Maryland Develops Plan to Beat Virginia

A new economic development strategy will focus on making Maryland business-friendly

P> When Silicon Valley Bank announced that it would open an office in Rockville, Md., last year, the branch manager, Brent Donnell, could not understand why the press was hounding him as to why the bank chose Maryland over Virginia. But the economic developers of the two states understood the issue all too well.


The competition between Maryland and Virginia has existed for years. In the economic development game, image is everything. The more you can put on your resume, the better you can sell yourself.

Last December, Maryland crafted its first economic development strategy since its founding more than 200 years ago. The man behind the plan is the new secretary of economic and business development for Maryland, James Brady.

In May 1995, Gov. Parris Glendening replaced Maryland's department of economic and employee development with the department of business and economic development. He eliminated 1,100 jobs and appointed Brady, who was a managing partner at Arthur Andersen's Baltimore operations for 33 years.

When Brady made the leap into the public sector, he saw many problems with Maryland's business community.

The state had no direction or focus, he said. So in his first seven months as secretary, he devised a strategic plan to foster a business-friendly climate that would pit Maryland against "the V state," North Carolina, Pennsylvania, Ohio and Kentucky.

"States that have very onerous regulatory environments have them because, to them, businesses are suspected rather than respected," said Brady. Maryland's stringent regulatory environment has held the state back from attracting new businesses.

Maryland businesses complain about state and local standards that are stricter than established federal standards, a lack of consistent enforcement, constant changes to existing laws and the adversarial attitude of state regulators. The business community identified the cumbersome process of obtaining building permits as the biggest regulatory barrier. For example Noel Buterbaugh, president and CEO of BioWhittaker Inc. in Walkersville, Md., experienced the permit burden 10 years ago when he tried to build a 100,000-square-foot addition to his company. He explains that a simple change in the company's name held up the process for months.

Corporate and private taxes are another problem. The state charges the fifth highest personal income tax in the country.

"A lot of people argue that all we want to get is money for the rich people. Wrong," said Brady. "I think rich people care about it less than the rest of the people."

The plan offers intelligent tax credits for companies that do things that are in the "state's long-term, best interest." Brady is pushing a job creation tax credit through the Maryland legislature this year, which will reward companies that add at least 60 new employees to their payroll during a 24-month period.

The plan also targets customized work force training to close the gap between the employee skills that businesses require and the skills people learn through the educational system. He committed a major portion of the plan to help companies develop and update their current work force and participate in building the future work force.

"We need to move in the right direction, and then we're going to kick butt," said Brady.

Despite his aggressive, in-your-face style, Virginia economic developers haven't flinched. And Brady himself doesn't have the full support of Maryland's own business leaders.

"I feel he is trying to straddle the fence and justify the governor's money for a new football stadium," said a Maryland business leader who asked not to be identified. "Technology people inherently are not into politics and going before the General Assembly. They like to concentrate on their work."

According to Morgan Stewart, press secretary to the secretary of economic development for Virginia, Virginia is competitive with the nation's 49 other states and the rest of the world.

The "Opportunity Virginia" plan identifies aerospace, agriculture, biotechnology, forestry, information technology, general international trade, manufacturing, maritime, minerals and tourism as growth industries.

"When companies look to expand or move, they do so with or without a state marketing manager," said Stewart, who was unaware of Maryland's new economic development plan. "We go to the same industrial trade shows that everyone else does."

Other economic development leaders of Virginia don't even recognize the competition between Maryland and Virginia.

Says Ray Pelletier, director of the Northern Virginia Technology Council, "We're trying to grow our own Microsoft. We're not trying to bring it here."

Joseph Giacalone, president of the Suburban Maryland International Trade Association, acknowledged that the state lags Virginia in attracting businesses.

Companies such as the Orkand Corp. have moved from Washington's Maryland suburbs to Northern Virginia. And more recently, the American Type Culture Collection moved from Rockville, Md., to Richmond, Va.

Giacalone wants to boost Maryland's economic development by increasing international business from Maryland through his association.

"The drive to keep competitive has dropped off [in Maryland]," said Giacalone. "But that mission is like pushing a huge, heavy ball up a hill."

Brady recognizes his biggest challenge is getting his business constituency to talk honestly and candidly about what Maryland must do to compete. "Don't tell me I'm a CEO, and I don't have time," said Brady. "You have to be prepared to go to the wall and make your case."

Maryland's targeted industries

IndustryNumber of companiesNumber of employees

Aerospace1,23960,786

Agriculture/Aquaculture 17,03536,932

Biotechnology26512,013

Health Care9,749199,062

Information technology1,90938,076

Minority business32,44515,505

Manufacturing1939,095

Telecommunications72525,927

Tourism40,66074,100

Warehousing/Distribution 7,484104,742

Source: State of Maryland


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