Second of five parts
By Ted Schnell • BocaJump
Economic development is one of those terms that most people agree is a good thing. But the idea is likely to draw blank stares or even glassy eyes when people are asked to explain what it means or, more pointedly, how it's done.
Most often, it's a long process that starts with a first contact from the community – an advertisement, word of mouth, some questions, some research, and ultimately, a conversation between a business person and someone in the community. And from start to finish, there are i's that must be dotted and t's that have to be crossed. Sometimes is can take years to bring a new business to town. Other times it can happen in a matter of months.
The latter example was clear on March 23 when the Elgin Area Chamber of Commerce gave its annual report to the City Council and told how the Swiss firm Bystronic broke ground less than a year after its initial contact with the city.
This year's chamber report focused on the efforts of the Elgin Development Group, a partnership between the chamber, the city and the Downtown Neighborhood Association. The group's mission is to recruit new businesses to Elgin, to help retain and expand existing businesses, to promote the city, to act as a clearinghouse for development and infrastructure improvements, and to work with educators to prepare local youth to enter the job market as they finish their education.
Chamber President Leo Nelson, Vice President Carol Gieske and Elgin Development Group Director Bob Malm discussed their organizations' economic development efforts with BocaJump on Wednesday. They said there are reasons, even as the nation struggles with the lingering aftereffects of “The Great Recession,” for optimism about Elgin's economy and job market as new businesses move into the city.
Not the least of those is Bystronic, a global high-tech machine tool company that recently broke ground on its $10 million North American headquarters in Elgin. The new facilities alone will generate $227,000 a year in property taxes for the area.
The sales, service and engineering offices at the site initially will employ about 30 people with a total annual payroll of at least $2.8 million, Nelson said, adding the company eventually hopes to begin assembly work and perhaps manufacturing at the site as well, “but that's some years down the road.”
“This is really important because it's a Swiss machine tool manufacturer … this is their North American headquarters … they're moving out from New York,” Malm said. “They want to be closer to their customers – half their customers are within 500 miles of Elgin.”
Bystronic competitor MAZAK, Malm added, already has offices here.
“There’s a lot of manufacturing still going on in the Midwest, and they want to be near that,” he said.
But new business have a broader impact than increased property taxes and a new payroll. New businesses bring ancillary benefits as well.
Malm noted that Bystronic executives will fly in from Switzerland to visit the Elgin headquarters, and customers from across the United States also will come here, taking advantage of the city's proximity to O'Hare International Airport. Those visitors will be spending money while they're in town, even if their visit is only a brief one.
Nelson said Bystronic is expected to generate 2,000 hotel room nights a year – the equivalent of roughly seven visitors staying in Elgin hotels for five full days each week of the year. That, chamber officials said, will generate $170,000 a year for area hotels. Considering these visitors will need to eat while they're here, and that's at least $90,000 a year more being spent at local restaurants, Nelson said.
That means that Bystronic alone will bring nearly $3.29 million in tax revenue and income to the local economy, plus another $3 million to $6 million in indirect spending. That is a total impact of between $6 million and $9 million annually, the chamber officials said in their report to the City Council.
Gieske said Wednesday that one reason for drawing out these types of data is to help make the importance of economic development more understandable to laymen.
“We try to put those terms together because economic development is a difficult thing for people to understand,” Gieske said. Economic development “means that not only is that company coming here, but it will be hiring Elgin people, it will be spending money at Elgin businesses and they'll be going to lunch at Elgin restaurants and they'll be driving on Elgin roads ...”
“So we tried to tell the story of, 'It means these people will stay the night, and as a result of that they'll be spending this much for hotel nights and that much for payroll taxes and this much for restaurants' and trying to equate it so people could understand what economic development is,” she said. “It's not just a building coming, it's all those additional items that impact the city and its resident.”
Bystronic is not the only positive development the Elgin Development Group has seen in the past year, however.
Meanwhile, yet another smaller alternative energy company from Europe has leased 11,000 square feet of long-vacant space in Elgin, which it, too, plans to call the home of its North American headquarters.
The Brussels, Belgium, firm is a small company that assembles wind turbines for energy generation. It brings eight jobs to Elgin initially, which it hopes will increase to 20 in three years and to 50 in seven to nine years.
But, as with Bystronic, there will be other impacts: The company has needs that must be supplied locally such as printing and information technology support, not to mention an attorney, a printer, a public relations firm, promotional materials and even a dealership to provide the company with cars.
And the chamber said the company expects to draw corporate visits from out of town, meaning a modest boost for area hotels (about 200 hotel nights a year) and for restaurants as well.
Nelson said the impact is cumulative, and only benefits Elgin.
About this series:
► March 31: Elgin Development Group touts first-year successes
► April 1: New firms to pump millions into Elgin economy.
► April 4: Siemens, Fabric Images expand Elgin holdings.
► April 5: Efforts focus on preparing students, others for job market.
► April 6: Tech now among basic business needs.
