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"Putting the Inner City First," is a series of briefings extending from ICIC’s research.

Putting the Inner City First
Volume I, Issue III | May, 2010

Doing Business in the Inner City: 2010 Inner City 100

ICIC and Bloomberg BusinessWeek released the 2010 Inner City 100, a list of the fastest-growing inner city companies in the U.S. on May 5, 2010. The Inner City 100 program recognizes successful inner city companies and their CEOs as role models for entrepreneurship, innovative business practices and job creation in America’s urban communities.

The Inner City 100 list provides unmatched original data on the fastest growing inner-city businesses in the U.S. In the last 12 years, 607 different companies have earned positions on the Inner City 100, collectively generating more than $27.2 billion in revenues and creating nearly 72,000 new jobs.
View this year's Inner City 100 and related coverage.

2010 Inner City 100: By the Numbers

  • 58 cities and 34 states represented
  • 340 percent average 5-year standard growth rate
  • $6.6 million median 2008 revenue
  • 10,680 employees (45 percent minority and 40 percent inner city residents)
  • 6,300 new jobs created between 2004 to 2008  


Role Models for Growth: Staples Foundation for Learning Hall of Fame

Since the inaugural Inner City 100 list in 1999, a select group of dynamic inner city businesses have been recognized as repeat Inner City 100 winners because of their astounding growth rates over a sustained period. These savvy urban companies are showcased during their fifth year on the Inner City 100 list as Hall of Fame recipients. Over the last 12 years, 41 Inner City 100 companies have been inducted into the Staples Foundation for Learning Hall of Fame. These companies employ more than 4,000 workers.  Congratulations to this year’s inductees!

ARGUS - Boston, MA | Cellular Specialties - Manchester, NH | Kauffman and Associates - Spokane, WA
Park Inc. - Charlotte, NC | Talon/ LPE - Amarillo, TX | The Roasterie - Kansas City, MO

Why Growth Matters: Dorothy A. Terrell Community Impact Award Winner
Presented by Chevron Corporation

W Industries
Detroit, MI
President and CEO: Ed Walker

When Ed Walker bought W Industries from his father in 1996, the company was one of the most successful welding companies in the auto business. Understanding that the auto market was slowing, Walker knew he had to transition his company’s customer base to capture other growing industries: defense, aerospace and, eventually, as a result of 9-11, homeland security. Now, as many companies in Detroit struggle to stay in business, W Industries is growing at an astounding rate because of Walker’s foresight. In the last five years, the company has experienced a 354 percent standard growth rate.

Not only has W Industries demonstrated successful growth, the company has created programs and initiatives to support the local community. In fact, W Industries has developed its own in-house certified welding program that has helped the company hire and train many of its employees directly from the inner city. As a result, 75 percent of W Industries’ workers are inner city residents.  View videos of W Industries and other Inner City 100 winners.

 

What Do the S&P 900 Know That You Don’t?
Volume I, Issue II | March 12, 2010

Since falling to multi-year lows one year ago this week, the market is up nearly 60 percent, offering hopeful signs of a much-anticipated economic recovery. The S&P 900 Index, a composite of the large-cap S&P 500 Index and the mid-cap S&P 400 Index, is a key indicator of this trend. Representing approximately 80 percent of the total publicly traded U.S. market by capitalization, the index includes America’s “blue chip” companies, including Microsoft, Boeing, and Procter and Gamble. In addition to measuring performance, the index can also provide insight into the strategic location decisions of the country’s largest companies. Inner cities are home to almost 20 percent of S&P 900 headquarters – three times the share of all U.S. firms located in the inner city. This fact begins to debunk a common myth that inner cities offer poor business environments and as a result are primarily made up of small, insular, “mom and pop” shops. Instead, the location patterns of the S&P 900 provide strong evidence that many of the country’s leading companies view the inner city as a great place to do business.

Headquarter locations serve as a company’s central nervous system, supporting the organization’s executive management and often other key functions such as research and development. For example, Eli Lilly, a major pharmaceutical company located in inner city Indianapolis, houses its C-suite, manufacturing and research and development at its headquarter site. These locations also are responsible for a significant share of the firm’s revenues and employment. For the average company in the S&P 900 Index, corporate headquarters house about 10 percent of the total workforce. This is true as well for S&P 900 companies headquartered in inner cities. In fact, after controlling for sector composition, inner city headquarters are actually slightly larger than non-inner city headquarter locations.  In other words, inner city headquarters are no less critical to firm operations than headquarters outside the inner city, countering any notion that S&P 900 inner city headquarters are “shadow” sites reflecting legacy investments.

Tellingly, S&P 900 firms with inner city headquarters perform just as well as their non-inner city counterparts. On a value-weighted basis, the most recent five-year returns for firms headquartered in the inner city is five percent, compared with six percent for the S&P 900 index overall. On an equal-weighted basis, S&P 900 firms headquartered in inner cities slightly outperform the index. While the impact of headquarter location on the overall firm performance cannot be isolated, the strong stock performance undermines any suggestion that businesses in the inner city are somehow penalized for their location.
So this is what the S&P 900 know: inner cities are strategic locations with the assets to attract and foster the nation’s strongest corporations. These leading companies are taking advantage of inner cities’ proximity to downtown business districts, logistical infrastructure, and wide-ranging workforce skills. 
 

Key Takeaways:

  • Inner cities are strategic locations that are capable of attracting and fostering the country’s strongest corporations.

  • Inner cities are home to almost 20 percent of S&P 900 headquarters – three times the share of all U.S. firms located in the inner city.

  • Inner city S&P 900 headquarters are six percent larger in size than non-inner city headquarter locations, when controlling for sector composition.

  • S&P 900 firms with inner city headquarters perform just as well as their non-inner city counterparts, with a five-year return at five percent and six percent respectively.


For additional information, please refer to the data appendix.


 

Building Bridges to Jobs: Investing in Inner City Infrastructure
Volume I, Issue I | January 28, 2010

In last night’s State of the Union Address, President Barack Obama announced his support for additional infrastructure spending in an effort to spur job creation. This comes on the heels of the House of Representatives making highway and transportation investment a major theme of its recent jobs bill, with the Senate largely expected to do the same.  This spending offers a tremendous potential return on investment in terms of job creation, particularly in America’s inner cities.

As the U.S. considers additional infrastructure investment opportunities, two principles should be followed.  First, investment should target geographies with a high concentration of heavily traveled roads and bridges in order to maximize the impact of projects.  Second, infrastructure spending should be channeled towards those communities with a high percentage of deteriorating infrastructure because these areas are at the heart of broader job losses. An approach that is grounded in these principles will most effectively target infrastructure improvements, enhancing regional and national competitiveness while maximizing job creation.  Inner cities are the ideal location for additional infrastructure spending.

Inner cities have incredibly high concentrations of infrastructure assets, including water ports, intermodal facilities and the country’s largest airports.  Per square mile, the average inner city has roughly 100 times as many of these assets as the rest of the U.S.  This infrastructure is also the core of regional transportation and distribution systems. By investing in inner city infrastructure, the U.S. has a great opportunity to strengthen the competitiveness of both local and regional economies.

At the same time, infrastructure quality represents a significant national problem.  One common measure of infrastructure quality, bridge deficiency, reveals that one in four bridges in the U.S. is deficient.  This issue is even more pronounced in inner cities. On average, more than 40% of inner city bridges are deficient, a staggering 60% higher than the national average.  This bridge quality gap has cost inner city economies between 2% and 3% of their total job base, affecting key industries such as transportation, logistics and professional services.  Infrastructure investment in America’s inner cities offers the best opportunity to restore these lost jobs and create new jobs, both locally and regionally.

Key Takeaways:

  • Spending on inner city infrastructure will result in a higher return on investment because inner cities have a high density of transportation assets.  

  • Poor infrastructure quality costs inner cities up to 3% of their job base, approximately a quarter of a million jobs, with most of the losses in key industries such as transportation, logistics and professional services. 

  • Focusing on inner city infrastructure yields job and wage growth that extends to the entire region due to the concentration of regional transportation assets in inner cities.


For additional information, please refer to the data appendix.