REGIONAL FOCUS <b>Colorado</b>: Climbing back up

Colorado is moving away from its quality-of-life message and promoting itself as a good state to do business in. Colorado is well known for its ski resorts. Today, like a skier at the bottom of a mountain waiting for the lift, the state is waiting for the economic recovery to reach it and carry it back to the economic heights it once knew.

Colorado is moving away from its quality-of-life message and promoting itself as a good state to do business in. Colorado is well known for its ski resorts. Today, like a skier at the bottom of a mountain waiting for the lift, the state is waiting for the economic recovery to reach it and carry it back to the economic heights it once knew.

In the 1990s, Colorado tied its economic fortunes to technology, tourism, and telecom, only to find all three hit hard in the recession. So far, no one industrial sector has emerged as the new engine of growth. Rather, government is taking the lead in trying to bring the state out of its economic malaise. Major highway construction is going on around Denver as a new convention center addition - and a neighboring hotel - are built. Voters will be asked to approve an expanded light-rail system in the fall. "If you come to Denver and drive around, you see what the engine of growth is: it's government," says Gwinavere Johnston, founder and CEO of JohnstonWells Public Relations. For PR firms, the slow economy has meant scrambling for project work or going outside the state for new business. Looking back at last year, Larry Holdren director of PR for Denver-based Barnhart/CMI, says, "2003 was a struggle; it was probably the toughest economy that I've experienced." Still, many PR people are optimistic the worst is over for Colorado PR. The election of a pro-business, pro-economic development mayor in Denver last year, John Hickenlooper, has buoyed spirits. Rather than just talking about development as most politicians do, this mayor seems to be doing something about it, appointing a marketing director for the city - a position few cities have. A local group, the Metro Denver Economic Development Corporation, also seems to be bringing the business community together to promote growth. "The Denver metro area has certainly coalesced around economic development," says Sharon Linhart, president of Linhart PR. Denver in the past has, in some ways, coasted when it came to economic development. Its natural beauty attracted people and new businesses from other states. Now, it's fine-tuning a new message, trying to position itself as pro-business rather than merely a nice place to live. "For a long time, we've hung our hat on quality of life," says Christin Crampton Day, a co-owner and principal at Schenkein Public Relations in Denver. Now, however, the region has to change what it's saying about itself. "We need to prove that Denver is a good city to do business in," she says. Rising PR revenues Despite the tough economic times, several PR firms had relatively good years in 2003. Linhart reports revenues up 20% last year to $1.5 million, and she is looking for a similar increase this year. The agency works for the Colorado chapter of the auto club and picked up Prologis, a REIT that specializes in warehouse and distribution facilities, last year. Other clients include Chipotle outlets in Colorado and Nevada, and the Colorado Department of Transportation. LeGrand-Hart Public Relations saw revenues rise 30% last year to $1.2 million and expects to do $1.5 million in PR business this year. Affiliated with MS&L, the agency last year did crisis work in countries like Japan, Greece, and Canada. It also picked up consumer-products work from clients like Orange Glo International, a Denver-based cleaning products company. "We are a middle-market town. Middle market companies are optimistic," says DeeDee LeGrand, president and CEO. Ogilvy PR's Denver office had a good year in 2003, thanks to consumer PR business from the likes of Pizza Hut, phone-maker Uniden, and Quiznos, says Cherie Quaintance, Ogilvy's Denver managing director. The firm's Denver outpost started as a tech shop in 1996, but has been trying to diversify into other areas. Technology still makes up about 60% of its business, Quaintance says. "The tech clients are being quite conservative, but everybody feels optimistic," she says, adding that she's looking for modest growth this year. Others report that while finding new revenues was tough, they made progress in trimming operating expenses and lowering their profitability points to levels where they can now make money even in the slower economy. Johnston says, "We cut back everywhere we thought we could," including subleasing some office space the firm had once used. With income last year around $1.7 million, the firm achieved profitability because of its expense cuts. "I think everybody has had a hard time, but everybody is feeling a renewed vigor," Johnston contends. Corporate concerns On the corporate side, all eyes have been focused on efforts to turn around the image of telecom giant Qwest Communications. New CEO Dick Notebaert "has brought tremendous credibility back to Qwest," says Jeremy Story, a VP who oversees Weber Shandwick's Denver office and a former employee of Qwest predecessor company US West. "They're absolutely headed in the right direction." (Qwest did not return calls for this article.) Besides its legal issues, Qwest had angered customers with poor service, upset retirees with talk of benefit cuts, and hurt employee morale with layoffs, Story recounts. While PR seems to be helping, Qwest's problems aren't all behind it just yet. The company recently set up a reserve fund of at least $100 million to cover potential liability from lawsuits and federal investigations. Accounting issues caused Qwest to erase $2.5 billion in revenues for 2000 and 2001 from its books. With four former executives now on trial facing charges of securities fraud and conspiracy, the old troubled image of the company hangs over the business landscape. Colorado has had to endure other negative PR in recent months in the form of Kobe Bryant's alleged misdeeds there and scandals in the University of Colorado football program. "That's frustrating when you're trying to put out messages. We can't allow those to be the only messages people hear about Colorado," says Linhart. Energy company Xcel is focusing its PR this year on improving its image for reliability, says Margarita Alarc?n, a media relations specialist with Xcel in Denver. Bad weather hurt service last year. The Minnesota-based company is investing $23 million to upgrade reliability in Denver, its second largest service area, Alarc?n says. The company is increasingly reaching out to Spanish-language consumers. Alarc?n, herself bilingual, joined the firm at the end of last year and has been leading efforts to communicate more with the Spanish-language media. The Colorado technology scene has slowed considerably in the past two years because of a lack of venture capital funding, explains John Metzger, CEO of Metzger Associates in Boulder. "Last year couldn't have been any worse," says Metzger who specializes in tech business. "I think we're seeing a thawing this year. I think we were in survival mode last year and now we're in sustaining mode." Boulder is a tech center. In the past, it's been a haven for California tech pros who wanted to escape the rat race there and set up their own ventures in more hospitable surroundings, Metzger explains. But without funding, tech ventures dried up in the recession, and the impact on PR was immediate, he says. His firm went from more than 40 people during the boom years to below 20, and saw a 25% revenue decline last year, to $1.8 million from $2.4 million. In Colorado Springs, tourism and government work helped Praco Public Relations start this year ahead of its projections, says Lisa Bachman, VP of PR. It has three PR vacancies it's trying to fill now. Kirk Hallahan, a PR associate professor at Colorado State University in Fort Collins, says the job market for PR grads is looking up in Colorado. Others agree firms are hiring entry-level people, though pros with more experience are having harder times finding work. No one is expecting any magic bullets to suddenly fire up the Colorado economy or the PR business there. "I don't see an angel company coming in to lead, one that's going to keep four to five agencies busy," says Michael Hoog, CEO of Corporate Advocates, Denver. Rather, Colorado agencies will continue to find work from mid-market companies that have become very careful with regards to how they are spending their money. Jeff Julin, president of MGA Communications in Denver, says he sees "more opportunities to pitch new business, but it's still project related, and much of it is about cost. Businesses really are looking at a return on their dollars." By cost, Julin says he's not talking about potential clients trying to bargain for lower rates. Rather, "they're saying, 'this is the money I have. What can you do for me?'" he says. "It's a tumultuous time, and I think we're learning to live with that." For Colorado PR agencies, tumult and slow growth is better than no growth at all. A rocky employment market In Colorado, as elsewhere in this recession, job loss has been the big economic story. "The Denver metro area, as well as the state of Colorado, has just witnessed two of the worst economic years in our history," says Patty Silverstein, president of Development Research Partners, Denver. The state lost 75,000 jobs in the past two years, following 15 consecutive years of job growth. The period marked the first time the state saw two consecutive years of job loss since records were first kept in 1939. The state unemployment rate was 2.5% in 2000, when it added 55,000 jobs. Those gains came as people flocked to Colorado. Its population grew 31% in the 1990s to 4.3 million people. The state's unemployment rate today is 6%. Only three industries showed job gains in 2003 - natural resources/ mining, educational and health services, and a category called "other services." This year, Silverstein is looking for six to nine months of flat economic activity. The telecom industry, once a major driver for Colorado, for example, still has excess capacity, she notes. But some signs of hope are emerging. "We're starting to see an uptick in tourism," she says. "Business investment in technology is picking up, but it will take a while for that to mean jobs. Employment will be up toward the end of this year." The state should gain about 15,600 new jobs this year, predicts Silverstein. Public-sector spending likely will be the main driver of Colorado's economy in coming months, she adds. Like other states, however, Colorado is facing budget woes, so even state spending could be hamstrung near term.

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