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Regional Review: Mid-Atlantic States’ New FDI Initiatives

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.

Location USA / April 2013
A cleanroom at GLOBALFOUNDRIES. The semiconductor manufacturer, is planning a new Technology Development Center (TDC) at its Fab 8 Campus in Saratoga County.
A cleanroom at GLOBALFOUNDRIES. The semiconductor manufacturer, is planning a new Technology Development Center (TDC) at its Fab 8 Campus in Saratoga County.
The Mid-Atlantic States are approaching the economic recovery with cautious optimism. Results from the 2013 Business Trends Survey, conducted by the Employer Associations of America, show 66 percent of employers in the Mid-Atlantic region believe their organizations will see an increase in sales/revenue in 2013 as compared to 2012.

Pennsylvania is diversifying and developing its manufacturing base, with the help of both U.S. and international companies. The Pennsylvania Department of Community and Economic Development notes that the state has the largest network of overseas offices of any other state, and it home to more than 6,000 foreign-owned businesses including Shire Pharmaceuticals, Gamesa, Siemens, Almac, Nestle, and Toshiba.

Pennsylvania’s life science sector harbors 125 bio-pharmaceutical companies, with eight of the largest U.S. pharmaceutical companies located within a 50-mile radius of Philadelphia. The Pennsylvania Department of Community & Economic Development touts that the state is consistently ranked in the top five among states for biotechnology investment, projects, jobs, and the overall strength of the industry.

Creative Financing Strategies

Maryland has good news from the The Enterprising States’ study, from the U.S. Chamber of Commerce, which noted that the state “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 Maryland 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, NY York Life, Selective, and Travelers can claim tax credits beginning in 2015.

In foreign direct investment, Ontario-based Protenergy Natural Foods is expanding its U.S. headquarters by purchasing the 67-acre site and 200,000 square-foot building that it had leased in Cambridge, Maryland. The manufacturer of premium quality natural foods and beverage products continues to implement its growth plan to triple its current work force of 53 by creating up to 100 new full-time jobs by April 2013 and by hiring another 27 employees over the next five years as it increases production capacity to meet the growing demand for its soups, broths, and sauces. The nine-year old company services 17 of the largest U.S. grocery retailers with 90 percent of its revenues generated from U.S.-based customers.

ELTA North America, a subsidiary of Israeli defense electronics firm Israel Aerospace Industries, Ltd. (IAI) North America, has opened in Howard County, Maryland, and plans to create 100 new high-technology jobs over the next four years. IAI, which is based in the Israeli port city of Ashdod, employs 3,500 people, including scientists, engineers, programmers, and technicians developing products for intelligence, surveillance, target acquisition and reconnaissance, homeland security, and fire control. The Maryland/Israel Development Center, a non-profit membership organization that promotes trade and investment between Maryland and Israeli companies, played a part in the selection process.

Governor Martin O’Malley’s office notes that Maryland’s tie with Israel is built on shared strengths in biotechnology, IT, aerospace, and defense. Maryland hosts 20 Israeli companies, including Teva BioPharmaceuticals, Rafael Advanced Defense Systems Ltd., and IMI Services (a subsidiary of Israel Military Industries).

Maryland also continues to cultivate economic development opportunities with China. According to the Maryland Department of Business and Economic Development, the state was the first in the U.S. to open a trade and investment office in China (in 1996) – the Maryland China Center. Sixteen Chinese-headquartered companies operate in Maryland, and eight Chinese companies are growing in Maryland’s International Incubator at University of Maryland, College Park. Maryland is also home to several Chinese organizations, including the Chinese Biopharmaceutical Association and the Maryland China Business Council.

Healthy Competition
Taking the initiative on initiatives is also a focus in New York, where 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.

To keep the healthy competition going in foreign investment, the New York City Economic Development Corporation recently held its fourth annual NYC Next Idea, a global business plan competition that encourages innovative business ventures to launch and operate in New York City. The winner, German-based KisiBox, was chosen from more than 220 applicants from different countries. The start-up, which is developing smartphone-managed entry security systems for buildings, apartments, and other spaces, will receive a grand prize of $35,000 for the launch of the innovative business in the Big Apple.

GLOBALFOUNDRIES, semiconductor manufacturer, is planning a new Technology Development Center (TDC) at its Fab 8 Campus in Saratoga County. The TDC is expected to result in at least 500 new, high-paying jobs, as well as 500 additional jobs at the Fab and administration buildings. Completion for the TDC is targeted for late 2014. Governor Mario Cuomo’s office noted that while no new incentives were provided from the state, the Global 450 Consortium project was integral in establishing the necessary collaborative environment. The consortium entails five leading international companies — IBM, Intel, Samsung, TSMC, and GLOBALFOUNDRIES — investing $4.4 billion to create the next generation of computer chip technology in New York State, which the Governor’s office calls an “unprecedented level of private investment in the nanotechnology sector in New York” that is expected to create 6,900 jobs. The College of Nanoscale Science and Engineering has been a critical element in developing the early-stage work from which the TDC builds.

In 2012, New Jersey launched the Office of International Business Development & Protocol to spread the news of the state’s educated work force, thriving industry clusters, and efficient intermodal transportation system. According to Governor Chris Christie’s office, the new entity “will concentrate its outreach efforts on New Jersey’s top investor nations — Germany, Switzerland, Japan, France, the United Kingdom, the Netherlands, and Canada — and countries where New Jersey enjoys rich relationships, such as Taiwan, India, Korea, and Israel.” Plans also are to nurture new partnerships with countries like Brazil and Mexico that do not have significant business ties to the state.

Upholding the moniker “the Medicine Chest of the World,” Governor Christie’s office touts 21 new foreign investment projects, several related to the pharma sector. The developments include Bayer HealthCare (Germany), Schär (Italy), Ferring International PharmaScience (Switzerland), Padtech (Norway), and Archimedes Pharma (United Kingdom) that are expected to create more than 1,800 new jobs.

Delaware reports a development in the pharmaceutical sector as well. Ashland Inc. plans to expand its pharmaceutical research and development Center of Excellence at the Ashland Research Center in Wilmington. Approximately 20 positions will be relocated from Columbia to Wilmington in connection with the expansion, and the new facility is slated to begin operations by summer of 2014. Ashland currently has pharmaceutical technology centers in Buenos Aires, Argentina; São Paulo, Brazil; Shanghai, China; Düsseldorf, Germany; Hyderabad, India; Istanbul, Turkey; and Mexico City, Mexico; in addition to Wilmington.

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