EDC looks to new employers and old in mission of adding jobs

Last week was a roller coaster ride for the Colorado Springs Regional Economic Development Corp. in its efforts to add jobs to the Pikes Peak region.

On Tuesday, the Iowa owners of energy company Rocky Wind Power backed off a plan to open a manufacturing operation in the Springs.

The about-face followed a hectic five days during which Rocky Wind announced it was coming and EDC President Mike Kazmierski lauded it as a “very strong, reputable” company — only to backpedal after questions surfaced about its business practices and technology.

“I think we have a little egg on our face,” EDC Board Chairman Scott Bryan conceded last week.

Rocky Wind’s reversal, however, came the same day San Antonio-based insurance and financial services giant USAA announced it would add 200 jobs to its 1,000-person work force at the company’s regional Springs office.

The EDC has worked closely with USAA on retaining and adding jobs, Kazmierski said.

The juxtaposition of jobs added by one of the Springs’ largest and most respected employers, and jobs never realized from a little-known newcomer, underscores the high-stakes game of risk and reward the EDC plays.

The private, nonprofit group — which was formed in the early 1970s by local business people and operated as an arm of the chamber of commerce before breaking off in 1992 — is the area’s principal jobs-generating machine.

It works to add, retain and create so-called primary jobs — positions created by employers whose hiring, equipment purchases and other investments pump wealth into the community even as most of their customers are outside the area.

Backers say the EDC deserves kudos for adding nearly 2,050 primary jobs in 2009, even though the nation was in the midst of its worst economic crisis in decades.

Yet, some business people question whether the EDC puts too much emphasis on attracting newcomers at the expense of nurturing existing employers.

Now, the Rocky Wind gaffe might give critics more ammunition.

“There are people who are looking for reasons to question their viability and what they do,” Jim Justus, president of commercial brokerage Olive Real Estate Group, said of the EDC.

That’s unfair, he said, because the EDC wasn’t the only one caught off guard. Justus represented a Nevada Avenue building owner where the company had planned to locate; now, Justus said, his client has a signed lease, but no tenant.

“It’s unfortunate people got blind-sided,” he said. “But also, in my mind, it shouldn’t give the EDC or the city and the people who supported this effort a black eye.”

On Feb. 25, Rocky Wind owners Steve and Pam Stultz held a news conference, attended by and arranged by EDC officials, to announce they would make rooftop wind turbines in the Springs and employ 25 to start and up to 140 in the future.

A few days later, Kazmierski said several people contacted him with concerns about Prevailing Power, a sister company owned by the Stultzes; at least four consumers had filed complaints with the Iowa Attorney General’s Office.

Also, an energy trade group had said that turbine designs similar to those of Rocky Wind failed to live up to expectations.

Generally speaking, when wooing employers, Kazmierski said the EDC first tries to sell a company on the Springs.
Eventually, the EDC moves into a due diligence phase and ramps up its research. In Rocky Wind’s case, EDC officials visited the Stultzes’ Iowa operation and conducted Internet searches on the company, Kazmierski said. By all appearances, the company appeared viable, he said.

“They had employees, they had trucks with their names on it, they were doing business in Iowa,” he said. “There was absolutely no negative indication at the time of our Internet search.”

The EDC can only go so far when it checks small companies, especially if they’re not publicly traded, Kazmierski said. The EDC often must enter confidentiality agreements with prospects, and must be careful not to alert employees or chamber officials in a town that might be in danger of losing a business, he said.

Once the EDC learned of complaints against Prevailing Power, it made the information public and alerted the Stultzes it would issue a statement to the community about the concerns.

“The consequences could have been much worse if some of these issues surfaced months down the road,” Bryan said.

Steve Bach, a Springs commercial real estate broker who helped found the EDC in the 1970s, said the organization can’t be expected to conduct exhaustive background checks of prospective employers.

Yet, Bach questions why the EDC was focusing on an outsider in the first place at the possible expense of local businesses. USAA’s announcement shows that if existing primary employers are satisfied, they’ll grow their operations, he said.

“To the extent we take better care of existing employers, we dramatically improve the probability they will stay here and expand here,” he said.

Developer Steve Schuck, also an EDC founder, echoed Bach’s comments.

“No matter what the level of activity that the EDC is undertaking to serve (existing primary employers), it ought to be redoubled and redoubled again because those are the people to whom we owe our loyalty and those are the people who, if well served, will be our greatest ambassadors.”

The EDC does emphasize existing primary employers, Kazmierski and Bryan say.

The organization’s local-industry division — which didn’t exist several years ago — made 150 visits in 2009 to primary employers as it worked to identify and resolve problems.

But the need to attract new employers to town shouldn’t be ignored, they said.

“There has to be an effort on both sides,” Bryan said. “You can’t say there has to be more given to one side than the other. Both sides need attention.”

Jobs are the bottom line for the EDC, said board member Fred Veitch, a vice president of Nor’wood Development Group, and neither the problems associated with one prospective employer nor a lousy economy will divert the EDC from that mission.

“Yeah, times are tough, but they’re tough for everyone,” Veitch said.

“What we need to do is to continue to sell the merits of doing business in Colorado Springs and the Pikes Peak region. I’d much rather be talking about Colorado Springs than I would be talking about, name it, Detroit, St. Louis, Los Angeles or other areas.”
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Contact the writer at 636-0228.