The Bottom Line: Growth requires focus and hard work
As chairman, president and CEO of 1st Source Corp., Murphy obviously wants businesses and individuals in the region to succeed so that the South Bend-based financial institution he heads can continue to prosper.
So Murphy obviously cares about the financial health of the region and has shown it by involvement in numerous organizations aimed at improving the health care, education and economic climate.
We recently had a chance to catch up with Murphy following the recent release of a financial report in which 1st Source reported strong fourth-quarter earnings and record-breaking earnings in 2012. We wanted to get his take on the local economy and how economic development officials are doing at cultivating the area for growth.
"We believe in our home," says Murphy, whose company employs some 700 people in the Michiana area. Indiana is especially attractive to businesses today because of passage of right-to-work legislation and the fact that the state government is fiscally sound, he says.
And Michigan is well on its way to addressing some of the core issues that might have made it less than attractive to businesses interested in expanding or relocating, he says.
Besides his work with economic development groups, Murphy is in a position to get a sense for business sentiment because 1st Source employees are busy each day helping businesses grow with loans and even advice.
Good fiscal management by state and local governments is important to businesses interested in expanding or relocating because it helps them determine operational costs. Places where governments are operating at a deficit might have to raise taxes to make up for budget shortfalls; that creates future uncertainty.
Murphy says the area also is blessed with a strong social safety net, including health care, and higher education that can provide everything from job training to job generation through research and projects that faculty are involved in.
"If you are hiring, you have good people coming out of these programs," says Murphy. And he points to South Bend-based Press Ganey as a company that grew directly from Notre Dame faculty and now employs hundreds of local people.
Though some primary and secondary schools in the area have struggled, those problems aren't so widespread or hopeless as to hold back the region when it comes to economic development. In fact, there are a lot of strong schools and school systems in the region.
All in all, Murphy feels the region is stable -- a much better rating than he gives some other parts of the country -- and that it could experience a manufacturing resurgence.
"We were losing a lot of jobs overseas," he says. "But that is changing because we've become more productive, and the cost of labor has risen dramatically in China and India."
Though Murphy sees a lot of positives in the region, he still believes there are many areas that warrant continuing attention.
When it comes to educating the young, for example, Murphy believes there has to be an honest and open discussion on how to do a better job reaching everyone who goes through school here. "The expectation should be that everyone will be well educated and prepared for the next step in life," he says.
And to ensure there are plenty of jobs for those coming out of school, the region has to keep building a foundation for entrepreneurship like we have seen in recent years at Notre Dame, Innovation Park, Ignition Park and Elevate Ventures, he says, while helping new and existing businesses to thrive in our region.
Though much is being done to cultivate the regional economy, Murphy admits there is an impatience perhaps caused by the desire of officials to earn important political points -- to prove, in other words, that something is being done.
"Seeds are being sown that will have an impact five, 10, 15, 25 years out," he says. "We will see the fruits down the road."
Perceived impatience can lead officials to pursue and provide taxpayer-supported incentives to "parasitic" businesses that can, in fact, serve to drain the local economy by not bringing in any new money from outside the region and not really utilizing any other local services -- advertising, technical and marketing support, for example.
In his wide-ranging discussion about the local economy, Murphy also gave props to the efforts to see economic development as a more regional effort. Much of that effort is necessarily outside the efforts of governmental agencies, which typically see borders between cities and counties.
"There's a growing realization that we are a region," says Murphy, who among other things was one of the founders of the Corporate Partnership for Economic Growth, a privately funded economic development group that is pushing a more regional approach to economic development.
"When you are trying to attract businesses from outside the area, they don't see individual cities or counties. They see a region and all of its assets," he says.
If we continue to focus on education, entrepreneurship and regionalization as well as keeping taxes and regulations down, good things should follow, Murphy believes.
"We need hard work, persistence, and discipline to make economic development work," he says. "And we need brutal honesty about whether or not a business we are trying to attract will pay higher wages than the average in the community and whether or not it adds to or subtracts from the wealth of the region. If it doesn't add to these, we should not be offering incentives."
There is still work to be done.
But Murphy adds, "There are a lot of people engaged at the table and many important strides already have been taken. There is a focus like never before."
Ed Semmler's The Bottom Line column appears on Sundays. If you have a comment or suggestion, contact him at firstname.lastname@example.org or at 574-235-6466.