PHARR, Texas – Economic development corporations in the Rio Grande Valley should place more emphasis on helping local businesses grow and less on bringing new companies into the region.
This is the view of Dr. Daniel P. King, executive director of Region One Education Service Center. King made clear his views during a Q&A session with economic development expert Alex Meade. The banker was giving the keynote speech at a recent RGV Focus retreat.
“We have little mom and pop businesses that could become bigger. We have medium size businesses that could become bigger. And we spend so much energy thinking that the great companies are somewhere else and we need to bring them here, instead of understanding that the potential to build a great company is right here,” said King, pictured above.
“And so I wish the EDCs had a formula where this much of our attention is going to be on, yeah, we need to recruit some, but this much is going to be, we are going to build our own with our own great people.”
Meade responded that King made an “excellent point.” He said that when he ran Mission Economic Development Corporation he had a program to help fund local startup companies.
“That’s an excellent point, Dr. King, because you’re absolutely right,” Meade said. “We have get back to basics. We have to invest in our community.”
Meade is now senior vice president of economic development and public finance at Texas Regional Bank. The grant funding program he implemented while at Mission EDC was called Ruby Red Ventures.
“I did that because I didn’t have anything else. I couldn’t promote land to recruit companies… because that was tied up in a lawsuit. So I had to create a fund to help the local businesses get started,” Meade said.
By way of example, Meade cited Pilar Gonzalez, a very successful business owner from Mission, Texas, who created Dip It.
“When we started Ruby Red, she came to us and she said, hey, look, I make a dip in my house and I want to be able to sell it. But, I don’t have the machines to mix it,” Meade explained.
Under Ruby Red Ventures, Mission EDC could give a maximum of $20,000 to any one entrepreneur. Gonzalez was a successful applicant for the grant.
“So she gets 20,000 bucks. Buys the machine, Starts producing more product. Gets into HEB. Now she’s in every single HEB in the state of Texas. She’s in Mexico. She’s getting ready to go into the Midwest. And guess what, her base is never going to leave the city of Mission,” said Meade, referring to Gonzalez and her Dip It company.
“She may expand to another city but her base is never going to leave. Now, she has a manufacturing plant. She’s packaging products for other entities that are in the food business the way she was. And she’s expanding. She’s got employees.
“And so to your point, Dr. King, we have to focus on what they call economic gardening, right. We have got to focus on building that foundation, if we want to go to the next level.”
The RGV Focus retreat was held at the Pharr Development & Research Center. A panelist at the event was Dr. Lance Nail, dean of the college of business and entrepreneurship at UT-Rio Grande Valley. Interviewed later, Dr. Nail said he agreed with Dr. King’s analysis.
“I absolutely agree with him. We’ve we’ve been working on that. And so we’re trying to actually scale that now. We’ve had a program called Adopt a Start-Up in Brownsville where our faculty and students actually adopt a startup to give them the training, the business skills, the things that they don’t have,” Nail said.
“They’re entrepreneurs, they know what they’re working on, but they don’t necessarily know how to run a company or to scale it. And so our students in a class project adopt them. So we’re trying to scale that up and have an even broader impact because we want to build our own here in the Valley.”
Interviewed later, Dr. King explained why he had brought up the subject of the emphasis EDCs place on recruiting, rather than growing.
“There’s a lot of emphasis placed by EDCs in terms of recruiting companies and so forth. The more we can balance that with supporting existing companies and not just not just a shark tank approach, not just a start up, but helping smaller companies become midsize and midsize become bigger companies, the better,” King said.
“And so, how can we bring together strategic assistance? Sometimes it’s not even just money per se. Sometimes it might be helping in strategic planning. How do you do that? How do you grow from this to this? What do you need to fill in the gaps? A lot of times somebody’s running a small business and trying to grow it. They’re breaking new ground for them but other people have been on that path. So how can EDCs bring together that support, to really support them in moving to the next step?”
King said he knows some EDCs are helping local businesses grow. “My hope is that type of work will continue to grow and expand, so it receives at least equal billing to recruiting companies.”
The other thing to remember about companies that move to a region, King said, is that they can just as easily leave. Locally-owned companies are less prone to do that, he argued.
“We’ve seen it with the garment factories. Once, they were up and down the Valley. So, companies that come here for low wages can just as easily move on to the next place that can give them a lower wage. Companies that grow very organically are much more likely to remain here and you know, kind of ride the ups and downs of business cycles.”
King added: “There is nothing like getting that quick hit of having a big company move into a town. But, but for the growth of the community, it’s just as important, maybe even more so, to figure out how to support the organic growth of those here.”
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