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Daugaard Fails to Keep Verifications, Shifts Economic Development Focus to Local Biz

Last updated on 2013.11.12

Dennis, what did you say to those guys?

It is likely unfair to blame Governor Dennis Daugaard for the decision of Verifications Inc. to pull out of Mitchell and Aberdeen and kill 140 jobs created with public subsidy. But the Governor acknowledged Thursday that he and economic development czar Pat Costello couldn't find the magic words to keep Verifications here:

I agree with Seth that the decision by Verifications Inc. to leave Mitchell is a disappointment. Pat Costello, commissioner of the Governor's Office of Economic Development (GOED), and I traveled to Minneapolis to visit with Verifications leadership last year, to encourage growth in South Dakota, and I regret that we are losing rather than gaining Verifications' jobs. That is truly an unhappy result [Gov. Dennis Daugaard, "State Focuses on Homegrown Businesses," Mitchell Daily Republic, 2012.05.24].

Governor Daugaard comes away from that bitter defeat affirming the economic development policy that I pointed out to him back when he was running for his current job in March 2010: locals first!

...economic development efforts cannot be primarily aimed at out-of-state companies, whose leadership has no ties to South Dakota. We must focus most of our efforts on companies already in South Dakota, and especially on those homegrown companies whose leadership has personal ties here. Our state efforts are aligned with this belief. Of course, we cannot ignore opportunities to attract outside companies into our state. Citibank was an outsider whose move to Sioux Falls spawned a credit card industry that has grown manyfold. There are countless other examples. Still, our best bet is with those already in South Dakota [Daugaard, 2012.05.24].

Daugaard is responding to a column by MDR's Seth Tupper, who compares the departure of Verifications to the departure seven years ago of Dakota Pork. Both out-of-state companies moved to South Dakota to great gubernatorial fanfare. Both companies took over a million dollars in publicly assisted loans. Both companies bailed. Tupper nudges Governor Daugaard toward his conclusion that slow and steady local investment beats the Toyota lottery:

I won't name any names, because I'll undoubtedly leave some out, but we all know the businesses that really built this city. They're the ones backed by familiar names, and most of their top executives have roots and relatives here. They don't leave when times get tough, because this is their home. Yet they're more often taken for granted than celebrated, let alone assisted.

Hopefully, something will be learned from the Dakota Pork and Verifications experiences. After each one, development officials swore their efforts to woo the companies were justified.

That may be so, and I'm not saying we should stop recruiting. But maybe we should put a little more effort into our homegrown entrepreneurs. I know it's not as sexy. There's often no pitch to make, no deal to broker, no package of incentives to negotiate, no public announcement, and no chance to stand before a microphone and make a grand speech. Compared to recruitment, growing from within doesn't sound like much fun.

You know what else isn't much fun? Being saddled with an empty building and dozens of unemployed people when faraway executives pull the plug on their Mitchell experiment [Seth Tupper, "Shift Development Focus More Toward Local Firms," Mitchell Daily Republic, 2012.05.11].

Tupper is duly frustrated at futility of chasing out-of-state corporations for economic development. If those footloose companies will move here for the promise of a low-interest loan or a marginal decrease in taxes, they'll move elsewhere just as quickly at the slightest bump to their budgets.

Let's hope the Governor sticks to his words and plows more of our scarce public dollars into local businesses who have more accountability to South Dakota.

6 Comments

  1. larry kurtz 2012.05.28

    Honestly, Cory? Any out of state industry that wants to locate in South Dakota should be instantly subject to suspicion as the red state is nothing but a tax haven for cheapskates and banksters.

    Tear out the Missouri River dams and rewild the corridor all the way to the Continental Divide then watch tourists flock to a state embracing its real heritage.

  2. Kathy Tyler 2012.05.28

    I am so glad to hear that others think we should support what we have--case in point: I started a business in 1998, putting heart, soul, money, and time to make it successful, as most small business owners do.

    A year ago, a young man approached me to buy my business. At my age, this was a wonderful opportunity for me. None of three banks in town or NESDAC would/could give him a loan--too young and with a mortgage. If he would have wanted to start a new business across the street, the money would have been there, but there is no program to buy an existing business, no matter how successful it is.

    My daughter, a controller, suggested self-financing. It's not totally what either of us wanted, but it's working. Now that's what I call local control!

    Let's take care of what we have.

  3. Steve Sibson 2012.05.29

    "Let’s hope the Governor sticks to his words and plows more of our scarce public dollars into local businesses who have more accountability to South Dakota."

    Stick to his words? Like celebrating a French cheesemaker in Brookings? Giving millions to out of state Manpower, causing three Sioux Falls firms to file a lawsuit?

  4. larry kurtz 2012.05.29

    You make a good point, Steve: the cheese plant would be far more palatable if it were sustainable, organic, and free-range.

  5. larry kurtz 2012.05.29

    btw, anybody know what the primary water source for the factory will be?

  6. caheidelberger Post author | 2012.05.29

    Ditto! Steve is totally on point! Despite his words above, Governor Daugaard is still sending a lot of our economic development cash out of state. And how much did we spend on that China trip?

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