A new era

First of two parts - Maryland's evolution from a manufacturing to a knowledge economy brings both opportunity and heartache

sun special report shifting fortunes

October 19, 2008|By Jamie Smith Hopkins and Stephen Kiehl | Jamie Smith Hopkins and Stephen Kiehl,jamie.smith.hopkins@baltsun.com and stephen.kiehl@baltsun.com

A few months after General Motors made its last van at the 70-year-old Broening Highway plant, a seed for Maryland's new economy sprouted across town in West Baltimore.

On a cold morning in October 2005, the governor and mayor heralded the opening of a biopark built by the University of Maryland, Baltimore - a place where researchers would pursue breakthroughs in treatments for diabetes, cancer and heart disease. One of the park's first tenants was a Japanese medical firm. Officials toasted the partnership with sake.

It could not have felt any further from the blue-collar manufacturing work at GM that provided a middle-class life for thousands of Baltimoreans, or from the furnaces at Bethlehem Steel, which went bankrupt in 2001.

Old-line manufacturing and industrial companies have failed, moved and contracted in rapid succession. But a new, knowledge economy has rushed in to replace the old, helping the Baltimore region add 70,000 jobs during the past seven years.

That shift appears poised to continue despite the country's financial and economic problems. Even as manufacturing job losses have accelerated, the metro area has more jobs now than it did at the beginning of the year - while U.S. employers have cut 760,000 from their payrolls.

Health care - less susceptible to downturns - and other knowledge fields have contributed to the growth. And while the widening credit crunch could stall projects and businesses, state officials hope their focus on such industries as science and health will help Maryland weather the turmoil.

A second biopark opened this year on the city's east side, and now cranes hover over depressed neighborhoods that many thought would never rebound. High-tech companies have moved downtown. Hospitals are expanding across the region. And Gov. Martin O'Malley has proposed spending $1.1 billion over the next decade to boost the state's biotech industry - a plan his administration said last week that it still stands behind despite recent budget cuts.

These changes are drawing researchers from out of state. They believe in the region.

"For me, it's almost a matter of destiny," said Francisco Leon, a medical researcher from Spain who specializes in celiac disease - an area in which Maryland scientists have broken new ground. Leon, who joined a Baltimore firm last year, is impressed with the state's commitment to biotech. "They have the political will. They are investing money."

In the new economy, factories are out. Computers, labs and researchers are in. Shin Nippon Biomedical Laboratories, which celebrated the biopark with sake, now owns the top two floors of the building.

"A decade ago, people said Baltimore was beyond the point of no return," said Anirban Basu, an economist and CEO of Sage Policy Group in Fells Point. "I don't think anyone would make that claim today."

The state's largest private employer is Baltimore's Johns Hopkins Institutions. Thanks to Hopkins, the state grabs the most federal research-and-development dollars per capita in the U.S. For every 100,000 workers, Maryland has more microbiologists than any other state, more physicists than any state but Colorado, and more database and network administrators than any place except Virginia and Delaware.

But for some, the changes have been wrenching.

Workers laid off from traditional manufacturing and industrial jobs see little personal benefit in the knowledge economy, which requires very different skills. And the blossoming biotech industry is no comfort to the Beth Steel retirees whose benefits disappeared a few years ago or the GM retirees who were told their health benefits will stop next year.

"We lost our health care, we lost our dental and optical and our life insurance," said Don Kellner, 70, president of a local Bethlehem Steel retirees association. "Everything."

The demands of the new economy are also roadblocks for thousands of residents who never worked in manufacturing but are being buffeted by the ripple effects of its long retrenchment. These are the workers with a high school education or less. They find themselves in jobs in hotels and other low-wage parts of the service sector, with no clear way out.

"Folks were able to provide for their families, they became homeowners, they sent their kids off to college - and these were manufacturing jobs," said Moses Hammett, director of work force development at the Center for Urban Families in the city. "When these manufacturing jobs left Baltimore, a lot of these opportunities left."

Knowledge jobs can leave, too, in good economic times as well as bad. The state's challenge is holding onto them, and growing, as competition increases.

The brain economy

The new economy is not thousands of people streaming into a factory each morning. It doesn't always lead to products as tangible as automobiles.

But it's no less potent. Knowledge workers are researchers inventing cancer drugs, accountants uncovering fraud and ER staff saving lives.

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