March 26 2009 12:00 AM

Local businesses unite to fence in local dollars

Brad Westen was enjoying a Spartan hockey game last winter until he saw a couple of cops carrying conspicuous cups of coffee.

The sales manager for Lansing-based Paramount Coffee has a mean coffee habit —14 cups a day at its height a while ago — but his pupils dilated even further at the sight of the Starbucks logo.

Westen approached the cops and explained that buying from local businesses rather than distant chains prevents dollars from flying out of town, including tax dollars that keep cops in uniform.

The cop countered that Starbucks, after all, employs local people.

Westen, who has heard that argument before, politely read them the riot act. Drink coffee from a local place like Biggby’s, he told the officers, and you support the local tax base via a local vendor (Biggby’s) and local roaster (Paramount), not to mention all their tax-paying local employees.

Then he hipped the cops to the economic multiplier effect. The benefits go right down the line, he told them, from Paramount’s locally purchased supplies to the local blends it makes for places like Quality Dairy and Horrocks all the way to Westen’s locally printed business card with its charming fake coffee ring.

Finally, there are the intangibles, like Paramount’s local charities and business partnerships, not to mention the heavenly plume of coffee aroma the roasters waft over the city every day. Who would want to outsource that?

The next time Westen saw the officers, they were drinking Biggby’s.

“That’s all it takes sometimes,” Westen said. “A simple conversation.”

With or without caffeine, the push to boost Lansing’s economy by patronizing local businesses is percolating through the area with newfound vigor.

Local First, a group of Lansing business about 100 strong so far, is ready to have Westen’s simple conversation, both between businesses and with the public.

Pinching Lincoln

There is a simple idea behind a Local First drive. One dollar, spent locally, may end up in two, three, four or more nearby tills, enriching local coffers like a magic bean until somebody drops it at Wal-Mart, blows it on a Bloomin’ Onion at Outback Steakhouse or mails it off in a mortgage check to Countrywide.

The trick is to delay the moment of escape as long as possible.

“We’re going to hold that penny here in Lansing ‘til Lincoln screams,” MSU economist and Local First board member Rex LaMore said.

Capital Area Local First follows similar movements in forward-thinking metro areas like Austin, Texas, San Francisco and Grand Rapids. The Lansing group was officially formed two years ago, with fits and starts going back to 2002, but it has been slow going. Getting busy local businessmen to agree, cooperate or find time to volunteer is not easy.

Now the group is beginning to feel its oats. Local First stickers are proliferating in windows and doors of locally owned businesses. There are plans for cross-promotions, a discount coupon book and ad campaigns hammering on the virtues of buying local.

A lot of the group’s activity is below public radar, and some of it infiltrates enemy territory.

Last summer, Westen persuaded the downtown Radisson Hotel to swap out Starbucks coffee for Capitol Blend, roasted and packaged at Paramount. Upperfloor Radisson guests can sip their inroom coffee and look down and see the vents from the Paramount roasters on Larch Street.

Westen is a master of the beverage leverage. Last week, on the strength of the Radisson deal, he trundled off in his new Prius to the Quality Inn near Frandor to seal another exclusive java deal. He hopes those two coups will help him persuade the west side Quality Inn to do the same.

At monthly meetings, Capital Area Local First members make crucial business-to-business connections that link local suppliers.

Let’s see now. What goes with coffee?

Jeff Johnson, president of Capital Area Local First and owner of Bake N’ Cakes in Lansing, brought some killer tortes to an early Local First meeting.

Manager Jim McMahon of Dublin Square, a recently opened, locally owned restaurant in East Lansing, went nuts over them.

Johnson wasn’t used to turning out his baked goods at a wholesale pace, but McMahon told him he didn’t want to serve cookie-cutter desserts.

“It was a real learning experience for me,” Johnson said. “I sharpened my pencil and pushed aside my retail brain. What can I really do this for and get it out with volume?”

Now Johnson sells multiple slabs of the killer tortes, along with plenty of other baked goods, to Dublin Square each week.

Dublin Square also hosts dinners for Bake N’ Cakes employees.

“It’s all from that one encounter,” Johnson said.

Johnson is spinning his sticky-sweet webs all over town. While he sat in the shop and talked about the joys of networking, a bustling blond-haired woman came into the shop with two kids in tow, as if on cue. She bought a half-dozen cupcakes, turned toward the door and lit up at the sight of him.

“Thank you so much for the hundreds of cookies and all the sheet cake,” she gushed.

The weekend before, the bustling lady, Lynne Sowers of Sowers Chiropractic in Mason, hosted a Mason Area Women’s Expo. Several local businesses, including Merindorf Meats, Biggby Coffee, Felpausch of Leslie and Bake ‘N Cakes, donated food and beverages to the expo. “Our goal, especially in tough economic times like this, is to show everybody who is here,” Sowers said.

Currents of currency

LaMore studies the Lansing-area economy at MSU’s community outreach
office, where he runs the school’s community economic development

If a human body is hemorrhaging, doctors can use dyes
and cameras to find out where the blood is going. Local money is a bit
trickier to monitor.

LaMore was fresh out of MSU in 1984, when
the NAACP and the Urban League civil rights network organized Black
Dollar Days across the country. For one day, African-Americans were
urged to pay for their usual purchases with hardto-ignore silver
dollars or two-dollar bills.

Black Dollar Days gave LaMore an
early glimpse at the hidden currents of currency.

“At the end of the
day, the businesses would look in their drawer and see who their
patrons were,” LaMore said. “If they had lots of silver dollars in
their drawer, it reinforced the idea that they ought to be attentive to
the concerns of African- Americans.”

LaMore said Local First
groups draw upon the same principle. Local money is local power.

of the characteristics of distressed, low-income areas is they have low
multipliers,” LaMore said. “There aren’t businesses that provide for
local needs.”

LaMore cited a 1998 MSU study of Mio in Oscoda
County where non-local purchases exceeded local ones in every category
across the board — from housing and transportation to health care to
entertainment. Two of the biggest culprits were clothing and food,
categories LaMore singled out as major money drains in many

LaMore said MSU also compared two hy
pothetical communities: one that spent 50 percent of its money locally,
and one that spent 20 percent.

After money changed ha nd s f
ive times, the communi ty with the 50 percent local spending rate had
nearly twice as much money circulating in the community, compared to
the community with the 20 percent spending rate.

The multiplier effect
is not just a hypothetical model. Dan Houston and Matt Cunningham are
the cofounders of Civic Economics, a strategic analysis and planning
firm based in Chicago and Austin, Texas.

In 2002, Civic
Economics released a groundbreaking study in response to the proposed
opening of a 25,000square-foot Borders Books outlet near two
long-standing independent stores, BookPeople and Waterloo Records. The
study concluded that for every $100 in sales, the independent stores
were pumping $30 back into Austin. That $30 had a total economic impact
of $45, owing to the multiplier effect. They estimated that every $100
spent at Borders would result in a direct return of only $9 — or,
taking the multiplier effect into account, $13.

“The local premium
matters the most in small to midsize cities,” Mitchell writes in his
new book, “Big Box Swindle.” A Lansing-sized city might house the
headquarters of a chain or big company — Borders in Ann Arbor, for
example — but it’s not the norm.

In a city the size of Lansing or
smaller, Mitchell writes, most dollars spent at bigbox store are gone
for good.

Civic Economics has also done work for Grand Rapids Local
First, with surprising results.

It sometimes seems as if Local
First groups are tilting against huge freemarket windmills, but they
don’t have to topple them. According the Grand Rapids study, a small,
locally made monkey wrench in the works could go a long way.

The Grand
Rapids study concluded that if the people of Kent County increased
their patronage of local businesses by 10 percent — that is, if they
reconsidered one decision out of 10 to use a chain store or restaurant
— the county would see more than $140 million in new economic activity,
over 1,600 new jobs, and $50 million in new wages.

Hillary, executive director of Grand Rapids Local First, said her
organization has grown from “a handful” of businesses in 2003 to 500
and counting.

“We don’t even recruit,” she said. “It’s all
word of mouth.”

Late last year, Grand Rapids Local First launched a
coupon book, with discounts from participating businesses. Hillary said 2,000 have already been sold.

She said it’s impossible to count the connections that have been made already.

on the northwest side didn’t know what was happening on the southeast
side,” she said.

When Grand Rapids Local First organized an Eat Local
Challenge event, Hillary discovered Kingma’s, a venerable
family-owned grocery store.

For years, the the Kingma family cultivated relationships with dozens of local farmers and producers. They
were as surprised as anyone to find that they were on the cutting edge
of a trend.

Hillary recruited the Kingmas as a model for the rest of
the group. “They carried tons of Michigan products,” she said. “I told them, ‘We’re try ing t o teach people to do this!’”

Smell me

Paramount fired up its roasters in 1935, sales agents wore fedoras and
local restaurants and diners were top customers. Within half a century,
most of those eateries were gone. If the rise of gourmet coffee sales
and coffee shops hadn’t perked up sales in the late 1980s, Paramount
might have been in serious trouble.

“All the chains that moved
into Michigan would have made it very difficult to survive,” Westen
said. “Bob Evans, T.G.I.Friday’s, Roadhouse — the list goes on and on.”

As a retail supplier, Paramount supports local partners, in part by
roasting and packaging local brands like Quality Dairy and Horrocks.

all Paramount product, but the package reminds customers where they got
they got their java. For Westen, the tie is also personal.

have some brand strength, but the Horrocks name has really grown since
they started in the 1950s,” Westen said.

“I know the entire family. I
used to work there. I ran around with the Horrocks brothers in high

It’s not just a matter of economic survival or
personal ties. There’s something almost primal about local businesses
and the distinctive flavor they give to a community.

Jeff Johnson visited relatives in Chicago. He checked into a hotel in
nearby Palatine and followed a deliberate routine. He went to the front
desk and asked for advice on where to eat.

Johnson said he always gets
the same answer to that question, which he paraphrased this way:
“There’s a Texas Roadhouse here, an Outback, an Applebee’s,’ yadda

At this point, he always leans forward and asks for he
inside dope. “Say you want to impress a girl, take her someplace
special — you know,” he told the Palatine clerk.

The concierge
hipped him to a local eatery, Johnny’s Kitchen and Tap.

“It was several
years ago, but I still remember the place,” he said.

The chain restau-
rants are never that memorable, Johnson said. “Take people to the
Golden Harvest and they say, ‘Wow, I sure wish we had one of these,’”
Johnson said.

The story demon strates how personal local pride can be.
Hotel clerks only send you to chains when they don’t know or care who
you are. Like that great big cloud of roasted coffee smell eman a t i n
g from Paramount, a distinctive community smell is a hard thing to
measure, but impossible to ignore and may even be necessary for mental

Grand Rapids’ Hillary said that in spite of the
quantifiable success of Grand Rapids Local First, she can’t overstate
the intangible benefits the group brings to her city.

“Local First has
encouraged the community to take pride in what we have here,” Hillary
said. “I like to think we’re giving people some hope, even in times
like these, that we can support each other and flourish.

Always there when you needs us, Local-Mart shopping keeps the dollars in your community!

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