Plans by more than 400 firms to invest nearly $1 billion in new or expanded facilities in Maryland should be a strong indication of industry's faith in the state's investment climate.
But a New York management consultant's analysis of Maryland's investment climate strongly suggests that the state has less appeal to outside industry than those figures indicate.
In fact, a study of location factors and their importance to companies suggests that most would prefer going to the Sun Belt instead of heeding the call in Maryland's marketing campaign: "Come for the carrots, you'll stay for the greens."
"The bottom line is that outsiders still do not perceive Maryland as being a probusiness state," said Dennis J. Donovan, vice president of business location services for Moran, Stahl & Boyer Inc.
Donovan discussed his findings during a recent seminar for newly elected members of the state legislature, local officials and economic development specialists.
Billed as "Maryland's report card," Donovan's remarks are especially important to state officials because his firm has recommended Maryland to several clients.
Despite its numerous prime economic development attractions, Maryland has what Donovan describes as a fragile investment climate. Thus, the state must work to improve it and to assure outside industry that there is a favorable attitude toward business, he said.
Despite an investment-climate rating that places it somewhere in the middle among all states, Maryland maintains a competitive edge over Northeastern states in recruiting new industry.
Maryland usually emerges with a favorable rating, for example, when business operating costs are compared with those in Northeastern states. Conversely, its higher costs for labor, utilities and building occupancy make it less attractive than Sun Belt competitors.
If Maryland at least can compete in the same "economic ballpark" as more aggressive states in the Sun Belt, then it can sell its major assets more effectively to private industry, Donovan maintains.
Substantial investment by outside firms in advanced-technology industries, regional offices, distribution centers, and corporate and divisional headquarters proves that there are prime opportunities in Maryland for economic development. Donovan suggests that what the state needs now is a comprehensive program, supported by legislative or policy mandate, to upgrade its competitive posture.
In that connection, Donovan says that developing the best possible investment environment for existing industry must supercede all other efforts.
He further recommends that Maryland:
* Substantially increase its capital infusion in the University of Maryland's engineering curricula and work toward building a national reputation for the university's school of engineering.
* Upgrade vocational and technical training.
* Improve science and math instruction at the high-school level and incorporate high-technology applications in some courses.
* Support capital formation for high-tech firms.
* Consider an income tax credit for new and expanding companies that create industrial and office jobs in the state.
Donovan cautioned that it is equally important for state officials to avoid passage of legislation that could be interpreted as antibusiness.
"Any major action, like last year's legislation to decouple Maryland from the federal accelerated depreciation schedule, could set the state's investment climate back by 10 years," he warned.
Sponsors of the seminar say they have had several requests for copies of Donovan's remarks, indicating a strong interest in following through on some of his recommendations.
In fact, one official said that Donovan's report card on Maryland "could end up becoming a reference" for legislative and policy decisions affecting economic development in the state.