Delaware’s director of economic development says don’t give up on the Chrysler plant, and tourism efforts are in full swing. Judy McKinney Cherry will never forget the first day on the job she has held for nearly five years. Bristol-Myers Squibb, which had acquired DuPont Pharmaceuticals a little more than a year earlier, announced that it was leaving Delaware, and 586 workers would be losing their jobs. Hardly an auspicious beginning for the new director of the Delaware Economic Development Office. That was in October 2002. Since then, most of Cherry’s days have been better than her first. Indeed, she says, Daimler-Chrysler’s Valentine’s Day announcement that it would “idle” its assembly plant in Newark in 2009 wasn’t as bad as it might have been. Cherry, whose office is responsible for promoting Delaware tourism in addition to recruiting new businesses and helping existing businesses grow, recognizes the importance of giving personal support to the local economy. She drives a Newark-built Dodge Durango and notes that the SUV’s features include a DuPont paint formulated with Ciba-Geigy pigments. But, she admits, “I wouldn’t expect a private citizen to think in those terms on a regular basis.” She lives in southern New Castle County with her husband Phil, a former aide to former Gov. Tom Carper who now works in the state Department of Natural Resources and Environmental Control, and their three children—a 16-year-old daughter and twin sons, age 14. Out & About caught up with the energetic DEDO leader at the Carvel State Office Building in Wilmington (She spends most of her time in Dover), where the 10th floor office affords a panoramic view of potential economic development sites from Claymont through Wilmington to as far south as the C&D Canal. |
Some people look at economic development programs and see payoffs to businesses—bring your business here and we’ll give you tax breaks and low-interest loans and we’ll build roads for you, too. Could you explain the mission of DEDO, and how you accomplish it? To give you some background, shortly after I started in 2002 a report came out, called the New Economy Index, and it rated Delaware ninth in the country. It looked at economic development, evaluating the states on whether they would be successful competing in a global economy and in a new economy, one based on knowledgeable workers and on innovation and ability to be resilient. We’ve used that index carefully to see what we can do for Delaware to be effective in 10 to 20 years. We want to be sure not to fall into the same trap as other states, which is to essentially pay incentives just to have a body count—just to have jobs for jobs’ sake. We made a decision to focus on businesses—to help them compete, be innovative, concentrate on research and development. We don’t create jobs, we help businesses grow. By 2007, Delaware had moved up to seventh in the New Economy Index. We’ve moved from quantity to quality. If someone called us up and said, “We have 500 jobs,” a lot of states would jump through hoops. We want to provide incentives only to companies that are paying sustainable wage jobs. There are states that, in their quest to land the big employer, will pay incentives for jobs that may be below the sustainable wage—and then they will end up subsidizing the workers’ housing, transportation and health care. We can’t do that. We have to be smart about what we are doing. We want to spend on research and development, sciences, corporate headquarters—the kinds of industries and businesses that have the opportunity to make a difference in our community. |
Let’s talk about Chrysler. Obviously the recent announcement was a setback. There will be more talk about what we can do to save the plant. Wouldn’t it be more productive to move on and find a new and better use for that site? | Clearly the market isn’t there for Durango. The fact that Daimler-Chrysler didn’t announce the plant’s closure, or stop production this year, has been lost on some people. I see an opportunity for Delaware to be creative, to work with them on how to make the plant a productive facility. And remember, that property is not owned by the state, it’s owned by Daimler-Chrysler. We have to be respectful of a business’s ownership, and not be dictating to a private business what they should be doing with that property. |
So you’re saying our options are limited until Daimler-Chrysler decides in which direction they want to go? | Correct. Chrysler is in a really interesting position. They have a very large building, and a paint shop that meets EPA regulations. Because we don’t know where Daimler-Chrysler is going in its global marketplace, we’re keeping our eyes on the international marketplace…Chery, the Chinese automaker, has already formed a relationship with Chrysler. Geely, another Chinese manufacturer, is building cars and looking for a U.S. facility. At some point, Daimler-Chrysler may be willing to let a non-U.S. owner come in. |
One of the issues is that the manufacturers that are part of the supply chain are not on the East Coast. The supplies you need to put a car together have to be hauled in from hundreds of miles away. We’re on the I-95 corridor, not the auto supply corridor. | Because we don’t have a strong supply chain here for Daimler-Chrysler, the costs for transportation and logistics are pretty high. If the plant were flexible, and could make different models like General Motors (at Boxwood Road) and we could get more suppliers to relocate, it would make more sense. There are lots of ways that facility could be re-used in the auto industry. We’ve just got to think beyond the traditional assembly plant. There are auto manufacturers in other countries—India, South America and certainly China—that are looking for an entrée into the U.S. marketplace. |
Daimler-Chrysler may be in decline, but other manufacturers are definitely adapting, moving into niche areas. What can you tell us about that? We’re seeing niche manufacturing as a very stable and growing part of our economy. We’re seeing movement away from mass, commodity manufacturing. Specialized niche manufacturers are growing and they’re profitable but they don’t necessarily have large work forces. They’re smaller, but they’re high value. They’re higher paid, they’re intellectually capitalized, they have patents behind them. They’re more resilient. They keep us diversified from a manufacturing standpoint. Here are a couple of examples. Scientific Products & Systems Inc. manufactures a fluid dispensing system used in the bioscience and pharmaceutical industries. Polymer Technologies Inc. is a small manufacturer that produces custom acoustical-related products for the airline and automotive industries. We have to get our employers to constantly be innovative. They have to sharpen their saw. That’s how they’re going to be productive and competitive. |
What’s going on with tourism marketing? Are you looking at bringing in day-trippers or are you trying to get people to stay longer? It’s simple: We want people to come in from outside the region and spend their money here. We have TV commercials for tourism running from Toronto to Atlanta. In most cases, they’re on HGTV and the Lifestyle, History and Food channels. One emphasizes sports and recreational activities—NASCAR, the beaches, Bombay Hook; the other is focused on art, culture, heritage, history and gardens. We relaunched our website two months ago. A visitor can go onto the site, key in their interests, and find different attractions. Drop items into a shopping cart and the website will map out your route.
It’s very cool. The site also allows our tourism venues to go in and add their events. It’s user-friendly for our industry, user-friendly for our visitors, and we’re monitoring hits—getting about 1,700 unique visitors a week. |
What have you found out about those visitors? | We’re capturing information on where they’re coming from—and there’s a lot of interest in Canada. We’ll be putting in a new phone system that will be integrated with the website. We’ll be able to track even better—understand what visitors are looking for and pass on information to the local convention and visitors’ bureaus, so they can mail their materials to these potential visitors. |
The credit card banks have driven the state’s economy for a generation. What are you expecting in the future? Even with the changes after Bank of America acquired MBNA, even with the loss of jobs, Delaware has continued to outperform the nation in its ability to create new jobs. Look at ING Direct. I love companies that are countercultural. ING is one of the best for this city and this state. They went counter to the trend [emphasizing savings rather than buying on credit], and they became a magnet for innovative, culturally savvy young professionals. |
So, does the banking industry have room to grow? | Yes, but in different areas. I think it will be around asset management, investment banking, captive insurance—a different flavor of banking. The U.S. Chamber of Commerce ranks our legal system number one among the states. Chancery Court is here, we’re on the railroad line, we offer access to top decision-makers. We have all the right services for the financial industry. |
One last question, about this incentives business. Look at AstraZeneca. It’s going to be another year before the roads around Route 202 are completed, and they’re already announcing they’re cutting jobs. So, are these incentives worth it? Your observation is a really solid observation. We know the costs of that project, including transportation, were over $400 million. I can’t find any evidence we required them to keep a certain number of jobs in Delaware for a particular time period or that they be at a certain salary level. Today, not only do we have time frames, but we have very specific requirements—for number of jobs, at specified salaries, for specified periods of time, and if you don’t do it we have recapture provisions. We’re now far more professional about the payback, the justification. Is it the right use of taxpayer dollars and are they the right jobs? You have to ask if the company would come anyway. We try to figure that out ahead of time. Does it make sense from a tax perspective for them to come here? It’s unfortunate for Delaware, but for a lot of companies there is this sense that, “If you love me, you’ll give me money.” If they’re coming here anyway, I don’t want to give them any money if I can help it. But if they’re leaving a state behind, sometimes they’ve got to hold their head up in that state and say “I’m going because I have a nice offer.” I don’t like to play the incentive games, but there are times when it is absolutely necessary. |
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