Va. leaves Md. behind in new jobs

October 22, 1994|By John E. Woodruff | John E. Woodruff,Sun Staff Writer

Virginia's economy's shares many of the same ills as Maryland's -- declining defense spending and a deteriorating industrial base, in particular. Yet Virginia's economy is generating jobs four times as fast as Maryland's.

The reason? According to a University of Baltimore analysis, Maryland has not yet generated a new growth sector, while Virginia has two, information technology and engineering management.

The analysis raises fundamental questions about the hundreds of millions of dollars Maryland is pumping into infrastructure to nurture a new biotechnology industry, which most analysts say can pay off in significant numbers of jobs only after a decade or more of research, product development and testing.

Virginia's employment grew 3.2 percent in the 12 months that ended June 30, faster than the national average of 2.7 percent, while Maryland's lagged at 0.7 percent, said Michael A. Conte, the university's director of regional economic studies.

"We anticipate that Maryland will not attain its pre-recession employment peak until mid-1996. In contrast, Virginia's employment reached its pre-recession peak . . . in June 1993," Mr. Conte wrote in the first issue of a new university publication, Regional Economic Review, set to go on sale next week.

Mr. Conte's article stops short of questioning Maryland's biotechnology strategy. Instead, it is silent on the state's biggest development investment, a sharp contrast with the article's extensive remarks on Virginia's new growth engines.

"Biotechnology is an expensive approach with a very long lead time, and I've been trying to find funding for a study on just that question," Mr. Conte said in an interview.

"But if a new industry can be implanted here, the payoff might be excellent, so without a study, I don't feel I can say anything directly about it."

Other analysts are not so reticent.

"To whatever extent Maryland is hitching its future to biotechnology, it is a high risk and a very long time to payoff," said Mayo Shattuck III,president and chief executive officer of Alex. Brown & Sons Inc., the investment banking house. "I don't know of any other industry that takes longer to reach the $H manufacturing stage and produce jobs."

Even after research produces a new medical product (health-related companies make up most of Maryland's biotechnology industry), it may require as long as a decade and tens of millions of dollars in testing before the federal Food and Drug Administration will allow production and sales on a scale that creates significant numbers of jobs.

"That's why I keep telling people that in biotechnology -- while Maryland has the big advantage of having many scientists, they have got themselves into a marathon, not a sprint, and it's going to be a long course to stay," Mr. Shattuck said.

Mark L. Wasserman, secretary of Maryland's Department of Economic and Employment Development, says the hundreds of millions of dollars the state has spent on biotechnology doesn't represent its only investment in the economy.

"Other engines of the future include environmental sciences, information technology, aerospace and export trade, all of which are very much part of the Maryland economic mosaic," Mr. Wasserman said.

Maryland has had discernible growth in information technology and engineering management consulting, but "less than one-tenth as much as Virginia has seen," Mr. Conte said.

Virginia's rising infotech industry has added 8,359 jobs since 1991, and its management engineering consulting business has added 10,927.

By contrast, Maryland's recovery has been dependent mainly on housing construction and consumer spending, Mr. Conte wrote. Since both of those sectors are hurt by rising interest rates, Maryland's recovery has already used up much of the steam it can expect consumer purchases to generate.

"The future of the recovery in Maryland depends on whether the state will be able to find new basic industries in which to expand employment; consumer demand can only take the economy so far," Mr. Conte wrote.

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