HomeMy WebLinkAboutStillwater Economic Development Strategy Phase I (1986)STILLWATER AREA
ECONOMIC DEVELOPMENT STRATEGY
_s
PHASE ONE
JUNE, 1986
_3
1MA, Inc.
STILLWATER AREA
ECONOMIC DEVELOPMENT STRATEGY
Phase One
June, 1986
Sponsored by the
Stillwater Area Chamber of Commerce
Prepared By
JMA, Inc.
Economic Consulting Services
with Guidance From the
Business and Industry Committee
of the
Stillwater Area Chamber of Commerce
CONTENTS
PAGE
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . i
A . Economic Analysis . . . . . . . . . . . . . . . . . . . . . 1
1. Regional Economic Trends . . . . . . . . . . . . . . . 1
2. Washington County . . . . . . . . . . . . . . . . . . . 5
Major Strengths . . . . . . . . . . . . . . . . . . . 9
Problem Areas . . . . . . . . . . . . . . . . . . . . 9
Summary . . . . . . . . . . . . . . . . . . . . . . . 10
3. The Stillwater Area Economy . . . . . . . . . . . . . . 11
4. Summary . . . . . . . . . . . . . . . . . . . . . . . . 19
B. Potentials and Constraints Analysis . . . . . . . . . . . . 21
1.
"Quality of Life Factors" . . . . . . . . . . .
. . . . 22
2.
Minnesota Business Climate . . . . . . . . . .
. . . . 23
3 .
Labor Force . . . . . . . . . . . . . . . . . .
. . . . 24
4.
Lack of Organized Development Effort . . . . .
. . . . 25
5.
Proximity to the Twin Cities . . . . . . . . .
. . . . 27
6.
Local Business Climate . . . . . . . . . . . .
. . . . 28
7.
Industrial Park . . . . . . . . . . . . . . . .
. . . . 29
8 .
Summary . . . . . . . . . . . . . . . . . . . .
. . . . 30
Appendix
Glossary of Terms . . . . . . . . . . . . . . . . . . . . . 31
Selected Standard Industrial Classification Codes . . . . . 33
Preface
This report documents the first of two phases in the Stillwater Area
Economic Development Strategy. The first phase includes two elements:
1. Economic Analysis
2. Potentials and Constraints Analysis
The economic analysis is intended to provide an understanding of the
economic make -up of the Stillwater Area, which includes the Cities of
Stillwater, Bayport, Oak Park Heights, and Lake Elmo and the surrounding
townships (see Map 1). Key economic activities are identified and the
relative importance of these activities is explained. The local economy is
also examined in terms of activities which may offer potential for expan-
sion, as well as those which are currently at or near local market satura-
tion. Economic activity in Washington County and the Twin Cities metro
area is also analyzed.
The potentials and constraints analysis presents a listing and evaluation
of factors which give the Stillwater Area a comparative advantage for
developing and substaining productive activities, as well as factors which
may tend to limit or inhibit economic development in the community.
The information and analysis resulting from the first phase establishes
the foundation for the Stillwater Area Economic Development Strategy. The
second phase, which is to be documented in a separate report, also includes
two elements:
1. Target Industries Analysis
2. Implementation Plan
The target industries analysis identifies economic activities, particularly
manufacturing industries, which offer the best prospects for added employ-
ment in the Stillwater Area. Targeting enables the community to establish
an effective economic development program by finding industries whose
locational needs match local circumstances and ruling out industries which
are not good candidates for location in the Stillwater Area.
The implementation plan establishes a course of action to take advantage
of potentials and eliminate constraints, and to implement the recommen-
dations of the target industries analysis. It provides guidelines for a
marketing program, establishes priorities, and delineates responsibilities
among various groups and agencies within the private and public sectors.
i
A. ECONOMIC ANALYSIS
1. Reaional Economic Trends
The Stillwater Area and Washington County are part of the state - defined
economic region (Region 11) which includes the seven counties in the Twin
Cities Metropolitan Area (Anoka, Carver, Dakota, Hennepin, Ramsey, Scott,
Washington). This economic region represents roughly 60 percent of the
non -farm covered employment in the State of Minnesota and is the largest
economic node in the Upper Midwest. The economy of the Twin Cities
Metropolitan Area has demonstrated solid growth during the 1970's and early
1980's. The area economy is fairly well- diversified, which has helped it
to come through most recent recessionary periods in good shape. The region
also has a mix of economic activities which includes a number of growth
industries such as computers, food processing, air transportation, medical
technology, and financial services.
In 1984 the Twin Cities area was home to sixteen of the Fortune 500 largest
industrial corporations. Only five other metro areas in the United States
were home to as many or more Fortune 500 firms. Firms on the Fortune 500
list include 3M, Honeywell, General Mills, Control Data, and Pillsbury.
Some of the other large firms based in the Twin Cities, but which are not
on the Fortune list, are Cargill, Andersen Corp., Dayton- Hudson, Northwest
Airlines, Republic Airlines, Northern States Power, Super Valu,
Deluxe Check Printers, and GELCO.
Employment trends in the Twin City metro area for the period 1978 -1984 are
summarized in Table 1. Despite a major national recession during 1980-
1982, and despite the continuing agricultural crisis, total employment in
the metro area grew by about 125,000 jobs during the period (12.8 percent
growth). Employment growth occurred in all of the major industry groups
except construction and government. The construction industry has been
seriously affected by the economic slump of the early 1980's, but has shown
a remarkable comeback since 1982.
Except for mining, which comprises a very small share of total employment,
the fastest growing industry groups have been services and finance,
insurance and real estate (FIRE). Services include a wide variety of
activities ranging from personal services (e.g., barber shops and dry
cleaners) to professional services (e.g., physicians and lawyers) to
business services and repair services. Table 2 summarizes employment
trends within the broad service industry in the Twin City metro area.
Health services represents the largest category of service employment (28.3
percent of all service jobs), followed by business services (25.3 percent),
social services (7.7 percent) and miscellaneous services (5.3 percent).
Business services was one of the fastest growing service sectors between
1978 and 1984 (58 percent employment growth for the period). Nearly 24,00
jobs were created in this sector during the period, more than any other
service sector.
1
Finance, insurance, and real estate, the second - fastest growing major group
during the period, represents slightly more than seven percent of total
Twin Cities employment. Table 3 summarizes recent employment trends within
the FIRE group. Insurance carriers comprise the largest sector within the
group, and more new jobs were added within this sector than any other in
the group between 1978 and 1984.
Table 1
Table 2
Employment Trends By Major Industry Group
Employment Trends in the Service Industry
Twin
Cities Economic Region
Twin Cities Economic Region
1978 -1984
1978 -1984
(in thousands)
(in thousands)
Percent
Percent
Service Type
Charge
1980
1978 1980
1982
1984
1 78 - 1 84
Agriculture, Forestry S Fishing
4.2 4.6
4.5
5.0
19.0
Mining
.4 .7
.8
.9
125.0
Construction
41.2 44.3
34.9
40.9
(.7)
Manufacturing
230.5 244.4
231.5
249.1
8.1
Transportation, Communications 6
10.0
22.0
Misc. Repair Services
3.1
Utilities
50.3 54.8
53.1
57.5
14.3
Trade
252.6 264.1
258.6
279.0
10.5
Finance, Insurance 6
8.9
10.7
11.2
11.9
Real Estate
62.7 68.5
71.1
77.6
23.8
Services
193.4 220.2
225.8
254.5
31.6
Government
135.7 128.2
131.6
131.4
(3.2)
Total
971.3 1039.8
1011.8
1095.8
12.8
Source: Minnesota Department of Economic Security
15.3
17.3
19.7
Finance, insurance, and real estate, the second - fastest growing major group
during the period, represents slightly more than seven percent of total
Twin Cities employment. Table 3 summarizes recent employment trends within
the FIRE group. Insurance carriers comprise the largest sector within the
group, and more new jobs were added within this sector than any other in
the group between 1978 and 1984.
Table 2
Employment Trends in the Service Industry
Twin Cities Economic Region
1978 -1984
(in thousands)
Percent
Service Type
1978
1980
1982
1984
Change
0 78 - 1 84
Hotels 6 Lodging Places
9.6
10.3
10.3
11.7
21.9
Personal Services
10.1
10.9
11.0
13.1
29.7
Business Services
40.9
49.3
48.4
64.5
57.7
Auto Repair b Other Services
8.2
8.6
8.7
10.0
22.0
Misc. Repair Services
3.1
3.6
3.1
3.2
3.2
Motion Pictures
1.7
1.9
1.9
1.9
11.8
Amusement 6 Recreation
8.9
10.7
11.2
11.9
33.7
Health Services
60.5
68.1
70.4
71.9
18.8
Legal Services
5.3
6.2
7.5
8.5
60.4
Educational Services
8.9
9.7
9.8
10.7
20.2
Social Services
13.6
15.3
17.3
19.7
44.9
Museums and Zoos
.7
.9
.7
.8
14.3
Membership Organizations
10.7
11.5
11.7
12.1
13.1
Private Households
.8
.9
.9
1.1
37.5
Misc. Services
10.4
12.4
12.9
13.6
30.8
TOTAL
193.4
220.3
225.8
254.5
31.5
Finance, insurance, and real estate, the second - fastest growing major group
during the period, represents slightly more than seven percent of total
Twin Cities employment. Table 3 summarizes recent employment trends within
the FIRE group. Insurance carriers comprise the largest sector within the
group, and more new jobs were added within this sector than any other in
the group between 1978 and 1984.
MAP 1
STILLWATER AREA
LE
OLK
...........
PRAIRME
0
ST. CROIX
0 ROBERTS
An777M?,
Itp ;—"—* -------
ICE
p'""'60 ay:llm
lo,-86
Table 3
Employment Trends in FIRE
Twin Cities Economic Region
1978 -1984
(in thousands)
Percent
Change
Sector
1978
1980
1982
1984
1 78 - 1 84
Banking
13.8
16.3
17.0
16.3
18.1
Non bank credit Agencies
6.3
6.3
6.6
8.8
39.7
Security Brokers
4.0
4.4
5.3
6.5
62.5
Insurance Carriers
20.4
21.8
22.2
24.0
17.6
Insurance Agents
5.3
6.0
6.6
7.0
32.0
Real Estate
11.9
12.4
12.0
13.0
9.2
Holding & Investment Offices
1.1
1.2
1.4
2.0
81.8
TOTAL
62.8
68.4
71.1
77.6
23.6
Source: Minnesota Department of Economic Security
Manufacturing industries generally represent a large percentage of total
local employment. Also, manufacturers are largely "basic" employers (i.e.,
predominantly serving markets outside of the local economy) and often pay
higher wages. Thus, manufacturing has traditionally been viewed as an
important element in an urban economy. Manufacturing accounted for about
22.7 percent of all non -farm jobs in the metro area in 1984, down from 23.7
percent of the total in 1978. The Twin Cities area has historically been
less dependent on manufacturing industries than other major urban areas in
the northern United States. It has also had a more diversified manufactur-
ing base and has been less dependent on durable goods production than most
other areas.
4
Table 4
Manufacturing Employment Trends
Twin Cities Economic
Region
1978 -1984
PERCENT
SIC
INDUSTRY
1978
1980
1982
1984
CHANGE
20
Food Products
19190
18299
17789
17506
-8.88
22
Textile Mill Products
801
631
23
Apparel & Fabric Products
4115
4023
1712
1645
-60.08
24
Lumber & Wood Products
5248
4510
3992
4913
-6.48
25
Furniture and Fixtures
1620
1585
1426
1772
9.4%
26
Paper and Allied Products
23906
24735
24108
25154
5.26
27
Printing and Publishing
20928
22939
24047
27585
31.78
28
Chemicals & Allied Products
5638
6083
6188
6546
16.1%
29
Petroleum & Coal Products
1423
1454
1559
1575
10.78
30
Rubber & Plastic Products
6840
7218
6406
7663
12.08
31
Leather Products
335
545
465
519
54.98
32
Stone, Clay & Glass Products
3051
3018
2913
3078
0.98
33
Primary Metal Industries
5219
5165
4213
4687
-10.28
34
Fabricated Metal Products
27931
28898
26445
27384
- 2.06
35
Machinery, except electrical
54433
64295
61458
69898
28.48
36
Electrical & Electronic Equip.
19439
18382
17579
16730
-13.98
37
Transportation Equipment
5299
4189
3032
3787
-28.5%
38
Instruments & Medical Products
20297
24075
22881
24300
19.78
39
Misc. Manufacturing
5610
5032
4470
3707
-33.98
All Manufacturing
230532
24445
231484
249080
Source: Minnesota Department
of Economic Security
4
Table 4 summarizes employment trends for the 1978 -1984 period for 2 -digit
SIC industries within the manufacturing group. While total employment in
manufacturing increased by about eight percent during the period, almost
half of the industry types experienced declines in employment. In terms of
the number of jobs lost, the biggest declines were in electrical and
electronic equipment (2709 jobs), apparel and fabric products (2470),
miscellaneous manufacturing (1903), food products (1684), and transporta-
tion equipment (1512).
Non - electrical machinery (SIC 35) is the largest manufacturing employer in
the Twin Cities metro area. With nearly 70,000 employees in 1984, it
accounted for 28 percent of all manufacturing jobs. Non - electrical
machinery has also been the source of the most manufacturing jobs in the
area (15,465 jobs between 1978 and 1984). The job creation within non-
electrical machinery was about 83 percent of the net jobs added by all
manufacturing industries. Other manufacturing industries which have exper-
ienced considerable growth in the Twin Cities area in recent years are
printing & publishing (6647 jobs), instruments and medical products (4003),
and paper and allied products (1248).
2. Washington County
Washington County represents a relatively small share of total economic
activity in the Twin Cities economic region. More than 80 percent of all
jobs in the region are in the two central counties of Hennepin and Ramsey.
With 24,150 non -farm employees in 1978, Washington County had about 2.6
percent of all employment in the metro area. By 1984 the county's share of
total Twin Cities area employment had increased slightly to 2.9 percent.
Total employment in the county has increased fairly steadily during recent
years, as shown graphically in Figure 1. Employment trends in the county
are further detailed in Table 5. With the exception of mining, which is a
very small portion of total employment, all major industry groups have
experienced growth. In some industry groups employment growth has far
outpaced the rate of total employment growth in the county. These groups
include finance, insurance and real estate (FIRE), services, retail trade,
and construction. Although FIRE has been a rapidly growing sector in the
Twin Cities region as a whole, much of the growth in this sector in
Washington County may be attributed to the establishment of a major
insurance office facility in Woodbury. There has been growth in manufact-
uring, wholesale trade, and transportation, communications and util-
ities, all at rates which exceed national averages for these industry
groups. However, the significance of these industry groups within the
county's economy appears to be decreasing, because they represent decreas-
ing shares of total county employment.
It is useful to look at changes in the county's economy and to compare
Washington County's economy with that of the larger Twin Cities area.
However, it is also useful to gain a perspective on the local economy by
observing its performance in recent years relative to that of the nation.
To -do so,.the_ technique _ used here is "shift- share" analysis.
5
FIGURE 1
1: i:: _J i``l 1_ ' �-,..�... �..� I t: r "•i t T
1 S'7 1i -1 .148
..__.._....._._.—.__._..........._..__._......._.____..__—.._._._—._._..._..._......_......__......._._._....__— ......... _ ... ...... _ ...... .....
...
6
:W:4 Et
.w.y .
LC
I it —
1
14-. —
10
•
191 75 1:.-N '19 79 19-81 1:.183 19E6
I) �'f 1= ..rr'!F:ac:r,;r.!'7r_riL• a• Ivlf+_1. rr•nF:�!•;.�,� rr!�_:rd:
Table 5
Washington County Employment Trends
1975 -1985
2
Percent
Industry Group
1975 1980
1985
Change
1975 -85
Agriculture, Forestry,
and Fishing
172 304
391
127.38
Mining
16 14
14
14.3
Construction
593 950
1048
76.7
Manufacturing
4750 6853
6826
43.7
Transportation, Comm.,
and Utilities
1516 1998
2368
56.2
Wholesale Trade
550 693
776
41.1
Retail Trade
3925 6043
6986
78.0
FIRE
378 1337
2177
475.9
Services
2306 3737
5025
117.9
Government
4779 5667
5754
20.4
TOTAL
18,985 27,596
31,365
65.2
Source: Minnesota Department of Economic Security
Shift -share analysis is a useful technique for
measuring changes in a study
area's economy by comparing
it to a larger "benchmark" economy (usually the
United States as a whole).
Employment is normally
used as a measure of
economic growth and change,
and shift -share analysis
separates employment
changes in various sectors
of the local economy
into
three basic components
and measures change in these sectors over time.
2
The first of these components measures the impact of total national
employment change on the local ecomony. The national growth component
tells us the potential change in local employment that would be expected if
each sector in the local economy grew at the.same rate as the total
national employment level during a specific time period.
Beyond the effects of national economic growth on a local economy, it is
necessary to explain other growth differentials that have taken place over
time. A local economy can have a faster or slower growth rate than the
nation because of either its "industrial mix" or its "competitive share."
The industrial mix component, as its name implies, measures local employ-
ment changes which may be attributed to the local industrial make -up.
For example, a local economy may be comprised of more fast - growing indus-
tries relative to the nation, and it would be labeled as having a "favor-
able growth mix." Of course, a local economy may have a disproportionate
share of slow - growth or declining industries, and the industrial mix
component would reveal this as well.
The competitive share component takes into account the difference between
actual performance and hypothetical or expected growth (from the first two
components). This component measures the ability of the local economy to
capture an increasing (or decreasing) share of a particular industry's
market.
The information generated by calculating the competitive share component is
perhaps the most interesting and the most revealing of the three because it
serves as an indicator, to some extent, of the efficiency, management
skills, and aggressiveness demonstrated by local firms. The industrial mix
component also provides useful information for economic development
officials because it identifies fast - growing and slow - growing industries,
and their relative contributions to local economic growth. The national
growth component serves as an "adjustment" to the data being analyzed,
while the industrial mix and competitive share components are more useful
in determining local economic development strategy.
Data of sufficient detail for a meaningful shift -share analysis are not
Available beyond 1983, so the period 1975 -1983 was used for this analysis.
This eight -year period is a good one for such an analysis because both the
base and end years were recovery years and are thought to be relatively
representative of similar economic conditions. Total county employment
(including farm employment) increased from 20,235 to 28,061 during the
period, for a net increase of 7,826 (38.7 percent).
The shift -share analysis reveals that total employment nationally increased
by 15.62 percent between 1975 and 1983. Washington County's employment
growth which may be attributed to national growth, therefore, amounted to
approximately 3161 jobs. The county's growth rate exceeded that of the
nation by roughly 23.1 percentage points, and this margin is made up of the
net results of totaling the industrial mix and competitive share components
described in the previous section.
Washington County has a favorable growth mix of industries, which means
that the county has experienced an overall employment gain because of its
fast - growing industries (relative to the 15.62 percent national average).
An estimated 547 jobs created in Washington County between 1975 and 1983
may be attributed to this favorable growth mix. The county's industrial
mix component is summarized in Table 6.
i
Table 6
Summary of Industrial Mix Component
Washington County Shift -Share Analysis
1975 -1983
Industry Group
Mining /Construction
Manufacturing
Trans., Communication & Public
Utilities
Wholesale /Retail
finance, Insurance & Real Estate
Services
Government
Agriculture
Number of Number of Net
fast - growing slow -growing Employment
Sector Sectors Contribution
1 3 (48.1)
4 9 (326.1)
3 3 (17:1)
5 4 592:4
6 1 63.1
11 3 696.8
— 3 (355.3)
1 (13.6)
30 27 542.4
The 30 relatively fast - growing sectors provided 1302.jobs, while the 27
slow- growing /declining sectors "lost" 760 jobs. The net gain resulting
from the county's industrial mix (542 jobs) can be largely attributed to an
improving position as a trade and service center.
The competitive share component also provided some interesting results.
The expected increase in employment based upon the national growth rate was
3161. Because of Washington County's industrial mix there were another 542
jobs added to the employment level. However, actual employment growth was
7826, which exceeded the sum of the national growth and industrial mix
components by 4123. This figure represents the county's competitive share
component for the eight -year period, meaning that the county's industries
have done quite well in capturing increasing shares of growth and increased
shares of markets.
Of the 57 economic sectors for which data are presented, 42 have achieved
increased competitive shares. In this case the number of sectors increas-
ing exceeds the number decreasing, but again the overall mix of industries
is important (See Table 7). The major groupings that have contributed most
to increased competitive shares are finance, insurance & real estate,
services, and trade. Within the FIRE category, all sectors achieved
apparent increased competitive shares.
Table 7
Summery of Competitive Share Component
Washington County Shift -Share Analysis
1975 -1983
.
Net
Number of
Number of
Employment
Industry Group
Sectors Gaining
Sectors Losing
Gain (Loss)
Mining /Construction
2
2
100.8
Manufacturing
10
3
458.4
Trans., Communication, & Public
Utilities
2
4
(136.7)
Wholesale /Retail
8
1
933.2
Finance, Insurance & Real Estate
7
-
1,549.7
Services
10
4
1,028.3
Government
3
-
420.8
Agriculture
_
1
231.7)
TOTAL
42
15
4,122.8
.
* Major Strengths
Table 8 lists those industries which had significant gains in competitive
share (i.e., had growth rates significantly above national average in their
respective industry). There are 18 such industries identified in Table 8.
It is interesting to note that in manufacturing the county is gaining
increasing shares of slow growing or declining industries. This should be
a source of some concern. In retailing there was rapid growth in both
growing sectors as well as declining ones. In services Washington County
had several sectors which far outpaced the national averages.
Table 9 lists those industries which have experienced employment declines
nationally, but which have shown growth locally. Between 1975 and 1983
there were seven such sectors in Washington County. It is worth noting
that three of the seven are manufacturing industries, which helps to
explain why the county had an unfavorable mix in the manufacturing sector.
The rapid growth in the two retail sectors which are bucking national
trends may be attributed to large population increases within the county.
Table 8
Industries Contributing Over 100 Jobs
Through Gains In Competitive Share
Washington County, 1975 -1983
Employment
G ins From
Increased % Change %Change
SIC DESCRIPTION Competitive Share U.S. Washington County
17
Special Trade Contractors
120
14.0
50.2
28
Chemicals & Allied Products
173
5.0
28.0
34
Fabricated Metal Products
152
3.0
68.5
36
Electric s electronic Equip.
134
16.5
151.5
39
Miscellaneous Manufacturing
119
- 4.0
900.0
52
Building Materials 6 Garden
Supplies
113
- .4
42.1
54
Food Stores
314
- 11.6
150.7
58
Eating 6 Drinking Places
171
50.3
61.0
60
Banking
130
30.3
93.7
63
Insurance Carriers 1,093
10.8
11000.0+
65
Real Estate
128
24.9
160.0
79
Amusement E Recreation Services
272
43.8
123.4
80
Health Services
518
42.8
102.4
83
Social Services
132
88.0
198.3
89
Miscellaneous Services
109
19.6
228.9
--
State Government
194
14.0
59.7
Local Government
218
7.8
12.9
Table 9
Industries Which
Are Declining in Employment
Nationally and Growing in Employment Locally
Washington county, 1975 -83
Percent
Change in Employment
SIC
DESCRIPTION
U.S.
Washington County
15
General Building Contractors
-10.3
6.4
23
Apparel s Other Textile Products - 3.1
33.3
35
Machinery, Except Electrical
- 4.1
9.4
39
Miscellaneous Manufacturing
- 4.0
900.0
44
Water Transportation
- 3.6
63.8
52
Building Materials s Garden Supplies - .4
42.1
53
General Merchandise Stores
-11.6
150.7
* Problem Areas
Although 30 of Washington County's industries gained competitive shares
during the study period, there were 27 which lost competitive shares.
enable 10 lists selected industries which experienced reduced competitive
share.
0
Similarly Table 11 lists selected industries which are growing in employ-
ment nationally, but;.which declined locally. There is no cause for great
alarm because of these decreases, but it is important to ask why industries
which have grown nationally have not been able to grow at the local level.
* Summary
Overall, Washington County's economy has performed well in recent years.
The county has a net favorable industrial mix (fast growing industries),
but not by a wide margin. Nine of the 13 manufacturing sectors represented
in the county are in declining or slow- growth industries nationally. This
fact suggests a need for an industrial development program to attract
new firms and start -ups to offset some of the slow- growth and declining
industries. The Stillwater Area should only be concerned about the
county's industrial mix to the extent that is is dependent on the slow -
growth/no- growth industries locally. For example, most of the manufactur-
ing industries which are slow - growth /no- growth nationally are not even
represented in the Stillwater Area.
Washington County's competitive share component is remarkable. Many of the
county's manufacturers appear to be getting larger shares of decreasing
markets, but how long can local firms be expected to grow in declining
industries? There have also been remarkable gains in industries which are
growing nationally (increasing shares of increasing markets). The Still-
water Area is well represented in these industries, especially in retailing
and services. This is good because it demonstrates that the community's
economy is responding to local population growth and that the Stillwater
Area is becoming a trade and service center for a larger market area.
However, a large share of retailing and service jobs are relatively low
paying. This, again, suggests a need for a better balance in economic
growth, which could be accomplished through a formal economic development
program.
10
Table 10
Industries Experiencing
Selected Reduced Competitive Share
Washington County, 1975 -1983
Employment
LOW
Change 9 Change
Reduced
SIC
DESCRIPTION U.S. Wash. Co.
Competitive Share
20
Food & Kindred Products -1.9 -33.7
- 89
29
Petroleum & Coal Products 3.2 -50.0
-399
41
Passenger Transit 34.7 .5
- 68
42
Trucking & Warehousing 9.9 - 5.6
- 76
49
Electric, Gas & Sanitary
Services 20.0 - 5.7
- 77
50
Wholesale Trade 24.4 11.0
- 92
Table 11
Industries Which Are Growing in Employment
Nationally and Declining in Employment Locally
Washington County, 1975 -1983
Present Change In Employment
SIC
DESCRIPTION U.S. Washington County
16
Heavy Construction Contractors 22.9 -13.0
25
Furniture and Fixtures .3 -20.0
29
Petroleum & Coal Products 3.2 -50.0
42
Trucking & Warehousing 9.9 - 5.8
49
Electric, Gas & Sanitary Services 20.0 - 5.7
86
Membership Organizations 48.4 - 4.6
* Summary
Overall, Washington County's economy has performed well in recent years.
The county has a net favorable industrial mix (fast growing industries),
but not by a wide margin. Nine of the 13 manufacturing sectors represented
in the county are in declining or slow- growth industries nationally. This
fact suggests a need for an industrial development program to attract
new firms and start -ups to offset some of the slow- growth and declining
industries. The Stillwater Area should only be concerned about the
county's industrial mix to the extent that is is dependent on the slow -
growth/no- growth industries locally. For example, most of the manufactur-
ing industries which are slow - growth /no- growth nationally are not even
represented in the Stillwater Area.
Washington County's competitive share component is remarkable. Many of the
county's manufacturers appear to be getting larger shares of decreasing
markets, but how long can local firms be expected to grow in declining
industries? There have also been remarkable gains in industries which are
growing nationally (increasing shares of increasing markets). The Still-
water Area is well represented in these industries, especially in retailing
and services. This is good because it demonstrates that the community's
economy is responding to local population growth and that the Stillwater
Area is becoming a trade and service center for a larger market area.
However, a large share of retailing and service jobs are relatively low
paying. This, again, suggests a need for a better balance in economic
growth, which could be accomplished through a formal economic development
program.
10
3. The Stillwater Area Economy
The Stillwater Area comprises a major part of the Washington County
economy. Again using employment as a measure, the Stillwater Area repre-
sents about 38 percent of the county's employment base. Total employment
in the Stillwater Area has grown at a faster rate than the county as a
whole in recent years (See Table 12 and Figure 2).
Detailed employment statistics below the county level of geography are not
available in Minnesota, but such data are needed to perform a good analysis
of a local economy. Therefore, a special survey of Stillwater Area
employers was conducted in April, 1986. The survey provided employment
figures for approximately 90 percent of the employers in the Stillwater
Area, using a three -digit Standard Industrial Classification (SIC) level of
disaggregation. This data base is used for much of the remaining economic
analysis.
FIGURE 2
I: �_ �!� "a' i:.:i .:3 I
1:: rn �d • .r• rrr i 'm: rr1 ..l..f .m: r1'1:.: '1 'Y" ..... •1 '48 -4
Cl
101 . : ,..11.
1.7 :.7 :fl ?::1" a5 i - ta::1
3 r
Con,
11
1 $i' i' _i '19 . ; 1 � `*:il � 1 � 81
Table 12
Stillwater Area /Washington County
Total Employment: 1977 -1984
Percent
1977 1978 1979 1980 1981 1982 1983 1984 Change
Stillwater Area 8019 9533 10,154 10,415 9520 9825 10,864 12,382 54.4
Washington County 21593 24150 26,937 27,600 27322 27322 28,369 30,516 41.3
Source: Minnesota Department of Economic Security
A community's economic vitality is dependent upon its economic base
activities or export base. A community's export base is comprised of those
sectors of the local economy that export goods and services to other
communities, outlying areas, and other parts of the state, nation and
world. For instance, it is quite apparent that an important part of
Stillwater Area export base is the manufacture of millwork, especially
windows. These products are then transported and marketed throughout the
region and nation. Such basic employment is an important source of
income for the Stillwater Area, generating further economic activity among
other sectors of the local economy.
This concept can be applied to any community using an analytical tool known
as the location quotient. This tool helps to identify export activities
and to measure their relative importance to the area. The location
quotient compares local employment to national averages (on a percentage
basis) for each type of economic activity. If the employment in a particu-
lar activity in the community is above the national average, it is
contributing to basic employment. Industries which employ proportionately
less in the community than their equivalent on a national scale are called
non -basic or support industries. Their purpose is to recirculate the
income brought in by export industries.
Table 13
Percent of Total Employment in Major Industry Groups:
Stillwater Area and United States, 1986
* Indicates export (basic) industry
** Rounding error
12
Stillwater
United
Location
Industry
Area
States
Quotient
Agricultural Services
.32
4.45
.1
Mining
.14
1.00
.1
Construction
2.67
4.86
Manufacturing
28.88
24.03
1.2*
Transportation, Communication 8
Public Utilities
2.45
4.47
.7
Retail Trade
22.07
15.98
1.4*
Finance, Insurance & Real Estate
4.30
5.44
.8
Services
18.74
17.70
1.1*
Government
18.00
16.36
1.1*
TOTAL
100.2 **
100.2 **
* Indicates export (basic) industry
** Rounding error
12
on a highly aggregated basis, the concepts of basic and non - basic
industries and location quotients are used in Table 13. The economic
base of the Stillwater Area is in several major sectors: manufacturing,
retail trade, services, and government. These four major ,hectors account
for almost 88 percent of total local employment. Consequently, the other
sectors of the economy are disproportionately small. While there are
inherent problems in expecting the Stillwater Area to reflect average
national employment distribution, extreme divergence from "norms" may be
cause for concern.
Manufacturing firms such as Andersen, UFE, and Press -on clearly are
producing goods far in excess of local demand. These and other manufactur-
ers in the community are exporting their output to other parts of the
state, region, nation and, perhaps, the world.
The Stillwater Area's strength in retailing comes as a result of the
community's position as a trade center, attracting shoppers from outside of
the immediate community to spend money at local stores. Also, the retail
sector is an export industry in the Stillwater Area because of the commun-
ity's ability to attract visitors /tourists. A large portion of any
community's retail sector is usually non - basic, serving strictly local
needs. As the local population expands, the local retail sector will also
have to expand in order for retailing to maintain its position as an export
industry. The community may also try to penetrate retail markets more
effectively or to reach further out to attract shoppers.
Another prevailing strength in the Stillwater Area is the service sector.
Services have been a source of growth on the national level in recent
years, and local growth in this broad group of activities appears to have
kept pace with, if not exceeded, growth in this group nationally. Major
service industries in the Stillwater Area include health services, amuse-
ment & recreation services, social services, auto repair services, and
membership organizations. The local service sector does not appear to be
overly dependent on any one or a few of these service industries. However,
it is important to consider the potential for continued growth in these
industries. For example, the potential for new jobs in amusement and
recreation services and hotels /motels appears bright as the community
builds on its already strong recreation and tourism base. But hospital and
health services would not appear to have much potential because of the
proximity to the extensive medical services available in the Twin Cities.
It may be difficult to think of government as an export industry. However,
because of Stillwater's position as the county seat, and the location of
the correctional facility in Bayport, the Stillwater Area has a higher
level of employment in government than might otherwise be expected.
Government employment is generally more stable than other sectors; it is
not likely to be a source of'economic growth for the community, but a major
drop in government jobs in the area in the foreseeable future is unlikely,
too. As the population grows in the county and the school district,
though, additional government employment is likely, and the community may
strengthen its position as an exporter within this sector.
The - statistics - presented in Table 13 represent a useful, but still simplis-
tic, means of economic analysis. The location quotient concept can be
carried further to analyze local economies in considerably more detail.
Location quotients have been generated for 138 industries in the Stillwater
Area. Based on the location quotient analysis, the largest basic employers
in the Stillwater Area are identified in Table 14 (all SIC's with 50 or
more basic employees are listed).
1 s
_.LJ
Table 14
Largest Basic Employment
Stillwater Area
1986
sIC
243
275
307
503
521
541
543
58
593
602
799
801
807
823
83
Total Basic
Location Employment Employment
DESCRIPTION Quotient Range Range
Millwork
Commercial Printing
Misc. Plastics Prod.
Lumber 6 Construction
Materials
Bldg. Materials, etc.
Grocery Stores
Fruit Stores /Veg. Markets
Eating & Drinking Places
Used Merchandise Stores
Commercial Banking
Amusement & Recreation
Offices & Physicians
Medical Dental Labs.
Libraries /Info. Centers
Social Services
Local Government
81.5
2000+
2000+
7.9
500- 999
500 -999
4.4
250 -499
250 -499
2.6
50-99
50-99
4.0
100 -249
100 -249
1.4
250 -499
100 -249
61.0
100 -249
100 -249
1.1
500 -999
50-99
7.2
50-99
50-99
1.2
250 -499
50 -99
2.3
100 -249
50-99.
2.1
250 -499
100 -249
4.6
50-99
50-99
33.7
50-99
50-99
1.8
250 -499
100 -249
1.9
500 -999
250 -499
Some of the industries listed in Table 14 are nearly totally basic (i.e.,
virtually all of the employment is devoted to production for export out of
the Stillwater Area). Such is the case with Millwork (Windows), Misc.
Plastics Products, Commercial Printing, and Medical /Dental Laboratories.
However, many industries which are large sources of basic employment are
also large Sources of non -basic employment. This is true of Grocery
Stores, Eating & Drinking Places, Commercial Banking, Offices of Physi-
cians, and Local Government. These are all activities which are oriented
toward meeting local needs, but the Stillwater Area is apparently serving
others outside the immediate area in these activities as well.
In addition to the larger basic employers identified in Table 14, the
Stillwater Area has a wide variety of other industries which are exporting
goods and services. A list of selected industries with location quotients
above 1.0 is presented in Table 15. These are all economic activities
which are bringing dollars into the community. Although the significance
of these activities as sources of income to the community may be small,
collectively they are very important.
Table 16 lists selected industries with location quotients below 1.0.
These activities have been chosen because they would be expected to have
location quotients of at least 1.0 (meeting local needs) or even slightly
above 1.0 (serving outside markets). The fact that these activities have
location quotients below 1.0 does not offer conclusive evidence of a "gap"
in the local economy, merely a preliminary indication that such a gap
may exist.
There are many factors which can affect a location quotient, including
proximity to other economic centers, classification of activities, local
tastes and preferences, income levels, and efficiency of local firms. Many
of these problems can be overcome, or at least minimized, using a technique
known as Comparative Economic Base Analysis. This technique compares the
economic base of the Stillwater Area to that „of "similar” communities.
14
Table 15
Selected Industries With
Location Quotients Above 1.00
Stillwater Area - 1986
SIC
DESCRIPTION
LOCATION QUOTIENT
078
Landscape and Horticultural Services
1.2
140
Nonmetallic Minerals (mining)
5.1
179
Special Trade Contractors
1.2
346
Metal Forgings 6 Stampings
2,3
383
Optical Instruments 6 Lenses
1,9
411
Local Passenger Transportation
3,2
446
Water Transportation Services
2,5
450
Air Transportation Services
2,3
491
Electric Services
1.5
525
Hardware Stores
2.2
553
Auto S Home Supply Stores
2,0
555
Boat Dealers
5.4
559
Automotive Dealers, nec
13.1
569
Misc. Apparel S Accessories
8.3
572
Household Appliance Stores
2.2
599
Misc. Retail Stores
2,0
628
Security 6 commodity Services
1.2
723
Beauty Shops
1.2
724
Barber Shops
8.2
731
Advertising
1.3
753
Automotive Repair Shops
1.5
764
Reupholstery 6 Furniture Repair
2.4
802
Offices of Dentists
1.3
866
Religious Organizations
1.3
State Government
1.0
Table 16
Selected Industries With
Location Quotients Below 1.00
Stillwater Area - 1986
SIC
DESCRIPTION
LOCATION QUOTIENT
15
General Building Contractors
.7
171
Plumbing, Heating 6 Air Conditioning
.6
173
Electrical Work
.3
531
Department Stores
.7
551 _
New & Used Car Dealers
.7
562
Women's Ready- to-Wear Stores
.3
571
Furniture b Home Furnishings
.4
591
Drug 6 Praprietary Stores
.1
701
Hotels /Motels
.8
721
Laundry s Garment Cleaning Services
.4
762
Electrical Repair Shops
.8
793
Bowling /Billiard Establishments
.6
806
Hospitals
4
811
Legal Services
,7
891
Engineering 6 Architectural Services
.5
Local Education
,8
Perhaps the most important aspect in this process is finding communities
that are, indeed, similar to the Stillwater Area; that are experiencing
economic pressures comparable to those to which the Stillwater area is
exposed.
Such pressures present themselves in the form of the community's major
characteristics, most of which are well beyond the control of the community
such as:
1. Population
2. Income
3-Closeness-to Urban Centers
4. Transportation Linkages
5. Unique Attributes
All of these factors directly influence the composition of the economic
base and also dictate parameters on the development potential of the
economy. These factors are important for the following reasons:
15
I. Population - The volume and variety of potential trade services
activity is directly related to the size of a place, and its trade
area.
2. Income - The volume and nature of potential trade and service
activity is directly related to total and per capita income as
both reflect purchasing power of the area. To be comparable,
communities should be similar in both total and per capita income
levels.
3. Distance to Urban Centers - Communities in close proximity to
larger urban centers will interact with those populations in much
different ways than "free standing" places. Free standing places
(distant from other urban centers), by virtue of their relative
isolation, tend to exhibit more diversity than suburban communi-
ties. Hence, all communities must be compared to their counter-
parts when measuring economic potential.
4. Transportation Linkages - Communities with excellent highway
connections to the nearest urban center are likely to exhibit
different retail and trade patterns than those linked by poor or
hazardous roads.
5. Unique Characteristics - It may be impossible to find many
communities which are essentially identical and it is important to
consider the impact of their unique features on development
potential.
About 20 communities in Minnesota and Wisconsin were screened for their
similarities to the Stillwater Area. The three that were chosen were
Hastings and Red Wing, MN and Hudson WI. Additional communities from the
Twin Cities area were considered, but data accessibility for these communi-
ties was limited. Table 17 presents a profile analysis of the comparison
communities. It is important to note that there is no community which is
exactly like the Stillwater Area, but the three that were selected are
similar in several key aspects.
Table 17
Profile Analysis of Comparison Communities
Central City Primary Trade Household
Pop ulation Area Population Income
Stillwater Area 12970 30000 $22,929
Hastings 13430 20670 21,113
Red Wing 14204
20368 19,803
Distance to
Unique
Urban Center
Attributes
16 mi.,
County Seat, river
St. Paul
town, high rate of
computing
15 mi.,
County Seat, river
St. Paul
town, high rate of
commuting
40 mi.,
River town, county
St. —Paul -__—
-seat, Some
commuting
Hudson 8135 11540 18,828 18 mi., County seat, river
St. Paul town, high rate of
commuting
16
To compare the economic activity in the Stillwater Area to its counterparts
requires the use of two concepts. The first is the population - employment
ratio and the second is the "confidence interval." Rigorous treatment of
these concepts is essential to accurate analysis, but, simply, they convey
a range of economic activity that should occur in "like" economies. Any
unusual variance from this range would indicate two possibilities:
1. When an activity reflects fewer consumers per job
than would be expected from the experience of the
study communities, it suggests that the Stillwater
Area may have more employment in that activity than
the economic conditions would support. Hence, it may
become a candidate for employment contraction (i.e.
layoffs) if the economic base of the area becomes
threatened. On the other hand, it could also be a
reflection of better market penetration, lack of
competition in the area and /or better management that
allows for more employment than would be expected.
Nonetheless, any industry that falls below the range
developed needs special consideration.
2. The other possibility is when the number of people
(potential customers) per job is above the level
expected. This strongly implies an underdevelopment
in that business or industry. It is a situation where
more people are being supported by fewer workers.
Consequently, area residents are importing an unusual
amount of a particular good or service. Job.creation
becomes quite possible for industries so characterized
in the Stillwater Area. Whenever this condition
arises, it merits further investigation to determine
what is necessary to generate the jobs which would
make employment levels in the community consistent
with the experience of other similar economies.
Table 18 presents the latter scenario, i.e. industries that employ propor-
tionately fewer people than would be expected given the population and
income base of the community. Table 18 reflects the types of industries in
which Stillwater Area firms employ significantly fewer people (hence a
higher population - employment ratio) than the underlying economic conditions
would suggest. In all of these activities, the experience of the compar-
able communities indicates a level of demand or profitability exists in the
selected economies to dictate a significantly higher level of employment
than encountered in the Stillwater Area.
Table 18
Activities with Population /Employment Ratios
Above the Average for Comparable Communities
17
AVERAGE
STILLWATER
PROBABLE
SIC
INDUSTRY
RATIO
AREA RATIO
RANGE
074
Veterinary Services
3193
6000
1081 -5306
506
Electrical Gds. (whsle)
2570
4286
876 -4264
519
Misc. Nondurable Goods
(whsle)
1593
1765
666 -2520
551
Motor Vehicle Dealers
296
375
205 -387
562
Women's Ready- to-Wear
Stores
296
375
205 -387
571
Furniture & Home
Furnishings
881
1304
592 -1170
591
Drug & Proprietary
Stores
2247
6000
0 -4824
721
Laundries
1275
1667
698 -1851
805
Nursing Care
545
236
20-453
17
An example of the technique may be most helpful in understanding its
benefits. Using Furniture and Home Furnishings, the "Average Ratio" column
presents the average number of people relative to each employee for the
four study communities. In this instance, 881 people are served on
average, by one employee in the Stillwater Area, Hudson, Hastings, and Red
Wing. The "Probable Range" presents the range of people per job expected
as "normal" given the experience of the four communities. For Furniture
and Home Furnishings as few as 592 people or as many as 1170 can be
served by one employee without it being "unusual," but the higher the ratio
the more likely there is an opportunity. The Stillwater Area serves 1304
persons per Furniture and Home Furnishings employee. This is above the
average, and outside the expected range. This is an indication of a need
for additional employment in this category. As with location quotient
analysis, the results of comparative economic base analysis are not
conclusive, but they give us an idea of which economic activities deserve
closer scrutiny.
On the other end of the spectrum, i.e. activities with a population base
smaller than anticipated, the Stillwater Area has a number of activities
which appear to be at or near market saturation. A list of these activi-
ties is presented in Table 19.
Table 19
Activities With Population/Employment Ratios
Below the Average for Comparable Communities
W
AVERAGE
STILLWATER
PROBABLE
SIC
INDUSTRY
RATIO
AREA RATIO
RANGE
179
Special Trade
Contractors
4150
411
0 -8796
503
Lumber 1 construction
Materials (whsle)
7983
370
0 -20251
514
Groceries & Related
Products (whsle)
648
395
405 -891
521
Lumber s Building
Materials (whsle)
821
164
0 -1686
526
Retail Nurseries 6
Garden Stores
4194
625
650 -7738
553
Auto s Home supply
Stores
1642
366
351 -2933
566
Shoe Stores
2650
1364
1648 -3653
581
Eating 6 Drinking _
Places
58
35
35 -83
593
Used Merchandise Stores
1485
330
0 -3378
594
Misc. Shopping Goods
680
405
191 -1170
599
Other Misc. Retail
478
361
388 -568
602
Commercial Banks
187
101
106 -268
653
Real Estate Agents
6 Managers
793
291
394 -1193
723
Beauty Shops
956
508
525 -1387
753
Auto Repair Shops
514
319
81 -948
794
Amusement s Recreation
Services
290
190
120 -460
802
Offices of Dentists
473
349
367 -578
804
Offices -of Other Health
Practitioners
1160
764
845 -1476
W
4. Summary
* Local Share of Regional Growth - The Stillwater Area and Washington
County have shared in the economic growth of the Twin Cities Metro Area
during the past several years. Between 1977 and 1984, total employment
grew by 12.8 percent in the Twin Cities region, 26.4 percent in Washington
County, and 20.8 percent in the Stillwater Area.
* Fastest Growing Industries - The fastest growing industry groups in the
Twin Cities area have been Services and Finance, Insurance & Real Estate.
These two major groups accounted for 61 percent of all new jobs in the
region between 1978 and 1984. Similar trends have been exhibited in
Washington County, where more than one -third of new jobs created in recent
years can be attributed to FIRE and Services.
* Favorable Industrial Mix - Washington County has a favorable industrial
mix, meaning that the county has experienced an overall employment gain
because of its fast - growing industries. However, a large number of
slow - growing or declining industries are also represented in the county.
The large number of slow - growth industries should be of concern to Washing-
ton County. However, the Stillwater Area is not overly dependent on firms
within these industries.
* Strong Competitive Share - Washington County's competitive share compon-
ent has been remarkable, indicating that many of the county's industries
are capturing larger shares of their respective markets. This is nArticu-
larly true in Insurance Carriers, General Herchandise Stores, Health
Services, Amusement & Recreation Services and Food Stores, although there
are many others. Forty -two of the 57 economic sectors in the county have
grown at a faster rate than would otherwise be expected.
* Declining Industries in the County - Industries represented in the county
which have been growing in employment nationally, but have been declining
locally, include Heavy Construction Contractors, Furniture & Fixtures,
Petroleum & Coal Products, Trucking & Warehousing, Electric, Gas & Sanitary
Services, and Membership Organizations. Although there are some excep-
tions, the Stillwater Area is not overly dependent on any of these indust-
ries.
* Local Economic Base - The Stillwater Area's economic base is in Manufact-
uring, Retail Trade, Services, and Government. These four large groups of
economic activity account for almost 88 percent of total local employment.
Within these four groups the major exporting activities are:
Manufacturing - Millwork, Misc. Plastics Products, and
Commercial Printing
Retail Trade - Building Materials and Supplies, Grocery
Stores, and Fruit Stores /Vegetable Markets
Services - Amusement & Recreation, Offices of Physicians,
Medical /Dental Laboratories, Libraries /Information
Centers, and Social Services.
Local Government - County Government
19
* Other Basic Activities - Location goutient analysis reveals numerous
other economic activities in the Stillwater Area which are exporting and,
therefore, are contributing to the local economic base. At the same time
there are a number of activities which have employment levels below what
would be expected of them, indicating that there are needs which should be
but are not met by local firms.
* Apparent "Gaps" - Another analytical tool, comparative economic base
analysis, supports many of the findings of the location quotient analysis.
There is apparent need for additional employment and /or firms in
Veterinary Services; Electrical Goods (wholesale): Miscellaneous Nondurable
Goods (wholesale); Motor Vehicle Dealers; Women's Ready -to -Wear Stores;
Laundries, Furniture & Home Furnishings, Drug & Proprietary Stores, and
Nursing Care Facilities.
* Apparent Saturation - The comparative economic base technique suggests
that there is apparent saturation in the following activities: Special
Trade Contractors; Lumber & Construction Materials (wholesale); Groceries &
Related Products (wholesale); Lumber & Building Materials (retail); Retail
Nurseries & Garden Stores; Grocery Stores; Auto & Home Supply Stores; Shoe
Stores; Eating & Drinking Places; Misc. Shopping Goods; Other Misc. Retail;
Real Estate Agents; Auto Repair Shops; Beauty Shops; Amusement & Recreation
Services; Offices of Dentists, and; Offices of Other Health Care Practitio-
ners.
Phi
B. Potentials & Constraints Analysis
An understanding of the factors that affect the process of economic development
is necesary before establishing a formal development effort. The evolution
of the economy of the Stillwater Area has been and will continue to be the
result of the interaction of physical, financial, environmental, and human
factors. Some factors tend to stimulate economic development, while others
inhibit it. If the community wishes to encourage economic development, it
must accentuate or take advantage of those factors which contribute to the
community's attractiveness for private investment. At the same time there
must be a recognition of inhibiting or constraining factors. Efforts will
be necessary to eliminate these negatives or to minimize their impacts.
There must also be a recognition that not all of the factors that affect
economic development are controllable, or at least they are not within reasonable
control by local individuals and groups involved with economic development.
For example, Minnesota has a harsh winter climate and that fact limits some
types of economic activity. There is little, if anything, that can be done
to change the state's weather patterns and it would be foolish to try to
do so. Similarly, there has been much talk about Minnesota's harsh business
climate and its impacts on economic development. While Stillwater Area development
officials can work to change the state's business climate, they probably
will not meet with much success on their own.
The purpose of this part of the strategy narrative is to identify the strengths
and weaknesses of the Stillwater Area with respect to economic development.
Additionally, the narrative describes the extent to which these strengths
and weaknesses represent potentials as well as constraints for economic development.
While the previous section (economic analysis) was very quantitative in nature,
the potentials and constraints analysis is largely qualitative. The major
factors which have been and are likely to continue to shape the local economy
are listed and described. It would be impossible to identify every factor
affecting local economic development. Similarly, it is beyond the scope
of this analysis to estimate or measure the effects of the various factors
on economic development.
The information used in preparing the potentials and constraints analysis
was derived through "exploratory," rather than "descriptive," research techniques.
Much of the imformation was obtained through a series of "key informant"
interviews conducted during April and May, 1986. Individual interviews were
conducted with a cross - section of business persons and local officials. While
common thinking among interviewees was of prime importance, unique responses
have also been given weight. Other methods of research have included a "literature
search" (reviewing available publications, including planning documents,
news articles, research reports, etc.) and observation by the author (including
tours of the Stillwater Area, participation in the 1985 Business & Industry
Seminar, attendance at local government meetings, etc.).
21
It is not unusual for a factor or a category of factors to have qualities
of both potentials and constraints. This should become apparent soon. Because
of this duality, the following narrative is organized by major factors rather
than listing and describing all potentials and constraints separately. The
relationships between potentials and constraints are often very crucial,
and it is better to study them together than separately.
1. "Quality of Life" Factors
Quality of life factors include a realm of characteristics, many of which
are intangible or difficult to quantify, which relate to the standard of
living, environmental surroundings, and ability to pursue a desired lifestyle.
Quality of life factors include proximity to recreational and cultural opportunities,
access to good schools, low crime rate, clean air, morals and ethics, and,
perhaps, climate.
There is little argument about the high quality of life in the Stillwater
Area. The community has a beautiful setting. A primary asset is the St.
Croix River, although other natural amenities contribute to the high quality
of life, too. The community has a rich history and a strong sense of tradition,
which appeals to many newcomers. There are excellent schools, numerous churches,
a low crime rate, and generally a "small town" atmosphere.
While quality of life factors definitely represent a strength, how important
are they for economic development? Some of these factors have contributed
significantly to the community's development as a tourist center, particularly
the river setting and the historic buildings. The quality of life has also
attracted people to live in the Stillwater Area, although many local residents
do not work in the immediate area. To a large extent, the Stillwater Area
has become a bedroom community for the Twin Cities.
Except for the relationship to recreation and tourism, and some other economic
activities, quality of life factors by themselves will probably not have
a significant impact on local economic development. Among factors that influence
business location decisions, quality of life ranks below a number of economic
and geographic factors. Generally labor force availability /productivity,
efficient transportation facilities, proximity to suppliers and /or markets,
water /sewer /electrical services and development costs are more important
to the location decision than quality of life factors. However, quality
of life factors are more important to some industries than others (e.g.,
high -tech firms and "footloose" activities) and quality of life may be increasing
in significance. Also, quality of life factors take on increased significance
when all other factors are equal or nearly equal.
Quality of life factors do represent a potential for the Stillwater Area,
especially for continued recreation and tourism development and the attraction
of some types of businesses. Quality of life factors should not necessarily
be a big part of promotional efforts because, to a large_ extent, these factors
will speak for themselves. Also, it must be recognized that quality of life
comes at a cost. Resources must be directed into maintaining the high quality
of life in the Stillwater Area. This should be a part of a formal economic
development effort and should not be ignored.
WA
2. Minnesota Business Climate
Much has been written about the Minnesota business climate in recent years,
most of it critical. The state's business climate has affected economic
development in the Stillwater Area and all Minnesota's communities. There
is considerable evidence that Minnesota's high taxes, workers compensation
and unemployment compensation, among other legislated factors, have resulted
in the loss of jobs, the relocation of firms, and foregone capital investment
in the state. The Small Business Development Center at St. Thomas College
has reported the loss of more than 82,000 jobs and at least 400 plant moves
between 1967 and 1982 which may be attributed to the harsh business climate.
The true effects of high taxes, etc. have been debated for many years but
Minnesota is perceived as being an expensive state in which to do business.
This is especially true for manufacturing.
For the Stillwater Area, and other "border communities," the problem, or
the perception of a problem, is compounded because Wisconsin is perceived
as having a better environment for business. This is a relative comparison
because many Wisconsin businesses have expressed concern about that state's
taxes and costs of doing business, too. The exodus of industry from Minnesota,
including the Stillwater Area, is real. And firms which consider establishing
operations in the Stillwater Area wiilalso probably consider Hudson, Somerset,
New Richmond and other nearby Wisconsin communities. These communities represent
competition for the Stillwater Area for certain types of economic development,
and the Stillwater Area must be cognizant of this competition.
Minnesota ranked 36th of the 48 contiguous states in Grant Thornton's well - publicized
annual study of the cost of doing business for manufacturers. For 1985 Minnesota
actually slipped a notch from 1984, mainly because of greater relative gains
among other states in the factors used to establish the ranking. It is worth
noting that Wisconsin's rank was 35th, indicating that overall the cost of
doing business isn't much better in the Badger State than in Minnesota.
The Minnesota business climate is a "given," and there is little, if anything,
that the Stillwater Area by itself can do to change it. The way in which
the Stillwater Area approaches economic development must be changed, however,
because of the state's business climate. For example, as part of a program
to attract manufacturing operations to the community, those types of manufacturing
which are least impacted by Minnesota's workers compensation rules are logical
targets. Also, in competing with Wisconsin communities for economic development,
the Stillwater Area should avoid going "head -to- head," because Wisconsin
communities will emphasize their state's favorable climate. Rather, the
Stillwater Area must emphasize its strengths and target those types of economic
activity for which its strengths are likely to be more important.
The true influence of tax rates on local economic development is virtually
impossible to measure with precision. As a locational determinant, taxes
(including workers comp and unemployment comp), are r if ever, the
sole factor affecting a decision - The - available evidence - supports -- this contention.
But there is still reason for the Stillwater Area to be concerned about the
effects of high taxes. Roger Schmenner, a business location expert, in his
book Making Business Location Decisions had the following to say about taxes:
23
Judging from my interviews with company executives, taxes are more likely
to dissuade a corporation from siting a new plant somewhere than they
are likely to attract a corporation to a particular place. In descriptive
terms, high taxes are more apt to "push" corporations away from potential
sites than low taxes are likely to "pull" corporations in from other
sites. Further, it is the particularly visible taxes which seem to incur the
wrath of corporate decision - makers: for example, one state's hike in
workmen's and unemployment compensation rates, or another state's high
inventory tax.
Additional evidence from Mr. Schmenner's research should be considered by
the Stillwater Area in shaping an economic development program. He notes
that "most relocating plants are small single -plant companies which are growing
rapidly, are in desperate need of space, desire to revamp their production
processes, wish to retain their workforces, and thus do not move more than
20 miles from their former plants." His survey results "suggest that tax
rate differentials matter little to these plants; they are as likely to move
to higher tax rate jurisdictions as lower."
3. Labor Force
Many of those interviewed identified the labor force as one of the Stillwater
Area's key strengths. Specifically, it is felt that the community's labor
force has a good work ethic, has above- average productivity, and is reasonably - priced.
Also, there was some mention of the relatively low level of unionization
within the community.
As a locational determinant for business activity, labor force considerations
are extremely important, with few exeptions. In fact, most lists of key
locational factors rank labor force as the most important or second most
important locational for industrial plants. Thus, the characteristics of
the Stillwater Area labor force should be a major consideration in a formal
economic development program.
For administrative purposes, the Stillwater Area is part of the Twin Cities
metro region and wage survey statistics for the Stillwater Area cannot be
distinguished from the region as a whole. It is felt that wage rates for
production workers in the Stillwater Area are lower than those in the central
cities of St. Paul and Minneapolis, but not by a significant margin. Wage
rates in the Stillwater Area are generally higher than in the Wisconsin counties
just east of the Stillwater area, and these higher wage rates are an attraction
for Wisconsin workers.
The labor shed for the Stillwater Area extends well into Wisconsin. According
to the 1980 Census, more than 3100 Wisconsinites from St. Croix, Polk and
Pier Cou nties commuted_to_Washington County to work._ Further detail as
to destination within Washington County is not available. In terms of labor
force availability, it is assumed that Wisconsin residents will continue
to make up a sizeable share of the Stillwater Area labor market. Unemployment
rates have generally been higher in these Wisconsin counties, and wage rates
are generally lower. But if job opportunities become more plentiful in these
Wisconsin counties and if the gap between wage rates narrows, it may be more
difficult to attract workers from outside the immediate area.
24
While a large number of workers come from outside the Stillwater Area, a
sizeable share of Stillwater Area residents commute.,to other parts of the
Twin Cities area to work. Again using'the 1980 Census statistics, 578 residents
of the Stillwater - Bayport -Oak Park Heights commuted to Minneapolis or other
Hennepin County locations for work. St. Paul and other Ramsey County locations
attracted 1876 persons from the three communities. A total of 2454 persons,
or more than one -third of the employed population, commuted from the three
municipalities to the two central counties of the Twin Cities. It is presumed
that if there were a sufficient number of comparable employment opportunities
locally, people who are presently commuting would prefer to stay in the immediate
area to work.
The relatively low rate of unionization among Stillwater Area employers,
especially manufacturers, would appear to be an advantage in promoting the
community as a place to do business. Avoidance of higher wages is generally
not as much of a concern to employers as avoidance of union - negotiated work
rules when considering the degree of unionization locally. Such rules can
influence productivity or management's ability to introduce new technology.
The existence of a strong union influence in a community can represent a
loss of control and ultimately higher operating costs. Andersen Corp. is
a good example of a large firm which pays excellent wages (as high, or higher
than union scale), and which has been able to achieve significant increases
in productivity with technological advances which it may not have been able
to do if a union was in place in the Bayport plant.
'The degree of unionization is more important to some industries than others.
In general, capital- intensive industries such as food processing, paper - making,
or chemicals are less sensitive to unionization than labor - intensive activities
such as furniture, apparel, and leather products. Non -union status is so
important to many firms that unionized companies in many industries are reluctant
to come into non -union communities (such as the Stillwater Area) for fear
of antagonizing these communities or other firms in the area. This, too,
should be considered in shaping an economic development program.
4. Lack of Organized Development.Effort
No formal economic development program exists in the Stillwater Area. Although
several agencies and organizations have economic development responsibilities
and functions, there is no coordination or ties among them. The lack of
-an organized development effort was cited by many of the interviewees as
a serious constraint and one of the principal reasons that economic development
has not occurred at a faster rate in the Stillwater Area in recent years.
The lack of an established program or a framework for economic development
is not absolutely essential for economic development to occur. Development
can be expected to occur in the Stillwater Area during the next several years
as a result of a number of factors, including proximity to the Twin Cities,
growing local markets, quality of life aspects, and many others. However,
the existence and operation of a formal economic development program, whether
it is housed within one organization or exists on an inter - agency cooperative
basis, is preferred for two principal reasons. First, it is likely to result
in more development because it will presumably encourage and facilitate development.
The second and perhaps most important reason is that the development that
takes place will likely be better related to locally established needs and
goals; development that is appropriate for the community can be.encouraged
and that which is not appropriate can be discouraged.
Getting a larger share of the economic development that is occurring in the
Twin Cities region seems to be a major interest of local business persons
and government officials in the Stillwater Area. A well- prepared and reasonably
aggressive economic development program can be expected to result in more
development than would otherwise occur because of the community's other strengths.
The mere existence of a formal program does not assure success in attracting
development; the program must be appropriate for the community, there must
be a true sense of a "common mission" and cooperation between the private
and public sectors, and there must be adequate financial support. The Stillwater
Area is in a much better position than many communities in the Upper Midwest
to capitalize on the establishment of a formal economic development program,
yet it may be one of the last in its size range to do so.
But success must not be measured only in the amount of growth which takes
place. Rather, the economic development which takes place should be based
on a strategy, of which this report is one part. Those involved with economic
development in the Stillwater Area must first decide what they wish to accomplish,
including the types of development they wish to encourage (goal- setting).
They must then determine how best to achieve these goals, including a determination
of changes that must be made, if any, and the need for resources (physical,
financial, human). Then they must implement the course of action they have
selected.
In the Stillwater Area there are several needs which an economic development
program should address. Downtown redevelopment /revitalization, attracting
new industries to the community, filling the existing "industrial park,"
encouraging additional tourist - related activity, business retention, cleaning
up the Highway 36 strip, developing a new industrial park, and providing
a better data base for development were some of the major needs identified
during the interviews.
To say that there is a lack of an organized development effort is not to
say that there is no development effort in the Stillwater Area. There are
a number of_entities involved in the economic development process and involved
in addressing the needs identified above. These include the Washington County
9
Housing and Redevelopment Authority, which is primarily providing assistance
with financing, and a recently- formed Economic Development Corporation, which
is focusing on downtown Stillwater, at least initially. There is apparent
commitment from local financial institutions, through the formation of St.
Croix Growth, to facilitate cooperation in financing major private sector
projects. The Stillwater Area Chamber of Commerce performs a coordinating
and information - providing function, but it is not currently geared up for
a major role in economic development.
The first step toward a formal program is to establish coordination among
those currently involved in economic development. The second step is to
agree on an economic development 'strategy. And the third step is to fill
in the gaps that exist to achieve the goals of that strategy.
5. Proximity to the Twin Cities
Although the Stillwater Area is a "freestanding growth center," it has many
of the characteristics of a suburban community. Much, but certainly not
all, of the growth and development that has occurred locally may be attributed
to the community's proximity to the Twin Cities. The high rate of commuting
from the Stillwater Area to the Twin Cities has already been mentioned.
The Stillwater Area is attractive to many people because they can live in
a small town environment and yet be close enough to a major urban center
to take advantage of its economic opportunities and cultural amenities.
In many respects the Stillwater Area offers the "best of both worlds."
The community's proximity to the Twin Cities has helped shape the local economy
and will continue to do so in the future. An understanding of the relationships
between the Stillwater Area and the Twin Cities is essential for an economic
development _program. To a large extent the Stillwater Area's proximity should
be viewed as a potential for economic development. Specifically, the community
should use its access to the resources of the Twin Cities (educational, technglogical,
financial, cultural, recreational, etc.) as a major consideration in its
strategy for economic development. Further, the potential linkages with
existing industries in the Twin Cities should be exploited. There is potential
for both forward linkages (i.e., local firms providing inputs to Twin Cities
industries) as well as backward linkages (i.e., local firms receiving inputs
from Twin Cities industries). These inter and intra- industry relationships
can be complex, but developing an understanding of these relationships and
capitalizing on this understanding should be central to a local industrial
development program.
Proximity is relative. While the Stillwater Area is only a half hour drive
to the center of the urban area, some feel that the community is too isolated,
too far removed from the hub of activity to benefit from linkages. There
are many other communities which are closer to the hub and, therefore, better
positioned to take advantage of the proximity to the urban center. The Stillwater
Area's advantage over those communities that are closer to the centers of
activity - is in the combination - relative - proximity - with its other assets
and attributes.
27
6. Local Business Climate
The local business climate, including community receptivity to business and
industry, is also an important locational factor, at least on some published
lists. The climate for economic development in the Stillwater Area is generally
perceived to be good or very good by most of the interviewees. In fact,
some of the interviewees feel that the present local business climate is
"excellent." This has apparently not always been the case, however. Most
interviewees noted a significant change in attitudes and receptivity to new
development during the past year. Also, the improved business climate is
not uniform throughtout the Stillwater Area.
If the local business climate has indeed improved, it is probably due to
several influences. The Stillwater Area, and particularly downtown Stillwater,
underwent a major transformation in the 1970's and tourism and related activities
became very important to the community. These activities are still very
important to the community, but there is also increased competition from
other communities (e.g. Red Wing) and developments in the Twin Cities area
(e.g. River Place, Galtier Plaza). There has been a recognition that, in
order to do well economically, the community may have to be more aggressive
to new and different types of development; keeping and strengthening what's
already there, but also expanding and diversifying in other areas.
There has been significant growth and development in other parts of the Twin
Cities area during the last ten years. While there has been growth and development
in the Stillwater Area, too, it has not occurred as rapidly as in some of
the western or southern suburban communities. This may be attributed to — •
the Stillwater Area's relative isolation, but many people feel that, until
recently, local business leaders, elected officials, and residents just didn't
want much in terms of economic development. There may have been a feeling
of satisfaction with the status quo. To be sure, the Stillwater Area has
had a lot going for it, but there seems to be a growing feeling that the
Stillwater Area should be able to get a larger share of the growth that is
taking place in the Twin Cities area.
There is a feeling that the "Metro East" area, of which the Stillwater Area
is a part, will attract a larger share of Twin Cities area development in
the future. A recent study completed by a planning team from the Humphrey
Institue suggests that "it is essential that the Metro East Area strike now
to attract new development in view of the slower growth projected for the
Metropolitan Region." There is some evidence that growth will occur at a
faster rate in the Stillwater Area than elsewhere in the metro region (several
major developments are in the planning stages), and there seems to be a growing
feeling that a cooperative approach makes sense.
The local business climate is not uniformly good or improving throughout
the Stillwater Area. For example, Lake Elmo has established policies which
will make it virtually impo i blefor _ economic de v_elopment_to_occur there.
Yet Lake Elmo is in a position in which it could benefit significantly from
the completion of I -94, being closer to St. Paul than other portions of the
Stillwater Area. The Lake Elmo City Council has an "anti- development" image.
Primarily because of the lack of sanitary sewer services, a significant amount
of commercial or industrial development in Lake Elmo is unlikely.
i
In summary, an improving business climate in the Stillwater Area should be
viewed as a strength. Receptivity to new commercial and industrial development
will draw more attention to the Stillwater Area. A spirit of cooperation
is encouraged on the part of local government and the business community.
However, a spirit of cooperation does not imply taking anything that comes
along or "selling out" to industrial and commercial development.
7. Industrial Park
Industrial development in the Stillwater Area is located in the older sections
of the communities (e.g. Andersen in Bayport and Maple Island in Stillwater),
as well in more recently developed areas. The need for land to accommodate
industrial development has been recognized by the community and an "industrial
park" with over 100 acres of vacant land is in place in the City of Stillwater.
However, over the years a considerable amount of non - industrial development
has been allowed to take place there, and this may seriously affect the community's
ability to attract new industrial development to the Stillwater Area.
The term "industrial park" is overused. It is applied to many tracts of
land which are intended for industrial use, but which don't actually develop
that way. Such is the case in Stillwater, where the industrial park is,
in essense, a mixed -use commercial development, including retail, office,
and service activity. The development pattern to date may make the industrial
park less attractive to potential occupants who are true industrial users.
Industrial firms are attracted to industrial parks because they offer a suitable
environment and will be protected from encroachment by non - industrial uses
and can benefit from urban services and transportation accessibility they
require to operate efficiently.
The National Industrial Zoning Committee has adopted the following definition
of an industrial park:
An Industrial Park is a tract of land, the control and administration
of which are vested in a single body, suitable for industrial use because
of location, topography, proper zoning, availability of utilities and
accessibility to transportation. The uses permitted are regulated by
protective minimum restrictions, including size of site, parking and
loading regulations, and building setback lines from front, side and
rear yards. The front yards, and side yards adjacent to streets, are
to be landscaped in conformance to planning standards set for the park.
All requirements are to be compatible with the community and surrounding
land uses in accordance with a comprehensive plan to enable a group
of industries to operate within it efficiently.
The existing "industrial park" can continue to be marketed and developed
for commercial and industrial uses. It may not be too late to take actions
to convert the remaining 100 + vacant acres to more of a true industrial
park. However, serious consideration should-be given to siting and establishing----
another industrial park within the Stillwater Area. A well - planned industrial
park will add immensely to the community's ability to diversity its industrial
base.
29
9. Summary
The principal factors and issues which have affected and will continue to
affect economic development in the Stillwater Area were identified through
a series of exploratory interviews, a review of published materials, and
observations. These principal factors and issues, which have been described
in terms of potentials and constraints,may be summarized as follows:
* Quality of Life - The high quality of life in the Stillwater Area
represents a potential for economic development in terms of the ability
to attract people and investment into the community. However, this
is a strength which will require investment and caution to maintain
and preserve.
* Minnesota Business Climate - Minnesota has an image as a high tax
state and one in which the costs of doing business are higher than they
could or should be. For the Stillwater Area this problem is compounded
because Wisconsin is perceived as having a better environment for business.
However, in pursuing economic development, the Stillwater Area should
accept the state's business climate as a "given," and emphasize the
community's other assets and target activities accordingly.
* Labor Force - The community's productive, reasonably- priced labor
force and the fact that there is a low level of unionization also represent
major strengths for economic development. Labor force considerations
collectively are usually very important as locational factors for business.
The community draws heavily from Wisconsin for its workers, and at the
same time, a high proportion of Stillwater Area workers commute to the
Twin Cities.
* Lack of organized Development Effort - One of the reasons that economic
development has not occurred at a faster rate in the Stillwater Area
is the lack of an organized development effort. Such an effort is likely
to result in more development. More importantly, a formal effort is
likely to result in economic development which is better related to
locally established needs and goals.
* Local Business Climate - The local business climate, including receptivity
to and cooperation with new business and industry, is crucial to a successful
economic development effort. An improved business climate in the Stillwater
Area is making it more attractive for economic development. While a
cooperative approach is encouraged, it is important to think in terms
of quality and facilitating economic development which is appropriate
for the community.
* Proximity to the Twin Cities - The Stillwater Area's economic development
efforts can benefit significantly because of the community's proximity
to the Twin Cities. Potential linkages with existing businesses and
industries in the Twin Cities should be exploited. Also, the community
should use its access to the resources of the Twin Cities as a major
consideration--in--its strategy for--economic develoopmen
* Industrial Park - The Stillwater Area principal "industrial park"
is more of a mixed -use commercial development than a true industrial
park. This represents a constraint and serious consideration should
be given to siting and establishing another industrial park within the
Stillwater Area.
30
APPENDIX
T
Standard Industrial Classification (SIC) - A numerical system for classify-
ing the total economy of the U.S. into its different industry segments.
SIC starts with the broadest industrial groupings, then by a series of
subdivisions identifies more finely detailed classes or groupings right
down to the individual product level. Thus at the one -digit level there is
the manufacturing sector of the economy. At the next level of detail, manufac-
turing is divided into 20 two -digit Major Groups, which in turn are
subdivided into 150 three -digit Industry Groups. They are further subdivi-
ded into 450 four -digit Specific Industries.
32
I selected sIC's
619 MISCELLANEOUS NONDURABLE GOODS
Otte, eticept cooking: animal and vege
6191 Farm Supplies
table — wholesale
Establishments primarily engaged in ithe wholesale distribution of animal feeds,
fertilizers, agricultural chemicals, pesticides, seeds, and other farm supplies, except
grains.
Plants, potted— wholesale
Agricultural cbemlcals— wholesale
Harness made to Individual order —
Agricultural limestone— wholesale
Al fat [a— wholesale
wholesale
Hay — wholesale
Bulbs, flower and field— wholesale
1 Farm supplies— wholesale
Insecticides— wholesale
Lime, agricultural— wholesale
Feed, except unmixed Frain— wholesale
Fertilizer and fertilizer materials—
Pesticides— wholesale
Phosphate rock, ground -- wholesale
wholesale
Seeds: field, garden, and Bower —
Harness equipment — wbolesale
wholesale
Straw — wholesale
5194 Tobacco and Tobacco Products
Establishments primarily engaged in the wholesale distribution of tobacco and its
products. Leaf tobacco wholesalers are elasslfied in Industry 6159, and establishments
primarily engaged in stemming and redrying tobacco In Industry 2141.
Chewing tobacco wholesale Snuff— wholesale
Cigarettes — wholesale Tobacco, except lent — wholesale
Cigars — wholesale Tobacco products, manufactured—
Smoking tobacco — wholesale wholesale
5198 Paints, Varnishes, and Supplies
Establishments primarily engaged in the wholesale distribution of paints, varnishes,
wallpaper and supplies. Glass is frequently handled. Establishments selling to the
general public and known as "rets.il" in the trade are classified in Industry 5231.
Calclmines— wholesale Paints— wholesale
Colors and pigments — wbolesale Shellac— wholesale
Enamels — wholesale V arni sbes— wbolesale
Lacquers— wholesale Wallpaper— wholesale
Paint brushes, rollers, sprayers —
wholesale
5199 Nondurable Goods, Not Elsewhere Classified
Establishments primarily engaged in the wholesale distribution of nondurable goods,
not elsewhere classified, such as books, periodicals and newspapers, art goods, flowers
and florist supplies, industrial ya rn, textile bags, and bagging and burlap.
Advertising s ecialties— wbolesale Leather goods, exceppt footwear, ggloves,
Art goods — wholesale luggage, and belting — wholesale
Artists' materials — wholeuale Lighters, cigar and cigarette— whole-
Automobile fabrics— wholesale sale
Begs, textile— wholesale Linseed oil— wholesale
Baling of wood shavings for mulch— Ma aztues— wholesale
who Malt extract — wholesale
Books—wholesale Malt—wholesale
Christmas trees - wholesale
Otte, eticept cooking: animal and vege
Clothes hangers — wholeuale
table — wholesale
Cordwood — wholesale
Pipes, smokers' — wholesale
Cotton yarns— wbolesal:
Plants, potted— wholesale
Felt— wholesale
Plastic foam — wholesale
Florists— wholesale
Rayon yarne-- wholesale
Flowers, artificial — wholesale
Rennet — wholesale
Flowers, fresh — wholesale
Rubber, crude — wholesale
Foam rubber— wholesale
Sausage caslags— wholesale
Gifts and novel tles—wbolesale
Sheet music-- wholesale
Greases, animal .tnd vegetable—whole-
Silk yarns— wholesale
sale
Smokers' supplies— wholesale
liep extract — wholesale
Wigs — wholesale
Ice, munufactured or natural —whole
Woolen and worsted yarns — wholesale
sale
Yarns — wholesale
Leather and cut stock—wholesale
559 AUTOMOTIVE DEALERS, NOT ELSEWHERE CLASSIFIED
5599-_ Automotive Dealers, Not - Elsewhere - Classified - - -
Establishments primarily engaged In the retail sale of new and used automotive
vehicles and new equipment and supplies, not elsewhere classified, such as snowmobiles,
dunebuggies and gocarts.
Aircraft dealers— retail Gocarts— retall
Dunebuggies— retall Snowmobiles — retail
33
7997 Membership Sports and Recreation Clubs
Sports and recreation clubs which are restricted to use by members and their guests.
Country, golf, tennis and yacht clubs are included in this industry. Health and physical
culture clubs are included in Industry 7299.
Athletic clubs slid gynunasluuas, mem-
Iership
Aviation clubs, membership
baseball clubs — little leagues
Bathlug beaches, membership
Beach clubs, membershl p
Boating clubs, m=0111)
Boating
Bridge clubs, membership
Clubs, membership: sports and recrea-
tion
Country clubs, membership
Flying fields, mnlntalned by aviation
clubs
(golf clubs, membership
Gun clubs, membershl a
Hunt clubs, membership
Recreation and sports clubs, member-
ship
ntdlug clubs, membership
Shooting clubs, membership
Sports and recreation clubs, member -
ahlp
Swimming clubs, membership
Tenuls clubs, membership
Yacht clubs, membersbip
7999 Amusement and Recreation Services, Not Elsewhere Classified
Establishments primarily engaged In the operation of sports, amusement. and
recreation services. not elsewhere classified, such as bathing beaches, swimming pools,
riding; neadendes and schools, carnival operation, exposition operation, game parlors.
horse shows, picnic grounds operatlon, rental of rowboats and canoes, and shooting
galleries. Establishments operating amusement parks are classified in Industry 7998;
those operating coin - operated amusement devices in Industry 7993; and those operat-
ing membership sports and recreation clubs In Industry 7997.
Aerial tramways, amusement or sceote
Amusemeut concessions
Amusement rides
Annual and reptile exldhlts, commercial
Animal shows. In circuses, fairs, and
carnivals
Aquariums, commercial
Art galleries, commercial
Astrologers
RuseballInstruction schools
Basketball Instruction schools
liath louses, Independently operated
Bathing heaches, nonmembership
Boat rental, pleasure
Bouts, party fishing: operation of
Rookies
Bookmakers, race
BotanleaI gardens, couunereinl
llowll I Instruction
Bridge clubs, nonmembership
Bridge Instruction
Cable lifts, amusement or sceute. op-
eruted separately frum lodges
Canoe rental
Carnival operation
Cave operation
Circus companies
Concession operators, amusement de-
vices and rides
Ilaty camps
B.xhibitlon operation
Exposition operation
Fars. agricultural : operation of
Fireworks display service
Fishing lakes, operatlon of
Fortune tellers
Gambling establishments, not prlumrlly
operating coin- operated machlmes
Gambling machines, except culn -op-
erutnl:, operation of
Game parlurs (not cola- operated)
Games, teaching of
Gocart raceway operation
Gocart rentals
Golf courses, miniature: operation of
Golf drlviug ranges
Golf, pitch -u -putt
Golf professionals, not operating retail
stores
Gymnasiums, operatlon of: nonmem-
bership
Horse shows
Ilousebout rentals
Iiunting guides
Judo Instructlon
Karate Instruction
Motorcycle rental
Museums, commercial
Natural wonders, tourist attraction:
commercial
Observation tower operation
OR -truck betting
Pack tralus, for amusement
Parachute training (for pleasure)
Phrenologista
Physical culture schools (gymnaslumal
Picnic grounds operation
Ping gong parlors
Planetaria, commercial
Rental of bench chairs aad accessories
Rental of hlcycles
Itentaal of golf carts
7999 Amusement and Recreation Services, Not Elsewhere Classified— Continued
Rental of rowboats and canoes
Rental of saddle horses
Reptile or animal exhibits, commercial
Riding academies and schools
Riding stables
Scenic railroads for amusement
Shooting galleries
Skating Instruction. tee or roller
Skating rink operation : lee or roller.
Ski Instructlon
Ski lifts, cable lifts ski tows : operated
separately from 'lodges
Skl rental concessions
Slot -car race tracks
Sporting goods rental
Sports Instructors, professional: for
golf, skiing, swimming, etc.
Sports arofesslonals
Swlmming Instruction
Swimming pools
Tennis clubs, nonmembership
Tennis courts, outdoor and Indoor: op.
eration of— nonmemberahlpa
Tennis professionals
Ticket sales ottices for sporting erents,
contract
Tourist attractions, natural wonder:
commercial
Tourist guides
Trampollae operation
Wax figure exhibitions
Yoga Instruction
Zoological gardens, commercial
- l
0 .
Major Group 83.— SOCIAL SERVICES
The Major Group as a Whole
This major group includes establishments providing social services and rehabilitation services to
those persons with social or personal problems requiring special services and to the handicapped and
the disadvantaged. Also included are organizations soliciting funds to be used directly for these and
related services. Establishments primarily engaged in providing health services are classified in Major
Croup 80, legal services are classified in Industry 8111, and educational services in Major Group 82.
Group Industry
No. No.
832 INDIVIDUAL AND FAMILY SOCIAL SERVICES
8321 Individual and Family Social Services
Establishments primarily engaged in providing one or more of a wide variety of
Individual and family social, counseling, welfare, or referral services, Including refugee,
disaster and temporary relief services This industry includes offices of specialists
providing counseling, referral and other social services. Government offices directly
concerned with the delivery of social services to individuals and families, such as
Issuing of welfare aid, rent supplements, food stamps, eIigibllity casework, etc. are
Included here, but central 'of ee administration of these programs is classified in Indus-
try 9441. Social Security offices are classified in Industry 9441. Establishments pri-
marily engaged in providing vocational rehabilitation - or counseling are classified in
Industry 8331; fraternal, civic, and social associations are classified in Industry 8841.
Adoption services
Adult day care centers
.lid to families with dependent chil-
dren (AFDC)
Centpra for senior citizens
Child duldance agencies
Community centers
Counseling centers
Disaster services
Family location services
Fumlly (marriage) counseling services
Family service agencies
Helping hand services: Big Brother,
Big sister, etc.
Homemakers' services
Multi-service centers (neighborhood)
Neighborhood centers
Old age assistance
Publlc welfare centers (offices)
Referral services for personal and
social problems
Refugee services
Relief services, temporary
Service leagues
Settlement houses
Social service centers : Salvation Army,
etc.
Traveler's Aid centers
Youth centers
833 JOB TRAINING AND VOCATIONAL REHABILITATION SERVICES
8331 Job Training and Vocational Rehabilitation Services
Establishments primarily engaged in providing manpower training and vocational
rehabilitation and habilitation services for the unemployed, the underemployed, the
handicapped, and to persons who have a job market disadvantage because of lack of
education, job skill or experience, skill obsolescences, or personal characteristics or
problems. Included are upgrading and job-development services, skill training, world -
of -work orientation, and vocational rehabilitation counseling. This industry Includes
offices of speclalists providing rehabilitation and job counseling. Also included are
establishments primarily engaged in providingwork experience for rehabflltees.
Job counseling Vocational rehabilitation counseling
Job training Vocational training agencies, except
Manpower training schools
Sheltered workshops work experlence centers (01C, Good-
Skill training centers will, Job Corps, Lighthouse for the
Vocatlonnl rehabilitation agencies Blind)
835 CHILD DAY CARE SERVICES
8351 Child Day Care Services
Establishments primarily engaged in the care of infants or children, or in providing
prekindergarten education where medical care or delinquency correction is not a
major element. These establishments may or may not have substantial educational
programs. These establishments generally care for prekindergarten or preschool child-
ren, but may care for older children when they are not in school. Establishments pro-
, viding babysitting services are classified in Industry 7299.
Child care centers Nursery schools
Day care centers Preschool centers
Group day care centers
Head Start centers, except In coniune.
tlon with schools
37
836
839
RESIDENTIAL CARE
8361 Residential Care
Establishments primarily engaged In the provision of residential social and personal'
care for children, the aged and special categories of persons with some limits on ability
for self -care but where medical care is not a major element. Included are establishments
providing 24 -hour, year round, care for children. Boarding schools providing elementary
and secondary education are classified In Industry 8211.
Bo 5 , towns
Children's boardine homes
Children's homes
Children's villages
Group foster homes
Halfway group homes for persons with
social or personal problems
}Ialfway home: for delinquents and
offenders
Homes for destitute men and women
Homes for children, with health care
Incidental
Homes for retarded, with health care
Incidental
Homes for the aged, with health care
lacidental
Homes for the deaf or blind, with
health care Incidental
Homes for the emotionally disturbed.
with health care incidental
Homes for the physically handicapped,
with health care Incidental
Juvenile correctional homes
Old soldiers' homes
Orphanages -
Ile habtiitatlon (residential) centers,
with health care Incidental
Rest homes, with health care Incidental
Self -belp group homes for persons with
soclal or personal problems
Training schools for delinquents
SOCIAL SERVICES, NOT ELSEWHERE CLASSIFIED
8399 Social Services, Not Elsewhere Classified
Establishments primnrily engaged in providing social services, not elsewhere classi-
fled. Including those establishments primarily engaged In community Improvement,
soclal change and neighborhood development. Organizations primarily engaged In
soliciting contributions on their own account, and administering appropriations and
-allocating funds among other agencies engaged in social welfare services are also
Included, but foundations And philanthropic trusts are classified In Industry 0732.
Establishments primarily engaged In the prevention of, criminal or anti- social behavior
are included, as are those providing rehabilitation services for ex- prisoners; but those
establishments that provide residential care are classified In Industry 8301. Jails and
reformatorles are classified in Industry 9223. Civic, social and fraternal organizatlons
are classified in Industry 8641; political organizations in Industry 8651; and establish -
ments which raise funds on a contract bast a in Industry 7399.
Antipoverty boards
Assorlations for retarded children, the
blind, the handicapped, etc.
Community action agencies
Community chests
Community development groups
Councils for social agencies, excep-
tional children, poverty, etc.
Fund raising organisations, except an a
fee basis (united funds, etc.)
Health and welfare councils
Neighborhood development groups
Offender rehabilitation agencies
Offender self -help organisations
Parole oftes
Probation offices
Self -help organisations: alcoholics and
gamblers anonymous
Senior citizens associations
Soe.lal change associations • Urban
Coalition, Urban m Leaggue, etc.
Social service lnforatlon exchanges:
alcoholism, drug addiction• etc.
United fund councils
United Givers Funds
Youth self-help agencies: Mobilization
for Youth, HARYOU Act, Pride, Inc.
38