New economic rivals challenge city

Think of Nashville, Tenn., and the Grand Ole Opry comes to mind. Memphis has the blues and Des Moines its cornfields.

But Nashville also is a budding manufacturing power, Memphis is flexing its muscle as a distribution center, and Des Moines is swelling as a Midwest insurance powerhouse.

And they all have their sights drawn on Indianapolis.

Much like Indianapolis aspires to compete with cities like Atlanta, Dallas and Denver, smaller cities are challenging Indianapolis and its peer cities for business development. Indianapolis economic developers say they increasingly encounter new cities as they fight for everything from factories to back-office financial operations.

Get used to the new class of competitors, developers say.

"They're not going to be the same in the future as they were in the past," said Kyle Salyers, the high-technology manager at Indianapolis Economic Development Corp.

Cincinnati, Columbus and Indianapolis have been rivals for years. The Ohio cities nearly always are hustling for the same projects. Louisville and Cleveland are often contenders and, depending on the project, Chicago and St. Louis sometimes are in the action.

In the past couple of years, though, other towns are coming into play, especially when a particular industry is at stake. Des Moines is after insurance. Lexington, Ky., is pursuing automotive businesses, and Champaign-Urbana, Ill., is a rising high-tech haven.

Nearly everyone local knows about the traditional competitors, said Larry Gigerich, president of the Indianapolis Economic Development Corp. But they don't all know about the up-and-comers.

"It's always important to know who your competition is," Gigerich said. "If you don't know who your competition is, your city and your region will be blindsided."

The most popular competitors are south of here and offer cheaper land and labor and a better climate. But they're far enough north to boast reasonably centralized distribution.

Ranked alphabetically, the following are some new Indianapolis rivals:

Champaign-Urbana, Ill.

Several years ago, Champaign-Urbana wasn't on the map among economic developers, but it is now, Gigerich said.

As home to the University of Illinois --where major Internet browser software has been developed-the neighboring cities are competing for technology companies. Gigerich said Indianapolis went head-to-head with Champaign-Urbana when a firm that made high-speed switches was looking for a site for a Midwest engineering center. The firm dropped its plans before it decided where to locate.

Des Moines, Iowa

Some of the most alluring sales pitches to locally based insurance companies originate in Des Moines, Gigerich said. The pitches usually urge the companies not to put all their eggs in one basket, but to diversify in cities like Des Moines. Long an insurance center, Des Moines touts Iowa's highly rated elementary and secondary education, as well as Iowa State University and the University of Iowa, which focus research on financial services and actuarial services.

Des Moines will be an increasingly robust competitor for insurance and financial service back-office operations, Gigerich said.

Greenville-Spartanburg, S.C.

The region is best known for its sweepstakes winning of BMW's first American auto plant. But other, less-visible projects were cropping up long before BMW's plant became national news.

Michelin Tire's North American research and development headquarters are in the region, close to engineering expertise at Clemson University, as are a number of other R&D facilities. The state also is investing in training to attract precision manufacturing facilities.

Lexington, Ky.

Race horses aren't the only things dotting the hills near Lexington. Already the site of a Toyota auto assembly plant, Lexington is gaining in light industrial and manufacturing. Having developed an economic development strategy several years ago, the city is promoting its low costs, central location and interstate highways.

Memphis, Tenn.

Indianapolis increasingly is competing with Memphis in distribution. Memphis not only has Interstate highways, it is home to cargo carrier Federal Express Corp. Gigerich said the city has attracted FedEx customers that need to be close to the airport for quick turnarounds.

"Memphis clearly is the rising star in the distribution area," Gigerich said. "They've done a nice job."

Memphis has slightly lower land and labor costs, but Indianapolis has more Interstates and lower airport landing fees, Gigerich said.

Memphis isn't competing only for distribution. It was No. 2 on a list of prospective cities for the expansion of Covance Central Laboratory Services, the westside firm that performs testing for pharmaceutical and biotechnology companies.

Vice President Tom Dunn said a spreadsheet analysis pointed to Indianapolis as the best site, Covance, formerly called SciCor Inc., now is adding 111,000 square feet to its existing 152,000 square feet by summer and hiring 200 employees over three years to supplement the current 800.

Memphis was competitive because Covance uses Federal Express, and because of Tennessee's improved tax structure and incentive package, Dunn said.

Nashville, Tenn.

Like Lexington, Nashville is luring automotive manufacturing by touting cheaper land and labor and close proximity to Eastern and Southern markets, Gigerich said.

Indiana University economist Morton Marcus noted Nashville now has professional sports: Its Oilers professional football team will help attract white-collar jobs. Other cities will increasingly be part of the competitive landscape.

Jim Wheeler, an Arthur Andersen consultant who has taken part in several studies of Indianapolis' competitive advantage, said Minneapolis-St. Paul and Cleveland are pushing medical companies. Salt Lake City, Utah; Charlotte, N.C.; and Phoenix, Ariz., also are rising second-tier cities that will tangle with Indianapolis for economic development.