Does Local Matter? And at What Cost?

Now more than ever, it seems we place more importance on sourcing locally, but at what cost?  Many feel we have an obligation to our neighbors and communities to keep the money local. I am torn on this issue a bit, possibly coming off a touch hypocritical. For example, I am very much a DIY person and seem to make several trips to both my local hardware and the Big Box stores over most weekends. I buy most of the bigger ticket items from Home Depot or Lowes, and the supplies or smaller items from my local hardware. I feel it is important to patronize the local hardware, after all several years ago we lost our hardware for a few years, mostly due to the Big Box competition.

In the food world, the biggest trend seems to be “Farm-to-Table” (Farm-to-Fork), which refers to a movement concerned with producing food locally and delivering that food to local consumers. These restaurants are popping up everywhere these days; it’s not just a “big-city” phenomenon anymore.  These chefs rely on traditional farmhouse cooking, with its emphasis on freshness, seasonality, local availability and simple preparations. West Michigan is one of the finest growing regions across the continent and our farmers having been selling their harvests to local restaurateurs long before the Farm-to-Table movement gained popularity. East-Town seems to have a large percentage of establishments that practice FTT, such as the Electric Cheetah, The Green Well, The Winchester, Marie Catrib’s, Brewery Vivant and others. I enjoy all of these great restaurants and while I might spend a touch more, I am always confident my food will be fresh, nothing worse than knowing your food was previously frozen, Gordon Ramsey has etched the importance into my mind over the past decade or so.

What constitutes local to you? Does that mean the state you reside in? Or do you take it down to the town or neighborhood you live in? Our company, while corporately located in Grand Rapids, MI, does business across the state and country. I have lost business on the east side of the state because we were considered outsiders, but I have also gotten business away from competitors because I was considered the local guy.

Should governments be encouraged to source their services and products locally? My opinion is while we live in a market place economy, the local guy should get a leg up. After all, it is the tax payers that are paying the salaries for these workers. This issue is very current for me, in fact; it hurts a bit just writing about it. I recently found out that I lost a deal with a local government agency to a company 2000 miles away. This was a public bid (RFP) that needed a minimum of four references. All of my references were local, in fact, one of them was less than two football fields down the same street. The company that was awarded the bid used all out-of-state references and their closest reference was 1500 miles away. There is a great possibility that they will need hands-on support; I suspect the buyer did not consider that in their equation.  I have years of experience working the RFP world and know that the lowest bid is key, but it should not be automatic. In this case, we were low bid for the 5-year option but were not the low bid on the 3-year option, less than 2% more, about $20. I did hear back from the purchasing department at the government agency, but their explanation seemed much more of an excuse. I sell technology and do not often get pushed off on purchasing, but when I do strange stuff seems to happen. I do not believe the contract would have been awarded to the out-of-state vendor if the buyer would have gotten input from their IT Department.

Are there goods or services you make sure to buy local? Is there a certain premium for local, but if it exceeds this limit, are all bets off? One of our Engineers, Gabe Bush, was just complaining this morning about the local prices on a new motor or pump for his pool. He was experiencing a 110% markup, compared to what he found on-line. He mentioned that markup to one of the guys he was talking to over the phone, and the gentlemen yelled at him and told him it would most likely refurbished and would come without a warranty. Gabe laughed and said it was clearly marked, “NEW”. Gabe was willing to pay a bit of a premium to get the motor in his hands today, but not 110%.

I would love to hear your thoughts.