State to visit 150 top firms

Economic agency's program aims to keep them happy

February 05, 2002|By William Patalon III and Bill Atkinson | William Patalon III and Bill Atkinson,SUN STAFF

After notching some major victories in the corporate-recruiting race in recent years, Maryland's top economic development agency is now increasing its attention on keeping companies here.

The Maryland Department of Business and Economic Development has identified 150 companies that are considered key to the state's health. The companies differ by location, size and industry, but all have one thing in common: Over the next several months, each one will get a personal visit from a representative of the state agency.

"These are 150 companies we have identified ... as important for us," said David S. Iannucci, the department's secretary. "We are in front of thousands of companies every year - and thousands of more companies we touch base with. But we've made this into a more scientific and [precise] process. These are the 150 companies over the next two or three months that we want to make a specific point of talking to."

Each company will get a letter telling them to expect a request for a visit from the Department of Business and Economic Development. State officials declined to name any of the 150 companies, saying the letters started going out only last week.

Iannucci said the corporate-retention project in no way signifies that Maryland is out of the corporate-recruiting game: The "welcome mat" remains out, he said.

However, the state agency's intensified focus on corporate retention does come at a time when some of the financing programs it relies on to lure companies could feel the pinch of the state's budgetary woes. The Glendening administration is proposing to tap $7.5 million from the Sunny Day development fund's $13.8 million existing balance, and $8.5 million from the $27 million balance in another development fund.

Both programs give the state significant flexibility in assembling the financing packages that can help determine which state a company will call home.

While conceding the U.S. recession and its accompanying problems are forcing corporations and government agencies alike to operate in tighter settings, Iannucci insists that his department's push to "get in front of" existing Maryland companies makes sense in both bad times and good.

For instance, keeping in close contact with companies reduces the chance the state will be surprised by a business announcing that it's relocating to another state, or just shutting its doors altogether - and firing its work force. With enough notice, Iannucci said, state assistance might avert such crises.

"We want to know in advance [if a firm is struggling], and not from a phone call from someone saying that Company XYZ is laying off 300 people," he said.

"I'm not saying that we're always going to know. But if we haven't been there in six months," there's very little chance the state can step in and fix problems before it's too late.

Another factor in favor of corporate retention is that existing companies create 80 percent of all new jobs.

In the long run, it's nearly always cheaper to keep an existing company than to recruit a company from outside the state, said Richard P. Clinch, director of economic research at the University of Baltimore.

"Economically speaking, business retention is a very economically sound investment," Clinch said.

Finally, the better a state is at keeping its existing companies, the better it ultimately will be in attracting new ones, said economist Charles W. McMillion.

"I know it is often seen as an either or issue, but I think it is more of a strategic issue: You work with the assets you have and [those] assets are the companies you have in the state," said McMillion, chief economist at MBG Information Services, a Washington business-information analysis and forecasting firm.

"Happy managers, happy CEOs, are really the best salesmen the state has. They need to use those folks to attract others."

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.