“What I want to try doing is
That’s exactly what Smith, a senior executive at FedEx Corp., recently has done.
“What I want to try doing is shake people out of this complacent posture,” Smith said.
Calling for a revolution
You might have seen Thursday’s headlines.
Smith assailed minority spending rules. These apply to corporations getting tax breaks from the city-county EDGE board.
Revise the rules, he said, because they deter companies from moving here. Memphians quickly protested, prompting Thursday’s article by Wayne Risher in The Commercial Appeal under the headline: “Critics pan white collar tax breaks.’’
Smith dialed back his proposal. But he remains focused on this:
❚ Recast the city-county EDGE board — do it now.
Memphis hasn’t recruited a major out-oftown company since Obama’s first term. ❚ Fire up the economy. Since EDGE was formed Memphis gross domestic product has fallen.
❚ Wake up Memphis’ political gentry — by all means.
These folks stand by while little Jackson, Tennessee, grows at a faster rate than Mem-
phis.
'Find a better way'
Smith enters Seasons 52, moves to the table where I’m seated with Memphis financial executive David Waddell, drinks deeply out of the water glass the waiter just set down before Waddell, and plunges into the story of what he is doing and why he is doing it.
He’s not against minority spending rules. He’s against something else: Memphis, he said, has tolerated slow growth too long.
Memphis and Shelby County finished 2016 with 1,400 fewer employers open for business than a decade earlier. He wants obstacles to growth cleared out.
“What we’re doing isn’t working very well,” Smith said. “We have to find a better way.”
Faith in Memphis
Smith, 40, is the son of FedEx founder and chief executive Frederick W. Smith, 74, who is widely regarded today as one of the most influential civic leaders ever in this 199-year-old city.
Richard Smith and Waddell, who runs an investment firm founded by his father, are among the small group of Memphis scions who five years ago launched the Chairman’s Circle, a group of more than 100 people inside the Greater Memphis Chamber.
If you drive a ’89 Olds Cutlass and live in a $25,000 northside cottage built before Firestone closed the tire plant, you might be tuning out right now, but look closely.
Rich Memphians — there are about 50,000 of them — don’t know precisely how the city’s 200,000 impoverished people can climb of poverty or the 100,000 lower-wage workers can step into the middle class. But some rich guys are trying.
Rather than wander off to Palm Beach and fiddle away the family fortune — Forbes magazine estimates Frederick Smith’s net worth exceeds $5 billion — Richard Smith, David Waddell and these other well-off folks created the Chairman’s Circle.
Voice of business
Whether the Chairman’s Circle has accomplished its mission is open to debate. I’d say it hasn’t lived up to its hype. Even so, this is how the city’s concerned scions are trying to move Memphis ahead.
For nearly a generation, prominent corporate executives including Frederick Smith have banded as Memphis Tomorrow, a civic leadership group that aims to steer the city with lofty ideas like improve education for children under 5.
Along came these younger Memphians, most of them in their 40s and 50s. They organized the Chairman’s Circle. They were widely viewed as the next generation trying not to push Memphis Tomorrow aside, but tackle two goals. Accomplish specific tasks and give the Greater Memphis Chamber a loud voice in public affairs.
Richard Smith recalls Chamber officials were muzzled by government leaders a decade ago, told not to weigh in
loudly as Memphis debated city-county government’s proposed merger.
Smith, then a member of the consolidation study committee, notes the Chamber is under-funded to this day in part because it refused government contributions so the newly formed Chairman’s Circle could speak out openly.
'It has to be us'
That’s the back story. Up front, the Chairman’s Circle is known best for the 2013 launch of what was called moon missions.
These include Harvard Tech (educate 30,000 skilled workers in 10 years) and EPICenter (create 1,000 new businesses in 10 years).
If either of these missions had found wild success by now, Memphis would be celebrating. Instead, Richard Smith, who this winter was elected chairman of the Greater Memphis Chamber (a voluntary, unpaid position), his launched his own personal economic mission. I ask him why. “We’re not getting ahead,” he said, pointing out he is busy enough as chief executive of FedEx Trade Networks, but feels compelled to take a public stand on economic development. He refers to an American rock star in the old band Grateful Dead.
“Jerry Garcia once said: ‘Somebody has to do something. Too bad it has to be us.’ That’s how it is,” Smith said.
Slower now than '01
Before lunch in Seasons 52, I’d never met Richard Smith.
I’d read his emails. He writes briskly, gets on point quickly. In person, he talks the same way.
He comes across like thousands of executives. He wants reports, numbers, data. He’s articulate, a graduate of University of Mississippi law school and George Washington University. But he doesn’t try to portray himself as bright, rich or exceptional.
His dad conducts himself with the bearing of a decorated U.S. Marine Corps pilot. He is that. The son is the guy in the corner with the disarming smile.
On this day, Waddell has set out a sheaf of charts. Smith refers to them. Memphis’ economy is slower now than in 2001.
Chamber officials, Smith said, warned him against talking openly. They find my writing negative and apparently feared I’d disparage the Chamber. Smith shrugged off the advice. He wants Memphis to know this:
“I’m not my father,” Smith said. “He served in Vietnam, came home with the medals and created this company. I’m not him. I’m just me. I need help to do this.”
Help doing what?
Waddell speaks up. “Does Memphis really want to grow?” Waddell said. “Memphis has to decide.”
If Memphis is going to grow, he said, the citizens have to speak up to politicians, support Richard Smith on his mission.
Smith took one large step to focus elected leaders on growth. He railed against the EDGE board — shorthand for the Economic Development Growth Engine for Memphis and Shelby County, an agency created in 2011.
PILOT property tax incentives are the foremost economic development tool in Memphis. These controversial tax cuts are awarded by EDGE, an agency that answers to both Memphis Mayor Jim Strickland and Shelby County Mayor Mark Luttrell. The mayors appoint EDGE's board of directors.
Failed leadership?
Smith insists EDGE staff must look beyond tax breaks and also court companies interested in locating in the city. He calls this dealmaking, said it is not happening now, and points to a Waddell chart showing the city economy has shrunk since EDGE was organized.
EDGE’s board, Smith wrote in an email, “should’ve been asking the question, ‘Why haven’t we had a single HQ or back office or large manufacturing project since we were formed in 2011?' To not ask that very basic question of why they’re losing, despite being told … they are the problem … is a complete failure of leadership.”
According to Smith, EDGE streamlined a few years ago but still badgers prospects with its paperwork instead of intently listening to what companies need and promising to secure it.
Weary of the bureaucracy, company officials often overlook the city, he said, and find sites across the state line in DeSoto County, where the economic development application process is simpler and state incentives richer.
“We do a great job selling for Northern Mississippi,” Smith said.
Is EDGE the issue?
Elected leaders have heard Smith. A special committee of Memphis City Council members and Shelby County Commissioners has begun an EDGE evaluation.
‘‘I don’t really know where the dysfunction came in but EDGE was formed to be the real leader in recruiting industry. We’re not meeting what I understood as the original vision,’’ said County Commissioner Heidi Shafer, a special committee member.
Not every committee member, though, agrees EDGE is the problem or the only problem.
“The Chamber are the guys who should be stepping up,” said County Commissioner Steve Basar, noting the Chamber funds its own economic development team and could handle dealmaker tasks.
Now, state officials, the Tennessee Valley Authority and site selection consultants usually introduce companies interested in Memphis to the Chamber. The Chamber answers questions about sites, workforce and other issues and calls in EDGE to complete the deal.
Smith said the underfunded Chamber is doing all it can and EDGE must do more but is sidetracked in part because it reports to two mayors. He contends only 25 percent of the prospects delivered by the Chamber complete deals with EDGE.
“I disagree. I’d like to know where those numbers come from,” said Reid Dulberger, EDGE chief executive officer, noting the agency has completed 129 projects that attracted or retained 17,000 jobs even though no real estate developer has readied a major tract of open land in the city or county for several years.
“I think we have proven we can close projects from International Paper down to Jim and Samella’s House,’’ he said, referring to a new Memphis restaurant.
What happens next?
“What Richard has done is generate some healthy discussion around our problems and he’s put a plan on the table,’’ Luttrell said. “That’s a good starting point.”
Luttrell said Dulberger, Chamber chief executive Phil Trenary and Mark Herbison, Chamber senior vice president for economic development, have been asked to compile a list of impediments to economic development and solutions.
“Let’s go to the experts and see what we can do,” Luttrell said. “There was a finger pointed at EDGE and the leadership of EDGE. But I don’t see them as the problem … The cities that go forward and are successful have strong corporate engagement. It’s good to see the corporate community in Memphis step up and offer solutions, but it doesn’t have to deal with the political subtleties like I and Jim Strickland do. Yes, Memphis wants to grow. There’s a divergence of opinions on how we do that.”
Ted Evanoff, business columnist of The Commercial Appeal, can be reached at evanoff@commercialappeal.com and (901) 529-2292.