8/6/2003

The Most Globalized Small Town in America

By Doug McGill
The McGill Report


Rochester, MN -- The town that faces more globalization issues than any other town its size in America is plunked down here in the cornfields of southeastern
Minnesota.


It's Rochester, Minnesota, home to the world-famous Mayo Clinic and also, less well known, to one of IBM's largest manufacturing plants. For decades the two institutions have constantly recruited the world's best doctors, scientific and medical researchers, software programmers and engineers.

They've thus created a knowledge-based, globally competitive economy that could be a model for thousands of small towns and cities trying to achieve the same trick.  

That's according to John Recker, an economist at the University of Ohio and the primary author of a report on Rochester's economic contribution to the State of Minnesota.

The report's headline numbers show Olmsted County, where Rochester is located, to be "an economic jewel rising from the prairie lands of southeastern Minnesota." Olmsted ranks No. 1 in the nation for its concentration of high-tech production, and third in the nation for the number of patents filed in the U.S. per capita during the 1990s, according to the report and to other studies cited in the report.

With a population of 89,000, Rochester constantly deals with globalization issues that normally only America's largest cities have to face, Recker said.

A Shuttered Plant

"Most cities the size of Rochester are still trying to build a knowledge-based economy to compete in a global world," he said. "They are still trying to retain their college graduates. Rochester has already done that. It has a strong knowledge-based economy and is now dealing with the ramifications of that, such as a big immigrant influx and the fact that an international war can directly affect its local economy."

As a result, Rochester will now be judged on how well the city's political and civic bodies rise to the many challenges its truly global economy has brought to the community, Recker said.

"Rochester can never ignore what's going on in the outside world, because its economy is so tied to the outside world," he said. "It's a great position to be in, but at the same time, if for example there is a global downturn in the economy, Rochester is going to feel that ahead of some other places."

IBM, which employed 4,600 workers in Rochester at the end of 2002, made more sales that year outside than inside the U.S. -- $41.4 billion and $36.4 billion, respectively. Any slowdown in foreign high-tech sales therefore directly contributes to local layoffs -- as 200 workers at IBM and 550 workers at Rochester's high-tech Celestica plant, which was shuttered two months ago, know all too well.

Greatest Concern

Last month, the real estate company marketing the Celestica building said it would look for new buyers or renters around the world because "there aren't that many companies in Minnesota" who could afford it. The real estate company has 252 offices in 52 countries globally.

The Mayo Clinic is likewise sensitive to a myriad of international trends. One concern is international patient flow. During the 1990s, hundreds of Saudi and other Middle Eastern patients flooded the town, sometimes staying for months at a time with their families in local hotels. King Hussein of Jordan stayed in Rochester for more than a year with his wife and royal retinue while he was being treated for cancer.

Both Mayo Clinic and IBM officials say their greatest concern is the post-9/11 tightening of visa restrictions for doctors, researchers, and computer workers from overseas who want to train or establish careers in the U.S.

Hiring the best and the brightest workers, no matter where they live in the world, is a competitive necessity and among the top priorities at both the Mayo Clinic and IBM.

"We source talent wherever we can find it in the world," said Tim Dallman, IBM's local spokesperson.

Knowledge-Based

Yet recruiting foreigners to live and work in Rochester is a matter of great public sensitivity, especially when times are hard in the U.S. So both Mayo and IBM have to balance the need to attract foreign talent with hiring local workers and being seen as strong corporate citizens of Rochester and Olmsted County.

Which is just another of the globalization issues facing Rochester, Recker said. Even the DM&E railroad proposal, in which a private company is trying to run a coal train through downtown Rochester, is at its core a classic new economy/old economy confrontation, he added.

"An industrial sector railroad doesn't fit with Rochester's knowledge-based economy," Recker said.

The most important globalization issue of all facing Rochester, Recker said, is whether it is perceived as welcoming of foreigners - both the highly-educated doctors and computer workers, and those who come to work in the equally necessary support jobs in the community.

Good Sense

One of the greatest dangers to the city's growth is that one of the racist incidents that occasionally crop up here - such as the recent appearance of racist anti-immigrant fliers in a local park - could attract national attention.

Just as a single national magazine article - the 1993 Money magazine listing of Rochester as the nation's most livable city -- drew hundreds of people to come live here, such an incident could scare away thousands of future tourists, patients, doctors, programmers, cooks, bellhops,and waitresses.

"To be welcoming to outsiders makes good economic sense," Recker said.

Addressing Rochester citizens in a recent newspaper article, he added: "Why not make a strategic plan to develop your cultural assets? Showcase the many cultures you have in Olmsted Country -- the cuisines, languages, art, music, dance. That's the beauty of globalization, to get a sense of what's out there in the world, beyond Minnesota."

Copyright @ 2003 The McGill Report