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Mid-Atlantic States
From Site Selection magazine, September 2009

Quick and Nimble

Smaller states vie for investment.

A Instruments, a manufacturer of high-tech thermal analysis instruments in New Castle, Del., needed more manufacturing space to keep up with its rapid growth. Having spun out of technology developed by DuPont in the 1990s, the company's roots are in Delaware, but it took a regional look before electing to stay home.
Gov. Jack Markell tours the Amtrak
TA Instruments has moved into its new facility in New Castle, Del.

      "Delaware is a small state and we are 20 miles [32 km.] away from three other states — New Jersey, Pennsylvania and Maryland — so we considered all of our options," says Terry Kelly, president of TA Instruments. "Delaware Governor [Jack] Markell and Alan Levin [director of the Delaware Economic Development Office] are a dynamic couple of guys. It's a very pro-business administration. They do it right in terms of supporting businesses. They've created financial awards for companies that create jobs, and they are not just giving money away."
      Incentives offered by the state convinced TA Instruments to move into a new 210,000-sq.-ft. (19,500-sq.-m.) facility in New Castle. The incentives are tied to the amount of capital TA Instruments invests in the state and the number of jobs it creates.
      "From the state to the county to the town, none were a bottleneck in the process of developing and building," Kelly says. "They helped us move along at a quick pace."
      TA Instruments employs 200 at its new facility and 500 worldwide. Kelly says six of the 10 systems that the company manufactures are for export markets.
      "We are the manufacturing opposite of what you read about in the newspapers. We hire people in China and India to sell our stuff, but not to manufacture it."
      Kelly says TA Instruments sales have grown by a factor of 2.5 over the past five years, and he believes the company has the same potential for the next five years, once the current economic downturn subsides.

Agile Delaware
      Jack Markell was elected Delaware's governor in November 2008 following a 10-year stint as the state's treasurer. Prior to that, Markell served as director of corporate development for Nextel, and is credited with coining the company's name. He says his private sector background helps him understand the needs of businesses. He believes that Delaware, despite its small size, has some big advantages to offer corporations.
Gov. Jack Markell tours the Amtrak
Delaware Gov. Jack Markell tours the Amtrak Maintenance Facility in Bear. The facility received $58.5 million in federal stimulus money, allowing the hiring of 52 new employees, some of whom came from shuttered Chrysler and GM plants.

      "Our view is that we have an economic climate that's attractive across many industries," Markell says. "We don't believe in putting all our eggs in one basket, and that's reflected in our economy today. We have a great position in financial services, chemicals and value-added industries around chemicals. We have advanced materials manufacturers like W.L. Gore."
      Markell says Delaware is taking steps to take advantage of the greening of its economy. One of those is a new law eliminating neighborhood covenants as an obstacle to homeowners installing rooftop solar panels.
      Markell describes Delaware's economic development effort as more nimble and agile than that of larger states.
      "When you're small, you have to be quicker," he says. "We try to put ourselves in the shoes of people who are creating jobs and determine what they are looking for. It's not complicated. We have great schools, a good, low cost of doing business and a great quality of life."
      Delaware's auto industry vanished in a seven-month period with the closing of Chrysler's plant in Newark in December 2008 and the shuttering of the GM plant in Wilmington in July 2009. Markell says those two plants offer significant redevelopment possibilities. He says he has had discussions with the private sector as well as the University of Delaware about potential uses for those facilities, and how to take advantage of the suddenly available auto work force.
      Markell launched the state's Limited Investment for Financial Traction (LIFT) program in April 2009 as a means to help Delaware's small businesses. It uses $5 million from the state's Strategic Fund to subsidize the interest on small-business loans. Businesses receiving the LIFT subsidy will repay the money to the state after two years, with the individual business owners themselves given personal guarantees as part of the program. The investment by the state is expected to help between 200 and 500 Delaware small businesses with good credit histories access as much as $50 million a year in loans from participating banks.
      "LIFT is an example of what we are doing to be more nimble and responsible," Markell says. "Part of it means listening to what businesses have to say. I think I need to be the best salesperson the state has. Frankly, we meet with a lot of companies who are really appreciative of the level of responsiveness that our state government and our office provide."

Close to Coal
      The southwest corner of West Virginia, about two miles (3.2 km.) from where Virginia and Kentucky connect, may one day be the site of one of the nation's biggest energy projects. TransGas Development has earmarked a site in Wingo County for a $3-billion coal-to-liquid facility. Projected to be operational by 2013, the plant will be built in Mingo County's new energy park near Gilbert. The construction phase is expected to generate 3,000 jobs. When fully staffed, the facility will employ about 250. TGDS estimates the facility will use up to 3 million tons of locally mined coal a year to produce more than 6.5 million barrels of gasoline.
      TransGas chose the site based on its proximity to the region's coal mines.
      "It's in the middle of Appalachia and close to the coal sources," says
West Virginia Gov. Joe Manchin
West Virginia Gov. Joe Manchin tours PWP Industries' new recycling facility in Wood County during its grand opening. The facility recycles plastic bottles into materials to make food containers.
Aaron Daley, director of development at TransGas Development. "We predominantly hope to take coal from West Virginia, although a lot of companies that operate in that region operate across state lines."
      The project is currently moving through the permitting phase. Daley says a conservative estimate has all the permits in place by the first quarter of 2010 with construction beginning in the third quarter. Construction will take 36 to 42 months, he says.

Manchin Touts
West Virginia's Fiscal Standing
      In a year when most state legislatures and governors worked past mandated deadlines, raised taxes and cut jobs, West Virginia emerged as one of a handful of states with a budget surplus.
      "We've been blessed," says Manchin. "It's taken a lot of hard work and it's taken a committed and disciplined approach in how we run our state. The Legislature has supported the efforts we have put forward. At a time when other states are cutting back, we haven't done any. This is one of the most challenging economic times, and here we are working on a balanced budget through 2014. If you are a business person and are looking at a state that continues to reduce its tax burden and live within its means, I would hope that would sell itself."
      Manchin says the TransGas project is a good fit for West Virginia, allowing it to use its natural resources to move toward energy independence.
      "We are vulnerable because of imported oil, and to break the cycle we need to be less dependent on foreign oil. West Virginia has the natural resources. Liquefaction of coal is a way to transform our coal into a synthetic gas, and we are very supportive of these types of industries."
      In June, Manchin signed the Alternative and Renewable Energy Portfolio Act. The bill mandates that electric utilities (excluding municipal utilities, rural electric cooperatives, and utilities serving fewer than 30,000 residential customers) obtain 25 percent of their electricity from alternative or renewable energy sources by 2025. The bill sets interim targets of 10 percent by 2015 and 15 percent by 2020.
      While West Virginia can't compete with larger states when it comes to financial incentives, it does compete in other areas, Manchin says.
West Virginia Gov. Joe Manchin
West Virginia Gov. Joe Manchin tours PWP Industries' new recycling facility in Wood County during its grand opening. The facility recycles plastic bottles into materials to make food containers.

      "If you are out shopping and looking for someone who will give you an incentive, we're not as big as a Texas or an Ohio. We have a very aggressive package in our state for economic development, and at the end of the day if it becomes a bidding war, then West Virginia is not the right place."
      Manchin prefers to show companies the state's success stories, and has recruiters take them to visit companies such as Hino Motors in Williamston and Toyota Motor Manufacturing's engine plant in Buffalo.
      Manchin takes issue when West Virginia's business climate gets low marks, as it did in a recent CNBC report which placed the state 47th.
      "There is a lack of knowledge out there and a misperception that West Virginia is not a progressive, friendly state for business. We have the nation's sixth highest rate in gross domestic product. West Virginia has a lot of offer."
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