Setbacks for Maryland offset by some gains

SUNDAY OUTLOOK

August 28, 1994|By Kim Clark

Maryland has lost jobs, and competitions for jobs, in recent weeks: London Fog Corp. announced plans to shut its local factories and move its rain coat production to lower-wage Asian plants, J. Schoeneman Inc. is moving a warehouse to Pennsylvania, and the Starbucks Corp. spurned a Maryland offer and decided instead to to build a coffee-roasting facility in Pennsylvania.

Is this just an unlucky streak, or are these losses reflective of fundamental problems with Maryland's economy and business climate?

Mark Wasserman

Maryland Department of Economic and Employment Development

In this world there are ups and downs. You've chosen to fixate on a couple of setbacks. But what we are seeing is a full pipeline and a series of recent significant victories. Two examples: Woodward and Lothrop is establishing a very substantial distribution center in the Cherry Hill neighborhood. That's a migration of jobs into Baltimore. And Time-Warner announced it is moving a major distribution facility to White Marsh. One of the basic strengths we promote about Maryland is that it is in a very potent location for distribution.

With regard to Starbucks: They started looking at five states and came down to two sites. These decisions are highly complex and only have a bit to do with the influence and involvement of government. In the clothing industry, everyone recognizes that there are forces operating at the macro level influencing the fate of the clothing industry. But I would like to point to tremendous success at Jos. A. Bank.

David Walker

Mid-Atlantic Regional economist, DRI/McGraw Hill, Lexington, Mass.

What has happened, I think, is that many states in the Southeast have gotten extremely competitive. You see Virginia aggressively pursuing Disney, South Carolina pursuing BMW, and Alabama going after Mercedes-Benz and winning. A lot of your banks are moving to Delaware.

But that is not to say it is a general trend of outflow. Maryland has been up against some very stiff competition lately, and has been losing. It is like any ball game. Sometimes you win, sometimes you lose.

Champe McCulloch

President, Maryland Business Council, Baltimore

You can attract business here, but Maryland has a very difficult row to hoe in attracting manufacturing for two reasons, relative to Southern states: Land costs are higher and labor costs are higher. That's just a fact of life. We've got to offer either significant competitive advantages in terms of location or significant advantages in the quality and talent of our work force.

The attraction game is only 20 percent of job growth. Eighty percent comes from companies you already have. The most important part of economic development is growing what you've got. Maryland, relative to states like Pennsylvania, Virginia and North Carolinava, has all of the economic development tools, but the relative funding levels are much lower. Maryland is a smaller state. In some cases we are just out of the ballpark. That was the answer for Starbucks.

There is no silver bullet. It will take a whole series of changes. There are opportunities for improvement in the way counties work together. That isn't done very well in Maryland, or the way the state apparatus works with regions. Another issue is regulation. It is not characterized by customer orientation.

Hans F. Mayer

Executive Director,Maryland Economic Development Corp.

The London Fog deal is really different than the Starbucks deal. London Fog was looking at significant labor cost savings, which government has a role in, in terms of workers' compensation, unemployment costs, and so forth. But the bottom line is the number of people working times hours times wages. The state did what it could. Competing offshore is very difficult when it is an hourly wage competition.

The Starbucks transaction was two-faceted. One was they were looking for space or land that could be expandable to something significantly over 1 million square feet. Those are difficult to locate. In addition, a significant financial package was put in front of them. We did not match that. However, I thought what we presented was very fair and comprehensive. Starbucks themselves indicated expansion capability was a significant part of their decision. There was much discussion about increasing the ante, but I don't think in either one of those cases it would have made a difference.

While there are some large projects that seem to gain notoriety, there are a myriad of other projects which we have assisted in one fashion or another that never see the light of day in the business pages.

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