ONE-ON-ONE - October 2006
by Ed G. Lane

'I See Very Hard-Fought Growth in 2007 – Not Robust, But Steady'
The head of Louisville's chamber of commerce talks about the city's recent successes and its plan for the future

Joe Reagan Joe Reagan is president and chief executive officer of Greater Louisville Inc. (GLI) - the Metro Chamber of Commerce, which serves as the region’s primary economic development, workforce development and business leadership organization. Prior to joining Greater Louisville Inc. in February 1998, Reagan was executive vice president of the Rockford (Ill.) Chamber of Commerce and was also executive director of the Council of 100, an economic development leadership organization. Earlier in his career, Reagan owned a marketing and publishing company and also spent 12 years in radio broadcast management, sales and programming. Prior to being named president and chief executive officer of Greater Louisville Inc. in 2005, Reagan served as chief operating officer for the organization. Reagan is a graduate of the University of Iowa. He and his wife, Julie, have five children.

Ed Lane: You’ve been with Greater Louisville Inc. (GLI) since February of 1998. What is the greatest change you’ve seen in Louisville since you started at GLI?

Joe Reagan: Numerous changes have occurred in downtown Louisville – like Fourth Street Live, the Ali Center and the many other fine amenities that have come online. The biggest change, based on the research GLI conducts, is a greater sense of momentum and a “can-do attitude” that is emerging in Louisville. That is very exciting for the future, because the cities GLI looks at that get perpetual success moving also have that “positive attitude” present.

EL: Prior to being selected CEO in 2005, you served as GLI’s chief operating officer. Since becoming CEO, what major changes have you made at GLI?

JR: Thanks to the leadership of (previous CEOs) Doug Cobb and Steve Higdon, we have built a strong track record and team at GLI. The achievements that I’ve made were putting our senior team leaders, who are tremendous executives in their own right, into what I believe are the right areas for their strengths.

We’ve also focused on three core strategies and emphasized a cultural change which we believe is significant. We refer to these three core areas as inclusion, engagement and leadership. When I was going out and listening to our constituencies last year, right after I became CEO, these were the three ideas that emerged. So GLI tried to react around these three principles.

EL: What was your best and worst idea?

JR: The best decisions have been around people. Recruiting Alice Houston, who is our incoming head of what we call the office of the chair – GLI’s top governing structure – and placing the senior team we have into their positions. In terms of the least effective decision, that hasn’t been proven out yet. There is no doubt that some decisions made in this first year aren’t going to be as effective as we hoped.

EL: Louisville consolidated most of its economic efforts into GLI in 1998. How well has the merger worked for Louisville?

JR: The merger has worked very well and our customers have said it worked well. Basically, businesses are either expanding or relocating to the community. What we are finding increasingly is our competitors are taking notice. Most recently, the leadership of Indianapolis came to Louisville to study how GLI merged economic development into one unified voice. They haven’t been able to do that yet and they are frustrated. Louisville’s original vision has held up. Having one strong unified voice for expanding or relocating companies requires a partnership that includes a number of different players, including Metro Louisville Government, the universities and others that really need to be at the table.

EL: From the perspective of the customer, what is the benefit of being able to deal with one entity regarding economic development assistance?

JR: Louisville is competing in a global economy; business is happening at a high rate of speed. GLI is a network that can react very quickly to customer needs. The benefit is speed – a solutions mentality. Our goal is not to “sell” Louisville or to promote a particular program or feature, but to reach an expedited solution for our clients and customers. That is the benefit our customers have seen.

EL: Can you give a few examples of how GLI has been able to quickly respond or provide a solution for a client?

JR: The most stunning example this year was the $1 billion deal that was put together with UPS. That transition happened very quickly because of the relationship and GLI’s focus on the customer. That is probably the most recent example.

Working with Mayor Jerry Abramson, Gov. Ernie Fletcher and Secretary of Economic Development Gene Strong, GLI is currently very focused on the needs of Ford Motor Company.

It’s too early to talk about details. GLI has very good relationships locally and in Dearborn. We are learning from Ford what kind of capital is needed to keep the two plants in Louisville competitive, what kind of training is needed to keep the workforce here in a competitive position, and we are looking at the regulatory environment. What we are doing is understanding how those issues are affecting Ford, and then we’ll respond accordingly.

EL: Has Gov. Fletcher been responsive to Louisville’s needs?

JR: GLI has had a very good relationship with Gov. Ernie Fletcher and he has been involved on the issues that we care about, like the arena and supporting companies like UPS and Ford. The governor has been a tremendous partner, very available to GLI and very willing to step up to make sure these projects are moving forward. He also supported our funding for the two bridges project in the last legislative session.

EL: How much funding does GLI receive from the Louisville Metro Government?

JR: Since 1998, GLI has had an annual contract with the then-city and county and now the Louisville Metro Government for $1.3 million. GLI provides economic development services for attracting new business and helping current businesses expand; a number of targeted efforts like our high-impact program, which focuses on the community’s fastest-growing companies; and inner-city developments in west Louisville.

GLI manages the client side of economic development and develops relationships with businesses. We negotiate incentives and recommend them to the mayor. We coordinate with the state so there is a constant voice working with all the departments. GLI uses the Metro Government contract to help raise three to four private sector dollars for every public sector dollar that it receives and together that provides the economic development funding that is needed.

GLI’s total budget is around $8 million dollars and it has about 60 employees.

EL: Who are GLI’s main contacts at the Louisville Metro Government and how frequently do you communicate?

JR: GLI has a very good communications system, both with the Metro Government’s administration and the Metro Council. The executive in charge is Eileen Pickett; she is GLI’s senior vice president of community and economic development. She and her team meet monthly with their counterparts in the mayor’s administration. I meet monthly with Mayor Abramson. Eileen and her team meet monthly with key council members, who chair various committees, to share what GLI is doing. On a day-to-day basis, there isn’t a day that goes by that GLI is not in touch with economic development counterparts in city and state government. We can’t do it by ourselves.

EL: Metro Louisville (the merger of the City of Louisville and Jefferson County) occurred in January 2003. How in your judgment is the merged government doing?

JR: The merger has worked extraordinarily well. During the first few years of a merger, the concentration is on the nuts and bolts of integration. Nimbleness of the government is one of the promises of merger. Before the merger, a lot of energy used to go into making sure the city and county were headed in the same direction. That energy is now being invested in serving the customer. That is exactly what we wanted.

EL: Did the merger help the mayor recruit better-qualified managers?

JR: That is one of the areas where the Abramson administration gets a strong ranking. In recruiting top talent – like Police Chief Robert White and (Metro Health Department Director) Dr. Adewale Troutman and all of the major department heads – Louisville has been able to attract some tremendous talent with specialized expertise, quality employees the city might not have been able to attract pre-merger. The city’s bond rating also improved; Louisville has a stronger capacity for investments in the future.

EL: Was Louisville cited by the EPA for inadequately treated waste water discharges?

JR: A consent decree was entered into last year, and it is a major issue facing the community.

Storm waters were going into sanitary sewer systems. Our antiquated storm sewers are inadequate for the type of growth Louisville is experiencing. This is not unlike what is happening in all communities our size; it’s not unique to Louisville. What’s unique to Louisville is the consent decree that Bud Schardein (executive director) and the team at the Metropolitan Sewer District negotiated.

The decree is one of the most favorable consent decrees issued across the country. Many communities would kill to have the solution that the federal government is mandating for Louisville. It is going to be a very expensive proposition, but one Louisville needs to do. You can’t have a good quality of life if your backyard is underwater.

EL: Incumbent Mayor Jerry Abramson and Metro Council member Kelly Downard are going head-to-head in the general election for mayor of Metro Louisville. What involvement does GLI have in the mayoral race?

JR: GLI doesn’t get involved in political or partisan politics as an organization. We do inform our members of where candidates stand on issues that are relevant to GLI. GLI also promotes debates and forums so our members can get better educated about the candidates – not only in the mayoral race but also in the school board elections, legislative districts, and so on. GLI has a pretty active Web offering and does e-mails to our members to alert them about what is happening in the races.

EL: Of the many national and regional rankings Louisville has received, which two are the most significant to companies evaluating the Louisville market?

JR: Many of the ratings are subjective and very hard to track. Probably, the most significant ranking in the last year that really caught our clients’ attention is Louisville’s ranking as being a top city for relocating professional families (www.primacy.com). That is a combination of several other rankings that are indexed together. Also, Louisville’s annual rankings in www.economy.com’s cost-of-doing-business rankings are excellent. Businesses today are very sophisticated about location analysis and rankings may play a role in getting Louisville on the list to be considered. In the end, the real critical analysis goes much deeper than any of the rankings.

EL: Has it been your experience when dealing with major corporations that they have a large staff of professional people and an executive committee that reviews all real estate decisions, and there’s not really much a community can do other than provide the facts?

JR: I disagree with that slightly. GLI found that about 80 percent of the information that companies look at is objective facts that are on our Web site or available from third-party sources. About 20 percent has to do with tailored solutions that Louisville can provide, like the particular real estate that is involved, workforce programs, education programs, and specific high-touch services for helping relocate key executives.

EL: Former Gov. John Y. Brown, Jr. suggested in last month’s One-on-One interview that Kentucky should abolish the state’s corporate income tax. Would this make it possible to recruit more companies to Kentucky?

JR: There is a tax GLI thinks should be abolished or dramatically reduced and it is the personal income tax. Kentucky taxes “knowledge workers” higher than any other means of production. Educated professionals can live anywhere. Increasingly, we see personal income tax as a competitive setback when Louisville is competing with Florida, Texas, and Tennessee – states with no personal income taxes.

EL: Are Louisville’s manufacturing jobs disappearing?

JR: If you look at the changes in manufacturing, offshoring is one of the drivers, but first and foremost is productivity. Many jobs just don’t exist anymore because of productivity increases, process changes, technology changes. Many of Louisville’s manufacturers, like GE, are leading the way in implementing those productivity changes. A lot of the shift in manufacturing in our community and throughout the region is going on inside the manufacturing plant.

Outside companies are providing services that used to be counted in the payroll of manufacturing. So manufacturing throughout the world is changed and changes in Louisville reflect those changes. Great companies are going to be the ones that have adapted to the new realities of manufacturing. Louisville wants to be a great place for companies that have adapted to those new realities, and it can be.

EL: The Louisville trade area includes a large portion of Indiana. How closely does GLI work with Indiana companies?

JR: When we say “Louisville” at GLI, we think of and act on a 25-county region that is our labor market and economic area. GLI has good relationships with the local economic development groups throughout that 25-county region. We’re always trying to improve and build on those relationships. GLI is extremely excited about what is happening in Southern Indiana with the formation of One Southern Indiana, which is a unified voice in economic development in Floyd and Clark counties.

EL: How important is Louisville’s school system in attracting technology businesses to the region?

JR: Today, if a business is going to be competitive it must make a heavy investment in technology. The No. 1 asset businesses look for is an educated workforce. In the real estate business, it used to be location, location, location. Today it’s people, people, people.

The University of Louisville has been the main driver of Louisville’s success over the last eight years if you look at the growth. Right now, UofL is the fastest-growing research institution in the United States based on NIH (National Institutes of Health) grants. The leadership at UofL under Dr. James Ramsey and the alliance that UofL has with the business community have been exceptional. GLI also has a tremendously supportive interest in the success of the University of Kentucky. GLI wants both institutions to excel in order for Louisville, Kentucky, and this region to move forward; we need it all.

EL: Jefferson County’s population growth is projected to be static over the next 10 years. Do you see an opportunity for increased inmigration in the near future?

JR: Sure. GLI spends as much marketing for talent as it does marketing for business. GLI uses targeted e-newsletters and road trip shows all around the country, in cities like Chicago, Atlanta, Dallas. GLI works a lot on retaining professionals that are in Louisville by helping them link to jobs that are in the area so if they leave one company they can find another job as efficiently as possible. GLI believes that we have to pay attention to the inmigration of talent if Louisville is going to be successful. Companies will follow the talent rather than the other way around.

EL: The Louisville-Southern Indiana metropolitan area is the site of the largest bi-state transportation project ever undertaken by the states of Indiana and Kentucky, the Ohio River Bridges Project. How is the two bridges project progressing?

JR: Two bridges and one future – that is the key. This project is not about one bridge; it’s about two bridges and always has been. It’s a massive project and U.S. Representatives Anne Northup and Mike Sodrel have done a tremendous job in Washington in securing the funding for the two bridges project.

The legislators in both states stepped up this year to provide state funding for the projects. GLI is very optimistic that the project is on course and the funding will be there. We need to be vigilant for the next decade to make sure that those two bridges are finished.

EL: What are the major benefits of the two bridges project?

JR: Relieving congestion and improving the connectivity of the entire region are the major benefits. A better connection with the regions around the Midwest is what Kentucky needs.

EL: Louisville is blessed with a good cross-section of financially successful, publicly traded companies. How important are locally headquartered companies like Humana, Yum Brands, Kindred Healthcare and Brown-Forman to Louisville’s economy?

JR: Having fiscally sound and growing headquartered companies is critical to Louisville’s economy. That’s why much of GLI’s economic development focus is on helping start fast-growth companies, because all of the companies you mentioned began the same way – as entrepreneurial companies in Louisville. GLI needs to be constantly nurturing start-ups; not all of them make it to the goal line. When you see a company like Texas Roadhouse take off and grow and the success they are having, that is very exciting. The decision-makers at headquartered companies care about investing in their community.

EL: UPS is Louisville’s largest employer. How would you describe the city’s long-term relationship with UPS?

JR: UPS and Louisville have a wonderful relationship that has supported the growth of Louisville Airport and benefited the entire region. It is a relationship that has given Louisville connections with companies like Johnson & Johnson and some of the leading health care companies in the world. We’ve been able to build relationships with those companies.

UPS Airline’s headquarters are in Louisville. That is something we lose sight of sometimes, but if you were to break the headquarters out it would be one of the largest headquarters in the region. So the growth of UPS hasn’t all been “all the eggs in one basket.” It’s been fairly diversified growth over a period of time.

EL: Could you give the readers an overview of the benefits of building a new downtown arena in Louisville and how it will affect the region?

JR: First of all, we want to thank the people of Lexington for lending Jim Host for this project. He has been a great leader for us and the arena project. We have just really enjoyed his energy and passion. The arena is about talent attraction, quality of life, and anchoring the growth of downtown in the future. The arena is also about the University of Louisville deserving a first-class venue for its premier sports programs.

The arena is a huge investment but it has great direct economic benefit with conventions, concerts and sporting events that will be attracted here. Major attractions demand downtown venues connected within walking distance to hotels. Louisville will now have that. The arena will also bring vital foot traffic to downtown to help support the rest of the downtown development that is going on. Global professionals tell us that having vibrancy downtown is one of the key reasons why they choose various cities.

EL: How do you see Louisville’s and the state’s economy in 2007?

JR: Louisville is very much tied to the national economy and tracks very closely with national trends. We have a lot of challenges with the national economy right now. I see growth for 2007, but it will be like it has been in the last few years: very hard-fought growth, not robust but steady. As long as the national economy holds a growth pattern, then Louisville will hold a growth pattern as well.

EL: Are you a transplant to Kentucky?

JR: One thing I always like to point out and one of the reasons I love to be here is that I have great roots here in Kentucky. I am proud that I am the great, great, great, grandson of Samuel Boone, Daniel Boone’s brother. Samuel and his wife, Sarah, were the ones that taught Daniel how to read and that is something that I am very proud of because of the importance that literacy has in Louisville’s future. I’m new to Kentucky in the last decade, but my family has deep roots here. We did name our son Alexander Boone Reagan. He was born 10 days before we moved to Kentucky – so you should watch his career.

Ed G. Lane is chief executive of Lane Consultants Inc. and publisher of The Lane Report.
edlane@lanereport.com

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