Charting path in tough times

Despite recession, economic chief still bullish on Md.

March 29, 2009|By Gus G. Sentementes | Gus G. Sentementes,

Maryland's unemployment rate is creeping higher, though still trailing the national average. The state's struggling with a budget deficit, and many agencies, including the Department of Business and Economic Development, face sharp funding cuts.

Yet Christian S. Johansson, the agency's new secretary, is bullish about Maryland's position in the recession. The 36-year-old Harvard MBA was tapped by Gov. Martin O'Malley in January to lead the agency,

He knows that past governors have typically chosen DBED leaders with more experience, but Johansson said he believes he'll be judged more on the results he can deliver to businesses and workers across Maryland. "That's ultimately what's going to matter," Johansson said.

In a recent interview, he ticked off a steady stream of the state's current strengths and selling points - top scientific and information technology talent, easy access to other major East Coast markets and the federal government as a major customer.

He has four main priorities: restore business confidence; build more ties to Maryland's existing businesses; help companies market to the federal government; and quickly distribute federal funding that Maryland receives from the American Recovery and Reinvestment Act, enacted in February.

Since marketing funds are virtually nonexistent, Johansson said he and his staff are exploring cost-effective ways of getting their message out, which could include use of free online social media tools such as Facebook and Twitter.

"There's a lot of new technology that, frankly, the state hasn't been cutting-edge on using. We want to know how to use it and how to best deliver our message," Johansson said.

With so much bad news coming out of states across the country, Maryland is faring better than most, he said. The state's unemployment rate was 6.7 percent in February, a 17-year high, and more than 200,000 workers were actively seeking work last month. The national rate was 7.6 percent in January and 8.1 percent last month.

Johansson said Maryland businesses have been adding jobs even as many have been shedding them. And by 2011, tens of thousands of federal jobs are expected to be relocated to Harford and Anne Arundel counties as part of the Base Realignment and Closure Act . The influx of jobs and new federal ventures will mean more potential economic stimulus - and growing pains - for significant portions of the state.

Johansson is hoping the state legislature doesn't cut too deeply into DBED's proposed budget. This year, DBED operated on a $125 million budget, and O'Malley submitted a $100 million budget to legislators.

The Baltimore Sun recently spoke with Johansson about how he will lead DBED.

Whatever the legislature decides DBED's funding to be, it sounds like you're going to be running a leaner DBED.

The governor put out a budget, obviously which we stand behind and support. But the legislature does have the power to cut. And, you know, we hope they use that power to cut wisely. Because the progress that we're talking about has a direct impact on jobs. ... A lot of people don't know that we do bonding for small businesses, we do revolving loan funds for small businesses, we do direct equity investment programs. We have training programs for small businesses.

That's all part of that (approximately) $100 million budget?

This is all part of our budget. I think the first reaction to DBED is often that this is about providing financing for larger businesses. That's not the case. The majority of the economy in Maryland, the majority of jobs that are created, are created by small and midsize businesses. It's something the governor has been extremely committed to. And our programs reflect that.

One of the interesting points [a recent Economic Alliance of Baltimore] report made is that it saw the major ties with the federal government as both a positive and, in some ways, a thing that could be holding industry back. The question is why, with so much intellectual capital in the Washington-Baltimore area, aren't we more like Silicon Valley or Boston? What's your take?

What you're seeing here is, yes, we're dominated still by government in terms of IT. But the other IT businesses that we have here, my guess is that a large percentage of them sprung from government and a lot of the talent came from folks who ... have transitioned over to the private side. ... It's not that complicated.

As a rule, you play to your competitive advantages. We have the world's largest customer sitting in our backyard. Any business that isn't trying to sell to them, if they're located here, is probably not realizing their full potential, in terms of opportunities.

It has been reported that the recession and the credit crunch has slowed the growth of the biotechnology park in East Baltimore. What's going on?

Big Pharma, in the short term, is going to be cutting back on space and a number of areas of investment. In the long term, health care, and next-generation solutions for health care, continues to be one of the bright spots globally. Bio and life sciences are a long-term investment.

christian s. johansson

Age: 36

Current position: Secretary of the Maryland Department of Business and Economic Development

Experience: President of the Economic Alliance of Greater Baltimore, managing director of Continental Equity, senior consultant for Sag Harbor Group

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