Challenge for Northeast: cooperating to attract jobs
A Delaware state official praises it as ''legitimate parochialism.'' A bank president in Lowell, Mass., worries that it is nothing more than ''moving the deck chairs.''
They are each describing what may be the most surprising aspect of the resurgence of America's Northeast: the highly competitive courtship of industries by the various states.
In the past several decades, the art of luring factories and their jobs into economically troubled regions has become increasingly sophisticated. In America's Southern states, in European Community countries, even in such troubled regions as Northern Ireland, governments have had some success in offering tax incentives, worker training programs, and land, buildings, and equipment to industrialists seeking new or expanded quarters.
But the Northeast Corridor states, until quite recently, have not thought it necessary to advertise - or, as some observers note, have been either too complacent or too aloof to blow their own horns. ''The Northeast has the contentment,'' says Baltimore developer James W. Rouse, adding that it also has ''an unwillingness to sell itself.''
Now, however, as the region fights its way back from the economic downturn of the mid-1970s, state after state is moving into high-powered media campaigns, printing glossy booklets promoting local attractions, generating reams of statistics showing statewide strengths, and opening offices overseas. Some examples:
New York. Three years ago, the state's budget for industrial development alone was $1.5 million. It is now just under $7 million. And of the state Commerce Department's $28 million budget, roughly half goes to the state's two major advertising campaigns, ''I Love New York'' and ''Made in New York.'' The state now has development offices in England, Germany, Japan, and Canada.
Maryland. Several years ago the state brought in a professional industrial developer, James O. Roberson, as head of its Department of Economic and Community Development - a cabinet position which, in many states, goes to a politician. Maryland now has offices in Brussels and Tokyo and is actively trying to upgrade its export promotion.
Pennsylvania. The state's Department of Commerce, which has a $40 million budget, spent $3.15 million on advertising in 1982 - up from a mere $60,000 in 1978. Its offices in Paris, London, Frankfurt, Tokyo, and Mexico City promote three things: investment by foreign companies into the state, exports to foreign markets of Pennsylvania-made goods, and tourism. The result? There are currently 420 foreign firms in the state, employing more than 100,000 people, while export trade, worth $15 billion, employs 150,000 more.
Massachusetts. Since the advent of the ''Make it in Massachusetts'' advertising campaign in 1979, the state has steadily increased its rate of industrial expansion. In the first six months of 1982, 185 firms expanded in the state, adding an estimated 14,605 jobs. Nearly half of these came from a single high-technology employer, Digital Equipment Corporation. State officials say this growth has helped keep the state's unemployment rate below the national average since October 1979.
What is the effect of this increasing activity? Some of these efforts, creating new overseas relationships, expand America's markets. Northeastern states capitalize on European investors' fears of creeping socialism on the Continent - emphasizing, as New York Deputy Commerce Commissioner Michael F. Woods says, that ''we're looked up to as the last bastion of free enterprise and capitalism.''
Yet some of these development efforts, say others, simply ''move the deck chairs'' - strip away factories and jobs from one region and plunk them down in another, causing not growth but simply redistribution of the nation's wealth.
Even within the Northeast, the more or less active ''raiding'' of firms from neighboring states is a significant part of the industrial development picture. New York has perhaps suffered most, as Manhattan-based businesses seek cheaper, newer quarters and lower income taxes for their executives in New Jersey and Connecticut.
Some value that competition. The director of the Delaware Development Office, Nathan Hayward III, says that ''I want New Jersey and New York and Virginia and Maryland to come up with new bells and whistles,'' noting that ''it keeps us on our toes, keeps us from getting stagnant.''
In Maryland, state development officer James Belch agrees. ''Every state feels that the business (of industrial development) is highly competitive,'' he says. Competition forces neighboring states to keep taxes and regulatory measures more or less on a par with one another.
But others, like New York investment banker Felix G. Rohatyn, worry that such competition keeps the states from useful cooperation. ''There is too much interstate competition in this country,'' he says flatly, ''which is quite destructive in many ways.'' He says the Northeast needs to unite around such major issues as water conservation, infrastructure, and energy, which all require interstate cooperation.
Part of the problem is that the Northeastern states, rather than diversifying their goals, are all seeking businesses of the same general type. All are interested in clean, high value-added firms in the high technology industries. Many states, too, have been strongly influenced by the studies of Massachusetts Institute of Technology Prof. David Birch, which show that the greatest job growth comes from small rather than large firms. As a result, many states hold out especially attractive packages for small-business startups - although they recognize that existing companies must also be cared for.
Several regionwide organizations have formed in the past decade, including the Council for Northeast Economic Action and the Coalition of Northeastern Governors. CONEG's ''Agenda for the Eighties'' calls for cooperative efforts in business and capital development, energy and environmental policy, training programs, and transportation.
Can the Northeast increase its cooperation? As competitive advertising efforts gain speed, many doubt it. ''We'd rather go it alone than cooperate,'' says a private-sector industrial developer in New Jersey, adding that ''We view Manhattan Island as our enemy.'' Over in Manhattan, Commissioner Woods sees ''absolutely no chance'' that the states will get together on questions of industrial development.
Yet CONEG research director David D. Arnold notes that the region's problems will increasingly have to be solved at the state, rather than the federal, level.