Any day now, some executive in Maryland, a business group or an elected official will engage in a familiar hand-wringing ritual over the state's latest business-climate ranking.
The sixth annual Alexander Grant & Co. study of general manufacturing climates was released yesterday, and the news isn't good for Maryland -- if you put much stock in that kind of thing. Officials in several states have stated flatly in the past that they don't.
The controversial rankings, which placed Maryland 27th in 1983, spawned a reactionary wave across the state. Imagine what Maryland's fall to 30th place in 1984 will do for the mental health of those who take these things seriously. Imagine the reaction in some quarters in Maryland when a look at the rankings shows that Virginia moved up one notch from 12th to 11th place.
For what it's worth, Virginia scored 0.6 percent higher in the 1984 rankings than it did in 1983 to move to 11th, edging Arizona by a narrow 0.1 percent.
Questions about the methodology used to arrive at the rankings of states have persisted since Alexander Grant, a Chicago accounting firm, began publishing the study. The study's primary objective, according to Alexander Grant, is to assist manufacturers in evaluating the 48 contiguous states in terms of key factors that affect business success.
The study ostensibly measures a state's "manufacturing climate" and rates the states based on a series of complex calculations. Factors that supposedly affect business success were selected last year by 37 state associations representing manufacturers. While those associations assessed the importance of factors such as energy costs, unionization, taxes, debt and wages, they did not rank states. Alexander Grant determined each state's "factor value" and assigned a ranking.
Out of that process came the revelation yesterday that the top-ranked states for 1984 are South Dakota, North Dakota and Florida, in that order.
"America's manufacturers still rank the Sun Belt No. 1 for its manufacturing climate, but the North Central and other areas are closing the gap," Alexander Grant announced.
To be sure, the Sun Belt's explosive growth over the past several years indicates a strong preference by industry to locate there. The rankings which show the Sun Belt as No. 1 in this case, however, were compiled by Alexander Grant. In the meantime, South Dakota, North Dakota and Florida aren't what one would describe as hotbeds of manufacturing activity.
If the North Central area, which includes North and South Dakota, is closing the gap, it's difficult to tell from reading a regional assessment contained in the study. The special section, which was prepared by the Naisbitt Group in Washington, notes that the availability of workers and density of general markets in the North Central region is "uniformly low." What's more, current population growth "does not indicate any dramatic improvements in work force availability or in general market density over the next few years," according to the study.
In No. 1-ranked South Dakota, farmland value has dropped 19 percent since 1981. In the region as a whole, farm bankruptcies have had a "debilitating effect" on farm equipment and supply companies, and have "forced some bank closures, with more to follow." Rural towns are being boarded up as businesses close and residents move elsewhere to find work, according to the regional overview. Of the nine North Central states, nevertheless, only two rank below Maryland.
Mid-eastern states, meanwhile, are attempting to reverse years of decline, according to the Alexander Grant study. States in the region, which includes Maryland, have made "respectable," and in some areas "phenomenal, progress" by keying into high-growth industries and by diversifying existing industries, the study says.
Against that background, Maryland, which is sinking in the rankings after being stuck in 27th place for three years, is acknowledged by Alexander Grant to be "home to biotechnology firms and is a center of worldwide data communications." Venture capitalists also are eyeing Maryland's fast-growing biotechnology industry, according to the study, which adds that much of that money goes to entrepreneurs.
"When Maryland's Montgomery County and the University of Maryland complete their biotechnology research and development center in Gaithersburg, that state will be a leading contender for biotech dominance. Biotechnology, computer technology and service industries will contribute most of the 360,000 new jobs projected for 1990, which are certain to push Maryland's 23rd-place ranking in unemployment expenditures well above 20th place," Alexander Grant predicts.
It's no small accomplishment either that the Institute for Defense Analyses elected to build its supercomputer research center at the Maryland Science and Technology Center.
The consistently low ranking in the Alexander Grant studies notwithstanding, high-tech industries, at least, seem to like the manufacturing climate in Maryland.