State Economic Development Bulletin – Issue 77, January 2025

Issue 77, January 2025

A Summary of Cutting-Edge Articles Affecting States

HEADLINES

SEDE News 🗞️

Economy 💰

Trade 📈

Industry Trends 💡

Workforce ⚒️

Business Expansions and Incentives 📊

SEDE News 🗞️

SEDE Network Meeting Executive Summary (SEDE) The State Economic Development Executives (SEDE) Network held its Winter meeting for top state economic development executives in Phoenix on December 9th. The agenda included discussions of current issues facing states like federal and state administration transitions and AI applications in economic development. Much of the meeting was dedicated to opportunities for networking among the state economic development commissioners, secretaries and executive directors or their top deputy. An executive summary of the meeting can be found here.

DOE Issues NOI for Funding in Strengthening Critical Minerals Processing and Manufacturing (DOE) The U.S. Department of Energy released a notice of intent for up to $725 million to boost domestic production of battery critical minerals, battery components and advanced batteries. Building the battery supply chain and domestic capacity enables large scale deployment and strengthens the U.S. grid energy, bolsters key defense and technology sectors, and supports the growth domestic market for clean vehicles. DOE’s Office of Manufacturing & Energy Supply Chains (MESC) anticipates awarding up to 14 grants with periods of performance from two to five years under the opportunity.

DOE Announces Nearly $13M to Incentivize Smart Manufacturing at Small-and-Medium Facilities (DOE) The U.S. Department of Energy announced nearly $13 million in funding available from the Bipartisan Infrastructure Law for states, as well as state-funded universities and technical and community colleges, to ensure that smart manufacturing technologies and high-performance computing resources are accessible to domestic manufacturing firms. Administered by DOE’s Office of Manufacturing and Energy Supply Chains (MESC), the State Manufacturing Leadership Program (SMLP) aims to remove existing barriers that prevent small- and medium-sized manufacturers (SMMs) from using innovative, data-driven tools and technologies. These critical tools will allow SMMs to increase production efficiency and play a key role in strengthening the domestic manufacturing base. The nearly $13 million in funding is the third round of funding to be released through the $50 million State Manufacturing Leadership Program. Full applications are due on April 21, 2025. Read the full funding opportunity here.

EDA Announces Several Major Grants for Tech Hubs and Good Jobs Challenge Programs (EDA) The U.S. Department of Commerce’s Economic Development Administration (EDA) announced that it has selected six consortia for funding through the Tech Hubs Program and eight awardees for the Good Jobs Challenge. Six designated Tech Hubs were selected to receive a total of $210 million in implementation grants, ranging between approximately $22 million and $48 million. The six latest selected recipients are among the 31 Tech Hubs designated in October 2023. EDA also selected eight recipients for a total of $25 million in Good Jobs Challenge funding to support high-quality, locally led workforce training programs that lead to workers placed in good jobs. These new projects will expand the reach of the Good Jobs Challenge program to 35 states and one territory.

SEDE Member Spotlight: Sandra Watson, President & CEO, Arizona Commerce Authority, SEDE Chair

Sandra Watson is an economic development professional with over 30 years of leadership experience in business attraction and expansion, innovation, entrepreneurship, economic policy and workforce development. Currently, Ms. Watson serves as the President & CEO of the Arizona Commerce Authority (ACA), a public-private partnership that leads statewide economic development. She previously oversaw the Workforce Arizona Council and Arizona Office of Economic Opportunity, a data-driven team focused on economic and labor market analysis. In addition to leading the ACA and serving on its Board of Directors, Ms. Watson serves on Arizona Governor Katie Hobbs’ leadership team as her Senior Economic Policy Advisor.

Ms. Watson is a member of the U.S. Investment Advisory Council, advising the U.S. Secretary of Commerce on policies to attract foreign direct investment. In addition, she is an inaugural member of Natcast’s National Semiconductor Technology Center (NSTC) Workforce Advisory Board. She also serves as a founding member and the Chair of the State Economic Development Executives Network Board of Directors, a founding partner on the Institute for Automated Mobility Board of Directors and serves on the boards of the National State Science and Technology Institute and the Make-A-Wish Arizona Foundation.

Economy 💰

Apartment Construction Cools Rents in Some Regions (Stateline) An historic rate of apartment building is starting to make a difference in Sun Belt rents, but most tenants are still paying way more than they did earlier in the decade and rents are still rising in many Northeast and Midwest states. For instance, Austin, Texas, experienced a 16.3% year-over-year rent decline, while Arizona, Georgia, and Utah saw rents drop by 6%. This trend is attributed to a surge in new apartment completions, which rose by 58% in the third quarter compared to the previous year, marking the highest level since 1974. Consequently, the national vacancy rate for multifamily apartments reached 8% in late 2024, with high-end units experiencing a 11.4% vacancy rate. Despite these declines, rents remain higher than in 2020, and some areas, such as Providence, R.I., and Virginia Beach, Va., have seen rent increases.

Working Alongside Rural Communities to Expand Housing Opportunity (Fed. Reserve Bank of Chicago) The number of cost-burdened renters – those spending over 30% of their income on housing – has reached an all-time high. Since February 2024 the Community Development team at the Chicago Fed has been working alongside two rural areas – Linn County, Iowa and southwest Wisconsin – to address issues as part of Reinventing Our Communities (ROC) – a nationwide Federal Reserve initiative organized by the Philadelphia Fed. As part of this work, Chicago Fed staff meet regularly with Linn County and SW Wisconsin community members to help them create affordable rental housing strategies that are informed by resources and research from the Federal Reserve. The ROC program is supporting efforts to leverage existing regional partnerships to build a resilient housing system capable of withstanding future crises. The ROC program concludes in spring 2025, with a final symposium to share reflections and exchange housing solution strategies.

Where Does a ‘Remarkable’ US Economy Go From Here? (The N.Y. Times) The U.S. economy is pulling ahead of its global peers, seeing notable growth with low unemployment and strong stock market performance, alongside a steady recovery in key sectors. However, persistent high inflation, which peaked at 9.1% in 2022, has eroded public confidence, leaving many feeling worse off despite positive economic indicators. The Federal Reserve continues to emphasize its independence, focusing on managing interest rates to sustain growth while addressing inflationary pressures and the challenges of elevated national debt.

Trade 📈

US Trade Deficits Widens as Goods Imports Surge (Reuters) The U.S. trade deficit widened in November. The trade gap increased 6.2% to $78.2 billion from a revised $73.6 billion in October, the Commerce Department’s Bureau of Economic Analysis said. Imports rose 3.4% to $351.6 billion with goods imports surging 4.3% to $280.9 billion. The imports were driven by a $3.7 billion increase in industrial supplies and materials, with crude oil imports rising $1.0 billion. Capital goods imports increased $3.5 billion, reflecting semiconductors and civilian aircraft. Economists, however, expect imports to remain elevated in December which is notable as trade has subtracted from GDP for three straight quarters. The Atlanta Federal Reserve is currently forecasting GDP rising at a 2.4% annualized rate in the fourth quarter. The economy grew at a 3.1% pace in the July-September quarter.

US Tariffs Set to Accelerate Landmark Shifts in Global Trade Flows (PR Newswire) Geopolitical rivalries, alliances, and aspirations are rewiring the global economy—and will continue to do so in the years ahead, accelerated by the proposed imposition of tariffs by the US on foreign imports. Without a broad increase in tariffs, world trade in goods will keep growing at an average of 2.9% annually for the next eight years, but the routes goods travel will change markedly as North America reduces its dependence on China and China builds up its links with the Global South, which is cementing its power in the global trade map. A report by Boston Consulting Group, Great Powers, Geopolitics, and the Future of Trade looks in detail at the regions and the sectors that would be most affected by the imposition of tariffs by the US. Some key findings include North America solidifying into a resilient trade bloc and China pivoting toward the Global South.

Industry Trends 💡

How LA Fires Impact Farmers and Agriculture Industry (ABC News) While raging flames, persistent smoke and damaging winds plagued residents in Los Angeles County, farmers across Southern California are also facing the possibility of devasting damage to their crops. Alba Velasquez, the executive director of the Los Angeles Food Policy Council, told ABC News that farmers face two hurdles, namely economic and air quality challenges. Currently, there are about 24 farms that are affected by the Eaton Fire, with numbers increasing every day. The California Department of Food and Agriculture recommends farmers who have experienced crop loss to look into their Noninsured Disaster Assistance Program, which “pays covered producers of covered non insurable crops when low yields, loss of inventory, or prevented planting occur due to natural disasters,” according to the website. The Los Angeles Food Policy Council and the Community Alliance with Family Farmers also provide post-wildlife recovery resources.

How Manufacturing in Southwestern PA is Building a Clean, Green Future (WESA) On the banks of the Ohio River, just west of Pittsburgh, workers make steel tubes for giant utility-scale solar panels at a former Bethlehem Steel plant in Leetsdale. During World War II, the steel produced here would go on to be used in the production of tank landing ships. The facility today is home to JM Steel, and — unlike the sooty shop floor of its predecessor — this plant is clean. These workers making low-carbon steel tubes are an example of just how much manufacturing in southwestern Pennsylvania has evolved over the past several decades. The region’s manufacturing sector is now largely made up of small and medium-sized companies and if the trends currently driving the region’s revamped manufacturing sector continue apace, southwestern Pennsylvania’s industrial future is likely to lean toward more energy-efficient processes and products. However, much of that will depend on the state and federal government’s appetite for continued investment in the country’s transition to cleaner energy.

Advanced Domestic Manufacturing Depends on Rebuilding the Blue-Collar Workforce (Fast Company) Recent federal legislation is fueling the U.S. manufacturing industry, but this growth brings with it a pressing need for a skilled workforce to sustain the momentum. Almost 60% of manufacturers cite the “inability to attract and retain employees” as a top challenge affecting their business. It is estimated that manufacturers could need as many as 3.8 million new workers by 2033. So, what can be done to bring back the manufacturing workforce? First, we need to change the way potential employees see the industry. Then, we need to provide a path to acquire the necessary skills and determine the best ways to keep these valuable workers. Modern manufacturing needs to be viewed as a STEM-powered career choice, bringing transferable skills and career opportunities. Clean energy technology, robotics, advanced analytics, cybersecurity, and AI are just a few of the elements driving change that will define the industry for decades to come.

Additive Manufacturing’s Opportunity: The Agile Solution to the US Manufacturing Crunch (3DPrint) The US manufacturing sector is bracing for what could be a perfect storm of supply shortages and surging demand. This ‘storm’, driven by reshoring efforts, potential tariffs, and ongoing manufacturing labor challenges, might just set the stage for additive manufacturing (AM) service bureaus (SBs) and contract manufacturers (CMs) to step into the spotlight. Unlike traditional manufacturing, which requires significant lead time for tooling, setup, and ramp-up, AM offers unparalleled flexibility. And because AM is inherently less labor-intensive, it can overcome some of the pain points associated with the current labor crunch. In a world where demand spikes can happen overnight, and policy shifts can rewrite the rules of the game, agility is priceless. AM might not be the answer to every challenge in US manufacturing, but for now, it looks like the right tool for a very specific—and urgent—job.

Workforce ⚒️

Louisiana Announces $15M for Future Health Care Workforce Programs (NOLA) The Louisiana Department of Health announced $15 million in funding for universities, technical colleges and health care systems (including hospitals, agencies and hospitals) for programs that train future health care professionals. To help narrow the shortage in healthcare workers, the Healthcare Employment Reinvestment Opportunity Fund, or HERO Fund, awards matching grants to programs that work to grow Louisiana’s health care pipeline. The state Board of Regents predicted a shortage of 6,000 registered nurses in Louisiana by 2030. The proposals must include a program with education institutions and training programs as well as a partner with health care providers, facilities or a related licensed health care organization in Louisiana.

As Apprenticeships Expand in Early Childhood, States Are Training the Field’s Future Leaders (EdSurge) In the last handful of years, registered apprenticeship programs have been booming in early care and education, with most states now offering a version of this longstanding workforce development pathway. Those programs primarily cater to individuals who lack expertise and experience in working with young children and want to upskill quickly, qualifying them for more senior and better-paying classroom teaching roles. Within that growing trend, though, is another, smaller movement catching on: Kentucky, Massachusetts and New Hampshire are among states offering apprenticeships tailor-made for emerging leaders in early care and education. These director-level apprenticeship programs reflect a recognition that many aspiring early childhood leaders — and, frankly, a number of existing ones — do not feel prepared to manage the myriad responsibilities of the job and need additional skills and training to close the gap.

Over $26M in State Grants Awarded to Boost Workforce Training Programs (KUAR) Fourteen higher education institutions in Arkansas have been awarded state funds to boost workforce training programs. Gov. Sarah Huckabee Sanders announced over $26 million in Higher Industry Readiness through Educational Development (HIRED) grants on Thursday. The grants use funding established through a state law known as the Workforce Initiative Act of 2015. Southern Arkansas University and Arkansas Tech University – Ozark received the highest awards at $2.75 million each, followed by Arkansas State University Beebe with $2.3 million. Other awardees include UA Little Rock, UA Monticello, and Ozarka College.

Oregon to Invest in Training the Energy Workforce of the Future (OPB) Oregon is looking to boost the renewable-energy workforce and train people in energy-efficient installations, in an effort to lower the state’s overall greenhouse gas emissions. The Oregon Department of Energy recently announced a $2 million Energy Workforce Training program aimed at providing technical education on energy-efficient installations for new and existing workers and contractors. The funding will go to community colleges, career and technical education programs at high schools, as well as trade organizations that provide apprenticeship and pre-apprenticeship programs and community-based organizations. The grants are part of the Climate Resilience Package passed by the Oregon Legislature in 2023. The package is a compilation of several bills aimed at increasing community resilience, climate change adaptation and reducing the state’s greenhouse gas emissions from the building sector. The legislation also includes a goal of installing 500,000 heat pumps across the state by 2030.

18 Colleges Receive Funding in Latest Round of US DOL SCCT Grants (Community College Daily) Eighteen community colleges will share $65 million through the fifth round of the U.S. Department of Labor’s Strengthening Community Colleges Training Grants program. DOL said in a release that the grantees will provide workforce development across several industries, many of which align with the Biden administration’s Investing in America agenda, such as advanced manufacturing, healthcare, IT, agriculture and infrastructure-related sectors, including transportation and broadband. The department noted grant recipients include a Tribally Controlled College, a Historically Black College and University, and five Hispanic-Serving Institutions, as well as 23 consortia members. Through five rounds of SCCT grants, DOL has invested $265 million, allowing 207 colleges in 35 states to address major workforce priorities for employers and workers in their respective states and local communities.

Business Expansions and Incentives 📊

Lessons from Economic Development Evaluations for Supporting Small Businesses (Pew) Tax incentives are one of the primary ways many states seek to spur business expansion, increase job numbers, and otherwise strengthen their economies. Often, these incentives target small businesses, in an effort to help them grow or attract new sources of funding. However, incentives may not be the most effective tool for the job of helping small businesses, as evaluations conducted by state officiations have identified several obstacles preventing these incentives from effectively benefiting small businesses. Fortunately, researchers have identified various modifications to make incentives more effective for small businesses, including reducing application and compliance barriers, promoting awareness of programs among eligible applicants, revising selection processes to reduce potential disadvantages for small businesses, and increasing the value of incentives to beneficiaries. Policymakers can draw on these lessons and recommendations to ensure that incentives meet their goals and boost their state economies as intended.

Macom Awarded $70M in CHIPS Funding (Manufacturing Drive) The U.S. Department of Commerce will provide up to $70 million to chipmaker Macom under the CHIPS and Science Act to expand its facilities in Lowell, Massachusetts, and Durham, North Carolina. The projects will create 350 manufacturing and 60 construction jobs across the two sites. The funding is part of a broader, five-year capital investment plan to invest up to $375 million in modernizing the two facilities.

Michigan Bills Establishing Innovation Fund, R&D Tax Credit for Entrepreneurship, and More (MEDC) Five bipartisan bills were signed in Michigan to establish the Michigan Innovation Fund and an R&D Tax Credit. These new tools will lower costs for businesses, support innovators and entrepreneurs, and create and support good-paying jobs by ensuring businesses of all sizes have the tools and resources they need to reinvest in Michigan. The bills also attract investments in our state by incentivizing research and innovation, growing Michigan’s economy, and creating thousands of jobs in counties across our state.

FloridaCommerce Offers $167M for Extended Small-Business Incentive Program (FloridaCommerce) FloridaCommerce has announced an additional $167 million is available for Florida small businesses through the State Small Business Credit Initiative 2.0 (SSBCI). Since January 2023, Florida has provided more than $202 million in loans and venture capital investments to 149 small businesses, stimulating more than $769 million in private capital that has created or retained nearly 4,967 jobs for Floridians.

Ohio Lands Major Defense Manufacturing Facility, Creating 4,000 Jobs by 2035 (ABC6) Anduril Industries will establish an advanced manufacturing facility in Pickaway County, Ohio. The project, expected to bring over 4,000 new jobs to Ohio by 2035, marks the largest single job creation and new payroll initiative in the state’s history. Anduril Industries, based in Costa Mesa, California, aims to “Rebuild the Arsenal” of U.S. military weapons by “hyperscaling” manufacturing with advanced software and production technologies. The Ohio facility will bolster the state’s position as a leader in developing critical national defense products. The project will seek a Job Creation Tax Credit from the Ohio Department of Development and request $70 million from the All Ohio Future Fund. JobsOhio will provide assistance through a JobsOhio Grant and Talent Acquisition Services.

 

 

The State Economic Development Executives (SEDE) Network engages in regular events throughout the year. State Economic Development.org lists these activities and offers an interactive forum for discussion among peers. The SEDE Steering Committee includes: Sandra Watson (AZ), Chair; Joan Goldstein (VT), Vice-Chair; Kurt Foreman (DE); Kevin McKinnon (MN); Hope Knight (NY); Christopher Chung (NC); Andrew Deye (OH); Sophorn Cheang (OR); Adriana Cruz (TX);  and Mike Graney (WV).

Allison Ulaky of the Center for Regional Economic Competitiveness (CREC) led the development of this Bulletin; for questions on the content in this Bulletin or for information on the SEDE Network contact Bob Isaacson, CREC Senior Vice President.