Pennsylvania luring jobs from New Jersey

Lehigh Valley becomes new land of promise for cost-conscious companies

March 29, 2000|By Charles V. Bagli | Charles V. Bagli,New York Times News Service

BETHLEHEM, Pa. -- After years of luring New York City jobs and companies across the Hudson River with promises of cheap real estate, lower taxes and tax breaks, New Jersey now finds that an interloper on its western flank is wooing manufacturers, distributors and back offices to the Lehigh Valley of northeastern Pennsylvania.

Dozens of companies based in New Jersey have moved at least some of their operations across the Delaware River to a 30-mile stretch of corn fields, turkey farms and dormant steel mills encompassing Easton, Bethlehem and Fogelsville.

Improving on a page from New Jersey's playbook, Pennsylvania state officials and Lehigh Valley Economic Development Corp. are offering even cheaper real estate, even lower taxes and even more tax breaks.

While New Jersey has chased blue-chip marquees from the New York Yankees to the New York Stock Exchange, the Lehigh Valley has opened its network of 42 industrial and corporate parks to all companies large and small, well known and obscure.

Fully one-third of the 216 companies that moved to Lehigh Valley or expanded there over the last four years were from New Jersey or New York.

"The hunter has become the hunted," said Linda Dow, a real estate consultant for Insignia/ESG who has advised clients like Aiwa America Inc. and Organon Inc. on moves to the Lehigh Valley. "Many Fortune 500 companies are now considering the Lehigh Valley as a true alternative, not just a stalking horse for a better deal in New Jersey."

The companies may not be as glamorous as Goldman, Sachs, and few companies are moving their headquarters from New Jersey, but they are moving other operations.

After scouring New Jersey for a new regional distribution center, Aiwa, the consumer electronics manufacturer based in Mahwah, N.J., took a look at the Lehigh Valley, where it found helpful officials and a less expensive deal.

The company moved into a new 407,000-square-foot building in Allentown, Pa., in May 1999 and pulled out of three smaller distribution centers in its home state.

Vertek Corp., a software and computer network provider based in Murray Hill, N.J., opened a $6.5 million service center in Bethlehem in 1999 that is expected to employ 170 people. The company received $600,000 in job training grants and tax credits from the state.

Organon, a pharmaceutical company based in West Orange, N.J., opened a small distribution center in Allentown in 1986 and has expanded three times, most recently in 1999 when it added a packaging plant.

Russell Stanley, of Red Bank, N.J., opened a manufacturing plant in Allentown in 1999 for plastic drums used by the food and drug industries.

"We've targeted northern New Jersey and New York and specific industries," said Sara Anderson-Greer, vice president of marketing for Lehigh Valley Economic Development Corp. "We're actively marketing the area, meeting with site advisers and building an infrastructure to accommodate them."

Welcome to the war between the states. It makes little difference that the governors of all three states are Republicans. Like their counterparts in California, Alabama and Minnesota, the governors and the local development corporations are chasing jobs and political glory.

No one has made a more concerted effort than Gov. Tom Ridge of Pennsylvania and officials in the Lehigh Valley, where even the giant Bethlehem Steel works, where 30,000 steelworkers once labored over the coke ovens and steel furnaces, is being converted into a 1,600-acre office and industrial park.

The parks allow companies to build almost immediately after signing a deal for office space, a warehouse or a manufacturing plant. Employers can then tap into a network of a dozen technical schools, colleges and universities in the valley for trained employees. Local economic development officials and the governor's "action team" aggressively court companies, acting as promoters and expediters.

Bill Bachenberg, founder of DBS International, which designs and supplies computer hardware for business customers, recently moved his company to Bethlehem from Flemington, N.J., after he received a $1.05 million low-interest loan from the state to buy an existing building. As it turned out, three-quarters of his staff already lived in Pennsylvania.

Like the owners of many small and medium-size businesses in New York and New Jersey, he had felt ignored by officials who were more interested in large employers with hundreds of employees.

"Here the local government welcomed us with open arms," said Bachenberg, whose company has 30 employees. "We closed on the purchase of our building in the morning, we had a building permit by noon and they started renovations that afternoon. In New Jersey, we'd still be waiting for a permit."

For a variety of reasons, taxes, real estate and labor costs are lower in Pennsylvania. State officials have added further enticements or "tools," ranging from tax credits and job training to cash grants from the governor's discretionary opportunity fund.

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