The most listened to, relevant organization in Annapolis,bar none.
Robert L. Ehrlich - Governor, State of Maryland

And the Winner Is... Criteria for Corporate Site Selection"
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The fifth one is the economic development effort. It's that process of understanding these five or six opportunities, segmenting them, listening to what their needs are, and then seeing where you can be effective in building a program that attracts that market segment.

The final one is how well the market perceives the state's response to each customer's needs. That's called image. And, perception is reality. Advertising, promotion, letting the word out that Maryland is a good place to do business, is not money poorly spent.

Maryland competes in terms of its economic development effort and its brand image with other neighboring states: Virginia, Pennsylvania, Delaware, West Virginia and the Carolinas. The reality is that most of the activity is in and around the neighboring states. Also, I would throw in New Jersey and New York in terms of where opportunities lie. Cities like Atlanta, Dallas, Kansas City Cincinnati, Houston, Richmond, Charlotte, Denver, St. Louis, Pittsburgh, Indianapolis, and Jacksonville typically get thrown into the net of cities that Baltimore or Montgomery County would be competing against in a city-to-cityor a region-to-region comparison.

By any measure I've seen, Maryland has not kept pace with Virginia and the Carolinas. This, in spite of Maryland's fabled ratings and infrastructure, labor market and quality of life. The reason for Maryland's lack of competitiveness is primarily due to a non-responsive business climate, a weak and ineffective economic development effort, and a poor image. Although Maryland usually passes the first screen on a site selection process, it has a hard time passing the scrutiny of most business leaders considering the region.

At PHH Fantus, we have the pleasure of working with some of the leading practitioners in economic development around the world. When we sit down with the governors of some of the more progressive states, or we go overseas to talk to government heads of economic development, we're talking to a business savvy executive. They know about market segmentation, marketing, promotion, and how to treat the economics of their state like the economics of a business. They think of it in terms of customers to be served, and funds to be raised to do work for other customers that we need to serve as well.

Due to the 1994 election, I think that more of these people got into office and more of that economic power in other states is being built. I think it should be a cry to Maryland to get involved and find out more about what's going on outside of your borders. To learn from it and grow from it.

There's a concept called benchmarking. It doesn't just look at a competitor and give you an assessment of what their strengths and weaknesses are, but what its successes have been and quantifies them. It tries to get at the core of what they do best and tries to identify. If workmen's compensation is an issue, what state has done the best in the area of workmen's compensation? If education is a hot button, what state is the best in the class in that area? At PHH we spend a lot of time benchmarking. I'll give you a couple of examples that come from some work that we've seen.

Keeping workmen's compensation rates reasonable and providing lucrative incentives designed to - offset the tax burden of new and expanding industries is proving successful in states such as Kentucky and South Carolina. Indiana has also been able to keep rates near the lowest in the U.S. in workmen's compensation. Oregon's system is frequently used as a model of cost containment. The state placed a cap on legal fees, required managed care by physicians and reduced the number of claims an individual can file. The net result was a 30 percent reduction in rates. Florida has recently established permitting standards that guarantee a permitting decision within three months of application. Some states have established public/private partnerships for economic development. That immediately reveals the level of business/ government cooperation to existing and relocating clients. Maryland has many attributes to become the best in the class in economic development if it acts swiftly to correct its weaknesses and promote its strengths.

A task force of business leaders recently came together to promote a legislative agenda for action by the new administration. I encourage you to read the document issued by the Maryland Chamber of Commerce. When I came into this state I went to the Maryland Chamber of Commerce, and I offered the services of Fantus to give a preliminary assessment. As an outgrowth, I was asked to participate in a panel of business executives to answer the question, "What could Maryland do to improve its competitiveness?" I was very pleased with the effort the

Maryland Chamber of Commerce did in guiding us through that process and I was very proud of the documents that resulted.

One particular recommendation - creating a private/public economic development commission I'd like to see enacted legislatively in 1995. It would be a step in the direction of getting top business executives involved in economic development in the state. Much the same way the Port Commission came together, which I believe is heralded as a private/public partnership success.

I was proud to be a part of that task force and it showed a real willingness on the part of business to take the first step. There are many to be taken. The road to repair the relationships between the business community and the legislative/ public sector is as wide as I've seen in any state. It needs to come together and forums like this do a good job of it.

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