REMARKS AS PREPARED FOR DELIVERY - SANDY K. BARUAH, ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT - ETA WIRED ACADEMY, ATLANTA, GEORGIA

20060613

AS PREPARED FOR DELIVERY

Thank you, Emily, for that kind introduction, and for the invitation to join you today at the First All-Region WIRED Academy.

Throughout George W. Bush’s presidency, he has encouraged the collaboration between Federal agencies to achieve common objectives, and I am proud to say that one of the great success stories in this effort is being highlighted here today.

The Department of Commerce has enjoyed a long standing partnership with the Department of Labor. Our two Departments have worked to leverage their resources and align their roles to help communities and regions address the challenges and opportunities presented by a changing world-wide economy.

This partnership has included helping communities respond to sudden and severe economic dislocation as well as those communities affected by the military Base Realignment and Closure (BRAC) process.

President Bush’s strong desire to better integrate the complementary functions of economic development and workforce development has provided me with the opportunity to work closely with Assistant Secretary DeRocco over the last few years, and she and her team are terrific, and I’d like to thank them for their hard work and innovative thinking.

I’d also like to recognize members of the Commerce team here today. EDA Chief of Staff Jim Yeager and from EDA’s Atlanta Regional Office: Phil Paradice, Lola Smith and Don Huff. I’d like to thank them for being here today and for all of their efforts in support of the WIRED initiative. I would also like to thank Georgia Tech for hosting us and the Council on Competitiveness for being here today.

As we meet here today, we have good reason to be very optimistic about the state of America as a global competitor. While the national media sometimes makes it difficult to see, the landscape is filled with positive news about the economy.

Let’s take a look at job growth: Our unemployment level just dropped to 4.6%. This is where we were prior to the 9-11 terror attacks in 2001, and represents a level of employment that many economists consider full employment.

We’ve created more than 2 million jobs in the past year and over 5 million new jobs since August 2003. To put this in perspective, that’s more new jobs than the E.U. and Japan combined.

Our growth rate – measured by GDP – for 2005 was 3.5%, almost twice that of any E.U. nation, and last quarter our GDP was an impressive 5.3%. We’ve grown for 18 straight quarters, and our GDP per capita is the highest among all major nations.

Real, after tax incomes, have increased about 14% since January 2001 and, despite returning $880 billion to American taxpayers as part of President Bush’s tax cuts, the Treasury Department recently reported that tax revenues are up 11% in 2006 and are at the highest level in history.

More Americans own their home than ever before, about 70%, which is not only a record here in America, but far outpaces our economic competitors…and homeownership is a critical economic driver.

All this is tremendous news, not just because the national economic picture is strong, but it means that your regions can tap in to this strong, growing national economy. Imagine how much more difficult it would be to have successful local economic development projects if there was not this strong economic growth across the nation.

Maintaining America’s leadership in the worldwide marketplace will take effort, and this morning I’d like to outline for you 5 “new realities” of the 21st Century economy for your consideration as you implement the WIRED initiatives in your regions.

Let’s start with New Reality #1: While perhaps the most obvious, it is the most important, which is that we are truly in a Global Economy, or as New York Times columnist Tom Friedman says, the world is…flat.

In the new flat, global economy, competition is not just from the firm down the road, our competition comes from any person in any corner of the globe with a good education, a good idea, and a good Internet connection.

Here is your globalization pop quiz: Which of following products is more “American”: a new Ford Mustang or a new Toyota Siena mini-van? … Well it depends. Of course, Ford is an American company. Toyota is not. Both products are built in America by American workers, but the Toyota mini-van contains 90% American-sourced parts, and the quintessential American Ford Mustang has about 65% American-sourced parts. Even the American muscle car has gone global.

Firms like Toyota become a more integrated part of the American economy every day. Toyota operates manufacturing facilities in Texas, West Virginia, California, Indiana, and Kentucky, and employs 38,000 workers in North America. I can say the same about Ford, as they have operated across the globe for generations, and Ford is practically considered a local company in places like the U.K. and Australia.

The global marketplace affords the American consumer choice and cost savings that are unprecedented in any nation’s history and has led to a standard of living that is the envy of the world.

New Reality #2: Competition is intense, and the pace of change will continue to accelerate. It took 55 years for the automobile to spread to one-quarter of the U.S. population. It took 35 years for the telephone to do the same thing. The personal computer accomplished the same level of market penetration in 16 years, 13 years for the cell phone and only 7 years for the Internet.

There are good jobs that exist today that we couldn’t even dream-up two years ago: Podcast manager…Blog writer…I-Pod accessory manufacturer…Satellite radio host.

This new reality where cycle times for products and ideas continues to shrink will require all institutions – public, private, educational, and non-profit – to continually adapt and change. Those that don’t are at risk. Those that do will be rewarded.

New Reality #3: Yes, the world becomes a bit more complicated every day – but that’s a good thing – it shows the advancement of not just the American people, but civilization as a whole. Responding to this reality means we have reached a point where the components of competitiveness can no longer be pursued separately. This reality holds two important lessons for the local and regional level:

First, the idea of workforce development, community development, economic development, and educational programs occurring in separate silos can no longer be tolerated. The interconnected challenges of these components must be tackled in concert – with each element leveraging the other. The resources available for each competitiveness component are important and precious, and we must use them to their full advantage. And the need for regions to integrate talent and skills development into their larger economic strategies is what the WIRED initiative is about.

While the physical infrastructure component of economic development is a critical part of a successful growth strategy, it is the talented people that use this infrastructure to create the new ideas and innovative technologies that make the American economy the envy of the world – far outpacing our competitors in the industrialized world.

The education and training that sparks this creativity gives our workers cutting-edge skills that are key to economic development, and it is encouraging to see the growing interest across the nation in aligning the work and the resources of economic development organizations and workforce organizations. And this is exactly what the WIRED initiative strives to accomplish in your region.

2nd, in our new 21st Century, Tom Friedman-the World is Flat reality, we must acknowledge what we all learned on the elementary school playground, that we are stronger when we stand together than when we stand alone, and as our coaches used to say, “there is no “I” in T – E – A – M — and WIRED is a good example of this.

We need to look beyond traditional political jurisdictions – the city boundary, the county line, even the division between States – and work together. Because the competitiveness of America’s companies is in large part tied to the competitiveness of the economic regions in which they do business.

Pooling resources and developing unified regional development strategies that capitalize on those resources are perhaps the most important steps State and local entities can take to better compete in the world-wide marketplace.

New Reality #4: Collaboration with the private sector becomes more critical every day. While governments at all levels and non-profit institutions can be important players, let’s not forget that the private sector is the most important element of any successful economic development strategy. Unless the private sector is ready, willing and able to invest in a community, economic growth simply will not occur, regardless of how much government spends.

The private sector should have not just a seat at the table, but should be actively engaged as full partners in the development of workforce and economic development strategies.

Educational institutions – including high school and community colleges – should be working hand-in-hand with business to ensure that there are sufficient local folks with the right skills for the job environment of today, and tomorrow.

Biotechnology may be the hot, sexy, new industry everyone is talking about, but if your region’s strength is in transportation logistics, advanced manufacturing or new energy technologies, your workforce development strategies had better be focused on those industries.

The private sector should be helping to shape – within the parameters of public accountability, of course – the development strategies that will lead to more higher-skill, higher-wage jobs. The days of “if we build it, they will come” are gone.

The 5th Reality is that America is positioned to win in the 21st Century. This nation has never encountered a challenge it has not met. We are the most competitive, productive, and innovative country the world has ever known:

• The U.S. has just 5% of the world’s population, but 40% of global wealth;

• The U.S. employs fully one-third of the world’s scientists and engineers and accounts for 40% of global R&D spending;

• America continues to be the country of choice for millions across the globe who are seeking learning and economic opportunity. And we are the most important market on the planet.

Maintaining our competitive edge, however, will not simply just happen. We need to work together and work seriously in order to maintain our competitive advantage.

And at the end of the day, our ability innovate is our – and every other – country’s only possible sustainable competitive advantage. It’s not location. It’s not cost of doing business. Factors such as these will continually shift in a dynamic world-wide economy – but if we maintain our edge in our ability to innovate, America will continue to lead the world in growth and opportunity.

This challenge is why President Bush proposed the American Competitiveness Initiative, which is a bold plan to:

• Double Federal funding for basic Research & Development;

• Make permanent the private sector R&D tax credit;

• Improve math and science skills in our schools;

• Triple the number of workers getting job training;

• And attract and retain the world's best and brightest people for the benefit of American enterprise.

The President’s plan, which calls for $137 billion to be devoted to basic R&D, doubles the Federal funding for this important type of research. The overall commitment the President is calling for will bring Federal R&D investment to the same percentage of the Federal budget as during the Apollo Space program.

EDA will support the Presidents ACI by focusing on the following types of investments:

• Supporting long-term, coordinated and collaborative regional economic development approaches, like the WIRED initiative;

• Supporting innovation and competitiveness;

• And encouraging entrepreneurship.

And to ensure we are successful in these goals, the President has called for a $47 million increase in our budget.

So, these are some of the “new realities” of the 21st Century economy:

• We are in a global economy;

• The pace of change will continue to accelerate;

• The components of competitiveness can no longer be pursued separately;

• Partnership with the private sector is critical;

• And America can and will win in the Global marketplace.

The WIRED Initiative is an innovative program that acknowledges these “New Realities” of the 21st Century economy. WIRED is the most visible Federal effort to-date that acknowledges the power of economic regions – that communities are stronger when they stand together than when they stand alone, and the reality that economic development and workforce development are two sides of the same coin and must be tackled in a comprehensive and holistic manner. And the Commerce Department is proud to be a partner with the Department of Labor – and your regions – in ensuring the success of this initiative.

President Bush has said – and I think you’ll agree – that when America leads, America wins – And with initiatives like WIRED and the A-C-I, America is leading the way in our competitive, world-wide, 21st century market place.

On behalf of President Bush, I would like to congratulate each you on your success in being selected as a WIRED region, and I thank you and my colleague Emily DeRocco for the invitation to be here today.

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