A conversation with.Judy McKinney-Cherry, Director, Delaware Economic Development Office
"In economic development, we always want to attract business to the state from the global economy. We are extremely targeted in how we manage our foreign direct investment programs. "
A. In the 2007 State New Economy Index, the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation ranked which states are prepared for the future. Delaware ranked seventh out of 50 states for being best prepared for the new economy and second for globalization and foreign direct investment. Our state also placed first in industry investment in research and development, fourth for scientists and engineers, fourth in innovation capacity and fifth for patents issued to companies and individuals. We also ranked 16th overall in economic dynamism.
Q. What does new legislation offer to businesses in Delaware?
A. The New Economy Jobs Bill, passed on June 30, offers two components: first, the extension of the existing program that provides corporate income tax credits and gross receipts tax credits for businesses located in targeted areas. The second component helps companies regardless of whether they are new or existing industry; an employer must add at least 50 new jobs to the state, each of which must have annual wages or salaries of at least $100,000 excluding benefits, in order to get a rebate of 25 to 65 percent of the withholding paid on behalf of those qualified employees during the taxable year for up to 10 years. Higher refund amounts are granted for jobs in targeted growth zones, incorporated municipalities or former brownfields. The focus is not on quantity, but on quality.
Another incentive, the Bank Franchise Tax, makes Delaware the only state in the country that allows financial institutions to choose the way they want their revenue to be taxed. They can determine whether they want to be taxed on a regressive rate, or an alternative three-factor formula, which takes into account the corporation's annual payroll, the value of its property, and twice its sales factor.
Q. What types of companies are on the economic development radar?
A. We are seeing expansions and relocations of research and development firms and other technology-based businesses. We have seen investments from large companies such as Schering-Plough and BASF. Clearly, I-95 is a hotbed for new research and development.
In June, the French company Air Liquide opened a new Delaware Research and Technology Center in Newark that will create 119 new jobs by 2010.
Q. Is technology a focus?
A. We have put a strong focus on creating new businesses in technology. This year we have been given $5 million from the general assembly for pre-venture funding for technology companies. In conjunction with our IP Business Creation Program, we are working to create businesses from 255 patents, from which the state currently owns 105. We will make these patents available for entrepreneurs such as scientists, engineers, or retirees. DuPont is donating a majority of the patents and chemical company Hercules, Inc. is also offering some of their patents.
Q. What is the status of direct foreign investment?
A. In economic development, we always want to attract business to the state from the global economy. We are extremely targeted in how we manage our foreign direct investment programs. Almost 25 percent of our manufacturing work force works for foreign-owned companies such as DaimlerChrysler, AstraZeneca, Ciba-Geigy, Barclay's, ING, and Air Liquide. The Fraunhofer USA Center for Molecular Biotechnology has committed to an investment of $10 million vaccine for a manufacturing facility to develop vaccines for avian flu and potential bioterrorism agents such as anthrax. Dassault Falcon Jet is slated to grow almost 30 percent in Delaware. We have consultants in Israel and Japan and an office in Taiwan.
Q. Besides global matters, are domestic changes affecting you as well?
A. We are working with surrounding states to help support the BRAC realignment mission moving from Monmouth, New Jersey, to Aberdeen, Maryland. There is a need for support companies to move close to Aberdeen. We are expecting a large influx of companies to support the move, and we have the talent, technology, and office space to accommodate them. About 8,800 direct jobs are expected to be created to support the mission in Aberdeen. We would like a good percentage of those to be in Delaware.
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