I recently had a conversation with a gentleman about this very subject and the effect of spending our local dollars with out of town or out of state businesses. His position was that he could buy things off the internet from www.whateveritisyourelookingfor.com for a cheaper price. While you can’t argue against the fact that you can find something cheaper, you can argue the position that local money should be kept local if at all possible. I realize that in some cases, what you are looking for may be a specialized item that is not available locally and these are not the items that I want to focus on. What I am talking about are the things that can be purchased here, but people choose to buy them somewhere else just to save a buck.
Now before you get all in an uproar, let’s take a look at this on a different level that everyone can relate to. How many jobs in Leitchfield were lost when Toyota (Trim Masters) decided they could take their business to a different location as a way to save money? How many jobs were lost when Jones Plastics decided to move their operation to save money? How many people were out of work at MTD when GE decided to move their contract to Mexico to save money or when Vermont American (Bosch) moved its operation to China? Not only did the people that worked there lose their jobs, but the local businesses lost valuable customers when those employers closed their doors. Now you’re asking: How does this relate to how the average person or small business spends their money? The answer is really simple; the local population is in essence the local business’s employer. When you spend your money somewhere else you are doing the same thing that a large sector of big businesses and factories have done to their employees. You have taken away their only source of income. This is the scenario that we hear people complain about because the big company was only interested in saving money and not worried about the people it had an impact on. Sound familiar?
The mindset of saving money without looking at the bigger picture is a foolish concept. One of the best examples of this is the auto industry. The top executives look for ways to “save money” and make the business “more profitable”. The actuality of this thinking is they are looking for a way to put more money in their pocket at this moment, not looking at the bigger picture five years down the road.
Step 1: They shut down five U.S. factories and relocate the operations to Mexico where labor is cheap. Thousands of U.S. jobs lost. However that is not enough to satisfy their greed, so they require their level 1 suppliers to cut the cost of their products.
Step 2: The level 1 suppliers, in order to keep their contract, close 15 U.S. factories and move their operations to China and Mexico to take advantage of the cheaper labor. Thousands more U.S. jobs lost.
Step 3: The level 1 suppliers, drop their U.S. based suppliers and contract the raw materials from suppliers outside the U.S. More U.S. jobs lost.
Step 4: They all realize that they have done away with one of the biggest markets for their products by trying to save money. There are no longer enough people able to buy their product, so what do they do? They ask the same people that they cut out of the economic flow to bail them out. So the people who lost their job so that someone could save a buck are now the people who are going to have to pay higher taxes because “they (the industries) wanted to save money”.
If you compare that to the local economy, you will see that as the employers (people of Grayson Co.) spend their money elsewhere to save a little now, they are going to end up realizing that ,as the local governments revenue dries up due to businesses closing and jobs disappearing, they are going to be the ones called upon, because the federal government is not going to step in to do a bail out on that level, to make up the difference with higher taxes and higher rates on utilities. There will also be an increase in the price of local goods due to remaining businesses feeling the pressure of decreased sales and increased operating costs.
There are going to be some that read this and say “Why don’t local businesses just lower their prices to what you can buy it on the internet for?” This is another situation that needs to be viewed from a different perspective. That is the same thing as GE or GM or Vermont American asking why can’t the employees here just take a pay cut and work for the same thing that the people in Mexico or China will work for? It is not going to work due to differences in the cost of living or doing business in that area. I would be willing say that 99% percent of all the businesses in Leitchfield / Grayson Co. are doing business at what it takes to stay in business and hopefully make a reasonable profit in order to support the business. No one is getting “Warren Buffett” rich off of any business in Grayson Co. Do the business owners want to make money from their business? Yes, the same way you want to make money from your job. Do you want to go to work everyday, just to cover the expense of going to work everyday? No, you want to be able to support yourself and your family.
By now you are wondering when I am going to get the point of why we should spend our money locally even if means it may cost a little more in the beginning. Yes, you read that right, I said in the beginning. Stay with me here and you will see what I mean.
The more money that is spent locally will increase the demand for products and services. As the demand increases the business owners will need to hire additional staff to fulfill the orders and requests. This will, as you may have guessed, mean there will be more jobs available to the people of Grayson Co. As those employees begin to receive their salaries, they will be looking to buy the things they need and want in a higher demand and more frequent manner since they now have jobs. Now that the existing businesses are growing, they are in need of support businesses to supply them with the goods they need to produce the goods you want to buy. What does that mean? That’s right, more jobs and more demand for the goods being produced locally. Now the local businesses are able to buy their raw materials in bulk and receive bulk pricing and upgrade their equipment to produce more goods in less time. Which in turn means the cost of producing products locally has been lowered. Now businesses can adjust their pricing to reflect their new cost of doing business. Now we have created an economic environment that will enable more businesses to locate in our community offering an even larger array of jobs, products and services that were previously unavailable locally and at rates that are competitive with, you guessed it, the “internet guys”.
Understanding that now is not the best time to ask the citizens of Leitchfield / Grayson Co. to spend more money; this is a true and undeniable way to build our local economy. We can either do it now or wait and see if the magic “Economy Fairy” shows up and does his job. Does it take effort? Yes. Does it require the people to make tough economic decisions? Yes. Will it improve the overall appeal of our community to the industrial market looking to locate their new factory? Yes. A vibrant local economy is the building block of growth and stability. It provides the local government with the tax revenue from occupational taxes, property taxes, business licensing, increased utilities usage and reduces the need to increase the tax rates imposed on individuals. When you look at the grand scheme of things, you will see that by spending our money locally, we will end up reaping the benefits in the near future. While that does not relieve the pressure immediately, it does put an ever brightening light at the end of the tunnel, compared to a light that continues to get smaller if we choose to continue on the same path.
Whether the people of Leitchfield vote Yes or vote No will not have anywhere near the impact to our local economy as compared to supporting our local businesses. The main question everyone should be asking is: Why would any new business want to locate itself into an area that shows no signs of a stimulated local economy? A restaurant, retail store, movie theatre, car dealership, etc. are all looking at one set of figures - population density compared to local spending. If the spending is not in line with what their business requires, they are going to look elsewhere; wet, moist, or dry will not be the biggest deciding factor. Just to clarify my position, I am not writing this to support either side of the “Moist vs. Dry” issue, as both have sides have a basis for debate and that is up to the people of Leitchfield to decide which side of the issue they feel is the right one for our community. I am only stating my position on what we can do collectively to better our community and provide for the best quality of life now and in the future in regards to our economy. Let’s support our local businesses and then we will see definite economic growth.
Steve Minton,
One of many local business owners
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