The Rostrum By MICHAEL T. WOELFFER

Keys to expansion: cooperation, exports and state role

I READ with great interest your 19-part series on economic development, and true to your prediction, views were wide-ranging, stimulating and even contradictory. Some authors said high technology efforts aren't worth the effort, and others chided the state for doing too little to promote high technology. One article suggested agriculture is basically sound for the foreseeable future, but another predicts serious farm problems in a relatively short time unless radical, new thinking is applied to agricultural policies. The debate over "chasing smokestacks" goes on. Is any effort on behalf of traditional heavy industries justifiable in a swiftly changing economy, and if so, how much? (The decision by Chrysler and Mitsubishi to locate in Illinois is obvious evidence that older, heavy industries are not dead. Yet some now ask, "Did Illinois give away the store?" Others say Illinois was just lucky to land Diamond-Star. They are, of course, wrong on both counts.)

Now, I have been asked to offer my thoughts on the future of economic development. Since Illinois Issues used 19 articles, more than two years and hundreds of thousands of words just to raise some pertinent questions, the best approach I can take in this short space is to touch on a few significant trends.

Three recent developments stand out in my mind, and I believe they form the foundation for a stronger Illinois economy in the years ahead: a cooperative spirit unifying Illinois interests, the push to expand Illinois' share of the international market and the trend to replace federal programs for business with the state's.

Perhaps most importantly, there is a real spirit of cooperation spreading across our land. This spirit was ignited when officials from dozens of Illinois cities got together to select the best sites for a Saturn facility, and it produced results for Illinois last fall when Diamond-Star decided to locate in Bloomington-Normal. In these and other cases, this magical cooperation is evident. Business leaders sit down with local officials to package what they think are the best features of their communities. Universities consider how their resources can be used to help companies better compete. School systems plan for what an influx of children will mean, and they design innovative programs to train children for jobs requiring new aptitudes and skills to match emerging technologies. Unions get involved, offering ideas on ways to prevent strikes, and towns project their needs for housing, sewage, water, police, fire protection and other local services. Utilities, railroads, banks and others come up with new ways to help support new industries and their communities.

In the wake of the Diamond-Star decision, the same kind of cooperation continues. The Department of Commerce and Community Affairs (DCCA) is coordinating training, educational and vendor/supplier activities with other state agencies, Diamond-Star, local officials and universities. Already, a labor pact has been reached between the company and Bloomington unions to ensure that the auto assembly plant will be built on time. Examples of close cooperation are not limited to the auto industry. In two cases involving DCCA, the private sector has stepped forward to lend crucial assistance to the state's economic development efforts. One example is the Illinois Development Board (IDB) that was created several years ago at the urging of Wilmette realtor Herb Rothschlid who is committed to making the public-private sector partnership work. The IDB provides constant and invaluable advice in every area, from legislative to international to labor to business issues. The other example is the "Illinois Ambassadors," a private sector statewide group organized by DCCA to give would-be investors in Illinois the business perspective in addition to the DCCA view. It is clear that as new and more effective partnerships develop in the next decade, they can only improve the Illinois business climate.

A second trend that should open doors for Illinois businesses in the decade ahead is the expanding overseas market, a market Illinois government is actively pursuing, again in conjunction with the private sector and local officials. Gov. James R. Thompson has led a number of investment and trade missions to China, Japan, Korea and Europe, and the payoffs for Illinois business, and workers are clear. Since the governor has been in office, his overseas trips have resulted in nearly 5,000 jobs and close to $1 billion in investments in the Illinois economy. As visible as these trips are, they represent just a small portioin of the work being done in the international business arena. In addition to DCCA's day-to-day work to find foreign markets for Illinois goods and services and its efforts to attract foreign investment here, the Illinois Export Development Authority works to establish credit guarantees and insurance to support export efforts, especially among small- and medium-sized businesses, and the lllinois Export Council works to enhance the export capabilities of all Illinois firms.

32/January 1986/Illinois Issues

A third economic development trend that will serve Illinois well in the future is the move toward replacing federal dollars and programs with state resources. Under the $2.3 billioin Build Illinois program, for example, DCCA administers a loan program for small business, and the state program is roughly comparable to the existing Community Development Assistance Program (CDAP) that relies on federal funds. Both are aimed at helping small firms start up or expand. If the federal CDAP tap os turned down or shut off completely, Illinois will still have a program of its own to help small business get off the ground or grow Unlike CDAP, the state version can be used anywhere in the state; CDAP federal dollars handled by DCCA may not be used in areas that receive CDAP funds directly from Washington. Another example of Illinois moving advantageously on federal programs is the popular U.S. Small Business Administration's 503 loan program. Illinois was among the first states to expand it from select (usually large) cities to the entire state. This program provides long-term, fixed-assets financing to small firms at favorable interest rates by combining owner equity, a traditional loan and a loan under the program, If this particular program should ever fall victim to budget cuts in Washington, Illinois has several of its own business financing programs. One is the direct loan fund available through the Illinois Development Finance Authority. This state program also relies on financing combinations involving equity from the company, a loan from the authority and loans from banks.

These three primary economic development trends should serve as the basis for Illinois business growth and expansion. In only the last two fiscal years, DCCA has been involved in efforts that have created or retained 56,000 jobs. This performance can only improve as we approach 21st century as long as our moves toward closer cooperation, penetration of overseas markets and greater reliance on our own resources continue.

Michael T. Woelffer is director of the Department of Commerce and Community Development.

January 1986/Illinois Issues/33