I have often argued the importance of redeveloping local food supply chains (see here, here, here, here, here, here, and here) If we think it is bad being dependent on foreign oil, think about being dependent on foreign food. Our dependence on foreign supplies of food is a critical weakness of our local economies, maybe the issue creating the most fragility.

A new study commissioned by Bill and Melinda Gates, “Community Food Enterprise: Local Success in a Global Marketplace,”  evidences the importance of local food economies for economic development. “Food is a catalytic place to begin.” As discussed in this Bloomburg Business week article,

The 190-page report, funded by the Bill & Melinda Gates Foundation and the W.K. Kellogg Foundation, highlights the role local food businesses play in economic development—creating jobs and bringing money into a community. Michael Shuman, an economist at the Business Alliance for Local Living Economies and co-author of the report, sees economic development intertwined with developing local food systems.

What were some of the findings of the study of local food enterprises on their communities:

  • Greater income for farmers, workers, and suppliers.
  • Concerted efforts at workforce training
  • Scrupulous environmental conservation and stewardship
  • These local food enterprises “pump up their community economies by hiring locally, buying local inputs, and engaging in and contracting for local value-added production.”
  • and enhanced empowerment of minorities.

How do you know that a local-job creation bill is working and actually building resilience into a local economy? Multi-national corporations, through the World Trade Organization, want to shut it down. In my previous blog post entitled: Good Ideas into Great Jobs, I suggested that Alabama policymakers should emulate a package of job creation measures enacted in Ontario, Canada. I wrote:

Ontario enacted its Green Energy Act in 2009. Since its enactment, 30 companies have publicly announced plans to set up or expand manufacturing facilities in Ontario that produce equipment for wind or solar power projects.  Ontario’s clean energy program is built around a strong commitment to local manufacturing and it has attracted as many as 43,000 new jobs at a reasonable cost per job.  The two primary planks provide alternative energy producers preferable rates and a local-content rule. Ontario announced the approval of 184 renewable energy projects worth $8 billion under theis Feed-In Tariff program.  The Ontario Green Energy Act includes these major components:

  • A Feed-In-Tariff program, which allows individuals and companies to sell renewable energy — like solar, wind, water, biomass, biogas and landfill gas — into the grid at set rates.
  •  Domestic content requirements, which would ensure at large percentages (60%) of wind projects and solar projects be produced and manufactured in Ontario.

The policies are exceeding expectations:

By most accounts, the plan is working. Reuters reported in March that Ontario’s green energy strategy was making the province “a magnet for global heavy hitters in the green energy sector, drawn by alluring subsidies at a time when incentives are being scaled back elsewhere.” Said one energy analyst, “I’m sure any major player in the clean energy space is looking at Ontario, now that they’ve put the sign out that they’re open for business and willing to have attractive incentives.

Clearly not everyone is impressed. Japan is a major exporter of solar technology with well known brands such as Sanyo, Mitsubishi and Sharp. Many Ontario solar power firms use these brands in residential or larger-scale business installations. But when local content quotas go up to 60 per cent in March, it will be difficult for companies not producing solar modules in Ontario to qualify for high feed-in tariffs.

Japan filed a complaint via the WTO; it is now being reported that the Obama adminsitration is deliberating whether to get involved in the WTO attack by Japan on Canada’s green jobs program. (Could it be that Japan is miffed that their chief competitor, South Korean Samsung was awarded a a 7 billion dollars contract?)

Japan’s trade challenge Monday of the McGuinty government’s green energy program could mean lost jobs and higher clean energy rates for Ontarians.

Tokyo took its fight against the Ontario Green Energy Act, introduced in May 2009 and focusing on solar and wind power, to the World Trade Organization (WTO) in Geneva. The provincial Liberal program promises creation of 50,000 jobs for Ontarians within its first three years, and aims to make Ontario “a leading green community in North America.”

While Ontario is the target, the Japanese challenge is against Canada. Tokyo is expected to argue the Ontario plan violates international trade law by providing subsidies for solar and wind power development and unfairly favouring local companies for procurement.

If Japan’s challenge succeeds, it could derail green programs across Canada.

Calling it a “test case globally,” Council of Canadians chair Maude Barlow told the Star it threatens policies designed to decrease greenhouse gas emissions.

“Why should the Ontario taxpayer be paying high rates for clean energy if it is going to the profit margins of big corporations from Japan or Europe?” she asked.

The challenge is the latest in a series of attacks on the ability of Canadian governments to set independent policy, without interference from foreign states, influenced by their corporate lobbies. It’s a pile-on that potentially puts every aspect of procurement, job creation and social policy under the microscope and derails “Made in Canada” programs.

These type policies enable communities to provide some level of economic resilience. I hope the Obama administration decides not only to not weigh heavily on the side of Japan, but actually oppose their WTO challenge in favor of local communities.

1. We know that rural entrepreneurship is the key to economic recovery because thriving entrepreneurship provides the necessary flexibility and agility for rapid response to unexpected upheavals from Wall Street, or Japan, or China. However, Alabama ranks 47th in entrepreneurial activity.

2. We know that rural Alabama is the land of locally-owned, small businesses.

3. We know that long-term job security is dependent upon economic resilience within our local economies.

4. We know that localy-owned, small business growth is the key to rebuilding communities that have been devastated by unemployment.

5. We know that investments in local businesses double the productivity of the investment in out-of-state corporations.

If we believe these things, then why do our policies not match our words. Why do our policy-makers focus almost exclusively on recruiting large, out-of-state industries as the primary plank of economic development policy? Could it be that effective, rural economic development is not good for politicians.

As cited in this article:

Hammett said that since Alabama used the tax break to attract Mercedes, several other states have done the same thing, including Kentucky, Mississippi and Georgia, and Alabama needs to bring back the tax break to remain competitive.

Mike McCain, executive director of the Gadsden-Etowah County Industrial Development Authority, knows the impact of the Kentucky law firsthand. He said Gadsden competed with Mt. Sterling, Ky., for a Chef America frozen foods plant that would employ 900 people, and Kentucky won because it offered the income tax incentives to the maker of Hot Pockets.

If the concern is keeping business in-state, locally-owned business are dramatically less likely to up and leave when a better deal comes along. Those locally-owned businesses are rooted here.

These type of policies only create a race to the bottom. Another state will always be able to play the system and out-bid us through greater tax breaks, more immunity, less restrictions, more grants, and more corporate welfare. At what point do our policy-makers look out for the common good? Can they not see that we are being played.  At some point, we must stop begging to be abused, bullied, exploited.

Instead of just “giving tax breaks to big industry,” we can match our rhetoric with actions by modifying the Governor’s bills. We should dedicate these large investments to locally-owned businesses. Since locally-owned businesses are already rooted in our communities, let’s ease their growth.

  • At least 50% of these incentives should awarded to locally-owned enterprises and entities.
  • Add domestic content requirements which would ensure large percentages (60% perhaps) of the projects’ materials and supplies be produced and manufactured locally.
  • Let’s encourage meeting local needs, locally.  Require additional consideration and preference be giving to projects which will produce items that satisfy local demand and consumption.

These type tweeks generate much greater monetary velocity of each dollar invested than the current proposals and therefore cause greater economic health and resilience.  As I still argue, as here:

We import so much unnecessarily into our local economies. Job security and economic resilience cannot be achieved by focusing exclusively on recruiting big industries to Alabama. A balanced approach should be adopted which encourages the development of home-grown, import-substituting local manufacturers. We must identify the leaks of investment out of our local economies and enact policies which catalyze the local production of many items we now import. Only then can we have some peace of mind concerning a future prosperity.

Long term stability of our local economies and job security will not be achieved by the current models of economic development.

What if Alabama Democrats would lead the charge for creating 50,000 new jobs, gaining Alabama energy independence, and empowering local communities all by one set of policies?

It can be done and now is the time to strike. Of course, the Republican leadership and their corporate sponsors would never let this happen, however, Alabama Democrats will be branded with for whatever we fight. Let next-generation energy and energy independence be one brand.

As I referenced here,

The United States is currently importing about 70 percent of its renewable energy systems and components,” said Phil Angelides, chairman of the Apollo Alliance. “If that trend continues, we stand to lose out on estimated 100,000 clean energy manufacturing jobs by 2015, and nearly 250,000 by 2030.

Currently, Alabama maintains no goals for renewable energy. Alabama Democrats must take the lead on this issue and propose forward-looking initiatives; the Republicans will continue to rant “Drill, baby, drill.”

This is no tree-hugger pipe dream. “There are no technological or economic barriers to converting the entire world to clean, renewable energy sources,” according to Mark Jacobson, a professor of civil and environmental engineering. “It is a question of whether we have the societal and political will.”

We can look to other states, regions, and countries that have already experimented with various policies; we will not be proceeding blindly.

For example, we can look to Ontario for lessons.

Alternative Energy Manufacturing Plant Applications since its Green Energy Bill in 2009

Ontario enacted its Green Energy Act in 2009. Since its enactment, 30 companies have publicly announced plans to set up or expand manufacturing facilities in Ontario that produce equipment for wind or solar power projects.  Ontario’s clean energy program is built around a strong commitment to local manufacturing and it has attracted as many as 43,000 new jobs at a reasonable cost per job.  The two primary planks provide alternative energy producers preferable rates and a local-content rule. Ontario announced the approval of 184 renewable energy projects worth $8 billion under theis Feed-In Tariff program.  The Ontario Green Energy Act includes these major components:

  • A Feed-In-Tariff program, which allows individuals and companies to sell renewable energy — like solar, wind, water, biomass, biogas and landfill gas — into the grid at set rates.
  • Domestic content requirements, which would ensure at large percentages (60%) of wind projects and solar projects be produced and manufactured in Ontario.

These two policies should be modified for implementation in the Alabama. (Several other countries and cities have employed the Feed-in Tariffs such as  Germany, Vermont, Australia, Switzerland, Gainesville, Florida, and Sacramento, California.)  For instance, the priority for wind and solar projects reflects Ontario’s region; Alabama might expand its list of priorities to include tidal, geo-thermal, hydro, and biomass because of our unique geographic.

Solar Array at School

 

In addition to these two policies, we should advocate that newly constructed government buildings be fitted with alternative energy with “buy-local” preferences for parts and equipment; old government buildings such as schools and jails can be retrofitted accordingly.   We should follow the example of Lee County which has unveiled a roof-mounted, 36- panel, solar-powered system that will supply up to 90 percent of the hot water used at the county jail.

Solar Array on a Residence

Finally, the feed-in tariff should be offered to anyone that is a renewable energy producer, no matter how small. Think 100,000 mini-power plants instead of a few centralized dams and nuclear plants. The goal would be that that majority of residences and small businesses will shift from mere energy consumption to actual energy production.  This can be accomplished with the feed-in tariffs,  net-metering, and on-site consumption rules.

The core of these policies would create a reason for alternative energy producers to locate to the Alabama and cause alternative parts manufacturers to locate to Alabama as well. For me, most importantly, it decentralizes energy production (no brown outs), builds greater resilience to our regional economies, and empowers ours local communities.

According to al.com:

Production will likely be interrupted after April 1 at Honda Motor Co.’s six North America plants, including the one in Lincoln, due to a lack of critical parts as Japanese suppliers work to recover from earthquake and tsunami damage, the automaker said today.

Not just Japanese manufacturers such as Honda, Toyota and Nissan are suffering; Ford Motor Co. will have to close some plants next week due to parts shortages resulting from the Japan earthquake and tsunami according to the ThirdAge.com.

“We also are pursuing other sources of supply as necessary and practicable,” the company stated in a regulatory filing. “Because the situation in Japan continues to develop, supply interruptions related to materials and components from Japan could manifest themselves in the weeks ahead.”

Alabama policymakers believe there is no other way to build an economy except by investments in these huge industries and clusters. However,  these industries and the economies that support them are unhealthily dependent as evidenced by this tragedy.  Healthy economies would have a myriad of networks and suppliers. Firms within a 21st century economies must be able to self-organize in response to global failures.  Resilience and agility must describe our firms and local economies. As I argued here:

As we continue in this new century,  we should continue to expect disruptions, shocks, and other unforeseen  occurrences within various sectors of the economy.  Similar to the collapse of the major banking and investment houses, other crises are poised to hit. Unfortunately, our present economic models have created an unsustainable economic environment.  The current policies makers have done very little to develop flexibility and resilience within our local economies; instead, our local economies are quite brittle.

To protect ourselves, we must develop resiliency to these oncoming shocks. I am sure most of you have seen this commercial: 

Our local economies must mimic this mattress. Although crazy and reckless things will happen in Wall Street or London or Tokyo, our local economies should be so well developed that, while we might rock a little from the recklessness, our local economies never tip over. We have seen how critically vulnerable our job security has become. From Randolph County, to Clay County, to Chambers County, to Lee County,  jobs vanished over night and communities entered a death spiral. Because of events and decisions made without our input or concern for us, the economic security of many families crumbled.

The twenty-first century demands new ideas and strategies, a bottom-up approach, for enabling our local economies to flourish despite the craziness within Wall Street and global trade markets.

These shutdowns evidence the brittleness and vulnerability of our local economies. Could the Talladega/Clay/Calhoun region afford to lose 4,000 jobs for 60 or 90 days?

(According to the MailOnline, the Japanese earthquake and tsunami has forced Honda to halve car production at its  British factory because of a shortage of parts from its homeland through the end of May.  However, thanks to a working-time agreement that the union negotiated in 2009, there will be no loss of earnings for the workforce while the company cuts production. Once full production is resumed, the reduced volume production will be quickly recovered using the banked hours. Let’s see if there is any difference of treatment for Alabama workers. As I understand it, Alabama workers will the option of staying on the job for “non-production activities,” taking vacation time or taking leaves of absence.)

P.S. On a side note and possible counter-argument to this post, on March 29, Honda announced it will invest $94 million in Lincoln.  According to the article, this investment will create 20 jobs according to the article.

UPDATE: According to the Huntsville Times, Toyota’s Huntsville engine manufacturing plant will suspend production on five days in April, starting next Friday. “On the non-production days, the company will keep providing employment for about 25,000 regular North American workers, the release stated. Employees not required to work have three options: Report to work for training and plant improvement activities, use vacation or take unpaid time off.”

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