Virginia Is For Businesses? | Competition picks up to lure Bay State biz south
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Bradford Wyatt, general manager of NED Corp. in Worcester, says if he were expanding he wouldn't do it in Massachusetts.
Recently, Bradford Wyatt, general manager of Worcester cutting tools company NED Corp., got a call from the Virginia Economic Development Partnership.
Out of curiosity, he invited the group to send him some information, and he soon received a letter touting Virginia’s low taxes, good location and support for companies’ staffing needs. With it came an invitation to meet representatives from the state when they visit Massachusetts in May.
“Even if you have no immediate or short-range project plans,” the letter read, “this appointment is an excellent opportunity for you to meet Virginia economic development contacts and gather baseline information that you may need in the future.”
Hard Sell
Virginia isn’t the only state using aggressive tactics to promote itself to Massachusetts businesses. And some say the Bay State is hard-pressed to fight back, given its relatively high costs and extensive government regulation.
Southern states in particular market themselves energetically, according to Andre Mayer, senior vice president for research at the Associated Industries of Massachusetts, “sometimes with not very strong arguments. ‘Come out here. We have lots of universities.’ Really? Is that a reason to go?”
But Mayer said some of the arguments can be more convincing, and Wyatt agreed. He said NED Corp. has been shrinking over the last few years, so he’s not looking to make a move, but if he were opening a new facility it would be somewhere with fewer regulations and lower energy and living costs. “I definitely wouldn’t do it in Massachusetts,” he said.
In fact, Mayer, who owned the company until he sold it to a California corporation in 2007, already looked to the south once, in 1988, when he opened a factory in Texas.
So how is Massachusetts fighting back? Susan Houston, executive director of the Massachusetts Alliance for Economic Development, said state economic development staff pay visits to companies in other states, largely as part of trips centered around trade shows.
But she said the state focuses less on recruiting new companies than retaining the ones that already do business here.
For example, she said, on a recent trip to California, Gov. Deval Patrick paid visits to companies based in that state that have operations in Massachusetts.
She noted that the state also focuses on particular industries, like life sciences and renewable energy. In general, she said, since Massachusetts isn’t a low-cost state it has to differentiate itself based on attributes like sophisticated research facilities, a highly trained workforce and good access to Europe.
“Overall it’s really the value proposition,” she said.
Mayer said he supports the state’s focus on retention before recruitment. He said it’s important that companies feel the state supports them.
“It really does make a difference to get a call from the governor,” he said.
Familiar Game Plan
Overall, Massachusetts’ approach to economic development actually has a lot in common with Virginia’s.
Christie Miller, a spokeswoman for the Virginia Economic Development Partnership, said her state’s governor travels to other parts of the country, and to other countries, to meet with business leaders, just as Patrick does. Miller and Houston both cited their respective states’ access to overseas transportation and strong workforces, and both said they’re working on creative marketing strategies to deal with the budget cuts that are common to state agencies across the country during the current recession.
Meanwhile, the recession also means that all states are facing a change in what economic development efforts can hope to accomplish. In the current climate, Mayer said, a more important task than recruiting companies or keeping them from moving to other states may be getting multi-state corporations to make their cuts elsewhere.
“We tend to benefit from inertia with companies that are already here,” Mayer said.
He said executives who need to reduce their workforces look to the bottom line when deciding which facility to close, and Massachusetts often has the highest costs.
“I think that is a very real issue for us, and I think it has a good deal to do with why in recent recessions Massachusetts has been slow to recover,” he said.
Wyatt said that sort of calculation is one that he has made. As his business dried up over the past few years, he said, he’s laid off many more employees in Massachusetts than in Texas. He add that Massachusetts could do a better job drawing and retaining businesses by changing policies on health care, unemployment and other issues to reduce costs.
AIM devotes much of its energy to advocating for business-friendly policies, but Mayer said the state isn’t positioned to compete on price alone. “You have to sell harder to get people to buy the more expensive product, and we’re the more expensive product,” he said.
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