Keeping Local Dollars Local

The Hometown Advantage is a national organization dedicated to promoting locally owned businesses.  In a February 5 article they report that an Arizona study found that state and local government purchases recirculate three times as much money in the local area as the same contract with a national firm.

The study, called "Procurement Matters:  The Economic Impact of Local Suppliers",  was commissioned by Local First Arizona, the state’s own organization for supporting local business.   Recently the state of Arizona switched its office supply contract from Wist Office Products, a local family-owned business to Office Max.  It was determined that only 11.6% of the contract’s total revenue remained in the local economy compared to 33.4% of the local company’s total revenue, nearly three times as much.

Some advantages of the local contract include:

  • Payroll. Wist has 60 employees in Arizona while Office Max’s contract division is located in Illinois.
  • Profits.  The profit from the Wist contract was returned to the local economy.
  • Other local purchases.  Wist purchases more goods and services locally.
  • Community support.  Local companies tend to be more involved in local charities.

Local First Arizona is using the results of the study to gain support for legislation that would require state contracts to go to local companies when prices are similar.

More information on local purchasing preference policies is available on the Local Purchasing Preferences section of the New Rules web site.

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