Prepared Remarks of Secretary Shaun Donovan at the Mid-South Aerotropolis Conference
University of Memphis
Tuesday, April 10, 2012
Thank you, Mr. Mayor -- for that introduction and for your leadership on behalf of Memphis families and businesses. I also want to thank Dexter Muller and the Chamber for their partnership.
It’s terrific to be in Memphis. When I flew in this morning, I got a chance to see the Aerotropolis for myself.
FedEx alone is something to behold -- moving 3.3 million packages per day, employing 32,000 people, 8,000 at night.
From aircraft off-load and inputs, to the people pushing packages to the outbound checker-sorters -- this is an operation--and a city--that proves its value, 24-7.
When the rest of the country is sleeping, Memphis is open for business 24 hours a day, deploying the largest air cargo fleet in the world.
And it’s not just FedEx -- Memphis calls itself home to the national distribution facilities of companies from Pfizer, to Nike.
And it’s not just air. From its perch on the industrial harbor, Nucor Steel ships its products down the Mississippi River to Mexico, India and Europe -- capitalizing on the fourth largest inland port in the nation, the city’s five Class 1 railroads and the third-busiest trucking corridor in the country.
Whether it’s runway and road, rail or river, it’s clear the Aerotropolis is a national and global resource alike.
I’m here today because the Obama Administration is committed to ensuring the Aerotropolis can continue be a global resource for the decades to come.
Importance of a Regional Economic Strategy
To be sure, none of this progress would have been possible had leaders in this room not shown an ability to work together in pursuit of a common goal.
In many ways, the push for a regional economic strategy began with the man who just spoke: Senator Lamar Alexander, back when he was Governor of this great state.
Like so many of this state’s entrepreneurs, he understood the clear competitive advantage Memphis had.
He knew the value of Memphis’ riverfront dated back before the Civil War -- and that Memphis started to grow as a port when the railroads built a bridge across the Mississippi River in the 1890s.
But then-Governor Alexander knew something else:
That FedEx’s arrival in the 1980s represented an historic opportunity to make Memphis not simply a global leader in the then-emerging fields of logistics and distribution -- but an anchor for growth in the region as a whole.
And leaders like Governor Haslam and Mayor Wharton have worked hand in hand with many of you to build on that vision ever since.
Indeed, that was the impetus behind Mayor Wharton’s work with Shelby County Mayor Mark Luttrell to create the Economic Development Growth Engine--or “EDGE”--which merged seven public offices under a single roof so that they can compete regionally.
As a result of all this work, not only are an estimated 166,000 jobs tied in some way to the airport. Just as importantly, Memphis has leveraged the Aerotropolis to create one of America’s most diverse and resilient local economies, including a state of the art orthopedic device manufacturing sector that is second-to-none.
But for all this progress, the competition isn’t over.
This audience knows that just because you have an advantage, it doesn’t mean you win.
Today, we live in a global economy where speed matters.
Where bandwidth is constantly increasing and consumers demand things fast.
Where even if you’re providing it fast, someone else is always trying to provide it faster and better.
Think about it. Here in Memphis, a broken Mac laptop from Florida can arrive via FedEx in the morning be driven by truck to an Apple service provider just a few miles from here, be fixed and shipped back to Florida that night.
Indeed, Flextronics repairs 3,000 laptops daily for same-day turnaround.
But if speed and agility matter, then proximity matters, too.
And we all know the challenges facing the neighborhoods surrounding the Aerotropolis.
Right next to the bustling Aerotropolis productivity I’ve just described is the kind of blight and poverty that seems like it’s not yards away -- but worlds.
In part because of the one-size fits all approach of Urban Renewal a generation ago, today these neighborhoods are marked not by growth and vibrancy but by deteriorating and vacant apartment buildings.
By poverty that has spanned generations.
By the single highest crime rates in the city.
None of you can develop in these neighborhoods and none of your workers want to live there -- this despite the fact that truck traffic on Lamar Avenue is already at 90 percent capacity, and tens of thousands of workers commute to FedEx alone every day.
Every mile your businesses and those that support them have to develop further away from the Aerotropolis--every additional mile your employees have to commute--is talent you aren’t attracting -- and money you aren’t earning.
And with 1-in-5 families in Shelby County living below the poverty line, these challenges don’t necessarily diminish the further you get from the Aerotropolis.
Nor do these problems stop at the state line. As sprawl pushes middle class families further and further out to places like DeSoto County, Mississippi--which has already more than doubled in population since 1990--nearby communities like West Memphis, Arkansas, are left to face severe disinvestment, rising poverty and population loss.
Now, the challenges posed by economic growth and sprawl are hardly unique to this region. After all, that’s why congestion on our roads costs our nation’s businesses five times as much wasted time and fuel today as it did 25 years ago.
It’s why families are spending 52 cents of every dollar they earn on housing and transportation.
And worst of all, it’s one big reason why 20 percent of kids in America live in poverty. Instead of contributing to our economy, these families are on the sidelines -- costing $500 billion, 4 percent of GDP, each year...every year.
But for businesses like yours, the real cost can’t be measured in dollars or GDP.
It’s not just lost productivity.
It’s also lost talent.
For me, it’s simple:
If we can’t get families living next door to opportunity connected to it--working, going to school, developing the skills your businesses need--then it isn’t just Memphis that’s in trouble.
It’s the future of the American economy.
A New Kind of Federal Partner
But I’m here today because I’m not resigned to that future -- and neither are you.
I believe--and President Obama believes--that Memphis has the leadership, the tools and the vision to be successful for the decades to come.
But in a world where flexible workplaces win…where flexible minds win…and where flexible economies win, you need a flexible, locally responsive, federal partner.
Now especially to this audience, that may sound like a bit of an oxymoron -- like that old joke about the Holy Roman Empire. It wasn’t Roman. It wasn’t Holy. And it wasn’t an Empire.
You might think the same thing about a “flexible, locally responsive federal partner.”
But listen, as anyone familiar with the history of this community knows, the biggest reason urban policies of the past failed was because they thought one-size-fit all.
They looked at every community as a blank slate. A tabula rasa.
They ignored local leadership and businesses -- and in some cases worked against it.
Put simply, they thought Washington knew best.
I’m here today--and my partner Transportation Secretary LaHood is here later this week--to deliver a simple message:
Memphis knows what’s best for Memphis.
Our job in Washington isn’t to tell you how to create jobs -- you’ve proven you know how to do that.
It’s to ensure what we’re doing isn’t working against the needs of the regional economies your businesses depend on -- but in support of them.
That is the goal of the Partnership for Sustainable Communities HUD forged with the Department of Transportation and the Environmental Protection Agency.
Over these last two years, we’ve awarded $270 million in planning grants to communities across the country.
And in competitions where less than 10 percent of applicants get selected, Memphis won two awards, including a $1.2 million grant to a consortium of over 60 public, private and non-profit partners led by the City, the Greater Memphis Chamber of Commerce, and the University of Memphis.
Together, they’re using these funds to create an integrated housing, transportation, economic and workforce development strategy to ensure the Aerotropolis can continue to thrive and grow.
And Memphis is not alone in recognizing the importance of these resources. Here in Tennessee, communities across the state are pursuing sustainable communities efforts -- from Knoxville to Nashville, from Chattanooga to Columbia.
You don’t need me to tell you why these planning resources are so important to this region -- and to this community in particular.
Each of you in this audience shares one thing in common:
You are all inherently risk takers.
As I know from my years leading Prudential’s affordable housing portfolio, in the private sector, you’re willing to push the limits of conventional wisdom -- and what we think is possible.
That’s not only why you’re successful businessmen and women -- taking risks is what makes our economy strong.
But one risk no one wants to take is locating in or expanding into a community that can’t deliver.
Everyone in this audience knows that the mobility of capital and people means in the 21st century you aren’t just competing against the company in the community next door.
You face competitors from across the country and the globe.
And a big part of what allows cities to win that competition and collaborate with other places that share an economic future is their regulatory structures, from taxes to land use.
But when it comes to the way cities manage transportation, building and land use, it isn’t always federal barriers that get in the way, but often that every community in a region has a different set of rules and codes.
This is particularly true in a region like this one -- which spans three states, multiple counties and countless jurisdictions.
What every one of you wants to see when you invest in a community is that it has a plan in place to overcome those barriers.
You want to see that the city is putting money behind it and that infrastructure is coming online.
And perhaps most important of all, you want to know that the community itself has been at the table from the very beginning.
When you go into a community, you are already committing to holding up your end of the bargain -- treating your workers with respect, and being good stewards of that community.
But every moment you spend worrying about whether the community can hold up its end of the bargain--cutting through red tape, getting everyone on board--is one you aren’t thinking about how to sell the product you are developing or service you are providing.
That’s not the kind of risk any CEO wants to take on -- for themselves or their company.
Here again, speed matters.
That’s why the investment we’re making in locally driven pre-development work here in the Aerotropolis is so important -- supporting its three major employment centers--the Lamar Industrial complex, the Airport complex and the Graceland Tourist and commercial center--the collective success of which is central to the success of the Aerotropolis and the Memphis region as a whole.
By identifying vacant land which is zoned for infill development along transit-ways and major roads, this grant lays the groundwork for mixed-income, mixed-use neighborhoods around the Aerotropolis that can attract not only new businesses but residents with the buying power to support them.
By ensuring local community colleges are certified to provide the training workers need to compete in the logistics communications and advanced manufacturing fields that are the Aerotropolis’ bread and butter, this grant also ensures that community residents can acquire the skills they need to be part of your companies’ success -- not sometime in the future, but today and for the decades to come.
And by ensuring this planning work is driven not by Washington but by local stakeholders across sectors and jurisdictions--from the Chamber, to the University, to the Whitehaven neighborhood association--it demonstrates to you that Memphis has the team in place to see this plan through long after the grant itself has been exhausted.
All told, it’s estimated that this $1.2 million grant will enable companies like Electrolux, Mitsubishi, and Nucor Steel to generate over 1,500 jobs with over $500 million of investment.
That’s not just a good investment for you. It’s a good investment for this community, for this region -- and for this country.
And in this budget environment, it’s why we need your help making the case in Washington that this is precisely the kind of smart, catalytic use of taxpayer dollars we need to create an economy built to last.
A New Kind of Partner to Cities
Of course, businesses aren’t the only ones frustrated by barriers that limit your ability to realize potential.
As Mayor Wharton could tell you, cities themselves have struggled with longstanding structural challenges that existed long before the recession hit -- and this is particularly true for cities like Memphis that, despite unique and remarkable assets, have faced decades of population loss, high poverty and unemployment, and deteriorating infrastructure.
That’s why last year, the Obama Administration chose Memphis as one of six cities and regions for its Strong Cities, Strong Communities pilot initiative.
Because of this pilot, 12 different federal agencies are coordinating together in an unprecedented way here in Memphis -- helping to cut through the red tape by dealing with the overlapping maze of regulations, and program requirements.
Of course, it’s not just about getting out of the way -- but also doing more with less, helping communities spend the resources they already have better, smarter and more catalytically.
That’s why, as Memphis’ Community Solutions Team works with the Chamber to expedite environmental and project reviews for transportation investments, they’re also helping the Mayor to develop a “City Stat” data-driven performance management system.
Based on the successful HUDStat system we began using in Washington, City Stat ensures municipal government operates less like a bureaucracy and more like a business.
The other innovative capacity-building tool that Strong Cities, Strong Communities provides to Memphis is a Fellowship Placement Program.
Funded not by government but philanthropy, with initial seed money from the Rockefeller Foundation, these fellows will “deepen the bench” here in Memphis to make sure that when the federal teams depart there is capacity and strength within the local government not just to carry on, but to lead.
Strong Cities, Strong Communities also creates new opportunities for the private sector to lead.
When Mayor Harold Washington reached out to the Chicago business community because the city faced capacity challenges of its own in the 1980s, the business community responded by creating the Civic Consulting Alliance -- recognizing that the best way to protect their investment was through civic engagement.
Today, the Civic Consulting Alliance’s $2 million operating budget leverages $12 million in pro-bono professional assistance funded by the private sector to fill the city government’s capacity gap.
That’s bang for the buck -- and that’s what we’re hoping to stimulate with Strong Cities, Strong Community’s Local Resource Networks.
So many business leaders in this community figured out how to grab hold of their company’s futures by changing practices and investing in new processes. As painful as it may have been, you did it because you knew the alternative was far, far worse.
Many of you are also just as committed to the future of this great city. And so, I challenge each of you here today to commit to being a part of Memphis’ reinvention and be a founding member of its Local Resource Network.
An Economy Built to Last
Now, some of you might look out the windows of your office buildings and wonder if anything in these neighborhoods can ever change -- if Memphis can truly become the engine of progress you all hope it can be.
But let me conclude with a story that provides a little perspective.
It’s about a one-industry town that was an economic powerhouse for decades. A town that because of shifting global headwinds and changing demands found its largest employer reeling, losing 60 percent of its workforce inside of four years.
It was the worst unemployment crisis any major city had seen since the Great Depression. Private investment had evaporated, and there were few signs of it coming back.
Hopes had so dimmed that two local realtors whose own families’ fates depended on the vibrancy of the city’s economy rented a billboard for $160.
Placing it on a road heading out of town as drivers left for the suburbs, the billboard read simply:
“Will the last person leaving Seattle turn out the lights?”
Forty years later, we know that one-industry town transformed into the home of Microsoft, Amazon and Starbucks -- and a community with a transportation system that gives virtually every family in the region access to jobs and opportunity.
You can tell this story in community from community -- from Pittsburgh to Boston.
There’s no good reason that the stories of these cities can’t be the story of a place like Memphis -- with all its assets, rich cultural heritage, local leadership, and--for the first time--a federal partner willing to support that leadership.
Like Memphis, these communities diversified their economies and exported goods.
But they also educated their workforces and committed to prosperity -- not for some, or even for many.
But for all.
Each of you, by virtue of your success and place in this community, has an extraordinary opportunity -- not only to grow your business but to demonstrate once again why America’s reinvention always begins with not with government investment but civic engagement.
Civic engagement that not only reveals a communities’ potential -- but helps unlock it for generations to come.
As Ronald Reagan said in his Second Inaugural Address, “There are no limits to growth and human progress when men and women are free to follow their dreams.”
Together, in the months and years to come, let us commit to affirming that belief once again -- here in Memphis and, indeed, for every family and business in America.