REVE-101 by O'Neil Arnold

If you’re a data-focused person living a data-driven life and working in a data-rich environment, you have a kindred spirit in Chuck Denny.

At Wedneday’s inaugural Real Estate Venture Exchange session, Denny, president, PNC Kentucky and Tennessee, gave a mini-seminar to real estate developers and investors on where Louisville ranks vis-a-vis cities with which we compete, and where our market is headed.

Oh, and which cities are going to be winners, which are losing and why.

(Not to give too much away, but research universities are the key, though winning basketball championships also contributes to economic competitiveness.)

In 20 slides, Denny compared Louisville to its regional cohort of 17 cities, including neighboring Nashville, as well as economic powerhouses such as Atlanta.

He prefaced his remarks in front of the new real estate market making group by saying, “This is not a chamber of commerce speech.

“I’ve got to tell you, some areas we do very well in, and some things we don’t do very well at all.”

Denny said Louisville is not Atlanta, not Chicago, not Charlotte.

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Louisville ranks No. 1 in productivity.

“In fact, we’re not Raleigh. When you see the Raleigh numbers, they’re going to jump off the page. Just how dynamite Raleigh is. And the reason for that is, they’re right next to Duke, the University of North Carolina and North Carolina State.”

His data indicates the cities of the future already have strong research universities, attracting human capital and investment capital, Denny said.

Denny paraphrased Vanderbilt University Chancellor Nick Zeppos as saying Vanderbilt is the Fortune 200 company that will never leave Nashville. “Will never be acquired. Never move to another city. And is the source for much of Nashville’s current expansion.”

Instead of a chamber of commerce speech, Denny gave a dispassionate appraisal of our strengths and weakness distilled from data culled from the Brookings Institute, the U.S. Census, federal labor statistics and other sources.

Denny said he collected the data during the four years since he joined PNC Bank after PNC’s 2008 acquisition of National City Corp., where he’d been Kentucky president.

Big companies such as PNC are pitted against other markets, so Denny put the data together to better understand Louisville’s relative competitive advantages.

Like any good showman, Denny waited to the end of his presentation to say Louisville has the promise to be a first-tier city. But like any good bank president, he acknowledged we have a long way to go, especially against the emerging econ-dev heavy weight of Raleigh.

As Denny put it, “Louisville needs to punch above its weight.” The data shows a correlation between the critical mass of regional heavyweights such as Atlanta and Baltimore and sustained economic growth.

Denny’s presentation broke down the metrics along population, job creation and workforce categories.

Okay, let’s parse some data:

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Louisville has had double-digit growth, but so have Nashville and other nearby cities. Click to enlarge.

• Louisville has had about 10 percent population growth rate between 1990 and 2010, a time other cities such as Cleveland and Pittsburgh were losing population, Denny said. “Now, take a look at Raleigh. Over 40 percent over the last 20 years. Raleigh is going to leap frog us pretty soon. But there are some cities we can overtake.”

• Denny divided gross city product by household income to measure productivity. How do we look? “We’re the best!” he said. Denny asked himself if he was seeing “a false positive. We look like a very productive community, punching above our weight. This goes to the nature of jobs in Louisville” in smart, high-dollar manufacturing, but with wages below cities with higher-paying job categories.

Louisville has reversed its brain drain of the 1980s.
Louisville has reversed its brain drain of the 1980s.

• Brain Drain. “We heard for years that we were losing our kids, exporting our kids to other cities. Instead, Louisville is now  attracting young people.” Atlanta picked up more than 400,000 people between 2000 and 2010. “We picked up 33,000, but we didn’t lose people. Cleveland lost 133,000 people during that time frame. That’s a good set for us. We’re no longer exporting people. We’re importing people.”

Science, technology, engineering and manufacturing, or STEM, jobs.  Louisville is 12th of 17 cities on the list with 19.5 percent of jobs STEM-based. “Why is this important?” Denny said. “This can be a great bootstrap for someone who doesn’t have a degree.” About 57 percent of Louisville’s STEM-based jobs are non-four-year-degree jobs, and about 43 percent are engineers and researchers. The average salary is $49,000 for non-four-year degreed STEM jobs while the average salary for non-STEM jobs that don’t require a college degree is $33,000 per year. “The economics of STEM jobs in your city are enormous,” Denny said. “When you look at the data long enough, you start to see patterns develop. And one of the patterns that develops is the cities that have research universities really do well with STEM jobs.” Louisville outranked Atlanta, Nashville and Memphis in STEM jobs.

Louisville is fifth in "cool" jobs in IT and media.
Louisville is fifth in “cool” jobs in IT and media.

• In “cool jobs,” Denny said, such as IT jobs, research, media and publishing and telecom, Louisville does surprisingly well. Louisville is fifth on the list of 17 in this STEM sector, which has some of the highest paying jobs. But in the highest paid career sectors such as engineers and architects, Louisville trails the most competitive cities.

Manufacturing is still strong in Louisville, which is a good thing. “What’s cool about Louisville is, we still make things here,” Denny said. About 20.5 percent of jobs are in manufacturing, where just a few years ago it was only 14.5 percent. “We’re doing very well in that regard. All manufacturing jobs have increased.”

• Louisville is the only city of the 17 without pro sports, and some have all four. “But our GDP is higher than some cities with pro sports, so it’s not the Holy Grail,” Denny said.

The bummers:

• Louisville is 12th and last among cities with National Institutes of Health research funding, which totals $64.6 million compared $889 million in Baltimore. Baltimore has Johns Hopkins University. However, Denny noted U of L’s NIH funding is increasing at the fourth highest rate in the nation.

Louisville is last in cities with National Institutes of Health grants.
Louisville is last in cities with National Institutes of Health grants.

• Louisville is last in household income, “but that’s the nature of jobs here.”

If you want to change that, Denny said, successful research universities are the key to success for major metros to really compete.

“The cities and the states that get that are the ones that are succeeding,” he said.

“In the Baltimores and Raleighs, Johns Hopkins, Duke, Maryland and North Carolina (universities) are driving those economies.”

At the end of the day, Louisville has the core ingredients for success: STEM jobs, a research university and amenities such as parks. “Were importing kids now, not exporting. We seem to have good job sets that are attracting employers that are STEM-related,” Denny said.

“What dawned on me is, we focus on education. We focus on getting STEM jobs, focus on those amenities that attract more people …  and the future looks good for this city to become a First Tier city.

“You claim your strengths, and you try to cover up your weaknesses.”

Terry Boyd has seven years experience as a business/finance journalist, and eight years a military reporter with European Stars and Stripes. As a banking and finance reporter at Business First, Boyd dealt directly with the most influential executives and financiers in Louisville.


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