Michigan Report Notes Iowa City's Success

SPECIAL REPORT: Benchmarking the economies in "Big Ten" college towns

By The Center for Michigan - Melissa Preddy

Below is an excerpt from this report.  For the full story, click here.

More Jobs in Iowa City

Iowa City is building on its unique strengths, too. Despite the recession, this college town has grown its GDP to $39,256 in 2008 from $36,027 five years earlier.

Even more impressive: The region actually has added employment when most markets are watching jobs and wages evaporate.

"We've had layoffs and companies that have closed or downsized, but from January 2006 to October 2009 we still have seen a net gain of 6 percent in our employment," said Joe Raso, president of the Iowa City Area Development Group, which serves the region. Some months this year, the market boasted the nation’s lowest unemployment rate, at less than 4 percent.

Efforts to wean the region from jobs dependence on the University of Iowa, the medical center and state government are paying off, Raso said. Private-sector employment has grown from 50 percent a few years ago to two-thirds of local jobs now. With state revenue on the wane, diversification initiatives are even more urgent, he said.

Iowa City already has a small but diverse manufacturing sector. It's strong in consumer goods, like Oral B toothbrushes, Procter & Gamble's giant mouthwash and hair care and Gillette shaving products.

Rockwell Collins, headquartered in nearby Cedar Rapids, makes aviation cockpit systems, providing jobs for some 5,000 engineers and technicians, Raso said. Lear Corp. employs about 800 workers making instrument panels and other automotive components.

Manufacturing is 7 percent of the local economy. "It's not a big component, but what we have is fairly skilled and entrepreneurial," Raso said. Other players providing jobs at a range of skill and wage levels include educational testing and assessment firms ACT and NCS Pearson.

Retaining businesses that don't experience a lot of cyclical volatility helps, Raso said. After all, people mostly likely are going to need to wash their hair, shave and take college board exams regardless of how the economy is doing.

"All of these allow for diversity in what is a fairly small market," he said.

On the horizon? Capitalizing on the University of Iowa's renewable energy strengths. The state already is second only to Texas in the amount of wind power generated, according to the American Wind Energy Association. And in further synergy the university offers a wind-power program through its mechanical engineering department.

Two turbine-makers, Clipper Windpower and Acciona Wind Power North America, already are located in the region. Now, the city has purchased 173 acres near these suppliers and is adding roads, sewers and other infrastructure in hopes of attracting more related businesses to its newly launched Wind Energy Supply Chain Campus.

Computer simulation, a natural outgrowth of the electronics and aviation presence in the region, is another budding industry. Already, BudCat Creations, a video game contributor, has helped develop editions of Guitar Hero, Madden NFL and NASCAR games. And the university's National Advanced Driving simulator, touted as the most advanced of its kind, is being mined for tech transfer possibilities as well as commercial research and military applications.

"We have the potential to build these into significant industries to drive our economic growth," Raso said.