Play Your Cards Close
to the Vest

Jim Friar

If your growing city or county is trying to land a new business or industry,
strict confidentiality will be crucial to your success.

Jim Friar is Economic Development Director of Dorchester County, South Carolina, a position he has held since 1990. Friar is also an Adjunct Professor at Charleston Southern University, where he teaches various business courses, including marketing and sales management. He can be reached at friar@aol.com.

When considering economic development, confidentiality may or may not come to mind as an immediate concern, but there are reasons to make it a priority.

To begin with, successful businesses have secrets—that’s the nature of business. Growing or expanding businesses have an even greater need to keep information confidential as the expansion is usually related to a new or improved business or technology factor. The creation of new jobs also carries with it a need to protect sensitive business information. Finally, even if a business or industry is not expanding, there is an element of confidentiality in the conduct of its day-to-day business. Core technology, formulas, marketing techniques, personnel compensation, technology changes, market shifts, new products. The list is endless.

Moreover, the need to protect financial information is critical. A public company provides a great deal of financial information to its shareholders and potential shareholders. A private firm, on the other hand, tends to protect all of its financial information.

Industries depend on economic developers to keep sensitive information private. Developers should be sensitive to these issues and let the prospect or new business determine the level of confidentiality desired.

Frequently the business cards go only one way, and the prospect leaves town with our allies knowing only a "John Smith" and "Jane Doe."

Here are some examples of companies and confidentiality issues of concern to economic developers:

Company A—This firm has a new product and new technology. The last thing the owners of Company A want is to have their competitors learn about these advances. Leakage of information, even something very trivial, can provide a tip-off of the new innovation to a smart competitor.

Company B—This industrial prospect has done its homework and has discovered that the new markets of the year 2005 and beyond will require a new location to maximize profits, improve customer service, and lower transportation costs. Keeping the name of the company and its location a secret is a requirement for this project. If a competitor learns how this market is shifting, the new company will forfeit its newfound advantage to its competitors.

Company C—This firm is in a very competitive market and desires to move to lower its operational cost. It requires a large site. Keeping its site decision a secret will help to avoid price escalation of the site and make the location more profitable. On the other hand, if word gets out, the new project may not be able to buy the site at a realistic price, thus killing the opportunity to create new jobs in the community.

The three examples given above are all real. My colleagues and I in economic development are fortunate not to have lost a prospect because of information leakage. However, there have been some close calls.

Industries depend on economic developers to keep sensitive information private. Developers should be sensitive to these issues and let the prospect or new business determine the level of confidentiality desired.
 

Our Dorchester County, South Carolina, team of economic developers is well-trained and understands the need for confidentiality as an additional requirement for economic development growth—especially in the industrial sector.

Training is ongoing in this area. Members of our economic development team meet periodically and review prospect handling. The training includes how to meet and talk with prospects who desire not to reveal their personal information, company name, or other information. It is important to respect this desire and communicate that respect. Frequently the business cards go only one way and the prospect leaves town with our allies knowing only a “John Smith” and “Jane Doe.”

We also train our key allies on how to handle the “non-public reception.” Occasionally prospects want to meet with key community leaders, but still cloak their identity. We provide a special training program for meetings such as this, so that our key allies don’t accidentally reveal that they lunched with a major prospect for a $40 million project from “out-of-state.” This training goes right down to the personal level and outlines what to say, when to say it, and how “not to monopolize” the prospect—instead making sure that each ally has personal face time with the prospect.

Though a prospect may be well-known to the economic developers, Dorchester County’s internal economic development team sometimes handles initial meetings under a code name without the exchange of business cards. Our team focuses on the simple and positive side, knowing that there will be an opportunity to explain complicated details of a given location at a future time. We pride ourselves on being industry friendly. Our confidential “roundtable” meetings are a part of this as we work together to try to understand a new project—while it is still very “hush-hush.”

Occasionally, our department does not know the name of a prospect or his company. This is usually the case on large projects. Many of these are also assigned code names, which further help to protect the identity of the company. Most larger prospects use consultants. In this case, our regional allies (Charleston Regional Development Alliance) and our state allies (South Carolina Department of Commerce, utilities, and transportation) may not know the identity of the prospect firm either.

All of this is the normal way that economic developers work with their prospects to provide an appropriate setting for new industry. The prospect determines the level of confidentiality and the timing of the release of information. On the first visit to a community, little may be given out about the new company. As additional visits take place, more information flows in both directions. As the prospect gathers information, the new company also gives information about itself.

If our community is selected as a final candidate for a new project, the company will probably give a full briefing to a handful of community leaders. Some from the local community may also be asked to visit the company.

When incentives enter the picture, the new firm’s executives will meet in a confidential setting with state and/or community leaders and brief them on the nature of the project, investment and new jobs to be created, infrastructure requirements, and impact on the community.

When incentives are awarded, this information becomes public, thus giving citizens an accounting of how incentives are being used to create jobs and build the industrial tax base. Incentives may be confidential at the onset, but when announced by local governments or allies, they become public knowledge.

We usually meet with the news media after a project is announced and brief them on why the project selected our area, the nature of incentives that may have been used, and other information. The media are often surprised to learn that many of the incentives are not of a financial nature—involving instead the provision of job training, rapid permitting, and other elements that save money for the industry; the project goes on line months sooner or has a trained workforce on “day one” of the new operation.

New or expanding firms want to locate in a business-friendly environment. In today’s business world, communities that understand the role of confidentiality in the community and site selection process have an advantage over other communities. The history of economic development is filled with tragic stories in which communities lost projects involving hundreds of jobs because they could not keep a secret.

We are fortunate to have a professional team and a network of allies that work together to keep a lid on projects when required. It is to our benefit to do so as the pay-off is improved job opportunities, a growing tax base, and a stronger community.

We . . . don’t “court” everyone who comes to our door. If the price of doing business is too high, we just don’t seek to land the prospect.
 

Dorchester County employs another strategy not common to all counties, that is, we use a niche marketing strategy, one that is designed to appeal to a more narrow market segment. We seek firms with a lower environmental impact, smaller buildings, and a smaller workforce. This process reduces the stress on confidentiality, making our work easier.

We also don’t “court” everyone who comes to our door. If the price of doing business is too high, we just don’t seek to land the prospect. This process builds a more positive image in the eyes of citizens and reduces the problems of maintaining confidentiality.

There are many elements to adding new industry in a community. The cycle usually lasts for 10 to 16 months. Maintaining confidentiality over this time period is a very important part of this process. The end result is greater economic development and improved financial well- being for everyone in the community. o

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3  From the U.S. Bureau of Labor Statistics.

Lisa Cubbins and Penelope Parmer, “Economic Change and Health Benefits: Structural Trends in Employer-Based Health Insurance,” The Journal of Health and Social Behavior, 42:1 (2001), 45-63.

Lee McIntyre, “The Growth of Work-Site Daycare,” Federal Reserve Bank of Boston Regional Review, 10:3 (2000).

Yu-Chu Shen and Stephen Zuckerman, “Why Is There State Variation in Employer-Sponsored Insurance?” Health Affairs (January-February 2003).