Things Look Different Here: The Economic Importance of Memphiss Distinctiveness

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Things Look Different HereThe Economic
Importance of Memphiss Distinctiveness

• Joseph Cortright

March 2008
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Roadmap

• City Vitals A Framework
• Why distinctiveness matters
• How Memphis is distinctive
• What Memphis can do to capitalize on its
  distinctiveness

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Education drives earnings
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Talent is critical for cities, too
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Per capita income
Per Capita Income, 2000
Source City Vitals
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The stakes are high
Per Capita Income, 2000
What if you could raise Memphis Per Capita Income
to the Average for typical metro areas?
Source City Vitals
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A 3 billion opportunity

• Just Getting to Average in Education and Income
  would produce an additional 3 billion annually
  in the Memphis economy

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Why distinctiveness matters
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Does distinctiveness matter?

• Whats good for GM is good for the country--and
  vice versa. GM President Charles Wilson, 1955
• We probably should have done a little more
  thinking about making sure each product was
  distinctive. GM President Rick Wagoner, 2005

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What the experts say

• Michael Porter (Harvard Business School)
• Competitive strategy is about being different.
• Jane Jacobs
• "The greatest asset that a city or a city
  neighborhood can have is something that's
  different from every other place."

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Recreationally-minded

• In the late 60s the jogging craze takes off in
  many towns led by Eugene Oregon
• In 1969 a guy starts selling Japanese running
  shoes out of the back of his station wagon

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Drinking to your health

• Historically, Northwesterners drank more tea and
  bought more whole bean coffee than other
  Americans
• In 1971, a small coffee shop starts in Seattles
  funky Pike Place Market

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How Memphis is distinctive
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Memphis competitors
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Memphis market definitions
MSA
DMA
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Memphis 43rd largest US metro area
Population
(Source Impresa analysis of Census data
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Dimensions of distinctiveness

• Demographics
• Jobs
• Attitudes
• Consumption
• Community

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Demographics Who we are
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Memphis is younger than average of largest US
metros
Median Age (2000)
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Lots of Kids in Memphis
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Memphis average in net in-migration of single,
college educated
Net Migration Rate, Single College-educated 25-39
year olds
(Source Census 2000 data)
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Fewer than average number of higher education
students
18 to 24 Year Olds enrolled in College, 2000
Source Census 2000
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Uniquely Diverse Population

• Most African-Americans
• Low in foreign born, Hispanics and Asians

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Memphis Among Nations Most Diverse Metro Areas
Non-Hispanic Whites as Percent of Population, 2000
Source Census 2000
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African-American

• Memphis has a proportionately larger
  African-American population than any other large
  US metropolitan area
• Ranks 1st in African-American share
• 2000 494,121 43.5
• 1990 408,854 40.6
• (Census category Non-Hispanic Black)

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Memphis Hispanic population is much lower than
average
Hispanics as Percent of Population, 2000
Source Census 2000
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Very few foreign born residents
Foreign Born as Percent of Population, 2000
Source Census 2000
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Economic specializations
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Distribution

• Sector LQ Jobs
• Couriers and messengers 10.1 27,332
• Wholesalers, durable goods 1.43 20,525
• Wholesalers, nondurable goods 1.41 13,423
• Warehousing and storage 2.56 7,563
• Support activities for transportation 1.9
  5,065
• Air transportation 1.76 3,962
• Water transportation 1.71 491

Source Bureau of Labor Statistics, 2005 LQ is
relative specialization US 1.
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Distribution occupations

• Rank Occupation LQ Jobs
• 1 Freight, stock, and material movers 2.10
  23,240
• 1 Truck drivers 2.06 16,110
• 1 Shipping, receiving, and traffic
  clerks 2.24 8,000
• 6 Stock clerks and order
• fillers 1.23 9,830
• 5 Packers and packagers 1.43 5,520

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Worlds leading brands

• Coca Cola
• IBM
• BMW
• American Express
• Microsoft
• Nike
• Pepsi
• Toyota
• Colgate-Palmolive

• Fedex
• Disney
• Hewlett Packard
• Kelloggs
• Sony
• Starbucks
• Intel
• Kodak
• Nokia

Source Interbrand
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Memphis is about average for manufacturing
Manufacturing Location Quoteint, 2006
(Source Impresa analysis of BEA data)
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Manufacturing specializations

• Sector LQ Jobs
• Paper manufacturing 3.02 6,635
• Printing and related 1.40 4,168
• Electrical equipment mfg. 1.47 2,985
• Beverage and tobacco manufacturing 1.74 1,597
• Petroleum and coal manufacturing 1.45 767

Source Bureau of Labor Statistics, 2005 LQ is
relative specialization US 1.
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Orthopedic/Spinal cluster

• Second Largest Cluster in US
• Medtronic Sofamor Danek,
• Smith Nephew,
• Wright Medical
• 4000 Jobs
• Orthopedic Clinics and Specialists

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Casino gambling

• 26 more likely to go casino gambling than the
  average American
• Rank 7th among 50 largest US metro areas in
  casino gambling (after Las Vegas, New Orleans and
  Sacramento, Milwaukee, Los Angeles and Phoenix)
• Ranks Second in US in Gambling Dealers of largest
  50 US metros (as a percent of workforce)

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Lower than average new business birth rate
New Business Births per Establishment, 2003-2004
(Source Impresa analysis of Small Business
Administration data)
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Low job growth from new firms
Jobs from New Business Births as a share of all
jobs, 2003-2004
(Source Impresa analysis of Small Business
Administration data)
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Well-educated young adults also below average for
entrepreneurship
College-educated young adults with business income
(Source Impresa analysis of Census 2000 data)
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Patenting below average
(Source Institute for Strategy
Competitiveness)
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Leading innovative firms
(Source Harvard Business School of U.S. Patent
Office data)
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Memphis has long innovated

• 1952
• Kemmons Wilson
• opens the first
• Holiday Inn
• in Memphis

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Consumption
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Memphis diet BBQ

• Rank Item Relative
• 1 Frozen Poultry 260
• 2 Frozen Corn on the Cob 235
• 3 Charcoal 185
• 4 Refrigerated Dips 183
• 5 Meat 180
• 6 Breakfast Meats 178
• 8 Dough/Biscuit Dough 171
• 9 Dinner Sausage 166
• 17 Flour/Meal 134
• 19 Baked Beans 133

Rank is per capita sales rank among 400 grocery
productsRelative is per capita sales as a
percent of US Average.
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Less Hispanic Asian food

• Rice sales 35 below the US average per capita
• Hispanic Foods -52
• Asian Foods -48
• Tortillas -57

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Low magazine subscriptions
Magazine Subscriptions Per Household,2007
(Source Impresa analysis of Audit Bureau of
Circulation data)
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Southern living . . .

• Magazine Rank Relative
• Southern Accents 4th 2.62
• Veranda 4th 1.67
• Traditional Home 4th 1.64
• Southern Living 6th 3.42
• Source Impresa Analysis of Audit Bureau of
  Circulation data

Rank is subscribers per capita in the 50 largest
metropolitan markets Relative is the relative
likelihood that a regions resident subscribes
to a magazine compared to the national average
for that magazine
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African-American culture

• Magazine Rank Relative
• Jet 1st 2.76
• Ebony 1st 2.52
• Essence 3rd 1.98
• Memphis residents also purchase 73 more home
  permanent/relaxer kits than average Americans.
• Source Impresa Analysis of Audit Bureau of
  Circulation data

Rank is subscribers per capita in the 50 largest
metropolitan markets Relative is the relative
likelihood that a regions resident subscribes
to a magazine compared to the national average
for that magazine
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Not elitists

• Magazine Rank Relative
• Martha Stewart Living 49th 0.52
• Marie Claire 48th 0.59
• Vanity Fair 48th 0.46
• The New Yorker 46th 0.27
• Gourmet 47th 0.52
• Bon Appetit 46th 0.44
• Source Impresa Analysis of Audit Bureau of
  Circulation data

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Ranks very low in physical activity
Percent of Persons Getting Sufficient Physical
Activity
(Source Impresa analysis of CDC BRFSS data
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Culture
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Weak cultural participation

• Visited an art gallery or museum Rank 47th
• Attended a lecture Rank 46th
• Went to the movies Rank 50th
• Went to a classical concert Rank 50th

Source DDB Needham Survey Data
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Cultural vitality rankings below average
Memphis rank among 60 largest metros

• Non-profit community celebrations, festivals,
  fairs parades 22nd
• Employment in arts establishments 31st
• Artists jobs 40th
• Non-profits arts contributions 46th
• Non-profit arts expenses 47th
• Arts non-profits 57th
• Arts establishments 60th

Source Urban Institute Per Capita Rankings
based on employment and non-profit organization
data
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Not well traveled

• Topic Rank Relative
• Took an airplane trip for
• personal reasons 47th 0.69
• Took a vacation trip 50th 0.87
• I like to visit places that
• are totally different from
• my home 50th 0.92

Rank is among the 50 largest metropolitan
markets Relative is the relative likelihood that
a regions resident answered a question in the
affirmative compared to the national average for
that question.
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A bit insular

• Below average in foreign travel --48th in
  percent that have traveled outside US
• But much better in foreign students 32nd among
  50 largest us metros in foreign students per
  capita)

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Distinctive local culture

• Blues Rock Invented Here
• Graceland
• Beale Street
• Attracts Millions
• A Global Image for Memphis

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Community
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Memphis housing is newer than in the typical US
metro area
Percent of Housing Built Before 1950
(Source Impresa analysis of Census 2000 data)
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Memphis housing is less expensive than average US
metro
2006 Median Single Family Home Price, Thousands
(Source Impresa analysis of National
Association of Realtors data)
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Memphis homeownership rate below US average
Homeownership Rate)
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Memphis close-in neighborhoods lost population in
the 1990s
Population Change, Close-In Neighborhoods,
1990-2000
(Source Impresa analysis of Census 2000 data)
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Crime is a big concern

• I am in favor of very strict enforcement of all
  laws (1st) 15
• Police should use whatever force is necessary to
  maintain law and order (1st) 18
• I always lock doors eve n when I leave for just
  an hour or two (2nd) 15
• I worry a lot about myself or a family member
  becoming a victim of (3rd) 13
• There should be a gun in every home (4th) 56
• Most people are honest (47th) -11
• Security guards (2nd) 101

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Segregation by income in Memphis is highest among
large metro areas
Economic Segregation Index
Most Mixed
Least Mixed
(Source Impresa analysis of Mumford Center data)
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What Memphis can do to capitalize on its
distinctiveness?
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Key opportunities

• Take care of the basics
• Upgrading education
• Build on strengths
• Young diverse population
• Industry clusters
• Unique cultural assets
• Take risks
• Entrepreneurship
• Dont play copy cat

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For More Information
www.ImpresaConsulting.com
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City Vitals

• Talent
• Innovations
• Connections
• Distinctiveness

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Talent

• Indicator Score Rank
• College Attainment 26.3 37th
• Creative Professionals 5.2 47th
• Young Restless 3.8 36th
• Traded Sector Talent 24.9 34th
• Foreign Born BA or Higher 7.5 40th

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Innovation

• Indicator Score Rank
• Patents 2.8 44th
• Venture Capital 97 37th
• Entrepreneurship 6.6 49th
• Small Businesses 13.4 50th

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Connections

• Indicator Score Rank
• Voting 56.7 27th
• Community Involvement 48.9 39th
• Economic Integration 53.0 50th
• International Students 6.2 32nd
• Foreign Travel 11.4 48th
• Weekly Transit Use 12.2 34th
• Internet Connectivity 11.8 29th

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Distinctiveness

• Indicator Score Rank
• Weirdness 124 19th
• Culture- Cable 22.6 47th
• Restaurant Variety 8.5 48th
• Movie Variety 11.8 4th
• Source City Vitals