Investments help sidelined companies, DCED secretary says
Pennsylvania could have a bright economic future if the state can develop its energy economy, as well as invest in companies that need a boost to get back in the game, said C. Alan Walker, secretary of the state Department of Community and Economic Development.
"I think right now the state of Pennsylvania is poised to have a very good economic future. I'm optimistic," Walker said during a recent interview with the Business Journal.
DCED and the Governor's Action Team this year have offered companies economic development packages worth $198 million, including tax credits, grants and loans, putting it on pace to be as active as in 2012, according to DCED numbers. The 2013 offers are also 8 percent more than those made in 2011.
DCED has offered assistance to companies in the midstate, including nearly $3 million to Procter & Gamble and the third-party logistics firm that will manage its proposed warehouse near Shippensburg. The department gave money to Volvo Construction Equipment for its Shippensburg facilities and to Chambersburg-area manufacturer Edge Rubber that is opening a raw-materials warehouse.
The state also is talking to Lancaster County-based Armstrong World Industries Inc. about its plans to open a new manufacturing facility in the U.S.
Q: Why has DCED offered so much money to companies at this time, particularly logistics and manufacturing?
A: I think we as a nation, and certainly we as a state, are coming out of the recession, and there are companies sitting on the side with plans waiting to take advantage of opportunities. I think Pennsylvania is pretty well positioned from a logistics standpoint because of the I-81 corridor, I-78 corridor, I-80 corridor, I-99. We have a good interstate highway system here in Pennsylvania and because of our position relative to our population centers of the Northeast, we are going to be a logistics hub. That's going to be a big part of what we are in the future.
What are our top five industries?
Anything high-tech. The gas industry. The things that will come along with the gas industry. We're hoping for this big project out in Beaver County, Pennsylvania, which will bring the plastics industry along with it and the petrochemical industry. Pharmaceuticals is doing very well.
And people don't look at education as an employment sector, but we are really big in education and health care. So I think those two sectors will do well. Probably we'll grow in those two sectors faster than the national average.
Manufacturing, mining, logging and construction have remained mostly flat. What has slowed their growth?
As far as mining, it's what's going on in the natural-gas industry because natural gas is replacing coal for the energy industry and that's cutting back the mining jobs. As far as logging, we were hurt internationally because we export a lot of our hard woods. When the world economy slowed down, the export of our hard woods slowed down. I think you're going to see that come back in the next couple years, but it's slow because of the slowdown in the overall world economy. Home construction slowed down. Furniture construction was off. That affects our hard woods, and our soft woods, too.
What about manufacturing? It's stagnant in terms of jobs.
I think we're still seeing the effects of some offshoring, although I think we're going to see that reversed. We're seeing a lot of competition from the Southern states trying to lure manufacturing industry from the Northeast. Some of the Southern states are extremely aggressive. ... Although, we are now seeing the beginning of reshoring and companies coming back from overseas, looking at the Northeast.
Will we see more state assistance to companies?
I'd like to see more money for these type of programs, but it starts to become a budget item. So we compete against every other area of state government for funds. ...
The analogy I've always used since I got here was: It's the seed corn that provides the base for the growth of the Pennsylvania economy moving forward. And we have to be careful we don't eat our seed corn. ... Let's solve current problems, not necessarily lay the groundwork for the economy of the future. This administration has really worked hard to come up with a balance.
We also have what I think is a really good export program to aid our manufacturers in exporting their products. We have a great network of agents overseas. ... And exports represent almost 8 percent of the Pennsylvania economy, so it's not something we can ignore.
How do we continue that pace?
We're trying to get into some markets that we haven't been in the past. For example, the Ukraine, which is a fairly large market now. Africa. We haven't done a whole lot in Africa. So we're trying to figure out, as a state, how we get representatives there. ...
I think the way to expand is more trade missions. Our international group does a lot of these. They're in the Middle East a lot, Saudi Arabia, which is a growing market for medical devices and things like that.
How do you reach out to small businesses?
PREP stands for Partnerships for Regional Economic Performance, and it's really getting all the regional economic development people to work together to be on the same page. And we're certainly encouraging them to identify companies that can export and educate them on what we do.
How does DCED tackle the problem of small-business financing?
There's no doubt the banks have really tightened up money. However, if (companies) apply for one of our programs — a loan or something — and we put our blessing on it, it tends to free up the money from the banks. I think what we do is give a project credibility through our review process.
What are your priorities for the next year?
I would like to get the Pennsylvania Business Development Authority through the legislature, which would allow us to borrow against assets we already have in place to build industrial parks and have more site-ready areas in Pennsylvania. I believe in "if you build it, they will come." Where there is good economic activity, it's usually because they have an industrial park already in place and a company wants to go in there. They don't want to have to go through the infrastructure battle either.
That's definitely a priority. Getting the message out that Pennsylvania really is a good place to do business.