Wednesday, June 04, 2008

Baltimore Sun on Maryland's DBED & Biotech

Let Md. focus on firms it has now

Jay Hancock

June 4, 2008

It's as plain as the steely resolve in Gov. Martin O'Malley's eyes that something interesting is about to happen to the Department of Business and Economic Development.

The governor didn't tell the department he wanted to overhaul it until just before he said so in a speech last month, according to people familiar with the situation, so O'Malley and DBED Secretary David W. Edgerley haven't been reading from the same PowerPoint


The risk is that, like governors before him, O'Malley will turn Business and Economic Development Department into a deal-chasing boiler room for planning ribbon-cutting announcements with out-of-state companies.

Of course, DBED needs to play the business recruitment game. But its primary focus should be helping the companies that have already thrown in their lot with the state.

The agency's present mode is small-ball - bite-size financial deals originated through county and city development offices, along with guidance from DBED branches for any Maryland company trying to make its way.

O'Malley can't say exactly how that will change until the completion of a top-to-bottom review this summer.

But he wants to put much more focus on promoting and developing high-tech business, especially biotechnology. He wants to publicize Maryland's smart work force, its constellation of employers, its proximity to Washington.

"It's a great story, and we've never told it well," he said in an interview. Edgerley, whom O'Malley appointed at the beginning of his term "has done a pretty capable job," he said, "and has gotten DBED to become more responsive and more accountable" to local economic development officials who deal with companies every day.

Now the governor seems to want to put the state, DBED and himself back in the front office with them, trolling for deals. He just got back from promoting Maryland's biotech economy to Israelis, and he's about to head to North Carolina to see how that state has done such a good job of developing its life sciences sector.

Far be it from me to identify this as a response to Maryland Comptroller and O'Malley rival Peter Franchot, who has been making his own headlines from biotech goodwill tours. Focusing on DBED had to wait until now, the governor said, because most of last year was taken up in fixing the state's fiscal problems.

The truth is that, while biotech is important for Maryland, there's a limit to what public officials can do. The biggest government decision for Maryland biotech came in the 1930s when Washington decided to put the National Institutes of Health in Bethesda. Most of what has happened since then has been about the private sector arranging itself around the public asset.

For all the attention it gets, biotech has never fulfilled its grandiose promise. A study last year by the Sage Policy Group found only 30,000 private-sector, bioscience jobs in the state - a little more than 1 percent of total employment. Products bought and used by patients - as opposed to those in development - are few. MedImmune, the state's premier biotech company, got sold off last summer to AstraZeneca.

For economic developers, the grail has been to land a big biotech manufacturing facility to help make up for the collapse of Maryland's traditional factory base. The biotech manufacturing portion "is a piece of our cluster that's underperforming," O'Malley said.

But it hasn't happened and it's not likely to. Novartis bypassed Maryland and put its plant in North Carolina because of lower labor costs. There's little DBED can do to reverse that. Even so, O'Malley said he might be willing to put tens of millions of dollars on the table - what North Carolina gave Novartis - "for the right company" to put a plant in Maryland.

Translation: Having just raised taxes on Maryland companies, he might use some of the money to try to lure drug factories here to compete with them for workers.

A big study partly financed by Baltimore when O'Malley was mayor found that the state must "invest greater resources and implement innovative deal structures" to lure biotech concerns. Shortly after being elected governor, he was talking about founding a "statewide life sciences authority" and putting up $100 million in public money to develop biotech, according to the Baltimore Business Journal.

To his credit, O'Malley knows that Maryland's highly educated work force and existing technical institutions - from the Johns Hopkins University to the National Security Agency - are its greatest attributes. He has continued the state's tradition of investment in higher education.

He knows that today's DBED, with a strategic focus and better financial department, is superior to the agency that once flailed around from company to politically connected company. He understands the need to continue the unglamorous work of Gov. Robert Ehrlich's DBED secretary, Aris Melissaratos, in connecting academic researchers with businesses.

Edgerley is on board with the overhaul. (He likes the term "refocusing" instead.) "It creates some nervousness among staff and among our partners," he said. "We're doing what we can to let everybody know we're focused on the opportunity it presents."

So is Melissaratos, now working with Johns Hopkins' technology transfer office.

"I don't see anything wrong with reorganizing it," he says. "Any improvement is well-accepted."

But those guys would say that. It's what the governor wants. The real constituency is the larger business community, which is already quite unhappy with O'Malley's tax increases.

Markets and businesses follow their own logic. Someday Maryland biotechnology may blossom into the same kind of employment engine as, say, the defense industry. But it won't have much to do with what one governor is able to do.

If renewed promotional efforts and hunting for biotech elephants distract DBED from being a service resource for ordinary Maryland companies - something it has become very good at - it'll hurt the economy more than help.

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