandservices,makingtheirbusinessoperationsvulnerabletostoppagesduetodowntimein
service.Andathirdphysicalinfrastructureconcernrelatingtotheneedformorelivablecommunitiesto
retainandtoattractyoungfamiliesisfrequentlynotedbyregionaleconomicdevelopmentstakeholders
acrossIowassmallercommunities.
|P a g e 48
FROMSTRATEGIESTOACTIONS
DetailedactionsareproposedtoaddressthestrategicprioritiescriticallyimportantforIowasfuture
economicprosperity.Indevelopingtheseactions,carefulconsiderationwastakentoidentifyspecific
gapsorenhancementsneededinIowascurrentmixofeconomicdevelopmentactivitiesacrossthe
strategicpriorities.Iowawasbenchmarkedagainstotherstatestoprovideinsightsintowhatworksand
howtoimplementsimilarprogramsandinitiativesinIowa.
Indevelopingtheactionplan,specifictacticswereidentifiedthatarehighlyachievableandcomplement
Iowasexistingeconomicdevelopmentactivities.Manyofthesetacticshavebenefitedfromongoing
discussionandanalysisinrecentyearsbyIowasmanyeconomicdevelopmentstakeholders.Nowa
consensusonhowtomoveforwardhasclearlybeenidentified.
Inadditiontotacticswhichrepresentspecificactionsthatcanbetakenintheshortterm,foreach
strategicprioritytherearestrategicdirectionsproposedwhichareintendedtoorientpolicymakers
towardthemostpromisinglongtermgoals,sotheycanalignfuturepoliciesaccordingly.
Figure15summarizestheproposedactionplanacrosseachofIowasstrategicprioritiesinvolvingtactics
andstrategicdirections.
Adiscussionoftheactionplanassociatedwitheachstrategicpriorityispresentedinthissection
explainingongoingexistingeffortsandhowtheactionsaddressspecificgapsandenhancements
needed,aswellasidentifyingleadingexamplesfromotherstatesandbestpracticeguidance.Amore
detaileddiscussionofthespecificsforeachoftherecommendedtacticsandstrategicdirectionsisset
outinaseparateAppendixtothisstrategy.
|P a g e 49
Figure15:SummaryofRecommendedTacticsandStrategicDirections
|P a g e 50
PROPOSEDACTIONPLANTOBUILDONTHECOMPETITIVENESSANDGROWTHOFIOWAS
INDUSTRYCLUSTERSTHROUGHINNOVATION,RETENTIONANDATTRACTION
SITUATIONALASSESSMENTOFIOWASECONOMICDEVELOPMENTPOSITION
ForIowatogeneratestrongeconomicgrowthintheyearsaheaditwillbechallengedtocontinueto
outpaceU.S.growthinitsleadingindustryclusters.Itcandothisbypursuingtwospecificobjectivesin
advancingthecompetitivenessofitsindustryclusters:
Oneobjectiveforhighergrowthistomaintainthemoresubstantialcompetitivenessofits
existingindustryclustersthroughmaintainingandgrowingIowashigherproductivitywithin
theseindustries.Thiswillnotbeeasyaseachoftheexistingindustryclustersisexpectedto
generatehigheroutputperemployeeby2022inthenationalBLSforecastssoIowahasto
increaseitsownpaceofgrowthinproductivitytooutperformtheU.S.
TheotherobjectiveforIowaistorealizeitspotentialinhighgrowth,emergingmarketsand
technologiesthatareexpectedtoarisewithinitsleadingindustryclusters.Havingaclearlineof
sighttogrowthopportunitiesforIowasleadingindustryclusterswillbecriticaltogiveIowas
economicprospectsamajorboostforward.
OnekeyadvantagethathasstrengthenedIowasabilitytocompeteistheretoolingofitstraditional
economicdevelopmentincentivestomeetthechallengesofintegratinginnovation,retentionand
attraction.Thestatesleadingbusinessretentionandattractionprogramofferingtaxcreditsanddirect
financialassistance,theHighQualityJobsProgram,alsooffersasupplementalR&Dtaxcreditalongwith
otherincentives,andisoftenpackagedwiththe260ECustomizedJobTrainingincentivesavailable
throughIowascommunitycollegestomeettheshorttermjobtrainingneedsforfirmsexpandingand
openingnewoperationsinIowa.ThismeansIowaisprovidingtheincentivesthatpositionitsleading
industryclusterstoadvanceinnovationtopursuenewmarketsandworkerskillstoraiseproductivity
andthedeploymentofadvancedtechnology.EconomicdevelopersacrossthestateviewtheHigh
QualityJobsProgramasaneffectiveattractiontoolforbusinessdevelopmentopportunitiesandasa
retentiontoolforexpandingIowafirms.
Acommonneedidentifiedbyeconomicdevelopersacrossthestateishavingadditionaldiscretionary
fundstoadvancemajorprojectsthatcanadvancespecificindustryclustersatthestateandregional
level.TheIowaEconomicDevelopmentAuthorityhasestablishedastrategicinfrastructurefundthat
seekstotappriorunusedeconomicdevelopmentappropriationsandothersourcesofincome
generatedbyprioreconomicdevelopmentactivities(includingthepastIowaValuesFund).Recent
legislativechangesnowfocusesthestrategicinfrastructurefundoncommonlyutilizedassetsacross
groupsoffirmstoadvanceeconomicdevelopment.Fromthemanydiscussionswithindustryleaders
andtheeconomicdevelopmentcommunity,manysuchopportunitiesexistatthestateandregional
leveltoadvancecommonlyusedassetsforindustryclusterdevelopmentsuchaspilotscaleupfacilities
andproductdevelopmentcenters,specializedmultitenantlabspace,improvedbroadbandcapacityand
intermodaltransportationneeds.Keyfindingsfromasurveyofotherstatesregardingtheenactment
anduseofastatediscretionaryfundforeconomicdevelopmentpreparedforKansasInc.foundthata
majorityofstateshavediscretionaryfunds,withatotalof30stateshavingdiscretionoveraneconomic
|P a g e 51
developmentfundbeyondstatutoryprograms,taxcreditsandgrantstheycompetitivelyoffered.14
BasedontheanalysisfromKansasInc.,anumberofbestpracticesemerged,includingenacting
extended,multiyearfundingsources,mandatingtimelyresponsefordecisionmaking,utilizingnon
generalfundsourcesandestablishinganoversightandannualreportingrequirement.
AnotherconcernvoicedconsistentlybyIowaseconomicdevelopmentcommunityisthatsmalland
mediumsizedIowamanufacturingfirmsneedassistancewithandaccesstomodernizationfinancing
andincentivestoimprovecompetitivenessandupscalejobs.Formanyofthesesmallandmidsized
manufacturingcompaniesitiscriticalforthemtomodernizeinordertostaycompetitiveandgrow
sales.Despiteimprovingacompanysoperationsandcompetitiveness,thesemodernizationeffortswill
oftennotleadtoincreasesinthesizeofthecompanysworkforceduetothegainsfromincreased
efficiencyandautomation.Thisresultofgrowingcompanysoperationsbutnottheirjobsplaces
modernizationbeyondthereachofmanyofIowaseconomicdevelopmentassistanceprogramsthatare
triggeredbyhavingjobcreation,evenifthecompanyisalsoretainingjobs.Theimportanceof
addressingmodernizationassistanceformanufacturingindustriesfacingsignificantglobalcompetition
andtheneedtomodernizetoraiseproductivityisbeingrecognizedbyanumberofstates.A2012
articleinSiteSelectionmagazinenotesanumberofstateshaveeithermodifiedexistingincentives
programsorcreatednewonestoaddressjobretention,includingMassachusetts,Illinois,Indiana,
Kentucky,NewJerseyandOhio.15
Iowaalsoneedstofocusonemerginggrowthopportunitiesthatbringtogethermultipleindustry
partnersandhighereducationinstitutionstopursuespecificactivitiesforinnovation,retentionand
attraction.WhatparticularlysetsIowaapartisthatitisfarmorethanjustafarmingstatein
agricultureofferinganadvancedindustrialandinnovationagriculturalcomplexacrossitsindustry
clustersandresearchassets.Iowascoretechnologystrengthsfoundinagbiosciencesareextensiveand
involvethedevelopmentofnewcropvarieties,protectionofcropsfromdiseaseandimprovinginsect
resistance,andbroadergenomicanalysisofplants,alongwithtechnologycompetenciesinindustrial
biotechnologyandchemicalprocessing.Iowahasopportunitiesinseveralemerginggrowthmarkets
relatedtoitsadvancedindustrialagbioeconomyfrombiobasedproductstoprecisionagriculture
developmenttoanimalhealth.Inaddition,thediverseindustryclustersfoundinIowa,combinedwith
existingandemergingresearchcompetenciesfoundacrossitsresearchuniversitiesandfederallabs,
alsooffersmanyotherhighgrowthmarketopportunitiesbeyondthestatesadvancedagbiocomplex.
Theseincludeeffortsinadvancedmaterials,advancedmanufacturingtechnologies,energyefficiency,
nextgenerationinformationanddataapplications,imagingandsensingtechnologies,andbiomedical
innovations,amongotheropportunities.Alreadynewinitiativesaretakingform,suchastheIowa
AdvancedManufacturingCenterandtheCultivationCorridor,thatseektoadvancetargeted
developmentinitiativesalignedwitheconomicgrowthopportunitiesforIowafocusedaroundmultiple
industryclustersanddrawinguponthecapabilitiesofIowashighereducationinstitutionsbutwithno
14
RichardCaplan&Associates,AnalysisofStateLevelEconomicDevelopmentContingencyFunds,preparedfor
KansasInc.,February2009.
15
BigginsandWeisfuse,PleaseDontGo:Stateincentivestoretainjobsevolvewiththetimes,butdefiningat
riskcanbetricky,SiteSelection,November2012.
|P a g e 52
formalizedapproachfromthestateseconomicdevelopmenteffortinhowbesttosupportandadvance
theseinitiatives.
PROPOSEDTACTICS:
CreateaninitiativetoassistIowamanufacturerstostayonthecuttingedgeoftheirindustry,
positioningthemtobegloballycompetitive.Thiswouldbeadedicatednewprogramefforttargetedto
SMEmanufacturingcompaniesthathaveanimprovementplanthatdocumentshowmodernization
effortswillleadtoquantifiableimprovementsoverbaselineoperationsandretentionofatleast85
percentofthecurrentworkforceforfiveyearswithnoreductioninbenefitsorwages.Thebenefitsfor
modernizingSMEmanufacturersshouldincludeaccesstolowinterestfinancingformachineryand
equipment,accelerateddepreciationforthemachineryandequipmentacquiredandautomatic
qualificationandpriorityaccessto260FIncumbentWorkerTrainingFunding.
IncreaseresourcesintheStrategicInfrastructureFundtoaddresscompetitiveindustrycluster
developmentneedsinacollectiveandcollaborativewayandtargetgrowthopportunitiesledby
industryconsortium.Thisnewtoolforaddressingindustryclusterdevelopmentneeds,inwhichthe
IowaInnovationCouncilplaysanimportantroleinreviewingproposeduses,shouldbeensureda
targetedleveloffundingofatleast$2millionannually.Iftargetedresourcesfromnoncurrentgeneral
fundsources,includingallloanandrepaymentsfrompasteconomicdevelopmentefforts,fallsshort,
thengeneralfundappropriationsshouldbeconsidered.
AddressIowasnoncompetitivetaxenvironmenttoreducethecomplexityofthesystemandsimplify
thestructureandrates.Asnotedearlier,Iowaranks49thinthenationintheTaxFoundationscorporate
taxsubindexduetothestructureandrateofitscorporateincometax.Withafourbracketcorporate
incometaxthattopsoutatanationleading12percent,itishardforcorporationstohavecertaintyin
theircorporatetaxes.Moreover,intaxcomplexityacrossmajorstatetaxes,Iowawasfoundtobe
amongthebottomtierofstatesinastudybyDeloitteConsultingLLPfortheIowaChamberAlliance.
DeloitteConsultingLLPusedthedatafromtheTaxFoundationtocreateameasureoftaxcomplexity.
TaxsimplificationinthestructureandratesoftaxesisakeysteptotaketoimproveIowaasa
destinationforjobcreatinginvestments.TheTaxFoundationreportsthattwentysevenstatesandthe
DistrictofColumbiahavesingleratecorporateincometaxsystems,whichisconsistentwiththesound
taxprinciplesofsimplicityandneutrality.Incontrasttotheindividualincometax,theTaxFoundation
arguesthereisnomeaningfulabilitytopayconceptincorporatetaxation.
PROPOSEDSTRATEGICDIRECTIONS:
Developfocusedpolicyinitiativesthatcapturethemostpromisingemerginggrowthopportunitiesfor
theindustryclusters.Iowashouldsupportthesetargeteddevelopmentinitiativesbybringingtogether
industryanduniversitiestopursuespecificactivitiesforinnovation,retentionandattractiontoposition
Iowaforgrowthintheseemergingopportunities.Theselectionoftargetedgrowthdevelopment
initiativesshouldbebasedonacompetitiveprocessthatevaluatesproposedactivitiesfromjoint
industryuniversityconsortiumapplicants.Amongthecriteriatobeconsideredshouldbe:theeconomic
growthpotentialoftheinitiativetocreatehighwagejobsinIowa;howtheinitiativewillprovidea
competitiveadvantageforIowa;thepotentialoftheinitiativetoleverageofprivateandfederalfunding;
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andhowtheproposedactivitiesaddressrealneedsforadvancingtheemergingopportunityinIowa.
LearningfrombestpracticesofOregonInc.andtheNorthCarolinaBiotechCenter,itisimportantfor
accountabilityandensuringstrongeconomicdevelopmentconnectionsthateachofthetargeted
developmentinitiativesbeadvancedasanindustryled,nonprofitorganization,withrepresentationof
stategovernmentandparticipatingIowauniversitiesandotherhighereducationpartners.
Promoteregionsthatareeconomicallyconnectedinordertofacilitatecollaborativeinitiatives.All
statescontainregionaleconomies,someofwhichcrossstatelines,wherecompanies,workersand
developmentassets/supportservicesareconnectedthroughcommercialandsocialrelationshipsand
interactions.Thesespatialrelationshipsthatdefineregionaleconomiesoftenbringtogethercities,their
suburbanringsandmoredistantruralcommunitiesintofunctionaleconomicregions.Thesenaturally
occurringeconomicregionsdiffer,sometimessignificantly,fromotherregionsdefinedbythepublic
andquasipublicsectoratvariouslevelsfortheiroperationalpurposes.Thereisagrowingrecognition
thatwhilemanyofIowasleadingindustryclustershaveastatewidepresence,eacheconomicregion
hasitsownindustrydynamicsandspecificdevelopmentassetsthatrequiremorelocalactionto
maximizethatregionseconomicpotential.Iowashouldrecognizetheuniquerolesandattributesofits
thefunctionaleconomicregionsandhowregionaleconomicstrategiescanbeadvancedandsupported
tocomplementandconnectthisstatewideeconomicdevelopmentroadmapthatsupportsindustry
clustersfoundacrossIowasregions.
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LeadingExampleinAdvancingaCompetitiveGrowthInitiativeBringingIndustryandUniversities
Together
TheOregonNanoscienceandMicrotechnologiesInstitute(ONAMI)isoneofthreesignature
researchcentersofOregonInc.andabestpracticesexampleofagovernmentindustry
universitypartnershipapproachorientedmoretotheconsortiummodelthatwasseededwith
statedollars.ONAMIisacollaborationoffourOregonuniversities(OregonHealthandScience
University,UniversityofOregon,OregonStateUniversity[OSU]andPortlandStateUniversity),a
nationallaboratory(PacificNorthwestNationalLaboratory[PNNL]),industry,andtheinvestment
community.ONAMIsmissionistoaccelerateresearchandcommercializationofmaterials
scienceandrelateddeviceandsystemtechnologyinOregon.
ONAMIseekstoaccomplishitsmissionby:
Providingmatchingfundsforfederalandprivatecollaborativeresearchprojects
undertakenbyONAMIprincipalinvestigators.
Providingindustrywithaccesstoacollectionofuniversitybasedshared/openuser
facilitiesonauserfriendly,feeforservicebasis.Theseareworldclassmaterials
characterizationandfabricationlaboratories.Notonlydothefirmshaveaccessto
sophisticatedequipment,buttheyalsohaveaccesstopeoplewiththeexpertisetorun
theequipment.
Providingcommercializationfundingandbusinessdevelopmentservices.ONAMI
providesproofofconceptgrantsthatenableuniversityresearcherstoconduct
commercializationactivities,andhelpslinkentrepreneurstosourcesofprivatecapital.
Effortsareunderwaytocreateananoscienceandmicrotechnologyfocusedearlystage
fundthatwouldbesimilartoSeattlesBiotechnologyAccelerator.
Holdingperiodicconferencesandseminarsandprovidingopportunitiesfornetworking
amongindustryandacademicresearchers.TheONAMInetworkincludes150research
affiliatesatfouruniversitiesandPNNL.
ONAMIreceivedbothcapitalandoperatingsupportfromtheStateofOregon.BetweenMarch
2006andApril2011,ONAMIdistributed$14.75millioningrantstoOregonuniversities,helping
toattractmorethan$100millioninfederalandindustryR&Dfunding.Between2004and2008,
awardstoOregonsuniversitiesfornanotechnologyandmicrotechnologyR&Dtripled,andseven
newcompanieswerecreatedbasedonnanotechnologyandmicrotechnologydiscoveries.1
CompaniesworkingwithONAMIhaveraisedmorethan$70millionforresearchprojectstohelp
dramaticallygrowresearchrevenueinOregonandacceleratecommercializationofresulting
technology.1ONAMIishousedinCorvallisonHewlettPackardscampus,andhasprovidedmany
researchandemploymentopportunitiesforOSUstudentsandgraduates.
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PROPOSEDACTIONPLANTOGENERATEANDATTRACTSKILLEDWORKFORCEINDEMAND
BYIOWASBUSINESSES
RecentstronggrowthinhighandmiddleskilledjobsinIowaisanimportantsignofIowasstrong
economicperformance;however,thelackofavailabilityoftheseskilledworkersisprovingtobea
strainonbusinessesinIowa.Whilethestatecanworktowardattractionofworkersfromelsewhere
andthereisevidencethatincentivescanaddresstargetedskillshortageareas,suchastheOklahoma
AerospaceEngineerWorkforceTaxCreditsitsfutureliesinthecurrentandfuturegenerationsofIowa
studentsandtheirabilitytocompeteliesinIowaseducationsystem,careerawarenessandtraining,
andtheirabilitytoenvisionaviablecareerpathintheirhomestate.Arobustandpredictabletalent
pipelineensuresstatebusinessescancompeteatthehighestlevelsandhaveconfidenceintheirability
togrowintheircurrentlocation.
Iowahasmanyeffortsunderwayinitseducationalsystemtoaddressthisworkforcedevelopment
theGovernorsSTEMAdvisoryCouncilisactivelyimprovingK12STEMeducationandexperiential
learning;theIowaDepartmentofEducationhasamajoreffortunderwaytotransformandmodernize
thedeliveryofcareerandtechnicaleducationtomiddleandhighschoolstudentsinIowa,withsupport
fromaSecondaryCareerTechnicalEducationTaskforceauthorizedbytheLegislature;manycommunity
collegesinthestateoffercareerconnectionsprogramsforhighschoolstudentsincollaborationwith
localindustryandthroughthepathwaysforacademiccareerandemploymentprogramaccesstomore
handsonnavigatorstoassisttargetpopulationsofstudentsthroughacademicandcareerplanning;
eachofthestatespublicuniversitiesofferanactiveprogramofcareerservicesforstudents;shortterm
customizedjobtrainingisamajorfacetofthestateseconomicdevelopmentinfrastructure;and
innovativeinitiativesareunderwaytoconnectveteranswithcareersinIowa.
Inanefforttodirectlyinfluenceandaddresstalentneeds,Iowascommunitycollegesappliedforand
wereawardeda$13milliongrantbytheU.S.DepartmentofLabortobuildcapacityinawarding
associatesdegreesandcertificatesinwelding,machining,industrialmaintenance,industrial
automation,manufacturingtechnology,robotics,andtransportationandlogistics.Thecommunity
collegeconsortiumeffort,knownasIowaAdvancedManufacturing(IAM)isworkingdirectlywithIowa
businessesandaligningskillsdeliverywithnationallyrecognizedcertifications.Synchronistcompany
interviewsspecificallyemphasizethefollowingkeyareasofshortageinmanufacturingwelders,
machinists,andmaintenance/repair.Eachoftheseoccupationsisexpectedtoseedoubledigit
employmentgrowththrough2020.InvestigationbyBattelleconfirmsthatinweldingandmachining
occupations,projectedannualdemandfornewandreplacementworkersisoutpacingassociatesand
certificatelevelgraduatesinIowa.TheIAMinitiativehasmadesignificantprogressinyearonewith27
of32signatureprogramslaunched,nearly$1Mofequipmentpurchasedanddeployedacrosssignature
programs,morethan800individualsenrolled,andasignificantoutreachcampaignisunderwayto
ElevateAdvancedManufacturing.16
16
SeeElevateIowaimplementationupdate:http://www.elevateiowa.com/assets/public/PDFs/I
AM%20One%20Year%20Brochure.pdf.
|P a g e 56
Iowaisalsohavingsuccessinadvancingstudentinternshipsandotherexperientiallearningeffortsas
atoolforretainingtalentinthestate,butmoresystematiceffortscanbeadvanced.TheIowaStudent
InternshipProgramisdesignedtosupportpostsecondarystudentinternsinIowasmalltomediumsized
companiesinthetargetedsectorsincludingadvancedmanufacturing,biosciences,andinformation
technologythroughgrantfundingwiththegoaloftransitioningtheinternintofulltimeemploymentin
thestatefollowinggraduation.Programparticipants,bothcompaniesandstudents,givetheprogram
highmarksandtheseconnectionsresultinincreasedstudentinterestinworkinginIowa;however,the
programislimitedinfundingandoversubscribedbyindustry.ThroughFY2013,160individual
companies(manycompaniesuseprograminmultipleyears)and822studentshaveparticipated.An
expansionofIowaspostsecondaryinternshipsforSTEMstudentswaspassedthislastlegislativesession,
butitisonlyanincrementalincrease.
AmuchlargernumberofpostsecondarystudentsinIowaparticipateinvolunteer,servicelearning
throughtheIowaCampusCompact,a statewideassociationof23communitycolleges,privatecolleges
andIowasthreepublicuniversities.Over18,000postsecondarystudentsinIowaparticipateannually,
gainingskillsincommunications,criticalthinkingandteamwork.Researchsuggeststhatvolunteers
havea27percenthigherlikelihoodoffindingajob,duelargelytoincreasingthevolunteerssocial
connectionsandskillsets.17Forthisreason,theIowaCommissionforVolunteerServicehasplacedan
emphasisonvolunteeringasapathwaytoemploymentinIowa.
Still,thebenefitsofaninternshiparesignificant.TheNationalAssociationofCollegesandEmployers
(NACE)intheir2013surveyofgraduatingseniorsfoundthat67percentofpaidinternsatforprofit
organizationswereofferedafulltimejob.18WhenNACEexaminedtheoutcomesofparticipatinginan
internshiptheimpactsweresignificantwiththosewithinternexperiencehavingstartingsalariesthat
wereabout$7,000greaterthantheircounterpartswithnointernshipexperience.19
AnuntappedopportunityforIowatoadvanceworkforcedevelopmentisfocusingmoreonupskilling
itsexistingworkforce,whichisthebulkofthestatesworkforceforthenextfewdecades.Thereis
alsoanopportunitytoupskillcollegegraduatesatalllevelswhofindthemselvesemployedinlow
paying,lowskilloccupations.Whileitisdifficulttofullyassessthelevelofunderemploymentfoundin
Iowa,ananalysisoftheAmericanCommunitySurveysuggeststhatnearlythreeintenofIowascollege
educatedworkerswithanassociatesdegreeandhigherareemployedinoccupationswithaminimum
educationalrequirementbelowanassociatesdegreeandwheretwooutofthreeoftheworkers
employedinthatoccupationdonothaveatleastanassociatesdegree.So,thesearecollegeeducated
workersemployedinoccupationsrequiringlowerskillsandwheremostoftheworkersdonothavean
associateorhighercollegedegree.
Anumberoftheseoccupationsmayalsorequiresomehigherskilllevelpositionsthatalsopaywellsoa
salesrepresentativeforanengineeringservicesfirmmayalsoneedtobeanengineeringgraduate,while
mostsalesrepresentativesdonotrequireanyformaleducationalrequirements.Thispopulationof
17
SeeCorporationforNationalandCommunityServicereportat:
http://www.nationalservice.gov/sites/default/files/upload/employment_research_report.pdf.
18
NationalAssociationofCollegesandEmployers(NACE),Classof2013StudentSurvey.Dataoninternshipsdonot
includethoseparticipatinginstudentteaching.
19
NACE,Classof2010StudentSurvey.
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underemployedcollegegraduatesisgenerallyuntappedbyexistingworkforceprograms.Iowasown
statefundedworkforcedevelopmentprogramsaremoreemployerdriven,whilefederalemployment
andtrainingprogramstendtoaddresstheneedsoftheeconomicallydisadvantaged,whotypicallyhave
loweducationalattainment.ThisoffersasignificantopportunityforIowatoreengagewithcollege
graduates,whohavethebasiceducationalgroundingtomastermorecareerspecifictraining,through
moretargetededucationalandtrainingefforts.
Fewifanystates,andcountriesforthatmatter,canclaimtohaveaseamlesseducationtowork
systemthateffectivelytransitionsitsstudentsthrougheducationlevelsandintoworkinamannerin
whichthestudenthasagreatawarenessofhisorheroptionsregardingcareerandpostsecondary
educationpaths.Iowafacessignificantchallengesinensuringthishighandmiddleskilledtalent
pipelineandmustconsideratransformativeapproachthatisuniquetoitspopulationandskills
challenges.IowawasselectedtoparticipateinaNationalGovernorsAssociationPolicyAcademyon
WorldClassEducation,WorldClassWorkforcetofurtherthepolicydevelopmentofaunifiedcareer
pathwaysysteminordertoensurethestateseducationandworkforcesystemsalignwithindustry
demand,areefficientlydelivered,targetandstretchlimitedresourcesandensurecontinualand
effectivebusinesspartnershipsatthestateandregionallevels.
PROPOSEDTACTICS:
Createincentivesforrecentgraduates,veteransandhighskilledworkerstotakepositionsinIowain
specificindustryclusterswithcriticalworkershortages.Apilotprogramisproposedthatwouldoffer
newworkerstoIowaeitherrecentgraduatesorrelocatedworkerswhohaveneverworkedinIowa
beforeanannualpersonalincometaxcreditoveratwoyearperiodforindividualswithabachelors
orhigherdegreeinspecificcriticalhighskilledshortagefields.BasedonSynchronistsurvey,IWDskill
shortageassessmentanddiscussionswithindustryandeconomicdevelopmentrepresentatives,itis
recommendedthatthepilotfocusoninformationtechnologyworkersthatareindemandacrossmany
industryclusters,involvingwebdevelopment,softwareengineers,andprogrammers.Thepersonal
incometaxcreditwouldbestructuredtoberevenueneutral,whichforITworkerswouldberoughly
$2,400peryear.
Advanceworkplacelearningthroughcolleges,continuingeducationandretraininginvolvingsmall
andmidsizedemployers,includingfurtherdevelopmentofinternshipprogramsandapprenticeship
opportunities.Toaddressthechallengeofhowtoscaleupinternshipandexperientiallearning,amore
broadbasedefforttomakeitbroadlyavailabletobusinessesaswellasembeddingwithinhow
universitiesandcollegesadvancetheirdegreeprogramsshouldbepursued.Itisproposedallpublic
collegedegreeprogramspursueaninternshiporotherexperientiallearningactivityinSTEMdegree
programs,ledbyProfessorsofPracticewhocanhelpwithemployerengagement,developmentof
internshipandexperientiallearningprojectsandhelpinplacingandmentoringstudents.Tomore
broadlyengageIowacompaniesataxcreditmechanismisproposedforinternshipsassociatedwith
STEMdegreemajorsenteringtheirsenioryearaswellasprovidingastatewideinternshipwebsiteto
facilitatethematchingofstudentstointernshipopportunitiesinIowaandofferothersupportservices
tostudentsandemployers.Whilemanystateshavepursuedinternshipprograms,Indianasefforts
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supportedbytheLillyEndowmentsuggesthowcapacitybuildingwithincollegesanduniversities
togetherwithawebbasedinternshiporganizationcanhelpinraisingthelevelofeffort.
CreateaK20industrydrivencareerdevelopmentpartnershipwiththeeducationcommunity.This
wouldbeabroadbasedefforttofullyintegrateacrossIowaseducationalsystemastrongeremphasis
oncareerdevelopment,suchasacceleratingalignmentofcareerdevelopmentwithongoingK12STEM
reformsthroughprojectbased,STEMintegratedcareerandtechnicaleducationcourses,addressing
industrysoftskillneeds,promotinguseofteacherandfacultyexternshipswithindustryand
promotingincreaseduseofcareerorientationcoursesatpostsecondarylevel.Thekeyelementfor
successwouldbecoordinatingindustryadvisoryskillpanelsacrosstheentireeducationsystemto
ensurealignmentonskillrequirementsandavoidfragmentation.
Scaleupongoingeffortsdemonstratingsuccessintechnicaleducationforadvancedmanufacturing
workforcedevelopmentofnewandincumbentworkers,througheffortssuchastheIowaAdvanced
ManufacturingCenterandtheIowaAdvancedManufacturing(IAM)communitycollegeinitiative.
TwoprograminitiativesunderwayholdsignificantpromiseinhelpingtoaddressIowasneedsfor
middleskilledmanufacturingworkers.OneistheIAMinitiativeofIowascommunitycolleges
(mentionedabove)andtheotheristhenewlyformedAdvancedManufacturingCenteratTechWorks,
whichisexpectedtobeacriticalhubformanufacturingworkforcetraininginIowaleveragingthe
presenceofitsAppliedResearchLabforspecializedhandsontraining.Itisimportantforthestateto
builduponthesuccessesoftheseeffortsandtoaddressneedsforfutureinvestmentsoncetheirinitial
fundingsupportendstokeeptheseprogramscurrent,suchasthroughinvestmentsinnewstateofthe
artequipment,professionaldevelopmentofinstructorsandnewcurriculumandprogramdevelopment.
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LeadingExampleinAdvancingCareerDevelopmentacrossEducationandTraining
WashingtonStatehasspentyearscoordinatingworkforcedevelopmentwiththespecificneedsofits
industryclusters.TheStateLegislatureformalizedthisapproachin2009enactinglegislationthat
identifiedindustryclustersasthecentralorganizingframeworkforworkforceplanningandservices.
Partnershipsacrossnumerousstateorganizationshavebeenfocusedoninitiativesthatalign
numerouscomponentsofworkforcedevelopmentwithaclusterbasedapproachincluding:
TheWorkforceBoardsIndustrySkillPanelsconnectregionalstakeholdersfrombusiness,
labor,andeducationtoenhanceworkerskillsforstrategicindustryclusters.Competing
businessescometogethertohaveinputonkeyskillandtrainingneedsandtoagreeonhow
tomonitorprogress.Thestatehasutilizedskillpanelssince2000andin200809the
WorkforceBoardinvestednearly$400,000for16skillpanelsacrossthestate.An
independentevaluationofjust4skillspanelsfoundtheyclosedskillgapsandjobvacancies
andleveragedsubstantialadditionalfunding,inthiscase$18millionor30timesthepublic
investment.
WashingtonsHighSkills,HighWagesStrategicFundworkstomeetclusterneedsthrough
workforcetrainingtargetedatlowincomepopulations.TheWorkforceBoardwasauthorized
tospend$950,000infederalWorkforceInvestmentActdollarstowardtheseprojectswhich
includetargetedregionalclusteractivities,includingaspecificemphasisonK12career
awarenessandtechnicaltraining.
Thestatehastargetedhighereducationfundingtoaddresshighdemandjobswhere
graduatelevelsareinsufficienttomeetprojectedannualdemands.Inmiddleskilljobs,two
areasofemphasishavebeenboostinggraduatelevelsinaerospacemechanicsand
technicians,andinalliedhealthoccupations,addressingneedsfortwokeystateclusters.
Amonghighskilledjobs,thestatehashadmoremixedresultsinitsinvestmentsinallied
health,computerscience,andengineering,areasithasfurtheridentifiedaskeytoits
clusters.
WashingtonsStateBoardforCommunityandTechnicalColleges(SBCTC)oversees10
clusterbasedCentersofExcellencethroughoutthestate,whichcreateandsharemodel
curricula,andbestpracticesincollegeassistancetoindustry.TheCentersalsocoordinate
partnershipsamongalleducationlevelsincludingarticulationarrangementsformore
seamlessrelationshipswithK12students.
TheWorkforceInvestmentAct(WIA)programprovidesemploymentandtrainingresources
forstrategicclusters.WIAfundedcommunityandtechnicalcollegetrainingdollarshave
beenusedpredominantlyinstrategicclusterindustries:healthcare(37percent);
manufacturing/construction(22percent);andinformationtechnology(11percent).
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PROPOSEDACTIONPLANTOACCELERATETHEDEVELOPMENTOFIOWASEMERGING
ENTREPRENEURIALECOSYSTEM
OneofthenewestandmostdynamicareasofstateeconomicdevelopmentactivitiesinIowahas
beentoadvanceinnovationandentrepreneurialdevelopment.Startingclosetotheoutsetofthe21st
Century,Iowasattentionhasturnedtobuildingabroaderinfrastructureofentrepreneurial
developmentservicesandsupportandtoshiftingitsbusinessculturetoembracehigherrisk
entrepreneurialendeavors.
WhatistakingforminIowaisamultisector,publicprivatepartnershipapproachinwhichgovernment,
collegesanduniversitiesandtheprivatesectorhaveeachbeenadvancingnewand,often,innovative
approachestoaddressingIowasentrepreneurialcultureandupgradingitsecosystemofsupport
services.
IowasfiveJohnPappajohnEntrepreneurialCenters(JPEC)wereinitiatedinthelate1990stoprovide
tailored,comprehensiveeducationandsupportserviceswiththemissionofgrowingentrepreneurs
andsustainablebusinessesinIowa.TheJPECsofferawholerangeofservices,oftenincollaboration
withtheIowaSmallBusinessDevelopmentCentersandhousedwithinstateuniversitiesanda
communitycollege,including:
Businessstartupandexpansionservices(includesbusinessplanpreparation,
counseling/consulting,accesstomarketresearch,mentoringandnetworking,incubationand
accelerationopportunities)
Technicalassistance(accesstoIowauniversitiestechnologytransferandothertechnology
resources,IPassessment,R&Dfundingsources)
Accesstocapital(guidanceregardingcommerciallending,seedandventurefunds,annualVC
andentrepreneurconference)
Creatingentrepreneurialcommunitiesandregions
Entrepreneurialeducationforstudents(spanningK12andpostsecondary).
BeyondthepresenceofthePappajohnEntrepreneurialCenters,Iowaspublicresearchuniversities
haveparticularlysteppedupinadvancinginnovationandentrepreneurialdevelopment.IowaState
University(ISU)andtheUniversityofIowaeachhaveuniversityaffiliatedresearchparksandincubators
thatsupportnewspinoutcompaniesandotherstartupsintheirregions.Giventhesubstantialresearch
baseatbothISUandUniversityofIowa,eachhaveactivetechnologytransferofficeswhichhavebeen
advancingmorebusinessfriendlyintellectualpropertypolicies;areplacingastrongemphasison
technologycommercializationwithresourcesfromIowasBoardofRegentstoundertakeproofof
conceptfundingtovalidatethecommercialpotentialofnewresearchdiscoveries;andfocusedon
generatingnewspinoffcompaniesfromtheuniversitysresearchactivities,includingeffortstosuch
earlystagecompanyformationwithEntrepreneursinResidence.TheUniversityofIowaResearch
Foundationisalsoprovidinggapfundingtobridgeearlystagefundingfromthestatesinnovation
programs.
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Still,thereisaclearconsensusthatthechallengesofcommercializingtechnologyinIowagiventhe
stateshistoricallackofentrepreneurialcultureposessignificanthurdlesforthecommercializationof
universityresearch.So,whilethebasictechnologytransferfunctioninvolvingtheidentification,
protectionandlicensingofauniversitysintellectualpropertybasedonresearchdiscoveriesoffaculty
andstudentsismostappropriatelyandeffectivelyhandledbyeachuniversitythroughitsown
technologytransferstaff,thereisaneedformorefocusedeffortstocomplementIowasuniversities
effortsintechnologycommercializationtoformhighqualitystartupventuresfromuniversityresearch.
TheUniversityofNorthernIowa,meanwhile,hasplacedamajoremphasisoninnovative
entrepreneurialprogramsthatserveentrepreneursstatewidegoingwellbeyondtheservicesadvanced
throughtheirPappajohnEntrepreneurialCenterandSBDC.TheUNIRegionalBusinessCenter,partof
theCollegeofBusinessAdministration,hostsandprovidesarangeofsupportforkeyprograms:
TwooncampusbusinessincubatorstheInnovationIncubatorandPurpleCatCoWork;both
aresupportedbycomprehensivesupportandtechnicalservicesattheUniversity.
MyEntre.NetwhichsupportsanonlinecommunityofIowasmallbusinessownersand
entrepreneurswithtraining,networkingevents,andsharedtechnologyresources.
AdvanceIowa,arelativelynewandpromisingstatewideeffortineconomicgardeningto
assistmidsizedIowabusinessestoexpand.ToparticipatewithAdvanceIowa,acompanymust
workwithalocalIowaeconomicdevelopmentorganization.Ifafirmqualifiesandisopento
examiningnewandinnovativeapproachestobusinessasetofstrategicplanningservicesare
offeredtothesecompanies.
Significantentrepreneurialactivitiesarealsowellestablishedandongoingatthecommunity
economicdevelopmentlevelinIowa.Forexample,theEDCbusinessacceleratorinCedarRapidsis
connectingexistingandemergingbusinessesandentrepreneursacrossthestatewithcriticalstate
resourcesandbusinessdirection.Overadecade,EDChasbuiltamodelprogramwithsignificant
impactssupportingmorethan600businesses,helpingraisemorethan$200millionincapital,helping
start88newbusinesses,helpinggenerate$738millioninnewbusinessrevenueand$266millioninnew
wagestranslatingintoroughly$1.2billionintotaleconomicimpacts.TheGreaterDesMoines
Partnershiphaslaunchedaseriesofentrepreneurialdevelopmentactivities,mostrecentlyannouncinga
newglobalinsuranceacceleratorwithbackingfromIowaindustryleaders,suchasPrincipalFinancial
Group,DeltaDentalandFarmersMutualHallInsuranceCompany,toattractinsurancetalentand
technologybasedstartupstoIowa.
Atthestatelevel,theIowaEconomicDevelopmentAuthority(IEDA)hasworkedactivelywiththe
industryledIowaInnovationCouncilandotherkeystakeholderstoidentifyandaddressgapsin
Iowasinnovationsystem.Anewpublicprivatepartnershipintermediarywaslaunchedin2012,the
IowaInnovationCorporation,toworkunderthedirectionfromIEDA,theIowaInnovationCounciland
withpublicandprivatepartners.JustrecentlytheIEDAandIowaInnovationCorporationlaunchedthe
InnovationIowabrandtocreateanumbrellathatencompassestheworkbeingdonejointlybyboth
organizations.
Onewellregardedeffortatthestatelevelhasbeenaseriesofinnovationprogramssuchasthe
DemonstrationFund(statefunds)andtheInnovationAccelerationFund(federalfunds)tosupport
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hightechnologyprototypeandconceptdevelopmentactivitiesbysmallandmediumsizedcompaniesin
advancedmanufacturing,biosciencesandinformationtechnologythathaveaclearpotentialtoleadto
commerciallyviableproductsorservices.Anindependenteconomicandfiscalimpactstudyofthe
DemonstrationFundseffortsfrom2007to2012foundthatthe127investmentsmade,totalingabout
$13million,generated600directjobsandannualrevenuegrowthof$87million,basedonsurvey
resultsfrom79ofthefirmsassisted(anumberoffirmsreceivedmultipleawardsandsomeclosedor
eventuallydeclinedtheinvestment).Thetotaleconomicimpactofthis$13millionofcommercialization
support,afterconsideringmultipliereffects,isestimatedat$150millioninadditionaleconomicactivity,
supportingabout1,100workersandgeneratingslightlyover$2millionannuallyinnewtaxrevenue
theequivalentofa16percentannualreturnbetween20072012overtheentirecostoftheprogram(it
wouldbe24percentreturnfromjustthosewhocompletedsurveys).20VentureNetIowahasbeenthe
outsourcemanagementproviderfortheseIEDA/IowaInnovationCorporationeffortsin
commercialization.Ithasearnedhighmarksforthereviewprocessthatengagesanetworkof
technologyandmanagementexecutivesandoffersqualityfeedbacktothefirmsapplyingforthestates
innovationprograms.
TheIEDA/IowaInnovationCorporationeffortsorwhatisnowreferredtoasInnovationIowaarenow
turningtoarangeofotheractivitiestofurtherinnovationandentrepreneurialdevelopmentinIowa.
OneeffortisfocusedonattractingfollowonventurecapitaltoIowathroughtheIowaInnovationFund,
whichwasrecentlyamendedtoofferaslightlyhighertaxcreditandeliminateathreeyearwaiting
period.NextLevelVentures,a$15millionventurefund,isthefirstIowaInnovationFundawardee,and
wasformedinearly2014.TheIowaInnovationCorporationisworkingtohelplaunchanotherfund
soon.
OtherstatelevelIowaInnovationeffortsincludeestablishinganSBIRassistanceprogramthatisseeking
toraiseIowasshareoftheapproximately$2.5billionawardedbyfederalagenciesconductingresearch
tocommercializepromisingtechnologiesbysmallbusinesses.IowaiswellbehindthenationinitsSBIR
awards.Overthe20092012period,onaper10,000populationbasis,Iowaaveraged$18,885annually
inSBIRawardscomparedto$72,343forthenation.Anindustryappliedresearchprogramhasalsobeen
initiated,buthasnotgeneratedinterestandabottomupreviewledbytheIowaInnovationCorporation
isjuststartingup.
Stillfurtherexpansionofinnovationandentrepreneurialservicesiswellrecognizedbystakeholdersin
Iowa.Effortsanddiscussionsareunderwayforarangeofactivitiesfromimprovingthe
commercializationofuniversityresearchtopilotingentrepreneurmentoringservices.
PROPOSEDTACTICS:
ExpandentrepreneurialservicesofferedthroughInnovationIowa(IIC/IEDA)toincludementoring
servicesandaccesstobusinessresources,aswellasprogrammingtoentrepreneurstopromotebetter
utilizationofthefederalSBIRprogram.Bestpracticesfromotherstatesmakeclearthatitiscriticalthat
Iowasentrepreneurialservicesprovidefollowonassistancebeyondmakinginitialproofofconceptand
20
EconsultSolutions,TheEconomicandFiscalImpactsoftheDemonstrationFundontheIowaEconomy,
February2013.
|P a g e 63
productdevelopmentinvestmentsinordertorealizethefullgrowthpotentialofitsemerging
innovationdrivenbusinesses.Mentoringandaccesstobusinessresourcesareproventoolsforhelping
emerginginnovationdrivencompaniestogrow.Also,thefederalSBIRprogramisthelargestproduct
developmentfundingsourceinthenationandIowaentrepreneursandemergingbusinessescanbetter
competeforthispoolofproductdevelopmentfundingbydeepeningthestatesSBIRassistanceservices
toinclude:amatchinggrantprogramforsuccessfulSBIRawardees;increasedcommercialization
planningassistance;andamoretargetedfocusonfederalagenciesthatalignstronglywiththestates
areasoftechnologycompetenciesandgrowthopportunitiesaswellasstrategicpartneringwithlarge
Iowacompaniesinthosefocusareas.
Createaneffectiveangelinvestortaxcreditthateliminatesthewaitingperiod,increasesthetax
creditpercentageandmakesthecreditstransferrabletoattractbroaderinvestorinterest.Unlike
otherstates,Iowasangelinvestmenttaxcreditshavenotbeeneffective.Iowashouldconsider
revampingalongthelinesofWisconsinssuccessfulprogramtoraisethetaxcreditfrom20percenttoat
least25percent,eliminatethethreeyearwaitingperiodforredeemingthetaxcredits,makingthem
transferabletoattractbroaderinvestorinterest,liftingthelimitsaninvestorcanclaimbyinvestingin
morethanonequalifiedcompanyandeliminatingoratleastraisingtheannualcapontotalavailabletax
creditsfrom$2millionto$5million.
Reassesspublicprivateresearchpartnershipstopromotestrategiccollaborationamongacademia,
governmentandindustry,includingthecreationofpostdoctoralandgraduateentrepreneurial
educationtracks.FollowtheapproachofScienceFoundationArizonaandtheNationalScience
FoundationsGrantOpportunitiesforAcademicLiaison(GOALI)inadvancingstrategicscientific
collaborationsinwhichIowauniversityfacultycanfocusonmoreindustryfacingbasicresearchthat
addresseskeychallengesidentifiedinconcertwithindustry,withtheindustrypartnerservingtofocus
moreontheappliedresearchrequiredtocommercializethetechnology.Oneinnovativemeansto
advancestrategicallianceswithindustryistoleveragetheeffortsofgraduatestudentsinpursuingthe
commercializationofuniversitybasedtechnologyadvances.Thesegraduatestudentsofferthehigher
skillsetsneededformoretechnologyintensivebusinesses,butlacktheentrepreneurialskillsfor
commercialization.Aonesemestergraduateentrepreneurshipcertificateisrecommended,witha
commoncorecurriculumacrossuniversitiesinIowa,andofferingstipendsforparticipatinggraduate
studentsandabusinessplancompetition.Iowamightwanttoconsiderhavingcompaniessponsor
competitionsofgraduatestudentteams,whoareparticipatingintheentrepreneurialeducation
courses,inspecifictechnologytopicareas,suchasprecisionagriculture,BigData,sensornetworks,etc.
Expandthestateseconomicgardeningprogram,AdvanceIowa,formidsizedgrowthcompanies.
Recognizingthatentrepreneursandnewbusinessesfaceasetofuniquechallengesastheygrowand
movebeyondtheirinitialstartupphase,therehasbeenamovementnationallytowardservicingthe
needsandchallengesofthesesecondstagebusinesses.EconomicGardeningprogramsassistthese
firmswithstrategiesforgrowththatmightincludeanewproductoffering,expandingintoanewmarket
orcustomerbase,orenhancingmarketing.Iowaseffortsafterjustoneyearofoperationhasreached
over50midsizedcompanies,butisreachinglimitsoncapacitytoservecompanieswithfarmore
demandthanitcanpresentlyhandle.AdditionalfundingisneededtoassistmidsizedIowafirmsrealize
|P a g e 64
theirgrowthpotentialbycreatingmorespokesacrossthestateaccesstheseeconomicgardening
consultingservices.
Facilitatethetransferofuniversityresearchanddevelopmenttoindustrystartups.Thesizeand
qualityofIowasuniversityandfederallabresearchbaseissufficienttogenerateincreasedlevelsof
highqualitytechnologybasedstartups,butIowasentrepreneurialculturesimplydoesnotmatchthat
ofEastandWestCoastlocations.Ratherthanreplicatingmanyofthevalueaddedservicesthatarethe
focusofexistingandplannedactivitiesoftheIowaInnovationCorporationforentrepreneurial
mentoring,improvedduediligenceandcommercializationassistance,Iowahasanopportunitytomore
directlyadvancehighqualitystartupsfromuniversityresearchbyleveragingthecapabilitiesofserial
entrepreneurstoleadventuredevelopmentcorporationstonotonlyidentify,assess,andvalidate
universityresearchdiscoveriesabletosupportnewbusinessventures,buttoactuallylaunchthenew
companiesandserveasthemanagementteamleadingthenewstartupinitsinitialproduct
developmentphase,includingraisinginitialangelandproductdevelopmentcapital.Asthenewstartup
reacheskeydevelopmentmilestones,thentheserialentrepreneurleadingtheventuredevelopment
corporationcanrecruitpermanentmanagementfortheadvancingnewbusiness.Keyresourcesthatwill
attracttheseserialentrepreneursandensuretheirsuccessinlaunchinghighgrowthpotential
companiesincludesaccesstopreseedandseedfundingsupport.
Increasetheamountofventurecapitalandseedstagefundingavailabletoallowstartupstogrow
locally.Thelackofventurefinancingatdifferentstagesfromangelinvestmentthroughseedinvestment
andmoreformalroundsofventurecapitalfundingisoneofthemoredifficultchallengestoaddress.
Theeconomicdevelopmentroadmapfocusesonaddressingthesevereshortfallinangelinvestmentin
Iowathrougharevampedtaxcreditmechanism.Abigquestionmarkiswhethertherecentchangesto
theIowaInnovationFundtaxcreditwillbesufficienttoattractadditionalventurecapitalfunds,
particularlyatearlierstagesofseedandthefirstroundofformalventurecapital.
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LeadingExamplesinVentureDevelopmentOrganizations
OneofthemorerecentandnotedapproachesistheSeattleAcceleratorCorporation,foundedin
2003,tocreatehighgrowthpotentialisavehiclefordisciplinedandefficientinvestmentinand
managementofemergingbiotechnologyopportunities.TheAcceleratorCorporationisledbyCarl
Weissman,whowaspreviouslyanaccomplishedventurecapitalistfromBostonandserial
biotechnologyentrepreneur.WhatisnotableabouttheAcceleratorCorporationisitspartnerships,
including:1)aworldclassresearchinstitutetheInstituteforSystemsBiology,anonprofitresearch
organizationfoundedbyLeeHoodwhichenablesdealflowplusaccesstospecializedscientific
equipmentandshareduselabs;2)nationalventurecapitalfirmsforseedcapitalforproofofconcept
fundingandinitialbusinessformation,includingAmgenVentures,ARCHVenturePartners,OVP
VenturePartners,PPD,Inc.andWRFCapital;and3)dedicatedwetlabspaceforlocatingits
companiesthroughitspartnershipwithAlexandriaREIT.Inthepastnineyears,twelvecompanies
havebeeninvestedinthroughAccelerator.Fivehaveemergedandraisedfollowonfinancingsof
morethan$164million.ThreecompaniesremainundermanagementatAccelerator.Inall,
Acceleratorcompanieshaveraisedinexcessof$221millionininitialandfollowonfinancings.
Recently,theSeattleAcceleratorCorporationannounceditsexpansiontoNewYorkCity.
AnotherexamplefromamoreremotelocationistheVirtualIncubatorCompany(VIC)in
Fayetteville,Arkansas.StartedbyaserialentrepreneurandformeruniversityprofessorwithaPhD
fromStanfordinmechanicalengineering.VICsfocusismultimarketandveryscienceoriented
companiesincludinginnanotechnology,instrumentation,andbiosciences.Ithasformed11
companiesinArkansasraisingmorethan$100millionofoutsidecapital.Itsfirstcompany,
NanoMech,isnowafullyindependentmanufacturerofinnovativeapplicationspecificnanoparticle
additives,nanoparticlebasedcoatingsandcoatingdepositionsystemsthatcanbeusedinavariety
ofcriticalindustrysectors.RecentlyVIChasopenedbranchofficesinsuburbanBostonand
Annapolis,Maryland,witheachnowleadingtwoportfoliocompaniesinthoseregions.
ArecentArkansasBusinessarticlefromthispastAugustexplainshowVICworks:1
Eachyear,VICreviewsroughly1,500technologiesfromresearchuniversitiesandlabsacross
theglobe.Itsintellectualpropertyassessmentteamthenselectsahandfulperhapsjusta
couple,perhapsasmanyasfourforwhichtonegotiate.
OnceVICobtainsanexclusivelicenseforthetechnology,itformsanewstartupfor
commercializationofthattechnology.
Thenewfirmreceives$250,000inseedmoneyfromtheVICInvestorNetwork,whose
membersretainanequitystakebasedonindividualinvestments.
AninternalVICbusinessdevelopmentteamandaCEOareassigned,andaninitialresearch
anddevelopmentteamishired.
VICstaffbasedattheFayettevilleheadquartersprovidesadministrativesupportintheareas
ofcorporaterecords,finance/accounting,graphicdesign/communications,grantwriting,
humanresources,ITsupport,engineeringandmore.
TheVICbusinessdevelopmentteamoverseesproductdevelopmentstrategies,funding
activitiesincludinggrantsandprivateinvestmentroundsandbeginsrecruitmentofa
permanentexecutiveteamfortheappropriatetimeinacompanysgrowth.VICthen
maintainsaboardpresenceinportfoliocompaniesthatbecomeoperationallyindependent.
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PROPOSEDACTIONPLANTOADVANCEIOWASPHYSICALINFRASTRUCTUREANDREGIONAL
DEVELOPMENTCAPACITIESTOREALIZEIOWASECONOMICPOTENTIAL
StatefundingforhighwaymaintenanceandimprovementsinIowaisofgreatconcernatatimewhen
theneedforhighwayimprovementsiswellrecognized.Similartoallstates,Iowausesdedicated
fundingsources,comprisedprincipallyexcisetaxonfuelsandvehicleregistrationfees.ForIowathese
fundsaredepositedintotheIowaRoadUseTaxFund(RUTF)andcannotbeusedforanyotherpurpose
thanhighwayprojects.TheIowaexcisetaxongasolineiscollectedasaflatfeepergallonpurchasedof
21cents.Theexcisetaxonethanolblendedfuelis19centspergallonand22.5centspergallonon
dieselfuel.Thesefiguresdonotincludetheonecentpergallonundergroundstoragetankfee.Iowaalso
hashadnoincreasesinthelevelofthemotorfuelsexcisetaxsince1989.
Controllingforthecostofconstruction,basedonactualawardedcontractsforexcavation,surfacingand
structuresinIowa,thepurchasingpowerofIowasRUTFreceiptshasplummetedfromjustover$900
millionin2003toroughly$650millionin2010,accordingtotheIowaDepartmentofTransportations
2011RoadUseTaxFundStudy.OnefactorcontributingtothedecliningpurchasingpowerofIowas
RUTFistheriseofmorefuelefficientandhybridcarsandtrucksthatinturnistranslatingintolower
usageofgasolinepermiletraveledandsolimitingthereceiptsfromthestatesmotorfuelsexcisetax.
TheIowaDepartmentofTransportationinits2011RoadUseTaxFundStudyestimatedthattomeetall
currentandfutureneedsofIowascity,countyandstateroadwaysystemwouldrequirenewfundingof
$1.6billionannually.Ofthatoverallfundingshortfall,anassessmentoftheneedsthataremostcritical
toassureIowasroadwaysystemcansupportandgrowthestateseconomywasconducted.Itwas
determinedthe20yearshortfallinmeetingIowasmostcriticalhighwayneedsis$215millionannually.
Thisfigurehasbeenthebasisofongoingfundingdiscussionsatthelegislature.
AcrossstatesintheU.S.awidevarietyofapproachesarebeingenactedorconsideredfromsimply
increasingthemotorfuelflatratepergallontoreplacingtheflatratewithasalestaxonfueltoindexing
theflatratetoinflationtoincreasingannualregistrationfeesorsomehybridofalloftheseactions.
Inbroadbanddevelopment,theunevendevelopmentinIowaisofgreatconcern.Forthisupdated
economicdevelopmentroadmap,thepriorityisplacedonaddressingthebusinessneedsfor
broadbandspeedsandreliability,nomatterwhereabusinessislocatedinIowa,includingIowas
farmerswhoincreasinglyneedtoaccessbroadbandfornewinnovationsinvolvingprecision
agriculture.Still,itisdifficulttoseparateouttheneedsofindustryforbroadbandintheirbusiness
operationstobroaderbusinessinterestsinensuringawelleducatedworkforceandqualityhealthcare
servicesinIowa.Asstudentsusebroadbandatschoolthedemandforaccessathomegrows.Similarlyin
healthcaredelivery,digitalinnovationsarerapidlyadvancingintomoreadvancedmonitoringand
diagnosingofpatientsintheirhomes.And,ofcourse,telecommutingfromhomeisbecomingmore
commonforworkers,atleastonapartialbasis,giventhatmuchoftheinformationsystemsoftheir
companiescannowbeaccessedthroughInternetbasedapplications.
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TheNationalConferenceofStateLegislaturesreportsthatall50stateshavecreatedeitherataskforce,
commission,orbroadbandproject.Somestateshavecreatedprogramstoidentifyunderservedand
unservedareasthroughonlinepublicmappingwebsites,whileothershaveestablishedtaskforcesor
commissionstoprovideinputonthedevelopmentofastatewidebroadbandframeworkandpromote
publicprivatesectorparticipation.Atleast14stateshaveenactedtheseinitiativesandauthorities
throughlegislation.
Despitethisbroadbasedconcernonadvancingbroadbandaccess,thereisnospecificprogramor
actionsthatstandoutasmakingthedifference.Instead,thecommoneffortsfoundacrossstatesare
focusedonawiderangeofactivities,suchas:creatingawarenessoftheimportanceofbroadbandand
raisingdigitalliteracyamongallareasandpopulationsinastate;helpinglocalcommunitiesmobilize;
focusingonleveragingexistingfederalfunding,stateassetsandexistingprovidernetworks;and
advancinghighvaluebroadbandapplicationsthatstategovernmentcanadvancefromconnected
schoolstotelemedicinetosmarthousingtopublicsafetynetworksasameansofdeliveringimproved
publicservices.
Iowaisdoingallofthistoadvancebroadbanddevelopmentandyetisstillfallingshort.Somoredirect
actiontomobilizethemarketplaceisneeded.
Inadvancinglivablecommunities,Iowaisactivelyinvolvedacrossmanystateagencies.RecentlyIowa
enactedanewWorkforceHousingTaxIncentiveProgram,administeredbytheIowaEconomic
DevelopmentAuthority,tocreatehigherincentivesforaffordablehousing,involvinga10percenttax
creditforhousingprojectsincludingmultipledwellingunits,upto$1millionforasinglehousingproject
anda$20millioncap.AnotherIEDAprogramfocusedonadvancinglivablecommunitiesisVisionIowa
thatassistsprojectsthatproviderecreational,cultural,entertainmentandeducationalattractionsthat
positionacommunitytotakeadvantageofeconomicdevelopmentopportunitiesintourismand
strengthenacommunityscompetitivenessasaplacetoworkandlive.IEDAalsoofferslimited
DowntownRevitalizationFunding,usingfederalcommunitydevelopmentblockgrantassistance,to
providegrantstocommunitiesforavarietyofprojectsandactivitiescontributingtocomprehensive
revitalizationinhistoriccitycenters.
Otherstateagenciesthroughmoreinfrastructurerelatedfundingarealsoactiveinsupportinglivable
communities.Examplesinclude:
IowaDepartmentofTransportationoffersanumberofprogramsthatsupportsthelivabilityof
communitiesincludingtrailfundingforrecreation,congestionmitigation,andBywaysprogram.
IowaDepartmentofNaturalResourceshelpsinfundingandregulatingcriticalinfrastructurefor
waterqualityandtreatment.OneexampleisthefundingIDNRreceivesfromtheResource
EnhancementandProtectionprogramsupportedbythestatesEnvironmentFirstFund(Iowa
gamingreceipts).Itincludesfundingforlandmanagement,cityparksandopenspace,andsoiland
waterenhancement,amongotheruses.
IowaDepartmentofCulturalAffairsadministersthehistoricpreservationtaxcreditwhichhelpsto
maintainthehistoriccharacterandrevitalizeareas.Sinceitsinception283historicbuildingsacross
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64communitiesinIowa.Inaddition,theDepartmentsupportstheArtsCouncil,whichhasawide
assortmentofprogramstosupportlocalartsandcultureacrossthestate.
Iowaspublicuniversitiesalsoareactivelyinvolvedthroughamyriadofprogramsinsupporting
communitydevelopmentacrossthestate.
Overall,itisclearthatinfrastructuredevelopmentneedsofIowaarewellbeyondwhatlocal,state
andfederalgovernmentcanafford.Anexcellentexampleofthelargedemandsforinfrastructure
developmentinvestmentaretheneedsthatexistontheUpperMississippiRivertoassurethelockand
damsystemcancontinuetofacilitatethemovementofIowasagriculturalproductsandother
commodities.Still,withouttheseinvestmentsIowaseconomywillunderperformresultinginlower
personalincomeinIowaandlowerstateandlocaltaxrevenues.
Foragrowingrangeofinfrastructuredevelopmentprojectsthatcandemonstrateeconomic
developmentviability,agrowingrangeofalternativefinancingapproachesthattaptheprivatesector
arebeingadvanced,including:
Advancingpublicprivatepartnershipapproachesinwhichtheprivatesectorassumesthe
substantialfinancial,technicalandoperationalresponsibilitiesandrisksforaninfrastructure
projectundercontractwiththepublicsectorandgeneratesrevenueseitherfromusersof
theprojectorthroughpaymentsfromgovernment.
Creatingregionaldevelopmentauthoritiesthataspoliticalsubdivisionsofastateormultiple
stateshavethepowerstomanagedesignatedlanddevelopmentfortransportationand
economicdevelopmentpurposes,financeandconstructkeyfacilitydevelopments,operate
thesefacilitiesandgeneraterevenuesfromtheoperations.
PROPOSEDTACTICS:
Addresshighwayimprovementfundingbyadvancingahybridapproachthatbalancestheneedfor
stableandpredictablerevenuebyretainingafixedpergallonfeebutatalowerrate,andaddinga
salestaxcomponentthatprovidesameanstoallowforrevenuegrowthasthepriceoffuelincreases.
TheIowaDepartmentofTransportation(IDOT)hasengagedinextensivepublicdialogueinthepastyear
abouthowtobestaddressIowasroadwayfundingshortfallusingthewiderangeofapproachesbeing
undertakenacrossthenation.Fromthisextensivepublicoutreachtheconceptthatgainedthemost
tractionisahybridapproachthatbalancestheneedforstableandpredictablerevenuebyretaininga
fixedpergallonfeebutatalowerrate,andaddingasalestaxcomponentthatprovidesameansto
allowforrevenuegrowthasthepriceoffuelincreases.
SupportIowaDepartmentofTransportations(IDOT)targetingofhighvaluetransportation
improvementsusinginformationgleanedthroughtheFreightOptimizationStudy.Thestudy,by
applyingsupplychainnetworkdesignandoptimizationtechniquesusedintheprivatesector,will
allowIowatoadvanceacomprehensiveapproachtoprioritizeinvestmentforadvancingthestates
freighttransportationcapacities.Withlimitedfundingavailableformajornewhighwayprojects,itis
essentialforIowatobeabletoidentifythespecificeconomicdevelopmentimpactsofproposed
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projectsinhelpingtodeterminetransportationimprovementpriorities.IDOT,withcooperationfrom
IEDA,isapplyingsupplychainnetworkdesignandoptimizationtechniquesusedintheprivatesectorto
advanceacomprehensiveapproachtoprioritizeinvestmentforadvancingIowasfreighttransportation
capacities.Thiseffortcompilesauniquedatabasethatintegratesinformationonsuppliers,plants,
warehousesandflowsofproductsfromorigintothefinalcustomertoestimateeconomicvaluefrom
differentproposedhighwayimprovements.Thisfocusoneconomicvalueofhighwayimprovement
projectswillpromoteIowasoveralleconomicdevelopment,plusitcanofferavaluableservicetohelp
Iowabusinessesoptimizetheirlogisticsapproaches.Theanalysisforthissupplychainnetworkdesign
andoptimizationisstillunderwayandworkisexpectedtobecompletedlaterthiscalendaryear.
Developincentivesforbroadbandinvestmentthatcreatesacomprehensiveapproachtospur
broadbanddevelopmentthatcanbedependeduponovertime.Recognizingfromtheeffortsofstates
acrossthenationthatthereisnosilverbullettosolvebroadbandneedsandthattherequirementsfor
broadbandspeedswillcontinuingtoincreaseashighervalueapplicationsunfolditiscriticalthatIowa
createacomprehensiveapproachtoadvancingabusinessenvironmenttospurbroadband
developmentthatcanbedependeduponovertime.Severalspecificinitiativesshouldbeadvancedas
componentsofthiscomprehensiveapproach,including:
Establishingacomprehensivepackageoftaxincentivesthatbroadbandproviderscanrely
uponinmakinglongterminvestmentdecisionsinbuildingoutandenhancingservice
capacity.
LeveragingtheexcesscapacityofthestateownedIowaCommunicationsNetworkina
mannerthatbalancesthebusinessinterestsofIowaslargenumberofindependent
telecommunicationsprovidersofbroadbandserviceswiththeneedsofindustry,residents
andcommunityimprovedaccesstobroadband.
Settingreasonabletimelinesforlocalregulatoryactionsonpermittingofwirelesstowers
andotherbroadbandinfrastructuresothatbroadbandproviderscanbeassuredsome
certaintyinmakinginvestmentdecisions.
Ensuringresourcesforcommunitycapacitybuildingtoadvanceapproachesonbroadband
development,sothatinformeddecisionsandincreasedawarenesscanbeadvanced.
Exploreinnovativemethodsoffinancinginfrastructureimprovements,includingtheuseofpublic
privatepartnerships.Iowashouldadvancetheuseofregionalportauthoritydevelopmentsandpublic
privatepartnershipsonacasebycasebasis,withspecificprojectevaluationcriteria.Aswayofgeneral
guidance,TheBrookingsInstitutionstudysetsoutsomegeneralguidelinesthatwouldbehelpfulfor
IowaasitexploresthesePublicPrivatePartnership(PPP)opportunities:
PPPsshouldbepursuednotsimplyforfundingaproject,butwithafocustoachieve
efficiencygainsfromtheprivatesectorbybundlingresponsibilityfortheinitialcapital
investmentwithfuturemaintenanceandoperatingcosts.
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PPPsshouldbewelldefinedprojectsthatareawardedincompetitiveauctionsandnot
throughbilateralnegotiations.
Governmentsshouldconsidernotonlythebenefits,butalsothecosts,ofPPPsandit
shouldbeaccountedforinbudgetreports.
Splittheresponsibilitybetweentwoseparategroupsingovernmentforplanning,project
selection,andawardingprojects,andanindependentunitresponsibleforcontract
enforcementandthesupervisionofcontractrenegotiations.
Focusonintermodaltransportationinfrastructureandotherinfrastructureimprovementstosupport
theexporteconomyandlivablecommunities.Intermodaltransportationisacriticalbutoften
overlookedneedinIowa.Upgradestoallformsoftransportationinfrastructurearenecessaryinorder
toincreaseregionalexportcapacity,addressbottlenecksinthestatesfreighttransportationsystemand
improvequalityoflifebytakingfreighttrafficofftheroads.Atthesametime,manyofIowasrural
communitiesneedotherinfrastructureimprovementsinordertoretainandattractyoungfamiliesand
thisincludesrevitalizingdowntownsanddevelopingmoreaffordablehousing.Therearemanyexisting
statesupportedprograms,includingthoseofferedbyuniversitiesinthestate,thatneedtobe
maintainedorexpandedandconsiderationofsomenewinitiativesbeingproposedinthiseconomic
developmentroadmap.Thesuccessandeffectivenessoftheseeffortsmustbeexaminedinthefuture,
buthavingaplantoaddressinfrastructureholisticallywillbeanimportantelementinhowIowa
advancesitsregionaldevelopmentstrategiesintheyearsahead.
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LeadingExampleinPublicPrivatePartnershipsforInfrastructureDevelopment
AustraliahasbeenoneofthemostactivenationsusingPPPs.AnindependentstudybytheAllen
ConsultingGroup,inconjunctionwithTheUniversityofMelbourne,oftheefficiencyofPublicPrivate
Partnerships(PPPs)relativetoTraditionalprocurementapproachesintheprovisionofpublic
infrastructurefoundthatthatPPPsprovidesuperiorperformanceinboththecostandtime
dimensions,andthatthePPPadvantageincreases(inabsoluteterms)withthesizeandcomplexityof
projects.Specificfindingsincluded:
PPPsdemonstrateclearlysuperiorcostefficiencyoverTraditionalprocurement,whichcan
rangefrom30.8percentwhenmeasuredfromprojectinception,to11.4percentwhen
measuredfromcontractualcommitmenttothefinaloutcome.
Inabsoluteterms,thePPPcostadvantagewasfoundtobeeconomicallyandstatistically
significant.Onacontracted$4.9billionofPPPprojectsthenetcostoverrunwasonly$58
millionnotstatisticallydifferentfromzero.For$4.5billionofTraditionalprocurement
projects,thenetcostoverrunamountedto$673million.
Withrespecttotimeoverruns,onavalueweightedbasiswefoundTraditionalprojects
werelikelytobecompletedlaterthanPPPsrelativetothebudget.Forexample,betweenthe
signingofthefinalcontractandprojectcompletion,PPPswerefoundtobecompleted3.4
percentaheadoftimeonaverage,whileTraditionalprojectswerecompleted23.5percent
behindtime.Thisdifferenceisstatisticallysignificant.
IncontrasttocommonlyheldperceptionsabouttherelativetransparencyofPPPs,wefound
thatPPPprojectswerefarmoretransparentthanTraditionalprojects,asmeasuredbythe
availabilityofpublicdataforthisstudy.
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APPENDIXA:LINEOFSIGHTTOIOWASINDUSTRYGROWTH
OPPORTUNITIES
WhileIowastwelveindustryclustersaredrivingmuchofthestateseconomy,itisalsoimportantto
takeamoreforwardlookingassessmenttounderstandthegrowthopportunitiesthatexistacrossand
withineachone.ItistheseopportunitiesthatdifferentiateIowaandestablishaplatformfromwhich
Iowacancompeteonanationalandevenglobalscale.Eachclusterispositionedinuniquewaysfor
growthintothefuturesomecontinuedtogrow,evenduringthedeeprecessionandhavebroadbased
opportunitiesmovingforward,whileothersmayhavebeenhithardduringtherecessionbuthavekey
nichecomponentsthatareemergingorpoisedforgrowth,stillothershavetechnologycompetencies
yettobeleveraged.Itiscritical,therefore,toinvestigateeachclustercomponentwithalineofsight
tomarketopportunities.
BattellesapproachtoidentifyingthislineofsightinvolvesidentifyingbothIowascurrentandemerging
strengthsacrossdetailedproductmarkets,aswellasaforwardlookingassessmentofcoretechnology
competencies.Theseanalysesaredescribedhere.21
TargetedProductMarketswithinClusters:Battelleidentified,foreachofthe12industry
clusters,detailedproductmarketsinwhichIowahasastrongorgrowingpresencebasedonits
currentemploymentconcentrationandrecentgrowth.Currentstrengthsinthesemost
detailedindustryclassificationsarethosethatarespecializedandgrowinginIowa,while
emergingstrengthsaregrowthareasthatdonotyethaveaspecializedemployment
concentration.Thesetargetmarketsarecombinedinthetableonthenextpage.
CoreTechnologyCompetenciesandInnovationThemes:Battelleconductedapatentcluster
analysisandcombinedthiswiththetechnologyfocusareasofemerginginnovativecompanies
toidentifyIowascoreresearchandtechnologycompetencieswhichwerethenalignedwith
eachcluster.ThepatentanalysisleveragesaproprietaryBattellesoftwaretoolthatconnects
andclustersthewordsandphrasesinthetitlesandabstractsofthemorethan3,500patent
applicationsandawardsamongIowainventorsfrom2009through2013.Whileindustrywas
thepredominantplayerinthepatentdata,Iowasuniversitieswereveryactiveinseveralofthe
patentinnovationthemes.
IdentifyPossibleMarketNichesforGrowth:Helddiscussionswithindustryexecutivesand
surveyedmarketresearchstudiesatthedetailedindustryandprojectleveltoidentify,forthe
mostattractiveproduct/servicemarketopportunities,themarketgrowthpotentialandcritical
technologyandmarketadvancesrequired.Battellegenerallyreliedonthemarketresearch
intelligencefromIBISWorldorBCCResearchtoidentifyfastergrowingmarketopportunities
andspecificmarketandtechnologychallenges.TheadvantageofIBISWorldisthatitsindustry
researchreportsalignwellwiththeindustryclassificationsystemandsofocusondetailed
industryproductmarkets.
21
Foramoredetaileddiscussionoftheseanalysesandforanoverviewoftheanalysisforeachindustryclustersee
theAppendixtothisreport.
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FigureA1: LineofSighttoIowasGrowthOpportunities
IndustryDrivers/Target IACompetitive IllustrativeGrowth

IndustryCluster
ProductMarkets Advantages/InnovationThemes Markets/Opportunities
Agbiosciences; Precisionagriculture
LargeArrayAcross
Ind.&NutritionalBiotech; Enhancedseed&plant
Ag&Food AgProduction; improvement/protection
Imaging &Sensing; Highervalueaddedfood
Production FoodMfg;
Internet, WirelessComputer (additives,functionalfoods)
Packaging Techs FoodSafety&Intelligence
Conveyorequip;Cutting&
machinetools;Pumping Imaging &Sensing;Valves,
Automation& Seals,FluidControl;
equip;MetalValves; Industrialprocesscontrols
Industrial Metalworkingmachinery; sensingsystems
Internet, WirelessComputer
Machinery Ind.Processinstrs,controls; Techs;TurbineFuelTechs
Ind Molds
Search,detection,& Imaging &Sensing;Internet, Unmannedaerialsystem

Avionics& electronics
navigationinstruments; WirelessComputerTechs;
Comm. Aircraftengines&parts; ElectricalSwitching,Power Consumerrelatedelectronicsfor
Electronics EngineeringSvcs Controls;Antennas aviation
Agbio incls:AgFeedstocks, Biobasedchemicals&products

Ethanolmfg,Agchemicals; Agbiosciences;Industrial& Medicalimaging&software
Biosciences Medicinal &botanicalsmfg; NutritionalBiotech; Animalhealth
Surgicalappliances; Biopharmaceuticals Biofuels
CommercialR&D Contractmanufacturing
Flatglassmfg;Woodoffice
Building& furniture;Showcases, AdvancedMaterials;
Construction partitions;Cutstone;Wood NetZeroenergyproducts
windows;Trussmfg; Sustainability
Products
Concrete;Ornamentalmetal
Blood&organbanks;
Nursingcarefacilities;
Healthinformatics
HealthServices Residentialmental& Biopharmaceuticals
Clinicalresearch
substanceabusefacilities;
Kidneydialysiscenters
Farmmachinery&equip;
Agbiosciences;AgMachinery
Constructionmachinery; Precisionagriculturerelated
&Vehicles;Imaging&
HeavyMachinery Vehicles:tires,carburetors, equipmentandmachineryand
Sensing;Valves,Seals&Fluid
pistons,powertrain,metal associatedservices
Control;AdvancedMaterials
stamping;Motorhomes
Customcomputer Enterprise&cloudcomputing
InfoSvcs,Digital programming;Systems Dataanalytics/customerinsights
Internet,WirelessComputer
Media& design;Ecommerce; DomainspecificapplicationsAg,
Technologies HealthIT,Educ.Software,Logistics
Technology Computerfacilities;
Publishing Mobileapplications
Comm.banking&creditunions;
Mortgage&nonmortg.loan
Insurance& brokers;Commoditycontracts
Internet,WirelessComputer Financialtransactionsprocessing
brokers;Claimsadjusting;Fin.
Finance Transactionsprocessing; Technologies Mobilefinanceapplications
Securities;Portfoliomgmt.;
Pensionfunds
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IndustryDrivers/Target IACompetitive IllustrativeGrowth
IndustryCluster
ProductMarkets Advantages/InnovationThemes Markets/Opportunities
Aluminumfoundries,die
casting&sheet/plate/foil
PrimaryMetals
mfg;Steelfoundries,pipes, AdvancedMaterials Nextgenerationaluminumalloys
Mfg. wire;Iron&steelmills;Iron
foundries
Ethanol/biofuels;Turbine& Biofuels
Renewable Industrial&Nutritional
turbinegenerators;Storage Windgeneration
Energy Biotech
batteries Energystorage
WholerangeacrossTDL
Transport., including:
Warehousing; Freighttrucking Logisticsmanagement&consulting
Distribution,& N/A svcs.
(general&longdistance);Broad
Logistics wholesaletrade;Logistics Intermodaltransportation
process&consultingsvcs

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Iowa&#39;s Re-Envisioned Economic Development Roadmap

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Iowa&#39;s Re-Envisioned Economic Development Roadmap

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Iowas Re-Envisioned

A Higher Standard of Living for Iowa

Major Industry Clusters

Economic Development Activities

Attraction Innovation Retention

Physical Business Entrepreneurial

AgricultureandFood AgriculturalProduction ConAgraFoods,Barilla,Heinz,GeneralMills,

Automation&Industrial Industrialmachinery VikingPump,ProgressiveToolCompany,EFCO,

Avionics& Search,Detection,&Navigation RockwellCollins;Goodrich;Honeywell

Biosciences AgriculturalFeedstock&Chemicals, ADM;BoehringerIngelheim;DuPontPioneer;

Building&Construction Windowsanddoors(bothwoodand Pella,HON,Curries/AssaAbloy,OmegaCabinets

HeavyMachinery PrimaryAg&ConstructionMachinery JohnDeere;Caterpillar;SauerDanfoss;

HealthcareServices OutpatientCareCenters UniversityofIowaHealthCare,MercyMedical

InformationServices, Software&ComputerServices CDSGlobal,DatavisionResources(Equifax),TM1

Insurance&Finance Insurance PrincipalFinancial,AEGON/Transamerica,

PrimaryMetals Iron,Steel,Aluminum,Nonferrous SSAB(SwedishSteel);PMXIndustries(Copper);

RenewableEnergy WindTurbines Siemens;GEWindEnergy;AccionaWindpower;

Transportation, Wholesale PerishableDistributorsofIowa,LTD.(HyVee);

Higher Share of Presence of

Agriculture & Food

Automation & Industrial

Avionics & Comm.

Building & Construction

Info Svcs, Digital Media

Insurance & Finance

Transp., Distribution, &

IndustryDrivers/Target IACompetitive IllustrativeGrowth

Search,detection,& Imaging &Sensing;Internet, Unmannedaerialsystem

Agbio incls:AgFeedstocks, Biobasedchemicals&products

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Iowa's Re-Envisioned Economic Development Roadmap

Iowa's Re-Envisioned Economic Development Roadmap