Good times at last Prosperity: Most of Maryland has finally shaken off the economic blahs, although employment growth continues to elude Baltimore City

Maryland's Economy Third-quarter Report

November 09, 1997|By Jay Hancock | Jay Hancock,SUN STAFF

Kenlee Precision Corp. has tripled employment since 1993, quadrupled sales and invested $10 million in computerized metal-sculpting machines.

Its blood-cell separators and hemodialysis equipment are shipped coast to coast; its laser units for making computer chips fetch inquiries worldwide. Lathes, engineering programs and inventory accounts in three Kenlee factories in two states are linked on the Internet.

That Kenlee operates from Baltimore and not Palo Alto or Fort Worth says something about this region's material well-being. It's better.

"These are very good times for Maryland," said Charles McMillion, chief economist for MBG Information Services, a Washington-based economics consulting firm. "It's a good, solid economy."

Maryland had 38,000 -- or 1.7 percent -- more state-based jobs in the June-September quarter than it did a year previously, according to the government.

If the state finishes 1997 with the same gains, it would log its best year since 1994, when it added 47,000 jobs, a growth of 2.2 percent.

State unemployment is down, hitting 4.7 percent in September. Two years ago unemployment was 5.2 percent; five years ago it was 6.7 percent.

Help-wanted advertising continues to climb. Business failures are down through the third quarter. And Maryland personal income is on track to grow this year by more than 5.5 percent, its fastest pace since before the last recession in the early 1990s, even while inflation is docile.

"We're growing at a very healthy rate, and we've been doing that for the last four quarters," said Mike Funk, an economist with the Regional Economic Studies Institute at Towson University. "Maryland, in the last half of 1996, really started picking up the pace and catching up with the nation."

Countrywide, employers are adding jobs at a 2.2 percent annual rate. That beats Maryland's 1.7 percent pace reported by the U.S. Labor Department.

But some economists believe that government statisticians are selling Maryland short.

In recent years the government has missed as many as 20,000 Maryland jobs in its initial tallies, revising the count upward only later when accurate, unemployment-insurance records become available. The theory is that the Labor Department doesn't count jobs at newly created companies in Maryland as well as it does in other states.

Patrick Bradley, an economist with Mercantile-Safe Deposit & Trust Co. in Baltimore, thinks that Maryland will have added jobs at about a 1.9 percent rate this year. Towson University's Funk is even more optimistic, forecasting robust 2.7 percent growth when the final results are in.

Whatever the fine print, the headline is clear: Maryland is out of the doldrums.

"You kind of expect this, given the strength of the U.S. economy," Bradley said. "Maryland seems to have reasonably good sensitivity to what goes on in the overall U.S."

True, but it's been a long time coming.

Maryland lagged far behind the nation for much of this decade, taking until 1995 to regain its employment peak from before the 1991 recession. Pulled along by the fast-growing Sun Belt, the nation accomplished the same thing by 1993.

"My assessment is that the economy is humming along, and in the near term that should continue in this area" said Ross Brown, chief commercial lender for Key Bank & Trust in Owings Mills.

"We're seeing a lot of loan demand," Brown said. "I've been lending in Baltimore for 14 years now, and this is probably some of the best times I've seen.

"It's a good time to start a business."

Businesses doing well include those involved in health care, engineering, accounting, computer services, investment banking, mutual funds and telecommunications.

Boosted by a jag of new stores, office buildings and football stadiums, Maryland construction employment hit its highest level this year since 1990.

But Maryland's general prosperity this year is defined as much by wounds that have stopped bleeding as by growth sectors.

Take manufacturing. The state is still shedding manufacturing jobs; Maryland factories are on pace to have 500 or 1,000 fewer positions at the end of 1997 than they did at the start.

That's far better, though, than a few years ago, when 5,000 or even 15,000 factory jobs would evaporate in a year.

Companies such as Kenlee are the reason.

Four years ago, Kenlee had 80 workers; now it has 270, including 170 in Baltimore. Once a garden-variety metal-part job shop, Kenlee has become the model of a modern U.S. manufacturer.

Its equipment is top-drawer. Its inventories are as thin as the tolerances on its computerized mills, which helps keep its costs competitively low. Its customers include such companies as Baxter International and Hewlett-Packard, for which it assembles entire machines or sub-assemblies.

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