An unusual business story is developing in Maryland. Major companies continue to move their headquarters or divisions to the state, and existing firms increasingly are announcing expansion plans. Encouraged by an apparent upbeat attitude by business leaders, developers are proceeding with ambitious plans to build giant office and industrial parks in many ares of the state.
On the other hand, economic development professionals in Maryland are worried about the state's business climate. In fact, a statewide organization of nearly 100 economic development professionals, known as the Maryland Industrial Development Association (MIDAS), has just issued a report critical of the state's efforts to improve the so-called business climate.
This latest assessment of the state's business climate is the second by MIDAS, which calls the review a progress report. The organization issued its first report on the subject in October 1983, explaining that its initial review was necessitated by a series of events that had generated "highly negative press coverage" of Maryland's business climate.
MIDAS concedes that several actions state officials have taken in the interim have helped to improve Maryland 's business climate. It acknowledges, for example, that the state has increased funds and other resources for education, made no additions to personal income taxes, rejected a unitary tax, and improved communications between the Maryland Department of Economic and Community Development and local economic development agencies.
On the other hand, MIDAS says it believes that Maryland officials need to take additional steps to ensure that the state retains and expands its economic base. The organization suggests that the state government, in cooperation with local officials and the private sector, develop a long-term, statewide strategy for economic development that can "transcend political changes."
MIDAS' recommendations appear to have merit, but the organization continues to base its concern on developments that served as the basis of its 1983 report. Although it acknowledges that certain state government actions have improved the business climate in the interim, MIDAS continues its preoccupation with events that should be relegated to ancient history.
Those events, said MIDAS, included Maryland's low ranking in a study done by a Chicago accounting firm, the decision by Fairchild Industries Inc. to relocate its corporate headquarters from Maryland to Virginia, and AT&T's decision to locate its mid-Atlantic service company in Virginia because of a "restrictive regulatory climate in Maryland."
Many observers consider those events unreliable barometers that, in the long run, had little or no adverse impact on the state's ability to attract new business.
Fairchild said it moved its corporate headquarters to Dulles International Airport in Northern Virginia because the company needed access to an international airport close to its other operations in Maryland. To be sure, Fairchild ran afoul of Maryland antipollution laws, but neither state officials nor Fairchild cited that as a reason for the move.
It is really Maryland's 27th-place ranking by Alexander Grant of Chicago that continues to trouble some segments of the state's public and private sectors. It is ironic that the Alexander Grant report should cause so much self-flagellation in Maryland when officials in states that have received higher rankings don't put much credence in the report.
Indeed, MIDAS notes in its progress report that there are "many limitations to the Alexander Grant report." The Alexander Grant report focuses solely on manufacturing industries, and Maryland's economic base is highly diversified, according to MIDAS. Therefore, MIDAS adds, the Alexander Grant report has no relevance to the major portions of the state's industrial sectors."
What's more, says MIDAS, there is no basis of comparability between the 1983 and 1982 Alexander Grant reports "due to changes in weighting of factors." That is precisely the argument of officials in several states, who disagree with the accounting firm's rankings.
So, why is MIDAS concerned about Alexander Grant's ranking of Maryland? Because, says MIDAS, it is recognized as an authority in the assessment and evaluation of business climates.
Maryland Gov. Harry Hughes is understandably annoyed by the MIDAS report. A spokesman said the governor described the report as "unfortunate" and "irresponsible."
"The governor wonders whether MIDAS has taken into account the progress of economic development instead of some sterile measurements," the spokesman commented.
In the final analysis, the most cogent statement on the subject can be found in, of all places, the MIDAS study itself. Business climate, says MIDAS, is "an intangible factor in the business location decision process. It is difficult to measure and is often rated on the basis of how it is perceived by business decision-makers."