Growing Pangs

There's been a lot of hand wringing in my hometown. Our second largest private employer is leaving.
December 2001
William Fulton
By William Fulton  |  Columnist
Director of the Kinder Institute for Urban Research at Rice University and former mayor of Ventura, Calif.

Well, it finally happened. The doomsday economic development scenario finally arrived in the city where I live: Our second largest private employer is leaving town.

Everybody seems to think this proves our economic development policies have failed, but I'm not so sure. I don't think we could have done anything to avoid it. And in the long run, we may be better off without them anyway.

The company in question is Kinko's, the retail photocopying chain with more than 1,000 stores nationwide--and a large corporate headquarters about a mile from my office in Ventura, California. Kinko's moved to Ventura 13 years ago from Santa Barbara--30 miles up the coast--largely because the chain was growing fast and Ventura happened to have a new corporate headquarters building that was vacant because of mergers in the oil industry.

The truth of the matter is, I loved the idea of sharing my town with a nationally known company. Whenever I'm traveling--which seems to be most of the time--I usually stop by a Kinko's for some reason or another, and a while ago I even got into the habit of always alerting the local staff that I was from Ventura. I guess I figured it would keep them on their toes.

Beyond my personal feelings, Kinko's is a great corporate success story. It's a large corporation that has grown from the vision of a dyslexic founder who started a small copy shop adjacent to the campus of the University of California at Santa Barbara. And it has retained a reputation as a very good place to work--flexible hours, excellent benefits--even as it has continued to grow.

Last year, however, Kinko's founder sold his company to New York investors. And in late October, the new owners announced plans to move the corporate headquarters to Dallas. A small contingent of Kinko's employees will remain on the job in Ventura, but hundreds more will be laid off. Hardly any of them were offered a transfer to Dallas.

There's been a lot of hand wringing around Ventura about Kinko's, as everybody has attempted to use the move to reinforce their position about our local growth policies. The local newspaper, the Chamber of Commerce and our local graduate business school all argued that the Kinko's situation proves that our complicated development policies are not business-friendly. (It didn't help, of course, that the Kinko's move was announced in the middle of a city council campaign.)

But Kinko's actually turned down a $4 million incentive package that the city put together in an attempt to entice the company into staying. And the more you look at the situation, the more it looks like a classic economic development case study, where proximity and cost turn out to be more important than subsidies--for several reasons.

The first is that Kinko's has stores all over the nation, but Ventura is 70 traffic-snarled miles from the nearest full-service airport, Los Angeles International. A transcontinental trip can often take an exhausting 12 hours door to door, as I have learned the hard way over the years. In that sense, the Kinko's move was not unlike Boeing's decision to pull up stakes in Seattle and set up its corporate headquarters in Chicago.

Second is housing cost. Ventura County's median home price is nearly $300,000, and Kinko's, unlike high-tech companies in other coastal California cities, does not pay huge salaries to its corporate staff.

Finally, and maybe most important, the new boss is from Dallas.

In fact, when you think about it, it's hard to believe that Kinko's stayed in Ventura as long as it did. Why would any big corporation with a national operation choose to base itself in a remote, high-cost location--even one that has Surfer's Point and the blue Pacific just a stone's throw from the office?

Many years ago, amid the distress in New England over the fact that Southern states were raiding the Northeast's textile mills, I heard one economic development expert from Massachusetts provide a refreshing point of view. "Those mills are headed for Mexico or Asia anyway," he said. "If South Carolina wants to rent those jobs for 10 years, that's fine with me. The sooner we lose them, the sooner we can rebuild."

So given everything, maybe we were renting the Kinko's jobs all along. Or, perhaps more accurately, we provided a good headquarters location for the company at a particular point in its history. But then the company and the community grew apart.

Instead of beating ourselves up over what now looks like the inevitable loss of Kinko's, maybe we in Ventura should be grateful that they stayed as long as they did. And then we can get on with the business of building our economic prosperity around our community's enduring assets, rather than basing it on the kind of happenstance opportunism that led us to snare Kinko's in the first place.