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Regional Review: Mid-Atlantic States Focus on New Initiatives

As the Mid-Atlantic States slowly plod toward recovery, each state is concentrating efforts on differentiating from the pack.

Mali R. Schantz-Feld (August 2012)
Diversifying the Manufacturing Base
Pennsylvania is diversifying and developing its manufacturing base. Manufacturing accounted for $66.3 billion of the Gross State Product in 2010, growing to nearly $70.9 billion in 2011. To prioritize issues that would have a positive impact on manufacturing growth, Governor Tom Corbett formed a public-private manufacturing council privately funded by the Team Pennsylvania Foundation to focus on the state's taxes and the regulatory climate; talent and innovation; international markets; energy costs; efficiency; and research and development.

Boosting technology and advanced manufacturing are the already established Ben Franklin Technology Development Authority, as well as a new $1 million manufacturing and innovation development program from Carnegie Mellon University in collaboration with Lehigh University; and the Research for Advanced Manufacturing in Pennsylvania (RAMP) program, funded through the Department of Community and Economic Development's (DCED) Discovered and Developed in PA program.

Pennsylvania's life science sector harbors 125 biopharmaceutical companies, with eight of the largest U.S. pharmaceutical companies located within a 50-mile radius of Philadelphia. The DCED boasts that the state is consistently ranked in the top five for biotechnology investment, projects, jobs, and the overall strength of the industry. In June, Central Admixture Pharmacy Services (CAPS) cut the ribbon on a 32,000-square-foot sterile compounding pharmacy slated to add 70 new jobs to the more than 2,000 employees already working in their two other facilities in the Lehigh Valley.

In the energy sector, the state is striving to develop new ways to leverage natural gas and its byproducts. According to the DCED, the shale gas that exists beneath approximately 60 percent of Pennsylvania has more BTU equivalent in energy than Saudi Arabia has in oil. Currently, Shell Chemical LP is assessing the commercial feasibility of a petrochemical complex in the Appalachian region and is checking into a site in Potter and Center Townships in Beaver County, Pennsylvania.

And a manufacturing project is expected to generate 165 jobs in Pennsylvania when it opens this September. Ocean Spray Cranberries Inc.'s $110 million juice bottling plant in the Upper Macungie Township is the company's first manufacturing facility in the state.

Focus on Initiatives
The Enterprising States' study from the U.S. Chamber of Commerce notes that Maryland has "outperformed the nation with strong science, technology, and professional services growth, driven in part by the strong performance of the entire Washington, D.C., region."

Maryland's economic development and government leaders are finding creative ways to raise money for new business. Governor Martin O'Malley's office noted that while other states have sold tax credits to fund similar venture capital initiatives, Maryland is the first state to use an online auction to raise the capital for such a program. About $84 million was raised for Maryland's Innovation Economy through InvestMaryland, an initiative targeting promising start-up and early-stage companies. The money was generated through an online auction of premium tax credits to insurance companies with operations in Maryland. At the online auction, more than two dozen insurance companies with operations in the state bid on the tax credits with a floor of $0.70 on the dollar. The 11 companies awarded the credits - Agency Insurance Company (AIC), Chubb-Great Northern Insurance, Chubb-Federal Insurance, GEICO, Hartford Insurance, IWIF Workers' Compensation Insurance, Med Mutual, MetLife, New York Life, Selective Insurance, and Travelers - can claim tax credits beginning in 2015.

New York is also focusing on initiatives. Governor Andrew Cuomo has realigned the state's initiatives around 10 new regional economic development councils. Each region will develop its own strategic economic plan, tailoring state-funded job-creation efforts to local needs. The newly adopted Power NY Act encourages energy-efficiency upgrades through a one-stop, multi-agency power-plant-permitting agency, designed to streamline the process of approving major energy-generation investments.

The U.S. Chamber of Commerce's survey of top performing talent pipeline states for 2012 placed New York in the top 20 in five of six work force measures, and the Empire State received accolades for its college-educated population, advanced-student achievement, and its output of college degrees.

Creating Jobs/Investing in Training
Job creation received attention in Delaware as Governor Jack Markell pledged his support for his state's job-creation efforts, "including fully funding the Strategic Fund, which has helped attract and retain jobs at significant employers like PBF Energy, Sallie Mae, Baltimore Air Coil, Fisker Automotive, Miller Metal, Bloom Energy, Mountaire Farms, and Capital One; investing in infrastructure, including the use of the Delaware Infrastructure Fund to attract businesses' expansion efforts like Amazon.com; and continuing to modernize the Port of Wilmington to increase our capacity to handle global trade."

Aerospace captured Delaware's development spotlight in July when Hawker Beechcraft Global Customer Support opened its newest factory-owned aircraft maintenance facility at New Castle County Airport (ILG) in Wilmington. Christi Tannahill, Hawker Beechcraft senior vice president of Global Customer Support, says that the facility will provide the firm's customers with a "convenient location for the world-class customer service and support they expect from the industry's largest factory-owned service center network." Tannahill credited the Delaware River & Bay Authority and Delaware Economic Development Office for transforming an existing training facility in Wilmington to meet the company's needs.

Rutgers economist Nancy H. Mantell notes that New Jersey's economy has "decisively" come out of the recession, but a number of ongoing problems in the U.S. and global economies will keep the state's comeback modest. At April's semiannual Rutgers Economic Advisory Service (R/ECON) subscriber conference, Mantell predicted that the state's average unemployment rate - 9.3 percent last year and currently 9 percent - will drop to 8.6 percent by year's end, and by the end of the 2022 forecast period, New Jersey's average jobless rate will stand at 5.7 percent, still above pre-recession levels. Mantell foresees growth in all sectors of the state economy, except manufacturing and information, during the course of the recovery.

After earning the moniker the Medicine Chest of the World, a pharmaceutical announcement is a healthy development. Watson Pharmaceuticals, Inc. is establishing a 32,000-square-foot Global R&D Technology Center in North Brunswick at the New Jersey Economic Development Authority's Technology Centre of New Jersey, a 50-acre complex consisting of lab, production, and office space and employing approximately 50 scientists, chemists, engineers, and support staff. Paul Bisaro, president and CEO of Watson, says that the location will enable the firm to leverage its proximity to educational centers of excellence such as Rutgers University and to establish collaborations with the university's pharmaceutics, chemistry, and engineering departments so that the firm can tap the state's talent pool. In 2010, the firm relocated its global corporate headquarters to Parsippany.

Educational and research institutions, state government's willingness for change, and signature Mid-Atlantic tenacity provide the foundation for this region's momentum heading into more promising economic times.
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