Tupelo, Miss., Concocts An Effective Recipe For Economic Health
Education, Racial Harmony Lure Firms, Which Then Are Expected to Pitch In Legacy of a Visionary Citizen
BY HEI.ENE COOPER
Staff Reporter of THE WALL STREET JOURNAL
TUPELO, Miss. When corporate recruiters here heard that Canadian wood-products maker Norbord Industries Inc. was scouting for a place to build an $83 million factory, they
promptly announced a program to plant 300,000 loblolly pines in the area.
The lure of plentiful raw materials soon had Norbord executives in town. Then when an off'-road vehicle carrying local and
company officials got mired in mud near a potential site, Harry Martin, head of Tupelo's economic development agency, hopped out and pushed. He got spattered. He also got Norbord. The company last year chose Tupelo over
competitors in Alabama and Florida.
"They were the most professional people we've ever encountered in industrial development circles," says Charles Gordon, director of corporate communications with Norbord.
Friendly professionalism is just one ingredient in a formula that has made this community of 30,000 people in the heart of the impoverished rural South a model of economic development.
Tupelo's proven track record at drawing the likes of Norbord without handing over the keys to the city and leaning on local taxpayers has made it the envy of corporate recruiters across the U.S.
Forward Movement
"There certainly is some jealousy of Tupelo," says J. Mac Holliday, a
corporate recruiter in Georgia. "They keep moving forward relentlessly--they're probably the best small city in the South." Adds Sheila Tschinkel, an economist with the Federal
Reserve Bank of Atlanta: "Tupelo is what we always come back to in economicdevelopment circles."
The unemployment rate in Tupelo easily beats the statewide figure--4% for
Tupelo and 6.2% for all of Mississippi in December, the latest month for which the Labor Department has a breakdown. For more than a decade now, the city has added an average of
1,000 new jobs a year--l,500 in 1993 alone. Per-capita income in Tupelo and surrounding Lee County is the second highest in the state. The city supports its own symphony orchestra and the nation's largest rural hospital.
All of which points to success at attracting a steady inflow of investment over the years. Eighteen Fortune 500 companies including Sara Lee Corp., Philip Morris Cos. and Cooper Tire &
Rubber Co.--as well as a large number of furniture makers and investors from as far away as Switzerland, Brazil and Australia have set up production in the town and environs. This Isn't New York
What makes Tupelo so seductive? For one thing, old-fashioned Southern hospitality of the kind Norbord enjoyed. "They really know how to push the right buttons," says Martin Silver, chief
executive of furniture maker Bauhaus USA Inc., which moved to Tupelo from Toronto four years ago. "In New York, just to get someone to talk to me, I had to make three phone calls.
With Tupelo, six guys met me at the airport. They had five different sites ready for me to look at."
When Norbord came calling, Tupelo was ready to tout its reforestation program. The Community Development
Foundation, the town's main corporate recruiter, spent $15,000 to buy 300,000 loblolly seedlings that it then gave to farmers and other landowners to plant. The trees, which will
provide the kind of wood Norbord needs, grow three times faster in northeastern Mississippi than they do in Canada, according to Mr. Martin of the CDF. "We even went to the
schools and gave 600 kids a tree each to plant in their yards," he says.
But that kind of treatment doesn't make Tupelo much different from poorer low-wage Southern towns hungry for jobs.
In fact, Tupelo doesn't go as far as some of its neighbors: Consider the more than $250 million in incentives Alabama granted to clinch a Daimler-Benz plant late last year and the
estimated $150 million South Carolina signed away to win over Bayerische Motoren Werke AG in 1992. Education and Harmony
What does set Tupelo apart is its long-term commitment to
investment in the community--and in the kinds of things companies say they look for when deciding where to set up shop. In a corner of the U.S. where labor's main selling point is
its low cost and where racial conflict has left deep scars, Tupelo spends heavily to build a skilled work force and acts quickly to address minority grievances. In addition, the city
shuns "buffalo hunts" for big-name investors like Mercedes made BMW, instead targeting small to midsize companies that appreciate special treatment. Last year, that strategy brought
in 16 new factories with total capital investment of $100 million.
Decades ago, Tupelo might have joined much of the rest of the South on the path to economic stagnation, distinguishing
itself for little other than being the birthplace of Elvis Presley. But George McLean, publisher of the town's Daily Journal from 1934 until his death in 1983, made sure that didn't happen.
After doing graduate work at Stanford University, Mr. McLean returned to Tupelo to champion economic development, local empowerment and other progressive causes. (Even now, "if
you read the newspaper, there's no way you can get away from it," says a local businessman.)
Mr. McLean urged Tupelo to modernize its dairy and poultry farms. He was more fervent in espousing industrial
development, even risking his own business for the cause. When a shortage of factory and warehouse space threatened growth in the late 1950s, he mortgaged his newspaper to build
more than 650,000 square feet of industrial space.
These days, the CDF, a group of local businesses, continues what Mr. McLean started. It buys farmland that is zoned for
industrial uses so that it's ready when potential investors are in the neighborhood. When existing factory or warehouse space becomes available, the CDF takes out classified ads in
papers across the U.S. and Canada. Candy-wrapper maker Bryce-Toga USA, for one, says it chose Tupelo last year for a production site partly because of available industrial space.
The CDF also works with the local community college on training programs for workers.
Once here, companies are expected to help Tupelo maintain its allure as both a place of business and a place to live. For
instance, when the CDF passes around the hat for funds to buy property for future industrial use, member companies are asked to dig deep. As a result, some 40 % of the CDF's $1
million annual budget comes from the private sector. (The rest is from grants and the CDF's investment portfolio.)
"There's an expectation that if you're enjoying the benefits of
being in Tupelo, you're expected to reinvest in the community," says John Hicks, president of North Mississippi Medical Center.
Company chiefs and plant managers new to Tupelo find
themselves quickly installed on various subcommittees of the CDF. "If you work with them, they'll help you train your labor, they'll help with transportation," says Vaughn Grisham, a
professor of sociology at the University of Mississippi who recently completed a book on Tupelo as an economic-development model. He notes that those who decide
against joining the CDF though not punished, are left to their own devices.
Tupelo's school system has been one of the clearest beneficiaries of the community's investment in its own future.
In the South, companies often can't find workers educated enough to cope with the demands of increasingly sophisticated production. Here, money pours into the schools.
According to Mike Walters, superintendent of the Tupelo school system, area schools receive some $500,000 a year in private donations, mainly from business. In 1991, L.D.
Hancock, founder of Hancock Fabrics, donated $3.5 million to Tupelo schools, one of the largest gifts to public schools from an individual in the state's history. And two years ago, a $17
million bond issue for a new high school passed with 89% voter approval.
The return on these investments appears to be high. In 1993, the average score for Tupelo-area students on the American
College Test was 20.7, higher than both the national average of 20.6 and the state average of 18.8. "I don't know about the schools in the rest of Mississippi, but we were very impressed
with Tupelo's schools," says Norbord's Mr. Gordon.
The racial balance of schools here, rare for the South, reflects one of Tupelo's other strong selling points: a pragmatic
approach to race relations. Much of Mississippi and the South in general has seen white flight to private academies; but in Tupelo, 66% of public-school students are white, compared with 48 % in the rest of the state.
In the early 1960s, Lee County was the first county in Mississippi to integrate its schools. By doing so, it avoided the public-relations debacles that for years shadowed Little Rock,
Ark., Oxford, Miss., and other Southern cities that resisted the civil-rights movement.
"For us, as Northerners, we had stereo-types of Mississippi,"
says Mr. Gordon. "We certainly did sense racial disharmony elsewhere during our search, and we wanted no part of it. But in Tupelo, we didn't get a sense of that at all."
When signs of racial tension develop, the city typically acts quickly and quietly. The city government's decision several years ago to privatize garbage collection prompted complaints
from black leaders that the move would eliminate the city's sole black department head. So Tupelo immediately hired a black man to be personnel director. And three years ago, when
blacks opposed a planned annexation because it didn't encompass a poor, primarily black neighborhood called Haven Acres, the annexation lines were redrawn to include the area.
While Tupelo has further to go in incorporating blacks into its white-collar ranks, "there is a level of cooperation that's far beyond" other areas of the state, says Kenneth Mayfield, a
former attorney with the National Association for the Advancement of Colored People and owner of Tupelo-based Mayco Furniture Manufacturing Inc. The unemployment rate
for blacks in Tupelo, at 8 %, is half that for blacks statewide.
Tupelo's heavy investment in worker training has been a major factor in bringing the black community within the ambit of the
town's economic success. Throughout the South, cheap labor is a big investment draw. But cheap labor often is poorly educated labor, meaning that many communities can draw only Low wage, low-skill industries.
Here, vocational training forms a big part of college curricula, which are heavily weighted toward topics like advanced machining processes, computer-aided drafting and. furniture
design. Two years ago, Itawamba Junior College in Tupelo set up a Computer Integrated Manufacturing Center where companies can train their employees. College officials spend
much of their time working with area companies on plant-specific training programs.
Officials at Tecumseh Products Co. say Itawamba's ability to train workers in machining and assembly was a major reason
the Tecumseh, Mich., manufacturer of compressors decided six years ago on Tupelo as thc site for production of its state-of-the-art rotary compressor.
Angola Lowe, a 26-year-old mother who used to spend most
of her time at home, heard about Itawamba's furniture-design training program a few months ago and signed up. Now, she is making wingback chairs and is virtually assured of a job when she finishes her training.
Some company executives say Tupelo may have done its job too well. Students who take Itawamba's program in tool-and-die making, for instance, usually have jobs waiting for
them when they finish. "We're trying to hire people every day," says Jim Diffee, president of Brookwood Furniture Co. "It keeps getting tougher."
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